OVAL Corporation

The Group actively conducts business operations in China and other Asian regions, the Middle East, North America, Europe, and elsewhere, which inherently involves risks such as changes in laws and tax systems, underdeveloped social infrastructure, trade friction, and wars or conflicts. Furthermore, changes in tariff policy or intensifying trade friction may increase tariff burdens and logistics costs, potentially affecting business performance. As overseas operations expand, the materialization of these risks could directly impact business performance and financial condition.

The electronics field is characterized by rapid changes in technology and customer needs, and the Group strives to maintain competitive advantages in quality, price, and delivery time, as well as to propose market-anticipating functions. However, if the Group falls behind in responding to technological changes and customer needs, or if the new product development period becomes prolonged, growth and profitability may decline. This could have a material impact on business performance and financial condition.

In many of the markets in which the Group operates, competitors supplying similar products exist, forcing the Group into severe price competition. Although the Group prides itself as a high-quality leading company, there is no guarantee that it can always maintain a competitive advantage in pricing. If products and services become subject to price competition, this may adversely affect earnings and financial condition.

If personal information or confidential information obtained through business activities is leaked due to unforeseen circumstances, or is misused, there is a risk of liability for damages and a decline in corporate value. Information leaks caused by cyberattacks or internal misconduct may affect business performance and financial condition. The Group strives to establish an information management system, but this does not guarantee complete prevention.

The Group's growth is heavily dependent on capable human resources, and there is a risk that securing and developing talent will become difficult due to the effects of a declining working population. Hiring personnel with the latest technology and know-how, or retraining existing employees, may lead to increased recruitment and training costs as well as rising labor costs. If these cannot be achieved, it may affect future growth, business performance, and financial condition.

The Group is subject to various public regulations both domestically and internationally, including business and investment licensing, export restrictions, antitrust regulations, and environmental regulations, and some of its products are subject to regulation under the Measurement Act. If regulatory tightening leading to future cost increases occurs, or if there are delays or lapses in obtaining type approval for specified measuring instruments, this could affect business continuity. The Group strives to comply with regulations, but the costs of responding to regulatory changes may affect business performance and financial condition.

The Group conducts transactions denominated in foreign currencies and hedges exchange rate fluctuation risk within a certain range in accordance with its hedging policy, but this does not eliminate all fluctuation risk. If significant foreign exchange rate fluctuations occur, this may affect business performance and financial condition. In particular, as overseas operations expand and the scale of foreign currency-denominated transactions increases, the impact of foreign exchange risk also increases.

The Group manufactures products in accordance with domestic and international quality control standards, but there is no guarantee that all products will remain free of defects in the future, or that product liability claims or recalls will not occur. The Group has taken out insurance against product liability claims, but there is no guarantee that this will cover the full amount of any eventual damages. If product defects materialize, this may affect business performance and financial condition due to the incurrence of compensation costs as well as a decline in corporate credibility.

The Group may engage in joint ventures, business alliances, business acquisitions, and business investments both domestically and internationally, and while it thoroughly evaluates profitability, risk, and recoverability, there is no guarantee that the expected results will be achieved. If a sudden change in the business environment prevents recovery of invested funds, or if an impairment loss on goodwill occurs, this may affect business performance and financial condition. Failure of M&A and alliance strategies could have a direct impact on the financial soundness of the Group as a whole.

Natural disasters such as earthquakes, storm and flood damage, fires, and volcanic eruptions, as well as the occurrence of large-scale infectious diseases, may cause suspension of production and sales operations or disruption of the supply chain. In the event of an infectious disease outbreak, it is anticipated that system-related projects may be cancelled or postponed, capital expenditures may be curtailed, raw material costs and transportation costs may rise, and the provision of products and services may become difficult due to employee infections. These factors may reduce order intake, net sales, and profit, potentially affecting business performance and financial condition.