Business Risks and Other Risks
Dependence on Specific Products and Industries
The Group's mainstay business is manufacture and sales of antennas and peripheral devices. In addition, most of the Group's products are manufactured for and sold to clients in the automotive industry. Therefore, future trends in sales of antennas and peripheral devices, as well as trends in the automotive industry could impact the Group's financial conditions and business performances.
The Group has bases not only in Japan but also in China, the Philippines, Vietnam, Mexico, the U.S.A., the U.K. and Thailand. The Group provides its products to different regions around the world, such as North America, Europe and Asia. On top of that, the Group aims to continue enhancing capital investment in various locations and strengthening its sales network in certain regions. This involves risks related to political and economic trends, unexpected change of laws or regulations, tax and accounting such as transfer price taxation, terrorism, war, epidemics and other risks which could affect the Group's financial conditions and business performances.
Fluctuation of Foreign Exchange Rates
The Group's production bases are located in Japan, China, the Philippines, Vietnam and Mexico, while its sales bases are located in Japan, the US, the UK and Thailand. Therefore, fluctuation in foreign exchange rates could have an effect on the Group's financial conditions and business performances.
Since the Group sells its products all over the world, it is constantly competing with overseas competitors and domestic manufacturers in terms of pricing, and this could cause prices and market shares to fluctuate, which in turn could have an impact on the Group's financial conditions and business performances.
Procuring Parts and Raw Materials
The Group procures raw materials from outside the Group to produce core parts, and also procures some parts from outside the Group; namely, copper wires and resin. Copper wires and resin are the main raw materials used in producing the Group's antennas and coaxial cables. Hence, there may be a delay in procuring parts and materials due to suppliers' circumstances which the Group has no control over, or purchase costs may increase due to sudden rises in material prices, including that of metal material such as copper, or that of oil, and this could affect the Group's financial conditions and business performances.
Quality Assurance of Products
The Group produces products in Japan, China, the Philippines, Vietnam and Mexico based on clients' quality standards, and makes every effort in managing quality. The Group has not yet experienced any lawsuits or recalls based on the Product Liability Act; however, in the event that lawsuits or other types of complaints are made against the Group's products, large amounts of compensation for damages may be required, or the reputation of the Group's products may decline, and this may result in impacting the Group's financial conditions and business performances.
Impact from Disasters and other Incidents
Natural disasters such as earthquakes or typhoons may cause decline in production capability at the Group's production and/or sales bases, breakdowns in IT infrastructure and secondary disasters, and thereby pose problems to the Group's financial conditions and business performances.