Notice:This document is an excerpt translation of the original Japanese document and is only for reference 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, 2024
For the year ended March 31, 2024

Summary of
Financial Results

2 Forecast of Consolidated Financial Results

for the Year Ending March 31, 2025
3 Medium-Term Business Plan

(FY 2024 to FY 2026)
4 Initiatives for an Increase in Sustainable

Corporate Value
5 Efforts for Research and Development
May 24, 2024

4092

© Nippon Chemical Industrial Co., Ltd.

1

Summary of Consolidated
Financial Results for the Year
Ended March 31, 2024

© 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, 2024
Outlook remains uncertain because of continued high raw material and fuel prices
and yen weakness as well as the deteriorated global situation.

◆Net sales increased 1.2% YoY while operating profit increased 75.2%.

・Net sales increased because of price revisions, which were continuously made from theprevious fiscal year, and contribution of new products despite weak sales volume for
LCDs, semiconductors and communication, as well as general industries.

・Profits largely increased due to review of supply chain and procurement cost of raw
materials and penetration of measures for improving revenues such as cost reductions.
・Capital investment was continued in growth fields.
■Tokuyama Factory: Dielectric materials for MLCC (barium titanate)* Expected to be completed in FY 2024
・Promotion of globalization: Strengthening of sales system mainly in the Asian region* Establishment of a local subsidiary in Taiwan (scheduled to be established in June 2024)
・Promotion of Sustainable Management■Setting of KPIs for materiality■Certification of environmental contribution products and others3© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Consolidated Financial Results for the Year Ended
March 31, 2024
Year ended(Millions of yen) March 31, 2023

Year ended
March 31, 2024

ChangeChange rate

Net sales
Operating profit

38,07538,538

462

1.2%

1,292

2,264

971

75.2%

Operating profit percentage

3.4%

5.9%

2.5pt

Ordinary profit
Profit

1,412

2,383

971

68.8%

855

1,590

734

85.9%

4,623

5,947

1,324

28.6%

2.0%

3.6%

1.6pt

Earnings per share
(Yen)

97.13

180.35

Capital expenditures

4,288

4,115

(173)

(4.0%)

Depreciation

3,331

3,683

352

10.6%

R & D expenses

1,518

1,452

(66)

(4.3%)EBITDA※
ROE※ Brief version of EBITDA (operating profit + depreciation) is used4© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Earnings for the Year Ended March 31, 2024, by Business(Millions of yen)
Inorganic
Chemicals

Specialty
Chemicals

Leasing
Business

Other

Total

Year ended
March 31, 2023

Year ended
March 31, 2024

ChangeChange rate

Net sales

20,327

17,777(2,550)(12.5%)

Operatingprofit

1,130

1,069

(61)

(5.4%)Net sales

15,98319,061

3,077

19.3%

Operatingprofit

(437)

589

1,026

-

Net sales

915

915

0

0.0%

Operatingprofit

541

528

(13)

(2.4%)Net sales

849

784

(64)

(7.7%)

Operatingprofit

81

49

(32)

(39.5%)Net sales

38,07538,538462

1.2%

Operatingprofit

1,292

2,264

971

75.2%

5

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

Net Sales in Inorganic Chemicals
for the Year Ended March 31, 2024
(Millions of yen)2023/32024/3

ChangeChangerate

Chromium Compounds

5,326

5,217

(109)

(2.0%)

Silicates and Silica

2,467

2,487

20

0.8%

Inorganic Phosphorus
Compounds

8,765

6,635

(2,130)(24.3%)

Other

3,768

3,437

(331)

(8.8%)

20,327

17,777(2,550)(12.5%)Total

Net sales

20,327

17,7772023/3◆Chromium Compounds: Weakness for plating, surface treatment, and refractory

2024/3Operating profit
1,130

1,069

◆Silicates and Silica: Solidness◆Inorganic Phosphorus Compounds: Sharp decline for LCDs, semiconductors andindustry2023/32024/36

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

Net Sales in Specialty Chemicals
for the Year Ended March 31, 2024

(Millions of yen)

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

2023/32024/3

ChangeChange
rate

7,617

8,462

845

11.1%

2,655

3,973

1,318

49.6%

4,022

5,044

1,022

25.4%

Net sales

19,061

15,9832023/3

1,687

1,580

(107)

(6.3%)

15,98319,061

3,077

19.3%

2024/3Operating profit◆Electronic Ceramic Materials: Sharp decline for communication and strong growth
for automobiles◆Organic Functional Materials- Phosphine Derivatives: Sharp decline for Quantum Dot and strong growth in new
products and other overseas catalysts- Active Agrochemical Ingredients: Strong growth for major customers◆Battery and Electronic Device Materials- Battery Materials: Execution of price revisions- Circuit Materials: Demand recovery for anisotropic conductive materials,
and strongness for paste- High-Purity Electronic Materials: Demand recovery for some grades for semiconductors

589
(437)
2023/32024/37

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

Net Sales in Leasing Business and Others
for the Year Ended March 31, 2024

(Millions of yen)2023/32024/3

Changerate

ChangeLeasing Business

915

915

0

0.0%

Book Store Operation

549

508

(41)

(7.5%)

Other

299

275

(24)

(8.0%)

Total

1,764

◆Leasing Business: Solidness

1,700

(64)

Net sales
1,764

1,700

2023/32024/3

(3.6%)

Operating profit◆Book Store Operation: Weakness
622

2023/3578

2024/38© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Balance Sheet(Millions of yen)March End,
2023

March End,
2024

ChangeMajor factors of change
Accounts receivable-trade: 2,189

Current assets

32,22833,975

1,747 Inventory: (1,290)

Non-current assets

40,66942,527

1,858 Retirement benefit asset: 1,927

72,89776,503

3,605

Current liabilities

17,492

20,102

2,610 Short-term borrowings: 1,669

Non-current liabilities

13,163

11,352(1,811) Long-term borrowings: (1,914)

30,656

31,455799

Shareholders' equity

38,62739,618991 Retained earnings: 964

Accumulated othercomprehensive income

3,614

5,429

1,815 1,670

Total net assets

42,24145,0472,805

Total liabilities and net assets

72,89776,503

3,605

Total assets

Total liabilities◆Equity ratio: 58.9％

Property, plant and equipment: 269,

Notes and accounts payable-trade: 536,

Remeasurements of defined benefit plans:9© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Cash Flows(Millions of yen)2023/32024/3

ChangeMajor changing factors

Profit before income taxes: 939
Decrease in inventories: 4,688
Purchase of property, plant and(1,597)equipment: (1,457)
Proceeds from long-term borrowings:(972)(2,500)Operating CF

1,494

6,152

4,658

Investment CF(2,817)(4,414)

Financial CF

102

(870)

Free CF *(2,069)

1,122

3,191

Cash and cash equivalents
at end of period

7,831

8,731

900

Dividends paid

747

615

▲ 132

Depreciation

3,331

3,683

352

* It was calculated by subtracting investment CF and dividend from operating CF.

Operating CF
Investment Cf
Free CF4,776

Changes in cash flow

5,216

2,632

6,152

1,975
1,062

(1,948)

1,494
1,122

(1,721)(2,069)(3,082)(2,817)2022/32023/3(1,298)(3,966)

2019/3(3,539)(4,414)(5,503)2020/32021/32024/310© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Composition of Net SalesYear ended
March 31, 2023

Year ended
March 31, 2024

Inorganic Chemicals

Other

53%

5%
5%

53%

4%

46%

Specialty Chemicals

42%
42%

50%
Electronic CeramicMaterials: 44%

Chromium
Compounds: 30%
Silicates
and Silica: 14%

Battery andElectronic Device
Materials: 27%

Inorganic
Chemicals

Inorganic
Phosphorus
Compounds: 37%

Specialty
Chemicals

Organic Functional
Materials: 21%11

２

Forecast of Consolidated
Financial Results for the YearEnding March 31, 2025

© Nippon Chemical Industrial Co., Ltd.

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

Points of the Full-Year Forecasts for the Year Ending
March 31, 2025
Forecast that uncertain situations will be kept including geopolitical risks andfluctuations in exchange rates◆Net sales will increase 3.8% YoY while operating profits will increase 28.1%.

・Estimate that demand for LCDs and semiconductors will show a recovery to the second
half

・Estimate a recovery for communication to the second half and continuing demand
increase for automobiles in electronic ceramic materials (for MLCC)
・Continue growth investment (barium titanium, high-purity phosphine gas, etc.）
・Liquidate the subsidiary Toho Ganryo Kogyo Co., Ltd., and transfer its main business to us(Scheduled to be liquidated: in FY2025)
・Strengthen overseas expansion: establishment of a local subsidiary in Taiwan(Scheduled to be established: June 2024)
・Seek to achieve ROE of 5% or more13© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Forecast of Consolidated Financial Results for the YearEnding March 31, 2025
(Millions of yen)

Net sales
Operating profit

Year ended
March 31, 2024
Actual results

Year ending
March 31, 2025
Forecast

ChangeChange rate

38,53840,000

1,462

3.8%

2,264

2,900

636

28.1%

Operating profit percentage

5.9%

7.3%

1.4pt

Ordinary profit
ProfitEBITDA ※
ROE

2,383

2,900

517

21.7%

1,590

2,000

410

25.7%

5,947

6,700

753

12.7%

3.6%

5.0%

1.4pt

180.35226.70--Interim：35
Year-end：35
Annual：70

Interim：35
Year-end：35
Annual：70--

Capital expenditures

4,115

8,600

4,485

109.0%

Depreciation

3,683

3,800

117

3.2%

R & D expenses

1,452

1,600

148

10.2%

Earnings per share(Yen)
Annual dividends per share(Yen)※ Brief version of EBITDA (operating profit + depreciation) is used14© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Forecast of Earnings for the Year Ending March 31,
2025, by BusinessInorganic
Chemicals

Specialty
Chemicals

Leasing
Business

Other

Total

Year ended
March 31, 2024
(Millions of yen) Actual results

Year ending
March 31, 2025
Forecast

Net sales

17,77718,300523

2.9%Operatingprofit

1,069

1,550

481

45.0%

Net sales

19,061

20,000939

4.9%Operatingprofit

589

850

261

44.3%

Net sales

915

915

0

0.0%

Operatingprofit

528

545

17

3.2%

Net sales

784

785

1

0.1%

Operatingprofit

49

(45)

(94)

-

Net sales

38,53840,000

1,462

3.8%

Operatingprofit

2,264

2,900

636

28.1%

ChangeChange rate15

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

Forecast of Net Sales in Inorganic Chemicals
for the Year Ending March 31, 2025
2024/3(Millions of yen) Actual results

2025/3
Forecast

ChangeChangerate

Chromium Compounds

5,217

5,500

283

5.4%

Silicates and Silica

2,487

2,450

(37)

(1.5%)

Inorganic Phosphorus
Compounds

6,635

6,650

15

0.2%

Other

3,437

3,700

263

7.7%

17,77718,300

523

2.9%

Total

Net sales
17,77718,3002024/32025/3Operating profit
1,550◆Chromium Compounds: Demand recovery for plating and surface treatment◆Silicates and Silica: Solidness

1,069◆Inorganic Phosphorus Compounds: Solidness
2024/32025/316

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

Forecast of Net Sales in Specialty Chemicals
for the Year Ending March 31, 2025
2024/3(Millions of yen) Actual results
Electronic Ceramic
8,462
Materials
Organic Functional
3,973
Materials
Battery and Electronic
5,044
Device Materials
Other
1,580
Total

19,0612025/3
Forecast

ChangeChange
rate

9,600

1,138

13.4%

3,400

(573)

(14.4%)

5,550

506

10.0%

1,450

(130)

(8.2%)

20,000939

4.9%

Net sales
19,061

20,0002024/32025/3Operating profit◆Electronic Ceramic Materials: Strongness for automobiles, and demand recovery
for communication◆Organic Functional Materials- Phosphine Derivatives: Demand recovery for Quantum Dot, and decline in special
demand in overseas catalysts- Active Agrochemical Ingredients: Net sales responding to contracted production andcustomer demand◆Battery and Electronic Device Materials- Battery Materials : Execution of price revisions according to an increase in market prices- Circuit materials: Decrease for paste reacting to new adoption of the previous period- High-Purity Electronic Materials: Demand recovery for semiconductors

850
589

2024/32025/317

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

Forecast of Net Sales in Leasing Business and Others
for the Year Ending March 31, 2025
Net sales

2024/3(Millions of yen) Actual results

2025/3
Forecast

Changerate

ChangeLeasing Business

915

915

0

0.0%

Book Store Operation

508

475

(33)

(6.5%)

Other

275

310

35

12.7%

1,700

1,700

0

0.0%

Total

1,700

1,700

2024/32025/3Operating profit◆Leasing Business: Solidness for major tenants◆Book Store Operation: Weakness

577
500

2024/32025/318

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

Capital Investment
For FY 2024, capital investment will be two times as many as that for the previous period
because of an amount postponed in FY 2023 of about 1.2 billion yen and continuing
100 investment in growth fields.
<Breakdown of capital investment><Capital investment>(hundred million yen)
Differences（12）

Maintenance andreplacement, etc.

4.6

Investments for
Growth
FY 2024:4
8.6 billion yen

100
49

54

44

44

43

41

86

0
2018 2019 2020 2021 2022 2023 2024（fiscal year）

Growth investment(forecast)Investment in a medium-to long-term perspective leading toan increase in enterprise value<Plan for FY 2024>■Electronic ceramic materials for MLCC: Tokuyama Factory■High-purity phosphine gas for semiconductors: Fukushima No. 2 Factory<Depreciation>(hundred million yen)

22

27

29

31

33

37

38

0
2018 2019 2020 2021 2022 2023 2024（fiscal year）(forecast)

Electronic ceramic materials(for MLCC)

High-purity phosphine gas(Dopant for silicon wafer)

1.8times

3times*Completion of investment:
Scheduled in FY 2024*

Completion of investment:
Scheduled in FY 2026
* Medium- to Long-term goals,
compared with pre-investment

３

Medium-Term Business Plan
(FY 2024 to FY 2026)
Promotion of the Growth Strategy
and New Value Creation© 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 with

Medium-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
FY
2024

FY
2026

FY
2030

© 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 and
New 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 the
Sustainability Management

FY
2024

■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 society

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

Managerial Targets■Regarding outlook for FY 2024, net sales will decrease from the first year of the medium-term
management plan while operating profit will be above that for the second year in the plan.
■For FY 2024, we focus on the direction of changes in business environment, considering the year
as one for assessing these changes.
■We will make examination that includes a review of numerical plan after the second year.
■Net sales■Operating profit(hundred millions of yen)
FY 2024（1st year in Medium-termbusiness plan）

Forecast

Medium-termbusiness plan

70
60

385

50

400

Targets ofthe final
fiscal year

430

460

490

500

400
Sales
decrease
2024
vs Medium-termbusiness plan

40

300

Profitincrease

30
20

29
23

2023

24

200

25
100

10
0

33

2024

0

2024
2025
2026（fiscal year）
Medium-term business plan
23
(2024-2026)

© 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 of
Basic 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 of
Production 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 for
Quantum 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 (paper
manufacturing)
Soil hardening agent (construction)

Inorganic Phosphorus
Compounds

Food additives
Optical glass materials

24© 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 (billion yen)
■ Growth fields (billion yen)
Ratio of growth fields in consolidated sales

34%

Targets of products in growth fields for FY 2026

40%

Growth fields
net sales

Growth fields
sales ratio

20 billion yen

40%

32%

<Capital investments, etc.>
20
Other

24%

2
13

Growth fields
net sales

Electronic ceramicmaterials net sales
in growth fields

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

12.5

8.6

6.5

2018

7.6

2022

Maintenance andreplacement

8.5

11.5

2023

Growth2024(Forecast)

2025

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

2026 (fiscal year)25© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Measure (ii) Promotion of globalization
Expand the business leveraging strength
Increase overseas net sales■Expand overseas with products satisfying local
needs
Strengthen overseas organizations■Increase the organizational strength to improveoverseas presence※Establishment of overseas subsidiary
in R.O.C (Taiwan) (scheduled)
100
Overview of Overseas Subsidiary

90

Overseas
net sales

Overseas
sales ratio

7 billion yen

14%< Ratio of overseas in net sales >■ overseas net sales (billion yen)

Ratio of overseas in consolidated sales

14%

13%

Taiwan Nippon Chemical Industrial Co., Ltd.

70

◆ Location

Taichung City

60

◆ Date of establishment

June 2024 (scheduled)◆ Business

Sales of industrial and specialty chemicals
NTD 27,000,000

12%
10%

7

8%

5

40

6%

3.7

30

4%

3

2%

10

0%

0

Pursue new opportunities■Pursue and develop new business model throughdeepened cooperation between overseas bases

10%
8%

50

20

16%
14%

80

◆ Company name◆ Amount of capital

Targets of overseas net sales for FY 2026

2018

2022

2023

2024
2025
(Forecast)

2026 (fiscal year)26© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

27

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

Cash Allocation
Effectively allocate of managerial resources
The company will allocate cash generated by expansion of growth fields, optimization of
inventories, and reduction in shares held for strategic purposes to growth fields, managementfoundation, and return to shareholders<Cash allocation for three years of Medium-term business plan (diagram)>

Optimization of working
capitalCash generation by
optimization of inventories

Operating CF:
13 billion yen
or moreGrowthinvestment:
6.5 billion yen* Excluding working capital

Reduction in crossshareholdings
Aim for the followings:
FY 2026:15% or less
FY 2030:10% or less

Optimization ofworking capital:
3 billion yen

Maintenanceand replacement
investment
and others

13.5 billion yen

Reduction in crossshareholdings

Financing

Return toshareholders:
2 billion yen
or moreGrowth investment
Investment from mediumto long-term perspective
leading to increase incorporate value
Return to shareholders
Extension of return toshareholders
・Payout ratio: about 30%
・Acquisition of treasury
shares and others28

４

Initiatives for an Increase in
Sustainable Corporate Value© Nippon Chemical Industrial Co., Ltd.

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

Recognition of Current Status and Issues
・The company recognizes that cost of shareholders equity represents 6-8%.
・ROE has remained low since FY 2022. The challege is to improve equity spread.
・PBR remains low at around 0.5.

(%)

10

Our recognition basedon CAPM<ROE and cost of shareholders’ equity>

Cost of shareholders’ equity

ROE

8
6

６% to ８％

Cost of shareholders’ equity

4
2
0
2017

2018

2019

2021

2022

2023 (fiscal year)<PBR>(multiple) 1.2

1
0.8
0.6
0.4
0.2
0

2020

At end of March, FY2024

PBR

PBR

Around 0.5

2017

2018

2019

2020

2021

2022

2023 (fiscal year)30© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Initiatives for an Increase in Sustainable Corporate Value
Improvement in equity spread through increase in ROE andreduction in the cost of shareholders’ equity
Increase in corporate value and PBR

Improvement in equity spread

Reduction in cost ofshareholders’ equity

Increase in ROE
Increase in return

Control of equity

Promotion of nonfinancial measures

Execution of MediumTerm Business Plan
(three measures)

Implementation of capital
policyPromotion of thesustainability
management■Business expansion
and strengthening thebusiness structure■Promotion of
globalization■New value creation■Efficiency of funds
flow■Securing of financial
health■Improvement inreturn to shareholders■facilitate
environmental
responses(TCFD, CDP, etc.)■Development of
human resources

Strengthening corporate
governance

Strengthening IR and
SR activities■Strengthening ofNomination andRemuneration Committee■Securing of diversity of
the Board of Directors■Introduction of stockbased remuneration■Evaluation of theeffectiveness of theBoard of Directors■Extension of
information
disclosure■Issuance ofintegrated report■Extension of English
disclosure© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Capital Policy
Effectively allocate of managerial resources andimprovement in return to shareholders
Reduction in cross-shareholdings■Targets for the ratio of cross-shareholdings
to net assets
FY 2026:15% or less
FY 2030:10% or less
150

<Changes in dividends per share>■Annual dividends（yen）
Payout ratio

72％

Efficiency of funds flow
■Efficiency of funds flow throughmaintenance of inventory turnover period100
of 3.0 to 3.5 months
Securing of financial health■Securing of financial health throughmaintenance of D/E ratio of 0.4 times

29％

33％

28％

39％
20％

85
70

70

70

70

70

50

Improvement in return to shareholders■Extension of sustainable shareholder return0
measures in the medium- to long-term
・Payout ratio Around 30 %・Acquisition of treasury shares and others-100.0
2018

2019

2020

2021

2022

2023 (fiscal year)32© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Promotion of the Sustainability Management
Aim for realization of sustainable society
Facilitate environmental responses

External evaluation■TCFD (October 2022 -)The company strengthened initiatives for Climate
Change and set long-term targets of Scopes 1 and 2.
■CDP
The company responded to CDP 2023 Climate Change
Questionnaire as external evaluation of ESG andreceived “B” score for Climate Change, and aims forhigher score.
■Environmental contribution products
The company established a system for certifying
products contributing to solution of environmental
issues as environmental contribution products and aims
for increasing the ratio of environmental contribution
products in net sales.

TCFD

EcoVadis

CDP（Climate Change）

Keidanren Initiative for Biodiversity
Conservation<CO2 emissions (t)>CO2 emissions (t)23％ reduction
by FY 2030

Development of human resources■Development of human resources using coaching■Extension of the system for encouraging the growth■Promotion of success of female employees
FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2030

Scope of data collection: Nippon Chemical Industrial Group33

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

Strengthening Corporate Governance andStrengthening IR and SR activities
Extension of disclosure of nonfinancial information
for reduction in cost of shareholders’ equity
Strengthening corporate governanceInitiatives for strengthening corporate governance■Strengthening of the effectiveness ofStrengthening of the effectiveness of Nomination
Nomination and Remuneration Committee
and Remuneration Committee■Securing of diversity of the Board of Directors ・Chairperson: Selected from among members who are independent
Outside Directors■Introduction of transfer-restricted shares・Activities (examples)
remuneration- Selection of Directors and Executive Officers■Execution of effectiveness evaluation- Selection of Representative Directors- Policy and procedure for determining the remuneration ofof the Board of Directors
Directors and Executive Officers

Strengthening IR and SR activities■Extension of information disclosure■Issuance of integrated report (scheduled to
be issued in 2024)■Extension of English disclosure<Transition to integrated report>

Securing of diversity of the Board of Directors
・ Selection of female Directors
・Three Outside Directors(Ratio of Outside Directors to all Directors: 50%)

Introduction of transfer-restricted shares
remuneration

・Applicable persons: 2 Directors, 16 Executive Officers andadministration officers
・Transfer period: until resigns

Execution of effectiveness evaluation of the Boardof Directors
To 2022
CSR report2023
Sustainability
report2024
Integrated report(scheduled)・Deepening of issues and measures based on results of theevaluation
・Recognition of the necessity to prepare and execute systematictraining programs for Directors and executive officers→Preparation and execution of the training program plan34

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

Action to Implement Management that is Conscious of Costof Capital and Stock Price■The company recognizes that the cost of shareholders’ equity represents 6% to 8%.

Recognition of current
status and issues■ROE was above the cost of shareholders’ equity at 9.2% for FY 2021 while being significantly
below the cost of shareholders’ equity at 2.0% for FY 2022 and 3.6% for FY 2023.
■PBR now remains low at around 0.5.
■The company recognizes that the challenge is to do the speedy recovery in ROE, to realize astable level above the cost of shareholders’ equity, and to do the improvement in equity
spread through a reduction in the cost of shareholders’ equity.

PolicyThe company will realize the ideal for 2030 and increase in sustainable corporate value.
■Targets for FY 2030: operating profit 6 billion yen, ROE 8%■Targets in Medium-term business plan : operating profit 3.3 billion yen, ROE 6%

initiatives■Increase in ROE: Execution of Medium-term business plan (three measures) and
implementation of capital policy→ROE Targets: 5% for FY 2024, 6% for FY 2026, 8% for FY 2030
■Reduction in cost of shareholders’ equity: Promotion of nonfinancial measures
35

5Efforts for Research andDevelopment© Nippon Chemical Industrial Co., Ltd.

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

Research and Development System
Research and Development System
R&D Planning Department
Research

Intellectual Property
Development

Basic research and development
4 Research departments
and 7 groups

R&D Division

R&D information
Sales information
Sales Division

Sales

Production Engineering
Division

Manufacturing
Production plan
Sales and sales promotion<Research building (at site of the headquarters of
Nippon Chemical Industrial Co., Ltd.)>

R&D Administration
Department

Operational
suitability test
4 factory development
sections

External joint research

Transfer of administrationand productization
4 factory manufacturingsections<R&D expenses>
Inorganic chemicals

10%
R&D expenses for
FY 2023

1,452
million yen
Specialty chemicals

90%37

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

New Value Creation<Environmental contribution products>■BESPA（Dielectric materials for MLCCs）<New value field platform>
Improvementof comfort

Energymanagement

Protection ofhealth (life)■High-purity barium carbonate（Raw materials for dielectric materials for MLCCs）<Examples of research themes>■SMERF（Anisotropic conductive adhesive formounting IC chips for RFID tags）■Cuprous oxide（Antifouling agents for ship-bottom paints）

CO2 capture
technology■EXPERT（Rust preventive agents in JIS K 5674）
Phosphine ligands
for pharmaceuticals

Environmental contribution products
Net sales
FY 2023
Net sales

FY 2023
Sales ratio

4 billion yen

10%

CURELIGHT（Copper oxide paste）

38

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

Solid Sorbent Technology for CO2 Capture (DAC)
DAC (Direct Air Capture) is・・・
The technology to collect CO2 in the air, using amine and materials of separation membrane.
It attracts attention as negative emissions technologies because it makes it possible to capture and reduce CO2
in the air.
DAC equipment

CO2 solid sorbents
Selective capture of CO2
Separation andcondensation ofcollected CO2

Activated carbon baseStorage andUtilization

Silica gel base

Our strengths■Phosphorus compounds: No odor, no volatility, and high thermostability compared to amine compounds■Selective capture of CO2■Existing manufacturing facilities available for mass-production
Future outlook■Search for needs of customers and markets■Progress performance improvement and building of mass-production system for profitability in future39

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