NIITAKA Co., Ltd.

Over 80% of consolidated group net sales are generated from the domestic food business industry, and the Group is directly affected by demand trends, price trends, competitive conditions, and the impact of new entrants in that industry. A deterioration in the business conditions of restaurants, inns, food factories, food supermarkets, and other customers could directly affect performance. In response, the Group is pursuing risk diversification by maintaining a balanced share among business formats, and is promoting expansion into new domains and the Healthcare Business.

Raw materials for detergents and cleaning agents are highly dependent on mineral resources such as petroleum and natural fats and oils, and there is a risk that prices will surge due to increased demand from emerging economies, inflows of speculative funds, reduced supply due to international conflicts, and exchange rate fluctuations. Rising raw material costs could push up manufacturing costs and worsen profitability. The Group is responding by strengthening resilience to price pass-through through the development of high value-added products, and by compressing costs through productivity improvements and cost reductions.

In its domestic and overseas business operations, the Group is subject to a wide range of laws and regulations related to environmental protection, health, chemical substance management, manufacturing, and transportation, and performance could be affected by regulatory tightening or new legislation. In addition, if violations occur due to insufficient understanding of laws and regulations or weakened compliance awareness, the Group could face social sanctions leading to a deterioration in performance. The Group strives to prevent violations through thorough legal compliance education and monitoring based on its ethics policy.

Although the Group thoroughly manages quality under its management policy of "Quality First," if a serious quality problem occurs with a handled product, performance could deteriorate due to the burden of response costs and a decline in corporate reputation. Impacts on product safety and reliability could also lead to customer attrition and lost sales opportunities. The Group works to minimize this risk by promoting company-wide quality management activities.

It is explicitly stated that operational disruption caused by a large-scale earthquake could impede production activities and affect performance, and earthquake risk is positioned as one of the major risks for the Group. The suspension of production sites could disrupt product supply, creating a risk that the Group would be unable to fulfill its responsibility to provide a stable supply to customers. The Group is strengthening its business continuity system through a mutually complementary structure with production bases in both eastern and western Japan.

The Group conducts business with a large number of business partners, and if difficulties arise in collecting receivables due to unforeseen events such as the bankruptcy of a business partner, performance could be affected. If sales are concentrated with a specific business partner, a deterioration in that partner's creditworthiness could increase the risk of larger losses. The Group responds by gathering credit information, diversifying transactions, and strengthening credit management.

If an infectious disease outbreak occurs and the government implements movement restrictions, product shipment volumes could decline significantly due to reduced business activity among key customers such as restaurants and inns. In addition, there is a risk that business delays due to travel restrictions, or the temporary closure of business sites and factories due to employee infections, could disrupt production activities. The Group is building a system to avoid production disruption by promoting measures such as remote work, staggered commuting, training of alternate personnel, and production automation.

Amid intensifying weather-related disasters, social demand for decarbonization is increasing, and the tightening of environmental regulations and heightened demands from stakeholders could affect performance. There is a risk that the cost of responding to carbon emission regulations in manufacturing processes and raw material procurement could increase. The Group is responding through the development of environmentally friendly products, the introduction of renewable energy, and energy conservation through the review of manufacturing processes and equipment.

There is a risk that personal information and confidential information of customers and business partners obtained through business activities could be leaked through unauthorized access, tampering, or leakage resulting from cyberattacks or other causes. In addition, the leakage or unauthorized use of the Group's confidential information related to technology, contracts, personnel, and other matters to third parties could also affect performance. The Group responds through the introduction of security systems, computer literacy education, data leakage prevention measures, and backup of important data.

As the Group has business bases in Japan and the Asia region and conducts numerous transactions with overseas companies, if an incident constituting a human rights violation occurs in business activities including the supply chain, the business could be affected by administrative sanctions or damage to social credibility and brand image. Against the backdrop of growing recent interest in business and human rights, insufficient response could also lead to a decline in evaluation by investors and customers. The Group is working to reduce human rights violation risk across the entire supply chain through the formulation of a human rights policy and procurement policy, and the implementation of human rights due diligence.