Maruken Lease Co., Ltd.

The Group's main customers are domestic construction companies, and its high degree of dependence on the construction market means that changes in demand trends in that market directly affect operating results and financial position. As countermeasures, the Group is promoting expansion into East Asia through Thai Maru-ken Co., Ltd. and Zuima Maruken (Anhui) Engineering Support Technology Co., Ltd., the addition of Takemoto Kiso Koji Co., Ltd. as a subsidiary in February 2025 and Daichi Lease Co., Ltd. as a subsidiary in April 2026, and the rollout of new products such as the large deck plate "Tough Series."

Prices of heavy-duty temporary construction steel materials, the Group's primary products, are affected by construction demand trends and steelmaking raw material market conditions; a sharp rise in prices puts pressure on earnings through higher procurement costs. As countermeasures, the Group is pursuing stable procurement through strengthened relationships with manufacturers and trading companies, curbing purchases of new materials through inventory transfers between the head office, branch offices, and factories, and securing a wide range of procurement sources by utilizing overseas group companies.

Since the Group relies in part on borrowings from financial institutions to fund business activities, an increase in interest-bearing debt or a rise in interest rates could adversely affect cash flow and financial position. The Group is strengthening its financial structure through deliberation on fund-raising policy at Board of Directors meetings, enhancement of its fund budgeting system, securing stable funds mainly through long-term borrowings, and utilization of group financing.

Since fiscal 2022, the number of corporate bankruptcies nationwide has been on an increasing trend, and rising bankruptcies in the construction industry, the Group's primary customer base, could increase the risk of uncollectible trade receivables, potentially affecting operating results and financial position. The Group manages this risk through setting credit limits and bad debt allowance rates based on customer ranking, utilizing individual guarantee insurance contracts, and conducting employee training based on past bankruptcy cases.

In overseas business centered on East Asia, including Thailand and China, there is a risk that business will not proceed as planned due to changes in political and economic conditions, foreign exchange rate fluctuations, legal amendments, or deterioration in the financial condition of partner companies. The Group addresses this by gathering local information through group companies such as Marubeni Corporation and Marubeni-Itochu Steel Inc. and external consultants, appropriately managing the scale of investment, and considering the introduction of forward exchange contracts as circumstances warrant.

Investments, contracts, accounting treatments, and other matters at affiliated companies that are not recognized by the Company could affect operating results and financial position, and the scope of management targets has expanded with the addition of Takemoto Kiso Koji Co., Ltd. as a subsidiary in February 2025 and Daichi Lease Co., Ltd. as a subsidiary in April 2026. The Group addresses this through dispatching directors from the Company, holding affiliated company liaison meetings twice a year, operating affiliated company management regulations through the Corporate Planning Department, and conducting annual business audits by full-time Audit and Supervisory Committee members and the Audit Department.

Accidents occurring at repair and processing factories for heavy-duty temporary construction steel materials, or at sites for pile driving/extraction, earth retention work, foundation work, obstacle removal work, and similar operations, could result in delays in steel material delivery, construction schedule delays, and compensation for losses, potentially affecting operating results and financial position. The Group addresses this through various insurance policies, continued investment in safety equipment, pre-construction review meetings and safety patrols, enhanced heatstroke prevention measures, and establishment of a safety guidance system for overseas group companies.

Against the backdrop of a declining working population due to the falling birthrate and aging population, failure to secure necessary personnel could hinder business operations and affect operating results and financial position. The Group addresses this through diverse recruitment activities combining regular new-graduate hiring, mid-career hiring, referral hiring, and hiring of foreign nationals; human resource development through tiered training and practical training programs; and initiatives under the medium-term management plan to promote human capital management, improve compensation, and enhance work engagement.

System failures caused by large-scale disasters or cyberattacks, or leaks of confidential or personal information, could have a serious impact on business continuity and social credibility. The Group addresses this by strengthening its business continuity plan through the replacement of core and information systems and complete relocation to a data center, migrating some systems to the cloud, implementing multi-layered email checks, taking out cyber insurance, and conducting IT security training sessions for new employees.

Pile driving/extraction, earth retention work, foundation work, obstacle removal work, civil engineering work, and similar operations conducted by the Group require licenses under the Construction Business Act, and revocation of such licenses would make it impossible to continue the relevant business, having a material impact on operating results and financial position. As a countermeasure, the Group is promoting the training and securing of qualified personnel, such as construction business management officers and first-class civil engineering construction management engineers, by revising incentive payments for obtaining public qualifications and establishing a new allowance for holders of such qualifications.