1

Copyright © 2022 NAGASE & CO., LTD.

Contents■ FYE March 2023 Second Quarter Results and FYE March 2023 Earnings Projection

P3～P18■ Medium-Term Management Plan ACE 2.0

P19～P22■ Prinova Group: Business Overview and Growth Strategy

P23～P39■ Appendix

P40～P42

Copyright © 2022 NAGASE & CO., LTD.

FYE March 2023 Second Quarter Results and FYE March 2023 Earnings Projection

Copyright © 2022 NAGASE & CO., LTD.

Consolidated statements income▶ Gross profit
・ Overall profit increased, despite lower gross profit margin due to lower profitability at certain manufacturing subsidiaries, etc.
▶ Operating income
・ Selling, general and administrative expenses increased due to higher logistics costs and increased activities; however,
the increase in gross profit exceeded this increase in expenses, resulting in higher operating income▶ Profit attributable to owners of the parent
・ Recorded record-high operating income for a first half and a Q2 profit that is a record high for any quarter

100 millions of yen

21/09

22/09

ChangeVs.PY

Forecast（Full year）

Achievement

Sales

3,737

4,555

+ 817

122%

ー

ー

Gross profit

687

793

+ 106

115%

1,590

50%

<GP ratio>

18.4%

17.4%

(1.0pt)－ー－

SG&A expenses

492

594

+ 102

121%

1,210

－

194

198

+3

102%

380

52%

204

202

(1)

99%

390

52%

146

155

+9

107%

285

55%

@ 109.8@ 134.0@ 24.2 Weak yen@120.0@ 17.0@ 19.9@ 2.9 Weak yen@18.5

OperatingincomeOrdinary
incomeProfit Attributableto owners of theparentUS$ Exchange rate
(period average)
RMB Exchange rate
(period average)※ Offset to sales and cost of sales from revenue recognition standards: September 2021, -¥117.1 billion; September 2022, -¥133 billion※ Impact from foreign exchange: Gross profit, +¥6 billion; Operating income, +¥1.9 billion

Copyright © 2022 NAGASE & CO., LTD.

4

Gross Profit By Region▶ Higher profit both domestic and overseas▶ Profit increased in Japan and overseas due to increased raw materials sales to the semiconductor industry▶ Significant increase in profits in the Americas and Europe due to strong Prinova Group performance▶ Despite the impact of lockdowns in Greater China, profits rose due to the effect of the weaker yen

Overseas gross profit By Region(100 millions of yen)Domestic & Overseas Gross profit(100 millions of yen)
Total 793

800

700

600

500

400

Total 687

Overseas437

Overseas334

Overseasgross profit
ratio
48.7%

100%

450

Total 437

90%

400

Europe61

80%Overseasgross profit
ratio
55.2%

70%

350

Total 334300

Europe
38

60%
250
50%

Other
6

Other
5

Americas172

Americas
115

200
40%

300

150
30%
200

Domestic
352

Domestic
355

20%

ASEAN
61

ASEAN
75

100
Greater
China
113

Greater
China
122

21/09
22/09
21/09
※Domestic figures under Domestic & Overseas Gross Profit include inter-regional adjustments

22/09

100

0

Copyright © 2022 NAGASE & CO., LTD.

10%

50

0%

0

5

Gross Profit By Business & Segment▶ Functional Materials: Sales increased for semiconductor-related products and other areas of the electronics industry▶ Profit decreased in part due to lower profitability in Advanced Materials & Processing, despite the positive impact of the weak yen,
as sales volume of resins declined and the segment experienced a reactionary decline stemming from increased profit ratios inconnection with soaring market conditions in the year-ago period▶ Electronics & Energy: Sales increased for materials used in semiconductor applications▶ Life & Healthcare: Sales were strong for food ingredients and manufacturing and processing in the Prinova Group

Change in Gross Profit By Segment (100 millions of yen)

Gross Profit By Business & Segment (100 millions of yen)
Total 793

800

700

600

500

Total 687

Manufacturing
270

Total 687
Manufact
uring
325

400

Electronics &Energy
147

300

200

Life &
Healthcare
218

Mobility
59

Trading &
Other
417

Life & Healthcare
66

Total 793

Trading &
Other
468

100

Life &
Healthcare
285

Advanced
Materials &Processing
(1)

687

Mobility
72

22/09

2１/09
Electronics &Energy157

Advanced
Materials& Processing
164

Advanced
Materials& Processing
163

History of Gross Profit(100 millions of yen)

400

345

394
341

353

353

300
200

Functional
Materials
114

By Business

By Business

By Segment

By Segment

21/09

22/09

21/09

22/09

Copyright © 2022 NAGASE & CO., LTD.

Electronics Mobility& Energy
129399

Functional
Materials
950Functional
Materials
19793

Corporate&Others
(0)

100
0

0

0
1Q

2Q
22/03

3Q

4Q

23/03

6

Operating Income by Business & Segment▶ Selling, general and administrative expenses increased due to higher logistics costs and increased activities; however, the increase ingross profit exceeded this increase in expenses▶ 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 year-ago period, as well as higher selling, general and administrative
expenses▶ Life & Healthcare business recorded a significant increase in profit due to strong sales of food ingredients by the Prinova Group▶ We continue to invest for sustainable future growth, including in DX-related areas
Change in Operating Income By Segment (100 millions of yen)

Operating Income by Business & Segment(100 millions of yen)
Total 198

240

200

Life & Healthcare
16

Total 194

Total 194

Total 198

Life &
Healthcare
50

Functional
Materials
6Life &
Healthcare
66

198
Corporate&Others
(6)

194

160

Manufacturing
64

Manufacturing
69Electronics &Energy54

120

80

Mobility
20

Trading &
Other
130

Trading &
Other
129

Advanced
Materials& Processing
64

(40)

By Business
21/09

By Business
22/09

Advanced
Materials &Processing(14)

Electronics &Energy51

Advanced
Materials& Processing
50

22/09

2１/09

History of Operating Income(100 millions of yen)
120
100

40

0

Electronics& Energy Mobility
4(3)

Mobility24

Functional
Materials
38

Functional
Materials
45

80

Corporate&Others(33)

Corporate&Others(40)

40

By Segment
21/09

By Segment
22/09

0

108
97

97

90

71

60

20
0
1Q

3Q

２Q
22/03

Copyright © 2022 NAGASE & CO., LTD.

86

0
4Q

23/03

7

Functional Materials Segment Operating Income Overview▶ Overall increase in profit due to soaring market prices and the weakening of the yen▶ Increased sales of coating and urethane raw materials to the automobile and other industries▶ Increased sales of raw materials for the semiconductor-related products and other areas in the electronics industry, as well as sales
related to industrial oil solutions and epoxy resins

Operating income by business（100 millions of yen）

History of operating income （100 millions of yen）

25
23

Total 45

45

Total 38

Manufact
uring
5

21
20
20

19

Manufact
uring
6

18

30

15

18

15

Trading &Other
32

Trading &
Other
39

10

5

0
0
21/09

22/09

1Q

２Q
22/03

Copyright © 2022 NAGASE & CO., LTD.

0

0
3Q

4Q

23/03

8

Advanced Material & 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 conditionsin the year-ago period▶ Digital print processing materials sales were weak due to sluggish demand▶ Profit decreased year on year due to lower profitability and an increase in selling, general and administrative expenses, etc.

History of operating income （100 millions of yen）

Operating income by business（100 millions of yen）

32
Total 64

31

30

Manufacturing1

25

24

Total 50

24

19

Trading &
Other
63

15
Trading &Other
51

Manufacturing
(1)

21/09

22/09

0
1Q

3Q

２Q
22/03

Copyright © 2022 NAGASE & CO., LTD.

0

0
4Q

23/03

9

Eｌectronics & Energy Segment Operating Income Overview▶ Sales increased in Japan, China, Taiwan, and Korea for materials used in semiconductors applications▶ Sales of formulated epoxy resins was strong for semiconductor applications, but slow for mobile devices▶ Profit decreased year on year due to weak performance in our manufacturing divisions

History of operating income （100 millions of yen）

Operating income by business（100 millions of yen）
60

29

30

Total 54
Total 51

26
25

Manufacturing19

25
24

Manufacturing
12

23

40
20

20

Trading &Other
35

Trading &
Other
39

10

0
0

0

0
21/09

22/09

1Q

22/03
Copyright © 2022 NAGASE & CO., LTD.

3Q

２Q

4Q

23/03

10

Mobility Segment Operating Income Overview▶ Resin sales were strong in Japan and overseas, despite semiconductor shortages and the lockdowns in Shanghai▶ Sales increased in functional materials and functional components for EV interior and exterior fittings and electrification▶ Profit increased year on year due to strong sales as described above

Operating income by business（１００ millions of yen）

History of operating income （100 millions of yen）
16

15

Total 24
14
Total 20
12

20

11
10

10

10

Trading &Other
20

Trading &
Other
24

9

10

9

8

6

4

2
0

0

0

0
21/09

22/09

1Q

22/03
Copyright © 2022 NAGASE & CO., LTD.

3Q

２Q

4Q

23/03

11

Life & Healthcare Segment Operating Income Overview▶ Prinova Group sales of food ingredients were particularly strong in the first quarter due to increased demand and sales of high-margin
products in response to supply chain disruptions; performance remained strong overall through the second quarter, despite certain
supply-demand adjustments performance remained▶ Hayashibara sales of food ingredients (mainly TREHATM) and pharmaceutical raw materials increased; however, sales of cosmetics
materials (mainly AA2GTM) decreased due to lower demand▶ In addition, Pharmaceutical product-related business performance was also strong, contributing to higher profit year on year

History of operating income （100 millions of yen）

Operating income by business（100 millions of yen）

Total 66

41
40

60
Total 50
30
27
25

Manufacturing
53

40

23

22
20

Manufacturing
37

20

20
10
Trading &Other
13

Trading &
Other
13

0

0

0

0
21/09

22/09

1Q

22/03
Copyright © 2022 NAGASE & CO., LTD.

3Q

２Q

4Q

23/03

12

State of Major Manufacturing Subsidiaries▶ Nagase ChemteX: Lower profit, despite strong semiconductor-related sales, due to weak sales of formulated epoxy resins for use inmobile devices▶ Hayashibara: Lower profit due to lower sales of cosmetic material AA2GTM and lower profitability of food material TREHATM, stemmingfrom higher raw materials and energy prices▶ Prinova Group: Higher profit due to higher sales of nutrition-related materials stemming from increased demand, as well as improved
profitability

100 millions of yen
21/09
Nagase ChemteX
Corporation

Hayashibara
Co.,Ltd.

Prinova Group

Change

Vs.PY

Sales

146

135

(10)

93%

Gross profit

47

38

(9)

80%

Operating income

23

11

(12)

49%

Sales

130

138

8

107%

Gross profit

54

53

(0)

98%

Operating income

23

20

(2)

87%

Goodwill amortization etc.

15

15

‐

100%

Operating income after
amortization burden

7

4

(2)

62%

Sales

557

950

392

170%

Gross profit

106

166

60

157%

Operating income

37

57

20

153%

9

11

1

114%

27

46

18

167%

Goodwill amortization etc.
Operating income after
amortization burden

Copyright © 2022 NAGASE & CO., LTD.

22/09

13

Consolidated Balance Sheets▶ Current assets: Increase in working capital due to overall strong performance▶ Net assets: Increase, despite dividend payments and share buyback, due to profit for the period and an increase in foreign currencytranslation adjustments due to the weaker yen▶ NET D/E ratio: Increased to 0.41 times due to an increase in interest-bearing debt resulting from higher demand for cash in connection
with an increase in working capital

100 millions of yen

22/03

22/09

ChangeDetailesTotal Current Assets

5,142

5,677

534

(Cash&deposits)

542

461

(80)

(Trade account receivbable)

2,898

3,164

266

(Inventories)

1,575

1,864

289

2,254

2,341

87

756

724

(31)

Total assets

7,397

8,019

622

Current Liab.

3,078

3,285

207

1,490

1,523

33

767

897

Total Liab.

3,846

4,182

336

Shareholders' equity

2,988

3,073

85

Accum. Other Comprehensive Income

454

652

197

Non-controlling interest

108

111

2

Total net assets

3,550

3,836

285

Working capital

2,983

3,505

522

Shareholders' equity ratio

46.5%

46.5%

(0.０%)

0.33

0.41

0.09

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

NET D/E ratio

Copyright © 2022 NAGASE & CO., LTD.

Short-term loans/CP+310,
Current Portion of Bonds(100)129 Corporate Bonds+100

Translation adjustment+218,
Appraisal Loss on Investment Securities(2５)14Consolidated Cash Flows▶ Operating CF : Net cash used of ¥17.9 billion as working capital increased due to strong business performance▶ Investing CF : Net cash used of ¥5.9 billion due to purchases of property, plant and equipment, etc., offset in part by proceeds from salesof investments in securities▶ Financing CF : Net cash provided of ¥11.5 billion, mainly due to an increase in interest-bearing debt in connection with an increase inworking capital, offset in part by payments of dividends and purchases of treasury stock

100 millions of yen

21/09

22/09

Operating CF

(136)

(179)

Investing CF

(49)

(59)

Free CF

(185)

(239)

144

115

3

47

(38)

(76)

68

71

(75)

(83)

(327)

(295)

Financing CF
Effects of exchange rate changes on cash andcash equivalents
Net change in cash and cash equivalents

Depreciation and amortization of
tangible and intangible assets
Fixed asset investment
Change in working capital

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15

FYE March 2023 Earnings Projection▶ Although the yen weakened compared to our initial forecast, we maintain our full-year earnings forecast
unchanged, reflecting following circumstances (we expect to record record-high earnings for a second consecutive year)▶ We expect to see continued growth, with semiconductor-related products and automobile-related businesses performing solidly, evenas we forecast food-related product to slow down compared to the first half due to economic sluggishness▶ In addition to crude oil prices and related chemical market conditions, we expect utility costs such as electricity and gas to remain high
▶ The sales decrease for formulated epoxy resins-related products caused by lower demand for mobile devices is not expected to recoverin full-year results

100 millions of yen

22/03
Actual23/03
Forecast

ChangeVs.PY

Gross profit

1,394

1,590

195

114%

SG&A expenses

1,042

1,210

167

116%

Operating income

352

380

27

108%

Ordinary income

364

390

25

107%

Profit attributable toowners of the parent

259

285

25

110%

US$ Exchange rate
(period average)@ 112.4@ 140.0(@120.0 ⇒ @140.0)

RMB Exchange rate
(period average)@ 17.5@ 20.0(@18.5 ⇒ @20.0)※Impact on operating income of 1 yen change in exchange rate: US$ approx. 100 million yen, RMB approx. 400 million yen
Copyright © 2022 NAGASE & CO., LTD.

16

FYE March 2023 Earnings Projection By segment▶ We revised our forecast for Functional Materials upward, mainly due to strong sales of electronics chemicals for semiconductor-relatedindustries and improved profitability resulting from market conditions and foreign exchange rate fluctuations▶ We revised our forecast downward for Advanced Materials & Processing, mainly due to weaker-than-expected performance in theresins business, which was affected by the Shanghai lockdowns, etc.
▶ We revised our forecast downward for Electronics & Energy, which should see firm performance for semiconductor-related products,
but weak sales of formulated epoxy resins, mainly due to a decline in demand for mobile devices▶ We revised our forecast upward for Mobility, mainly due to improved profitability in response to market conditions and foreignexchange rates, as well as an increase in market share of Functional Materials and components for EVs▶ We revised our forecast for Life & Healthcare upward, mainly due to the Prinova Group nutrition-related business performing better
than expected in the first half, including an increase in market share
100 millions of yen

23/03
23/03
Previous forecast Revised forecast

22/03 Actual

Functional Materials

PercentagechangeChangeGross profit

198

221

229

8

3.6%

Operating income

78

83

95

12

14.5%

Advanced Materials& Processing

Gross profit

323

343

330

(13)

(3.8%)

Operating income

108

117

105

(12)

(10.3%)

Electronics& Energy

Gross profit

297

325

310

(15)

(4.6%)

Operating income

102

115

103

(12)

(10.4%)

Gross profit

127

142

149

7

4.9%

41

44

55

11

25.0%

447

557

571

14

2.5%

94

112

117

5

4.5%

1

2

1

(1)

(50.0%)

(72)

(91)

(95)

(4)

ー

1,394

1,590

1,590

ー

ー

352

380

380

ー

ー

MobilityLife & Healthcare
Corporate & Others
Total

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

Copyright © 2022 NAGASE & CO., LTD.

17

Shareholder Returns▶ We plan to pay an interim dividend of ¥30 per share and a year-end dividend of ¥30 per share for an annual dividend of ¥60 per sharefor fiscal 2022 (expected 13th consecutive fiscal year of dividend increases)▶ The repurchase of ¥6 billion in treasury stock, resolved in February 2022, is on schedule(We repurchased the cumulative total to ¥4.6 billion as of October 31, 2022)

Total Dividend

Stock buy-backTotal Payout ratio%

51.0

millions of yen

48.3

50.0

15,00012,00033.7

42.4

12,520

39.5
35.6

36.0

35.2

12,085

40.0

5,041

30.0

33.0

30.5
6,006

9,000
6,799
6,000

5,269
3,811

3,557

4,064

7,186

6,643

1,956

5,456

952

5,023

5,230

5,456

5,691

1,776

20.0

1,107

3,000

6,514

7,044

3,557

3,811

4,064

4,162

14/03

15/03

16/03

17/03

18/03

19/03

20/03

21/03

22/03

23/03
（Forecast）

¥２8

¥30

¥32

¥33

¥40

¥42

¥44

¥46

¥54

¥60

0

Dividend per
share

10.0

0.0

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

Copyright © 2022 NAGASE & CO., LTD.

18

Medium-Term Management Plan ACE 2.0

Copyright © 2022 NAGASE & CO., LTD.

ACE 2.0 Non-Financial Targets (KPIs)
Initiatives Toward Solving Materialities
Carbon Neutrality

Employee Engagement
-KPI-

-KPI-

Engagement survey implementation rate

Greenhouse gas emissions reductions

and scores(Scope 1,2 basis)
Initiatives to Achieve Targets▶ Conducted FY2022 engagement survey▶ Encouraged two-way dialogue through various▶ Conducted activities as an endorsing company of the GX
LeagueParticipated in working group discussions related to lowcarbon/carbon-free materials

combinations of participants
Director x Manager, President x Employee,
Female Director x Female Employee▶ Adopted Activity-Based Workplace (ABW)With the relocation of the Tokyo head office, we
engaged in work-style innovation to allow employees
the choice of where to work in the office▶ Participated in a METI-led storage battery CFP calculation
trial project
Participated in CFP calculations of the storage battery
supply chain as a component supplier; acquired newexpertise on CFP data linkage▶ Participated in the Green × Digital Consortium*
Participated in private/corporate discussions on the CO2
Visualization Framework; contributed to the establishmentof rules▶ Began proof-of-concept tests related to the creation offorest credits*Led by Japan Electronics and Information Technology Industries Association (JEITA)

Copyright © 2022 NAGASE & CO., LTD.

20

Sustainability Promotion Activities
Accelerating Zeroboard Expansion in Japan and Southeast Asia
Partnered with Zeroboard Inc. to support decarbonization management in Thailand
Visualizing GHG emissions in Thailand to decarbonize supply chain partners and overseas
manufacturing sites
Supporting the future of decarbonization management throughout Asia

Formed business alliance with Vietnamese logistics startup LOGIVAN VIETNAMTECHNOLOGY COMPANY
・Working in collaboration with Logivan, operator of an inter-corporate logistics platform,
to foster lgoistics efficiencies and reduce GHG emissions in Vietnam through DX
・Pursuing optimal solutions for GHG emissions reduction through collaboration with zeroboard (Cloud-based SaaS to
calculate and visualize GHG
emissions)

Selected as a Constituent of the FTSE Blossom Japan Index for the First Time・Of the ESG indexes used by GPIF, NAGASE has already been selected as a constituent of the FTSE
Blossom Japan Sector Relative Index, MSCI Japan Empowering Women (WIN) Select Index, and the
S&P/JPX Carbon Efficient Index
・With this selection, we have been included in four of the five domestic stock ESG indices used by GPIF

Copyright © 2022 NAGASE & CO., LTD.

21

Medium-Term Management Plan ACE 2.0 Numerical Targets
Our Policy to Pursuit of Quality Remains Unchanged as We Review Our KGIs and KPIs
▶ Increase profitability（ACE 2.0 KGI）

・We expect to record two consecutive years of record-highprofits in FY2021 and FY2022
・Despite certain external factors, businesses in focus areas(food, semiconductors, etc.) are growing faster than expected▶ Improve capital efficiency

Measures
Increased
profitability
Improvementin capitalefficiency

Indicators

FY2021
Actual35.2
Operatingbillion yen
incomeROE

7.7%

FY2022
Forecast

FY2025Plan

38.0
billion yen

35.0
billion yen

Approximately

8.0％

8.0%
or Greater・We expect ROE to be close to the target level for the second
consecutive fiscal year

At the same time, we are still in the process of portfolio replacement and creating businesses that solve social andenvironmental issues are still(Operating income and ROE)
40

Operating income：Left Axis
（billion yen）

ROE：Right Axis（%）

8.0%

7.7%

8.0%

6.6%
5.9%

5.8%

30

38.0

35.2

6.0%

4.9%
20

3.7%

24.1

25.2
19.1

10

21.9

4.0%

15.0
2.0%

ACE-2020

0FY2016FY2017

Copyright © 2022 NAGASE & CO., LTD.

FY2018

ACE 2.0
FY2019FY2020

FY2021

0.0%
FY2022
Forecast

22

Prinova Group: Business Overview and Growth Strategy

Copyright © 2022 NAGASE & CO., LTD.

Contents

Prinova Group’s Position Within the ACE 2.0 Medium-Term Management Plan

P25

Significance of Food-related Businesses for us

P26

Prinova Group Corporate Overview

P27

Prinova Group Strengths

P28

Prinova Group Business Model

P29

Prinova Group Business Overview

P30

What is the Sports Nutrition Market?

P31

Sports Nutrition Market

P32

Manufacturing and Processing | The Armada Business

P33

Growth Strategy | Expand Manufacturing and Processing Businesses
The Armada Business

P34

Manufacturing and Processing | Solutions Business

P35

Growth Strategies | Expanding Manufacturing and Processing Businesses
Solutions Business

P36

Growth Strategies | Create Group Synergies (1)P37

Growth Strategies | Create Group Synergies (2)P38

ACE 2.0 Prinova Group Numerical Results and Plans

P39

Copyright © 2022 NAGASE & CO., LTD.

24

Prinova Group’s Position Within the ACE 2.0 Medium-Term
Management Plan
・The food-related business is one of the focus

・ A company that will play a central role in theareas in ACE 2.0.

growth of our Life & Healthcare segment,

・Overseas-lead business also represent

including the food-related business:

important measures for future growth.

Prinova Group

Partialwithdrawal

Approach to Business Portfolio

Develop

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

35.0

Next-generation communications-related (5G, 6G, CASE)
Overseas-led business

Growthpotential(billion yen)

Environment-related
Energy-related

Partialwithdrawal

Change in Operating Income by Segment(4.1)

Bio-related
Semiconductor-related

7.8

Food-related

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

Brokerage of commodity materials and products
ROIC Company-wide capital costs
Copyright © 2022 NAGASE & CO., LTD.

2.2
2.3
1.7

21.9
2.8

2020

Functional
Materials

Advanced
Materials &Processing

Electronics & Mobility
EnergyLife &
Healthcare

Corporate& Others

2025

25

Significance of Food-related Businesses for us
Food-Related Businesses Contribute to Solving Social Issues
Nagase Group Materialities│Solving Social and Environmental Issues, Globalization
・Solve problems that threaten safety and security, e.g.,
climate change and food and water shortage.
・Contribute to securing and improving food safety
by utilizing biotech, AI, and other advanced
technologies.
・Fulfill health maintenance demands due to increasingly
aging societies in advanced countries.
・Contribute to the acceleration of globalization andsolve social issues in each region.

Prinova Group
Hayashibara

Nagase ChemteX

Balancing Economic Value and Social Value
Copyright © 2022 NAGASE & CO., LTD.

26

Prinova Group Corporate Overview

Name
Head OfficePrinova Group LLC

Vertically Integrated
Company

Illinois, USA

Trading
Founded

Scope

Manufacturing

1978
Sales ： １２０.９ billion yen
Operating income ： ６.９ billion yen
1US$=１０９．９yen (Exchange rate : December 2021)

Employees

1,０３２ (as of December 2021)

Manufacturing
Locations

U.S. (６), U.K. (1), China (1)Sales Offices

U.S., U.K., and 9 other countries
Food ingredients (vitamins, amino acids, etc.)

Products

Flavored ingredients, premixes and contract
manufacturing (sports nutrition)

Sales of food ingredients and flavors,

Business Lines

production and processing of premixed
products, contract manufacturing

Copyright © 2022 NAGASE & CO., LTD.

27

Prinova Group Strengths
Gain Customer Trust by Handling Everything from Procurement
to Manufacturing and Processing on a Global BasisBusiness Model

Global Network

Customer Base

Vertical integration of trading
company, manufacturing, andprocessing functions

Locations in Europe, the U.S., andAsia

Trusted relationships with bluechip customers

Wide range of functions fromEnd-to-end global support

Doing business withprocurement to processing,system, from procurement tocustomers with top classproduct design/proposal, andmanufacturing, withmarket share in a wide

manufacturing of end

manufacturing andrange of fields

products One-stop solutions

processing sites in the U.S.,

to customer issues

U.K., and China

Copyright © 2022 NAGASE & CO., LTD.

28

Prinova Group Business Model
Demonstrate Competitiveness through Vertical Integration of Functions,
From Procurement to Product Design/Proposals, and Manufacturing
Ingredientproduction

Distribution（Trading
function）

Manufacturing/
Processing(Premixes and Blends)

Final
Processing andPackaging

Brand Owners
beverage

GeneralFlow

Foodingredient
manufactures

Distributors

Manufacturing/
Processing
companies
Premix Suppliers

Contract
Manufacturers

Food &
Beveragecompanies

Strength 1 Distribution of vast number of products including several leading products in the market

Foodingredient
manufactures

Strengths

Prinova（Over 2,000
foodingredients）

Manufacturing/
Processing
companies
Premix Suppliers

Food &
Beveragecompanies
ｓportsnutrition

Strength 2 Ability to make proposals anticipating the needs of food & beverage companies
Prinova

More than
3,000
customers

Contract
Manufacturers

food

Food
ingredient
manufactures(Provide solutions through original
proposals)(Customized for each brand andproduct)

Contract
Manufacturers

Food &
Beveragecompanies

pet food

Strength 3 Company offering one-stop services for end-food manufacturers
generalnutrition

Foodingredient
manufactures

Copyright © 2022 NAGASE & CO., LTD.

Prinova(One-stop-service from procurement of ingredients tofinished product)

SportsNutrition
Companies

29

Prinova Group Business Overview
Value Proposition

Manufacturing Ratio
55%

Operating Income

AromasTrading

Applications, Main Business
Major Products

Reliable supply ofaromas andessential oils to thefood and nutrition
markets
Ingredients
Distribution of morethan 2,000 foodingredients to the foodand nutrition market,
offering reliablesupply, quality andprice【Major Products】
Aromas and essential oils

（100 million yen）

97

106
Aromas1207480

Ingredients

50%

Solutions40%

47【Major Products】
Vitamins, amino acids,
acidulants, food extracts,
sweeteners, umami seasoning,polysaccharides, nutrient
enhancers, phosphates

60%

40
Armada30%
0Flavors
Corporate

Manufacturing・Processing

Solutions
Production ofpremixes, andmicronizing, combining
a wide range ofingredients to provide
solutions that meetcustomer needs

ArmadaCustomized powder premixes(amino acid, vitamins andminerals) and liquid premixes

Reliable flavors
developed bycertified flavorists(added-value for
Prinova’s
manufacturing
capabilities)

Copyright © 2022 NAGASE & CO., LTD.

-40

20%

Rate
(US$)

FY2020

FY2021

FY2022
Forecast

FY2025
Plan

1０6.8

1０９.９

1３３.0

108.7

*The figures above are the results of the Prinova Group and do not include
amortization of goodwill and other expenses incurred at the time of consolidation【Main Business】
One-stop-solutions
from productplanning to
manufacturing
finished products

Flavors【Main Business】

Sports nutrition products inthe finished form(powder
and capsule) with quality
assurance and regulatorycompliance【Examples of Applications】
Confectionery (e.g., gummies,
chocolates, candies), beverages(e.g., soft drinks), dairy
products (e.g., ice cream,
yogurt), baking (enriched flour)

FY2025 Plan

FY2022 Forecast

Solutions
15%

Ingredients
65%

Ingredients
38%

Armada14%

Aromaｓ5%

Aromaｓ
Flavor
8% Flavors
4%
4％

Solutionｓ27%

Armada24%

30

What is the Sports Nutrition Market ?
The Market is Fragmented and the User Base is Broad in the U.S.
Representative Products

Usage Scenarios
Pre-workout
・ To prepare the body for exercise before training(Typical ingredients: amino acids, etc.)

Intra-workout
・ To prevent energy deficiencies during training
Classification by
product form・ Powder・ Capsules, tablets
・ Drinks(Typical ingredients: carbohydrates, water, etc.)

Classification byingredients・ Protein・ Non-protein, etc.

Post-workout
・ Ingested after training to enhance the effects of training
and recovery (Typical ingredients: protein, amino acids,
carbohydrates, etc.)

User Base

General consumers/sports enthusiasts, weekend athletes(athlete population: medium to large x frequency/volume:
medium to large)
Copyright © 2022 NAGASE & CO., LTD.

Professional bodybuilders/professional athletes, etc.
(athlete population: small × frequency/volume: large)

31

Sports Nutrition Market
Sports Nutrition Market is Expected to Grow Globally
Global Market Size

U.S. and Europe Market Size
U.S. Market Size（Millions of US$）Approximately 1.5 trillion yen（Millions of US$）

40,00020,000Approximately 2.6 trillion
yen（FY2021）
CAGR 9.0%(FY2016 - FY2027)
30,000（FY2021）U.S.
Europe10,00002016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
20,000Asia and Japan Market Size
6,000

Japan Market Size
Approximately 210 billion yen（Millions of US$）（FY2021）日本
4,000
10,000Asia Total（Including Japan）
Approximate ５９０ billion yen

2,000

0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Copyright © 2022 NAGASE & CO., LTD.

02016 2017 2018 2019 2020 2021 202220232024202520262027*Source: Euromonitor*Global, European and Asian markets sizes exclude some regions.
*1US$ =120 yen

32Manufacturing and Processing | The Armada BusinessContract Manufacturer of Sports Nutrition Products
Characteristics of the sports nutrition product contract manufacturing market

U.S.: In most cases, brand owners do not have manufacturing capabilities andoutsource to OEMs
Japan and Europe: Most of brand owners manufacture in-house
Functions Offered

Locations

Product
Planning

Formulation

Materials
Procurement

Manufacturing

Production
Management

Quality
Assurance(Examples ofContracted
Products)(State of Utah)(State of Tennessee)

Provide speedy, one-stop solutions that include not only manufacturing,
but also product design/proposals and raw materials procurement
Largest capacity in North America with the start of operations of Utah plant
Copyright © 2022 NAGASE & CO., LTD.

33

Growth Strategy | Expand Manufacturing and Processing Businesses
The Armada Business
1

Plant Operations in Utah, U.S. Started | Building a Stronger
Contract Manufacturing Capabilities

・High demand for contract manufacturing inthe sports nutrition field; manyinquiries/requests, but lack of capacity at
Tennessee plant
・Launched Utah plant and doubled capacity(Phase 1)・Established a two-site system to meetcustomer BCP requirements
・Layout design leaves room for future
expansion

Manufacturing and processing base in the U.S.

Tennessee Plant

Utah Plant

2

Improved Plant Productivity

・Pursuing advanced plant management
utilizing DX at both the Tennessee and Utah
plants・Evolved into plants where safety is ensured
and training is conducted through timely
checks of KPIs related to the status ofoperations and quality
・Promote capacity expansion at Tennessee
plant by reviewing existing equipment, flowlines, and improving production processes

Copyright © 2022 NAGASE & CO., LTD.

Current Capacity

Utah（Phase 1）

Tennessee

Production
Capacity

Approximately
8,400MT/YearApproximately
13,000MT/YearSales

Approximately
US＄190 million

Approximately
US＄220 million

Floorspace

Approximately
40,000 ㎡

Approximately
31,000 ㎡

34

Manufacturing and Processing | Solutions BusinessBusiness that Provides a Wide Range of Processing Solutions to Fulfil
Customer Needs
Maintain capabilities to solve diverse customer needs on a global basis
Processing Locations

Functions Offered
PremixMultiple Raw Materials

United States

China

United Kingdom

Blending Technologies

Control particle size of powders

Particle Enhancement(improve texture, solubility,
dispersibility, etc.)

Repacking

Bulk to small packages
Small to bulk packages

Provide Functions According to Customer Needs

Global Footprint (Europe, the U.S., and Asia)

Providing high value-added functions to solve diverse needs through our sites
in Europe, the U.S., and Asia
Capable of providing worldwide support to customers with global operations

Copyright © 2022 NAGASE & CO., LTD.

35

Growth Strategies | Expanding Manufacturing and Processing
Businesses Solutions Business
Solutions | Expand Processing Capabilities and Improve Profitability

Acquired Further Processing Capabilities (Particle size control)・Increased capacity through the acquisition of Lakeshore Technologies,
expanding footprint in the U.S.
・Considering to invest in additional processing capabilities to address a broader
range of customer issues (estimated investment of US$5 million)

Lakeshore Technologies’ Technologies and Strengths
Provides a wide variety of high-quality, competitively priced powder processing(mixing/dispersion, micronization, granulation)
Ventilation
Pulverization
nozzleRawmaterial
supplynozzleSpray nozzle
Granulation Water

GranuleHot wind

Mixing & Dispersion（V type Blender）
Copyright © 2022 NAGASE & CO., LTD.

Micronizing（Jet Milling）

Granulation（Planed Investment）

Lakeshore Technologies
Location: Michigan, U.S.A.

36

Growth Strategies | Create Group Synergies (1)Expanding the Application Lab to Enhance Customer Solutions
Background/Issues
・Expanding sales of TREHA™ and other products through the Prinova Group's
sales network was one of the synergies expected at the time of acquisition
・To sell functional ingredients, we must identify customer issues, propose
solutions, and have them experience the value of our products

Preparing to establish a third overseas lab in the U.S.,
following China and Singapore
Labs currently
underdevelopment

Japan

Singapore

China・ Promote proposals and application development tailored to the foodculture and customer needs in North America

・ Establish a base to utilize Hayashibara’s ability to propose solutions
Copyright © 2022 NAGASE & CO., LTD.

37

Growth Strategies | Create Group Synergies (2)Hayashibara’s Functional Ingredients as Sports Nutrition
Pre-workout

HAYASHIBARA HESPERIDIN S
・A polyphenol contained in citrus fruits such as
mandarin oranges
・Increases blood flow for improved pre-sportconditioning and training efficiency

Intra-workout

TREHA™
・Trehalose is a functional carbohydrate found inmushrooms and other foods
・ Energy source to sustain performance until the last
spurt

Post-workout

Fibryxa™
・Soluble fiber produced from starch through thepower of enzymes
・Improves intestinal environment which mitigates thenegative effects of protein and other substances
Copyright © 2022 NAGASE & CO., LTD.

HAYASHIBARA HESPERIDIN S Sold in the UnitedStates Under the CITRAPEAK Brand Name

38

ACE 2.0 Prinova Group Numerical Results and Plans
Expand Business at a Rate Outpacing the Growing Sports Nutrition Market(billion yen)

FY2022 Second Quarter Results

CAGR 18%

・ Distribution business: Profitability increased due
to higher sales volume and higher prices
・ Manufacturing and processing business: Decline
in profitability due to rising raw material prices
and labor costs(FY2019 - FY2025)

10.6
9.7

Based on strong distribution business in the firsthalf of the year, the impact of yen depreciation,and other factors, we;

Rate
(US$)

4.7

Q2 Results

Approximately
4Sports NutritionRelated

Under Review

5.6

Plan at Acquisition

7.4

Most‐Recent Full‐Year Forecast

8.6

Full‐Year Forecast (before revision)

Revised FY2022 full-year
forecast upward
Also started reviewing FY2025
targets

Operating income

ACE 2.0

FY2019FY2020

FY2021

FY2022

FY2025

108.0

106.8

109.9

133.0

108.7

*The figures above are the results of the Prinova Group and do not include amortization of goodwill and other expenses incurred at the timeof consolidation*FY2019 Operating income: Excludes special expenses related to M&A
Copyright © 2022 NAGASE & CO., LTD.

39

Appendix

Copyright © 2022 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

Copyright © 2022 NAGASE & CO., LTD.

(2) Promote sustainability(3) Strengthen corporate functions

41

Quantitative Goals“Pursuit of Quality” Key Goal Indicators (KGIs)
Measures

Indicators

FY2020

FY2025*

Improvement in capital efficiency

ROE

5.9%

8.0% or greater

Increased profitability

Operating Income

21.9 billion yen

35.0 billion yen* FY2025 assumptions: 1 US$= 108.7 yen, 1 RMB = 15.6 yen

Key Performance Indicators (KPIs) for achieving the “Pursuit of Quality”
Measures

Measures

FY2020

FY2025Growth investments*1—

150.0 billion yen
or more*2

Secure 10% of company-wide
invested capital and reinvest in
focus and develop areas—

10% or more

Create “N-Sustainable businesses”

Operating Income—

5.0 billion yen
or more*3

Improve productivity of manufacturing
and expand value-added throughtechnical innovation

Manufacturing business operating
income*4

13.8 billion yen*5

20.0 billion yen
or moreImprove productivity of core
operations

Ratio of gross profit to generaladministrative expenses*6

57.1％*7

52.1％

Deepen awareness of capital efficiency

Net DE ratio

0.23 times

0.5 times or lessAccelerate DX further

Invested capital (including
expenses)*8

2.4 billion yen

10.0 billion yen*2

Company-wide asset replacement andreallocation of resources
Reform of Profit
Structure

Reform of Corporate
CultureFunctions supporting
reforms

Indicators*1 N-Sustainable investment, new business investment, DX-related investment, R&D expense,
working capital*2 5-year cumulative figure*3 Figure based on internal management*4 Simple sum calculation*5 Manufacturing classifications were reviewed, and Prinova Group reclassified as a manufacturingbusiness from FY2021; FY2020 results shown are also based on that reclassification.

Copyright © 2022 NAGASE & CO., LTD.

*6 Excludes R&D expense, amortization of goodwill and other acquisition-related intangible assets,
and profit and loss due to amortization of actuarial differences*7 Average figure for past five years (FY2016-FY2020)*8 Five-year cumulative total of 10.0 billion yen in DX-related investments is included in growthinvestments of 150.0 billion yen

42https://www.nagase.co.jp/english/

These presentation materials contain projections based on forward-looking
assumptions, forecasts, and plans as of November ２５, 202２.
Actual earnings may differ from projections due to risks and uncertainties in
the future global economy, competitive landscape, currency exchange rates,
etc.

Copyright © 2022 NAGASE & CO., LTD.