FY2023 Second Quarter
Financial Briefing
NAGASE&CO.,LTD.
Stock exchange listing : Tokyo (Prime Market)
Code number : 8012

November 27, 2023

Copyright © 2023 Nagase & Co., Ltd.

Executive Summary

FY2023
SecondQuarter
Results
andFY2023
Earnings
Projections

Profitability of the digital print processing materials business deteriorated due to falling unit prices caused byintensifying competition
Resin sales were sluggish due to a decline in global demand and weak market conditions
Profit contribution by the new Utah plant (Prinova Group) delayed
Despite the sluggish overall semiconductor market, our trading company function expanded its product lineup while the
manufacturing function enjoyed strong sales for high-end server applications
Hayashibara recovered, mainly due to completing the incorporation of utility costs in unit prices, increased demand forcosmetics materials, and the wider adoption of Functional ingredients・ Final-year KGIs and KPIs unchanged under Medium-Term Management Plan ACE 2.0
ACE 2.0

・ Steady progress under QUICK WIN as explained at the May 2023 presentation
・ Clarification of future growth strategy

Copyright © 2023 Nagase & Co., Ltd.

2

Business Environment by Segment

Segment

Dept.

Markets

Initial Assumption

Coatings

Supply chain inventory adjustments resolved,
automobile production recovered, etc.

Automotive-related recovery, butconstruction-related slump

Recovery compared to first halfColor Formers

Demand remained weak

Demand slumped more than expected,
market conditions declined

Same level as the first half

Semiconductors

Weak in the first half; expected recovery in the
In line with projections
second half and beyond

Same level as the first half

Epoxy

Logistics inventory adjustments in the first
half; recovery beginning in the second half

Remained sluggish

Recovery due to the elimination oflogistics inventories

Industrial Oil

Steady growth due to recovery in automobile
production volume, etc.

Weak performance in China and Japan

Recovery due to the elimination oflogistics inventories

Recovery in demand for office equipment,
appliance, and video game devices

Mainly weak in China

Recovery beginning in the first half

Performance
Chemicals

Functional
Materials
Speciality Chemicals

Advanced
Materials &Processing

Polymer Global
Account

Resin

Weak in the first half; expected recovery in the
In line with projections
second half and beyond

Same level as the first half

Weak in the first half; expected recovery in the Overall market is challenging, but products
second half and beyondfor high-end applications performed well

No market recovery, but increase inproducts for high-end applications

Smartphones

Weak in the first half; expected recovery in the
Slower than projected
second half and beyond

Recovery due to the elimination oflogistics inventories

Automobiles

Recovery in automobile production beginning
in Q1

In line with projections

Increase due in part to rising automobile
production

Food

Strong sports nutrition market Europe and theAmericas

Decreased demand in the U.S. market,
market decline

Gradual recovery in demand in the U.S.
marketIncrease in demand for cosmetics productswith the end of COVID-19, etc.

In line with projections

Decreased demand for seasonalmerchandise

Increased demandHigh utilization due to inventory buildup,etc.

Decrease compared to the first half due
to rebound in the first half

Display
Electronics &EnergySemiconductors
Advanced Functional
Materials

Life & Healthcare

Life & Healthcare
Products

Second-Half Projections vs.

No market recovery; we expect arecovery to start in the next fiscal year

Electronics

Mobility Solutions

Projections

Market was worse than expected, but
Weak in the first half; expected recovery in the
expanded lineup of new commercial
second half and beyond
products

Semiconductors

MobilityFirst Half vs.

Cosmetics

Pharmaceutical

First
Half

Full-Year Projections(vs. Initial
Projections)*Business classifications after reorganization effective October 1, 2023

Copyright © 2023 Nagase & Co., Ltd.

3

Contents■ FY2023 Second Quarter Results and FY202３ Earnings Projectionｓ P5～P22■ Medium-Term Management Plan ACE 2.0

Copyright © 2023 Nagase & Co., Ltd.

P23～P40

4

FY2023 Second Quarter Resultsand FY202３ Earnings Projections

Copyright © 2023 Nagase & Co., Ltd.

5

Consolidated statements income▶ Gross profit : Profit decreased mainly due to lower profitability of the resin sales business under Advanced Materials &Processing▶ Operating income : Profit decreased due to lower gross profit and increases in selling, general and administrative expenses inconnection with personnel costs, etc.
▶ Profit Attributable to owners of the parent : Profit decreased due to lower operating income, as well as a decrease in net
income stemming from higher interest expenses, etc.
100 millions of yen

Forecast(Original)

FY2022 2Q

FY2023 2Q

Change

Sales

4,555

4,501

(53)

99%

9,580

47%

Gross profit

793

788

(4)

99%

1,710

46%

<GP ratio>

17.4%

17.5%

0.1ppt

－

17.8%

－

SG&A expenses

594

644

49

108%

1,365

－

198

144

(54)

73%

345

42%

202

142

(60)

70%

326

44%

ProfitAttributable toowners of theparent

155

102

(53)

66%

240

43%

US$ Exchange rate
(period average)@ 134.0@ 141.1@ 7.0 Weak yen@ 135.0

RMB Exchange rate
(period average)@ 19.9@ 19.7@ 0.2 Strong yen@ 20.0OperatingincomeOrdinary
incomeVs.PYAchievement※ Offset to sales and cost of sales from revenue recognition standards: FY2022 2Q -¥133 billion, FY2023 2Q -¥132 billion※ Impact from foreign exchange: Gross profit, +¥2.3 billion; Operating income, +¥0.2 billion

Copyright © 2023 Nagase & Co., Ltd.

6

Gross Profit By Region▶ Domestic business profit increased while overseas business profit declined, resulting in an overall decrease in profit▶ Increase in domestic business sales, mainly due to higher sales of cosmetic materials and formulated epoxy resins▶ Despite higher profits overseas due to the weaker yen, profits decreased due to sluggish resin sales stemming from the impactof the economic slowdown

Domestic & Overseas Gross profit(100 millions of yen)Overseas gross profit By Region(100 millions of yen)
Total 437

800

Total 793

Total 788

Overseas437

Overseas
430

700

100%
Europe
61

400
90%

Other
6

Total 430

Other
7

Europe
67

80%
600

500

Overseasgross profit
ratio
55.2%

Overseasgross profit
ratio
54.5%

400

70%

300

Americas
172

60%
50%

200

40%

300

Americas
163

ASEAN
75

ASEAN
74

Greater
China
122

Greater
China
117

FY2022 2Q

FY2023 2Q

30%
200

Domestic
355

Domestic
358

100

100
20%
10%
0%

0
FY2022 2Q

FY2023 2Q

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

7

Gross Profit By Business & Segment▶ Functional Materials posted lower sales of coating raw materials and raw materials for semiconductor-related products andother electronics industry products▶ Advanced Materials & Processing posted lower sales due to decreased demand for resin sales in the office equipment,
appliance, and video game device market, as well as the impact of inventory adjustments by customers▶ Despite a decrease in raw materials sales for semiconductor-related products in Electronics & Energy, profits rose overall withan increase in sales of formulated epoxy resins for semiconductor- and electronics-related products▶ Sales of Life & Healthcare-related cosmetic material and pharmaceutical raw materials increased
Change in Gross Profit By Segment (100 millions of yen)

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

800

Total 793

Total 788

700

600

Manufacturing
325

Manufacturing319

500

Total 793

Life &
Healthcare
285

Mobility
72

400

Electronics& Energy
157

300

200

Trading& Other468

Trading& Other
469

100

Total 788

Functional
Materials(8)Life &
Healthcare
301

Mobility73

Life &
Healthcare
16793Functional
Materials
114

Functional
Materials
1060
By Business

By Business

By Segment

By Segment

FY2022 2Q

FY2023 2Q

FY2022 2Q

FY2023 2Q

Mobility1

FY2022 2Q

FY2023 2Q

History of Gross Profit(100 millions of yen)

Electronics& Energy
163

Advanced
Materials& Processing
142

Electronics& Energy
5

Advanced
Materials& Processing
(21)

399
400

Advanced
Materials& Processing
163

788
Corporate& Others
0

387

394

401

390

369

300
200
100
0

0

0
１Q

２Q
FY2022

Copyright © 2023 Nagase & Co., Ltd.

３Q
FY2023

４Q

8

Operating Income by Business & Segment▶ Functional Materials and Advanced Materials & Processing posted lower operating income due to a decrease in gross profit▶ Electronics & Energy posted higher operating income with increased gross profit▶ Life & Healthcare recorded higher gross profit; however, weaker profitability at the Prinova Group, increased personnel expense,
other selling, general and administrative expenses, and a delay in the profit contribution of the new Utah plant caused adecrease in operating income▶ We continue to invest for sustainable future growth, including in DX-related areas

Operating Income by Business & Segment(100 millions of yen)

210
180
150

Life &
Healthcare
66

Total 198

Manufacturing69

Total 144
Manufacturing
37

120
90
60

198

Total 198

240

Trading& Other
129

Trading& Other
107

Mobility
24
Electronics& Energy
51
Advanced
Materials& Processing
50

Functional
Materials
4530
0Change in Operating Income By Segment (100 millions of yen)

Functional
Materials(7)

Total 144

Electronics& Energy
2
Mobility(1)

Advanced
Materials& Processing(18)

Life &
Healthcare
51

Life &
Healthcare(14)
Corporate& Others(13)

Mobility
23
Electronics& Energy
54
Advanced
Materials& Processing
31

Functional
Materials
37

FY2023 2Q

FY2022 2Q

History of Operating Income(100 millions of yen)
120

108
90

100
80

75

69

75
59

Others
(40)

(30)

60
Others
(54)

40
20

(60)

144

By Business
FY2022 2Q

By Business
FY2023 2Q

By Segment
FY2022 2Q

By Segment
FY2023 2Q

0

0

0
１Q

２Q
FY2022

Copyright © 2023 Nagase & Co., Ltd.

３Q
FY2023４Q

9

Functional Materials Segment Operating Income Overview▶ Decrease in sales of coating raw materials due to sluggish sales for architectural applications, despite recovery in sales to theautomotive and other industries▶ Sales decreased for raw materials for semiconductor-related products and other electronics industry products, as did sales ofraw materials for industrial oil solutions and plastic materials▶ Lower profit year on year as a result of overall weak performance due in part to customer inventory adjustments

Operating income by business（100 millions of yen）

History of operating income （100 millions of yen）

Total 45
Manufacturing5

Manufacturing3

Total 37

23
22
21

21
20

16

Trading &Other
39

FY2022 2Q

Trading &Other
34

FY2023 2Q

１Q

Copyright © 2023 Nagase & Co., Ltd.

２Q
FY2022

３Q
FY2023４Q

10Advanced Materials & Processing Segment Operating Income Overview▶ Lower profit due to decreased demand for resin sales in the office equipment, appliance, and video game device market, as wellas the impact of inventory adjustments by customers▶ Lower digital print processing materials sales due to lower profitability in the manufacturing business▶ Decrease in resin sales and lower profitability in the manufacturing business led to weak performance in trading company andmanufacturing businesses and lower profit year on year

History of operating income （100 millions of yen）

Operating income by business（100 millions of yen）

Total 50

26
25
24

Total 3118
16

Trading &
Other
51

12
Trading &Other
36

Manufacturing(1)
FY2022 2Q

FY2023 2Q

Manufacturing(5)

１Q

Copyright © 2023 Nagase & Co., Ltd.

２Q
FY2022

３Q

４Q

FY202311

Eｌectronics & Energy Segment Operating Income Overview▶ Despite weakening semiconductor market conditions, sales of materials to the semiconductor industry increased due to growth
in product sales▶ Sales of formulated epoxy resins increased mainly for server applications and mobile device applications▶ Profit rose overall year on year with strong sales of formulated epoxy resins

Operating income by business（100 millions of yen）

History of operating income （100 millions of yen）

Total 54
Total 51
31
Manufacturing
12

Manufacturing
13

26

25
23
21
19

Trading &Other
39

Trading &Other40

FY2022 2Q

FY2023 2Q

１Q

２Q
FY2022

Copyright © 2023 Nagase & Co., Ltd.

３Q

４Q

FY2023

12

Mobility Segment Operating Income Overview▶ Sales increased for resins, mainly due to an increase in automobile production and expanded market share to existingcustomers▶ Sales increased in functional materials and functional components for interior and exterior fittings and electrification▶ Operating income decreased year on year due to an increase in selling, general and administrative expenses associated withhigher activity volume, etc.

Operating income by business（100 millions of yen）

History of operating income （100 millions of yen）

15
Total 24
Total 23
13

9

Trading& Other24

FY2022 2Q

13

9

9

Trading &Other
23

FY2023 2Q

１Q

２Q
FY2022

Copyright © 2023 Nagase & Co., Ltd.

３Q

４Q

FY202313

Life & Healthcare Segment Operating Income Overview▶ Overall, the Prinova Group recorded higher sales due to the impact of the weaker yen and operations at the new plant in Utah;
however, food ingredient sales profitability declined due to falling market prices▶ Hayashibara posted increased sales, mainly in cosmetic material▶ Despite strong performance at Hayashibara, profit decreased overall year on year due to weaker in the Prinova Group and adelay in the profit contribution of the new Utah plantOperating income by business（100 millions of yen）

Total 66

History of operating income （100 millions of yen）

41

32

Total 51

Manufacturing53

Trading &Other
13
FY2022 2Q

25
Manufacturing
26

19

20
18

Trading &Other
24

FY2023 2Q

１Q

２Q
FY2022

Copyright © 2023 Nagase & Co., Ltd.

３Q

４Q

FY202314

State of Major Manufacturing Subsidiaries▶ Nagase ChemteX : Despite the transfer of the biochemicals business, profit rose due to increased sales of highly profitable
formulated epoxy resins▶ Hayashibara : Higher profit due to the wider advancement of price increases and strong sales of cosmetic material stemmingfrom a recovery in demand▶ Prinova Group : Despite increased sales in our manufacturing and processing business, profit declined due to the impact of
weaker profitability in food ingredient sales stemming from deteriorating market conditions, increased personnel expense andother selling, general and administrative expenses, and a delay in the profit contribution of the new Utah plant

100 millions of yen

NagaseChemteX
Corporation

Hayashibara
Co.,Ltd.

Prinova GroupFY2023 2Q

Change

Sales

135

122

(12)

90%

252

49%

Gross profit

38

37

(1)

97%

71

52%

Operating income

11

13

1

112%

20

66%

Sales

138

170

31

122%

367

46%

Gross profit

53

62

9

118%

131

48%

Operating income

20

26

6

133%

50

53%

Goodwill amortization etc.

15

15

-

100%

30

50%

Operating income after
amortization burden

4

11

6

239%

19

58%

Sales

950

968

18

102%

2,035

48%

Gross profit

166

164

(2)

98%

367

45%

Operating income

57

26

(30)

47%

84

32%

Goodwill amortization etc.

11

12

1

110%

24

50%

Operating income after
amortization burden

46

14

(31)

32%

59

24%

Copyright © 2023 Nagase & Co., Ltd.

Vs.PY

Forecast(Original)

FY2022 2Q

Achievement

15Consolidated Balance Sheets▶ Current assets : Decrease due to reduced inventories▶ Net assets : Increase, despite dividend payments and share buybacks, as we posted a profit for the period, as well as increases
in net unrealized holding gain on securities and translation adjustments due to the weaker yen

100 millions of yen

23/03

23/09

ChangeDetails

Total Current Assets

5,301

5,388

87

(Cash&deposits)

408

408

(0)

(Trade account receivbable)

3,021

3,245

224

(Inventories)

1,697

1,542

(155)

2,325

2,458

132

697

752

55

Total assets

7,626

7,847

220

Current Liab.

2,862

2,906

44 Short-term loans・CP(121)

1,404

1,567

163

980

1,018

37

Total Liab.

3,843

3,924

81

Shareholders' equity

3,090

3,066

Accum. Other Comprehensive Income

586

785

199

Non-controlling interest

107

70

(36)

Total net assets

3,783

3,922

138

Working capital

3,313

3,220

(93)

Shareholders' equity ratio

48.2%

49.1%

0.9ppt0.38

0.34(0.04)

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

NET D/E ratio

Lease Obligation+35,
Non-Current Loan (12)(24) Treasury Stock(66)Copyright © 2023 Nagase & Co., Ltd.

Translation Adjustment+154,
Net unrealized holding gain on securities+38

16

Consolidated Cash Flows▶ Operating CF : Net operating cash flow of ¥38.2 billion, mainly due to a decrease in working capital▶ Investing CF : Net cash used of ¥6.4 billion, mainly due to purchase of property, plant and equipment and intangible assets,
offset in part by proceeds from the sales of investment securities, etc.

▶ Financing CF : Net cash used of ¥36.6 billion, mainly due to a decrease in short-term loans and commercial paper, dividend
payments, and share buybacks

100 millions of yen

FY2022 2Q

FY2023 2Q

Operating CF

(179)

382

Investing CF

(59)

(64)

Free CF

(239)

318

Financing CF

115

(366)

Effects of exchange rate

47

50

Net increase / decrease in cash and cash
equivalents

(76)

2

Depreciation of tangible and intangible assets

71

79

Fixed asset investment

(83)

(82)

Increase / decrease in working capital

(295)

233

Copyright © 2023 Nagase & Co., Ltd.

17

FY2023 Earnings Projection(Changed)▶ While certain businesses, such as the automobile-related, semiconductor-related, and Life & Healthcare have been performing
solidly, we lowered our full-year earnings forecast in light of the following conditions▶ Resin sales declined due to lower demand for electronic and electrical projects caused by global inflation; profitability declined
due to falling market prices▶ The food-related business experienced a delay in profit contribution of the Prinova Group’s new Utah plant, while foodingredient sales profits declined due to falling market prices▶ Smartphone demand has yet to see a full-fledged recovery in demand, which we expected to begin in the second half of the
fiscal year; profits from sales of related materials and raw materials may be lower than initial forecast
100 milions of yen

FY2022
ActualFY2023
Previous forecast

FY2023
Revised forecast

ChangePercent
Change

Sales

9,128

9,580

9,000

(580)

(6%)

Gross profit

1,554

1,710

1,630

(80)

(5%)

<GP ratio>

17.0%

17.8%

18.1%

0.3ppt-SG&A expenses

1,220

1,365

1,330

(35)

(3%)

Operating income

333

345

300

(45)

(13%)

Ordinary income

325

326

290

(36)

(11%)

Profit attributable toowners of the parent

236

240

225

(15)

(6%)

US$ Exchange rate
(period average)@ 135.5@ 135.0@ 143.0

RMB Exchange rate
(period average)@ 19.7@ 20.0@ 20.0

Copyright © 2023 Nagase & Co., Ltd.

@ 8.0 Weak yen-

18

FY2023 Earnings Projection By segment(Changed)▶ Sales of Functional Materials should increase due to a transfer of business from the Advanced Materials & Processing segment;
however, we revised our forecast for operating income downward due to the negative impact of the digital print processing
business, which is experiencing a decline in profitability▶ While we expect sales in the Electronics & Energy business to decrease, the decline in gross profit should be minor due to theincrease in sales of high-profit products; therefore, we made an upward revision in operating income▶ We made a downward revision in operating income due to the delayed contribution of Prinova Group's new plant in Utah,
despite the strong performance of Hayashibara in the Life & Healthcare-related business▶ We reduced Corporate & Others after reviewing cost effectiveness*Figures for FY2023 prior to revision represent business segments before reclassification; FY2022 actual and FY2023 revised
forecasts represent business segments after reclassification

FY2022
ActualSales
Functional Materials Gross profit
Operating income
Sales
Advanced Materials
Gross profit& Processing
Operating income
Sales
Electronics
Gross profit& Energy
Operating income
Sales
Mobility
Gross profit
Operating income
Sales
Life & Healthcare
Gross profit
Operating income
Sales
Corporate&Others
Gross profit
Operating income
Sales
Total
Gross profit
Operating income

1,561
298
104
2,209
242
76
1,369
307
92
1,255
144
47
2,731
559
105
0
1
(94)
9,128
1,554
333

FY2023
Previous forecast
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

FY2023
Revised forecast
1,540
275
83
1,970
236
69
1,390
335
111
1,299
149
48
2,800
634
108
1
1
(119)
9,000
1,630
300

100 milions of yen
Percent
ChangeChange
390
46
(6)
(730)
(107)
(41)
(110)
(3)
5
(57)
(7)
(3)
(73)
(9)
(5)
ー
ー
5
(580)
(80)
(45)

34%
20%
(7%)
(27%)
(31%)
(37%)
(7%)
(1%)
5%
(4%)
(5%)
(6%)
(3%)
(1%)
(4%)
ー
ー
4%
(6%)
(5%)
(13%)

*Effective from October 1, 2023, NAGASE has changed the method of classifying its business segments, and the figures for theprevious fiscal year have been reclassified to reflect this change
Copyright © 2023 Nagase & Co., Ltd.

19

FY2023 Earnings Projections by Segment(1st half Actual, 2nd half forecast)▶ All figures below reflect organizational changes effective October 1, 2023
▶ We expect operating income overall to increase versus the first half in respect to a certain degree of easing in inventory
adjustments by customers, which occurred during the first half. We also expect a recovery in profitability due to the sell-downof inventory for high-unit-price resin and food ingredients, which are in a declining market▶ We expect Electronics & Energy sales to decrease; however, operating income should increase compared to the first half owing
to strong sales, etc., of high-profit Nagase ChemteX products▶ Corporate & Others: We expect expenses to decrease overall compared to initial projections; however, expenses will likely behigher in the second half compared with the first half, as there are more expense items budgeted for the second half
100 millions of yen

Functional Materials

Electronics& Energy

Corporate&Others

2nd half forecast

Revised forecast

Achievement

1,540

Gross profit

132

14２

275

48%

Operating income

36

4６

83

4４%

1,022

94７

1,970

52%

Gross profit

116

1１９

236

49%

Operating income

32

3６

69

4８%

Sales

712

67７

1,390

51%

Gross profit

163

17１

335

49%

Operating income

54

5６

111

49%

47%

649

6４９

1,299

50%

Gross profit

73

7５

149

５０%

Operating income

23

2４

48

4９%

1,396

1,40３

2,800

50%

301

33２

634

4８%

Gross profit
Operating income

51

5６

108

4８%

Sales

ー

1

1

ー

Gross profit

0

０

1

５９%

Operating income

(54)

(6４)

(119)

4６%

4,501

4,49８

9,000

50%

Gross profit

788

84１

1,630

48%

Operating income

144

15５

300

48%

Sales
Total

1st half Actual

818

Sales
Life & Healthcare

FY202３

721

Sales
Mobility

FY202３

Sales

Sales
Advanced Materials& Processing

FY2023*We changed segment classifications on October 1, 2023. The figures above have been reclassified to reflect these changes.
Copyright © 2023 Nagase & Co., Ltd.

20

FY2023 Earnings Projection By Major Manufacturing Subsidiaries(Changed)▶ Nagase ChemteX : While we expect overall sales to decrease, we made an upward revision to operating income due to strong
sales of high-profit products▶ Hayashibara : We made an upward revision to operating income, mainly due to strong sales of cosmetic material, reflecting thewider advancement of price increases and recovery in demand▶ Prinova Group : We made a downward revision of operating income due to the delay in profit contribution from the new Utah
plant and the impact of lower profitability in food ingredient sales due to falling market prices

100 millions of yen

FY2022
ActualSales
Nagase ChemteX
Corporation

Hayashibara
Co.,Ltd.

FY2023
Revised forecast

Percent
ChangeChange

253

252

247

(4)

(2%)

Gross profit

68

71

77

5

8%

Operating income

18

20

24

4

23%

Sales

281

367

347

(19)

(5%)

Gross profit

103

131

128

(2)

(2%)

Operating income

37

50

52

1

3%

Goodwill amortization etc.

30

30

30

ー

ー

7

19

21

1

8%

1,927

2,035

1,943

(91)

(5%)

Gross profit

312

367

355

(12)

(3%)

Operating income

80

84

62

(22)

(27%)

Goodwill amortization etc.

24

24

25

0

4%

Operating income after
amortization burden

56

59

36

(23)

(39%)

Operating income after
amortization burden

Sales

Prinova GroupFY2023
Previous forecast

Copyright © 2023 Nagase & Co., Ltd.

21

Shareholder Returns▶ We plan to pay an interim dividend of ¥40 per share and a year-end dividend of ¥40 per share for an annual dividend of ¥80
per share for fiscal 2023 (expected 14th consecutive fiscal year of dividend increases)▶ We are proceeding as planned with the repurchase of ¥８ billion in treasury stock, as resolved in May 2023 (repurchase period:
May 2023 to December 2023), reaching cumulative purchases of ¥7.1 billion as of the end of October 2023
▶ We expect the total payout ratio for fiscal 2023 to be 76%, including greater shareholder returns through increased dividends
and share buybacks

Total Dividend

share buyback

Total Payout ratio
76.2

millions of yen

20,000

％

70.0
58.9

17,14860.0

16,000

51.0

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
5,269
4,000

3,811

4,064

6,799

7,186

1,776

1,956

30.0
6,643
5,456

952

20.0

1,107

8,246
5,691

9,148

6,514

10.0

5,023

5,230

5,456

FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023(Forecast)

¥33

¥40

¥42

¥44

¥46

¥54

¥70

¥80

3,811

4,064

4,162

FY2014FY2015

¥30

¥32

0

Dividend per
share

0.0

※ FY2023 year-end dividend to be submitted for approval to the 109th general meeting of shareholders scheduled for June 2024.

Copyright © 2023 Nagase & Co., Ltd.

22

Medium-Term Management Plan ACE 2.0

Copyright © 2023 Nagase & Co., Ltd.

23

Contents

・ Medium-Term Management Plan ACE 2.0 Progress
・ Growth Strategies for the Future

Copyright © 2023 Nagase & Co., Ltd.

24

Medium-Term Management Plan ACE 2.0 Progress

Copyright © 2023 Nagase & Co., Ltd.

25

Medium-Term Management Plan ACE 2.0 Quantitative Targets(No Changes)
We made certain revisions in the third year of ACE 2.0 based on progress We made no changes to quantitative targets, aiming to build a structure for growthwith an ROE of 8.0% or more and operating income of 35 billion yen as thebaseline for profitability
 We are leaving the basic policy unchanged and clarifying strategies for the value
we offer over the medium to long term

Key Goal Indicators (KGIs): Pursuit of Quality
Measures

Indicators

FY2020

FY2021

FY2022

FY2025

Improvement incapital efficiency

ROE

5.9%

7.7%

6.6%

8.0% or higher

Increased
profitability

Operatingincome¥21.9 billion¥35.2 billion¥33.3 billion¥35.0 billion

Copyright © 2023 Nagase & Co., Ltd.

26

ACE 2.0 Basic Policies (No Changes)
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

Mindset toward the Ideal NAGASE(1) Pursuit of profitability and efficiency
・Implement a company-wide asset replacement andreallocation of resources(2) Strengthen existing businesses(1) Pursuit of economic and social value
・Fostering a sustainability mindset, and rigorous
monitoring of financial and non-financial indicators(2) Pursue efficiency

・Expand business opportunities through globalization
・Improve productivity of manufacturing businesses andexpand value-added through technical innovation

・Deepen awareness of capital efficiency
・Improve productivity of core operations(3) Strengthen human resources to drive reforms(3) Create sustainable businesses (N-Sustainablebusiness)

Functions supporting reforms(1) Accelerate DX further(2) Promote sustainability(3) Strengthen corporate functions

Copyright © 2023 Nagase & Co., Ltd.

27

Medium-Term Management Plan ACE 2.0 Progress
ACE 2.0 Pursuit of Quality
Results to Date (Through March 2023)

Issues as of April 2023

Reform of Profit
Structure

・Invested capital in Focus Areas (food andsemiconductors) to expand earnings
・Developed and began marketing new Bio-Relatedmaterials
・Sold unprofitable businesses and consolidated
overseas locations
Reform of
Corporate Culture

・Work-style innovations in connection with officerelocation
・Increased diversity through mid-career hires
・Reduced strategic cross-shareholdings
FunctionsSupporting Reforms

・Improved employee engagement through more
opportunities for dialogue
・Pursued carbon neutrality in coordination with
Zeroboard・ Need for partial or complete revision of the plan
(plan assumptions have changed beyond acertain scope)・ Bold growth strategy to raise our stage to a newlevel
・ Decision-making and mechanisms that respondto the speed of environmental change

Launch of
QUICK WIN・ Not making the most or best use of finite
resources (foster a mentality of innovation)
・ Eliminate waste
・ Increase awareness of sustainability

・Improved ESG scores from external evaluation
organizations

Copyright © 2023 Nagase & Co., Ltd.

28QUICK WIN Status

Maximize the Use of Resources (People, Money, and Time) and Generate
Greater Efficiencies

QUICK WIN

Measures Initiated Over the Past Six Months

Evolve Our Business and Financial Portfolios••
Manageandandexecutebusiness
portfolio portfolio
based onManageexecutebusiness
ROIC

based on ROIC

• Rebuild or liquidate unprofitable businesses• Rebuild or liquidate unprofitable(including businesses at risk of impairment)(including
businesses• businesses
Execute a corporate-led
growthstrategy at risk
• ofStrengthen
search and development (S&D) function
impairment)• Engage in digital marketing• Execute a corporate-led growth strategy

Strengthen Management Governanceandoperateour organizationin pursuit•• Consolidate
Consolidate
andoperateour organization
in ofrationality and efficiency

pursuit of rationality and efficiency• Revise and systematize decision-making structures• Revise and systematize decision-making structures• Delegate authority• Established WACC for each business division to
improve ROIC• Developed action plans/made decisions onwhether to withdraw• Shifted resources (facilities, etc.) from mature
markets to growth markets• Formulated growth strategies for the future(see P31 and later)• Decided to form a CVC to create new businesses• Consolidated business Dept. from 11 to 7 tospeed up decision making• Reviewed meeting bodies to streamline business
operations• Delegated authority• Delegate authority

Restructure Our Human Resources Portfolio•• Traingenerationof human
resources
Trainthethenext
next
generationof human•resources
Conduct talent management (reallocate human• resources)
Conduct talent management (reallocate• Establish an environment for D&I implementation;

human resources)

revise systems and mechanisms• Establish an environment for D&I
implementation; revise systems andmechanisms• Introduced HRBP system (strengthened
collaboration between business divisions andcorporate)• Reallocated human capital through the integrationof business divisions• Encouraged dialogue between management andemployees• Established women's employment ratio target of
30% or more for career-track positions and 6% ormore for management positions (by fiscal 2025)

Copyright © 2023 Nagase & Co., Ltd.

29QUICK WIN

Strengthen Management Governance• Launched new organization in October (consolidated 11 Dept. to 7 Dept.).
• Improved decision-making speed and business productivity by streamlining organizational operations

Creating an Organizational Structure for Rationality and Efficiency
Functional Materials

Performance Chemicals Dept.

Performance Chemicals Dept.
Integrated

Speciality Chemicals Dept.

Speciality Chemicals Dept.

Advanced Materials& Processing

Electronics& Energy

Colors & Advanced Processing
Dept.

Integrated

Polymer Global Account Dept.

Polymer Global Account Dept.

Electronics Dept.

Electronics Dept.

Information & Communication ・Energy OfficeIntegrated

Advanced Functional Materials
Dept.

Functional Resin Dept.
Precision Process Materials
Dept.

MobilityLife & Healthcare

Integrated

Newly organized

Mobility Solutions Dept.

Mobility Solutions Dept.

Life & Healthcare Products
Dept.

Life & Healthcare Products Dept.
Integrated

Food Ingredients Dept.

Copyright © 2023 Nagase & Co., Ltd.

30

Growth Strategies for the Future

Copyright © 2023 Nagase & Co., Ltd.

31

Who is NAGASE?
A Company Whose Mission is to Solve
Manufacturing Issues Through Materials
NAGASE
Bio-Materials

Chemicals

Materials
Inorganic
Materials

Social andEnvironmental
IssuesConsumer
Needs

Resin

Solutions

Creating
Sustainable
Societies

Solving Social Issues
Fulfilling Consumer Needs

Markets
Food

Electrical
Equipment

Semiconductors

MobilityLife Sciences

Chemical Industry

Copyright © 2023 Nagase & Co., Ltd.

32

NAGASE Group Strengths
A Company Whose Mission is to Solve
Manufacturing Issues Through Materials
Bio-Materials

Chemicals

Materials

TradingFunctions

Resin

Manufacturing
Functions

Inorganic
Materials

Solving Issues Together
With Partners

Solving Issues Using InHouse Products

・Ability to discern
information

・Unique materials andtechnologies

・Exploring issues andfinding matching solutions

・Manufacturing and quality
control・Global network

・Materials customization

SolutionsMarkets
ResearchandDevelopment
Electrical
Food
FunctionsEquipment
Solving Issues by Developing New
Materials

Semiconductors

MobilityLife Sciences

Chemical Industry

Copyright © 2023 Nagase & Co., Ltd.

33

Growth Strategies for the Future
Reorganize every Area based on the functional axis between trading company,
manufacturing, and R&D functions.
(1) Base Area
Obtain cash and information to enhance
manufacturing functions in Focus andDevelop Businesses

Potential investments(Approximately 80 billion yen)in Focus and Develop businesses after 2023
(3) Develop Area

(2) Focus Area

Future Sources of Revenue

Manufacturing Functions inSpecific Areas

Research anddevelopment(biotechnology)

Food

New businesses(new products, etc.)

Semiconductors

New Areas(Southern Hemisphere)

Life Sciences(4) Improve Area

(1) Base Area

(2) Focus Area
Concentrate investments in food,semiconductor, and life science
manufacturing functions to make highgrowth and high-profit products in-house(3) Develop Area
Trading Functions

Expand into the Southern Hemisphere

GrowthPotential

Accelerate R&D, increase in-house products

Unprofitablebusinesses

Semicondu
ctorsElectrical
Equipment

Possibly impaired
businesses

Food

Mobility

ChemicalIndustry

Life
Sciences(4) Improve Area
・ Improve unprofitable businesses, etc.

ROIC

(see next page)
Copyright © 2023 Nagase & Co., Ltd.

34

Improve

Improve Business Initiatives

Reduce unprofitable and impaired businesses
Improvement Targets(1) Operating loss among subsidiaries and equity in losses of affiliates
Develop and implement improvement plans as early as possible. Study withdrawing from businesses notexpected to improve.
(2) Impairment losses
Strengthen monitoring of assets at risk of future impairment; minimize impairments（3） Unprofitable transactions
Strengthen monitoring to improve unprofitable transactions or consider withdrawing[Operating Loss, Loss in Equity, Impairment Loss, and Unprofitable Transactions With
Operating Subsidiaries]
FY20212021年度FY2022
2022年度Through~ FY2025

2025年度Aiming for Zero Losses

Approximately¥9.0 billion

Approximately¥8.0 billion

Copyright © 2023 Nagase & Co., Ltd.

35

Manufacturing Functions in the Food Area

Focus

[Social Issues]

Expand the High-Profit Manufacturing and Processing Business・ Growing global healthconsciousness

NAGASE × Prinova × Hayashibara

・ Awareness of food loss issues

・ Contact points with the high-growth sports nutrition market

Sports Nutrition Global
Market ($M)

・ Diverse lineup of materials, including functional foodingredients manufactured in-house

Longer Healthy Life
Expectancy(In-house materials: TREHA™, Fibryxa™,
HAYASHIBARA HESPERIDIN S, etc.)

Food Loss Reduction

・ Sales network covering the globe
・ M&A experience and expertise・ One-stop business model that encompasses everything fromprocurement to manufacturing*Source: Prepared by the Company based on data from Euromonitor (as of 2022).

<Growth Strategies and Initiatives>
Strategy

2021

2022

2023

2024

Share/Regional
ExpansionAcquired TIH(sweetener market
acquisition)

Expand Production
Capacity

New Utah plant(expanded contract
manufacturing)

Acquired Flavor Tec(stabilizing raw materials
procurement)

Installed sealing
equipment

Expanding stickpackaging facilities

ExpandApplications
Expand Manufacturing
Technologies

2025

～

Strengthening sales
structure in Asia
Study of overseas
production for in-houseproducts

Acquired Lakeshore(expanded powder
processing function)*TIH: The Ingredient House, LLC* Lakeshore: Lakeshore Technologies, LLC* Flavor Tec: Flavor Tec - Aromas De Frutas Ltda

Copyright © 2023 Nagase & Co., Ltd.

36

FocusManufacturing Functions in the Semiconductor Area
Expand Sales of High-Value-Added Products in the Advanced Semiconductor Market[Social Issues]
・Increasing demand foradvanced semiconductors

NAGASE × Nagase ChemteX・Multipolarization of production
bases necessitated for reasonsof economic security
Overall Semiconductor
Materials Market Size($M)

・ Spec-in results in the advanced semiconductor market⇒*Holds the No.1 share of liquid sealants forsemiconductors for FOWLP devices
Establishing a Presence as an
・ Planning, design, and manufacturing capabilities
Indispensable Company
based on diverse elemental technologies
in the Semiconductor* FOWLP: Fan out wafer level package

Industry

Pre-process
Post-process

Expanded use of sealants*Source: Prepared by the Company based on data from Fuji Keizai

Expand business in advanced semiconductors for high-end servers

Postprocess
Notes

Designated as a materials
transportation consolidator by
Rapidus Corporation

New plant built to manufacture releaseagents and expand business
Increasing production for the domestic market, entering and expanding in the
Taiwanese market, developing a supply system including the construction of anew plant
Commercialize recovery and recycling ofdeveloper solution at the time of production

Contributing to the domestic
production of advanced
semiconductors

Established a new plant in Higashi Osaka using electrolysis and refining
technology (NAGASE investment: ¥2 billion)
Most advanced example of the recovery and recycling of used developer
solution in Japan

Copyright © 2023 Nagase & Co., Ltd.

37

FocusManufacturing Functions in the Life Sciences Area

[Social Issues]

Provide in-house materials that meet market trends and customer needs inthe life sciences market, where concerns about sustainability are rising

・Aging society and growing healthconsciousness
・Rising concerns about sustainability

NAGASE × Hayashibara × Nagase ChemteX
Sugar stabilization technology for more stable
pharmaceuticals
Prescription suggestion, analysis, and evaluation
functions

Provide Safe, Secure BioDerived Materials

Country-specific regulatory compliance function
Precision organic synthesis technology
Global presence related to sustainability*Exhibit: Prepared by the Company based on data from Statista Market Insights

Pharmaceutical Materials
PULLULAN: Bio-derived pullulan of particularly high quality. Expansion into the capsule market.
TREHALOSE SG: Low endotoxin-type trehalose. Expansion into the pharmaceuticals market.
Personal Care Materials
AA2G ™ : Stable vitamin C, a naturally derived cosmetics material. Accelerate overseas expansion
based on a growing awareness of beauty and health.
Glucosyl naringin: Highly water-soluble naringin. Highly effective anti-aging introduced in thecosmetics market.
Precision Organic Synthesis Technology
Endotoxin removal: Removal services and other solutions. Propose and provide solutions to the
medical devices industry, etc.
Copyright © 2023 Nagase & Co., Ltd.

38

Develop

Research and Development (Biotechnology)[Social Issues]
・Climate change
・Resource circulation

Strengthen R&D to develop new core bio-materials

NAGASE (Nagase Bio Innovation Center) × Hayashibara
Bioprocesses Serving as the Foundation of NAGASE・Healthy life expectancy(cognitive function, sleep
quality, etc.)
Expanding Needs for
Presymptomatic, Disease Prevention
Advanced Nations: Population
Aged 65+ Years (Millions)
Ratio: 19%→28%

Enzyme Production

Microbial Design

Enzy
mes
Microbes

Raw
Materials

Enzyme Utilization

Enzymes(Bio-Materials)

Fermentation
Products(Bio-Materials)

EnzymeReactants(Bio-Materials)

Realize a sustainable
world where people
live with peace of
mind

Raw
Mater
ials

Well-being:
Advancement in mass production of ergothioneine via
fermentation, expected to have the following effects:*Source: Annual Report on the Ageing of Society (Summary) FY2022,
Cabinet Office, Government of Japan; prepared by the Company basedon international aging trends

Approximately 19.3 billion disposable diapers/year
Approximately 20% of the material is high-polymer
absorbent

・Positive effects on cognition
・Improved skin wrinkles and spots
・Comfortable sleep

Cosmetics

Functional Foods

MedicalGreen:Development of bio-based biodegradable SAP
・ High-quality pulp ・ Resin ・ High-polymer absorbent

・Reduced diaper waste (see next page)
・Greening of drought-stricken areas

Chemical Industry*Source: Prepared by the Company based Guidelines for Recycling Used
Disposable Diapers, Ministry of the Environment, and statistical datafrom the Japan Hygiene Products Industry Association

Copyright © 2023 Nagase & Co., Ltd.

39

Leveraging Materials to Take on the Social Issue of Diaper Disposal*Appeared in the Culture section of the Nihon Keizai Shimbun, October 31, 2023

Copyright © 2023 Nagase & Co., Ltd.

40

■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 November 27, 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.