Results Presentationof FY2023 2Q(The 1st Half of the Fiscal Year Ending March 2024)

Securities code: 4061
Denka Co., Ltd
November 8, 2023

Contents

1

FY2023 1st Half Resultsa) Summaryb) Operating Income Change Factorsc) By Segmentd) Change Factors by Segmente) By Segment

2(Year on Year, vs Forecast as of August)(Year on Year)
“

)

(

“

)

(vs Forecast as of August)FY2023 Earnings Forecasta) Summaryb) Market Outlookc) Operating Income Change Factorsd) By Segment(vs Forecast at the beginning, Year on Year)e) Change Factors by Segment((vs Forecast at the beginning)()“f) Investment, Depreciation, R&D by Segmentg) Shareholder Returns, ROE

3

(

03
04
05
06-09
10

Measures to Improve FY2024 Earnings

“

)

12
13
14
15
16-19
20
21

22-30

Upcoming Schedule for Quality and Safety31(Reference) Forecast (By Segment) (Year on Year)

32(Reference) Quarterly Trends (By Segment)

33
1

FY2023 1st Half Results

2

FY2023 1st Half Resultsa) Summary (Year on Year, vs Forecast as of August)▮ Profit declined significantly year on year (higher than August forecast)(¥ billions)

FY2022
1H Actual

FY2023
1H Actual(Year on Year)FY2023 1H
Forecast as of August

190.0

202.9

191.4

- 11.6

18.3

10.5

-

7.8

9.0

9.0%

5.5%

-

3.6%

4.7%

Ordinary Income

17.0

8.1

-

8.9

7.0

Net Income
Attributable to
Owners of Parent

14.3

6.6 *

-

7.8

5.0

Forex
(¥/$)

131.6

139.9

138.7

82,85065,45062,600

Sales
Operating Income
Operating Margin

Japan Naphtha(¥/Kl)*Gain on sale of strategic cross-shareholdings +1.2 billion yen

3

FY2023 1st Half Resultsb) Operating Income Change Factors (Year on Year)▮ Profit declined significantly due to significant negative impact of volume

difference due to lower demand
Operating 10.5 billion yen Year on Year -7.8 billion yen
Income1. Volume:(Minus)Operating Income Variance Analysis(Year on Year)

Chloroprene rubber: Lower demand for applications in industry and adhesives;
ongoing adjustments to market inventories in automobiles despite recovery indemandSpherical alumina, spherical fused silica, and high-performance film: Declining
demand for consumer electronics (smartphones, PCs, home appliances)
Acetylene black: Demand temporarily declined due to construction delays for highvoltage cables(¥ billions)

18.3(Plus)

2.
+5.8
1.
-9.3

FY2022
1H Actual

VolumeIncrease in demand for simultaneous test kits for COVID-19 and influenza due to the
spread of influenza

3.
-3.5
4.
-0.7

Pricing

Variablecost
difference

Costs

10.5

FY2023
1H Actual

2. Pricing: (Includes effect of currency fluctuations +5.8)(Plus)
Chloroprene rubber: Benefits of price increases implemented in stages over the last
fiscal year
(Minus)Styrene-related products: Price revision due to decline in raw materials and fuel prices
3. Variable cost difference: (Includes effect of currency fluctuations -3.6)
Despite decrease in raw materials and fuel prices, negative difference due to currency
fluctuations
4. Cost variances
Increased costs for buildings a system to increase production and for strengthening
sales systems in Electronics & Innovative Products
Increase in repair, labor, and other costs at DPE in the U.S.
* DPE: Denka Performance Elastomer LLC, a U.S. chloroprene rubber manufacturingsubsidiary4

FY2023 1st Half Resultsc) By Segment (Year on Year)▮ Profit declined significantly year on year for Electronics & Innovative Products, as well as

Elastomers & Infrastructure Solutions
FY2022
1H Actual

FY2023
1H Actual

Electronics & Innovative
Products

47.5Life Innovation

Incr.
Decr.

VolumePricing

41.7

- 5.8

- 8.5

+

2.7

21.9

22.2

+ 0.3

+ 0.3

+

0.0

Elastomers & Infrastructure
Solutions

62.9

57.2

- 5.7

- 12.1+

6.4

Polymer Solutions

63.6

61.5

- 2.2

+ 1.2

-

3.4

Others

7.0

8.8

+ 1.8

+ 1.8

Total

202.9

191.4

-11.6

- 17.3

Sales (¥billions)Operating Income(¥ billions)

FY2022
1H Actual

FY2023
1H Actual

Incr.
Decr.

Electronics & Innovative
Products

9.6

4.9

-

Life Innovation

6.5

6.6

Elastomers & Infrastructure
Solutions

1.3

Polymer Solutions+

5.8

VolumePricing

Cost&
Others

4.7

- 4.0

+ 2.7

- 3.4

+

0.1

+ 0.5

+ 0.0

- 0.5

-1.6

-

2.9

- 5.3

+ 6.4

- 4.1

-0.2

-0.3

-

0.1

- 0.6

- 3.4

+ 3.8

Others

1.0

1.0

-

0.1

+ 0.0

-

- 0.1

Total

18.3

10.5

-

7.8

- 9.3

+ 5.8

- 4.2
5

FY2023 1st Half Resultsd) Electronics & Innovative Products (Year on Year)▮ Profit declined significantly due to major declines in demand for consumer electronics (smartphones, PCs,

home appliances) from 3Q of the previous fiscal year

Operating Income Variance Analysis(Year on Year)

Operating Income by Quarter

9.6-4.7 billion
5.6
4.1

4.1

9.6
4.9

2.1

1Q

+2.7
-4.0

4.2

FY2022(¥ billions)

41
-3.4

4.9

2.8

FY2023
2Q

3Q

Sales Trends and Costs by Product

4Q

1Q

2Q
*Costs: Increase in costs for systems to raise production, cost to
strengthen sales systems

Spherical alumina•

Demand for xEVs is recovering, however demand for consumer electronics, plunged in the 3Q of last fiscal year, is continuing in
the first half of this fiscal year, and overall shipments are significantly lower than the previous year

Spherical fused silica•

Demand for consumer electronics, which had plummeted in 3Q of the previous year, continued to decline during the first halfof the current fiscal year, with shipments falling below the previous year•

Shipments were lower year on year as sales for films used in semiconductors remained sluggish, despite a recovery in market
inventories of electrical components during the current fiscal year leading to a gradual recovery in demand of consumer
electronics, which had plummeted in 3Q of the previous year
Despite recovery in demand for xEVs, demand for high-voltage cables, which had been growing steadily, saw lower overall
shipments than the previous year due to a temporarily decline in Europe stemming from construction delays, as well as
sluggish demand in China

High-performance film

Acetylene black•

Ceramic substrates(silicon nitride,aluminum nitride)•

Shipments for electric railways were on par with the previous year, and shipments of xEVs exceeded the previous year's level,
recovering from the first half of the previous fiscal year, which was affected by automobile production cutbacks due to theshortage of semiconductors
6

FY2023 1st Half Resultsd) Life Innovation (Year on Year)▮ Continued strong performance from the previous year due to the increase in demand for simultaneous

test kits (combo kits) for COVID-19 and influenza due to the spread of influenza

Operating Income Variance Analysis(Year on Year)

Operating Income by Quarter+0.1 billion
6.5

6.6
6.0

6.5

+0.5

+0.0

(¥ billions)

6.6
-0.5

5.7

5.0
2.8

0.5
FY2022
1Q

0.9
2Q

3Q

4Q

FY2023
1Q

2Q

Sales Trends and Costs by ProductInfluenza vaccine• Shipments began in September as planned and were largely unchanged from the previous year

COVID-19 rapid
antigen test kit• Despite shipments of COVID-19 antigen test kits falling below the previous year's, achieved higher
sales and profits thanks to shipments of simultaneous test kits for COVID-19 and influenza (combokits) due to the spread of influenza• Maintaining the price after downgrading COVID-19 to a Class 5 infectious disease

IVD reagents(Inflammation
markers, etc.)• Shipments largely unchanged from the previous year

7

FY2023 1st Half Resultsd) Elastomers & Infrastructure Solutions (Year on Year)▮ Lower profit due to increased repair and labor costs and declining demand despite successful

price hikes for chloroprene rubber

Operating Income Variance Analysis(Year on Year)

Operating Income by Quarter-2.9 billion

1.3

-0.2

2Q

1.3

-1.6

1.5

FY2022
1Q(¥ billions)

-1.3

-1.1

3Q

4Q

-0.7

+6.4
-4.1

-0.9

-1.6

-5.3
FY2023
1Q

2Q*Costs: Increase in repair, labor, and other costs at DPE in the U.S.

Sales Trends and Costs by Product
Chloropren
e rubber••Specialcementadditives•

Cement•Shipments falling below the previous year due to lower demand from 3Qof the previous fiscal year for applications in industry and adhesives aswell as ongoing adjustments to market inventories in automobiles
despite recovery in demandContributions from price increases implemented in stages over the last
fiscal year
Largely unchanged from last year

[Customs Statistics] Chloroprene rubber (dry + latex) export unit price（US$/t）

5500

5250
5000
4750

•

The 2,300 yen/ton price increase is complete (as of September 30 2022)
The 3,000 yen/ton price increase, despite delays, is almost complete asof July 31 2023

4500

Coal prices fell
(FY2022 1H: $399/t ⇒ FY2023 1H: $154/t)

4000

4250
2021年

2022年

2023年

Jan 3月Mar 5月May 7月Jul 9月11月1月
Sep Nov Jan 3月
Mar 5月May 7月Jul Sep
Nov Jan Mar
Jul 9月
Sep
1月
9月11月1月
3月 May5月 7月

8FY2023 1st Half Resultsd) Polymer Solutions (Year on Year)
Demand remained weak and was largely unchanged from the previous year, despite maintaining spreads▮
and fixed cost reductions from a non-scheduled maintenance year for the styrene monomer plantOperating Income Variance Analysis(Year on Year)

Operating Income by Quarter-0.1 billion
-0.2

-0.3

-0.2

(¥ billions)

+3.8

-0.6

-0.3

-3.4
-0.1
FY2022
1Q

-0.0
2Q

-0.9

-0.1

3Q

4Q

Sales Trends and Costs by ProductMS resin-0.0

FY2023
1Q-0.2
2Q
Spreads were maintained and fixed costs decreased due to a nonscheduled maintenance year for the styrene monomer plant• Shipments for LGP applications for PC monitors, which had been weak since the beginning of the previous
fiscal year, bottomed out in 3Q with the recovery trend continuing into the current fiscal year, resulting inshipments exceeding the previous year

AS, ABS,• Demand for consumer electronics, cosmetics containers, general merchandise, etc., which had deteriorated
transparent resins,in 3Q of the previous year, continues to decline in the current fiscal year due to overall sluggishness in theetc.
global economy, with overall shipments falling below the previous year
Food wrapping• Shipments largely unchanged from the previous year
sheets andcontainers
Toyokalon• Shipments were largely unchanged from the previous year stemming from continuing weakness inpurchasing power in Africa and the U.S. due to inflation from the first half of the previous fiscal year
9

FY2023 1st Half Resultse) By Segment (vs Forecast as of August)▮ Profit exceeded our August forecast in Life Innovation from increased demand for

simultaneous test kits (combo kits) for COVID-19 and influenza
Sales (¥billions)Electronics & Innovative
Products

FY2023 1H
Forecast as ofAugustFY2023
1H Actual

Incr.
Decr.

VolumePricing

40.0

41.7

+

1.7

+

1.2

+

0.5

Life Innovation
Elastomers & Infrastructure
Solutions

20.0

22.2

+

2.2

+

2.0

+

0.2

57.5

57.2

-

0.3

-

0.9

+

0.7

Polymer Solutions

65.0

61.5

-

3.5

-

4.1

+

0.5

Others

7.5

8.8

+

1.3

+

1.3

Total

190.0

191.4

+

1.4

-

0.5

Operating Income(¥ billions)Electronics & Innovative
Products

FY2023 1H
Forecast as ofAugustFY2023
1H Actual

Incr.
Decr.

-

+

1.8

VolumePricing

Cost&
Others

4.0

4.9

+

0.9

+

0.2

+

0.5

+

0.2

5.0

6.6

+

1.6

+

1.3

+

0.2

+

0.2

-1.5

-1.6

-

0.1

-

0.4

+

0.7

-

0.4

Polymer Solutions

0.5

-0.3

-

0.8

-

0.8

+

0.5

-

0.5

Others

1.0

1.0

-

0.0

+

0.1

-

-

0.2

Total

9.0

10.5

+

1.5

+

0.4

1.8

-

0.7

Life Innovation
Elastomers & Infrastructure
Solutions+10

FY2023 Earnings Forecast

11

FY2023 Earnings Forecasta) Summary (vs Forecast at the Beginning, Year on Year)▮ Downward revision from our initial forecast

FY2023
Initial Forecast

FY2023
Revised Forecast(¥ billions)vs
Forecast
at thebeginning

FY2022
Actual(Year on Year)

430.0

400.0

-

30.0

407.6

-

7.6

33.0

19.0

-

14.0

32.3

-

13.3

7.7%

4.8%

-

2.9%

7.9%

-

3.1%

Ordinary Income

29.0

12.0

-

17.0

28.0

-

16.0

Net Income
Attributable to
Owners of Parent

22.0

11.0

-

11.0

12.8

-

1.8

Forex
(¥/$)

130.0

143.0

Japan Naphtha(¥/Kl)

64,200

Sales
Operating Income
Operating Margin135.1

1H:139.9
2H:145.0

70,30076,500

1H:65,450
2H:75,200
12

FY2023 Earnings Forecastb) Market Outlook▮ Lower-than-expected demand for consumer electronics, xEVs, and chloroprene rubber(Market Trends)

Semiconductors

Revised Forecast

Initial Forecast
Automotive-related applications: Gradual
recovery toward the end of 2023
Consumer electronics-related applications:
Gradual demand recovery in 2Q and beyond

Automotive-related applications: (No change)
Consumer electronics-related applications: Gradual
recovery from the second half, except for memory,which will be from FY2024 onward

xEV

Accelerated market expansion despite negative
effects of inflation and other factors

Market expansion growth slower than expected

COVID-19

・Projection of approximately two epidemics per
year
・Demand for in-hospital testing will continue,
but municipal testing will decrease・No revision for insurance points in the current
fiscal year

(No change)

Chloroprene rubber

Gradual recovery in demand beginning in thefirst half
Second half to recover to 90% of FY2022 firsthalf levels

Despite a recovery in demand for automobile
applications, the market inventory levels are higher
than expected, while demand remains sluggish forindustry and adhesive applications
Moderate recovery from FY2024 onward, mainly inindustrial and automobile applications

Food containers

Increase in demand in the ready-made meal
market, which is less expensive than eating out

Reduced demand in the ready-made meal market
with further rising food prices
13

FY2023 Earnings Forecastc) Operating Income Change Factors (vs Forecast at the Beginning)▮

We expect profit to significantly decease due to delays in expected recoveries of demand forchloroprene rubber and consumer electronics products
Operating
Income19.0 billion yen vs Forecast at the beginning -14.0 billion yen

Operating Income Variance Analysis(vs Forecast at the beginning)

1. Volume:
Chloroprene rubber: Delays in recovery in demand for applications inindustry and adhesives; ongoing adjustments to market inventories in
automobiles despite recovery in demand
Semiconductor-related products, functional resins: Delays in recovery indemand for consumer electronics (smartphones, TVs, PCs, home
appliances)(¥ billions)

33.0

2.
+8.7
1.
-19.8

InitialForecast

VolumePricing3-4.9.

Variablecost
difference

4.
+2.0

Costs

19.0

2. Pricing: (Includes effect of currency fluctuations +14.3)
Chloroprene rubber: Lower sales prices due to intensifying competition
with the products of other companies
Styrene-related products: Price revision due to decline in raw materials andfuel prices

3. Variable cost difference: (Includes effect of currency fluctuations -9.3)
Raw materials and fuel price decreases, etc.

Revised
Forecast

4. Cost variances
Implement company-wide cost reductions to ensure profitability
Further deterioration in repair, labor, and other costs at DPE in the U.S.
* DPE: Denka Performance Elastomer LLC, a U.S. chloroprene rubber
manufacturing subsidiary14

FY2023 Earnings Forecastd) By Segment (vs Forecast at the Beginning)▮ Despite increased profits expected in Life Innovation, profits are expected to significantly

decline in Electronics & Innovative Products, Elastomers & Infrastructure Solutions, andPolymer Solutions
FY2023
InitialForecast

FY2023
Revised
Forecast

Electronics & Innovative Products

100.0Life Innovation

Sales (¥billions)

Incr.
Decr.

VolumePricing

90.0- 10.0- 12.8

+

2.8

45.0

45.0

± 0.0

-

1.1

+

1.1

Elastomers & Infrastructure
Solutions

130.0

120.0

- 10.0- 11.0+

1.0

Polymer Solutions

140.0

130.0

- 10.0- 13.7+

3.7

Others

15.0

15.0

± 0.0

-

Total

430.0

400.0

- 30.0- 38.7

FY2023
InitialForecast

FY2023
Revised
Forecast

Electronics & Innovative Products

15.0

11.5

-

Life Innovation

9.5

12.5

Elastomers & Infrastructure
Solutions

2.5

Polymer Solutions

Operating Income(¥ billions)

Incr.
Decr.

+

8.7

VolumePricing

Cost&
Others

3.5

-

7.2

+

2.8

+

0.9

+

3.0

+

0.5

+

1.1

+

1.4

-7.5

-

10.0

-

9.3

+

1.0

-

1.8

4.5

1.0

-

3.5

-

3.8

+

3.7

-

3.4

Others

1.5

1.5

±

0.0

-

Total

33.0

19.0

-

14.0

- 19.8

+

8.7

-

2.9
15

FY2023 Earnings Forecaste) Electronics & Innovative Products (vs Forecast at the Beginning)

We expect a sharp decline in demand from initial projections, resulting in significantly
lower profits▮-3.5 billion

Operating Income
18.7
12.7

15.0

18.0
15.0

14.2

101

FY2019ActualFY2020
ActualFY2021
ActualMarket Outlook and Sales Trends(Market)Semicondu
ctors

xEV
Renewableenergy(High voltagecables)

Initial Forecast

FY2022
ActualFY2023
Revised

Forecast

Forecast

Accelerated market expansion
Market expansion growth
despite negative effects ofslower than expected
inflation and other factors
Partial delay in large-scale
projects in Europe anddeclining demand in China+2.8

InitialForecast

Revised Forecast

Automotive-related
Automotive-related
applications: No change
applications: Gradual recovery Consumer electronics-related
toward the end of 2023
applications: GradualConsumer electronics-related recovery from the second
applications: Gradual demand half, except for memory,which will be from FY2024
recovery in 2Q and beyond
onwardPartial delay in large-scale
projects in Europe

-7.2

11.5

FY2023
Initial(¥ billions)Operating Income Variance Analysis(vs Forecast at the beginning)

+0.9

11.5

Revised
Forecast

Sales Trends
Spherical fused silica

High-performancefilm
Spherical alumina
Ceramic substrates(silicon nitride,aluminum nitride)
Acetylene black: We forecast a sharp decline in demand from initialprojections for consumer electronics: We forecast a sharp decline in demand from initialprojections for consumer electronics, and decreasein demand for xEVs.
: Same as initial forecast due to steady demand
from major users: We forecast a decline in demand from initialprojections for both xEV and high-voltage cables

16

FY2023 Earnings Forecaste) Life Innovation (vs Forecast at the Beginning)▮ Expecting an increase in profits due to increase in demand for simultaneous test kits for COVID-19 andinfluenza (combo kits) due to the spread of influenza, and to maintaining prices of test kits after
downgrading of COVID-19 to a Class 5 infectious disease
Operating Income

14.8

15.5

+3.0 billion

+0.5

14.4

12.5
9.5

7.0

FY2019ActualFY2020
ActualFY2021
ActualFY2022
ActualMarket Outlook and Sales Trends

FY2023
InitialForecast

FY2023
Revised
Forecast

Revised Forecast

Influenza

・The number of vaccinations wasin line with the as usual due toepidemic trends and a revisionof the number of COVID-19
vaccinations

・The epidemic from lastseason is ongoing,
resulting in earlier
vaccination dates

・Projection of approximately two
epidemics per year

InitialForecast(Inflammation
markers, etc.)

Chinese market to the preCOVID-19 levels of 2019

12.5

Influenza vaccine : Shipments began in September as planned
We revised the number of shipments from 11
million vaccines to 10 million vaccines in responseto earlier vaccination dates and consumption rates
Rapid antigen
test kits:・Increase in shipments expected for simultaneous
test kits for COVID-19 and influenza (combokits) due to the spread of influenza
・Maintaining the price of test kits after
downgrading of COVID-19 to a Class 5
infectious disease

IVD reagents(Inflammation
markers, etc.): Same as initial forecast(No change)(No change)

Revised
Forecast

Sales Trends

・No revision for insurance points

IVD reagents Recovery in demand in the

+1.4

9.5

*Costs: Reduced costs in R&D

Initial Forecast

・Demand for in-hospital testing
will continue, but municipal
testing will decrease+1.1(¥ billions)101(Market)COVID-19

Operating Income Variance Analysis(vs Forecast at the beginning)17

FY2023 Earnings Forecaste) Elastomers & Infrastructure Solutions ( vs Forecast at the Beginning)▮ We expect to see a significant loss due to ongoing weak demand for chloroprene rubber, falling sales prices,and further deterioration of costs at DPE in the U.S.

-10.0 billion

Operating Income
3.9

2.5

2.5
-3.6

-3.5

(¥ billions)Operating Income Variance Analysis(vs Forecast at the beginning)

-1.1
-7.5

FY2019ActualFY2020
ActualFY2021
ActualFY2022
ActualFY2023
InitialForecast

FY2023
Revised
Forecast

Market Outlook and Sales Trends(Market)

Chloroprene rubber

Initial Forecast
Gradual recovery in demand
beginning in the first half
Second half to recover to 90% of
FY2022 first half levels

Special cement
additives

Increase in domestic investments(private and government) anddemand recovery in China

CementCoal price: $209/ton projected
Additional price increase of 3,000
yen/ton will make a gradualcontribution over the first half

-9.3

+1.0

-1.8

InitialForecast-7.5
Revised
Forecast*Costs: Further deterioration in repair, labor, and other costs at DPE in the U.S.

Revised Forecast
Despite a recovery in demand for automobile
applications, the levels of market inventory
adjustments are higher than expected, while
demand remains sluggish for industry andadhesive applications
Moderate recovery from FY2024 onward, mainly
in industrial and automobile applications
Domestic investments, mainly in thegovernment, remained strong
Demand is sluggish in China, but gradually
recovering in Europe and Southeast Asia

Coal price: $145/ton projected
The 3,000 yen/ton additional price hike, despite
delays, is almost complete as of July 31, 2023

Sales Trends
We expect prolonged sluggish demand andvolumes to reduce significantly
Lower sales prices due to intensifying competition
with the products of other companies

Same as initial forecast

Delayed contribution of price hikes despite falling
coal prices

18

FY2023 Earnings Forecaste) Polymer Solutions (vs Forecast at the Beginning)▮

We expect a sharp decline in demand from initial projections, resulting in significantly lowerthan-expected profits
Operating Income

7.1

8.4

-3.5 billion

7.9

+3.7

4.5

4.5

(¥ billions)Operating Income Variance Analysis(vs Forecast at the beginning)

4

-3.4

-3.8

1.0

1.0
-1.2
FY2019ActualFY2020
ActualFY2021
ActualFY2022
Actual5
FY2023
InitialForecast

FY2023
Revised
Forecast

Market Outlook and Sales Trends(Market)ConsumerElectronics(TVs, PCs, home
appliances, etc.)

Initial Forecast
Gradual demand recovery in
2Q and beyond

Revised Forecast
Recovery of demand is
expected to be delayed

Revised
Forecast

InitialForecast

Sales Trends
MS resin
AS, ABS,transparent
resins, etc.

Cosmetics
containers,
Generalmerchandise,
etc.

Gradual demand recovery in
2Q and beyond

Recovery of demand is
expected to be delayed

Food containers

Increase in demand in theready-made meal market,
which is less expensive thaneating out

Reduced demand in theready-made meal market
with further rising foodpricesFood wrapping
sheets andcontainers

Toyokalon

We expect a recovery indemand in the African and
U.S. markets

Delayed recovery indemand in the African and
U.S. markets

Toyokalon: We expect a delayed recovery in demand for PC
monitor, LGP for lighting, and other applications(cosmetics containers), causing shipments to belower than initial forecast: We expect a delayed recovery in demand for
consumer electronics, cosmetics containers,
general merchandise, etc., causing shipments tobe lower than initial forecast: Lower than Initial forecast: Lower than Initial forecast
19

FY2023 Earnings Forecastf) Investment, Depreciation, R&D by Segment▮ The first half is flat year on year, with no change to initial forecast for the full year
1H (Year on Year)(¥ billions)Electronics & Innovative Products

Investment

Depreciation

R&D

FY2022

FY2023

FY2022

FY2023

FY2022

FY2023

1H Actual

1H Actual

1H Actual

1H Actual

1H Actual

1H Actual

7.0

8.2

3.8

4.4

2.5

2.8

Life Innovation

0.5

1.4

2.0

1.9

2.0

2.3

Elastomers & Infrastructure
Solutions

4.8

4.6

5.0

4.3

1.7

1.5

Polymer Solutions

4.7

2.3

2.3

2.5

1.3

1.2

-

-

0.2

0.2

-

-

17.0

16.5

13.4

13.4

7.5

7.8

Others

Total

Investment

FY(vs Forecast at the beginning)

Depreciation

R&D

FY2023

FY2023

FY2023

FY2023

FY2023

FY2023

InitialForecast

Revised
Forecast

InitialForecast

Revised
Forecast

InitialForecast

Revised
Forecast

Electronics & Innovative Products

20.0

9.0

5.0

Life Innovation

7.0

4.0

6.0

Elastomers & Infrastructure
Solutions

13.0

Polymer Solutions

7.0

OthersTotal

Nochange9.0
5.0

Nochange

3.0
2.0

-

0.5

-

47.0

27.5

16.0

No
change20

FY2023 Earnings Forecastg) Shareholder Returns, ROE▮ We reduced dividends due to unavoidable circumstances calling for a significant downward

revision

FY2018ActualNet Income
Dividends per Share*

FY2019ActualFY2020
ActualFY2021
ActualFY2022
ActualFY2023
Forecast(¥ billions)

25.0

22.7

22.8

26.0

12.8

11.0

(¥/share)

120.0

125.0

125.0

145.0

100.0

100.0
Mid-term 60.0
End 40.0

Dividend

10.5

10.8

10.8

12.5

8.6

8.6

42%

48%

47%

48%

68%

78%

(¥ billions)

2.1

-

-

-

-

-

(¥ billions)

12.6

10.8

10.8

12.5

8.6

8.6

50%

48%

47%

48%

68%

78%

(¥ billions)Shareholders Return
Stock PurchaseTotal Return
Total Return Ratio
Depreciation(¥ billions)

22.9

22.5

22.9

23.9

27.0

27.5

Investment & Lending(¥ billions)

32.8

36.9

42.3

35.6

39.4

47.0

Interest Bearing Debt(¥ billions)

112.1

134.3

138.2

137.0

169.7

188.0

Net D/E Ratio

0.40

0.42

0.42

0.40

0.50

0.56

ROIC

7.8%

6.6%

6.8%

7.3%

6.7%

3.3%

ROE

10.3%

9.1%

8.8%

9.4%

4.4%

3.8%
21

Measures to Improve FY2024 Earnings

22

Measures to Improve FY2024 Earningsa) FY2024 Forecast▮ We expect profit to decline in FY2023 after record-high profit in FY2021 due to changes in the economic environment
We will implement measures to improve earnings, forecasting that they will recover in FY2024(¥ billions)Operating Income
Record-high profit

40.1
32.3
19.0

FY2021

FY2022

FY2023

Electronics &Innovative Products

18.7

18.0

11.5

Life Innovation

15.5

14.4

12.5

Elastomers &Infrastructure Solutions

-3.5

-1.1

-7.5

Polymer Solutions

7.9

-1.2

1.0

Others

1.5

2.3

1.5

FY2024(By Segment)

23

Measures to Improve FY2024 Earningsb) FY2021 vs FY2023 Forecast Variance Analysis▮

Volume and cost difference will deteriorate significantly in FY2023 compared to the year ofrecord-high profits in FY2021
FY2021
ActualFY2023
Revised
Forecast

Incr.
Decr.

Electronics & Innovative
Products

18.7

11.5

Life Innovation

15.5

Elastomers &Infrastructure Solutions*Fluctuations due to
COVID-19 antigen test kits

VolumePricing

Variablecost
difference- 7.2- 10.0+ 10.8

-

6.6

- 5.8

+ 4.4

12.5

- 3.0

+ 17.0- 16.6 *

-

0.8

- 2.6

- 0.1

-3.5

-7.5

- 4.0

- 10.0+ 20.9- 13.3

- 3.3

+ 1.8

Polymer Solutions

7.9

1.0

- 6.9

- 3.4

+ 2.9

-

2.6

- 3.5

- 0.4

Others

1.5

1.5

- 0.0

+ 0.0

-

-

0.4

- 0.0

-

Total

40.1

19.0

-21.1

- 0.6

+ 18.0- 23.6

-15.2

+ 5.8

- 23.1+ 34.6- 22.9

-12.6

+ 5.9

Operating Income(¥ billions)

Total excluding Life Innovation

Cost&
OthersForeign
Exchange
Difference

Spread improvement

Volume and cost difference to deteriorate significantly in FY2023 compared to the year of record-high profits in FY2021
We will implement measures to improve earnings, forecasting that they will recover in FY2024.
24

Measures to Improve FY2024 Earningsc) Countermeasures by Segment▮

In addition to optimization of sales and production systems, launch a company-wide cost
reduction project as a drastic cost measure and implement thorough cost reduction
Earnings Improvement Measures
VolumeCosts

xEVs and Semiconductor-Related ProductsElectronics &Innovative ProductsLife Innovation

Elastomers &Infrastructure
Solutions

Grasp the recovery in demand by enhancing ourcapacity through upfront investment under theprevious management plan of Denka Value-Up
Launch of Organic Low Dielectric Materials for
Next-Generation Communications Use(Sales of 10.0-15.0 billion yen in FY2030)
SNECTON (Low Dielectric Macromonomer/LDM),LCP Film (Liquid Crystal Polymer Film), Other

Launch of Company-Wide Cost Reduction ProjectIncrease sales by establishing of production
system for G47Δ formulation(Sales of 70.0 billion yen in FY2030)

We will launch a comprehensive company-wide
project that actively incorporates the knowledge ofoutside consultants

Optimize chloroprene rubber business

Optimize sales and production systems based on
demand trends
Recover demand for consumer electronics

Polymer Solutions

Optimize sales and production systems in line withthe market size of styrene-related products

25

Measures to Improve FY2024 Earningsd) Upfront Investments to Achieve Mission 2030 Targets▮ Planned operation of active upfront investment projects in focus areas to achieve Mission 2030 targets

Aiming to Make the World a Better Place as Specialists in Chemistry

8-Year strategic investment of 360 billion yen-FY2023
Increase Spherical Alumina

ICT＆Energy(launched in April 2022)
Investment:4.0 billion yen

Increase Ceramic Substrates(launch in 2023 2H)
Investment: 4.0 billion yen

FY2024FY2025

FY2026-

Increase Spherical Fused
SilicaIncrease Silicon
Nitride Powder

Acetylene black
New manufacturingbase in Thailand(launch in 1H)

Relocate to New
Facility for Thermally
Conductive Sheets(launch in 1H)
Investment: 1.7 billion yen

Launch Manufacturing andMarketing of SNECTON(Low Dielectric
Macromonomer/LDM)(develop in 1H)(launch in 1H)

Operate LCP Film Facility(Liquid crystal polymer film)

Operate TBM Facility(Temporary Bonding Material foruse in Semiconductor
Manufacturing Processes)(launch in 2026 2H)
Investment: 0.4 billion USD

M to A investments
Introduce in Omuta Plant(launch in 2026 1H)
Investment: 6.7 billion yen

Planned invest in SNECTON(Low Dielectric
Macromonomer/LDM)

Increase Emitters(launch in 2H)

Investment: 1.0 billion yen

Healthcare

Sustainable
LivingIncrease Influenza Vaccine(launched in March 2022)
Investment: 16.0 billion yen

Increase MS Resin(launched in July 2021)
Investment: 2.7 billion yen

Increase IVD Reagents andAntigen Test Kits
(launch in 2H)
Investment: 11.0 billion yen

Increase G47Δ pharmaceutical(Phase 1: End of FY2025; Phase 2: ２H FY2027)
Investment: 12.0 billion yen

Relocate to New Facility for
TOYODRAIN Polyethylene
Drainpipes(launch in 1H)
Investment: 2.3 billion yen

Chemical Recycling(launch in 2023 2H)
Investment: 3.8 billion yen

Details of each category are provided on the following pages

M to A investments
Deploy in Omi Plant

Carbonation Admixture
Planned investment in LEAF
26

Measures to Improve FY2024 Earningsd) Upfront Investments to Achieve Mission 2030 Targets
ICT＆Energy (1)・Applications: LiBs for xEVs, high-voltage transmission line cables for offshore wind power generation
・In response to the rapidly growing demand for acetylene black, we established a joint venture with SCG Chemicals
Acetylene black
New manufacturing base Public Company for the manufacturing and sale of acetylene black, and will construct a plant with an annual
production capacity of 11,000 tonsin Thailand(launch in 2026 2H)・Operation launch: 2026 2H Investment amount: US$400 million Investment ratio: DENKA Group 60%, SCG 40%

Investment: 0.4 billion USD

Increase Silicon
Nitride Powder(launch in 2025 1H)

https://www.denka.co.jp/eng/storage/news/pdf/463/20231010_denka_abjv_en.pdf

・Applications: insulating substrates for xEV inverters in power modules, bearing balls for traction motors
・Reliable quality and cost-effective performance that meet requirements in the xEV (automotive) market: heatdissipation, light weight, high rigidity, and long useful life
・Expand further to meet the strong xEV market demand (Operation launch: FY2025)

Increase Spherical Fused
Silica(launch in 2024 1H)

Decision to Expand Spherical Fused Silica Manufacturing Facilities in Singapore -Increasing manufacturing capacity byapproximately 30% for further growth in the environment and energy fieldshttps://www.denka.co.jp/eng/storage/news/pdf/470/20220511_denka_silica_en.pdf

Increase Spherical
Alumina(launched in April 2022)

Full-scale Operation of New Production Line of Spherical Alumina in Singapore
https://www.denka.co.jp/eng/storage/news/pdf/433/20220511_denka_alumina_en.pdf

Investment: 4.0 billion yen

Relocate to New Facility Denka Introduces New Production Facility for Thermally Conductive Sheet for 5G/xEV to Shibukawa Plant and Doubles
for Thermally Conductive Production Capacity
Sheets-Positioning as One of the Core Production Plants of Electronic Materials to Enhance Specialty Business(launch in 2024 1H)
Investment: 1.7 billion yen

https://www.denka.co.jp/eng/storage/news/pdf/376/20211125_denka_shibukawa_en.pdf

27

Measures to Improve FY2024 Earningsd) Upfront Investments to Achieve Mission 2030 Targets
ICT＆Energy (2)Increase Ceramic
Substrates(launch in 2023 2H)
Investment: 4.0 billion yen

Increase Emitters(launch in 2024 2H)

Investment: 1.0 billion yen

SNECTON(Low Dielectric
Macromonomer/LDM)

LCP Film(Liquid Crystal Polymer
Film)

TBM

(Temporary Bonding Material
for use in Semiconductor
Manufacturing Processes)

・Applications: xEV insulating substrates for inverter power modules
・The only manufacturer that manufactures silicon nitride powder, bare substrate, and copper bonded circuit substrate in an
integrated manufacturing process and the only manufacturer with a lineup of two types of products--aluminum nitride andsilicon nitride. This advantage allows us to respond flexibly to the characteristics required to achieve higher performance.
・Expand to meet increasing demand for automotive products (further expansion planned, including doubling in the second halfof FY2023)
・Applications: Surface observation application for semiconductor materials and devices (wafer inspection, mask inspection, etc.)
and circuit patterning application in semiconductor manufacturing lithography processes, etc.
・Demand for emitters capable of emitting electronic wires only a few micrometers thick due to miniaturization andmicrominiaturization of semiconductors.
Enhance to meet growing demand・Applications: Substrates for copper clad laminates (CCL) and interlayer dielectric materials
・With thermosetting materials composed of ethylene styrene-divinylbenzene, we resolve issues faced bysoft materials in heat resistance and dielectric properties.
Evaluation is progressing steadily as a base material for rigid substrates for high speed communications and an interlayer
dielectric material. As the only manufacturer of both resin materials and inorganic fillers, we are able to offer our own uniqueproposals by Varnish, a resin filler mixture.
・Applications: Substrates for flexible copper clad laminates (FCCL)・LCP is a extremely difficult resin to make into film, and few manufacturers can provide a stable supply of LCP. By applying thefilm deposition technology for organic materials cultivated in the electronic packaging and food packaging sheet businesses, w
e have established a technology for manufacturing LCP using the T-die method (T die extrusion method) , which offers
superiority in mass production andfilm thickness control. LCP is expected to be a base material for flexible circuits of high speed communications.
・Applications: Temporary fixing heat-resistant adhesive used in back-grinding process to thin wafers in the semiconductor
manufacturing process
・The most common method of protecting wafer circuit surfaces and fixing wafers to equipment is through temporary fixing withtape, such as our Elegrip, due to its cost and simplicity. However, using adhesives to temporarily fix wafers is common whenprocessing difficult-to-grind wafers, such as ultra-thin films or hard and brittle wafers, to improve handling. In addition, thepolished surfaces after back grinding are subjected to high temperature treatment in the manufacturing of next-generation
semiconductors, such as power devices. As tapes cannot be used on these surfaces due to insufficient heat resistance, themarket for heat-resistant adhesives is expected to expand.
28

Measures to Improve FY2024 Earningsd) Upfront Investments to Achieve Mission 2030 Targets

Healthcare

Increase G47Δ
pharmaceutical(Phase 1: End of FY2025;
Phase 2: ２H FY2027)
Investment: 12.0 billion yen

・G47Δ is the world's first approved oncolytic therapeutic virus for malignant glioma (brain tumors)
・We decided to increase G47Δ in preparation for a rapid increase in future demand, such as in overseas expansion andclinical research in other types of cancers
・Operation launch: Phase 1: End of FY2025; Phase 2: ２H FY2027
・Investment: Approximately 12 billion yen,・Target sales of 70.0 billion yen in 2030
https://www.denka.co.jp/eng/storage/news/pdf/456/20230412_denka_g47_en.pdf

Increase IVD Reagentsand Antigen Test Kits

Denka Announces Expansion of Reagent Production Capacity Including Antigen Test Kits through Strategic Investment ofApproximately 11 Billion Yen-Strengthening Health Care Business and Commitment to Control Infectious Diseases Worldwidehttps://www.denka.co.jp/eng/storage/news/pdf/409/20220414_denka_gosen_en.pdf

Increase Influenza
Vaccine・Launched new undiluted liquid plant building for influenza vaccine to double production capacity from previous level
・Production volumes were previously affected by differences in manufacturing strains, but increased production capacity
will enable us to provide vaccines to the market as quickly as possible
https://www.denka.co.jp/eng/storage/news/pdf/316/20201116_denka_gosen_en.pdf(launch in 2024 2H)
Investment: 11.0 billion yen(launched in March 2022)
Investment: 16.0 billion yen

29

Measures to Improve FY2024 Earningsd) Upfront Investments to Achieve Mission 2030 Targets
Sustainable Living
・To reduce CO₂ emissions, we introduced equipment to the Omuta plant for a new process to produce acetylene frommethane developed by Transform Materials, a venture company in the U.S. We demonstrate this technology and conduct
M to Ajoint research on technological improvements toward large scale mass production of acetylene.
(Methane to Acetylene)
・We deploy M to A, which established mass production technology at Omuta plant, to the carbide chain at the Omi Plant,
Investment
which has our unique hydroelectric power generation system. This enabled us to achieve low carbon chloroprene rubber
Introduce in Omuta Plant
and utilize hydrogen energy obtained as a byproduct of the manufacturing process.
(launch in 2026 1H)・We expect to reduce 300,000 ton of CO₂ through the conversion of our current manufacturing method (the carbide
Investment: 6.7 billion yen
method) and the utilization of hydrogen⇒Deploy in Omi Plant
・Operation launch: FY2026 1H
https://www.denka.co.jp/eng/storage/news/pdf/468/20230809_mtoa_en.pdf
Denka Decides on the Construction of Chemical Recycling Plant for Used Polystyrene Resins-Aiming to Build a Carbon-free, Resource Circulating Societyby Reusing Waste Plastic to Achieve the SDGs(launch in 2023 2H)
Investment: 3.8 billion yen https://www.denka.co.jp/eng/storage/news/pdf/389/20220111_denka_ps_chemical_recycle_en.pdf

Chemical Recycling

Carbonation
Admixture
LEAF

・This is the key material for CO₂-SUICOM, the world's only carbon-negative concrete used in practical application
・A consortium of 55 companies, led by Kajima Corporation, Takenaka Corporation, and our Company, made a joint
proposal to the NEDO Green Innovation Fund Projects, aiming for the full-scale diffusion of LEAF. The proposal was
adopted.
・The consortium developed CUCO, a precast component for construction, which was used as a foundational
component in temporary buildings for the Expo 2025 Osaka, Kansai, Japan. This is the first time the component has
been applied to an actual building since its use in civil engineering structures in FY2022.
*Released by Takenaka Corporation https://www.takenaka.co.jp/news/2023/10/04/

Increase MS Resin
Denka Completes Construction of Production Facility to Boost Production of High-Functional Transparent Polymers (MS Resin) at(launched in July 2021)
Base in Singapore
Investment: 2.7 billion yen -Doubling Annual Production Capacity to Approx 140,000 tons and Enhancing Specialty Businesshttps://www.denka.co.jp/eng/storage/news/pdf/354/20210708_denka_singapore_msresin_en.pdf
Relocate to New Facility
Denka Increases Capacity to Produce TOYODRAIN Polyethylene Drainpipes through Strategic
for TOYODRAIN
Polyethylene Drainpipes Investment of Approximately 2.3 Billion Yen
https://www.denka.co.jp/eng/storage/news/pdf/432/20221011_toyodrain_en.pdf(launch in 2025 1H)
Investment: 2.3 billion yen

30Upcoming Schedule for Quality and Safety

Future schedule for quality and safety matters

Improprieties Related to Third-Party
Certification of Resin Products of Denka andToyo Styrene, an Equity-Method Affiliate

Notice Concerning an Accident at Omi Plant

ScheduledPublication

December,
2023

ScheduledPublication

January, 2024

・ Under investigation by an external
investigation committee
We plan to announce the external
investigation committee report in addition
to any countermeasures to be
implemented based on said report.
・ Under investigation by the accident
investigation committee
The accident investigation committee
report is scheduled to announce
preventive measures to be implemented
by the Company based on therecommendations of committee members.

We will clarify management responsibility at the time of the publication of the investigation results.
The Denka Group will work together to further strengthen compliance and safety to regain the trust of all
stakeholders.

31

(Reference) Forecast (By Segment) (Year on Year)Sales (¥billions)

FY2022
ActualFY2023
Revised
Forecast

Incr.
Decr.

VolumePricing

Electronics & Innovative
Products

93.5

90.0

-

3.5

-

7.3

+

3.7

Life Innovation

47.5

45.0

-

2.5

-

2.3

-

0.3

Elastomers & Infrastructure
Solutions

123.8

120.0

-

3.8

-

9.4

+

5.5

Polymer Solutions

127.6

130.0

+

2.4

+

4.2

-

1.7

Others

15.1

15.0

-

0.1

-

0.1

Total

407.6

400.0

-

7.6

- 14.8FY2023
Revised
Forecast

Incr.
Decr.

Operating Income(¥ billions)

FY2022
Actual+7.3

VolumePricing

Cost&
OthersElectronics & Innovative
Products

18.0

11.5

-

6.5

-

3.4

+

3.7

-

6.8

Life Innovation

14.4

12.5

-

1.9

+

1.1

-

0.3

-

2.7

Elastomers & Infrastructure
Solutions

-1.1

-7.5

-

6.4

-

5.5

+

5.5

-

6.5

Polymer Solutions

-1.2

1.0

+

2.2

+

0.3

-

1.7

+

3.6

Others

2.3

1.5

-

0.8

-

0.9

-

+

0.1

Total

32.3

19.0

-

13.3

-

8.3

+

7.3

- 12.332

(Reference) Quarterly Trends (By Segment)
FY2021

Sales (¥billions)

FY2022

FY2023
2H Forecast(3Q, 4Q)

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

Electronics & Innovative
Products

21.0

22.8

22.3

24.0

21.9

25.6

22.3

23.8

19.2

22.5

48.3

Life Innovation

6.0

19.3

10.9

9.9

6.4

15.5

16.9

8.8

7.2

15.0

22.8

Elastomers &Infrastructure Solutions

24.6

26.8

26.1

29.3

30.4

32.5

31.6

29.3

28.0

29.2

62.8

Polymer Solutions

31.8

31.5

29.5

33.9

31.6

32.0

30.3

33.7

29.8

31.7

68.5

Others

3.5

4.0

4.0

3.7

4.1

2.9

4.7

3.4

3.7

5.1

6.2

Total

86.7

104.4

92.8

100.9

94.4

108.6

105.8

98.8

87.8

103.5

208.6

2H Forecast(3Q・4Q)

Operating Income(¥ billions)

FY2021

FY2022

FY2023

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

Electronics & Innovative
Products

4.4

4.8

4.6

4.9

4.1

5.6

4.1

4.2

2.1

2.8

6.6

Life Innovation

0.3

10.4

1.2

3.6

0.5

6.0

5.0

2.8

0.9

5.7

5.9

Elastomers &Infrastructure Solutions

0.1

-0.0

-1.2

-2.3

-0.2

1.5

-1.3

-1.1

-0.7

-0.9

-5.9

Polymer Solutions

2.6

1.8

1.9

1.6

-0.1

-0.0

-0.9

-0.1

-0.0

-0.2

1.3

Others

0.4

0.5

0.4

0.2

0.6

0.4

0.9

0.4

0.5

0.5

0.5

Total

7.7

17.5

7.0

7.9

4.9

13.4

7.8

6.3

2.8

7.7

8.5
33

Cautionary statement regarding forward-looking information

業績予想の適切な利用に関する説明（将来に関する記述等についてのご注意）

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 based 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
本資料に掲載されている業績の見通し等の将来に関する記述は、
to differsignificantly from the description in the material.
Such risks and uncertainties include adverse economic conditions, currency
当社が現在入手している情報および合理的であると判断する一定
exchange rate fluctuations, adverse legislative and regulatory developments,
delaysin new product launch, pricing, and product initiatives of competitors,の前提に基づいており、実際の業績等は様々な要因により大きく
the inability of the Company to market existing and new products effectively,interruptionsin production, infringements of the company's intellectual property
異なる可能性があります。
rights and the adverse outcome of material litigation.

34

Inquiries regarding this material

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

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