The following are the major Group business and other risk-related issues which are deemed to have the potential to seriously impact investor decision-making. Please be aware that the following issues were decided upon by the Group and are subject to uncertainty; actual results may differ.
Kuriyama Group handles a wide range of manufactured products; however, factors such as pressure from customers to lower prices, increasingly strong cost competition and declining demand due to economic slowdown have pushed sale prices down across the board. Particularly in North America and the European Union, a large influx of cheap products from China, Korea and other Asian countries has forced us into price competition with Asian products in some categories. Currently, the amount of direct price competition has been limited, due to an ongoing trade war between China and the United States which has imposed tariffs on Chinese products, as well as due to the differences in quality between Kuriyama products and products from Asia; however, it is quite possible that the level of competition will intensify as the level of quality of Asian products improves.
The price of the resin which serves as the primary raw material in the plastic hoses Kuriyama Group manufactures is affected by changes in the price of crude oil. When procuring raw materials, Kuriyama Group makes sure to adequately investigate options for obtaining a stable supply and, based on this as well as the economic environment, market situation and other factors, engages in price negotiations with suppliers and works to reduce costs by ordering large quantities/in-bulk on an annual basis. Nevertheless, the variability in the price of resin and other raw materials is likely to affect Kuriyama Group's business performance. Within the Group we are working to dampen the impact of higher raw materials costs via such means as improving productivity and passing the costs on to the customer; however, there is no guarantee that any such measure will have the desired outcome.
Kuriyama Group performs manufacturing and purchasing in anticipation of customer orders in order to ensure we have a full product line-up to facilitate our effectiveness as a trading company, and this means that we must maintain our inventory at a given level. Thus, in the event that the Group is wrong about the level of demand for a product, our business performance will be impacted as a result of either missing sales opportunities due to insufficient supply, being forced to sell at a discounted price in order to get rid of excess supply, or, depending on the circumstances, writing off loss on the valuation or abandonment of products.
Consolidated subsidiary Kuriyama Japan Corporation has a 3PL agreement in place with an external logistics company for distribution services, thereby streamlining delivery through the integration of inventory and distribution functions; however, if the distribution center were to be damaged or otherwise rendered inoperable, it would be likely to impact the business performance and financial situation of Kuriyama Group. In addition, at overseas business facilities, the Group expedites delivery through the use of carefully managed delivery services, including hiring delivery trucks to make numerous daily product deliveries directly to wholesalers and users, as well as making use of delivery companies to accommodate specific volume and size needs. The use of such delivery systems helps us to differentiate ourselves from our competitors, but, at the same time, they can also contribute to higher distribution costs for overseas business facilities.
Nearly all of the rubber, plastic and metal industrial-use hoses and other products Kuriyama Group manufactures in North America, Europe and Central and South America are sold to the local market. Overseas sales made up 63.5% of the current consolidated sales for the current consolidated accounting fiscal year. Because Kuriyama Group continues to pursue a policy of active business development overseas, the business performance of the Group faces risks from currency exchange fluctuations; local business cycles, consumer behavior and economic trends; changes in local political and social conditions; regulatory requirements; local customs and norms; and other unpredictable factors. Additionally, some Kuriyama Group customers in Japan are moving their production facilities overseas to China and other parts of Asia. For these customers, we mostly export products from Japan; however, because of their pressing need to lower costs, if we do not establish a local supply system, secure high-quality suppliers and steadily reduce purchasing costs, the Group's business performance is likely to be negatively impacted.
Most Kuriyama Group products are sold to customers via local distributors. Although the Group is not overly dependent on any specific distributors, because they also handle our competitors' products, any changes in the distributors' purchasing policies can impact the Group's business performance.
Most Kuriyama Group products are sold to customers via local distributors. Although the Group is not overly dependent on any specific distributors, because they also handle our competitors' products, any changes in the distributors' purchasing policies can impact the Group's business performance.
Consolidated subsidiary Kuriyama Japan Corporation not only sells products but also provides construction/installation services; hence, it must comply with the Building Standards Act, Construction Business Act and other laws and regulations. In the unlikely event that, for whatever reason, a Group company is subject to administrative sanctions by the Ministry of Land, Infrastructure, Transport and Tourism or some other competent authority, this has the potential to negatively impact the Group's business performance. The table below lists the major permits, licenses, registrations, etc., that we have obtained.
Date Obtained | Permits/Licenses | Recipient | Permit/License Details | Period of Validity |
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July 2022 | Special Construction Business (license) |
Kuriyama Japan Corporation | License approved by the Minister of Land, Infrastructure, Transport and Tourism (Special-4) No. 24558: Architectural and construction business; Civil engineering business | 'From June 19, 2022 to June 18, 2027. After this, subject to renewal every five years. |
Same as above | Ordinary Construction Business (license) |
Same as above | License approved by the Minister of Land, Infrastructure, Transport and Tourism (Ordinary-4) No. 24558: Plastering business; Tiling, brick and block work; Waterproofing business; Carpentry business; Masonry business; Paving business; Interior finishing business; Scaffolding and excavation business; Steel structure contracting business; Painting business; Roofing business; Sheet metal business; Electrical contracting business | Same as above |
December 2022 | Same as above | Same as above | License approved by the Minister of Land, Infrastructure, Transport and Tourism (Ordinary-4) No. 24558: Plumbing business; Landscaping business | From December 13, 2022 to December 12, 2027. After this, subject to renewal every five years. |
'Consolidated subsidiary Kuriyama Japan Corporation not only sells products but also provides construction/installation services; hence, it must comply with the Building Standards Act, Construction Business Act and other laws and regulations. In the unlikely event that, for whatever reason, a Group company is subject to administrative sanctions by the Ministry of Land, Infrastructure, Transport and Tourism or some other competent authority, this has the potential to negatively impact the Group's business performance. The table below lists the major permits, licenses, registrations, etc., that we have obtained.
Kuriyama Group conducts business activities on a global scale. As a result, unanticipated natural disasters, changes in the political and economic landscape, the spread of infectious/communicable diseases, legal and regulatory changes, terrorism, war and other social upheaval, etc., all run the risk of negatively impacting the financial situation and business performance of the Group. In order to counter these risks, we engage in business continuity planning (BCP) to manage crisis situations and minimize interruption due to natural disasters and other risks.
In order to further improve Kuriyama Group earning capacity and business quality, we are fully focused on addressing the following priority challenges.
Industrial Products |
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Sports Facility & Construction Products |
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Other |
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