Yamadai Corporation

There is a risk that demand for general housing will decline due to the progression of the declining birthrate and aging population, fluctuations in long-term interest rates that affect housing loan rates, significant changes in land prices, tax system changes such as consumption tax rate revisions, and instability in crude oil supply against the backdrop of the situation in the Middle East. A decline in the number of housing starts directly affects the Group's order intake and could adversely affect its financial position and business performance. As a countermeasure, the Group judges that it can mitigate the impact of the decline in general housing starts by responding to increasing demand for low-rise public buildings and large-scale private wooden construction projects utilizing domestic timber.

The Group holds substantial fixed assets such as land, buildings, and machinery, centered on its factory in Ishinomaki City, and if profitability declines due to deterioration in the housing market or other factors, accounting standards related to impairment of fixed assets may be applied, potentially affecting the Group's financial position and business performance. In the current consolidated fiscal year, the Group has already recorded an impairment loss of ¥25 million. There is a risk that additional impairment could occur in the future depending on drastic changes in industry trends or intensification of competition.

The Group has concentrated its production plants and other facilities in Ishinomaki City to reduce costs, and if a large-scale natural disaster such as an earthquake occurs in this region, production equipment and other facilities could be damaged, potentially having a material impact on business performance and financial position. The geographic concentration of production sites creates a risk that alternative production means will be limited in the event of a disaster. The securities report does not describe specific measures regarding diversification or business continuity plans (BCP).

Drastic changes in industry trends or intensifying competition could affect the Group's financial position and business performance. If competition with other companies intensifies in the market for wooden construction of public buildings and large-scale wooden construction projects, there is a risk that securing orders will become difficult. The Company positions its facilities and technologies, such as the Wood Mill plant and precut plants capable of handling large-scale wooden construction, as competitive advantages, but there is a possibility that these advantages could be lost depending on changes in the competitive environment.

Policies such as the mandatory use of wood in low-rise public buildings under the Act on Promotion of Use of Wood in Public Buildings and various subsidies form the premise for the Group's expansion of demand for domestic timber. If the government's carbon dioxide reduction measures and policies for cultivating and using domestic timber are changed or scaled back, there is a risk that demand for public building projects and large-scale wooden construction projects will decline, causing the complementary effect that offsets the decline in general housing starts to be lost. Tax system changes (such as consumption tax rate revisions) are also cited as a factor that directly affects housing demand.