Results Presentation of FY2023(Fiscal Year Ended March 2024)

Securities code: 4061
Denka Co., Ltd
May 10, 2024

Announcement of New Regulations set by the U.S. Environmental Protection Agency That
Apply to Chloroprene Rubber Manufacturing Facilities in the U.S.
◼ The EPA emission regulations will have a significant impact on whether Denka Performance Elastomer (DPE) will be able to continue operations in
the U.S. DPE is considering all possible responses, including taking legal actions seeking a revision of the regulations.
(Press release)・ April 17 2024: Announcement of New Regulations set by the U.S. Environmental Protection Agency that apply to Chloroprene Rubber
Manufacturing Facilities in the U.S.
https://www.denka.co.jp/eng/storage/news/pdf/490/20240417_denka_dpe_en.pdf

Details and Company Response
Details・April 9, 2024 (local time)
U.S. Environmental Protection Agency (EPA) announces new chemical air emission regulations applicable to chloroprenerubber manufacturing facilities in the U.S., including facilities operated by DPE・Details of the rules call for significant reductions in chloroprene monomer emissions
・The rules take effect 60 days from publication of the rules in the federal register, and the grace period for compliance is
90 days from the date of effect(Date of publication in the federal register: Not published as of now)

Company Response

・The Company is considering all possible measures to have the new regulations revised, including taking the matter to the
U.S. Court of Appeals
・We are carefully investigating the impact the regulations will have on DPE chloroprene rubber manufacturing operations
and financial results* DPE: Denka Performance Elastomer LLC, a U.S. chloroprene rubber manufacturing subsidiary2Presentation Highlights

FY2023 Results(P4-P13)◼ Operating income: 13.4 billion yen -18.9 billion yen year on year
◼ Net income:11.9 billion yen -0.8 billion yen year on year
Gain on sale of strategic cross-shareholdings
Portfolio transformation+12.5 billion yen (FY2022 +5.0 billion yen → FY2023 +17.4 billion yen)
+10.9 billion yen (FY2022 -17.7 billion yen → FY2023 -6.8 billion yen)

*FY2022: Recorded an extraordinary loss due to the withdrawal from the cement business;
FY2023: Recorded an impairment loss on goodwill, etc., related to Icon Genetics due to termination of norovirus vaccine development

FY2024
Earnings Forecast◼ Operating income: 18.0 billion yen◼ Net income:9.0 billion yen+4.6 billion yen year on year
-2.9 billion yen year on year

(P14-P25)

We have not factored in the impact of drastic measures for the chloroprene rubber business planned for announcement
during 2024

Shareholder
Returns◼ Maintain 100 yen per share dividend, the same as the previous year, taking into account the impact
drastic measures in the chloroprene rubber business to be announced during 2024, cash flow
improvement for FY2025 and beyond, etc. (total return ratio of 96%)
◼ Future dividend policy: Aiming to maintain or increase dividend per share based on a total return ratioof 50%(cumulative total for the eight years of the management plan)(P26)

Response to
ChangedAssumptions Under
Mission 2030
Management Plan
(P27-P32)◼ A positive shareholder return policy, carefully selected strategic investments (reduce investment planby 100 billion yen cumulatively over eight years), portfolio transformation, and best practice project◼ Return performance to a growth trajectory in the second half of FY2024, while maintaining a steady
D/E ratio of 0.6x to 0.8x
3FY2023 Results

4

FY2023 Resultsa) Summary (Year on Year, vs Forecast as of February)◼ Operating income decreased year on year due to slowing demand and other factors, net income was impacted by the posting of a 17.4 billion yen
gain on the sale of strategic cross-shareholdings and a 6.8 billion yen impairment loss due to the termination of norovirus vaccine development(¥ billions)

FY2022
ActualFY2023
Actual(Year on Year)FY2023
Forecast as ofFebruary(vs Forecast as
of February)

Sales

407.6

389.3

-

18.3

380.0

+

9.3

Operating Income

32.3

13.4

-

18.9

11.0

+

2.4

7.9%

3.4%

-

4.5%

2.9%

+

0.5%

Ordinary Income

28.0

5.5

-

22.6

3.0

+

2.5

Net Income Attributableto Owners of Parent

12.8

-

0.8

11.0

+

0.9

Operating Margin

Forex
(¥/$)

Japan Naphtha(¥/Kl)*1

135.1(1H: 131.6 2H: 138.6）

*2

143.8
(1H: 139.9 2H: 147.7)

76,50069,000(1H: 82,850 2H: 69,400)(1H: 65,450 2H: 72,550)*1 Extraordinary Losses due to withdrawal from cement business -17.7 billion yen

Gain on sale of strategic cross-shareholdings +5.0 billion yen

11.9

142.8

68,500*2 Gain on sale of strategic cross-shareholdings: +17.4 billion yen

Impairment loss on goodwill, etc., related to Icon Genetics due to termination of norovirus vaccine development -6.8 billion yen
Restoration costs for facilities, etc., due to the Noto Peninsula earthquake -0.9 billion yen

5FY2023 Resultsb) Operating Income Change Factors (Year on Year)◼ Significantly lower profits due to lower sales volumes with lower demand, as well as higher fixed costs
Operating Income Variance Analysis(Year on Year)(¥ billions)

32.3
+8.0

-5.0
-13.4

-8.6

-18.9
billion yen(Minus)Chloroprene rubber
Consumer electronics
products
Acetylene black(Plus)
Rapid antigen test kits

FY2022
ActualVolume13.4

Spread difference +3.0 billion yen(+4.0 billion yen in currency fluctuation; write-down ofchloroprene rubber inventory; cement price increase;maintained Styrene-related products spread)

Increase in expenses at DPE
in the U.S.
Increase in costs for systems
to increase production, cost
to strengthen sales systems

Pricing

Variable cost difference

Fixed costs

FY2023(Includes effect of
currency fluctuations +10.8)(Includes effect of
currency fluctuations -6.8)(Includes effect of
currency fluctuations -2.1)

Actual6

FY2023 Resultsc) By Segment (Year on Year)◼ Profit declined significantly year on year for Electronics & Innovative Products, as well as Elastomers & Infrastructure Solutions

Sales

FY2022

FY2023

Incr.
Decr.

VolumePricing(¥ billions)Electronics & Innovative Products

93.5

87.8

-

5.7

-

9.2

+

3.5

Life Innovation

47.5

47.1

-

0.4

-

0.5

+

0.0

Elastomers & Infrastructure Solutions

123.8

111.4

- 12.5- 19.1+

6.6

Polymer Solutions

127.6

124.2

-

3.3

-

1.3

-

2.1

Others

15.1

18.8

+

3.7

+

3.7

Total

407.6

389.3

Operating Income

FY2022

FY2023-- 18.3- 26.3

+

8.0

Incr.
Decr.

VolumePricing

Cost and
Other

Electronics & Innovative Products

18.0

9.0

-

9.0

-

5.1

+

3.5

-

7.4

Life Innovation

14.4

11.7

-

2.6

-

0.1

+

0.0

-

2.6

Elastomers & Infrastructure Solutions

- 1.1

-9.3

-

8.2

-

6.9

+

6.6

-

7.8

Polymer Solutions

-1.2

-0.1

+

1.1

-

1.0

-

2.1

+

4.2

Others

2.3

2.0

-

0.3

-

0.3

-

+

0.0

Total

32.3

13.4

- 18.9- 13.4+8.0- 13.6
7

FY2023 Resultsd) Operating Income Change Factors by Segment (vs. FY2023 3Q)◼ Lower Life Innovation and Polymer Solutions profit compared to 3Q, profit decreased overall

Sales

FY2022(¥ billions)

FY2023Vs. 3Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

Electronics & Innovative Products

21.9

25.6

22.3

23.8

19.2

22.5

21.7

24.5

+

2.9

Life Innovation

6.4

15.5

16.9

8.8

7.2

15.0

15.8

9.0

-

6.8

Elastomers & Infrastructure
Solutions

30.4

32.5

31.6

29.3

28.0

29.2

28.6

25.6

-

3.0

Polymer Solutions

31.6

32.0

30.3

33.7

29.8

31.7

30.9

31.9

+

1.0

Others

4.1

2.9

4.7

3.4

3.7

5.1

4.5

5.4

+

0.9

Total

94.4

108.6

105.8

98.8

87.8

103.5

101.5

96.4

-

5.1

Operating Income

FY2022

FY2023Vs. 3Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

Electronics & Innovative Products

4.1

5.6

4.1

4.2

2.1

2.8

1.8

2.4

+

0.6

Life Innovation

0.5

6.0

5.0

2.8

0.9

5.7

3.1

2.0

-

1.1

Elastomers & Infrastructure
Solutions

-0.2

1.5

-1.3

-1.1

-0.7

-0.9

-3.9

-3.7

+

0.2

Polymer Solutions

-0.1

-0.0

-0.9

-0.1

-0.0

-0.2

0.6

-0.4

-

1.1

Others

0.6

0.4

0.9

0.4

0.5

0.5

0.4

0.6

+

0.2

Total

4.9

13.4

7.8

6.3

2.8

7.7

2.0

0.8

-

1.2
8

FY2023 Resultse) Electronics & Innovative Products (Year on Year)◼ Profit declined significantly due to major decrease in demand for consumer electronics (smartphones, PCs) in FY2022 3Q, weak demand for highvoltage cables, and cost increases beginning
Operating Income Variance
Analysis (Year on Year)18.0(¥ billions)Reason for Variance(Year on Year)(By Application)
Sales

+3.5

- 5.1

- 7.4

-9.0

9.0

billion yen(Reference) Operating Income by Quarter

Volume(TIM* applications)・Lower YoY as demand for
consumer electronics, which had
plummeted in FY2022 3Q,
continued to decline in FY2023

Spherical
Alumina

4.1

2.1

3Q

4Q Non-Consolidated (vs. 3Q)

4Q

FY2023
1Q
2Q

・Acetylene black:High-voltage cables are shipped in batches to a certain extent, resulting
in shipments increased in 4Q due to differences in timing for said shipments
・Spherical alumina: Shipments increased with recovery in demand
・Ceramic substrates: Shipments decreased due to design changes among major users: PlusHigh-Performance
Film・For semiconductors, same asabove.
・For electronic component
applications, gradual recovery as
inventories in the market are
worked down・Overall, sales largely in line withthe previous year

Same asabove

Same as above

・Demand for high-voltage
cables in Europe declined
due to construction delays;
demand for high-voltage
cables in China also
weakened

Same asabove

・Demand recovered andshipments were higher YoY

・Sales for electric railway
applications were on a parwith the previous year

Same as
above

2.4

4Q

Currency
fluctuation

Same asabove

Ceramic Substrates

3Q

Pricing(Semiconductor sealants)
Same as above

Acetylene Black

1.8

Other

・Level YoY with aslowdown in European and
U.S. EV market growth,which account for a highpercentage of total sales,
and other factors

4.2
2.8

FY2022
1Q
2Q

xEV

Spherical Fused
Silica5.6
4.1

Semiconductor and Electronic
Components(silicon nitride, aluminum
nitride)Cost and
Other

Increase in costs for systems to raise production, and costs to strengthen sales systems*TIM (Thermal Interface Materials)

9

FY2023 Resultse) Life Innovation (Year on Year)◼ Profit decreased, despite an increase in demand for simultaneous test kits for COVID 19 and influenza (combo kits), due to cost increases, etc.
Operating Income Variance
Analysis (Year on Year)

14.4(¥ billions)

+0.0

-0.1

4.1
-2.6

-2.6

Reason for Variance(Year on Year)

11.7

Sales

6.0

5.7

Influenza Vaccine

Rapid Antigen Test
Kits

・Higher shipments of simultaneous test
kits for COVID 19 and influenza (combokits) due to the spread of influenza

IVD Reagents(Inflammation
markers, etc.)

5.0
3.1

2.8
0.5
FY2022
1Q
2Q

3Q

4Q

0.9
0.9
FY2023
1Q
2Q

3Q

Pricing・Assuming that the number ofvaccinations would return to normal, we
manufactured 10 million vaccines, anincrease from the previous year, but thevaccination rate did not increase andremained at the same level as theprevious year

billion yen(Reference) Operating Income by Quarter

Volume・Maintained prices after thedowngrade of COVID-19 to a
Class 5 infectious disease・Largely unchanged from last year

2.0

4Q

4Q Non-Consolidated (vs. 3Q)
Influenza vaccine: Sales completed by 3Q as normal;
rapid antigen test kit: sales volume down

Cost and
Other

Soaring prices of raw materials for influenza vaccines, R&D expenses, etc.

10

FY2023 Resultse) Elastomers & Infrastructure Solutions (Year on Year)◼ Profit decreased significantly with weak demand for chloroprene rubber, cost increases, including repairs and labor costs at DPE in the U.S., andinventory valuation write-downs
Operating Income Variance
Analysis (Year on Year)(¥ billions)Reason for Variance(Year on Year)
Sales

-9.3
-1.1

+6.6
-8.2

billion yen-6.9

Chloroprene
Rubber-7.8

VolumePricing・Shipments falling
below the previous year
due to lower demand
from FY2022 3Q for
applications in industry
and adhesives, as well as
ongoing adjustments tomarket inventories in
automobiles despite
recovery in demand(Reference) Operating Income by Quarter

・Currency fluctuation: Plus・Impact excluding currency fluctuations: Flat year
on yearFlat YoY, as, despite gradual price hikes in FY2022,
sales prices fell in FY2023 due to intensifiedcompetition from products of other companies[Customs Statistics] Export unit prices (dry + latex)(Yen/Kg)
800
750
700
650
600
550
500
450
400 2021

2022

2023

2024

1月
Jan 4月Apr 7月Jul 10月
Oct 1月Jan 4月Apr 7月Jul 10月
Oct 1月Jan 4月Apr 7月Jul 10月
Oct 1月
Jan

1.5

-0.2
FY2022
1Q
2Q

-1.3

3Q

-1.1

-0.7

-0.9

SpecialCementAdditives

Largely unchanged fromlast year

CementLargely unchanged fromlast year

0.9
4Q

FY2023
1Q
2Q

-3.9
3Q

-3.7
4Q

4Q Non-Consolidated (vs. 3Q):
・Posted chloroprene rubber inventory write-down in 3Q.
Chloroprene rubber in the 4Q:
Impact of Noto Peninsula earthquake on sales: -1.1 billion yen

Cost andOther

・Despite delays, the 3,000 yen/ton additional price
hike, was essentially complete as of July 31, 2023

Increase in repair, labor, and other costs at DPE in the U.S.*1, write-down on valuation of chloroprene rubber inventory*2*1 DPE: Denka Performance Elastomer LLC, a U.S. chloroprene rubber manufacturing subsidiary*2 Posted write-down due to lower utilization capacity caused by a decrease in demand, as well as higher costs at DPE in the U.S.

Coal prices fell (FY2022: $392/t ⇒ FY2023: $161/t)

11

FY2023 Resultse) Polymer Solutions (Year on Year)◼ Profit improved, despite weak demand, since we maintained spreads and fixed costs decreased due to a non-scheduled maintenance year for the
styrene monomer plantOperating Income Variance
Analysis (Year on Year)

-1.2

+1.1

billion yen-1.0(¥ billions)Reason for Variance(Year on Year)
Sales

4.1
+4.2

MS Resin

Higher YoY as demand for LGP
applications for PC monitors, which had
been weak in FY2022, recovered gradually

AS, ABS,Transparent
Resins, Etc.

Level YoY, as demand for consumer
electronics, cosmetics containers, generalmerchandise, etc., which began
weakening in FY2022, continued to
decline in FY2023 due to overallsluggishness in the global economy(Reference) Operating Income by Quarter
Food Wrapping
Sheets and Containers
0.6
-0.0

-0.1
-0.9

FY2022
1Q
2Q

3Q

4Q

-0.0
-0.2
-0.7
0.9
FY2023
1Q
2Q

Pricing

-0.1

-2.1

-0.1

Volume-0.4

3Q

Toyokalon

Styrene Related Product:
Price revision in conjunction
with falling raw materials andfuel prices

Lower YoY, with declining demand forready-made meals due to food pricehikes
Largely unchanged YoY due to continuing
weakness in purchasing power in Africanand U.S. markets due to inflation, whichbegan in FY2022

4Q

Cost and
Other

Variable costs: Improved due to lower raw material and fuel prices (spread maintained)
Fixed costs: Improved due to a non-scheduled maintenance year for the styrene monomer plant

4Q Non-Consolidated (vs. 3Q):
Certain products incorporating a formula for unit sales prices
experienced a timing variance in sales price adjustments

12

FY2023 Resultsf) By Segment (vs Forecast as of February)◼ Elastomers & Infrastructure Solutions performance exceeded the February forecast, as we maintained chloroprene rubber sales prices andrecorded a smaller inventory write-down as a result(¥ billions)
Incr.
FY2023 Forecast
FY2023
Sales
Decr.
VolumePricing
as of February

ActualElectronics & Innovative Products

85.0

87.8

+

2.8

+

2.6

+

0.3

Life Innovation

45.0

47.1

+

2.1

+

2.3

-

0.2

Elastomers & Infrastructure Solutions

110.0

111.4

+

1.4

+

0.8

+

0.5

Polymer Solutions

125.0

124.2

-

0.8

-

1.6

+

0.8

Others

15.0

18.8

+

3.8

+

3.8

Total

380.0

389.3

+

9.3

+

7.9

Operating Income

FY2023 Forecast
as of February

FY2023
Actual

Incr.
Decr.

Volume+1.4

Pricing

Cost and
Other

Electronics & Innovative Products

8.5

9.0

＋

0.5

+

0.1

+

0.3

+

0.2

Life Innovation

12.0

11.7

-

0.3

+

0.1

-

0.2

-

0.1

Elastomers & Infrastructure Solutions

-10.5

-9.3

+

1.2

-

0.2

+

0.5

+

0.9

Polymer Solutions

-0.5

-0.1

+

0.4

+

0.1

+

0.8

-

0.5

Others

1.5

2.0

+

0.5

+

0.5

-

-

0.0

Total

11.0

13.4

+

2.4

+

0.5

1.4

+

0.5

+

13

FY2024 Earnings Forecast

14

FY2024 Earnings Forecasta) Summary (Year on Year)◼ The first half will continued sluggishness from FY2023, operating profit is expected to increase as a gradual recovery
is factored in from the second half(¥ billions)

FY2023
ActualFY2024
Forecast

FY2024 1H
Forecast(Apr-Sep)

Incr.
Decr.

FY2024 2H
Forecast(Oct-Mar)

Sales

389.3

420.0

+

30.7

200.0

220.0

Operating Income

13.4

18.0

+

4.6

8.5

9.5

3.4%

4.3%

+

0.8%

4.3%

4.3%

Ordinary Income

5.5

12.0

+

6.5

5.0

7.0

Net Income Attributableto Owners of Parent

11.9 *

9.0

-

2.9

4.0

5.0

148.0

148.0

148.0

77,60077,60077,600Operating Margin

Forex
(¥/$)
Japan Naphtha(¥/Kl)

143.8(1H: 139.9 2H: 147.7)

69,000(1H: 65,450 2H: 72,550)*Impairment loss on goodwill, etc., of -6.8 billion yen related to Icon Genetics due to termination of norovirus vaccine development
Restoration costs for facilities, etc., due to the Noto Peninsula earthquake -0.9 billion yen
Gain on sale of strategic cross-shareholdings +17.4 billion yen

15

FY2024 Earnings Forecastb) Market Outlook◼ Demand for consumer electronics and xEV should recover gradually beginning inthe second half of the year
(Market Trends)

Electronics &Innovative
Products

Semiconductor and Electronic
Components(including automotive)xEV

Life Innovation

Elastomers &Infrastructure
Solutions

Polymer
Solutions

Infectious Disease Testing(e.g., COVID-19, influenza)

Chloroprene Rubber

Resin

FY2023 Actual

Weather Symbols(Good)(Bad)
FY2024 Forecast

Automotive-Related: Gradual recovery

Automotive-Related: Moderate recovery continuing from 2023

Consumer Electronics:
Electronic components and semiconductors forother than memory should see a moderate
recovery beginning in the second half; recovery
likely to lag for memory-related

Consumer Electronics:
Electronic components and semiconductors forother than memory should see a moderate recovery;
demand to recover in the second half for memory
and expand further for generative AI

・Recovery trajectory since FY2022
・However, the growth rate of EV in Europe and the U.S. is slower
than EV in China (our products account for a high percentage ofsales in Europe and the U.S.)・An influenza pandemic continued throughout the year, as did
COVID-19, increasing the demand for testing in Japan・No revisions to COVID-19 insurance points

・Global chloroprene rubber demand was 220,000 tons
Ongoing weakness in demand for applications in industry andadhesives as well as ongoing adjustments to market inventories
in automobiles despite recovery in demand
・Sales prices lower gradually due to intensifying competition withthe products of other companies beginning during the current
fiscal year
Demand for LGP applications for PCs and home electronics on arecovery trajectory; however, demand forother applications remained sluggish
General Merch.:
Demand remained sluggish
Food Containers:
Decreased in demand in the ready-mademeal market with further rising food prices

・Growth slower than expected due to reduced EV subsidies in
Europe, etc., but the market growth trend itself should continue
・However, the growth rate of EV in Europe and the U.S. is slower
than EV in China (our products account for a high percentage ofsales in Europe and the U.S.)・Influenza infections to return to normal levels
・Assuming FY2023 levels for COVID-19
・COVID-19 insurance point reduction (revised June 1, 2024)
COVID-19 alone: 300 points → 150 points
Combo: 420 points → 225 points

・Global demand for chloroprene rubber expected to be 230,000
tons

Gradual recovery in demand beginning in the second half
・Further decline in sales prices continuing from FY2023
Steady demand for LGP applications for PCs and home appliances,moderate recovery in other applications
General Merch.:
Demand to remain sluggish
Food Containers:
Wage increases have not kept pace withhigher prices, and demand likely to remain
weak in the ready-made market

16

FY2024 Earnings Forecastc) Operating Income Change Factors (Year on Year)◼ Recovery in sales volume likely to be limited as demand will not recover until the second half of the fiscal year. In addition, we do not expect arecovery to FY2021 profit levels (record-high levels) yet due to worsening spreads and increased fixed costs
Operating Income Variance Analysis(Year on Year)(¥ billions)
+5.3

+12.5
-7.3
-6.0

13.4
(Plus)
Chloroprene rubber
Consumer electronics
products
Acetylene black(Minus)Rapid antigen test kits

FY2023
ActualVolume18.0+4.6
billion yen
Spread difference -2.0 billion yen(Chloroprene rubber, rapid antigen test kits)

Increase in researchexpenses due to R&D
for new businesses

Pricing

Variable cost difference

Fixed costs

FY2024(Includes effect of
currency fluctuations +6.5)(Includes effect of
currency fluctuations -4.2)(Includes effect of
currency fluctuations -1.5)

Forecast
17

FY2024 Earnings Forecastd) By Segment (Year on Year)◼ Despite expectations for decreased profits in Life Innovation, we expect profits to improve in Electronics & Innovative Products and Elastomers &Infrastructure Solutions.
(¥ billions)
Sales

FY2023
ActualFY2024
Forecast

Incr.
Decr.

VolumePricing

Electronics & Innovative Products

87.8

100.0

+

12.2

+

11.1

+

1.1

Life Innovation

47.1

45.0

-

2.1

-

0.4

-

1.7

Elastomers & Infrastructure Solutions

111.4

120.0

+

8.6

+

12.5

-

3.8

Polymer Solutions

124.2

135.0

+

10.8

+

1.0

+

9.8

Others

18.8

20.0

+

1.2

+

1.2

Total

389.3

420.0

+

30.7

+

25.4

Operating Income

FY2023
ActualFY2024
Forecast

Incr.
Decr.

Volume+5.3

Pricing

Cost and
Other

Electronics & Innovative Products

9.0

12.0

+

3.0

+

6.2

+

1.1

-

4.2

Life Innovation

11.7

9.0

-

2.7

-

0.5

-

1.7

-

0.5

Elastomers & Infrastructure Solutions

-9.3

-5.5

+

3.8

+

5.5

-

3.8

+

2.1

Polymer Solutions

-0.1

0.5

+

0.6

+

1.4

+

9.8

-

10.6

Others

2.0

2.0

-

0.0

-

0.0

-

+

0.0

Total

13.4

18.0

+

4.6

+

12.5

5.3

-

13.2

+

18

FY2024 Earnings Forecaste) Electronics & Innovative Products (Composition by Application)◼ Recovery is likely to be delayed;
however, business growth in megatrending semiconductors, xEV, and renewable energy
Sales Composition by
Application(Sales: ¥billions)

100.0

100
90.2
74.9

75.7

93.5

87.8

77.7

Other (electric railways, etc.)
Automotive (excluding xEV)
Renewable energy

50

xEV
semiconductors and electronic components(including automotive)

0
FY2018(Actual)

FY2019(Actual)FY2020(Actual)FY2021(Actual)FY2022(Actual)FY2023(Actual)FY2024(Forecast)19

FY2024 Earnings Forecaste) Electronics & Innovative Products (Year on Year)◼ We expect demand recovery for both consumer electronic and xEV applications to be limited. In addition, we do not expect a recovery to FY2021
profit levels yet due to increased costs.
Operating Income Variance
Analysis (Year on Year)(¥ billions)Reason for Variance(Year on Year)(By Application)

Sales

+1.1
+6.2

9.0

-4.2

Volume12.0+3.0
billion yen

Semiconductor andElectronic
Components

Spherical
Alumina(TIM applications)・Demand recovery(semiconductor
sealants)
・Demand forgenerative AI likely toincrease

Spherical Fused
Silica(semiconductor
sealants)
・Demand recovery
beginning in 2H

High-Performance
FilmSame as above

xEV

18.7

12.7

Ceramic Substrates

12.0

12.2

FY2018ActualSame as above

・Increased demand for highvoltage cables, despite
construction delays for Europe,as demand in North America islikely to increase in response toinflation control laws

・Lower YoY due to designchanges among major
users

・Sales for electric railway
applications were on a par withthe previous year

18.0

14.2

(silicon nitride, aluminum
nitride)Pricing・Increased demand
accompanying the
expansion of the market,
despite a slowdown in thegrowth rate of EV in Europe
and the U.S., which accountfor a high percentage of
total sales(Reference) Operating Income
Acetylene
Black

Other

9.0

FY2019ActualFY2020

ActualFY2021

ActualFY2022

ActualFY2023

FY2024

Cost andOther

Inventory impact (impact of fixed cost per unit on beginning inventory balances)
Increase in depreciation, labor costs, etc., due to establishment of increased production system

Actual Forecast*TIM (Thermal Interface Materials)

20

FY2024 Earnings Forecaste) Life Innovation (Composition by Application)◼ Demand for testing expanded due to changes in the environment for infectious diseases after COVID-19, driving growth in the diagnostic field(IVD reagents, rapid antigen test kits) in FY2024 and beyond
Sales Composition by
Application(Sales: ¥billions)

50
42.9
34.1

46.1

47.5

47.1

45.0
Treatment (hyaluronic acid, G47Δ)

35.5

Diagnosis (IVD reagents)
Diagnosis (rapid antigen test kits)

25

Prevention (vaccine)

0
FY2018(Actual)

FY2019(Actual)FY2020(Actual)FY2021(Actual)FY2022(Actual)FY2023(Actual)FY2024(Forecast)* In January 2023, the termination of contract manufacturing
for macromolecular sodium hyaluronate.

21

FY2024 Earnings Forecaste) Life Innovation (Year on Year)◼ We forecast a decrease in profit due to lower profits from rapid antigen test kits (impact of lower sales prices and lower sales volume), higher
research expenses, etc.
Operating Income Variance
Analysis (Year on Year)

11.7

-0.5

(¥ billions)-1.7(Reference) Operating Income
15.5

Sales

9.0

4.1
-0.5

-2.7
billion yen

14.8

Reason for Variance(Year on Year)

FY2018ActualInfluenza
VaccineRapid Antigen Test
Kits

・We expect the normalization of
influenza infections to result in fewer
simultaneous test kits for COVID 19 andinfluenza (combo kits)

・Factored in the risk of lower
sales prices due to reductionsin insurance points

IVD Reagents(inflammation
markers, etc.)

・We expect to see a broader base in the
Chinese market and rising demand fortesting as the market shifts fromconcentration among large hospitals to
decentralization among smaller regional
hospitals

・Selling prices likely to fall in
conjunction with theimplementation of thecentralized purchasing policy inChina, a measure to counterrising medical costs

14.4
9.0

7.0

Cost andOther
FY2019ActualPricing

・Productivity for manufactured strains
expected to be on par with the previous
year
・We expect sales to increase with early
shipments (9 million vaccines produced)

11.7
6.3

VolumeFY2020

ActualFY2021

ActualFY2022

ActualFY2023

Increase in research expenses due to R&D for new businesses

FY2024

Actual Forecast

22

FY2024 Earnings Forecaste) Elastomers & Infrastructure Solutions (Year on Year)◼ Despite lower sales prices, chloroprene rubber should see narrower losses with an increase in sales volume and a decrease in the amount of
inventory write-downs; as a whole, segment loss should also narrow
Operating Income Variance
Analysis (Year on Year)(¥ billions)+3.8
billion yen

-9.3

4.1

Sales

-5.5

+5.5
+2.1

-3.8

Reason for Variance(Year on Year)
VolumePricing

Chloroprene
Rubber・Higher YoY, as demand recovers

Special Cement
Additives

Largely unchanged from last year

CementLargely unchanged from last year

(Reference) Operating Income
7.3

・We expect sales prices todecrease significantly due tointensifying competition withthe products of othercompanies

・Price hikes in the previous
fiscal year will contribute to
an increase

3.9
-3.6

-3.5

-1.1
-5.5
-9.3

FY2018Actual

FY2019ActualFY2020

ActualFY2021

ActualFY2022

ActualFY2023

ActualCost and
Other

Decrease in write-downs of chloroprene rubber inventory*
Coal prices fell
(FY2023: $161/t ⇒ FY2024: $129/t)

FY2024

Forecast

23

FY2024 Earnings Forecaste) Polymer Solutions (Year on Year)◼ Demand for PCs, home appliances, and other products should experience a moderate recovery,
but we do not expect to reach FY2021 profit levels yet
Operating Income Variance
Analysis (Year on Year)(¥ billions)Reason for Variance(Year on Year)

+9.8

+1.4

Sales

(Reference) Operating Income

8.4
7.0

AS, ABS,Transparent
Resins, Etc.

・Higher YoY, as we expect a recovery indemand for consumer electronics,
cosmetics containers, generalmerchandise, etc.

Food Wrapping
Sheets and Containers

・Largely unchanged YoY, as demand will
likely remain weak

Toyokalon

・Higher YoY, as demand in the African
market likely to experience a moderate
recovery

FY2019ActualStyrene Related Product:
Price revision in response tosoaring raw materials and fuelprices0.5-1.2
Actual・Higher YoY, as demand for LGP
applications for PCs recover

7.9

7.1

0.5
FY2018MS Resinbillion yen-0.1

Pricing

0.5

-10.6

+0.6

VolumeFY2020

ActualFY2021

ActualFY2022

Actual-0.1

FY2023

Cost and
Other

Variable costs: Higher raw materials and fuel prices (spread maintained)
Fixed costs: Increase due to labor costs, etc.

FY2024

Actual Forecast

24

FY2024 Earnings Forecastf) Investment, Depreciation, R&D by Segment◼ We will pursue further selectivity in investments, while we expect to make important strategic investments in FY2024, including a new
manufacturing hub for acetylene black in Thailand and construction to increase production of IVD reagents and rapid antigen test kits(¥ billions)
Investment
FY2023

Depreciation
FY2024FY2023R&D
FY2024FY2023

FY2024

1H
ActualFY2023
Actual1H
Forecast

FY2024
Forecast

1H
ActualFY2023
Actual1H
Forecast

FY2024
Forecast

1H
ActualFY2023
Actual1H
Forecast

FY2024
Forecast

Electronics & Innovative Products

8.2

23.2

23.0

48.0

4.4

8.8

4.8

9.6

2.7

5.3

3.0

6.0

Life Innovation

1.4

3.9

2.0

10.0

1.9

3.7

1.5

3.0

2.3

4.5

3.0

6.0

Elastomers & Infrastructure Solutions

4.6

11.8

3.0

8.0

4.3

8.9

4.5

9.0

1.4

2.8

1.5

2.5

Polymer Solutions

2.3

4.7

2.0

4.0

2.5

5.1

2.5

5.0

1.2

2.2

1.0

2.5

-

0.2

-

-

0.2

0.4

0.2

0.4

0.2

0.5

-

-

16.5

43.7

30.0

70.0

13.4

26.9

13.5

27.0

7.8

15.2

8.5

17.0

Others

Total

25

FY2024 Earnings Forecastg) Shareholder Returns, ROE◼ We expect to maintain the same level as the previous year at 100 yen per share (96% total return ratio), after taking into account the impact ofthe drastic measures for the chloroprene rubber business to be announced in 2024, as well as expectations for cash flow improvement in FY2025
and beyond, and other factors
FY2018ActualNet Income
Dividends per ShareFY2019ActualFY2020
ActualFY2021
ActualFY2022
ActualFY2023
ActualFY2024
Forecast(¥ billions)

25.0

22.7

22.8

26.0

12.8

11.9

(¥/share)

120.0

125.0

125.0

145.0

100.0

100.0

9.0
100.0
Mid-term 50.0
End 50.0

Dividend

10.5

10.8

10.8

12.5

8.6

8.6

8.6

42%

48%

47%

48%

68%

72%

96%

(¥ billions)

2.1

-

-

-

-

-

-

(¥ billions)

12.6

10.8

10.8

12.5

8.6

8.6

8.6

50%

48%

47%

48%

68%

72%

96%

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

22.9

22.5

22.9

23.9

27.0

26.9

27.0

Investment & Lending(¥ billions)

32.8

36.9

42.3

35.6

39.4

43.7

70.0

Interest Bearing Debt(¥ billions)

112.1

134.3

138.2

137.0

169.7

174.4

209.0

Net D/E Ratio

0.40

0.42

0.42

0.40

0.50

0.45

0.60

ROIC

7.8%

6.6%

6.8%

7.3%

6.7%

2.5%

3.0%

ROE

10.3%

9.1%

8.8%

9.4%

4.4%

4.0%

2.9%
26

Response to Changed Assumptions
Under Mission 2030 Management Plan

27

Management Plan Mission 2030
Progress and Response to Changing Assumptions◼ In response to changing assumptions related to our management plan, we intend to return performance to a growth trajectory beginning in thesecond half of FY2024, controlling financial status to a D/E ratio of between 0.6x and 0.8x
Progress in Key Financial KPIs
KPIs for FY2030

FY2021 Actual(record-high profit)

FY2023
ActualFY2024
Forecast

Operating Income

100 billion yen or more

40.1 billion yen

13.4 billion yen

18.0 billion yen

Operating Margin

15% or higher

10.4%

3.4%

4.3%

ROE

15% or higher

9.4%

4.0%

2.9%

ROIC

10% or higher

7.3%

2.5%

3.0%

Approved Investment Amount

FY23 to FY30 (8 Yrs)
540 billion yen

35.6 billion yen

116.7 billion yen

42.0 billion yen

Environmental Changes Alter Management Plan
Assumptions

Response(Result)
Upfront investments prevent us from achieving sales
volume growth commensurate with increased costs

Results: Return to growth trajectory beginning in the second halfof FY2024

FY2023 Operating Income Variance Analysis (vs. FY2021)
・Volume difference: -10.0 billion yen
・Fixed cost difference: -15.0 billion yen

Financial: Target a D/E ratio of between 0.6x and 0.8x28Management Plan Mission 2030
Specific Measures in Response to Changing Assumptions◼ We will return our performance to a growth trajectory in the second half of fiscal 2024 and control our D/E ratio to 0.6-0.8times by maintaining an
aggressive shareholder return policy, carefully selected strategic investments, portfolio transformation and promotion of the best-practice project

Positive Shareholder Return Policy
Total return ratio of 50% (cumulative
eight-year total for plan)
Aiming to maintain or increase
dividends per share, taking into accountfuture cash flows, etc.

Portfolio Transformation
Top priority: Drastic measures in thechloroprene rubber business (to be
determined by the end of 2024)

Revise Investment Plans
Careful Selection of Investment Projects
Aiming to reduce investment cash flowby 100 billion yen over eight years

Best Practice Project
Cost Reduction
10.0 billion yen or more per year by
FY2026
Business Streamlining
Individual employee growth29

Management Plan Mission 2030
a) Revise Investment Plans◼ Concentrate management resources on carefully selected investment projects, aiming to reduce investment cash
flow by 100 billion yen over eight years
FY2024FY2025
FY2026-

Mission 2030 Eight-Year Plan
(Investing CF)
570 billion yen

470 billion yen

initial Plan

Updated Targets

・Clarify investment priorities and exercise
even greater care in selecting investment
plans
・Revise schedules for non-urgent projects

Carefully Selected Investment Projects

Revise Investment Plans

ICT &EnergyIncrease Spherical Fused Silica(launch in 1H)

Increase Silicon Nitride Powder(launch in 1H)

Relocate to New Facility for
Thermally Conductive Sheets

Operate LCP Film Facility

Launch Manufacturing andMarketing of SNECTON

Operate TBM Facility(launch in 1H)
Investment: 1.7 billion yen

Acetylene black

New manufacturing base in Thailand(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 investment in SNECTON(begin in 2H)

Increase Emitters(launch in 2H)

Investment: 1.0 billion yen

Healthcare

Increase IVD Reagents andAntigen Test Kits

Increase G47Δ pharmaceutical
Investment: 12.0 billion yen(launch in 2H)
Investment: 11.0 billion yen

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

M to A investments
Deploy in Omi Plant

Carbonation Admixture LEAF
Planned investment

Details for each area provided on pages 33-35

30

Management Plan Mission 2030b) Portfolio Transformation

Portfolio Transformation◼ Pursue business restructuring, including divestitures and withdrawals, to concentrate management resources on
growth areas, improve business performance, and bolster finances

Progress
Unit: No. of businesses

・Plans to implement final measures over a defined period of time for six
businesses

Present

1-star and loss-making businesses discussed in FY2023; policies to be determined by the end of FY2024.
Six of these businesses to implement final measures over a defined period of time.

FY2030 Target

Six businesses: Total operating loss of -15.0 billion yen
Highest Priority:
Drastic measures for the chloroprene rubber business (to be decided
by the end of 2024)(1) Examine demand trends for signs of recovery to the pre-COVID-19 level of 270,000 tons
to 290,000 tons
(2) Examine optimal production capacity for chloroprene rubber for the Denka Group in the
Omi Plant and DPE in the U.S. in light of perspectives including exchange rate trends, rawmaterial market conditions, and BCP measures, based on the assumption of future
demand trends

3-StarBusinesses

1-StarBusinesses

3-Star Businesses to 100%2-StarBusinesses

Accelerate considerations related to styrene related product businessAccelerate considerations of sales and production optimization for the styrene related product business,
which is neither a 1-star nor a loss-making business, considering how to address the ongoing slump inpolymer solutions and trends in industry restructuring

See page 37 for the definition of a 3-star business31Management Plan Mission 2030c) Best Practices ProjectBest Practice Project◼ In addition to achieving results of 5 billion yen per year by FY2025 and 10 billion yen per year by FY2026, we
intend to improve the efficiency of human capital for operational efficiencies and the individual growth ofeach employee

Cost reductions based on in-house knowledge

To DateMake full use of external benchmarking and best practice
SystemZero-based review• President personally committed as overall leader• Establish the Best Practice Promoting Department to act as a
dedicated organization• Appoint an owner with numerical accountability for each team

• Conduct thorough review of needs, cost justifications

Best Practice Project

Global optimization

Governance• Engage in consistent cross-departmental coordination andpursue overall optimization• Conduct rigorous progress management and timely visualizationof results• Use monthly policy-making meetings to receive top approvals forgoals and measures

Scientific approach

Engagement• Engage in rational cost management based on facts anddata• Involve all employees in detailed management-employee dialogues• Share a portion of successful results with employees

Pursue best practice to achieve not only numerical results, but also individual employee growthTarget(¥ billions)

1.0

5.0

FY2024FY202510.0
FY2026

Copyright © Denka Co., LTD. All Rights Reserved.

32

(Reference) Upfront Investments to Achieve Mission 2030 Targets
ICT＆Energy (1)・Applications: LiBs for xEV, 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 Public Company for the
manufacturing and sale of acetylene black, and will construct a plant with an annual production capacity of 11,000 tons
(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
https://www.denka.co.jp/eng/storage/news/pdf/463/20231010_denka_abjv_en.pdf
Acetylene black
New manufacturingbase in Thailand

Increase Silicon Nitride
Powder(launch in 2025 1H)・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: heat dissipation, light weight, high rigidity, andlong useful life
・Expand further to meet the strong xEV market demand (Operation launch: FY2025)

Increase Spherical Fused ・Decision to Expand Spherical Fused Silica Manufacturing Facilities in Singapore -Increasing manufacturing capacity by approximately 30% for further
Silicagrowth in the environment and energy fields(launch in 2024 1H)
https://www.denka.co.jp/eng/storage/news/pdf/470/20220511_denka_silica_en.pdf
Relocate to New Facility
for Thermally・Denka Introduces New Production Facility for Thermally Conductive Sheet for 5G/xEV to Shibukawa Plant and Doubles Production Capacity
Conductive Sheets-Positioning as One of the Core Production Plants of Electronic Materials to Enhance Specialty Business(launched in 2024 1H)
Investment: 1.7 billion yen

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

33

(Reference) Upfront Investments to Achieve Mission 2030 Targets
ICT＆Energy (2)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: 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 and microminiaturization ofsemiconductors. Enhance to meet growing demand・Applications: Substrates for copper clad laminates (CCL) and interlayer dielectric materials
・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 ourown unique proposals 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 the film 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 and film 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 with tape, such as ourElegrip, due to its cost and simplicity. However, using adhesives to temporarily fix wafers is common when processing difficult-to-grind wafers,
such as ultra-thin films or hard and brittle wafers, to improve handling. In addition, the polished surfaces after back grinding are subjected to hightemperature treatment in the manufacturing of next-generation semiconductors, such as power devices. As tapes cannot be used on thesesurfaces due to insufficient heat resistance, the market for heat-resistant adhesives is expected to expand.

34

(Reference) Upfront Investments to Achieve Mission 2030 Targets
Healthcare
Increase G47Δ
pharmaceutical

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 and clinical research in othertypes of cancers
・Investment: Approximately 12 billion yen
https://www.denka.co.jp/eng/storage/news/pdf/456/20230412_denka_g47_en.pdf

Increase IVD Reagentsand Antigen Test Kits

(launch in 2024 2H)
Investment: 11.0 billion yen

・Denka Announces Expansion of Reagent Production Capacity Including Antigen Test Kits through Strategic Investment of Approximately 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

Sustainable Living
M to A(Methane to Acetylene)
Investment

Introduce in Omuta Plant(launch in 2026 1H)
Investment: 6.7 billion yen⇒Deploy in Omi Plant

Carbonation Admixture
LEAF

・To reduce CO₂ emissions, we introduced equipment to the Omuta plant for a new process to produce acetylene from methane developed by Transform Materials, a venturecompany in the U.S.
We demonstrate this technology and conduct joint research on technological improvements toward large scale mass production of acetylene.
・We deploy M to A, which established mass production technology at Omuta plant, to the carbide chain at the Omi Plant, which has our unique hydroelectric power generation
system. This enabled us to achieve low carbon chloroprene rubber and utilize hydrogen energy obtained as a byproduct of the manufacturing process.
・We expect to reduce 300,000 ton of CO₂ through the conversion of our current manufacturing method (the carbide method) and the utilization of hydrogen・Operation launch: FY2026 1H
https://www.denka.co.jp/eng/storage/news/pdf/468/20230809_mtoa_en.pdf

・This is the key material for CO₂-SUICOM, the world's only carbon-negative concrete in 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 forthe 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/

Relocate to New Facility for
TOYODRAIN Polyethylene
Drainpipes(launch in 2025 1H)
Investment: 2.3 billion yen

・Denka Increases Capacity to Produce TOYODRAIN Polyethylene Drainpipes Through Strategic Investment of Approximately 2.3 Billion Yen
https://www.denka.co.jp/eng/storage/news/pdf/432/20221011_toyodrain_en.pdf

35

(Reference) ROIC by Segment（ROIC: %）

20.0

17.0

15.0

10.0

13.2
9.7

11.4

6.8

6.6

5.0

0.0

9.4

13.4

17.8

14.7
9.6

7.3

10.8
7.3
6.7
-1.3

-2.5

13.8

12.1

2.5

-5.0

15.3

-2.5

5.4
2.5

0.0

3.0
Life Innovation
0.8
-2.5

-0.3

Electronics & Innovative Products

Elastomers & Infrastructure Solutions
Polymer Solutions-5.4

Consolidated total (including common-10.0

and other assets)
FY2019(Actual)FY2020(Actual)FY2021(Actual)FY2022(Actual)FY2023(Actual)FY2024(Forecast)36

(Reference) Management Plan Mission 2030

Definition of 3-Star Businesses

Three Elements

Definition

Objective

Specialty

ROIC by Product >10%

To emphasize capital efficiency, in addition to
profits resulting from market share, uniqueness,and technological capabilities (number of patents)

Megatrend

Three Applicable Focus Areas

Businesses judged to have growth potential if saidbusiness corresponds to the three focus areas
derived from identified megatrends

Less Than 10,000 Tons of CO₂ Emissions by ProductandLabor Productivity by Product (Op. Inc./Person) > 5 million Yen

CO₂ emissions must be included, as emissions
represent clear KPIs toward a 60% reduction in
2030 and carbon neutrality in 2050
In addition, businesses having low laborproductivity will find it difficult to continue
operations due to the future decline in the working
population

Sustainability(Past Three-Year Avg.)(ICT＆Energy, Healthcare, and Sustainable Living)37

(Reference) Major Financial / Non-financial KPIs in the Mission 2030 Management Plan
2030 KPI Targets

Financial

OperatingincomeROE

Approved
investment
amountOperatingmargin15% or higher

15% or higher

ROIC

10% or higher

540 billion yen

Total
returnratio

50% level

100 billion yen or more

(8 years from FY2023 to FY2030)

NonFinancial

CO2 emissions

60% reduction
compared with FY2013(1 million tons)

Rate of lostworktime injuries:(Number of deaths andinjuries ÷ Total hours
worked × 1 million)

0.2 or lessMaximum output
of renewableenergy power

150MW

Managerial positions
occupied by women,
foreign nationals, andexperienced hires

50%
38

(Reference) Detail of Megatrends Incorporated in the Mission 2030 Management Plan

Business Segments and Mission 2030 Megatrends (Breakdown of Operating Income Targets)Segment

FY2026

Management Plan:Three Megatrend Areas

FY2030(¥ billions)
FY2026

FY2030Electronics & Innovative
Products

30

45

ICT & Energy

3045Life Innovation

20

40

Healthcare

20

40

Elastomers &Infrastructure Solutions

3

5
Sustainable Living

10

15

Total

60

100

Polymer Solutions

Total

7

10

60

100

39

(Reference) Quarterly Trends (By Segment)

Sales(¥ billions)

FY2022

FY2024
Forecast

FY2023

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1H

2H

Electronics & Innovative Products

21.9

25.6

22.3

23.8

19.2

22.5

21.7

24.5

45.0

55.0

Life Innovation

6.4

15.5

16.9

8.8

7.2

15.0

15.8

9.0

20.0

25.0

Elastomers & Infrastructure Solutions

30.4

32.5

31.6

29.3

28.0

29.2

28.6

25.6

60.0

60.0

Polymer Solutions

31.6

32.0

30.3

33.7

29.8

31.7

30.9

31.9

65.0

70.0

Others

4.1

2.9

4.7

3.4

3.7

5.1

4.5

5.4

10.0

10.0

Total

94.4

108.6

105.8

98.8

87.8

103.5

101.5

96.4

200.0

220.0

Operating Income(¥ billions)

FY2022

FY2024
Forecast

FY2023

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1H

2H

Electronics & Innovative Products

4.1

5.6

4.1

4.2

2.1

2.8

1.8

2.4

5.0

7.0

Life Innovation

0.5

6.0

5.0

2.8

0.9

5.7

3.1

2.0

4.0

5.0

Elastomers & Infrastructure Solutions

-0.2

1.5

-1.3

-1.1

-0.7

-0.9

-3.9

-3.7

-1.5

-4.0

Polymer Solutions

-0.1

-0.0

-0.9

-0.1

-0.0

-0.2

0.6

-0.4

0.0

0.5

Others

0.6

0.4

0.9

0.4

0.5

0.5

0.4

0.6

1.0

1.0

Total

4.9

13.4

7.8

6.3

2.8

7.7

2.0

0.8

8.5

9.5
40

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 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
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.

41

Inquiries regarding this material

Corporate Communications Dept,
Denka Co., Ltd.
TEL

03-5290-5511

URL

https://www.denka.co.jp/eng/