Nitta Gelatin Inc.

Fluctuations in global economic conditions affecting meat consumption, stagnation or suspension of meat production due to climate change or animal diseases, and increased procurement costs due to rising tariffs may impact the business. Changes in procurement regions caused by distribution regulations also lead to increased raw material costs. As countermeasures, the Group is promoting diversification of procurement sources and raw material types, strengthening collaboration with suppliers, and reducing costs through productivity improvements.

There are concerns about the impact of expanded sales of competing products in the North American market, a key region for business operations, and in Asian regions including India, which the Group plans to focus on going forward. The Group addresses this through global pricing responses, quality improvement, differentiation of technology and services, and global management of optimal-location production and optimal-location sales.

Changes in consumer sentiment toward livestock farming and animal-derived raw materials, as well as potential future tightening of regulations on animal-derived products, may impact the business. There is also a risk that progress in the development of substitute meat and cultured meat using soybeans and other materials could make it difficult to procure animal-derived raw materials in the future. The Group addresses this by examining the potential for entry into substitute markets and creating new businesses.

Natural disasters, geopolitical issues such as war, and unknown infectious diseases pose risks of deteriorating raw material procurement conditions, disruption to logistics, and impacts on production and sales systems due to employee infection. Restrictions on economic activity at domestic and overseas sites may affect business results and financial condition. The Group addresses this by developing and periodically reviewing its Business Continuity Plan (BCP), diversifying its supply chain, and promoting optimal-location production and optimal-location sales.

If stable operation of information systems becomes difficult due to troubles during system updates or cyberattacks, this poses risks of disruption to business activities, recovery costs, and damages to customers. Leakage of sales information, customer information, personal information, and the like could lead to loss of trust and claims for damages. The Group addresses this through operation of a CSIRT, dissemination of security policies, strengthened network monitoring, and strict management of access rights.

Serious quality issues such as foreign matter contamination or errors in disseminating quality-related information pose risks of claims for damages and loss of trust. Major domestic and overseas plants have obtained FSSC22000 certification and manufacture products in accordance with an international quality management system. The Group addresses this by ensuring traceability from raw materials to products and building a management system in collaboration with suppliers.

There are risks of product recalls and loss of trust due to the abolition or establishment of various laws and regulations in Japan and overseas, or deviations from labeling rules. There are also concerns about lost sales opportunities due to certification revocation resulting from deviation from the rules of various religions. The Group addresses this by establishing a team to review domestic and overseas laws and regulations, joining various industry associations and gathering information through experts, and designing products and implementing quality control in line with the regulations of final export destinations.

Foreign exchange and interest rate fluctuations beyond expectations pose risks of impacting business results and financial condition. For the Group, which operates globally, foreign exchange risk across multiple currencies is an ongoing challenge. The Group addresses this by using forward exchange contracts to reduce foreign exchange risk related to operating transactions and by reducing interest-bearing debt such as borrowings.

There is a risk that changes in tariffs due to each country's tariff policies or the entry into force of agreements such as the TPP and EPAs may cause actual import and export prices to fluctuate. International taxation risks such as transfer pricing taxation systems in various countries may also affect business results. The Group addresses this by gathering information on tax reforms in each country, procuring from overseas group companies and partner companies located in low-tariff countries, and promoting optimal-location production and optimal-location sales.

If the recruitment and development of qualified personnel does not proceed as planned due to changes in employment conditions, or if employee turnover increases, this poses a risk of decline in the Group's competitiveness and impact on business continuity. The Group addresses this through strengthening career-track hiring in addition to new graduate recruitment, enhancing tiered education and training programs, reviewing evaluation and compensation systems, improving employee engagement, and promoting work-style reform and women's advancement.