NANSO Transport Co.,Ltd.

The Group relies on long-term and short-term borrowings from financial institutions to fund the construction of warehouses, distribution centers, and other facilities, resulting in a high ratio of borrowings to total assets. A rise in interest rates could increase financial costs and adversely affect the profitability of capital investments that require long-term recovery periods. The Group seeks to minimize the impact by diversifying funding sources and staggering funding periods.

The Group is subject to various laws and regulations applicable to the Motor Truck Transportation Business, warehousing business, and other operations, and violations of such regulations could result in business suspension, revocation of registration, or other actions that make it difficult to continue operations. There is also a risk that tightening emission regulations for diesel trucks could increase vehicle replacement costs. The Group maintains a system for continuously obtaining the latest information and responding promptly to regulatory changes.

In accepting outsourced work from clients, the Group makes upfront investments in land, buildings, and equipment. If a client's business performance suddenly deteriorates or a business relationship is terminated, difficulties may arise in recovering the invested funds. This could also lead to reduced future growth and profitability. The Group mitigates this risk by diversifying its client base so that transaction volume is not overly concentrated with specific clients.

Because the Group's operations are centered on the logistics business, a surge in crude oil prices directly leads to higher fuel costs. As it is difficult to pass such cost increases on through transportation fees, a substantial rise in crude oil prices could increase transportation costs and affect business performance. The Group continuously monitors crude oil price trends and procures fuel based on forecasts of price movements.

If a major traffic accident occurs in the transportation business, which uses trucks and other vehicles, it could not only damage social credibility and customer trust but also lead to administrative sanctions such as suspension of vehicle use, suspension of business operations, or revocation of business licenses, significantly affecting business performance. The Group holds monthly "Zero Accidents Meetings" and "Safety Meetings" to thoroughly instill safety awareness among employees.

Natural disasters such as earthquakes, typhoons, heavy snowfall, and torrential rain could cause severe damage to logistics and administrative facilities as well as customers' goods, and disruptions to logistics operations due to power outages or blocked transportation routes could affect business performance. Given the increasing frequency of natural disasters, the Group has clarified response procedures premised on the occurrence of such disasters in order to minimize risk.

In providing logistics services, the Group handles information belonging to customers and others. If information is leaked externally or data is lost, it could damage social credibility and lead to claims for damages, affecting business performance. The Group is working to strengthen information management through thorough compliance and personal information management, as well as internal training.

The Group owns rental stores, offices, and warehouses (including land) in Chiba Prefecture and elsewhere, and a large-scale withdrawal of tenants or a decline in land prices could result in impairment losses affecting business performance. In particular, the Miyamoto Warehouse (Sakura City, Chiba Prefecture) has the largest book value among the Group's rental real estate holdings, and signs of impairment have already emerged due to a significant decline in land prices. The Group manages its rental real estate portfolio to ensure that it does not account for an excessive proportion of overall revenue.

A resurgence of COVID-19 or the spread of a new infectious disease could reduce operational capacity and thereby affect business performance and continuity. The Group continues to develop backup systems and emergency support arrangements in anticipation of the spread of infectious diseases, and implements BCP measures including regular reviews.

As the Group's operations are centered on labor-intensive businesses such as logistics and staffing services, a shortage of personnel or failure in employee development could reduce service opportunities and lower service quality, affecting business performance. In response to the "2024 Problem" and the declining working-age population, the Group is promoting increased recruitment channels, enhanced employee training, improved workplace environments, and greater operational efficiency through IT/DX utilization.