FP CORPORATION

For major raw materials such as polystyrene, PET, and polypropylene, there is a risk that procurement difficulties or sharp price increases may arise due to intensifying international tensions, the crude oil supply-demand balance, or exchange rate fluctuations. As countermeasures, the Company promotes stable procurement of raw materials, reduction of plastic usage through product weight reduction and optimization of material composition, and domestic recycling through the Fpco recycling method, while passing on cost increases that cannot be absorbed to product prices in line with market trends.

If operations at production plants or distribution centers are suspended due to natural disasters such as earthquakes or typhoons, or the occurrence or spread of accidents or infectious diseases, this could disrupt raw material procurement, production, and product supply, potentially affecting business performance. As countermeasures, the Company has established an integrated management system for production, logistics, and sales through a supply chain management system at its nationwide bases, and has equipped all 22 major logistics facilities nationwide with emergency power generation equipment and 72 hours' worth of fuel stockpiles.

If the worsening labor shortage in Japan makes employee recruitment difficult and materially affects operations, this could affect business performance. As countermeasures, the Company promotes labor saving and reduced workforce requirements through the introduction of industrial robots in production divisions and the use of IT in logistics divisions, and works to improve the working environment for employees by constructing employee dormitories for single occupants (Pico House), raising salary levels, and reviewing personnel and labor systems.

If a carbon tax or taxation on containers and packaging using virgin plastic is introduced in the future, this could affect business performance. As countermeasures, the Company promotes the realization of a recycling-oriented society through the Fpco recycling method, which began in 1990, and the development of industry-leading, low environmental impact containers through environmentally conscious design, while striving to conduct scenario analysis of climate change risks and operate a governance framework based on the TCFD recommendations.

There is a risk that unexpected product defects could lead to claims for damages; while the Company has taken out insurance to prepare for such compensation, if a serious incident occurs that cannot be covered by insurance, this could affect business performance. As countermeasures, the Company complies with internal standards and relevant laws and regulations in product development and production, giving due consideration to safety and quality, and has established a system for prompt customer response and root cause investigation in the event of a complaint.

Contraction in demand due to economic conditions or fluctuations in the supply-demand balance and prices due to intensifying competition with competitors could affect business performance. As countermeasures, the Company maintains a product lineup of approximately 12,000 items at all times and responds to changes in demand by switching to new products, while also building a system less prone to price competition by differentiating itself from competitors through an increase in the sales composition ratio of original products.

Although the Company does not hold securities for trading purposes, all securities with market value are valued at fair value, and fluctuations in market value in the stock market could affect business performance. The securities report does not describe specific countermeasures.

Although transactions are conducted under sufficient credit management, if unexpected bad debt risk materializes due to a customer's credit concerns and results in a significant bad debt loss or the need for additional provisions, this could affect business performance. Thorough credit management is cited as a countermeasure, but the description of specific management methods in the securities report is limited.

If unauthorized access or system failures cause the leakage of confidential information or personal information held in the course of business, or cause business activities to be suspended, this could affect business performance. As countermeasures, the Company implements multi-layered security measures, including regular data backups, use of an external data center, redundant communication lines, introduction of a system to prevent erroneous email transmissions to outside parties, and disposal of PCs by specialized contractors.

In mergers and acquisitions or capital alliances, if the initially expected synergy effects are not obtained due to deterioration in the business environment or other factors, this could affect business performance. As countermeasures, when undertaking acquisitions or alliances, the Company gathers sufficient information from the perspectives of "business expansion," "improvement of profitability," and "strengthening of financial structure," and has established a system for carefully judging the contribution to enhancing corporate value.