Nov 9th, 2020

Summary of Consolidated Financial Results
Denka Company Limited
1. Summary
1.1 Overview
To realize the corporate philosophy enshrined in The Denka Value, the Denka Group set up threefold growth vision designed to create a“Specialty-Fusion Company,” “Sustained Growth” and “Sound Growth” through the execution of Denka Value-Up, a management plan spanninga period of five years beginning in April 2018. To this end, the Group has been promoting the plan’s two growth strategies, namely, the businessportfolio shift and the introduction of innovative processes, aiming to expand its operations and enhance profitability.
In the first six months of the fiscal year ending March 31, 2021, the shipping volume of some mainstay products was sluggish, reflecting thesignificant impact of the novel coronavirus pandemic, while the showings of styrene-based products were stagnant and their sales prices weredownwardly revised in step with plunges in raw material prices. Consequently, consolidated net sales totaled ¥160.3 billion, down ¥31.7 billion,
or 16.5%, compared with the same period of the previous fiscal year.
On the earnings front, due to the fallout from the infectious disease, chloroprene rubber (CR), diagnostic reagents and other mainstay
products have been subject to greater negative impact than originally anticipated. On the other hand, the shipping volume of sphericalalumina for EV-related applications was robust. Moreover, growing demand associated with the introduction of 5G infrastructure as well as anincrease in data center-related product needs caused the shipping volume of semiconductor-related products (e.g. highly functional films foruse as embossed carrier tapes for electronic components and semiconductors, and fused silica fillers for use as semiconductor encapsulantfillers) to exceed the level recorded in the same period of the previous fiscal year. Also, the earlier-than-usual shipping of influenza vaccines
contributed to first-half operating results.
In addition, the Group launched sales of QuickNavi™-COVID19 Ag, a rapid diagnostic testing kit for detecting novel coronavirus antigen, inAugust 2020. And, administrative expenses as well as fixed costs associated with its plants reduced.
As a result, operating income fell ¥3.3 billion, or 21.4%, year on year to ¥12.1 billion. Ordinary income was ¥12.3 billion, down 15.4% year
on year, while net income attributable to owners of the parent was ¥10.0 billion, down 7.8% year on year.
From the third quarter onward, the Denka Group expects sales to be lower than its initial forecast for the full year, despite improving
demand for some mainstay products, such as CR, which was affected by the novel coronavirus pandemic. On the other hand, as the Group
anticipates growth in demand for QuickNavi™-COVID19 Ag, a rapid testing kit for detecting novel coronavirus antigen, and other specialty
products, as well as a recovery in demand and the positive effect of cost reductions, the full-year operating income forecast is expected toexceed the previous year’s figure of ¥33.0 billion.

1.2 Results by Segment
Elastomers & Performance Plastics
Sales of MS resin for use in light guiding substrates for televisions and monitors and other applications was firm. However, the novel
coronavirus pandemic severely impacted overall production activities, including those undertaken in the automotive industry, causing them tofall into stagnation. This, in turn, resulted in a year-on-year decline in CR sales volume, leading to a significant decrease in segment income.
From the third quarter onward, demand for CR remains on a recovery track. However, the Group expects full-year segment income to showa year-on-year decrease.

Infrastructure & Social Solutions
Despite the positive effects of the Group’s efforts to maintain product prices after the recent upward revisions, segment income declined
due mainly to lower sales volumes for cement, special cement additives, fertilizers, fire-resistant materials and steelmaking materialscompared with results seen in the same period of the previous fiscal year due to the pandemic.
The Group will nevertheless continue to maintain the product prices in the third quarter and beyond while striving to achieve a year-onyear increase in segment income in terms of full-year operating results.

Electronics & Innovative Products
As the Group was buoyed by growing demand associated with the global introduction of 5G infrastructure and an increase in data centerrelated product needs worldwide, robust sales of highly functional films for use as embossed carrier tapes for electronic components andsemiconductors exceeded results recorded in the same period of the previous fiscal year, as did sales of fused silica fillers for use assemiconductor encapsulant fillers. Similarly, sales of spherical alumina for use in EV-related applications were up year on year. Thanks tothese factors, segment income increased.
As the Group anticipates that demand for EV-related products will grow in the third quarter and beyond, segment income is expected toincrease year on year in terms of full-year operating results.

Living & Environment Products
Due to the fallout from the pandemic and other factors, the sales volumes of plastic rain gutters, TOYOKALON synthetic wig fibers andindustrial tapes were down year on year. However, thanks to growing demand for takeaway food services, overall sales of food packaging
sheets and processed products using such sheets largely remained firm. Moreover, plunges in raw material prices and a reduction in fixed
costs contributed to segment results. Taking these and other factors into account, segment income rose from the same period of the previous
fiscal year.
Based on the Group’s projection that the circumstances discussed above will largely remain unchanged in the third quarter and beyond,segment income is expected to increase year on year in terms of full-year operating results.

Life Innovation
Because of the pandemic, sales of diagnostic reagents have declined year on year due to a fall in the number of diagnostic examinations anda trend toward voluntary restraint in the conduct of health checkups. On the other hand, R&D expenses and other forward-looking
investments increased. However, as influenza vaccines were shipped earlier than usual this year, sales saw a year-on-year rise. Moreover, theAugust 2020 release of QuickNavi™-COVID19 Ag, a rapid diagnostic testing kit for detecting novel coronavirus antigen, contributed to segment
results. Consequently, operating income for the first half was virtually unchanged from the same period of the previous fiscal year.
In terms of full-year operating results, the Group anticipates that sales of influenza vaccines will remain virtually unchanged from theprevious fiscal year. Given the expected contribution of QuickNavi™-COVID19 Ag and other products, the Group also believes that full-year
segment income will grow year on year.

2. Consolidated Financial Results and Forecast
FY2020
Apr to Sep

Net Sales
Operating Income
Ordinary Income
Net Income attributabletoowners of parent

FY2019Apr to Sep

Billions of Yen
Incｒ.
△Decr.

FY2020
Forecast
Apr to Mar

160.3
12.1
12.3

192.0
15.3
14.5

△ 31.7
△ 3.3
△ 2.2

350.0
33.0
30.0

380.8
31.6
30.0

10.0

10.9

△ 0.8

22.0

22.7

3. Net Sales and Operating Income by segments
FY2020
Apr to Sep

54.6
2.1
24.5
0.2
33.3
6.6
16.6
0.5
16.2
2.4
15.2
0.3
160.3
12.1

Net Sales
Elastomers ＆Performance Plastics Operating Income
Net Sales

Infrastructure ＆Social Solutions

Operating Income

Electronics ＆Innovative Products

Operating Income

Net Sales

Net Sales
Living ＆Environment Products Operating Income
Life innovation

Net Sales
Operating Income

Net Sales

Others/Companywide

Operating Income

Net Sales

Total

Operating Income

FY2019ActualApr to Mar

Billions of Yen

FY2019Apr to Sep

78.7
6.9
26.9
0.3
33.5
5.8
18.6
△ 0.2
15.0
2.5
19.2
0.2
192.0
15.3

Incr.
△Decr.

FY2020
Forecast
Apr to Mar△ 24.1
△ 4.8
△ 2.5
△ 0.1
△ 0.2
0.8
△ 2.00.7
1.2
△ 0.1
△ 4.0
0.2
△ 31.7
△ 3.3

115.0
3.0
52.0
0.5
70.0
13.0
33.0
1.0
46.0
15.0
34.0
0.5
350.0
33.0

4.1 Net Sales by segments

FY2019ActualApr to Mar

149.3
10.9
54.8
0.3
68.0
12.4
37.0
0.1
35.5
7.0
36.2
0.9
380.8
31.6
Billions of Yen

Net Sales
FY2020
Apr to Sep

54.6
24.5
33.3
16.6
16.2
15.2
160.3

Elastomers & Performance Plastics
Infrastructure & Social Solutions
Electronics & Innovative Products
Living & Environment ProductsLife innovation
OthersTotal

FY2019Apr to Sep78.7
26.9
33.5
18.6
15.0
19.2
192.0

Incr.
△Decr.

△ 24.1△ 2.5△ 0.2△ 2.01.2△ 4.0△ 31.7

Sales price△ 11.90.2
△ 0.5
△ 0.5
△ 0.1
△ 12.8

Sales volume△ 12.2
△ 2.7
0.2
△ 1.4
1.3
△ 4.0
△ 18.8

4.2 Operating income by segments

Billions of Yen
Operating income

FY2020
Apr to Sep

Elastomers & Performance Plastics
Infrastructure & Social Solutions
Electronics & Innovative Products
Living & Environment ProductsLife innovation
Others
Total

2.1
0.2
6.6
0.5
2.40.312.1

FY2019Apr to Sep6.9
0.3
5.8
△ 0.2
2.5
0.2
15.3

Incr.
△Decr.

△ 4.8
△ 0.1
0.8
0.7
△ 0.1
0.2
△ 3.3

Sales price△ 11.9
0.2
△ 0.5
△ 0.5
△ 0.1
△ 12.8

5. Key operating factors

Research and Development
Interest-bearing debt

Yen / USD exchange rate
Naphtha price (yen/ Kl)

Operating cost& others

△ 5.7
△ 0.7
0.6
△ 0.6
1.2
0.1
△ 5.2

12.8
0.4
0.7
1.9
△ 1.1
0.0
14.7

Billions of Yen
FY2020
Apr to Sep

Investment
Depreciation

Sales volume

17.1
11.57.4
140.5
106.828,250

FY2019Apr to Sep

18.9
11.0
7.3
123.3
109.2
42,800Incr.
△Decr.

△ 1.8
0.4
0.2
17.2

FY2020
Forecast
Apr to Mar

45.0
23.0
16.0
141.0

FY2019ActualApr to Mar

36.9
22.5
15.0
134.3