Risk of fluctuations in meat prices and volumes due to animal diseases and safeguards

「In the アスモトレーディング business, surging prices driven by global inflation and continued yen depreciation accelerated further, forcing the company to sell at unprecedentedly high price levels. In addition, logistics delays caused by climatic factors such as drought and growing instability in global conditions, together with rising gasoline prices, kept meat prices on an upward trend. For chicken, surging prices of Brazilian chicken thighs, and for pork, an import ban on Spanish pork, made procurement under previous conditions difficult and led to lower sales volumes.」

「The balance between demand and supply was severely disrupted by external factors including exchange-rate movements, abnormal weather, global conditions and economic conditions, materially affecting stable sales.」

「Because the アスモトレーディング business of the group is primarily engaged in selling beef, beef offal, pork and processed livestock products, its past performance has fluctuated significantly due to outbreaks of animal diseases and the imposition of safeguards on imported beef and pork.」

「In the アスモトレーディング business, overseas imports of meat declined because global inflation affected the prices of imported meat from countries around the world. In Japan, meat prices continued to surge amid intermittent yen depreciation from the previous year, and the company continued selling under conditions that made it difficult to pass higher costs on to selling prices.」

「In the meat market, fuel prices surged amid geopolitical uncertainty, while transport costs and grain feed prices remained high. As a result, global inflation drove up prices for imported beef from the United States, Australia and other countries. In Japan, meat prices continued to rise amid the intermittent weakening of the yen, making it difficult to pass higher costs on to selling prices. In September in particular, demand declined and the exchange rate approached ¥150 per US dollar, causing demand to weaken amid soaring prices and hindering profit generation.」

「In the アスモトレーディング business, within the global meat market, the sharp rise in crude oil prices caused by Russia's invasion of Ukraine drove up transportation costs and grain feed prices, making supplies of imported beef from the United States, Australia and elsewhere unstable. The business environment also changed significantly in Japan, where meat prices continued to surge amid a record level of yen depreciation.」

「In the アスモトレーディング business, while supplies of imported beef from the United States, Australia and elsewhere remained unstable and prices continued to surge, the company leveraged its strengths in steadily procuring Mexican beef locally and its price advantage, successfully capturing food-service demand from around autumn through the year-end period without restrictions on activity, and sales continued to increase from the cumulative second quarter of the fiscal year.」

「In particular, amid surging prices for imported beef from the United States, Australia and elsewhere, the company has increased sales to both new and existing customers by leveraging its strengths in procuring Mexican beef steadily from local sources and its price advantage.」

「As supplies of imported beef from the United States, Australia and elsewhere became unstable and prices surged, demand for the Mexican beef handled by the company increased, resulting in higher volumes handled.」

「In the アスモトレーディング business, domestic sales remained firm from October 2021 as demand in the food-service industry increased following the lifting of the state of emergency for COVID-19. However, profit margins declined due to higher costs resulting from labor shortages in meat-producing countries, the upward trend in prices caused by persistently high international demand and the yen's depreciation.」

「In addition to the phased easing of various restrictions intended to prevent COVID-19 infections in Japan's food-service industry, global beef prices have risen sharply due to factors including a sudden increase in international meat demand, prolonged drought in Australia, a decline in global meat production during the COVID-19 pandemic and higher ocean freight rates.」

「In the fourth quarter, the market was also affected by COVID-19. In March, container congestion bound for China caused major changes and delays in shipping companies' schedules, disrupting smooth distribution and slowing sales.」

「As African swine fever (ASF), which has spread primarily in China, drove up pork prices worldwide, chicken and beef were also affected.」

「However, this year, demand in the Kanto region did not grow as much as expected due to unsettled weather in July. Although western Japan suffered less weather-related damage than last year, the impact of Typhoon No. 15 and torrential rain caused damage in various areas of the Kanto region, resulting in significant economic losses.」

「In the アスモトレーディング business, the operating environment remains difficult for maintaining stable operations, due to higher logistics costs resulting from labor shortages and higher tariffs on frozen beef from the United States, Canada, New Zealand, and other countries following the safeguard measure introduced in August.」

「The Group is working to broaden the range of products it handles and develop procurement routes in an effort to establish a management base less susceptible to market fluctuations and other factors. However, if animal diseases or other factors cause sharp fluctuations in the prices or volumes of products handled, the Group's business performance could be affected.」

「Because the アスモトレーディング business is primarily engaged in selling beef, beef offal, pork, and processed livestock products, its past performance has fluctuated significantly due to outbreaks of BSE, avian influenza, foot-and-mouth disease, and other diseases, as well as the imposition of safeguard measures covering imported beef and pork.」