Financial Capital and Manufacturing CapitalSocial Capital and Natural Capital

Financial CapitalSocial Capital◎Related Information: Message from the CFO P49-52, Financial Review P85-92

Shareholder Returns

Financial capital is essential for conducting business activities.
Nissan Chemical has built up a robust financial base, having given careful consideration to a balance between shareholdersʼ equity and debt. Our equity ratio continues to climb, while our debt
is falling. As a result, the D/E ratio, one of the key indicators offinancial soundness, remains at a low level (the lower the ratio
the sounder a companyʼs financial position). We are in a very favorable state in terms of cash flow and can continue to utilize
this cash for investment and shareholder returns as needed.

Nissan Chemical emphasizes ROE, an indicator of earnings power, while aiming to take full advantage of shareholdersʼ equity.
Since ROE recorded at 9.5% in FY2011, it has continued to rise,
and the result for FY2022 was 19.4%. The dividend payout ratio
has been gradually increasing from 30.7% in FY2015, and the result for FY2022 was 56.3%. The total shareholder payout ratio
has also been at a high level, hovering around 70% since FY2015.
Our proactive approach to returning profits to shareholders,which combines dividends and share repurchase, has attracted
long-term capital investment and contributed to the enhancement of shareholdersʼ equity.

Debt: Equity ratio: D/E ratio
Equity ratio (%)■Debt (billion yen)(billion yen)

40

68.1

69.9

71.0

73.0

D/E ratio (%)

73.7

74.9

73.6

30
20

33.1

30.8

28.6

100

26.6

24.6

22.7

-1.6

-3.2-5.7-5.7-3.4-5.2

2015

2016

2017

2018

2019

2020

22.7-6.1

2021

Total payout ratio / Dividend payout ratio

(%)

73.1

27.3

-1.1

80
70
60
50
40
30
20
100Dividend payout ratio

80
60

71

70

71

-100

2022 (FY)

(%)

75

75

76

43

45

45

78
56

40
2072

31

2015

33

2016

Manufacturing Capital

38

2017

422018

2019

2020

2021

2022 (FY)◎Related Information: Corporate Information P93-96

Our plants are located in five prefectures in Japan, and while thestone-built facilities, which have been designated as a chemical
heritage, still remain, state-of-the-art equipment and facilities
are being steadily introduced. With a history of over 130 years,
we are still moving forward focused on the stable manufactureof products.

monia chemical plants, backed by abundant water and electricity. The plant is still manufacturing many derivatives. In recentyears, the plant has also made inroads into the field of electronicmaterials, contributing greatly to the advancement of the global
semiconductor industry and IT technology. The plant has research laboratory, which enables us to respond quickly tonext-generation needs.

● The Sodegaura Plant (Chiba Prefecture)● The Nagoya Plant (Aichi Prefecture)
Facing the Port of Nagoya, the Nagoya Plant has developed
mainly through the production of sulfuric acid, and has developed products ranging from industrial use to high-grade products for semiconductor cleaning in response to the needs of thetimes. The plant currently produces refined sulfuric acid, highpurity sulfuric acid, sodium bisulfite, and AdBlue®, a high-gradeurea solution for purifying emissions from diesel vehicles.

Located in the petroleum complex in Chiba Prefecture, theSodegaura Plant is a core plant of our Specialty Chemicals business. It engages in production of inorganic materials and electronic materials used in a wide range of industrial fields, including the cutting-edge information and electronics industries.
The plant is a development-oriented plant that works closelywith research laboratories.

● The Onoda Plant (Yamaguchi Prefecture)
Located in the southwestern part of Yamaguchi Prefecture, theOnoda Plant has a history of more than 130 years, having produced Japanʼs first agrochemicals in 1910. It currently produces
veterinary drugs and agrochemicals such as insecticides, acaricides, and herbicides, as well as pharmaceuticals such as hyperlipidemia treatments, and organic fine chemical products.

● The Saitama Plant (Saitama Prefecture)
Located in the rich natural environment of northwestern
Saitama Prefecture, the Saitama Plant produces herbicides forpaddy rice, insecticides and fungicides, and contributes to agriculture in Japan and around the world.
● The Toyama Plant (Toyama Prefecture)
Located in the central part of Toyama Prefecture, the Toyama
Plant has developed into one of Japanʼs leading integrated am-Nissan Chemical Corporation

Interaction with Local Residents
We hold plant tours and explanatory meetings on regular basis
for local residents and schools. In particular, during these meetWeb

Total payout ratio

100ings we explain our initiatives for disaster prevention and environmental protection in an effort to show that the plants aresafe and secure. In addition, we also participate in local beautification activities such as cleaning of public roads and nearby stations around the plants, and planting flowers together with local
residents. In FY2022, we started activities such as cleaning andthe preservation of nectar source plants for insects, at a park in
Chuo-ku, Tokyo, where our head office is located.

The relationships of trust that we have cultivated over a long period of time with a variety of stakeholders, including investors, local
communities and NPO/NGOs, form the basis for supporting ourbusiness activities. With the Nissan Chemical Groupʼs sites as thefoundation for social contribution, we are engaged in a variety ofsocial contribution activities as a corporate citizen, focusing on thefour areas: promotion of education, science, and culture; contribution to local communities; conservation of the global environment;
and promotion of health and welfare and promotion of sports.

Contribution to Communities and Society
https://www.nissanchem.co.jp/eng/csr_info/communication/community.html
Biodiversity Conservation
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/conservation.html

Scene of conservation activities (Chuo-ku, Tokyo)

Natural Capital◎Related Information: Responsible Care P73-75

In manufacturing products, it is difficult to avoid placing burdens
on the environment, such as the use of energy, water and raw
materials as well as greenhouse gas (GHG) emissions. We identified “Continuous improvement of responsible care activities” as
one of our materialities. We have identified the mitigation of climate change and reduction of industrial waste and pollutant
emissions as key materiality factors, and are striving to reduce
our environmental impact through responsible care activities
that consider the environment, health, and safety.

Carbon efficiency

Nissan Chemical
Major domestic chemical manufacturers (average)(tons / million yen)

10.00
8.00
6.00
4.00

8.15

7.53

Initiatives to Reduce GHG Emissions

2.332.04

1.96

2.03

1.79

2017

2018

2019

2020

2021

2022 (FY)

Initiatives to Reduce Energy Consumption (Logistics)

At the Toyama Plant and the Onoda Plant, we have significantly
reduced CO2 emissions by converting naphtha that is raw material and fuel for ammonia, and heavy oil that is fuel for boilers into
natural gas. The Companyʼs carbon efficiency (GHG emissionrate) is relatively good in the chemical industry due to thelow-carbon investments it has made to date and the characteristics of its products.

As a cargo owner, we are working together with Nissan Butsuryu Co., Ltd., a group company that handles our logistics operations, to promote the rational use of energy for transportation.
We have received the Eco Rail Mark certification in 2018, andwill continue striving to improve our energy consumption rateby promoting modal shifts, replacing vehicles with energy-saving, and practicing eco-driving.

WebResponsible Care Management
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/management.html
Mitigation of Climate Change
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/environment/reduction.html
Reduction of Industrial Waste and Pollutant Emissions
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/environment/management.html
Management of Chemical Substances
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/chemical.html
Water Resources Conservation
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/environment/effective.html
Biodiversity Conservation
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/conservation.html

29

Integrated Report 2023

Nissan Chemical Corporation

8.69

2.58

2.00
0.00

8.45

30

Integrated Report 2023

Value Creation & Growth Strategies

Financial Standing