FYE March 2023
Financial Briefing
NAGASE&CO.,LTD.
May 26, 2023

Copyright © 2023 Nagase & Co., Ltd.

Contents■ FYE March 2023 Results, FYE March 2024 Earnings Projection P3～P19■ Medium-Term Management Plan ACE 2.0

P20～P27■ Assuming the Position of President

P２８～P３２

Copyright © 2023 Nagase & Co., Ltd.

FYE March 2023 Results,
FYE March 2024 Earnings Projection

Copyright © 2023 Nagase & Co., Ltd.

Consolidated statements income▶ Gross profit : Overall profit increased, despite lower gross profit margin due to lower profitability at certain manufacturingsubsidiaries, etc.
▶ Operating income : Gross profit increased, but profit decreased due to rising logistics costs and increased SG&A associatedwith increased activity▶ Profit Attributable to owners of the parent : Profit Attributable to owners of the parent also decreased, reflecting lower
operating income and lower ordinary income, mainly due to higher interest expenses

100 millions of yen
22/03

23/03

ChangeVs.PY

Forecast

Achievement

Sales

7,805

9,128

+ 1,323

117%

ー

ー

Gross profit

1,394

1,554

+ 159

111%

1,590

98%

<GP ratio>

17.9%

17.0%

(0.8ppt)－ー－

SG&A expenses

1,042

1,220

+ 178

117%

1,210

－

Operating income

352

333

(18)

95%

380

88%

Ordinary income

364

325

(39)

89%

390

83%

Profit Attributable toowners of the parent

259

236

(23)

91%

285

83%

@ 112.4@ 135.5@ 23.1 Weak yen@140.0@ 17.5@ 19.7@ 2.2 Weak yen@20.0

US$ Exchange rate
(period average)
RMB Exchange rate
(period average)※ Offset to sales and cost of sales from revenue recognition standards: March 2022, -¥244.8 billion; March 2023, -¥268.9 billion※ Impact from foreign exchange: Gross profit, +¥12.1 billion; Operating income, +¥2.9 billion

Copyright © 2023 Nagase & Co., Ltd.

4

Gross Profit By Region▶ Higher profit both domestic and overseas▶ Profit increased due to higher sales of raw materials and materials to the semiconductor industry in Japan and overseas▶ Profit increased significantly in the Americas and Europe due to expansion in the Prinova Group businesses▶ Profit increased in Greater China, despite the lockdowns, due to the weaker yen

Domestic & Overseas Gross profit(100 millions of yen)Overseas gross profit By Region(100 millions of yen)
900

1,600
Total 1,394
1,400

Total 1,554

100%

Overseas833

90%

Overseas681

Total 833
800

80%

700

Total 681

600

Europe
84

1,200

1,000

Overseasgross profit
ratio
48.8%

Overseasgross profit
ratio
53.7%

70%
60%

500

50%

800

Other
11

Other
15

Europe112

Americas331
Americas
238

400
40%

600

300
30%

400

Domestic
713

Domestic
720

200

0%
22/03

ASEAN
149

200
20%
10%

0

ASEAN
127

100

Greater
China
218

Greater
China
225

22/03

23/03

0

23/03

※Domestic figures under Domestic & Overseas Gross Profit include inter-regional adjustments
Copyright © 2023 Nagase & Co., Ltd.

5

Gross Profit By Business & Segment▶ General increase in sales in Functional Materials, including sales of coating and urethane raw materials, as well as sales of raw
materials for semiconductor-related products and other electronics industry products▶ Profit decreased in part due to lower profitability in Advanced Materials & Processing, despite the positive impact of the weakyen, as sales volume of resins declined and the segment experienced a reactionary decline stemming from increased profit
ratios in connection with soaring market conditions in the year-ago period▶ Electronics & Energy sales increased for materials used in semiconductors▶ Life & Healthcare recorded an increase in food ingredients business in the Prinova Group
Change in Gross Profit By Segment (100 millions of yen)

Gross Profit By Business & Segment (100 millions of yen)

Total 1,554
1,500

1,200

Total 1,554
Total 1,394

Total 1,394

Manufacturing
546

Manufacturing
618

Life &
Healthcare
447

Mobility
127

900

Electronics& Energy
297

600
Trading& Other
847

Life & Healthcare
1,554
111
Corporate&Others0

Trading& Other
936

300

0

1,394

Mobility
144

22/03

Advanced
Materials &Processing
(5)

399
400

Advanced
Materials& Processing
323

Advanced
Materials& Processing
317

300

Functional
Materials
198

Functional
Materials
223

100

By Business

By Segment

By Segment

22/03

23/03

22/03

23/03

23/03

History of Gross Profit(100 millions of yen)

Electronics& Energy307

By BusinessElectronics Mobility& Energy
1710Functional
Materials
25

Life &
Healthcare
559

345

394
353

341

390

353

369

200

0
1Q

Copyright © 2023 Nagase & Co., Ltd.

2Q
22/03

3Q
23/03

4Q

6

Operating Income by Business & Segment▶ Profit decreased overall due to an increase in selling, general and administrative expenses in connection with higher
distribution costs and increased activities▶ Advanced Materials & Processing recorded lower profit, partly due to a reactionary decline from the stemming from increased
profit ratios in connection with soaring market conditions in the previous fiscal year, as well as higher selling, general andadministrative expenses▶ Life & Healthcare profit increased especially due to strong performance of food ingredients sales in the Prinova Group▶ We continue to invest for sustainable future growth, including in DX-related areas
Operating Income by Business & Segment(100 millions of yen)

400
Total 352
Total 333

350
300

Manufacturing
114

250

Manufacturing
91

200
150
100

Trading& Other237

Trading& Other241

50
0Total 333

Life &
Healthcare
94Life &
Healthcare
105

Mobility
41
Electronics &Energy102

By Business
22/03

By Business
23/03

Life & Healthcare
11３５２Advanced
Materials &Processing
Electronics(15)& Energy(10)

Mobility
6333
Corporate&Others(21)

Electronics &Energy92
Advanced
Materials& Processing
93

Functional
Materials
78

Functional
Materials
88

By Segment
22/03

Functional
Materials
9

Mobility
47

Advanced
Materials& Processing
108

Coporate&
Others
(72)

(50)
(100)

Total 352

Change in Operating Income By Segment (100 millions of yen)

23/03

22/03

History of Operating Income(100 millions of yen)

108

120
100

97

97

90

86
75

80
Coporate&
Others(94)
By Segment
23/03

71
59

60
40
20
0
1Q

22/03
Copyright © 2023 Nagase & Co., Ltd.

3Q

２Q
23/03

4Q

7

Functional Materials Segment Operating Income Overview▶ Sales of coating and urethane raw materials for the automobile and other industries increased, due in part to soaring market
prices and the weaker yen▶ Sales increased for raw materials for semiconductor-related products and other electronics industry products, as did sales ofraw materials for industrial oil solutions and plastic materials▶ Performance remained strong overall, and profit increased year on year

History of operating income （100 millions of yen）

Operating income by business（100 millions of yen）
Total 88

90

Total 78
75

Manufact
uring
9

25

Manufact
uring
11

23
22
21
20

20
20

60

18

18

15

45

30

19

Trading &Other67

Trading &
Other
78

10

5

15

0

0
22/03

23/03

1Q

Copyright © 2023 Nagase & Co., Ltd.

3Q

２Q
22/03

23/03

4Q

8

Advanced Materials & Processing Segment Operating Income Overview▶ Despite the impact of the weak yen on resin sales to the office equipment, appliance, and video game device market,
profitability decreased due to a reactionary decline stemming from increased profit ratios in connection with soaring market
conditions in the previous fiscal year
▶ Sales of digital print processing materials continued to be weak in manufacturing businesses▶ Profit was lower year on year due to a decrease in resin sales, lower profitability in manufacturing businesses, and anincrease in selling, general and administrative expenses

History of operating income （100 millions of yen）

Operating income by business（100 millions of yen）
Total 108
Manufact
uring
0

96

32

Total 93

31

30
26

25

24

76

24

19
56

Trading &
Other
107

16

Trading &
Other
96

15

36

16
Manufact
uring
(3)
0
-4

1Q
22/03

23/03

22/03
Copyright © 2023 Nagase & Co., Ltd.

3Q

２Q
23/03

4Q

9

Eｌectronics & Energy Segment Operating Income Overview▶ Sales increased for materials for semiconductors▶ Sales of formulated epoxy resins was slow for semiconductor applications and mobile devices▶ Profit decreased year on year due to the significant impact of weak sales in manufacturing businesses in connection withformulated epoxy resin-related products for mobile devices

History of operating income （100 millions of yen）

Operating income by business（100 millions of yen）

29

30

Total 102
100

26

Total 92

80

Manufact
uring
35

25

25
24
23

Manufact
uring
20

21
19

20

60

40

Trading &Other67

Trading &
Other
72

10

20

0

0
22/03

23/03

1Q

22/03
Copyright © 2023 Nagase & Co., Ltd.

3Q

２Q
23/03

4Q

10

Mobility Segment Operating Income Overview▶ Sales increased for resins, mainly due to an increase in automobile production and the impact of the weakening yen▶ Sales increased in functional materials and functional components for interior and exterior fittings and electrification▶ Profit increased year on year due to generally strong sales

History of operating income （100 millions of yen）

Operating income by business（100 millions of yen）
50

Total 47
16

15

Total 41
14

40

13

12
10

30

20

11

10

Trading &Other
41

Trading &
Other
47

9

10

9

9

8

6

4
10
2

0

0
22/03

23/03

1Q

22/03
Copyright © 2023 Nagase & Co., Ltd.

3Q

２Q
23/03

4Q

11

Life & Healthcare Segment Operating Income Overview▶ Prinova Group sales of food ingredients were particularly strong in the first quarter, and remained strong overall in the second
quarter and later, despite some adjustments in supply and demand▶ Prinova Group manufacturing and processing business profitability declined due to increased costs associated with the start upof a new plant▶ Hayashibara ｓales of food ingredients (mainly TREHATM) increased; however, sales of cosmetics materials (mainly AA2GTM)
decreased due to lower demand overseas and other factors▶ Profit increased, despite a decrease in profit at Hayashibara, mainly due to higher profits in the Prinova Group and strong
performance in the trading company business related to pharmaceuticals and cosmetics
History of operating income （100 millions of yen）

Operating income by business（100 millions of yen）

Total 105
41
100

40

Total 94

80
Manufact
uring
67
60

30
27
25

Manufact
uring
69

23

22
20

20

20

18

40

20
Trading &Other25

Trading &
Other
38

10

0

0
22/03

23/03

1Q

22/03
Copyright © 2023 Nagase & Co., Ltd.

3Q

２Q
23/03

4Q

12

State of Major Manufacturing Subsidiaries▶ Nagase ChemteX: Lower profit due to weak sales of formulated epoxy resins for use in semiconductors and mobile devices▶ Hayashibara: Lower profit due to lower sales of cosmetic material AA2GTM and lower profitability of food material TREHATM,
stemming from higher raw materials and energy prices▶ Prinova Group: Profit increased due to higher materials sales, even as manufacturing and processing businesses saw lower
profitability due to costs associated with the start-up of a new plant

100 millions of yen

22/03
Sales
Nagase ChemteX
Corporation

Hayashibara
Co.,Ltd.

Change

Vs.PY

289

253

(35)

88%

Gross profit

89

68

(20)

77%

Operating income

37

18

(19)

48%

Sales

265

281

15

106%

Gross profit

108

103

(4)

96%

Operating income

45

37

(7)

84%

Goodwill amortization etc.

30

30

-

100%

Operating income after
amortization burden

14

7

(7)

50%

1,209

1,927

718

159%

Gross profit

218

312

93

143%

Operating income

69

80

11

116%

Goodwill amortization etc.

20

24

3

120%

Operating income after
amortization burden

49

56

7

114%

Sales

Prinova Group

23/03

Copyright © 2023 Nagase & Co., Ltd.

13

Consolidated Balance Sheets▶ Current assets: While levels remained high, accounts receivable and inventories began to decline from a peak in Q3▶ Net assets: Increase, despite dividend payments and share buyback, due to profit for the period and an increase in foreign
currency translation adjustments due to the weaker yen▶ NET D/E ratio: Despite an increase compared to the end of the previous year, the increase in interest-bearing debt peaked,
falling to 0.38 times from 0.40 times in the previous quarter

100 millions of yen

22/03

23/03

ChangeDetails

Total Current Assets

5,142

5,301

158

(Cash&deposits)

542

408

(133)

(Trade account receivbable)

2,898

3,021

122

(Inventories)

1,575

1,697

121

2,254

2,325

71

756

697

(58)

Total assets

7,397

7,626

229

Current Liab.

3,078

2,862

(216) Short-term loans/CP +59

1,490

1,404

(85)

767

980

Total Liab.

3,846

3,843

(3)

Shareholders' equity

2,988

3,090

102

Accum. Other Comprehensive Income

454

586

131 Appraisal Loss on Investment Securities(28)Non-controlling interest

108

107

(1)

Total net assets

3,550

3,783

232

Working capital

2,983

3,313

330

Shareholders' equity ratio

46.5%

48.2%

1.7%

0.33

0.38

0.05

Total non-current assets(Investments in security)(Trade account payable)
Non-current Liab.

NET D/E ratio

Copyright © 2023 Nagase & Co., Ltd.

Current Portion of Bonds(100),

213 Corporate Bonds+100, Lease long-term debt +87

Translation adjustment+167,

14

Consolidated Cash Flows▶ Operating CF : Net operating cash flow of ¥9.4 billion due to a decrease in working capital stemming from slowing sales in Q4
and inventory reductions▶ Investing CF : Net cash used of ¥8.0 billion, despite proceeds from sales of investment securities, etc., mainly due to purchaseof property, plant and equipment and intangible assets▶ Financing CF : Net cash used of ¥17.2 billion, mainly due to dividend payments and share buybacks

100 millions of yen

22/03

23/03

Operating CF

(177)

94

Investing CF

(76)

(80)

(254)

13

272

(172)

29

30

Net change in cash and cash equivalents

+ 47

(128)

Depreciation and amortization of
tangible and intangible assets

136

149

Fixed asset investment

(169)

(173)

Change in working capital

(631)

(200)

Free CF
Financing CF
Effects of exchange rate changes on cash andcash equivalents

Copyright © 2023 Nagase & Co., Ltd.

15

FYE March 2024 Earnings Projection▶ We expect raw materials and resource prices to remain high, due in part to the protracted conflict between Russia and Ukraine▶ We expect the business environment to remain challenging, given inflation in many countries, consumer spending impacted
negatively by tightening measures, and the suppression of economic activities▶ Under these circumstances, we expect to see higher profit for the next full year due to steady growth in the automobile-related
business, continued growth in the food-related business, and a recovery in profitability in our manufacturing businesses, which
faced a difficult situation in the previous fiscal year

100 millions of yen
23/03
Actual24/03
Forecast

Change

Vs.PY

Sales

9,128

9,580

451

105%

Gross profit

1,554

1,710

155

110%

<GP ratio>

17.0%

17.8%

+0.8ppt

SG&A expenses

1,220

1,365

144

112%

Operating income

333

345

11

103%

Ordinary income

325

326

0

100%

Profit attributable to ownersof the parent

236

240

3

102%

US$ Exchange rate
(period average)@ 135.5@ 135.0

RMB Exchange rate
(period average)@ 19.7@ 20.0-※Impact on operating income of 1 yen change in exchange rate: US$ approx. 100 million yen, RMB approx. 400 million yen

Copyright © 2023 Nagase & Co., Ltd.

16

FYE March 2024 Earnings Projection By segment▶ We expect Functional Materials and Mobility to remain firm, mainly in response to an increase in automobile production volume▶ We expect higher profit in Advanced Materials & Processing to increase, driven mainly by a recovery in resin sales volume(declined in the previous year due to lockdowns in China) and an improvement in the earnings of our manufacturing subsidiaries▶ We expect higher profit in Electronics & Energy, mainly due to recovery in sales of formulated epoxy resins for mobile devices
and other products▶ We expect higher profit in Life & Healthcare, driven mainly by full-scale operations at the new Prinova Group plant engaged in
sports nutrition contract manufacturing, a return to profitability at Hayashibara, etc.
▶ We expect Others & Corporate to be impacted by increased development costs for future profits and increased amortization ofretirement benefit actuarial differences

100 millions of yen

Functional Materials

Advanced Materials& Processing
Electronics& Energy

MobilityLife & Healthcare

Corporate&Others

Total

Sales
Gross profit
Operating income
Sales
Gross profit
Operating income
Sales
Gross profit
Operating income
Sales
Gross profit
Operating income
Sales
Gross profit
Operating income
Sales
Gross profit
Operating income
Sales
Gross profit
Operating income

23/03 Actual

24/03 Forecast

1,120
223
88
2,650
317
93
1,369
307
92
1,255
144
47
2,731
559
105
0
1
(94)
9,128
1,554
333

1,150
229
89
2,700
343
110
1,500
338
106
1,356
156
51
2,873
643
113
1
1
(124)
9,580
1,710
345

Copyright © 2023 Nagase & Co., Ltd.

Change
29
5
0
49
25
16
130
30
13
100
11
3
141
83
7
0
(0)
(29)
451
155
11

Vs.PY
103%
102%
101%
102%
108%
118%
110%
110%
114%
108%
108%
106%
105%
115%
107%
122%
62%
ー
105%
110%
103%

17

FYE March 2024 Earnings Projection ofMajor Manufacturing Subsidiaries▶ Nagase ChemteX: We expect formulated epoxy resin products for mobile devices to recover beginning in the second half of theyear; however, the impact of integrating fermentation and enzymes business with Hayashibara and the likelihood of increased
fixed costs will limit the extent of profit growth▶ Hayashibara: We expect a significant increase in profit due to the full-year contribution of price revisions in response toincreased raw materials and utility costs, as well as increased sales of AA2G™, a cosmetic material for overseas markets▶ Prinova Group: We expect market declines and lower demand in sales of food ingredients, but profits should increase due to thefull-scale operation of the Utah plant that conducts contract manufacturing for sports nutrition products
100 millions of yen

253

24/03
Forecast
252

Gross profit

68

Operating income

23/03
Sales
Nagase ChemteX
Corporation

Hayashibara
Co.,Ltd.

Vs.PY

(1)

99%

71

2

104%

18

20

1

110%

Sales

281

367

85

131%

Gross profit

103

131

27

127%

Operating income

37

50

12

133%

Goodwill amortization etc.

30

30

-

100%

7

19

12

275%

1,927

2,035

107

106%

Gross profit

312

367

54

118%

Operating income

80

84

3

105%

Goodwill amortization etc.

24

24

0

103%

Operating income after
amortization burden

56

59

3

106%

Operating income after
amortization burden
Sales

Prinova Group

ChangeCopyright © 2023 Nagase & Co., Ltd.

18

Shareholder Returns▶ We plan to pay ¥70 per share for the full year, consisting of an interim dividend of ¥30 per share and a year-end dividend of¥40 per share, ¥10 per share higher than our originally planned year-end dividend of ¥30 per share for FYE March 2023
▶ Based on policy under ACE 2.0, we plan to increase dividends per share by ¥10 to an annual dividend of ¥80 per share in FYEMarch 2024 (representing a 14th consecutive year of dividend increases)▶ We resolved to repurchase ¥8.0 billion of treasury stock in May 2023, and we expect to achieve a total return ratio of 71% in
FYE March 2024 (repurchase period scheduled between May 2023 and December 2023)

Total Dividend

Stock buy-backTotal Payout ratio
71.3

millions of yen

％

70.0

20,00058.9

17,10960.0

51.0

16,000

48.3

33.7

35.6

33.0

36.0

35.2

50.0
8,000

12,52039.5

12,00013,908

40.0

5,662
6,006

8,000

6,799
5,269

4,000

3,811

4,064

3,811

4,064

4,162

15/03

16/03

¥30

¥32

1,776

30.0

7,186
1,956

6,643
5,456

952

20.0

1,107

8,246

9,109

6,514

10.0

5,023

5,230

5,456

5,691

17/03

18/03

19/03

20/03

21/03

22/03

23/03

24/03
(Forecast)

¥33

¥40

¥42

¥44

¥46

¥54

¥70

¥80

0

Dividend per
share

0.0

※ 2３/03 year-end dividend to be submitted for approval to the 108th general meeting of shareholders scheduled for June 202３.

Copyright © 2023 Nagase & Co., Ltd.

19

Medium-Term Management Plan ACE 2.0
https://www.nagase.co.jp/english/assetfiles/tekijikaiji/20210802-1.pdf

Copyright © 2023 Nagase & Co., Ltd.

ACE 2.0 Basic Policies
Become a true “Business designer”
ACE 2.0 “Pursuit of Quality”
With a mindset focused on Accountability (A), Commitment (C) and Efficiency (E), and to enable its sustained growth,
NAGASE will work to give concrete shape (business, mechanisms, culture)(Pursuit)

to the aspirations expected by all of its stakeholders.
(Quality)

Reform of Profit Structure

Reform of Corporate Culture

Create a profit base toward the Ideal NAGASE(1) Pursuit of profitability and efficiency

Mindset toward the Ideal NAGASE

・Implement a company-wide asset replacement andreallocation of resources(2) Strengthen existing businesses
・Expand business opportunities through globalization
・Improve productivity of manufacturing businesses andexpand value-added through technical innovation(3) Create sustainable businesses (N-Sustainablebusiness)(1) Pursuit of economic and social value
・Fostering a sustainability mindset, and rigorous monitoring offinancial and non-financial indicators(2) Pursue efficiency
・Deepen awareness of capital efficiency
・Improve productivity of core operations(3) Strengthen human resources to drive reforms

Functions supporting reforms(1) Accelerate DX further(2) Promote sustainability

Copyright © 2023 Nagase & Co., Ltd.

(3) Strengthen corporate functions

21

Reform of Profit
Structure

Pursuit of Profitability and Efficiency▶ In addition to generating stable cash in base businesses, we made progress in growing and strengthening the structure of the focus
businesses that we expect to grow further▶ We secured capital resources from terminated or sold-off businesses▶ Our manufacturing businesses have faced difficult conditions, particularly Nagase ChemteX and Hayashibara, due to the impact ofsoaring raw materials and utility prices, not to mention a decline in sales due to adjustments in demand for certain high-profit products;
however, we expect profitability to recover in FYE March 2024

Growth of Focus Businesses and Portfolio Replacement[Food-Related]

Partialwithdrawal

Approach to Business Portfolio

Focus

Foster and explore new business fields
Plant seeds for key fields in the future

Businesses that have management
resources to maintain its competitive
advantages
Businesses where synergies are
expected to accelerate

Environment-related
Next-generation communications-related (5G, 6G, CASE)
Energy-related
Overseas-led businessBio-related
Semiconductor-related
Food-related

Growthpotential
Partialwithdrawal

Expand the Prinova Group market share and launch new plant operations; accelerate the marketing ofHayashibara Fibryxa™

Develop・Expanded trading company market share and strengthened our structure for further growth in the
manufacturing businesses, including the launch of operations at the Utah plant・Accelerated marketing of soluble fiber Fibryxa™ for beverage applications and developed new applications[Semiconductor-Related]
Pursue spec-in activities in the semiconductor industry

Improve

Base

Delivered values are diluted /Group synergies are small /NAGASE’s core competence is
not utilized / Difficult to establish
competitive advantages

Business with organizational
capabilities (competitiveness inintangible assets) that are
generating stable cash flows

・Expanded trading company sales of processing materials
・Pursued spec-in activities for semiconductor manufacturing in Japan[Bio-Related]
Integrate fermentation and enzymes groups, and pursue the development and marketing of bio-derived
products

Brokerage of commodity materials and products

・Conducted a reorganization to enhance group synergies by integrating the fermentation and enzymes
businesses of Hayashibara and Nagase ChemteX.

ROIC Company-wide capital costs（100 millions of yen）

(reference ; )Results of
Manufacturing

FY2020Results

FY2021Results

FY2022
Results

Gross Profit

475

546

617

Operatingincome

138

169

144

・Pursued efforts to launch Green DENACOL™, a bio-derived epoxy compound from Nagase ChemteX.
・Succeeded in developing a bio-based super absorbent polymer (SAP) by combining Hayashibara's enzyme
technology with Nagase ChemteX's resin manufacturing technology. Pursued efforts to bring the product tomarket.
・Continued efforts to mass-produce ergothioneine, a rare amino acid.
[Business Replacement]*Resultsabove
calculated
using
simplesums*Figuresrepresent
simplesums

Transfer two subsidiaries to reconfigure business portfolio
・Sold shares of Setsunan Kasei Co., Ltd., a plastics compounding company, and Daitai Kako Co., Ltd, a paintmanufacturing company.
Copyright © 2023 Nagase & Co., Ltd.

22

Reform ofCorporate Culture

Pursue Profitability and Efficiency - Expand Shareholder Returns and Salesof Cross-Shareholdings
Expand Shareholder Returns
FY2021Results

FY2022
Results

FY2023
Forecast

・In FYE March 2023, we increased the annual dividend per share

Dividend per share(yen)

54

70

80

We plan to increase dividends by 10 yen per share in FYE March（interim + year-end）（24+30）（30+４0）（40+40）Share buybacks(100 millions of yen)

60

56

80

Total Payout ratio（％）

48.3

58.9

71.3

by 16 yen compared with the previous fiscal year

2024
・Approved a new resolution in May 2023 for share buybacks We
expect FYE March 2024 total return ratio to be 71%

Expand shareholder returns to improve capital

Shareholder Return Policy Under ACE 2.0
Dividends: Continue to increase dividends

efficiency in tandem with rising profit levels;

Repurchase Treasury Stock : Implement flexibility

improve capital efficiency through business and※Limited to 30.0 billion yen which is the target amount of cross-shareholding
sold Under ACE 2.0

financial strategies

Sales of Cross-Shareholdings
FY2020
Number ofholdings(companies)

Balance at
end ofperiod(billions ofyen)
Percentageof netassets

FY2021

FY202２【FY２０２２】

Sold shares of 13 holdings for7.3 billion yen

180

137

132

Listed 130
Unlisted 50

Listed 85
Unlisted 52

Listed ７８
Unlisted 5４(Number of holdings includes holdings sold in part)

816

632

569

Listed 773
Unlisted 43

Listed ５９３
Unlisted ３８

Listed ５４７
Unlisted ２１

24.1%

17.8%

1５.０%

(Reference: Sold shares in a total of 49 holdings in FYEMarch 2022 for 7.8 billion yen)

We plan further divestments to reach the 30.0 billion
yen divestment target described under ACE 2.0

Copyright © 2023 Nagase & Co., Ltd.

23

Reform ofCorporate Culture

Pursuit of Profitability and Efficiency - Funds Allocation▶ During FYE March 2023, we generated proceeds of 36.3 billion yen, excluding changes in working capital and deducting investments(expenses) such as DX and R&D▶ We generated proceeds of 9.6 billion yen from the sale of cross-shareholdings and the sale of shares in subsidiaries and affiliates inconnection with portfolio replacement▶ Major growth investments include the construction of a new Prinova Group plant (Utah, U.S.A.) for the contract manufacturing of sports
nutrition products▶ We continue to balance growth investments with increased returns through a combination of share buybacks and dividends, using funds
from the sale of cross-shareholdings
100 millions of yen

FY2021

FY2022525

363

Proceeds from sales ofcross-shareholdings, etc.

92

96

Proceeds from change
in interest-bearing debt

401

7

Cash inflow
Operating CF after adjustments

Other income

Total

*

1,026

FY2021

FY2022

124

1３９

Investment in DX, R&D, etc.

71

６８

ー

Increase in working capital

631

200

９

Other growth investments, etc.

156

173

Outlays for change
in interest-bearing debt

ー25

Other expenditures

25

2０

1,008

６２8

４６９

Cash outflow
Dividends and share buybacks

Total* Operating CF excluding the impact of changes in working capital, DX and R&D costs recorded as expenses, etc.

Copyright © 2023 Nagase & Co., Ltd.

24

Reform ofCorporate Culture

Pursuit of Profitability and Efficiency - Indicators▶ WACC increased by 0.2ppt year on year, mainly due to an increase in the risk-free rate
▶ ROIC decreased 0.9ppt year on year due to a decrease in net income and an increase in invested capital▶ We aim to achieve stable ROIC > WACC by improving profitability and capital efficiency

FY2020

FY2021

ChangeFY2022

FY2025
Target

ROE

5.9%

7.7%

(1.1)

6.6%

8.0% or higher

WACC

5.7%

5.5%

+0.2

5.7%

5.0% or lower

ROIC

4.2%

5.3%

(0.9)

4.4%

5.0% to 5.5%

NET D/E Ratio

0.23

0.33

+0.05

0.38

0.5 or lower

3,384

3,550

1,189

1,665

Net assets(100 millions of yen)Interest-bearing
debt(100 millions of yen)

+232

+131

Copyright © 2023 Nagase & Co., Ltd.

3,783
1,796

25

Functions
supporting reforms

Pursue Sustainability - Progress in Corporate Projects
Improve Employee Engagement(Main FYE March 2023 Initiatives)
・Introduced Activity-Based Workplaces (ABW) at the Tokyo Head Office・Created opportunities for communication between management andemployees
・Furthered discussions on women's advancement and establishedrelated targets

ACE 2.0 Non-Financial Targets (KPIs) and Results（KPI）
NAGASE: Engagement survey score of 60 or moreGroup companies: Percentage of companies conducting regular
engagement surveys 100%
(FYE March 2023 Results)

Vitalized communication vertically and horizontally in our organization,

Total score: 56.5 (FYE March 2022: 52.4)

making progress in creating more comfortable work environments for

Percentage of companies conducting regular engagement surveys:

diverse personnel

81% (FYE March 2022: 41%)

Carbon-Neutrality(Main FYE March 2023 Initiatives)

ACE 2.0 Non-Financial Targets (KPIs) and Results・Invested in Zeroboard Inc.
・Supported visualization of GHG emissions in the printing（KPI）

industry supply chain[Consolidated] Scope 1 and 2 reduction rate of 37% or more (compared・Forest credit creation proof-of-concept

to 2013)
Reduce emissions through the generation or purchase of renewableenergy of 35,000 tons or more (cumulative total)

We furthered collaboration with Zeroboard, which provides
GHG emissions visualization services in Japan. In addition,
we are developing support for emissions visualization, not[NAGASE (non-consolidated)] Scope 2 Zero emissions(FYE March 2023 results) *Provisional values prior to certification bodyguarantee

only in Japan, but also in Southeast Asia. Through proof-of-[Consolidated] Scope 1 and 2 reduction rate: 34%

concept work related to credit creation, which is only[Consolidated] Reduction through renewable energy generation andgaining in importance, we are building knowledge andpurchases: 524t (cumulative)

expertise in carbon neutrality[Non-Consolidated] Scope 2: 1,987t
Copyright © 2023 Nagase & Co., Ltd.

26

Functions
supporting reforms

Evaluations From ESG Rating Agencies▶ We pursue sustainability activities and disclose sustainability-related information proactively▶ We receive higher evaluations year by year from all major external evaluation organizations, particularly in FYE March 2023

Highestrated

FY２０１９Results

FY202０Results

FY2021Results

FY2022
Results

FTSE

5.0

１.2

１.9

2.7

3.5

MSCI

AAA

BB

BB

BBB

A

Climate Change

A

C

B

B

A-

Water

A

C

B

A‐

A

Forest

A

C-

C

C

B

Supply Chain
Engagement

A

D

B

B

A

Ecovadis（NAGASE Group）

100

41
ー

46
（Bronze）

43
ー

48（Bronze）

ＣＤＰ

ESG Rating Agencies

Copyright © 2023 Nagase & Co., Ltd.

27

Assuming the Position of President
Maximize the Use of Resources (People, Money, andTime) and Generate Greater Efficiencies

Copyright © 2023 Nagase & Co., Ltd.

We Live in an Era of Unprecedented Change

An Era of Trade-On
Environmental value is aprerequisite for
economic value

An Era of HyperCompetition
Digitalization
Entry Into Other Industries
Aggression From Overseas,
Generative AI, Etc.

An Era of Mutability
Economic Security
Pandemic
Geopolitical Risks, Etc.

The new normal is proceeding at breakneck speed
What was common sense in the past is now outdated

We must continue to change for survival

Copyright © 2023 Nagase & Co., Ltd.

29

In our third year under ACE 2.0, various issues and discrepancies are
becoming apparent
Specific Issues
Need for partial or complete revision of the plan
(plan assumptions have changed beyond a certain scope)
Bold growth strategy to raise our stage to a new level
Decision-making and mechanisms that respond to the speedof environmental change
Awareness that resources are limited(Innovative culture has been fostered)
Elimination of waste

We will conduct a partial revision of the ACE 2.0 basic policy,
Pursuit of Quality, implementing two reforms
Copyright © 2023 Nagase & Co., Ltd.

30

Who is NAGASE? Why does NAGASE exist as acompany?
We are a company whose mission is
to solve manufacturing issues through materials

Execute QUICK WIN in Corporate Organization andBusiness Execution

Copyright © 2023 Nagase & Co., Ltd.

31QUICK WIN
Maximize the Use of Resources (People, Money, and Time)and Generate Greater Efficiencies
Evolve our business andfinancial portfolios

Objective

Strengthen front-line capabilities and improve capital efficiency

・Manage and execute business portfolio based on ROIC
・Rebuild or liquidate unprofitable businesses(including businesses at risk of impairment)
・Execute a corporate-led growth strategy
・Enforce EXIT rule and cash allocation
・Strengthen search and development (S&D) function
・Engage in digital marketing

Strengthen management
governanceObjective

Increase management efficiency and decision-making speed・Consolidate and operate our organization in pursuit of rationality and efficiency
・Revise and systematize decision-making structures
・Delegate authority

Restructure our humanresources portfolio

Objective

Maximize human capital and improve engagement

・Train the next generation of human resources
・Conduct talent management (reallocate human resources)
・Establish an environment for D&I implementation; revise systems and mechanisms

Copyright © 2023 Nagase & Co., Ltd.

32

*We plan to announce revised ACE 2.0 KGIs, KPIs, etc., in our Q2 results meeting as we move forward with QUICK WIN.

■Inquiries:
https://www.nagase.co.jp/english/contact/ir/■NAGASE Group Investor Relations Website:
https://www.nagase.co.jp/english/ir/

These presentation materials contain projections based on forward-looking
assumptions, forecasts, and plans as of May 26, 2023.
Actual earnings may differ from projections due to risks and uncertainties in
the future global economy, competitive landscape, currency exchange rates,
etc.

Copyright © 2023 Nagase & Co., Ltd.