Business Risks

Of the business and accounting circumstances described in the marketable securities report, the following information could have an important impact on investor decisions.

Note that indications about the future reflect the Shimadzu Group's judgment as of the end of the current consolidated fiscal year.

(1) Disasters or Accidents

To be prepared in the event of an earthquake, fire, or other disaster, the Shimadzu Group implements disaster countermeasures, equipment inspections, and so on. However, if a fire, earthquake, or other natural disaster occurs, it could significantly impact Shimadzu Group financial results and financial status, due to human or property losses, interruption of business operations, or other factors.

(2) Market Trends in and Outside Japan

About 50 % of consolidated net sales for the Shimadzu Group are from within Japan, which can be significantly impacted by domestic government policies, economic trends, capital investment trends, and other factors in Japan. Furthermore, Shimadzu Group products and services are sold throughout the world, so local economic or capital investment trends in respective regions might also affect Shimadzu Group results or financial status.

(3) Impact of Exchange Rate Fluctuations

Shimadzu Group businesses involve products manufactured and sold throughout the world, with about 50 % of consolidated net sales occurring outside Japan. Therefore, the exchange rate used to convert financial results into yen could affect value. Though efforts are made to minimize such impacts through foreign exchange contracts, for example, exchange rate fluctuations could nevertheless potentially impact Shimadzu Group results and financial status.

(4) Business Activities Outside Japan

As part of our business strategy, the Shimadzu Group is currently expanding business operations in markets outside Japan in order to increase sales revenue, reduce costs, and improve profitability. However, business activities outside Japan can involve unexpected changes in laws or regulations, vulnerabilities in the industrial base, terrorism, war, or other factors with a risk of social or political disruption, which could potentially impact Shimadzu Group results and financial status.

(5) Intellectual Property Rights

Given the Shimadzu Group's effort to acquire intellectual property rights useful for current business activities or for deploying businesses in the future, we regularly investigate the intellectual property rights of other companies to prevent any problems from occurring, but if a dispute about intellectual property rights occurs with another company, it could potentially impact Shimadzu Group results and financial status.

(6) Product Defects

The Shimadzu Group implements the best possible quality control practices for products and services in an effort to maintain trust, but unanticipated defects or a recall could potentially occur. If a defect or other problem with Shimadzu Group products or services occurs, it could potentially impact Shimadzu Group results and financial status.

(7) New Product Development Capabilities

Shimadzu Group businesses require a high level of specialized expertise and sophisticated technical capabilities. Therefore, given the large investments in product development, delays in commercializing new technologies or failing to develop new products that match market needs, could decrease future growth and profitability, which could potentially impact Shimadzu Group results and financial status.

(8) Procurement Risks

Though we keep a certain amount of raw materials and other supplies in stock, if the supply of certain parts is delayed and a substitute procurement source cannot be secured, or if procurement costs increase sharply, it could result in lost opportunities or decreased profit margins of products, for example, which could potentially impact Shimadzu Group results and financial status.

(9) Laws and Regulations

The Shimadzu Group is committed to obtaining applicable permits and licenses and complying with applicable regulations required by various laws, regulations, or governments in and outside Japan. Nevertheless, an inadequate understanding of such laws and regulations or difficulty appropriately complying with an unexpected change in such laws or regulations might be treated as a violation of the various laws or regulations. That could result in a fine, penalty, or other financial loss, business suspension, or some other government action that could potentially impact Shimadzu Group results and financial status.

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