Nissan Chemical Corporation
2Q FY2021 Financial Results Briefing
Presenter:
MIYAZAKI Junichi Director, Senior Executive Vice President & CFO
Q&A session:
Yagi Shinsuke Representative Director, President & COO

November 11, 2021

Miyazaki: I'm Miyazaki. Thank you. Now, please refer to page 2 of the handout.
As for changes in accounting policies, there is a change in item A, agent transactions. The total decrease ofagent transactions for FY2021 was forecast to be JPY44.6 billion as of May, but it has been revised to JPY20.5
billion.
This is because the sales of our products sold through our trading company, Nissei Corporation, which werepreviously considered to be subject to elimination, are no longer considered to be agent transactions.
Naturally, this has nothing to do with profit.

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Page 3 shows highlights of the first half.
First of all, operating profit increased by 19% or JPY3.3 billion to JPY21.3 billion, compared to JPY18.0 billion
for the same period last year. By segment, it increased in Chemicals, Performance Materials, andPharmaceuticals, and decreased only in Agrochemicals.
Net income was JPY16.3 billion compared to JPY13.9 billion in the same period last year, an increase of JPY2.4
billion or 17%. Operating profit, ordinary income, and net income were over the past record high in the firsthalf of FY2018.
Operating profit was JPY21.3 billion compared to the forecast of JPY17.7 billion, an increase of JPY3.6 billion.
Operating profit was over the target in all segments. Net income was JPY16.3 billion compared to the forecastof JPY14.0 billion, an increase of JPY2.3 billion.

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Page 4 shows the forecast for the second half of the fiscal year.
First of all, operating profit was JPY24.5 billion in the same period last year, and for this fiscal year we expect
it to be JPY26.1 billion, which is an increase of JPY1.6 billion or 6%.
It will increase in Chemicals, Performance Materials and Agrochemicals, and will decrease in Pharmaceuticals
only. Net income is expected to be JPY20.1 billion compared to JPY19.6 billion in the previous year, an increaseof JPY0.5 billion.
Compared with the previous forecast in May, operating profit is expected to be JPY26.1 billion, an increase of
JPY0.2 billion. In this regard, we expect an upward swing in Chemicals and Performance Materials, and a
downward swing in Agrochemicals and Pharmaceuticals. Net income is expected to be JPY20.1 billion, thesame amount as the previous forecast.

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Page 5 shows the highlights of the full‐year forecasts.
First, operating profit is expected to be JPY47.4 billion compared to JPY42.5 billion in the previous year, an
increase of JPY4.9 billion or 11%. Agrochemicals will remain flat, but other segments will see an increased
profit. Net income is expected to be JPY36.4 billion compared to JPY33.5 billion in the previous year, an
increase of JPY2.9 billion.
Despite the COVID‐19 pandemic, we expect operating profit and ordinary income to reach new record highs
for the eighth consecutive year, and net income for the ninth consecutive year. ROE is forecasted to be 18.1%,
which will be the first time for us to reach 18% and exceed the Mid‐term Plan target of 16%.
In comparison with the previous forecast, operating profit forecast increased by JPY3.8 billion. We areforecasting an increase in all segments. Net income forecast is JPY36.4 billion, an increase of JPY2.3 billion.
Let’s look at the comparison with the figures in the Mid‐term Plan. This year is the final year of the plan.
Despite the COVID‐19 pandemic, we expect to achieve our Mid‐term plan of operating profit, ordinary income,and net income of JPY4.4 billion, JPY4.8 billion, and JPY3.4 billion, respectively.
Next is about shareholder returns. This time, we expect to pay an annual dividend of JPY114, JPY50 for theinterim, and JPY64 for the year‐end, an increase of JPY10 from the previous year's JPY104. This figure
represents an increase of JPY6 from the previous forecast of JPY108, and as a result, the dividend is expected
to increase for the 10th consecutive year. As for the repurchase of treasury stock, we completed an amountof JPY7.0 billion in July.

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I would like to make a few comments here. In the current fiscal year, many companies in our industry are
expected to have much higher profit growth rates than us. However, most of them have finally recoveredfrom the situation, with profits declining for 2 consecutive years in FY2019 and FY2020.
In contrast, our company has posted the highest profits in FY2019 and FY2020, and we expect to post thehighest profits for 8 or 9 consecutive years this fiscal year. We also expect to meet all the target figures of
Mid‐term Plan set in May 2019, when COVID‐19 did not exist.
On the other hand, if we look at the level of achievement of the Mid‐term Plan by other companies in thesame industry, only 2 of the 19 companies that completed the Mid‐term Plan between 2018 and 2020 met
their profit targets.
I will now explain the details of the first half of the fiscal year, but I would like you to take a look not only at
the current trends, but also at our ability to execute and our DNA of business creation, which enables us tocontinuously achieve our goals even in a difficult environment, as I just mentioned.

Now let's go back to the document. Page 7 provides a table of results for the first half of the fiscal year. As
you can see in the middle of the page, operating profit was JPY21.3 billion, and net income was JPY16.3 billion.

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There is a summary on page 8. What I have not mentioned so far is extraordinary income and loss.
We posted a net decrease of JPY1.1 billion. As you can see from the breakdown on the right side, in FY2020,
we had only posted extraordinary income of JPY1.1 billion, but this fiscal year we posted an extraordinary lossof JPY2.8 billion. We recognized melamine restructuring costs and plant equipment removal cost of Nippon
Phosphoric Acid.
As for Nippon Phosphoric Acid, as you can see in the note below, we have a 35% stake in the Company, and
ZEN‐NOH, the National Federation of Agricultural Cooperative Associations, and other companies also invest
in the Company. The Company manufactures sulfuric acid and phosphoric acid liquid, but has stopped
manufacturing phosphoric acid liquid, which is mainly used for fertilizer.
As a result, each investing company will bear the cost of equipment removal. Since the operation of thisCompany is run on a non‐profit and non‐loss basis, it does not have a lot of capital, so these extraordinary loss
will be borne directly by each investing company.
As for shareholder returns, as I mentioned earlier, we plan to pay a dividend of JPY50 for the first half, anincrease of JPY4 from the previous year.

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Next, please refer to page 9. Page 9 is the forecast for the year.
As in the past, we also disclose earnings forecasts for the third and fourth quarters. As you can see in the table,in the second half of the fiscal year, operating profit will be JPY26.1 billion and net income will be JPY20.1
billion, which means that for the full year, operating profit will be JPY47.4 billion and net income will be
JPY36.4 billion.
Based on those figures, the operating profit margin will be 23.1%. The assumed exchange rate for the second
half of the fiscal year is set at JPY107. In addition, for crude oil (JCC), we are assuming a price of USD75.

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Go to page 10. I will explain the second half forecast.
As I mentioned earlier in the highlights section, operating profit is expected to increase by JPY1.6 billion YoY,
and extraordinary income/loss is expected to improve by JPY0.5 billion from the previous year.

8Then, on page 11, you will find the annual forecast.
As I mentioned earlier, operating profit will increase by JPY4.9 billion, ordinary income will increase by JPY4.9
billion, and net income will increase by JPY2.9 billion, and we plan to achieve record high profits for 8 and 9
consecutive years, respectively.

9Page 12 shows non‐operating and extraordinary income/loss.
If you look at the extraordinary income/loss at the bottom of the page, last year, FY2020, we posted a gain on
the sale of securities of JPY1.59 billion and no extraordinary loss was recorded.
For this fiscal year, in the first half of the year, as I mentioned earlier, the 2 extraordinary income and loss
items were offset, and we have recorded almost no amount. We are expecting a gain of JPY1.0 billion in thesecond half of the fiscal year, which will result in an extraordinary income of JPY1.0 billion for the full year,
which is about a JPY0.6 billion decrease from last year.

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Go to page 13. Page 13 shows the cash flow.
Looking at the actual results for the first half of FY2021 and the annual forecast that was newly released in
November, we expect that the cash flow will remain enough as before.

11For the balance sheet, please see page 14.
As in the past, in the case of our company, accounts receivable related to Agrochemicals are collected in thefirst half of the fiscal year, so accounts receivable decrease significantly, and we will use the collected funds
to repay the debt.
In September 2021, cash and cash equivalents were JPY28.4 billion, but borrowings were JPY6.5 billion, which
saw a reduction.
At the bottom of the assets column is a breakdown of investment securities. In terms of listed shares held on
a non‐consolidated basis, the number of stocks held in September last year was 35, but this September it was
30, which is a decrease of 5 stocks.

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Next, page 15 shows a table of sales by segment.
On this page, in the small table at the bottom of the page, you can see the impact of the change in accounting
policy on YoY change in sales, and on the outlook change of agent transactions.

13Page 16 shows the trend of operating profit, and the impact of the change in accounting policy as well.
You see the impacts of difference in the timing of the recording of royalties for Fluralaner and the timing of
the recording of discounts for pesticides.

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Now let's move on to the explanation of each segment. Page 17 shows the Chemicals segment.
Look at the green line graph. As you can see, the operating profit margin has improved significantly and is
expected to reach the 8% level.

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Page 19 shows the impact of shutdown of the melamine plant.
As I explained at the first quarter briefing, in terms of the impact on our business performance, as I mentioned
before, the related costs were covered by the gain on sales of securities.

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On page 20, you can see the growth rate of sales of major products.
In the third line from the top, first of all, the results of Fine Chemicals for the first half of the year were 15%
higher than the same period of the previous year, which is slightly lower than the target of 17%, but for thefull year, we expect a 16% YoY increase, exceeding the target set at the beginning of the year.
In Basic Chemicals, in the bottom, sales increased 17%, which is higher than the forecast of 12%. For the fullyear, we are forecasting a 13% increase in sales, up from 6% forecast at the beginning of the year.

17The following is the sales trend of the segment. Please refer to page 21.
For each segment, figures for the first quarter, the second quarter, the first half, and the second half are
indicated, but due to time constraints, I will focus on the first half and the second half.

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First of all, on page 22, you see the first half results for chemicals.
In Fine Chemicals, many products saw an increase in sales, resulting in higher sales and operating profit. As
for the Basic Chemicals, we have already seen a recovery in demand in general, and despite the increase in
fixed costs and higher feedstock and raw materials costs, both sales and profit have increased.
As a result, net sales increased by JPY2.4 billion and operating profit increased by JPY1.3 billion. This figures
for Fine Chemicals are slightly lower in both sales and profit when compared to the earnings forecast. The
negative factors were a downturn in TEPIC for electric materials and short‐term production problems inenvironmental‐related products.
As for the Basic Chemicals, despite the high cost of feedstock and raw materials, both sales and profit werehigher than the forecasts. In total, sales were JPY0.4 billion higher than the forecast, and profit was JPY0.2
billion higher.
On the right is the outlook for the second half of the year. The Fine Chemicals business continues to perform
well, and both sales and profit will be up. As for the Basic Chemicals, although prices for feedstock and raw
materials will be high, we expect sales, prices, and volumes to grow, and we anticipate an increase in bothsales and profit. Sales are expected to increase by JPY2.1 billion and profit by JPY0.1 billion.
In the Fine Chemicals, sales are expected to be higher than the outlook, but profit is expected to be lower due
to the increase in fixed costs. As for the Basic Chemicals, both sales and profit are expected to be higher, andfor the segment as a whole, sales are expected to exceed the outlook by JPY1.4 billion and operating profit by
JPY0.3 billion.

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Next is Performance Materials. First of all, the green line graph on page 23 shows the profit margin, which has
been increasing and is expected to reach 32.5% this fiscal year.

20Page 24 shows the composition of sales by sub‐segment.

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Next, on page 25, is the status of sales of major products.
First of all, in the area of display materials, sales of SUNEVER exceeded our initial forecast with a 7% increasein the first half. The outlook for the full year is 7% YoY increase, which is also higher than our initial forecastof the year of 2%. The total sales of Semis Materials increased by 20% YoY in the first half and are expected
to remain strong in the second half. For the full year, sales are expected to increase by 21%, far above theinitial forecast of 10%. Inorganic Materials sales increased by 23% YoY in the first half of the year, and are
expected to increase by 10% for the full year.
These are the projections for the overall sales growth.

22This is followed by the profit trend in Performance Materials. Page 28 shows the figures for the first half andthe second half.
First of all, let's look at the YoY comparison for the first half. Both sales and profit of display materials increased.
Photo IPS sales have continued to be strong, especially in the non‐smartphone sector.
Sales from rubbing IPS decreased due to the shift to photo IPS. Sales from VA decreased, because production
in South Korea has been partially halted, and we are making up for it in China.
For Semis Materials, sales and profit were up, and all products are performing well. Inorganic Materials arealso performing well, with increased sales and profit.
Overall, sales and operating profit increased by JPY5.0 billion and JPY2.5 billion, respectively.
Compared to the forecast figures, both sales and profit of Display Materials and Semis Materials are expected
to be higher. On the other hand, due to the increase in costs and other factors, sales from Inorganic Materials
will be higher, but profit will be lower.
As a result, overall sales exceeded the outlook by JPY2.4 billion and profit by JPY1.6 billion.
For the second half, go to the right side.
We expect to maintain the trend of increased sales and profit in Display Materials and Semis Materials
compared to the same period last year.

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On the other hand, sales of Inorganic Materials are expected to decrease slightly, and with the addition ofincreased costs, we expect a decrease in profit.
The overall segment sales are expected to increase by JPY4.3 billion and profit by JPY1.4 billion. Compared to
the forecast as of May, the figures for Display Materials and Semis Materials will be up, while operating profit
of Inorganic Materials is expected to be slightly down.
The overall increase will be JPY2.7 billion in sales and JPY0.9 billion in operating profit.

Next, let’s look at Agrochemicals. Please refer to page 30.
This is the sales trend of major products. You see a mix of increase and decrease.
First of all, sales from ROUNDUP for the first half of the fiscal year was up 4% YoY, but this was below theoutlook. For the second half of the fiscal year, we expect a 3% increase, but the full‐year sales increase is
expected to be 3%, which is slightly lower than the initial forecast in May.
On the other hand, sales from Fluralaner in the first half decreased by 9% YoY, which was above the plan. The
shipment of APIs was almost as expected, but royalties income was higher than expected. The second half ofthe fiscal year is expected to see the same upturn in royalties, so for the full year, we will see a decline of 3%,
which is somewhat higher than our initial forecast of a decline of 11%.
On the other hand, sales from ALTAIR decreased YoY and were also lower than the forecast. The situation willbe the same for the full year. This is due to the fact that there was a lot of earlier shipments in the second halfof last fiscal year, and there is a considerable amount of inventory. And sales to other companies in the same
industry are currently a bit sluggish.

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Sales from GRACIA decreased significantly. The status of sales of GRACIA is shown in the bar graph at thebottom left of this page. This is the same situation throughout the year.
The reason for this is that in the first half of the year, the harvest of spring cabbage and other crops was very
early due to very good weather in early spring, and pest control was omitted. In addition, it is expected that
there will be far fewer pests through the year. In addition, as for inventory adjustments, there is a considerable
amount of channel inventory, and this has had an impact on the situation.
Looking at the overall results, the total for the Agrochemicals segment at the bottom, before discounting, isflat YoY for the first half, which means lower result than forecast, but the amount of the decline is less than
JPY0.2 billion, which is not a large amount. For the year, the figure is a positive 3%, which is a little less than4%.

Next, jumping ahead to page 34, the status of the Fluralaner.
Please look at the fourth bar graph in blue. This is unchanged from the bar graph shown in May 2020. The
increase in royalties income indicates that the BRAVECTO sales on the ground is quite well.
Although inventory adjustments are progressing, we have not yet made a decision to revise this scenario that2022 will be the bottom.

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Next, let’s jump to page 38, which shows the trend of profit in Agrochemicals.
The first half is on the left. The situation is quite different depending on products. Overall, sales of GRACIA
decreased, sales of ALTAIR decreased, and sales of Fluralaner APIs decreased, resulting in a decrease of JPY0.7
billion in sales and JPY0.8 billion in operating profit.
However, price discounting increased by JPY0.9 billion in the first half of the year due to a change in accounting
policies, so if we exclude this change, the results were almost the same as last year.
As you can see, due to the increase in royalties income from Fluralaner and the strong performance of TARGA,
overall sales exceeded the forecast by JPY0.2 billion and operating profit by JPY1.2 billion, which is a significant
increase.
Next, the outlook for the second half of the fiscal year is shown on the right. In the second half of the fiscal
year, sales will increase by JPY2.7 billion YoY due to the full year sales of DITHANE.
Operating profit is expected to increase by JPY0.8 billion YoY. As a result of the downturn in sales of GRACIA
and ALTAIR, sales are expected to be down JPY0.6 billion and operating profit down JPY0.6 billion comparedto the plan.
In this way, the profit of Agrochemicals will be the same as in FY2020. The figure for FY2020 was JPY18.2
billion, and the figure for the current fiscal year will be JPY18.2 billion.

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Next, let’s move on to Pharmaceuticals on page 40. Please refer to the table.
As for the situation of LIVALO, the performance has been steadily declining, but in the current fiscal year,
domestic sales have been increasing due to problems with generic manufacturers in Japan.
Our API sales were expected to be JPY2.0 billion in the initial forecast in May, but our current outlook is for a
figure of JPY2.3 billion.

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I will skip to page 46, which shows the revenue trend of Pharmaceuticals.
In the case of Pharmaceuticals, we have already disclosed information on Drug Discovery and Custom
Chemicals.
In the area of Drug Discovery, domestic sales increased but exports decreased. Sales declined by JPY0.12
billion, and operating profit declined by JPY0.08 billion YoY. Sales of Custom Chemicals continued to increasestrongly, with sales up JPY0.44 billion and profit up JPY0.5 billion.
Compared to the forecast, in the Drug Discovery, sales of LIVALO were up JPY0.38 billion and profit was up
JPY0.27 billion. Figures for Custom Chemicals were almost in line with expectations.
As for the outlook of YoY changes for the second half of the fiscal year on the right, the decrease in exports
will have a negative impact on LIVALO, resulting in a YoY decrease in sales of JPY0.36 billion and a decrease inprofit of JPY0.23 billion. Sales from Custom Chemicals will decline as planned. As a result of the decrease insales, profit is also expected to decrease slightly.
In the Drug Discovery, sales will be down compared to the forecast, but profit is expected to be in line withthe expectations. Results for Custom Chemicals will be almost as expected.

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This concludes explanation by segment, and we will move on to page 47, ESG.
This chart shows the actual greenhouse gas emissions in FY2020, 318,000 tons, which is a decrease from
FY2019, and we are aiming for a 30% reduction in FY2030 compared to FY2018. As you can see from the dateof June 2022, a reduction of about 26,000 tons is expected with the melamine production stop.

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Next is the comparison with the Mid‐term Plan. Go to page 50.
You see the actual outlook on the rightmost and the figures in the Mid‐term Plan on the left hand of it. As you
can see, as I mentioned at the beginning of this report, we expect to clear all profit levels. In terms ofmanagement indices, we believe that the operating profit margin, ROE, and dividend payout ratio will all be
met.

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Page 51 shows cash flow in the Mid‐term Plan and current cash flow. As you can see, the current Mid‐termPlan, the current results for FY2019 and FY2020, and the projected figures for FY2021 are almost the same.

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Page 52 shows the difference between the Mid‐term Plan and the outlook for FY2021.
If you look at operating profit, there is a significant downturn in Chemicals, with JPY2.2‐billion decline. The
main reason is that we could not predict the impact of cheap Chinese products at the time.
Operating profit for Performance Materials is expected to be higher by JPY9.0 billion, due to increased sales
in photo IPS in Display Materials and main products in Semis Materials. In Inorganic Materials, although the
Oilfield materials is in a major slump, profit will greatly exceed this, resulting in an increase in operating profit.
In the area of Agrochemicals, we acquired DITHANE, QINTEC, but we did not anticipate any inventory
adjustment for Fluralaner at the time, so this has a significant effect on our results.
In Pharmaceuticals, contracted production of peptide CMO in Custom Chemicals is below the forecast, andoperating profit will be below target by about JPY0.2 billion. In total, the outlook of operating profit is above
the target by JPY4.4 billion.

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Finally, page 57 shows the status of treasury stock.
The smaller chart on the bottom of page 57 shows the actual number of shares repurchased. In the first halfof FY2021, we repurchased 1.262 million shares at a cost of JPY7.0 billion and cancelled 2 million shares.
This is the end of the explanation of the financial results.

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Comments on the business environment (Person in charge of each business)<Chemicals Division>
I will explain the results for the first half. First of all, compared to the same period last year, both sales andoperating profit have increased significantly due to the recovery from the decline in demand caused by the
major impact of COVID‐19 in FY2020.
Basically, the numbers are growing in a well‐balanced manner, with melamine, nitric acid, TEPIC, chlorine
isocyanurate, etc. all growing.
On the other hand, when we look at the operating profit of Fine Chemicals in comparison with the forecast,
there was a downward swing, but this was due to the fact that we had trouble with our manufacturing facilities
during the first half of the year, which prevented us from releasing products, and also due to the sluggish
growth of chlorinated isocyanurate used in swimming pools in Japan. Initially, we had expected a recovery
from COVID‐19, but things did not go as expected.
In the second half of FY2021, both sales and profit are basically expected to increase. However, the difficult
circumstances of natural gas and shipping services resulted a lower operating profit forecast than expected.
The reason for the decline in operating profit in Fine Chemicals is partly due to fixed costs, but it also includes
the expectation that the prices of TEPIC for the general applications in China will come down a little.
As for the trouble with the chlorine isocyanurate equipment, it is not only affecting the first half of the year
due to shipping reasons, but is also affecting the second half of the year.

<Display Materials Department, Performance Materials Division>
First of all, in the first half of the fiscal year, the display market continued to be favorable for both TVs and IT
during the COVID‐19 pandemic. In particular, for IT applications, the technology shift to photo IPS is underway.
In the IT field, the technology shift is progressing in tablets, notebook PCs, monitors, and even in‐vehicle
applications. In such a situation, our sales performance has achieved an increase in both sales and profit while
maintaining our market share.
In the second half of the fiscal year, we expect the IT business to remain strong. Among them, our major
customers in each region are planning to start operation of photo IPS expansion lines, and we expect further
conversion to photo IPS to proceed due to the increased production.
In particular, as the shift in notebook PCs and in‐vehicle applications progresses, we expect to see further
increases in both sales and profit.

<Semiconductor Materials Department, Performance Materials Division>
In the first half of FY2021, we achieved a positive result against our forecast, due to the strong performanceof the overall semiconductor market. The positive factors, in order of magnitude, are increased demand for36

advanced logic and memory in Korea, increased demand for older generation logic and memory in China, andincreased demand for overall logic and memory in Taiwan.
The forecast for the second half of the fiscal year is for continued strong performance. In addition, device
manufacturers have increased their production capacity, so we expect an increase from the first half results.
The positive factors in this category, in order of magnitude, are the increase in production capacity in China,
the increase in production capacity in Korea, the continued strong performance in Taiwan, and the start ofadvanced logic devices.

<Inorganic Materials Department, Performance Materials Division>
In the first half of the fiscal year, both sales and profit increased compared to the same period last year. Salesof core product, SNOWTEX, increased. Last year, we were greatly affected by the COVID‐19 pandemic, but
this year, demand for automotive and semiconductor‐related applications has been strong.
We are also beginning to see the effects of the suspension of production in March this year by othercompanies in the same industry in Japan. Sales of Organo/Monomer Sol, and Oilfield Materials also increased
YoY. This was also due to the significant impact of COVID‐19 in the previous year.
I will explain the second half forecast. As for SNOWTEX, we expect demand to remain strong. On the other
hand, we are concerned about the decline in profitability due to the soaring cost of raw materials. We areplanning to revise the prices of the product. Sales of Organo/Monomer Sol are expected to continue toincrease YoY.
In the Oilfield Materials, we expect a YoY decline in sales, partly because of the actual demand of a large‐scale
project last year. As you know, oil prices are soaring, and the market environment is good, but in the US, theBiden administration has a negative policy, and this is a cause for concern.

<Agrochemicals>.
First of all, in the first half of the fiscal year, overall sales decreased slightly YoY on a pre‐discount basis.
Inventory adjustments of Fluralaner had an impact, and in Japan, unseasonable weather caused a drop in our
shipments of GRACIA. In the same way, there was a decrease in shipments of the herbicide ALTAIR due to
distribution stock.
However, this was offset by strong exports of DITHANE, a newly acquired fungicide, and TARGA for overseas
markets. With regard to GRACIA, we were concerned in the early spring that the clearance of distribution
inventory would not proceed smoothly, but as of the end of September, we are aware that the clearance of
inventory is proceeding relatively smoothly.
On the other hand, TARGA is growing steadily, especially in India, where it is being marketed as a mixture, andin Brazil, another demand area, where the area soybeans are planted has increased significantly due to thehigh price of grain and strong exports. Sales of the TARGA have increased in proportion to this.
For the second half of the fiscal year, we are also forecasting an increase in sales compared to the same periodof the previous year on a pre‐discounted sales basis. The main reason for this is an increase in royalties income
from animal health products. As I mentioned earlier, exports of TARGA continue to be strong.

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On the other hand, domestic sales of GRACIA will continue to decline, but overseas sales are expanding, so
we expect an increase in sales.

<Pharmaceuticals Division>
In the first half of FY2021, sales and profit from LIVALO were higher than the forecast. The demand for brand‐
name products has increased a bit, which had a positive impact. Sales of Custom Chemicals also increased in
the first half of FY2021.
As for the forecast for the second half of FY2021, shipments of both LIVALO and Custom Chemicals wereconcentrated in the first half, and the overall result in the second half is expected to be slightly negative.
We expect a slight increase compared to the full‐year forecast. I would like to add that although there havebeen reports about the adjustment of shipments of generic products of eldecalcitol, the shipment of API isproceeding without any problems.

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Question & Answer<Questioner 1>
Q: The full year forecast will exceed the target in the Mid‐term Plan. In particular, Performance Materials,
photo IPS and Semis Materials are performing well, and these are standing out. What kind of portfolio are you
planning for the next 3 years of growth? Particularly in the area of Display Materials, I believe that thetechnological shift to photo IPS will continue, but it may be slower than the past 3 years, so how can you
increase profit under such circumstances? Can you please explain about this area?
A: I'm Yagi, the president. The next 6 years Mid‐term Plan which includes next 3 years to come and more 3
years, will start from next year. In addition to Display Materials, we also have plans to increase profit from
Semis Materials in the Mid‐term Plan. In the Agrochemicals field, new active ingredients have also been added
to the lineup. Moreover, we are currently examining new fields, and although we are not sure if it will be able
to make an immediate contribution, we are committed to further expansion.
Q: Is it correct to say that there s still considerable room for technological change in Display Materials?
A: Yes.

<Questioner 2>
Q: The first question is related to the inventory adjustment of Agrochemicals. You mentioned that inventory
reduction of GRACIA is smoothly progressing as of end‐September. Do you expect this will be resolved within
this fiscal year? Also, how do you feel about ALTAIR's inventory problem in the second half? With regard to
Fluralaner, looking at page 38, there is a description that the sales of APIs are also increasing in the second
half of the fiscal year, so I wonder if inquiries from Merck are getting stronger. Or is it simply a matter oftiming? Could you please provide some additional comments on the 3 products that are having the inventory
adjustment problem?
A: First of all, I would like to explain the progress of the inventory adjustment of 2 agrochemicals, GRACIA and
ALTAIR. In the case of GRACIA, the pest control was skipped once due to an extremely rare case of continuous
good weather in early spring. Initially, we were very concerned about the situation because of the very poor
digestion of distribution stock and the departure of warehouses. After that, we had heavy rains in the fall as
well, and in the end, at the end of September, we conducted a survey on the inventory in our account, andwe found that the inventory was more smoothly digested than we had initially feared. But We have not yet
reached a completely appropriate inventory situation, so we are expecting some impact in the early part of
FY2022, up to the first and second quarters of the year.
Regarding ALTAIR, the usage period has ended since April 2021, and the current inventory in the distribution
system is almost the same. However, since the inventory is not so large, we believe that the impact on thenext fiscal year will be minimal.
With regard to Fluralaner, although there will certainly be an upturn in API sales in the second half of the fiscal
year, it is a very small amount, so it is not a noticeable amount.
Q: I understand. Royalties are also on the rise, so we have high expectations for the next fiscal year and beyond.
The second question is about fixed costs. For both Performance Materials and Agrochemicals, you have39

increased fixed costs in the second half of the fiscal year compared to the initial plan. In the area ofAgrochemicals, you have increased fixed costs by JPY0.3 billion from the initial plan for the second half of the
fiscal year, and in the area of performance materials, I think you have increased fixed costs by JPY0.5 billion,
mainly for Display Materials. Do you have any additional comments on this background?
A: The Agrochemicals Division is currently the first in the Company to start DX, so the cost of that will be large,
and we are also assuming that travel and transportation expenses will return to normal, so that will be a large
factor. The Performance Materials Division also has an assumption that overall travel and transportation
expenses will return to normal, and R&D expenses will be delayed and come out in the second half of the
fiscal year, so there will be an increase in those expenses.
Q: When you say that it will return to normal, do you mean before COVID‐19?
A: That's right. I see it coming back gradually.
Q: In reality, if business travel does not increase that much, there is room for an increase in profit.
A: Yes, that's right.

<Questioner 3>
Q: First, I would like to ask Mr. Yagi, the president, about the next Mid‐term Plan. You mentioned about thecreation of a new growth engine. I don't think you can comment clearly, but I would like to know if you have
any ideas about the areas that you are targeting. Also, ROE has already risen to 18%, so I would like to know
if you are looking at 20% or higher in the next Mid‐term Plan.
A: I am Yagi, we are working on a Mid‐term Plan and then a Long‐term Plan, but I cannot give you any specificdetails yet. However, for example, we are currently exploring whether it is sufficient to use only existing
technologies in the life sciences, or whether our technologies can be used in areas that are not enclaves, suchas by attaching them to the life sciences. Please look forward to next year's announcement. As for ROE, I think
you can consider it to be around the current level.
Q: I understand. In that sense, do you take M&A into account to some extent? Or do you want to focus onorganic growth?
A: There is no specific talk on M&A right now, but of course we are considering it with an eye to the future.
Q: I understand. Thank you. Secondly, I would like to ask you about the Semis Materials, for which forecasts
have been revised upward both in the first and second half of the current fiscal year. Can you tell us a little bit
more about the background behind the higher‐than‐expected increase in KrF and ArF in the ARC section, andother semiconductor materials section, respectively?
A: As for the background of the upward swing, the main reason for this is that our customers have been
increasing their production capacity ahead of our expectations. In addition, as we move toward the leadingedge of advanced logic, the use of EUV is increasing and the number of lithography sessions is increasing,which is a positive factor in the overall use of materials and the expansion of our market share.
Q: I understand. By the way, in the area of other semiconductor materials, I think there are some othermaterials such as CMOS image sensor, EUV under layer, and multi layer materials. Is there anything you cantell us about this area?

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A: In other areas, multi layer materials are growing the most because they are related to lithography at theleading edge of semiconductors. The CMOS image sensor is slightly growing. Also, the EUV under layer is
growing significantly.

<Questioner 4>
Q: Please tell us about SUNEVER in the Display Materials. I think there are some concerns that demand for
PC‐related products may drop in reaction to the considerable sales during the first half. What are yourassumptions about the demand for this set in the second half of the fiscal year and beyond? What are yourthoughts on this?
A: In the second half of the fiscal year, we expect notebook components to remain strong. In this context, we
see the continued strong performance as the shift to photo IPS progresses further.
Q: I understand that the increase is due to the shift to photo IPS, but do you expect the demand of the set toremain steady as well?
A: Yes, that's right. Our major customers are preparing to increase their production capacity.

<Questioner 5>
Q: In the area of Agrochemicals, the accounting policy has changed a little bit from this time, so it is a little
difficult to determine whether the trend is upward or downward. In the third and fourth quarters, do you
expect the performance to recover in the fourth quarter?
A: With regard to the profitability of Agrochemicals, it is difficult to answer your question, but there is quite a
bit of seasonality, so we have to look at the total profitability.
Q: If that is the case, I think it would be a downturn compared to the previous forecast. I think you mentioned
earlier that the inventory in GRACIA has been adjusted to some extent. Could you give us some additional
information about the future outlook and when you think it will return?
A: If we look at the term of the next fiscal year, I think we will be able to see the trend around the time of thesecond quarter.

<Questioner 6>
Q: As for Agrochemicals, recently, your company has introduced several pesticides from American companies,
and I think there is still a lot of work to be done to review the business portfolio of multinational companies,
can you give me a feeling of whether or not there are still deals that would be good for your company?
A: Regarding an acquisition of a pesticide after QUINTEC and DITHANE, we do not have anything concrete inmind at this time. However, if there is a pesticide that is suitable for our company in the multiple portfolio
stages, we will keep a close eye on it. This is the situation.
[END]

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