Bringing 100 years of technology
and trust, now and to the future

Corporate Business Plan(FY2022–2024)

KX2.0: Striving for transformation utilizing
knowledge and experience of over 100 years

March 2022（Updated August 2022)
KOEI CHEMICAL COMPANY, LIMITEDContents
ⅠCorporate
Business Plans in Previous Periods (FY2016-2021)
前中期及び現中期経営計画（2016年度-2021年度）の総括

ⅡNew
Corporate Business Plan (FY2022-2024)
中期経営計画（2022年度-2024年度）

3-7
8

1

FutureDirections
目指すべき方向性

92Business
Environment
事業環境

10

3

Performance
業績計画 Targets

11

4

BasicPolicies
基本方針

12

Business Growth Strategy
事業成長戦略加速(1) Accelerate13-15Business Foundations
経営基盤強化(2) Strengthen

16-26of Human Resources Development
人材育成強化・加速(3) Enhancement27

5ResourceAllocations
経営資源投入（人員計画・設備投資計画）

28-30

6DividendPolicy
配当政策・実績予想

31

7

Mid-to-Long-Term
Challenges
中長期経営課題への取り組み

32

Bringing 100 years of technology
and trust, now and to the future

I.
Corporate Business Plans
in Previous Periods(FY2016–2021)

1. Past Performances4(in 100M yen)

Net sales
300

111

109

Exchange rate (yen/dollar)

111

109

113

106

120

250
200

100

185

183

181

173

176

60

1004050

2000

FY2017FY2018FY2019FY2020Operating income

1415

FY2021Net income

192060155450124010580150

FY20161517330520161110100
FY2016 FY2017 FY2018 FY2019 FY2020 FY2021

1990
FY2016FY2017FY2018FY2019FY2020

FY2021

2. Financial Results FY2019 - 2021

5(in 100M yen)

PlanNet sales
250200200185△15207176△31Results
200173△27150100500FY2019

FY2020

FY2021

Operating income
2519201514+5+213△15201510550

FY2019FY2020

FY2021

3. Challenges and Achievements

66

Major Investment Projects Implemented for Future Business Expansion andIncreased Competitiveness

FY2016-2018 Plan
Challenges◇Key projects

Achievements

sites

・Consolidation of production sites into Chiba.

・Osaka plant shut down in 2016.

・Construction of CM III plant (2 production lines).

・Operations started in 2017 ( Line 1) and 2019 (Line 2)◇Business restructuring
・Transfer of pentaerythritol business to Perstorp.

・Transfer completed and Koei’s production terminated in 2017.
・Sales agency with Perstorp expired in 2022.

FY2019-2021 Plan
Challenges

Achievements◇Key projects
・Construction of CM IV plant.

・Decision taken in 2020.
・Production scheduled to start in fall 2022.

・Restructuring of basic products plants.

・Amine plant(partial).
Amine plant(partial)

Restructuring of basic products plants
・Accelerate new product development.

・Gas-phase reaction plant.
・Pursue development of low-temperature curing catalysts forpolyurethane◇Business restructuring
・Shift to high-value-added activities.

・DX initiatives started.
・HR, organization structure, meetings/committees re-examined.

3. Challenges continuing furtherItems◇Accelerate new product development.

7Actions
・Commercialize low-temperature curing catalysts forpolyurethane.
・Additional applications/uses for ionic liquids.

◇Strengthen basic business.

・Profitability analysis and future production planning
for a gas -phase reaction plant.

◇Capital investments.

・Realizing the return on the past capital
investments◇Sustainability development.

・Promote carbon neutral initiatives.

◇Human resources development.

・Improve middle managers’ management capabilities.
・Enhance junior/young employees’ skills.

To be addressed in the New Corporate Business Plan

Bringing 100 years of technology
and trust, now and to the futureⅡ.
New Corporate Business Plan
FY2022–2024
KX2.0: Striving for transformation utilizing
knowledge and experience of over 100 years1. Future Directions

9(1) KOEI Vision 2030
To accelerate innovations across the sectors —sales, R&D, manufacturing, as
well as support and administration—for creating new corporate values that willlead to sustainable growth, and to make meaningful contributions to a sustainable
society through business activities.

PERFORMANCE TARGETS(FY2030)PERFORMANE TARGETS(FY2024)

NET SALES: 21.4 bil. yen
ROIC:8%NET SALES: 30 bil. yen
ROIC:10%

2. Business Environment

10Key Factors(1) Increase in socio-economic activities as COVID-19 impact wanes.
(2) Growth in frictions between the US and China; concerns over growing geopolitical risks.
(3) Rise in raw materials/energy costs.
(4) Acceleration in efforts to address social and environmental challenges as awareness of sustainability enhances worldwide.
(5) Promoting DX-driven productivity improvement and pursuit of work-style reform.

Outlook for Major Product Areas
Basic Products

Specialty Products and New Business(1) Pyridines and pyrazines:● Tuberculosis drug intermediates: Stable demand expected.
● Electronic materials: Demand expansion expected overthe medium-to-long term.
● Raw materials/intermediates for crop protection products:
Demand outlook and cost competitiveness to bereexamined.

(1) Organometallic catalysts and Pharmaceuticals/crop protection products intermediates:● Expansion in custom synthesis business expected.

(2) Amines:● Raw/materials/intermediates for crop protection products:
Steady demand foreseen.
● Expanded demand expected for CO2-absorbing
applications.

(3) Synergy with Sumitomo Chemical Group to be expanded:● Pharmaceuticals/crop protection products intermediates.
● Optical materials, organometallic catalysts, etc.

(2) Ionic liquids/low-temperature curing catalysts forpolyurethane:● Acceleration of new product development.

3. Performance Targets
Net Sales(in 100M yen)
350
300

11Item項目

Net sales

Exchangerate
為替Operating income
Net income

Naphtha
ナフサ価格
price

FY2022
2022年度
125 yen/$115円/$
135 yen/€
130円/€FY2023
FY2024
2023年度
2024年度
110 yen/$110円/$

130円/€

82,00055,000円/KLyen/KL

300

50,000yen/KL50,000円/KL

214

204

173
11925

21

15

2015

15

1010100

58

550

EBITDA

3530

195
150

40130 yen/€

250
200Profit(in 100M yen)

Assumptions

0FY2021
FY2021FY2021

FY2022
FY2022

FY2023
FY2023

FY2024FY2024

2.3 billionyen

3.6 billionyen

4.5 billionyen

5.3 billionyen(results)(forecast)(plan)(plan)

FY2030
FY2030(target)4. Basic Principles(1) Accelerate Business Growth Strategy(2) Strengthen Business Foundations(3) Enhancement of Human Resources
Development12

4-(1) Accelerate Business Growth Strategy131) Basic products: Enhance competitiveness & Develop high-value added uses
• Expand sales of amines and pyridines and expedite new products commercialization.
• Accelerate development of new applications (e.g., CO2 absorption).
• Pursue business expansion via collaboration with third parties.
• Improve competitiveness through fundamental cost reduction and productivity enhancement measures.

2) Specialty Products and New Business: Expansion• Achieve smooth startup of CM IV plant (scheduled to start fall 2022)• Find new applications for ionic liquids.
• Early commercialization of low-temperature curing catalysts and accelerate development of applications.
• Expand organometallic catalyst and pharmaceuticals/crop protection products intermediates business.
• Accelerate new product development through stronger collaboration with Sumitomo Chemical Group.
• Explore new business fields (e.g., optical/electronic/battery materials, environmental impact reduction).
• Construct new business models through combination of existing and new technologies.

3) Business portfolio enhancement• Review of product priorities in light of profitability and strategic importance as well as theimplementation of PLCM (product life cycle management) for maximizing profits.

(a) Expansion of Specialty Products and New Business

FY2024 (plan)

FY2021 (results)

Net sales

Basic
Products
60%

17.3
billionyenSpecialty
Products and Expansion ofNew Business Specialty Products
40%
and New BusinessBasic products
Specialty Products and New Business

14BasicProducts
49%

Net sales

21.4billionyen

10.4 billion yen⇒10.5 billion yen
6.9 billion yen⇒10.9 billion yen

SpecialtyProductsand NewBusiness51%

(b) New Product Sales Growth

15

New ProductSales(in 100M yen)

New ProductSales Ratio
(%)

70

20.0%

New product sales
60

20.0%

New product sales ratio
15.0%

50

43
40

8.5%

7.8%

7.5%

10.0%

135.0%

30
2016141000.0%FY2019(results)

FY2020(results)

FY2021(results)

FY2024(plan)

4-(2) Strengthen Business Foundations

161) Digital Transformation2) Management Transformation(a) Enhance productivity and strengthen
competitiveness in Manufacturing, R&D,
SCM and Office areas.

(a) Enhanced use of new management
indicators- Return on invested capital (ROIC)- Cash conversion cycle (CCC)(b) Data scientists/engineers’ skilldevelopment.

(b) Strengthen PR and IR activities.

DX promotion

MXpromotion(c) Pursue organizational development.

Corporatevalue
improvement

4) Sustainability

SX
promotion

Transformation(a) Improve KPIs for corporate value
creation.
(b) Create and implement a plan and schedule
for carbon neutrality.

3) Governance Transformation
GX promotion(a) Adapt to the new Corporate Governance
Code (CGC).
(b) Improve governance structure andrelevant rules.
・ Reorganization and enhancement ofinternal committees.

Improve corporate value through cross-functional initiatives

1) DX

17(a) Objectives and Vision

VisionPLANT

Improved production opportunities with maximized production capacity.

R&D

Faster and more advanced R&D through data-driven research.

SCM

Faster and optimized operation of the overall supply chain activities.

OFFICE

More employee-friendly operations with digital technology.

Improve productivity and competitiveness1) DX

18(a) Objectives and Vision

・Improve development
precision and speed.
・Improve production
opportunities and yields.

Productplanning

Product
designEngineering chain

Faster and optimized operation of
the overall supply chain activities.

Prototyping

・Accommodate wider productvariety and prompt productdeliveries.
・Cost reduction throughrationalization.

R&D

MA/SFA/CRM

PLANT
Processplanning

SCM
OFFICE

Manufacturing
facilities
construction

Supply chain

Sales
forecast

Supply/demandmanagementRawmaterials
procurement

Manufacturing/inspection

OFFICE

Inventory
control

Sales

Distribution2) MX

19(a) Initiatives for Improving Management Capability
Strengthen efforts aimed at improving the return on invested capital(ROIC) and cash conversion cycle (CCC), and significantly enhance
management efficiency.
●Improve ROIC andshorten CCC

・Sale of marketable securities in possession for asset reduction.
・Shorten the accounts receivable turnover period.
・Extend the accounts payable turnover period.
・Shorten the inventory turnover period.

●Strengthen PR and IR

Strengthen PR and IR activities, and value communications with all
stakeholders.

●Pursue organizational
development

Pursue an optimal organization structure for the business operations.2) MX

20(b) Management Targets (ROIC and CCC)

ROIC(%)

CCC（days)

Reduction of inventories

CCC

250

ROIC
16%

206

199

200

15312%

151

10%

1508%
8%

1006%

1004%4%

1%

500%0
FY2019(results)

FY2020(results)

FY2021（results）

Sale of third party marketable securities

FY2024（plan）

FY2030（target）

3) GX

21(a) Initiatives for Strengthening Corporate Governance2015

・Nomination Committee/Compensation Committee established.

2016

・Introduced an effectiveness evaluation of the Board of Directors.
・Transformed the structure into a company with an Audit and Supervisory
Committee.

2019

・First female director appointed.
・Established an Outside Directors Meeting system.

2020

・Number of Directors/Audit and Supervisory Committee Members is increased
from three to four.

2021

・Introduced an Executive Officer structure, making 1/3 of Board consisting ofthe Independent and Outside Directors.

Future initiatives

・Abide by the new Corporate Governance Code (CGC)
・Improve the governance structure and relevant rules.
・Reorganization and enhancement of various internal committees.

3) GX

22(b) Corporate Governance Structure
株 主 総 Meeting会
Shareholders’Election and dismissal
Appointment and dismissal
選解任

Appointment and dismissal
選解任

Election
選解任 and dismissal

Audit and Supervisory会
Auditingand連携
監査等
Board of Directors
Cooperation
Committee
取締役会
supervision
監査等委員会
計Accounting
Auditors
監
Directors who監査等委員である取締役
are Audit and Supervisory Committee members
査
社内取締役５名
Full-time Audit and Supervisory
常勤監査等委員１名
Internal Directors (5)Committee member (1)人Outside Directors (4)社外取締役３名
社外監査等委員３名
Outside Audit and Supervisory

答申（取締役会の諮問委員会）(Advisory to the Board of Directors)
社外取締役会議
OutsideDirectors Meeting（取締役会の諮問委員会）(Advisory to the Board of Directors)
サステナビリティ委員会
Sustainability Committee（取締役会の諮問委員会）(Advisory to the Board of Directors)

答申↑
Reporting/recommendations

Committee members (3)Accounting audit
会計監査

答申

指名委員会
Nomination
Committee
報酬委員会Compensation
Committee

Cooperation
連携

Appointment/dismissal and supervision
選解任・監督<Executive
structure>＜執行体制＞
執行役員
Executive
Officers
８名(8)＜各種委員会＞<Committees>

経営会議
ExecutiveCouncil

内部統制委員会
Internal
Control Committee

・人材開発統括会議• HR Development Council• Sustainability Promotion Council
・サステナビリティ推進統括会議• DX Strategy Council
・DX戦略統括会議

Risk Management

リスクマネジメント部会
Subcommittee

各部門
Departments

Internal Control &内部統制・監査室
Audit OfficeInternal
内部監査
auditing

Chiba Works,
R & D Division, Sales and
工場・研究開発本部・
Marketing Division and営業本部・間接部門他
other supporting functional teams

Activity
活動のpromotion,awareness推進・
raising,management
啓発・
管理

Compliance
Subcommittee
コンプライアンス部会
Human Rights Promotion

人権尊重推進部会
Subcommittee

Responsible
Care Committee
レスポンシブルケア委員会

4) SX

23(a) Sumitomo Chemical Group’s Vision
What We Strive to Be

Achieve sustained growth for the Sumitomo Chemical Group and build
a sustainable society by creating economic and social value.

*in Japanese

Benefiting Society（Rita*）

Creating Social ValueContributing to realization ofsustainable society

Enhancing
Corporate
Value

Benefiting Society atlarge, not just Our
Own Interests(Koushi-Ichinyo*)“Jiri-Rita Koushi-Ichinyo,” is a phrase in Japanese passed down throughgenerations, which represents Sumitomo’s business principle that ourbusinesses must benefit the nation and society at large, not just our own
interests, and to advocate an idea that one should do business in keepingwith the public interest.

Scope ofValue Creation
Creating Economic Value

Benefiting Ourselves (Jiri*)

Sustainable growth of BusinessAs a member of the Sumitomo Chemical Group, we, Koei Chemical, have also been conducting our business to contributeto the realization of a more sustainable society while simultaneously achieving sustainable growth.

4) SX24(b) Sumitomo Chemical Group
Material Issues for Sustainable Value Creation *1
Material issues for
future value creation

Material issues forsocial value creation●Contribute to the environment○Climate change mitigation and adaptation●Advance innovation○Contribute to recycling resources○Sustainable use of natural capital●Bolster competitiveness leveraging DX●Contribute to the food supply〇Advance sustainable agriculture●Contribute to healthcare●Contribute to ICT●Human resources:
DE&I*2, growth & development, healthFoundation for business continuation *1●Occupational safety and health, and●Product safety andoperational safety and disaster prevention
quality assurance●Respect for human rights●Cybersecurity●Anti-corruption※1 Partially revised in March 2022
※2 Diversity, Equity & Inclusion●Compliance4) SX

25(c) KOEI Chemical KPIs

Material issues
Material issues
for social
value creation

Material issues
for future
value creation

KOEI Chemical KPI●Contribute to the environment○Climate change mitigation andadaptation○Contribute to recycling resources○Sustainable use of natural capital

CO2 emissions (Scope 1 + 2):[Target: 50% reduction compared with 2013]
Improvement in energy efficiency etc.

●Contribute to the food supply〇Advance sustainable agriculture

Sales of raw materials and intermediates forcrop protection products.

●Contribute to healthcare

Sales of raw materials and intermediates forpharmaceuticals.

●Contribute to ICT

Sales of electronic materials-related products●Advance innovation

New product sales ratio.
Cumulative savings from cost rationalization.

●Bolster competitiveness leveraging DX

Digital literacy assessment.

●Human resources:
DE&I*, growth & development, health*Diversity, equity & inclusion

Percentage of female new graduate hires:[Target: 20% or more]
Employment rate of persons with disabilities:[Target: 2.5% or more]4) SX

26(d) Initiatives

Sustainability-relatedactivities●Introduction of the Sustainability Committee as an advisory committee to theBoard of Directors.
●Key activities〇KPIs progress follow-up and improvement.
〇Plan various actions for achieving carbon neutrality.
・Energy conservation programs.
・Increase renewable energy uses (e.g., solar power generation).
〇In-house promotion and awareness-raising.

〇Milestones for carbon neutrality
50% reduction
by FY2030•CM IV plant tostart operation.

Achieve net zeroemissions byFY2050

4-(3) Enhancement of Human Resources Development

1) Enhance management capability2) Career development of junior/young employees

3) Reform HR systems

27(a) Strengthen management training programs.
(b) Continue improving performance appraisals
skills.
(c) Establish new programs for middle managers.

(a) Reexamine and strengthen development
programs in functional area (manufacturing,R&D and sales/marketing).

(a) Establish a career development system.
(b) Update a dual career ladder path scheme.
(c) Improve and modify the management ofobjectives, including clarification of criteria forappraisals

5. Resource Allocations

28(1) Headcount plan(a) Strengthen R&D activities.
⇒ Continue adding new hires to support new research
themes.

1) For future businessexpansion(b) Increase salesforce.
⇒ Future business growth.

(c) New Pilot Plant operation staff.
⇒ Secure new product development and process
rationalization.

2) For DE & I(a) Increase hiring of people with disabilities.
⇒ Further diversity.

5. Resource Allocations

29Headcount Plan*
Number ofemployees
500429400327335

FY2016(results)

FY2017(results)

349397404

FY2020(results)

FY2021(results)

362

300

200

1000
FY2018(results)

FY2019(results)*Non full-time/non-permanent employees are included.

FY2024(plan)

5. Resource Allocations

30(2) Capital Investment (on a decision-making timing basis)
Aggressive investment

Highly selective investment

FY2016–2018

FY2019–2021

FY2022–2024(results)(results)(plan)

Multi-purpose
Plant expansion
19%

Maintenanceand renewal48%

Personnelrelated
6%

Maintenanceand renewal
22%

8.1

16.4

billionyenbillion
yen
Base plant
restructuring
27%

Multi-purpose
Plant
expansion
51%

Base plant
restructuring
27%

Business expansion and competitiveness improvement

Maintenanceand renewal
47%

6.2

HR-related
30%

billionyen
DXrelated
5%

New productdevelopment-related
18%

Expansion in sustainable investment
Realizing returns onpast investments.

6. Dividend Policy

31(1) Dividend Policy
We will determine dividends for each financial year taking into account such factors as maintenance of longterm and stable benefits for shareholders, our financial performance and position, and requirements for theshareholder equity to facilitate future growth and expansion.
Target dividend payout ratio: 50%.

(2) Dividend Records
Dividend(yen/share)

Dividend payoutratio(%)

150
10080%

Dividend
Dividend payout ratio

100
70

506%

10060%

52%

40%

80
60

31%

25%

20%

26%

00%
FY2017FY2018FY2019FY2020

FY2021

7. Mid-to-Long Term Business Challenges

32

Medium-to-long-term business challenges
1) Performance target(a) Achieve 10% return on invested capital (ROIC).

2) Growth strategy(a) Increase productivity of multi-purpose plants.
(b) Review the restructuring plan of the manufacturing plants
for the Basic Products according to business plans.
(c) Entry to new business field(s); explore new businessmodel(s)(d) Continue study on a new manufacturing site, overseasbase(s) and/or M&A(s).

3) Strengthen businessfoundations(a) Develop skills for data scientists/engineers.
(b) Expedite plan on achieving carbon neutrality.

4) Enhancement of humanresources development(a) Secure and train new hires sufficient for future growth.
(b) Adapt to legal and regulatory requirements for theemployment of elderly workforce.
(c) Promote further diversity & inclusion.

Bringing 100 years of technology
and trust, now and to the future

Thank you for your attention.
[IMPORTANT]
These materials include performance figures, expectations, outlooks, targets, plans and otherfuture-related information pertaining to KOEI Chemical. This information is derived from data
currently available at the time these materials were prepared and is based on assumptions,estimates, outlooks and other determinations made by KOEI Chemical in light of said data,and, as such, contains inherent or unknown risks and uncertainties. Therefore, various,
subsequent factors may arise which cause the predictions, plans, targets, etc., presented inthese materials to not be realized, or which lead to results which diverge significantly from theexpected performance, research and development achievements/progress or other outlooks
expressed herein.