MITSUMURA PRINTING CO., LTD.

Escalating tensions in the Middle East and disruptions to global supply chains may lead to supply shortages, extended lead times, and significant increases in purchase prices for raw materials such as paper, ink, and film. The Group strives to secure stable supplies through procurement from multiple manufacturers and distributors and through comparative quotations; however, if the necessary volumes cannot be secured, there are concerns that production plans and delivery schedules could be affected, and that rising raw material costs could deteriorate business performance. While the use of substitute materials and review of procurement sources are being implemented as countermeasures, complete avoidance of this risk remains difficult.

In the Printing Business, the Group's core business, demand for paper media continues to decline due to changes in lifestyles and the acceleration of digitalization. Should further progress in paperless practices lead to significant changes in printing demand, this could have a material impact on business performance. The Group is working to strengthen price competitiveness through productivity improvements, but responding to the structural trend of shrinking demand remains a challenge.

In the Industrial Materials & Electronic Components Manufacturing Business, the Group faces a risk of earnings volatility due to its dependence on specific industries such as semiconductor-related applications. Should sudden market changes result in significant demand fluctuations, unit price declines, or production adjustments by customers, business performance could be affected. The Group is working to reduce this dependence by expanding applications into the medical and healthcare field and industrial sensor applications, but the risk of concentration in specific industries remains.

Price competition with numerous competitors is intensifying, and further declines in order unit prices could affect business performance. The Group strives to secure profits through expanded sales of high-value-added products and cost reductions, but there is a risk that profit margins could be squeezed due to deterioration of the competitive environment. The overall shrinkage in demand across the printing industry serves as a structural background factor exacerbating this competition.

Sales to The Yomiuri Shimbun Holdings, Tokyo Head Office, and Yamato Transport Co., Ltd. account for approximately 40% of consolidated net sales, and this high degree of dependence on specific business partners represents a risk of earnings volatility. Should the business performance of these partners deteriorate or their transaction policies change, this could have a material impact on the Group's business performance. While the Group strives to maintain strong relationships of trust and strengthen business ties, a structural resolution to this concentration risk has not been achieved.

Should personal information entrusted by business partners be leaked, this could affect business performance through loss of credibility and the incurrence of response costs. The Group has obtained Privacy Mark certification and implements strict measures to prevent loss, falsification, and leakage, but complete elimination of this risk is difficult. Continuous strengthening of the information management system is required.

Should information systems be halted or security incidents occur due to cyberattacks or system failures, this could lead to operational delays and loss of credibility, affecting business performance. The Group strives to ensure safety by introducing systems that monitor suspicious PC behavior, strengthening its information security framework, and providing employee training, but the increasing sophistication of cyber threats requires continuous updates to its response measures.

Should product defects arise due to deficiencies in the manufacturing process, this could affect business performance through the incurrence of rework costs and loss of credibility. The Group manufactures products under a thorough quality control system, but it is difficult to completely eliminate risks in the manufacturing process. Since quality issues can directly damage relationships with business partners, continuous strengthening of quality control is important.

Should disadvantageous contracts be concluded or fraudulent acts occur in the course of business, this could affect business performance. The Corporate Planning Office reviews contract terms, and the Compliance Department conducts fraud prevention activities in cooperation with the Group's legal advisors, but complete elimination of this risk is difficult. Compliance violations also carry the risk of leading to legal liability and a decline in social credibility.

Should a large-scale natural disaster or similar event cause unexpectedly severe damage to employees, facilities, or equipment, this could affect business performance through the suspension of production activities. The Group implements fire prevention and earthquake resistance measures at its main facilities to ensure continuity of production activities, but there are limits to its ability to respond to disasters exceeding expectations. Ensuring the effectiveness of its business continuity plan (BCP) remains an ongoing challenge.