Konoike Transport Co.,Ltd.

In FY2026 (ending March 2026), sales to the steel industry accounted for approximately 15% of consolidated net sales, while sales to the beverage and food industries accounted for approximately 25%, resulting in a structure highly susceptible to fluctuations in the business conditions of these specific industries. If major customer companies undergo production adjustments, industry restructuring, relocation overseas, or closure/downsizing of business sites, this could have a material impact on the Group's business results and financial position. Although the Group maintains a policy of diversifying risk through transactions with a variety of companies, structural concentration risk continues to exist.

In addition to the structural decline in the domestic working-age population, addressing the medium- to long-term labor shortage arising from the "2024 problem" has become an urgent issue, and personnel expenses and other costs are expected to increase in order to secure labor and maintain/improve working conditions. If the Group is unable to develop and secure the necessary personnel or achieve appropriate staff allocation, this could affect its business results and financial position. The Group is addressing this through active recruitment activities, formulation of career plans, and enhancement of educational systems, but is also required to respond to human rights issues, including those involving outsourced companies.

The Group is entrusted with a wide variety of operations, including important processes that affect the quality of customers' products, and in contracted operations, bears broad responsibility ranging from labor management to production volume, delivery schedules, quality, equipment, and materials management. If troubles such as quality deterioration, operational delays, or stoppages occur due to defects attributable to the Group, this could cause significant disruption to customer companies' business activities or substantial losses, potentially leading to a decline in reliability, claims for damages, or termination of transactions. The Group strives for business operations through adherence to appropriate operating procedures, but the complexity of managing operations across multiple sites and industries increases this risk.

Hazardous work, including the operation of trucks, forklifts, and large machinery, forms the core of the Group's business, and industrial accidents or accidents may occur due to unforeseen causes. If litigation or administrative sanctions arise from a serious accident, this could result in claims for damages and a loss of social credibility and customer trust, potentially affecting business operations, business results, and financial position. The Group positions safety and health management as its top priority and strives to conduct operations with the utmost care, but complete avoidance is difficult.

Fuel costs for transport vehicles, vessels, and other equipment are affected by fluctuations in crude oil prices, and fuel costs may rise due to international supply-demand balance, financial conditions, or the political situation in oil-producing countries. In addition, since logistics facilities, including refrigerated and cold storage warehouses, consume substantial amounts of electricity, an increase in electricity rates would also lead to higher costs. While the Group maintains a policy of maintaining appropriate service rates through negotiations with customer companies, if sufficient cost pass-through proves difficult, this could affect the Group's business results and financial position.

As advances in artificial intelligence, robotics, and other technologies promote automation and labor-saving in production processes and logistics operations, the operations traditionally contracted to the Group could be substituted or reduced. The Group is addressing this by accumulating site-specific know-how and exploring new forms of contracted operations utilizing new technologies, but if it is unable to adequately respond to technological innovation, this could affect its business results and financial position. Given the nature of the outsourcing business model, the progress of automation is directly linked to the risk of a medium- to long-term contraction in business scale.

The Group operates its business by obtaining numerous licenses and permits, including for worker dispatching business, general motor truck transportation business, warehousing business, customs brokerage business, and port transportation business. If licenses or permits are suspended or revoked due to violations or other causes, or if legal regulations are tightened, this could have a material impact on business development. The Group is also required to ensure appropriate classification of contracting and dispatching arrangements and to comply with the Subcontract Act and labor-related laws and regulations; if administrative sanctions arise from misconduct or violations due to inadequate management, this could affect business operations, business results, and financial position. Furthermore, if environmental regulations concerning diesel vehicles are tightened, this could lead to increased countermeasure costs and constraints on business operations.

If natural disasters such as earthquakes and typhoons, or the outbreak and spread of infectious diseases such as novel viruses, make it difficult to ensure employee safety or maintain site functions, this could cause interruption or delay of critical operations, resulting in a material impact on business results and financial position. The increasing frequency and severity of typhoons, heavy rains, and other events associated with climate change in recent years has heightened business continuity risk across the entire supply chain, and the Group is addressing this through the development and training of BCPs, securing of alternative sites, and prior consultation with customer companies. However, given the nature of the business spanning multiple sites and industries, continuous efforts are required to ensure effectiveness at all locations.

While the Group is promoting global expansion centered on Asia, North America, and other regions, it is affected by the laws, regulations, exchange rates, socio-political conditions, and economic trends of each region, and may face obstacles related to overseas business customs and culture in areas such as receivables collection, building relationships with business partners, and employee management. Expansion of overseas business may require a long period of time and substantial funds before investment returns are realized, and the increase in costs due to investment may exceed the increase in revenue. If unexpected changes in circumstances occur, this could affect the Group's business results and financial position, and the Group strives to grasp risks by researching the laws, political situation, and economic conditions of each region.

The Group positions M&A and business alliances as important strategies for expanding its business scope, but there is a possibility that unrecognized liabilities, such as contingent liabilities, may be discovered after an acquisition. Where goodwill arises, if changes in the business environment or competitive landscape after an acquisition impede execution of the original business plan, impairment losses on goodwill may occur, potentially affecting business results and financial position. While the Group strives to avoid such risk by conducting detailed due diligence, complete elimination of risk after the fact is difficult.