Results Presentationof FY2021 3Q(the 9 months of the Fiscal year ending March 2022)

Securities code：4061
Denka Co. ,Ltd
February 7, 2022

Contents
1

2

FY2021 3Q Resultsa) Summary（Year-on-Year）

03b) Change Factors

（

）

04

c) Graph of Operating Income Change Factors

（

）

05

d) By Segment

（

）

06

e) Change Factors By Segment

（

）

07-10

“
“
“
“

FY2021 Earnings Forecasta) Summary（vs Forecast as of November, Year-on-Year）b) Main Reasons for Earnings Forecast Revisions

13c) Change Factors（vs Forecast as of November） 14d) Graph of Operating Income Change Factors（e) By Segment（f) Change Factors By Segment（g) Key Performance Indicators

“
“
“

）

15

）

16

）

17-20
21

h) Shareholder Returns

22i) FY2022 Numerical Targets of Denka Value-Up

23j) (Reference) By Segment（Year-on-Year）

k) (Reference) Quarterly trends(by segment)

3

12

24
25

Topic
Reorganization of company-wide research and new business development structure26
1

FY2021 3Q Results

2

FY2021 3Q Resultsa) Summary（Year-on-Year）
FY2020 3Q
Apr-Dec
ActualFY2021 3Q
Apr-Dec
Actual

Incr.
Decr.

262.0

284.0

+ 22.0Operating Income

28.0

32.2

+ 4.2

Operating Margin

10.7%

11.3%

+ 0.6%(¥ billions)

Sales

Ordinary Income

27.3

30.1

+ 2.8

Net income
attributable to
Owners of parent

18.9

22.9

+ 4.0

（Extraordinary losses）
Costs related to voluntary
product recall-1.0 ** 1.0 billion yen in expenses related to the voluntary recall of some lots of rapid test kits for COVID-19 antigens
was recorded as an extraordinary loss.

Denka Value-Up initiatives led to record-making
profits for cumulative 3Q

3

FY2021 3Q Resultsb) Change Factors （Year-on-Year）
YoY (¥ billions)Sales

284.0 billion+ 22.0

1. Volume：Increased demand for xEVs and semiconductor-related products
Sales increased for test reagents such as rapid test kits for COVID-19 antigens (including supply to thegovernment) and inflammation markers, while sales of influenza vaccines decreased due to weakening
productivity.
Demand recovered from the negative impact of COVID-19 (chloroprene rubber, etc.)+ 17.5

2. Pricing： Revised price for styrene-related products in conjunction with rising raw materials costs+ 26.7

3. Other ： Change in accounting standards for recognition of revenue (change in group trading company net sales, etc.)- 22.3Operating
Income32.2 billion

YoY (¥ billions)+ 4.2

1. Volume：Increased demand for xEVs and semiconductor-related products
Sales increased for test reagents such as rapid test kits for COVID-19 antigens (including supply to thegovernment) and inflammation markers, while sales of influenza vaccines decreased due to weakening
productivity.
Demand recovered from the negative impact of COVID-19 (chloroprene rubber, etc.)+ 10.2

2. Pricing： Revised pricing for styrene-related products in conjunction with rising raw materials costs (inlcudes impact of
currency fluctuations +4.6)+ 26.7

3. Variable Cost
Difference ：Raw material price increase, etc. (Includes effect of currency fluctuations -2.5)- 26.7

4. Costs- 6.1：Fixed costs, etc.

Maintained spread* due to agile price revisions, in response to rising raw material prices
Increased income due to positive volume resulting from recovery, expansion, and growth in demand*margin between product sale prices and raw materials prices

4

FY2021 3Q Resultsc) Graph of Operating Income Change Factors（Year-on-Year）(¥ billions)+ 26.732.2+ 10.2- 26.728.0- 6.1
・ Increased demand for xEVs andsemiconductor-related
products
・ Increase in sales of COVID-19
test kits(including supply togovernment), inflammation
markers, and other test
reagents; however, decrease insales of influenza vaccines due
to weakening productivity

Revised price for styrenerelated products inconjunction with rising
raw materials costs, etc.

・Recovery in demand(chloroprene rubber, etc.)

FY2020 Q3
Apr-Dec

VolumePricing

Raw material
price increase, etc.

Variable Cost Difference(Includes effect of currency
fluctuations +4.6)(Includes effect of
currency fluctuations -2.5)

Fixed costs, etc.

Costs

FY2021 Q3
Apr-Dec

Maintained spread due to agile price revisions, in response to rising raw material prices
Increased income due to positive volume resulting from recovery, expansion, and growth in demand5

FY2021 3Q Resultsd) By Segment （Year-on-Year）
FY2020 3Q
Apr-Dec
ActualFY2021 3Q
Apr-Dec
ActualElectronics & Innovative Products

56.6

Life Innovation

Sales

Incr.
Decr.

Pricing

VolumeOther *

66.2

+ 9.5

+

2.5

+

9.4

-

36.6

36.2

- 0.5

-

0.6

+

0.2

Elastomer & Infrastructure Solutions

66.6

77.5

+ 10.9

+

2.9

+

9.5

-

1.4

Polymer Solutions

78.6

92.7

+ 14.1+ 22.0

-

7.5

-

0.4

Others23.5

11.4- 12.1-+

6.1- 18.1

Total

262.0

284.0

+ 22.0+ 17.5- 22.3(¥ billions)+ 26.7

2.3-*Change in accounting standards for recognition of revenue

FY2020 3Q
Apr-Dec
ActualFY2021 3Q
Apr-Dec
ActualElectronics & Innovative Products

10.2

13.8

+

Life Innovation

13.8

11.9

Elastomer & Infrastructure Solutions-2.1

Polymer Solutions

Operating Income

Pricing

VolumeCost &
Others

3.6

+

2.5

+

5.3

-

4.2

-

1.9

-

0.6

-

0.3

-

1.0

-1.2

+

0.9

+

2.9

+

4.3

-

6.2

5.4

6.3

+

0.9

+ 22.0+0.1- 21.3

Others

0.7

1.3

+

0.7

-

+

0.7

-

Total

28.0

32.2

+

4.2

+ 26.7(¥ billions)

Incr.
Decr.

+ 10.2Three divisions, led by Electronics & Advanced Products,
contributed to profit growth

0.0- 32.7

6

FY2021 3Q Resultse) Electronics & Innovative Products（Year-on-Year）(¥ billions)

FY2020 3Q FY2021 3Q
Apr-Dec
Apr-Dec
ActualActual

Incr.
Decr.

Pricing

Volume

Other

Sales

56.6

66.2

+ 9.5

+ 2.5

+ 9.4

- 2.3 *

Operating Income

10.2

13.8

+ 3.6

+ 2.5

+ 5.3

- 4.2

*Change in accounting standards for recognition of revenue

Sales Trends and Costs
by ProductSpherical alumina• Growth of xEV-related applications and 5G communications-related demand• Results of partial operation of new facilities in Singapore (scheduled for full operation in April 2022)

Fused silica• Shipments exceeded the previous year, supported by strong demand for semiconductor-related
High-performance film
products
Acetylene black• Shipment of xEV-related products exceeded the previous year; however, lower October-December
automobile production due to semiconductor shortages impacted the performance• Strong demand for high-voltage cables for offshore wind power generation

Ceramic substrates• Shipment of xEV-related products exceeded the previous year; however, lower October-December
automobile production due to semiconductor shortages impacted the performance• Delay in demand recovery for electric railways due to the negative impact of COVID-19

Other• Increase in raw materials costs (→rise in prices for fused silica from November, etc.)• Costs for further development of specialties (e.g., increase in costs for systems to production increase,and sales strength, etc.)

Increase in profits from megatrends in xEV, 5G,
and semiconductors

7

FY2021 3Q Resultse) Life Innovation （Year-on-Year）(¥ billions)

FY2020 3Q FY2021 3Q
Apr-Dec
Apr-Dec
ActualActual

Incr.
Decr.

Pricing

Volume

Other

Sales

36.6

36.2

- 0.5

- 0.6

+ 0.2

-

Operating Income

13.8

11.9

- 1.9

- 0.6

- 0.3

- 1.0

Sales Trends and Costs
by Product
COVID-19 rapid
antigen test kit• Improved rapid antigen testing system as part of countermeasures against COVID-19 infections
between July and September
Supplied for distribution by the Ministry of Health, Labor and Welfare (for use in elderly carefacilities, workplaces, schools, etc.)• Demand for testing system dropped sharply between October and December as the fifth wave
came to an end• Voluntary recall announced in November (220,000 kits); conducted replacement shipments• Meanwhile, sales prices declined year on year (insurance points reduced beginning December 31).
• Start Overseas shipping to the U.S. In November

Other test reagents(Inflammation
markets, etc.)• In addition to a recovery of demand in China, increased demand for tests in Europe and the U.S.

Influenza vaccine• Production and shipment volumes were lower than last year due to a deterioration in yield ratecaused by differences in the strains manufactured and a shortage in vaccine production materials

Rapid test kits for COVID-19 antigens contributed to profits at the same level
as in the previous year; however, influenza vaccine shipments fell, resulting in lower profits
8

FY2021 3Q Resultse) Elastomer & Infrastructure Solutions（Year-on-Year）(¥ billions)

FY2020 3Q FY2021 3Q
Apr-Dec
Apr-Dec
ActualActual

Incr.
Decr.

Pricing

Volume

Other

Sales

66.6

77.5

+10.9

+ 2.9

+ 9.5

- 1.4*

Operating Income

-2.1

-1.2

+ 0.9

+ 2.9

+ 4.3

- 6.2

*Change in accounting standards for recognition of revenue

Sales Trends and Costs
by Product
Chloroprenerubber• Strong recovery in demand in industrial, adhesive, and automotive applications• Made additional price increases in February (following in August) due to rising raw materials prices(butadiene, chlorine, coke)• U.S. DPE shut down facilities after frost damage in February and Hurricane Ida at the end of August
The resumption of operations was delayed compared with the November forecast

Special cement
Additives• A drop in shipment volume due to a slowdown in private construction

Cement• As well as sluggish private sector demand, public sector demand for disaster recovery, etc. also fell from theprevious year, while prices rose for raw materials and fuel, including coal

Operating losses continued due to the impact of the hurricane on
U.S. DPE and soaring raw materials prices

9

FY2021 3Q Resultse) Polymer Solutions （Year-on-Year）(¥ billions)

FY2020 3Q FY2021 3Q
Apr-Dec
Apr-Dec
ActualActual

Incr.
Decr.

Pricing

Volume

Other

Sales

78.6

92.7

+14.1

+ 22.0- 7.5- 0.4 *

Operating Income

5.4

6.3

+ 0.9

+ 22.0+ 0.1- 21.3*Change in accounting standards for recognition of revenue

Sales Trends and Costs
by ProductMS resin• Demand for use in light guide plates in TVs and monitors and in other applications such as cosmetic
containers has remained strong(While shipped volumes of PS resin dropped from last year due to conversion to MS resin
manufacturing facilities and remodeling)
AS, ABS, transparent • Recovery from the negative impact of COVID-19 resulting in increased shipped volumes
resins, etc.
over previous year
Food wrapping
sheetsand containers• Almost unchanged from last year

Toyokalon• Recovery from the negative impact of COVID-19 resulting in increased shipped volumes
over previous year

Spread• Spread improved due to price pass-through in response to rising raw materials prices (ethylene,
benzene, etc.)

Profit increase due to improved spreads, despite higher raw material prices
10

FY2021 Earnings Forecast

11

FY2021 Earnings Forecasta) Summary （vs Forecast as of November, Year-on-Year）
FY2021
Forecast as ofNovember

FY2021
Revised
Forecast

395.0

385.0

Operating Income

44.0

Operating Margin(¥ billions)

Incr.
Decr.

FY 2020
Act

Incr.
Decr.

- 10.0354.4+ 30.6

40.0

-

4.0

34.7

＋ 5.3

11.1%

10.4%

- 0.7%

9.8%＋ 0.6%

Ordinary Income

40.0

36.0

-

4.0

32.1

＋ 3.9

Net income
attributable to
Owners of parent

29.0

26.0

-

3.0

22.8

＋ 3.2

Sales

Although operating income decreased compared with the November forecast,
we expect each profit indicator to beat our record high12

FY2021 Earnings Forecastb) Main Reasons for the Revisions
FY2021 Full-Year Operating Income Forecast: ¥40.0 billion (Down ¥4.0 billion vs. November Forecast)① Elastomer & Infrastructure Solutions- 2.5 billion[Volume: -1.9 billion]⇒The impact of Hurricane Ida on the upstream supply chain resulted in a delay of the start-up of U.S. DPE(suspended since August) compared with our November forecast, leading to opportunity losses② Life Innovation - 1.0 billion[Volume: +2.2 billion]⇒Test demand declined sharply between October and December when the fifth wave of
COVID-19 settled(replacement shipments for voluntary recalls made beginning in November)
Demand for tests due to the 6th wave increased rapidly beginning in January[Pricing: -3.7 billion]⇒Insurance points for COVID-19 antigen tests were reduced on December 31 last year
Normally, points are revised on April 1, but since the points were a temporary measure moved ahead bygovernment policy, we did not incorporated the point revisions in our November forecast.
(Insurance points: antigen test kit 600 points → 300 points; combo kit 600 points → 420 points)③ Polymer Solutions – 1.0 billion[Volume: - 0.7 billion]⇒Demand for MS and MBS resins was lower than the November forecast due to deteriorating market
conditions in China; and we also expect demand for AS and ABS resins to be affected significantly
by reduced automobile production due to semiconductor shortages

13

FY2021 Earnings Forecastc) Change Factors（vs Forecast as of November）

Sales

385.0 billion

Vs. forecast (¥ billions)- 10.0

1. Volume ：Positive factors (Increasing demand for COVID-19 rapid antigen test kits)
Negative factors (Opportunity loss due to reduced DPE production, reduced demand forfunctional resins)- 6.5

2. Pricing ：Positive factors (Additional price increases for chloroprene rubber, POVAL, etc.)
Negative factors (Reduced insurance points for COVID-19 rapid antigen test kits)- 3.5

Operating
Income1. Volume40.0 billion

Vs. forecast (¥ billions)：Positive factors (Increasing demand for COVID-19 rapid antigen test kits)
Negative factors (Opportunity loss due to reduced DPE production, reduced demand forfunctional resins)

2. Pricing

- 4.0

- 0.9

：Positive factors (Additional price increases for chloroprene rubber, POVAL, etc.)
Negative factors (Reduced insurance points for COVID-19 rapid antigen test kits)(Includes effect of currency fluctuations -0.2)- 3.5

3. Variable Cost
Difference：Raw material price increase, etc. (includes effect of currency fluctuations +0.1)- 0.5

4. Costs： Manufacturing costs, administrative expenses, etc.

＋ 0.9

Expected substantial negative cost-price spreads
14

FY2021 Earnings Forecastd) Graph of Operating Income Change Factors（vs Forecast as of November）(¥ billions)

44.0
- 0.9

Forecast as ofNovember

+ 0.9
- 3.5

- 0.5

Increasing demand for
COVID-19 rapid antigen
test kits, Opportunity loss
due to reduced DPE
production, reduced
demand for functional
resinsCOVID-19 rapid
antigen test kits,etc.

Raw material
price increase,etc.

VolumePricing

Variable Cost
Difference(Includes effect of
currency fluctuations -0.2)(Includes effect of
currency fluctuations +0.1)

40.0

Manufacturingcosts,
administrative
expenses, etc.

Costs

Revised
Forecast

Expected substantial negative cost-price spreads
15

FY2021 Earnings Forecaste) By Segment （vs Forecast as of November）
Sales (¥ billions)

FY 2021
Forecast as ofNovember

FY2021
Revised
Forecast

Incr.
Decr.

Pricing

VolumeElectronics & Innovative Products

90.0

90.0

±

0.0

+

0.1

-

0.1

Life Innovation

50.0

45.0

-

5.0

-

3.7

-

1.3

Elastomer & Infrastructure Solutions

110.0

110.0

±

0.0

+

0.7

-

0.7

Polymer Solutions

130.0

125.0

-

5.0

-

0.6

-

4.4

Others

15.0

15.0

±

0.0

-

±

0.0

Total

395.0

385.0

3.5

-

6.5

Operating Income(¥ billions)

FY 2021
Forecast as ofNovember

FY2021
Revised
Forecast- 10.0

-

Incr.
Decr.

Pricing

VolumeCost&
OthersElectronics & Innovative Products

18.5

18.5

±

0.0

+

0.1

-

0.9

+

0.8

Life Innovation

15.5

14.5

-

1.0

-

3.7

+

2.2

+

0.5

Elastomer & Infrastructure Solutions

-1.0

-3.5

-

2.5

+

0.7

-

1.9

-

1.3

Polymer Solutions

9.5

8.5

-

1.0

-

0.6

-

0.7

+

0.4

Others

1.5

2.0

＋

0.5

-

＋

0.5

±

0.0

Total

44.0

40.0

-

4.0

3.5

-

0.9

+

0.4

-

Despite increased demand for COVID-19 tests, profit decreased due toreduced insurance points, opportunity loss caused by delay in the launch of DPE,
and a decrease in demand for functional resins

16

FY2021 Earnings Forecastf) Electronics & Innovative Products（vs Forecast as of November）(¥ billions)

FY 2021
Forecast asof November

FY2021
Revised
Forecast

Incr.
Decr.

Pricing

Volume

Sales

90.0

90.0

± 0.0

+ 0.1

- 0.1

Operating Income

18.5

18.5

± 0.0

+ 0.1

- 0.9

Cost&
Others+ 0.8

Sales Trends & Costs by
Product
Spherical alumina• xEV-related and 5G communications-related demand expected to grow in line with our
November forecast

Fused silica
high-performance film

• Strong shipments of semiconductor-related products continue, supported by growing
demand for 5G communications and data centers; performance is in line with our November
forecast

Acetylene black• Shipment of xEV-related products expected to be sluggish due to the impact of reduced
automobile production caused by semiconductor shortages• Demand for high-voltage cable applications for offshore wind power generation expected toremain firm and in line with our November forecast• We expect xEV-related shipments to be lower due to the impact of reduced automobile
production caused by semiconductor shortages

Ceramic substrates
Other• Decrease in manufacturing costs due to lower sales volume, etc.

To be in line with our November forecast due to cost decreases,
despite the impact of automobile production cutbacks
caused by semiconductor shortages

17

FY2021 Earnings Forecastf) Life Innovation （vs Forecast as of November）(¥ billions)

FY 2021
Forecast asof November

FY2021
Revised
Forecast

Incr.
Decr.

Pricing

Volume

Sales

50.0

45.0

- 5.0

- 3.7

- 1.3

Operating
Income

15.5

14.5

- 1.0

- 3.7

+ 2.2

Cost&
Others+ 0.5

Sales Trends & Costs by
Product

COVID-19 rapid
antigen test Kit• Sharp drop in test demand between October and December, when the fifth wave of COVID-19 settled(replacement shipments for voluntary recalls made beginning in November)• Demand for tests due to the sixth wave increased rapidly beginning in January• Insurance points for COVID-19 antigen tests were reduced on December 31 last year.
Normally, points are revised on April 1, but since the points were a temporary measure moved ahead
by government policy, we did not incorporated the point revisions in our November forecast.
(Insurance points: antigen test kit 600 points → 300 points; combo kit 600 points → 420 points)

Other test reagents(inflammation
markers, etc.)• Strong demand in China, Europe and the U.S. and expected boost shipments

Influenza vaccine• Vaccinations after December expected to be lower than expected

We project higher shipment volume COVID-19 test kits, but performance is likely to belower than our November forecast due to the revision of insurance points
18

FY2021 Earnings Forecastf) Elastomer & Infrastructure Solutions (vs Forecast as of November)
FY 2021
Forecast asof November

FY2021
Revised
Forecast

Incr.
Decr.

Pricing

Volume

Sales

110.0

110.0

± 0.0

+ 0.7

- 0.7

Operating
Income

-1.0

-3.5

- 2.5

+ 0.7

- 1.9

(¥ billions)

Cost&
Others- 1.3

Sales Trends & Costs by
Product
Chloroprenerubber• Due to Hurricane “Ida”, DPE facilities had been shut down
since the end of August, causing delays compared with our
initial schedule and resulting in opportunity losses inconnection with lower production (impact: ¥1.5 billion)• We made additional price increases in February following
in August) due to rising raw materials prices (butadiene,
chlorine, coke)
We expect to raise sales prices (see table)

SpecialcementAdditives• We expect shipment volume to decline

Cement• Sales prices fell short of November forecast
despite the pursuit of price hike negotiations(yen/kg)
520.0[Customs Statistics]
Chloroprene rubber (dry + latex)
export unit price

500.0
480.0
460.0
440.0
420.0
1月 Feb.
2月 Mar.
3月 Apr.
4月 May5月 Jun.
6月 Jul.
7月 Aug.
8月 Sep.
9月 10月
11月
Oct. Nov.
2021 Jan.

Expected profit decrease due to opportunity losses
caused by the delayed start-up of U.S. DPE19

FY2021 Earnings Forecastf) Polymer Solutions（vs Forecast as of November）(¥ billions)

Sales

Operating
IncomeFY 2021
Forecast asof November

FY2021
Revised
Forecast

Incr.
Decr.

Pricing

Volume

130.0

125.0

- 5.0

- 0.6

- 4.4

9.5

8.5

- 1.0

- 0.6

- 0.7

Cost&
Others+ 0.4

Sales Trends & Costs by
Product
MS resin• We expect light guide plate applications for TVs and monitors to fall short of November forecast due
to lower demand in China and other markets• Focusing on other applications such as lighting and cosmetics containers

AS, ABS,transparent
resins, etc.

• We expect sales volume of AS and ABS to be lower due to the impact of reduced automobile
production caused by the shortage of semiconductors• Market conditions likely to weaken for transparent resins, mainly in China.

Food wrapping
sheets andcontainers• Spread to worsen due to price increase delays

Toyokalon• We expect sales volume to fall in stock adjustment.

Expected decrease due to deteriorating market in China andthe impact of reduced automobile production from semiconductor shortages
20

FY2021 Earnings Forecastg) Key Performance Indicators
FY2020Q3(Apr-Dec)
ActualFull-Year(Apr-Mar)
ActualFY2021
Q3(Apr-Dec)
ActualQ4(Jan-Mar)
ActualQ4(Jan-Mar)
ActualFull-Year(Apr-Mar)
ActualInvestment

31.7

10.6

42.3

27.8

11.2

39.0

Depreciation

17.2

5.7

22.9

17.6

5.9

23.5

R&D

11.1

3.6

14.7

10.9

3.6

14.5

Interest-Bearing
Debt

140.0

138.2

138.2

135.7

137.0

137.0

FY2020Q3(Apr-Dec)
ActualQ4(Jan-Mar)
ActualFull-Year(Apr-Mar)
ActualFY2021
Q3(Apr-Dec)
ActualQ4(Jan-Mar)
ActualFull-Year(Apr-Mar)
Actual

Forex

106.1

104.8

105.8

111.0

114.3

111.8

Japan Naphtha

29,36038,80031,80053,80059,60055,300(¥ billions)(¥/$)(¥/Kl)

Continuing strategic investment into specialty businesses21

FY2021 Earnings Forecasth) Shareholder Returns
FY2017
ActualNet Income
Dividend per share*

FY2018Actual

FY2019ActualFY2021
Revised
Forecast

FY2020
Actual(billion)

23.0

25.0

22.7

22.8

26.0

（¥）

105.0

120.0

125.0

125.0

145.0
Mid-term70.0
End75.0

Dividend

9.2

10.5

10.8

10.8

12.5

40%

42%

48%

47%

48%

(billion)

2.3

2.1

-

-

-

(billion)

11.5

12.6

10.8

10.8

12.5

Total Return Ratio

50%

50%

48%

47%

48%

Depreciation

24.6

22.9

22.5

22.9

23.5

27.0

32.8

36.9

42.3

39.0

10.0%

10.3%

9.1%

8.8%

9.4％

(billion)

Shareholders Return
Stock PurchaseTotal Return

Investment & lending

ROE(billion)* The figures have been adjusted, considering stock consolidation of1 from 5 on 10/1/2017.

Expecting to maintain a dividend of ¥145 per share22

FY2022 Management Plani) FY2022 Numerical Targets of Denka Value-Up
Operating
Income(¥ billions)Electronics &Innovative
Products

Life Innovation

Elastomer &Infrastructure
Solutions

FY2020
Actual

14.2

14.8

-3.6

FY2021
Revised
Forecast

18.5

14.5

-3.5

FY2022
Management
Plan

22.0

11.0

7.0

Year onyear

Main measures+3.5

Spherical alumina:
Accelerated xEV and 5G communications-related demand and impact of Singapore
expansion (scheduled for completion in March 2022)
Acetylene black:
Accelerated demand for high-voltage cable applications for xEVs and offshore windturbines; further shift from low-cost applications to high-value-added applications-3.5

Influenza vaccine:New facility for bulk liquid production to begin operations for the 2022 season
Test reagents:
Expansion of product lineup, recovery of demand for tests (inflammation markers for
China, etc.)
COVID-19 test kit:
Factor in the risk of falling sales prices
DELYTACT® Injection G47Δ virus preparation for cancer treatment: Shipments
started in October 2021
(expected full-scale contribution from FY2023)+10.5

Chloroprene rubber:Price revisions, recovery from Hurricane “Ida” impact (transitory)
Cement:Price revisions
Special cement additives:
Increasing in demand for the linear shinkansen, focus on expanding sales of the
Clear Shot dust control product used in tunnel construction.

Polymer
Solutions

8.4

8.5

11.0

+2.5

MS resin:
Increasing in demand in light guide plates in TVs and monitors as well as in lighting,and expanding demand in other applications such as cosmetic containers.
Production capacity in Singapore to be double (operations started in July 2021)
IP:
Expanding sales of high value-added grades (for automotive interior/exteriormaterials, etc.)

Others

0.8

2.0

-1.0

-3.0

(Includes increased labor costs resulting from better labor conditions throughout theentire Group)

Total

34.7

40.0

50.0

+10.0

* DELYTACT is a registered trademark of Daiichi Sankyo Company, Limited

Continuing Denka Value-Up specialty strategy towards ¥50 billion target in operating income

23

FY2022 Management Planj) (Reference) By Segment （Year-on-Year）
FY2020
ActualFY2021
Revised
Forecast

Incr.
Decr.

Electronics & Innovative Products

77.7

90.0

Life Innovation

42.9

Elastomer & Infrastructure Solutions

Sales(¥ billions)Pricing

VolumeOther＋ 12.3+4.5+ 11.4

-

3.6

45.0

＋

2.1

-

4.0

+

6.2

-

0.1

91.9

110.0

＋ 18.1+

6.9+ 13.3-

2.0

Polymer Solutions

109.9

125.0

＋ 15.1+ 29.9- 14.1-

0.6

Others

32.0

15.0- 17.0

-

+

8.1

-

25.1

Total

354.4

385.0

＋ 30.6+ 37.3+ 24.8-31.5*Change in accounting standards for recognition of revenue

Operating Income(¥ billions)

FY2020
ActualFY2021
Revised
Forecast

Incr.
Decr.

Pricing

VolumeCost&
OthersElectronics & Innovative Products

14.2

18.5

＋

4.3

+

4.5

+

6.2

-

6.5

Life Innovation

14.8

14.5

-

0.3

-

4.0

+

5.7

-

2.0

Elastomer & Infrastructure
Solutions

-3.6

-3.5

＋

0.1

+

6.9

+

4.4

- 11.3Polymer Solutions

8.4

8.5

-

0.1

+ 29.9-0.3- 29.5

Others

0.8

2.0

＋

1.2

-

+

1.2

-

Total

34.7

40.0

＋

5.3

+ 37.3+ 16.80.0- 49.424

FY2022 Management Plank)(Reference) Quarterly trends (by segment)
FY2019FY2020

FY2021

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4
Forecast(Net)

Electronics & Innovative
Products

17.3

20.0

18.3

20.0

17.1

19.6

20.0

21.1

21.0

22.8

22.3

23.8

Life Innovation

5.1

9.9

13.7

6.8

5.3

10.9

20.5

6.3

6.0

19.3

10.9

8.8

Elastomer & Infrastructure
Solutions

26.9

27.6

24.9

26.1

19.8

22.0

24.8

25.2

24.6

26.8

26.1

32.5

Polymer Solutions

32.4

33.5

30.5

31.5

25.3

25.1

28.3

31.3

31.8

31.5

29.5

32.3

Others

9.1

10.1

9.2

7.7

8.7

6.5

8.2

8.5

3.5

4.0

4.0

3.6

Total

90.9

101.1

96.7

92.1

76.2

84.1

101.7

92.4

86.7

104.4

92.8

101.0

Sales (¥ billions)

FY2019FY2020

FY2021

Operating Income
Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4
Forecast(Net)

Electronics & Innovative
Products

2.6

3.3

2.8

4.0

2.8

3.8

3.6

4.0

4.4

4.8

4.6

4.7

Life Innovation

0.1

2.4

3.8

0.6

0.0

2.4

11.4

1.0

0.3

10.4

1.2

2.6

Elastomer & Infrastructure
Solutions

2.1

1.0

0.0

0.8

0.3

-0.4

-1.9

-1.5

0.1

-0.0

-1.2

-2.3

Polymer Solutions

1.8

2.0

1.5

1.9

1.3

1.6

2.5

3.0

2.6

1.8

1.9

2.2

Others

0.2

-0.0

0.5

0.3

0.0

0.3

0.3

0.2

0.4

0.5

0.4

0.7

Total

6.7

8.6

8.7

7.6

4.4

7.7

16.0

6.7

7.7

17.5

7.0

7.8

(¥ billions)25

Reorganization of company-wide research and new businessdevelopment structure (Effective April 1, 2022)✓✓

Establishment of New Business Development
Restructuring ofCorporate Research and Development（Present）

Research & Development Dept.／Intellectual Property Dept.
／Automotive Materials & Solutions Dept.
／New Business Planning & Development Dept.

Denka Innovation Center
Administration Dept.
Advanced Technologies Research Institute
Advanced Materials Research Dept.
Specialty Ceramics Research Dept.
Advanced Polymer Research Dept.
Materials Characterization DeptLife Innovation Research InstituteDiagnostics Research Dept.
Vaccine & Biomedicine Dept.
Infrastructure & Solutions Development
Research Institute
Solutions Development Dept
Polymer & Processing Technology InstituteElectronics & Innovative ProductsLife Innovation
Elastomer & Infrastructure Solutions
Polymer Solutions✓✓

Restructuring of Denka Innovation Center
Reorganization ofresearch department of existing businesses（Since after April 1, 2022）
New Business Development

R&D Management Dept.／Intellectual Property Dept.
／Analysis Technology Research Dept. ／ New Business Creation Dept.
／New Business Incubation Dept.
Denka Innovation Center
Administration Dept.／ Advanced Materials Research Dept.
／ Specialty Ceramics Research Dept.／ Advanced Polymer
Research Dept.／ Vaccine & Biomedicine Dept.／ Diagnostics
Research Dept.／ Infrastructure & Solutions Research Dept.
Electronics & Innovative Products

Ceramics Research Dept.（Omuta Plant）
Electronic Materials Research Dept. （Shibukawa Plant）
Polymer Processing Research （Isesaki Plant）
Battery & Conductive Materials Dept. Polymer Research Dept.（Chiba Plant）

Life Innovation

Vaccine & Diagnostics R&D Dept. （Gosen Site）
Diagnostics Research Dept. （Denka Innovation Center）

Elastomer & Infrastructure Solutions

Cement & Special Cement Additives Research Dept. Organic Materials
Research Dept.（Omi Plant）
Infrastructure & Solutions Research Dept.（Denka Innovation Center）
Ceramics Research Dept.（Omuta Plant）
Polymer Research Dept.（Chiba Plant）
Electronic Materials Research Dept.（Shibukawa Plant）

Polymer Solutions

Polymer Research Dept.（Chiba Plant）
Organic Materials Research Dept. （Omi Plant）
Polymer Processing Research Dept. （Isesaki Plant）
Plastic Processing Dept.（Ofuna Plant）

Strengthening of new business creation and further development of existing businesses
Clarification of responsibility and management system for research

26

Cautionary statement regarding forward-looking information

Target figures in this material are not forecasts of business results.
In addition, any description relating to the future in this material is subject toknown or unknown risks and uncertainties,
although it is base on management's current assumptions and beliefs
in light of the information currently available to it.
Please be cautioned that a number of important factors could cause actual results
to differ significantly from the description in the material.
Such risks and uncertainties include adverse economic conditions, currency
exchange rate fluctuations, adverse legislative and regulatory developments,
delays in new product launch, pricing, and product initiatives of competitors,
the inability of the Company to market existing and new products effectively,interruptions in production, infringements of the company's intellectual property
rights and the adverse outcome of material litigation.

27

Inquiries regarding this material

Corporate Communications Dept,

Denka Co., Ltd.
TEL
ＵＲＬ

03-5290-5511
https://www.denka.co.jp/eng/