NISHIO HOLDINGS CO. , LTD.

The core construction and equipment rental business is significantly affected by construction investment trends linked to private capital expenditure and public works budgets of national and local governments. A downturn in demand directly impacts net sales and operating profit. As countermeasures, the company is expanding overseas sales through M&A and expanding its non-construction machinery segment (events field), diversifying into other industries to spread risk.

Revenue in the events field is affected by fluctuations in corporate advertising expenditure, and deterioration in economic conditions or the occurrence of natural disasters can significantly alter demand. During economic downturns or major disasters, companies may reduce event-related spending, potentially causing sales in this segment to decline. Although positioned as a revenue source for risk diversification aside from construction machinery rental, dependence on external conditions remains high.

There is a lag of approximately 5 to 6 months between public investment budget decisions and the start of construction work, and the peak season for construction work is concentrated from September to March of the following year. As a result, net sales and profit tend to be concentrated in the first half of the consolidated fiscal year (October to March). In the most recent period, first-half net sales of ¥111,543 million accounted for 51.9% of full-year net sales of ¥214,954 million, and first-half operating profit of ¥11,421 million accounted for 58.3% of full-year operating profit of ¥19,602 million. If second-half (April to September) performance falls short of expectations, there is a risk that achieving the full-year plan could become difficult.

Most of the real estate held by the Group is used as business offices, maintenance plants, and equipment storage yards for rental. If a significant deterioration in the business environment causes a decline in the investment yield of held assets, this could have a material impact on the financial position and business performance through the recognition of impairment losses. The securities report does not describe specific countermeasures, indicating an asset composition highly sensitive to changes in the business environment.

The core products, construction machinery and vehicles, must comply with environmental and safety regulations including exhaust gas standards. If regulations are tightened in the future, this could affect business performance and financial position through increased costs of new procurement. As a countermeasure, the company focuses on maintaining existing machinery to extend its service life, working to minimize the impact of increased new procurement costs.

As a measure to diversify earnings volatility risk, the company is promoting overseas sales expansion through M&A, but this carries inherent risks related to governance management and integration processes for overseas subsidiaries and acquired companies. Deterioration in the performance of acquired companies or failed integration could lead to goodwill impairment or additional costs. The securities report does not provide detailed disclosure of the specific risk management framework for the M&A strategy.