Operational risks that may affect the Ajinomoto Group’s performance and financial position are listed below PDF file by risk factor. Most notably, the Group recognizes the ongoing COVID-19 pandemic as an extremely material risk currently in play.The list below is not all-inclusive; unforeseeable risks and risks not presently deemed material may have future impacts.
The Group has developed various responses and mechanisms to minimize such management and operational risks.
Forward-looking statements in the PDF file below are based on the Group’s assessments as of March 31, 2020. For information regarding impacts on the Group due to the COVID-19 pandemic as well as the Group’s responses to the pandemic, please see "Assessment of COVID-19-related Risks" described at the bottom of the page.
Assessment of COVID-19-related Risks
COVID-19 is expected to significantly impact our business due to restrictions on consumption activity because of state of emergency declarations in individual countries as well as the economic downturn going forward. The current pandemic, the subsequent period of coexistence with the virus, and the recovery stage through the development of a vaccine or treatment will take at least one year, and a recurrence of the epidemic in second and third waves is expected in some countries.
We believe that the consumption activity of consumers will also undergo significant change. While hoping for a rapid conclusion to the pandemic, the Ajinomoto Group will make concerted efforts to realize the Group Vision contained in the Medium-Term Management Plan for 2020-2025: “Unlocking the power of amino acids to solve food and health issues associated with daily eating habits and aging and co-create wellness.”
The Ajinomoto Group has been taking action and countermeasures since the spread of infections in China and has continued its business activities, with a priority on ensuring the safety of its employees and their families in the early stages of the pandemic. Specifically, the Group had already implemented measures such as the following in the early stages of the outbreak.
・Establishing the Japan Regional Task Force and liaising with crisis management staff at each regional headquarters
・Updating and maintaining the response policy as “Preventing COVID-19 Infection,” and making it known to employees
・Applying response guidelines to the Group in cases of infected individuals
・Centralized assessment of business status (sales, production, distribution, and development)
In addition, the Ajinomoto Group established the “COVID-19 Corporate Continuity Plan Basic Policy” and formulated and implemented its response plan as follows with the order of priority for the activities set at (1) ensuring the safety of employees and their families; (2) contributing to regions and communities; and (3) continuing business activities (delivering products and services to customers).
1. Measures to ensure the safety of employees and their families
・Approximately 90% of head office, sales, and research unit employees at the main Group companies in Japan working remotely from home
・Accessing disease information at Group companies worldwide in real time ・Delivering 100% of global training by HR online
・Making arrangements for the masks and disinfectants required to continue business activities at production sites worldwide
・Ensuring social distancing and reducing use of public transport at production sites
2. Initiatives for regions and communities
・Providing information to support consumers through Ajinomoto Park online content featuring recipes, etc.
・Participating as a founding member in IP Open Access Declaration Against COVID-19. Launching efforts for the release of intellectual property owned for activities related to diagnosis, testing, treatment, and hygiene management for a certain period with the aim of ending the spread of COVID-19.
・Providing our products to healthcare practitioners, such as “Teiko Katsuryoku” (cystine and theanine) amino acid supplement that supports immune functions, and Hearty Miso Soup, and soup.
・Concluded agreement with United States Federal Emergency Management Agency (FEMA) for supply of 2.5 million vials for COVID-19 specimens.
3. Initiatives to continue business activities
1) Business strategy for coexistence and recovery stages
・Boosting information collection to assess business impact in each country
・Continually holding COVID-19 Scenario Planning Meeting with Executive Committee members, general managers of business divisions, and general managers of regional headquarters as the main members to formulate and implement business strategies for the new normal
2) Initiatives to maintain supply chain
・Concentrating production on main products to maintain production system that ensures safety and meet customer demand
・Strengthening relationships with and supporting suppliers to maintain sustainable procurement 3) Funding initiatives
・Ensuring funding stability through maintaining adequate liquidity on hand ratio (at least one month) and commitment lines already established with main banks
・Also established emergency loan facility for overseas consolidated subsidiaries with possibility of fund liquidity risk, etc. to create temporary framework for cash flow support