Kanamoto Co.,Ltd.

The mainstay Construction-related business is heavily influenced by domestic construction investment trends, whether from public or private demand. If public works spending is significantly cut or private-sector construction activity declines, or if rental asset lease prices or utilization rates fall, this could adversely affect business performance. Intensifying competition for orders may also act as a factor pushing down rental unit prices.

Because there is generally a roughly six-month time lag between budget decisions for public works and the start of construction, demand for Construction Machinery Rental tends to be concentrated from October through March each fiscal year, causing sales and profit to be skewed toward the first half (November to April). This seasonal fluctuation tends to structurally lower second-half performance, affecting the accuracy of full-year performance forecasts and cash flow management.

The Group procures external funding for capital expenditures related to the acquisition of rental assets and the opening of sales offices, as well as for working capital needs, and is therefore exposed to interest rate fluctuation risk. Although the Group works to mitigate the impact through measures such as fixing interest rates, a sharp rise in interest rates over a short period could adversely affect business performance and financial condition.

The Group has entered into debt guarantee agreements with financial institutions for borrowings by affiliated companies. If the financial condition of an affiliated company deteriorates and the Group is required to fulfill a debt guarantee, this could directly and adversely affect the Group's business performance and financial condition.

The Group applies the "Accounting Standard for Impairment of Fixed Assets" and holds a large volume of fixed assets, including rental assets. If the profitability of these fixed assets declines due to a significant deterioration in the future business environment or other factors, the recognition of impairment losses could have a material impact on business performance and financial condition.

In overseas businesses conducted by overseas subsidiaries and affiliated companies, business operations may be affected by changes in the political situation or economic conditions of the local country, or by unexpected changes in laws and regulations. Although the Group regularly monitors conditions in each country and provides management support, it is difficult to completely eliminate this risk.

Sales of used construction machinery to overseas markets are affected by global economic trends and exchange rate movements at the time of sale. If a period of yen appreciation coincides with an economic downturn in the destination country, this could lead to lower sale prices or reduced demand, adversely affecting earnings.