TOYOTA TSUSHO CORPORATION

The Group conducts commercial transactions and business activities across a wide range of overseas regions, and is exposed to risks of product manufacturing/procurement disruption and investment losses arising from various governments' regulations, political instability, and restrictions on fund transfers. For emerging countries with high country risk, the Group hedges through NEXI insurance and other means and sets country-specific risk asset ceilings; however, it is difficult to completely avoid risks such as delays or inability to collect receivables or carry out business operations due to deterioration of conditions in the countries where business partners or business operations are located. As of the end of March 2026, RA÷RB was 0.6, remaining within the range of the financial basic policy (<1.0), but heightened geopolitical risk may adversely affect the Group's business results and financial position.

The Group manufactures, processes, sells, invests in, and provides services for a wide range of products, including automotive-related products, both domestically and internationally, and is affected by the political and economic conditions of Japan and related countries. A global economic downturn driven by the situations in Russia-Ukraine, the Middle East, and the effects of the U.S. and China, along with stagnation in personal consumption and capital investment, may adversely affect the Group's business results and financial position. Business segments with a higher dependence on specific regions face a greater risk of impact.

Revenue from the Toyota Motor Group accounts for 20.0% of the Group's total revenue, and transaction trends with this group may directly affect the Group's business results and financial position. There is a risk that changes in the Toyota Motor Group's production and sales trends or procurement policies will be linked to the Group's performance, and the impact would be significant if there were changes in transaction terms or a reduction in transactions. Specific countermeasures by the Group are not explicitly stated in the securities report.

The Company has 815 consolidated subsidiaries and 227 equity-method affiliates, and its basic policy is to make medium- to long-term strategic investments. However, if the value of investee companies or their stock market value declines due to changes in the business environment, technological innovation, or unforeseen events, there is a risk of losing all or a substantial portion of the invested amount or being forced to provide additional funding. For each investment case, quantitative evaluation using ROIC, RVA, and TVA is conducted, along with deliberation by the investment/loan council, post-execution check-and-support activities, and strict application of restructuring/exit rules; however, the risk cannot be completely eliminated. A deterioration in the performance of investees may adversely affect the Group's business results and financial position.

The Group conducts numerous transactions denominated in foreign currencies in connection with product trading, investment activities, and other business, and is affected by fluctuations in foreign exchange rates. While hedging measures such as forward exchange contracts are employed, complete avoidance is not possible, and translation differences arising when converting the financial statements of overseas group companies into yen may also affect business results and financial position. Given the large number of overseas group companies, the impact on consolidated results may be particularly significant during periods of yen appreciation.

The Group raises business funds through borrowings from financial institutions, commercial paper, and bond issuances, and since a portion of these carry floating interest rate terms, there is a risk of increased interest expense burden during periods of rising interest rates. The Group works to minimize interest rate fluctuation risk through ALM (Asset Liability Management), but complete avoidance is difficult, and future interest rate trends may affect business results and financial position. A substantial portion of the floating-rate exposure is stated to be matched against operating assets to which the effects of the fluctuation can be passed on.

There are risks of leakage of confidential information and personal information due to unauthorized external access or computer virus intrusion, as well as risks of information system outages due to equipment or communication failures. The Group has implemented measures such as establishing information security regulations and guidelines standardized across the Toyota Group and Toyota Tsusho Group, introducing continuous communication monitoring, endpoint behavior monitoring, and automatic isolation, and building a cyberattack response system; however, the risk of unforeseen cyberattacks cannot be completely eliminated, and if such risks materialize, they may adversely affect business results and financial position.

The Group conducts a wide range of businesses both domestically and internationally, and is subject to a broad array of laws and regulations, including the Companies Act, Antimonopoly Act, Financial Instruments and Exchange Act, various bribery-related laws, security trade control regulations, and sanctions-related laws. While measures such as strengthening the compliance system through a global network managed by dedicated compliance departments, hierarchical training, and establishing internal reporting systems have been implemented, if misconduct or illegal acts by officers or employees occur, this could damage the Group's social credibility and adversely affect its business results and financial position. In logistics-related operations, the Group is also working to establish compliance systems for the Foreign Exchange and Foreign Trade Act, Customs Act, U.S. sanctions laws, and U.S. re-export control regulations.

The Group recognizes that environment-related risks, including climate change, water resources, and biodiversity conservation, may have a material impact on management, and conducts scenario analysis (transition risk and physical risk) in line with the TCFD recommendations. The Group has set a target of reducing GHG emissions (Scope 1 and Scope 2) by 50% by 2030 compared to 2019 levels and achieving net zero by 2050; however, if unforeseen circumstances arise due to the progression of climate change, changes in the natural environment, or tightening of related laws and regulations, this may adversely affect the Group's business results and financial position. The Group also conducts surveys using a water risk assessment tool (Aqueduct) and assessments of impacts on biodiversity.

There is price fluctuation risk in commodities handled by the Group, such as non-ferrous metals, rare earths, food, and textiles, and depending on commodity market conditions and price trends, this may affect the Group's business results and financial position. The Group works to reduce risk by setting position limits for each commodity and regularly monitoring operations within these limits; however, price fluctuation risk cannot be completely avoided. Sharp fluctuations in resource and energy prices pose a risk of directly affecting the Group's procurement costs and selling prices.