MITSUI & CO., LTD.

The company bears risks of being unable to recover invested capital or achieve planned profits due to limitations in management control over joint venture partners and equity-method affiliates, as well as dependence on operators in non-operator businesses. The impact is particularly significant in the Metal Resources and Oil & Gas Exploration, Development and Production businesses. As countermeasures, the company makes investment decisions based on quantitative and qualitative criteria for new investments, conducts regular reviews of the strategic rationale for holding all businesses, and performs regular monitoring and stress testing of risk assets.

Prolonged conflict in the Middle East and its regional spillover, the situation in Russia and Ukraine, and tensions in US-China relations pose risks of energy market and resource price volatility, logistics disruptions, and increased business operating costs. The gross risk exposure to Russia was ¥279.8 billion (approximately 1.5% of the company's total) as of the end of March 2026. The company seeks to reduce risk through the use of insurance and export credit agencies, monitoring of local conditions, and accumulation of contingency response know-how, but states that it is difficult to avoid all geopolitical risks.

Policy and regulatory risks such as carbon taxes and emissions regulations, technology risks from obsolescence of existing products due to new technology adoption, and market risks from changes in fossil fuel supply and demand and financing constraints may materialize over the medium to long term. Under a 4°C scenario, analysis shows that approximately 80% of the 65 companies analyzed face high heatwave risk by 2050, and wildfire risk is projected to roughly double from current levels. The company addresses these risks by introducing an internal carbon pricing system and setting targets to halve GHG impact and reduce emissions by 30% by 2030.

Prices of commodities such as iron ore, coking coal, copper, crude oil, and natural gas/LNG fluctuate widely due to supply-demand imbalances, economic cycles, and exchange rate movements, directly affecting sales revenue from production businesses. Sensitivity for FY2027 (ending March 2027) is estimated at ¥1.3 billion in profit for the period per US$1/barrel change in crude oil, and ¥3.0 billion per US$1/ton change in iron ore (excluding hedging effects). The company hedges using commodity swaps and other derivatives, manages positions and loss limits by business unit head, and has established a regular reporting framework through an independent risk management department.

The company bears translation risk on foreign currency-denominated assets and liabilities and foreign exchange risk on investments in overseas affiliates, which may have a material impact on comprehensive income and financial position. Sensitivity for FY2027 (ending March 2027) is estimated at ¥4.6 billion in profit for the period per ¥1 change in the USD/JPY rate, and ¥1.8 billion per ¥1 change in the AUD/JPY rate. The company hedges using derivatives such as forward exchange contracts and currency swaps, and applies net investment hedges using foreign currency-denominated borrowings, with hedge accounting applied.

The company holds marketable equity financial assets classified as FVTOCI, for purposes such as creating business opportunities and strengthening business relationships, amounting to ¥1,479.3 billion (7.1% of total assets) at the end of the consolidated fiscal year. Fluctuations in stock market prices could deteriorate other comprehensive income and have a material impact on financial position. The company manages this through regular reviews of its equity portfolio covering all holdings, but states that market decline risk cannot be completely eliminated.

Current trade receivables and other items, net of loss allowance, amounted to ¥2,344.5 billion (11.3% of total assets) at the end of the consolidated fiscal year, and the company bears the risk that receivable collection may become difficult due to deterioration in counterparties' financial condition, an increase in corporate bankruptcies, liquidity crises, and similar factors. The company implements management measures such as credit line management, monitoring of collection due dates, and obtaining collateral, but states that credit management policies cannot completely eliminate this risk.

Operational risks such as fires, explosions, accidents, natural disasters, and import/export restrictions exist across the company's globally diversified businesses, and in the event of an environmental accident, the company may be forced to bear cleanup costs, damages, and fines even as a non-operator. The company addresses this through consideration of risk mitigation and loss prevention measures and by obtaining insurance coverage, but states that not all losses may be covered.

Against a backdrop of increasing global cyberattacks, a major failure of information systems infrastructure or the destruction or theft of confidential management information could lead to a significant decline in operational efficiency or difficulty in continuing business operations. The company has implemented measures such as establishing related regulations, monitoring communication networks, conducting regular emergency drills, and obtaining cyber damage insurance, but states that not all losses may be covered.

Across its broad range of business areas and regions, violations of laws such as trade and investment regulations, antitrust law, anti-corruption law, and tax law, or deviations from internal rules, could lead to unpredictable losses, damage to social credibility, and uncontrollable risks. The company revised the "Mitsui & Co. Group Code of Conduct - With Integrity" in May 2024 and continues efforts such as fostering a speak-up culture, establishing reporting and consultation channels both within and outside the management line, and strictly addressing compliance violations, but states that it cannot completely eliminate all illegal acts.