FY2024 1Q Financial Results Presentation
Summary of Q&A Session(August 7, 2024)
Electronics & Innovative Products
Q1: Isnʼt it true that first-quarter operating income seems to be lagging behind what it should bein light of the first-half target?
A1: Due mainly to recovery in demand for spherical alumina and other semiconductor- andelectronics component-related products, most of Denkaʼs mainstay offerings in this segment saw
greater-than-expected sales. On the other hand, sales of ceramic substrates fell short ofprojections. Furthermore, costs grew due to the impact of inventories and an increase indepreciation and amortization. Taking these factors into account, the overall status of operating
income can be considered to be almost in line with our forecast.
Q2: Please elaborate on the factors causing spherical alumina sales to exceed your estimate.
A2: Products for xEV applications are being negatively affected by customersʼ inventory
adjustments in response to the slowing pace of expansion in European markets. However, wehave seen robust sales of products for semiconductor applications as they provide the superior
thermal dissipation performance required for cutting-edge semiconductor packaging, including
GDDR. Going forward, we expect sales of spherical alumina to further expand in this area.
Q3: How is acetylene black demand trending? Also, will your new acetylene black manufacturingbase in Thailand be launched according to schedule?
A3: Sales of acetylene black for use in high-voltage cables are currently being affected by delays
in construction projects in Europe. However, projections have suggested demand growth over themedium to long term, and this outlook remains unchanged. Moreover, although growth in salesof acetylene black for use in xEV-related products is currently decelerating in European markets,
we believe that the overall trend toward xEV market expansion will continue. Accordingly, we
have no intention to amend our construction plans for the new manufacturing base in Thailand.
Life Innovation
Q4: Please tell us what contributed to the year-on-year growth in sales of rapid antigen test kitsrecorded in the first quarter as well as your projections for these products.
A4: Over the course of the first quarter, demand associated with influenza testing remained inplace at some parts of Japan, while the COVID-19 virus surged once again, marking the “11thwave” of this pandemic. Against this backdrop, Denkaʼs production bases continued operating atfull capacity. In the second quarter, distributors will be seeking to secure inventories in preparation
for possible pandemics in autumn or later. Therefore, we expect sales to remain strong going
forward and in line with our estimates.

Denka Co., Ltd

Elastomers & Infrastructure Solutions
Q5: Please describe the reasons for the \3.6 billion increase in operating income from the fourth
quarter of fiscal 2023 to the first quarter of fiscal 2024.
A5: Showings of chloroprene rubber (CR) were buoyed by gradual recovery in demand and theresolution of the impact from the Noto Peninsula Earthquake, which had struck in the fourth
quarter of fiscal 2023. In addition, in the previous fiscal year we saw progress in the phased
upward revision of cement prices. We have also benefitted from recent downturns in raw material
coal prices. Together, these developments positioned us well to improve profitability and served
as the primary factors behind the higher operating income.
Q6: The Louisiana Department of Environmental Quality (LDEQ) approved a two-year extensionof the grace period for the new regulations. Please tell us about what led to this decision.
A6: The factors leading to this decision are unknown. In response to the LDEQʼs approval of thetwo-year additional grace period, Denka Performance Elastomer (DPE) filed an appeal with theUnited States Court of Appeals for the Fifth Circuit, which has jurisdiction over the state ofLouisiana, requesting that the validity of this decision be confirmed. However, the schedule forcourt procedures is currently undecided.
Polymer Solutions
Q7: In the first quarter, Denka recorded a turnaround in operating income in this segment, withdemand getting on a recovery track. However, the current level of profit remains lower thanhistorical results. What are your plans for achieving profit recovery?
A7: We indeed benefitted from a recovery in demand that began in the first quarter, and expect
this recovery to continue, albeit modestly, over the second half. However, it will be hard for us toachieve a profit level equivalent to past operating results unless overall sales volumes return tothe levels seen in past fiscal years. With this in mind, we are currently considering a variety ofoptions, such as the optimization of our supply capacity.

Denka Co., Ltd