Azuma Shipping Co.,Ltd.

The Group operates its business under numerous legal regulations, including the Port Transportation Business Act, the Motor Truck Transportation Business Act, the Warehousing Business Act, and the Customs Business Act. If regulatory reviews or revocation of licenses occur, this could hinder major business activities. The industrial waste collection and transport license requires renewal every five years, necessitating continuous management. As countermeasures, the Group has established a Group compliance framework, conducts internal audits, provides compliance education, and operates an internal whistleblowing system.

Reliance on Taiheiyo Cement Corporation, a major shareholder, and its group companies accounts for 28.7% of overall operating revenue (¥11,517,314 thousand in FY2026 (ending March 2026)), and within the Marine Transportation Business alone, the proportion attributable to the same group is extremely high at 77.6%. There is a risk that changes in the business trends or demand of the group could directly affect the Company's performance. As a countermeasure, the Company aims to reduce dependence through expansion of the Port Transportation Business, Warehousing Business, and international operations.

The Company owns numerous vessels, trucks, forklifts, and other equipment in its principal businesses such as marine transportation, land transportation, and port transportation, and fuel costs represent a significant proportion of variable costs. A sharp rise in crude oil prices due to geopolitical tensions or conflicts in the Middle East could affect performance. As countermeasures, the Company conducts regular market research on fuel prices and undertakes bulk purchasing from multiple suppliers.

The Real Estate Business, which makes a significant contribution to profit, is affected by real estate market conditions, lending interest rate levels, and customer demand trends, and fluctuations in land and building rental market rates could affect performance. As countermeasures, the Company secures a stable revenue source and aims to smooth profits by clarifying rent revision rules and extending contract terms.

In the operation of transport equipment such as vessels, trucks, and forklifts, as well as warehouses and container terminals, the Company uses fossil fuels and electricity and emits greenhouse gases. Insufficient response to emissions reduction could lead to loss of social credibility, exclusion by customers, and loss of new business opportunities. As a countermeasure, the Company has established a basic sustainability policy and promotes the realization of a decarbonized society and contribution to a circular economy as materiality issues.

The Company positions human capital as the most important factor in creating corporate value, and failure to secure it could affect performance. In particular, there is a need to respond to the cap on overtime work for truck drivers (the '2024 Problem'). As countermeasures, the Company promotes diversity and inclusion, harassment prevention education, work style reform (telework, staggered working hours, reduction of long working hours), and the development of a safe and healthy working environment.

The Company operates overseas businesses through local subsidiaries and other entities in East Asia, Southeast Asia, and CIS countries, and is exposed to risks such as infectious diseases, sudden changes in laws and tax systems, exchange rate fluctuations, political instability due to terrorism or civil unrest, and reduced production due to adverse weather. In particular, if economic stagnation or exchange rate fluctuations become apparent due to the prolonged situations in Ukraine and the Middle East, this could have a significant impact on performance. As a countermeasure, the Company routinely gathers the latest information from the governments and local embassies of the countries in which it operates and reviews its business plans according to the situation.

The operation of large vessels and cargo-handling equipment carries risks of oil pollution accidents, marine pollution, and large-scale traffic accidents, and facilities such as port facilities and warehouses are constantly exposed to risks from natural disasters such as typhoons, heavy rain, and earthquakes. In addition, a pandemic of a new infectious disease could cause a stagnation of business activities and a serious impact on the economy. As countermeasures, the Company implements PDCA based on transport safety management, conducts major accident drills, maintains various insurance policies, and has established a crisis response headquarters system.

As of March 31, 2026, the balance of interest-bearing debt (excluding lease obligations) was ¥12,375,475 thousand (28.1% of total assets), an increase from ¥10,240,520 thousand (24.9%) in the previous fiscal year. If market interest rates rise due to changes in economic conditions, this could affect performance through an increase in financial expenses. As a countermeasure, the Company has set a policy of strengthening its financial structure by reducing interest-bearing debt.

The Company holds personal information of customers and employees/officers, as well as trade secret information such as price lists, customer lists, and vessel drawings. Leakage, falsification, or unauthorized use of such information could lead to a decline in credibility and competitiveness. In addition, since nearly all operations are run through online systems, cyberattacks, computer viruses, or large-scale disasters causing prolonged system failures could affect performance. As countermeasures, the Company has established basic information security regulations, conducts regular training, and has built a backup system using external data centers.