Nippon Soda Co., Ltd.

Some of the Group's products and services are affected by economic fluctuations, and if market conditions fluctuate significantly due to changes in the economic environment, this could have a material impact on business performance. The Agribusiness segment has demand seasonality (a tendency for revenue to increase in the fourth quarter) and weather dependency, with weather fluctuations directly affecting business performance. No specific countermeasures are described, and this is recognized as a structural risk.

With overseas sales, primarily in Chemical Materials and Agribusiness, accounting for approximately 56% of total sales, changes in local laws and regulations, large-scale infectious diseases, geopolitical risks such as war, riots, and terrorism, and changes in trade policy in major countries could have a material impact on business performance. As a countermeasure, the Group has established local subsidiaries in each country and region to collect risk information and analyze business trends.

Due to global business operations, exchange rate fluctuations affect sales denominated in foreign currencies and raw material procurement costs, and the yen-converted amounts of overseas consolidated subsidiaries and equity-method affiliates are also subject to exchange rate movements. Sharp exchange rate fluctuations could have a material impact on business performance, and the Group utilizes hedging instruments such as forward exchange contracts to mitigate the impact on operating results.

If it becomes difficult to secure raw materials or if prices fluctuate sharply, this could have a material impact on business performance. As countermeasures, the Group strives for stable procurement through diversification of supply sources, and mitigates the impact of rising raw material prices through cost reductions and revisions to selling prices.

Against the backdrop of rising global awareness of environmental issues, regulations on chemical products are tending to become stricter. If environmental regulations become stricter than expected in the future and require substantial new investment, this could have a material impact on business performance. The Group conducts business activities in compliance with laws and regulations in Japan and overseas, but depending on the speed and scope of regulatory tightening, there is a risk that compliance costs will increase.

Research and development in the Agribusiness segment requires a long development period to confirm efficacy and safety, resulting in substantial upfront investment in R&D expenses and outsourced testing costs. If a research theme fails to reach commercialization, the invested management resources may not be recovered, which could have a material impact on business performance. Since substantial management resources are allocated to new product development, the risk of pipeline failure carries a significant financial impact.

As a chemical manufacturer, if an unforeseen accident or large-scale natural disaster occurs at production facilities or storage facilities for chemical products, this could result in human and property damage, damage to areas surrounding the plant, loss of social credibility, incurrence of countermeasure costs, and opportunity losses due to production stoppages, which could have a material impact on business performance. The Group engages in Responsible Care activities (environmental protection, occupational health and safety, security and disaster prevention, logistics safety, and chemical product safety) to strive to prevent accidents before they occur.

As a chemical manufacturer, the Group engages in Responsible Care activities for quality control and management improvement through ISO9001, but there is no guarantee that all products will be free of defects and that product liability issues will not occur. If an unexpected serious quality defect occurs, this could have a material impact on business performance, and the Group has taken out product liability insurance to prepare for potential accidents. When selling new products or improving quality, the Group conducts prior product liability risk assessments in accordance with ISO9001 to prevent issues before they occur.

If confidential business information is unexpectedly leaked outside the company, this could lead to a stagnation of business activities and loss of credibility, having a material impact on business performance. As countermeasures, the Group has established internal regulations concerning information management, instills awareness of management and handling rules through employee education, and enters into confidentiality agreements with stakeholders with whom confidential information is shared, striving to strengthen its information management system.

If the Group is unable to secure sufficient labor due to the decline in the working-age population, this could have a material impact on business performance due to a stagnation of business activities, among other factors. As countermeasures, the Group promotes efficiency in production processes and business operations based on the "Nippon Soda DX Vision," and promotes diversity and human resource development under the human capital management vision "Employees Also Shine." In addition, the occurrence of human rights issues in business activities or the supply chain risks leading to a loss of stakeholder trust and social credibility; based on the "Nippon Soda Group Human Rights Policy" established in March 2026, the Group promotes efforts to respect human rights in line with international norms.