Business and Other Risks
We recognize the following as major risks that may affect our Group's business performance, share prices, financial standing, etc. Any descriptions of future events in the statements below are expectations based on information and data available as of the end of the most recent consolidated fiscal period.
Changes in product markets
Major customers of the Industrial Business come from the energy, petrochemical, and electric power industries. A decline in demand or intensifying competition in these industries may have adverse effects on our Group's performance and financial standing. The majority of the Aerospace Business' customers are from the aircraft industry. If any event that has a serious effect on the aircraft demand, such as the 9/11 attacks, occurs, it may have adverse effects on our Group's performance and financial standing.
Health insurance regulations
The Medical Business supplies products primarily to medical markets such as dialysis-related markets and is subject to health insurance regulations. Therefore the markets and prices of Medical Business products are directly or indirectly affected by such regulations. In the event that a market downturn or a decline in prices occurs due to future regulatory trends, it may have adverse effects on our Group's performance and financial standing.
Our Group operations involve foreign-currency-denominated sales, purchases, assets, and liabilities (including those posted by our overseas subsidiaries), which are translated into yen on our consolidated financial statements. The U.S. dollar and euro are the primary foreign currencies we use. Changes in the exchange rates of these currencies may have adverse effects on our Group's performance and financial standing. In overall Group operations, foreign-currency-denominated sales exceed foreign-currency-denominated purchases, and foreign-currency-denominated assets exceed foreign-currency-denominated liabilities. Therefore the yen's appreciation against these currencies may have adverse effects on our Group's performance and financial standing.
As we sell more products overseas, we are producing more outside Japan. Our industrial division produces pumps mainly in Germany and the U.S. along with some other products in China, Taiwan, and other locations outside Japan. Some aircraft parts are produced in Vietnam. The medical division produces blood tubing lines, which are consumables, in Vietnam and Thailand and some dialysis machines at a joint venture in China. Changes in the laws and regulations of these countries or changes in local political or economic factors may affect the normal operation or production activity of our subsidiaries and may have adverse effects on our Group's performance and financial standing.
We acquire or invest in business companies in Japan or overseas with an eye to enhancing the product portfolio, technology, sales channels, etc. of our existing businesses or gaining new businesses. We believe that strengthening our business foundation through such acquisitions and investments will enhance our growth potential, but if an acquisition or investment significantly fails to deliver results, it may have adverse effects on our Group's performance and financial standing.
In addition to the above, a global economic downturn, conflict, major natural disaster, or other event, significantly affecting the environment in which our Group operates, may have adverse effects on our Group’s performance and financial standing.