Business Results for the Second Quarter ofFiscal Year Ending March 31, 2023
(April 1, 2022 – September 30, 2022)
November 14, 2022

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１．Business Results for the H1 FY 2022
２．Projection for the FY2022
３．Future Outlook

2Naphtha Prices in the H1 FY2022✓ Recovery from the COVID-19, lockdown in China, the invasion to Ukraine and etc led to global inflation, whichrose to 1.6x YOY.
✓ The United States and European countries are raising interest rates to curb inflation, however resource prices
remain high, and there are fears of economic recession.

Naphtha PricesH1 FY2021

H1 FY2022¥80,000

Source: Amerex Energy Com.

3

USD/JPY Exchange Rate for the H1 FY2022✓ In order to curb inflation, policy interest rates were raised mainly in the United States and European countries.
✓ The yen depreciates from 110 yen/USD to 145 yen/USD (1.3 times) due to the interest rate differential between
Japan and the United States.

USD/JPY Chart
H1 FY2021

H1 FY2022

Source: Yahoo Finance4

Semiconductor Market in H1✓ Demand for consumer products such as smartphones and PCs has declined due to the end of the COVID-19 special demand.
✓ However, demand for advanced semiconductors is expanding under demand for DX, competition for technological supremacy,and accelerating investment competition.
✓ Continuing shortage of semiconductors for automobiles.

World Semiconductor Sales
H1 FY2021

H1 FY2022

Source: WSTS

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Display Market Environment✓ Special demand for PCs and TVs due to COVID-19 has run its course, and sales of smartphones have also
declined due to the economic slowdown.
✓ Market for panels is sluggish due to inventory adjustment and slowdown in consumption. A recovery is expectedfrom 2023 onward.

Display Area Demand Forecast-4.8%Source: DSCC6

Financial Results for the H1 FY2022• Sales increased by 12% YOY thanks to continued strong demand for advanced semiconductor materials amid aslowdown in demand for displays.
• Operating profit reached a record high of 2.85 billion yen (+20%) thanks to the sales increase in cutting-edge fields
and reflecting surging raw material, fuel, and freight costs in selling prices.
• Ordinary profit increased 39% YOY, thanks in part to foreign exchange gains.
• Compared to the forecast, although sales decreased due to a decline in demand for electronic materials, profit
increased by 37% due to the weaker yen and an increase sales in cutting-edge products.

H1 FY2022
Projections

Net sales

15,71020,00017,553+1,843+12%(2,446)(12%)

Operating profit

2,369

2,450

2,852

+483

+20%+402+16%

Ordinary profit

2,360

2,400

3,278

+918

+39%

+878

+37%

Profit

1,625

1,650

2,247+622

+38%

+597

+36%EPS¥204.79¥207.89¥283.22¥15¥20¥20¥109.9/$¥125/$¥133/$(Million yen)Interim Dividends
FX Rate (USD)H1 FY2022
Results

Comparison withForecasts
ChangeYoY

H1 FY2021
Results

YoY

ChangeYoY7

Quarterly Sales & Operating profit Trend• Quarterly average sales increased +5.9% from the previous term. Operating income maintained around 1.4 billion
yen.
• Maintained high level of sales and profit due to strong demand for advanced semiconductor materials amid soaring
raw material and fuel prices, rising fixed costs, and display market inventory adjustments.

Average Sales¥8,776 million

Keep strong sales fromsecond half and rush demand

Securing inventories due tosupply chain disruptions

COVID-19 special demandhas run its course.
FPD inventory adjustments

Impact from raw materials, fuel and transportation cost
increasing

2021.32022.38

Change analysis: Operating profit• Rise in raw materials/fuel/freight rates and increase in cost for production capacity expansion were offset by increased sales ofhigh-value-added products and reflected in prices, resulting in an increase in profit.

(Million yen)

Increase in sales volume,
Selling price is underincreasing due to highraw material prices.

+412+1,462
FX

2,369+154△90Operation
improvement

Inventory
revaluation△692

Increase in expenses for technology
development and production capacity
expansion for advanced semiconductor
fields△763
Impact from raw
materials, fuel,consumables andtransportation cost
increasing

2,852
Expenses
increase+483

Sales growth

H1 FY2021
Operating profit

H1 FY2022
Operating profit

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Photosensitive Materials Segment

Net sales: 10,481 million yen（YoY+828 million yen, +9%）+14%

• Strong demand continues for logic semiconductor applications.
• Sales for memory and general-purpose semiconductor
applications keeping firm growth.

• Although demand for display applications declined, the weaker
yen made up for it.

Operating profit: 1,905 million yen（YoY+228 million yen, +14％）• Record-high, as increased production of materials for advanced
semiconductors absorbed increased expenses.
• Soaring raw material and fuel prices, and increased costs fortechnology development and production capacity expansion.

10

Chemicals Segment

Net sales: 7,072 million yen（YoY+1,014 million yen, +16.7%）+37%• Sales of high-purity solvents for semiconductors continued tobe strong.

• Solvents for other electronic materials and aroma chemicals
were weak due to the economic slowdown.
• In the logistics business, the contract rate remained highdespite a decrease in cargo movement due to lower
automobile production and other factors.
• Selling prices continue to be adjusted in raw material prices
increase accordingly

Operating profit: 946 million yen（YoY+254 million yen, +37%）• Record high thanks to shift to high value-added products.
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H1 FY 2022 Income Statement• Gross profit increased by 800 million yen and the gross profit margin improved by 1.9 percentage points to a high level of 28%, ashigh value-added products offset higher raw material and fuel costs as well as higher fixed costs. Operating profit increased by
480 million yen (+20%).
• Ordinary profit increased by 920 million yen (+39%) due to foreign exchange gains (430 million yen) from yen depreciation.

(Million yen)

H1 FY2021

H1 FY2022

Change%15,71017,553+1,843+12%

11,577

12,597+1,019+9%4,133

4,956+823+20%

1,7642,103+339

+19%

2,369

2,852+483+20%

Non-operating income

59486+426+713%

Non-operating expenses

6859(8)

(13%)

2,360

3,278+918+39%

(12)

(36)

(23)

－2,347

3,242+895

+38%

721

994

+272

+38%

1,625

2,247+622+38%

Net sales
Cost of sales
Gross profit
SG&A expenses
Operating profit

Ordinary profit
Extraordinary income & losses
Profit before income taxes

Income taxes
ProfitGross profit margin
improved by 1.9pt.

Foreign exchange gainof 434 million yen
Ordinary profit margin
Improved by 3.7pt.

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H1 FY2022 Balance sheet• Working capital improved due to a decrease in accounts receivable.
• Inventories increased by 2,029 million yen due to a partial recovery to decent inventory levels and higher inventory value resulting
from higher raw material costs.
• Shareholders' equity increased by 2,128 million yen due to an increase in net income.

• Equity ratio is 38.1%, the highest ever since listing (up 3.8pt from the end of the previous term).
(Million yen)
Current assets

Mar. 2022
ended

Sep. 2022
ended

Change19,76621,007+1,241

Cash and deposits

3,681

3,732

+51

Notes and accounts
receivable – trade

7,402

6,635

(766)

Inventories

8,080

10,109+2,029

602

530

(72)

27,11926,780(338)

25,37625,090

(285)

Other
Fixed assets
Property, plant andequipment

Intangible assets
Investments and otherassets
Total assets

511

544

+33

1,231

1,145(86)46,88647,788+902

Mar. 2022
ended

Sep. 2022
ended

Change30,82429,589(1,235)

5,010

5,001

(9)

17,81918,236+417

Other

7,993

6,351

(1,642)

Net assets

16,061

18,199+2,137

16,007

18,136+2,128

Valuation and translation
adjustments

5463+8

Liabilities and net assets

46,88647,788+902
13(Million yen)
Liabilities
Notes and accounts payable –trade
Interest-bearing debt

Shareholders’ equity

H1 FY2022 Statement of Cash flows• Operating CF ¥2,109 million:

Decrease due to corporate tax increase due to rapid profit growth in the previous term andinventory level recovery.
• Investment CF ¥(2,396) million: Temporary decrease in payments for large-scale investments.
• Financial CF ¥215 million:
Control the increase in interest-bearing debt and secure the capacity for future capital investment.
(Million yen)

H1 FY2021

H1 FY2022

ChangeCash flows from operating activities

4,479

2,109(2,370)

Profit before income taxes

2,347

3,242+895

1,273

1,374+101

407

766+359(654)(2,029)(1,374)

Increase (decrease) in trade payables（+: increase）

933

0(933)

Other

172(1,245)(1,417)(3,195)(2,396)+798

1,284(287)(1,571)(1,287)215+1,503

Effect of exchange rate change on cash and cash equivalents

6123+116

Net increase (decrease) in cash and cash equivalents

351+47

3,385

3,320(65)

Depreciation
Decrease (increase) in trade receivables（+: decrease）
Decrease (increase) in inventories（+: decrease）

Cash flows from investing activities
FCF
Cash flows from financing activities

Cash and cash equivalents

14１．Business Results for the H1 FY 2022
２．Projection for the FY2022
３．Future Outlook

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Business Environment in the 2nd Half◼ Global Economy－Resource prices remain high and the economy is in recession due to policy interest rate hikes,
especially in the U.S. and European countries.
－The IMF forecasts lower economic growth in almost all countries in 2023.

◼Electronic Materials Market－Semiconductor Market: Overall, mainly general-purpose semiconductors will slow down through thefirst half of 2023 and return to high growth from 2024 onward.
－Demand for advanced semiconductors, mainly logic, is expected to remain strong.
－Displays market will be under inventory adjustment by the end of the year and will begin a gradual
recovery from the beginning of the year.

◼ Flavor and Fragrance Market－Although there is a risk of demand decline due to the economic slowdown, expecting thesecond half of the year to be at the same level as the first half.
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Revision of the Forecasts for the FY2022• Sales were revised downward, factoring in the impact of the economic slowdown and declining demand for FPDs, smartphones,and PCs.
• Profits are expected to achieve the initial forecast, mainly due to a shift to high value-added products.

• Exchange Rate Sensitivity: ¥21 million/$ (Half Year) ⇒ ¥9 million/$ (Half Year) *Decrease in $ denominated sales

Previous Forecast

Revised forecastChange%

40,00035,000(5,000)(12.5%)

Operating profit

5,150

5,150－－

Ordinary profit

5,000

5,000－－Profit

3,500

3,500－－EPS¥440.98¥440.98－－¥125/$¥145/$(Million yen)

Net sales

FX Rate (USD)17

Forecast and Progress for the FY2022• As of the end of the first half, the full-year progress rate is 50% for sales, 55% for operating profit, and 66% for ordinary profit(including foreign exchange gains).
• Progress of 50% or more for each profit against the performance forecast.

FY2022
Forecasts

H1 FY2022ResultsProgress
Ratio

Net sales

35,00017,55350%

Operating profit

5,150

2,852

55%

Ordinary profit

5,000

3,278

66%

profit

3,500

2,247

64%

EPS

¥440.98¥283.22(Million yen)18

Factors of Profit Decrease in the 2nd Half
Fixed costs and operating profit Trend
Operating profit(¥100 M)

Continue to increase production capacity asplanned to achieve Beyond500+700 M
Fixed cost+¥760 M

• Fixed costs in the 1st half rose by 760 million yen fromthe previous year, and are expected to rise by another
700 million yen in the 2nd half compared to the 1st half.
• In the 2nd half of the year, ordinary income is expected
to decline due to an increase in fixed costs of 700
million compared to the first half of the year and theabsence of foreign exchange gains of 400 million we
had in the 1st half of the year as well as a decline indemand, however for the full year, profits are expected
to exceed from the previous year.
19Capital Investment, Depreciation & R&D Plan
• Infrastructure enhancement is underway to meet growing demand for electronic materials.
• R&D continues to strengthen process technology enhancement (Analytical capabilities, Productivity improvement, pilot productioncapability) to improve productivity and quality.

• Capital investment in FY2022 is about 5.7 billion yen as plan.
(Million yen)

CAPEX, Depreciation & R&D Plan
CAPEX

R&D

Beyond 500 Term

Average investment amount

Depreciation

20

Shareholder Returns• Although it is based on stable dividends, it decides on a shareholder return policy by comprehensively considering growthpotential, financial balance, etc.
• FY 2022, there is no change from the annual dividend plan of 40 yen (interim 20 yen).

(Yen)

Annual dividends per share(Fiscal Year)(Projection)
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１．Business Results for the H1 FY 2022
２．Projection for the FY2022
３．Future Outlook

22Market Environment from 2020 to 2030
• Semiconductors support the evolution of social infrastructure, and the market is expected to double from 2020 to 2030. Continued growth
thereafter.
• With the progress of miniaturization and the spread of new technologies such as next-generation EUV / 3D / metal resist, we will further
evolve the solvent / photosensitive material manufacturing technology that we have cultivated for 70 years and support the future
evolution of the industry.

Current

Global Semiconductor MarketTechnology Roadmap
7nm
5nm

Shipment amount(trillion yen)

EUV

3nm
2nm
1.5nm
EUV DP 3D-Packaging
1nm
High-NA
0.7
Metal Resists
nm

Beyond500

Source: The Ministry of Economy, Trade and Industry (METI)"Strategy for Semiconductors and the Digital Industry"

Beyond500
2018

2020

Source: IRDS 2021

2022

2024

2026 2028

2030

2032

2034
23

Display Market Outlook• In 2022, there will be a negative growth of 4.8% due to the end of the COVID-19 special demand and the slowdown in
consumption due to inflation, but it is expected to recover in 2023 as display inventories normalize.
• High resolution display share expansion by large display TV, smart phone with OLED type, 4K&8K TV and etc. contributedemand increase for ultra high purity solvent and photosensitive materials.

Display Area Demand Forecast

Source: DSCC

24

Medium-Term Management Plan “Beyond500”

売上高

営業利益

¥50 billion

Net sales Operating profit¥33.1
billion¥20.5
billion¥1.3
billion

OPmargin¥4.6billion¥8billion

2018年3月期

2022年3月期

2027年3月期

6.3%14.0%

16％ ormore

FY2021 Results
Net sales: ¥30 billion
Operating profit: ¥4.6 billion(14%)

FY2026 Projection
Net sales: Over ¥50 billion
Operating profit: Over ¥8 billion(Over 16%)
CAPEX: ¥30 billion (Cumulative)※FX Rate: ¥115/$
25

Semiconductor Demand Forecasts and Capacity Up Investment• Semiconductor market returns to high growth after 2024 from low growth in 2023.
• Decided to expand production facilities for photosensitive materials in response to increased demand. Expandproduction capacity to 1.8 times the current level. (scheduled for completion in July 2024)(M $)900,000

FY2020

FY2022

FY2023

FY2024FY2025

FY2026

Photosensitive
Materials
New Plant

600,000

Capacity Up
Infrastructure enhancements

Expansion of No. 4
photosensitive materials plant(Aug. 30 Disclosure)

Capacity up at 300,000
existing facilities

0Chemicals

Expansion of new distillation
column at Awaji Plant(Apr. 5 Disclosure)

Awaji Plant
出所：WSTSより当社作成

Infrastructure enhancements

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Individual Development, to the global Chemical(NB)
The forecasts made in this document contain a variety of uncertain factors since it has been prepared based on
judgments from information that is currently available.
Therefore actual business results may differ from those projected, depending on factors and risk such as the economic
status of the market surrounding the company, and do not perform any strict promise and guarantee.

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