The following section describes primary risks in terms of those that our management has recognized as potentially affecting the Morinaga Milk Group’s operating results and financial position. Forward-looking statements contained herein are based on conclusions reached by the Group as of the filing date of the Securities Report.

（as of June 24, 2026)

(1) Dairy and Milk Industry

When engaging in business transactions involving raw milk used as a raw material for dairy products manufactured by the Morinaga Milk Group, subsidies are paid to producers under the system for subsidizing producers of milk for manufacturing use, pursuant to the Livestock Stabilization Act. Accordingly, the Group’s operating results and financial position could be affected by possible future changes in subsidy levels upon substantial modification or abolishment of the Livestock Stabilization Act.
Moreover, whereas a tariff system protects the domestic agricultural industry with respect to dairy products, its operating results and financial position could be affected if the government were to substantially overhaul said system.
The Group accordingly strives to achieve solutions in a manner that involves coordinating efforts with relevant ministries and agencies, as well as other relevant organizations, in order to facilitate timely and appropriate action in addressing issues and other matters pertaining to the dairy and milk industry. We also visit dairy farmers and dairy farming organizations on a daily basis and engage in activities to promote dairy production, such that involve providing them with information on techniques for managing the health of dairy cattle as well as raw milk supply and demand.

(2) Procurement of Raw Materials

The primary raw materials used by the Group are subject to factors that may affect pricing or delivery times, such that include changes in the balance of supply and demand domestically and overseas, modifications to tariff systems and currency exchange rates. Accordingly, these fluctuations may affect the Group's business results and financial position.
The Group, based on the Morinaga Milk Group Procurement Policy, places the highest priority on safety and security, closely monitors market trends, and takes various measures such as purchasing from multiple regions and suppliers, securing alternative raw materials, and entering into foreign exchange forward contracts and foreign currency settlements.

(3) Food Safety

Although the Group takes an approach to manufacturing that involves making every effort to ensure the safety and quality of food products, its operating results and financial position could be affected should an unforeseen product-related contingency arise that would result in a large-scale product recall and product liability claims.
As such, the Group remains committed to ensuring product safety and quality, and has accordingly established a Quality Policy premised on the concept of ensuring quality throughout the supply chain extending beyond manufacturing sites.

(4) Global Business, New Business, etc.

The Group is engaged in overseas M&A, new businesses, and capital investment in innovative products as means of growth. In particular, with regard to overseas M&A, we strive to gather as much information as possible on exchange rate risks, local political conditions, regulations, business practices, market uncertainties, and other factors. However, if there is a significant negative deviation between forecasts and actual results, such as failure to achieve initial business plans due to rapid changes in the external environment, impairment losses may occur, which could affect the Group's business results and financial position.
The Group strives to avoid impairment risks in the future by strengthening the checks and balances for each investment project and by regularly monitoring and reviewing the progress of companies acquired through M&A and new businesses.

(5) Climate Change

Amid intensifying global environmental concerns as represented by climate change, the Group’s operating results and financial position could be affected if it became subject to regulations or hearsay regarding the use of fossil-fuel energy or plastics, water risks, and other issues that could call for review of its product strategy, capital investment, or responses to surging energy and raw materials procurement costs. For this reason, the Group is taking action using information it collects through various stakeholders.
The Group has identified “Resources and the Environment” as one of the materiality theme in its Sustainability Medium- to Long-Term Plan 2030, and appropriately sets and manages goals based on the ISO 14001 standard for environmental management systems, as stipulated in the Morinaga Milk Group Environmental Policy.
The Group’s initiatives for climate change are reviewed periodically by the Climate Change Measures Subcommittee and the Sustainability Committee. For details, please refer to “Initiatives Related to TCFD” and “Initiatives Related to TNFD” on the Company’s website.

URL to Initiatives Related to TCFD
https://www.morinagamilk.co.jp/english/sustainability/resources_and_the_environment/tcfd/
URL to Initiatives Related to TNFD https://www.morinagamilk.co.jp/english/sustainability/resources_and_the_environment/tnfd/

(6) Unforeseen Circumstances such as Natural Disasters and Infectious Diseases

The Group’s operating results and financial position could be affected under scenarios that include potential long-term work stoppage, suspension of product supply amid disruption of logistics channels, and changes in markets and lifestyles, should a sudden and substantial disaster strike. Such potential scenarios include natural disasters such as earthquakes and storms, incidents and accidents such as fire and terrorism, and proliferation of infectious disease affecting the Group’s business sites.
In the event of such unforeseen circumstances, the Group will give top priority to protecting the lives of its employees, their families, customers, business partners, neighboring communities, and other related parties. We have also established manuals such as business continuity plans and are working to build a system that will enable us to supply products appropriately and restore business activities at an early stage.

(7) Human Rights

There is a strong social expectation that companies will respect and protect human rights in the course of their corporate activities, thus helping people to live in dignity and happiness, and this is congruent with the Group’s Corporate Philosophy. However, in the event of an infringement of the human rights of employees, business partners, or other stakeholders, the Group could be exposed not only to the legal risk of violating laws and regulations and reputational damage but also to a loss of social trust that could affect such business activities as raw material procurement and our ability to attract human resources, which in turn could affect the Group’s operating results and financial position.
The Group has formulated the Morinaga Milk Group Human Rights Policy, and is building a human rights due diligence framework in recognition of the fact that business activities can have a negative impact on human rights. By implementing appropriate education and training of employees, it is also working to prevent and mitigate human rights risks. In addition, to address cases in which there are clear negative impacts on human rights, the Group is putting in place a system based on international codes of conduct to facilitate dialogue with related parties and to provide assistance through appropriate procedures. The Group discloses progress on these human rights initiatives, and their results, on the corporate website and elsewhere.

(8) Recruitment of human resources

While the aging of the population and the declining birthrate are causing the workforce to shrink on the one hand, the invigoration of the market for personnel seeking to change careers has led to human resources becoming increasingly fluid on the other hand. This has made it even more difficult for the Company to attract the human resources it needs, and if the number of employees resigning increases or if there is a shortage of necessary human resources, this could hinder the business operations of the Group. Scarcity of human resources could affect the Group’s operating results and financial position.
For new graduates, the Company engages in position-specific recruitment after working to promote understanding of its operations through unique work experience programs and factory tours. In terms of mid-career recruitment, we work to attract diverse human resources through the use of multiple recruitment techniques. Moreover, through internal recruitment and various career training programs, we seek to not only develop and empower human resources but also improve retention.

(9) Compliance

The Group has established a Compliance Subcommittee under the Internal Control Committee and promotes compliance activities mainly through this subcommittee. In order to raise compliance awareness among all employees of the Group, we have introduced multiple education and training programs and have established a system whereby anyone can consult with us in confidence through our internal reporting system, “Morinaga Help Line.” However, in the event of a compliance violation, etc., the Group's business performance and financial condition may be affected by a decline in social credibility.
The Group regularly monitors compliance through measures such as “Compliance Awareness Surveys,” and based on the results of audits conducted by the internal audit department, we continuously review and improve our compliance initiatives.

(10) Intellectual Property

The Group utilizes various forms of intellectual property throughout its business activities, including intellectual property owned by the Group and that legally subject to user licensing of a third party. As such, the Group’s operating results and financial position could be affected as the result of a third party unexpectedly filing a lawsuit against the Group for having violated intellectual property rights.
The Group accordingly takes action that involves showing deference toward intellectual property rights, filing and maintaining intellectual property applications that enable it to appropriately perform business activities, and consistently maintaining divisions dedicated to such matters ensure that the Group is not violating rights of third parties.

(11) Intellectual Property Information Systems, Information Security

The Group utilizes information systems in all aspects of its business, including order taking, raw material ordering, product manufacturing instructions, and accounting, and therefore has established rules and regulations, strengthened its support system, and implemented various information security measures. However, in the event of a disaster, power outage, computer virus infection, unauthorized access, or other incident that results in the suspension of information systems or the leakage of information, the Group's business results and financial position could be affected due to the inability to supply products and a decline in social credibility.
The Group has established an Information Security Subcommittee under the Internal Control Committee to strengthen hardware measures such as vulnerability countermeasures and backup of important data. At the same time, we are working to improve software measures such as reviewing business continuity plans and security rules and providing employee training, in order to ensure the stable operation and security of our information systems.
Furthermore, the Group has prepared for incidents by setting up a Computer Security Incident Response Team (CSIRT) and establishing a system to enable prompt and targeted responses both internally and externally.

(12) Fluctuations in interest rates

The Group has financial liabilities such as borrowings and financial assets such as deposits, and fluctuations in interest rates could have an impact on these holdings and affect the Group’s operating results and financial position. Based on the status of the Group’s financing, the immediate effects of short-term fluctuations in market interest rates would have only a limited impact on the profit and loss of the Group as a whole. Nevertheless, if interest rate levels were to rise in the future as a result of revisions to monetary policy or changes in the financial market environment, this could have such effects as higher financing costs when sourcing new funds or refinancing existing borrowings. These factors could affect the Group’s financial strategy and results.
The Group conducts regular analyses of its financial position, and as well as continuously monitoring changes in the financial environment, including interest rate trends, it considers a comprehensive range of factors related to financing methods and level as of interest-bearing debt as part of its efforts to ensure the stability of its finances.

(13) Reputational risk

Because the Group manufactures and sells foodstuffs and provides products and services to the general public in large numbers, the business environment is one in which information related to the Group can be disseminated easily through mass media, social media, and other channels.
If the dissemination of information not based on fact, or information that is not interpreted as the Company intended, or rumors originating in such information were to lead to a loss of social trust or damage to the brand image, the Group’s operating results and financial position could be affected.
As well as striving to provide high-quality products and services, the Group has put in place a system to ensure appropriate responses to inquiries and opinions expressed by customers, such as by providing training for employees based on social media guidelines, and by seeking to understand information trends on various types of media.

(14) Conflict risk

The outbreak and prolongation of conflict or confrontation between states would increase the uncertainty of the business environment, and could affect the business activities of the Group.
Specifically, there is the risk that supply chain interruptions and logistics paralysis would hinder raw material procurement and product supply, and we also assume the possibility of significant impacts from soaring energy and raw material prices.
The Group is working to mitigate the impact by diversifying procurement, securing alternative raw materials, decentralizing the supply chain and strengthening risk monitoring, and other measures.

The above risks are not the only risks to which the Group is exposed.