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Code Number 3355
Information on the website regarding current plans, strategies and beliefs and other statements of Kuriyama Holdings Corporation with the exception of historical facts are based on future management's projections, and these projectons contain risks and uncertain factors. Please note that actual results could differ from these projections because of a number of unknown and uncontrollable factors.
Corporate Policy

Risk Factors

The factors described below may be risk factors that could materially affect investors' decisions about Kuriyama group. The information below is based on the beliefs and judgments of Kuriyama group and include uncertainties so actual results may differ.

Selling Prices

Selling prices tend to be lower in general due to the nature of customer demands and intensified price competitions. We are forced to participate in the price competitions for some of the products, especially in North America and Europe, because of the large volume of similar products from Asian countries. We have a limited impact at the moment; however, competition may be more intense if the quality of Asian products improves.

Trends in Public Investment

20% to 30% of our sales in Sports and Construction Product Business segment is generated by providing products to public works. Therefore, trends in public investments may adversely affect our group's business results.

Raw Materials Prices

Resin and rubber hoses could impact our group results through market price fluctuations of raw materials. We will try to minimize the impact of increases in raw material prices by improving productivity and price pass-through. Nevertheless, there is no assurance that these measures will be as effective as expected.

Necessity of Inventory

One of the keys to providing high quality customer service is to have enough stocks of a wide variety of products. Therefore, in case of mis-forecasting of demand, we might lose sales opportunities, be forced to conduct discount sales for liquidation of excess inventories, or to recognize written off or loss on disposal of obsolete inventories. Our results could be adversely affected by these situations.

Logistics System

KURIYAMA CORPORATION, which is one of the consolidated subsidiaries of the Company, has 3PL contracts with outsourced logistics companies, as there is a large number of customers who need logistics services in the Kansai area and we improve distribution efficiency by consolidating the inventory and logistics functions. However, in the event that the operation of a logistics facility is stopped due to disasters or any other reasons, the Group's business performance and financial position may be adversely affected. Our overseas group companies also aim for fast deliveries. To achieve this goal, it makes numerous deliveries every day directly to wholesalers and end-user customers using contracted transport vehicles. The Group also provides a finely tuned delivery service that relies on the use of a variety of delivery companies depending on the volume and size of product to be shipped. This delivery system has enabled the Group to differentiate our service from that of our competitors, but we may also be increasing logistics costs in our overseas group companies.

Importance of Overseas Operations

Our sales generated in overseas are 56.7% of total sales of the Group for fiscal year 2019, and we will further accelerate overseas operations. Thus, apart from currency fluctuations, our business results might be influenced by economic circumstances, such as consumption, etc., and changes in political and social situations, and similar considerations in the areas Kuriyama Group operates. In addition, some of our Japanese customers have been expanding their production bases in Asian regions including China and they have strong needs in cost reduction. As such, if our strategy of preparing local supply systems, securing good suppliers and procurement cost reduction do not go favorably, our future results might be adversely affected.

Sales Channels

We sell many of our products and items to users via our local distributors. The Group does not have any specific distributors whom we especially depend on, but the distributors also deal with products of our competitors, thus changes in purchasing policies of these distributors could impact our operating results.

Currency Fluctuations

Financial statements on local currency basis are translated to Japanese Yen for consolidated financial statements, so currency fluctuations could affect our consolidated financial positions. The Group's procurement of raw materials and other goods in overseas markets exposes it to foreign exchange rate fluctuation risk. To reduce this risk, the Group engages in hedging transactions using foreign exchange forward contracts. Nonetheless, foreign exchange fluctuations pose a risk to the Group's business performance and financial condition over the medium and long term.

Legal Restrictions

KURIYAMA CORPORATION, a consolidated subsidiary, is subject to regulations of the Construction Business Act and the Building Standard Act. Our results might be adversely affected if we receive an administrative penalty from the regulatory agencies such as the Ministry of Land, Infrastructure, Transport and Tourism.

Changes in Accounting Standard & Tax Regulations

Our operations and financial positions could be adversely affected by unexpected changes in accounting standards or tax regulations. Moreover, we could have more tax burden than expected in case of conflicts with tax authorities.