Investor Briefing
Shikoku Kasei HD Corp.
For FY 2023
2023/2/9

SHIKOKU KASEI HOLDINGS CORPORATIONTokyo Stock Exchange Prime Market 4099

1

2

2

1. Consolidated Financial Results

33

Financial highlights

Increased sales but decreased profits year on year (January – December)Previous year※
CY2022January to
December

FY2023

ChangeRemarks

Rate

Chemicals operations increased due to the recovery in thesecond half and the depreciation in the yen
Housing Materials operations decreased due to deteriorating
market conditions in the housing area
Profit decreased due to higher raw material costs, labor, anddepreciation cost
Foreign exchange gains 549 (YoY

34)

Gain on sale of investment securities 2,071 (YoY +1,203)
Impairment losses
Net sales+18
billion yen
OperatingProfit+7
billion yen

41 (YoY +795)

Foreign exchange impact on PL included in change from theprevious year (total of Chemicals and Housing Materials)
Only the impact of exchange rate fluctuations on foreign currency transactions isshowed. Many yen-denominated transactions are also substantially affected bychanges in foreign exchange rates, but they are not included.

* Since the Company has changed the fiscal year-end from March 31 to December 31 in the previous year, for comparison with theprevious year, the twelve-month period from January to December 2022 is compared with the “same period previous year,” as a reference.

44

Net sales increased in both Chemicals (+14.6) and Housing Materials (+1.7), resulting in a companywide increase in sales (+16.4 in total)
Operating profit decreased companywide (-6.8 in total) due to lower profit margins and lower profits in both Chemicals (-4.8) and Housing
Materials (-1.7)

20.0

614.8

631.2

160.0

510.0

521.0

520.5

528.0
494.3

185.4

18.0

17.1
140.0Ratio %

16.4
15.2

187.1

14.8

16.0

14.5

14.2

120.0

12.7

192.2

197.7

207.2

181.8

12.0

100.0

192.5

87.2

86.7
79.1

80.0

77.0

28.0
27.2

60.0

418.8
310.8

315.3

305.7

293.0

31.3

433.3

333.7

14.0

71.7

22.2

87.0
16.8

80.2
15.1

29.6

10.0

8.0

6.0

40.0

58.3
20.0

0.0
1-12

1-12

1-12

1-12

1-12

1-12

1-12

2017

2018

2019

2020

2021

2022

FY2023

63.0
51.2

44.8

68.7

63.8

40.9

4.0

2.0

1-12

1-12

1-12

1-12

1-12

1-12

1-12

2017

2018

2019

2020

2021

2022

FY2023

0.0* Results for the previous years were recalculated for the same period of the current year (January to December).

* From FY2023, accompanying changes to the management framework, corporate expenses, which were previously not allocated toeach segment, are now allocated to each segment based on reasonable criteria. In addition, results for the previous years are also
compared by using the revised measurement method.

55The decline in profitability due to higher cost (raw materials and depreciation costs) and lower unit sales
price was partially offset by positive impact of increased sales, weaker yen, and normalization of export
logistics costs.

Increase in gross

Increase in profit
accompanying increasein net sales(Chemicals operations)

Increase in depreciation cost of new Neo-Chlor
plant
Increase in cost of production of approximately

490 million (decrease in profit)
Increase in raw material prices (purchasebasis)
Increase in cost of production of approximately

profit margin
Increase in profit
accompanying increase (Housing Materials Increase inoperations)in net sales
logistics costs(Housing Materials(Housing
operations)

Decrease ingross profit
margin(Chemicals Decrease inoperations) logistics costs(Chemicals
operations)

Materials
operations)(▲684)

Price revision carriedout since January(approximately 10%)Impact of FX fluctuations
Decrease in profit of approximately
200 million yen(related to purchase of aluminum
raw materials)

Increase in other
SG&A expenses(companywide)

Cost of company split
Support for Marugame Half Marathon
Increase in provision for bonuses
accompanying change in fiscal year end

810 million (decrease in profit)

2022/1-12
Operating profit

Increase in
R&D expenses(companywide)

Impact of FX fluctuations: Increase in profit of approximately 900 million yen→ Net positive effect of increase in sales in foreign currency and negative effectof increase in purchase and transportation costs in foreign currency

FY2023Operating profit

6

6

Total sales increased by 1.06 billion yen YoY. Chemicals operations achieved significant growth of 1.18 billion due
a reactive increase from sluggish performance in the previous year and bottoming out of the market conditions.
Housing Materials operations decreased slightly by 130 million yen due to volume declines affected by deteriorating
market condition, offset by price revisions.
Sales increased by 420 million yen QoQ. Chemicals operations decreased by 40 million yen due to a seasonal
decline in organic products.
Housing Materials operations increased by 450 million yen due to a seasonal rise in demand for housing, despite
lower level of cargo movement.

158.0
149.1

161.9
155.0 152.7

163.3

18.5
16.3

146.9

128.7

41.7

124.0

15.0

42.2
42.6

43.5

47.9

51.9

11.6

53.5

8.5

41.2

26.0
23.6
20.3

10.4

113.3
83.9

90.9

14.7

11.2

25.1

78.7

16.4
13.7

13.8

49.2

45.7
40.8

16.7

16.9

139.6

135.7

54.0

159.1

Total operating profit decreased by 200 million yen YoY. Chemicals operations slightly increased by 80 million yen
as positive factors such as increased sales and lower logistics costs were offset by a decline in unit sales price andhigher raw material costs. Housing Materials operations slightly decreased by 80 million yen due to increased cost.
Operating profit decreased by 450 million yen QoQ. Chemicals operations decreased by 300 million yen due to adecrease in organic products sales and lower profit margins. Housing Materials operations recovered, up 90 million
yen, due to a rise in the ratio of landscape exteriors affected by a recovery of demand for properties (seasonalrise).

110.0

95.0

117.5
100.5

112.7

112.3

17.7

24.1

3.1

22.4

23.4

20.9

4.7
7.0

4.1

17.8

18.9
4.4

5.3

1.5

2.9

3.5

7.8

13.8

90.8

80.2

22.6
18.9

18.5
14.4

14.4

4Q 1-3
FY2020

1Q 4-6

15.8

14.9

16.0

15.1

1Q 4-6

2Q 7-9 3Q 10-12 1Q 1-3
FY2022

15.4

13.6

15.9

-0.6
4Q 1-3
FY2020

1Q 4-6

2Q 7-93Q 10-12 4Q 1-3

FY2021

1Q 4-6

2Q 7-9FY2022

3Q 10-12 1Q 1-3

2Q 4-6

3Q 7-9FY2023

4Q 10-12

2Q 7-9 3Q 10-12 4Q 1-3
FY2021

2Q 4-6
3Q 7-9FY2023

4Q 10-127

7

Inorganic chemical products bottomed out and showed recovery signs, with increases of 690 million yen YoY and 470 million yen QoQ.
Orders for insoluble sulfur increased as the weaker yen restored price competitiveness in the Chinese market. Sales to North America
expanded.
Organic chemical products (Neo-Chlor) were weak, with decreases of 170 million yen YoY and 1,110 million yen QoQ.
In the North American market, special demand due to our competitor’s supply ended and demand was fulfilled, resulting in prolonged
inventory adjustments and restrained purchasing.
Fine chemicals showed a clear recovery trend, with increases of 650 million yen YoY and 600 million yen QoQ.
While the cargo movement of imidazoles (electronics) recovered, the market conditions of electronic chemicals (Glicoat-SMA) remained
unchanged.
In the new field, resin modifiers showed an upward trend due to the end of inventory adjustments and demand for semiconductor processmaterials are expanding for prototype production.
The impact of foreign exchange was about +200 million yen (JPY/USD: 143→148) YoY and +200 million yen (JPY/USD: 144→148) QoQ.

Operating profit increased by 80 million yen YoY. The weaker yen contributed to an increase in profit of about 100
million yen.
Sales of insoluble sulfur and fine chemicals increased, but unit sales price of export of insoluble sulfur and Neo-Chlor
lowered due to supply and demand conditions, resulting in worsening of profitability (rate of return).
The cost of various raw materials mainly in organic products continues to rise, and we are working on revising prices
for domestic products.
Depreciation expenses of the new Neo-Chlor plant increased slightly in 4Q (depreciation will gradually decline basedon the declining-balance method in the next year).
Operating profit decreased by 300 million yen QoQ due to a drop in sales of organic chemicals (Neo-Chlor) affectedby both seasonal and market factors.

19.7
18.2

113.3

90.9
83.9
78.7

95.0

117.5
110.0

16.8

112.3

14.2
15.1

25.9

26.9

17.0

15.7

112.7

21.3

100.5

22.4

20.5

20.3

17.2

90.8

14.2

31.9

11.5

25.4

80.2

24.4

21.1

28.0
22.4
23.0

25.2

61.4

54.8

54.7

48.4

32.2
25.2

29.2

41.1

43.5

36.6

22.6

27.7

28.3

29.3

29.5

4Q 1-3

1Q 4-6

2Q 7-9FY2020

45.2

18.9

18.5

33.7

29.5

3Q 10-12 4Q 1-3

FY202136.1

1Q 4-634.8

2Q 7-9FY2022

33.1

34.7

32.1

36.9

3Q 10-12 1Q 1-3

2Q 4-6

3Q 7-94Q 10-1229.9

FY2023

14.4

14.4

4Q 1-3
FY2020

1Q 4-6

15.8

14.9

2Q 7-9 3Q 10-12 4Q 1-3
FY202116.0

1Q 4-6

15.1

15.4

2Q 7-9 3Q 10-12 1Q 1-3
FY202215.9
13.6

2Q 4-6
3Q 7-9FY2023

4Q 10-1288

Housing Materials operations as a whole decreased by 130 million yen or 2.6% YoY. Sales of interior, exterior finishedand paving materials, and housing exteriors were weak due to sluggish new housing starts (detached house).
Sales of interior, exterior finished and paving materials remained weak, with a decrease of 30 million yen YoY and anincrease of 10 million yen QoQ.
Sales of exterior products decreased by 90 million yen YoY as the effect of price revisions (10%) offset by a decreasein volume.
While the housing business was weak, the landscape business increased from the previous year due to recovery of
demand.
Sales increased by 450 million yen QoQ, including a seasonable rise of a natural increase in demand for landscapeexteriors, which, as usual, bottoms out in the April-June period.

Housing Materials operations as a whole decreased by 80 million yen YoY.
Profitability of exterior products recovered after two price revisions, but it was not enough to offset the decline involume, mainly in landscape exteriors. Costs increased mainly due to an increase in personnel expenses, rise in sales
expenses in line with full-scale sales activities, and a decline of profitability in production sites due to weak sales.
Raw material prices including aluminum ingot remained stable at high prices, resulting in limiting improvement of
profitability by price revisions.
Operating profit increased by 90 million yen QoQ as the ratio of high profitable landscape exteriors grew due to aseasonal rise.

19.3

54.0

51.9
49.2
41.7

41.2

10.0

47.9

45.7
40.8

42.6

14.6

13.5

53.5

42.2

10.3

10.7
8.1

7.3

43.5

9.2

7.1
3.5
-1.5

50.4

48.2
42.2
37.3

45.6
38.3

38.0

50.3

39.5

39.1

40.3

44.7
10.4
7.8

7.0

2.9
3.7

3.5

3.2

4Q 1-3

1Q 4-6

2Q 7-9FY2020

3.5

3.7

3Q 10-12 4Q 1-3

FY2021

3.6

3.4

3.1

1Q 4-6

2Q 7-9 3Q 10-12 1Q 1-3
FY2022

3.2

3.1

3.1

3.3

2Q 4-6

3Q 7-94Q 10-12

FY2023

4.1

5.3

4.7

4Q 1-3
FY2020

1Q 4-6

2Q 7-9 3Q 10-12 4Q 1-3
FY2021

4.4

3.1
1.5
1Q 4-6-0.6
2Q 7-9 3Q 10-12 1Q 1-3
FY20223.5

2Q 4-6
3Q 7-9FY2023

4Q 10-1299

2. Financial Forecast

for the Fiscal Year Ending 202410

10

Sales of Chemicals operations are expected toincrease due to sales expansion of insoluble
sulfur and recovery of the fine chemicals
market.
Sales of Housing Materials operations are
expected to increase due to recovery of the
housing market.
Operating profit of Chemicals operations is
expected to be stable due to lower unit sales
price and an increase in fixed costs (repair
costs of plants).
Operating profit of Housing Materials
operations is expected to decrease due to anincrease in fixed costs associated withvarious sales promotion initiatives.
Ordinary profit is expected to decrease further
due to the non-recurrence of foreignexchange gain recorded in FY2023(Foreign exchange gain in FY2023: 549 million
yen)Profit is expected to decrease considerably
due to the non-recurrence of gain on sale ofinvestment securities recorded in FY2023(Gain on sale of investment securities
recorded in FY2023: 2,088 million yen)
One yen change against US dollar has apositive impact of approximately 180 million
yen in sales and 70 million yen in operating
profit.

1111

[Major capital investment in FY2023]
2,230 million yen for the construction of new plant for insoluble sulfur
800 million yen for the construction to accommodate increased production of Neo-Chlor (scheduled tostart operation in the autumn of 2024)
180 million yen to add a solar power generation facility to the Marugame plant[Major capital investment in FY2024]
2,550 million yen for the construction of new plant for insoluble sulfur (scheduled to start construction in
the winter of 2024 and start full-scale operation in 2026)
380 million yen for the construction to accommodate increased production of Neo-Chlor
540 million yen for production and surface treatment facilities for Neo-Chlor tablet

1212[Shareholder Return Policy]
The Company aims to achieve “a dividend payout ratio of 30% and a
total payout ratio of 50% based on consolidated financial results” underthe “Challenge 1000” long-term vision for 2030.

[FY2023 Shareholder Return Policy]
Annual dividends were 28 yen per share (interim dividend of 14 yen andyear-end dividend of 14 yen)
Repurchased the Company shares of 3,220 million yen in total in Juneand November 2023 through TosTNet-3. Total shareholder returns
including dividends of 1,420 million yen are 4,640 million yen, with a
total payout ratio of 59.1%.

[FY2024 Shareholder Return Policy (plan)]
Plans to maintain dividends of 28 yen per share (interim dividend of 14
yen and year-end dividend of 14 yen).
In addition, premised upon the shareholder return policy, the Company
will repurchase its shares in a flexible manner and promote thereduction of excess capital and cross-shareholdings to improve thevalue of shares.

13

13

3. Action to Implement Managementthat is Conscious of Cost of Capitaland Stock Price

14

14

Since the ROIC of the business is high enough at present, we can achieve an
ROE level that exceeds the cost of shareholders' equity by reducing excess
capital.
To accelerate in the current direction, we plan to consider and carry out various
capital policies.

[Future earnings to be acquired (FCF)](Shareholder return)
Carry out promptly, targeting 50%
of profit(Internal reserve)
Prioritize investments in growthand human capital as risk capital

Consolidated Balance Sheets (as of 12/31/2023)[Financial assets]
Cash and deposits
Securities (short-term bonds)
Investment securities (longterm bonds)
Investment securities (crossshareholdings)¥69.8

Approx.
bn(+¥8.6 bn from the
beginning of the year)[Business assets]
Trade receivables
Inventories
Property, plant, andequipment/ Intangible
assetsChemicals operations
Approx.¥43.1 bn
Housing Materials operations[Excess capital](Risk buffer retention policy)
Retain 1/3 of annual net sales(Allocable funds)
Consider shareholder returns, withthe amount excluding risk buffers as
the capital that can be reduced if
there is no urgent demand for funds.
In particular, the reduction of crossshareholdings is prioritized whileworkingoncreating
business
synergies with companies of crossshareholdings.

[Investment capital](Profit indicators to be compared)
Operating profit after tax bybusiness→ ROIC by business
Chemicals operations
Approx.¥30.1 bn (+¥1.5 bn
from the beginning of the year)
ROIC 15.2%
Housing Materials operations
Approx.¥8.1 bn ( ▲ ¥1.4 bn
from the beginning of the year)
ROIC 12.0%¥39.2 bn

Approx.

Approx.¥14.4 bn[Business liabilities]¥61.1 bn

Trade payable
Labor liabilities and provisions

Approx.

[Group capital invested](Profit indicators to be compared)
Profit after tax (operating profit +financial revenue)→ Group ROIC
(Target ROIC)
Set to WACC as a hurdle rate of
ROIC, and aim to achieve WACC
of 6% or less by reducing thecost of equity through leverage.
(Current status)
There is a gap between business
ROIC and Group ROIC, and thereturn on invested capital as awhole is declining due to excess
capital with low yields.
Aims to improve the return onGroup ROIC by reducing excess
capital to an appropriate amount.

¥109.0Approx.
bn(+¥7.1 bn from the beginningof the year)
ROIC5.8%[Net assets in carrying
amount](Profit indicators to be compared)
Profit → ROE(Assumed cost of shareholders’equity)6-8%(Target ROE)
Set to 8% as a hurdle rate in the
short term, and aim to exceed
10% in the future by capital
reduction
Approx.
bn¥86.1[Future net assets]
Maintain ROE and net asset
levels that exceed the cost ofcapital at all times throughbalance sheet management tosecure both aggressive growthstrategies and capitalefficiency.
In addition, consider capital
policies that enhance theattractiveness of share value
from perspectives other thanprofitability (increased liquidity
and preferential treatment) andincentive plans that makeemployees and management
more aware of share value.

(+¥4.8 bn from the
beginning of the year)
ROE9.4%[Interest-bearing debt][FY2023 Financial and CF Summary](Basic policy on leverage)
・Actively utilize low-cost funds tothe extent that the credit rating canbe maintained・Set D/E ratio to the 30% level

Profit temporarily increased to ¥7.8 billion, with ROE at a high level of 9.4%, due tothe recording of gain on sale of cross-shareholding in an extraordinary income.
Shareholder returns decreased by ¥4.6 billion in total of dividends and repurchaseof own shares.
→ As a result, shareholders' equity increased by ¥3.2 billion.
(Combined with comprehensive income, net assets increased by ¥4.8 billion.)
The Company raised approximately ¥2 billion in additional interest-bearing debt.
→ The total of group capital invested increased by ¥7.1 billion.

¥22.2

Approx.
bn(+¥2.0 bn from the beginningof the year)

This capital increased was invested in capital expenditures of ¥5.3 billion (*up¥3.3 billion in depreciation), and financial assets increased by ¥8.6 billion from theprevious year to ¥69.8 billion.
Assets increased temporary mainly due to an increase in valuation of listed shares(approximately ¥4 billion) and an increase in income taxes payable (approximately¥2.5 billion) associated with a change in the fiscal year-end.
→ Accelerate discussions on reduction measures of assets and capital.

15

15

Both Chemicals and Housing Materials operations maintain high capital turnover due to high added value
based on low cost ratio and high ROS arising from their niche business areas and R&D capabilities as well
as lower investment burden on production facilities.

1616

4. Review of the Fiscal Year Ending 2023

17

17

Progress of 'Challenge 1000'
100 million yen

Toward "one- step-ahead, proposal" company
with Dokusouryoku (creativity)
Solve social issues with creative ideas, leading the progress of the world

Improve manufacturing technology andestablish a mass production system toexpand sales
Expand sulfur-driven business domains

160
Establish a high-efficiency production system
Expand business domains by introducing new
products in response to changes in customer
needs

275

800
180

Expand production bases andincrease production capacity
Enhance the products that belong
to our brand and strengthenmarketing activities

リレーションシップ ID rId5 のイメージ パーツがファイルにありませんでした。

Financial
Goals

Net Sales
100 billions of yen

Pillars for
Strategy

Business Reform
PolicyYONPO- YOSHI

Customers Employees(Contributions to Shareholders)Operating Income
15 billions of yen
Companywide
Reform Policy

Proactive
Investment

120

ROE10%
Achievementof SDGs

Shareholders Society

Advanced and specialty chemicals: Work to bring to fruition the early
expansion of the performance of semiconductor process materials
evelop new applications for resin curing agents and resin modifier
Glicoat-SMD: Expand sales by differentiating from other companies basedon the superior quality we offer
GliCAP: Aim for the adoption and achievement of optimal use of server
board and package board applications

ROE

STAGE 1

STAGE 2STAGE 3

* In the graph, performance in prior years is adjusted to the same period in FY2023 (January to December).

18

18

Construction of the new insoluble sulfur plant is progressing smoothly.
Completion scheduled in December→ Due to a change (improvement) in the manufacturing method, which
requires an authorization by a manufacturer, full-scale continuous operationand contribution to revenues will begin from FY2026.
In the carbon disulfide business, we started overseas
sales of hydrogen sulfide, a by-product.
→ Target sales of 300 million yen due to high demand
for the Company's high-quality products→ Continued search for new business based on sulfur
The investment in facility enhancement of Neo-Chlor is scheduled to be completed in FY2024.
→ It will contribute to profits by full-scale operation of three lines in FY2025.
Continued investment in facilities for tablet products to become the largest supplier of solid chlorine
agent in Japan.
→ In addition to Japan's only ODM production, which undertakes integrated operations fromconcept design to packaging, new B-to-C products (WASHMANIA series) that apply original basic
technologies is also under development.
Acquired "MICROFADE®" business, a ballast water
management system, from Kuraray Co., Ltd.
→ Challenge the expansion of the drug market throughsystem selling.

For advanced & specialty chemicals, growth continues in the area of resin modifiers and semiconductor
process materials.
→ For resin modifiers, new compounds in low dielectric and biomass materials areas are currently being
evaluated by users in addition to the growth of the mainstay TS-G.
In addition, acquired Masuda Chemical Industries co., LTD. as a subsidiary toestablish a production system.
→ For semiconductor process materials, several candidate compounds are being
evaluated in the field of high-function films (BARC and resist) for the next andmore advanced generations in line with the generation evolution of thesemiconductor manufacturing process.
For electronic chemicals, sales of GliCAP are expected to double
from the previous year in FY2025.
→ In the server substrate area, it was adopted in the manufacturing line and put into practice.
→ In the semiconductor packaging area, manufacturing tests for the next-generation GPUs are in the final stage

19

19

Showed the feature product “Myport 7” at Osaka Mobility
Show.
Started the official account on “Pinterest”
Reformed the organizational structure and newly established
Overseas Sales Department and Special Sales Department.
→ Strengthening proposal of space for interior, exterior
finished and paving materials, and overseas sales of exteriors
products.
Acquired Ryouwa Kasei Kogyo Co, Ltd. as a subsidiary toensure stable supply of exterior resin parts and a BusinessContinuity Plan (BCP).

[Investment in a comfortable working environment]
Construction of a building for welfare at the Marugame Plant
Renewal (new construction) of company housing in Marugame
Drafting a basic plan for constructing a new R&D center (target in FY2027)
Started considering reconstruction of an office building at the Tokushima Plant[Establishment of business sites]
Transfer of East Japan sales office (branch office) for the Chemicals operations
from Makuhari to Nihonbashi, Chuo-ku (2024/5)
Establishment of R&D Center Satellite Laboratory at Kanagawa Science Park
Expansion of sales offices for the Housing Materials operations (Tokyo, Kanagawa,East Kanto, and Okayama)Transfer and functional enhancement of a subsidiary in China (Shikoku (Shanghai)Co., Ltd.)

Challenge 1000 in the 5th year, hitting the halfway point.
“Overall inspection” now underway to confirm the gap between the current status of each business and their
desired state, and accordingly reconsider the appropriateness of strategies.

20

20

Thank you for your attention!

21

21

Disclaimer

 This material is intended to help shareholders, investors, etc., understand pertinent information such as the Company’s
management policy, plans, and financial status, and it does not solicit investment such as purchasing or selling stocks in the
Company.
 The information contained in this document has been presented with the utmost care, but there is no guarantee as to whether
the content is accurate or currently up to date. Additionally, the Company assumes no responsibility for any damage ordisability arising out of or in connection with this document, such as published information or errors, regardless of the reason.
 Among the Company’s current plans, forecasts, and strategies as presented in this material, those that are not historical facts
are forward-looking statements or projections based on the judgment of the Company’s management according to theinformation that was available at the time of the relevant decision; hence, risks and uncertainties are involved. Actual
performance and business results may differ greatly from these prospects due to various factors.
 If you understand the above and are interested in exploring investment opportunities, please peruse additional materials suchas the Company’s securities report and make your investment decision at your own discretion.

Contact information
SHIKOKU KASEI HOLDINGS CORPORATION, Corporate Planning Dept.
TEL: +81-(0)877-21-4119
https://www.shikoku.co.jp22