Results Presentationof FY2021(Fiscal year ended March 2022)

Securities code: 4061
Denka Co., Ltd
May 11, 2022

Contents
1 Denka Value-Up Plan Five-Year Performance Trends

02

2 FY2021 Resultsa) Summaryb) Change Factorsc) Graph of Operating Income Change Factorsd) By Segmente) Change Factors by Segment(Year on Year, vs Forecast as of February)(Year on Year)
(
“
)
(
“
)
(
“
)
(vs Forecast as of February)f) By Segment

04
05
06
07
08-11
12

3 FY2022 Earnings Forecasta) Key Performance Indicators

14b) Summary(Year on Year)

15c) Change Factors

(

“

)

16

d) Graph of Operating Income Change Factors

(

“

)

17

e) By Segment

(

“

)

18

f) Change Factors by Segment

(

“

)

19-23

g) Shareholder Returns

24h) Difference vs Denka Value-Up Numerical Targets

25i) Toward FY2023

26j) (Reference) Quarterly Trends (By Segment)27
1

Denka Value-Up Plan Five-Year Performance Trends(¥ billions)
FY2018 Actual
Operating
IncomeOperatingMargin34.2 B
8.3 %Specialty Ratio

64％

FY2019 Actual
Operating
IncomeOperatingMargin31.6 B
8.3 %Specialty Ratio73％

FY2020 Actual
Operating
IncomeOperatingMargin34.7 B
9.8 %Specialty Ratio

97％

FY2021 Actual
Operating
IncomeOperatingMargin40.1 B

10.4 %

Specialty Ratio

92％

FY2022 Forecast
Operating
IncomeOperatingMargin43.0 B
9.5 %Specialty Ratio

87％

Specialty Business
Operating Income
Specialty Business
Operating Income

Specialty Business
Operating Income

Specialty Business
Operating Income

22.0B

23.0B

FY2018(Actual)

FY2019(Actual)Specialty Business
Operating Income

37.0B

37.5B

33.5B

FY2020(Actual)FY2021(Actual)FY2022(Forecast)

Steady Growth of Specialty Businesses under Denka Value-Up Plan
2

FY2021 Results(Fiscal year ended March 2022)

3

FY 2021 Resultsa) Summary (Year-on-Year, vs Forecast as of February)
FY2021
Forecast as ofFebruary

Incr.
Decr.

FY2020

FY2021

Incr.
Decr.

354.4

384.8

＋ 30.5

385.0

- 0.2

Operating Income

34.7

40.1

＋ 5.4

40.0

+ 0.1

Operating Margin

9.8%

10.4%

＋ 0.6%

10.4%+

Ordinary Income

32.1

36.5

＋ 4.3

36.0

+ 0.5

Net Income
Attributable to
Owners of Parent

22.8

26.0

*

＋ 3.2

26.0

+ 0.0

(¥ billions)

Sales

0%

* ¥1.0 billion yen in expenses related to voluntary recall of some lots of rapid test kits for COVID-19 antigens and ¥1.0 billion
impairment loss of goodwill for DPE, a U.S. subsidiary, were recorded as extraordinary losses

Specialty businesses make significant contributions, marking
record highs in all income stages

4

FY 2021 Resultsb) Change Factors (Year-on-Year)
YoY (¥ billions)Sales

384.8 billion+ 30.5

1. Volume: Increased demand for xEVs and semiconductor-related products
Sales increased for test reagents such as rapid test kits for COVID-19 antigens (including supply to thegovernment) and inflammation markers, while sales of influenza vaccines decreased due to weakening
productivity.
Demand for mainstay products like chloroprene rubber recovered from the impact of COVID-19+ 28.6

2. Pricing: Reduced insurance points for COVID-19 antigen test kits
Revised prices for styrene-related products, etc. addressing rising raw materials costs+ 33.1

3. Other: Change in accounting standards for recognition of revenue (change in group trading company net sales, etc.)- 31.3Operating
Income40.1 billion

1. Volume: Increased demand for xEVs and semiconductor-related products
Sales increased for test reagents such as rapid test kits for COVID-19 antigens (including supply to thegovernment) and inflammation markers, while sales of influenza vaccines decreased due to weakening
productivity.
Demand for mainstay products like chloroprene rubber recovered from the impact of COVID-19+ 5.4+ 20.5

2. Pricing: Reduced insurance points for COVID-19 antigen test kits
Revised prices for styrene-related products, etc. addressing rising raw materials costs (Includes impact of
currency fluctuations +8.4)+ 33.1

3. Variable Cost Difference:
Raw material price increase , etc. (Includes effect of currency fluctuations -5.5)- 40.5

4. Cost:- 7.8

Fixed costs, etc.

xEV and semiconductor-related products, COVID-19 rapid antigen test
kits contribute from demand growth5

FY 2021 Resultsc) Graph of Operating Income Change Factors (Year-on-Year)(¥ billions)+ 33.1+ 20.5

34.7
・IncreaseddemandforxEVsand
semiconductor-relatedproducts
・IncreaseinsalesofCOVID-19testkits,inflammationmarkers,andothertest
reagents;however,decreaseinsalesof
influenzavaccinesdueto weakening
productivity

Volume- 7.8

Revised price forstyrene-related products
in conjunction withrising raw materials
costs, etc.
Reduced insurance
points for COVID-19
antigen test kits
Raw material
price increase, etc.

・Recoveryin demandin corebusinesses
suchas chloroprenerubber.

FY2020
Actual40.1- 40.5

Pricing(Includes effect of
currency
fluctuations +8.4)

Variable Cost
Difference

Fixed costs, etc.

Costs

FY2021
Actual(Includes effect of
currency
fluctuations -5.5)

xEV and semiconductor-related products, COVID-19 rapid antigen test
kits contribute from demand growth6

FY 2021 Resultsd) By Segment (Year-on-Year)
Sales

Incr.
Decr.

Pricing

Volume90.2+ 12.4+ 4.8+ 10.8

-

3.2

42.9

46.1

+

3.2

- 7.3

+ 10.5-0.1

Elastomers & Infrastructure Solutions

91.9

106.9

+ 15.0+ 4.9+ 12.3-

2.2

Polymer Solutions

109.9

126.6

+ 16.7+ 30.8- 13.5-

0.6

Others

32.0

15.1- 16.8

-

＋ 8.4

-

25.3

Total

354.4

384.8

+ 30.5+ 33.1- 28.6-31.3

FY2020

FY2021

Electronics & Innovative Products

77.7Life Innovation(¥ billions)

Other *

*Change in accounting standards for recognition of revenue

Operating Income

FY2020

FY2021

Electronics & Innovative Products

14.2

18.7

+

Life Innovation

14.8

15.5

Elastomers & Infrastructure Solutions- 3.6

Polymer Solutions

Pricing

VolumeCost&
Others

4.4

+ 4.8

+ 6.1

- 6.4

+

0.7

- 7.3

+ 9.3

- 1.3

- 3.5

+

0.1

+ 4.9

+ 4.9

- 9.7

8.4

7.9

-

0.5

+ 30.8- 0.5- 30.8Others

0.8

1.5

+

0.7

-

+ 0.7

- 0.0

Total

34.7

40.1

+

5.4

+ 33.1+ 20.5- 48.3(¥ billions)

Incr.
Decr.

Electronics & Innovative Products sees much higher profits, Life Innovation
continues to maintain high profit levels from the previous year7

FY 2021 Resultse) Electronics & Innovative Products (Year-on-Year)FY2020

FY2021

Incr.
Decr.

Pricing

VolumeOthers

Sales

77.7

90.2

+ 12.4+ 4.8+ 10.8- 3.2 *

Operating Income

14.2

18.7

+

+ 4.8

+ 6.1

- 6.4

(¥ billions)

4.4*Change in accounting standards for recognition of revenue

Sales Trends and Costs
by ProductSpherical alumina• Growth of xEV-related applications and 5G communications-related demand• Results of partial operation of new facilities in Singapore

Fused silica
High-performance film

• Shipments exceeded the previous year, supported by strong demand for semiconductor-related
products

Acetylene black• Steady shift to high value-added grades• Shipment of xEV-related products exceeded the previous year's level, although temporarily affected byautomobile production cutback due to semiconductor shortage• Strong demand for high-voltage cables for offshore wind power generation

Ceramic substrates(silicon nitride,aluminum nitride)• Delay in demand recovery for electric railways due to the negative impact of COVID-19• Shipment of xEV-related products exceeded the previous year's level, although temporarily affected byautomobile production cutback due to semiconductor shortage

Cost• Increase in raw materials costs (→rise in prices for fused silica from November, etc.)• Costs for further development of specialties (e.g., increase in costs for systems to production increase
and sales strength, etc.)

Increase in profits from megatrends in xEV, 5G, and semiconductors
8

FY 2021 Resultse) Life Innovation (Year-on-Year)FY2020

FY2021

Incr.
Decr.

Pricing

VolumeOthers

Sales

42.9

46.1

+ 3.2

- 7.3

+10.5

- 0.1 *

Operating Income

14.8

15.5

+ 0.7

- 7.3

+ 9.3

- 1.3

(¥ billions)*Change in accounting standards for recognition of revenue

Sales Trends and Costs
by ProductInfluenza vaccine• Production and shipment volumes were lower than last year due to a deterioration in yield rate causedby differences in the strains manufactured and a shortage in vaccine production materials

COVID-19 rapid
antigen test kit• Sales prices declined year on year (insurance points reduced beginning December 31).
• Between July and September, supplied for distribution by the Ministry of Health, Labor and Welfare (foruse in elderly care facilities, workplaces, schools, etc.); from January, demand skyrocketed for testingwith test kits due to the sixth wave of COVID-19, leading to sales exceeding the previous year
• Began shipping overseas to the U.S. In November

Other test reagents(Inflammation
markets, etc.)• Demand recovered and grew for products to China, Europe, and the U.S., with shipments exceeding
the previous year's

While influenza vaccine shipment volumes fell below the previous year's, volumes
were higher year on year for COVID-19 test kits and other test reagents, leading tomaintained high profit levels from the previous year9

FY 2021 Resultse) Elastomers & Infrastructure Solutions (Year-on-Year)FY2020

FY2021

Incr.
Decr.

Pricing

VolumeOthers

Sales

91.9

106.9

+ 15.0+ 4.9+ 12.3- 2.2 *

Operating Income

-3.6

-3.5

+

+ 4.9

+ 4.9

- 9.7

(¥ billions)

0.1*Change in accounting standards for recognition of revenue

Sales Trends and Costs
by Product
Chloroprenerubber• Recovery in demand in industrial, adhesive, and automotive applications• Made an additional price increase in February and after a price increase in August addressing
rising raw materials prices (butadiene, chlorine, coke)• Lost opportunities in U.S. DPE due to February frost damage and August hurricanes

SpecialcementAdditives• A drop in shipment volume due to a slowdown in private construction

Cement• As well as sluggish private sector demand, public sector demand for disaster recovery, etc. also
dropped from the previous year
• Delayed revised prices addressing rising materials costs, such as coal

Operating losses continued due to the impact of frost damage
and hurricane on U.S. DPE and soaring raw materials prices10

FY 2021 Resultse) Polymer Solutions (Year-on-Year)(¥ billions)

Sales

Operating Income

FY2020

FY2021

Incr.
Decr.

Pricing

VolumeOthers

109.9

126.6

+ 16.7+ 30.8- 13.5

-

8.4

7.9

-

+ 30.8- 0.5- 30.80.5

0.6 **Change in accounting standards for recognition of revenue

Sales Trends and Costs
by ProductMS resin• Sales increased year on year in light guide plate applications such as TVs and monitors, and otherapplications such as cosmetics containers(Shipped volumes of PS resin dropped from last year due to conversion to MS resin manufacturing
facilities and remodeling)

AS, ABS, transparent • Recovery from the negative impact of COVID-19 resulting in increased shipped volumes over previous
resins, etc.
year
Food wrapping
sheets andcontainers• Largely unchanged from last year

Toyokalon• Recovery from the negative impact of COVID-19 resulting in increased shipped volumes over previous
year

Spread• Spread maintained due to price pass-through in response to rising raw materials prices(ethylene, benzene, etc.)

Maintained spread despite rising raw material prices11

FY 2021 Resultsf) By Segment (vs Forecast as of February)Sales(¥ billions)

FY2021
Forecast as ofFebruary

FY2021
Actual

Incr.
Decr.

Pricing

VolumeElectronics & Innovative Products

90.0

90.2

+ 0.2

+ 0.3

- 0.1

Life Innovation

45.0

46.1

+ 1.1

- 0.4

+ 1.5

Elastomers & Infrastructure Solutions

110.0

106.9

- 3.1

+ 0.2

- 3.3

Polymer Solutions

125.0

126.6

+ 1.6

+ 1.1

+ 0.5

Others

15.0

15.1

+ 0.1

-

+ 0.1

Total

385.0

384.8

- 0.2

+ 1.2

- 1.4

FY2021
Forecast as ofFebruary

FY2021
Actual

Incr.
Decr.

Operating Income(¥ billions)Pricing

VolumeCost&
OthersElectronics & Innovative Products

18.5

18.7

+

0.2

+ 0.3

+ 0.0

- 0.1

Life Innovation

14.5

15.5

+

1.0

- 0.4

+ 0.6

+ 0.9

Elastomers & Infrastructure Solutions

-3.5

-3.5

+

0.0

+ 0.2

- 0.1

- 0.1

Polymer Solutions

8.5

7.9

-

0.6

+ 1.1

- 0.2

- 1.5

Others

2.0

1.5

-

0.5

-

- 0.5

-

Total

40.0

40.1

+

0.1

+ 1.2

- 0.1

- 0.9

Generally in line with the February forecast
12

FY2022 Earnings Forecast(Fiscal year ending March 2023)

13

FY2022 Earnings Forecasta) Key Performance Indicators
The current available assumptions of raw material and fuel prices,foreign exchange rates, and other factors are taken into account.
FY2021
Actual

1H(Apr.-Sep.)
Actual2H(Oct.-Mar.)
ActualFY2022
Forecast

1H(Apr.-Sep.)
Forecast

112.1

109.9

114.2

125.0

125.0

125.0

56,80050,80063,05089,00089,00089,000

FY2021
Actual

1H(Apr.-Sep.)
Actual2H(Oct.-Mar.)
ActualFY2022
Forecast

1H(Apr.-Sep.)
Forecast

Investment

35.6

15.4

20.2

46.0

23.0

23.0

Depreciation

23.9

11.5

12.4

26.0

13.0

13.0

R&D

14.2

7.4

6.8

15.0

7.5

7.5

Interest Bearing Debt

137.0

131.5

137.0

157.0

158.0

157.0

Forex
(¥/$)

Japan Naphtha(¥/Kl)

2H
Oct.-Mar.
Forecast(¥ billions)
2H
Oct.-Mar.
Forecast

Continued strategic investment into specialty businesses

14

FY2022 Earnings Forecastb) Summary (Year-on-Year)FY2021
ActualFY2022
Forecast

384.8

Operating Income

Incr.
Decr.

FY2022
Apr.-Sep.
PlannedFY2022
Oct.-Mar.
Planned455.0＋ 70.2

210.0

245.0

40.1

43.0

＋ 2.9

18.0

25.0

Operating Margin

10.4%

9.5%

- 1.0%

8.6%

10.2%

Ordinary Income

36.5

41.0

＋ 4.5

17.0

24.0

Net Income
Attributable to
Owners of Parent

26.0

29.0

＋ 3.0

13.0

16.0

(¥ billions)

Sales

Operating income marked record highs for three consecutive years
Ordinary and net income both expected to mark record highs for thesecond consecutive year

15

FY2022 Earnings Forecastc) Change Factors (Year-on-Year)Sales

455.0 billion

1. Volume: Significant increase in shipments due to new influenza vaccine wing operations
xEV/semiconductors/5G communications/renewable energy demand growth
Elimination of transitory negative impact of Hurricane Ida on chloroprene rubber
2. Pricing: Significant price revision in line with acetylene black product value
Reduced insurance points for COVID-19 antigen tests
Revised product selling prices addressing rising raw materials market prices (Additional priceincreases for chloroprene rubber, POVAL, etc.）

Operating
Income43.0 billion

YoY (¥ billions)+ 70.2+ 14.1+ 56.0+ 2.9

1. Volume: Significant increase in shipments due to new influenza vaccine wing operations
xEV/semiconductors/5G communications/renewable energy demand growth
Elimination of transitory negative impact of Hurricane Ida on chloroprene rubber+ 7.1

2. Pricing: Significant price revision in line with acetylene black product value
Reduced insurance points for COVID-19 antigen tests
Revised product selling prices addressing rising raw materials market prices (Additional priceincreases for chloroprene rubber, POVAL, etc.)(includes effect of currency fluctuations +21.8)+ 56.03. Variable Cost Difference:Price increase for raw materials, etc. (Includes effect of currency fluctuations -16.7)- 49.2

4. Cost:- 11.0

Fixed costs, etc.

Demand expansion and growth by capturing megatrends in specialty
businesses, and spread improvement through flexible price revisions

16

FY2022 Earnings Forecastd) Graph of Operating Income Change Factors (Year-on-Year)(¥ billions)+ 56.040.1+ 7.1
・ Increased shipments ofInfluenza vaccine
・ Demand growth in xEV,
semiconductor, 5G
communications, andrenewable energy
・ Recovery from chloroprenerubber negative impact(transitory)

FY2021
Actual- 11.0Volume-49.2
・ Price revisions of Acetylene
black・ Reduced insurance points
for COVID-19 antigen test
・ Revised price for products inconjunction with rising raw
materials costs (chloroprenerubber, etc.)

Pricing(Includes effect of
currency
fluctuations +21.8)

Raw material
price increase,
etc.

Variable Cost
Difference

43.0

Fixed costs, etc.

Costs

FY2022
Forecast(Includes effect of
currency
fluctuations -16.7)

Demand expansion and growth by capturing megatrends in specialty
businesses, and spread improvement through flexible price revisions
17

FY2022 Earnings Forecaste) By Segment (Year-on-Year)Sales(¥ billions)

FY2021
ActualFY2022
Forecast

Incr.
Decr.

Pricing

VolumeElectronics & Innovative Products

90.2

105.0

+14.8

+ 11.0+ 3.8Life Innovation

46.1

50.0

+ 3.9

- 6.4

+ 10.3

Elastomers & Infrastructure Solutions

106.9

135.0

+28.1

+ 24.6+ 3.5

Polymer Solutions

126.6

150.0

+23.4

+ 26.8- 3.4

Others

15.1

15.0

- 0.1

-

- 0.1

Total

384.8

455.0

+70.2

+ 56.0+ 14.1

Operating Income(¥ billions)

FY2021
ActualFY2022
Forecast

Incr.
Decr.

Pricing

VolumeCost&
OthersElectronics & Innovative Products

18.7

23.5

+

4.8

+ 11.0

+ 2.7

- 8.8

Life Innovation

15.5

10.0

-

5.5

- 6.4

+ 3.1

- 2.2

Elastomers & Infrastructure Solutions

- 3.5

1.0

+

4.5

+ 24.6+ 2.1- 22.2Polymer Solutions

7.9

7.5

-

0.4

+ 26.8- 0.2- 27.0

Others

1.5

1.0

-

0.5

-

- 0.6

+ 0.1

Total

40.1

43.0

+

2.9

+ 56.0+ 7.1- 60.2

Despite lower profit expected in Life Innovation, is exceeded by profit growth inElectronics & Innovative Products and Elastomer & Infrastructure Solutions
18

FY2022 Earnings Forecastf) Electronics & Innovative Products (Year-on-Year)FY2021

FY2022

Incr.
Decr.

Sales

90.2

105.0

+14.8

Operating
Income

18.7

23.5

+4.8

(¥ billions)

Sales Trends and Costs
Spherical alumina

Acetylene black(Breakdown of profit differences)•

Sales volumes expected to rise as a result of full-scale newfacilities in Singapore in April 2022•

Strong demand for use in high-voltage cables for xEV and
offshore wind power generation
Significant price revisions in line with added value•

Pricing

VolumeCost&
Others

Total

+11.0

+2.7

-8.8

+4.8

Spherical silica
High-performance
film
Ceramic substrates(silicon nitride,aluminum nitride)•

Strong shipments expected to continue due to expanding
demand for semiconductors•

xEV-related demand growth expectedMarket Trends (Semiconductor-Related)[Spherical Silica]
Market share of approx. 30

・Decided to Expand Production in Singapore(Supply capacity) +30%
(Construction completion) Planned for FY2024

・Omuta Plant begins construction to increase
production of next-generation high-performance
spherical fillers such as low dielectric dissipation material[High-Performance Film]・Supporting Higher Speed and Capacity
Through Development of LCP Film
Promoting commercialization of LCP filmwith "low dielectric properties" effective in
reducing transmission loss, which isessential for 5G communications

Increase in profits from megatrends in xEV, 5G communications,and semiconductors

19

FY2022 Earnings Forecastf) Electronics & Innovative Products (Year-on-Year)
Market Trends (xEV-Related)

Increased Demand for xEV-Related Products[Main xEV-related products]
・ Spherical alumina: Heat-dissipating material for LiB
cooling mechanisms[Acetylene Black]・Demand Forecast for LiB Applications andDenka’s Supply Capacity
Supply capacity
Demand outlook

Considering capacity
expansion・ Acetylene black: Conductivity aid for LiB cathodematerials

・ Silicon nitride: Heat-dissipating substrates for inverters

2021[Spherical Alumina]
Market share of approx. 60

2022

2023

2024

2025

2026

2027

[Silicon Nitride]・Full Operation of New Facilities in Singapore
From April 2022

・Maintain No.1 Market Share and Grow Share Further

Production capacity(approx. 30% increase over current capacity)

5x

2018

Increasing manufacturing capacity at the Omuta Plant
Operation launch planned for the second half of FY2022

2022

Continuing growth strategy in response to increasing demand/growth20

FY2022 Earnings Forecastf) Life Innovation (Year-on-Year)FY2021(¥ billions)

FY2022

Incr.
Decr.

Sales

46.1

50.0

+3.9

Operating
Income

15.5

10.0

-5.5

(Breakdown of profit differences)
Pricing

VolumeCost&
Others

Total

-6.4

+3.1

-2.2

-5.5

Sales Trends and Costs

COVID-19
rapid antigen test kit• Reduced insurance points (from December 31, 2021)• Although there is no plan to provide test kit supplies
to the Japanese government like the previous year,
shipment volumes are expected to be on par with lastyear due to increased demand for testing with test
kits in Japan.

Other test reagents• Strong demand for Europe/U.S./China

Influenza vaccine• Strong demand expected to continue in the current
fiscal year
• Planned production increase due to operation of new
wing: 10 million vaccinesMarket Trends
Influenza Vaccine stock solution
facility begins operations(Facility capacity) 2x vs. previous levels(Investment) Approx. ¥16.0 billion

Sales Trends for Test Reagents (Excluding Antigen Test Kits)
売上高（億円）Sales(¥ billions)200
Negative
新型コロナ
によるof
impactマイナス影響COVID-19(Manufacturing target)
FY2022: 10 million vaccines(For approx. 20 million people)⇒ Addressing demand

150

Decided to increase
capacity for test
reagent products
Strategic investment
addressing growing
demand(Investment)
Approx. ¥11.0 billion(Planned completion)
Second half of FY2024

100
2016年
2016

2017年
2017

2018年
2018

2019年
2019 2020年
2020 2021年
2021 2022年
2022 2023年 2024年

Despite lower income due to expected negative impact from reduction of insurance points,
strengthening and expanding vaccine and test reagent businesses21

FY2022 Earnings Forecastf) Elastomers & Infrastructure Solutions (Year-on-Year)FY2021(¥ billions)

FY2022

Sales Trends and Costs

Incr.
Decr.

Sales

106.9

135.0

+2.81

Operating
Income

-3.5

1.0

+4.5

(Breakdown of profit differences)
Pricing

VolumeCost&
Others

Total

+24.6

+2.1

-22.2

+4.5

Chloroprene rubber• Elimination of negative impact from the previous
year's natural disasters• Ongoing revised prices addressing soaring raw
materials costs

Special cement
Additives• Shipment volumes expected to rise

Cement• Advancing price increase negotiations from theprevious year
• Incorporating sharp rises in coal prices due to thesituation in Russia and Ukraine

Market Trends
Chloroprene Rubber Global Demand (Denka Estimate)(1,000 tons)

Our No. 1 global share(approx. 40%)300

Release of Denka
chloroprene rubber
price increases

Supplied globally for
applications such asindustrial belts, hoses foruse in construction,
conveyor belts,
automobiles, adhesives,and gloves, etc.

250

200
2017

(¥/kg)[Customs Statistics]
Chloroprene Rubber (Dry + Latex) Export Unit Price

20182019 20202021 2022

2023

・ Aug. 2021
Exports +500$/t or more・ Jan. 2022
Exports +500$/t or more・ Apr. 2022
Exports +500$/t or more
2021

2022

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Despite rising raw material prices, profit increased due to flexible price hikes
and elimination of the negative impact of the natural disaster at DPE last year
22

FY2022 Earnings Forecastf) Polymer Solutions (Year-on-Year)FY2021(¥ billions)

Sales

126.6

Operating
Income

7.9

Sales Trends and Costs

Incr.
Decr.

FY2022

150.0
7.5

+23.4
- 0.4

(Breakdown of profit differences)
Pricing

VolumeCost&
Others

Total

+33.3

-0.2

-33.5

-0.4

•

Shipments expected to increase year on year due to impact
from increased production in Singapore amid strong demand

AS, ABS, transparent •resins, etc.

Maintaining spread with revised prices addressing soaring raw
materials costs

Food wrapping
sheets andcontainers•

Spread expected to maintain due to price revisions

Toyokalon•

Demand expected to recover with the resumption of economic
activities at hair salons, etc.

Cost

•

Styrene monomer plant scheduled for routine repairs(last performed in FY2018)

MS resin

Market Trends
Price Revisions of Raw Materials and in This Segment(¥/kg)

Naphtha (MOP/J) trends

Jan 2021

Performance plastics(AS, ABS, transparent resins, etc.)
Trends in price increases(from Jan. 2021)

MS Resins Production Capacity Increase in
Singapore in July 2021
(Production capacity)
Approx. 70,000 t/yr ⇒ Approx. 140,000 t/yr
(Investment)
Approx. ¥2.7 billion(Sales)・ Light guide plate applications
for LCD TVs and PC monitors
・ Non-optical applications such as cosmetic containers

May 2022

Maintaining spread year on year despite rising raw material prices

23

FY2022 Earnings Forecastg) Shareholder Returns
FY2018ActualNet income
Dividends per share*

FY2019ActualFY2020
ActualFY2021
ActualFY2022
Forecast(¥ billions)

25.0

22.7

22.8

26.0

29.0

(¥/share)

120.0

125.0

125.0

145.0

145.0
Mid-term 70.0
End 75.0

Dividend

10.5

10.8

10.8

12.5

12.5

42%

48%

47%

48%

43%

(¥ billions)

2.1

-

-

-

(¥ billions)

12.6

10.8

10.8

12.5

50%

48%

47%

48%

(¥ billions)Shareholders Return
Stock PurchaseTotal Return
Total return ratio

Maintaining
total return
ratio policy of50%

Depreciation(¥ billions)

22.9

22.5

22.9

23.9

26.0

Investment & lending(¥ billions)

32.8

36.9

42.3

35.6

46.0

ROE

10.3%

9.1%

8.8%

9.4%

(9.8％)

Equity Ratio

51.0%

50.0%

50.8%

51.7%

(51.3%)

0.45

0.54

0.52

0.48

(0.51)

Debt Equity Ratio*The company executed a one-for-five reverse stock split for common shares on October 1, 2017. Dividends per share have been recalculated to reflect this reverse split
for comparison.

Maintaining a dividend of ¥145 per share of last year

24

FY2022 Earnings Forecasth) Difference vs Denka Value-Up Numerical Targets
Operating Income(¥ billions)Electronics & Innovative
Products

FY2022
Management
Plan(Recalculated)

21.5

FY2022
Forecast

23.5

Vs. PlanReasons for Difference・ Growth for xEV, semiconductor, renewable energy-related products, etc., in linewith assumptions+2.0[Progress according to plan]
・Spherical alumina: Full operation of new facilities in Singapore from April 2022
・Acetylene black : Price revisions in line with product valueLife Innovation

10.5

10.0

-0.5

[Progress according to plan]
・Influenza vaccine: Full operation of new wing from FY2022
・COVID-19 test kits: Expanding demand due to recognition of kit usefulness
Fall in sales price for domestic market expected to be in linewith assumptions
・ Test reagents: Demand growth in line with assumptions

Elastomers & Infrastructure
Solutions

6.5

1.0

-5.5

・Chloroprene rubber: Despite price revisions addressing soaring raw materials costs,
deterioration vs. assumptions with time lag to revision
・Cement: Cost increase due to soaring raw material prices (coal)

Polymer Solutions

10.5

7.5

-3.0

・MS resin: Shipments expected to fall below assumptions
・Styrene monomer costs increase above assumptions, including routine repair costs

Others

1.0

1.0

±0.0

Total

50.0

43.0

-7.0

*

* ¥2.0 billion in increased labor costs resulting from better labor conditions throughout the entire Group booked under Others is recorded proportionally in each segment.

Despite steady progress against plan in Electronics & Innovative Products and Life Innovation, Elastomer& Infrastructure Solutions and Polymer Solutions suffer negative impact of soaring raw material prices
and worsening market conditions, therefore performance expected to fall short of numerical targets.
25

FY2022 Earnings Forecasti) Toward FY2023(¥ billions)
FY2018 Actual
Operating
IncomeOperatingMargin34.2 B
8.3 %Specialty
Business
Operating
Income22.0B
FY2018(Actual)

FY2019 Actual

FY2020 Actual

FY2021 Actual

FY2022 Forecast

FY2023 Target

31.6 B

34.7 B

40.1 B

43.0 B

50.0 B

8.3 %Specialty
Business
Operating
Income9.8 %Specialty
Business
Operating
Income33.5B

10.4 %

Specialty
Business
Operating
Income9.5 %Specialty
Business
Operating
Income

37.0B

37.5B

FY2021(Actual)FY2022(Forecast)

11.0 %

Specialty
Business
Operating
Income

40.0B

23.0B

FY2019(Actual)FY2020(Actual)FY2023(Target)Aiming for ¥50 Billion in Operating Income Through Sustainable Growth ofSpecialty Businesses and Improved Profitability of Core Businesses26

FY2022 Earnings Forecastj) (Reference) Quarterly Trends (By Segment)

Sales(¥ billions)

FY2020

FY2022
Forecast

FY2021

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

1H

2H

Electronics & Innovative
Products

17.1

19.6

20.0

21.1

21.0

22.8

22.3

24.0

50.0

55.0

Life Innovation

5.3

10.9

20.5

6.3

6.0

19.3

10.9

9.9

20.0

30.0

Elastomers & Infrastructure
Solutions

19.8

22.0

24.8

25.2

24.6

26.8

26.1

29.3

65.0

70.0

Polymer Solutions

25.3

25.1

28.3

31.3

31.8

31.5

29.5

33.9

67.5

82.5

Others

8.7

6.5

8.2

8.5

3.5

4.0

4.0

3.7

7.5

7.5

Total

76.2

84.1

101.7

92.4

86.7

104.4

92.8

100.9

210.0

245.0

Operating Income(¥ billions)

FY2020

FY2022
Forecast

FY2021

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

1H

2H

Electronics & Innovative
Products

2.8

3.8

3.6

4.0

4.4

4.8

4.6

4.9

11.0

12.5

Life Innovation

0.0

2.4

11.4

1.0

0.3

10.4

1.2

3.6

4.0

6.0

Elastomers & Infrastructure
Solutions

0.3

-0.4

-1.9

-1.5

0.1

-0.0

-1.2

-2.3

1.0

0.0

Polymer Solutions

1.3

1.6

2.5

3.0

2.6

1.8

1.9

1.6

1.5

6.0

Others

0.0

0.3

0.3

0.2

0.4

0.5

0.4

0.2

0.5

0.5

Total

4.4

7.7

16.0

6.7

7.7

17.5

7.0

7.9

18.0

25.0
27

Cautionary statement regarding forward-looking information

Target figures in this material are not forecasts of business results.
In addition, any description relating to the future in this material is subject toknown or unknown risks and uncertainties,
although it is base on management's current assumptions and beliefs
in light of the information currently available to it.
Please be cautioned that a number of important factors could cause actual results
to differ significantly from the description in the material.
Such risks and uncertainties include adverse economic conditions, currency
exchange rate fluctuations, adverse legislative and regulatory developments,
delays in new product launch, pricing, and product initiatives of competitors,
the inability of the Company to market existing and new products effectively,interruptions in production, infringements of the company's intellectual property
rights and the adverse outcome of material litigation.

28

Inquiries regarding this material

Corporate Communications Dept,
Denka Co., Ltd.
TEL
ＵＲＬ

03-5290-5511
https://www.denka.co.jp/eng/