HAGOROMO FOODS CORPORATION

There is a risk that procurement costs for raw materials and supplies may rise due to seasonal fluctuations in catch/harvest volumes, and fluctuations in exchange rates, crude oil prices, and resource prices. Supply stoppages or delays may also occur due to stricter environmental regulations associated with climate change or the revocation of approvals for raw materials used. As countermeasures, the Company is promoting diversification of suppliers, strategic procurement of raw materials, and cost reduction through productivity improvement.

There is a risk that political instability, deteriorating economic conditions, changes in legal systems, labor strikes, and measures against human rights/environmental violations in countries and regions where procurement and production sites are located may lead to delays or stoppages in the supply of products and raw materials, and a decline in profits at overseas affiliated companies. Fluctuations in exchange rates also affect earnings. The Company addresses this through diversification of suppliers and production sites, gathering information on relevant countries, and strengthening relationships with labor unions.

Social and economic disruption caused by natural disasters or the spread of infectious diseases poses a risk of damage to production facilities and logistics facilities, personnel shortages, and collapse of the supply chain, potentially leading to a stoppage in the supply of products and raw materials or a halt in head office functions. The expansion of protectionism, such as export restrictions, may also cause delays in maritime transport and domestic distribution. The Company addresses this through the development and periodic review of business continuity plans, diversification of suppliers and production/logistics sites, and diversification of the supply chain.

There is a risk that sales volume and market share may decline due to long-term consumption decline and market contraction caused by population decrease, changes in consumer needs and consumption trends, and changes in market prices. Changes in distribution channels may also lead to sluggish sales activities. The Company addresses this through the development and cultivation of high-value-added products, strengthening brand power, enhancing product development capabilities, and reducing costs through productivity improvement.

There is a risk that inappropriate advertising or customer service may trigger boycott movements, damaging the corporate and product brand image. This could directly lead to loss of sales opportunities and reduced profits due to suspension of sales. The Company works to prevent the spread of reputational risk through verification of inquiry information, monitoring of social media comments, and accurate, prompt, and courteous media response.

There is a risk that a delivery crisis caused by personnel shortages in the logistics industry, such as drivers, may lead to loss of sales opportunities and an increase in logistics costs. There are concerns that stricter working hour regulations, as typified by the so-called "2024 Problem," may accelerate the rise in logistics costs. The Company addresses this by reducing driver restraint hours, reducing the workload of warehouse staff, and diversifying logistics sites.

There is a risk that business activities may stagnate due to an inability to secure necessary personnel resulting from a declining working-age population. Personnel shortages in manufacturing, sales, and administrative departments directly lead to a decline in productivity and competitiveness. The Company addresses this through thorough labor-saving and streamlining of operations, diverse recruitment activities, establishment of personnel systems, and creation of attractive, community-based workplaces.

There is a risk that cyberattacks causing system outages or malfunctions, network destruction and data leaks, or information leaks by employees could result in the suspension of business activities and the leakage of confidential information or personal data. In addition to loss of profit due to lost sales opportunities and suspension of sales, there are also concerns about long-term brand damage due to loss of trust. The Company addresses this through thorough enforcement of security policies, enhanced network monitoring, employee training, and review of recovery and business continuity systems.