NIHON PLAST CO.,LTD.

In FY2026 (ending March 2026), the sales ratio to the Nissan Motor group was 65.3%, and to the Honda Motor group was 29.9%, with the top two customers accounting for approximately 95% of total sales. Major customers have successively announced restructuring of production systems and reviews of EV strategies, raising the possibility that declines in sales could materialize due to reduced factory utilization rates in specific regions or changes to or cancellation of new vehicle development plans. As a response, the company is promoting the expansion of orders from other Japanese automakers and the development of business for non-automotive industries, but complete elimination of the risk remains difficult.

Additional tariffs resulting from U.S. trade policy are currently being imposed on products exported to the U.S. from Mexico and Japan, and rising costs have materialized. Discussions and negotiations with customers regarding appropriate cost-sharing for the increased costs are ongoing, but depending on the outcome of these negotiations, profitability could be directly affected. The company states that it will continue to closely monitor developments in U.S. trade policy and strive to respond nimbly to minimize the impact of tariffs.

Competition in the global automotive parts industry is intensifying, and the company is exposed to competition with rivals across all areas including quality, cost, supply, and development. If the company fails to maintain superior quality and price competitiveness relative to competitors, or fails to develop attractive products, future growth could be impeded. In its management policy for FY2027 (ending March 2027), the company is pursuing “development of new technologies/new products and new business domains,” “automation and digitalization,” and “strengthening earning power” as priority measures to secure competitive advantage.

As the company has established subsidiaries in North America, China, and other regions and increased its overseas production ratio, there is a risk of unexpected enactment or amendment of laws and regulations, changes in political conditions in various countries, and rising labor costs. The recent heightening of geopolitical risks, such as the situation in the Middle East, could disrupt logistics networks and cause a sharp rise in energy and raw material costs through surging crude oil prices, potentially triggering production adjustments at major customers. The company is working to respond promptly by strengthening cooperation with overseas sites and centralizing information, but states that a reasonable estimate of the impact is difficult.

The prices of raw materials and parts such as steel, resin materials, and magnesium ingots fluctuate depending on the global supply-demand balance and economic conditions in each production region. If increases in raw material prices cannot be passed on to sales prices or absorbed through cost reductions from improved manufacturing methods, profitability could deteriorate. The company is working to avoid increases in procurement costs by pursuing economies of scale through consolidating part types and narrowing down suppliers.

Sales, expenses, and assets denominated in local currencies in overseas operations are affected by exchange rates when converted into yen, and significant currency fluctuations could affect business results and financial condition. The company funds capital expenditures and working capital through borrowings from financial institutions, and significant interest rate fluctuations could also increase the financial burden. The company works to reduce these risks through hedging via forward exchange contracts, fixed-rate borrowings, and use of derivatives, but states that complete elimination is difficult.

The company manufactures automotive safety parts such as Steering Wheels, Airbag Modules, and resin parts, and if a product defect were to occur, it could result in significant costs and loss of credibility. The company has obtained ISO9001 and IATF16949:2016 certifications and conducts quality control, and under its management policy for FY2027 (ending March 2027), it is promoting improvement of the quality assurance process itself under the keyword “front-loading” as a priority measure.

The company makes extensive use of information technology, networks, and systems in its business activities, and if confidential information or personal information were to be leaked due to cyberattacks, unauthorized access, or computer virus attacks, this could result in a decline in social credibility and adversely affect business results. The company strives to thoroughly manage information in accordance with the “Nippon Plast Security Policy,” but risks stemming from increasingly sophisticated threats continue to exist.

There is a possibility that declines in factory utilization rates in specific regions could materialize due to restructuring of production systems and reviews of EV strategies at major customers, and if the market value of fixed assets declines significantly or business profitability deteriorates, there is a risk that impairment losses could occur. The company applies impairment accounting, creating a structure in which changes in the business environment directly affect its financial condition.

As the company operates businesses in countries around the world, there is a possibility that natural disasters, wars, terrorism, strikes, epidemics, and other events could cause delays, disruption, or suspension of raw material procurement, product manufacturing, sales, and logistics services. There is also a risk that an event in one region could spread to other regions, and if delays or disruptions become prolonged, this could have a material impact on business results and financial condition. The company states that it will respond flexibly to changes in circumstances and strive to minimize the impact on business performance.