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FY2024 Management Briefing
June 6, 2024
Hiroshi Yokota, President
Tokuyama Corporation
1 Corporation. All rights reserved.
© 2024 Tokuyama

Medium-Term Management
Plan 2025▶Medium-Term Management Plan 2025
▶Final Year Targets© 2024 Tokuyama Corporation. All rights reserved.

2

Medium-Term Management Plan 2025
FY21 - 25 Priority Issues

1Transform businessportfolio

Increase growth businesses’ share of
consolidated net sales to over 50%

2

Contribute to mitigation of
global warming

Expedite development/commercializationof next-gen energy technologies; Reducegreenhouse gas emissions 30% from FY19
by FY30
Step up high-priority CSR initiatives to lay

3Practice socially
responsible management

groundwork for further growth and realize
our vision© 2024 Tokuyama Corporation. All rights reserved.

3

Final Year Targets
KPI

FY23
（Result）

Net Sales¥341.9bn

経営目標

FY25
（Target）

Factors in Achieving Targets¥400.0bn

Focus on portfolio transformation
Reflect cost inflation(Revised April 26, 2024)

Operating
Profit¥25.6bn¥45.0bn

Expand operating profit approaching FY25
Revise by changing depreciation method

Growth Business
Net Sales Growth
Rate

8.5%

CAGR
≥10%

Strengthen R&D
Accelerate international expansion≥ 11%

Balance shareholder’s equity efficiency
and financial baseRevise by changing depreciation method

ROE

7.4%

(Note) FY23 results: exchange rate (¥/US$) 145, domestic naphtha price (¥/kl) 69,100© 2024 Tokuyama Corporation. All rights reserved.

4▶Target Business Portfolio

１
Transform businessportfolio▶Strategy by Business▶Capex Plan Breakdown▶Cash Flow Generation and Allocation▶Cash Flow Trend and Plan

© 2024 Tokuyama Corporation. All rights reserved.

5

Target Business Portfolio
Position a consolidated sales ratio of 50% or more for growth businesses
in FY25 as a milestone while aiming for even higher levels

Breakdown of consolidated net sales by business
Targetingat least

Sales growth driven by aggressive investment in electronics,
healthcare and environmental domains
We expect chemicals and cement’s shares of sales to shrink
in tandem with domestic demand
Consolidated sales ratio
for growth businesses
Electronic& Advanced
Materials¥400 billion

60%

50% or more

35%

Life Science
Eco Business
Chemicals
CementOther

FY20（Result）

FY21（Result）

FY22（Result）

FY23（Result）

FY24
FY25
FY30
（Forecast）（Current Outlook）（Planned）(Note) The sales ratio in each segment was calculated using monetary amounts that include sales between segments.
FY20 was created using reference values that include the financial impact of the current “Accounting Standard for Revenue Recognition ,” etc.

© 2024 Tokuyama Corporation. All rights reserved.

6

Target Business Portfolio
Despite the downturn in earnings up to FY22 owing to the impact of higher raw material and fuel costs,
work toward achieving the final fiscal year target on the back of an upswing in profit from FY23

Breakdown of consolidated operating profit by business
Growth businesses: Recovery in semiconductor market conditions;Life Science segment moving steadily toward growth¥45 billion

Traditional businesses: Business growth by adhering strictly to therevision of sales prices while prioritizing earnings

Electronic& Advanced
Materials
Life Science
Eco Business
Chemicals
CementOther

FY20（Result）

FY21（Result）

FY22（Result）

FY23（Result）

FY24
FY25（Forecast） （Current Outlook）© 2024 Tokuyama Corporation. All rights reserved.

7

Strategy by BusinessBusiness Goal

Electronic& Advanced
Materials

Push forward with globalization, and capture top share in the highpurity and thermal management materials fields supporting theminiaturization and stacking of semiconductors
Priority Measures▶Pursue aggressive expansion in overseas markets▶Develop new applications, expand product portfolio▶Produce high-quality products, pursue analysis technology
Progress to Date

▶Decision taken to establish a Malaysian JV and Vietnamese subsidiary forsemiconductor-grade polycrystalline silicon▶Overseas expansion of high-purity IPA;FTAC (Taiwan) commenced production and shipment in earnest
STAC (Korea) completed the installation of production facilities and commenced
sample shipments▶Completed steps to expand surface treatment silica production capacity in China▶Enhance lineup of thermal management materials
Future Endeavors▶Increase profits by ensuring full operation FTAC, and launch STAC▶Work to expand applications for silica and thermal management material-related
products and to cultivate new customers© 2024 Tokuyama Corporation. All rights reserved.
8

Functions/Measures by High-purity IPA Base in Asia
Market characteristics and challenges at each baseProduction/sales from raw materials
Production/sales from supplies received frommanufacturing bases

China (Tokuyama Chemicals)・Stable supply to growing markets

Toward further expansion in 2025 and beyond
Korea (STAC):

・Entering markets where strong demand
expected・Responding to high quality requirements

Japan (Tokuyama):

・Responding to domestic demand growth・Serving as a support base for each region,
including human resources/technology

Taiwan (FTAC):
Singapore (Tokuyama Singapore)・Sole local supplier・Expanding sales to markets where
further growth expected

・Expanding sales to meet strong demand・Supporting customers’ cutting-edge
production lines with higher quality© 2024 Tokuyama Corporation. All rights reserved.

9Strategy by BusinessBusiness Goal

Life Science

Use unique technology to capture top niche share in areas where
differentiation is possible (vision, dental, diagnostics)
Priority Measures▶Strengthen the marketing system and accelerate expansion of production
capability to further boost market share of dental materials outside Japan▶Develop new products and strengthen sales activities to further expand thephotochromic market outside Japan▶Strengthen the medical diagnostic systems business
Progress to Date

▶Expanded share in the U.S. and Europe by introducing new dental materials
products(OMNICHROMA)▶Expanded production capacity to meet strong demand for dental materials▶Commenced construction of production building in line with electrolyte businessgrowth in medical diagnostic systems
Future Endeavors▶Increase earnings from dental materials by expanding production capacity andswitching to smart factories▶Accelerate product development for plastic lens-related materials, APIs, and intermediates▶In medical diagnostic systems, improve production capacity in the electrolyte business;
strengthen development of diagnostic reagents© 2024 Tokuyama Corporation. All rights reserved. 10

Toward Growth in Dental Materials and Equipment BusinessMeasures for globalization;
Effort by each region▶Expanding market share in stable
markets▶Developing demand in growing
markets

Global Market Size of Dental Materials and Equipment (Composite Resin)

Ensuring early full operation of new plant● Further expanding market share of composite resinNorth(aim for over 10% market share)
America ● Increasing brand awareness; enhance product lineup

EuropeEuropeNorth
AmericaJapan
Middle East
AfricaSoutheast Asia

Central and SouthAmerica
Australia

Stable markets

Growing markets

Circle size: Market size

● Expanding market share throughout the region● Expanding sales structure by restructuring

Japan
and
Asia

● Accelerating development for digital dental field

CentralandSouth
America● Cultivating demand for restorative materials

Africa● Considering market entry continuously

R&D● Promoting research and development for digital dental field● Expanding CAD/CAM business and full-scale entry into

● Continuing market research in China● Promoting the development of Asian demand(composite resins and adhesive materials)● Accelerating development of esthetic composite resin market

3D printer market© 2024 Tokuyama Corporation. All rights reserved. 11

Strategy by BusinessBusiness Goal

Serve as a new business pillar to carry the future
Eco BusinessPriority Measures▶ Respond to expanded demand for water treatment membranes due tostrengthened environmental regulations▶ Expand resource recycling business in waste gypsum board, photovoltaic
modules and others▶ Commercialize developed next-generation energy technologies
Progress to Date

▶Commenced operation of Muroran Plant, Hokkaido, the 3rd facility for waste gypsum
board recycling▶Excel Shanon included in the Company’s scope of consolidation as an equitymethod affiliate through the transfer of shares▶Technology for recycling photovoltaic panels entered a commercialization phase▶Introduction of demonstration equipment of alkaline water electrolyzers
Future Endeavors▶Promote development of next-generation membranes and efforts to strengthen the
supply system for ion exchange membranes▶Implement technology for recycling photovoltaic panels and establish a business
model▶Refine technological capabilities and competitiveness to meet market/customer
demand in the water electrolysis business© 2024 Tokuyama Corporation. All rights reserved. 12

Strategy by BusinessBusiness Goal

Ensure stable earnings in the existing business

Chemicals

Priority Measures▶Strengthen and streamline business to maximize profits▶Reduction of CO2 emissions and waste through the improvementof manufacturing process▶Improve supply chains through promoting DX
Progress to Date

▶Secured stable earnings by revising sales prices in response to soaring raw
material and fuel costs▶Improved efficiency of the electrolysis/PVC paste resin chain through theabsorption-type merger of Shin Dai-Ichi Vinyl▶Improvements to the soda ash manufacturing process progressed to theimplementation phase
Future Endeavors▶Demonstrate a competitive top-class electrolyzers▶Transfer sales functions to Tokuyama Soda Trading; work to improve
efficiency and strengthen points of customer contact▶Consider improvements to the soda ash manufacturing process at actual
plants and reduce the amount of waste generated© 2024 Tokuyama Corporation. All rights reserved. 13

Strategy by BusinessBusiness Goal

CementBecome the domestic industry leader in energy
efficiency

Priority Measures▶Introduce energy-saving equipment to reduce CO2 emissions▶Reduce the amount of coal usage by accepting more fuel-based wastematerials such as waste plastic
Progress to Date

▶Achieved profitability through cost reductions on the back of revision to sales prices
and use of low-grade coal, etc.

▶Reducing coal consumption by expanding the use of waste plastics▶Suspended operations of one cement kiln line from FY24, transitioned to a two kilnline production system▶ Promotion of energy conservation by introducing clinker cooler equipment
Future Endeavors▶Work to secure stable earnings by optimizing sales prices▶Continue to promote measures aimed at increasing the amount of waste plastic andliquid fuel accepted© 2024 Tokuyama Corporation. All rights reserved. 14

Capex Plan Breakdown
Key words are priority investment in growth fields, reduction of CO2 emissions, and energy saving
Capex Plan Breakdown (FY21-25)
 Despite strict assessment of total investment, investment in growth business and R&D has been generous.

Investment(Billions of yen)

計画策
At the timeofplanning 定時

200
GrowthBusiness

Rationalization/energy saving/
CO2 reduction

Infra-structure
for growth

R&D

Traditional
Business

Current
見通し
Outlook

Others160
0Major Capex Results
 Construction of the factory of joint venturecompany in Taiwan for high-purity IPA

 Waste gypsum board recycling business
Construction of a new plant in Muroran Construction of the factory of joint venturecompany in Korea for high-purity IPA

 Establishment of the Center forCommercialization of Advanced Technology

 Production capacity expansion of dental materials Co-firing of biomass at power plants© 2024 Tokuyama Corporation. All rights reserved. 15

Cash Flow Generation and Allocation
Working to enhance shareholder returns, promoting capital efficiency improvements;
Steps taken to reflect investment amounts, etc. (¥200 billion at time plans formulated)● Earnings growth● Cash flow fromnew products

Revised in FY23

Operating CF● Reduction in holdings of listed
shares for purposes other thanpure investment● Screen prospective investments

Cumulative ¥200.0bn
over 5 years● Reduce inventory*¥250 billion at time plans formulated
・FY21,22:Sluggish operating CF
・Continued disciplined investment

Capex¥160.0bn*¥200 billion at time plans formulated

Strategic Investment（M&A, new business development）

Max ¥30.0bn*Including investment for Malaysian JVShareholder Returns
Dividends

3%

DOE

30%

Payout ratio

Consideracquisition ofown shares© 2024 Tokuyama Corporation. All rights reserved. 16

Cash Flow Trend and Plan
(Billions of yen)

80.0

Operating CF

Free CF

55.8

60.0
40.0

Investing CF

43.3
25.9

20.0

(11.8)

0.0(20.0)(19.2)(33.7)(40.0)(60.0)

FY20

FY20(33.7)
FY22(30.4)

FY23

FY24
Plan

FY25
Plan
© 2024 Tokuyama Corporation. All rights reserved. 17

２▶Path to Greenhouse Gas (GHG) Emission Reductions
地球温暖化防止へのContribute to mitigation 貢献

of Global Warming▶Setting Scope 3 Reduction Target© 2024 Tokuyama Corporation. All rights reserved. 18

Path to Greenhouse Gas (GHG) Emission Reductions
Steady implementation of reductions in GHG emissions (Scope 1, 2) with a focus on fuel-derived emissions;
Steps taken to consider reduction targets for each emission source amid continued challenges to achievement
Medium- to long-term reduction targets for GHG emissions (Scope 1, 2)（mil.MT-CO2e）
8.00

Emissions from fuels

7.26

7.00

Emissions from raw materials

30%

reductioncompared to
FY19(1)Emissions
6.32 from fuels

6.00

(1)

Emissions from waste materials(2)Emissions fromraw materials

4.00

・Suspended operation of a cement kiln,
increase in small amounts of mixed
ingredients(3)

・Thermal recycling(4)

・Increased biomass and ammonia co-firingratio → Monofuels
・Use renewable energy
・Business portfolio transformation
・Further use of local energy
・Increase energy efficiency, improve
processes, upgrade equipment
・Collaboration with other companies in
Shunan Industrial Complex(5)・Ca recycling
・Development of low GHG-emission
cement/concrete
・Business portfolio transformation(6)

・Thermal recycling(7)

・Conversion to innovative manufacturingmethods(6)Emissions fromwaste materials

3.00
2.00

(5)Emissions from (7) Innovativetechnologies
raw materials

1.00

2019

Baseline

2023*Figures in FY2023 are before third-party certification

2030

～
～

0.00

(2)

(3)Emissions from
(4)Emissions
waste materials 5.08 from fuels

5.00

Achieve carbon neutrality
by FY50

2050/FY

・Co-firing of biomass and ammonia
・Use of local energy
・Increase energy efficiency, improve
processes, upgrade equipment
・Business portfolio transformation(8)(8)Carbon offsets

・Introduction of negative emission
technologies (CCUS)
・Offsets (J credits, etc.)© 2024 Tokuyama Corporation. All rights reserved. 19

Setting Scope 3 Reduction Target
Aiming to achieve carbon neutrality for total supply chain emissions,while aiming for a 10% reduction (compared with FY22) in Scope 3 categories 1, 3, and 4 by FY30
Medium- to long-term reduction target for total supply chain emissions (categories 1, 3, and 4)（mil.MT-CO2e）

2.00
1.80

Category1

Category3

Category4

1.86
1.67

1.60

10%

reduction compared to
FY22

1.40
1.20
1.00

Challenge carbon neutrality
by FY50

0.80
0.60
0.40
0.20
0.00

0.00
2022

Baseline

カテゴリー1

2023

カテゴリー3*Figures in FY2023 are before third-party certification

2030

カテゴリー4

2050

目標値

/FY
© 2024 Tokuyama Corporation. All rights reserved. 20

3Practice socially
responsible management▶Formulation of a Human Resource Strategy© 2024 Tokuyama Corporation. All rights reserved. 21

Progress in CSR Management: Formulation of a Human Resource Strategy
Focus of CSR management: Responding to 10 key CSR material issues
Formulating strategies for developing human resources; promotion of diversity and career fulfillment
Eight Strategic Cornerstones to Bridge Gaps between Three Perspectives toward Our Vision
Perspective:
Management
strategy

Improving business operation
productivity
Building of Group personnel
management systems

Providing human resources to growthfields/new projects
Recruiting humanresources, creating
positions for them todrive the Company’s
growthPerspective:
ESG investment

Presenting/utilizing
personnel-related data
in visual form

Infrastructure/
Gauging ofeffectivenessSetting KPIs

Our Vision: Human resource strategies that while
contributing to the realization of management
strategies improve employee value
Improving engagement
Responding to the diversity of values
and ensuring fairness

Perspective:
Labor market© 2024 Tokuyama Corporation. All rights reserved. 22

Supplementary Materials© 2024 Tokuyama Corporation. All rights reserved. 24

Transform business portfolio

Accelerated International Expansion

Aiming to increase overseas share of consolidated net sales to over 50% by FY30

overseas

21%

overseas

26%

FY20

FY23

Domestic

Domestic

79%

74%(Note) FY20 was NOT created using reference values that include the financial impact of the current “Accounting Standard for Revenue Recognition ,” etc.

©
©2024
2024Tokuyama
TokuyamaCorporation.
Corporation.All
Allrights
rightsreserved.
reserved. 25

Transform business portfolio

R&D Policy

Medium-Term Management Plan 2025
Make the transition to a company that creates value and provides solutions❶ Focusing management resources on corporate R&D▶Concentrate energy on medium- to long-term
development themes centered on marketing▶Attack areas where the company’s business divisiondevelopment has not yet started❷ Strengthening business division R&D▶Have a wider range of product variations
which can meet customer requirements▶Accelerate the pace of development❸ Strengthening open innovation

Initiatives until FY2023
Promoted the development of growthbusinesses by improving corporate
development bases●●

Tsukuba Research Laboratory II
Tokuyama Taiwan●●

Tokuyama Research Laboratory
Strengthening analytical skills
Center for Commercialization ofAdvanced Technology●●● Electronics● Environment● Healthcare●●

Developed tailored to client needsin business division development▶Expanded heat management products
and strengthening systems▶Pioneered new uses for silica products
e.g., uses in leading-edge semiconductormaterials, uses in cosmetics, etc.
▶Water electrolyzers: verified
commercialization and consideredbusiness structure

Accelerating development throughjoint research with Taiwan’s
Industrial Technology ResearchInstitute (ITRI), universities,
national research institutes, etc.,
and participation in NEDO
projects▶Developed new medical products

UniqueHigh purification

Nitride reduction

Technologies

SinteringPowder control

Crystallization, deposition

Electrode and membrane

Sol-gelPhotopolymerization

Molecular design© 2024 Tokuyama Corporation. All rights reserved. 26

Transform business portfolio

Promoting Digital Transformation (DX)Set KPIs and follow up regularly; clarification of scenarios toward vision realization
TDX Basic Policy andAction Plan

TDX Quantitative Targets:
15 major items (to 2025)〈 Phase 3 〉
Promoting Reforms〈 Phase 2 〉 Preparing
foundations for reforms〈Phase1〉 Steps to ensurecorporate survival

Infrastructure development
1.Completion of SCM platform installation in Kashima area
2.Completion of digital twin construction at each manufacturing plant
3.Completion of all-employee DX literacy training
4.Completion of infrastructure development for utilization of HR information

Overcome Change

FY30

GrowthGrowthbusinesses
GlobalDecarbonization

Resource allocation
Cash/humanresources

TDX

Productivity
improvements
Functional
enhancement,
Acceleration

LinkedMedium-termManagement Plan 2025

Productivity improvements
5. More than 300,000 hours freed up across the Group
6. Realize double (dental) plant productivity
7. Reduce paper documentation by 50%, streamline operations
Functional enhancement
8. Train more than 100 DX workplace leaders
9. Share information on 100 DX initiatives within the Group
10. Expand MI material development by more than 10 times compared withprevious years
11. Register 20,000 new members through new marketing
Acceleration
12. Reduce time required to formulate factory budgets by 80%
13. Reduce time required to create production plans by 50%
14. Reduce time required to compile ESG data by 90%
Overall
15. Improve DX promotion index to 3.5 points (initially 0.8)

Tokuyama’s Vision
Tokuyama aspires to be:

Be a value-creative company
that places first priority on
R&D and marketing

Achieve
Medium-termManagement
Plan 2025

Be a company that neverstops challenging new
domains while refining andexploiting its unique strengths
Be a company with healthy
employees who have healthyfamilies and take pride in theirwork at their company
Be a company that fosters
bonds with people incommunities and societies
worldwide©
©2024
2024Tokuyama
TokuyamaCorporation.
Corporation.All
Allrights
rightsreserved.
reserved. 27

Reference: Realize Management Conscious of the Cost of Capital and Stock Price© 2024 Tokuyama Corporation. All rights reserved. 28

© 2024 Tokuyama Corporation. All rights reserved. 29

© 2024 Tokuyama Corporation. All rights reserved. 30

Disclaimer
This material is supplied to provide information of Tokuyama and its Group
companies, and is not intended as a solicitation for investment or other actions.
This material has been prepared based on the information currently available andinvolves uncertainties. Tokuyama and its Group companies accept no liability inrelation to the accuracy and completeness of the information contained in thismaterial.
Tokuyama and its Group companies assume no responsibility whatever for any
losses or deficits resulting from investment decisions based entirely on projections,numerical targets and other information contained in this material.
Accordingly, the information on this material may not be used, reproduced, altered,
distributed, sold, reprinted or published without the prior approval of the Company.
© 2024 Tokuyama Corporation. All rights reserved. 31