Ifuji Sangyo Co.,Ltd.

Since hen eggs, the primary raw material for the Liquid Egg Business, are subject to daily fluctuations in purchase and sale prices, a sharp rise in market prices due to a large-scale outbreak of avian influenza or supply-demand tightness caused by changes in food policy could significantly increase costs and put pressure on earnings. Conversely, a sharp decline in market prices also poses a risk of reduced profitability. As countermeasures, the Group is implementing low-cost purchasing during periods of low demand, increasing the ratio of purchases of processing-use raw eggs, and reducing costs by concentrating production of frozen products in the summer months.

As consumer awareness of food safety and reliability increases, the occurrence of safety or hygiene issues caused by the Group's products, including incidental causes, could have a material impact on the Group's financial position and business results. As countermeasures, the Group has introduced state-of-the-art equipment, implements thorough quality and temperature control, and provides hygiene education to employees; however, complete elimination of such risk is difficult.

Frozen products, which account for the majority of merchandise and product balances, are stored in external commercial warehouses, with inventory management entrusted to warehouse operators. As a result, large-scale inventory damage would directly affect the Group's financial position. In addition, excess inventory due to inaccurate sales forecasts, or inventory depletion caused by tight hen egg supply or excess sales, could also affect business results. Inventory management is conducted by reconciling inbound/outbound transaction reports and inventory certificates against internal system records.

The primary sales destination for the Liquid Egg Business is the bread-making industry, which accounted for approximately 40% of sales in the consolidated fiscal year under review. Consequently, changes in that industry's purchasing and production trends directly affect business results. To reduce this sales concentration risk, the Group is expanding its sales channels into new industries and markets, such as frozen food manufacturers and prepared food manufacturers, but a high degree of dependence on the bread-making industry currently continues.

Should a natural disaster such as a typhoon, flood, or major earthquake occur in the regions where the Group's four plants are located—Kanto, Tokai, Kinki, and Kyushu—the resulting suspension of public infrastructure or the need for plant repairs could affect business results. There is also a risk of business interruption due to unforeseeable power outages or communication failures. As countermeasures, the Group has established a crisis management manual including a BCP (Business Continuity Plan) and has developed a mutual supply system among plants in different regions.

Should personal information and confidential information of customers and business partners, as well as business and technical confidential information held through the Group's business activities, be leaked due to cyberattacks, unauthorized access, computer viruses, or similar causes, this could damage the Group's credibility and affect its financial position and business results. There is also a risk that destruction or falsification of important data, or system outages, could disrupt business continuity. As countermeasures, the Group is building a strict information management system, enhancing internal rules and regulations, and thoroughly educating employees.