The following factors related to our business and accounting practices may materially influence investment decisions. The Company is endeavoring to establish a system for anticipating potential risks for the Group, preventing their occurrence, and promptly and appropriately dealing with them if they occur. Forward-looking statements contained herein are based upon assessments made by the Sekisui Chemical Group at the end of consolidated fiscal year 2016.
1) Foreign Currency Fluctuations
Exchange rates may affect the value of the Group’s overseas assets held in foreign currencies when converted into yen. The Group employs hedging strategies as needed in response to currency fluctuations. However, the business results and the financial position of the Group may be affected if the exchange rates diverge significantly from the forecasted levels.
2) Raw Material Price Volatility
The Group’s business results and financial position may be affected in the event that the Group, especially the High Performance Plastics Company and the Urban Infrastructure & Environmental Products Company, is unable to transfer changes in prices of polyvinyl chloride, olefin, steel, or other raw materials to product prices in a timely manner and is unable to maintain sufficient margin.
3) Overseas Business Activities
Unforeseeable changes in laws and regulations, fragility in the industrial base, and social or political turmoil such as terrorism, war, or other factors may affect the Group’s overseas business activities. The emergence of such risks may disrupt the Group’s overseas business activities, which would affect the business results and future plans of the Group.
4) Housing Related Tax and Interest Rate Trends
The Group’s housing-related businesses are affected by domestic taxes and consumption taxes on house purchases and by interest rate trends. These trends may impact our housing-related businesses and affect the Group’s business results and financial position.
5) Electronics Market Trends
The electronics industry, a market for the Group's High Performance Plastics Company, is characterized by severe fluctuations in demand. A rapid drop in demand within a short period could affect the Group’s business results and financial position.
6) Trends in Public Works
The Group’s Urban Infrastructure & Environmental Products Company includes products used in the public sector. Trends in public works therefore influence the Company’s business performance. Public investment is determined by government policy at the national and local levels, and decisions to reduce public investment may impact the Group’s business performance and financial position.
7) Industrial Accidents and Disasters
A fire, explosion, or other industrial accident at one of the Group’s facilities that causes a major impact on the Group’s business capability and on the local community could damage society’s trust in the Company and incur response costs, including compensation costs directly related to the accident, business opportunity costs from the stoppage of production activity, and compensation costs from payments to customers. Such an event may affect the Group’s business results and financial position.
8) Intellectual Property and Product Liability
In the event that a dispute arises concerning the Group’s intellectual property, the dispute resolution may not be favorable to the Group. The discovery of defects in the Group’s products may require large-scale product recalls and compensation for damages. The possibility exists that insurance may not be able to cover associated costs, which could impact the Group’s business results and financial position.