MUTOH HOLDINGS CO., LTD.

Demand for Large-Format Inkjet Printers and plotters is directly affected by economic conditions in major markets including Japan, North America, Europe, and Asia. Economic downturns or reductions in capital expenditure by key customers may result in orders falling short of expectations. As countermeasures, the Group works to understand market and customer needs in each region and invests in medium- to long-term R&D and new market development.

A significant portion of sales consists of transactions denominated in foreign currencies including the US dollar and euro, and yen appreciation adversely affects business performance, while currency appreciation in production regions increases manufacturing and procurement costs, reducing profit margins and price competitiveness. Business results are also affected by exchange rates used when preparing consolidated financial statements. As a countermeasure, the Group appropriately conducts forward foreign exchange contracts for major currencies including the US dollar, euro, Australian dollar, and yen, to minimize the adverse impact of short-term fluctuations.

Competition in the Large-Format Inkjet Printer and plotter industry is extremely intense, and some competitors possess greater R&D, manufacturing, and sales resources than the Group. Further intensification of competition is expected in each product and regional market. As countermeasures, in addition to introducing high-quality, high-value-added products, the Group is working to improve profitability through business process reform, structural reform, and IT system reform.

Component supply shortages or increases in raw material prices and transportation costs may raise procurement costs, leading to higher manufacturing costs and delivery delays to customers. This could disrupt manufacturing and sales activities and affect business performance and financial condition. As countermeasures, the Group works to thoroughly reduce costs and improve production efficiency, while confirming suppliers by product and maintaining appropriate inventory levels based on lead times and inventory status.

In the globally deployed supply chain, logistics issues in various countries and regions may spread, causing supply delays and cost increases due to higher transportation costs. Restrictions on the use of the Suez Canal due to the conflict in the Middle East have already led to longer transportation times and increased transportation costs due to detours via the Cape of Good Hope route. As countermeasures, the Group flexibly changes logistics routes and appropriately reviews forwarders to shorten transportation times and reduce transportation costs.

In overseas markets including Europe, North America, Central and South America, Asia, Oceania, and the Middle East, there are inherent compound risks such as unexpected changes in laws and regulations, unfavorable political and economic factors, difficulty securing global talent, unfavorable tax changes, and social disruption due to terrorism or war. These events may adversely affect business performance and financial condition. As a countermeasure, the Group works with overseas subsidiaries and local sales agents to monitor political and economic trends overseas, enabling prompt responses.

In certain regions, legal restrictions make complete or even limited protection through intellectual property rights impossible, and the Group may not be able to effectively prevent third parties from manufacturing similar products. There is also a risk that the Group's future products and technologies may be alleged to infringe on the intellectual property rights of other companies. As a countermeasure, the Group works closely with overseas subsidiaries to strengthen information gathering and checking systems.

Through its global business activities, the Group handles confidential information including customers' personal information, and information leaks from within the organization, unauthorized external access such as cyberattacks, or internal system failures could affect business performance and financial condition. As countermeasures, the Group has established confidential information management regulations, conducts semi-annual information security training for all employees, and strengthens security under the leadership of the Information Systems Group.

In each country where the Group operates, it is subject to a wide range of government regulations including export and import controls, tariffs, trade regulations, antitrust, patents, taxation, and environmental recycling, and failure to comply with such regulations could lead to restrictions on business activities or penalties and increased costs imposed by public authorities. The Group strives to strictly comply with regulations, and the Legal Department leads efforts to establish a response framework in coordination with lawyers and others.

Due to intensifying competition for talent, if the Group is unable to hire or retain excellent personnel and faces a shortage of human resources, this could affect business performance and financial condition. In particular, securing product development personnel and global talent to continue domestic manufacturing and grow as a global company is a challenge. As countermeasures, the Group promotes creating a culture and work environment where diverse personnel can demonstrate their abilities, and strives for sustainable talent acquisition and development, including strengthening mid-level staff.