TOYO Corporation

The Group operates domestically and internationally, and if a natural disaster such as a major earthquake, tsunami, typhoon, or flood, or an event such as terrorism, war, or an infectious disease outbreak occurs, corporate activities as a whole and human resources could be significantly damaged, potentially affecting business performance and financial condition. As countermeasures, the Group has introduced a safety confirmation system and diversified data centers, and continues to improve its business continuity plan (BCP).

Since the Group imports products from overseas and sells them both domestically and internationally, sharp yen depreciation or appreciation directly affects profit and loss. In addition, exchange rate fluctuations may affect business performance and financial condition when translating the financial statements of overseas consolidated subsidiaries into yen. The Group works to mitigate this risk through changes in sales prices and foreign exchange forward contracts, among other measures.

For large-scale projects, construction business licenses may be required in some cases, and delivery and installation of measurement systems can be prolonged, making delayed acceptance inspections more likely to occur. If an acceptance inspection scheduled during the period is postponed, revenue cannot be recognized for that period, potentially affecting business performance. The Group addresses this through thorough schedule management and by conservatively setting revenue recognition timing for projects with a high risk of delay.

If an overseas manufacturer with which the Group has a general agency agreement terminates the agreement due to establishing a Japanese subsidiary or being acquired by another company, the Group could lose sales opportunities for the relevant products, potentially having a significant impact on business performance. The Group seeks to diversify this risk by strengthening partnerships through investments in overseas manufacturers and by building relationships with numerous overseas manufacturers, including competing manufacturers.

As the Group expands its business through M&A, the number of domestic and overseas subsidiaries is increasing. If legal compliance and business process management at any subsidiary are inadequate, legal violations, fraud, or scandals could occur, potentially affecting business performance and financial condition. The Group strives to appropriately carry out the post-merger integration process (PMI) to reduce risk and maximize synergies.

The Group is strengthening its R&D activities in order to provide high-value-added proprietary solutions. However, if development must be abandoned due to a prolonged development period or other factors, or if sales remain sluggish after market launch, the Group may be unable to recover its R&D costs, potentially affecting business performance and financial condition. Disclosure of specific countermeasures in the securities report is limited, and there is an inherent risk regarding the effectiveness of development investment.

If the Group is unable to secure the necessary capabilities and number of personnel due to a decline in the labor force population resulting from Japan's declining birthrate and aging population, this could affect business performance. The Group seeks to secure and retain talent through active profit distribution based on business performance, expansion of its personnel systems, and promotion of work-style reforms.

If human rights violations such as forced labor, child labor, harassment, discrimination, or inappropriate working conditions occur within the Group or its supply chain, this could result in damages claims, suspension of business transactions, and damage to brand value, potentially affecting business performance and financial condition. The Group has established a human rights policy and a procurement policy, and works to mitigate this risk by requiring business partners to comply with and address these matters as well.