TSUKIJI UOICHIBA COMPANY, LIMITED

The Company's primary business is the wholesale of marine products at the Toyosu Market, one of the Tokyo Metropolitan wholesale markets, and its dependence on wholesale markets is extremely high. The deterioration in the financial condition of intermediate wholesalers within the market has been gradually increasing, and the occurrence of bad debts due to the inability to collect trade receivables may affect business performance. The Company addresses this by establishing allowances for doubtful accounts; however, combined with rising costs related to the state-of-the-art facilities at Toyosu Market, multiple risks exist in combination.

The Company Group relies on borrowings from financial institutions for working capital and capital expenditure funds, and changes in the lending trends of financial institutions may affect its financial position. As a countermeasure, the Group aims to strengthen its financial base by maintaining continued positive operating cash flow and reducing net borrowings.

The Company Group conducts settlements denominated in foreign currencies for import and export transactions, and fluctuations in exchange rates may affect the unit prices of import and export transactions. The Group implements risk hedging through forward foreign exchange contracts, but this does not completely eliminate the risk.

The Company Group purchases products taking market conditions into account, but fluctuations in the market prices of held products may affect business performance. As a countermeasure, the Group sets target month-end inventory balances for each sales department and works to optimize inventory holdings and improve turnover rates through periodic reviews.

An unexpected outbreak of infectious disease could lead to the declaration of a state of emergency or similar measures, causing business-related establishments to voluntarily restrict or suspend operations and refrain from holding banquets and parties, which may reduce sales in the Marine Products Wholesale Business, the Company's main segment. There are also concerns about a decline in high-end fish prices and a contraction in the volume of marine products distributed due to stagnation in imports and exports.

International political conditions and regional conflicts may cause sharp increases in the prices of imported marine products and a decrease in the volume of import and export transactions handled. There is a risk that if increases in procurement costs, such as fish prices, transportation costs, and tariffs resulting from rising resource prices, cannot be passed on to selling prices, this could adversely affect profit and loss.

Due to the amendment of the Labor Standards Act in April 2024 regulating drivers' overtime work (the so-called "2024 Problem"), the Company Group's logistics costs may rise. This has been positioned as a key issue in the medium-term management plan, and if the integration of commercial and physical distribution and the pass-through of logistics costs to selling prices cannot be realized, this will affect profit and loss.

While irregular business closure days and working hours are necessary to ensure a stable food supply and maintain market functions, there is a concern that securing the necessary personnel and talent may become difficult due to Japan's declining working population and the growing job transfer market. As a countermeasure, the Company is actively pursuing the recruitment of new graduates, second-time new graduates, and mid-career hires, and is focusing on talent development by renewing tiered education programs.