Financial Briefing

NAGASE&CO.,LTD.
November 22,2021

Copyright © 2021 NAGASE & CO., LTD.

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FYE March 2022 Second Quarter

Contents■ FYE March 2022 Second Quarter Results,

Earnings Projection

P3～P18■ Promotion of our sustainability initiatives P19～P22■ Prinova Group Growth Strategy

Copyright © 2021 NAGASE & CO., LTD.

P23～P38

ContentsFYE March 2022 Second Quarter Results,

Earnings Projection

Copyright © 2021 NAGASE & CO., LTD.

Consolidated statements income▶ Gross profit
・ Higher profit in all segments, with all stages of profit below gross profit reaching record highs for a cumulative Second quarter・ In particular, the automobile-related business, resins and electronics-related businesses, and the Prinova Group‘s nutritionrelated business performed well
▶ Operating income
・In response to the increase in gross profit, income increased significantly year-on-year; the economic impact of the COVID-19
epidemic had been significant in the same period of the previous year
▶ Profit attributable to owners of the parent
・Income increased due to significant increase up to ordinary income despite decrease in gain on sales of cross-shareholdings
100 millions of yen

20/09

S

a

l

e

21/09

ChangeVs.PY

Forecast

Achievement

s

2,863

3,737

+ 873

131%

ー

ー

Gross profit

537

687

+ 149

128%

1,300

53%

<GP ratio>SG&Ae x p e n s e s

18.8%

18.4%

(0.4pt)

－

ー

－

448

492

+ 43

110%

1,000

－

89

194

+ 105

218%

300

65%

96

204

+ 107

211%

310

66%

101

146

+ 44

144%

225

65%

@ 106.9@ 109.8@ 2.9 Weak yen@109.5@ 15.3@ 17.0@ 1.7 Weak yen

＠16．9

Operatingi n c o m e
Ordinaryi n c o m eProfit attributableto owners of thep a r e n t
US$ Exchange rate
(period average)
RMB Exchange rate
(period average)※ Offset to sales and cost of sales from application of revenue recognition standards: Sep. 2020, -¥94.7 billion; Sep. 2021, -¥117.1 billion※ Impact from foreign exchange: Gross profit, +¥1,000 million; Operating income, +¥300 million
Copyright © 2021 NAGASE & CO., LTD.

4

Gross Profit By Region▶ Higher profit both domestic and overseas▶ Domestic : In particular, the automobile-related business and electronics-related business for mobile devices/displays performed well
▶ Overseas: The resins business, mainly for office equipment, appliances, and video game devices and focused on Greater China and ASEAN,
and the nutrition-related business in Europe and the Americas performed wellDomestic & Overseas Gross profit(100 millions of yen)
Total 687

700

Overseas334

Overseas gross profit By Region(100 millions of yen)

100%

90%

600

Total 537

80%

500

Overseas
239

70%

400

Overseas
ratio
44.6%

Overseas
ratio
48.7%

60%
50%

300

40%

200

Domestic
297

Domestic
352

30%
20%

100
10%
0

0%

20/09

21/09

※From FYE March 2022, the usual overseas net sales per-destination region have been replaced by per-region information for grossprofit, aggregated for each location of consolidated※Domestic figures under Domestic & Overseas Gross Profit include inter-regional adjustments
Copyright © 2021 NAGASE & CO., LTD.

5

Gross Profit By Business & Segment▶ Higher profits in all segments, with a cumulative second quarter gross profits reaching record highs▶ Advanced Materials & Processing: Profitability improved due to strong demand in the resins business and rising market conditions▶ Life & Healthcare: Profits increased due to strong performance in the Prinova Group's nutrition-related business and strong salesof cosmetics-related materials※Comparison information for segment values reflects impact from business segmentation changes implemented on April 1, 2021.

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

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

20/09

21/09

History of Gross Profit(100 millions of yen)
400
300

345
260

341
277

308

299

200

100
0

0

0
Q1

Q2

21/03
Copyright © 2021 NAGASE & CO., LTD.

Q3

22/03

Q4

6

Operating Income by Business & Segment▶ Due to higher gross profit across all business segments, operating income reached a new record high for a cumulative
consolidated second quarter, continuing record highs from the first quarter▶ we continue to invest for sustainable future growth, including in DX-related areas▶ Establish the NAGASE Biotech Office as a groupwide development organization responsible for gathering group bio-related
knowledge and creating sustainable businesses.
Change in Operating Income By Segment (100 millions of yen)

Operating Income by Business & Segment(100 millions of yen)240

Total 194200

Total 194

160

Manufacturing64

Life &
Healthcare
50

Mobility 20

Total 89
120

80

40

Total 89

Life &
Healthcare
30

Manufacturing
45

Electronics &Trading &EnergyOther Mobility
33
130
3

Electronics &Energy54

20/09

Trading &
Other
44

0

History of Operating Income(100 millions of yen)

Advanced Materials& Processing
64

Advanced Materials& Processing
34
Functional materials
Functional materials
19

38

Corporate&Others(31)

Corporate&Others
(33)

21/09

97

100

97
71

80

40

58

52

60
36

20
0

△40

0

0

By Business
20/09

By Business
21/09

Copyright © 2021 NAGASE & CO., LTD.

By Segment
20/09

By Segment
21/09

Q1

Q２

21/03

Q3

22/03

Q4

7

Functional Materials Segment Operating Income Overview▶ Raw materials sales increased for coating and urethane raw materials as well as those related to industrial oil solutions and plastic

materials, driven by an increase in automotive production▶ Sales trended strong in areas like electronics chemicals for the electronics industry, such as for semiconductor-related products▶ Profits increased year-on-year; the economic impact of the COVID-19 epidemic had been significant in the same period of theprevious year, primarily in the automobile-related businessHistory of operating income （100 millions of yen）

Operating income by business（100 millions of yen）

40

Total 38

20

19
18

Manufact
uring 6
15

30

13

13

10
20

10

Total 19
Trading&Other32

8

Manufacturing 2
10

5

Trading&Other
16

0

0

20/09

21/09

Q1

Q２

21/03
Copyright © 2021 NAGASE & CO., LTD.

0

0
Q3

Q4

22/03

8

Advanced material &Processing Segment Operating Income Overview▶ The resins business, mainly in products for the office equipment, appliance, and video game device industry, performed well thanks to increased

demand in Japan and overseas, primarily in China, as well as rising market conditions▶ Digital print processing materials sales continued to be sluggish due to impact from declining market conditions from the second half of theprevious fiscal year
▶ Profits increased significantly year-on-year thanks to strong demand in the resins business both domestically and overseas, as well as
improvement on profitability from rising market conditions

Operating income by business（100 millions of yen）

History of operating income （100 millions of yen）

Total 64
32

60
Manufacturing 1

31

30

45
20

20

Total 34
30

15

Manufacturing
4

Trading&Other
63

17
15

14

Trading&Other
30

0

0

0

0
20/09

21/09

Q1

Q２

21/03
Copyright © 2021 NAGASE & CO., LTD.

Q3

Q4

22/03

9

Eｌectronics & Energy Segment Operating Income Overview▶ Sales increased for display-related materials and precision processing-related materials for semiconductors▶ Sales of formulated epoxy resins-related products increased, primarily for mobile devices and semiconductors▶ Establish a structure for a next-generation communications-related business, aiming for medium-term growth after upfront
development costs

History of operating income （100 millions of yen）

Operating income by business（100 millions of yen）
60

29

30
Total 54
25

25

24
Manufact
uring
19

45

20
Total 33
30

16

16

Manufacturing
16

Trading &
Other
35

15

10

Trading &
Other
17
0

0
20/09

21/09

Q1

Q２

21/03
Copyright © 2021 NAGASE & CO., LTD.

0

0
Q3

Q4

22/03

10

Mobility Segment Operating Income Overview▶ Sales increased in the resins business domestically and overseas, primarily in ASEAN, and profitability increased thanks to rising market
conditions▶ Sales increased in functional materials and functional components for interior and exterior fittings and electrification▶ Profits increased significantly year-on-year amid recovery in automotive production

History of operating income （100 millions of yen）

Operating income by business（１００ millions of yen）

Total 20

20

10

10
9

8
7

15

7

6

Trading &
Other
20

10

4
3

2
5
0

Total 3

Trading &
Other
3

(1)
(2)

0

20/09

21/09

Q1

Q２

21/03
Copyright © 2021 NAGASE & CO., LTD.

0

0

Q3

Q4

22/03

11

Life & Health Care Segment Operating Income Overview▶ Materials sales, manufacturing, and processing all trended strongly in the nutrition-related business, primarily focused on the Prinova Group▶ Sales increased related to food materials, primarily TREHA™, in cosmetics materials, primarily AA2G™, and related to pharmaceutical raw
materials and intermediates▶ Profits increased significantly year-on-year; the economic impact of the COVID-19 epidemic had been significant in the same period of theprevious year, primarily in food materials and cosmetics-related material

History of operating income （100 millions of yen）

Operating income by business（100 millions of yen）
Total 50
50

30

27

23

40

21

Total 30
30

Manufact
uring
37

20
16
13

20

Manufact
uring
24

13

10

10

0

Trading &
Other
6

20/09

Trading &
Other
13
0

21/09

Q1

Q２

21/03
Copyright © 2021 NAGASE & CO., LTD.

0

0
Q3

Q4

22/03

12

State of Major Manufacturing Subsidiaries▶ Nagase ChemteX Corporation: Profits increased with strong sales related to formulated epoxy resins primarily for mobile devices andsemiconductors, as well as for products like photolithography materials for displays▶ Hayashibara Co., Ltd.: Profits increased with demand for the TREHA™ food material and with recovery in demand for the AA2G™
cosmetics material▶ Prinova Group: Profits increased with continued strong sales of nutrition materials thanks to U.S. economic recovery as well as withrecovery of manufacturing and processing

100 millions of yen

20/09
NagaseChemteX
Corporation

Hayashibara
Co., Ltd

Copyright © 2021 NAGASE & CO., LTD.

Change

Vs.PY

Sales

120

146

25

121%

Gross profit

37

47

10

127%

Operating income

14

23

9

164%

Sales

114

130

15

114%

Gross profit

49

54

4

109%

Operating income

21

23

1

108%

15

15

-

100％

5

7

1

127%

444

557

113

126%

Gorss profit

85

106

21

126%

Operating income

25

37

12

148%

9

9

(0)

100%

15

27

12

180%

Goodwill amortization
etc.
Operating income after
amortization burden

Sales

Prinova Group

21/09

Goodwill amortization
etc.
Operating income aftar
amortization burden

13Consolidated Balance Sheets▶ Current assets: Accounts receivable and inventories increased due to favorable performance (working capital increased)▶ Net assets : Shareholders' equity increased slightly due to booking profit from the quarter despite purchases of treasury stock,
payments of dividends, and decline in market value of investments in securities▶ Net D/E ratio: Increased to 0.28 with increase in short-term borrowings due to demand for funds from increased working capital
100 millions of yen

21/03

21/09

ChangeTotal Current Assets

4,017

4,415

398

(Cash&deposits)

492

456

(35)

2,425

2,607

181

972

1,218

246

2,388

2,371

(17)

937

904

(32)

Total assets

6,405

6,786

381

Current Liab.

2,061

2,431

370

960

858

(101)

Total Liab.

3,021

3,289

268

Shareholders' equity

2,847

2,928

449

468

87

99

Total net assets

3,384

3,497

Working capital

2,198

2,554

Shareholders' equity ratio

51.5%

50.1%

0.23

0.28

(Notes&account Receivbable)(Inventories)
Total non-current assets(Investments in security)

Non-current Liab.

Accum. Other Comprehensive Income
Non-controlling interest

NET D/E ratio
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DetailesShort-term loans/CP+275
Current Portion of Bonds+100

81 Purchase of treasury stock (35)Translation adjustment+46
19 Net unrealized holding gain on
securities （２５）
12
112

14

Consolidated Cash Flows▶ Operating CF: Net cash used of ¥13.6 billion as working capital increased due to strong business performance overall▶ Investing CF: Net cash used of ¥4.9 billion due to investments, mainly in property, plant and equipment, offset in part by proceedsfrom sales of investments in securities▶ Financing CF: Net cash provided of ¥14.4 billion, mainly due to an increase in short-term loans in connection with an increase inworking capital, offset in party by repayments of long-term loans and purchases of treasury stock
100 millions of yen

２0/09

21/09

Operating CF

132

(136)

Investing CF

(25)

(49)

Free CF

106

(185)

(236)

144

(4)

3

(134)

(38)

66

68

(86)

(75)

22

(327)

Financing CF
Effects of exchange rate changes oncash and cash equivalents
Net Change in cash and cash equivalents

Depreciation and amortization of
tangible and intangible assets
Fixed asset investment
Change in working capital
Copyright © 2021 NAGASE & CO., LTD.

15

FYE March 2022 Earnings Projection▶ Strong first half performance exceeding initial expectations in the resins, automobile-related, and electronics-related business, as well as the

Prinova Group▶ We expect second half profits to be lower than the first half. This forecast mainly reflects a softening of the resin market, a decrease in demand
due to weakening of demand for in-home consumption, concerns regarding a decrease in automobile production due to shortages in the supply ofsemiconductors, components, etc., and an increase in business expenditures due to a normalization in economic activities.
▶ While we expect a slowdown in the second half of the fiscal year, we project full-year profit to increase year on year for all profit measures below
gross profit(No changes to the earnings projections released in August 2021)

100 millions of yen

21/03
Actual22/03
Forecast

ChangePercent Change

Gross profit

1,146

1,300

153

113%

SG&A expenses

926

1,000

73

108%

Operating income

219

300

80

137%

Ordinary income

228

310

81

136%

Profit attributable to ownersof the parent

188

225

36

119%

US$ Exchange rate
(period average)@ 106.1

＠ 10９．５

RMB Exchange rate
(period average)@ 15.7@ 1６．９Copyright © 2021 NAGASE & CO., LTD.

16

FYE March 2022 Earnings Projection(By segment)▶ We expect second half profits to be lower than the first half across all segments, although we expect year-on-year profit growthacross all segments on a full-year basis. This forecast mainly reflects a softening of the resin market, a decrease in demand due toweakening demand for in-home consumption, concerns regarding a decrease in automobile production, and an increase in business
expenditures across all business segments due to a normalization in economic activities(No changes to the earnings projections released in August 2021)

100 millions of yen

21/3 Actual
Functional materials

177

21

114%

Operating income

47

66

18

140%

268

295

26

110%

73

96

22

131%

255

274

18

107%

Operating income

84

88

3

105%

Gross profit

89

112

22

125%

Operating income

18

34

15

184%

374

437

62

117%

65

93

27

143%

1

5

3

271%

Operating income

(68)

(77)

(8)

112%

Gross profit

1,146

1,300

153

113%

219

300

80

137%

Electronics& Energy

Gross profit

Corporate&Others

Total

Copyright © 2021 NAGASE & CO., LTD.

Percent Change

155

Gross profit

Life & Healthcare

ChangeGross profit

Advanced Materials& Processing

Mobility

2２/3 Forecast

Operating income

Gross profit
Operating income
Gross profit

Operating income17Shareholder Returns▶ Current fiscal year: We expect to pay a dividend of ¥48 per share for the full year, consisting of a ¥24 per share interim dividend
and a ¥24 per share year-end dividend (expected increase in dividends for a 12th consecutive fiscal year)▶ Currently mid-acquisition of treasury stock of ¥6 billion (February 8, 2021 to February 4, 2022; as of Sep. 30, 2021,
acquisition completed for ¥4.4 billion)

Total Dividend

Stock buy-backTotal Payout Ratio(100 Millions of yen)(%)

14,000

51.0
48.2

50.0

12,00010,85239.5
10,000

34.9

33.7

35.6
33.0

5,047
6,799

4,000

2,000

40.0
35.2

30.5

8,000

6,000

36.0

5,269

4,943

1,649

3,557

3,811

4,064

1,107

4,064

4,162

1,776

7,186

30.0

6,643

1,956

5,456

952
20.0

5,023

5,230

5,456

5,691

5,805

3,295

3,557

3,811

13/03

14/03

15/03

16/03

17/03

18/03

19/03

20/03

21/03

22/03
(Forecast)

¥２６

¥２8

¥30

¥32

¥33

¥40

¥42

¥44

¥46

¥48

0
Dividend per
share

10.0

0.0

※ 18/03 year-end dividend include a special dividend of ¥5 per share.
※ 22/03 year-end dividend to be submitted for approval to the 107th general meeting of shareholders scheduled for June 2022.

Copyright © 2021 NAGASE & CO., LTD.

18

Promotion of our sustainability initiatives

Copyright © 2021 NAGASE & CO., LTD.

19

Establishing a Sustainability Advancement Structure
・Establish a structure to advance sustainability throughout the group
・Launch the Employee Engagement Improvement and Carbon-Neutral Projects as acorporate projects

Board of Directors
Committee/Project

Business Execution Organization

Established in June 2020

Established in April 2021

Sustainability
Committee

Corporate Communication Dept.
Corporate Sustainability Office※Chairman：Asakura

Representative Director, President▶Emission reduction▶LCA Visualization▶Food Systems

Employee Engagement
Improvement Project

Carbon-Neutral Project

Established in September 2021

Established in July 2021

※Owner：Asakura※Owner： Kamada

Representative Director, President

Director▶Disclose of related information

Corporate Projects
Issues for the NAGASE Group to Address
Copyright © 2021 NAGASE & CO., LTD.

▶Circular Economy
for ESG assessment

Individual Projects
Issues to be addressed throughcollaboration among relatedorganizations

20

Progress

Background

Objectives

Materiality

Corporate Projects
Employee Engagement
Improvement Project
プロジェクト【Use diverse human resources;
offer a workplaceenvironment and corporate culture】
Provide a workplace environment and foster a corporate culture
as a Group where employees with diverse backgrounds have

Carbon-Neutral Project【Solving Social and Environmental Issues, and Globalization】
Solve problems that threaten safety and security, e.g.,
climate change and food and water shortage

mutual respect and motivate each other.
Employee engagement: A state in which the company (organization) andemployees mutually understand and elevate each otherWe need to formulate a long-term(1) Improve understanding of and spread employee engagement(2050, 2030, 2025) policy proposal(2) Encourage open communication between the company (organization) and employees(targets, measures, etc.) for carbon(3) Identify, improve, and eliminate obstacles to improved employee engagement

neutralIncreased importance due to changes in the external
environment, diversification of individual values, andintensifying competition for human resources

Implementing engagement survey for all
NAGASE employees

The external environment is changing dramatically, and addressing
climate change is essential for sustainable enhancement ofcorporate value. Specific policies to reduce carbon emissions
toward carbon neutrality are needed.

This fiscal year…
Publish a statement of support for TCFD
Set and disclose long-term goals

We are currently establishing activity policies and setting KPIs for non-financial targets based onmateriality for the period covered by ACE 2.0
Copyright © 2021 NAGASE & CO., LTD.

21

Visualizing Emissions in the Supply Chain, AllianceWith Zeroboard, Inc.
・Business alliance with Zeroboard, Inc., a provider of cloud services for calculating and visualizing CO2 emissions
・We will market the Zeroboard service, identify customer needs, and develop and provide solutions for reducing CO2 emissions.

Collaborate with various stakeholders to visualize and reduce emissions in society as a whole
Solution providers
Electricity Retailer
Gas Retailer
Consulting firm
Energy-saving services

Local economy
Local government
Shop and company
Renewable Electricity
ProviderCredit provider

Solution

CO2 data

Subsidies

CO2 data

Users
Financial institution
Bank
Insurance company

Supply chain

Green loan

CO2 data

NAGASE is making progress in visualizing
CO2 emissions in our supply chain

Copyright © 2021 NAGASE & CO., LTD.

22

Copyright © 2021 NAGASE & CO., LTD.

IDE N TIFY >>> DE V E LOP >>> E X PA N D

P r i n o v a G r ou p G r ow t hStrategyContents

Prinova Group’s Position Within the ACE 2.0 Medium-Term P３
Management Plan
Prinova Group Corporate Overview

P４

Prinova Group’s Strengths

P５

Prinova Group’s Business Overview

P６

Business Model (Supply Chain)

P７

Acquisition, PMI and Progress to Date

P８

Leveraging NAGASE Group’s Strengths

P９

ACE 2.0 Growth Strategy

P１０-P１６

24
Copyright © 2021 NAGASE & CO., LTD.

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

・The food-related business is one of the focus
areas in ACE 2.0.
・ Initiatives for overseas-led businesses are also
an important measure for future growth
Approach to Business Portfolio

・ Prinova Group: a company that willplay a central role in the growth of ourLife & Healthcare segment which
includes the food-related businessChange in Operating Income by Segment(billion yen)

Develop
Partialwithdrawal

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

Environment-related

Energy-related

Growthpotential

Overseas-led businessPartialwithdrawal

35.0

Next-generation communications-related (5G, 6G, CASE)(4.1)

Bio-related
Semiconductor-related

7.8

Food-related

2.2

Improve

Base

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

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

2.3
1.7

21.9
2.8

Brokerage of commodity materials and products

2020

Functional
materials

Advancedmaterials andProcessing

Electronics
and energy

MobilityLife &
Healthcare

Others/Companywide

2025

25
Copyright © 2021 NAGASE & CO., LTD.

Prinova Group Corporate Overview

Name
Head OfficePrinova Group LLC

Vertically Integrated
Company

Illinois, USA

Trading
Founded

Scope

Manufacturing

1978
Sales ： 86.6 billion yen
Operating Profit ： 4.7billion yen（FYE December 2020）

Employees

1,200 (as of September 2021)

Manufacturing
Locations

U.S. (4), U.K. (1), China (1)Sales Offices

U.S., U.K., and 11 other countries
Food ingredients (vitamins, amino acids, etc.)

Products

Flavors, premixes and contract
manufacturing (sports nutrition)

Distribution of food ingredients andBusiness Linesflavors, production and processing ofpremixes, contract manufacturing

26
Copyright © 2021 NAGASE & CO., LTD.

Prinova Group’s Strengths
・ One of the leading global distributors of food ingredients・ Production of premixes and flavors, and contract manufacturing offinished products (US, Europe, China)
Ingredientproduction

GeneralFlow

Foodingredient
manufactures

Strength 1
marketMore than
3,000
customers

Distributors

Manufacturing/
Processing(Premixes and Blends)

Manufacturing/
Processing
companies
Premix Suppliers

Final
Processing andPackagingContract
Manufacturers

Brand Owners

Food &
Beveragecompanies

Distribution of vast number of products including several leading products in theFoodingredient
manufactures

Strengths

Distribution（Trading
function）

Prinova（Over 2,000
foodingredients）

Manufacturing/
Processing
companies
Premix Suppliers

Contract
Manufacturers

Food &
Beveragecompanies

Strength 2 Ability to make proposals anticipating the needs of food & beverage companies
Prinova
Foodingredient
manufactures(Provide solutions through original
proposals)(Customized for each brand andproduct)

Contract
Manufacturers

M
a
r
k
e
t

Food &
Beveragecompanies

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

Foodingredient
manufactures

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

SportsNutrition
Companies

27
Copyright © 2021 NAGASE & CO., LTD.

Prinova Group’s Business Overview
Value

Manufacturing

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

Flavors

Added
Value

Competitors

High

Few

Blending(Premix),
Micronization(Contract
manufacturing)

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

Distribution

Reliable supply ofaromas andessential oils to
the food andnutrition markets

Distribution

Distribution of morethan 2,000 foodingredients to thefood and nutrition
market, offering
reliable supply,
quality and price

SolutionsAromasIngredients

Enhanced functions add values

One-stop-solutions
from productplanning to
manufacturing
finished products【Examples of Applications】

chocolates, candies), beverages (e.g.,

ArmadaNutritional
Product
Formulation and
Manufacturing
SolutionsApplications,
Major Products

Confectionery (e.g., gummies,

Greater functions mean less competition

Function

soft drinks), dairy products (e.g., ice
cream, yogurt), baking (enriched flour)【 Major Products 】
Sports nutrition products in the finishedform(powder and capsule) with quality
assurance and regulatory compliance【Major Products】
Customized powder premixes(amino acid, vitamins and minerals)
and liquid premixes【Major Products】
Aromas and essential oils

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

Low

Many

enhancers, phosphates

28
Copyright © 2021 NAGASE & CO., LTD.

Business Model (Supply Chain)
Covering the entire supply chain from procurement of ingredients topremixing, micronizing, and manufacturing final products

Hayashibara

NagaseChemteX

Over 2,000 food ingredients

Ingredients（Trading
Function)

Manufacturing/Processing(Premixes and Blends)

Final
Processing andPackaging

Brand Owner)

Contract
Manufacturers

Solutions

Flavors

NagaseCo.,ltd.
NAGASE
Local Entities

Target Markets

Food

PremixSuppliers

Food & Beverage companies,
etc.

Distribution

AromasFood Ingredient
Manufacturers

Ingredient
Production

ArmadaSports Nutrition
Companies(Brand Owners)

One-stop-service from planning and proposal
to finished products

Processed Meat
Products

Baked goods

Beverages

Lactic Acid
Products

Nutrition

Sports Nutrition

・・・

More than 3,000 Enterprise Customers
29
Copyright © 2021 NAGASE & CO., LTD.

Acquisition, PMI and Progress to Date
2019

2020

Governance Structure

Aug: Prinova GroupAcquisition

・ Established whistleblowing system

Start of PMI process
・13 working groups
・90 PMI members

Governance Structure
・Reviewed management structure,authority and rules
・Implemented management accounting
and CMS・Implemented internal control
system and confirmed its effectiveness

Creation of Group Synergies
・Started sales of Hayashibara andNagase ChemteX products
・Reduced cost through centralizedpurchasing of raw materials
・Started collaboration to expand into
Asia

2021

Launch of DX initiatives
・ Built marketing platform

M&A activities
・ Acquired North America’s
leading specialty sweetener
distributor
Production Capacity Expansion
・Began set up of new plant for
Armada business
Digital Marketing
・ Launched new website focusedon better customer experience●At the same time, overall profits increased during
COVID-19 pandemic due to growth in demand forfood ingredients in response to rising healthconsciousness● Armada business recovered due to the reopening ofsports gyms and other factors● Despite a difficult supply chain situation in themarket, Prinova utilized its procurement
capabilities and speed to win new businesses,
resulting in growth of revenue and profit

FY2020 Actual
4.7billion yen

FY2021 Projection
7 billion yen●Armada business remained sluggish due to closuresof sports gyms due to COVID-19 pandemic

Operating profit
FY2019 Actual
approximately 4 billion yen*The above figures are the results of the Prinova Group and do not include amortization of goodwill and other items that will occur upon
consolidation.
*FY2019 operating income excludes special expenses related to M&A
Copyright © 2021 NAGASE & CO., LTD.

30

Leveraging NAGASE Group’s Strengths

Strategic
Vision2032（200th Anniversary of Nagase)

Expanded
Product
Lines

DX
Project

Globalizing

With a global manufacturing and distribution footprint
and a vertically integrated supply chain network,

GlobalCustomers

Expansion

Armadainnovation and unprecedented customer service to help
feed the world and make it healthier.

Flavors
Solutions

ExpandedMarketingPrinova will partner with its customers to provide

IT
SupportIngredients

M&A
Opportunities

Financial
Strength2025

AromasPrinova will leverage the power of the NAGASE

R&D

network and all their capabilities to continue to growExpertise

globally, expand market reach and enhance product

HAYASHIBARA,
Nagase ChemteX
Products

offerings both organically and via acquisition. Thisfocus will continue to shift towards building strong
relationships with customers in higher margin value
added services, while still growing the basedistribution business with an increasing on-line
presence and strong supplier relationships.

31
Copyright © 2021 NAGASE & CO., LTD.

ACE 2.0 Growth Strategy
Expand Manufacturing and Processing Businesses◆ Expand business with existing customers and acquire new customers in the U.S. and European markets
・ Expand business with major brands and acquire new customers by leveraging global footprint, procurement capabilities, and speed◆ Expand manufacturing & processing capabilities, flavor technologies and product offerings to meet customer needs
・Armada business: Respond to a wide variety of customer needs in addition to current powder and capsule products
・Solutions business: Respond to a wide variety of customer needs, including liquids, powders, and customized particle size enhancement◆ Strengthen manufacturing and production capabilities
・ Pursue acquisition of new value-added functions and increase production capacity
・ Expand business platform by increasing product portfolio and by acquiring quality customers

Create Group Synergies◆ Increase the sales of NAGASE Group's Hayashibara products in the U.S. and Europe throughPrinova’s distribution network, expand Hayashibara’s and other functional ingredients to the Solutions and Armada businesses◆ Sell Prinova products in Asia and Latin America by utilizing the NAGASE Group's global network

32
Copyright © 2021 NAGASE & CO., LTD.

Market Size and Growth Potential (Sports Nutrition Market)
Sports Nutrition Market is Expected to Grow Globally
Global Market Size

U.S. and Europe Market Size（Millions of US$）

20,000（Millions of US$）Approximate 1,4 trillion yen /year（FY2020）

40,00015,000CAGR 8.8％

10,0005,000

30,000

0
2016

2017

2018

2019

2020

2021

USA

Europe

2022

2023

2024

2025

2026

Asia and Japan Market Size

20,000（Millions of US$）

6,000

Approximate 160 billion yen /year（FY2020）

5,000
4,000

10,000
3,000
2,000
1,000
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

*Source: Euromonitor*Global, European and Asian markets sizes exclude some regions.
Copyright © 2021 NAGASE & CO., LTD.

2025

2026

0
2016

2017

2018

2019

2020

2021

ASIA（including JAPAN）

2022

2023

2024

2025

2026

JAPAN

33

Expand Manufacturing and Processing Businesses
１

New Armada Plant in Utah, U.S.A. will start operations in Spring, 2022
Operating income

・Existing plant in Tennessee is operating at a high level・Expanding manufacturing capacity of Armada business as the（ 100 millions of yen）

40

32

sports nutrition market continues to grow3530・Considering expansion into Solutions business, including premix

Current Plant(Tennessee)

2

New Plant （Phase 1）（Utah）

Production
Capacity

Approximately
700MT/MonthApproximately
700MT/MonthSales

Approximately
US＄190 million

Approximately
US＄190 million

Floorspace

Approximately
31,000 ㎡

Approximately
40,000 ㎡

16

20

10

7

0

FY2020*US$1 Converted rate

FY2025
ArmadaSolutions

FY2020:107.76 Yen FY2025:108.7 Yen

Acquired The Ingredient House, one of North America's leading specialty sweeteners distributors

・One of North America's leading distributors of sweeteners to food and beverage manufacturers
・Acquire blue-chip customers (major brands) in the beverage industry and opportunities to expand into the beverage business・Expand customer base of the Ingredients business by expanding the Prinova Group's portfolio of approximately 2,000 ingredients・Enhance the value proposition of the Solutions business and the Armada business by expanding the product portfolio of the Ingredientsbusiness which is the foundation of the Prinova Group34
Copyright © 2021 NAGASE & CO., LTD.

Create Group Synergies

Hayashibara Products
Nagase ChemteX products
Japanese products outsideof the NAGASE Group
Solutions UK（united Kingdom）

Solutions china（changzhou）

Hayashibara Products
Nagase ChemteX products
Japanese products outsideof the NAGASE Group

Solutions U.S.
（ Illinois ）Nagase & Co., Ltd.
Nagase ChemteX
Hayashibara, etc.

Sell Prinova products (Ingredients)
Expand the Solutions business in Asia

Sell Prinova products (Ingredients, Aromas)
Expand the Solutions business in Asia

Armada U.S.
（Tennessee）：Prinova Group location：NAGASE Group location

35
Copyright © 2021 NAGASE & CO., LTD.

ACE 2.0 Global Expansion
Accelerate expansion into other regions such as Asia during ACE 2.0, in
addition to business expansion in North America and Europe
Regional Portfolio (Sales)
Asia etc.3％

Asia etc.7％

Sales (Unit:100 million yen)
Approximately
560 ⇒ 920

North
America/Europe

North
America/Europe

Approximately
280 ⇒ 380

97％

93％

FY2020

FY2025

EuropeNorth
America

FY2020 FY2025

FY2020 FY2025

Asia

Approximately
10 ⇒ 50
FY2020 FY2025

South
America

Approximately
15 ⇒ 50
FY2020 FY2025*US$1 Exchange rate FY2020: 107.76 Yen

FY2025: 108.7 Yen

Copyright © 2021 NAGASE & CO., LTD.

36

ACE 2.0 Growth and Business Portfolio
Expand high value-added manufacturing and processing businesses
with the foundation of distribution businesses such as the
Ingredients businessBusiness Portfolio（Operating income）

Operating income（Billion Yen）

150

Flavors

10.6
FY2020

FY2025120

Armadamanufacturing
・processing

Flavors

Flavors

3%

4%

90

4.7

Flavors

Solutions

Armada11%

ArmadaArmada60

Solutionsmanufacturing
・processing

AromasAromas30

24%

Solutions38%

Ingredients

23%

56%

Ingredients
Ingredients

Ingredients

7%
AromasSolutions26%

8%

Aromas0
Corporate(30)

FY2020

Corporate

FY2025

Expand the Armada, Solutions
Manufacturing and Processing
Businesses*The above figures are the results of the Prinova Group and do not include amortization of goodwill and other items that will
occur upon consolidation.
*US$1 Exchange rate FY2020: 107.76 Yen FY2025: 108.7 Yen
Copyright © 2021 NAGASE & CO., LTD.

37

ACE 2.0 Earnings Projection
Aim to exceed 10 billion yen in operating income during ACE 2.0 period(226% vs. FY2020 level)
Growth expected to be higher than planned at the time of acquisition（billion Yen）

120

10.6

80

7

Plan at Acquisition

100

Operatingincome60

4.7
40

Approximately 4

200FY2019FY2020

FY2021（Projection）

FY2022

FY2023

FY2024FY2025(Plan)

ACE 2.0*The above figures are the results of the Prinova Group and do not include amortization of goodwill and other items that will occur
upon consolidation.
*FY2019 operating income excludes special expenses related to M&A.
*FY2025 Exchange rate 108.7 Yen
Copyright © 2021 NAGASE & CO., LTD.

38

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

These presentation materials contain projections based on forward-looking
assumptions, forecasts, and plans as of November 22, 2021.
Actual earnings may differ from projections due to risks and uncertainties in
the future global economy, competitive landscape, currency exchange rates,
etc.

Copyright © 2021 NAGASE & CO., LTD.