KOMATSU WALL INDUSTRY CO., LTD.

Approximately 24% of net sales are to government and public agencies, while approximately 76% are to the private sector, meaning that reductions in public investment and curtailment of investment in offices and commercial facilities due to economic downturns directly affect business performance. Since sales are limited entirely to the domestic market, vulnerability to changes in the external environment is high. As countermeasures, the Company is working to expand its customer base centered on the Tokyo metropolitan area, establish sales offices in underserved regions, and expand product applications.

Prices of key raw materials such as steel sheets may rise sharply due to market fluctuations, supply-demand tightness, natural disasters, or unforeseen circumstances at suppliers, and if such price increases cannot be passed on to selling prices, profitability will be squeezed. There is also a risk that production activities themselves could halt if raw material procurement is disrupted. As countermeasures, the Company is pursuing cost reductions through man-hour reduction and yield improvement, diversifying suppliers, and securing policy inventories of critical materials.

Because the business model involves handling the entire process of design, manufacturing, sales, installation, and service in-house, continuously securing and developing highly specialized personnel in each process is essential. If recruitment and training plans are delayed due to intensifying competition for talent in the labor market or the departure of specialized personnel, business performance may be affected. As countermeasures, the Company continues planned recruitment activities, has established career paths divided into management and specialist tracks, and is promoting workplace environment improvements including expansion of the accumulated leave system.

If social disruption occurs due to natural disasters such as earthquakes or torrential rain, or due to fires, business activities may be suspended, resulting in lost opportunities and recovery costs that could affect business performance. Since manufacturing and installation are handled in-house, the impact of a disaster affecting company facilities would be significant. As a countermeasure, the Company has formulated a Business Continuity Plan (BCP) that prioritizes the protection of life and safety while aiming for early business recovery and maintenance of customer service.

If significant defects or deficiencies occur in the products or services provided, corresponding costs for repair and compensation may arise, potentially affecting business performance. Since the Company handles everything from design through installation in-house, quality control at each process stage is important. As a countermeasure, the Company has built and operates a quality management system based on ISO9001, implementing defect reduction activities and continuous improvement.

If acts in violation of laws and regulations occur, or if internal controls are deemed insufficiently functional, this could affect business performance in addition to damaging corporate trust. As countermeasures, the Company conducts compliance training for all officers and employees upon joining and once annually, and has established an internal whistleblowing system. It has also built and operates an internal control system to ensure the reliability of financial reporting and the effectiveness of operations.

If a significant information system failure occurs due to cyberattacks or computer virus infections, normal business activities may be disrupted, potentially affecting business performance. In addition, if an information leak occurs, there is a risk of diminished corporate credibility and liability for damages to customers and others. As countermeasures, the Company has established a management structure based on its basic information security policy and internal regulations, and continuously implements security measures and employee education and audits to prevent unauthorized access and minimize damage.

Physical risks associated with climate change (such as the intensification of natural disasters) and transition risks (such as stricter regulations and costs of decarbonization measures) may affect business performance. The Company discloses information based on TCFD and analyzes climate change risks and opportunities. Reducing the environmental impact of corporate activities is treated as an important management priority.