Toell Co.,Ltd.

LP gas is largely dependent on imports from the United States and the Middle East, and is affected by market fluctuations arising from geopolitical factors and supply-demand balance, as well as by foreign exchange fluctuations. While contracts with major customers adopt import price linkage, allowing for prompt response, price revisions for general household use require careful consideration, resulting in a time lag between cost of sales and selling prices that may put pressure on profits.

The flagship product "Pure Hawaiian" is manufactured at the Oahu Factory in Hawaii and supplied via long-distance ocean transport, which entails various transport-related risks (delays, quality deterioration, transport disruptions, etc.). While the company strives for quality control and stable supply at its own factories, including "Alpina" manufactured at the domestic Omachi Plant in Nagano Prefecture, any disruption to imports from the Hawaii factory would directly affect supply stability.

The Energy Business reaches peak demand in winter, and the Water Business in summer, forming a structure in which the two businesses mutually complement each other's seasonal demand gaps. However, if abnormal weather such as a cool summer or warm winter occurs, this complementary effect between the two businesses may be undermined, potentially adversely affecting business performance.

With the liberalization of the energy market, competition in the LP gas industry with the electric power and city gas industries has intensified, and in the water industry as well, competition has become even fiercer due to the entry of major soft drink manufacturers and online retailers. If competition further intensifies, not only among industry peers but also with businesses from other industries, it may have a material impact on business results and financial condition.

The company is pursuing an export strategy for Japanese bottled water centered on five countries and regions—Singapore, Hong Kong, Thailand, Vietnam, and Taiwan—but there is a risk that sudden changes in the political and economic situation of a partner country could make it difficult to continue contracts. Although the company exercises caution in selecting contract partners and determining contract terms, geopolitical risks cannot be entirely eliminated.

Customer personal information for both the LP Gas and Water businesses is managed through the company's own information management system, and is strictly controlled in accordance with the Personal Information Protection Act and other relevant laws as well as internal regulations. In the event of a large-scale leak of customer information, the resulting loss of corporate credibility and payment of damages could affect business results and financial condition.

The company operates lifeline businesses in LP gas and water, centered mainly on the Kanto region, and if business locations were to suffer catastrophic damage from a large-scale earthquake or similar event, business activities could be disrupted in order to ensure the safety of business partners and employees. Although the company has formulated a Business Continuity Plan (BCP) and established a system to respond to emergency requests for assistance from local residents and government authorities, risk remains in the event of a severe disaster.

In the Energy Business, the company operates in compliance with the High Pressure Gas Safety Act and the Act on Ensuring the Safety and Proper Trade of Liquefied Petroleum Gas, and in the Water Business, with the Food Sanitation Act and other relevant laws and administrative guidance. If these laws and regulations are significantly amended, this could result in expanded operational constraints, the emergence of new competition, and the need for substantial capital investment, potentially having an unforeseeable impact on business performance and financial condition.