KENKO Mayonnaise Co.,Ltd.

Edible oil (soybean and rapeseed), eggs, and vegetables are the principal raw materials, and their purchase prices are significantly affected by domestic and overseas commodity market prices and foreign exchange rates. In particular, egg prices have risen since the second half of FY2024 due to the outbreak of highly pathogenic avian influenza, and prices have remained elevated in FY2025 as well. Although the Group implements hedging through diversification of production areas and year-round price contracts, fluctuations in market prices may affect its business results.

As consumer concern over food safety increases, quality issues involving raw materials or the mixing in of foreign matter during the manufacturing process could have a material impact on business results and financial condition. As countermeasures, the Group has established a quality assurance system through acquisition of FSSC22000, JFS-B, and ISO17025 certifications and the introduction of a traceability system.

Climate change caused by global warming affects the procurement of raw materials such as agricultural products, and may also have a significant impact on overall production and procurement activities through severe damage to production facilities, operational stoppages, and supply chain disruptions. The Group has set a target to reduce CO₂ emissions per unit by 50% by FY2030 compared to FY2019, and is advancing initiatives such as switching to energy-saving equipment.

Competition is intensifying not only with companies in the same industry but also with those in different industries, and food safety issues such as abnormal weather, highly pathogenic avian influenza, and pesticide residues could lead to a decrease in sales. In addition, since the majority of customers are domestic, there is a risk that deterioration in the domestic economy, market contraction, poor sales performance by major customers, or changes in their product policies leading to a decline in demand could affect business results.

Important information related to production, sales, logistics, and accounting is managed at an external data center, and if a system failure, data loss, or external leakage occurs due to a natural disaster or cyberattack, it may affect business results and financial condition. The Group implements prevention, detection, and response measures through the introduction of security-related systems and employee education and training.

The Group's logistics operations are fully outsourced to external specialized companies, and if changes in transaction terms with contractors or troubles due to accidents or disasters occur, this may affect business results and financial condition. Although there are multiple contractors, full external dependence on logistics functions constitutes a risk factor for supply stability.

For fixed assets such as land, buildings, machinery and equipment, and investment securities, if a decline in market value or profitability due to a sudden change in the external environment makes it impossible to expect recovery of the investment amount, an impairment loss may be recognized. Although the Group verifies investment effectiveness and recoverability at the time of asset acquisition and continuously confirms their ongoing effectiveness, there are limits to responding to changes in the external environment.

Funds for capital expenditures are raised through long-term borrowings and installment contracts, and interest rate fluctuation risk is hedged by procuring funds at fixed rates; however, if significant changes occur in financial conditions, this may affect business results and financial condition.

In addition to full-time employees, support staff and part-time workers are engaged in order-receiving and production operations, and if revisions are made to employment-related laws, costs may fluctuate and affect business results.

If the business environment, such as the business conditions of business partners or the economic situation, differs significantly from the assumptions made at the time the medium- to long-term management plan was formulated, the target figures may not be achieved. In addition, failure to achieve sustainability targets could lead to a decline in trust from business partners and other stakeholders, and may affect business results and financial condition.