Management Risks

The following matters related to business, accounting, and other factors concerning the Tsukishima Kikai Group have the potential to significantly impact decisions by investors.
Any forward-looking statements below reflect judgments made as of March 31, 2020.

1. Demand and market conditions

Results of the Water Environmental Business may be affected by fluctuations in public investment in facilities such as water purification plants and sewage treatment plants by local governments, the primary customers in this business.
Results of the Industrial Business may be affected by changing market conditions and associated trends in capital investment by major customers in industries such as chemicals, steel, and foodstuffs.

2. Risks related to business expansion overseas

Results of the Tsukishima Kikai Group’s overseas businesses may be affected by factors such as fluctuating exchange rates and crude oil prices, political unrest and systemic changes in individual nations, as well as terrorist activity, abrupt changes in economic conditions, and unanticipated amendments to laws, regulations, or taxation systems.

3. Accidents and disasters in facility construction and manufacture of equipment

Business results of the Tsukishima Kikai Group may be affected by accidents, incidents, or other unexpected developments at plants under construction or completed by the Group or at the manufacturing sites of individual devices.

4. The nature of the Group's businesses

The Tsukishima Kikai Group’s businesses are based on production to order. Due to various factors, actual production costs may differ from the costs estimated at the time quotations were provided when contracts are concluded. These factors include material procurement costs, demand and supply conditions, as well as outsourcing and other expenses that may lead to cost increases after order receipt.
Installation work may involve unforeseen additional costs due to factors such as design changes and modifications during construction.
At the same time, defects or other issues in products delivered or in plants designed and constructed may result in costs associated with repairs, remedial work or compensation to customers, as well as the possibility of litigation or other disputes such as compensation claims if customers or others sustain damages.
Any of the above may affect business results of the Tsukishima Kikai Group.

5. Stock price fluctuation

Business results of the Tsukishima Kikai Group may be affected by abrupt changes in market prices for shares and other investment securities held by the Company.

6. Retirement benefit obligation

Business results of the Tsukishima Kikai Group may be affected by fluctuations in the market value of the Group’s pension assets, changing conditions for investment yields, or changes in assumptions made when calculating retirement benefit obligations, such as discount rates.

7. Laws and regulation

The Tsukishima Kikai Group is subject to various laws and regulations, including the Construction Business Act, Product Liability Act, Measurement Act, and Waste Management and Public Cleansing Act.
While the Group makes every effort to comply with laws and regulations, business results of the Group may be affected by cases such as enhancement of laws or regulations or their unforeseen introduction or revisions.

8. Large-scale disasters

Earthquakes, floods, fire, snow damage, and other large-scale natural disasters or other disasters affecting Tsukishima Kikai Group production facilities, business sites, construction sites, or partner business facilities can impair or suspend production functions due to damage to production equipment or products or damage to lifeline infrastructure, etc. Business results of the Group may be affected by such events.