NIPPON FINE CHEMICAL CO., LTD.

Financial Results Meeting forthe 1st Half of FY2022
November 14, 2022
NIPPON FINE CHEMICAL CO., LTD.

NIPPON FINE CHEMICAL CO., LTD.

1. NFC Long-Term Vision

Sustaining the KIREI of the Earth through sustainable manufacturing
Sustaining the KIREI of communities through compliance, safety, and actions that ensure peace of mind
Sustaining the KIREI of the future through diversity-driven innovation

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NIPPON FINE CHEMICAL CO., LTD.

2. NIPPON FINE CHEMICAL Group’s Business Sectors

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NIPPON FINE CHEMICAL CO., LTD.

2. NIPPON FINE CHEMICAL Group’s Business Sectors

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NIPPON FINE CHEMICAL CO., LTD.

2. NIPPON FINE CHEMICAL Group’s Business Sectors
ReportingSegments

Company(Divisions / Departments)
andandSubsidiaries*
Subsidiaries*

Corporate Products and Businesson the Company’s Website

Industrial
Products

Cosmetic Ingredients
Division

Cosmetic IngredientsBusiness(cosmetic ingredients)

Main Business
FieldsBeauty care field
Beauty care field

Lanolin Cholesterol
Business

Lipid Division
Fine Chemicals Department
Nipo and Zillion
Trading companies(subsidiaries) in Japan
Bilis, Oleo, and PLAS-TECH

HouseholdProducts

Arbos

Health care field

Lipid Business(phospholipids forpharmaceuticals)

Fine Chemicals
Business

Health care field

Perovskite solar cells

Colorless heat resistant film
High-speed communication
printed circuits

Electronic and functional resinmaterials field
Natural resources and energy field
Health care field*Names of subsidiaries• Nipo: Sichuan Nipo Fine Chemical Co., Ltd. (China)• Zillion: Zillion Fine Chemicals International Co.,Ltd.
(Taiwan)• Bilis: Nissei Bilis Co., Ltd.
• Oleo: Oleotrade International Co., Ltd.
• PLAS-TECH: NISSEI PLAS-TECH CORPORATION• Arbos: Arbos Co., Ltd.

Health care field
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NIPPON FINE CHEMICAL CO., LTD.

2. NIPPON FINE CHEMICAL Group’s Business Sectors• Analysis of the external environment of the cosmetics market (market for cosmetic ingredients)
Item

Item
Details

Market size
(estimate)

Analysis of the current environment

The Company’s response

Japan

Approx.
¥2.6 trillion

Inbound demand disappeared and domestic
Widely adopted by cosmetics
demand declined due to the COVID-19 pandemic manufacturers ⇒ expansion⇒ slow recovery from the COVID-19 impact

GlobalApprox.
¥38 trillion

Many countries rebounded swiftly from the
COVID-19 pandemic and kept growing⇒ expect continual steady growthMarketExpand adoption by major global
cosmetics manufacturers, etc.

Market trends

Cosmetics markets expanded primarily in thegrowing East and Southeast Asian economies,－
and there was an increase in high value-added
products

Combine highly functional
ingredients and marketing

Sustainability

Selection of ingredients, use of plant-derived－ and Non-GMO ingredients mainly in Europe andthe U.S.

Develop products to meet theneeds

Products⇒ Meeting market needs and capturing overseas demand (including outbound demand)
are the keys to future growth
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NIPPON FINE CHEMICAL CO., LTD.

2. NIPPON FINE CHEMICAL Group’s Business Sectors• Major strategies for cosmetic ingredients✓Through our numerous highly functional ingredients,
implement marketing activities to meet the needs of customers and consumers accurately⇒ Increase performance through the adoption of our cosmetic ingredients by a large number ofcosmetics manufacturers in Japan⇒ Expand sales by applying the method developed in theJapanese market and by identifying needs that match themarket characteristics of each country

Trends in net sales of the Group’s cosmetic
ingredients✓Develop and launch

RSPO-certified products and Non-GMO* products⇒ Respond swiftly to the needs of the cosmetics industry,
which is moving rapidly toward sustainability*RSPO･･･Roundtable on Sustainable Palm Oil (certification system)
Non-GMO･･･Products that do not use genetically modified organisms

Growth more thandoubled in eightyears
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021

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NIPPON FINE CHEMICAL CO., LTD.

3. Overview of Consolidated Financial Results for the 1st Halfof FY2022• Net sales and profits reached record highs, achieving the latest forecast• EBITDA also increased from the 1st half of FY2021(Unit: Millions of yen)

1st half of
FY2021

1st half of
FY2022

ActualamountActualamountLatest Forecast(Announced on April 28, 2022)
Year-on-yearchangesAmountChange fromforecast

Net sales

16,21818,67715.2%

17,900

4.3%

Operating profit

2,387

2,727

14.2%

2,450

11.3%

Ratio of operating profit (%)

14.7%

14.6%

Ordinary profit

2,517

2,905

15.4%

2,600

11.7%

Profit attributable to owners ofparent

1,698

1,956

15.2%

1,750

11.8%

Basic earnings per share (Yen)

71.54

82.84

EBITDA(Operating profit before
depreciation and amortization)

2,896

3,173

13.7%

74.10

*From FY2022, thedepreciation method
is unified to thestraight-line method

9.5%
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3. Overview of Consolidated Financial Results for the 1st Halfof FY2022• For Industrial Products, net sales and profit increased; both net sales and operating profit reached record highs• For Household Products, both net sales and operating profit declined; the ratio of operating profit also declined
Reporting segments

1st half of

2nd half of

1st half ofChange from 1st half of
FY2021

Change from 2nd half of
FY2021(Unit: Millions of yen)

FY2021

FY2021

FY2022

AmountAmountIndustrial
Products

HouseholdProducts

Other*Rate

Rate

Net sales

11,445

12,154

13,944

2,498

21.8%

1,789

14.7%

Operating profit

1,793

1,827

2,139

345

19.3%

311

17.0%

Ratio ofoperating profit

15.7%

15.0%

15.3%

Net sales

4,261

4,384

4,043

-218

-5.1%

- 341

-7.8%

Operating profit

442

484

367

- 75

-17.0%- 117-24.1%

Ratio ofoperating profit

10.4%

11.1%

9.1%

Net sales

510

690

689

178

34.9%

-1

-0.2%

Operating profit

151

181

220

69

46.1%

39

21.6%

Ratio of
29.6%
26.3%
32.0%
operating profit*Other: Real estate business and the contract business of pharmacology and safety tests

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NIPPON FINE CHEMICAL CO., LTD.

3. Overview of Consolidated Financial Results for the 1st Halfof FY2022• Status of net sales by major business category
ReportingSegments

Main business
Cosmetic IngredientsBusiness(cosmetic ingredients)

Lanolin Cholesterol
Business
Industrial
Products

Lipid Business(phospholipids forpharmaceuticals)

Status(Year-on-yearchanges)

+28％
+13％

Overview
Domestic market: increase in business for our customers’ largescale products; Overseas market: Europe and the U.S. perform
well
Overseas sales, which increased significantly in the previous fiscal
year (FY2021), continue performing well
Overseas sales expansion remains stable+7％
Fatty acid amides business continues to growFine Chemicals BusinessHouseholdProducts

Arbos

+36％
-5％

Corporate demand for COVID-19 infection control products
declined
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3. Overview of Consolidated Financial Results for the 1st Halfof FY2022• Analysis of operating profit
Profit increased due to increased sales despite increases in other fixed costs and raw material prices
920(Unit: Millions of yen)

-240

2,390

2,730

170

-280

-220
¥340
millionincrease

Industrial Products: ¥820 million
Household Products -¥60 million

1st half of
FY2021

Increasein salesIncrease inpersonnel
expenses

Increase inother fixed
costs

Other

Impact ofexchange rate
fluctuations

Change

1st half of
FY2022

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NIPPON FINE CHEMICAL CO., LTD.

3. Overview of Consolidated Financial Results for the 1st Halfof FY2022• Balance sheet (Unit: Millions of yen)Account

Balance as of
September 30, 2022

Change from theend of FY2021

Main factors for increase / decrease

Cash and deposits

12,013-848

Notes and accounts receivable – trade

9,239

+536

Inventories

9,756+1,336

Securing raw materials and responding to increase in sales

Property, plant and equipment

14,242+1,469Investment related to phospholipids for pharmaceuticals(includes construction in progress)

Investments and other assets

10,844-360

Decrease in unrealized gains on investment securities andsale of some assets

Other

1,719

+876

Increase in intangible assets (new core system)

Total assets

57,816+3,009Notes and accounts payable – trade

3,916

-12

Deferred tax liabilities

2,215

-51

Other

5,857

+1,806

Total liabilities

11,989+1,742

Total net assets

45,827+1,266¥1,902.04+¥50.20

Net assets per share

Increase in sales

Increase in accounts payable in capital investment(investment related to phospholipids for pharmaceuticals)

Equity-to-asset ratio 77.7% (-2.1% from the end of
FY2021)

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NIPPON FINE CHEMICAL CO., LTD.

3. Overview of Consolidated Financial Results for the 1st Halfof FY2022• Statement of cash flows (CF) (Unit: Millions of yen)
Category
Profit before income taxes
Depreciation

1st half of
FY2022
2,882
445

Increase in working capital-1,768

Income taxes paid

-1,063

Other

Main factors

Securing raw materials, effects of an increase in sales-237

CF from operating activities

258

CF from investing activities-408(Free CF)(-150)

CF from financing activities-725

Effect of exchange rate change
on cash and cash equivalents

47

Net increase (decrease) incash and cash equivalents-827

Purchase of property, plant and equipment -452

Year-end dividend -684

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NIPPON FINE CHEMICAL CO., LTD.

3. FY2022 Topics (Sustainability)• Set numerical goals of materialities (key issues that we should engage in
TCFD Reportas management)• Disclosed TCFD report, set indicators and targets, etc.
• As specific actions, the head office building and the threeplants in Takasago, Kakogawa-higashi, andKobe have switched to 100% renewableenergy• With the goal of achieving “Diversity & Inclusion”,

participated in “Work Happiness Farm”

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NIPPON FINE CHEMICAL CO., LTD.

4. Consolidated Earnings Forecasts for FY2022• Upward revision from figures announced on April 28, 2022 (assumed rates also updated)• Net sales fell short of the medium-term management plan but are close to the target figure(Unit: Millions of yen)

FY2021

FY2022

ActualamountForecast
amountMedium-term Management Plan
(Final year)
Year-on-yearchangesTarget amount

Increase/decrease
from the target

Net sales

33,44837,40011.8%

39,000-4.1%

Operating profit

4,881

5,200

6.5%

3,900

33.3%

Ratio of operating profit (%)

14.6%

13.9%

Ordinary profit

5,127

5,550

Profit attributable to owners of parent

3,472

3,750

Basic earnings per share (Yen)

146.32158.69

EBITDA(Operating profit before depreciation
and amortization)

5,952

6,200

10.0%
8.2%
8.0%

4.2%

*Assumed rates
130 yen per US$
135 yen per EUR(change from the
beginning of FY2022,
US$ +10 yen
EUR +5 yen)

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NIPPON FINE CHEMICAL CO., LTD.

4. Consolidated Earnings Forecasts for FY2022• Industrial Products will increase from the figures announced on April 28, 2022, while Household Products willslightly decrease• In both segments, the price adjustment compensates for the rise in raw material prices, etc.
FY2020

Reporting Segments

FY2021

FY2022Year-on-year changes
Amount(Unit: Millions of yen)
Industrial Products

Net sales

19,30523,60027,300

3,699

15.7%

Operating profit

2,293

3,621

4,000

378

10.4%

Ratio of operating profit

11.9%

15.3%

14.7%

10,069

8,646

8,800

153

1.8%

Operating profit

1,423

927

850

- 77

-8.4%

Ratio of operating profit

14.1%

10.7%

9.7%

Net sales

1,134

1,201

1,300

98

8.2%

223

332

350

17

5.3%

19.7%

27.7%

26.9%

Household Products Net sales

Other*

Rate

Operating profit
Ratio of operating profit*Other: Real estate business and the contract business of pharmacology and safety tests

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4. Consolidated Earnings Forecasts for FY2022• Trends in semiannual net sales, operating profit and ratio of operating profit
Despite continued increases in sales and profit, profit is expected to decrease in the 2nd halfof FY2022 due to an increase in raw material costs and new plant launch costs.
18,677(forecast)
18,722

Net sales (Unit: Millions of yen)

17,229Operating profit (Unit: Millions of yen)
1st halfofof operating
FY2019Ratio
profit16,108

16,2182,727
14,772
14,274

1,987

14,400
1,880

2,387

2,494

2,472

2,059
14.7%

1,654

14.5%

14.6%

13.5%

13.2%

13.1%
12.8%

11.6%

1st half of
FY2019

2nd half of
FY2019

1st half of
FY2020

2nd half of
FY2020

1st half of
FY2021

2nd half of
FY2021

1st half of
FY2022

2nd half of
FY202217

NIPPON FINE CHEMICAL CO., LTD.

4. Consolidated Earnings Forecasts for FY2022• Trends by segment

Household Products

Industrial Products
Net sales for the 2nd half of FY2022 (Unit: Millions of yen)
Net sales for the 1st half of FY2022 (Unit: Millions of yen)

27,30023,600

Ratio of operating profit (Unit: FY)
FY2017

20,323
19,93020,573(forecast)
14.7%

19,305

15.3%

13.4%

13,356

11.9%

12,155
10,231

10,165

10,1769,700

10,15910,397FY2017FY2018FY201910,069Net sales for the 1st half of FY2022(Unit: Millions of yen)

14.1%

(forecast)

6,606

6,685

7.9%

8.1%

9,266

FY2020

FY2021

10.7%
9.7%
5,456
4,384

3,490

3,198

3,196

3,351

FY2017FY2018FY20194,757(forecast)

3,987

3,408

13,944FY2022

8,800(forecast)

7,337
8.4%

10,03911,4468,646

FY2017of operating profit (Unit: FY)
Ratio

11.8%

9.8%

Net sales for the 2nd half of FY2022(Unit: Millions of yen)

4,613

4,262

4,043

FY2020

FY2021

FY2022・While net sales for the 1st half of FY2022 declined from the 2nd

・In the 1st half of FY2022, net sales reached record highs
half of FY2021, they are up from FY2019
・Expect steady performance in the 2nd half of FY2022 with profit ・Upward trend in net sales and profit margins remains steady for
margins remaining at a high levelthe full fiscal year
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4. Consolidated Earnings Forecasts for FY2022• Status of net sales by major business category
ReportingSegments

Main business
Cosmetic IngredientsBusiness(cosmetic ingredients)
Lanolin
Cholesterol BusinessIndustrial
Products

Lipid Business(phospholipids forpharmaceuticals)

Fine Chemicals BusinessHouseholdProducts

Arbos

Status(Year-on-yearchanges)

Overview (forecast)+27％

Increased sales due to the new adoption of cosmetic ingredients incustomers' products and the gradual recovery of domestic and overseas
cosmetics markets+8％

Overseas sales, which increased significantly in the previous fiscal year
(FY2021), will continue to perform well (growth started in the 2nd half of
FY2021, and the growth rate declined)

+5％
+18％
+3％

Overseas sales expansion is expected to remain stable (the new plant
will start operating after January 2023)
The fatty acid amides business continued to grow due to product priceadjustments, and functional coatings are expected to recover
Despite the decline in corporate demand for COVID-19 infection control
products in the 1st half of FY2022, expect growth in other infection
control products and increased prices in the 2nd half of FY2022
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NIPPON FINE CHEMICAL CO., LTD.

4. Consolidated Earnings Forecasts for FY2022• Capital investment (based on non-current assets recorded) and depreciation
Investment related to phospholipids for pharmaceuticals proceeds as planned (plantcomplete)
Period of the Medium-term Management Plan
Expected total
capital investmentof approx.
¥10,700 million

Depreciation (Unit: Millions of yen)
Capital investment (Unit: Millionsof yen)*Capital Investment Plan
Total ¥10,000 million forfive years until the end of
FY2022*From FY2022, thedepreciation method is
unified to the straight-line
methodFY2017FY2018FY2019FY2020

FY2021

FY2022 (forecast)

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NIPPON FINE CHEMICAL CO., LTD.

4. Consolidated Earnings Forecasts for FY2022• (Consolidated) Trends in R&D expenses
FY2022 will see an increase from FY2021, expect new record highs will be reached

900

R&D expenses (Unit: Millions of yen)

824

Ratio of research expenses to net sales (Unit: %)

717

712

675
609

2.2

FY2017

2.4

2.5

2.3

FY2018FY2019FY20202.5

2.4

FY2021 FY2022 forecast

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4. Consolidated Earnings Forecasts for FY2022• Trends in dividends per share

Dividends increased from the FY2021 (planned dividends with a consolidated
DOE target of 3.0%)
56.0
54.0

Year-end
dividend(Yen)
Year-end
dividends(Unit: Yen)
28.0

Interimdividends(Yen)
Interimdividends(Unit: Yen)
29.0

33.0
28.0

(forecast)

30.0

17.5
16.5

35.0

18.5

18.0

25.0

11.5

12.0

FY2017FY201815.5

16.5

FY2019FY2020

FY202128.0

FY2022 forecast

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NIPPON FINE CHEMICAL CO., LTD.

• Statements regarding earnings forecasts, etc. described inthis document are based on the information obtained by theCompany at the time of preparation of each document andcertain assumptions that it deems reasonable, and are notintended to promise that they will be realized.
• Please be aware that, due to various factors, actual
business results may vary from these forecasts.
• Ecolano, LanoAce, Presome, NEUTRON, Plandool, and
LUSPLAN are trademarks registered by Nippon Fine
Chemical Co., Ltd.