Business Risk Factors

While each of the Star Micronics Group’s businesses is conducted globally, demand is influenced by trends in economic conditions in each of the countries and regions in which the Group’s products are sold. In particular, the mainstay Machine Tools Segment operates in an industry that is highly susceptible to the capital investment demand of corporations. The Group strives to cultivate customers, develop products and take other steps to make the structure of each business segment less susceptible to the impact of cyclical economic fluctuations. However, should trends in economic conditions deteriorate, the Group’s business results could be affected.

The Star Micronics Group operates each its businesses in various regions around the world and conducts a high percentage of its production and sales activities overseas. As a result, the Group is exposed to foreign exchange rate-related risks. Although the Group employs a variety of tools including foreign exchange forward contracts in a bid to mitigate these risks, its business results could be impacted by large fluctuations in foreign exchange rates.

The Star Micronics Group faces fierce price-based competition for many of the products it handles. Although the Group constantly works to develop high value-added products and technologies that exceed what other companies offer, while engaging in such activities as the cultivation of new markets and cost-cutting, its business results could be impacted in the event of intensified price-based competition.

In its mainstay Machine Tools Segment, sales to the automobile industry account for a high percentage of the Star Micronics Group’s total sales. While every effort is being made to capture new demand expected from the shift to electric vehicles and to expand market share in areas outside the automotive industry including the medical and telecommunications sectors, the Group’s business results could be impacted by changes in production trends and demand in the automotive industry.

The Group has a high overseas production ratio. The Group’s overseas production sites, including outsourced manufacturing, are mainly based in China and Thailand. Although the Group has decentralized production bases in each of its businesses, the occurrence of unforeseen events including changes in social conditions or disasters at production bases could impact the Group’s business results.

The Star Micronics Group is dependent on specific suppliers for the procurement of certain components. While the Group has maintained positive relationships with the suppliers and put in place a system to facilitate stable supply, in the event that such issues as a decrease in the amount of supply, a hike in prices, and quality should arise, the Group’s business results could be affected.

Most of the Star Micronics Group’s production sites are located overseas. However, the Company’s Head Office and domestic plants are located in Japan’s Shizuoka Prefecture, where an earthquake is predicted to strike in the Nankai Trough region. While the Group has formulated a business continuity plan and taken such measures as adopting a seismic isolation structure at its Head Office, in the event of a major earthquake in the Nankai Trough or other region, the impact could extend to not only Head Office functions and production activities, but also the Group’s business results as a whole.
Furthermore, in the event that a major natural disaster strikes the Group’s production and sales sites around the world or the surrounding regions, the Group’s business results could be significantly impacted.

The Star Micronics Group conducts business activities on a global scale, and we consider it is essential to secure and develop excellent human resources with diverse values and specializations for our medium to long-term growth. To this end, we are working on constructing new personnel systems, making active investments in education, and promoting flexible and diverse work styles. However, intensified competition for human resources may impact the performance of our group if we are unable to secure and develop human resources sufficiently.

The Star Micronics Group have established information security policies to prevent information assets such as confidential and personal information of customers, business associates, and employees obtained through business activities from leaking to the outside or being used for unintended purposes. Furthermore, we are continuously working to strengthen our security management system, including at our overseas bases, and we provide necessary education and training to all our directors and employees. However, if information leakage occurs due to human or technical negligence, or illegal or unauthorized access, it could affect the performance of our group.

The Star Micronics Group is aware of other risks such as trade friction, public regulations, patent disputes, environmental issues and quality issues.
Although the Group strives to gather all relevant information as appropriate, in the event that such risks materialize, the Group’s business results could be affected.