ISHIHARA SANGYO KAISHA,LTD.

Amid tightening global agrochemical regulations, if maintenance or renewal of existing product registrations is not approved, or if applications are forced to be narrowed, sales opportunities will decrease and impact business performance. As countermeasures, the company implements appropriate responses to registration authorities in each country, investigates the registration evaluation and response status of other companies, and secures specialized personnel while passing on registration know-how.

If full approval in the United States or approval by European regulatory authorities is denied or delayed, sales may fall significantly short of expectations, impacting business performance. The company addresses this by utilizing consultants to gather information on regulatory and approval trends at authorities, and by strengthening cooperation with contract manufacturers and sales partners.

The Yokkaichi Plant, the company's main Titanium Dioxide production site, is located in an area expected to be affected by a Nankai Trough earthquake. In the event of a major earthquake, damage to facilities and products, plant operation stoppages, and human casualties could occur, potentially having a significant impact on business performance. The company addresses this through seismic reinforcement of aging facilities, storing products at multiple locations, updating business continuity plans, obtaining earthquake business continuity expense insurance, and concluding earthquake-response commitment lines.

If malware infection via targeted attack emails spreads through the internal network, business activities such as production and sales could be disrupted, and the leakage of customer information or confidential data to outside parties could cause loss of trust and significant damages. The company addresses this through measures to prevent leakage of confidential information, strengthening security measures, enhancing cyber risk insurance, and establishing a group information security policy.

If controls over overseas group companies and others are not fully effective, incidents such as accounting fraud, bribery, or quality misconduct may be discovered, impacting business performance. The company is strengthening group governance by organizing and clarifying the functions and roles of the three lines model, refining and disseminating rules and regulations regarding group companies, and strengthening internal audits.

Titanium ore, the main raw material for Titanium Dioxide, is entirely sourced from overseas, and as market oligopolization by major manufacturers progresses, if ore prices or fuel prices such as coal and natural gas surge, manufacturing costs will rise, and if this cannot be sufficiently passed on to sales prices, it will impact business performance. The company addresses this through purchasing from multiple countries and multiple suppliers, energy conservation activities, passing costs on to sales prices, and considering the use of lower-grade titanium ore.

In the agrochemical industry, large-scale reorganization is leading to oligopolization by major players, and price competition is intensifying due to the spread of generic agrochemicals. In Titanium Dioxide, the sales environment is becoming increasingly difficult due to the business expansion of overseas competitors and capacity increases by Chinese manufacturers. This intensifying competition could impact business performance through a decline in the company's market share. The company addresses this by reducing manufacturing costs, differentiating through the development of new agrochemical agents and mixed formulations, and promoting expansion into electronic component materials to move away from commoditized products.

The Yokkaichi Plant supplies steam and generates power using coal boilers and other equipment. If carbon taxes are imposed or emission regulations are further strengthened in the future, this could impact business activities. The company addresses this by promoting carbon neutrality through the formulation of GHG emission reduction plans involving energy transition and realization of the roadmap.

Due to the high tariff policies of the United States, there is a possibility of declining sales in the U.S. market, contraction of transactions due to switching to alternative suppliers, and supply chain disruptions, which could impact business performance. The company addresses this by partially relocating manufacturing from high-tariff regions to countries with less tariff impact, strengthening sales in regions with minimal tariff impact, passing on part of the tariff costs to prices, and implementing tariff refund procedures.

Due to the declining birthrate, aging population, and increasing labor market fluidity, if securing necessary personnel or passing on skills from experienced workers to younger employees becomes insufficient, planned operations may not proceed as scheduled, significantly falling short of projected revenue and impacting business performance. The company addresses this through multi-channel recruitment activities, visualizing know-how, promoting human resource development, considering workplace environment and systems to prevent turnover, and strengthening employee engagement.