K.R.S.Corporation

The Group is subject to legal regulations such as the Trucking Business Act, Warehousing Business Act, Road Vehicles Act, and various environmental regulations, and continuation of its business requires permits and registrations from the Minister of Land, Infrastructure, Transport and Tourism. Additional costs arising from regulatory compliance, or any disposition received in the future, may affect business performance. The Group is undertaking various initiatives to comply with legal regulations and respond to environmental regulations.

The Group continuously carries out capital expenditures in response to customer needs such as the expansion of logistics networks, quality improvement, and environmental response, primarily centered on the development of logistics facilities and the acquisition of new vehicles and transport equipment, and an increase in the investment burden may affect business performance. The Group strives to reduce costs through rationalization measures such as improved vehicle allocation efficiency, reduction of outsourcing costs, and operational efficiency improvements, but the risk of expanding investment scale continues to exist.

Fuel prices for transport vehicles are linked to fluctuations in global crude oil prices, and sustained high prices become a factor in increased costs. In addition, electricity consumption is significant for refrigerated and frozen warehouses and logistics facilities, and increases in electricity rates may also worsen profitability. The Group works to pass on costs through rationalization improvements, but if sufficient cost pass-through becomes difficult, business performance will be affected.

Securing specialized personnel such as drivers and warehouse staff is a challenge, and the Group is engaged in active recruitment activities, enhancing in-house training, and creating an attractive workplace. In addition to increased labor cost burdens for securing personnel and maintaining and improving the working environment, business performance may be affected if there are difficulties in developing and securing necessary personnel or in appropriate staff allocation.

The Group conducts business activities in China and Indonesia, which inherently involve risks such as unforeseeable changes in laws and regulations, adverse political and economic factors, underdeveloped social infrastructure, changes in tax systems, social unrest caused by war, terrorism, or infectious diseases, and significant exchange rate fluctuations. If these risks materialize, the Group's business performance may be affected.

Due to the Group's history of developing specialized food logistics operations, its customer base is weighted toward the food, retail, and restaurant industries. Competition has intensified due to declining unit fee revenue caused by product miniaturization, weak consumption stemming from the declining birthrate and aging population, and reduced cargo volume resulting from companies' inventory reduction and logistics reviews, and price reduction requests or decreased cargo volume may affect business performance. The Group is working to strengthen price competitiveness through cost reduction and to improve customer satisfaction through the use of logistics information systems.

Given that the cargo handled is food, low-temperature logistics (frozen and refrigerated) is central to operations, requiring stringent logistics quality control. The Group positions logistics quality control as an important management issue and continuously implements capital expenditure, employee training, and the development of regulations, but if a quality problem were to occur, business performance could be affected.

Although the Group has a wide range of business partners, there are some customers with a relatively high proportion of operating revenue. If cargo volume from such customers decreases, business performance may be affected. The Group strives to strengthen business relationships by maintaining a trusted operational structure and promoting diversification of its customer base.

If warehouses, vehicles, information systems, infrastructure, etc. are damaged by natural disasters such as earthquakes, storms, or floods, disruptions to logistics operations and other business impacts may occur. In addition, if outbreaks of new infectious diseases cause business suspensions or closures at customers or outsourcing partners, resulting in reduced cargo handling volume, business performance may also be affected. The Group has developed disaster response manuals for BCP implementation, earthquake resistance measures for information systems, comprehensive disaster drills, and an infectious disease response system based on crisis management manuals.

If information systems are disrupted or information is leaked due to computer virus infection, unauthorized external access including cyberattacks, disasters, or other causes, business performance may be affected through business suspension, damages claims from business partners, and loss of trust. The Group implements measures such as regular targeted attack drills, information security training, and appropriate management and backup of information equipment, but it is difficult to completely eliminate such risks.