- 1.Economic Conditions
- Demand for the Group's products is affected by the economic conditions of the countries and regions where the Group sells them. The Group's products are not basic necessities, and so in a recessionary phase the demand for them decreases as non-urgent spending. This may affect the performance and financial standing of the Group.
- 2.Exchange Rate
- The Group is engaged in production and sales activities around the world. Therefore, since the currencies traded in the production regions differ from those in the marketing regions, the Group is always subject to currency fluctuation risk. In order to reduce the risk of exchange-rate fluctuations, the Group tries to hedge the risk through derivatives, such as forward exchange contracts. However, there are no assurances to avoid the currency risk completely. In addition, any increase in the currency value of an area where the Group performs production may raise the production costs in such area. Such an increase in the manufacturing cost may reduce our operating margin and price competitiveness, and may have a potential impact on our operating results and financial conditions.
As the Group prepares its consolidated financial statements converting its overseas subsidiaries’ local currency-denominated financial statements into the Japanese yen, a fluctuation in the applicable exchange rate will affect the amounts reported in the consolidated financial statements.
- 3.New Product Development Capability
- The Group is maintaining dominance in each product field by developing innovative new products based on electronics and stimulating new demand. For this reason, in case the Group fails to fully forecast market changes and develop new products meeting market needs, or misses the good timing of new product launches, it may affect the performance and financial standing of the Group.
- 4.Quality Problem
- The Group's products are manufactured in accordance with the quality control standards which are recognized internationally. However, it is not impossible that any quality problem which may lead to a massive recall or product liability damages may come up. In such case it may adversely affect the performance and financial standing of the Group.
- 5.Intellectual Property
- It is difficult to perfectly protect intellectual property such as unique technologies, know-how, and designs owned by the Group, and in case it fails to efficiently prevent low-cost similar items or imitations using its intellectual property illegally or software piracy, there is a possibility that such problem may reduce the market share of the Group's products. On the other hand, though the Group is paying due attention not to infringe on any other company's right, there is still a possibility that the Group may become involved in legal cases. The litigation costs incurred and damages awarded in a lost case may adversely affect the performance and financial standing of the Group.
- With most of the key functions of the Company and its domestic consolidated subsidiaries are located in Shizuoka Prefecture, once a big earthquake strikes the Tokai area, there is a possibility that corporate activities may stop. Though the Group has taken disaster prevention and safety measures and measures for early restoration and business continuity based on the Business Continuity Plan (BCP), the restoration and other costs incurred may affect the performance and financial standing of the Group. Also, even when a disaster has occurred in a region outside of the Shizuoka Prefecture, there is a
possibility that the production plan will be affected by trouble that arises in connection with the
procurement of components, etc.