Results Presentationof FY2022 3Q(The 9 months of the Fiscal year ending March 2023)

Securities code: 4061
Denka Co., Ltd
February 7, 2023

Contents
1

Assumptions: Key Performance Indicators

2

FY2022 3Q Results

3a) Summary(Year on Year)04b) Change Factors

(

“

)

05

c) Graph of Operating Income Change Factors

(

“

)

06

d) By Segment

(

“

)

07

e) Change Factors by Segment

(

“

)

08-11

FY2022 Earnings Forecasta) Summary(vs Forecast as of November, Year on Year)b) Main Reasons for Earnings Forecast Revisions

1314c) Change Factors(vs Forecast as of November)

15d) Graph of Operating Income Change Factors

(

“

)

16

e) By Segment

(

“

)

17

f) Change Factors by Segment

(

“

)

18-21

g) Response Measure Toward FY2023

22-25h) Shareholder Returns(Reference) Forecast (By Segment)(Reference) Quarterly Trends (By Segment)

26(Year on Year)

27
28
1

Assumptions: Key Performance Indicators
FY2021
3Q Cumulative(Apr-Dec)
Actual

Forex
(¥/$)

Japan Naphtha(¥/Kl)FY2022
3Q Cumulative(Apr-Dec)
Actual

111.0

135.7

53,80079,900

FY2021
ActualFY2022
Forecast asof November

FY2022
Revised Forecast

112.1

138.3

134.8

4Q : 115.4

4Q :145.0(announced
January 13)

4Q : 132.0(Jan-Mar)(Jan-Mar)(Jan-Mar)56,80077,80075,900

4Q : 65,800(Jan-Mar)

4Q : 72,800(Jan-Mar)

4Q : 63,900(Jan-Mar)(¥ billions)

Investment

27.8

28.1

35.6

43.0

43.0

Depreciation

17.6

20.2

23.9

26.0

26.0

R&D

10.9

11.3

14.2

15.0

15.0

Interest Bearing
Debt

135.7

178.4

137.0

164.0

164.0

Naphtha prices remained lower than expected, however the yen appreciatedmore than expected2

FY2022 3Q Results

3

FY2022 3Q Resultsa) Summary (Year on Year)(¥ billions)

FY2021
3Q Cumulative(Apr-Dec)
ActualFY2022
3Q Cumulative(Apr-Dec)
Actual(Year on Year)+ 24.8

284.0

308.7

Operating Income

32.2

26.1

Operating Margin

11.3%

8.4%

Ordinary Income

30.1

23.7

-

Net Income
Attributable to
Owners of Parent

22.9

8.8*

- 14.1

Sales

*

-

6.1

- 2.9%

6.4*Extraordinary Losses of -17.0 billion yen due to withdrawal from cement business (cumulative 3Q)*Sale of strategic cross-shareholdings +3.1 billion yen (cumulative 3Q)

Lower profit year on year

4

FY2022 3Q Resultsb) Change Factors (Year on Year)
YoY (¥ billions)308.7 billion+24.8

1. Volume:(See below)-

2. Pricing:(See below)+ 33.526.1 billion

- 6.1

Sales

Operating
Income1. Volume(Plus)(Minus)2. Pricing:

COVID-19 antigen test kits: Increased demand with the 7th and 8th wave of infections
Semiconductor-related, functional resins: Deceleration of market activity in China for
consumer electronics (smartphones, TVs, PCs, home appliances)
Chloroprene rubber: Lower demand for applications in industry, adhesives, automobiles, etc.

8.7

+

11.4

+

33.5

-

37.4

-

13.5

(Includes effect of currency fluctuations +23.7)(Plus)(Minus)Acetylene black: Significant price revision in line with product value
Chloroprene rubber, styrene-related products, etc.: Price revisions in response to higher raw
materials and fuel prices
COVID-19 antigen test kits: Price declines due to reduction in insurance points

3. Variable costdifference:(Includes effect of currency fluctuations -16.1)
Price increase for raw materials, fuel prices, etc.

4. Cost variances:

Increased costs for building a system to increase production and for strengthening sales systems;
styrene monomer plant scheduled for routine repairs in the first half (last performed in FY2018), increasein sales logistics costs, etc.

Profit decrease due to negative cost and variable cost variances,
despite positive volume and selling price variances

5

FY2022 3Q Resultsc) Graph of Operating Income Change Factors (Year on Year)(¥ billions)+ 33.5+ 11.432.2- 37.4(Plus)
COVID19 antigen test kits
(Minus)Consumer electronics related
products(smartphones, TVs,
PCs, home appliances)
Chloroprene rubber

FY2021
3Q Cumulative(Apr-Dec)ActualVolume- 13.5(Includes effect of currency
fluctuations +23.7)(Plus)
Acetylene black
Chloroprene rubber, styrene
related product(Minus)COVID19 antigen test kits

Pricing

26.1(Includes effect of currency
fluctuations -16.1)
Raw material price increase, etc.

Variable cost difference

Increase in costs for systems toincrease production, scheduled
for routine repairs; increase insales logistics costs, etc.

Costs

FY2022
3Q Cumulative(Apr-Dec)Actual

Profit decrease due to negative cost and variable cost variances,
despite positive volume and selling price variances

6

FY2022 3Q Resultsd) By Segment (Year on Year)
Sales

FY2021
FY2022
3Q Cumulative 3Q Cumulative(Apr-Dec)Actual (Apr-Dec)Actual(¥billions)

Incr.
Decr.

VolumePricing

Electronics & Innovative Products

66.2

69.8

+ 3.6

- 8.5

+ 12.1

Life Innovation

36.2

38.8

+ 2.6

+ 21.8- 19.1

Elastomers & Infrastructure
Solutions

77.5

94.5

+17.0

- 4.6

+ 21.6

Polymer Solutions

92.7

93.9

+ 1.2

- 17.7+ 18.9Others

11.4

11.7

+ 0.3

+ 0.3

-

Total

284.0

308.7

+24.8

- 8.7

+ 33.5

Incr.
Decr.

VolumePricing

Cost&
OthersOperating Income(¥ billions)

FY2021
FY2022
3Q Cumulative 3Q Cumulative(Apr-Dec)Actual (Apr-Dec)Actual

Electronics & Innovative Products

13.8

13.8

-

0.0

- 4.0

+ 12.1- 8.2

Life Innovation

11.9

11.5

-

0.4

+ 19.5- 19.1- 0.7

Elastomers & Infrastructure
Solutions

-1.2

- 0.0

+

1.1

- 1.5

+ 21.6- 18.9Polymer Solutions

6.3

-1.1

-

7.4

- 3.5

+ 18.9- 22.8Others

1.3

1.9

+

0.5

+ 0.9

-

- 0.3

Total

32.2

26.1

-

6.1

+ 11.4+ 33.5- 50.9Sharp decline in profit for Polymer Solutions
7

FY2022 3Q Resultse) Electronics & Innovative Products (Year on Year)
Operating Income Variance Analysis(Year on Year)

Operating Income by Quarter-0.0 billion

13.8
4.8

4.4

13.8

4.6

4.9

+12.1

5.6
4.1

(¥ billions)

41
13.8

13.8
4.1

- 8.2
- 4.0

FY2021
1Q
2Q

3Q

4Q

FY2022
1Q
2Q

3Q

Sales Trends and Costs by ProductSpherical alumina• Demand for xEVs has been recovering since July; but demand from consumer electronics (smartphones, PCs,
home appliances) weakened beginning in October, resulting in lower shipments year on year for cumulative 3Q

Fused silica• Weakness in consumer electronics (smartphones, PCs, home appliances) in the first half was offset by a recovery
High-performance filmin automotive applications; but demand from consumer electronics weakened further beginning in October, andshipments fell year on year
Acetylene black• Strong shipments for high-voltage cables continued from the previous year
Shipments for xEV-related products, which began recovering in July last year, were generally level year on year
through 3Q• Sales prices rose sharply due to price revisions in line with product value

Ceramic substrates• Demand from electric railways remained sluggish as in the previous fiscal year
Shipments for xEV-related products, which began recovering in July last year, were generally level year on year
through 3Q

Cost• Increased costs due to rising raw materials and fuel prices (corresponding to product prices), increase in costs for
systems to increase production, cost to strengthen sales systems(silicon nitride, aluminum
nitride)Despite the impact of acetylene black price revisions, demand for consumer electronics(smartphones, PCs, home appliances) weakened, leading to level results year on year

8

FY2022 3Q Resultse) Life Innovation (Year on Year)
Operating Income Variance
Analysis (Year on Year)

Operating Income by Quarter-0.4 billion

11.9(¥ billions)

+19.5

11.5

10.4

6.0
1.2

0.3
FY2021
1Q

2Q

3Q

5.0

3.6

11.9

-19.1

-0.7

11.5

0.5

4Q

FY2022
1Q

2Q

3Q

Sales Trends and Costs by ProductInfluenza vaccine• Shipment increased year on year due to increased production in connection with the new undiluted liquid
plant building, despite a significant decrease in consumption rates for supply volume in the market comparedto the previous year

COVID-19 rapid
antigen test kit• Even in the absence of supply to the Japanese government to the degree of the previous year, shipments weresignificantly higher year on year for test kits in Japan due to the 7th and 8th wave of infections• Selling prices fell sharply due to the reduction of insurance points on December 31, 2021

Other test reagents(Inflammation
markets, etc.)• Despite the trend of increasing demand for testing, shipments were lower year on year due to a decrease indemand for hospital testing as a result of the activity restrictions during China's Zero-COVID policy, as well as
self-restraint after the government’s easing of measures

Despite increased profit for influenza vaccines, overall profit was level year on year due to decrease in profit for COVID-19
antigen test kits (impact of price decline > impact of volume increase)9

FY2022 3Q Resultse) Elastomers & Infrastructure Solutions (Year on Year)
Operating Income Variance
Analysis (Year on Year)

Operating Income by Quarter+1.1 billion-1.2(¥ billions)

+21.6

-0.0
1.5

0.1
-0.0
FY2021
1Q

2Q

-1.2

3Q

-2.3

4Q

-0.2
FY2022
1Q
2Q

-1.3

-1.2

-1.5

-18.9

-0.0

3Q

Sales Trends and Costs by Product•[Customs Statistics] Chloroprene rubber (dry + latex) export unit price
Shipments were lower year on year due to inventory reductions at users in
response to declining demand in industrial, adhesive, automotive, and other（円/kg）(¥/kg)
applications, as well as intensified competition with the products of other800.0
companies
750.0•

Spread improved due to price hikes in response to rising raw materials costs 700.0(additional price increase in September of last year (4th increase))
650.0

Special cement
additives•

Cement•Largely unchanged from last year

600.0

550.0

•

The 2,300 yen/ton price increase is almost complete (as of September 30)
Progress in the 3000 yen/ton price increase has been delayed

500.0

Coal prices soared(FY2021 3Q Cumulative: $153/t ⇒ FY2022 3Q Cumulative: $392/t)

400.0

450.0
2021年
2021

2022年
2022

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

1月
2月
3月
4月
5月
6月
7月
8月
9月
10月
11月
12月
1月
2月
3月
4月
5月
6月
7月
8月
9月
10月
11月

ChloroprenerubberDespite a large increase in cement costs due to a sharp rise in coal prices, overall profit improved due to higher
profits related to chloroprene rubber (impact of price hikes > impact of demand decline)10

FY2022 3Q Resultse) Polymer Solutions (Year on Year)
Operating Income Variance
Analysis (Year on Year)

Operating Income by Quarter

6.3(¥ billions)+18.9-7.4 billion

2.6
1.8

1.9

-1.1

1.6

-0.1

FY2021
1Q

2Q

3Q

4Q

FY2022
1Q

6.3

-0.0

-0.9

2Q

3Q

-3.5

-22.8

-1.1

Sales Trends and Costs by ProductMS resin• In the first half, weak demand for LGP applications for TVs and PC monitors due to the economic slowdown in the
Chinese market was offset by increasing capacity in Singapore to capture replacement demand from competing
materials; however, demand weakened further beginning in 3Q, and shipments fell significantly lower year on year

AS, ABS, transparent • Global economic slowdowns (e.g., home appliances, etc.) led to increased efforts to reduce inventories at users,
resins, etc.
resulting in lower shipments year on year
Food wrapping
sheets andcontainers• Shipment volume was lower than the previous year

Toyokalon• Shipments were lower year on year stemming from continuing weakness in purchasing power in Africa and the U.S.
due to inflation

Cost• Raw materials cost increases (maintained spread due to flexible price revisions)• Styrene monomer plant routine repairs (last performed in FY 2018) during the first half increased sales logistics costs

Price revisions in response to rising raw materials prices implemented to maintain the spread;
however, profit declined significantly due to lower demand caused by economic downturn,as well as an increase in routine repair and logistics costs.

11

FY2022 Earnings Forecast

12

FY2022 Earnings Forecasta) Summary (vs Forecast as of November, Year on Year)FY2022
Revised Forecast(announced
January 13)(vs Forecast as ofNovember)

445.0

410.0

- 35.0384.8+ 25.243.0

33.0- 10.0

40.1

-

9.7%

8.0%

- 1.7%

10.4%- 2.4%

Ordinary Income

39.0

29.0

- 10.036.5-

Net Income
Attributable to
Owners of Parent

18.5

12.0

- 6.5

26.0

- 14.0

FY2022
Forecast as ofNovember(¥ billions)

Sales

Operating Income
Operating Margin

FY2021
Actual(Year on Year)

7.1

7.5

Lower profit compared with forecast as of November
13

FY2022 Earnings Forecastb) Main Reasons for Earnings Forecast Revisions
FY2022 Operating Income Forecast
33.0 billion yen (-10.0 billion yen vs forecast as of November)(1) Electronics & Innovative Products -4.0 billion yen[Volume: -5.2 billion yen]
⇒ Consumer-related products such as high-performance film, fused silica, spherical alumina, etc.
・ Market inventories ballooned due to supply chain disruptions during a period of increased demand
While the disruption has subsided and supply chain companies are more proactive in reducing
inventories, we expect shipments to be lower than actual demand in response to a sharp decline indemand for consumer electronics (smartphones, PCs, home appliances).

(2) Elastomers & Infrastructure Solutions -5.0 billion yen[Volume: -5.2 billion yen]
⇒Chloroprene rubber
・ We expect demand for industrial, adhesive, and automotive applications to decline due to the global
economic slowdown, resulting in inventory reductions at users and intensified competition from theproducts of other companies, including products from China
14

FY2022 Earnings Forecastc) Change Factors (vs Forecast as of November)
Vs. forecast as of November (¥ billions)Sales
1. Volume:

2. Pricing:Operating
Income1. Volume:

2. Pricing:410.0 billion(See below)(See below)

33.0 billion(Minus) Chloroprene rubber: Demand declined sharply due to economic slowdown
Consumer-related products (electronic materials-related and functional resins):
Sharp decline in demand for smartphones, TVs, PCs, and home appliances
Influenza vaccine: Influenza vaccine uptake lower than expected(Plus) COVID-19 antigen test kits: Increased demand with the 8th wave of infections- 35.0- 28.5- 6.5- 10.0- 11.2(Includes effect of currency fluctuations -4.2)(Minus) Styrene-related products: Price revision due to decline in raw materials and fuel prices
Chloroprene rubber: Impact of stronger yen- 6.5

3. Variable costdifference:(Includes effect of currency fluctuations +3.3) Price decrease for raw materials, fuel prices, etc.

+ 5.6

4. Cost variances:

Exhaustive measures to reduce fixed costs (repairs, etc.), SG&A

+ 2.1

Forecast profit decrease, despite positive variable cost variances and cost variances, due tonegative impact of volume and price variances
15

FY2022 Earnings Forecastd) Graph of Operating Income Change Factors (vs Forecast as of November)

43.0(¥ billions)

+5.6

+2.1

33.0

-11.2
-6.5

(Minus)Chloroprene rubber
Consumer-related
products
Influenza vaccine

Forecast as ofNovember(Plus) COVID19 antigen
test kits(Includes effect of
currency fluctuations -4.2)(Minus)Styrene related product
Chloroprene rubber(Includes effect of currency
fluctuations +3.3)
Raw material pricedecrease, etc.

Exhaustive measures toreduce fixed costs, SG&A

VolumePricing

Variable cost difference

Costs

Revised Forecast(announced January 13)

Forecast profit decrease, despite positive variable cost variances and cost variances, due tonegative impact of volume and price variances
16

FY2022 Earnings Forecaste) By Segment (vs Forecast as of November)
Sales(¥billions)

FY2022 Forecast
as of November

FY2022 Revised
Forecast(announced
January 13)

Incr.
Decr.

VolumePricing

Electronics & Innovative Products

105.0

95.0

-10.0

- 9.3

- 0.7

Life Innovation

50.0

50.0

± 0.0

- 0.4

+ 0.4

Elastomers & Infrastructure Solutions

140.0

125.0

-15.0

- 12.4- 2.6

Polymer Solutions

135.0

125.0

-10.0

- 6.3

- 3.7

Others

15.0

15.0

± 0.0

-

-

Total

445.0

410.0

-35.0

- 28.5- 6.5

FY2022 Forecast
as of November

FY2022 Revised
Forecast(announced
January 13)

Incr.
Decr.

VolumePricing

Cost&
OthersOperating Income(¥ billions)Electronics & Innovative Products

21.5

17.5

-

4.0

- 5.2

- 0.7

+ 1.9

Life Innovation

13.0

14.0

+

1.0

+ 0.7

+ 0.4

- 0.2

Elastomers & Infrastructure Solutions

3.5

-1.5

-

5.0

- 5.2

- 2.6

+ 2.7

Polymer Solutions

2.5

1.0

-

1.5

- 1.0

- 3.7

+ 3.2

Others

2.5

2.0

-

0.5

- 0.5

-

- 0.0

Total

43.0

33.0

- 10.0- 11.2

- 6.5

+ 7.7

We expect a significant profit decline for Electronics & Innovative Products,
as well as Elastomers & Infrastructure Solutions

17

FY2022 Earnings Forecastf) Electronics & Innovative Products (vs Forecast as of November)-4.0billion

Operating Income
21.5
18.7
12.2

12.7

FY2018Actual

FY2019Actual17.5

21.5

FY2021
ActualFY2022
Forecast as ofNovember

+1.9
-5.2

14.2

FY2020
Actual(¥ billions)Operating Income Variance Analysis(vs Forecast as of November)

-0.7

17.5

Revised
Forecast

Market Outlook and Sales Trends(Market)

Forecast as of November

Consumer electronics
weakened, and automotiveSemiconductors
related demand could notcompensate

Revised Forecast(announced January 13)
Consumer demand
weakened greater thanour forecast as ofNovemberSales Trends
Fused silica
High-performancefilm
Spherical alumina

xEV

Gradual recovery beginning(No change)in July

Ceramic substrates(silicon nitride, aluminum
nitride)Renewableenergy(High voltagecables)

Continued strong demand(No change)

Acetylene black: We forecast consumer electronics demand toswing downward and be lower than projected: We expect demand for xEVs to be in line with
forecast; however, spherical alumina overall
downside prospect as we project consumer
demand to be lower than forecast: We forecast underperformance due to market
share decline among certain users: We forecast demand for LiBs for consumer use
to decline.

We forecast lower profit due to further weakening in demand for consumer electronics(smartphones, PCs, home appliances)18

FY2022 Earnings Forecastf) Life Innovation ( vs Forecast as of November)Operating Income+1.0 billion
14.8

15.5
13.0

6.3
FY2018Actual

14.0

+0.4

13.0

FY2019ActualFY2020
ActualFY2021
ActualForecast as of November

FY2022
Forecast as ofNovember

-0.2

14.0

Revised
Forecast

Revised Forecast(announced January 13)
・Outbreaks are in line withexpectations

Influenza

+0.7

7.0

Market Outlook and Sales Trends(Market)(¥ billions)Operating Income Variance Analysis(vs Forecast as of November)

We forecast an outbreak to acertain degree

Sales Trends

Influenza vaccine: We expect 10 million vaccines to be manufactured
as planned; however, we project the market
consumption to be lower than expected initially

COVID-19 rapid
antigen test kits

: We expect shipments to increase due to increased
demand in connection with the 8th wave
(Including simultaneous test kits for COVID 19 andinfluenza)

Other test
reagents(Inflammation
markets, etc.): Same as forecast as of November

・Vaccination coverage wasmuch lower than expected
・A year-on-year increase in
numbers

COVID-19

Other test
reagents(Inflammation
markets, etc.)

7th wave (through August)
8th wave (projected)

Greater than projected dueto the 8th wave

Despite a trend toward
increasing demand, in
hospital testing demanddecreased due to the
Shanghai lockdowns

China eased regulations, but
demand for hospital testingremained weak due tobehavioral self-restraint

Despite lower-than-expected influenza vaccine consumption rates, we expect profit to increase in response to higher demand for
COVID-19 antigen test kits in connection with the 8th wave of infections

19

FY2022 Earnings Forecastf) Elastomers & Infrastructure Solutions (vs Forecast as of November))Operating Income-5.0 billion

7.3
3.9

3.5

3.5

-1.5
FY2018Actual(¥ billions)Operating Income Variance Analysis(vs Forecast as of November)

FY2019Actual-3.6

FY2020
Actual-3.5

FY2021
Actual+2.7-5.2
FY2022
Forecast as ofNovember

Revised
Forecast

-1.5

-2.6

Market Outlook and Sales Trends(Market)

ChloroprenerubberSpecial cement
additives

CementForecast as of November

Revised Forecast (announced January 13)

Sales Trends
We expect inventory reductions related to lower demandand intensified competition with the products of othercompanies to reduce volume significantly

Raw materials lower than forecast as ofAugust (coke, etc.)
Demand expected to remain on parwith FY2019

Global economic slowdown will reducedemand in industrial, adhesive, andautomotive applications

Recovery of demand is expected to bedelayed(No change)

Same as forecast as of November

Fuel coal: US$405/ton

Fuel coal: US$396/ton

In negotiations for additional price increase of 3,000
yen/t, but progress delayed

Negative impact due to greater-than-expected strengthof the yen(Forecast as of November: 145 yen/US$ for the 2nd half
→ Revised forecast: 138 yen/US$ for the 2nd half)

We expect profit to decrease sharply due to lower demand for chloroprene rubber
20

FY2022 Earnings Forecastf) Polymer Solutions ( vs Forecast as of November)
8.4
7.1

7.0

(¥ billions)Operating Income Variance Analysis(vs Forecast as of November)Operating Income
7.9-1.5billion

2.5

1.0
FY2018Actual

FY2019ActualFY2020
ActualFY2021
Actual

+3.2

-1.0

2.5
FY2022
Forecast as ofNovember

1.0

-3.7

Revised
Forecast

Market Outlook and Sales Trends
Revised Forecast(announced January 13)(Market)

Forecast as of November

ConsumerElectronics(TVs, PCs, home
appliances, etc.)

We forecast the recovery in demand to be
slower than expected and will begin in
November or later

Recovery of demand is
expected to be delayed

Cosmetics
containers,
Generalmerchandise,
etc.

Economic slowdown in Chinese Market
Assuming recovery in the second half ofthe year

Sales Trends
MS resin: Same as forecast as of November(MS resin manufacturing and sales company hasa December fiscal year end)

Recovery of demand is
expected to be delayed

AS, ABS,transparent
resins, etc.

: Demand for consumer electronics, cosmetics
containers, general merchandise, etc., expected to
be lower than forecast

Food containers

Decrease in demand related tosupermarkets and convenience stores, but
increase in take-out-related demand
Recovery of demand is expected to bedelayedGreater decrease indemand than expected

Food wrapping : Lower than November forecast
sheets andcontainers

Toyokalon

Prolonged decrease in demand due to
inflation in the African and U.S. markets

Greater decrease indemand than expectedToyokalon: Lower than November forecast

Demand recovery has been slower than expected, and we forecast lower profits

21

FY2022 Earnings Forecastg) Response Measures Toward FY2023

Spherical Alumina

Electronics & Innovative Products[Market share: Approximately 50%]・We expect sales volume next year to exceed this year due to rising demand(Application 1) Thermal interface materials for LiB cooling mechanisms(Application 2) Thermal interface materials for On Board Chargers (OBC)

AC Charging

Market Expansion+ Top Share

Increase in battery output, downsizing, and weight reductions⇒ Increase in OBC heat generation and heat generation density
Rapid growth in demand for OBCs with an output range of 6kW-plus= Further growth in demand for spherical alumina(Application 3) Consumer-product related(semiconductor sealants)→ Products for graphics-related semiconductors, highspeed/large-capacity routers and servers, etc.; however,inventory adjustments are currently underway

BMS/
Battery

On Board Charger (OBC)・Transformer installed in EV/PHEV (onetransformer required)・Boosts and regulates power supply voltage(AC current) of an ordinary charger to thebattery voltage (DC current)

22

FY2022 Earnings Forecastg) Response Measures Toward FY2023
Silicon Nitride Powder[Market share: Approximately 50%]

Silicon nitride ball and bearing (concept)

Electronics & Innovative Products

・We expect sales volume next year to exceed this year due to rising demand(Application 1) Heat-dissipating substrates for xEV inverters (Market share: Approximately 90%)
(Application 2) Use in bearing balls for offshore wind power generation(Application 3) Use in bearing balls for EV traction motors

・Demand increased in response to preventing electrical corrosion inconnection with high-output, high-frequency motors, as well as tosupport high speed rotation stemming from miniaturization
・Increased adoption due to price/quality balance compared tocompeting products

Market Expansion+ Share Expansion(Supply structure) Continuously increase in manufacturing capacity ⇒ Supply structure responding to market expansion

Semiconductor-Related Products
・While inventory adjustments are underway due to a decline in consumer demand, we expect to see
demand recover beginning in July

Emitters✓Fused silica: Sealants✓High-performance film: Carrier tape for semiconductors and electronic components✓Elegrip tape: Back grinding tape, dicing tape
✓Emitter: Surface observation application for semiconductor materials and devices (wafer
inspection, mask inspection, etc.) and circuit patterning application in semiconductor
manufacturing lithography processes, etc.

MarketExpansion

Demand for emitters capable of emitting electronic wires only a few micrometers thick due tominiaturization and microminiaturization of semiconductors
23

FY2022 Earnings Forecastg) Response Measures Toward FY2023
DELYTACT (G47Δ)•

A new concept using genetically modified herpes simplex virus type I
to develop the world's first approved oncolytic virus for treating cancer targeting malignant glioma
Enhance supply structure to establish a mass production system in response to strong supply
requests from domestic and overseas customers⇒ Plan to increase supply volume in FY2023

Life Innovation

Influenza Vaccine•

Although we manufactured 10 million vaccines this fiscal year, the low market consumption rate resulted inlower-than-expected sales; however, we expect sales volume next year to exceed this year
✓Due to the change in administrative measures for COVID-19 vaccinations, the impact on influenza vaccines
should decrease during the next fiscal year
⇒ We expect the vaccination status to return to normal✓We made various necessary preparations leading to the start of production this fiscal year, which was thefirst year of operations in the new building
We will be able to accelerate supply to the market by about one month next year, which will be thesecond year of production
Expand market share by increasing shipments during the beginning of the supply period(September-October) when the market is at its peak

Test Reagents (Inflammation Markets)•

With the lifting of China's Zero-COVID policy, we expect demand in the Chinese market to recover over the next
fiscal year; we project sales volume to exceed this fiscal year

24Elastomers & Infrastructure Solutions

FY2022 Earnings Forecastg) Response Measures Toward FY2023
Chloroprene rubber[Market share: Approximately 40%]

Price Maintenance + Demand Recovery•

Raised prices four times since last year. Maintained selling price as the price leader in the market•

Determine demand recovery trends by application and region, and prepare for response during the recovery period
Inventory adjustments in the market should run its course in the first half of the next fiscal year, and demand should
recover beginning in the second half We expect sales volume to exceed this year
Cement•We are planning for spread improvement by ensuring an additional price increase of 3,000 yen/t

Functional Resins✓MS Resin: Demand for LGP applications and other applications began to recover sharply beginning December 2022

Polymer Solutions

We expect sales volume next year to exceed this year
*Singapore MS resin manufacturing and sales company hasa December fiscal year end✓AS, ABS, transparent resins: Demand expected to recover in consumer-related,
cosmetics, and general merchandises for China
Sales volume expected to increase over the next
fiscal year

Polymer Solutions
Operating Income by Quarter
2.6
1.8

1.9

2.1
1.6
-0.1 -0.0 -0.9

FY2021

FY20221Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q✓Costs: We will record about 1.5 billion yen in routine repairs for the styrene monomer plant in FY2022
Next scheduled maintenance is for FY2026, so costs will be lower in FY2023(Forecast)25

FY2022 Earnings Forecasth) Shareholder Returns
FY2018ActualNet Income

Dividends per Share*

FY2019ActualFY2020
ActualFY2022
Forecast(announced
January 13)

FY2021
Actual(¥ billions)

25.0

22.7

22.8

26.0

12.0

(¥/share)

120.0

125.0

125.0

145.0

100.0
Mid-term 70.0
End 30.0

Dividend

10.5

10.8

10.8

12.5

8.6

42%

48%

47%

48%

72%

(¥ billions)

2.1

-

-

-

-

(¥ billions)

12.6

10.8

10.8

12.5

8.6

50%

48%

47%

48%

72%

(¥ billions)Shareholders Return
Stock PurchaseTotal Return
Total Return Ratio
Depreciation(¥ billions)

22.9

22.5

22.9

23.9

26.0

Investment & Lending(¥ billions)

32.8

36.9

42.3

35.6

43.0

ROE

10.3%

9.1%

8.8%

9.4%

(6.2％)

Equity Ratio

51.0%

50.0%

50.8%

51.7%

(50.6%)Net D/E Ratio

0.40

0.42

0.42

0.40

(0.47)

5years Cumulative(2018～2022)

Total
Return Ratio

50.9%

We reduced dividends due to unavoidable circumstances calling for a significant downward revision
We intend to maintain a policy of 50% standard total return ratio for the five-year cumulative period of the
Denka Value-Up management plan (2018-2022)
26

(Reference) Forecast (By Segment) (Year on Year)Sales(¥billions)

FY2021 Actual

FY2022 Revised
Forecast(announced
January 13)

Incr.
Decr.

VolumePricing

Electronics & Innovative Products

90.2

95.0

+ 4.8

- 11.0+ 15.9Life Innovation

46.1

50.0

+ 3.9

+ 20.7- 16.8

Elastomers & Infrastructure
Solutions

106.9

125.0

+ 18.1- 9.2+ 27.4

Polymer Solutions

126.6

125.0

- 1.6

- 24.3+ 22.7

Others

15.1

15.0

- 0.1

- 0.1

-

Total

384.8

410.0

+ 25.2- 24.0+ 49.2

FY2021 Actual

FY2022 Revised
Forecast(announced
January 13)

Incr.
Decr.

VolumePricing

Cost&
OthersOperating Income(¥ billions)Electronics & Innovative Products

18.7

17.5

-

1.2

- 6.6

+ 15.9- 10.4

Life Innovation

15.5

14.0

-

1.5

+ 16.8- 16.8- 1.5

Elastomers & Infrastructure
Solutions

-3.5

-1.5

+

2.0

- 4.0

+ 27.4- 21.4

Polymer Solutions

7.9

1.0

-

6.9

- 3.2

+ 22.7- 26.5

Others

1.5

2.0

+

0.5

+ 1.0

-

- 0.6

Total

40.1

33.0

-

7.1

+ 4.1

+ 49.2- 60.427

(Reference) Quarterly Trends (By Segment)
FY2020Sales

FY2021

FY2022

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q
Forecast(Net)

Electronics & Innovative
Products

17.1

19.6

20.0

21.1

21.0

22.8

22.3

24.0

21.9

25.6

22.3

25.2

Life Innovation

5.3

10.9

20.5

6.3

6.0

19.3

10.9

9.9

6.4

15.5

16.9

11.2

Elastomers &Infrastructure Solutions

19.8

22.0

24.8

25.2

24.6

26.8

26.1

29.3

30.4

32.5

31.6

30.5

Polymer Solutions

25.3

25.1

28.3

31.3

31.8

31.5

29.5

33.9

31.6

32.0

30.3

31.1

Others

8.7

6.5

8.2

8.5

3.5

4.0

4.0

3.7

4.1

2.9

4.7

3.3

Total

76.2

84.1

101.7

92.4

86.7

104.4

92.8

100.9

94.4

108.6

105.8

101.3

(¥billions)Operating Income

FY2020

FY2021

FY2022(¥ billions)

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q
Forecast(Net)

Electronics & Innovative
Products

2.8

3.8

3.6

4.0

4.4

4.8

4.6

4.9

4.1

5.6

4.1

3.7

Life Innovation

0.0

2.4

11.4

1.0

0.3

10.4

1.2

3.6

0.5

6.0

5.0

2.5

Elastomers &Infrastructure Solutions

0.3

-0.4

-1.9

-1.5

0.1

-0.0

-1.2

-2.3

-0.2

1.5

-1.3

-1.5

Polymer Solutions

1.3

1.6

2.5

3.0

2.6

1.8

1.9

1.6

-0.1

-0.0

-0.9

2.1

Others

0.0

0.3

0.3

0.2

0.4

0.5

0.4

0.2

0.6

0.4

0.9

0.1

Total

4.4

7.7

16.0

6.7

7.7

17.5

7.0

7.9

4.9

13.4

7.8

6.9
28

Cautionary statement regarding forward-looking information

業績予想の適切な利用に関する説明（将来に関する記述等についてのご注意）

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 based 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
本資料に掲載されている業績の見通し等の将来に関する記述は、
to differsignificantly from the description in the material.
Such risks and uncertainties include adverse economic conditions, currency
当社が現在入手している情報および合理的であると判断する一定
exchange rate fluctuations, adverse legislative and regulatory developments,
delaysin new product launch, pricing, and product initiatives of competitors,の前提に基づいており、実際の業績等は様々な要因により大きく
the inability of the Company to market existing and new products effectively,interruptionsin production, infringements of the company's intellectual property
異なる可能性があります。
rights and the adverse outcome of material litigation.

29

Inquiries regarding this material

Corporate Communications Dept,
Denka Co., Ltd.
TEL
ＵＲＬ

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