Financial Results Briefing for theFiscal Year Ended March 31, 2023

Kanto Denka Kogyo Co., Ltd.
(Tokyo Stock Exchange Prime Market,Securities Code: 4047)

May 23, 2023

Contents

I Overview of Financial Results for the Fiscal Year
Ended March 31, 2023
II Business Outlook and Future Trends
III Supplementary Materials© Kanto Denka Kogyo Co., Ltd. All rights reserved.

2

I Overview of Financial Results for the Fiscal Year
Ended March 31, 2023

© Kanto Denka Kogyo Co., Ltd. All rights
reserved.

3

Key Earnings Data
■ FY2022

 Achieved record highs for net sales and each profit indicator.
 Sales increased significantly due to growth in sales volume and price revisions,despite the impact of production adjustments by semiconductor manufacturers inthe second half.
 Prices of raw materials such as lithium compounds, tungsten and anhydroushydrofluoric acid increased markedly alongside rising electricity costs.
■ FY2023

 Semiconductor price adjustments are expected to continue throughout FY2023
with a full recovery anticipated in FY2024.
 For battery materials, high-priced raw materials purchased in FY2022 arescheduled for use in the first half.
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

4

Statement of Income(Billions of yen)

FY2021

FY2022Difference% change

Net sales

62.2

78.6

16.3

26.3

Operating profit

11.1

12.9

1.7

16.0

Ordinary profit

11.1

13.6

2.5

22.7

Profit before income taxes

11.1

13.4

2.2

20.3

Profit attributable to owners of parent

7.7

9.3

1.6

20.9

135.12163.32

28.2

Basic earnings per share (yen)© Kanto Denka Kogyo Co., Ltd. All rights reserved.

5Balance Sheet(Billions of yen)
FY2021

FY2022

AssetsCash and deposits
Trade receivables
Inventories
Non-current assets (tangible + intangible)

109.9

130.7

Liabilities
Interest-bearing debt
Trade payables
Income taxes payable

49.9

Net assets
Equity ratio (%)

59.9© Kanto Denka Kogyo Co., Ltd. All rights reserved.

26.7
18.0
13.1
38.9
30.9
8.9
2.6

53.0%

22.3
21.6
23.9
48.0

Difference % change
20.8

19.0

–4.3
3.6
10.7
9.1

–16.4
20.4
82.1
23.4

61.9

11.9

24.0

68.7

8.8

14.8

37.7
10.6
2.7

51.6%

6.8
1.7
0.1

–1.4%

22.3
19.5
3.9■Highlights
Level of cash and deposits
We plan to mainly allocate cashand deposits toward growthinvestments and consider thelevel of cash and deposits to beappropriate.
Reason for increase ininventories
Inventories are increasing due toa significant rise in lithiumcompound prices, which isimpacting unit prices.

6Fundamental Chemicals Division(Billions of yen)

FY2021

FY2022Difference

Net sales

7.9

9.4

1.4

Operating profit (loss)

(0.0)

0.3

0.3

Net sales・ Caustic soda: Sales increased due to effects from price revisions, despite lower sales volumes・ Hydrochloric acid: Sales increased due to effects from price revisions, despite lower sales volumes
・ Trichloroethylene: Sales increased due to effects from price revisions, despite lower sales volumes
・ Perchloroethylene: Sales increased due to effects from price revisions, despite lower sales volumes
Operating profit (loss)
・ A turnaround to profitability was achieved as increases in raw material and fuel prices were absorbed
through price revisions.
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

7

Fine Chemicals Division(Billions of yen)

FY2021

FY2022DifferenceNet sales

49.0

63.9

14.9

Operating profit

10.0

11.4

1.4

Net sales
・ Nitrogen trifluoride: Sales increased due to effects from price revisions, despite lower sales volumes
・ Tungsten hexafluoride: Sales increased due to higher sales volumes
・ Hexafluoro-1,3-butadiene: Sales increased due to higher sales volumes
・ Lithium hexafluorophosphate: Sales increased due to effects from price revisions
Operating profit
・ Profit was up thanks to sales growth beyond increases in raw material and fuel prices and depreciation.

© Kanto Denka Kogyo Co., Ltd. All rights reserved.

8

Ferrochemicals, Commercial Business, Facilities Divisions(Including consolidation adjustments)(Billions of yen)

FY2021

FY2022Difference

Net sales

5.3

5.3

0.0

Operating profit

1.1

1.1

–0.0

Ferrochemicals
Sales were up due to increased sales of carriers.
Commercial Business
Sales were down due to lower sales of chemical products.
Facilities
Sales were up due to more contract work at a consolidated subsidiary.

© Kanto Denka Kogyo Co., Ltd. All rights reserved.

9

Consolidated Operating Profit: Difference Analysis(FY2021 vs. FY2022)(Billions of yen)30

25+18.17

20–14.14–1.01

15–1.24

10

11.16

11.16

(Previous year)
Operating profit

Sales/production

5

14.18

12.94

12.94

0

(Current year)
Operating profit

OtherDepreciation

Raw material andfuel prices© Kanto Denka Kogyo Co., Ltd. All rights reserved.

10

Operating Profit and Operating Profit Margin Over Time(Consolidated)(Billions of yen)
15.0

25.0%
Operating profit

12.5

10.0

Operating profit margin

17.1%
0

17.9%

15.0%

10.9%

9.4

20.0%

14.4%

7.5

5.0

16.5%

11.1
7.7

2.5

12.9

5.6

10.0%

5.0%

0.00.0%FY2018FY2019© Kanto Denka Kogyo Co., Ltd. All rights reserved.

FY2020

FY2021

FY202211

Capital Investment and Depreciation Over Time(Consolidated)(Billions of yen)
20
Capital investment
15Depreciation

1016.6
510.2

10.1
5.4

5.00

12.2

8.4

6.7

7.6

6.6

Investment Depreciation Investment Depreciation Investment Depreciation Investment Depreciation Investment Depreciation
FY2018FY2019© Kanto Denka Kogyo Co., Ltd. All rights reserved.

FY2020

FY2021

FY2022

12

The Kanto Denka Group (Consolidated Subsidiaries)(Billions of yen)
CapitalShare ofinvestment (%)

Net sales:
FY2022Year-on-yearchange

Major business lines

Kanden Kosan Co., Ltd.

¥10 mil.

100.0

11.3

3.6

Sale of chemical products, maintenanceof containers, insurance agency services

Jobi Engineering Co., Ltd.

¥120 mil.

49.4

5.9

1.5

Manufacture, processing, and repair ofchemical industry equipment

Kanto Denka Finetech Co., Ltd.

¥27 mil.

100.0

0.6

–0.0 Manufacture and sale of iron oxide

Kanto Denka Korea Co., Ltd.

300 mil. won

100.0

14.9

1.8 Sale of fluorine products

Taiwan Kanto Denka Co., Ltd.

7 mil. NT dollars

100.0

6.9

1.9 Sale of fluorine products

Kanto Denka Fine Products
Korea Co., Ltd.

42.0 bil. won

100.0

3.2

0.8

Manufacture and sale of fluorine
products

Xuancheng KDK Technology
Co., Ltd.

50 mil. dollars

98.3

——

Manufacture and sale of fluorine
products

43.1

9.7

Total
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

13

II Business Outlook and Future Trends© Kanto Denka Kogyo Co., Ltd. All rights reserved.

14Performance Forecast By Segment (Consolidated)(Billions of yen)

Net sales
FY2022

FY2023Operating profit
Difference

FY2022

FY2023Difference

Fundamental
Chemicals

9.4

9.7

0.2

0.3

0.3

–0.0

Fine Chemicals

63.9

62.7

–1.2

11.4

4.6

–6.8

Other*

5.3

5.9

0.5

1.1

1.1

–0.0

Total

78.6

78.3

–0.3

12.9

6.0

–6.9

Capitalinvestment

16.6

18.5

1.9

Depreciation

7.6

9.5

1.8

R&D expenses

1.1

1.5

0.3

© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Assumption for Performance Forecast
USD/JPY Rate: ¥135
* “Other” includes the Ferrochemicals,Commercial Business, Facilities Divisions, andconsolidation adjustments.

15

Consolidated Operating Profit: Difference Analysis(FY2022 vs. FY2023)
14–1.3112+1.31–1.85

Group company profit
downPersonnel costs up
Repair costs up

–2.50

108

(Billions of yen)

12.94

–2.59

6

6.0

42

(Current year)
Operating profit

OtherInventory impact

Depreciation

Raw material and fuel prices

Sales/production(Previous year)
Operating profit© Kanto Denka Kogyo Co., Ltd. All rights reserved.

16Performance Forecast by Segment (Consolidated):
H1 Results vs. Forecast(Billions of yen)

Net sales

Operating profitH1 (results)

H1 (forecast)Difference

H1 (results)

H1 (forecast)Difference

Fundamental
Chemicals

4.1

4.5

0.3

0.0(0.1)–0.1

Fine Chemicals

30.3

28.9

–1.4

6.0

1.2

–4.8

Other*

2.8

2.9

0.0

0.4

0.4

–0.0

Total

37.3

36.3

–1.0

6.5

1.5

–5.0

* “Other” includes the Ferrochemicals,Commercial Business, Facilities Divisions,and consolidation adjustments.

© Kanto Denka Kogyo Co., Ltd. All rights reserved.

17

Consolidated Operating Profit: Difference Analysis(FY2022 H1 vs. FY2023 H1 Forecast)
10
Billions of yen
8+1.45–1.42

64–0.87

Group company profit down
Personnel costs up
Repair costs up

–2.50
6.53

–1.69

21.50

(H1 forecast)
Operating profit

OtherInventory impact

Depreciation

Raw material and fuel prices

Sales/production(H1 result)Operating profit© Kanto Denka Kogyo Co., Ltd. All rights reserved.

18Performance Forecast by Segment (Consolidated):
H1 vs. H2(Billions of yen)

Net sales
H1 (forecast) H2 (forecast)

Operating profit
Difference

H1 (forecast) H2 (forecast)Difference

Fundamental
Chemicals

4.5

5.20.7(0.1)

0.4

0.5

Fine Chemicals

28.9

33.8

4.9

1.2

3.4

2.2

Other*

2.9

3.0

0.1

0.4

0.7

0.3

Total

36.3

42.0

5.7

1.5

4.5

3.0

Capitalinvestment

8.6

9.9

1.3

Depreciation

4.2

5.3

1.1

R&D expenses

0.7

0.8

0.1

© Kanto Denka Kogyo Co., Ltd. All rights reserved.

* “Other” includes the Ferrochemicals,Commercial Business, Facilities Divisions,and consolidation adjustments.

19

Topics (Status of Major Capital Investments)
Details

Investment
Hexafluoro-1,3-butadiene(C4F6)

Remarks400t/yr ⇒ 600t/yr

・ April 2022 (400t/yr)
・ End of 2023 plan (600t/yr)

Carbonyl sulfide (COS)

150t/yr ⇒ 200t/yr

・ June 2022 (150t/yr)
・ Fall 2024 plan (200t/yr)
Phase III construction at Xuancheng

Lithium hexafluorophosphate(LiPF6)5,400t/yr ⇒ 10,000t/yr

・ Scheduled for completion around fall 2023

New etching gas (KSG-14)

150t/yr・ Scheduled for completion in March 2024

Phase I construction: Ammonium
fluoride
Phase II construction: WF6, C4F6, CF4
Phase III construction (COS, pending)・ Phase I construction: Facilities were completed inMarch 2023 and test operations are currently
underway.
・ Phase II construction: Scheduled for completion bythe end of 2023
・ Phase III construction: Scheduled for fall 2024

Xuancheng KDK TechnologyCo., Ltd.

© Kanto Denka Kogyo Co., Ltd. All rights reserved.

20

Topics (Concluded LiPF6 License Agreement)
Kanto Denka announced on February 2, 2023 that it had signed a production technology licensing agreementwith Mexichem Fluor Inc. ("Mexichem") for lithium hexafluorophosphate (LiPF6), a key raw material in lithiumion battery electrolytes.
Outline of agreementKanto Denka will license its production technology to Mexichem for use in its new manufacturing facility for
LiPF6, a first in the United States, being built on its existing plant in the state of Louisiana. Under thisagreement, Kanto Denka will receive technical support fees and royalties in accordance with the progress oftechnical support (specific amounts are undisclosed as per the agreement).
About Mexichem
Mexichem is the core company of Koura, which operates the fluorine business of the multinational Orbia
Group. It owns a vertically integrated fluorine supply chain in North America and sells fluorine-based products
for various applications worldwide.
Other
By entering into this agreement, Kanto Denka aims to establish a robust LiPF6 supply system in North America,
which will contribute to the development of the battery value chain.
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

21

Measures to Increase Corporate Value
Considering Capital Costs
Management leveraging ROIC
Kanto Denka will strive to comprehend the positioning of each business segment and implement appropriate measures accordingly.
Inefficient businesses

Growth businesses

Fine Chemicals(batterymaterials)

Growth potential

Fine Chemicals(fluorochemicals)

Facilities

Commercial

Ferrochemicals

FundamentalChemicals

Restructured businesses

Mature businesses[Direction of Each Segment]
Fine Chemicals (fluorochemicals)
Further expand business through aggressive growth investments to drive
overall Group growthFine Chemicals (battery materials)
Expand business through growth investments and enhance profitability
through technical tie-ups and other alliances
Ferrochemicals
Improve business efficiency to generate higher returns
Facilities and Commercial
Streamline operations and support the growth of key segments
Fundamental ChemicalsConsider business restructuring, including structural reform, whilefulfilling its role in raw material supply

Abnormal return (ROIC –WACC)

Establishment of Public Relations & Investor Relations Department and Human Resource Development Department
These departments will be launched on June 29, 2023 with the aim of strengthening investor relations activities and investment in human capital.
Note: Specific details will be announced as soon as they are finalized.
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

22

III Supplementary Materials© Kanto Denka Kogyo Co., Ltd. All rights reserved.

23

－Outlook for Major Products－

Nitrogen Trifluoride (NF3) Chamber cleaning gas for plasma CVD equipment for semiconductor and FPD manufacturing
 Production capacity: 3,700t/year

tons
50,000Demand trends (Kanto Denka forecasts for
FY2023 and beyond)

Forecasted market share・Kanto Denka holds over 10% of market share・Kanto Denka holds around a 20% share in themarket for leading semiconductor manufacturers

40,00030,00020,000

Kanto Denka

10,00002019

2020

2021

2022

Semiconductor-related© Kanto Denka Kogyo Co., Ltd. All rights reserved.

2023

2024

2025

FPD-related

2026

Kanto Denka
Competitor C

Competitor A
Competitor D

Competitor B
Other24

－Outlook for Major Products－Tungsten Hexafluoride (WF6) Wiring material gas for semiconductors
 Production capacity: 720t/year (Nov. 2016) ➡ 910t/year (Aug. 2018) ➡ 1,400t/year (Oct. 2019)

8,000

tons

Demand trends (Kanto Denka forecasts for

FY2023 and beyond)

Forecasted market share・Kanto Denka holds nearly 30% of market share

6,000

4,000
Kanto Denka

2,000

0

Kanto Denka
Competitor C2019

202020212022© Kanto Denka Kogyo Co., Ltd. All rights reserved.

2023

2024

2025

Competitor A
Competitor D

Competitor B
Other

2026

25

－Outlook for Major Products－Hexafluoro-1,3-butadiene (C4F6)

 Etching gas for semiconductors
 Production capacity: 260t/year (Dec. 2019) ➡ 400t/year (Apr. 2022) ➡ 600t/year (Planned for the end of2023)
tons

2,000

Demand trends (Kanto Denka forecasts for

Forecasted market share

FY2023 and beyond)・Kanto Denka holds around 30% of market share
・Increasing demand alongside progress in themultilayering of 3D-NAND

1,500

1,000Kanto Denka
50002019

2020

2021

2022

© Kanto Denka Kogyo Co., Ltd. All rights reserved.

2023

2024

2025

2026

Kanto Denka
Competitor CCompetitor A
OtherCompetitor B

26

－Outlook for Major Products－Carbonyl Sulfide (COS) Etching gas for semiconductors
 Production capacity: 80t/year (Oct. 2019) ➡ 150t/year (June 2022) ➡ 200t/year (Planned for fall2024)
400

tons

Demand trends (Kanto Denka forecasts for
FY2023 and beyond)

Forecasted market share・ Kanto Denka holds 60% or more of market share

350

・ Increasing demand alongside progress in themultilayering of 3D-NAND

300
250
200
150

Kanto Denka

100500

2019

2020

2021

2022

© Kanto Denka Kogyo Co., Ltd. All rights reserved.

2023

2024

2025

2026

Kanto Denka

Competitors

27

－Outlook for Major Products－

Lithium Hexafluorophosphate (LiPF6)

Electrolyte materials for lithium-ion secondary batteries
Demand reaches full-scale pace for EVs and other in-vehicle applications
Production capacity: 5,400t/year ➡ 10,000t/year (Planned for fall 2023)



Forecasted market share

Demand trends (Kanto Denka forecasts fortons FY2023 and beyond)In the automotive battery market, Kanto Denka commands 70%
share in Japan, 40% in the United States and 10% in Europe.

400,000

It is essential to have high-quality LiPF6 amid tough requirements
for automotive application in terms of battery properties andsafety, etc.

300,000

200,000

Kanto
Denka

100,000

0

2019

2020

2021

2022

© Kanto Denka Kogyo Co., Ltd. All rights reserved.

2023

2024

2025

2026

Kanto Denka
Competitor D

Competitor A
Competitor E

Competitor B
Competitor F

Competitor COther28

－Overseas Production Sites－Kanto Denka Fine Products Korea Co., Ltd.

 LocationCheonan City, South Chungcheong
Province, Republic of Korea
 Business Lines
Manufacture and sale of fluorochemicals
for semiconductors
 Production Items
・ Carbonyl sulfide (COS)・ Carbon tetrafluoride (CF4)・ Chlorine trifluoride (ClF3)© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Exterior plant view

29

－Overseas Production Sites－

Xuancheng KDK Technology Co., Ltd.

 Location
Xuancheng City, Anhui Province, People's Republic ofChina
 Business Lines
Manufacture and sale of fluorochemicals forsemiconductors
 Production Items
Phase I construction: Ammonium fluoride
Phase II construction:
・ Tungsten hexafluoride (WF6)・ Carbon tetrafluoride (CF4)・ Hexafluoro-1,3-butadiene (C4F6)
Phase III construction (pending)・ Carbonyl sulfide (COS)© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Rendering of completed plant

Approx. 250 km

30Kanto Denka's Technology and Business Direction■ Future
Polymerization

Ferrochemicals

Recycling

Chlorination

Inorganic
synthesis
Miniaturization

Create new business pillars

Fluorochemicals
Battery materials

MI* andcomputationalscience

sis

Promote growth in the finechemicals business

LIB materials using
recycled LiFine Chemicals

High purity

Fluorination

Electroly-SDGs/ESG

High-sensitivity
analysis

Fundamental
Chemicals

Creatingcomposites

Inorganic and organicproducts© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Fluorine-based coatingmaterials

Life science materials

Coating■ KDK-Core Technology

Organic-inorganic
hybrid materials

Ferrochemical products* MI: Material informatics

31

Business Segments
Name
Fundamental
Chemicals

Fine Chemicals

Products and services

Inorganic products

Caustic soda, hydrochloric acid, sodium hypochlorite, aluminum chloride, etc.

Organic products

Trichloroethylene, perchloroethylene, vinylidene chloride, cyclohexanol, etc.

Fluorochemicals

Sulfur hexafluoride, carbon tetrafluoride, trifluoromethane, hexafluoroethane,
nitrogen trifluoride, hexafluoro-1,3-butadiene, octafluoropropane, tungsten
hexafluoride, silicon tetrafluoride, chlorine trifluoride, octafluorocyclobutane,
monofluoromethane, carbonyl sulfide, iodine pentafluoride, KSG-14, etc.

Battery materials

Lithium hexafluorophosphate, lithium tetrafluoroborate, etc.

Ferrochemicals Ferrochemical products

Carriers, magnetite, pigments, iron oxide, etc.

Commercial
Business

Kanden Kosan Co., Ltd.

Sale of chemical products, maintenance of containers, insurance agency
services, etc.

Facilities

Jobi Engineering Co., Ltd.

Factory plant construction, plant facility maintenance work, etc.

© Kanto Denka Kogyo Co., Ltd. All rights reserved.

32

Notes This document does not constitute disclosurematerial as defined by the Financial Instruments andExchange Act and other laws and regulations, andtherefore the Company does not guarantee its
accuracy or completeness.
 Performance forecasts in this document werecreated based on information available as of thedate of this document's publishing, and actual
results may differ versus forecasted figures due to avariety of factors arising in the future.
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

33