Cleanup Corporation

Given a business structure dependent on domestic demand, a decline in new housing construction starts or a significant drop in renovation demand due to a domestic economic downturn would directly affect business performance. In addition, surges in raw material costs and logistics costs could also affect the financial condition. The Company continuously monitors demand trends in the housing equipment market while conducting business operations.

Against the backdrop of a decline in new housing construction starts, competition in the housing equipment industry, including system kitchens, has intensified. Because technical imitation is relatively easy, similar products tend to be introduced to the market in short periods, and if price competition intensifies due to the introduction of low-priced products by competitors, this could adversely affect business performance and financial condition. The Company is differentiating itself through the development of high-quality, high-value-added new products, but there is no guarantee of a sustained competitive advantage going forward.

If the supply of raw materials and parts/components from suppliers is interrupted or delayed due to unstable international conditions, natural disasters, infectious diseases, accidents, etc., product supply could be disrupted, affecting business performance. Furthermore, there is a risk that purchase prices and energy costs could rise beyond expectations due to market conditions, exchange rate and interest rate fluctuations, overseas political instability, or new regulatory or tax changes, and that this could not be fully absorbed through productivity improvements or cost reductions from VE (value engineering) activities, resulting in delayed pass-through to selling prices. The Company strives for stable procurement through maintaining appropriate inventory levels and purchasing from multiple suppliers.

If an information security incident occurs due to a cyberattack or infection by an unknown computer virus, the tampering, destruction, or leakage of information assets could lead to a decline in social credibility and adversely affect business performance. In addition, the suspension of information systems due to natural disasters such as earthquakes could also affect business continuity. The Company strives to strengthen security through the establishment of security policies, regular evaluation and review, and educational activities for all employees.

If a large-scale accident or natural disaster beyond expectations occurs and production and sales activities are suspended for an extended period, this could have a material impact on business performance and financial condition. The crisis management regulations set forth countermeasures against various risk events such as natural disasters, large-scale fires, power outages, infectious diseases, and serious accidents, and regular drills and inspections of facilities and equipment are conducted. However, despite the establishment of such regulations, there are limits to complete preparedness for unpredictable events.

If it becomes difficult to secure, retain, and develop excellent human resources due to a decline in the working population caused by the declining birthrate and aging population, and intensifying competition among companies to acquire talent, this could affect business performance and financial condition. As countermeasures, the Company is promoting diverse work styles, enhancing various training programs, supporting career development for women, employing elderly people, foreign nationals, and people with disabilities, and hiring experienced workers, among other diversity, equity & inclusion initiatives. The Company is also addressing changes in the working environment through operational efficiency improvements and labor-saving measures.

If new regulations or legal amendments related to climate change mitigation and environmental conservation increase the burden of environment-related costs or equipment modifications, this could affect business performance and financial condition. The Environmental Subcommittee under the Sustainability Committee formulates company-wide policies and deliberates on measures, while the BCP/SCM Subcommittee under the Risk Management Committee has established a system to deliberate and report on countermeasures against important risks to business activities.

If an accident occurs that results in product liability being sought due to product defects or installation faults, this could damage the corporate and brand image and give rise to damages liability exceeding the coverage limit of product liability insurance, thereby affecting business performance and financial condition. The Company is working to ensure product safety through ISO 9001 certification, the establishment of the "Cleanup Group Voluntary Action Guidelines for Product Safety," and the establishment of internal regulations covering everything from product development to recall response.

The outbreak or spread of a new infectious disease could affect business performance and financial condition through delays in product supply or a decline in sales due to sluggish personal consumption. Based on the crisis management regulations and infectious disease countermeasure guidelines, the Company has established systems to minimize the impact on its business, including thorough infection prevention measures at showrooms, the development of online consultations and online showrooms, and the use of remote work, staggered working hours, and remote meetings.

If environmental pollution resulting from business activities occurs due to unforeseen circumstances and incurs substantial costs, this could affect business performance and financial condition. All production plants have obtained ISO 14001 certification, and the Company has established systems for formulating environmental policies and continuously monitoring and evaluating environmental laws and regulations, as well as conducting regular inspections of facilities handling hazardous materials and chemical substances and emergency response drills. The Company is also promoting initiatives to reduce industrial waste and achieve zero emissions.