Marubeni Corporation

Events affecting the global economy, such as U.S.-China political and economic conditions, the Russia-Ukraine situation, the Middle East situation, and climate change/natural disasters, may adversely affect the business activities of the Marubeni Group, which operates in more than 60 countries. In addition, insufficient response to technological innovation such as generative AI and changes in industrial structure due to decarbonization poses a risk of existing business models becoming obsolete. A deterioration in the global economy or an insufficient response to changes in industrial structure would have a direct adverse impact on business performance and financial condition.

As of the end of the current fiscal year, investments in resource interests totaled approximately ¥1,050.0 billion (approximately ¥590.0 billion for copper, approximately ¥190.0 billion for iron ore, approximately ¥150.0 billion for coking coal, etc.). It is estimated that a fluctuation of US$100 per ton in the copper price would have an annual impact of approximately ¥1.3 billion on profit for the year, while a fluctuation of US$1 per barrel in the crude oil price would have an annual impact of approximately ¥0.2 billion. These commodity prices fluctuate due to factors beyond the Company's control, such as global supply-demand imbalances, economic cycles, and geopolitical conditions. A decline in prices could result in impairment losses or the inability to recover invested funds, which could materially and adversely affect business performance and financial condition.

The Company Group holds substantial long-lived assets, including resource interests, intangible assets including goodwill, and equity-method investments. If asset values decline significantly due to changes in the economic and industry environment or revisions to business plans, impairment losses or additional losses upon withdrawal may occur. Equity-method investments in copper mines in Chile (Los Pelambres, Centinela, Antucoya), an iron ore mine in Australia (Roy Hill), and coal mines in Australia (Jellinbah East, Lake Vermont, Hail Creek) represent the Company's main exposures in this regard. Impairment testing is conducted in accordance with IFRS, but business plans may be revised due to fluctuations in commodity prices and production volumes, or increases in operating costs.

The Company Group conducts transactions in various currencies, and since much of the equity in earnings and dividend income from overseas consolidated subsidiaries and equity-method affiliates is denominated in foreign currencies, exchange rate fluctuations directly affect business performance. It is estimated that a ¥1 fluctuation in the Japanese yen against the U.S. dollar would have an annual impact of approximately ¥1.9 billion on profit for the year, while a ¥1 fluctuation against the Australian dollar would have an annual impact of approximately ¥0.6 billion. Although risk mitigation is pursued through derivative contracts such as forward exchange contracts, complete avoidance is not possible.

The Company Group conducts business globally, with major country risk exposures amounting to ¥1,368.3 billion in the United States, ¥677.2 billion in Chile, ¥450.7 billion in Australia, ¥262.2 billion in Indonesia, and others. The Group is exposed to country risks such as changes in the economic environment in regions where it operates, deterioration of social conditions including war, terrorism, and civil unrest, and changes in legal systems and policies. A deterioration in the business environment could adversely affect business performance and financial condition. Although risk hedging is pursued through the establishment of country risk management standards based on country classifications and the taking out of trade and investment insurance, complete elimination of such risk is difficult.

The Company Group's businesses are subject to a wide range of laws and regulations in Japan and other countries, including export/import controls, antitrust laws, anti-money laundering regulations, anti-corruption and anti-bribery laws, personal information protection laws and the GDPR, and environmental protection laws. In some countries where the Group operates, legal systems may not function sufficiently, or unforeseen changes in laws and regulations may occur. Compliance violations could result in penalties, including business suspension, and a loss of credibility. In addition, there is a risk of unexpected taxation due to differences in views with tax authorities in various countries, which could result in an additional tax burden.

In a series of lawsuits with the Sugar Group in Indonesia, the second judicial review (retrial) in the Gunung Sugih lawsuit was declared inadmissible. In addition, with respect to the damages claim lawsuit (main suit), the Company received on January 19, 2026, a decision granting a judicial review (retrial) filed by the Sugar Group, which overturned the Supreme Court judgment the Company had received on November 8, 2022. Depending on future court proceedings, the Company may be required to bear all or part of the damages, interest, and litigation costs based on an adverse judgment, which could adversely affect business performance and financial condition.

Transition risks arising from GHG emission regulations, such as the introduction or strengthening of carbon taxes, and the rapid development of decarbonization technologies could adversely affect business performance, particularly in fossil fuel-related businesses such as power generation and resource interests/sales businesses. In addition, if physical risks such as intensifying natural disasters and worsening extreme weather materialize, profitability in businesses such as agricultural materials and afforestation could deteriorate. The Company is pursuing initiatives aimed at achieving net-zero GHG emissions by 2050, including halving the net power generation capacity of coal-fired power plants by 2025 compared to the end of FY2018 (ending March 2019), but if these initiatives do not succeed, business performance and financial condition could be adversely affected.

The increasing sophistication of cyberattacks has heightened risks such as the leakage of confidential and personal information and the shutdown of information systems due to unauthorized external access and computer virus intrusions. The Company has taken measures such as establishing an IT Strategy Committee chaired by the CDIO, building a response framework through the Security Management Team (M-CSIRT), and developing common Group-wide IT governance rules. However, security risks related to business IT (e-commerce sites, IoT, control systems, etc.) are also increasing, and complete elimination of such risk is not possible.

If major turmoil occurs in domestic and overseas financial markets, or if profitability declines or credit ratings are significantly downgraded by rating agencies, fundraising may be constrained or the cost of funding may increase. In addition, the portion of funding procured at variable interest rates is exposed to interest rate fluctuation risk. While the Company utilizes asset-liability management and interest rate swap contracts, among other measures, the impact of interest rate fluctuations cannot be completely avoided. Should these risks materialize, they could adversely affect business performance and financial condition.