Among FURUNO Group’s business operations, accounting, etc., the points that may have a particularly strong influence on the decisions of investors are outlined below. Please note that those points that relate to the future are expectations based on information and data available as of the end of the most recent consolidated fiscal year.
Changes in the Market Environment
The Group sells products to a large number of countries and regions, and so the economic situation and changes in demand in these countries/regions may have a negative impact on the Group’s performance and financial situation.
Shifts in Exchange Rates
Around 60% of our sales are outside Japan, so the Group’s performance and financial situation are affected by shifts in the international currency exchange.
Although we make every effort to arrange exchange contracts in advance, etc., this may have a negative impact on the Group’s performance.
Regarding the consolidated financial statements, our sales figures, costs, etc. in each country’s local currency are calculated based on the JPY exchange rate. For this reason, the exchange rate at the time of calculation may have an impact on the figures shown in our financial statements.
Reliance on Marine Business
The Group’s Marine Business accounts for roughly 80% of our sales, and so we rely on it very heavily. Due to a reduction in resources available in the fishing market, which is the target of our Marine Business, global regulation of the fishing industry has become increasingly stringent. Additionally, the recreational boats market is affected by the economic situation in Europe and North America, as well as individual consumption trends. Due to western countries’ economies taking a downturn, or such factors as a stagnation in supply and demand of merchant ships and developments related to the increasingly regulated fisheries industry, there is a possibility of a contraction in the demand for marine equipment, which may have a negative impact on the Group’s performance and financial situation.
Intellectual Property Rights
In order to secure the superiority of its business, the Group actively pursues the protection of products and technologies it develops by means of intellectual property rights. However, there is a possibility of formal objections, claims of invalidity and so on in relation to the intellectual property rights held by the Group. Additionally, there is also the possibility, should we need to use a technology protected by the intellectual property rights of a third party, that we will be unable to acquire the necessary license, or that the only way we can acquire said license is by accepting unfavorable conditions. Furthermore, we cannot rule out the possibility that either the Group will be faced with a lawsuit relating to a third party’s intellectual property rights, or that we will be forced to pursue legal action to protect our own intellectual property rights. Such lawsuits can cost a large amount in legal fees, not to mention the possibility that we would be required to pay a large amount in damages, and such payments may have a negative impact on the Group’s performance and financial situation.
Price competition in the Group’s market has become extremely intense, and it is expected that this trend will continue going forward. By cutting down on production costs and selling products with high added value, we are handling the price drop trend as best we can, but with the emergence of new competitors and the putting of low-priced goods on the market by our competitors, etc., there is a possibility of the price competition growing even more extreme and this may have a negative impact on the Group’s performance and financial situation.
Securing of Human Resources
In order to promote growth and global expansion of our business operations, the Group is proactively engaged in hiring activities, but there is increasing competition in the race to secure sufficient human resources. Under these circumstances, in the event that we are unable to ensure that we do not lose employees or that we cannot secure the necessary human resources, the Group’s business plan execution, performance and financial situation may be negatively impacted.
In the event of a large-scale natural disaster such as an earthquake, a fire, or flooding, or a terrorist attack or cyberattack, the Group’s core facilities may be severely damaged, some of its operations may be required to cease, and our production and shipping may be delayed. There is also a possibility that repairing damaged facilities could incur massive costs. Consequently, the Group’s business plan execution, performance and financial situation may be negatively impacted.