1. Fluctuations in exchange rates

The Group’s overseas sales accounted for 27.6% in this interim accounting period, and raw materials are imported from overseas. Though the exchange risk of overseas sales in domestic business is hedged through forward markets, performance of the Group is affected by the exchange rate. Performances of overseas subsidiaries are also influenced by the exchange rate when their figures are translated into Japanese yen.

2. Risks associated with product quality

The Group manufactures each product in accordance with the carefully planned quality control standards to detect any defects in products. However, there is no guarantee that all products are free from all defects, possible recall, or are free from issues of product liability in the future. Product defects leading to a recall or product liability may cause a large amount of cost and negatively affect the Group’s financial position and performance.

3. Risks associated with prices and procurement of raw materials

A steep escalation of the prices of raw materials or failure to secure replacement suppliers in case of an interruption of the supply of any parts may worsen the profitability of products or cause opportunity loss, and negatively affect the business results and financial position of the Group.