New Medium-Term Business Plan

Value Creation 3000 & 300

Aica
Kogyo Co.,Ltd.
アイカ工業株式会社
May 25, 2023

© Aica Kogyo Co., Ltd. all rights reserved.

1

Table of Contents
AICA’s Goals
1． Philosophy/Strategy
2． AICA’s Value Creation Model
3． Vision
4． Historical Consolidated Results
5． Toward the 90th Anniversary

P3
P4
P5
P6
P7

New Medium-Term Business Plan (MTBP) “Value Creation 3000 & 300”
6． Kick-off of the New (3rd) Medium-Term Business Plan
7． Review for 2nd Medium-Term Business Plan ((1) Managerial KPI, (2) by Segment,(3) Capex & Growth Investment, (4) Materiality)
8． Major Topics of the 2nd Medium-Term Business Plan
9． Recognizing Issues in the New Medium-Term Business Plan
10．Fundamental Policies of the New Medium-Term Business Plan “Value Creation 3000 & 300”
11．New Medium-Term Business Plan - Managerial KPI
12．New Medium-Term Business Plan - Financial Target by Segment
13．Priority Strategic Policy of New Medium-Term Business Plan (1) Profitability Improvement,(2) Creation and Expansion of Growth Businesses, (3) Creation of a Sound Business Infrastructure)
14．New Medium-Term Business Plan - Climate Change Response Policy ((1) Responding to Climate
Change Through Our Products, (2) GHG Emission Reduction Targets)
15．New Medium-Term Business Plan - Human Capital Investment Policy
16．New Medium-Term Business Plan - Capital Strategy (1) (2)17．New Medium-Term Business Plan - Dividend Policy© Aica Kogyo Co., Ltd. all rights reserved.

P9
P10
P14
P15
P16
P17
P18
P19
P22
P24
P25
P27

Medium-Term Business Plan

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1

Philosophy/Strategy© Aica Kogyo Co., Ltd. all rights reserved.

Medium-Term Business Plan

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2

AICA’s Value Creation Model
Source of Value Creation (Business Model)

AICA’s strengths lie in our extensive product range that leverages the advantages in Chemistry and Design,
as well as a solid customer base, overseas business bases, brand value, excellent human assets, the trust ofsociety backed by highquality and environmental well-being, and a healthy financial base which support that
product range. We will improve our corporate sustainability by emphasizing dialog with stakeholders andcontinuing to enhance these strengths.

Achievement of Sustainable Society
External environment

INPUT

Globalization
Diversification

Social issues and needs

Politics
Economic trends

Financial
capitals

Socialresources

Demographics

Incorporation
into business

External
environment

OUTPUTOUTCOME

IMPACT

HealthCustomers

SafetySuppliers

Resource depletion

Lifestylechanges

Contribution
throughbusiness

Return ofresources

Resource
input

Brand building
Synergy creation

Brand
value

Expansion ofsales channels
M&A

Derivative
products

Solutions to
issuesHumanassetsClimate change

EnergyIssuesCustomerbase

Marketdevelopment

Expansion of
applications

Environmental
well-being

Extensiveproduct
range

Improvement

Practical
feedback

Overseas
expansion

Quality/
Environmental
well-being

Chemical
Products

Reassurance

Employees
Shareholders

Synergies

ManufacturingassetsIntellectual
resources

Synergydevelopment

Provision ofseedsCore technologies

Laminates &Building
Materials

ComfortEasierconstruction

Chemistry × Design

Long-life

Corporate Principle (Challenge & Creation)

Naturalresources

Local
communities

Corporate Philosophy
Corporate Policy

Sustainability Policy

Universal
design*© Aica Kogyo Co., Ltd. all rights reserved.

* Lower right photo : Shion Kindergarten Annex + Shion School Children’s Club

Design: Kozue Hotta, Goyokiki

Medium-Term Business Plan

4

3

VisionWe aim to provide new value to society and continuously improve our corporate value by
helping solve social issues through a fusion of Chemistry and Design.

Reassurance

ComfortEasierconstruction

Environmental
well-being

SafetyHealthLong-life

Chemistry × Design

Universal
designChemical Products

Laminates & Building Materials

While promoting high value-added resins in the construction
sector to support people's lives and social infrastructure, we willgrow our business in non-construction sectors, including
automotive/household goods/electronic materials.

We will expand our business market in the wooden furniture as wellas our domains in wall, floor, ceiling, and fabricated products withenhancing our ability to propose innovative solutions in the whole
space structure in Japan, while promoting the Japan Technology tooverseas markets.

© Aica Kogyo Co., Ltd. all rights reserved.

Medium-Term Business Plan

5

4

Historical Consolidated Results

Sois, Wilsonart, AHT,
and NISHI TOKYOCHEMIX VIETNAM

TCC･Sois
EMC･
TCC

Divestment of
the company’s
Electronics
Business

COVID-19 pandemic
starts (2020)→

1,200"Lehman Shock" financial crisis (2008)→

1,600

CERARL became ahuge success as
kitchen panel (1996)→

2,000

Number of new
housing starts

Japan’s economic bubble
collapse (1991)→

Captured top shareof Japanese HPL
market in the second
half of the 1980s→

2,400

Revision of Building Standards
Law, prompted by earthquake
resistance data falsification scandal(2007)Net Sales(JPY million)

During the 2010s,
AICA expanded ourbusiness overseas
through M&As→

AICA experiences growth despite flat
Due to the success ofBusiness domestic market due to overseas expansion
CERARL, AICA experiences
performance linked
Operating profit (JPY 100 million)
growth even while the
Number of new housing starts (10,000 units)
to domestic market
housing market was
Area of non-residential building starts (1 million m 2)
shrinkingBusiness performance during this period linked to area of
non-residential building starts in Japan

ATK
ASP

Adtek

250
Taiwan
AICA

200

150

AAP

ALIP

100

800
Area of private non-residentialbuilding starts
Net Sales

400

0

50

Operating Profit*

FY1970

FY1975© Aica Kogyo Co., Ltd. all rights reserved.

FY1980

FY1985

NEXT
JUMP
1500

*

FY1990
FY1989FY1995
FY1994

FY2000
FY1999FY2005
FY2004FY2010FY2009FY2015FY2014

C&C2000

Change &Grow 2400

FY2020FY20190* Due to a change in the months comprising the fiscal year, FY1989 is divided into two components: December 1988 to March 1989 and April 1989 to March 1990.
Medium-Term Business Plan
Note: Consolidated accounting began from FY1979. All accounting years prior to that are non-consolidated.

6

5

Toward the 90th Anniversary

In October 2026, Aica Kogyo will celebrate our 90th anniversary.
In accordance with our Corporate Principle of“Challenge and Creation,” the AICA Group has
established a unique position as a chemical
manufacturer by continuously creating new added
value through the power of “Chemistry” and “Design.”
In the final year of the new Medium-Term Business

Plan, we will celebrate the 90th anniversary of our
founding.
AICA will take on the challenge of “Value

Creation,” creating more value, and aim forsustainable development.
© Aica Kogyo Co., Ltd. all rights reserved.

Medium-Term Business Plan

7

Medium-Term Business Plan (MTBP)FY2023 to FY2026© Aica Kogyo Co., Ltd. all rights reserved.

Medium-Term Business Plan

8

6

Kick-off of the New (3rd) Medium-Term Business Plan
Value Creation
3000 & 300

As original sales target (JPY240 billion of 2nd MTBP) has been achieved
one year ahead of schedule, we step up to a new MTBP this year.
Consolidated Net Sales[JPY billion]

C&C 2000

300
3000

JPY

2000
200

JPY

174.6
214.5

151.6

Billion80th anniversary

191.3

191.5

163.7

151.6

174.6

90th anniversary

242

300

242

250

100.7

105

Laminates &Building Materials

Net Sales: 125

141.3

145

Chemical Products

Net Sales: 175

92.1

76.7

122.3

1000
100
74.8

1st MTBP

300

BillionBillionBillionNEXT
JUMP1500
JPY

JPY

Change＆Grow2400

New 3rd MTBP

2nd MTBP

0
FY2016FY2017© Aica Kogyo Co., Ltd. all rights reserved.

FY2018FY2019FY2020

FY2021

FY2022

FY2023

FY2024FY2025

FY2026

Medium-Term Business Plan

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Review for 2nd Medium-Term Business Plan (1) Managerial KPI
Growth in overseas market and other factors brought one-year-ahead achievement of our Sales target.
On the other hand, due to hikes on raw material prices, profitability declined. Also, due to large impairment loss,
capital efficiency declined.

Key words

Indicator

CapitalEfficiency

ROE

Sales onPromisingMarketFY2020A

FY2021A

FY2022A

FY2023
Original
Plan

Evaluation

Approx.10%

Poor

JPY 114.7 billion

JPY 135.2 billion JPY 115 billion

Very GoodJPY 15.5 billion

JPY 16.9 billion

JPY 19.3 billion

JPY 21 billion

Fair

Ordinary profit

JPY 18.4 billion

JPY 21.8 billion

JPY 22 billion

JPY 24 billion

Fair

Net sales

JPY 174.6 billion

JPY 214.5 billion

JPY 242 billion JPY 240 billion

Very Good

8.1%

9.4%

Overseas + Functional
materials sales*1

JPY 81.2 billion

Solving
Social Issues

AS product sales*1*2

Added
Value

Business
Size

6.9%

*1: Sales amount before consolidated elimination© Aica Kogyo Co., Ltd. all rights reserved.

*2: “AS Product” stands for Aica Solution Product that resolves social issues

Medium-Term Business Plan

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Review for 2nd Medium-Term Business Plan (2) by Segment
Chemical Products: Overseas market contributed, but Exchange rate fluctuation & Raw Materials’ hike impacted
severely, resulting in lower profitability.
Laminates & Building Materials: Both Domestic and overseas sales equally grew, but still needs improvement toachieve FY2023 original plan.
FY2023
CAGR
Original Plan
FY2020A
FY2021A
FY2022A
FY2020-2022(reference)[JPY million]

Chemical
Products

Laminates& Building
Materials

Net sales

90,446

122,323

141,31225.0%

125,000

Operating Profit

7,109

7,376

7,494

2.7%

-

% vs Net Sales

7.9%

6.0%

5.3%

-

-

EBITDA

10,247

10,75910,946

3.4%-% vs Net Sales

11.3%

8.8%

7.8%

-

-

Net sales

84,182

92,191

100,743

9.4%

115,000

Operating Profit

13,751

16,37916,740

10.3%-% vs Net Sales

16.3%

17.8%

16.6%

-

-

EBITDA

16,12918,945

19,560

10.1%-% vs Net Sales

19.2%

20.6%

19.4%

-

-

© Aica Kogyo Co., Ltd. all rights reserved.

Medium-Term Business Plan

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Review for 2nd Medium-Term Business Plan (3) Capital Investment and Business Investment

We generated cash in Japan, and actively reinvested the cash in the overseas growth market,
and made steady investments in a well-balanced manner in both capital investment and business investment.
Investment Volume

Analysis on latest year Investments in FY2021-2022“Average Annual Investment” by past MTBPs

OthersChemical
Products- Japan

2nd MTBP[JPY million]

Laminates& Building Materials- Overseas

16000

12000

7331

Business Investment(Including M&A)

5321

8000

Capital Investment
4000

1079

6755

3572

7903

(Expansion and upgrading,maintenance and renewal
etc.)

0
FY2013-2016 FY2017-2020 FY2021-2022
YearlyYearlyYearlyAverage
Average
Average© Aica Kogyo Co., Ltd. all rights reserved.

Chemical
Products- Overseas

Change & Grow 2400
(FY2021-2022)
Breakdown of investmentsby segment*1: AICA Asia Pacific Holding Co., Ltd.

Laminates& Building Materials- Japan⚫
⚫

AAPH*1: Acquired shares in Aica Adtek JPY 3 billion
EMC*2: Acquired Covestro Resin (Taiwan) ’s Dayuan plant
and attendant business JPY 1.47 billion

Capex

⚫
⚫
⚫

AICA Interior: Artificial Stone Production Line JPY 0.16 billion
AAPH*1: AICA Fujian, New Factory JPY 1.35 billion
AAPH*1: AICA Guangdong, Factory Relocation JPY 3.69 billion

IT

⚫
⚫

Aica Kogyo: System Introduction & renewal JPY 0.5 billion
Aica Kogyo: Other Systems renewal JPY 0.82 billion

M&A*2: EVERMORE CHEMICAL INDSUTRY CO., LTD.

Medium-Term Business Plan

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Review for 2nd Medium-Term Business Plan (4) Materiality
AICA identified and addressed seven key issues to build a foundation to enhance the soundness of the entire Group.
(1) Provide economic value

See pages 10 and 11 for details. Sales and growth market development targets were achieved one year
ahead of schedule. Although ordinary profit and sales of products designed to solve social issues were asplanned, efficiency declined due to the impact of soaring raw material prices and impairment losses on
subsidiaries. Dividends were paid at a higher payout ratio than planned.

(2) Solving social issues
with products

FY2022 AS product*2 sales : JPY 19.3 billion (sales were in accordance with plans)
Defined SDG-oriented products and set targets.

Financial

Non-financial(3) Human resources andorganizational development

Established a Group-wide system to monitor education, training costs, and training hours on a perperson basis as well as employee satisfaction. Updated succession plans at overseas group companies
and created skill lists by division and hierarchy on a stand-alone basis. Built a foundation for the
restructuring of the education and training system that makes use of those factors.

(4) DX*1 implementation

Capital investment and digitization investment that contribute to automation and labor-saving: 390 million
yen (for 2 years in total)
The per-person labor productivity of Aica Kogyo increased by 8.7% on a non-consolidated basis (FY2022
actual result compared to FY2020).

(5) Responding
to climate change

Although GHG*3 emissions revenue intensity were expected to be reduced by 22% from the FY2020
target of 10%, total GHG emissions are expected to increase slightly. Industrial waste emissions revenue
intensity are expected to fall short of the target with a 9% reduction compared to FY2020 instead of a
10% reduction. Note: All estimates are approximate since calculations are still being performed.

(6) Strengthen governance

AICA conducts BCP training at all production sites on an annual basis. We also issued an AICA
Compliance Casebook. In addition, restructuring of the overseas internal whistleblowing system wascompleted. Informatization investment that contribute to strengthening of security: 820 million yen (for 2
years in total)(7) Quality assurance
and occupational safety

Quality improvements were made based on customer satisfaction surveys. AICA also developed andimplemented departmental quality training plans.
Increased in the number of lost-time accidents (from 19 in FY2020 to 20 in FY2022)© Aica Kogyo Co., Ltd. all rights reserved.

*1 DX: Digital Transformation*2: “AS Product” stands for Aica Solution Product that resolves social issues*3: GHG: Greenhouse gas

Medium-Term Business Plan

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Major Topics of the 2nd Medium-Term Business Plan
Segment

RegionJapan

Chemical
Products
OverseasJapan

Laminates& Building
Materials
Overseas© Aica Kogyo Co., Ltd. all rights reserved.

Achievement

Key words

Partial Business Transfer from DIC Corporation (Phenolic Resin Business)

New Market

Development of three-dimensional decorative hard-coat film as an alternative to painting
automotive exteriors

New Market
Climate Change

Expansion of biomass-grade products, recycled products, and social problem-solving products,
including adhesives, construction resins, phenolic resins, and organic fine particles

Climate Change

AAPH*1 acquired shares of Adtek*2 (Malaysia), and made it a subsidiary

Facility Expansion
Widening Sales
Channel

EMC*3 acquired Dayuan factory and associated businesses from Cobestro Resin (Taiwan)

Facility Expansion
New Market

Launch of “Three Major Projects” in China (Nanjing, Guangdong and Fujian) by AAPH*1

Facility Expansion

Development of HPL using Plant-based Phenolic Resin

Climate Change

Development and launch of new products for a Ceiling market

New Market

Investment in strengthening of manufacturing capacity for Fiore Stone processed products

Facility Expansion

Start of Construction for the second HPL line at ALV*4

Facility Expansion

Acquiring of shares in Taiwan AICA*5, which became wholly owned subsidiary

Widening Sales
ChannelCompleted the fourth press machine for HPL of ALIP*6

Facility Expansion*1: AICA Asia Pacific Holding Co., Ltd. *2: Aica Adtek Sdn. Bhd.
*3: EVERMORE CHEMICAL INDSUTRY CO., LTD.
*4: Aica Laminates Vietnam Co., Ltd.
*5: Taiwan Aica Kogyo Co., Ltd. *6: Aica Laminates India Pvt. Ltd.
Medium-Term Business Plan

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Recognizing Issues in the New Medium-Term Business Plan

Internal resources and assets
Intellectual
resources⚫ Launch next-

Manufacturingassets⚫ Aging plants

Humanassets⚫ Recruit and develop

generation large-⚫ Delay in automation

leaders, globally

scale core products⚫ Optimization ofcompetent human⚫ Create brand value

second only to

production systems⚫ DX* Implementation

domestic HPL

resources, andprofessional humanresources⚫ Accumulateknowledge

External resources and assets
Financial
capitals⚫ Deterioration ofcapital efficiency⚫ Investment

impairment loss risk
⚫ Foreign exchangeriskSocialresources

Naturalresources⚫ Shrinking of the domestic wooden

furniture market⚫ Transition to low-

carbon society⚫ Higher raw materials, energy, andlogistics costs⚫ Increased risk ofnatural disasters⚫ Expanding/Changing environmental

regulations and tax systems⚫ Shift to biomass

products and low-

⚫ Improve engagement⚫ Worsening skilled workers shortage

carbon emission⚫ Promote D&I⚫ Decline in number of new housing

products⚫ Quality / Safety

starts in Japan(800,000 units)

AICA recognizes that issues related to human assets and natural resourcesin particular should be given urgent focus© Aica Kogyo Co., Ltd. all rights reserved.

* DX: Digital Transformation

Medium-Term Business Plan

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Fundamental Policies of the New Medium-Term Business Plan “Value Creation 3000 & 300”

Financial
1. To Improve Profitability
In our “Four Segment” ; Chemical Products – JAPAN /OVERSEAS, Laminates & Building Materials– JAPAN /OVERSEAS, we will improve profitability by widening
added value and optimizing capital allocation.
We aim to stretch profit margin in line with market
characteristics and balancing to allocate capital.

Non-financial
3. To Build robust Management Base
We aim to be a sustainable corporate entity by focusing seven key
themes (“Materiality”). 1. Providing Economical Value, 2. Solving
Social Issues with Products, 3. Responding to
Climate Change, 4. Human Resources and Organizational
Development, 5. DX Implementation, 6. Strengthening Governance,
7.Quality Assurance & Occupational Safety. Amongst these, “Human
Resources” and “Climate Change” are our core focuses.

To Responding to Climate Change

2. To Create and Nurture Growth Businesses
In both Chemical Products and Laminates & Building
Materials, we will actively invest in promising market where
we can leverage our strength. Looking ahead to our 100th
anniversary, we will formulate and develop new profit
generating pillars that can drive sustainable growth.

© Aica Kogyo Co., Ltd. all rights reserved.

*GHG: Greenhouse gas

Responding to climate change is essential element for our
purpose. We have decided to dedicate ourself more in this area.
We declare “Carbon Neutrality” by 2050 and reduce GHG*
emissions by 30% from FY2022 consumption level by FY 2030.

To Strengthen Human Capital and Organization
With recognizing “human capital is the principal” for AICA’ssustainable growth, we will develope organization throughstrengthening existing resourse and new hirings. Through strong
engagement by those resource, we will lead innovation.

Medium-Term Business Plan

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New Medium-Term Business Plan - Managerial KPI
Profitability

GrowthClimate Change

Financial Target
Consolidated Net SalesJPY

AS Product Sales *1

JPY

28 billion

Non-Financial Target

Consolidated Ordinary Profit

300 billion

JPY

30 billion

Climate Change

GHG*2 Emission Reduction(Scope1+2)
Environmental Investment

Overseas Sales Ratio

50% or more
ROIC

Approx.

10%© Aica Kogyo Co., Ltd. all rights reserved.

Approx.

8%(14%)(compared with 2022)

2

JPY
billion(4 years cumulative)

Human Resource
HR Investments *1

ROE

Human Resource

Engagement Score* 1: Aica Kogyo (non-consolidated) *2 GHG: Greenhouse gas

4JPYbillion(4 years cumulative)

4.0 points or more

(3.9 points in 2022 (full score: 5 points))
Medium-Term Business Plan

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New Medium-Term Business Plan – Financial Target by Segment

FY2022A

FY2023P

YoY

CAGR
FY2022-2026

FY2026P[JPY million]
141,312145,000

102.6%

175,000

5.5%

Operating Profit

7,494

7,600

101.4%

12,000

12.5%% vs Net Sales

5.3%

5.2%

10,946

11,700

7.8%

8.0%

Sales

100,743

105,000

104.2%

125,000

5.5%

Operating Profit

16,74017,900106.9%

22,500

7.7%% vs Net Sales

16.6%

17.1%

EBITDA

19,56020,500% vs Net Sales

19.4%

19.5%

Sales

Chemical
Products

EBITDA% vs Net Sales

Laminates& Building
Materials© Aica Kogyo Co., Ltd. all rights reserved.

6.9%
106.9%

17,300

12.1%

9.9%

18.0%
104.8%

26,400

7.8%

21.1%
Medium-Term Business Plan

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Priority Strategic Policy of New Medium-Term Business Plan (1) Profitability Improvement
AICA will focus on improving profitability in the domestic Chemical Products business and overseas business for both
Laminates & Building Materials and Chemical Products. For Laminates & Building Materials business in Japan, we expand
the scale while maintaining our current position.

Profit Growth
Rate

Future market shift

Laminates & Building
Materials (Overseas)

Segment

PolicyChemical
Products(Japan)Thorough management of profitability by resin andstructural reform through selection and concentration

Chemical
Products(Overseas)

Increase production capacity to capture demand in the
Asian region

Laminates &Building Materials(Japan)Pursue enhancing added value by helping to solve social
issuesLaminates &Building Materials(Overseas)

Accelerate the deployment of Japan Technology to overseas
group companies

Laminates & Building
Materials (Japan)
Chemical Products(Overseas)
0%

Profitability
Chemical Products (Japan)- Profitability: Operating profit before consolidation and elimination- Circle size indicates size of operating profit- Profit Growth Rate: The average annual growth rate of operating profit over an eight-year period© Aica Kogyo Co., Ltd. all rights reserved.

We will concentrate our management resources on value-added
adhesives and construction resins that can solve social issues as wellas products for non-construction sectors.

We will expand our manufacturing capacity in China, Vietnam,
Thailand, Malaysia and other Asian countries to introduce high valueadded products that meet customer needs through local production
for local consumption.

By identifying the needs of customers who face social issues, we will
differentiate ourselves by developing functional products that add
value to existing products and by proposing construction methods toexpand our highly profitable business model.

We will optimize our production bases in Japan, China, Thailand,
Indonesia, Vietnam, and India to achieve a strategy of differentiationin high-end markets.

Medium-Term Business Plan

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13

Priority Strategic Policy of New Medium-Term Business Plan (2) Creation and Expansion of Growth Businesses
By focusing on solving social issues and entering/cultivating untapped markets,
we will create growth businesses in a well-balanced manner both in Japan and overseas for both
Chemical Products and Laminates & Building Materials to build a foundation for sustainable growth.

Chemical Products

Laminates & Building Materials

Applying the bonding and joining technologies that we have cultivated in thewooden furniture and construction fields, we will grow in non-construction fields,
including automotive/household goods/electronic materials, while simultaneously
deepening synergies among group companies, and aiming for making remarkable
growth in overseas market.

AICA will continue to grow by adjusting our business portfolio appropriately in linewith market needs. In Japan, we are focusing on the business market of wall, floor,
ceiling, and fabricated products. Overseas, we will promote the expansion of Japan
Technology and grow in a balanced manner both domestically and internationally.

Mainly forfurniture,
fixtures,and walls

Infrastructure andCivil engineering

Sanitary
materials

Automobiles

Woodworking/Furniture Bonding and Joining
Technologies

Electronic materials

Construction

FY2012

Cosmetics

Mainly forwall
marketHousehold goods

FY2022
FY2026

Domestic

Domestic

Overseas

Overseas

Note: Accumulated net sales prior to consolidation elimination© Aica Kogyo Co., Ltd. all rights reserved.

HPL
fabricatedproducts

High
Pressure
Laminates(HPL)
Decorative
boards,architecturalfilms, etc.

FY2022

FY2026

Sales increased 2.5 times overthe past 10 years
JPY 13 billion → JPY 32.2 billion

Expand application to floors, a newmarket for this product.
Aim for JPY 30 billion in overseas
markets.

Decreased 20% over the past
10 years
JPY 15.1 billion → JPY 12.5
billionThe decorative plywood board market
is shrinking.
We will cultivate the PVC film market.

CERARL

Sales increased 1.4 times overthe past 10 years
JPY 15.8 billion → JPY 21.7 billion

Deepening of non-housing and renovation
applications.
Develop new ceiling market for CERARL.
Technology will be transferred overseas
for full scale launching.

NonCombustible
Building
Materials

Sales increased 7.4 times overthe past 10 years
JPY 1.1 billion → JPY 7.8 billion

Continue to capture the needs of nonresidential properties pertaining tosafety.
Develop new “ceiling” market.

Postform
Counters

Sales increased 1.9 times over the
past 10 years
JPY 11.3 billion → JPY 21.3 billion

Fittings &Interior
Housing
Materials

Expand by capturing the need toreduce on-site processing labor..

Sales decreased 20% over the
past 10 years
JPY 6.4 billion → JPY 5.2 billion

Medium-Term Business Plan

20

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Priority Strategic Policy of New Medium-Term Business Plan (3) Creation of a Sound Business Infrastructure

Addressing the seven material issues passed on from the previous Medium-Term Business Plan, we will
focus on addressing “climate change” and “building a foundation for human capital management”.
(1) Provide economic value

Net sales: JPY 300 billion*2, Ordinary profit: JPY 30 billion*2, Overseas sales ratio: More than 50%*2,
ROE: 10% *2, ROIC: 8% *2, Continue progressive dividends without reducing dividends(2) Solving social issues
with products

AS products *3 sales target: JPY 28 billion*1.
Develop technologies that contribute to the reduction of industrial waste over entire life cycle andvisualize amount of contribution.

Financial

Non-financial(3) Responding toclimate change

Reduce total GHG *4 emissions by 14%*2 from the FY2022 level by FY2026 to achieve carbon neutrality
by 2050. Set Scope 3 emission reduction targets and formulate reduction measures.
Disclose carbon footprint (CFP) for each main product. Develop products with a reduced CFP.

(4) Build a foundation forhuman capital management

Invest more than JPY 4 billion*1 (cumulative total) in human capital over a four-year period to develop
human resources to drive business growth, acquire an organization and diverse human resources thatwill generate innovation, and create a work environment that will improve productivity.
See page 24 for details on target values.

(5) DX *5 implementation

Capital Investment and informatization investment that will contribute to automation and labor-saving:More than JPY 1 billion (total over a 4 years)*1(6) Strengthen governanceConduct BCP training at all production sites at least once a year*2. Strengthen the management andauditing of policies, regulations, and systems related to Group governance. Regularly conductsustainability surveys for suppliers and address issues. Deepen information security measures andexpand them to all Group companies.

(7) Quality assurance andoccupational safety

Achieve the quality defect reduction target set at each site.
Serious occupational accidents: 0*2
Number of lost-time accidents: Reduce by half compared to FY2022 level (10 or less*2).

© Aica Kogyo Co., Ltd. all rights reserved.

*1: AICA Kogyo (non-consolidated) *2: AICA Group *3: “AS Product” stands for Aica Solution Product that resolves social issues *4: GHG: Greenhouse gas *5: DX: Digital Transformation

21

14

New Medium-Term Business Plan - Climate Change Response Policy(1) Responding to Climate Change Through Our Products

Based on AICA's resin synthesis technology and material utilization technology, we will develop and expand sales of
products that respond to the climate change issues.
This will allow us to transform into a corporate group that achieves sustainable growth even in a rapidly changing world.

Biomass

LCA Provide quantitative environmental information

Utilize carbon-neutral materials
Absorption

Quantitatively calculate CO2 emissions from LCA

Emissions

CO2

CO2

±

0

Photosynthesis

Resources

Offset

HPL, decorative boards, floor coating materials, adhesives, electronic materials

On tile construction method

Propose recycling and renovation methods
for products
Reduce demolition workby utilizing existing foundation

Waste
Reduction

Noise
Reduction

Shortened
Construction
Time

Contributes to the creation of a recycling-oriented society by reducing waste
Melamine fire retardant decorative panels (for repairs),
multifunctional calcium silicate panels© Aica Kogyo Co., Ltd. all rights reserved.

CO2

Manufacturing

Distribution

CO2

CO2

Consumption

Disposal

Disposal

Reduce CO2 emissions from raw materials by actively utilizing biomass materials

Waste reduction

CO2

Contribute to climate change measures by providing
environmental information on products
HPL, melamine fire retardant decorative panels

Easier construction

Simplify construction methods andshorten construction periods

Resin to prevent concrete chips from falling・ The construction method, which used to take several
days, can be shortened to as little as one day bysimplifying the process
・ Reinforcement of concrete contributes to improved safety
Contributes to the reduction of CO2 emissions during construction andalso responds to the problem of the shortage of labor at sites
Wall coverings, wall/floor coating materials, floor coating materials,
repair/reinforcing materials
Medium-Term Business Plan

22

New Medium-Term Business Plan -Climate Change Response Policy(2) GHG* Emission Reduction Targets

14

Reduce GHG* emissions by 14% in FY2026 and by 30% in FY2030 (Scope 1 & 2, compared to FY2022)with the aim of achieving carbon neutrality in FY2050.
AICA Group GHG* emissions reduction plan (Scope 1 & 2)
170000[t-CO2]

Measures to reduce GHG* emissions⚫ Promotion of energy saving activities

EnergysavingProcess Improvement(14%)

Energycreation
UtilityrenewalRenewable
EnergyCoefficient
Improvement

Renewal Utility⚫ Creation of energy(30%)

Installation of Solar Panels⚫ Purchase of renewable energy
Switching the Power Menu

Purchase of Renewable Energy Power Certificates⚫ Radical review of manufacturing methods

CarbonNeutrality

100000Use of ICP (internal carbon pricing) program
for these measures
Environmental Investment

FY2026FY2022

FY2030FY2050Total of JPY© Aica Kogyo Co., Ltd. all rights reserved.

*GHG: Greenhouse gas

2 billion for 4 years
Medium-Term Business Plan

23

15

New Medium-Term Business Plan - Human Capital Investment Policy
With the aim of maximizing the value of human capital, AICA will proceed human resource development
and environmental improvement in line with business issues to achieve sustainable growth.
Business Issues

Human Resource and Environmental Issues

・Growth of overseas business・Synergy creation and expansion
・Creation and expansion of growth businesses
・Expansion of applications and business domains
・Resolving social issues with products

・Development of human resources to drive business growth
Globally competenthuman resources

JPY

4billion over four years(cumulative total)(870 million yen in FY2022)

Key KPIs

Number of employees who havebeen assigned overseas*1
More than

100 employees in FY2026(78 employees in FY2026)© Aica Kogyo Co., Ltd. all rights reserved.

Professional human resources

・Creation of organizations and diverse human resources thatgive birth to innovation
・Creation of working environments that improve productivity

Improve Employee Job Satisfaction
Human Capital Investment Amount*1

Leaders

Sustainable Growth of the AICA GroupEngagement Score*2

4.0

Labor Productivity*1,*3

points or higher(3.9/5 in FY2022)

More than JPY

22.8

million per worker(21 million yen per worker in FY2022)

Childcare Leave Acquisition Rate*1
Percentage of women recruited to newgraduate career-track positions*1
More than%
Men: More than 70%, Women: 100%
(In FY2022, 53.1% of eligible males took childcare leave
four years (cumulative)30(42.0% for hired in April 2023)

and 100% of eligible females took childcare leave)*1: Aica Kogyo (non-consolidated) *2: AICA Group *3: Labor productivity = Value Added / Number of Employees

Medium-Term Business Plan

24

16

New Medium-Term Business Plan - Capital Policy (1)Cash Allocation
NEXT JUMP 1500 annual average CF(FY2013-FY2016)

C&C 2000 annual average CF(FY2017-FY2020)

Change & Grow 2400 annual average CF(FY2021-FY2022)

Stable financial base

Active investment and enhancement ofshareholder returns

Continuing to make active investments, enhancing shareholder
returns, and strengthening the financial base through the issuance of
convertible bonds.

[JPY million][JPY million][JPY million]

Dividend
3.4 billion
yen/year

Dividend
7 billion
yen/yearCB
18 billion
yen

Dividend
6.6 billion
yen/year

3,368© Aica Kogyo Co., Ltd. all rights reserved.

23/3 Cash and cash
equivalents

21/4 Cash and cash
equivalents

Increase / Decrease

Cash flow fromfinancing activities

Free cash flow

Cash flow frominvesting activities

Cash flow fromoperating activities

21/3 Cash and cash
equivalents

17/4 Cash and cash
equivalents

Increase / Decrease

Cash flow fromfinancing activities

Free cash flow

Cash flow frominvesting activities

Cash flow fromoperating activities

17/3 Cash and cash
equivalents

13/4 Cash and cash
equivalents

Increase / Decrease

Cash flow fromfinancing activities

Free cash flow

Cash flow frominvesting activities

Cash flow fromoperating activities-1,642Medium-Term Business Plan

25

16

New Medium-Term Business Plan - Capital Policy (2)Maintainfinancialsoundness

Previous Medium-TermBusiness Plan Results

New Medium-Term Business Plan Policies

Cash equivalents

JPY 50.993 billion

Secure liquidity for about two to three months of monthly sales to strengthen our risk tolerance

Equity ratio

58.1% (as of end Mar. 2023)

ROE
ROIC

Improvementof capitalefficiency

Focus onshareholder
returns(as of end Mar. 2023)

Maintain an appropriate rating and an equity ratio of 50% or more

ROE > ROIC > WACC structure
Create ROE and ROIC that exceed the cost of capital and gain equity spreads to increase
shareholder value
ROE target of about 10% (current cost of equity is approximately 6.3%)
ROIC target of about 8% (current WACC is approximately 5.5%)

ROE6.9%
ROIC8.1%(FY2022)

JPY7.056 billion

Secure FCF to support aggressive investment in growth and increased shareholder returns

FCF(two fiscal year average)

Investment discipline-

Focus on investment projects that generate returns that exceed cost of capital

Portfolio management-

Promote portfolio optimization using ROIC by business/company

Dividends

No dividend reduction for 25
consecutive years
Increase in dividends for 14
consecutive years

Emphasize the continuity of stable dividends that have not been reduced for the past 25
consecutive years
Basic policy: Maintain progressive dividends without reducing dividends

Share buybacks

Acquired approx. JPY 4 billion
worth of treasury shares

Consider flexible share buybacks

New Medium-Term Business Plan
Four-year investment targets(cumulative)*© Aica Kogyo Co., Ltd. all rights reserved.

Capital Investment

Business Investment

R&D Investment

Environmental
Investment

Human Capital
Investment

JPY 40 billion

JPY 20 billion

JPY 17.5 billion

JPY 2 billion

JPY 4 billion* Some capital investment and R&D investment are counted in duplicate environmental investment and human capital investment.

Medium-Term Business Plan

26

17

New Medium-Term Business Plan -Dividend Policy

In order to return profits to shareholders and to realize sustainable corporate growth, our fundamental policy is to pay
dividends after comprehensively considering the consolidated results for each term, the dividend payout ratio, andinternal reserves. Under "Value Creation 3000 & 300“, our new Medium-term Business Plan, we continue our basic
policy of a progressive dividend, avoiding a dividend reduction, and we will also consider flexible share buybacks.
[JPY]

Interim Dividends

32

34

28

30

13

15

17

17

15

15

15

17

FY2008FY2010

109*

110*

57

58

58

59*

59*

56

47

49

49

50

50

51*

85

50

47
38

19

19

43
23

46
25
38

FY2012

108

92

36

17

107

103

Year-end Dividends

Until the end of March, 2023,
Dividend increasing for 14
consecutive years*
Dividend not decreasing for 25
consecutive years*
Expect to increase in Dividends
per Share for FY2023*

106

19

20

FY201442

21
FY2016FY2018FY2020

FY2022

FY2026*Dividends per Share for FY2022 will be decided at the General Meeting of Shareholders held in June 2023.
© Aica Kogyo Co., Ltd. all rights reserved. *Dividends for FY2023 is current projections.
Medium-Term Business Plan

27

[Appendix] New Medium-Term Business Plan -Materiality (1)Item

Scope ofCoverage

FY2022A

Net sales: JPY 242 billion(1) Provide
Economical Value

AICA Group

ROE:6.9%

Ordinary profit: JPY 22.0 billion

ROIC:8.1%

FY2023-FY2026

Net sales: JPY 300 billion

Ordinary profit: JPY 30 billion

ROE: Approx. 10%, ROIC: Approx. 8%

Plan to pay a dividend of JPY 109(Without 25 consecutive years’ dividend reductions, 14
consecutive years’ dividend increases, Dividend payout ratio of
69.3%)

Progressive dividend distribution to be continued

Aica Kogyo

Sales of AS(AICA Solution) products: JPY 19.3 billion

Sales of AS (AICA Solution) products: JPY 28 billion

AICA Group

Launch of products using biomass raw material
Expanding construction methods that reduce waste (Cerarl-onTile Method)

Development of new recycling methods for mainstay products

Greenhouse gas emissions: 160,000 t-CO2

Reduce greenhouse gas emissions by 14% (compared to
FY2022)

Obtaining 3rd-party guarantees for certain categories ofEstablishment Scope 3 of calculation standards in Japan andoverseas

Setting Scope 3 reduction targets and setting the strategy

Development of products with reduced carbon footprint (CFP)

Disclosure of CFP information on major products anddevelopment of CFP reduction products(2) Solving Social
Issues with Products

AICA Group(3) Responding to
Climate Change

Aica Kogyo© Aica Kogyo Co., Ltd. all rights reserved.

Medium-Term Business Plan

28

[Appendix] New Medium-Term Business Plan -Materiality (2)Item(4) Build aFoundation for
Human CapitalManagement(5) DX*
implementation

Scope ofCoverage

Aica Kogyo

FY2022A
Labor productivity (added value ÷ number of employees):
JPY 21.0 million /person

Labor productivity: JPY 22.8 million /person

Human capital investment: JPY 0.87 billion

Human capital investment: More than JPY 4 billion (4 years total)

78 employees with expat experiences

Expat experiences: 100 or more

Ratio of new graduates hired as women in major carrier path: Ratio of new graduates hired as women in major carrier path: 30% or
42.0% (hired in April 2023)
more (4 years total)
Ratio of taking childcare leave: 53.1% (males) 100%
Ratio of taking childcare leave: 70% or more (males) 100% (females)(females)

AICA GroupEngagement score: 3.9 points

Engagement score: 4.0 points or more

Aica Kogyo

Investment for Automation, labor-saving, andInformatization
2-year cumulative JPY 390 million

Investment for Automation, labor-saving, and Informatization
4-year cumulative JPY 1.0 billion

Strengthening group governance rules
AICA GroupBCP Drills in all consolidated production bases (1 time/year)(6) Strengthening
Governance
Aica Kogyo

AICA Group(7) Quality
Assurance& Occupational
SafetyFY2023-FY2026

Revision and publication of the AICA Group Sustainability
Procurement Guidelines
Investment for strengthening Information Security:
JPY 410 million (for 2 years in total)

Expansion and supervision of policies, rules, and systems related togroup corporate governance including promotion of initiatives forrespect of human rights
BCP Drills for Disasters at all consolidated production bases(1 time/year)
Conducting sustainability surveys of suppliers on a regular basis andaddressing issues
Expand and strengthen information security throughout the Group

Quality improvements through customer satisfaction surveys Achievement of “Defect reduction targets” at all sites

AICA Group© Aica Kogyo Co., Ltd. all rights reserved.

Lost-time Injury: 20 cases* DX: Digital Transformation

Serious labor accidents: Zero
Lost-time Injury: 10 or lower
Medium-Term Business Plan

29

“FY” in this report indicates the fiscal year ending March 31 of the succeeding year.
This document has been translated from the Japanese original for reference purpose only. In the event of any discrepancy between this translated
document and the Japanese original, the original shall prevail.
The matters such as current plan, prospect, strategy, or conviction which indicated in this report, but not historical fact are only the expectation of the
future achievement, and there are the risks or unexpected factors.
This information has been made based on the judgment of the manager of Aica Kogyo Co., Ltd. using current available information. The actual results
may be different from the current forecast because of various important elements, so please avoid depending entirely on this forecast.

This document is not designed to induce investment. We request that decisions about investment be made on the basis of each user’s own judgment.

© Aica Kogyo Co., Ltd. all rights reserved.

Medium-Term Business Plan

30