YOROZU CORPORATION

The ratio of overseas sales to consolidated net sales stood at high levels of 70.5% in FY2025 (ended March 2025) and 69.1% in FY2026 (ending March 2026), and exchange rate fluctuations have a significant impact on consolidated business results. As the Group intends to continue expanding globally, the overseas sales ratio is expected to rise further, requiring continued response to foreign exchange risk.

Raw materials for the Group's core automotive parts products (steel sheet for automotive use) are significantly affected by international market conditions, and prices, which rose sharply from 2004 onward, remain at elevated levels. Increases in raw material costs may push up manufacturing costs and adversely affect profitability.

The Group's business results are affected by the sales trends of automobile manufacturers, its customers. If automobile manufacturers experience sluggish sales or implement production adjustments, this could directly affect the Group's net sales and earnings.

Although the Group manages product quality through company-wide activities based on its quality assurance system, if an automobile manufacturer customer receives complaints or recalls from the market, the Group may also be held partially responsible as a manufacturer. There is a risk of bearing recall costs and adverse effects on business relationships.

With the overseas sales ratio at a high level of 69.1%, changes in overseas laws or tax systems could create problems in the conduct of business. Changes in the regulatory environment of each country can directly affect the business operating costs and profitability of local subsidiaries.

Social disruption or sudden changes in economic conditions due to terrorism, war, or other factors could impede business operations at overseas locations. Given the high overseas sales ratio, which is expected to rise further, the Group's exposure to geopolitical risk is on an increasing trend.

Although the Group has diversified its production bases in preparation for disasters such as earthquakes and accidents, if a disaster or accident actually occurs in any region and halts operations, it could disrupt the supply of products to customers and affect the Group's financial position and business performance. Disruption of the supply chain could also adversely affect business relationships with automobile manufacturers.