New midterm management plan

「DK-One Next」

Copyright©2022 DAIICHI KIGENSO KAGAKU KOGYO CO., LTD. All Right Reserved

1Introduction of the new midterm management plan "DK-One Next”
We introduced a new 10-year midterm management plancalled “DK-One Next” in FY2023.
In order to respond quickly to these trends, we have ended the “DK-One Project”
one year ahead of schedule.

Gas reduction targets of major nations
Carbon Neutrality Target
JapanUSAEU

2050

Prime Minister’sSpeech(Oct. 2020)

2050

Mr. Biden's pledge(Jul. 2020）2050年

Long term strategy(Mar. 2020)

UKChina
ROK

2050

Long term strategy(Mar. 2020)

2060

Speech at the UN(Sep. 2020）

2050

Long term strategy(Dec. 2020)

Sales of vehicles with internal combustion
engines will not reach the outlook expected
before COVID-19.
Million units

100
90
80
70
60
50
4030
20
100

Forecast as of Q2 2021
Forecast as of Q4 2017

Source: Our processing based on METI's website
Source: Our calculations based on LMCA report

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2Management Philosophy・Vision・Midterm Management Policy

Management Philosophy
To pursue a continuous supply of valuable products for society,we need to utilize the hands of individuals who live a fulfilling life.
In order to live a fulfilling life,
we need to create a rewarding workplace – a place where we spend a significant part ofour lives.

VisionGrowing with Rare Elements - Becoming a 100 Year Company

Midterm Management Policy
We remain committed to creating new businesses and tackling the major changes
that are set to occur in the business environment over the next 10 years.

Copyright©2022 DAIICHI KIGENSO KAGAKU KOGYO CO., LTD. All Right Reserved

3Concept of the new midterm management plan "DK-One Next”
Growing with Rare Elements– Becoming a 100 Year Company・Carbon neutrality・Electrification

100Major changes in our business environment

thA solid business foundationthat will allow us to respond to changes

76thDifference in the 100th term!

⑥ Sustainability⑤ Corporate culture④ Organization③ Technology② Profit structure

Decline① New businesses
FY2023.3～
FY2026.3

FY2027.3～
FY2029.3

FY2030.3～
FY2032.3

1st period

2nd period

3rd period
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4

The six pillars to work on
Developing innovative
manufacturing
techniques

Creating new businesses

Continuingorganizational
development practices
that produces results

Implementing measures
for sustainability

Cultivating a Kigensolike corporate culture

Reforming
our profit structure

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5

Business Portfolio Transition
We have identified strategic areas for major investment.
Strategic areas ：Semiconductors/Electronics, Energy, and Healthcare

Strategic areas
Strategic areas

Strategic areas

Automotive
exhaust gas
purifying catalyst

Automotive
exhaust gas
purifying catalyst

Basic areas

Basic areas

Basic areas

FY2022.3

FY2026.3

FY2032.3

Automotive
exhaust gas
purifying catalyst

Copyright©2022 DAIICHI KIGENSO KAGAKU KOGYO CO., LTD. All Right Reserved

6Market Environment and Sales Forecast for Automotive Exhaust Gas
Purifying Catalysts
Million units

120
110
100in demand for precious
1 Increase
metal carriers

2 Increase in catalyst loading

YoY change
from FY2013.3

The volume and number of catalytic converters installed ineach vehicle is expected to increase from 2023 to 2027 due
to stricter environmental regulations.

The amount of precious metals used per automobile isincreasing due to stricter environmental regulations. As
precious metal prices soar, demand for high-performance
carriers and auxiliary catalysts that contribute to reducing
the amount of precious metals used is expected to increase.

200%
180%
160%

90

140%

80

120%

70

100%

6080%

350
4060%
40%

The share of hybrid vehicles among vehicles withinternal combustion engines is expected to increase.

3020%

IC engine only（LHS）*1Hybrid（LHS）*120The company's net sales volume（Forecast）（RHS）
The company's net sales volume（Market equivalent）（RHS）

100

Increase in hybrid vehicles

Rh demand for autocatalyst per vehicle（RHS）*2

2013

2014

2015

2016

2017

2018

-20%

Source *1: Our calculations based on LMCA report*2: Our calculations based on Johnson Matthey, pgm-market-report

Pd demand for autocatalyst per vehicle（RHS）*2

2012

0%

Fig. Market Environment and Our Sales Volume Forecast

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

-40%

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7Market Environment and Initiatives in Strategic Areas
Carbon Neutrality
Energy savings

・Fuel cells
・Water electrolysis
・Hydrogen generation

Population Agingin developed countries and regions

・Dental materials
・Health care

Diversification of functional materials
・We have identified strategic areas for major investment.
・We have formed a new businesses creation team.
・We will fully utilize the network that it has cultivated in our core areas.
・Semiconductors
・Electronics

Advances in IoTsuch as 5G, DX, and smartification

・Secondary batteries

Electrification
including hybrid vehicles
Copyright©2022 DAIICHI KIGENSO KAGAKU KOGYO CO., LTD. All Right Reserved8Key Management Figures and Policies（FY2026.3）
Management Targets

Based on raw material prices and exchange rates
as of September 2021

FY2022.3

Forecasts
as of October 2021

FY2026.3
Targets

Net sales

29.2 billion yen

40.0 billion yen

Operating profit

3.0 billion yen

4.0 billion yen

EBITDA

5.6 billion yen

9.0 billion yen

ROIC

4.9%

6.0% or higher

Cash Flow Plan

To keep the total net investment cash flows and dividends
within operating cash flows for the four-year period

Approach to profit allocation

To hold a basic policy of actively providing return of profits toshareholders while comprehensively consider business results andpromoting investment in strategic fields, and to aim for a shareholder
return ratio of 30%

Breakdown of Sales

40.0 billion yen
9.0

29.2 billion yen
4.1

22.0

17.6

9.0

7.5

FY2022.3
FY2026.3
Strategic areas
Automotive exhaust gas purifying catalysts business
Basic areas

Breakdown of Investments

Creating
new businesses

Others

4.0 billion yen
Developing innovative
manufacturing techniques

2.5 billion yen
Implementing measures
for sustainability

10.0 billion yen
Total

21.5billion yen

FY2023-2026

5.0 billion yen
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9Major Investments （FY2023.3-2026.3)
Breakdown

Creating newbusinesses

Implementing
measures forsustainability
Developing
innovative
manufacturing
techniques
OthersEstimated

Purposes and Initiatives

investment

Increase production and promote innovation in strategic areas
・Supply to the semiconductors/electronics, energy, and healthcare areas
・Opening a new R&D center at Osaka Site and further strengthening R&D system
・State-of-the-art evaluation equipment for new applications and products

Sustainable supply chain and carbon neutrality

billion yen

5.0

・Manufacturing intermediate materials in Vietnam, an ore-producing country
・Environmental friendly process design and facilities
・Reduction of CO2 emissions through reuse of waste heat, etc.

billion yen

Improvement of productivity and operational efficiency
・Fundamental review of production processes to improve production throughput
・Digital transformation (DX) to save manpower and increase productivity
・Strengthen sales, logistics, and production bases
・Renovation of production facilities
・Development of IT infrastructure

10.0

2.5billion yen

4.0

billion yen＊Includes investments in progress
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10Disclaimer for this material
Forecasts and forward-looking statements in this document are based on
currently available information and assumptions about economic conditionsin Japan and other countries, industry trends related to our business, andother factors that may affect our performance.
These factors are subject to a number of uncertainties, including marketconditions, competitive conditions, and the availability of our new products.
Therefore, please be aware that actual results may differ significantly fromthese forecasts.
DAIICHI KIGENSO KAGAKU KOGYO CO., LTD.
4-4-9, Kitahama, Chuo-Ku, Osaka 541-0041, Japan
Corporate Planning Division
TEL: +81-6-6206-3318 (Dial In)
Ｍail： kikaku4082@zr.dkkk.co.jp

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