(Note) This document has been translated from the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail.

April 26, 2024
Company Name: Tokuyama Corporation
Representative Name: Hiroshi Yokota,
Representative Director, President and Executive Officer(Code No. 4043, Prime Market, TSE)
Contact: Tetsuya Nakano, General Manager
Corporate Communications & Investor Relations Dept.
TEL: +81-3-5207-2552

Efforts to Realize Management Conscious of the Cost of Capital and Stock Price
Tokuyama Corporation (hereinafter referred to as “Tokuyama” or “the Company”) resolved at a meeting ofits Board of Directors held on April 26, 2024, to analyze and assess the Company’s cost of and return oncapital, and to implement policies and specific initiatives in a bid to ensure improvement. Brief details arepresented as follows.
1. Current Assessment
After trending upwards of 10% until FY2021, return on equity (ROE) declined in FY2022 as a result ofacross-the-board cost inflation due to skyrocketing raw material and fuel costs. Although ROE recovered to7.4% in FY2023, the recovery in net income during this period was insufficient, thereby preventing ROEfrom reaching its previous levels. On the other hand, the price earnings ratio (PER) increased 11.0-fold inFY2023.
Meanwhile, the Company’s price book-value ratio (PBR) improved slightly in FY2022, yet failed to reach afactor of 1x in FY2023. According to the Company’s analysis, the primary factors behind this were a delayed
recovery in ROE and a failure to fully indicate a path toward future profitability growth.
<Tokuyama Management Indicator Trends>
FY2019FY2020

FY2021FY2022

FY2023 *1

ROE (%)

12.4

13.4

13.2

4.1

7.4

PER (fold)

7.3

8.0

4.4

16.2

11.0

PBR (fold)

0.86

1.01

0.55

0.66

0.78

2,092

2,793

1,718

2,105

2,715

Stock Price (closing price)(yen)*1 Management indicators for FY2023 are calculated based on unaudited financial statements (the same shallapply hereinafter).
*2 The denominator for ROE is the average shareholders’ equity during the period, while the denominator
1for PBR is shareholders’ equity as of the end of the period.
2. Policy and Targets
The Company has laid out its mission as “creating a bright future in harmony with the environment, incollaboration with its customers, based on chemistry,” and is therefore endeavoring to achieve sustainablegrowth and enhance medium- to long-term corporate value. Moreover, the Company included ROE as oneof the management indicators in its Medium-Term Management Plan 2025, and has since worked to improvethe efficiency of shareholder equity. However, the Company recognizes the high degree to which enhancing
corporate value relies on further advancing this effort, as well as on achieving targets by more resolutely
carrying out Medium-Term Management Plan 2025.
Medium-Term Management Plan 2025* Priority Issuesi) Transforming the business portfolio (Increase the share of consolidated net sales from growthbusinesses to over 50%)ii) Contribute to mitigating global warming (Expedite the development/commercialization of next-gen
energy technologies; Reduce greenhouse gas (GHG) emissions by 30% (compared with FY2019))
iii) Practice socially responsible management (Step up high-priority CSR initiatives to lay the groundworkfor growth)* https://www.tokuyama.co.jp/ir/business_policy/mid_term.html
In order to realize greater corporate value, the Company recognizes the indispensable nature of trust andcooperation among its shareholders and other stakeholders. And for this reason, it will actively promote
greater shareholder returns and dialogue with its shareholders. Along with steadily carrying out theMedium-Term Management Plan, the Company intends to link these efforts to realizing a management
structure that exceeds a PBR of 1x at the earliest possible time by meeting the expectations of its shareholders
and other stakeholders.
3. Specific Initiatives(1) Enhancing shareholder returns
The Company has positioned the return of profits to its shareholders as one of its most importantmanagement policies. Along with positioning a continuous, stable dividend as the foundation of the Basic
Policy on Shareholder Returns, another aspect of this Policy is continuously returning profits to shareholders
upon securing the retained earnings necessary to maintain a healthy financial position, improve shareholder
value for the future, and address changes in business conditions. Under this policy, after FY2024, theCompany determines the dividend based on a comprehensive assessment of performance trends, mediumand long-term business plans, and the cost of capital, among others. Specifically, the Company aims for adividend payout ratio of at least 30% with a target of 3% for the dividend on equity ratio (DOE), which is
not easily affected by performance during any one fiscal year.
(2) Making priority investments in growth businesses that actively utilize return on invested capital (ROIC)
and revisions to existing businesses
2The Company has promoted management conscious of cost of capital regarding businesses that haverecorded an ROIC below WACC for two consecutive years, including assessing the propriety of continuingsuch businesses each year. Going forward, the Company will set a target ROIC for each business division,and along with working to further expand profits for growth businesses, it will agilely respond to revisions inexisting businesses.
(3) Reducing cross-shareholdings
The Company aims to reduce the number of currently held cross-shareholdings (20 issues) on an ongoingbasis in order to improve asset efficiency. In FY2024, the Company will work in aims of reducing around 10
issues, where the cash generated through their disposal will be applied to growth businesses, as well as toresearch and development.
(4) Shareholder dialogue
The Company recognizes the importance of ongoing relationship-building with its shareholders and investors
for the purpose of enhancing medium- to long-term corporate value. Likewise, managers at the Company
actively participate in various briefings (IR and SR), where they converse with shareholders and investors.
Going forward, the Company will deepen its relationships with its stakeholders through a multi-layered
approach to communicating information founded on a spirt of fair disclosure.

See the attachment regarding these efforts.

3        

1.40
1.30
1.20
1.00

1.01

1.20

1.20

1.00

1.10

0.78

0.86

0.66



0.55

  
FY2019FY2020

FY2021

FY2022       
1FY2023    ：                    ­      ÷      ÷       
13.4



13.2

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7.4

    

4.1


FY2019

1.01
0.86

0.66

FY2020

FY2021

FY2022

FY20230.78

0.55

   
FY2019FY2020

FY2021

FY2022

16.2

FY2023

7.3

11.0

8.0

4.4
FY20192

FY2020

FY2021

FY2022

FY2023    ：                      

ROE = Net Proﬁt Margin × Net Asset Turnover× Financial Leverage

9.5    ÷        ÷       ÷   

8.1
6.3

5.2

       
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FY2019  
13.4

FY2020

FY2022

FY2023 

13.2
0.83

0.79

7.4

FY2021

FY2022

0.72

0.77

0.73

 ­        4.1
FY2020

FY20212.7

   12.4

FY2019

FY2023

FY2019FY2020

FY2021

FY2022  

2.27

1.95

1.93

FY20232.08

1.83

       

FY20193FY2020

FY2021

FY2022

FY2023 ：                      ­           Equality      
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FY2021

FY2022

FY2023    7070

707080 

24.4

19.9

18.0

53.8

32.4

   

2.9

2.6

2.4

2.3

2.5

FY2019FY2020

FY2021

FY2022

FY2023    2422212020

     
 

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