S Foods Inc.

The Star Foods Group, whose core business is the manufacture and sale of meat and processed meat products in Japan and the United States, is exposed to fluctuations in market size and selling prices as well as intensifying inter-company competition due to changes in economic conditions, demographics, and consumer values. These changes may directly affect net sales and profit margins. The annual securities report does not describe specific countermeasures.

Since much of the meat raw materials and products are procured from overseas, the Group is subject to trade and tariff regulations, and changes to or new establishment of such regulations may result in new capital expenditure, increased improvement costs, or restrictions on business activities. Domestically, the Group is also subject to various legal regulations, including those related to food safety and quality assurance, and changes in the regulatory environment may affect business performance and financial condition. The annual securities report does not describe specific countermeasures.

Disease issues such as BSE, foot-and-mouth disease, and avian influenza, as well as import systems such as safeguards (emergency import restriction measures) and the differential tariff system on pork, can affect procurement volumes and consumption trends, potentially leading to rises and falls in procurement and selling prices. In addition, deterioration in feed grain crop conditions due to climatic factors and fluctuations in livestock production and raising volumes are also factors behind changes in market conditions, affecting the Group's business performance and financial condition. The annual securities report does not describe specific hedging measures or other countermeasures.

As meat raw materials and products are procured both domestically and overseas, fluctuations in foreign exchange rates can increase or decrease import costs. In a yen-depreciation phase, procurement costs rise, and if it is difficult to pass these on to selling prices, profit margins may be squeezed. The annual securities report does not describe specific hedging measures or other countermeasures.

Fluctuations in the market conditions of resources with high overseas dependence, including oil, can increase or decrease import costs. Rising energy costs may also spill over into manufacturing and logistics costs, potentially affecting the business performance and financial condition of the Group as a whole. The annual securities report does not describe specific countermeasures.

In addition to production and sales activities in the United States, the Group's procurement regions have expanded to North America, Australia, China, and Latin America, creating a risk of unpredictable issues arising from each country's political, economic, and social conditions, legal regulations, trade relations, and natural conditions. If such issues materialize, procurement stability may be undermined, potentially causing a material impact on the Group's business performance and financial condition. The annual securities report does not describe a specific risk management system.

Although the Group strives to manufacture safe products in accordance with laws and regulations and globally recognized safety and quality control standards, if a product recall or product liability claim arises due to unforeseen circumstances, this may result in issue-resolution costs and a decline in trust from consumers and business partners. Safety issues are a risk directly tied to business continuity for food companies, raising concerns about the impact on business performance and financial condition.

Domestically, the Group is subject to various legal regulations, including those related to food safety and quality assurance, and new or strengthened regulations may result in new capital expenditure and increased improvement costs. Tightening of regulations such as the Food Sanitation Act and the Food Labeling Act requires continuous compliance efforts, and the associated response costs may affect business performance. The annual securities report does not describe a specific response system.

If livestock diseases such as BSE, foot-and-mouth disease, or avian influenza occur, this may lead to import restrictions and a sharp decline in procurement volumes, making it difficult to secure a stable supply of raw materials. Although procurement sources span a wide area including North America, Australia, China, and Latin America, if a particular disease spreads over a broad region, alternative procurement may also be constrained, potentially disrupting manufacturing and sales activities. The annual securities report does not describe a specific business continuity plan (BCP).

Deterioration in feed grain crop conditions due to climatic factors and declines in livestock production and raising volumes can cause changes in market conditions, potentially leading to higher procurement costs or insufficient procurement volumes. Although procurement regions span multiple continents, if extreme weather events occur simultaneously across broad areas, it may become difficult to respond through alternative procurement, potentially affecting business performance and financial condition. The annual securities report does not describe specific countermeasures.