NH Foods Ltd.

Information systems used for production, sales, accounting, and other functions may experience leakage of personal or confidential information, or suffer a suspension of operations for a certain period, due to sophisticated cyberattacks, natural disasters, equipment failures, and other causes. The Group continuously implements technical measures such as firewalls, intrusion prevention systems, and antivirus software, as well as employee education and training, and revisions to backup methods, but it is difficult to prevent this 100% if a society-wide problem occurs.

If natural disasters, infrastructure failures, system failures, infectious diseases, livestock diseases, etc. occur at domestic and overseas production, manufacturing, and logistics facilities, there is a possibility that stable product supply could be hindered due to operational stoppages, delivery delays, and other disruptions. The Group is responding through diversification of procurement routes, development of alternative production systems, and establishment/revision of BCPs, but the impact cannot be completely avoided if a large-scale disaster or long-term supply constraint exceeding assumptions occurs.

Raw materials such as meat, dairy products, wheat, and seafood face risks of rising procurement costs or procurement difficulties due to fluctuations in livestock prices, feed prices, and crude oil prices, as well as the occurrence of livestock diseases (BSE, avian influenza, classical swine fever, African swine fever, etc.) and the invocation of safeguard measures. The Group is responding through diversification of procurement routes, development of high-value-added products and branding, and strengthening of quarantine systems, but complete avoidance is difficult given the significant influence of uncontrollable factors such as global supply-demand trends and economic fluctuations.

In the production and procurement of livestock conducted domestically and overseas, if diseases such as BSE, avian influenza, foot-and-mouth disease, classical swine fever, or African swine fever occur, this may have a significant impact on the performance and financial condition of the meat business and processed foods business. The Group is working on strengthening quarantine systems, diversifying supplier regions and procurement routes, and enabling mutual substitution between domestic and imported raw materials, but complete avoidance is difficult given the significant influence of uncontrollable factors.

If large-scale natural disasters associated with earthquakes and climate change, or large-scale infectious diseases such as COVID-19, occur, this may cause equipment damage and difficulty securing personnel at domestic and overseas production, manufacturing, logistics, sales, and R&D facilities, potentially resulting in operational stoppages, shipment delays, and restrictions on sales activities. The Group has established initial response systems through regular development and revision of disaster prevention and BCP manuals and selection of priority operations, but complete avoidance is difficult if an event exceeding assumptions occurs.

Stagnation of production and manufacturing activities due to abnormal weather such as droughts, heavy rains, and rising temperatures, as well as a significant increase in environmental investment due to amendments to related laws and regulations, may affect business performance and financial condition. The Group recognizes rising feed prices due to climate change as a particularly important risk, and is working to mitigate the impact through improving feed conversion ratios, strengthening cooperation with feed companies, and utilizing domestically produced feed, but complete avoidance is not guaranteed.

As of the end of March 2026, the total book value of property, plant and equipment, right-of-use assets, intangible assets, goodwill, and investment real estate was ¥462.2 billion (¥462,200 million), and if asset values decline due to reduced profitability or changes in economic conditions, the recognition of impairment losses may have a significant impact on business performance and financial condition. For investment projects above a certain amount, the Group conducts deliberations at management meetings on the validity of assumptions, risk analysis, and profit/loss plans, and responds through regular progress reports and deliberations on improvement measures after the investment is executed, but complete avoidance is difficult if the business environment deteriorates beyond expectations.

If the acquisition, development, and retention of diverse human resources in line with business needs does not proceed as planned, due to the decline in the working-age population, diversification of work values and lifestyles, and increased labor mobility, this may hinder the creation of new value and innovation, potentially affecting business performance and financial condition. The Group is implementing HR measures such as strengthening new graduate and career recruitment, systematic education programs and succession plans, support for career autonomy, and promotion of flexible working styles, but complete avoidance is not guaranteed.

Foreign exchange fluctuations affect business performance and financial condition both positively and negatively through yen conversion of foreign-currency-denominated transactions and receivables/payables, and translation differences arising from the financial statements of overseas consolidated subsidiaries. In addition, as of the end of March 2026, the majority of the interest-bearing debt of ¥228.5 billion (¥228,500 million) carries fixed interest rates, and the impact of near-term interest rate increases is judged to be minor, but there is a risk of increased interest burden in the event of future interest rate hikes. The Group responds through hedging transactions such as forward foreign exchange contracts based on its foreign exchange risk management regulations, a combination of direct and indirect financing, establishment of commitment lines, and introduction of CMS, but complete avoidance is not guaranteed.

In handling a wide range of food products such as meat, dairy products, and seafood, if product quality or safety is compromised due to foreign object contamination, inappropriate labeling, or failure to comply with related laws and regulations such as the Food Sanitation Act, this may result in recall costs, damages, and restrictions on business activities, potentially affecting business performance and financial condition. The Group is responding by building a group-wide quality assurance system, obtaining third-party certification for manufacturing plants, and continuously conducting audits, inspections, and quality assurance education at domestic and overseas plants, but complete avoidance is difficult if a society-wide food safety problem occurs.