Satoh&Co.,Ltd.

Large-scale natural disasters such as increasingly severe typhoons, concentrated heavy rainfall, and earthquakes may cause disruptions to lifelines and breakdowns in logistics networks. Climate change is also a concern due to its wide-ranging impact on policy and regulatory frameworks as well as changes in customer preferences. Although the Company has installed private power generators and fuel supply equipment and has built a cooperative system among its business sites, prolonged impacts could affect business performance.

The Company holds customer information and personal data for a large number of business partners and consumers. If information leakage occurs due to human error, unauthorized access, or cyberattacks, this could result in liability for damages and a decline in social credibility. Although the Company addresses this through backup systems, enhanced system security, appointment of information management officers, and the establishment of system management regulations, it is difficult to completely avoid failures in core systems and networks.

The Company procures a certain volume of ingredients through overseas trading companies and manufacturers, and if the yen depreciates, procurement costs may rise, making it difficult to pass on the increase to selling prices. Fluctuations in ingredient market conditions due to weather, crop yields, and import restriction measures may similarly affect business performance. Although the Company takes measures such as sustainable procurement through multiple suppliers and countries of origin and inventory preparation, there may be cases where corporate efforts cannot fully offset increases in purchasing prices.

The Company owns office equipment and land for its head office, 21 stores, and 9 sales offices, and may need to recognize impairment losses if new store openings fail to meet plan or if business performance deteriorates. In addition, bonds and stocks held for the purpose of utilizing surplus funds may need to be written down due to market conditions or deterioration in the management or financial condition of investees. Although the Company manages this risk through variance analysis of budget versus actual results at monthly regular meetings and monitoring of market values and credit ratings by the Board of Directors, the impact on business performance cannot be completely eliminated.

In delivery operations within the wholesale business segment, logistics costs are rising due to ongoing labor shortages, an aging driver workforce, working hour regulations, and increases in labor and fuel costs. The revision to the Motor Truck Transportation Business Act, to take effect in April 2026, will also require responses to improve logistics efficiency and ensure fair transactions, necessitating periodic review of outsourcing contracts. Although the Company is working to optimize delivery routes through the introduction of dispatch systems and the use of reception systems, if cost increases exceed expectations or if securing personnel becomes difficult, business performance may be affected.

If a wide range of business partners go bankrupt or if a major business partner's financial condition deteriorates sharply, credit risk arises from the inability to collect accounts receivable. Although the Company works to prevent non-performing receivables through the introduction of receivables guarantee services and the recognition of allowances for doubtful accounts, if it becomes necessary to strengthen receivables guarantees or increase allowances, business performance may be affected.

If a compliance violation is discovered, trust relationships with customers may be damaged, and employment issues, harassment, human rights violations, and other problems may arise, potentially causing significant damage to the Company's corporate image. The Company addresses this by holding monthly meetings of the Compliance Committee, chaired by the President, and by establishing compliance regulations and internal whistleblower protection regulations, but if such issues occur, the business may be affected.

If food safety incidents such as expired products, food allergies, or foreign object contamination occur, this may affect not only business performance but also product procurement and credibility. The Company has established a Quality Control Department and implements safety measures such as preparing raw material specification sheets, creating standards manuals, improving on-site inspection functions through guidance, and multi-temperature management, but the risk of unforeseen incidents cannot be completely eliminated.

In hazardous operations such as delivery vehicle driving, forklift operation, and cargo handling, serious traffic accidents, industrial accidents, or product accidents may occur. If such incidents lead to administrative penalties or claims for damages, this could result in a loss of social credibility and customer trust, affecting business operations and performance. The Company continuously implements measures such as regular safe driving education, monthly meetings of the Vehicle Accident Committee, use of drive recorders, and thorough enforcement of warehouse safety rules.

The Company is subject to a wide range of legal regulations, including the Food Safety Basic Act, the Food Sanitation Act, the JAS Act, the Containers and Packaging Recycling Act, the Customs Act, the Product Liability Act, and the Liquor Tax Act. In particular, handling of products that do not conform to food standards under the Food Sanitation Act could result in administrative dispositions such as business suspension. Although the Company implements operational manuals, employee training, and legal procedures to protect its rights, changes in legal systems may affect business activities and performance.