FURUYA METAL CO.,LTD.

PGMs such as iridium and ruthenium, as well as platinum and palladium, fluctuate in price due to supply-demand trends, speculative factors, political and economic conditions in producing countries, and exchange rate movements, directly affecting net sales and profit. The Group is working to maintain relationships with overseas mining companies, diversify procurement routes, and increase the usage ratio of recycled raw materials, but it states that avoiding price fluctuation risk for the entire volume is difficult. Price fluctuations during the manufacturing and inventory holding period may affect business results and financial condition.

Iridium, ruthenium, and other rare metals have limited production locations and volumes, and there is a risk that output and distribution volumes may decrease due to changes in the political and economic situation of producing countries, legal amendments, or global supply-demand tightening. The Group prepares for procurement risk by holding a certain level of raw material inventory, but if a supply disruption occurs, it may affect business results and financial condition.

The balance of borrowings at the end of the consolidated fiscal year reached ¥28,600 million (debt dependency ratio of 23.1%), and the ratio of interest expenses to net sales was 2.2%. If borrowings increase due to increased purchases of precious metals or if market interest rates rise, the interest expense burden may increase and affect business results. In addition, since there are borrowings with financial covenants, if the covenants are breached due to deterioration in business results or other factors, it may hinder new fundraising and affect business development.

Since a portion of raw materials and products are imported and exported in foreign currencies, and the financial statements of overseas consolidated subsidiaries are also prepared in foreign currencies, exchange rate fluctuations affect revenues and expenses, the yen-equivalent amounts of foreign currency-denominated receivables and payables, and consolidated business results. The Group mitigates risk through forward exchange contracts and receivables securitization, but depending on the state of exchange rate fluctuations, the mitigating effect may not be sufficiently obtained.

The main production base is concentrated at the Tsukuba Plant in Chikusei City, Ibaraki Prefecture, with diversification to the Tsuchiura Plant and Chitose Plant remaining only partial. If production activities are forced to stop due to external factors such as natural disasters, it may affect the Group's business results and financial condition. While the concentration of production bases contributes to efficiency, it also entails business continuity risk.

Tanaka Kikinzoku Kogyo K.K. is a major shareholder holding 17.32% of total voting rights, and under a capital and business alliance agreement, conducts purchase transactions of iridium and other materials (purchases of ¥166 million in FY2025 (ended June 2025), 0.4% of total purchases) and product sales (sales of ¥139 million, 0.2% of total net sales). If this company, Tanaka Kikinzoku Group Co., Ltd., or Field In & Company Co., Ltd. changes its management policy or policy of continued shareholding, it may affect business results, financial condition, stock price, and cash flow through changes in raw material procurement and product sales volume.

The Group's business results tend to be affected by capital investment trends and production activities in industries such as mobile phones, liquid crystal displays, electronic components, semiconductors, optical glass, and catalysts. If trends in these industries deteriorate, it may adversely affect business results and financial condition. Regarding the U.S. tariff issue, the company states that it does not have a significant impact on it.

Customers demand strict quality specifications for each individual product, and if the required standards or specifications are not met or non-conformities occur, this may lead not only to delivery of replacement products but also to compensation payments, damages, or termination of transactions. Quality problems, particularly at major delivery destinations, may have a significant impact on business results and financial condition, and the Group addresses this through manufacturing process control and quality management systems based on ISO9001.

Deferred tax assets related to raw material refining and recovery costs are scheduled based on future refining and recovery execution plans, but these plans are affected by product orders and international commodity market prices for precious metals. If deferred tax assets are reduced in whole or in part due to significant changes in business results or the business environment, or amendments to tax or accounting standards, it may affect business results and financial condition.

Securing and developing specialized personnel well-versed in precious metal processing is positioned as an important management issue, and if personnel development and recruitment fail to keep pace with business expansion, or if there is a mass outflow of personnel, it may affect business development and results. The company is addressing this through strengthened mid-career and new graduate recruitment and enhanced education and training programs, but given the high level of specialization, securing personnel who can contribute immediately takes time.