MEITO CO., LTD.

The main raw materials of the food business are agricultural products, and procurement costs may increase due to fluctuations in harvest volumes of imported raw materials, market price surges, and exchange rate movements. Packaging materials (petroleum products) and energy costs (electricity and gas charges) may also rise due to market trends, potentially affecting business performance. As countermeasures, the Group secures several months' worth of inventory through long-term purchasing and diversifies risk through procurement from multiple suppliers, while also working to improve its earnings structure through changes in product content volume and price revisions.

In the food business and chemical products business, recalls or disposal of products may occur due to causes attributable to business partners or unforeseen quality problems, potentially forcing a decrease in net sales or extraordinary losses. As countermeasures, the Group maintains product liability insurance, has established a food accident crisis management manual through the Food Accident Prevention Committee, and has clarified procedures to minimize damage in the event of an accident.

Sales in the food business may be affected by weather conditions such as extremely hot or cool summers, and if a large-scale natural disaster occurs, it could adversely affect business performance and financial condition. As countermeasures, the Group has taken out insurance and formulated a basic business continuity plan that clarifies the priority of ensuring the safety of employees, related parties, and local residents, as well as the appropriate continuation and operation of business.

If an unforeseen bankruptcy of a business partner occurs, it could adversely affect business performance and financial condition. As a countermeasure, the Group focuses on receivables preservation through information gathering and credit management, striving to prevent situations in which receivables become uncollectible.

In the chemical products business, the proportion of direct overseas transactions not conducted through trading companies is high, which may result in extended collection periods for trade receivables or exposure of foreign currency-denominated receivables to exchange rate fluctuations. As countermeasures, the Group hedges risk by confirming the financial condition of business partners, managing transaction progress, setting advance payment terms for business partners in developing countries, and utilizing general trade insurance and bank guarantees.

Fluctuations in the stock market may result in valuation losses on held securities and investment securities. In addition, since dividends received from investment securities account for a significant proportion of earnings, a substantial decrease or suspension of dividends due to deteriorating performance or changes in dividend policy at issuing companies could affect business performance and financial condition. As countermeasures, the Group regularly monitors market values and business performance, continuously reviews its holdings, and is working to improve its earnings structure by reducing policy-held shares and reallocating proceeds from sales.

The Group procures part of its necessary funds through borrowings from financial institutions, and a significant rise in interest rates could adversely affect business performance and financial condition. As countermeasures, the Group continuously monitors market interest rate trends and works to mitigate them, while reducing risk by procuring part of its borrowings at fixed interest rates.

The Group manages development, production, logistics, and sales information using computers, and if a system failure, information leakage, or data tampering occurs due to unauthorized access or computer virus infection, it could adversely affect business performance, financial condition, and social credibility. As countermeasures, the Group has established basic policies on information system operation, implements security measures such as prevention of unauthorized intrusion and unauthorized use, and works to maintain and strengthen information security through thorough employee awareness.

If impairment losses must be recognized on held fixed assets due to changes in the business environment or declining profitability, this could affect the Group's business, performance, and financial condition. The Group applies impairment accounting for fixed assets, and no specific countermeasures are described.

If a large-scale outbreak of infectious disease occurs or becomes prolonged, various business activities may be restricted, potentially affecting business performance and financial condition. As countermeasures, the Group prioritizes the safety and health of customers, business partners, and employees, thoroughly implementing infection prevention and control measures, while striving to establish a company-wide response system to prevent impacts on sales, production, and raw material procurement.