Suzuki 2015 Annual Report Download - page 29

SUZUKI MOTOR CORPORATION 27
Risks in Operations
(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 addition, we
export those products and parts from the overseas manufacturing plants to multiple other countries. Fluctuations of exchange rates
may adversely aect the performance and nancial conditions of The Group as well as our competitiveness.
Further, the exchange uctuations will aect 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 about 60 percent of consolidated sales for the current
consolidated scal year, and transactions in foreign currencies account for signicant part. We take hedging measures such as forward
exchange contracts to reduce the risks of exchange-rates and interest-rates uctuations, but it is impossible to hedge every risk, and
the yen appreciation against other currencies may adversely aect the performance and nancial conditions of The Group. On the con-
trary, 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 regulations may
be revised, in many cases strengthened. Expenses to comply with these regulations may largely aect the performance of The Group.
In addition, many governments determine the imposition of taris, 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 de-
pending on the establishment of new laws or changes of existing laws. Further, unexpected changes or new application of tax systems
and economic measures of each country may adversely aect the performance and nancial conditions of The Group.
(6) Quality assurance
We place the top priority on the product safety and make eorts to establish the quality assurance system from development to sales.
We buy insurance for the product liability, but there are risks not covered by insurance. The occurrence of large expenses for a large-
scale recall to ensure safety of the customers may adversely aect the performance and nancial conditions of The Group.
(7) Alliance with other companies
We conduct various alliance activities with automobile manufacturer around the world and other companies such as for research and
development, manufacturing, sales and nance, but factors that cannot be controlled by The Group such as situations inherent to the
alliance partners may adversely aect the performance and nancial 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 judg-
ments disadvantageous to us are made in such legal proceedings, they may adversely aect the performance and nancial conditions
of The Group.
(9) Inuences 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 oce and other facilities of The Company are also concentrated in the Tokai region. Any occurrences of Tokai and Tonankai
Earthquake may adversely aect the performance and nancial condition of The Group largely. We have taken various preventive mea-
sures such as quake-resistant measures for buildings and facilities, re preventive measures, establishment of BCP (Business Continuity
Plan), purchases of earthquake insurances to minimize the inuences 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 diculties, 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, and provision of logistics and services. If such
delay or suspension caused by any of these factors occur or prolong, they may adversely aect the performance and nancial condi-
tions 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.