NIKKEN KOGAKU CO., LTD.

Continued price increases may reduce the volume of public works projects that can be executed, potentially affecting business performance. Since the Group's business domain is centered on public works, a decrease in project volume directly impacts sales and profits. As a countermeasure, the Group is working to create new demand through the development and dissemination of new products and construction methods.

Since the majority of sales relate to construction work ordered by government agencies, delays in ordering or project cancellations may affect business performance. High dependence on specific ordering parties means that delays or suspensions in budget execution can lead to instability in earnings. The Group seeks to reduce this risk by obtaining accurate information early and sharing it within the Group.

Since the majority of customers are in the civil engineering and construction industry, intensifying competition for orders, regional imbalances in public works, and rising labor and material costs may cause customers to fall into financial difficulty, resulting in the inability to collect accounts receivable. The Group seeks to reduce this risk by exchanging credit information with partner companies and distributors in each region and by concluding contracts that facilitate early collection.

Sharp increases in the prices of construction materials such as steel and ready-mixed concrete may raise procurement costs, and if these cost increases cannot be passed on to selling prices, business performance may deteriorate. The Group strives to negotiate appropriate selling prices and works with industry associations on activities aimed at establishing appropriate design pricing.

Since the Group does not own its own factories and outsources all manufacturing of concrete products, deterioration in the financial condition or halted production of subcontractors may prevent the Group from fulfilling its delivery obligations. The Group seeks to diversify and reduce this risk by building good relationships with multiple partner factories and exchanging information with them.

If employees become infected with a new infectious disease virus, business suspension for a certain period may affect operating results and financial condition. The Group is implementing measures aligned with new lifestyle practices, including telework and staggered commuting, to reduce employees' risk of infection.