Fuji Nihon Corporation

The sugar business is operated based on laws and regulations such as the "Act on Price Adjustment of Sugar and Starch," and changes in the government's domestic agricultural policy or trade policies of various countries could directly affect performance. The company works to reduce this risk through information gathering via membership in industry associations and regular internal study sessions.

If the domestic food products market were to shrink or transform to an unexpected extent due to changes in consumer purchasing behavior stemming from the declining birthrate, aging population, and shifting food preferences, this could affect performance. Since the company's core business is manufacturing and selling food products domestically, it has high sensitivity to changes in market structure.

The sugar business depends on overseas imports for the majority of its raw sugar materials, and procurement prices fluctuate due to changes in raw sugar market conditions, ocean freight rates, exchange rates, and ethanol demand, thereby affecting performance. Due to the cost structure, fluctuations in raw material procurement costs directly impact profitability, presenting an inherent risk.

Refined sugar production is entirely outsourced to other companies, and if the outsourcing partner experiences technical or regulatory issues, or disasters such as fire or earthquake, this could halt product supply and significantly impact performance. The company has established a system in which directors concurrently serve at key outsourcing partners and receive regular reports on factory operating status and equipment renewal status.

As of the end of the consolidated fiscal year, the company holds ¥7,202 million in other securities with market value, and fluctuations in stock market prices could affect performance through valuation gains and losses. The company has formulated a basic risk management policy and established a reporting system for management status to reduce this risk.

The company has applied the "Accounting Standard for Impairment of Fixed Assets" since FY2006 (ended March 2006), and impairment losses may occur and affect performance if land prices decline or if profitability deteriorates in any of its businesses. There is a risk that the scale of losses could expand if deterioration in the business environment occurs simultaneously across multiple businesses.

The company operates in multiple overseas locations including Thailand, and in addition to exchange rate fluctuation risk, there is latent country risk such as unexpected changes in laws and regulations or deterioration of political and economic conditions. The company strives to minimize risk through strengthened cooperation with overseas local subsidiaries and hedging via forward exchange contracts.

The company has a high degree of dependence on various IT systems, and there is a risk of business disruption due to external factors such as system defects or computer viruses. The company also holds a large amount of information including personal data, and if an information leak were to occur, this could affect performance through a decline in social trust. The company has established a system for rapid recovery through data backups and cloud-based systems.

If demand were to change abruptly due to abnormal weather, unfavorable weather conditions, or sudden changes in the market environment including overseas legal reforms, inventory could become slow-moving, affecting the financial position and business results. The company is promoting countermeasures such as merchandising that takes into account market conditions and shortening production lead times through cooperation with suppliers.

Amid the rapid diversification of the employment environment, if it becomes difficult to prevent the departure of capable personnel or to secure and develop new talent, this could affect performance through a decline in the competitiveness of each business. The company aims to build a highly productive organization through personnel system reforms that enhance job specialization, promote the active appointment of younger employees, and expand diversity in work styles.