Summary of Financial Results Briefing for Q1 Fiscal 2023
August 3, 2023
Asahi Kasei Corporation
Participants
Toshiyasu Horie
CFO
Motomichi Kishino
Senior General Manager, Corporate Accounting & FinanceYozo Sato
Senior Managing Executive, Corporate Accounting & FinanceKatsura Tanaka
Senior General Manager, Planning & Coordination, Environmental Solutions SBU
Takahiro Onodera
General Manager, Separator Planning & Strategy, Environmental Solutions SBU
Tsuguo Moriwaki
Senior General Manager, Planning & Coordination, Mobility & Industrial SBU
Hiroyuki Igarashi
Senior General Manager, Planning & Coordination, Life Innovation SBU
Yuta Kume
General Manager, Accounting & Control Dept., Asahi Kasei Homes Corp.
Masayuki Takahashi
General Manager, Business Strategy & Planning, Asahi Kasei Pharma Corp.
Tomoo Otsubo
General Manager, Investor Relations

Presentation
P. 2 Focus of Q1 2023 results and H1 2023 forecast
Horie: In Q1 2023, both sales and operating income declined compared to the same period last year.
The decline in operating income was due to the delayed recovery of demand and falling market prices
in Material, and the impact of acquisitions in Medical in Health Care. However, we are largely inline with our initial forecast for FY 2023 announced in May.
For H1 2023, we expect a year-on-year decrease in operating income under the assumptionthat the business environment will remain challenging in Material. On the other hand, theperformance of Homes and Health Care is anticipated to exceed the initial forecast. We recognizethat accelerating business portfolio transformation in Material is a major challenge.
Regarding shareholder returns, there is no change from the initial forecast, and the interim
dividend is expected to be 18 yen per share.
P. 4

Q1 2023 consolidated financial results
Net sales for Q1 totaled 650.7 billion yen, down slightly less than 3% year-on-year.
Operating income was 21.8 billion yen, down 56% year-on-year. Net income attributable to ownersof the parent was 9.6 billion yen, down 68% year-on-year.
P. 5

Q1 2023 results by segment
1Operating income in Health Care declined by 5.3 billion yen year-on-year. This was due tothe effect of the consolidation of Bionova and an increase in SG&A expenses in the Health Carebusiness category.
Operating income of Homes declined by 1.9 billion yen. The profit margin deteriorated
due to higher material prices in order-built homes, and leveling off of the lumber prices in the North
American business, where we were able to maintain high selling prices despite declining lumber
prices in the same period of the previous year.
Material posted a sharp decline in operating income of 19.1 billion yen. In the
petrochemical-related business, decrease in sales volume due to slow recovery of demand in China
and inventory valuation loss resulted in the decreased operating income. In Life Innovation, sales
volume also declined due to a slowdown in demand in some areas.
P. 6

Statements of income
Non-operating income decreased by 2.6 billion yen year-on-year, mainly due to a
deterioration in net equity in earnings of affiliates from a gain of 1.6 billion yen to a loss of 0.3 billion
yen, centered on the deteriorated performance of PTT Asahi Chemical Company Limited.
P. 7

Extraordinary income and loss
Extraordinary items amounted to a loss of 2.4 billion yen, a 0.5 billion yen deteriorationfrom the same period last year. Although there were some changes in the individual items, no majordifferences were seen overall, so I will not provide a detailed explanation.
P. 8

Balance sheets
Total assets increased by 151.2 billion yen from the end of March 2023. Both current assets
and fixed assets increased, with a slight increase in inventories under current assets. In liabilities,
noncurrent liabilities increased by 60.0 billion yen. In net assets, accumulated other comprehensive
income increased by approximately 100 billion yen, due to an increase in foreign currency translation
adjustment as a result of the weaker yen.
D/E ratio rose by 0.03 to 0.59.
P. 9

Cash flows
Operating cash flow was a net cash inflow of 30.2 billion yen, an improvement of 70.3
billion yen year-on-year. Investment cash flow saw a decrease in cash outflow, and as a result, free
cash flow improved by 97.3 billion yen year-on-year. Inventories increased in FY 2022, and we areworking to reduce them in FY 2023. Since the effects are not yet fully realized, we will continue ourefforts to improve operating cash flow. Cash and cash equivalents increased by 56.6 billion yen fromthe end of FY 2022.
P. 11

H1 2023 consolidated operating performance forecast
As for the H1 forecast, net sales are expected to be 1,345.0 billion yen, almost unchanged
from the same period last year. On the other hand, operating income is expected to be 24.2 billion
yen in Q2, compared to 21.8 billion yen in Q1, for a total of 46.0 billion yen in H1, a 46% decreaseyear-on-year. Net income for H1 is projected at 22.0 billion yen, a decline of 57%.
P. 12

H1 2023 operating performance forecast by segment (year-on-year)
Regarding H1 operating income, Health Care is forecasted to decline by 6.8 billion yen
year-on-year. While Critical Care is expected to see an increase, the Health Care business category
is expected to see a decrease due to negative factors associated with the consolidation of Bionova in
Medical and an increase in SG&A expenses, such as R&D expenses, in Pharmaceuticals.
In Homes, we forecast a ¥2.8 billion decrease year-on-year. Although order-built homes
has been affected by the rising cost of materials, the business has been relatively strong due to thesteady promotion of high value-added products.
Material is expected to decrease by 28.5 billion yen due to a decline in sales volume andother factors, as demand growth is impaired by the slow economic recovery in China.

2

P. 13

H1 2023 operating performance forecast by segment (vs. forecast in May)
H1 operating income was revised upward in Health Care and Homes from the initial
forecast.
On the other hand, Material has been revised downward, and we need to push forward withbusiness portfolio transformation and cost reductions amid a slower-than-expected recovery in the
Chinese economy.
P. 15

Material: Sales and operating income increase/decrease
Now I will explain the situation by segment.
The graph shows the factors of year-on-year increase/decrease in operating income forMaterial. The sales volume factor was a negative 7.5 billion yen. Terms of trade, which is the sumof sales prices, feedstock costs, and foreign exchange factors, were positive, but the others factor
was a negative 14.9 billion yen. The deterioration in the others factor was due to a decline in capacity
utilization against the backdrop of lower shipments, and inventory valuation loss.
P. 16

Material: Overview by Business
The following is an explanation of the trends in operating income for each business inMaterial from Q1 to Q2. Environmental Solutions is expected to deteriorate further, from a loss of
0.7 billion yen to a loss of 3.5 billion yen. This is due in part to special factors such as a maintenanceturnaround in Basic Materials.
Mobility & Industrial is forecasting a decrease in operating income from 3.0 billion yen to
1.6 billion yen. Engineering plastics is expected to remain relatively firm, but car interior materials
is expected to see a decrease with seasonal factors that brought forward shipments to Q1 due to thesummer vacation season in Europe and the U.S.
Life Innovation is expected to increase its operating income from 4.5 billion yen to 5.8
billion yen. In Digital Solutions, Q1 saw a slight struggle due to a decline in demand for mid- to lowend smartphones and other products in China, but we expect shipments to improve in Q2.
P. 18

Homes: Sales and operating income increase/decrease
In Homes, there was no significant change in operating income year-on-year. The 1.5
billion yen decrease in operating income from overseas operations, which is included in the others
factor, is mainly due to fluctuations in lumber prices.
P. 19

Homes: Overview by businessWe expect that order-built homes, real estate, and overseas operations will all see anincrease in operating income through Q2. In order-built homes, there is a seasonal factor that raises
the volume of construction work in Q2, and in real estate, the number of condominiums sold is
expected to increase. In overseas operations, the main factor is that the profit margin will improve inAustralia due to progress in the construction of properties for which higher material costs have been
passed on to selling prices. In general, Homes is on pace to exceed the initial forecast.
P. 22

Health Care: Sales and operating income increase/decrease
As for Health Care, operating income decreased by 5.3 billion yen year-on-year. The main
reason was a negative 5.8 billion yen in the others factor. This was due to the negative impact of theconsolidation of Bionova in Medical and an increase in SG&A expenses in Pharmaceuticals.
P. 23

Health Care: Overview by business
Through Q2, we expect a slight decrease in operating income in the Health Care businesscategory due to an increase in SG&A expenses, although sales are strong.
In Critical Care, we expect an increase in operating income with sales growth ofdefibrillators, despite decreased profit in LifeVest wearable defibrillator that performed well in Q1.
For Health Care as a whole, performance has been exceeding the initial forecast.

3

P. 28Overseas Sales
Overseas sales in Q1 were 54% of the total, up from the same period last year. While sales
in Asia decreased from 21% to 18%, the portion in the U.S. and Europe increased. Within Asia, theportion in China decreased from 9.4% to 9.0%. The increase in the U.S. reflects solid performance
especially in Health Care and the consolidation of the Focus Companies in the North American
operation of the Homes business category.
We have not revised the full-year forecast at this time. The H1 operating income forecast
has been revised slightly downward from 51.5 billion yen to 46.0 billion yen, but we plan to closely
examine the H2 forecast. We will proceed with cost reductions and business portfolio transformation
based on the assumption that the recovery of demand in China will be slow.
Questions and Answers
Questioner 1: I would like to ask about business portfolio transformation. I think the target area isMaterial in particular, but what specific measures will you take to accelerate the transformation?
Horie: At the April management briefing, we reported on our intention to move forward withstructural transformation in the petrochemical chain-related business. We are now in the process of
formulating concrete action plans. We are not yet at the stage of making an announcement, but weare working urgently to implement it. We are advancing discussions including the perspective ofwhether or not we are the best owner, and some businesses could be sold. In some cases we arehaving negotiations, and in some cases we are in the process of developing overall plans.
Questioner 1: Do you have any figures that you can show us, such as how much ROE will improveas a result of the business transformation?
Horie: What we are particularly focusing on is improving our balance sheets. We would like toreduce our assets somewhat and prevent them from continuing to increase. This is also related towhat amount of invested capital will be required for our growth businesses, so we need more time toannounce specifics.
Questioner 2: I would like to ask about Homes. In order-built homes, orders received in Q1 werequite weak. Q2 is expected to increase compared to the same period last year, but how confident are
you about it?
Kume: Orders received in Q1 fell sharply, by 16% from the same period last year. The mostsignificant factor was a large drop in April due to the particularly high orders in April last year. Yearon-year variance has been improving since May, with positive 11% in June, and we expect therecovery to continue in July. The forecast for Q2 orders is positive 6% year-on-year, but due to thelarge decrease in Q1, the forecast for H1 as a whole is negative 5%.
Questioner 2: Orders for unit homes, which account for a large percentage of total orders, havebeen decreasing, but Q2 orders are expected to recover considerably and exceed 100 billion yen for
the first time in a long time. Do you have a high degree of certainty, including a recovery in unit
homes?
Kume: Although the number of buildings of orders for unit homes is declining, there is still room
to expand with the strategy of larger and higher value-added products in regional cities, etc., and wehave launched new products in the higher price range. While the products targeting the mid- to highend segment have been driving orders mainly in the Tokyo metropolitan area, we expect orders forunit homes to recover by promoting the higher value-added strategy in regional cities as well.

4Questioner 2: I would like to ask about your overseas business in the Homes business category.
You are forecasting sales decrease and operating income increase from Q1 to Q2. Is this due to an
improvement in the product mix in Australia? Also, is it correct to assume that the improvement of
performance in the overseas business continue in H2 as the lumber prices have leveled off?
Kume: In the overseas business, both Australia and North America are expected to remain strong
from H1 to H2. However, in North America, we are closely monitoring the situation of high interest
rates, and we conservatively forecast a slight decrease in net sales. Operating income is expected toincrease due to an improvement in the profit margin, as construction work on properties in Australia,
for which prices were raised in response to increased material costs, progresses in Q2.
The number of construction starts in North America improved from Q1 to Q2, and is
expected to remain steady through H2.
Questioner 2: The North American business is in a very difficult situation, as you can infer fromthe market prices of vinyl chloride resins. What is the basis for your view of improvement while
there is no sign that interest rates will come down?
Kume: Although there are concerns that mortgage rates will remain high, actual demand for homes
in Arizona and Nevada, where we operate, is firm. Demand is strong, with a large population inflow
and a continuing shortage of existing homes, and we expect construction starts to recover.
Questioner 3: With regard to Health Care, you have revised upward your H1 operating income
forecast by 1.1 billion yen from the previous forecast. Please explain the factors behind this and thelatest situation. I am looking at page 24 of the presentation material, and what are the factors behindthe downward revision of sales in Medical? Also, the operating income forecast for Critical Care has
been revised upward by about 30%. Is this because the parts procurement difficulty is being resolved
faster than expected?
Otsubo: The downward revision to net sales in Medical is due to the fact that Bionova, a CDMO
acquired in FY 2022, has been affected by the difficulty of biotech venture companies in raisingfunds. Although orders have been received, they have not been executed and sales have not beenrecorded as expected. In addition, shipments of Planova virus removal filters have been lower thaninitially expected, as some customers are adjusting their inventories, which had increased due to
COVID-19.
The upward revision to operating income in Critical Care is due to a better-than-expected
improvement in parts procurement difficulties for defibrillators, etc., which have continued since FY
2022. In particular, shipments of AEDs, automated external defibrillators, have been strong. In
addition, sales of Itamar, which deals in diagnostic devices for sleep apnea, acquired in FY 2021, area little higher than initially expected.
Questioner 3: Looking at the sales of main pharmaceuticals on page 25 of the presentation materials,
Teribone appears to be slightly sluggish. Is there an impact from a competitor’s new drug?
Takahashi: There are two types of formulation for Teribone: autoinjectors and the conventional
lyophilized formulation. Sales of the conventional formulation declined in Q1 year-on-year due tothe launch of a generic product in September 2022, although we have been able to defend against it
better than expected. Autoinjectors, on the other hand, are steadily growing in sales volume, butsomewhat slower than initially forecasted. We believe this is because we have concentrated ourresources on defending the conventional formulation against the generic product, which resulted ininsufficient promotion of autoinjectors. We plan to shift resources to autoinjectors and increase
shipments in H2.
We don’t believe that we are particularly affected at this stage by the new drug from thecompetitor.

5

Questioner 3: You mentioned that orders for LifeVest are recovering, but what is the status of orders
for defibrillators for professional use, for which sales were weak in H2 2022? Also, are orders for
AEDs continuing to be strong?
Otsubo: Weak orders for defibrillators for professional use are still having an impact, andshipments declined slightly from Q4 to Q1. We are watching closely to see if orders will recover in
Q2 and H2. However, we originally expected AEDs to drive the defibrillators business in FY 2023,
and we are doing better than expected in this respect.
As for LifeVest, revenue tends to vary from quarter to quarter. In Q1, revenue was firm
year-on-year due to an improvement in reimbursement conditions, but there was no volume growth
due to a shortage of marketing personnel. Now, however, we have nearly sufficient personnel, andexpect to improve orders and increase revenue in H2.
Questioner 4: With regard to Material, I would like to know the Q1 results and Q2 forecast foracrylonitrile (AN) market prices and spreads, as well as the utilization rate.
In addition, regarding the shipments of LIB separators, your initial assumption was toincrease them by about 50% in FY 2023 year-on-year, but how are the Q1 results and H1 forecast?
Also, the downward revision of the H1 forecast for Digital Solutions is significant. Is thismainly due to the slump in electronic components and materials for smartphones that was explained
earlier?
Tanaka: I will answer regarding AN. The utilization rate continues to be around 70% due to weak
demand. The same level is expected to continue in Q2 for inventory reduction. Regarding market
prices and spreads, in Q1, $1,339/ton for AN and $834/ton for propylene, for a spread of $505/ton.
In Q2, we are assuming slight deterioration: $1,150/ton for AN and $700/ton for propylene, for a
spread of $450/ton. Shipments will increase slightly from Q1 to Q2, but demand remains weak.
Onodera: The initial assumption for the LIB separator shipments was that demand for bothconsumer electronics applications and automotive applications would recover in FY 2023 and thatthey would grow by about 50% year-on-year. Q1 growth was in the single-digit percent year-on-year,
and Q2 growth is expected to be 10–20% year-on-year. We are now closely scrutinizing the full-year
shipments forecast, paying particular attention to economic trends in China.
Igarashi: In Digital Solutions, as you pointed out, the deterioration in Q1 was mainly due tosmartphones, with middle- to low-end smartphones in particular being affected by the Chinese
economy. Both electronic components and electronic materials were affected by the weaksmartphone and server-related markets. Electronic components were also affected by the subsidingof COVID-19-related demand for power tools and other products. In addition to lower shipments
and the resulting deterioration in capacity utilization, inventory valuation loss exacerbated theoperating income decrease.
Questioner 5: In Environmental Solutions, with respect to businesses other than Basic Materials,
what is the background behind the year-on-year operating income increase in Q1 being smaller thanthe decrease in amortization of goodwill associated with the impairment on Polypore? Also, what are
the price trends and the supply-demand balance for LIB separators? What is the reason for yoursluggish shipments while major battery manufacturers' sales seem to have increased significantly
year-on-year?
Onodera: Q1 results for the separator business show lower sales and higher operating income yearon-year, but lower operating income excluding the effect of lower amortization of goodwill, etc.
Shipments of LIB separators for automotive applications improved from the same period last year,
when Russia’s invasion of Ukraine and other factors impacted sales, but those for consumer
electronics applications declined due to the economic downturn in China. In addition, there was an
impact of lower capacity utilization and decline in selling prices due to the usual price revisions.

6

Questioner 6: Regarding Mobility & Industrial, you explained the seasonality of car interiormaterials as one reason for the decrease in operating income from Q1 to Q2, but sales are expected
to increase over the same period. Is that due to the difference in product mix?
Also, what were the reasons for the Q1 year-on-year decline in operating income for
Comfort Life of Life Innovation?
Moriwaki: In Mobility & Industrial, although sales of car interior materials are expected to decline
from Q1 to Q2, sales of engineering plastics are expected to increase. In addition to the operating
income decrease due to lower sales of car interior materials, we plan a maintenance turnaround andexpect inventory effects in nylon intermediates, while performance coating materials is expected tohave decreased sales in China and lower market prices and lower spreads for general-purpose gradesin Asia. There was also a nonrecurring factor that contributed in Q1. These factors add up to theforecast of sales increase and operating income decrease.
Igarashi: In Comfort Life, the decline in shipments was the main reason for the year-on-year
decrease in operating income in Q1. After the Bemberg cupro fiber plant fire in April 2022, we wereable to meet demand in Q1 last year through sales of inventories, but production is currently not
sufficient to meet demand. Shipments of several other products also declined due to the economic
slowdown. In addition, there is also an impact of higher depreciation and other expenses for products
for which capacity was increased in FY 2022.
Questioner 6: With regard to Comfort Life, do you expect that operating income in Q2 will notreach the level of the same period last year?
Igarashi: We see it that way. However, due to the recovery of the Chinese market and the increasein production of Bemberg, we are expecting higher operating income than in Q1.
Questioner 7: Regarding Envarsus XR, sales were strong in Q1, but the past trends seem to varyfrom quarter to quarter. What are the reasons for sales not continually increasing? Also, do you expect
sales to increase from Q1 to Q2?
Otsubo: Q1 sales of Envarsus XR grew more than expected, up 32% year-on-year. Q2, on the other
hand, is expected to fall slightly from Q1. This is due to seasonal factors, such as a tendency forprescriptions to decline during the U.S. summer vacation season. For H1 as a whole, we expect sales
to grow as expected year-on-year.
Questioner 8: You explained that the growth of CDMO business by Bionova has been slower than
expected. Please tell us about measures to promote synergies and your ideas for mid- to long-termbusiness expansion for Bionova, Itamar, and Respicardia?
Otsubo: Itamar and Respicardia in Critical Care are involved in devices for the diagnosis andtreatment of sleep apnea. Sleep apnea is believed to be interrelated with heart disease, and we believethat synergies can be expected by, for example, introducing these devices to medical institutions that
handle LifeVest.
As for Itamar, it will take a little more time to turn a profit, but sales are growing year-onyear and losses are steadily decreasing. We expect to see synergies in the future.
Questioner 8: Regarding Itamar, Respicardia, and Bionova, is the situation that all are growing inline with your assumptions at the time of acquisition and no concerns about impairment losses? Or
are they lagging behind expectations?
Otsubo: We are not aware of any signs of impairment at this time. Bionova was acquired in FY
2022, but the current situation is slightly behind our initial expectations due to fundraising difficulties

7

for U.S. biotech startups. Itamar and Respicardia were acquired in FY 2021. Although the current
situation is slightly behind our initial expectations, they are growing steadily and we expect them togrow in the future.
Questioner 8: With regard to Bionova, some U.S. biotech startups are experiencing serious
difficulties in raising capital. Even taking this into account, you still see no need to consider
impairment risk?
Otsubo: That's the way we see it. We will continue to monitor the business environment closely.
That concludes the financial results briefing. Thank you for your participation.

Note: The forecasts and estimates mentioned in this document are dependent on a variety of assumptions andeconomic conditions. Plans and figures depicting the future do not imply a guarantee of actual outcomes.
Reasonable efforts have been made to ensure the accuracy of the transcription, but no representation or
guarantee is made with respect to the presence of any errors or omissions.

8