Fujicco Co., Ltd.

As consumer quality demands increase, there is a risk that quality issues or rumors affecting the industry as a whole, even if not specific to the Group, could impact business performance. As countermeasures, the Quality Assurance Department operates a residual pesticide inspection system, a genetically modified organism inspection system, and the Fujicco Trace System, and has established a crisis management system based on the establishment of an Accident Prevention Committee and product recall manuals.

The occurrence of a large-scale natural disaster could cause temporary production suspension or disruption of the logistics network, resulting in a delay in product supply that could affect business performance and financial condition. In the event of a disaster, an emergency response headquarters is immediately established to confirm the safety of employees and restore the production and supply system, while training based on the Business Continuity Plan (BCP) is conducted and the plan is reviewed periodically.

Kombu and beans, the main raw materials, are primarily sourced domestically from regions such as Hokkaido, and there is a risk that production volume and prices may fluctuate due to weather conditions in producing regions. In addition, since some raw materials are procured overseas, medium- to long-term exchange rate fluctuations may also affect business performance, and the Company addresses these risks through inventory stockpiling, securing multiple production regions, use of forward exchange contracts, and stabilization of purchase prices through long-term contracts.

In addition to the risk of delays or non-delivery caused by abnormal weather or traffic accidents in nationwide delivery via chilled and ambient-temperature transport, further increases in logistics costs are expected due to driver shortages. The SCM Department is leading initiatives to improve loading efficiency, joint delivery, and logistics DX, and is working to mitigate risk by maintaining a certain level of product inventory and searching for optimal delivery routes.

The Company holds shares of major business partners for the purpose of maintaining and strengthening business relationships, and since all securities with market prices are marked to market, there is a risk that significant price fluctuations could affect business performance and financial condition. The Board of Directors examines the appropriateness of continuing to hold individual stocks and is progressively reducing the number of stocks held and the number of shares.

The Company is subject to various legal regulations in its business activities, and there is a risk that business performance and financial condition could be affected by business restrictions in the event of non-compliance, as well as by import/export regulations in various countries and new legal regulatory tightening. Each responsible department works together with the Legal and Intellectual Property Department to establish a system for compliance with relevant laws and regulations, and the Compliance Committee is working to systematize education and training and strengthen functions to prevent misconduct.

If a system failure, information leakage, or data tampering occurs due to system inoperability or data loss caused by a disaster, unauthorized access, computer virus infection, or other causes, there is a risk that business performance, financial condition, and social credibility could be affected. The Company takes measures such as regular updates of antivirus software, virus email education tests, establishment of alternative servers through cloud migration, and regular backups, and strives to protect important information, including a large amount of personal information.

Since the main sales channel is concentrated in supermarkets, there is a risk that business performance could be affected if emerging channels continue to grow. The Company is working to expand and diversify sales channels into convenience stores, drug stores, mail order, and food service materials, while promoting the development of overseas markets in anticipation of the shrinking domestic market due to population decline.

Securing factory workers is becoming increasingly difficult year by year at the parent company's 8 plants and 2 subsidiaries with production functions, and there is a risk that rising hourly wage rates due to labor shortages could affect business performance through increased personnel cost burden. The Company is advancing labor-saving on production lines, and is promoting the robotization of complex tasks, such as on weighing lines for daily prepared foods, by leveraging AI and robotics technology innovations.

Climate change caused by global warming affects ecosystems and the natural environment, and there is a risk of lost sales opportunities and other impacts if poor harvests occur in the production areas of agricultural and marine products, including kombu and beans, the main raw materials. The Company strives for stable procurement of raw materials through planned purchasing and purchasing from multiple companies, while the Risk Management Committee considers the identification, evaluation, and response to climate change risks.