TAKARA STANDARD CO.,LTD.

If new housing starts, owner-occupied housing starts, or renovation demand decline significantly, it may affect the business performance of the Group. Contraction of the domestic housing market is a concern amid the declining birthrate, aging population, and population decline. As a countermeasure, the Group is enhancing resilience to demand fluctuations by expanding its product lineup for both new construction and renovation.

Intensifying competition among companies may lead to price competition and loss of market share, which could affect the Group's business performance. As a countermeasure, the Group differentiates itself from competitors by promoting its proprietary material, "High-Grade Enamel," and through its showroom network of approximately 160 locations nationwide, the largest in the industry.

If market prices surge due to unstable international conditions, including the situation in the Middle East, resulting in rising raw material prices or supply shortages/stoppages from suppliers, it may affect the Group's business and performance. As a countermeasure, the Group continuously works to strengthen cost competitiveness through manufacturing cost reductions, while ensuring stable procurement through multi-vendor purchasing and thorough supplier information gathering and credit management.

If a serious accident occurs in relation to products, construction, or after-sales service, it may affect the Group's business and performance as well as its social credibility. The Group has established a system to ensure thorough quality control from the product development stage, and is enhancing its internal systems to enable swift and appropriate responses in the event of a serious accident.

In its global business operations, fluctuations in exchange rates and interest rates, changes in political systems, and changes in tariffs, import regulations, and taxation may affect the Group's business and performance. The business divisions and related departments work together to share risk information and take proactive measures to prevent such risks.

Tightening of laws and regulations related to air pollution, water pollution, waste disposal, and global warming countermeasures may lead to new capital investment and increased compliance costs, affecting the Group's business and performance. Each business division works with the legal department to ensure compliance with laws and regulations, and the Group implements environmentally conscious capital investment, including energy conservation and CO2 emission reduction.

If the Group is unable to systematically secure and develop human resources due to a shrinking labor force resulting from the declining birthrate and aging population, as well as the outflow of talent, operational efficiency may be impaired, affecting the Group's business and performance. In addition to promoting diverse working styles and enhancing various training programs, the Group is promoting operational efficiency and labor-saving measures to build a system capable of adapting to changes in the working environment.

As the Group holds a large amount of customers' personal information in the course of production, sales, and other operations, the occurrence of disasters, cyberattacks, unauthorized access, computer virus infections, or software/equipment defects could lead to the leakage or tampering/destruction of internal information, including personal data, potentially causing business disruption and a decline in social credibility. The Group has established a roadmap covering the development of security personnel, system improvements, and collaboration with external organizations, and thoroughly implements appropriate security measures and strict information management.

The occurrence of natural disasters such as earthquakes or typhoons, or the spread of infectious diseases causing serious health damage, may cause damage to the Group's business sites, disrupting part or all of business activities and resulting in restoration costs. The Group strives to minimize damage from disasters and reduce the impact on performance through the diversification of production sites and the formulation of Business Continuity Plans (BCPs).