FEED ONE CO.,LTD.

Imported raw materials for compound feed, such as corn and soybean meal, can fluctuate significantly due to grain market conditions, exchange rates, ocean freight rates, and geopolitical risks. In the event of sharp fluctuations, the company may be unable to pass raw material cost increases on to feed prices, potentially deteriorating profit margins. In addition, increases or decreases in reserve funds borne by compound feed manufacturers under the Compound Feed Price Stabilization System (recorded as selling, general and administrative expenses) may also affect business performance.

The company has livestock and animal product production companies among its consolidated subsidiaries and affiliates, and outbreaks of diseases such as CSF (classical swine fever) or avian influenza could result in large-scale disposal of products or suspension of sales. Disease outbreaks among livestock and aquaculture producers could also adversely affect the manufacturing and sale of compound feed, and there is a risk that deteriorating management conditions at sales destinations could give rise to receivables collection problems or demands for the fulfillment of guarantee obligations. In response, the company is strengthening its disease prevention system centered on a team of veterinarians.

Climate change and natural disasters may cause raw material price increases, damage to manufacturing plants, and reduced livestock and fisheries productivity, and in addition, tightening of policies and regulations such as the imposition of carbon taxes could affect business activities and performance. In livestock farming, rising heat may reduce livestock feed intake and reproductive capacity, while in aquaculture, rising seawater temperatures may increase mortality rates among farmed fish and lead to feeding restrictions, potentially resulting in decreased feed sales volumes. In response, the company is promoting research into the use of alternative raw materials and providing products and technologies that help maintain productivity under high-heat and high-water-temperature conditions.

There is a risk that cyberattacks such as targeted attack emails, phishing, unauthorized access, and ransomware could cause information system failures or leaks of internal information. If such risks materialize, they could lead to reduced revenue due to loss of trust and damages claims, potentially affecting business activities. In response, the company is strengthening access control systems and conducting employee training such as targeted email drills.

If the spread of a new strain of influenza or emerging/re-emerging infectious diseases increases infections and absences among employees, it could hinder normal business operations and affect the supply of products and food. In particular, feed plants face the risk of production suspension for a certain period. In response, the company has established response policies and action guidelines, is promoting remote work and staggered work hours, and is reviewing its BCP (business continuity plan).

There is a risk that production at feed manufacturing plants could be halted due to unforeseen causes or large-scale disasters. In particular, plants located in coastal areas raise concerns about building and machinery collapse from major earthquakes, or submersion and damage from tsunamis. In response, the company is promoting job rotation, establishing systems to confirm employee safety, conducting disaster prevention drills by in-house firefighting teams, and strengthening mutual support and cooperation between plants.