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Risk Management

Management considers the following to be the principal risks that could materially affect investors’ decisions, based on their likelihood of occurrence, potential impact, and other factors, in relation to the Group’s business operations and financial position described in this Annual Securities Report (submitted on June 18, 2026).

The following terms are used in the tables for “1. Main External Risks” and “2. Main Internal Risks.”

Items marked with an asterisk: Issues designated as UACJ materiality issues

Risk details and impacts
Specific details of each risk and the principal impacts expected on the Group’s businesses if the risk materializes

Opportunities: Potential opportunities for the Group’s businesses among the identified impacts
Threats: Potential threats to the Group’s businesses among the identified impacts

Actions: Key measures to address the relevant risk

1. Main External Risks

Climate change and other changes in the global environment*

Risk details and impacts			Actions
	Threats	The Group could lose business opportunities, and its products could become less competitive against alternative materials if its efforts to reduce greenhouse gas (GHG) emissions, a major driver of climate change caused by global warming, are insufficient.	Management review and deliberation, through the cross-functional Environmental Committee, of targets, initiatives, and performance, is ongoing. Action plans and KPIs are in place for three materiality issues—leading a circular economy in aluminum, taking measures to address climate change, and supporting environmental health and nature (nature positive), and related initiatives continue. The Group actively participates in third-party climate initiatives, including the GX League, and has obtained certification from the Aluminium Stewardship Initiative (ASI). It has also begun preparations to align with ISSB standards and is considering measures for transitioning to an emissions trading scheme following the implementation of the GX Promotion Act. The Group has declared its commitment to carbon neutrality and is expanding the operation and recipient base of environmental assurance (mass-balance) programs, with efforts underway to address the Carbon Border Adjustment Mechanism (CBAM).
Opportunities		The Group could expand business opportunities and contribute to solving social challenges by providing products and services that leverage the beneficial properties of aluminum, including its light weight, high thermal conductivity, and ability to be recycled indefinitely.

Changes in government policies, economic trends, and geopolitical risks

Risk details and impacts			Actions
	Threats	The Group could incur higher selling, logistics, and procurement costs, or face procurement difficulties and challenges in continuing operations if political and economic conditions change, regulations are abruptly changed, or public order deteriorates in countries where its customers, suppliers, and production sites are located.	The Group procures raw materials and other inputs from diverse suppliers to avoid overdependence on specific countries and regions. Sufficient inventories of necessary materials are maintained, and multiple alternative manufacturing sites are considered. Measures are continually implemented to improve the Group’s ability to effectively respond to changes in the external environment, such as reducing the break-even point. The Group has established pricing systems that enable it to pass on cost increases and market price fluctuations through to selling prices. The Group has stepped up efforts to monitor political and economic trends in Japan and overseas.
	Threats	Conflicts or other disruptions in countries where the Group operates could affect employee safety.

Spread of infectious diseases

		Actions
Threats	The spread of an infectious disease could affect the Group’s purchasing and procurement from suppliers.	Infectious disease business continuity plans (BCPs) are reviewed periodically. Sufficient inventories of necessary materials are maintained. Customer information is collected at an early stage, and production plans are developed flexibly.
Threats	Changes in customer operating conditions resulting from the spread of an infectious disease could affect the Group’s manufacturing operations and sales.
Threats	The spread of an infectious disease could lead to delays, suspensions, or stoppages of the Group’s operations.
Threats	Increased virulence of an infectious disease could affect the lives of employees.

Natural disasters

Risk details and impacts			Actions
	Threats	The Group’s manufacturing operations and sales could be impacted if a natural disaster, such as an earthquake, tsunami, typhoon, or flood, threatens the safety of its employees and their families or the operations of production facilities at one of its workplaces around the world, or damages infrastructure or facilities operated by its customers or suppliers.	Progress is being made to establish business continuity plans at the business and site levels, and business continuity management is continually strengthened on a group-wide basis. Response policies for Nankai Trough Earthquake Extra Information have been established and shared with customers. Periodic drills are conducted to ensure the effectiveness of business continuity management. Redundant communication channels are maintained for emergencies.

Changes in foundational technologies and demand structures

Risk details and impacts			Actions
Opportunities	Threats	Demand for the Group’s products could shift significantly due to rapid advances or changes in digital and other foundational technologies, or growing expectations for corporations to protect the global environment.	DX promotion projects continue to advance the digital visualization and automation of core business processes in manufacturing, sales, and management, while also focusing on the development of digitally skilled personnel. New business opportunities continue to be identified through the internal venture program, which is driven by proposals originating from frontline operations. Cross-organizational initiatives in Group priority areas continue to develop new businesses aligned with changes in demand structures. The Group is continuously studying and evaluating the comparative advantages of its products and their competitiveness with other materials in various markets, as well as changes in demand on a broader societal level and its progress in developing technologies that can address these shifts in demand. Sales expansion and promotional activities for aluminum products in new fields and applications continue under the “ALmitas+” brand, together with expanded sales of the environmentally conscious “ALmitas+ SMART” product line. The Group continues to collect, analyze, and monitor market trends.
Opportunities	Threats	Competition could intensify due to technological innovations, and demand structures could change if aluminum is replaced by alternative materials.

Abrupt changes in the market

Risk details and impacts			Actions
Opportunities	Threats	Changes in virgin aluminum ingot prices: Although most of the Group’s businesses have established pricing systems that reflect market fluctuations in selling prices, thereby mitigating the impact of medium- to long-term changes in virgin aluminum ingot prices on earnings, accounting profit or loss for a reporting period may be affected by changes in inventory valuations if aluminum market prices fluctuate sharply over a short period or if there is a timing difference between market price movements and their reflection in selling prices.	Inventory levels are effectively controlled through more accurate sales forecasting. The Group has introduced pricing systems that respond flexibly to fluctuations in supply and demand and to prices of raw materials such as scrap, UBCs, and metals used in aluminum alloys, and that promptly reflect price changes in logistics costs and energy prices. Funding sources are diversified and financing flexibility is maintained in anticipation of rising interest rates, while efforts continue to reduce working capital. The Group continues to collect, analyze, and monitor market trends. Efforts to promote the environmental value of aluminum, including its high recyclability, to customers and society are being strengthened.
Opportunities	Threats	Changes in scrap and UBC prices: Fluctuating recycling demand could affect the prices and procurement of aluminum scrap and UBCs (used beverage cans).
	Threats	Fluctuations in raw material prices, including alloying metals, logistics costs, and energy prices: Significant short-term fluctuations in these prices and costs, as well as volatility stemming from chronic, structural supply chain issues, could have a significant impact beyond the Group’s capacity to absorb them on its own.
Opportunities	Threats	Exchange rate and interest rate fluctuations: In particular, exchange rate fluctuations could affect operations at sites with a high proportion of product exports. In addition, rising interest rates could impact the Group’s operations in Japan and overseas.

2. Main Internal Risks

Occupational health and safety

Risk details and impacts			Actions
	Threats	A workplace accident or illness could cause harm to employees and damage to physical property.	Management review and deliberation through the Health and Safety Committee is ongoing. Health and safety policies have been established and are continuously updated to address current issues. Health and safety related rules have been put in place and training is carried out on an ongoing basis. Safety and compliance have been designated as basic principles of the UACJ Way, a set of guidelines for all employees, while occupational health and safety remains the top priority in business activities. Management resources continue to be allocated and countermeasures taken to eliminate hazards in the workplace, including fire and explosion risk assessments. Safety measures using digital technology are promoted. The establishment of a safety training center is under consideration (operations commenced in April 2026).
	Threats	A workplace disaster could interfere with the Group’s manufacturing operations.

Environmental considerations

Risk details and impacts			Actions
	Threats	Occurrence of an environmental accident, such as the leakage of environmentally hazardous substances into wastewater or the emission of air pollutants.	Management review and deliberation through the Environmental Committee is ongoing. An environmental policy has been established, and initiatives to address issues at each manufacturing site are routinely implemented. Internal environmental regulations have been established and training is provided on an ongoing basis.

Product quality assurance

Risk details and impacts			Actions
	Threats	The Group could lose the trust of its customers and other stakeholders if its quality assurance activities are carried out fraudulently or improperly.	Management review and deliberation through the Quality Committee is ongoing. A quality assurance policy has been established and related measures are routinely executed. Internal quality regulations are maintained. Basic quality training courses for Group employees have been launched. The Group continues to expand the use of automated quality verification tests. Mutual quality audits continue to be conducted across the Group. The UACJ Quality Assurance Guidelines, which incorporate customized audits by external experts to ensure the reliability of test and inspection data, are in place.
	Threats	Producing or selling products that do not meet quality specifications could inconvenience customers, disrupt the market, and lead to an inability to fulfill supply obligations.
Opportunities		The Group can earn greater trust from customers and a stronger market reputation by implementing stricter quality controls.

Human resources

Risk details and impacts			Actions
	Threats	In Japan, the recruitment of talented personnel is increasingly competitive due to the declining birth rate and aging population.	Management review and deliberation through the Human Resources Development Committee is ongoing. Human resources continue to be a company-wide priority. The committee responsible for reviewing human resource development discusses organizational and systematic succession planning and human resource development plans on an ongoing basis. The Group is enhancing training programs for passing down manufacturing skills in the workplace, including its Monozukuri Gakuen program. Internal recruitment systems are being used to effectively assign employees, and personnel recruitment is carried out on an ongoing basis through various systems, including programs for hiring local talent, broadening recruitment channels, retaining employees, and promoting the success of women in the workplace. Human resource portfolios are being visualized, and recruitment and development initiatives are being enhanced to address future workforce needs. The Group is further enhancing training programs, including its Monozukuri Gakuen program, to facilitate the transfer of skills and technical expertise among shop-floor employees and staff.
Opportunities	Threats	Increasingly advanced skills are needed for expanding business internationally.
Opportunities	Threats	The effective deployment of human resources is critical for the success of the Group’s businesses.
	Threats	Employee turnover could affect the Group’s ability to retain talented personnel.

Respect for human rights*

Risk details and impacts			Actions
Opportunities	Threats	The Group’s promotion of respect for human rights in its workplaces around the world could succeed or fail depending on social and cultural factors in each respective country.	Management review and deliberation through the Compliance Committee is ongoing. Action plans and KPIs are in place for respect for human rights as a materiality issue, and related initiatives continue. Human rights due diligence under the UACJ Group Human Rights Policy is conducted on an ongoing basis. The UACJ Group Sustainable Procurement Guidelines are applied as part of supplier management.
	Threats	Insufficient human rights initiatives throughout the supply chain could lead to a loss of trust among stakeholders, social sanction, or lawsuits.

Diversity and equal opportunity*

Risk details and impacts			Actions
	Threats	Inadequate diversity and equal opportunity in the workplace could result in a loss of trust among stakeholders or social sanctions.	Ongoing management review and deliberation through the Human Resources Development Committee (same committee as described in the Human Resources section). Ongoing implementation of action plans and KPIs for diversity, equity, and inclusion (DE&I) as a materiality issue. Continued employee engagement surveys and implementation of engagement improvement initiatives. Raising employee awareness of the DE&I Promotion Statement. Global dialogue sessions to promote the corporate philosophy and hear employees’ views. Continued implementation of workplace reform initiatives. Targets for the percentage of women among mid-career and new graduate hires and in management positions. Targets for the percentage of foreign nationals among newly hired graduates. Promotion of the hiring of people with disabilities through the special subsidiary system. Utilization of older employees through the post-retirement reemployment program. Expansion of training programs in Japan for overseas local employees. Continued mid-career hiring and comeback hiring. Ongoing career interviews and various training programs to help employees with career development. Measures to improve employee work-life balance.
Opportunities	Threats	Diversity and inclusion in the workplace: Inadequate diversity and inclusion could lead to difficulties in retaining and recruiting employees, an inability to attract diverse talent, and a loss of competitiveness due to slow and insufficient responses in times of volatility, uncertainty, complexity, and ambiguity (VUCA). Conversely, effective diversity and inclusion could revitalize business activities, stimulate future-oriented innovation, and contribute to business resilience.

Compliance

		Actions
Threats	The Group could lose business opportunities if, due to a violation of laws or regulations, it becomes subject to criminal penalties, administrative sanctions, or liability for damages, resulting in a loss of credibility.	Management review and deliberation though the Compliance Committee is ongoing. Subcommittees at UACJ and Group companies continue operating as forums for sharing information on issues discussed, directed, and reported by the Compliance Committee, as well as for promoting the implementation of such matters throughout the Group. All employees are informed that safety and compliance are the Group’s highest priorities and are offered a wide range of training programs, including ongoing training on relevant laws and regulations, education on the UACJ Group Code of Conduct, anti-harassment training, and role-based continuing education. Internal whistleblowing channels are communicated to employees, and their improvements to their operation continue. Legal compliance is verified through internal operational audits on an ongoing basis.
Threats	Compliance with new laws, regulations, and systems could incur additional costs.
Threats	Various forms of harassment could damage the Group’s credibility.

Group-wide corporate governance

Risk details and impacts			Actions
Opportunities	Threats	The Group’s ability to fully leverage its collective strengths could be adversely affected by insufficient penetration of important Group-wide initiatives and inadequate integrated management of domestic and overseas Group sites.	The Group’s corporate philosophy is communicated to all employees. Internal controls are continually strengthened across the Group. Continued dialogue sessions between Group employees and management, including the Representative Director, President. Internal control audits and operational audits are conducted on a routine basis. The review and organization of UACJ’s internal rules and regulations is ongoing.

Information management

		Actions
Threats	The Group could incur liability for damages and lose credibility and business opportunities if information in its possession is leaked or stolen, such as customer data, personal information, trade secrets, and technological information.	Continued strict management of information based on the Group Information Security Basic Policy, Group Information Management Rules, Group Electronic Information Security Rules, and Group Technical Information Management Rules. Ongoing assessments and measures to enhance security levels in accordance with the Cybersecurity Management Guidelines issued by the Ministry of Economy, Trade and Industry and the Innovation Platform Agency, Japan. Expansion of external monitoring systems and internal detection systems, and acquisition of cyber insurance coverage. Provision of information security training. Commencement of operation of the Group Information Management Guidelines.
Threats	A cyber-attack on the Group could cause a suspension of operations due to a stoppage of information systems, and costs for system restoration and related measures could be incurred.
Threats	Inadequate responses to increasing requirements for enhanced information management under economic security-related laws and regulations.

Financing

Risk details and impacts			Actions
	Threats	Financing constraints and increases in financing costs due to changes in business and financial conditions.	Financing methods have been diversified through committed credit lines with banks, long-term funding to ensure funding stability, and asset finance. Measures are taken to enhance cash flow generation through improvements in business profitability and capital efficiency.

3. Risks Related to Accounting Valuation and Estimates

Impairment of non-financial assets

Regarding the impairment of non-financial assets such as property, plant and equipment, goodwill, and intangible assets recorded in the Group’s consolidated statement of financial position, if the recoverable amount falls below the carrying amount due to a decline in profitability or changes in fair value, an impairment loss may be incurred. This could have a significant impact on the Group’s operational results and financial position.

The risks described herein could significantly impact the UACJ Group’s operational results and financial position should they materialize, but not all such risks are listed. Other risks unforeseen at the time of preparing this report could also materialize and significantly affect the Group’s operational results and financial position. Furthermore, while the Group has established the management system and prepared countermeasures for the risks described herein, it might not be able to achieve the intended outcome of those countermeasures in the future.

Unless otherwise stated, the forward-looking statements herein are based on judgments made as of the end of the fiscal year under review.

Some of the information posted on our website contains references to future results. The posting of such information does not constitute a guarantee of future results, and the information is subject to risk and uncertainty. Please be aware of the possibility of different future results caused by changes in the environment or similar factors.

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Risk Management