1 Summary of Consolidated Financial Results

for the Year Ended March 31, 2023
For the year ended March 31, 2023

Summary of
Financial Results

2 Forecast of Consolidated Financial Results

for the Year Ending March 31, 2024
3 Medium-Term Business Plan (Progress)
4 Efforts for Research and Development

May 26, 2023

4092

© Nippon Chemical Industrial Co., Ltd.

Notice: This document is an excerpt translation of the original Japanese document and is only forreference purposes. In the event of any discrepancy between this translated document and the original
Japanese document, the latter shall prevail.

1

Summary of Consolidated
Financial Results for the Year
Ended March 31, 2023

© Nippon Chemical Industrial Co., Ltd.

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

Points of the Full-Year Financial Results for the Year
Ended March 31, 2023
Uncertain outlook has been unchanged because of rising raw material and fuelprices, weakening of the yen, and the effect of the international situation.

◆Net sales increased 2.1% Y-o-Y while operating profit decreased 67.0%.

・Sales increased because of revisions to the selling prices, but profits decreased becauseof capacity utilization lowered by rapid production adjustment of major customers.
・Capital investment was made mainly in Specialty Chemicals.
■Tokuyama Factory: Dielectric materials for MLCC (barium titanate)* Expected to be completed in FY 2024
■Fukushima No. 2 Factory: High-purity red phosphorus for semiconductors(May 2022)■Fukushima No. 2 Factory: Phosphorus materials for the next-generation display(December 2022)

・Portfolio optimization(Silicates and silica: Dissolution of Kanto Sodium Silicate Glass Co., Ltd.)* The system was ensured to stably procure and supply sodium silicate glass via
CT GLASS COMPANY LIMITED (capital and business alliance relationship) in Thailand.
3© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Consolidated Financial Results for the Year Ended
March 31, 2023

Year ended(Millions of yen) March 31, 2022

Net sales
Operating profit

Year ended
March 31, 2023

ChangeChange rate

37,27538,075

800

2.1%

3,921

1,292

(2,629)(67.0%)

Operating profit percentage

10.5%

3.4%

(7.1pt)Ordinary profit
ProfitEBITDA※
ROE

3,864

1,412

(2,452)(63.5%)

3,735

855

(2,879)(77.1%)

6,982

4,623

(2,359)(33.8%)

9.2%

2.0%

(7.2pt)424.47

97.13-

Earnings per share
(Yen)

-

※ Brief version of EBITDA (operating profit + depreciation) is used4© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Earnings for the Year Ended March 31, 2023, by Business(Millions of yen)
Inorganic
Chemicals

Specialty
Chemicals

Leasing
Business

Air-conditioning
Business

Other

Total

Year ended
March 31, 2022

Year ended
March 31, 2023

ChangeChange rate

Net sales

16,11020,327

4,217

26.2%

Operatingprofit

950

1,130

180

18.9%

Net sales

17,426

15,983(1,442)(8.3%)

Operatingprofit

2,075

(437)

(2,512)-

Net sales

913

915

1

0.2%

Operatingprofit

537

541

4

0.7%

Net sales

1,926

-

(1,926)-

Operatingprofit

258

-

(258)

-

Net sales

898

849

(49)

(5.5%)

Operatingprofit

95

81

(14)

(14.7%)Net sales

37,27538,075800

2.1%

Operatingprofit

3,921

1,292

(2,629)(67.0%)

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

Net Sales in Inorganic Chemicals
for the Year Ended March 31, 2023
(Millions of yen)2022/32023/3

ChangeChangerate

Chromium Compounds

4,679

5,326

647

13.8%

Silicates and Silica

2,078

2,467

389

18.7%

Inorganic Phosphorus
Compounds

6,222

8,765

2,543

40.9%

Other

3,131

3,768

637

20.3%

16,11020,327

4,217

26.2%

Total

Net sales

20,327

16,1102022/3◆Chromium Compounds: Execution of price revisions despite sharp decline
for refractory and weakness for plating

2023/3Operating profit
1,130
950

◆Silicates and Silica: Execution of price revisions despite weakness for civilengineering and industry◆Inorganic Phosphorus Compounds: Execution of price revisions despite
sharp decline for LCDs and semiconductors and industry

2022/32023/36

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

Net Sales in Specialty Chemicals
for the Year Ended March 31, 2023

(Millions of yen)

Electronic CeramicMaterials
Organic Functional
Materials
Battery and Electronic
Device Materials
Other
Total

2022/32023/3

ChangeChange
rate

7,911

7,617

(294)

(3.7%)

3,349

2,655

(694)

(20.7%)

4,075

4,022

(53)

(1.3%)Net sales
17,4262022/3

2,089

1,687

(402)

(19.2%)

17,426

15,983(1,442)(8.3%)

15,9832023/3Operating profit
2,075◆Electronic Ceramic Materials: Solidness for automobiles and sharp decline
for communication and in high-purity barium carbonate◆Organic Functional Materials- Phosphine Derivatives: Solidness for Quantum Dot and sharp decline
in other overseas catalysts- Agrochemicals: Sharp decline for major customers◆Battery and Electronic Device Materials- Battery Materials: Execution of price revisions- Circuit Materials: Sharp growth for paste- High-Purity Electronic Materials: Strong growth for semiconductors
and sharp decline in some products(437)
2022/32023/3

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

Net Sales in Leasing Business and Others
for the Year Ended March 31, 2023

(Millions of yen)2022/32023/3

Net sales

Changerate

Change3,739

Leasing Business

913

915

1

0.2%

Air-conditioning Business

1,926

-

(1,926)-

Book Store Operation

619

549

(70)

(11.3%)

1,764

2022/3

Other

Total

281

299

18

6.4%

3,739

1,764

(1,975)(52.8%)

2023/3Operating profit
890◆Leasing Business: Solidness622◆Air-conditioning Business: The business was outside the scope of
consolidation from the Q3 of the year ended March 31, 2022,
because of sales of the business.

◆Book Store Operation: Weakness

2022/32023/38© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Cash Flows
2022/3(Millions of yen)2023/3

ChangeMajor changing factors

Operating CF

1,975

1,494

(481) Profit before income taxes (1,896)

Investment CF(3,082)(2,817)265

Financial CF

120

102

(18)

Free CF *(1,721)(2,069)(348)

Cash and cash equivalents
at end of period

9,002

7,831

(1,171)Dividends paid

614

747

133

Depreciation

3,061

3,331

270

Purchase of property, plant andequipment: 2,238* It was calculated by subtracting investment CF and dividend from operating CF.

Changes in cash flow
4,776

Operating CF
Investment Cf

5,216

Free CF
2,632
1,975
1,062

(1,721)(1,948)1,494(2,069)(1,298)(3,539)(3,966)(3,082)(2,817)2022/32023/3(5,503)

2019/32020/32021/39© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Composition of Net Sales
The composition ratio of Inorganic Chemicals increased in the short term
as a result of sharp price revisions in Inorganic Chemicals according to a rise in market prices.

43%

Year ended
March 31, 2022

Year ended
March 31, 2023

10%

47%

Inorganic Chemicals

Other

Specialty Chemicals

53%
43%

10%

53%

5%

42%
47%

5%

42%
Electronic CeramicMaterials: 48%

Chromium
Compounds: 26%
Silicates
and Silica: 12%

Battery andElectronic Device
Materials: 25%

Inorganic
Chemicals

Inorganic
Phosphorus
Compounds: 43%

Specialty
Chemicals

Organic Functional
Materials: 17%10

２Forecast of Consolidated
Financial Results for the YearEnding March 31, 2024

© Nippon Chemical Industrial Co., Ltd.

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

Points of the Full-year Forecasts for the YearEnding March 31, 2024
Uncertain outlook will be unchanged because of geopolitical risk and fluctuations
in exchange rate and impact of fluctuations of raw material and fuel prices.

◆Net sales will increase 5.1% Y-o-Y while operating profit will increase 23.8%.
・Expect completion of production adjustments of major customers but assume a slow
recovery of demand for LCDs and semiconductors and communication.
・Solid in electronic ceramic materials (for MLCC) for automobiles.
・Continue growth investment (barium titanate).
・Focus on expansion of revenue base and value creation toward mid- and long- term
growth.
・Allocate managerial resources mainly to growth fields, overseas expansion, and productdevelopment. Continuously optimize the business portfolio.

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

Forecast of Consolidated Financial Results for the YearEnding March 31, 2024
(Millions of yen)

Net sales
Operating profit

Year ending
March 31, 2023
Actual results

Year ending
March 31, 2024
Forecast

ChangeChange rate

38,07540,000

1,925

5.1%

1,292

1,600

308

23.8%

Operating profit percentage

3.4%

4.0%

0.6pt

Ordinary profit
ProfitEBITDA ※
ROE

1,412

1,600

188

13.3%

855

1,000

145

17.0%

4,623

5,400

777

16.8%

2.0%

2.4%

0.4pt

97.13

113.47--

Interim：35
Year-end：35
Annual：70

Interim：35
Year-end：35
Annual：70--

Capital expenditures

4,288

5,300

1,012

23.6%

Depreciation

3,331

3,800

469

14.1%

R & D expenses

1,518

1,500

(18)

(1.2%) 13

Earnings per share(Yen)
Annual dividends per share(Yen)※ Brief version of EBITDA (operating profit + depreciation) is used© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Forecast of Earnings for the Year Ending March 31,
2024, by BusinessInorganic
Chemicals

Specialty
Chemicals

Leasing
Business

Other

Total

Year ending
March 31, 2023
(Millions of yen) Actual results

Year ending
March 31, 2024
Forecast

Net sales

20,327

19,950(377)(1.9%)

Operatingprofit

1,130

870

(260)

(23.0%)Net sales

15,983

18,330

2,347

14.7%

Operatingprofit

(437)

155

592

-

Net sales

915

915

0

0.0%

Operatingprofit

541

535

(6)

(1.1%)Net sales

849

805

(44)

(5.2%)

Operatingprofit

81

40

(41)

(50.6%)Net sales

38,07540,000

1,925

5.1%

Operatingprofit

1,292

1,600

308

23.8%

ChangeChange rate14© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Forecast of Net Sales in Inorganic Chemicals
for the Year Ending March 31, 2024
2023/3(Millions of yen) Actual results

2024/3
Forecast

ChangeChangerate

Chromium Compounds

5,326

5,500

174

3.3%

Silicates and Silica

2,467

2,900

433

17.6%

Inorganic Phosphorus
Compounds

8,765

7,750

(1,015)(11.6%)

Other

3,768

3,800

32

0.8%

20,327

19,950(377)(1.9%)

Total◆Chromium Compounds: Execution of price revisions despite weakness
in sales volume

Net sales
20,327

19,9502023/32024/3Operating profit
1,130
870

◆Silicates and Silica: Execution of price revisions and sales expansion◆Inorganic Phosphorus Compounds: Weakness for LCDs and semiconductors
2023/32024/315

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

Forecast of Net Sales in Specialty Chemicals
for the Year Ending March 31, 2024
2023/3(Millions of yen) Actual results
Electronic Ceramic
7,617
Materials
Organic Functional
2,655
Materials
Battery and Electronic
4,022
Device Materials
Other
1,687
Total

15,9832024/3
Forecast

ChangeChange
rate

8,400

783

10.3%

3,200

545

20.5%

5,050

1,028

25.6%

Net sales
18,33015,9832023/31,680(7)(0.4%)

18,330

2,347

14.7%

2024/3Operating profit◆Electronic Ceramic Materials: Solidness for automobiles, and demand recovery
for communication and in high-purity barium carbonate toward the second half
◆Organic Functional Materials- Phosphine Derivatives: Flat for Quantum Dot and sharp growth in other overseas
catalysts- Agrochemicals: Execution of price revisions

(437)

155

2023/32024/3◆Battery and Electronic Device Materials- Battery Materials : Execution of price revisions according to an increase in market prices- Circuit materials: Solidness in sales volume- High-Purity Electronic Materials: Recovery of demand for organic electronic materials
16© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Forecast of Net Sales in Leasing Business and Others
for the Year Ending March 31, 2024
Net sales

2023/3(Millions of yen) Actual results

2024/3
Forecast

Changerate

ChangeLeasing Business

915

915

0

0.0%

Book Store Operation

549

510

(39)

(7.1%)

Other

299

295

(4)

(1.3%)

1,764

1,720

(44)

(2.5%)

Total

1,764

1,720

2023/32024/3Operating profit◆Leasing Business: Solidness for major tenants◆Book Store Operation: Weakness

622

2023/3575

2024/317

3Medium-Term Business Plan
(Progress)© Nippon Chemical Industrial Co., Ltd.

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

Progress of Medium-Term Business Plan
(Net Sales and Operating Profit)
Achievement of plan resulting fromprice revisions despite decreased
demand resulting from deteriorated
external environment

A slow recovery in demand andunit selling prices remaining inhigher price range

FY 2022

FY 2023500

Medium-term
business
plan

400

380

300

Specialty
Chemicals

Actualresults

381

Medium-term
businessplan

385

FY 2024
Medium-term
business
plan

Forecast

400

Expected to achievetargets early

400

Target of net sales”40 billion yen for
FY 2024”

Net200sales(Hundredmillion yen)

100

Inorganic
Chemicals

03530Operatingprofit21
13

16(Hundredmillion yen)19© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Review (Results) of theMedium-Term Business Plant (First Year)(i) Expansion of growthfields(ii) Promotion of
globalization(iii) Reinforcement ofbusiness foundation■Active advancement of capital investment mainly in Specialty Chemicals
Expanded the capacity for electronic ceramic materials (expected to be completed in FY 2024).
Expanded the capacity for semiconductor materials (completed in May 2022).
Expanded the capacity for phosphorus materials for Quantum Dot (completed in December2022).
■Reinforcement of the system, and optimization of functions, of overseas sales bases
Expanded operations of JCI (Thailand).
■Tighter cooperation with overseas sales bases■Promotion of sustainable management
Established Sustainability Promotion Committee and issue TCFD report.
■Optimization of business portfolio
Dissolved Kanto Sodium Silicate Glass Co., Ltd.

20

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

Review (Challenges) of Medium-Term Business Plan
(First Year)■Shortfall from targets and delay at new businesses in growth fields
There is a delay in demand expansion despite prior investment in expectation of increasing
demand.
(including organic electronic materials, MLCC materials, phosphorus materials for the nextgeneration display)→Steadily execute valuation of customers and building of mass production system inanticipation of demand recovery and expansion phases.
■Improvement of corporate value
ROE and EBITDA remained low below assumptions.
→Actively implement measures to increase ROE through improvement of shareholder
return.
■Promotion of sustainability management→Deepen efforts to increase social value, including establishment of KPIs for identified
materiality.

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

Growth Fields
Progress in FY 2022

Net sales in growth fields■Shortfall from the initial plan for FY 2022

200
(Hundred millions of yen)

10% lower than in the initialplan due to weak demand■Expansion of external demand driving sales behind
about a year from the initial plan

■Demand related to digitalization and energy saving
expected to be expanded in the mid- and long- term

100

0

2018

2019

2020

2021

2022

2022
2023
MediumForecast
termbusiness plan

2024 （fiscal year）
Mediumterm
business plan

<Products in growth fields><Major uses>■Electronic Ceramic Materials

Dielectric materials for MLCC

■Phosphoric acid for LCDs andsemiconductors

Etching agents■High-purity electronic materials

Dopants for silicon semiconductor, compound semiconductormaterials, electronic materials■Phosphorus materials for QD

Materials for the next-generation display (Quantum Dot display)22© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Capital Investment
Progress in FY 2022

<Breakdown of capital investment>■Allocation of 70% of capital investment amount to Specialty
Chemicals where products in growth fields concentrated
Inorganic Chemicals■Completion of capital investment in growth fields
excluding electronic ceramic materials

32%
Investments for
FY 2022:

4,288■Establishment of mass production including customer
evaluation of new equipment in preparation for demand
expansion phase<Major capital investment>

million yen
Specialty Chemicals

65%● Completed 〇 Scheduled to be completed

Factory

Details

Investment
amountTokuyama

Electronic Ceramic Materials(Construction of new productionbuilding)

6,000-7,000
million

2018

2019

2020

2021

2022

2023

2024

○
Completion of new
production building(Cumulative total for 20182022: 4,200 million yen)

Fukushima
No.2

Organic electronic materials(Increasing capacity)

2,000 million

Fukushima
No.2

High-purity red phosphorus(Construction of new productionbuilding)

400 million●

Fukushima
No.2

Phosphorus materials for QD(Increasing capacity)

800 million

●

●

23

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

Improvement of Corporate Value■Key performance indicators, EBITDA and ROE, remain low.
■Put a priority on profit growth while seek continuous growth of ROE by increasing
capital efficiency through improvement in return to shareholders.
■Examine concrete policies and measures to increase profitability including ROE.

Profitability

Shareholder value

EBITDA

ROE

100

10.0

(hundred millions of yen)（％）

Initial forecast:
5,700 hundred million

50

46

5.0
initial forecast:
3.3％

2.0

0.0

0
2018 2019 2020 2021 2022 2023

2018 2019 2020 2021 2022 2023
（fiscal year）* Brief version of EBITDA (operating profit + depreciation) is used.

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

Promotion of Sustainability Management■September 2022: Established Sustainability Promotion Committee.
October 2022: Declared support for TCFD recommendation and issued TCFD report.
■Identified materiality and give consideration to the establishment of KPIs in future.

■Continuously strive to increase social value and corporate value<Materiality (Important issues)><Reduction target> 23% reduction by FY 2030
CO2 emissions (t)FY 2030(Target)Boundary: Nippon Chemical Industrial Group25

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

Strengthening of Human CapitalStrengthening of organizational power
Development of human resources using coaching

Improvement in work-life balance

Increase in company recognition

Promotion of work-style reform

Use of wrapping advertising and commercials* The service started in May 2023 (in Fukushima prefecture)26

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

Shareholder Return■Focus on stable and continuous dividend, giving comprehensive consideration to businessresults and mid- and long-term growth.
■Enhance shareholder return

150

Annual dividends (yen)Payout ratio (％)

72.1

100

28.6

33.1

70

70

28.2

50

70

61.7

20.0

85

70

70

0

-100.0
19/3

20/3

21/3

22/3

23/3

24/3
Forecast27

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

Research and Development
高効率な研究開発に取り組む

Make highly efficient research and development

Trend in R&D expenses(Millions of yen)

Inorganic chemicals

1,518
1,177

1,290

1,223

1,326

17%
R&D expenses for
FY 2022

1,518
millionSpecialty chemicals

83%
2018

2019

2020

2021

2022
(fiscal year)28

４

Efforts for Research andDevelopment© Nippon Chemical Industrial Co., Ltd.

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

Concept of Research and Development
New technologies and new materials
contributing to resolving the next-generation social issues

New value field platform
Increase in comfort

Energy management

Protection of health (life)

Present business field platform / functional material groups
Phosphinederivatives

Electro-conductive
materials

Dielectricmaterials

Anisotopic
conductive paste

Secondary battery
cathode materials

Highly selective
adsorbents

Oxidenanoparticles

Basic technologies / key material groups

Lithium

SiliconPhosphorus

Intellectual property
Technical agreements

Industrial-academic-government collaboration
Open innovation
Chromium

Barium30

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

Phosphine gas, phosphine derivatives
Only phosphine gas producer in Japan
What are phosphine derivatives?・・・
They represent organic compounds made from phosphine that consist ofphosphorus and hydrogen. They are used for catalysts, which promote
chemical reaction, and antistatic agents.

Purification

Yellow
phosphorus

High-purity phosphine gas
High-purity red phosphorus
・Dopants for silicon semiconductor
・Compound semiconductors

Phosphine gas(Toxicity and pyrophoricity)

Safety control

High-pressure
reaction

Our strengths

Phosphine derivatives
・Catalysts and ligands
・Petroleum refining catalysts
・Materials for Quantum Dot■Safety control process:Safely handling phosphine gas with the toxicity and pyrophoricity■High-purification process:Providing high-purity gas for semiconductors by efficiently refining huge volumes of the gas through gas liquefaction process■High-pressure reaction process:Realizing a wide variety of lineups by precisely controlling chemical reactions31

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

Phosphine derivatives: A wide variety ofApplicableligands to pharmaceuticals
What are ligands?・・・
They represent compounds coordinately bond to metals.
They are widely used as materials for catalysts to promote
chemical reactions.

<Example of ligand products>

LigandCatalyst

Business strategies■Use of organic synthesis technologies of phosphine derivatives■Cost competitiveness from integrated manufacturing from phosphine■Aggressive expansion into pharmaceuticals and organic electronics areas

The forecasts of financial results and business plans included in the materials were based on currently available information available and certain
preconditions, and so the forecasts do not guarantee future financial results. Actual financial results may differ from the forecasts for to a varietyof reasons.
Please make your own decisions on investments.