ICHIKOH INDUSTRIES, LTD.

The Group's sales are highly dependent on the Toyota Group and Nissan Group, and the sales trends of these automakers directly affect the Group's business performance. If production adjustments or sales declines occur at specific customers, there is a risk that the Group's earnings could be significantly impaired. There is no specific description of efforts toward customer diversification.

The Group manufactures products in accordance with global quality standards, but it cannot guarantee that all products are free of defects or that recalls will not occur in the future. If a large-scale recall or product liability claim occurs, it could have a material adverse effect on business performance and financial position. The Group continues to develop its quality control system, but it is difficult to completely eliminate this risk.

The Group conducts production and sales operations not only in Japan but also in North America, Asia, and other regions, and prepares its consolidated financial statements by converting sales, expenses, assets, and liabilities denominated in local currencies into yen. Fluctuations in exchange rates affect the yen-converted financial figures even when the value in local currency terms remains unchanged. Given its global business operations, the Group's foreign exchange risk exposure spans multiple currencies.

The Group procures raw materials and parts from numerous suppliers, and there is a risk of rising procurement prices due to market fluctuations, indirect effects of exchange rate movements, energy cost fluctuations, tight supply-demand conditions for electronic components, and delivery delays due to deterioration in suppliers' financial condition. If these factors occur in combination, they could adversely affect business performance and financial position through increased manufacturing costs and delays in production plans. There is no specific description of countermeasures such as supply chain diversification.

The Group is committed to allocating management resources to technology development and responding to market trends, but if unexpected technological innovation or rapid changes in market needs occur, there is a risk that it may become difficult to develop and supply products required by customers. Against the backdrop of rapid technological transformation in the automotive industry, such as electrification and autonomous driving, maintaining product competitiveness is a challenge. If the response is delayed, it could adversely affect business performance and financial position.

While the Group promotes efforts toward carbon neutrality, future tightening of environmental regulations or changes in customer requirements could lead to increased costs such as raw material costs and tax burdens. There is also a risk that an increase in natural disasters associated with climate change could affect business activities. If these risks materialize, they could adversely affect business performance and financial condition.

The Group conducts business operations in Japan as well as across Asia and globally, and may be affected by fluctuations in economic conditions in the countries and regions where it sells its products. If an economic downturn or decline in demand occurs, it would directly affect the Group's sales and earnings through reductions in automakers' production volumes. If dependence on a specific region is high, the impact of economic fluctuations in that region may be amplified.

The Group's retirement benefit expenses and obligations are calculated based on actuarial assumptions such as the discount rate and the long-term expected rate of return on pension assets. If actual results deviate from these assumptions, or if the investment environment for pension assets deteriorates, the effects accumulate and impact expenses and obligations in future periods. If changes in the interest rate environment or fluctuations in capital markets necessitate a revision of these assumptions, this could impact financial position.

The Group recognizes the recruitment and development of human resources in various fields, including technology and management, as an important issue, but if it is unable to secure adequate human resources, this could affect business performance and financial position over the long term. This is set against a backdrop of intensifying competition to acquire specialized talent in each region amid global business expansion. There is no detailed description of specific recruitment and development measures.

In addition to product liability, the Group faces litigation risks related to intellectual property rights, labor matters, and environmental pollution, among others. Depending on the outcome of these legal proceedings, the Group may be required to pay damages or fines, which could affect business performance and financial position. Due to its global business operations, risks arising from different legal systems in various countries exist in a complex and compounded manner.