This Announcement is a translation of the original; “Shihon Kosuto ya Kabuka wo Ishiki Shita Keiei no Jitsugen ni Muketa Taio ni Tsuite” written in Japanese,for convenience purpose only, and in the event of any discrepancy, the original in Japanese shall prevail.

June 18, 2024
For Immediate Release
Company:
Representative:

Contacts:

NIPPON SHOKUBAI CO., LTD.
Kazuhiro Noda, President andRepresentative Member of the Board(Code number: 4114, Prime Market,
Tokyo Stock Exchange)
Takeharu Tatsumi, General Managerof Corporate Communications Dept.
(Tel: +81-3-3506-7605)

Action to Implement Management that is Conscious of Cost of Capital and Stock Price(Updates on Progress)
NIPPON SHOKUBAI CO., LTD. has discussed at the Board of Directors the current situation on cost of capital andprofitability, and the progress in actions to enhance corporate value.
Please refer to the attached document for details of action to implement management that is conscious of cost of capitaland stock price.

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Action to Implement Managementthat is Conscious of Cost of Capital and Stock Price－Updates on Progress－

June 18 th, 2024

NIPPON SHOKUBAI CO., LTD.

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AgendaⅠ．Summary of previous announcement on 20 th June 2023

Ⅱ．New additional actions to increase corporate value
Ⅲ. Progress in actions announced on 20 th June 2023
（References）Analysis of current situation

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Ⅰ．Summary of previous announcement on 20 th June 2023
■ The followings are “the analysis of current situation, targets, actions and initiatives”, which wasannounced in June last year.

Analysis of current situation✓✓

ROE is lower than the cost of shareholders’ equity.
PBR has been lower than 1.0x for the last several years.

Target✓Achieve the ROE targets set out in the long-term vision and mid-term management plan of 7.5% in FY2024
and at least 9.0% in FY2030, and achieve PBR of at least 1.0x by taking additional actions.

Initiatives✓

In addition to the actions of the long-term vision and mid-term management plan (three transformations), thefollowing additional actions will be implemented.
Initiatives
Business Transformation（Expand the Solutions business, Achieve the Materials business Resilience）

Actions in Long-term vision andmid-term management plan

Environmental Transformation（Reduce GHG emissions and expand sales of environmentally friendlyproducts）

Organizational Transformation（Human resource development and promotion）
Previously added actions
on top of the mid-term
management plan
(20th June 2023)

Optimization of leverage level
Improvement in liquidity
Enhancing dialogue with shareholders and investors
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Ⅱ．New additional actions to improve corporate value■ New management and financial strategies have been added onto the actions announced last year to improve
corporate value. (Newly introduced in May 2024)
・The following chart shows the relationship between the issues and actions to improve PBR.
・Specific details and progress are given from the next slide onwards.

Actions

IssuesActions announced last year

Additional actions to improve
corporate value

Improve
profitability
Improve

ROAImprove

ROE

Business Transformation

Improveasset efficiency→P.11

Increase leverage

Optimization of leverage level→P.13

Improve

PBR

Raise expectations
for growth
Raiseliquidity

Improve

PERLower
the costof equity

Efforts forESG

Enhancing dialogue withshareholders and investors
→P.14

＋

Revision inManagement
Strategy

Revision inFinancial
Strategy→P.6~7→P.8~9

Improvement in liquidity→P.13

Environmental
Transformation→P.12

Organizational
Transformation→P.12

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Ⅱ．New additional actions to improve corporate value
Revision in Management Strategy

Revision in Financial Strategy■ Revision of management and financial strategies to improve corporate value announced in May 2024,
without waiting for the next mid-term management plan to be drawn up.
*Please refer to Financial Results Briefing Material for the Fiscal Year Ended March 2024 (FY 2023)
Reference: Financial Results Briefing Material for the Fiscal Year Ended March 2024 (FY 2023)

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Ⅱ．New additional actions: Revision in Management strategy
Revision in Management Strategy■ Selected “Growth Business” and determined to actively invest resources in those businesses.
Reference: Financial Results Briefing Material for the Fiscal Year Ended March 2024 (FY 2023)

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Ⅱ．New additional actions: Revision in Management strategy
Revision in Management Strategy

Reference: Financial Results Briefing Material for the Fiscal Year Ended March 2024 (FY 2023)

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Ⅱ．New additional actions: Revision in Financial strategy
Revision in Financial Strategy■ Set specific targets and timing for reduction of cross-shareholdings and financial leverage (shareholders’equity ratio)■ Decided to start ROIC business management＜Balance Sheet＞

Reference: Financial Results Briefing Material for the Fiscal Year Ended March 2024 (FY 2023)

Future Policy
Reduction ofshareholders’ equity
ratio to near 60%

ROIC business
management
50% reduction ofCross-Shareholdings
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Revision in Financial Strategy■ Revised the cash allocation policy of the current mid-term management plan and decided a policy to aim
for both increased profits and improved capital efficiency through proactive investment in growth andshareholder returns.

＜Cash Allocation Policy＞

Reference: Financial Results Briefing Material for the Fiscal Year Ended March 2024 (FY 2023)

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Ⅲ. Progress in actions announced 20 th June 2023：
Actions in the current mid-term management plan
■ The current mid-term management plan (FY2022-2024) sets the target of ROE of 7.5% in FY2024
and at least 9.0% in FY2030 alongside with 'three transformations'.

FY2030 Goals◆ Provide materials and solutions required by people and society◆ Become a chemical company that keeps evolving by identifying social trends◆ Develop with various stakeholders inside and outside the company

Initiatives and Target
through FY2024

Transform portfolio from existing togrowth fields

Promote sustainability to realize carbon
neutrality by FY2050

Expand the Solutions Business
Achieve the Materials Business Resilience

Contribute to reducing our environmental
impact throughout the entire life cycle

Transform into an organization with sustainable growth and acompany where diverse human resources are motivated to work

Realize frameworks able to foster Individual andorganizational growth

Please refer to the URL below for further details

・Long-term visionhttps://www.shokubai.co.jp/ja/docs/ir/vision/long-term_vision.pdf
・Mid-term Management Plan https://www.shokubai.co.jp/ja/docs/ir/vision/mid-term_managementplan.pdf
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Ⅲ. Progress in actions announced 20 th June 2023：
Actions in the current mid-term management plan
【 Glossary 】 AA ：Acrylic Acid
AES：Acrylates

Business Transformation

SAP：Superabsorbent polymers
EO：Ethylene oxide■ Although it is becoming increasingly difficult to achieve the FY2024 target (ROE 7.5%) of the mid-term management
plan, we will improve profitability in early stage through the implementation of the action plans.
Section

Expansion of Solutions
Business

Progress Status

Future Action Plan

●Sluggish Sales of Strategic Products
・Resins for Optical Films: Sales did not increase as expected due to delays in recovery of display-related demand.
・Concrete Admixtures Material: Volume decreased due to restructuring of the admixture industry andcompetition with Chinese and Korean products in overseas markets.
・Detergent Ingredients: Reduced use of our company products used in high-performance detergents●Recovery in the strategic product group・Resins for optical films: Respomse to the shift in the LCD
market to China
・Concrete Admixture Material: Early launch of products
contributing to carbon newtral
・Detergent Ingredients: Reviewing optimal production
system.

●Delayed by about 2 years in Energy (battery, hydrogen) and life sciences (health and medicine: Nucleic Acids &Peptides CDMO) where aiming to expand business (profit contribution) from FY 2025 onwards●Completion of the development of a platform to strengthen the ability to propose solutions.
・Increase in personnel resources approximately 100 more people in 3 years (initial plan indicated 70)
・Establish a mechanism to visualize and share customer information

Resilience in the Materials
Business●AA・SAP:・SAP: Completion of capacity expansion through remodeling of existing plant
・AES: Decline in market conditions and sales volume due to outflow of low-priced Chinese products to Asian
regions as a result of economic slowdown in China.
●EO:・Reflecting raw materialand fuel price increase into selling prices.
●Developing bio-AA production methods for multiple routes (to build bench and pilot facilities)●Demand for biomass-derived products has not increased as expected●Invest resources actively in 3 Businesses (Energy business,Electronics business, and Life science business)●Execution of diverse business expansion plans (M&A,product clustering, overseas expansion, etc.)●SAP: Strengthen sales to growth markets such as in highly
functional fields and the Indian market●AA and EO: Increase market share in view of domestic
industry restructuring●EO: Acquire contract for new EO additions●Continuation for the development of bio-AA
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Ⅲ. Progress in actions announced 20 th June 2023：
Actions in the current mid-term management plan
Environmental Transformation

Organizational Transformation■ ”Environmental Transformation” and “Organizational Transformation” are progressing as planned.

FY2021 Results

FY2022 Results

FY2023 Results

FY2024
Forecasts

FY2024Mid-termmanagement plan

2030
Our Goal

2% reduction

14% reduction*

13% reduction*--

30% reduction

39.0 billion yen

44.0 billion yen

45.0 billion yen

45.0 billion yen

55.0 billion yen

135.0 billion yen

Ratio of female recruitment
in clerical and chemical position

23.3%

24.1%

28.6%

30.0%

30%

-Ratio of female managers

4.1%

4.4%

5.4%

6.0%

6%

-Ratio of male employees taking
childcare leave

4.1%

36.4%

90.0％

100.0%

100.0%-Targets
CO2 emission reductions (Scope 1and Scope 2 emissions in Japan relativeto FY 2014)

Environmental Contribution
Products Revenue*Change from more than one day tomore than 15 days(* Includes 7.5%carbon credits)(* Includes 7.3%carbon credits)

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Ⅲ. Progress in actions announced 20 th June 2023：
Added actions on top of the mid-term management plan
Optimization of leverage level

Proactive shareholder returns■ Total shareholder return ratio for FY2023 is expected to be 99.7%, exceeding the target of 50% of
current mid-term management plan.
■ Reviewed the shareholder return policy of the current mid-term management plan and decided toincrease shareholder returns from FY2024 to FY2027 (→ page 9)
Improvement in liquidity

Stock Split■ Executed a four-for-one stock split effective April 1,2024 and reduce the amount per unit of investment.
⇒Ratio of individual shareholders increased from approx. 10% (as of end/September 2023)
to approx. 11% (as of end/March 2024)

Cross-shareholding dissolution■ Continued discussions with our shareholding partners regarding the dissolution of cross-shareholdings.
⇒In FY2023, approximately 3 million shares(*) of the Company's stock were sold by thecompany's holdings *Number of shares after the stock split
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Ⅲ. Progress in actions announced 20 th June 2023：
Added actions on top of the mid-term management plan

Enhancing dialogue with shareholders and investors

Enhancement of dialogue opportunities and dialogue tools■ Continue to hold financial results briefings for institutional investors, small meetings,
interviews and facility tours, and briefings for individual investors.
■ Early release of English-language versions of financial results briefing materials and financialstatements.
⇒ Consideration of disclosure for future 1Q and 3Q financial results briefing
materials. (currently only 2Q and full year)

Reflecting the content of dialogue in management strategies■ Feedback opinions from shareholders and investors to management andthe Board of Directors as appropriate.
＜ Main Dialogue Topics ＞
・Future growth strategies
・Cost of capital and financial strategies
・ESG (CO2 emission reduction, corporate governance, etc.)
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（References）Analysis of current situation■ PBR has been in upward trend since the 2nd half of FY2023 by announcement and execution of actions.
■ ROE is lower than the cost of shareholders’ equity

PBR

(x)

(％)

(from end/Sep 2023 to end/May 2024)

0.8

ROE

12.0

May 2024
Revision ofFinancialStrategy

Target 2030
9.0%Target 2024
7.5%

8.0

Apr 2024
Stock split
executed

Dec 2023
Announcementof stock split

Cost ofshareholders’equityApprox. 7%(Estimationbased on CAPM)

4.0

0.6

0.0
FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

0.4
end/Sep

end/Nov

end/Janend/Marend/May

2023

2023

2024

2024

2024

-4.0
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This presentation material (“Material”) is aiming to provide readers referential information,
not to persuade investment. Material contains forward-looking statements and statements ofthis nature based on reasonable judgments in accordance with information currently available.
We do not commit nor guarantee the contents of Material.
Readers should be aware that actual results and events might differ substantially from theseprojections.

IR Contacts: NIPPON SHOKUBAI CO., LTD.
Corporate Communications Dept.

Hibiya-Dai Bldg. 1-2-2 Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011 JapanTEL:+81-3-3506-7605

E-mail :ns_ir@shokubai.co.jp

URL

https://www.shokubai.co.jp/en/: