The following matters represent risks that could have a significant material impact on investors’ decisions among the matters concerning business conditions and accounting conditions mentioned in this annual report. These risks do not necessarily cover all possible risks facing the Fujitec Group and there are also other risks that are difficult to forecast. The Fujitec Group’s business, business results and financial condition could be significantly and adversely affected by any risk factor in the future.
Forward-looking statements contained in this report represent judgments by the Fujitec Group as of the end of the consolidated fiscal year.
The Fujitec Group has 10 production bases and numerous sales bases in 24 countries and regions around the world and carries out global business activities. Political and economic circumstances in these countries and regions where business is carried out could have an impact on the supply of and demand for the Fujitec Group’s products. In particular, the Fujitec Group’s products are elevators and escalators that are installed in buildings, including office buildings, hotels, commercial buildings and residences. Therefore, these products have one aspect whereby the scale of public-sector investment and economic trends in the construction industry in Japan and overseas could have an impact on the Fujitec Group’s business results.
The Fujitec Group continually carries out activities for the development of new products that are matched to customer needs. In the elevator and escalator industry, where the Fujitec Group operates, customer needs are diversifying in step with the maturing of markets. On the other hand, product development competition among leading manufacturers worldwide is fierce and there is a possibility of being driven out of the market by failing to adapt in a timely manner to leading-edge technological trends.
Under such conditions, not being able to adequately forecast industry and market changes and develop appealing new products could lower the Fujitec Group’s future growth and profitability and have an adverse impact on its financial condition and business results.
In domestic and overseas markets, where the Fujitec Group undertakes business, there is ongoing fierce competition with competitors that include leading manufacturers carrying out business on a global scale. In addition, it is expected to be a continued trend toward business dominance by increasing market share. In particular, there has been an intensification of price competition for products and services introduced into the market at even lower prices as part of business development of competing companies and a business strategy of business alliances that include mutual competitors. This could have an adverse impact on the Fujitec Group’s financial condition and business results.
The Fujitec Group undertakes integrated production, sales, installation and maintenance of elevators, escalators and moving walks, and in each business process conforms with the laws, regulations and guidelines applicable in each market. Also, the Fujitec Group makes adequate considerations to assure the safety of customers and users by offering products and services verified in accordance with its own internally established technical standards and safety standards. Nevertheless, an unforeseen product defect or usage by the user could cause equipment damage or an incident or even in certain instances an accident resulting in injury or death.
In such circumstances, responsibility as a manufacturer could be called into question. This could have an adverse impact on the Fujitec Group’s financial condition and business results because of indemnification for damages or the loss of trust by society.
The Fujitec Group basically carries out business using its own capital. However, it undertakes business through joint ventures due to legal restrictions in some countries. One such principal country is China, where the Fujitec Group has extremely favorable relations with its joint venture partners and plans to continue mutually beneficial equitable relationships.
Nonetheless, in the event of a change in a joint venture partner’s economic circumstances or policies concerning business development, the Fujitec Group cannot eliminate the possibility of re-evaluating the joint venture, replacing the joint venture partner or dissolving the joint relationship in the future. Such an event could have an adverse impact on the Fujitec Group’s financial condition and business results.
As the Fujitec Group carries out global business development, the following latent risks could have an adverse impact on business development and business results.
1) Terrorism, wars, revolutions and other social upheaval
2) Occurrence of natural disasters such as earthquakes, typhoons and contagious disease pandemics
3) Unexpected changes in laws and regulations
4) Strikes by workers at seaports and airports or by persons in the transport industry
5) Interruption of production activities due to an infrastructure accident such as a power outage or interruption of the water supply at production bases
Procurement prices for raw materials such as steel stock, wire rope and stainless steel that make up the Fujitec Group’s products are susceptible to the impact of steel market conditions. Therefore,
a rise in prices in the steel market will push up product manufacturing costs, which could have an adverse impact on the Fujitec Group’s business results.
The Fujitec Group carries out asset liability management (ALM) at each company and works to maintain adequate liquidity. However, the emergence of instability in the financial system and a change in the lending policies of financial institutions could have an adverse impact on the Fujitec Group’s financial condition. Through ALM, financing is being carried out to minimize the impact of a rise in financing costs. However, a large rise in interest rates could have an adverse impact on the Fujitec Group’s business results.
The Fujitec Group is operating global production and procurement structures for mutually supplying products and components that are advantageous in terms of cost and quality, and works to minimize the adverse impact of exchange rate fluctuations on its business results. However, an unexpectedly rapid and large fluctuation in exchange rates could have an adverse impact on the Fujitec Group’s financial condition and business results.
The net asset value of “other securities with a fair market value” held by the Fujitec Group could decrease due to a decline in share prices, which could have an adverse impact on the Fujitec Group’s financial condition.
Under the Information Security Policy, the Fujitec Group promotes appropriate handling, storage, secure management and the prevention of leakage of such critical information assets as confidential information and customer information. However, in the event of unexpected disasters, an information system shutdown because of illegal access, communication failure and other reasons or an occurrence of information leakage, the resulting loss of business opportunities arising from a suspension of operations as well as the erosion of society’s trust could have an adverse impact on the Fujitec Group’s financial condition.
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