FUJICOPIAN CO.,LTD.

Overseas sales account for approximately 30% of consolidated net sales, and foreign exchange fluctuations may affect business performance and financial position. In addition, the Group widely uses raw materials such as petrochemical products, and there is a risk that prolonged international conflicts such as the situations in Ukraine and the Middle East could cause raw material prices and energy costs to surge. As countermeasures, the Group implements hedging through forward exchange contracts and matching of foreign currency-denominated receivables and payables, strengthens its supply chain through diversification, decentralization, and globalization of procurement sources, and has introduced highly efficient equipment at the Okayama Plant.

In some businesses, it is difficult to differentiate from competitors' products, and intensifying competition is expected in each product market and regional market. If price competition progresses beyond expectations, it may lead to a decline in sales due to falling selling prices and a decrease in profit margins. As a countermeasure, the Group seeks to differentiate itself and enhance its competitiveness through new product development leveraging its technological capabilities and unique services.

The Group operates businesses in North America, Europe, Asia, and other regions, and unexpected changes in laws and regulations, fluctuations in political and economic factors, and disruptions to international society due to terrorism or war may hinder the procurement of materials and the stable supply of products. Should these risks materialize, they would affect business performance and financial position. As a countermeasure, the Group has established a system for quickly and accurately gathering information through overseas subsidiaries and local specialists.

For efficiency reasons, the Group concentrates its main production facilities at the Okayama Plant, and if a natural disaster or other unforeseen accident occurs at this plant, production activities across the entire Group may be constrained. Due to the high degree of concentration of production sites, a single event could have a significant impact on business performance and financial position. As a countermeasure, the Group formulates and trains for a Business Continuity Plan (BCP) to minimize damage.

Large-scale outbreaks of infectious diseases such as COVID-19 may lead to restrictions on economic activity, supply chain disruptions, factory production stoppages, and sharp declines in demand. Should these risks materialize, they would affect business performance and financial position. As a countermeasure, the Group secures an environment for business continuity by stockpiling infection prevention supplies, implementing staggered work hours and telework, and actively utilizing remote work tools.

Due to the nature of its business, the Group is subject to laws and regulations concerning the environment, chemical substances, safety and health, and various regulations tend to become stricter against the backdrop of growing awareness of environmental issues. Increased costs of responding to stricter regulations may affect business performance and financial position. As a countermeasure, in addition to complying with laws and regulations, the Group engages in environmentally conscious business activities, including obtaining ISO14001 certification.

The Group has acquired intellectual property rights for products and technologies that are important to its business strategy; however, there is a possibility that third parties may bring lawsuits alleging infringement of intellectual property rights, or that the Group's own intellectual property may be infringed by third parties. Should these risks materialize, they would affect business performance and financial position. As a countermeasure, the Group conducts patent searches through patent firms as needed during development and commercialization.

The Group holds personal and confidential information of customers and business partners, as well as its own confidential management and technical information, and if information leakage or system outages occur due to cyberattacks, unauthorized access, computer viruses, or the like, this may lead to the suspension of business activities and loss of social credibility. As a countermeasure, the Group strengthens information security by establishing a rigorous information management system, developing information management regulations and thoroughly communicating them to employees, and regularly updating antivirus software.

The Group raises funds through borrowings from financial institutions, and if financing costs rise due to changes in financial market conditions or a deterioration in business performance, this may adversely affect fundraising. As a countermeasure, the Group secures credit lines with its partner financial institutions and strives to strengthen its financial position, primarily by reducing interest-bearing debt.

The Group holds substantial fixed assets due to continuous capital investment, primarily aimed at improving productivity at the Okayama Plant, and if it is determined that the recovery of the invested amount cannot be expected due to a significant decline in fair value or a decline in business profitability, impairment of fixed assets will be required. Should an impairment loss occur, it would affect business performance and financial position. As a countermeasure, the Group conducts regular monitoring of retirement benefit obligations and investment status.