F.C.C.CO.,LTD.

The Group's business is concentrated in clutch products, its core business, and there is a possibility that clutch products may become unnecessary due to the spread of automobiles and motorcycles not powered by internal combustion engines, as well as changes in market values driven by stricter regulations on internal combustion engine vehicles and climate change issues. In response, in addition to evolving the core business, the Group is actively promoting new business development themed around electrification products, energy solutions, environmental purification, and other areas.

The majority of revenue is derived from the automobile and motorcycle industries, and in the current consolidated fiscal year, revenue from the Honda Group accounted for approximately 36% of the total, indicating a high degree of dependence on specific customers. Since changes in the Honda Group's business strategy or purchasing policies could directly affect business performance, the Company continues to actively propose to customers in order to acquire new customers.

As the Group conducts global business centered on Japan, the United States, and Asia, its business performance may be affected by political and economic trends in each country, exchange rate fluctuations, unexpected changes in laws and regulations, international tax risks such as transfer pricing taxation, and the occurrence of disasters. The Group strives to reduce such risks by utilizing local information gathering through overseas subsidiaries and a mutually complementary system within the Group.

The competitive environment in the global automobile and motorcycle industries is extremely severe, and if it becomes difficult to maintain or strengthen competitiveness for any reason, market share and profitability may decline. The Company aims to further expand its global share by improving product competitiveness, including quality, cost, and delivery.

If a vehicle manufacturer conducts a large-scale recall due to defects in delivered products, the resulting significant costs and serious impact on corporate reputation could have a severe effect on business performance and financial condition. The Company continuously works to improve quality and strengthen its quality assurance system across all business activities.

As the Group's main facilities are concentrated in the western region of Shizuoka Prefecture, if the anticipated Tokai or Tonankai earthquakes were to occur, production equipment could be severely affected, significantly reducing production capacity. The Group has established a business continuity system for emergencies by preparing risk response manuals and developing a Business Continuity Plan (BCP) covering the supply chain.