Zojirushi Corporation

The Group has production bases centered on China and sales companies around the world, and changes in the international situation—such as U.S.-China relations, the Russia-Ukraine situation, and the situation in the Middle East—can have a significant impact on business operations. In particular, U.S. tariff policy has already been implemented, and there is a risk of further strengthening, retaliatory measures, and changes to trade and energy policies and legal systems in various countries. As countermeasures, the Group is continuously monitoring tariff trends and regulatory changes, reviewing its supply chain, and appropriately passing costs through to sales prices.

The prices of key raw materials such as stainless steel, resin, and copper are heavily influenced by international market conditions, and increases in raw material and parts prices may affect business results and financial condition. If price increases become prolonged, there is a risk that rising manufacturing costs will squeeze profitability. As a risk mitigation measure, the Group is implementing responses such as reviewing the sales prices of finished products.

Assets denominated in local currencies from overseas operations are affected by exchange rates at the time of translation, and products and materials imported from overseas are settled in currencies other than the Japanese yen; therefore, if the yen depreciates beyond expectations, business results and financial condition may be affected. The Group allocates U.S. dollars received from exports to cover payments, and hedges a portion of the shortfall through forward foreign exchange contracts based on its risk management policy.

The Group's core products compete with those of home appliance manufacturers and others, and some competitors have greater research, development, manufacturing, and sales resources than the Group. If competition intensifies in the future and market share declines, business results and financial condition may be affected. As countermeasures, the Group is actively promoting the expansion of its product lineup, revitalization of existing products, and development of new products to increase sales and market share, as well as new value-proposition activities.

Pressure from the market to reduce delivery prices and demands for rebates are tending to intensify, and if price declines significantly exceed the Group's assumptions and persist over the long term, business results and financial condition may be affected. The Group is working to maintain or raise product prices through the introduction of competitive new products, but depending on market conditions, there is a risk that this could lead to a decline in profitability.

The Group aims to introduce products in new categories and develop high-value-added products and price-competitive products, but it may not always be able to accurately predict new products and technologies that will gain support in the market, and if sales are poor, this could reduce future growth and profitability. While the likelihood of this risk materializing is difficult to predict, the Group is working to provide value-added products through improving the basic performance of products, resolving dissatisfaction points during use, and maintaining a commitment to safety and ease of use.

Although products are manufactured under strict quality control standards, the Group has taken out product liability insurance in case a product defect should occur. However, if a large-scale product defect or recall occurs, losses that cannot be fully covered by insurance may arise, and damage to brand credibility could have a material impact on business results and financial condition.

Through its business activities, the Group holds personal information and confidential information of customers and business partners; if cyberattacks, unauthorized access, computer viruses, or other incidents cause information leaks or the destruction, falsification, or system shutdown of important data, this could lead to a loss of trust and affect business results and financial condition. As risk mitigation measures, the Group has obtained ISMS certification, strengthened system security measures and monitoring systems, and thoroughly conducted employee training to maintain confidentiality on both the system and operational sides.

Since the Group conducts production and sales activities both domestically and internationally, if earthquakes, floods, typhoons, fires, wars, infectious diseases, or other events occur and damage the Group or its business partners, business activities could be disrupted, affecting business results and financial condition. While the likelihood of this risk materializing is difficult to predict, the Group has formulated a crisis management manual and disseminated it to all employees, is considering a variety of scenarios including relocation of head office functions, and is examining ways to avoid concentrating administrative work and production sites in one location.

The Group takes measures against counterfeit products through trademark applications and registrations both domestically and internationally, but if counterfeit products bearing the Group's brand appear on the market, damage to brand value could affect business results and financial condition. In addition, in certain regions sufficient protection of intellectual property rights may not be available, and if the Group is accused by a third party of infringing intellectual property rights, there is also a risk of losses arising from damages or royalty payments.