SEIWA CHUO HOLDINGS CORPORATION

In the steel distribution industry, where significant growth is not expected, competition with other companies is intensifying, and there is a risk that sales and profits may decline if it becomes difficult to maintain appropriate prices. The Group expects the challenging business environment to continue and recognizes that there remains a reasonable possibility of this risk materializing going forward. As a countermeasure, the Group is working to provide high-quality, high-value-added products that accurately capture user needs.

The purchase prices of steel products handled by the Group tend to fluctuate depending on supply and demand trends, and since they are affected by global steel supply and demand trends, fluctuations in market conditions could have a significant impact on business results. The Group recognizes that there remains a reasonable possibility of this risk materializing going forward. As a countermeasure, the Group is stabilizing profitability by securing multiple suppliers and reducing costs.

Due to the sluggish construction industry and declining demand, significant growth in construction investment is not expected to continue, creating a risk of declining sales and profits. In large-scale steel frame processing projects, significant design changes during construction and the timing of drawing finalization based on industry practice may result in unexpected additional costs, low profitability, or losses, and there is also a risk that revenue recognition timing may be delayed in the event of construction delays. As a countermeasure, the Group is promoting selective order acceptance based on a detailed profitability review of each individual project, rather than prioritizing order volume, together with thorough cost reduction.

With numerous business partners, there is a possibility that bad debt losses could arise from the bankruptcy or other events affecting business partners, which could reduce sales and profits and have a significant impact on business results. The Group strives to prevent the occurrence of non-performing receivables by setting credit limits according to the creditworthiness of each business partner.

If the Group is unable to secure sufficient human resources due to the declining birthrate, aging population, and shrinking labor force, this may disrupt operations that the Group has cultivated over many years, potentially having a significant impact on business results and financial condition. The Group regards human resources as an important asset, and is promoting fair and appropriate treatment as well as improvements to the working environment through work-style reforms, while also conducting mid-career hiring of experienced personnel in addition to new graduate recruitment.