TS TECH CO., LTD.

86.4% of consolidated revenue (89.0% on a final destination basis) is generated from sales to the Honda Motor group, meaning that changes in the Honda group's business strategy, production adjustments, purchasing policy changes, recalls, etc. have a direct and significant impact on the Group's business results. As a countermeasure, the Group has established a Business Development Division to acquire new customers and expand new business rights globally, but the degree of dependence remains at a high level.

Economic slowdowns in Japan, North America, South America, China, Asia & Europe, changes in the structure of the automobile market, and declining consumer purchasing appetite due to price increases could lead to decreased sales of two-wheeled and four-wheeled vehicles, affecting the Group's business results. The Group is working to build a high-profitability structure through customer diversification, production automation, supply chain restructuring, and cost reduction, among other measures.

The Group's core product, Seats for Four-Wheeled Vehicles, is composed of steel materials, resin materials, urethane, skin materials, mechanical components, semiconductors, and other materials. Supply chain disruptions caused by regulatory changes, production cuts by suppliers, sharp price increases, and other factors may affect business results. The Group seeks to mitigate this risk by securing stable procurement based on basic transaction agreements with suppliers and by adopting transaction arrangements that allow market fluctuations to be reflected flexibly in transaction prices.

As the Group operates globally, it is affected by foreign exchange rate fluctuations in foreign-currency-denominated transactions arising from mutual complementation of parts between countries. The main currencies are the US dollar and the Chinese yuan, and the Group strives to minimize the risk of exchange rate fluctuations in foreign-currency-denominated transactions through the use of hedging transactions such as forward exchange contracts.

The Group manufactures automotive parts that are safety-critical, coming into direct contact with and protecting the occupant's body. If a recall or similar event occurs, it could result in substantial compensation costs, recognition of product warranty provisions, and reputational damage. The Group has established a system for rapid response through quality refinement from the development stage, operation of quality management systems such as IATF16949, and the introduction of traceability systems.

If operations are disrupted due to large-scale natural disasters such as earthquakes, infectious diseases, deteriorating conditions surrounding the Middle East, Russia, and Ukraine, terrorism, strikes, or similar events, it could have a material impact on business results. The Group has established a fund management system, under the direction of a Risk Management Officer and applying the "Safety Fund Guidelines" across the Group, that enables smooth business operations and employment maintenance even in the event of an emergency.

As the Group operates in North America, South America, China, Asia & Europe, unexpected enactment or amendment of laws and regulations, additional tariffs and tightened import/export regulations in the U.S. and elsewhere, and fluctuations in U.S.-China relations or the Middle East situation may affect the broader supply chain. The Group addresses this through the distribution of legal and regulatory information to group companies, gathering of information from local institutions, use of the Advance Pricing Agreement (APA) system for intra-group transactions between Japan and the U.S., and the establishment of region-specific supply chain systems.

The Group is subject to legal regulations concerning automobile safety and the environment in each country where it operates, and any delay in responding to regulatory tightening or new regulations could lead to restrictions on business activities or increased costs. The Group continuously monitors the latest regulatory trends, primarily in Europe and the U.S., and maintains a development structure capable of responding to future legal regulations.

The Group holds technical information, employees' personal information, and important customer information. If confidential information is lost, tampered with, or leaked outside the company, it could result in damage to corporate value, loss of social credibility, and liability for damages. In addition to establishing internal regulations, employee training, and strengthening security systems, the Group strives for thorough information management, including obtaining TISAX certification at relevant sites.

The Group procures raw materials and parts from numerous suppliers, and if a supplier's financial condition deteriorates or it goes bankrupt, the supply chain could be disrupted, causing delays or stoppages in product manufacturing. The Group strives to minimize this risk through regular checks of suppliers' financial conditions, support for strengthening their financial soundness, and identifying parts with high dependence on specific suppliers to formulate alternative measures in advance.