FUJI SEAL INTERNATIONAL,INC.

If raw material prices surge sharply due to global economic conditions, supply-demand balance, exchange rate fluctuations, etc., the resulting increase in raw material costs could put pressure on business performance. In addition, if a sudden increase in demand or supply tightness occurs, it may hinder product supply to customers. As countermeasures, the Group is working to reduce costs and secure stable procurement by building strong relationships with multiple suppliers.

If facilities or employees at production sites are damaged by fires, major earthquakes, flooding, infectious diseases, etc., this could lead to production interruptions, decreased sales, and restoration costs. If business partners are affected, this could also lead to delays in production and shipment. Crime, terrorism, and large-scale power outages are also recognized as factors that could affect procurement and production activities.

The Group holds confidential information such as customers' new product information, and if such information is leaked externally due to unauthorized access or cyberattacks, or if information leakage or misuse occurs due to employees or outsourcing partners, this could adversely affect the company's trust and image. The Group takes maximum measures to maintain confidentiality of information, but such risk cannot be completely eliminated.

The Group holds and applies for patents, utility model rights, etc. related to Shrink Label, Soft Pouch, and packaging-related equipment. However, if a lawsuit or claim is filed by a third party alleging infringement of intellectual property rights, this could affect business performance and financial condition. The Group continues to work on preventing leakage through strengthening internal check systems and thorough information management.

In response to climate change, marine plastic issues, and resource depletion, various countries are considering or enacting legal regulations such as carbon taxes, plastic packaging taxes, and lifecycle monitoring responsibility obligations. Increased compliance costs or reputational decline due to delayed response could affect business performance. Under the management strategy "FSG.30," the Group has set targets to reduce Scope 1 and 2 emissions by 42% and Scope 3 emissions by 25% by FY2031 (ending March 2031) compared to FY2023 (ending March 2023), but there is a risk that regulatory changes could prevent the Group from progressing as planned.

In local production and sales operations in the Americas, Europe, and ASEAN countries, if international tax risks such as licensing, tax systems, trade restrictions, transfer pricing taxation, or political and economic turmoil and unforeseen country risks materialize, this could affect business activities, performance, and financial condition. The Group conducts research and consideration of local political, economic, cultural, and customary conditions to respond, but such risks cannot be completely avoided.

The Group as a whole works on quality control in its local production systems in Japan, the Americas, Europe, and ASEAN countries, but if quality issues such as claims that affect customer products arise due to unforeseen circumstances, this could affect business performance and financial condition. The Group strives to ensure optimal quality under its quality control system, but complete elimination is difficult.

The Group is subject to various legal regulations both in Japan and overseas, including competition law, anti-corruption law, human rights and labor-related law, safety regulations, environmental regulations, and tax law. If these are revised or strengthened, this could affect business performance and financial condition due to increased compliance costs, etc. The Group conducts its business based on compliance as a fundamental principle, but is required to respond to changes in regulations.