FUJIFILM Holdings Corporation

With the overseas sales ratio on a consolidated basis reaching approximately 65%, fluctuations in exchange rates significantly affect business performance. It is estimated that a 1 yen fluctuation against the US dollar impacts consolidated operating income by approximately ¥1,000 million annually, while a 1 yen fluctuation against the euro impacts it by approximately ¥800 million annually. Although hedging is implemented mainly through forward contracts, depending on the extent of fluctuations, the impact on business performance cannot be completely avoided.

While the CDMO business market is estimated by the company to grow at an annual rate of 13%, major risks include large-scale changes in administrative policy due to healthcare system reforms, tightening of laws and regulations, postponement or cancellation of new drug development by pharmaceutical companies, and intensifying competition. If timely acquisition of licenses and approvals is not achieved, or if responses to environmental changes are delayed, this could lead to reduced profit margins due to lower manufacturing facility utilization rates or the recognition of impairment losses. The company is addressing these risks through research and development and marketing leveraging its competitive advantages in advanced image processing and AI technology, nanotechnology, and other areas, but success or failure in these efforts will affect business performance.

While the semiconductor industry is expected to grow over the long term due to the development of generative AI and IT infrastructure and the spread of EVs and autonomous driving, major recognized risks include rising raw material costs, intensifying competition from alternative materials, and raw material procurement risks and supply chain disruptions arising from heightened awareness of economic security. The company continues research and development of products and services leveraging proprietary technologies such as functional molecular technology and advanced film-forming and coating technology, but depending on the success or failure of these efforts, a decline in sales could occur.

The company has conducted multiple corporate acquisitions for sustainable growth and may continue to do so in the future, but there is a risk that expected acquisition benefits or profits may not be realized due to economic downturns, political instability, changes in laws and regulations, poor performance of target companies, or delays in business integration. In addition, if goodwill and other intangible fixed assets recognized in connection with corporate acquisitions become less recoverable due to a decline in future cash flows, impairment losses may be recognized, potentially affecting business performance. The company conducts careful examination based on certain internal standards and monitors post-acquisition performance, but the risk cannot be completely eliminated.

There is a risk of data tampering or destruction, leakage of personal information, or failure of information systems due to unauthorized access through cyberattacks, malicious acts or serious negligence by employees, power outages, disasters, and other causes. The company implements security measures through software and equipment and conducts regular education and training for employees, but if such events occur, they could affect business performance.

If policy strengthening in various countries and regions toward a decarbonized society, or revisions or new enactments of carbon emissions-related laws and regulations, are implemented within an unexpectedly short period, there is a transition risk of increased response costs and restrictions on business activities. There are also physical risks such as supply disruptions and price spikes for raw materials and parts due to abnormal weather, plant operation stoppages, and supply chain disruptions. The company has set targets of a 50% reduction in CO2 emissions by fiscal year 2030 (compared to fiscal year 2019) and net zero by fiscal year 2040, has obtained SBTi certification, and is advancing information disclosure through participation in RE100 and endorsement of the TCFD recommendations.

Sharp increases in raw material and parts prices, natural and man-made disasters, and production stoppages due to unforeseen circumstances at suppliers are recognized as risks threatening production activities. The company seeks to diversify risk by exploring alternative materials and securing multiple sourcing options, but if market conditions change beyond expectations or unforeseen circumstances occur, this could lead to reduced profitability or lost sales opportunities.

In the regions where it conducts business, the company is subject to a wide range of laws and regulations covering import/export, trade, fair trade, intellectual property, pharmaceutical affairs, the environment, and other areas, and violations of these regulations could result in fines or other penalties. The company works to ensure thorough compliance through gathering information on domestic and international legal regulations, developing guidelines and manuals, and educating employees, but if regulations are strengthened or significantly changed, this could affect business performance through activity restrictions or the incurrence of response costs.

Competition for highly specialized talent in research and development, manufacturing, ICT, management, and other fields is intensifying, creating a risk that the company may be unable to secure the necessary personnel. The company focuses on developing global and core personnel from a long-term perspective and strives to create an environment where diverse talent can demonstrate their abilities, but if personnel development fails or personnel leave the company, this could affect business performance.

There is a risk that securing competitive advantage becomes difficult due to the expiration of patent rights or the emergence of alternative technologies. In addition, if negotiations to use other companies' patents or know-how fail to reach agreement, or if the company becomes involved in litigation, it may bear litigation costs and damages. The company continuously conducts research on other companies' intellectual property rights, but recognizes that it is difficult to completely avoid litigation risk.