TOLI Corporation

There is a structural tendency for both net sales and operating income to be skewed toward the second half of the fiscal year, due to orders received for properties completed at year-end. For FY2026 (ending March 2026), the operating income composition ratio is projected at 27.4% for the first half and 72.6% for the second half, meaning first-half profitability alone will be limited. It is difficult to assess full-year performance based solely on first-half results, and investors need to take this seasonality into account when making evaluations.

Since many of the Group's principal raw materials are petrochemical products, there is a risk that surging crude oil prices, exchange rate fluctuations, and shortages of upstream raw materials caused by geopolitical risk could lead to higher manufacturing costs and adjustments to production and supply. Changes in the supply-demand balance could directly affect business performance and financial position, and the Group is examining ways to ensure stable supply and improve profitability through regular reporting and confirmation at the Board of Directors and management meetings.

Many of the Group's products face fierce competition from other companies' products, and depending on market price trends, there is a possibility of declining selling prices or reduced sales volumes. Intensifying competition poses a risk that directly leads to lower net sales and profits, and the Group works to mitigate this risk through close scrutiny of the competitive landscape and supply-demand balance, as well as tiered management of selling prices, at the Board of Directors and management meetings.

Because the Group handles various chemical substances as raw materials, tightening of environmental regulations both in Japan and overseas aimed at reducing environmental impact could result in significant compliance costs or restrictions on business activities. Increased regulatory compliance costs could directly affect business performance and financial position, and the Group is working to minimize this risk through compliance with relevant laws and regulations and early awareness of related information.

The fixed assets held by the Group generate revenue through business operations, but in the event of a significant deterioration in the business environment leading to reduced profitability or a sharp decline in market prices, the application of impairment accounting could result in impairment losses that affect business performance. If the scale of fixed assets is large, impairment losses pose a risk of significantly and temporarily damaging financial figures.

The Group holds marketable securities, and a significant decline in stock prices could result in valuation losses that affect business performance and financial position. Although the Board of Directors and management meetings regularly review the rationale for holding these securities and check stock price movements, valuation losses may be unavoidable in the event of a sudden change in market conditions.

Retirement benefit obligations and expenses are calculated based on actuarial assumptions such as the discount rate and the expected rate of return on pension assets, and actual changes in interest rate levels or a deterioration in the investment yield of pension assets could affect business performance and financial position. The Group regularly monitors the investment status of pension assets and works to establish an appropriate investment environment.

The Group holds many business locations in Japan, and if a large-scale natural disaster were to damage production and logistics facilities or information systems, this could halt production activities and result in substantial recovery costs, affecting business performance and financial position. The Group has formulated a Business Continuity Plan (BCP) and continues to conduct comprehensive inspections, while also proceeding with disaster risk countermeasures focused primarily on production and logistics facilities.

If a cyberattack on the corporate website or core systems were to cause a system failure, this could halt business activities or lead to the leakage of confidential information. In light of the growing threat of cyberattacks in recent years, the Group is strengthening its defenses by building closed networks and restricting website access, formulating an information security policy, and improving the literacy of officers and employees through targeted phishing email training.

The Group conducts basic research into new materials and new processing technologies to strengthen future competitiveness, but by the nature of research and development activities, outcomes are uncertain, and there is a possibility that sufficiently competitive new products cannot be developed. Delays or failures in new product development pose a risk of reduced medium- to long-term competitiveness, and for important R&D projects, the Group works to mitigate this risk through investment deliberations and regular progress reporting at the Board of Directors and management meetings.