MIRAI INDUSTRY CO., LTD.

If unexpected defects occur in any products, the company may bear product liability and incur substantial costs. While quality control is thoroughly enforced through manufacturing and sales in accordance with various laws and regulations such as the Electrical Appliance and Material Safety Act and the Water Supply Act, as well as internal quality standards, potential risk cannot be eliminated.

The Electrical & Piping Materials Business and Wiring Devices Business are highly dependent on the residential construction industry, and fluctuations in the number of new housing starts directly affect business performance. Due to the revision of the Building Standards Act effective April 1, 2025, which mandates compliance with energy-saving standards for all buildings, stricter design and building confirmation application requirements and increased costs have led to a declining trend in new housing starts. As countermeasures, the company is promoting the development of new products for buildings and factories and expanding sales channels by developing new markets for existing products.

The core business is the manufacture and sale of plastic molded products, and plastic raw materials such as polyethylene are procured from domestic trading companies; however, the risk of unstable procurement and increased costs has heightened since the previous report due to the worsening situation in the Middle East. If raw material prices rise more than expected and it becomes difficult to pass on the increase to product sales prices, business performance may be affected. As countermeasures, the company has adopted naphtha-linked pricing to stabilize prices in line with market prices, and passes on costs to sales prices while taking market trends into consideration.

If a serious failure, program malfunction, or external infrastructure outage occurs in the core system or peripheral systems, operations such as order receipt, production, logistics, and accounting processing may stagnate or stop, which could affect business performance and financial condition. In response to the increasing risk of cyberattacks, the company has introduced endpoint security software utilizing AI and cloud technology to provide 24/7/365 monitoring and incident response, and is strengthening its data backup system and employee awareness activities.

If business locations deployed across Japan are damaged by natural disasters caused by climate change or by acts of terrorism, business activities could be significantly disrupted, and substantial costs may be incurred for relocation of facilities and equipment repair. The company has formulated business continuity plans (BCP) at its main business sites to establish emergency response and early recovery systems, and continuously implements Scope 1, 2, and 3 environmental data calculations and the introduction of equipment aimed at CO2 reduction.

In the Electrical & Piping Materials Business and Wiring Devices Business, the increase in the number of retail outlets has led to smaller order lot sizes and demand for immediate delivery, which is a factor increasing the logistics cost burden. There is a high degree of dependence on existing logistics companies, and deterioration in the logistics market could affect business performance. As countermeasures, the company is working to reduce logistics costs through the use of joint delivery, freight rate negotiations, and consolidation of logistics bases and warehouses.

If the performance of the 7 consolidated subsidiaries does not improve, corporate reorganization, including business transfers and liquidation, may become necessary, which could affect the performance of the Group. Based on the "Subsidiary Management Regulations," the company requires monthly profit and loss reports and submission of quarterly financial statements, and manages risk through appropriate guidance as needed.