New Japan Chemical Co.., LTD.

Purchase prices of oil-and-fat raw materials and petrochemical raw materials may fluctuate significantly due to crop failures caused by climate change, expanding demand for biofuels, international market conditions for crude oil and naphtha, geopolitical circumstances in oil-producing countries, and speculative factors in futures markets. These price fluctuations directly affect the business performance of the Company Group. As a risk mitigation measure, the Company takes measures such as passing costs through to product sales prices.

If a supply stoppage, delay, or quality defect occurs at a supplier due to a natural disaster, accident, or other cause, stable production of the Company's products may become difficult, potentially affecting business performance. As a countermeasure, the Company strives to ensure stable procurement through diversification of suppliers based on quality and cost considerations.

If foreign exchange rate fluctuations cause significant changes in the prices of imported raw materials, this may affect the business performance of the Company Group. To mitigate this risk, the Company employs hedging measures such as the use of foreign exchange forward contracts within an appropriate range.

Against a backdrop of labor shortages and other factors, logistics costs have risen markedly, and difficulty in securing optimal logistics means may affect business performance. The Company strives to optimize cost, time, and quality by utilizing a wide range of logistics means, including domestic and international shipping and domestic land transport.

If a large-scale natural disaster or accident occurs at a plant, this could result in opportunity losses from the suspension of production activities, compensation to customers, damages to neighboring areas, and loss of social credibility. The Company implements measures such as education and training in preparation for disasters, regular maintenance of manufacturing equipment, and enrollment in casualty insurance.

If a serious quality problem, such as an unexpected defect, occurs in a product, this may result in product recalls and compensation to customers, affecting business performance. The Company addresses this through strengthening its quality assurance system based on its quality management system and by maintaining product liability insurance.

If a dispute regarding intellectual property arises with a third party and a ruling unfavorable to the Company Group is made, this may affect business performance. The Company strives to prevent rights infringement through early acquisition of rights for developed technologies and thorough investigation of third-party intellectual property rights.

If it becomes difficult to recruit and retain excellent human resources due to the declining domestic labor population and changing values, resulting labor shortages may hinder business operations and affect business performance. The Company takes measures such as diversifying recruitment methods and employment types, developing a comfortable working environment, and promoting the transfer of skills using digital technology.

If information systems are suspended or malfunction due to cyber attacks such as ransomware or unauthorized access, computer virus infection, equipment failure, or disaster, this may result in opportunity losses from operational stoppages, restoration costs, loss of social credibility due to information leaks, and compensation to customers. The Company is advancing measures such as strengthening security measures, conducting regular data backups, providing security education to employees, and developing emergency response plans.