Yamatane Corporation

There is a risk that business profitability may deteriorate due to fluctuations in handling volumes resulting from changes in logistics strategies among major customers in the food, home appliance, medical, and other sectors. The logistics industry's "2024 problem" and structural driver shortages may make it difficult to secure contracted transportation companies, potentially causing outsourcing costs to rise sharply. The Group seeks to reduce this risk by strengthening collaboration with customers to promptly grasp their needs, proposing efficient logistics solutions, and appropriately passing on cost increases through pricing.

There is a risk that declining food consumption due to population decline and changes in consumption patterns may intensify price competition with competitors. The aging of production areas and reduced rice production due to climate change increase the risk of fluctuations in procurement prices, while driver shortages make it difficult to maintain transportation and delivery networks, and rising logistics costs may squeeze business profitability. Imported frozen processed foods also carry geopolitical and foreign exchange risks. The Group addresses these risks by strengthening collaboration with production areas and suppliers and utilizing its own logistics functions.

There is a risk that the technological competitiveness of the core mainframe systems business may decline due to the rapid advancement of cutting-edge technologies including AI. The aging of existing engineers and intensifying competition to acquire advanced IT talent may result in insufficient resources to meet customers' DX needs. The Group seeks to reduce this risk through the acquisition of cutting-edge technology by dedicated departments, strengthened collaboration with external system companies, and proactive investment in human capital.

In addition to the risk of vacancy and price competition arising from an increased supply of large office buildings in the Tokyo metropolitan area, the Group faces risks of rising procurement costs due to interest rate increases and fluctuations in the real estate market. Elevated material prices and labor costs may increase construction costs, potentially causing delays in development schedules or requiring plan revisions, and there are also concerns about increased renovation costs for existing buildings due to tightening environmental regulations. The Group aims to strengthen its competitiveness by promoting flexible business planning and the systematic development and improvement of environmentally conscious properties.

While the Group primarily procures funds at fixed interest rates to address the risk of fluctuations in variable-rate borrowings, interest on variable-rate borrowings and financing at the time of refinancing may be affected by interest rate conditions, potentially causing business performance to fluctuate. In addition, if the economic value of held assets declines, impairment losses may need to be recognized, which could materially affect the Group's financial position and business performance. The Group is working to reduce this risk by continuously promoting reductions in interest-bearing debt.

If information systems become temporarily inoperable or information leaks or losses occur, this is expected to affect not only the Group but also business partners, potentially leading to a decline in credibility and impact on business performance. While the Group has implemented internal information management systems, defenses against external intrusion, and Privacy Mark certification, among other measures, complete protection is difficult given the increasing sophistication of cyberattacks. In the information-related business, there is also a risk of increased costs to respond to the rapid escalation of security requirements from an economic security perspective.

If a large-scale natural disaster such as an earthquake or an infectious disease such as COVID-19 occurs, it may cause significant damage to the Group and its business partners, potentially affecting business performance. Although the Group has established response manuals and formulated a Business Continuity Plan (BCP), there is a risk that business continuity as planned may become difficult in the event of a widespread, large-scale disaster.

Failure to recruit, secure, and develop excellent talent, or to prevent the outflow of talent, may affect the business. Because the Group operates diverse businesses spanning logistics, food, information, and real estate, it requires a broad range of talent suited to each field, and competition to acquire advanced IT talent is particularly intense in the information-related business. There is also a risk of reputational damage from serious workplace accidents resulting from inadequate labor management.

Prolonged tensions in the Middle East and Ukraine, together with the depreciation of the yen, may cause elevated energy prices to persist over the long term, potentially raising procurement costs for vehicle fuel and cargo handling materials in the logistics-related business, packaging materials in the food-related business, and construction materials and electronic components in the real estate and information-related businesses, thereby affecting business performance. The Group aims to reduce the impact on performance by reviewing materials and procurement routes, curbing material consumption through digitalization, and promoting appropriate price pass-through in light of market conditions.

Changes in the business environment following corporate acquisitions or investments, the discovery of unexpected liabilities, or delays in the post-merger integration (PMI) process may hinder business plans and affect business performance and financial position. Although due diligence is conducted in advance, it is difficult to fully predict changes in the environment following an acquisition. The Group seeks to reduce this risk by having administrative department personnel participate in PMI at an early stage, dispatching personnel to acquired companies to quickly establish governance, and building a monitoring system through regular progress evaluations by management.