TOYO SUISAN KAISHA, LTD.

Myojo U.S.A., Inc. and Myojo de Mexico, S.A. de C.V. are significant consolidated subsidiaries accounting for over 10% of consolidated net sales, and sharp fluctuations in exchange rates directly affect operating results. While the Company hedges risk on import/export transactions through forward exchange contracts and similar measures, it may not be able to fully respond to sudden fluctuations exceeding forecasts. In addition, deviations from the initially assumed exchange rates when translating the assets, liabilities, revenues, and expenses of overseas subsidiaries into yen also affect business performance.

Prices of major raw materials such as wheat flour and market prices of marine products fluctuate depending on catch volumes and harvest yields, directly affecting manufacturing costs and selling prices. Price revisions to offset rising raw material costs and utility expenses may lead to a decline in sales volume, and increased sales promotion expenses such as discount rebates and special sales costs may also put pressure on earnings. The continuation of the global inflationary trend has further heightened these cost increase risks.

In the domestic instant noodle business, hundreds of new products are launched annually across the industry, resulting in an extremely short product cycle, making it essential to respond to changing consumer needs. If the Company fails to develop attractive new products that respond to consumers' growing health consciousness and other trends, future growth and profitability may decline. There is also a risk that market share could fluctuate significantly due to alliances among existing competitors.

Product incidents may occur due to spoilage or pesticide issues in raw materials, foreign matter contamination during the manufacturing process, allergen issues, or mold growth resulting from bag breakage during distribution. If a large-scale product incident occurs, substantial costs such as product recalls may arise, along with a decline in corporate reputation and a decrease in net sales. Although measures such as obtaining ISO certification, implementing product information management systems, traceability management, and enrolling in product liability insurance have been taken, such risks cannot be completely eliminated.

The Company outsources part of its marine food and frozen food production to overseas companies, and differences in local food hygiene standards and awareness may result in product incidents caused by the use of pesticides that do not conform to Japanese legal standards. This could lead to substantial costs for product recalls and disposal, as well as a decline in corporate reputation, risking a future decrease in net sales. Although measures such as thorough education and guidance on Japanese standards and enhanced on-site inspections and product testing have been implemented, the risk remains.

Due to the growing instability in international affairs, including in the Middle East region, and heightened geopolitical risk, the outlook for the global economy remains uncertain. If such conditions persist over the long term, they may cause surges in raw material prices and disruptions to the supply chain, potentially affecting the Group's operating results. Securing a stable supply network, including stable procurement of raw materials, is a prerequisite for business continuity.

Weather fluctuations such as extreme heat, cool summers, and warm winters affect sales of certain products. If manufacturing facilities are damaged by large-scale natural disasters such as earthquakes or typhoons at production sites, this could lead to a decrease in net sales due to reduced manufacturing capacity from operational disruptions, as well as increased facility repair costs. Impacts from infrastructure usage restrictions, such as reduced electricity supply, also pose risks that could affect operating results.

Although the Company promotes thorough measures against computer viruses and information management, unforeseeable virus intrusions, unauthorized access, operational troubles, and other issues may cause failures in information systems. In the event of such a failure, customer service could be disrupted, and the resulting costs could affect operating results.

Amid the ongoing long-term decline in the labor population, if the Company is unable to secure the personnel necessary for business continuity, its business activities may be restricted. Human capital is essential for the continuation of each business activity, and difficulty in recruiting and retaining personnel poses a risk of disruption to functions such as production, sales, and logistics.

Due to the impact of the logistics crisis exemplified by the so-called 2024 Problem, building a stable logistics network may become difficult. If a stable logistics network cannot be secured, stable supply of products may be hindered, posing a risk of restricted business activities. Maintaining a stable logistics network is an essential foundation for the continuation of each of the Group's business activities.