TACHIKAWA CORPORATION

The Interior & Exterior Furnishing Products Business (window covering products such as blinds, and partition products), which accounts for approximately 84% of net sales, is subject to performance fluctuations driven by trends in the construction industry and changes in the number of housing starts. In a phase of declining demand, this could directly affect business results and financial condition. As countermeasures, the Company is promoting expanded sales of high-function products, creating new demand through electric products and partition products, and pursuing growth areas such as the renovation market.

Prices of major raw materials such as steel and aluminum materials fluctuate in response to market conditions, and rising costs could affect business results and financial condition. If cost increases cannot be fully absorbed through production efficiency improvements or cost reductions, the Company plans to consider revising selling prices; however, there is a risk that profitability will be squeezed if price pass-through proves difficult. The Company strives to procure materials at appropriate prices by securing multiple suppliers.

Since products and materials include goods imported from overseas, fluctuations in foreign exchange rates affect procurement costs and could affect business results and financial condition. In a yen depreciation phase, there is a risk that rising import costs will squeeze profitability. As a countermeasure, the Company utilizes hedging instruments such as forward exchange contracts to mitigate fluctuation risk.

The Company holds marketable securities, mainly in business partners, and if stock prices decline significantly due to changes in domestic and international conditions, this could affect business results and financial condition through the recognition of valuation losses, among other effects. In the event of a sudden change in the political or economic environment, there is a risk that large valuation losses could arise within a short period. The Company periodically verifies the rationale for holding such shares and reviews the number of shares held.

In the Interior & Exterior Furnishing Products Business, which accounts for approximately 84% of net sales, demand for the completion and renovation of building projects is concentrated at the end of the calendar year and the end of the fiscal year, resulting in seasonal fluctuations whereby net sales in the first and fourth quarters are higher than in other quarters. This imbalance creates a structure in which performance in specific quarters has a significant impact on overall business results and financial condition. The Annual Securities Report does not describe specific countermeasures.

The Company has major production sites located at seven locations in Japan, and if production facilities are damaged by natural disasters such as earthquakes or by infectious diseases, this could affect business results and financial condition through the suspension of production activities or the incurrence of restoration costs. If business partners are affected, there is also a risk that disruption to the supply chain could impact performance and financial condition. The Company has formulated a Business Continuity Plan (BCP) and has established a framework for emergency response and early business recovery.

If an important business partner becomes insolvent due to a deterioration in economic conditions or other factors, bad debt losses significantly exceeding the recorded allowance for doubtful accounts could arise, affecting business results and financial condition. If credit concentration toward specific major business partners materializes, there is a risk that the scale of losses could expand. As a countermeasure, the Company sets credit limits for each business partner and strives to avoid losses by managing transactions within those limits.

Through its business activities, the Company holds a large amount of important confidential information, including personal information, and if an information leak occurs due to unforeseen circumstances, this could have a material impact on business results and financial condition, in addition to damaging social credibility and giving rise to liability for damages. In an environment where risks such as cyberattacks and internal misconduct are increasing, there is a concern that the impact could be far-reaching. The Company implements appropriate management of confidential information through the introduction of information security tools and access controls over internal information.