Suzuki 2012 Annual Report Download - page 32

30 SUZUKI MOTOR CORPORATION
Financial review
(4) Fluctuations of exchange rates and interest rates
We export motorcycles, automobiles, outboard motors and related parts to various countries in the world from Japan. In ad-
dition, we export those products and parts from the overseas manufacturing plants to multiple other countries. Fluctuations of
exchange rates affect the management results and financial conditions of the Group as well as our competitiveness and the
performance and financial conditions of the Group.
Further, the exchange fluctuations will affect the price setting of the products sold by The Company in foreign currencies as well
as the price of the raw materials purchased. The ratio of the overseas sales has reached two thirds of consolidated sales for the
current consolidated fiscal year, and transactions in foreign currencies account for significant part. We take hedging measures
such as forward exchange contracts to reduce the risks of exchange-rates and interest-rates fluctuations, but it is impossible to
hedge every risk, and the yen appreciation against other currencies may adversely affect the performance and financial condi-
tions of the Group. On the contrary, the yen depreciation may result in opportunity losses.
(5) Government regulations
Various legal regulations are applied to the motorcycle, automobile and outboard motor industries in relation to the emission level
of emission gas, mileage, noises, safety and contaminated material emission level from the manufacturing plants. These regula-
tions may be revised, in many cases strengthened. Expenses to comply with these regulations may largely affect the perfor-
mance of the Group.
In addition, many governments determine the imposition of tariffs, price control regulations and exchange control regulations.
The Group is paying expenses to comply with these regulations and will expect to continue bearing them. We may pay more
expenses depending on the establishment of new laws or changes of existing laws. Further, unexpected changes or new ap-
plication of tax systems and economic measures of each country may adversely affect the performance and financial conditions
of the Group.
(6) Quality assurance
We place the top priority on the product safety and make efforts to establish the quality assurance system from development to
sales. We purchase insurance for the product liability, but there are risks not covered by insurance. The occurrence of large ex-
penses for a large-scale recall to ensure safety of the customers may adversely affect the performance and financial conditions
of the Group.
(7) Alliance with other companies
We conduct various alliance activities with automobile manufacturer around the world and other companies for research and
development, manufacturing, sales and finance, but factors that can not be controlled by the Group such as situations inherent
to the alliance partners may adversely affect the performance and financial conditions of the Group.
(8) Legal proceedings
We may become a party to lawsuits and other legal proceedings in the course of our business activities. In the case where any
judgments disadvantageous to us are made in such legal proceedings, they may adversely affect the performance and financial
conditions of the Group.
(9) Influences of natural disasters, wars, terrorism and strikes, etc.
The major manufacturing plants of the Group in Japan conduct manufacturing activities, located mainly in the Tokai region. In
addition, the head office and other facilities of The Company are also concentrated in the Tokai region. Any occurrences of Tokai
and Tonankai earthquake may largely affect the performance. We have taken various preventive measures such as quake-
resistant measures for buildings and facilities, fire preventive measures, establishment of business recovery plans, purchases of
earthquake insurances to minimize the influences of damage by such disasters.
We also conduct businesses around the world and are subject to number of risks relating to our overseas operations. Such risks
include political or social instability and difficulties, natural disasters, diseases, wars, terrorism and strikes. These unexpected
events may delay or suspend the purchase of raw materials and parts, manufacturing, sales of products, logistics and provision
of services. If such delay or suspension caused by any of these factors occur or prolong, they may adversely affect the perfor-
mance and financial conditions of the Group.
Further, there are various risks other than those mentioned above, and what have been stated in this section do not represent all
the risks of the Group.