Risks that may have significant effects on the judgment of investors include the following. Please note that any forward-looking statements in this material are based on the judgment of the Nissui Group as of the end of this consolidated fiscal year.
(1) Food safety risks
Food quality issues have emerged in recent years, such as problems related to pesticide residue, the bird flu, radioactive contamination, as well as pesticide contamination incidents in the frozen food industry. The Nissui Group has established strict quality assurance standards and a system is in place for quality assurance. For example, prohibiting the carrying in of objects into the factories as well as the management of drug storage areas and laboratories is strictly adhered to, ensuring maximum effort is made in quality assurance to deliver safe products to our customers. However, when unforeseen problems do occur, the possibility of adverse affects on Nissui Group's business performance arises.
(2) Risks related to market conditions of fishery products
Fishery products handled by the Nissui Group are largely imported from overseas countries and sold in Japan. When conditions in the fishery products market vary beyond what can be foreseen, the risk of adverse effects on Nissui Group's business performance arises. Some examples of varying conditions include an increase/decrease in the volume of landed fish, spread of disease among farmed fish, and large-scaled natural disasters that affect supply and demand.
(3) Risks related to fluctuations in the prices of raw materials
Prices for fuel, auxiliary material, equipment and other raw materials used by the Nissui Group vary based on market conditions. When such raw material prices rise significantly higher than expected and cannot be covered with cost reductions, or cannot be added to sales prices, Nissui Group's business performance may be affected.
(4) Risks related to businesses overseas
The Nissui Group has business operations in North America, South America, Asia, Europe and other parts of the world. If situations occur in these regions, such as political and economic instability, war, terrorism, or the spread of disease among farmed fish or large-scaled natural disasters, effects on Nissui Group's business performance may result.
(5) Risks related to the aquaculture business
The Nissui Group is engaged in the aquaculture business both in Japan and overseas. When disease spreads among the fish that is unpreventable, effects on Nissui Group's business performance may result.
(6) Risks related to fluctuations in currency exchange rates
The Nissui Group carries out export and import transactions related to product and raw materials and is affected by changes in the exchange rate. To mitigate this risk, measures such as foreign exchange contracts are used, but in the case of fluctuations in the exchange rate greater than what can be foreseen, Nissui Group's business performance may be affected.
(7) Risks related to changes in legal regulations
The Nissui Group is subject to various regulations both in Japan and overseas during the course of business operations. Should any revisions to regulations in place or new legal regulations arise in the future that cannot be currently foreseen, the possibility of the Nissui Group's business performance being affected may arise.
(8) Risks related to changes in the accounting system
The Nissui Group faces the possibility of its business performance or financial status being affected by changes in the accounting system such as the implementation of new accounting standards.
(9) Risks related to effects on assets held resulting from share price fluctuations
The Nissui Group reviews as necessary its securities and other assets held putting into account aspects such as relationships with business partners and market conditions. However, in cases where the value of securities and other assets fall due to sudden fluctuations in the stock prices or poor performance by invested entities and impairment becomes necessary, the Nissui Group's business performance may be adversely affected as a result.
(10) Risks related to information systems
The Nissui Group retains the personal information of a large number of customers in relation to activities including marketing campaigns and online sales. The Nissui Group implements appropriate security measures, such as having regulations in place and strictly ensuring that all employees are made aware of the importance of information management through education and training to prevent the loss, misuse, and tampering, etc., of such important information. However, there still remains the risk of the destruction, suspension, temporary disruption of the information system or the loss, leak, tampering, etc., of internal data including customer information due to an unpredictable situation such as a power outage, disaster, software or equipment failure, computer virus infection, unauthorized access, etc. In the event of such incident, the Nissui Group's business performance may be adversely affected.
(11) Risks related to the environment
The Nissui Group observes all relevant laws, rules and regulations related to the environment in the course of its business operations and strictly adheres to initiatives for waste reduction, recycling, energy conservation, carbon dioxide emission reduction, and package recycling.
However, changes in relevant rules and regulations may require investments in new facilities, changes in waste management or other similar actions, and in the case significant costs are incurred as those results, the Nissui Group's business performance may be adversely affected.
(12) Risk of litigation
The Nissui Group obeys relevant laws and regulations and does its utmost to have its employees understand and adhere to compliance over the course of business operations.
However, the risk of a lawsuit against the Nissui Group is always present both in Japan and overseas, and in case a lawsuit is filed against the Nissui Group, the ruling may cause adverse affects upon the Nissui Group's business performance.
(13) Risks related to the securing and training of human resources
The Nissui Group believes it is important to secure and develop human resources in various areas including sales, technology and business management, and is taking necessary measures to do so. However, if the Nissui Group is unable to secure and develop human resources, it will face the risk of being unable to achieve its business objectives.
(14) Risks related to changes in the business environment
The Nissui Group, in carrying out its business operations, faces the risk of being heavily affected by consumption trends due to economic conditions such as the state of the economy. A drop in consumer spending or a decline in demand due to a global recession may adversely affect the Nissui Group's business performance and financial status. Japan's declining birth rate and aging population also pose a risk to shrinking the overall market.
(15) Risks related to credit management
The Nissui Group is prepared for credit risks of business partners, but in cases where the unexpected risk of credit loss as a result of the credit standing of business partners arises and there is a need to record additional losses or provisions, the Nissui Group's business performance may be adversely affected.
(16) Risks related to natural disasters
The Nissui Group regularly inspects its facilities to ensure safe and standard operations of its manufacturing lines. However, in the event of a disaster such as an earthquake, typhoon or tsunami where operations are halted for a long period of time, the Nissui Group's business performance faces the risk of being affected.