Natural Disasters, Infrastructure Disruptions and System Failures

「Cabbage, the main raw material used in the Company's flagship product, 「餃子」, has experienced a sharp rise in market prices because abnormal weather caused a significant decline in harvest volumes. Rice prices have also remained elevated.」

「Regarding domestic demand, employment conditions remained solid against a backdrop of labor shortages, but personal consumption struggled to grow because of the reaction following the rush in demand before the consumption tax increase and the effects of wind-related damage from typhoons and other events,」

「In the food service industry, customer traffic was sluggish in April, particularly in eastern Japan, because of low temperatures and bad weather. The industry also declined somewhat in the second half of May because of the change of era to Reiwa and the reaction following the long holiday period, although overall conditions remained solid, albeit gradually.」

「In the food service business, some restaurants were forced to suspend operations or shorten their hours because of continuing natural disasters. However, we worked to minimize the impact on business performance by securing alternative logistics routes and strengthening promotions in regions outside the disaster areas.」

「Although retail sales remained solid, consumer sentiment continued to lack strength because of uncertainty surrounding the domestic and overseas economies and preparations for natural disasters still fresh in people’s memories. The mild weather in early winter also slowed the start of winter merchandise sales, leaving the market somewhat lacking in momentum.」

「During the cumulative second quarter of the current consolidated fiscal year, corporate production and service activities and consumer sentiment in households were somewhat weak because of wind-related disaster damage, including the torrential rains in western Japan in July and a succession of typhoons, the effects of the 2018 Hokkaido Eastern Iburi Earthquake and higher raw material prices, although conditions were generally solid.」

「While real income remained sluggish, unfavorable weather caused fresh food prices to rise and reduced people’s desire to go out, resulting in weak everyday spending on daily necessities and food products.」

「In the food industry, while various production areas suffered damage from the Kumamoto earthquake, adverse weather and other factors, consumers' preference for domestically produced goods remained strong, making raw-material procurement difficult for companies.」

「In household consumption, income increased, albeit very gradually, as employment conditions remained solid. However, concern about the future due to the slow pace of income growth remained strong. Consumer sentiment remained broadly flat, also affected by a substantial decline in incentives to go out because of unfavorable weather, including a succession of typhoons making landfall.」

「Although the food industry has continued to experience disruptions in raw-material procurement and logistics as a result of the Kumamoto earthquake and adverse weather, companies have been working to respond to rapidly changing new consumer spending trends.」

「If earthquakes, tsunamis, typhoons or other natural disasters cause personal or property damage, or if normal business activities at our company or our business partners are disrupted by interruptions or restrictions affecting electricity, gas, water, transportation networks or other infrastructure resulting from such disasters, our business performance could be affected. In addition, our business activities rely on computer systems and networks. We therefore implement measures against system failures, including strengthening security, establishing data backup systems and upgrading hardware.」