Consolidated Financial Results for the Nine Months Ended December 31, 2023 [JGAAP]
Company Name:

February 9, 2024
Stock Exchange Listing: Tokyo

Kanto Denka Kogyo Co., Ltd.

Code Number: 4047 URL: https://www.kantodenka.co.jp/english/
Representative:
Jun’ichi Hasegawa, President
Contact: Masanobu Shirokura, General Manager, Public Relations & Investor Relations Dept.
Scheduled date for submitting the Quarterly Securities Report: February 9, 2024
Scheduled date to commence dividend payments:―
Availability of supplementary briefing material on financial results: None
Financial results briefing session: None

Phone: +81-3-4236-8804

1. Consolidated financial results for the first nine months of the fiscal year ending March 31, 2024 (April 1, 2023–December31, 2023)(Amounts are rounded down to the nearest million yen)

(1) Consolidated operating results(% figures are the rate of year-on-year increase or decrease)

Net sales

Operating profit

Millions of yen%

Millions of yen%

–611
9,895

—
23.5

Nine months ended December 31, 2023
49,051–14.3
Nine months ended December 31, 2022
57,20727.8(Note) Comprehensive income:Nine months ended December 31, 2023: ¥2,130 million (–76.8%)
Nine months ended December 31, 2022: ¥9,198 million (59.9%)
Basic earnings per share

Millions of yen

Total assets

Millions of yen%

226
7,860

–97.1
40.0

Yen

3.94
136.82(2) Consolidated financial position%

24 –99.8
10,917 36.4

Diluted basic earnings per share

Yen

Nine months ended December 31, 2023
Nine months ended December 31, 2022

Profit attributable toowners of parent

Ordinary profit——Net assets

Equity ratio

Net assets per shareMillions of yen

Millions of yen%Yen

132,333
As of December 31, 2023
130,762
As of March 31, 2023
(Note) Equity capital:
As of December 31, 2023: ¥67,654 million
As of March 31, 2023: ¥67,480 million

69,152
68,77451.1
51.6

1,177.56
1,174.54

2. Dividends
Annual dividends per share
End of 1Q

End of 2Q
Yen

End of 3Q
Yen—
Fiscal year ended March 31, 2023—
Fiscal year ending March 31, 2024
Fiscal year ending March 31, 2024
(Forecast)(Note) Revision of dividend forecast from the latest announcement: None

Year-endYen10.00
7.00——TotalYen

Yen

23.00

33.00

7.00

14.00

3. Forecast of consolidated financial results for the fiscal year ending March 31, 2024 (April 1, 2023–March 31, 2024)(% figures are the rate of year-on-year increase or decrease)

Net sales
Full year

Operating profit

Profit attributable toowners of parent

Ordinary profit

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

63,800–18.9–2,000—–1,600—–1,600—(Note) Revision of performance forecast from the latest announcement: NoneBasicearnings pershareYen–27.85

Notes:(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): Notapplicable
New: ― companies (company names); Removed: ― companies (company names)(2) Application of special accounting for preparing quarterly consolidated financial statements: Yes(3) Changes in accounting policies, changes in accounting estimates and retrospective restatementi. Changes in accounting policies accompanying amendments to accounting standards, etc.: Noneii. Changes in accounting policies other than i.: Noneiii. Changes in accounting estimates: None
iv. Retrospective restatement: None
(4) Number of shares issued (common stock)i. Number of shares issued at the end of the period(including treasury shares)
ii. Number of treasury shares at the end of the periodiii. Average number of shares during the period

As of December 31, 2023 57,546,050 shares As of March 31, 2023

57,546,050 shares

93,187 shares As of March 31, 2023

93,137 shares

As of December 31, 2023

As of December 31, 2023 57,452,906 shares As of December 31, 2022

57,451,016 shares

Notes: Summary of financial results are not subject to audit by a certified public accountant or an auditing firm.
Proper use of performance forecasts, and other special matters(Notes to forward-looking statements)
The performance outlooks and other forward-looking statements in this document are based on information currently available to the Company andcertain assumptions that the Company deems reasonable, and are not intended to be a promise by the Company that they will be realized. Actual
results may differ significantly due to various factors. Please refer to "Consolidated earnings forecasts" on page 3 of the attached materials for
information on the performance forecasts.

Contents
1. Qualitative information on the first nine months ended December 31, 2023 ............................................ 2(1) Operating results................................................................................................................................. 2(2) Financial position ............................................................................................................................... 3(3) Consolidated earnings forecasts ......................................................................................................... 3
2. Consolidated financial statements and notes.............................................................................................. 4(1) Consolidated balance sheet................................................................................................................. 4(2) Consolidated statement of income and consolidated statement of comprehensive income ................ 6(Consolidated statement of income) .................................................................................................... 6(Consolidated Statement of Comprehensive Income) ......................................................................... 7(3) Notes to the consolidated financial statements ................................................................................... 8(Notes on premise of going concern)................................................................................................... 8(Notes on significant changes in the amount of shareholders’ equity) ................................................ 8(Special accounting for preparing quarterly consolidated financial statements) ................................. 8(Segment information)......................................................................................................................... 91

1. Qualitative information on the first nine months ended December 31, 2023
(1) Operating results
In the first nine months of the fiscal year ending March 31, 2024, the Japanese economy showed signs ofa gradual recovery due to the positive effects of various government policies under an improving
employment and income environment. However, severe conditions continued to prevail. Overseas, theoutlook remained uncertain due to the need for caution amid downside risks stemming from such factors
as global monetary tightening and concerns over the prospects for the Chinese economy, as well asinflation, geopolitical tensions in the Middle East, and fluctuations in financial and capital markets.
Amid this business environment, net sales for the first nine months of the fiscal year ending March 31,
2024 amounted to ¥49,051 million, down ¥8,155 million or 14.3% year on year, mainly due to thesubstantial decline in demand in the Fine Chemicals Division, despite the Group’s active efforts inmarketing. On the profit front, the Group recorded ordinary profit of ¥24 million, down ¥10,892 million
or 99.8% year on year. This decrease was mainly due to the cost of sales remaining at a high level due toan inventory balance affected by the surge in the price of raw materials for batteries and a loss on valuationof inventories to reflect the deterioration in selling prices since the end of the previous period, in addition
to the decrease in net sales. Profit attributable to owners of parent amounted to ¥226 million, down ¥7,634
million or 97.1% year on year.
The following provides an overview for each segment.
a. Fundamental Chemicals Division
For inorganic products, sales of caustic soda and hydrochloric acid were up year on year due to theeffects of price revisions, despite lower sales volumes.
For organic products, a decline in trichloroethylene sales volume caused sales to decline year onyear. Sales of perchloroethylene were down due to the lower sales volume and decrease in selling price.
As a result of the above, net sales in the Fundamental Chemicals Division amounted to ¥6,338
million, down ¥130 million or 2.0% year on year. Operating loss totaled ¥31 million (versus operating
profit of ¥128 million in the first nine months of the previous fiscal year).
b. Fine Chemicals Division
Sales of fluorochemicals for semiconductors decreased year on year due to a decline in sales volumefor nitrogen trifluoride, tungsten hexafluoride, and hexafluoro-1,3-butadiene.
Sales of lithium hexafluorophosphate, a battery material, were down due to a decrease in sales
volume and decrease in selling price.
As a result of the above, net sales in the Fine Chemicals Division amounted to ¥39,331 million,down ¥7,404 million or 15.8% year on year. An operating loss of ¥1,317 million was recorded(compared to operating profit of ¥8,984 million in the first nine months of the previous fiscal year).
The loss was mainly due to the persistent high cost of sales for battery materials and recognition of aloss on valuation of inventories, in addition to the decline in net sales.
c. Ferrochemicals Division
Sales of reprographic carriers, used in developers for copiers and printers, were down year on year due
to lower sales volumes. Sales of iron oxide were down year on year due to lower sales of colorants.
As a result of the above, net sales in the Ferrochemicals Division amounted to ¥1,266 million, down
¥749 million or 37.2% year on year. Operating profit totaled ¥96 million, down ¥413 million or 81.1%
year on year.
d. Commercial Business Division
Commercial business sales were down year on year due to lower sales of chemical products.
As a result of the above, net sales in the Commercial Business Division amounted to ¥524 million,
down ¥40 million or 7.2% year on year. Operating profit totaled ¥144 million, down ¥9 million or 6.2%year on year.
e. Facilities DivisionNet sales in chemical facility plant and general industrial plant construction were up year on year due
to an increase in contract work.
As a result of the above, net sales in the Facilities Division amounted to ¥1,589 million, up ¥169
million or 12.0% year on year. Operating profit totaled ¥525 million, up ¥55 million or 11.7% year onyear.

2(2) Financial position
As of the end of the third quarter of the fiscal year ending March 31, 2024, assets amounted to ¥132,333
million, up ¥1,571 million from the end of the previous consolidated fiscal year, mainly due to increases
in cash and deposits and property, plant and equipment, despite decreases in notes and accounts
receivable—trade, and contract assets, and inventories.
Liabilities totaled ¥63,181 million, up ¥1,193 million, mainly due to an increase in borrowings, despite
decreases in income taxes payable and notes and accounts payable—trade.
Net assets amounted to ¥69,152 million, up ¥378 million, mainly due to increases in the foreign
currency translation adjustment and the valuation difference on available-for-sale securities, which
exceeded the decrease in retained earnings. The equity ratio was 51.1%, versus 51.6% at the end of theprevious fiscal year.
(3) Consolidated earnings forecasts
The consolidated earnings forecast for the fiscal year ending March 31, 2024 remains unchanged from theprevious forecast announced on October 25, 2023.
The above forecasts were created based on information available as of the date of this document's
publishing, and actual results may differ versus forecast figures due to a variety of factors arising in thefuture.

3

2. Consolidated financial statements and notes(1) Consolidated balance sheet(Millions of yen)
As of March 31, 2023

As of December 31, 2023

Assets:Current assets
Cash and deposits
Notes and accounts receivable—trade, and contract
assetsElectronically recorded monetary claims—
operatingMerchandise and finished goods
Work in process

22,355
20,56028,09913,831

1,130

1,370

7,055
9,332

8,264
8,038

Raw materials and supplies
Other

7,516
5,030

4,755
4,458

Allowance for doubtful accounts

(62)

(46)

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net

72,91968,772

10,93011,531Other, net

19,291
10,512
6,669

17,591
16,372
6,906

Total property, plant and equipment

47,40452,401

676

646

7,399
14
1,404
950

8,025
21
1,538
935

Machinery and equipment, net
Construction in progress

Intangible assets
Investments and other assets
Investment securities
Retirement benefit assets
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

4(7)

(7)

9,762

10,513

57,842

63,561

130,762

132,333

(Millions of yen)
As of March 31, 2023

As of December 31, 2023

Liabilities:Current liabilities
Notes and accounts payable—trade

9,620

7,806

Electronically recorded obligations—operating
Short-term borrowings

1,022
4,516

1,661
4,674

Current portion of long-term borrowings
Income taxes payable

6,914
2,701

8,577
237

134

—

Provision for bonuses for directors (and otherofficers)
Other

8,769

8,392

Total current liabilities

33,68031,349Non-current liabilities
Long-term borrowings

25,591

29,027

143

145

1829

1,805

1,898

Provision for retirement benefits for directors (andother officers)
Provision for share awards for directors (and otherofficers)
Retirement benefit liability
Other748

729

28,30831,831

61,98863,181

CapitalCapital surplus

2,877
1,859

2,877
1,859

Retained earnings
Treasury shares

58,486(65)

56,986(66)

Total shareholders' equity

63,15761,657

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans

2,512
1,534275

3,083
2,649
263

Total accumulated other comprehensive income

4,323

5,996

Total non-current liabilities
Total liabilities
Net assets:
Shareholders’ equity

Non-controlling interests

1,293

1,498

Total net assets
Total liabilities and net assets

68,774

69,152

130,762

132,3335

(2) Consolidated statement of income and consolidated statement of comprehensive income
Consolidated statement of income(Millions of yen)
From April 1, 2022
to December 31, 2022

From April 1, 2023 to
December 31, 2023

Net sales
Cost of sales

57,20740,24149,05142,846Gross profit
Selling, general and administrative expenses

16,965
7,069

6,205
6,816

Operating profit (loss)

9,895(611)

Non-operating profit
Interest income

1242

Dividend income
Foreign exchange gains

243
618

254
717

Gain on sale of trial products
Other

271
194

—
239

Total non-operating profit

1,340

1,255

Non-operating expenses
Interest expenses
Loss on valuation of derivatives

232
47

357

Loss on sale of trial products
Other—
3992
32

Total non-operating expenses

319

618

10,917

24—
—

580
580

163
17180

193
—
193

Profit before income taxes

10,736411

Income taxes payable

2,810

6ProfitProfit attributable to non-controlling interests

7,926
65405
178

Profit attributable to owners of parent

7,860

226

Ordinary profit
Extraordinary income
Gain on sale of investment securities
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on valuation of investment securities
Total extraordinary losses

6136

Consolidated Statement of Comprehensive Income(Millions of yen)
From April 1, 2022
to December 31, 2022

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income

From April 1, 2023
to December 31, 2023

7,926

405

(133)
1,251

615
1,122153

(12)

1,272

1,725

Comprehensive income

9,198

2,130

Comprehensive income attributable to:
Owners of parent
Non-controlling interests

9,136

1,899

61231

7

(3) Notes to the consolidated financial statements(Notes on premise of going concern)
Not applicable.
(Notes on significant changes in the amount of shareholders’ equity)
Not applicable.
(Special accounting for preparing quarterly consolidated financial statements)
Tax expenses are calculated by multiplying profit before income taxes by the reasonably estimated effective tax rate after the application oftax effect accounting to profit before income taxes for the fiscal year ending March 31, 2024, including the third quarter. However, in cases
where calculating tax expenses using the estimated effective tax rate would significantly lack rationality, tax expenses are calculated using
the statutory effective tax rate.

8

(Segment information)
I. From April 1, 2022 to December 31, 2022
1. Information on net sales, profit or loss by reportable segment
Reportable segment(Millions of yen)Amountrecorded on
Adjustment(Note 1) the statementof income(Note 2)Fundamental
Chemicals

Fine
Chemicals

Ferrochemicals

CommercialBusiness

Facilities(1) Net sales to externalcustomers

6,469

46,736

2,016

565

1,419

57,207—57,207(2) Inter-segment net sales
or transfers

—

—

0

1,075

2,782

3,858

(3,858)

—

Total

6,469

46,736

2,016

1,641

4,202

61,065(3,858)57,207

Segment profit

128

8,984510

153

470

10,246(350)

9,895

Total

Net sales(Notes) 1. The segment profit adjustment of –¥350 million is elimination of inter-segment transactions.
2. Segment profit is adjusted with operating profit in the consolidated statement of income.
2. Information about impairment loss and goodwill on non-current assets by reportable segment
Not applicable.
II. From April 1, 2023 to December 31, 2023
1. Information on net sales, profit or loss by reportable segment
Reportable segment(Millions of yen)Amountrecorded onAdjustment
the statement(Note 1)of income(Note 2)Fundamental
Chemicals

Fine
Chemicals

Ferrochemicals

CommercialBusiness

Facilities(1) Net sales to externalcustomers

6,338

39,331

1,266

524

1,589

49,051—49,051(2) Inter-segment net sales
or transfers

—

—

—

1,079

3,023

4,103

(4,103)

—

Total

6,338

39,331

1,266

1,604

4,612

53,154(4,103)49,051(31)(1,317)96144

525(582)

(29)

(611)

Total

Net sales

Segment profit (loss)(Notes) 1. The segment profit (loss) adjustment of –¥29 million is elimination of inter-segment transactions.
2. Segment profit (loss) is adjusted with operating loss in the consolidated statement of income.
2. Information about impairment loss and goodwill on non-current assets by reportable segment
Not applicable.

9