1 Review of Medium-Term Business Plan

Medium-TermBusiness Plan
(FY 2024 to FY 2026)(FY 2022 to FY 2024)
2 Medium-Term Business Plan

(FY 2024 to FY 2026)“Promotion of the Growth Strategy andNew Value Creation”

November 20, 2023

4092

© Nippon Chemical Industrial Co., Ltd.

Forecast of business results and business plans included herein are based on the information
available for us as of now and certain preconditions, and they provide no guarantee of our futurebusiness results. Actual business results may depend on a wide variety of factors.

1Review of Medium-TermBusiness Plan
(FY 2022 to FY 2024)© Nippon Chemical Industrial Co., Ltd.

© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Review of Medium-Term Business Plan
(FY 2022 to FY 2024)■Net sales achieved those for FY 2022 in the plan as the selling prices remained
high even during weak external demand. For FY 2023, we will implement a wide
variety of measures to achieve those in the plan even though some demand fromcustomers is weaker than expected.
■Operating profit is expected to be substantially below that in the plan mainly dueto a decrease in the operation rate resulting from weak demand.
Net sales

Operating profit(hundred millions of yen)

380 381385

400(hundred millions of yen)

400
35
30

Large
divergence

21
16

13

Medium-term Actual
business plan results

2022

Medium-term Forecast
business plan

2023

Medium-termbusiness plan

2024 (fiscal year)

Medium-term Actual
business plan results

2022

Medium-term Forecast
business plan

2023

Medium-termbusiness plan

2024 (fiscal year)3© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Review of Medium-Term Business Plan
(FY 2022 to FY 2024)

Achievements■Investment mainly in Specialty Chemicals(including MLCC materials and semiconductor materials)■Optimization of functions of overseas sales bases■Building of the sustainability system(establishment of Sustainability Promotion Committee)■ Portfolio optimization(winding-up of Kanto Sodium Silicate Glass Co., Ltd)

Challenges■Failure to achieve numerical targets in growth fields and delay innew businesses■Increase in corporate value (Increase in ROE and EBITDA)■Further promotion of sustainability management4

２Medium-Term Business Plan
(FY 2024 to FY 2026)© Nippon Chemical Industrial Co., Ltd.

© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Positioning of Medium-Term Business Plan
Targets for FY 2030

Operating profit

EBITDAROE

6 billion yen

11 billion yen

8%

Backcasting based on our ideal vision

Our ideal vision
for 2030
Providing products and solutions that
help in solving social issues

Forecasting ofcontinuous issues to deal withMedium-TermBusiness Plan
(FY 2024 to FY 2026)
Promotion of the
成長戦略の推進とGrowth Strategy and
新たな価値の創造

Increasing corporate value anddeveloping trust with stakeholders
Needed by society throughchemical technology andevolving continuously

New Value Creation

Present

Sustainability management
FY2023

FY2026

FY2030© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Points of Medium-term Business Plan(i) Updated the business plan in response to promotion of the sustainabilitymanagement
Reflection of measures to increase corporate value from the long-term
perspective in the medium-term business plan(ii) Updated the business plan in response to changes in external environment
Review of sales plan
Review of numerical plans resulting from additional investment(iii) Updated the period for medium-term business plan to 3 years from FY 2024

Period for medium-termbusiness plan

2022

2023

2024

2025

2026

Announced May 2022
Announced this time7© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Policies and Priority Measuresin Medium-Term Business Plan

FY
2030

Policy for medium-term business plan

Promotion of the Growth Strategy andNew Value Creation
FY
2026
Three measures based on the sustainability management
Measure (i) Business expansion andstrengthening the businessstructure■Expand the business in growth fields■Strengthen the business structure of basic fields■Pursue deepening and succession of production technology

Measure (ii) Promotion of globalization■Increase overseas net sales■Strengthen overseas organizations■Pursue new opportunities

Measure (iii) New value creation■Promote development of products withcompetitive advantage■Achieve early research results

Promotion of theSustainability Management

FY2024■Effectively allocate managerial resources■Strengthen supply-chain management■Improve employee satisfaction■Strengthen and complete corporate governance and compliance■Facilitate environmental responses■Promote contribution to local communities and society8© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Numerical Targets
Final fiscal year in Medium-term business plan

Targets ofthe final
fiscal year

Targets for FY 2026
Net sales
Operating profit
EBITDA *1
ROE*2■Net sales■EBITDA■Operating profit

490
49 billion yen
500
460
120 (hundred millions of yen)
430
450
3.3 billion yen
400
381
400
373
100 362346
8 billion yen
350
80
300
6%
80

Net sales in growth fields
Overseas net sales
Capital investment(cumulative total for three years)
Payout ratio
Ratio of cross-shareholdings tonet assets

7020 billion yen 60
7 billion yen
57
51
20 billion yen
40

Around 30 %15 % or less 20*1 Brief version of EBITDA (operating profit + depreciation) is used
*2 ROE＝Net income / Average shareholders’ equity

64
46150

3328

24
130200543925250

7025162019 2020 2021 2022 2023 2024 2025 2026

100500(fiscal year)9© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Measure (i) Business Expansion and Strengthening
Business Structure
Focus on strengthening and expansion of earning capacity
Expand the Business in Growth Fields■Obtain business opportunities by continuously
making strategic investments in electronic
ceramic materials■Realize business expansion by pursuingefficient and stable production of organic
electronic materials

Strengthen the Business Structure ofBasic Fields■Expand the lineup of differentiated products
satisfying the diversifying customer needs■Implement measures to increase profitabilityof low profitable products and businesses

Pursue Deepening and Succession ofProduction Technology■Clarify core technologies and implement
succession of production technologies andexpertise■Increase profitability and safety by making
production efficient and stable<Products in growth fields and their major uses>
Electronic CeramicMaterials
High-Purity Electronic
Materials

Dielectrics for MLCC and dielectric materials(Barium titanate / High-purity barium carbonate)

Semiconductor materials and organic
electronic materials(High-purity phosphine gas / High-purity red
Phosphorus, etc.)

Phosphoric Acid for LCDs andSemiconductors

Etching agents

Phosphorus Materials forQuantum Dot

Materials for Quantum Dot display(Phosphoric acid)(Phosphine derivatives including TMSP)<Products in basic fields and their major uses>
Chromium Compounds

Hard chromium plating (automobiles)Refractory bricks (metallurgical furnace)
Electromagnetic steel sheet plating(electronic vehicles)

Silicates and Silica

Deinking of used papers (papermanufacturing)
Soil hardening agent (construction)

Inorganic Phosphorus
Compounds

Food additives
Optical glass materials

10© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Growth Fields
Increase net sales in growth fields to more than 20 billion yen<Ratio of growth fields in net sales>■Total■Growth fields

Targets of products in growth fields for FY 2026
Growth fields
net sales

Growth fieldssales ratio

20 billion yen

40%

49 billion yen

38.1 billion yen
36.2 billion yen<Capital investments, etc.>
Targets ofthe final
fiscal year

20billion

8.6billion

13billion

Other

2

6.5
Investment
amount(cumulative total
for three years
20 billion yen

Maintenance andreplacement

11.5

24％

34％

40％

2018

2022

2026 (fiscal year)

GrowthGrowth investment
Investment in a medium- tolong-term perspective leading toan increase in corporate value■For electronic ceramic materials■Phosphine derivatives■For semiconductors, and others

11© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Measure (ii) Promotion of globalization
Expand the business leveraging strength
Increase overseas net sales

Targets of overseas net sales for FY 2026

■Expand overseas with products satisfying
local needs

Overseas
net sales

Overseas
sales ratio

7 billion yen

14%Strengthen overseas organizations■Increase the organizational strength toimprove overseas presence<Examples of products increasing net sales in overseas markets>

Pursue new opportunities■Pursue and develop new business modelthrough deepened cooperation between
overseas bases

For semiconductors

JAPANCHINA

For the next-generation
display

For RFID tags

U.S.A.

THAILAND

12© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Measure (iii) New value creation
Create new value through highly efficient R&D
Promote development ofproducts with competitive
advantage<Concept of Research and Development>■Promote commercialization of highvalue-added products using coretechnology

New value creation

Achieve early research results■Response to increasingly diverse andsophisticated social issues through theeffective use of external resources■Promote the development of new products
and process responding to carbon neutral
and growth fields
Targets of R&D expenses for FY 2026
R&D expenses

Ratio of R&D
expenses to net sales

1.8 billion yen

4%

Improvementof comfort

Energymanagement

Protection ofhealth (life)

New value field platform

Present business field platform

Intellectual property
Technical agreements

Basic technologies andexpertise

Industrial-academicgovernment
collaboration
Open innovation

13© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Cash Allocation
Effectively allocate of managerial resources
Allocate cash generated from the expansion of growth fields and optimization ofinventories to growth fields and business foundation
Conduct a stable dividend increase as the return to shareholders with a payout
ratio target of 30%
Cash flows from operating activities

Capital Investment , etc.

13 billion yen

20 billion yen

Optimization of working capital *Shareholder Return3 billion yen

2 billion yen(on a cashout basis)* Optimization of working capital through inventory reduction

Financing(including the sale of shares held for strategic purposes)

15 billion yen

Payment of interest-bearing
liabilities and others

9 billion yen
14

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