Sugimura Warehouse Co., Ltd.

There is a risk that competition with other companies will intensify due to domestic and overseas economic fluctuations, changes in major customers' logistics policies, and changes in the rental real estate market. The degree of impact may increase further depending on the trends of customers with a high sales ratio, and dependence on specific customers could act as an amplifying factor for business performance fluctuations. While no specific countermeasures are stated, the premise rests on maintaining a diverse customer base spanning manufacturing, wholesale, services, and other industries.

If logistics networks are disrupted due to changes in overseas situations such as wars, making it difficult for client companies to secure raw materials, there is a risk that clients' production and procurement activities could stagnate for an extended period, leading to a decrease in the volume of operations outsourced to the Company. Since client companies outsource logistics for cargo they produce and procure domestically and overseas to the Company, this creates a structure in which geopolitical risk indirectly spreads to affect business performance and financial condition. No specific countermeasures are described.

The logistics business is subject to regulation under related laws, and changes in or strengthening of laws and regulations could lead to increased costs, potentially affecting business performance and financial condition. In the logistics industry, discussions continue regarding the strengthening of labor regulations, environmental regulations, and the like, creating a risk that rising regulatory compliance costs could squeeze earnings. No specific countermeasures are described.

The Group continuously makes capital investments to establish and renew business-use assets, raising funds from financial institutions. If financial instability recurs or inflation occurs, the fund-raising environment could deteriorate, and rising interest rates could increase financial costs, potentially affecting business performance. While the Company states that its relationships with its correspondent banks currently remain favorable, vulnerability to changes in the external environment remains.

If the market value of held land, buildings, investment securities, etc. declines, if the profitability of business locations deteriorates significantly, or if errors occur in profitability estimates for new investments, impairment accounting may become necessary, potentially affecting business performance. As the Company holds many facilities primarily in the Logistics Business and Real Estate Business, deterioration in real estate market conditions or business profitability creates a structure directly linked to impairment risk. No specific countermeasures are described.

If a temporary failure occurs in the logistics information systems that manage inventory and financial information, operations could be affected until the systems are restored. While the Company guards against unauthorized external access and computer virus infection through the introduction of antivirus systems and the like, complete protection is not guaranteed. If a system failure becomes prolonged, it could hinder the provision of customer services, creating a risk of declining reliability.

The Company handles personal information in the course of its business, and if important information such as personal data is leaked due to unexpected unauthorized access, computer viruses, or other unlawful acts, this could affect financial condition and business performance. The Company has established an "Information Security Basic Policy" that all officers and employees are required to comply with in an effort to prevent leakage of personal information, but complete prevention is difficult given the increasing sophistication of cyberattacks. Should an information leak occur, there is also a risk of customer claims for damages and loss of business due to reputational damage.

If facilities are damaged or social infrastructure is disrupted by natural disasters such as earthquakes, typhoons, or tsunamis, storage, sorting, and delivery functions could be suspended, potentially affecting operating results and financial condition. As the Company holds many facilities primarily in the Logistics Business and Real Estate Business, there is a risk that a large-scale disaster in a specific region could directly damage business continuity. No specific countermeasures such as a BCP (Business Continuity Plan) are described.

If a new type of infectious disease spreads, causing infections within the Group and restricting business activities, this could lead to a backlog of handled cargo, potentially affecting operating results and financial condition. The logistics business is inherently dependent on manual labor on-site, and personnel shortages due to the spread of infection pose an operational risk that is difficult to offset through substitution. No specific infectious disease countermeasures are described.