IKUYO CO.,LTD.

The Group conducts business primarily in Japan but is affected by economic fluctuations and social conditions both domestically and overseas. If legal or tax system changes, shifts in political or economic conditions, wars, terrorism, or the spread of infectious diseases occur in the regions where business partners or their end users are located, this could disrupt production activities and adversely affect the Group's business performance and financial position. No specific countermeasures are described, and this is recognized as a broad macro risk.

The Group's main sales customer is Mitsubishi Motors Corporation, and sales dependence on this company reaches approximately 20%. If transactions with this company decrease significantly, it could have a material impact on the Group's business performance and financial position. While the Group is diversifying its delivery destinations to other finished vehicle manufacturers, the high degree of dependence continues to be a risk factor.

The Group procures raw materials, semi-finished products, and other materials from multiple suppliers domestically and overseas, and purchase prices may rise due to increases in prices of petroleum-related products and other factors. Although the Group strives to reduce costs in its manufacturing processes, if it is unable to sufficiently pass on price increases to selling prices, this will adversely affect business performance and financial position. The ability to respond to market fluctuations is an important factor determining profitability.

The Group has manufacturing facilities and other equipment in the regions where it conducts business, and there is a risk that business activities could be interrupted or delayed if large-scale earthquakes, typhoons, floods, or other natural disasters, pandemics of infectious diseases, fires, or other accidents occur. Should such events occur, they could have a material impact on the Group's business performance and financial position. There is no description in the securities report of specific countermeasures such as a BCP (Business Continuity Plan).

The Group recognizes the securing and development of excellent personnel in sales, technology, business administration, and other areas as an important issue and is implementing necessary measures. However, if the Group is unable to sufficiently secure and develop appropriate personnel, this could affect business development and performance from a long-term perspective. A shortage of human resources could particularly become a constraining factor in achieving the Group's growth strategy.

If sluggish consumption or declining demand occurs due to a simultaneous global recession, this poses a risk of adversely affecting business performance and financial position. In addition, the declining population and progressing low birthrate and aging population in Japan may affect the Group's business performance and financial condition over the long term. As an automotive parts manufacturer, the structural contraction of the domestic market is a medium- to long-term challenge.

The Group is subject to environmental laws and regulations in its business activities, and significant changes to laws or public regulations could result in substantial costs. If costs associated with responding to stricter regulations increase, this poses a risk of affecting business performance and financial position. The automotive parts industry is particularly sensitive to trends in environmental regulations, requiring continuous monitoring.

If automakers reduce production due to semiconductor shortages or other factors stemming from unforeseeable political or economic risks, the Group's product sales may decline. This is recognized as a risk that could disrupt production activities and have a material impact on financial position, business results, and cash flows. It inherently carries the risk that rising geopolitical tensions could spread throughout the entire automotive supply chain.