Maruha Nichiro Corporation

There is a risk that procurement prices will rise sharply due to raw material demand trends, exchange rate fluctuations, variations in fish catch volumes, and other factors. Inventory valuation losses may also occur, which could have a material impact on earnings. As countermeasures, the Group is promoting diversification of handled items, procurement sources, and procurement timing, maintaining appropriate procurement and selling prices, and optimizing inventory levels.

There is a risk that rising crude oil prices will increase fuel costs, shipping and delivery expenses, and other costs, putting pressure on earnings. The fisheries and food businesses are highly dependent on logistics costs, so the impact could be far-reaching. The Group addresses this through energy-saving equipment and efficient operations, improving storage and delivery efficiency through carton modularization, and optimizing inventory levels.

There is a risk that product supply could become impossible due to damage to production facilities, operational stoppages, or disruption of logistics functions caused by natural disasters such as earthquakes. In the aquaculture business, there is also a risk of farmed fish mortality due to fish diseases, typhoons, red tide, and similar factors. The Group addresses this through diversification and reorganization of production and storage sites, formulation of business continuity plans (BCP), participation in mutual aid and insurance programs, and research into disease-resistant fish and aquaculture methods.

There is a risk that labor shortages could lead to operational stoppages or reduced productivity, while at the same time there is an opportunity for business model transformation through the promotion of digital transformation (DX). Labor shortages in the food manufacturing industry are a structural challenge, raising concerns about medium- to long-term impacts on earnings. The Group addresses this through the use of digital technology, standardization of business processes, labor-saving through machinery, establishment of appropriate wage systems, and the use of career-track hiring.

There are concerns about leakage of personal or confidential information, system outages, response costs arising from cyberattacks, and a decline in social credibility. Cyber risk is on an increasing trend amid the progress of digitalization. The Group addresses this through the development of regulations and manuals, ongoing employee training, establishment of a system management framework, and incident response drills.

There is a risk that violations of legal regulations such as the Food Sanitation Act, the Warehousing Business Act, and the Antimonopoly Act could give rise to response costs and undermine the trust of all stakeholders. The food and fisheries industries are subject to a wide range of regulations, and the impact of violations could extend to the entire business. The Group addresses this through the development of regulations and manuals, ongoing employee training, and strengthening of the internal whistleblowing system and internal audit functions.

There is a risk that a financial crisis or similar event could deplete funds, or that failure to achieve plans due to various risk factors could necessitate additional fund-raising. The Group is promoting appropriate diversification of funding sources and maturities, maintaining and strengthening its financial position, improving capital efficiency through optimization of the cash conversion cycle (CCC), and diversifying fund-raising methods.

There is a risk that exchange rate fluctuations could affect the procurement prices of imported products and the yen-denominated translation of overseas subsidiaries' results, and that interest rate fluctuations could affect borrowing costs and the performance of overseas subsidiaries. The Group utilizes hedging instruments such as foreign exchange forward contracts and swaps from floating to fixed interest rates, while also maintaining and strengthening its financial position and diversifying fund-raising methods.

In overseas operations, there is a risk that changes in the political, economic, social, or legal systems of countries in which the Group operates, or the occurrence of terrorism, riots, or war, could disrupt supply chains or distribution networks. There are also concerns about the impact of changes in tariff policies in other countries on selling prices and procurement costs. The Group addresses this through appropriate diversification of countries of operation, strengthening information gathering, diversifying procurement sources through enhanced resource access, and considering a shift to domestically produced raw materials.

There is a risk that declining demand due to Japan's falling birthrate, aging population, and population decline could affect earnings, while there is also an opportunity to expand the customer base through appropriate market marketing. The Group addresses this by strengthening research and development capabilities and technological expertise, expanding its product lineup, and expanding overseas market development across the entire Group.