Financial Results Briefing for the Six Months
Ended September 30, 2023 and Revision of theMedium-Term Management Plan
Kanto Denka Kogyo Co., Ltd.
(Tokyo Stock Exchange Prime Market,
Securities Code: 4047)

November 22, 2023

Contents

I

Overview of Financial Results for the Six Months Ended
September 30, 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 Six Months Ended
September 30, 2023

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

3

Key Earnings Data
 Rapid deterioration in the fine chemicals business environment
Fluorochemicals for semiconductors: Impacted by production cuts due to inventory
adjustments by semiconductor manufacturers
Battery materials: Deterioration in supply and demand environment due to slowing growth in
the electric vehicle (EV) market

 Recognition of impairment loss on inventories for battery materials
 Fees paid under licensing agreement posted to net sales
 Full-scale rebound of the semiconductor market next fiscal year No change in dividend forecast (Interim: ¥7; Year-end: ¥7; Annual: ¥14)
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

4

Statement of Income(Billions of yen)

H1 FY2022

H1 FY2023

Difference% change

Net sales

37.3

34.8

–2.4

–6.6

Operating profit

6.5

(0.4)

–7.0

—

Ordinary profit

7.3

0.1

–7.2

–98.1

Profit before income taxes

7.1

0.4

–6.7

–93.5

Profit attributable to owners of parent

5.1

0.2

–4.9

–95.0

Basic earnings per share (yen)

90.38

4.48

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

5Balance Sheet(Billions of yen)
FY2022
AssetsCash and deposits
Trade receivables
Inventories
Non-current assets (tangible + intangible)
Liabilities
Interest-bearing debt
Trade payables
Income taxes payable
Net assets
Equity ratio (%)© Kanto Denka Kogyo Co., Ltd. All rights reserved.

130.7
22.3
21.6
23.9
48.0
61.9
37.7
10.6
2.7
68.7
51.6

H1 FY2023

Difference% change

124.4
21.4
17.4
21.0
50.8
54.9
34.6
10.0
0.2
69.5
54.7

–6.2
–0.8
–4.2
–2.8
2.7
–7.0
–3.1
–0.5
–2.4
0.7
3.1

–4.8
–3.8
–19.8
–12.0
5.7
–11.3
–8.4
–5.4
–89.3
1.1
6

Fundamental Chemicals Division(Billions of yen)

H1 FY2022

H1 FY2023

Difference

Net sales

4.1

4.3

0.2

Operating profit (loss)

0.0

(0.0)

–0.0

Net sales・ Caustic soda: Sales increased due to effects from price revisions, despite lower sales volumes
・ Hydrochloric acid: Sales decreased due to lower sales volumes
・ Trichloroethylene: Sales decreased due to lower sales volumes
・ Perchloroethylene: Sales decreased due to lower sales volumes
Operating profit
・ Operating profit decreased due to an increase in fixed costs, despite the benefit from growth in sales© Kanto Denka Kogyo Co., Ltd. All rights reserved.

7

Fine Chemicals Division(Billions of yen)

H1 FY2022

H1 FY2023

Difference

Net sales

30.3

28.2

–2.1

Operating profit (loss)

6.0

(0.8)

–6.8

Net sales
・ Nitrogen trifluoride: Sales decreased due to lower sales volume
・ Tungsten hexafluoride: Sales decreased due to lower sales volume
・ Hexafluoro-1,3-butadiene: Sales decreased due to lower sales volume and lower sales prices
・ Lithium hexafluorophosphate: Sales decreased due to lower sales volume and lower sales prices
・ Technical support fees: Fees paid under licensing agreement posted to net sales
Operating profit
・ Operating profit decreased due to persistently high cost of sales and recognition of an impairment loss
on inventories, in addition to lower sales volume for some products© Kanto Denka Kogyo Co., Ltd. All rights reserved.

8

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

H1 FY2022

H1 FY2023

Difference

Net sales

2.8

2.2

–0.6

Operating profit

0.4

0.4

–0.0

Ferrochemicals
Sales decreased due to lower sales volume of carriers
Commercial Business
Unchanged year on year
Facilities
Unchanged year on year

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

9

Consolidated Operating Profit: Difference Analysis(H1 FY2022 vs. H1 FY2023)(Billions of yen)
808
606
404

The price of lithium declined substantially fromthe end of last fiscal year. An impairment loss
was recognized on inventories of high-priced
lithium compounds.

–2.53
–1.46

6.58

202

–0.72
–2.75

00

–0.42
(H1 FY2023)
Operating profit

Other

Inventory impact

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

Raw material and fuel prices

Sales/production(H1 FY2022)
Operating profit

-20
–2

+0.46

10

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

17.9%

17.1%

16.5%

14.4%

140
14

Operating profit
Operating profit margin

10.9%

110
11

20%

15%

10%
80
8

5
50

9.4

7.7

2
20

–1
-10

11.1

12.9

5%

–1.2%

5.6

0%

–0.4
FY2018FY2019© Kanto Denka Kogyo Co., Ltd. All rights reserved.

FY2020

FY2021

FY2022

FY2023(through Q2)

-5%

11

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

20
200

Capital investment

16
160

Depreciation

12120

H2 plan

80
8
40
4

0

10.2

10.1
5.0

5.4

16.6

12.2

8.4

6.7

9.7

H2 plan

4.9

7.6

6.6

5.8

4.0

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

FY2020

FY2021

FY2022

FY2023

12

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

Net sales:
H1 FY2023

Year-on-yearchangeMajor business lines
Sale of chemical products, maintenance

Kanden Kosan Co., Ltd.

¥10 mil.

100.0

4.8

–0.0 of containers, insurance agency services

Jobi Engineering Co., Ltd.

¥120 mil.

49.4

2.7

–0.3 chemical industry equipment

Kanto Denka Finetech Co., Ltd.

¥27 mil.

100.0

0.2

–0.0 Manufacture and sale of iron oxide

Kanto Denka Korea Co., Ltd.

300 mil. won

100.0

7.8

0.7 Sale of fluorine products

Taiwan Kanto Denka Co., Ltd.

7 mil. NT dollars

100.0

2.8

–0.4 Sale of fluorine products

Kanto Denka Fine Products
Korea Co., Ltd.

42.0 bil. won

100.0

1.9

0.4 products

Xuancheng KDK Technology
Co., Ltd.

50 mil. dollars

98.3

-

- products

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

20.5

Manufacture, processing, and repair of

Manufacture and sale of fluorine
Manufacture and sale of fluorine

0.1

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

Operating profit

FY2022 (results)

FY2023(initial forecast)

FY2023(revised forecast)

FY2022 (results)

FY2023(initial forecast)

FY2023(revised forecast)

Fundamental
Chemicals

9.4

9.7

9.2

0.3

0.3

0.3

Fine Chemicals

63.9

62.7

50.0

11.4

4.6

(3.1)

Other*

5.3

5.9

4.6

1.1

1.1

0.8

Total

78.6

78.3

63.8

12.9

6.0

(2.0)

Capitalinvestment

16.6

18.5

15.6

Depreciation

7.6

9.5

9.0

R&D expenses

1.1

1.5

1.5

© 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Performance Forecast By Segment (Consolidated):
H1 Forecast vs. Results(Billions of yen)

Net sales
H1 (forecast)

H1 (results)

Operating profit
Difference

H1 (forecast)

H1 (results)

Difference

Fundamental
Chemicals

4.5

4.3

–0.1

(0.1)

(0.0)

0.0

Fine
Chemicals

28.9

28.2

–0.6

1.2

(0.8)

–2.0

Other*

2.9
36.3

2.2
34.8

–0.6
–1.4

0.4
1.5

0.4
(0.4)

0.0
–1.9

Total

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

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

16

Consolidated Operating Profit: Difference Analysis(H1 Initial Forecast vs. H1 Results)(Billions of yen)
20
2

10
1

1.50

The price of lithium was lower than the initial forecast.
The impairment loss on inventories increased for lithiumcompounds.

–1.56
–0.01

0

+0.20

–0.64

+0.09

–0.42

-10
–1
H1 (results)
Operating profit

Other

Inventory impact

Depreciation

Raw material and fuel prices

Sales/production

H1 (forecast)
Operating profit© Kanto Denka Kogyo Co., Ltd. All rights reserved.

17Performance Forecast By Segment (Consolidated):
H1 vs. H2(Billions of yen)

Net sales

Operating profit

H1 (results)

H2 (forecast)

Fundamental
Chemicals

4.3

4.8

0.4

(0.0)

0.3

0.3

Fine Chemicals

Total

28.2
2.2
34.8

21.7
2.3
28.9

–6.4
0.1
–5.8

(0.8)
0.4
(0.4)

(2.2)
0.3
(1.5)

–1.3
–0.1
–1.1

Capitalinvestment

5.8

9.7

3.9

Depreciation

4.0
0.6

4.9
0.8

0.8
0.2

Other*

R&D expenses© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Difference

H1 (results)

H2 (forecast)Difference* "Other" includes the Ferrochemicals,Commercial Business, Facilities Divisions,and consolidation adjustments.

18

Consolidated Operating Profit: Difference Analysis(H1 Result vs. H2 Forecast)(Billions of yen)
Full impairment loss
recognized in H1

2
20

Mainly from:
Decrease in subsidiary profits: –¥1.20 billion
Increase in fixed costs: –¥1.02 billion

10
1
00

–0.42

-10
–1

+3.32

–1.50

H2 (forecast)
Operating profit

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

–0.88
Inventory impact

Sales/production

H1 (results)
Operating profit

-30
–3

+0.82

Depreciation-20–2

Raw material and fuel prices

–1.88

–2.46

19

Topics (Status of Major Capital Investments)
Investment

Details

Remarks

Hexafluoro-1,3-butadiene (C4F6)400 t/yr ⇒ 600 t/yr

・Scheduled to commence operation in FY2024

Carbonyl sulfide (COS)

150 t/yr ⇒ 200 t/yr

・Scheduled to commence operation in FY2025

Lithium hexafluorophosphate(LiPF6)5,400 t/yr ⇒ 8,000 t/yr

・Scheduled to commence operation in FY2024

New etching gas
150 t/yr(KSG-14) mass production facilities

Xuancheng KDK Technology Co.,Ltd.

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

Phase I construction:
Ammonium fluoride
Phase II construction: WF6,
C4F6, CF4
Phase III construction: COS,
pending・Scheduled to commence operation in FY2024
・Phase I construction: Currently operating
・Phase II construction: Scheduled for completionby the end of 2023
・Phase III construction: Scheduled forcompletion in 2025

20

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

21

Nitrogen Trifluoride (NF3)－Outlook for Major Products－

 Chamber cleaning gas for plasma CVD equipment for semiconductor and FPD manufacturing
 Production capacity: 3,700 t/yr.
Demand trends (Kanto Denka forecasts for
FY2023 and beyond)tons

Forecasted market share・Kanto Denka holds over 10% of market share

50,000・Kanto Denka holds around a 20% share in themarket for leading semiconductor manufacturers

40,00030,00020,000

Kanto
Denka

10,000
0

2019

2020

2021

2022

Semiconductor-related

2023

2024

2025

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

2026

Kanto Denka
Competitor C

Competitor A
Competitor D

Competitor B
Other

22

－Outlook for Major Products－

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

8,000

Demand trends (Kanto Denka forecasts for

Forecasted market share

FY2023 and beyond)・ Kanto Denka holds nearly 30% of market share

6,000

4,000

Kanto Denka

2,000

0

2019

2020

2021

2022

2023

2024

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

2025

2026

Kanto Denka
Competitor C

Competitor A
Competitor D

Competitor B
Other

23

－Outlook for Major Products－

Hexafluoro-1,3-butadiene (C4F6)

 Etching gas for semiconductors
 Production capacity: 260 t/yr. (Dec. 2019) ➡ 400 t/yr. (Apr. 2022) ➡ 600 t/yr. (Scheduled to commence
operation in FY2024)
tons
2,000

Demand trends (Kanto Denka forecasts for

Forecasted market share

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

1,500

1,000

Kanto Denka
500

0

2019

2020

2021

2022

2023

2024

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

2025

2026

Kanto Denka
Competitor C

Competitor A
Other

Competitor B

24

－Outlook for Major Products－

Carbonyl Sulfide (COS) Etching gas for semiconductors
 Production capacity: 80 t/yr. (Oct. 2019) ➡ 150 t/yr. (June 2022) ➡ 200 t/yr. (Scheduled to commence
operation in FY2025)
tons
500

Demand trends (Kanto Denka forecasts for

Forecasted market share

FY2023 and beyond)・ Kanto Denka holds 60% or more of market share
・ Steady demand alongside progress in the multilayering of
3D-NAND

400
300

Kanto
Denka

200
100
0

2019

2020

2021

2022

2023

2024

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

2025

2026

Kanto Denka

Competitors

25

－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: 5,400 t/yr. ➡ 8,000 t/yr. (Scheduled to commence operation in FY2024)Forecasted market share

Demand trends (Kanto Denka forecasts for
tons

400,000

FY2023 and beyond)In the automotive battery market, Kanto Denka commands 70% share in
Japan, 40% in the United States, and 10% in Europe.
Tough requirements for battery properties, safety, etc.
Essential to have high-quality LiPF6

300,000

200,000

Kanto
Denka

100,000

0

2019

2020

2021

2022

2023

2024

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

2025

2026

Kanto Denka

Competitor A

Competitor B

Competitor C

Competitor D

Competitor E

Competitor F

Other

26

－Overseas Production Sites－

Kanto Denka Fine Products Korea Co., Ltd.

 Location
Cheonan City, South Chungcheong
Province, Republic of Korea
 Business Lines
Manufacture and sale of fluorochemicals
for semiconductors and FPDs
 Production Items
・ Carbonyl sulfide (COS)・ Carbon tetrafluoride (CF4)・ Chlorine trifluoride (ClF3)
Exterior plant view

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

27

－Overseas Production Sites－

Xuancheng KDK Technology Co., Ltd.

 Location
Xuancheng City, Anhui Province, People's Republic of China
 Business Lines
Manufacture and sale of fluorochemicals for semiconductors
and FPDs
 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)Exterior plant view・ Carbonyl sulfide (COS)© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Approx. 250 km

Rendering of completed plant

28

Kanto Denka's Technology and Business Direction■FutureSDGs/ESG

High-sensitivity
analysis

LIB materials using
recycled Li

Fine Chemicals

Fluorination
MI* andcomputational
science

Ferrochemicals

Recycling

Chlorination

Inorganic
synthesis

Miniaturization

Create new business pillars

Fluorochemicals
Battery materials

High purity

Electrolysis

Significantly strengthen existing
businesses

PFAS-freeproducts

Ferrochemical products

Fundamental
Chemicals

Creating
composites

Inorganic and organic
products

Electronics/Informationmaterials

Life science materials■KDK-Core Technology* MI: Material informatics© Kanto Denka Kogyo Co., Ltd. All rights reserved.

29

Business Segments
Name
Fundamental
Chemicals

Products and services

Inorganic products

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

Organic products

Trichloroethylene, perchloroethylene, vinylidene chloride, cyclohexanol, etc.

Fine Chemicals Fluorine products

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.

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.

30

Notes This document does not constitute disclosure material as
defined by the Financial Instruments and Exchange Act andother laws and regulations, and therefore the Company
does not guarantee its accuracy or completeness.
 Performance forecasts in this document were createdbased on information available as of the date of thisdocument's publishing, and actual results may differ versus
forecasted figures due to a variety of factors arising in the
future.
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

31

Revision of the 12th Medium-Term
Management Plan

November 22, 2023

Kanto Denka Kogyo Co., Ltd.
Jun’ichi Hasegawa, President

32

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

33

Progress on the 12th Medium-Term
Management Plan

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

34

Progress on the 12th Medium-Term Management Plan (Numerical Targets)(Billions of yen)

Consolidated basis

FY2022 plan

FY2022 results

FY2023 plan

Net sales
76.0
78.6
92.0
11th Medium-Term Management Plan (Consolidated)

FY2023announced Oct. 25

63.8

Operating profit

10.9

12.9

13.0

–2.0

Operating profit
margin

14.3%

16.5%

14.1%

–3.1%

Equity ratio

—

51.6%

—

—

ROE

—

14.9%

—

—

 Outperformed the plan in FY2022, the initial year of the plan Expect a substantial decrease in sales and profit compared to the plan in FY2023© Kanto Denka Kogyo Co., Ltd. All rights reserved.

35

Progress on 12th Medium-Term Management Plan (Key Strategies)
Key Strategies〇: Achievements▲: Challenges

Promoteexpansion of thefine chemicals
business✓ Capacity expansion to address market growth(semiconductor gases and battery materials)✓ Bringing fluorochemicals demanded by customers(cutting-edge, low GWP products) to market✓ Organic collaboration with overseas sites✓ Strengthening development capabilities for gas andbattery material products✓ Establishing an integrated production system within
the Group, from raw materials to finished products〇 Increased COS capacity (Jun. 2022)〇 Brought KSG-14 (low GWP gas) to market (Apr.
2023)
〇 Began R&D operations in South Korea (Nov. 2023)〇 Established new Development Section andPrototype Manufacturing Section in the
Semiconductor Materials Development
Department (Jul. 2022)▲ Procuring a stable supply of raw materials fromthe Xuancheng plant in China

Raise the level ofproduction
technology✓ Improving productivity by promoting DX✓ Improving quality assurance capability〇 Used the results from an AI analysis of operations
Created a database of production management
data〇 Installed high-sensitivity analytical equipment✓ Implementing human resource development andstrategic education programs✓ Pursuing employee well-being (including a sense of job
satisfaction)✓ Promoting gender and other diversity〇 Established a new Human Resource Development
Department (Jun. 2023)〇 Implemented a strategic education program▲ Ratio of women hired for career-track positions:
14% (results for FY2022-FY2023)✓ Promoting activities for sustainability✓ Shrinking energy-intensive products and strengthening
initiatives toward decarbonization✓ Promoting recycling〇 Opened a new sustainability webpage▲ Continuing to introduce renewable energy〇 Established basic technology for recycling lithiumfrom discarded batteries

Enhance humanresource
development

Increase social
value© Kanto Denka Kogyo Co., Ltd. All rights reserved.

36

Revision of the 12th MediumTerm Management Plan

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

37

Background on Revision

Assumptions at the time the Medium-Term
Management Plan was formulated Expansion of semiconductor andEV markets
 Demands for supply from
customers

Change in performance over time Entering a rapid market
adjustment phase

Growth through active
investment plans

Change in business environment Ascertaining the cost ofcapital Increasing capital efficiency
 Promoting sustainability

 Building a solid base to respond to major changes in the external environment isa challenge Extended the final fiscal year by two years and revised the plan
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

38

Policy on Revision Temper our strengths and implement measures to accelerate growth further
 Steadily capture medium and long-term market growth

H
F

Cl

 Promote expansion of thefine chemicals business Raise the level of the
production technology
 Enhance human resource
development
 Increase social value

Fluorine, chlorine, andhydrogen obtained efficiently
through electrolysis
technology and developmentof proprietary chemicals using
these elements

Key Strategies

 Business strategy
 Increasing capitalefficiency
 Strengthening
governance Human capital strategy
 Organizational strategy
 ESG strategy

New strategies
and measures

Innovative developmentdriven company

Our vision forourselves in 2030
With a stable managementfoundation, we will provide asafe work environment withjob satisfaction, support
technologies that are cuttingedge on a global stage with
our superior, original
products, and grow to
become an innovative,
development-driven company
to contribute to a sustainable
society.
* No change from before

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

39

Business strategy
Measures to Increase Corporate Value Considering Capital Costs

Growth potential

Inefficientbusinesses

Fine
Chemicals(batterymaterials)

Growthbusinesses
Fine
Chemicals(fluorochemicals)

Ferrochemicals
Fundamental
Chemicals

Maturebusinesses

Restructured
businesses

Abnormal return (ROIC –WACC)

Direction of Each Segment
Fine Chemicals (fluorochemicals) Concentrate investment in development of andinvestment in growth products that are highly efficientinvestments, and expand business
Fine Chemicals (battery materials)
 Transform the business structure to create a highly
capital-efficient structure Use technology transfers to capture rapid growthmarkets in Europe, the U.S., and Asia
Ferrochemicals
 Consolidate in a separate company within the Groupand improve efficiency
Fundamental Chemicals
 Rebuild the business as a division that supplies raw
materials(from materials for our financial results briefing held on May 23, 2023)

 The policy of increasing corporate value while taking capital costs into
consideration was presented at the financial results briefing on May 23, 2023
 Implement strategies tailored to opportunities, risks, and challenges, according to
the direction of each segment© Kanto Denka Kogyo Co., Ltd. All rights reserved.

40

Business Strategy -Growth Strategy (Fluorochemicals)-

Opportunities Height of market
growth potential
 Active investment insemiconductors invarious countries
around the world
 Demand fordevelopment of newgases along withtechnologicalinnovation



Risks
Trend toward unstabledemand due to the“silicon cycle”
Change in the types ofgases used due totechnological advances© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Our strengths

MissionWorld-class fluorination
technology
Extensive experience and trackrecord in the development offluorochemicals

Use technologies that are cuttingedge on a global stage to supply
the specialty materials needed
and contribute to a sustainable
societyStrategy

Improvingdevelopment
capabilities

 Expand the range ofdevelopment
evaluation equipment
Measures Diversify to multiple
development sites

Strategy

Measures

Building a stablesupply structure Diversify to multiple
manufacturing sites

41

Business Strategy -Growth Strategy (Battery Materials)Opportunities Rapid market growth Expectations of our
products andtechnologies due toheightened
economic security
 Demands fordevelopment of new
additives, etc. toimprove theperformance oflithium batteries

Risks
 Erratic fluctuations in
the price of raw
materials
 Heightened export
restrictions on rareminerals© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Our strengths

Mission Top quality in the industry
 Extensive expertise andtechnological capabilities

Use technologies that are cuttingedge on a global stage to supply
the specialty materials needed
and contribute to a sustainable
society

Capturing rapid
market growth

Building a businessstructure that isresilient to raw
material prices

Strategy

Measures Expand licensing
business

Strategy Commercialize
lithium recycling
Measures  Improve inventory
turnover rate42

Business Strategy-Portfolio Transformation (Ferrochemicals and Fundamental Chemicals)-

Challenges in
Ferrochemicals

 Market shrinkage due to going
paperless and other trends
 Extremely high-mix, low-volume
market Shift to business domains offering
better growth

Strategy

Concentration and conversionof management resources

Measures Transfer of control over
manufacturing carriers to Kanto Denka
Finetech Co., Ltd. and specialization inhighly profitable products
 Concentrate management resources
at existing carrier manufacturing sites
in fluorochemicals with high growthpotential© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Challenges in Fundamental
Chemicals Market shrinkage
 Low profitability
 Increasing cost of investment inmaintenance and upgrades due toaging equipment

StrategyStrengthening function for
supplying raw materials to Fine
Chemicals Cease production of caustic soda flakes
 Optimize business scale for maintaining
sustainable supply of raw materials

Measures43

Business Strategy - R&D -ThemeStrategy

Measures

Early creation of new products leveraging ourcore technologies

 Promoting customer-oriented R&D

Image of the new R&D building Strengthening the connection between the
R&D and Manufacturing functions
 Launch R&D operations within the
manufacturing site in South Korea (Nov. 2023)
 Plan to build a new R&D building inside the
Shibukawa Plant (construction scheduled forcompletion in FY2026)© Kanto Denka Kogyo Co., Ltd. All rights reserved.

44

Increasing Capital Efficiency -ROIC Tree Add ROIC to the management indicators and aim for a structure that will sustainably
generate returns that exceed the weighted average cost of capital (WACC)
Strengthen
earning power

After-tax operating profit
÷ Invested capital

ROIC

After-tax
operatingprofit margin

Increase capitalefficiency

Invested capitalturnover rate

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

Cost of sales
ratio
Cost ofmanufacturing
ratio

Specific Initiatives
Steadily expand sales opportunities by staying
close to customers
Bring cutting-edge, low GWP products to market
Grant technology licenses

SG&A expense
ratio

Reduce raw material costs

Operatingcapitalturnover rate

Shrink inventories by revising processes(improve CCC)

Business noncurrent assets
turnover rate

Improve productivity

Implement more sophisticated investment andexit standards and monitor them
Diversify investment methods
Reduce cross-shareholdings

45

Increasing Capital Efficiency and Strengthening Governance

Reduce crossshareholdings

Revise the officer
remuneration
systemChallenges

Increase capital efficiency

Measures Sell around 20% of cross-shareholdings by
FY2024 and around another 10% by FY2026
for a cumulative reduction of around 30%
 Reduce cross-shareholdings from around
11% (as of March 31, 2023) to around 8% of
net assets through sale

Challenges

Designing a system that leads toan increase in corporate value

Measures Adopt total shareholder return (TSR) as anevaluation standard Increase percentage of share-based
compensation* General Meeting of Shareholders resolution© Kanto Denka Kogyo Co., Ltd. All rights reserved.

46

Human capital strategy

Human resource
development

Promotion ofdiversity andpursuit of
employee wellbeing (creating a
comfortableworkplace)

Strategy

 Established a new Human Resource Development
Department (Jun. 2023)
Measures Plan to introduce a new human resource training
program (general and selective) from FY2024
Non-financial targets

Numerical targets

Percentage of women in
managerial positions

2x the level in FY2020 (2%) by
FY2030Percentage of women hired forcareer-track positions

30% or more

Taking childcare leave

Women: Maintain at 90% or higher
Men: One person a year or more

Percentage of employees taking
paid vacation

80% or more(from the Annual Securities Report for the 116th period)© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Human resource development linked
to business strategy

Introduced a system of mandatory retirement at age 65 with a system forextending employment up to age 70 (FY2022)

47

Organizational strategy

Strengthen IR

Promote DX

Strategy

Strategic and effective IR activities

Measures Established a new Public Relations & Investor
Relations Department (Jun. 2023)
 Publish an Integrated Report (during FY2023)

Strategy

Improve productivity through the useof digital technology

Measures

Strengthen thelegal and export
trade management
structure© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Strategy
Measures Considering establishment of a DX Promotion
Department (tentative name)Strengthen the structure along withexpansion of overseas business andthe licensing business Develop and expand Legal human resources

48

Revision of Numerical Targets(Billions of yen)

Consolidated basis

FY2026 Plan

Current FY2024 Target

Net sales

100.0

100.0

Operating profit

15.0

15.0

Operating profit
margin

15.0%

15.0%

Equity ratio—

50.0% or more

ROE

12.0% or more

12.0% or more

ROIC

8.0% or more—

 Extended final fiscal year by two years Added ROIC to take shareholder return and capital efficiency into consideration
 Maintain the equity ratio and an appropriate level in light of business risk
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

49

Revision of Numerical Targets (Five Years)(Billions of yen)

Beforerevision(threeyears)

Consolidated
basis

FY2023

FY2024

Net sales

76.0

92.0

100.0

Operatingprofit

10.9

13.0

15.0

Consolidated
basis

FY2022(results)

Afterrevision
Net sales(five years)
Operatingprofit© Kanto Denka Kogyo Co., Ltd. All rights reserved.

FY2022

Extended final fiscal year by two years
FY2023(forecast)

FY2024(plan)FY2025(plan)FY2026(plan)

78.6

63.8

78.0

93.0

100.0

12.9

(2.0)

7.0

8.0

15.0
50

Investment Plan (Five Years)
 We revised the investment plan and timeframe to respond to changes incustomer trends and the market environment
 Each business division will invest with an awareness of the capital costs
 We will continue to invest in growth businesses
Other

Other

¥11 billion¥5 billion
Newly developed products¥10 billion

Newly developed
products

12th Medium-Term
Management Plan
(three years)¥11 billion

Total: ¥60 billion

Total: ¥64 billion

Overseas investment: ¥10 billion
Domestic investment: ¥50 billion

Semiconductor materials
Battery materials¥45 billion© Kanto Denka Kogyo Co., Ltd. All rights reserved.

12th Medium-Term
Management Plan
(five years)
Overseas investment: ¥11 billion
Domestic investment: ¥53 billion

Semiconductor materials
Battery materials¥42 billion

51View on Allocation of Funds

Dividend policy

View on shareholder return(Current) Consolidated dividend payout

Implement investment plans with an awareness of thecapital costs and undertake a growth strategy and portfoliotransformation to increase corporate value. Provide
appropriate shareholder return after considering thebalance with investment.

ratio of 20%⇓(Revised) Consolidated dividend payout
ratio of 30% or more
* For reference, the payout ratio in FY2022 was 20.2%.

Five-Year Cash Allocation (FY2022 – FY2026)

Cash out

Cash inFinancing with interestbearing debt
Sale of cross-shareholdings
Around ¥9.5 billion

Investing CF

Operating CF

Around ¥75.0 billion

Around ¥73.0 billion

Shareholder return
Around ¥7.5 billion© Kanto Denka Kogyo Co., Ltd. All rights reserved.

52

Measures to correct a PBR ofless than 1x© Kanto Denka Kogyo Co., Ltd. All rights reserved.

53

Analysis of Current Conditions
PBR (x) Over TimeROE (%) Over Time
20%

2.00

1.00

10%

0.00

0%

Mar. 2018 Mar. 2019 Mar. 2020 Mar. 2021 Mar. 2022 Mar. 2023

Mar. 2018

Mar. 2019

Kanto Denka

Mar. 2020

Mar. 2021

Mar. 2022

Mar. 2023

Average for other companies in the chemical industry (based on internal research)

PER (x) Over Time
30.0

15.0

0.0

Mar. 2018 Mar. 2019
当社

Mar. 2020

Mar. 2021

Mar. 2022

Mar. 2023

化学業界他社平均（当社調べ）

 We recognize that increasing PER is a particularly urgent issue We need to lower capital costs and raise the expected growth rate
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

54

Measures to correct a PBR of less than 1x

PBR

Target 1x or higher(currently around 0.7x)

PER

ROE
Expand business, mainlyin Fine Chemicals
Pursue management
leveraging ROIC×Strengthen ongoing
dialog with andcommunication of
information to investors
Reduce capital costs by
reducing crossshareholdings

Revised dividend policy
Consolidated dividend payout ratio: Revised from 20% to 30% or more
© Kanto Denka Kogyo Co., Ltd. All rights reserved.

55

Initiatives for Carbon Neutrality© Kanto Denka Kogyo Co., Ltd. All rights reserved.

56

Initiatives for Carbon Neutrality
Vision for2030

Accelerate growth by pursuing further expansion of the fine chemicals
business while also reducing greenhouse gas emissions and pursuing developmentof technology aimed at decarbonization to grow into an innovative, developmentdriven company that contributes to a sustainable society.

Reduction target for CO2 emissions
from energy use: 50% in FY2030* Adds a reduction of 20% to the current target* vs. FY2013* For Scope 1 and Scope 2

Initiative policies
1. Reducing CO2 emissions intensity while achieving
growth in the Fine Chemicals business2. Introducing renewable energy
3. Using the product mix to reduce CO2 emissions

Reduction factors
 Capital investment (energy conservation)
 Introducing renewable energy Portfolio transformation
 Shift of power source composition toward
renewable energy by electric powercompany (reduction in emissions factor)

 Pursuing development of environmentally friendly products that
contribute to reducing Scope 3 emissions© Kanto Denka Kogyo Co., Ltd. All rights reserved.

57

Initiatives for Carbon Neutrality
CO2 Reduction Roadmap
Reduction target

2030

50% reduction vs. FY2013

Expansion of
production
capacity

Scope 1
Scope 2Emissions239 kt2013© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Portfoliotransformationand shift ofpower sourcecomposition
towardrenewableenergy by electric
power company

Energyconservation
Improvement
in emission
intensity

2050

Purchasing nonfossil certificate
and generating
power fromrenewable energy
sourcesTargeting carbon neutrality(virtually zero emissions)Cut 50%Carbonneutrality
achieved

Emissions
119 kt

2030

2050

58

CO2 Emissions from Energy Use Over Time and Reduction Targets(Scope 1 + Scope 2)
Reduction target

2030

CO2 emissions from energy use (10,000 tons)

25.0

50% reduction vs. FY2013

2050

Performance to 2022
vs. FY2013
11% reduction
0.8
1.1

20.0

vs. FY2013

50% reduction

15.0
10.0

23.1

0.4

20.2

5.0
0.0

2013
(Base year)© Kanto Denka Kogyo Co., Ltd. All rights reserved.

Targeting carbon neutrality(virtually zero emissions)2022
scope2

11.5

Carbonneutrality
achieved

2030

2050

0.0

scope159

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.
 The forecasted numbers in this document werecreated based on information available as of thedate on which this document was published, andactual results may differ from forecasted numbers
due to a variety of factors arising in the future.

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

60