Country Risk in Overseas Markets and Local Partner Risk

「However, the outlook remains uncertain due to rising raw material and energy prices resulting from geopolitical risks, higher labour costs, uncertainty over US trade policy and logistics risks in the Strait of Hormuz.」

「Overseas, various prices, including raw material prices and labour costs, continue to rise amid geopolitical instability. Although monetary tightening in response to inflation is easing, concerns over inflation resulting from US tariff policy and other factors remain, requiring continued monitoring, as in Japan.」

「The global economy during the current consolidated fiscal year remained uncertain, with concerns over an economic slowdown caused by soaring raw material and energy prices resulting from the situations involving Russia and Ukraine and Israel and Palestine, rising labour costs due to wage increases and a declining working population, and global inflation resulting from tariff measures by the new US administration.」

「The global economy during the current consolidated fiscal year remained uncertain, with concerns over an economic slowdown caused by soaring raw material and energy prices resulting from the situations involving Russia and Ukraine and Israel and Palestine, rising labour costs due in part to a declining working population, and monetary tightening in response to persistent global inflation.」

「Overseas, amid geopolitical instability, concerns remain over soaring raw material and energy prices and an economic slowdown caused by monetary tightening in response to inflation, requiring continued monitoring, as in Japan.」

「Overseas, amid geopolitical instability, concerns remain over soaring raw material and energy prices and an economic slowdown caused by monetary tightening in response to inflation, requiring continued monitoring, as in Japan.」

「Overseas, although some countries and regions were affected by the spread of COVID-19 from January through April 2022, the situation subsequently moved steadily toward recovery. At the same time, as in Japan, concerns remain over soaring raw material and energy prices and labour shortages in the service industry amid the geopolitical instability described above and a challenging economic environment, requiring continued monitoring.」

「Overseas, some countries and regions are moving toward a degree of recovery as restrictions related to COVID-19 are eased with a view to normalising economic activity, while others have imposed lockdowns as infections rise, resulting in stagnant economic activity.」

「Overseas, infections with a variant began to spread again in Shanghai, China, in late March 2022, resulting in movement restrictions due to a lockdown, which was lifted in June 2022. In many other countries and regions, although the number of infections remains high, restrictions are being eased with a view to normalising economic activity, and the economies are moving toward a degree of recovery.」

「In addition, close attention remains necessary due to the continued rise in raw material and energy prices resulting from geopolitical risks such as the situation involving Russia and Ukraine and tensions between the United States and China, as well as the outlook for foreign exchange rates.」

「Although repeated lockdowns in various countries caused the growth rate of consumer spending to alternate between slowing and accelerating, recovery tended to accelerate after lockdowns were lifted. At present, infections with the Omicron variant are beginning to spread again, leaving the outlook uncertain.」

「While the United States and Europe showed signs of recovery as lockdowns were lifted, customer numbers remained weak in Singapore and Taiwan after renewed lockdowns were imposed, despite their earlier recovery.」

「Overseas, the Japanese food market, including ramen, is on an expansionary trend and is expected to grow over the long term. At present, although consumer spending in Europe and the United States is recovering as lockdowns are lifted, there are still many cases in other areas where economic activity has not fully resumed due to the spread of COVID-19.」

「While performance in Singapore and Taiwan benefited from the early recovery in customer numbers, some areas, led by the United States and Europe, experienced another lockdown and weak customer traffic even after operations resumed.」

「As part of governments' policies to prevent the spread of COVID-19, from mid-March 2020 stores in various countries were forced to suspend operations or close, extending the period during which only contactless operations such as takeaway and delivery were available, while in some areas another lockdown occurred and customer visits remained sluggish even after operations resumed」

「At present, the impact of COVID-19 has left many countries and regions, including the United States, where economic activity has not fully recovered, and this uncertain situation continues.」

「In overseas markets as well, even before the effective shutdown of economies in various countries due to the spread of COVID-19, there were numerous uncertainties regarding the economic outlook, including the impact on the economy of trade friction involving Europe and China stemming from the protectionist economic policies of the United States, the economic environment resulting from the UK's withdrawal from the EU, and civic activities observed in Hong Kong, France and elsewhere.」

「The Group's performance may be affected by country-specific risks in the countries where it operates, including political conditions, economic conditions, laws and regulations, and business practices. In overseas markets, in addition to directly operated stores run by subsidiaries, the Group enters into joint venture agreements and licensing agreements with local companies」

「Taiwan is an important market for our Group's overseas restaurant operations business. Following an indication from 乾杯, formerly our partner, of its intention to withdraw from the IPPUDO business, we held discussions and determined that changing the IPPUDO business in Taiwan to direct operation by our Group would be the best option for customers, and therefore decided to acquire the shares.」

「We determined that changing the IPPUDO business in Taiwan to direct operation by our Group would be the best option for existing customers and therefore decided to acquire the shares.」

「乾杯 operates foodservice and related businesses mainly in the yakiniku format under the 乾杯 brand in Taiwan, China, and other markets, and has recently been actively pursuing overseas expansion, including considering entry into Europe and the United States. While accelerating its overseas expansion, it determined that it needed to focus and concentrate its business in Taiwan and approached us to say that it wished to withdraw from the IPPUDO business in Taiwan.」

「In addition, in China and Hong Kong, we changed the operating model from joint ventures with partner companies to licensing and entered into licensing agreements on new terms. In Malaysia, we also changed from operation through a joint venture to a new licensing arrangement with a new partner, while making the Indonesian entity a subsidiary and changing the business to direct operation.」

「CWM stated its management policy of focusing on its IT business and other operations and withdrawing from the foodservice business as a whole, and approached us to say that it wished to abandon the continuation of the IPPUDO business.」

「The distinctive country risks of the markets in which we operate, including political conditions, the economy, laws and regulations, and business practices, may affect the Group's results. In addition to directly operated stores through subsidiaries overseas, the Group enters into joint venture and licensing agreements with local companies to facilitate smooth multi-store expansion and locally rooted store operations in those countries. If a partner company's performance deteriorates or store-opening plans are delayed, the Group's results may be affected by lower store sales and royalty income.」