Nissan Chemical Corporation
3Q FY2022 Financial Results Briefing
Presenter:
DAIMON Hideki Director, Managing Executive Officer & CFO
February 10, 2023

Daimon: I am Daimon of Nissan Chemical Corporation. Thank you for taking time out of your busy schedules
to join us today.
Now, let’s get started.
First, please see page four of the presentation material on the financial results briefing. This is a summary of
the financial results for 3Q.
At the top, here are the results for the October-December period, 3Q, three months, compared to the same
period of the previous year. Sales increased by JPY0.2 billion and operating profit decreased by JPY2 billion,
or down 16%. Net income decreased by JPY2.2 billion, or down 24%.
Next is the cumulative results for the period from 1Q to 3Q. Compared to the same period last year, net sales
increased by 13% to JPY17.9 billion, operating profit increased by 14% to JPY4.9 billion, and net income
increased by 20% to JPY5.2 billion. Regarding the cumulative results for the period from 1Q to 3Q, operating
profit, ordinary income, and net income were the highest ever for two consecutive years.
On the other hand, this is a comparison with the outlook presented in November. Net sales were largely inline with outlook, operating profit increased by JPY0.7 billion, and net income was in line with outlook.
Regarding shareholder returns, there has been no change in the situation through December from theprevious announcement. The interim dividend was JPY70 per share, and JPY5 billion share repurchases werecompleted in 1Q.

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Next, page five. This is a summary of 3Q results compared to the same period last year.
In the middle of the chart are the results for FY2022, including 1H results, the 3Q results, and the cumulative
total for the period from 1Q to 3Q.
The right-most area shows YoY comparisons. As I mentioned earlier, operating profit increased by JPY4.9
billion, while non-operating income/expenses decreased by JPY1.3 billion in the 3Q results. Of this amount,as I will explain later, foreign exchange gains and losses amounted to minus JPY2.1 billion in 3Q alone.
Net income, as I mentioned earlier, is plus JPY5.2 billion.
The second line from the bottom shows the exchange rate for 1H, JPY134, which was the average during theperiod. For 3Q, the dollar is JPY141, which is about JPY7 higher than the dollar.
Comparing the exchange rates at the end of each month, the rate at the end of September was JPY145, while
the rate at the end of December was JPY133 due to the sharp appreciation of the yen at the end of October.
The difference of about JPY12 from the appreciation of the yen here is the reason for the foreign exchange
loss of about JPY2.1 billion in non-operating income/expenses that I mentioned earlier.

2Page six is the financial summary compared to outlook as I explained earlier.
Please check this later.

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Next, page seven is the analysis of changes in operating profit by segment.
The upper row is for 3Q as I mentioned earlier, and operating profit for the Company as a whole will be minus
JPY2 billion. On the other hand, compared to the outlook, there is an upward swing of JPY0.7 billion.
Let’s take a look at a few in turn. Chemicals showed a minus JPY0.9 billion decrease in profit compared to thesame period last year. The end of sales of melamine, the decrease in sales of TEPIC, and the high cost of raw
materials and fuels also had a negative impact.
Against the outlook, the result was down JPY0.5 billion, reflecting the impact of TEPIC and other products, aswell as the high cost of raw materials and fuels.
Regarding Performance Materials, the YoY change was minus JPY0.7 billion. In terms of sales, Semis Materials
sales remained flat, but sales in the Display Materials declined. There was also an increase in fixed costs ofabout JPY0.5 billion, which I will discuss later.
Against the outlook, the result was minus JPY1.2 billion. In this period, the Display Materials was almost inline with our expectations, but the Semis Materials was on the downswing due to the slowdown in the semis
market.
Next, Agrochemicals. The total amount is JPY0.1 billion higher than the previous fiscal year, and JPY1.5 billion
higher than the outlook. There was also an advance in the shipment of API for Fluralaner from 4Q4Q to 3Q.
This was also the result of an upswing in royalties, as well as an upswing in the GRACIA and PERMIT.

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Healthcare is as described here.
The cumulative total for the nine months from 1Q to 3Q is shown below. As I mentioned earlier, the Company
as a whole increased its profit by JPY4.9 billion, with a negative JPY1 billion in Chemicals, almost the samelevel as the previous year in Performance Materials, and a positive JPY5.3 billion in Agrochemicals, a significant
increase here.

Moving on to page eight. This is a breakdown of non-operating income/expenses and extraordinary
income/loss.
The third line from the top shows the foreign exchange gains, and as I mentioned earlier, the figure in the
middle, shows a minus JPY2.1 billion in 3Q results for FY2022. This is due to the sharp appreciation of the yen
toward the end of December, as I mentioned earlier.
As for extraordinary income/loss, as shown in the table, there is none for FY2022.

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Please see page nine. Cash flows. The YoY comparisons are shown on the far right, and cash flow of 1Q to 3Q
cumulative periods are shown.
Cash flow from operating activities was positive JPY2.8 billion, a cash inflow. As for cash flow from investing
activities, we reported a net cash outflow of JPY6.7 billion, which represents an increase in capital investment
in India and South Korea, where we are currently expanding our facilities, as I mentioned before.
On the other hand, in the area of investment securities, we sold some shares in FY2021 but did not sell any
this fiscal year, resulting in a cash outflow of minus JPY4.0 billion.
This is followed by cash flow from financing activities, which shows a cash outflow of JPY2 billion. As
announced, the dividend payout ratio has been 55% since FY2022, which is 10 points higher than the previous
year. The dividend was a net cash outflow of JPY4.6 billion.
On the other hand, the portion of treasury stock within the shareholder return is decreased, so it is a cash
inflow.
Borrowings have been a slight cash inflow, and regarding the final line for cash and cash equivalents, balances
are almost on par with the previous period, so I think we can say that cash flow continues to be ample.

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Moving on to the balance sheet on page 10.
The upper left-hand corner shows total assets, and the last line shows the comparison with the end of theprevious fiscal year. This is a slight decrease of JPY3.1 billion in assets.
On the other hand, on the liabilities side, repayment of borrowings has progressed by about JPY12 billion
compared to the end of the previous fiscal year or the end of March, but compared to the end of December
2021, the level is almost the same as shown here.
As a result, the equity ratio was 77.1%, as shown in the lower right-hand corner, and we believe that we
continue to have a strong financial position.
I will talk about the bottom left, which is the breakdown of investment securities. In the column for listed
shares, the first line shows that the number of shares held decreased by 1 from the end of the previous period.
By the end of December, the sale of 1 issue as a whole was completed, but it was not a large amount.
In terms of the ratio of strategic shareholdings to net assets, it is at a level of 9.1%.

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Next, I would like to explain our full-year outlook for the current fiscal year. Please see page 12.
As stated at the beginning of this report, we have revised downward our full-year outlook. In terms ofoperating profit, the new outlook is JPY53.4 billion for the current fiscal year. The concept is that we havechanged the previous outlook based on the cumulative 3Q results and the 4Q4Q outlook.
On a full-year basis, sales are expected to increase by JPY21.5 billion, or 10%, compared to the same period
last year, as shown in the upper row. Operating profit is expected to increase by JPY2.4 billion, or 5%. Net
income increased by JPY3.3 billion, or 9%.
As a result, operating profit and ordinary income are expected to reach record highs for 9 consecutive years,
and net income for 10 consecutive years. ROE is assumed to be 19.7%.
Below that is a comparison with the previous outlook for the full year, with the figures we presented in
November. The sales and operating profit figures here show a downward swing of JPY4.7 billion and JPY2.1
billion, respectively.
Since I mentioned earlier that there was an upward swing of JPY0.7 billion in 3Q, this means that there was a
downward swing of minus JPY2.8 billion in 4Q4Q. Net income is in line with the previous outlook.
The following is a description of 2H of the fiscal year.

8The bottom line is the outlook for shareholder return. As indicated in blue, we have already announced ashare buyback of JPY4 billion today. As a result, the total return ratio will be 76.1%, slightly higher than thetarget of 75%.
As for dividends, as announced in November, we will pay JPY164 for the full year, with an interim dividend of
JPY70 already paid, and a year-end dividend of JPY94, including the dividend payout ratio, which remains
unchanged.

Next, page 13, shows the specific figures.
This is based on a YoY change in the outlook of business performance.
As shown in the rightmost column, in the yellow box. On an annual basis, as I mentioned earlier, operating
profit will increase by 5% to JPY2.4 billion, and ordinary income will increase by JPY1.8 billion.
On the other hand, as for extraordinary gains/losses, the figure for 4Q is JPY1.5 billion. We plan to proceedwith the sale of strategic shares. As a result, net income will increase by JPY3.3 billion, up 9% on an annual
basis.
The second line from the bottom is the exchange rate. I have previously mentioned the figures up to 3Q. For
4Q, we are assuming JPY130 per dollar, but this is a 3-month average figure, and we expect the yen to
appreciate slightly more at the end of March.

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On the other hand, the 4Q outlook for crude oil is USD100 per barrel, which is expected to be almost the sameas the 3Q results.

Page 14 shows comparisons with the previous outlook.
The rightmost column shows the comparison with the forecast, and the figure minus JPY2.8 billion for
operating profit in 4Q is shown.

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Continued on page 15, analysis of changes in operating profit by segment.
The upper row, 2H, shows a decrease of JPY4.5 billion. This is also a downward revision of JPY2.1 billion fromthe previous outlook as of November.
Specifically, in the Chemicals segment, we expect a decrease of JPY2 billion YoY in operating profit, due to theend of sales of melamine, lower sales of TEPIC, and higher raw material and fuel prices, as in 3Q. This is also
a downward revision of JPY0.8 billion compared to the outlook.
For Performance Materials, operating profit decreased by JPY2.2 billion YoY. We expect sales of Semis
Materials to increase, but we are seeing a decline in sales of Display Materials here. There has also been a
considerable increase in fixed costs, which I will discuss later. This is a decrease of JPY4.1 billion from theprevious outlook, and we assume that this figure is the result of a decline in sales of both Display Materials
and Semis Materials.
The Agrochemicals shows an increase of JPY0.2 billion YoY and an upward swing of JPY1.6 billion from theoutlook. The strong sales of our main products and the downward swing in fixed costs of about JPY0.4 billion,
which also contributed to the upward swing in profit.
For Healthcare, the figures are almost flat.
The bottom row shows the figures for the full year. As I mentioned earlier, the increase in profit was JPY2.4
billion, and as you can see here, the Agrochemicals led the overall increase.

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Continuing on, specific figures by segment, page 17.
This shows a YOY comparison, and the yellow box on the far right shows the numbers I mentioned earlier.
We are also disclosing 4Q figures by sales and operating profit, and by segment, as forecast figures.

12On page 18, we present the comparison with the previous forecast in November. Please check this later.

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I will now give you a brief overview of the Chemicals segment. Page 19.
As shown in the graph below, we will see an increase in sales and a decrease in profit for the current fiscal
year.

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This is the growth of the main products in terms of specific sales, please see page 20.
As you can see here, sales of Fine Chemicals will decrease by 5% in 2H. It is also lower than the previous
outlook. This is where the slowdown in TEPIC sales and other factors are having an impact. The annual outlook
is for an 8% increase in sales.
In Basic Chemicals, sales in 2H are expected to decline by 2% YoY. However, excluding melamine, which was
discontinued in 3Q, sales would have increased by 21%, as shown in the bracketed figures in the table below.
This is a downward swing from the previous outlook, and also a 4% increase in the full-year outlook, and a
15% increase in sales excluding this melamine.

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On page 21, we show the specific figures for the YoY change for 3Q and 2H of the fiscal year, as well as for thefull fiscal year.
As shown in the yellow box on the right, in 2H of the fiscal year, we expect net sales of chemical products todecrease by JPY0.6 billion YoY, and operating profit to decline by JPY2 billion.
There are a few comments below. In terms of Fine Chemicals, as you can see here, for TEPIC for generalapplications, there has been an influx of inexpensive Chinese products, and in terms of demand, there has
been a decrease in sales due to the buildup of some inventories at customers. TEPIC for electronic materials
also saw a decline in sales due to lower demand.
On the right side of Basic Chemicals, sales of Urea/AdBlue and nitric acid products increased, but as I
mentioned earlier, sales of melamine ended in December, so sales will decrease on a YoY basis.
Sales of high purity sulfuric acid also declined due to the sluggish semis market.

16Page 22 shows the FY2022 financial outlook compared to the outlook as of November.
If you look at the 2H outlook on the far right, there is a JPY2.7 billion drop in sales and a JPY0.8 billion drop in
operating profit.
There is a particular JPY2.1 billion downturn in sales in Fine Chemicals, of which more than 70% is attributable
to TEPIC’s sales decline.

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Next, for Performance Materials, skip to page 25.
As shown in the graph at the bottom of this page, the rightmost graph shows an increase in sales and adecrease in profit. Sales are expected to increase by 2% and operating profit is expected to be JPY26.2 billion,a decrease of 5%.
However, the OP margin is 31.4% and is expected to remain in the 30% range, although it will be slightly lower.

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Next, on page 26 is sales by subsegment.
If you look at this bar graph, the rightmost one, the outlook for the current fiscal year, the Semis Materials,
the blue one in the middle, we are forecasting a sales increase by 16% YoY.
On the other hand, as you can see from this graph, sales of Displays Materials decreased by 13%, but we
expect a recovery trend in 2H from the bottom in 2Q.

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On page 27, here are the YoY sales growth figures for the main products in the Performance Materials segment.
The table in the middle shows the 3Q results, the 1Q to 3Q results, the 4Q outlook, and the outlook for 2H
and the full year.
First of all, for Display Materials, it is to be decreased by 14% in 2H and lower than the previous outlook. We
also expect a 13% decrease in sales for the full-year. However, since the bottom was reached in 2Q, we expect
a recovery trend in 2H. In addition, in terms of the comparison between 1H and 2H of FY2022, we areprojecting a 5% increase in sales, although the table is not shown here.
Next is Semis Materials, which will see a 7% increase in sales in 2H, a downward swing from the previous
forecast. For the full-year, we expect sales to increase by 16%, as I mentioned earlier.
For Inorganic Materials, we expect an 11% increase in sales in 2H, and a 10% increase for the full year.
In the area of Semis Materials, we expect demand for EUV to continue to be very strong, with a YoY increaseof 40% in 2H of the current fiscal year and an annual increase of 49%.

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On page 28, here are SUNEVER sales by mode.
As stated in the opening sentence, the annual decrease is 12%. The previous forecast was for YoY decline of
7%, so this is a downward revision from the previous forecast. However, we are aware that the conversion
from other modes such as rubbing IPS to photo IPS is progressing well.
The sales growth rate by mode is shown below, and I am sorry to say that the range is a little wide, but interms of the revised full-year outlook, VA sales will decrease in YoY, and IPS sales as a whole, which is the sumof rubbing IPS and photo IPS, will also decrease. The total is minus 12% at SUNEVER.

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Continuing on page 29, we have included a few images of the outlook for the display and semis markets.
The upper graph, here is the outlook for the display market, and as noted in small print in the source section,these are figures from an outside research firm as of January. The figures are based on area.
As you can see, it is expected to bottom out in 2Q of FY2022 and gradually recover. As you can see, we expect
recovery from 1H of FY2023. We also recognize that the conversion to photo IPS is expected to proceedsmoothly as before.
Also, the outlook for the semis market is shown in the bottom row. This is our own forecast based on various
surveys. As you can see, we entered a rather sharp adjustment phase from 2Q to 3Q, but we expect a recovery
from the beginning of FY2023, mainly in 1H. In the medium to long term, there is no change in the fact that
this is a growing market for us.
The above is a temporary adjustment due to current market environment factors, but we believe that growth
will return in the future.

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Specific numbers are provided on page 30.
As shown in the box on the far right, this shows outlook for sales and operating profit for 2H and for the fullyear on a YOY basis.
In 3Q, sales decreased by JPY0.3 billion and operating profit decreased by JPY0.7 billion. Of this amount, fixed
costs increased by JPY0.5 billion. In 2H, sales will decrease by JPY0.6 billion and operating profit will decreaseby JPY2.2 billion, of which fixed costs will increase by JPY1.6 billion.
Below you will find a few comments on Display Materials, Semis Materials, and Inorganic Materials,
respectively.
As I mentioned earlier, sales of photo IPS were flat in 3Q, almost in line with expectations, but some shipments
were accelerated from 4Q to 3Q.
Rubbing IPS, sales here declined in both 3Q and 2H, and the same is true for VA. As for the increase in fixed
costs, as written below, the slowdown in the display market has led to a YoY decrease in customer utilization,
which can be seen here.
On the right side, Semis Materials, sales remained flat in 3Q. Although the decrease in profit was only a slight
range, we expect an increase in both sales and profit in 2H of the fiscal year.
As mentioned in the other semis materials section, sales of multilayer materials and EUV materials haveincreased, and in particular, the market share of EUV under layer continues to expand.

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On the other hand, for 2H, fixed costs will increase, and the figure here is JPY0.9 billion.
For Inorganic Materials, as described here, in 2H, there will be an increase in sales and a decrease in profit, as
well as a JPY0.3 billion increase in fixed costs.

Continuing on page 31, this page shows the FY2022 financial outlook compared to outlook as of Nov 2022.
As you can see on the right, sales and operating profit will decrease by JPY5.7 billion and JPY4.1 billion,
respectively, in 2H of the fiscal year. There was no significant change in fixed costs.
It is just as described here, so I will omit individual explanations.

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Next, page 32 is for Agrochemicals.
As shown in the bottom graph on the far right, we are projecting a significant increase in both sales and profit.
This represents a 24% increase in sales and a 30% increase in operating profit.

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Specific numbers, page 33.
As with the Performance Materials mentioned earlier, in the blue area in the middle, we have included YoY
sales growth rates for each of the major products: 3Q results, 1Q to 3Q total, 4Q, 2H, and full-year forecast.
As you can see, there are mostly positive numbers. If you look at the full-year as a whole, there is a 24%
increase in sales. ROUNDUP, Fluralaner, ALTAIR, etc., all had double-digit increases, while QUINTEC was minus
26%, but this is because sales in FY2021 were slightly higher than our ability due to some shifts from 2H of
FY2020. Therefore, this is a minus 26%.
Sales in GRACIA have also recovered considerably, and as shown in the graph on the lower left, the forecast
for FY2022 assumes a considerable jump from FY2021.

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Page 34 shows the YoY changes in the FY2022 financial outlook.
For the full-year, sales are expected to increase by JPY15.6 billion and operating profit is expected to increaseby JPY5.4 billion.
The second line from the top shows our main product, Fluralaner. As I mentioned earlier, in 3Q, someshipments of API were accelerated from 4Q to 3Q. Royalties were also strong.
As you can see the description stating sales down, regarding PERMIT and QUINTEC, there was a slight delay
in shipments during the fiscal year.

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Page 35 shows the FY2022 financial outlook compared to outlook as of Nov 2022.
This is 2H of the fiscal year, and looking at the rightmost part of the outlook, the operating profit will be JPY1.6
billion higher than the previous forecast. As you can see here, there is an upward swing in each of these figures,but for Fluralaner, although it is written as a downward swing in sales in 2H of the fiscal year, the amount isvery small.
API shipment is in line with expectations, with a slight downward swing in royalties. This is just an outlook.

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Page 36, this is a list of major products, unchanged from the last time we showed it in November.
We are on track to bring out major new pipelines during the period of this mid-term plan.

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Continuing on, please skip to page 38 for the Fluralaner sales trend.
The vertical bar graph on the left shows the updated figures as FY2022 Outlook on the far right. Please checkthis later.

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Next, is the Healthcare segment. Please see page 41.
Sales were almost flat, with a slight increase of 2% in profit.

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On page 42, here are the figures for LIVALO.
The YoY growth rate is on the far right. Upper table. The LIVALO sales is expected to decrease by 1%. Domestic
sales will decrease, while overseas sales will increase slightly compared to the previous year.
Custom Chemicals sales will see a slight increase in sales, as shown in the table at the bottom.

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Page 43 and page 44 below show specific figures for your reference.

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Regarding ESG, there are no major changes from November 2022.
Please skip to page 53. In terms of reducing GHG emissions, we have not changed our 2027 target of 254,000
tons compared to 2021.
We will continue to steadily implement various measures, as described on the right.
That’s all from me, but I would like to make a few closing comments.
As we have just explained, we recognize that the temporary market environment for displays andsemiconductors was a factor in the downward swing in 4Q or 2H.
On the other hand, as I explained, Agrochemicals is steadily expanding, and as a result, we expect to record
the highest profit this fiscal year.
Future growth drivers are progressing well. In terms of Performance Materials, we are making good progressin EUV under layers and the conversion to photo IPS.
In Agrochemicals, veterinary drugs, as we have informed you, have been recovering steadily this fiscal year,
as inventory adjustments on the Merck side were completed last fiscal year.
In addition, we are also seeing a return to growth in GRACIA, and steady progress in the development of ouragrochemical pipeline.

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In addition, we are making steady progress toward the expansion of our production facilities for Semis
Materials and agrochemicals in South Korea and India, and we are carrying out these projects while ensuring
robust financial discipline.
As a result, we expect to achieve shareholder returns, dividends, and treasury stock as per our November
commitment, and we hope that everyone will have high expectations not only for the immediate short-term,
but also for medium- and long-term growth.
That is all from me.

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Question & Answer<Questioner 1>
Q: The CFO mentioned the medium- to long-term outlook at the end of the presentation, and I think that thecurrent revision is also a return to the initial outlook. I would like to ask if there has been any change in yourview of the medium-term plan for the next three years, and about your confidence in your ability to increase
profits in the next fiscal year. I am a little concerned about the high inventory, so I wonder if you could
comment on this area and your perspective for the next fiscal year, including any adjustments in that area.
A: As for the medium-term plan, this is the first year of the plan, and as you mentioned, we will return to the
JPY53.5 billion in operating profit that we set at the beginning of the fiscal year.
We will present specific figures for the next fiscal year in May, but we are assuming that the current market
environment for Performance Materials, especially Display Materials and Semis Materials, will recover in themanner I have just described. I don’t think we need to worry too much about that.
Also, in terms of the inventory, Sales of Agrochemicals in particular have increased, so the amount of inventory
itself has certainly increased. However, when analyzed on a turnover period basis, the increase is not thatsignificant. I don’t think we need to worry too much about that at this point in time.
Q: So you are saying that pesticides are the main cause of the increase in the inventory, including seasonal
ones.
A: Yes, that’s right. Your understanding is correct.
Q: The second question is also about Performance Materials. On page 29 there is a discussion of outside
forecast data and your forecast in Semis Market. Could you comment more on the degree of adjustment inthis area? For displays, there will be a slight upward movement and then another adjustment.
I would also appreciate it if you could comment on the semiconductor adjustment, or if you say it is as per
this line, but I would appreciate it if you could comment on some more details. Thank you.
A: As you pointed out, the outside forecast expects a slight decrease in 4Q of FY2022 due to inventory
adjustments by set makers for notebook PCs and other factors, as well as demand that has yet to fully recover.
After recovery, the forecast is for a slight downturn in 4Q of FY2023, but looking at the market trends over
the years, the outlook shows a declining trend in 4Q because it is the off-season.
The graph on page 29 shows a forecast based on area shipped by panel makers. In terms of panel
manufacturers’ production and inventory, which correlate with our sales and profit, we do not expect any
major negative impact on our sales, as our customers will secure inventories of components and raise
utilization in the recovery toward 1Q of FY2024.
Q: When do you expect your company’s sales to recover?
A: In correlation with our forecast, we expect recovery to begin in 1Q of FY2023.
A: For Semis market, currently the amount of usage by customers is decreasing, as is the general decline inoperation. The order of recovery is expected to be Logic, DRAM, and NAND, in that order, with the timing ofrecovery expected to be around June or July 2023.

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<Questioner 2>
Q: In the graph on page 29, I would like to know more about the outlook image of semiconductors. Comparing
the situation in FY2022 and FY2023, 1H of the current fiscal year and 2H of the next fiscal year are roughly thesame in terms of level, and 4Q is roughly flat, so looking at this, is it safe to assume that we cannot expect
much recovery or growth in the Semis Materials in the next fiscal year?
Or, are you saying that you can make it grow more than the market, especially with your company’s EUV
under layer, etc.?
A: As you have commented, our current forecast is that 1H of FY2022 and 2H of FY2023 will be almost thesame, and we do not expect a large increase in FY2023. As for our expectations, since the application of EUV
to DRAM has begun in the area of advanced technologies, we believe that if the input and production volumesof these advanced wafers increase, there could be a slight upward swing in our outlook.
Q: I see. In ARC, for example, can we assume that ArF will grow more than KrF? In the area of other semismaterials, should we take the view that this area will still grow significantly in the next fiscal year?
A: Well. It is difficult to determine whether KrF or ArF will increase, differences in the composition of thedevices produced by our customers can have a significant impact. It is not easy to scrutinize. We believe thatdemand for the older generation will also increase, so both KrF and ArF will recover.
We are also currently promoting 3D packing process materials to our customers, so we are hoping to see
results in that area as well.
Q: I understand. In terms of Semis Materials for the next fiscal year, which do you expect most from KrF, ArF,
or other semis materials?
A: As for the growth rate, I expect EUV in other semis materials.
Q: I have another question. Please tell about Agrochemicals. Please explain in more detail the factors behind
the JPY1.8 billion increase in sales and JPY1.5 billion increase in operating income in the 3Q compared to theprevious forecast on page 35. You mentioned earlier that Fluralaner shipment is moving forward from 4Q, can
we assume that this is a major contribution, or are there other agrochemicals that have grown more than
expected?
A: As for agrochemicals, both sales and profits will be smaller in the 3Q than in the 4Q due to seasonality. In
this context, a large portion of the 1.8 billion yen increase in sales in the 3Q over the forecast is due to theincrease in Fluralaner. As stated in the materials, some of the increase is due to the advance of shipments of
Fluralaner from the 4Q. Also, sales of agrochemicals other than Fluralaner also showed an upward swing
compared to the forecast.
Q: On the other hand, looking at the 4Q, the forecast is almost unchanged from the previous forecast. Is thisa reactionary decline from the advance to the 3Q, or are you taking a conservative view?
A: In 4Q, shipments of Fluralaner were brought forward from 4Q to 3Q, so there will be a reactionary decline
in 4Q, but we expect a commensurate increase in sales of agrochemicals other than Fluralaner. We areassuming that the price increase for domestic agrochemicals will take effect mainly in Q4 from January to
March, since the price increase for domestic agrochemicals was effective from December.

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Q: As for the price increase for the domestic agrochemicals, is it correct to say that the price has gone up morethan expected?
A: We believe that we were able to raise domestic prices slightly more than expected.

<Questioner 3>
Q: My first question is also about Performance Materials on page 29.
In your image of the industry and the market as a whole as shown here, how is your company performing interms of sales? Can you tell us the direction of sales from 2Q to 3Q and from 3Q to 4Q?
A: In the Display Materials, SUNEVER sales increased from 2Q to 3Q, and sales of photo IPS alone also
increased. For 4Q from 3Q, SUNEVER sales are expected to decline slightly and photo IPS sales are also
expected to decrease.
As for Semis Materials, sales decreased from 2Q to 3Q, and sales are expected to increase from 3Q to 4Q.
Q: With regard to Semis Materials, the movement toward 4Q seems to be a little different from the market
movement, but does this mean that there is a buildup of inventory on the customer side?
Or is it likely to be able to outperform to the market because the adoption of EUV under layers is becoming
much more advanced? Could you please explain a little more about this?
A: For Semis Materials, we expect an increase in sales from 3Q to 4Q, but most of the increase in sales is
attributable to the increase in inventory levels at our customers.
Q: If so, is there a risk of sluggish sales for your Semis Materials in 1Q of the next fiscal year, since inventory
levels will start out relatively high? How about a look beyond that?
A: We are aware that the risk is low because our customers want to maintain the inventory levels built up in
4Q.
Q: Regarding the second question, for 2H, SUNEVER has been falling short of your plan of three months ago.
I am looking at page 31. I understand that photo IPS and rubbing IPS are on the downside, but can you please
explain to the extent possible what applications or regions in particular are on the downside?
A: In terms of the comparison to the previous forecast in 2H, the largest downward swing is seen in rubbing
IPS, especially in applications of monitors and notebook PCs. Photo IPS does not go that far. As for photo IPS,
we expect the sales of large monitors to remain flat and the sales of notebook PCs, tablets, and automobiles
to decline. For smartphones, we expect a downward swing by pre-single-digit percentage range. On the other
hand, for VA, we are looking at an upward swing with the assumption of a slight positive here.

<Questioner 4>
Q: My first question is in the area of Performance Materials.
As for the segment as a whole, you forecast that sales will remain flat from 3Q to 4Q, but profit will decreaseby about JPY1.5 billion. Can you explain the factors behind this, such as an increase in fixed costs?

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A: Sales will increase by about JPY0.3 billion, but profit will decrease by JPY1.5 billion from 3Q to 4Q, and we
expect fixed costs to increase by more than JPY1 billion. In particular, semiconductors fixed costs account for
about 60% of the total. One reason for the increase is the rise in testing costs.
Q: Second, I would like to ask about the Fluralaner. I think Merck’s October to December was a little weak,and I think the Merck situation from October to December is reflected in your company’s royalties for theJanuary to March period, so I imagine that the slight downward swing in royalties is partly due to that.
Regarding a slight downward swing, is this also affected by the fact that the exchange rates from October toDecember will be much more effective on the positive side than originally assumed? As for API, can you
confirm whether there has been any change in Merck’s procurement situation, except for a delivery period
gap, and whether there has been any change in the order?
A: I am, of course, aware of Merck’s disclosure of their 4Q figures this time, but I think the figures were forcompanion animals as a whole.
We are not in a position to respond to BRAVECTO sales, which affect our royalty income, because it is naturally
undisclosed. Foreign exchange has a small but positive effect.
As for shipments of API, although some shipments were brought forward from 4Q to 3Q, there was no
particular movement in 2H as a whole, and we are now aware that shipments are proceeding as expected.

<Questioner 5>
Q: This is about the market share at the Display Materials and Semis Materials. I think both originally have ahigh market share, but is there any market share fluctuation in this 3Q and 4Q?
Also, can you envision a scenario in which your company’s sales and shipments recover one step further thanthe overall return of the market by expanding market share one more step in the phase of returning demand?
Please let me confirm about the share.
A: There is no change in market share. If the demand returns in the future, I don’t think there will be any
major changes in the current market share, but in terms of some Display Materials, I hope that our products
for VA will be highly evaluated, and replacement will progress further.
[END]

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