Mitsui DM Sugar Co., Ltd.

In the event of a significant quality problem, there is a possibility of impact on business performance and financial position, including loss of customer trust, decline in sales, production suspension, product recalls, and increased costs for control enhancement. The company seeks to prevent such incidents and minimize damage through the operation of management systems obtained via ISO, FSSC, and other standards, strengthening of food defense, and regular implementation of quality incident response training.

With the sugar business accounting for the majority of sales, if changes in government agricultural policy or developments related to EPAs, FTAs, and TPP result in the import of inexpensive overseas products or refined sugar, there is a possibility of decreased sales and impairment risk on fixed assets. Domestic sugar consumption is on a gradual decline due to population decrease and diversification of sweetener demand, indicating a high degree of structural vulnerability in the business. The company seeks to diversify the impact of domestic policy changes through expansion of overseas sugar businesses in ASEAN, China, and the Middle East, and diversification of raw sugar procurement routes.

Imported raw sugar is a foreign currency-denominated commodity, and market conditions can fluctuate significantly due to exchange rate movements, rising energy prices, geopolitical risks, and weather conditions and sugarcane growth in Brazil, Thailand, Australia, and other regions. If fluctuations in the purchase prices of raw sugar and raw materials cannot be appropriately reflected in product prices, or if there is a time lag in price revisions, there is a possibility of impact on business performance and financial position, such as an increase in the cost ratio. The company addresses this through thorough risk management based on internal rules and timely and appropriate price reflection.

If damage to production facilities such as factories or impacts on raw material procurement occur due to the intensification of weather-related disasters, there is a possibility of impact on business performance and financial position, such as a decline in sales. Given the substantial energy consumption in the manufacturing, processing, and sales processes, transition risks toward a low-carbon society, such as the introduction of a carbon tax, are also recognized as an important issue. The company promotes climate change response based on the TCFD recommendations and conducts detailed analysis and disclosure.

In domestic and overseas business investments and M&A, if disruptions occur to the business operations of target companies due to the emergence of contingent liabilities, sudden changes or abolition of policies and systems in various countries, or the materialization of geopolitical risks, there is a possibility of impact on business performance and financial position. Goodwill and intangible fixed assets recorded in connection with investments carry the risk of requiring impairment treatment if the future earning capacity of the target business declines. The company strives to enhance business value through detailed due diligence, decision-making at the Board of Directors, and dispatch of management personnel and regular management oversight after investment.

If it becomes difficult to secure and develop the necessary human resources domestically and internationally as planned due to intensifying competition for talent in the labor market, there is a possibility of impact on business performance and financial position. Against a backdrop of proactive business investment promotion, a shortage of specialized personnel poses a risk of directly hindering the execution of growth strategies. The company seeks to secure and retain human resources through prioritizing labor safety and health, improving employee engagement, and promoting diversity, equity and inclusion.

Large-scale natural disasters such as earthquakes, typhoons, and heavy rainfall may make it difficult to procure raw sugar and produce and distribute products, and if demand declines due to behavioral restriction policies accompanying the spread of infectious diseases, there is a possibility of impact on business performance and financial position. Since the company operates businesses both domestically and internationally, there is also a risk that multiple locations could be affected simultaneously by a disaster. The company addresses this through BCP formulation, regular review, and training implementation, as well as establishing a production continuity system under advanced hygiene standards.

If core systems are shut down due to increasingly sophisticated and malicious cyberattacks exploiting vulnerabilities in the supply chain, there is a risk of extensive disruption to business activities. If a leak of personal information or confidential information occurs, it could result in a loss of social trust and claims for damages, potentially having a significant impact on business performance and financial position. The company addresses this through unauthorized access countermeasures, malware countermeasures, development of authentication and authorization infrastructure, employee training, promotion of cyber BCP formulation, and strengthening security management across the entire supply chain, including outsourcing partners.