| Risks related to changes in the business environment |
- The domestic oil and fat market is shrinking and demand is declining due to factors such as a low birthrate, an aging population, population decrease, and changes in consumer lifestyles.
- Loss of market share due to changes in trading and sales policies resulting from customer mergers and acquisitions.
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- Developing high value-added products and services based on materials and technologies such as "oils and fats" and "starchs," revising product lineups, and strengthening proposal capabilities to stabilize the trading base and build long-term relationships.
- Expanding business opportunities and diversifying geographically through overseas market expansion.
- Development and expansion of new business areas, including non-edible areas such as SAF.
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| Risks related to raw materials procurement, exchange rates, etc. |
- Unavailability of procurement and increased procurement costs due to geopolitical risks and regulations in various countries.
- Increased procurement costs due to increased demand for biofuels and other applications.
- Increased procurement costs due to changes in the quality and price fluctuations of key raw materials
- Increased procurement costs due to fluctuations in exchange rates, ocean freight rates, etc.
- Difficulty in securing a stable supply of raw materials due to rising temperatures, decreased harvest yields, and changes in quality.
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- Transactions that are considered to be in a competitive position within the scope of raw material purchasing regulations and foreign exchange forward contract operation regulations.
- Futures pricing and hedging transactions using forward exchange contracts, etc.
- Research and adoption of new raw material sources and suppliers
- Implementation of initiatives through Refining Partners Japan Co., Ltd., aimed at ensuring a stable supply of oils and oilseed meal.
- Implementing price revisions for products based on costs and improving profitability through cost reductions.
- Promoting sustainable procurement activities throughout the supply chain
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| Risks related to natural disasters, infectious diseases, accidents, etc. |
- Human casualties among employees, damage to facilities and equipment, etc., due to large-scale earthquakes, typhoons, torrential rains, fires, explosions, and other accidents.
- Operations suspended and product supply disrupted due to the spread of infectious diseases.
- Difficulties in continuing business activities due to supply chain disruptions and breakdowns in social infrastructure
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- Strengthening response capabilities by regularly reviewing crisis management systems and business continuity plans (BCPs)
- Efficient business operations, including remote work
- To ensure stability, we are diversifying our production and supply systems by securing subcontractors and partners, ensuring appropriate inventory levels, and speeding up communication and information sharing with customers.
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| Risks relating to overseas expansion |
- Changes in laws, regulations, tax systems, etc. that have an adverse effect on the region in which the business operates.
- Occurrence of conflicts and terrorism, changes in political and social conditions, occurrence of natural disasters
- Accounting fraud and illegal acts occurring due to poor governance at overseas subsidiaries
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- Obtaining information on laws and regulations in various countries and overseas risks from external consultants and group companies operating abroad, and implementing prompt responses.
- Strengthening internal controls and conducting regular audits
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| Risks related to product safety, quality and stable supply |
- This includes situations such as health hazards to customers, violations of labeling and other laws, voluntary recalls due to foreign object contamination, and food fraud or data falsification.
- Failure to comply with laws and regulations regarding quality and food safety at external contractors, business interruptions, manufacturing delays, and shortages due to defective products.
- Product supply interruption due to production equipment failure caused by aging equipment, etc.
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- Operate a quality management system based on ISO9001 (reduce quality risks by implementing quality assessments at the product development stage and strengthening the system)
- Obtaining ISO22000 certification and conducting quality audits to ensure proper operation and confirmation
- Continuing employee education
- Product development and research and development that reflects customer feedback
- Preventing problems and strengthening competitiveness through equipment maintenance based on preventative maintenance, and through medium- to long-term renewal plans and investment decisions.
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| Logistics-related risks |
- Logistics failure due to lack of proper logistics cost management, such as stagnation of product supply and significant delivery delays due to a shortage of drivers and loading and unloading workers or an inability to secure delivery vehicles
- Production and shipment halt due to delays or stagnation in the arrival of raw materials and packaging materials.
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- Improving the logistics and working environment by improving incidental tasks outside of delivery work, reducing long waiting times, systematically securing vehicles by extending lead times, and setting appropriate fees.
- Appropriate response to changes in laws and regulations
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| Risks of information leaks and cybersecurity |
- Unauthorized access, computer virus infections, information leaks, alterations, and loss due to ransomware, etc., and shutdowns of ICT (*1) infrastructure and production lines.
- Inadequate response when an incident occurred
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- Implementation of a system to protect against unauthorized intrusion into the internal network.
- Improving and thoroughly disseminating security awareness among employees through e-learning and other means.
- Response to incidents (continuous strengthening of CRIST)
- Improving security measures for personal information handling systems to prevent data leaks.
- Promoting the transition to a zero-trust security platform
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| Climate change and environmental risks |
- Increased production costs due to stricter CO2 emission regulations
- Decline in corporate value due to insufficient environmental measures and violations of environmental laws
- Loss of social credibility due to inadequate response to biodiversity and water resource risks.
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- Promoting ESG management integrated into business
- Resource and energy conservation, reduction of CO2 emissions, reduction of plastic use, effective use of water resources
- Maximizing resource utilization efficiency by utilizing AI in the value chain
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| Human rights risks |
- Decreasing corporate value due to inadequate human rights practices in the supply chain
- Human rights violations such as harassment
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- Identify and improve sustainability issues in the supply chain through effective use of external programs
- Ensuring traceability in raw material procurement
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| Risks related to securing human resources and labor management. |
- The ongoing recruitment and training efforts, hindered by the declining workforce, are resulting in a shortage of highly skilled personnel, individuals with diverse values, and future leaders.
- Loss of corporate value due to industrial accidents, violations of labor-related laws and regulations, labor disputes, etc., and claims for damages.
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- Maintaining and improving a pleasant working environment, establishing a fair personnel and treatment system and implementing appropriate operations
- Developing human resources with advanced expertise and the next generation of management talent
- Promoting diversity through the active participation of women and post-retirement employment extension systems
- Implementing safety and health education, establishing a safety and health management system, improving the working environment, and responding quickly when accidents occur
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| Risks related to fund raising |
- Increase in interest burden due to rising market interest rates
- Difficulties in raising funds due to turmoil in financial markets
- Difficulty in raising funds when credit ratings or evaluations of ESG initiatives decline.
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- Selection of a comprehensive fund raising method based on the nature of fund demand, financial market environment, long-term and short-term balance, fund raising costs, and diversification of fund raising sources
- Reduce interest rate fluctuation risk by combining fixed interest rate financing through corporate bonds and long-term borrowings
- Grasp the scale of capital impairment risk through continuous monitoring of assets with impairment risk and deferred tax assets
- Improve capital efficiency by thoroughly reducing assets through working capital management and reduction of cross-shareholdings
- Promoting sustainability initiatives and maintaining external evaluations through appropriate information disclosure.
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| Risks related to impairment losses on goodwill and fixed assets |
- Poor performance of subsidiaries acquired or invested in, and significant shortfall in business plans
- Decline in the fair value of fixed assets
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- Deliberations at the Investment and Loan Committee and the Management Committee regarding the appropriateness of the acquisition price and follow-up on the realization of post-acquisition synergies
- Regular monitoring of the macroeconomic environment
- Estimates of future cash flows based on business plans
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| Risks regarding intellectual property |
- Our intellectual property rights are insufficiently protected against similar technological developments by competitors, or we lose our competitive advantage due to infringement of our intellectual property by competitors.
- Injunctions against sales and claims for damages due to infringement of third-party intellectual property rights, etc.
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- Strengthening collaboration with related departments to quickly discover inventions and acquire intellectual property rights promptly and appropriately
- Establishing a mechanism to prevent infringement of third party intellectual property rights
- Ongoing training for employees on intellectual property rights
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| Compliance risks |
- Occurrence of acts that violate laws, regulations, or social norms, or fraud, harassment, etc.
- Business constraints due to changes or additions to laws and regulations
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- Formulated the "J-Oil Mills Code of Conduct" to ensure compliance with laws, regulations and social norms, and thoroughly publicized it through in-house training
- Early detection and correction of fraud and harassment through the establishment of internal reporting systems both inside and outside the company
- Keep a close eye on information on amendments to laws and regulations to keep up with changes
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| Risks relating to the establishment of a group management structure |
- Additional costs incurred for correcting significant deficiencies or weaknesses in group governance or internal controls within the group.
- Dilution of synergy effects due to inadequate planning and review of group strategies.
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- Implementation of reporting to ensure the effectiveness of internal controls in group companies
- Promoting a group-wide support system, including training programs involving group companies.
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