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Status of assets (partner companies) continuing on an autonomousAssets

NIPSEA Group(Asia)

Overview

FY2021 operating results
Revenue increased from the previous year as a result of the newconsolidation of the Indonesia business, coupled with strong market
growth and selling price increases in the decorative paints business
at NIPSEA China. Revenue also increased from the previous year
in Asia Excepting NIPSEA China due to the progress with selling
price increases in every region, despite the impact of thepandemic in some regions. As a result, revenue in NIPSEA Group
increased by 48.3% to ¥579.4 billion.
Operating profit increased by 12.1% to ¥67.5 billion on higher
revenue, including revenue growth from the new consolidationand the impact of exchange rate changes, despite the significant
negative effect of the higher prices of raw materials.

growth trajectory
Financial indicators

Growth since the acquisition (FY2014)
Since becoming our consolidated subsidiary in FY2014, NIPSEAGroup has achieved growth that significantly outperformed themarket and competitors by leveraging the following strengths:① Strong brand recognition, ② Competitive workforce due to a
Lean for Growth (LFG) culture, ③ Strong base of supply chains andproduction locations, and ④ Competitive technologies.
This strong growth at NIPSEA Group has driven earnings
growth of Nippon Paint Group. In addition, NIPSEA Group has
supported the operations and management of Betek Boya and PT
Nipsea by sharing the group’s broad expertise and technologies built
up in emerging markets over the last 60 years. Due to this support,these two companies have grown faster than before theiracquisitions by NPHD. As a result, revenue has increased 145.0%
following the acquisition and operating profit has increased 191.1%.

Revenue

NIPSEA China(China)

Betek Boya(Türkiye)

NIPSEA China remained the market leader in both the DIY
and Project businesses as the market shares increased to 27%
and 9%, respectively.

FY2021 operating results
Revenue increased by 35.9% from the previous year to 49.2 billion
yen despite the impact of the weak Turkish lira against major
currencies. This growth was the result of the expansion of dealer
coverage, an increase in the market share with dealers as a resultof aggressive sales and marketing activities, and selling priceincreases. On a local currency basis, which excludes the effects
of exchange rate fluctuations, revenue was up 65.3% from theprevious year.
Operating profit increased by 53.1% to 7.5 billion yen despite
higher raw material prices because the strong revenue growthabsorbed the higher cost of raw materials and negative effects ofexchange rate movements.
Betek Boya’s market share increased to 34% as this companyretained its No. 1 market position. This accomplishment wasattributable to successful activities such as the multi-brand strategy
and aggressive marketing activities.

Growth since the acquisition (FY2019)
Betek Boya has achieved revenue growth and market share gains
that are significantly greater than before the acquisition. This isbecause the acquisition has allowed the company to benefit fromNIPSEA Group’s know-how for growth in emerging markets andthe Nippon Paint brands. In addition, Betek Boya repaid all of its
loans with high interest rates by utilizing Nippon Paint Group's
low-cost financing capability. Repaying loans allowed Betek Boyato allocate cash generated to large expenditures for marketingand other activities. As a result, revenue increased by 70.6% andoperating profit by 124.1% compared with the amounts at the timeof the acquisition two years ago.

Growth since the acquisition (FY2014)
Since becoming a consolidated subsidiary of NPHD in FY2014,
NIPSEA China has consistently achieved strong growth and steadily
increased its market share every year, led by an excellent
management team dedicated to the Lean for Growth (LFG) spirit
and based on the following strengths: ① High recognition of theLiBang brand, ② extensive distribution network that provides
nationwide coverage, ③ world’s leading and most advanced
production systems, ④ strong relationships with the top 100 realestate developers, and ⑤ extensive support provided to customers
based on its comprehensive capabilities such as capital strengthand broad product lineups. As a result, revenue increased by 96.4%
and operating profit by 77.8% compared to the amounts when
NIPSEA China was acquired.

YoY comparison*1

Growth since
the acquisition*2¥579.4 billion+48.3%+145.0%

Revenue /20142018¥67.5 billion

Operating profit+12.1%+191.1%

2019
2020
2021

OP margin

FY2021 operating results
Automotive coatings revenue increased from the previous year due
to flow-through of selling price increases implemented to respondto raw material price increases, although automobile production
remained unchanged from the previous year due to shortage ofsemiconductor chips and disruptions of parts supply due to thepandemic. The decorative paints business achieved high revenue
growth in the first half of the year following the pandemic downturnin the previous year and strong market growth continued in thesecond half. In addition, selling prices were increased during theyear. As a result, our DIY revenue increased by 35% and Project
revenue increased by 29% from the previous year. The industrial
coatings business achieved revenue growth due to solid demandfor coatings, coupled with strong demand for general industrial
coatings and powder coatings. Consequently, revenue increased
by 41.4% to 379.1 billion yen.
Operating profit decreased by 18.3% to 35.9 billion yen despite
higher revenue, due to the deterioration of the raw material cost
contribution ratio and recording a provision for potential credit loss.

FY2021*1Revenue

11.5%-3.8pt+1.8pt¥379.1 billion+41.4%+96.4%¥35.9 billion

Operating profit-18.3%+77.8%

2014
2018

9.5%

OP margin-6.9pt-1.0pt

2019
2020

DIY

27%

+3pt+5pt
2021

Marketshare*3Project

Revenue*4

Operating profit*4

9%

+1pt

+6pt

¥49.2 billion+35.9%+70.6%¥7.5 billion+53.1%+124.1%

20192020

OP margin*4

15.2%+1.6pt+3.6pt

Market share(decorative)*334%

+4pt

+7pt

2021

Operating profit (Billion yen)

236.5
23.2
355.7
52.4
374.3
54.1
390.7
60.2

579.4

67.5

193.1
20.2
251.7
38.4
257.5
40.1
268.1
43.9

379.1

35.9

28.8
3.3
36.2
4.9

7.5

49.2

*1 The earnings for FY2020 and thereafter have been adjusted retrospectively following the classification of the European automotive coatings business and the India business as discontinued operations
after they were transferred to Wuthelam Group (announced on August 10, 2021) and a change in accounting policy regarding cloud computing agreements beginning with 4Q FY2021.
*2 Earnings comparison with the amounts at the time of acquisition are estimates because there are cases where accounting policies applied or assumptions used to estimate the market are different.
*3 NPHD’s estimates*4 Segment basis (after elimination of internal transactions and after PPA)

027

Nippon Paint Holdings Integrated Report 2022

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Message from Management
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PT Nipsea(Indonesia)

Dunn-Edwards(USA)

DuluxGroup(Australia, Europe)

Japan Group(Japan)

Overview

FY2021 operating results (acquired in FY2021)
Revenue increased by 30.4% from the previous year to 39.5 billion
yen driven by selling price increases, the extension of distribution
networks, the addition of more distributors, and the increase in
the use of Computerized Colour Matching (CCM) machines despite
the temporary slowdown of economic activities due to COVID
restrictions and lockdowns.
Operating profit increased by 15.7% to 11.8 billion yen due tohigher revenue and the product/mix improvement, despite higher
raw material prices and sales promotion expenses.
PT Nipsea’s market share was about the same as in theprevious year at 17% but the company retained its No. 2 position.

FY2021 operating results
Revenue increased by 11.2% from the previous year to 51.7 billion
yen due to solid repainting demand in every operating region
centered on California and Arizona as well as multiple selling priceincreases to reflect higher raw material prices.
Dunn-Edwards’ market share remained about the same as in
the previous year at 2.5%.

Growth since the acquisition (FY2017)
After joining Nippon Paint Group, Dunn-Edwards provided its
unique customer services that differentiate it from competitors
combined with high quality products. This company also increased
sales of new products by opening new stores and using its existing
distribution network mainly in the Southwestern U.S. by leveraging
the know-how accumulated within Nippon Paint Group. As aresult, revenue has increased steadily by 15.8% compared withthe amount in FY2018.

FY2021 operating results
Revenue in the decorative paints and paint related businesses
increased from the previous year due to the recovery of the trade
DIFM*6 markets following the easing of COVID restrictions andlockdowns and due to the proactive management of selling prices.
However, demand in the consumer DIY markets was weaker thanin the previous year when consumer demand escalated temporarily
due to the COVID pandemic. As a result, revenue increased by
18.8% from the previous year to 176.2 billion yen.
Operating profit increased by 23.7% to 19.0 billion yen due tostrong trade sales and strong discipline in managing costs to offset
the impact of higher raw material prices.
DuluxGroup has maintained the No. 1 market share (volumebasis) in decorative paints in Australia, at approximately 50%.

Growth since the acquisition (FY2019)
In the mature Australia and New Zealand markets, DuluxGrouphas grown faster than the market through its continued focus on
the fundamentals of consumer insights, strategic brand marketing,innovation and customer service; complemented by a number ofstrategic bolt-on acquisitions. In addition, DuluxGroup is sharing
its core capabilities to help drive Nippon Paint Group’s growth in
the SAF (Sealants, Adhesives & Fillers) business in Asia, and isdelivering on its targeted and strategic M&A agenda asdemonstrated by the acquisitions of Cromology in France and JUB
in Slovenia in FY2022 These acquisitions provide a platform for
future growth in mature western and central European markets.
As a result, revenue increased by 30.7% and operating profit by
57.0% compared to the time of acquisition two years ago.

FY2021 operating results
Revenue in the automotive coatings business increased from theprevious year due to selling price increases to respond to higher
raw material prices, despite lower automobile production comparedto the previous year because of the shortage of semiconductor chips
and disruptions of parts supplies due to the pandemic. Revenue inthe decorative paints business increased in all business segments,
primarily architectural paints, due to our unique sales promotion
activities by leveraging our paint distribution network andaggressive new ideas for products. Revenue in the industrial
coatings business increased due to the recovery in the housing,construction machinery, and agricultural machinery sectors fromthe previous year when demand was impacted by the pandemic.
As a result, revenue increased by 1.6% from the previous year to164.6 billion yen.
Operating profit declined by 36.2% to 10.3 billion yen due tohigher raw material prices in the 2H of FY2021, despite higher
revenue in the 1H of FY2021 due to recovery from the pandemic.

*1 The earnings for FY2020 and thereafter have been adjusted retrospectively following the classification of the European automotive coatings business and the India business as discontinued operations
after they were transferred to Wuthelam Group (announced on August 10, 2021) and a change in accounting policy regarding cloud computing agreements beginning with 4Q FY2021.
*2 Earnings comparison with the amounts at the time of acquisition are estimates because there are cases where accounting policies applied or assumptions used to estimate the market are different.
*3 Segment basis (after elimination of internal transactions and after PPA)
*4 NPHD's estimates029

Nippon Paint Holdings Integrated Report 2022

FY2021*1

YoY comparison*1

Growth since
the acquisition*2

Revenue*3¥39.5 billion+30.4%+30.4%

Operating profit*3¥ 11.8 billion+15.7%+15.7%

Financial indicators

OP margin*3

29.7%-4.1pt-4.1ptMarket share*4

17%

+0pt

+0pt

¥51.7 billion+11.2%+15.8%*5

Revenue

Market share*4

Revenue*3

Operating profit*3

2.5%+0.1pt+0.1pt¥176.2 billion+18.8%+30.7%¥19.0 billion+23.7%+57.0%

Revenue /10.8%+0.4pt+1.8ptMarket share(Australia)*4*7

50%

+0pt

+2pt

¥164.6 billion

+1.6%

–

Revenue¥10.3 billion-36.2%–

6.3%-3.7pt

–

39.5

11.8

37.4*520172018

44.6

2019

46.5

202046.5

51.7

2021

2019

2021

2017

2019
2020

OP margin

10.2

2021

2018
Operating profit

30.3

2020

2020
OP margin*3

Operating profit (Billion yen)

2021

134.9
12.1
148.3
15.4

19.0

176.2

175.9
30.6
182.8
29.6
182.6
23.4
162.0
16.1

10.3

164.6

*5 FY2017 earnings of Dunn-Edwards are for 10 months from March, when the acquisition closed, to December 2017. Earnings changes since the acquisition are calculated using FY2018 earnings.
*6 Do It For Me*7 Volume basis

Nippon Paint Holdings Integrated Report 2022030