65th Business ReportMar. 1, 2022 - Feb. 28, 2023

CEO Interview

Accelerate further development of highvalue-added products that contribute toenvironmental responsiveness andimproved functionality.
While net sales for the 65th reporting period reached a record high in part because of price corrections,earnings declined due to soaring raw material prices, transport and energy costs, and other factors. And
though there are unknowns along the way forward, the current raw material prices have stabilized,
while the price correction time lag issue is gradually being resolved. In our Functional Fluids Division,
the products of which are chieﬂy used in automobiles, sales in Southeast and South Asia and China
have been solid by virtue of the recovered market, while quantities sold in North America and Japan
were on a par with the previous year due to production adjustments by major customers. In the Hot
Melt Adhesive Division, there has proven to be a solid foundation for demand for hygiene products andadhesive applications, with sales increasing signiﬁcantly, especially in India. In the Synthetic
Lubricants Division, quantities were down due to slowing investment in data center applications, whilein the Liquid Parafﬁn & Sulfonates Division, effects were felt from the decline in demand for liquidparafﬁn. In terms of the overseas sales ratio, the ﬁgure was 37.9%, down 0.5 percentage points from theprevious year, but up 2 percentage points in terms of sales volume.
Under the MORESCO Group Sustainability Policy and the new management vision established lastyear, in FY2023 we will improve business value and realize a sustainable society by accelerating thedevelopment and deployment of high-value-added products unique to MORESCO that provide both
environmental beneﬁts and functionality. With efforts already underway toward that objective, otherwork is also in progress. Our efforts to grow the automotive ﬁeld include the development of a systemthat visualizes and quantiﬁes the coating state of small-quantity application release agents, allowing
the simulation of optimal usage conditions. Development of the market for new energy vehicles
includes the promotion of market expansion of release agents suitable for various lightweightmaterials, cutting ﬂuids for aluminum in eAxles and battery cases, lubricants for new processing
methods such as Gigacast and impact molding. And we will steadily advance the development ofmaterials in areas such as the expansion of recycled oil usage that contributes to resource reuse, power
generation materials for organic thin-ﬁlm solar cells (OPV), and sealing materials for perovskite solar
cells. Our overseas strategy will include the assigning of executive ofﬁcers in charge of three areas(China, Southeast/South Asia, and North America) to strengthen our sales, development, andproduction systems, while also actively engaging in M&A and alliances. Regarding the creation of new
business, we will collaborate within the group while also deepening ties of cooperation with
universities and other external institutions to focus on the development of new products capable ofaddressing social issues by fusing existing technologies with new technological developments.
FY2023 marks the ﬁnal year of the current medium-term management plan. During this ﬁscal year of
the plan, we at MORESCO will forge our way to the next stage of growth by recovering our proﬁtability,
strengthening our overseas strategies, and further following through on efforts to addressenvironmental and social issues.

CEO, Representative Director, President

Motohisa Morozumi

New System Launched to Further Strengthen Presence in Overseas Markets

Project for Generating
Petrochemical
Materials from Biomass

We are exploring ways of utilizing biomethane for bothsustainable economic development and better lives.
We are currently conducting joint research with multiple universities. This project involves the synthesisof hydrocarbons from the biomethane produced by livestock manure, and currently laboratory
veriﬁcation is underway for the synthesis of oils for lubricants and polymers for hot melt adhesives fromthese hydrocarbons. Even as a shift away from petroleum and coal is taking place the world over,petrochemicals
are still
indispensable
to all industries.
Since the productionof non-petrochemical
Enhancingautonomyandagility in management
decision-making
and execution
across each market.
materials made from neither petroleum nor coal is a challenge of critical importance for both the

Executive Ofﬁcer
General Manager, Corporate R&D Department

COO, Director, Senior Managing Executive Ofﬁcer

Katsuhito Fukuda
Nobuhiro Sewaki

Companyʼsbusinessand economic
our daily lives,
we are committed
to realizing
to makethis throughout
Signiﬁcantchangesin theenvironment
and market
trendsrobust
took solutions
place in eachcountry
possible. By Thesesetting circumstances
for ourselves milestones
to meet every
years, our andaim implementation
is to establish a of businessthe pandemic.
have necessitatedthethreeformulation
strategies
suitedto regional
characteristics.
prototypeproduction
line forthe consistent generation of lubricants and polymer raw materials fromIn FY2023,
we
integrated
theFunctional
Fluids Divisionʼs Functional Material Business and Metal working
biomethane by the year 2030.
Fluids Business, and at our overseas bases assigned executive ofﬁcers to take charge of three areas: China,
Making newsynthetic
technology
leads
the wayin thebased on prompt
Southeast/SouthAsia, andNorth America.
We will movethat
forwardwith business
operations
decision-making and strengthen our sales, development, and production system in each area to promoteeradevelopmentof decarbonization
will
beofaeachstrengthof will
MORESCO.
businessthat caters to theneedsmarket. We
continue to make contributions as
the MORESCO
Group,
delivering
to
the
world
one-of-a-kindproducts
thatare environmentally friendly.
MORESCOʼs strength in this project is our ability to utilize conventional compounding and synthesis
know-how from the hydrocarbon synthesis stage. Since the generation of a completely new compound
is not the objective, we believe that this project is sufﬁciently achievable as a business. And though the

a

in
Ch
Biomass Plant

production of synthetics requires considerable cost at present, we feel we can make ourselvescompetitive enough for a pair of reasons. It is a given that we will improve the manufacturing process

Strengthening basic
technology
and researchthrough technologicaladvancement,
while we will also reap the beneﬁts of the anticipated scarcity of
petrochemicals
due to changes
in thedevelopment
external environment, such as soaring prices and consolidation ofcapabilities basedon expertisein thepetrochemical materials caused by reﬁnery closures and declining oil production. This research isof environmentallyfriendly products.
intriguing due to the very nature of biomethane, a substance that is generated throughout all facets ofeconomic activity, including even in food debris for disposal. This is why the research holds the
Liu
Yingjin, Executive Ofﬁcer in charge of China

potential to evolve into a technology that creates resources from the very course of our daily lives. Withlaser focus, we are committed to perfecting and disseminating this technology so that it becomes partandthewill
life continue
in the carbon-neutral
era. As new
In China, nearly 30% of new car sales are EVs,a parceltrend ofthatto accelerate.
components for EVs are being developed, should MORESCO fail to keep up with the impending
The process of generating petrochemical materials from biomass
technological evolution and resulting changes in product demand, we have every reason tobelieve that we will lose our place in the market in the blink of aneye. With environmental
LiquidLiquid fertilizer
Lubricating oil(high-quality fertilizer)
regulations in China becoming more and more stringent by the year, the many environmentally
Hydrogen (H2)
Raw material for polymers
Animalwaste
friendly products we offer take on an advantage ‒ products such as small-quantity application
Oxidation
Decomposition/Recombination
release agents, low VOC hot melt adhesives, and non-chlorine, PRTR free cutting ﬂuids.
Hydrocarbon
Fermentation(-CH2-) nGas
Leveraging this strength to ﬁrm up our basic technology andandresearchandenhancingseparation capabilities
Oxidized
substances
Methaneour ability to develop new products, we will meet the needs of the market as it evolves by the day
Biogas plant (i.e., more or
Combustion → Power generation
By-products
to aim to become an entity that Chinaʻs automotive
less manufacturing
a fermentation tank) industry cannot live without.

MORESCO TRADING (ZHEJIANG)
Water (H2CO.,O) LTD.

Biogas

ia
h As
t
u
o
t/S
heas
t
u
o
S

Synthesis Equipment

Food debris for
disposal, sewage
sludge, disposed
foodstuff, etc.

SolidsElectricity for sale orenergy for use in synthesis
Bedding material(livestock bedding straw)

Strengthening production and development systems
to promote business expansion that taps into area
growth.
Keiichi Matsutani, Executive Ofﬁcer in charge of Southeast/South Asia

Nov.

Endorsement of the TCFD Recommendations

Nov.

Exhibited at METALEX in Thailand

Southeast and South Asia are energetic areas where the populations continue to grow. We will tap
into the expansion of the markets by virtue of economic growth to increase the number and variety

MORESCO set up a booth of our own within
MORESCO bothofexpressed
oursell.
supportproducts we
In Thailand, we will increase our production capacity while also strengtheningthat of Yamazen (Thailand) Co., Ltd. to display
for the TCFD therecommendations
andsystem we have inplace as a development center for Southeast and South Asia. In Indonesia, weofferings such as new Die casting lubricant

disclosed the impact
of climate
will increaseourchange
production capacity for hot melt adhesives, and in India we will promote

products. A massive success, the event

localization.
will also
on our business.
This year, We
we planto promote cooperation with distributors and other companies to further

attracted over 80,000 visitors in four days,

to neighboring countries such as Malaysia and Vietnam,
where we do notdisclose aboutexpand
our our
duebusinessdiligence
including Minister of Economy, Trade andDetailshere
currently
South
Asia become a growth Industry,
driver forYasutoshi
MORESCO.
regarding humanrights. have bases, so that Southeast andNishimura.

MORESCO HM&LUB INDIA PRIVATE LIMITEDBecome an
indispensable presencewith our environmentallyfriendly products

China

Boost our overseas bases so that
we are quick to grasp the needs of each area
and thereby achieve the goal of

50% overseas sales ratio

Overseas sales ratio

50%

Japan
(major base)

37.9%
Expand business bytapping into economic
growthProvide solutions byproviding thoroughturnkey services

Southeast/South Asia

North America……

FY2022

rth

No

a

ric

e
Am

Developing business as a partnerthat solves customersʻ problems.
Hidenori Amaki, Executive Ofﬁcer in charge of North America

In an environment of heightened geopolitical risk and concern about social turmoil, ever more strict
regulations continue to be imposed on countries of origin in North America. This inevitably necessitatescompanies to determine how to quickly respond to demand based on the characteristics of the North
American region. We will actively pursue M&A and partnerships with other companies in the industry tofurther strengthen our development, production, and sales system. In the US in particular, the relative
superiority or inferiority of work environments in plants is a driver of employee attrition, while a companyʼscommitment to environmental initiatives can assure job retention. It is therefore essential that we continue
the development of environmentally friendly products that can signiﬁcantly reduce oil consumption andthe disposal of ﬂuids. On top of that, we will continue to develop our business as a partner who provides
solutions to the issues faced by our customers by improving our turnkey services, including new ideas forperipheral equipment such as hydraulic equipment and instantaneous property analysis equipment.
MORESCO USA Inc.

Highlights of the Year

Sept.

Exhibited at Inter DieCast 2022 in India

Sept.

Participated in the MATSURI project

MORESCO participated in an Indian domestic

MORESCO took part as a corporate partner

die-casting exhibition for the ﬁrst time. Ourin MATSURI, a project run by the Chitose

main focus was on promoting die castingGroup to build an “algae-based society.”lubricants, hydraulic ﬂuid, and aluminum

Through the fusion of MORESCO technology

processing oils. We were able to conduct

with microalgae-derived resources, we willbusiness negotiations with over 60 companies,

promote the development of new products

making it a very meaningful opportunity.

that are eco-friendly.

Project for Generating
Petrochemical
Materials from Biomass

We are exploring ways of utilizing biomethane for bothsustainable economic development and better lives.
We are currently conducting joint research with multiple universities. This project involves the synthesisof hydrocarbons from the biomethane produced by livestock manure, and currently laboratory
veriﬁcation is underway for the synthesis of oils for lubricants and polymers for hot melt adhesives fromthese hydrocarbons. Even as a shift away from petroleum and coal is taking place the world over,petrochemicals are still indispensable to all industries. Since the production of non-petrochemicalmaterials made from neither petroleum nor coal is a challenge of critical importance for both theCompanyʼs business and our daily lives, we are committed to realizing robust solutions to make thispossible. By setting for ourselves milestones to meet every three years, our aim is to establish a
prototype production line for the consistent generation of lubricants and polymer raw materials frombiomethane by the year 2030.

Executive Ofﬁcer
General Manager, Corporate R&D Department

Katsuhito Fukuda

Making new synthetic technology that leads the way in theera of decarbonization will be a strength of MORESCO.
MORESCOʼs strength in this project is our ability to utilize conventional compounding and synthesis
know-how from the hydrocarbon synthesis stage. Since the generation of a completely new compound
is not the objective, we believe that this project is sufﬁciently achievable as a business. And though the
production of synthetics requires considerable cost at present, we feel we can make ourselvescompetitive enough for a pair of reasons. It is a given that we will improve the manufacturing process
through technological advancement, while we will also reap the beneﬁts of the anticipated scarcity of
petrochemicals due to changes in the external environment, such as soaring prices and consolidation of
petrochemical materials caused by reﬁnery closures and declining oil production. This research is

Biomass Plant

intriguing due to the very nature of biomethane, a substance that is generated throughout all facets ofeconomic activity, including even in food debris for disposal. This is why the research holds thepotential to evolve into a technology that creates resources from the very course of our daily lives. Withlaser focus, we are committed to perfecting and disseminating this technology so that it becomes partand parcel of the life in the carbon-neutral era.

The process of generating petrochemical materials from biomass
LiquidLiquid fertilizer(high-quality fertilizer)

Hydrogen (H2)Animal waste
Oxidation
Fermentationand separation

Gas

Biogas plant (i.e., more orless a fermentation tank)
Food debris for
disposal, sewage
sludge, disposed
foodstuff, etc.

MethaneDecomposition/Recombination

Oxidized substances
Combustion → Power generation

Bedding material(livestock bedding straw)

Hydrocarbon(-CH2-) n

By-products

BiogasSolidsLubricating oil
Raw material for polymers

Water (H2O)

Electricity for sale orenergy for use in synthesis

Synthesis Equipment

Nov.

Endorsement of the TCFD Recommendations

Nov.

Exhibited at METALEX in Thailand

MORESCO both expressed our support

MORESCO set up a booth of our own withinfor the TCFD recommendations andthat of Yamazen (Thailand) Co., Ltd. to display
offerings such as new Die casting lubricant

disclosed the impact of climate change

products. A massive success, the eventon our business. This year, we plan toattracted over 80,000 visitors in four days,

disclose about our due diligence
regarding human rights.

Details here

including Minister of Economy, Trade andIndustry, Yasutoshi Nishimura.

Major Consolidated Financial Indicators
Net Sales and Operating Proﬁt to Net Sales Ratio
During the ﬁscal year, the Japanese economy transitioned into a

Net Sales(Millions of yen)phase of recovery due to factors including revived personaleconomy, European countries and the United States have pivoted

Operating proﬁt to
net sales ratio（％）

30,33330,000 27,064

consumption. With inﬂationary pressures descending on the world

Operating proﬁt to
net sales ratio

Net Sales

12

27,30024,4798

20,000

toward the tightening of monetary policy. Amid this ﬁnancial

5.3

4.7

4

10,000situation, the USD/JPY exchange rate has seen volatile ﬂuctuations.

3.4

Chinaʼs economy has been compromised by disruptions brought on

0

by the strict restrictions of its zero-COVID policy and a resulting

FY2019FY20201.7
FY20210

FY2022rapid spread of the disease in the wake of the termination of thatpolicy.

Ordinary Proﬁt and Ordinary to Total Assets Ratio

Under these circumstances, the MORESCO Group had to adjust sales
prices in response to factors such as the surge in raw material prices,

Ordinary proﬁt(Millions of yen)resulting in net sales of 30,333 million yen (up 11.1% YoY). However,

3,000

Ordinary proﬁt

Ordinary proﬁt to Ordinary proﬁt tototal assets ratio total assets ratio（％）

20

the time lag in transferring the price increases to sales prices led to

2,011

operating proﬁt falling to 523 million yen (down 63.5% YoY) and

1,568

1,500

ordinary proﬁt dipping to 1,046 million yen (down 48.0% YoY).

7.4

5.8

0

FY20193.4

4.2
FY2020

10

1,046

1,030

FY20210

FY2022

Overseas Sales and Overseas Sales Ratio

Annual Dividend per Share and Payout Ratio

Equity and Rate of Return on Equity (ROE)

Overseas sales(Millions of yen)

Annual dividend
per share(Yen/share)

Equity(Millions of yen)

12,00011,492

10,484

9,517

8,000

Overseas sales
ratio
（％）

Overseas sales
Overseas sales ratio

75

50

36.1

35.2

50

38.4

20

25

FY2019FY2020

FY2021

FY2022

0

0

40

40
74.0

120
60.4

61.8

10
0

Payout ratio
（％）

150
40

30

37.9

4,000

Payout ratio

50

40

8,841

Annual dividend per share

FY2020

FY2021

FY202220,00015,00017,962
15,931

Rate of returnon equity（％）

20

18,533

15,89915
10.7

10,000

10

60
30

20.8
FY201990

EquityRate of return on equity

0

5,000

4.9

0

FY20193.4

3.3
FY2020

FY2021

FY202250Segment Information
By Division
Others 6%

By Region
Functional Fluids

US

50%

(of this, Energy Device Materials
accounts for 0.7%)

3%
Japan

Asia (excl. China)

Hot Melt
Adhesives

62%

22%

25%
FY2022
Sales by Division

FY2022
Sales by region

billion yen

billion yen

30.3

30.3

China

13%

Liquid parafﬁne& Sufonates

13%
Synthetic Lubricants6%

Information on Shareholder Beneﬁts
We at MORESCO would like to extend our sincerest thanks to all of our shareholders. In order to increase the attractiveness of this investment
and to encourage more shareholders to maintain ownership over the medium to long term, we have made the following changes to ourshareholder beneﬁts, which are available to those who are shareholders as of February 28, 2023. We hope this clariﬁes the new arrangement.
Shareholder Beneﬁts

Timing of Beneﬁt Delivery
Beneﬁts will be mailed in late May of each year, enclosed with the

Number of shares held and continuous holding period

Shareholder Beneﬁts

300 shares or more and less than
3 years of continuous ownership

QUO Card worth 3,000 yen* There are beneﬁts enclosed in this business report.

300 shares or more and 3 or more
years of continuous holding period

QUO Card worth 4,000 yen(How to conﬁrm the length of time MORESCO shares have been held)

business report.

Shareholders who wish to conﬁrm the holding period of their shares

Beneﬁts are available to shareholders who hold three units (300 shares) or more of the Companyʼs

are asked to contact the following number and request a certiﬁcate ofstock and are listed or recorded in the shareholdersʼ register as of the last day of February every year.

share transfer.

A continuous holding period of three years or longer is contingent on the same shareholder number
being listed or recorded in the shareholdersʼ register as of the last day of February and the last day ofContact information: Osaka Corporate Agency Division, Mitsubishi

August seven or more times consecutively.

UFJ Trust and Banking Corporation

Should a shareholder holding fewer than 300 shares make an additionalpurchase so that their number of shares is 300 shares or more as of the last
day of February, the period in which fewer than 300 shares were held will
also be included in the continuous holding period.

Phone number: 0120-094-777 (toll free)
Hours: Weekdays 9:00-17:00, excluding Saturdays, Sundays, national
holidays, etc.

Company Proﬁle and Stock Information (As of February 28, 2023)■ Company ProﬁleShareholder Memo
■ Fiscal year

■ Situation of Stock

Company name:

MORESCO Corporation

Total number of authorized stocks :20,000,000

Establishment:

October 27, 1958

Total number of stocks outstanding:

9,696,500

Capital:2,118,294,000 yen

Number of shareholders

Number of employees :End of Feb.

15,938(In the case of interim dividends)

381■ Head Ofﬁce and Business Ofﬁces
Head Ofﬁce & R&D Center::

March 1 through the last day of February of the following year
■ Shareholder Fixed Date for Year-end Dividend Receipt

5-5-3, Minatojimaminami-machi,
Chuo-ku, Kobe-city, Hyogo

August 31■ Distribution of Sharesby Shareholder:

Tokyo Branch, Osaka Branch

Sales Ofﬁce:

Nagoya Sales Ofﬁce

Plants:Chiba Plant, Akoh Plant■ Ordinary General Meeting of Shareholders

Foreign corporations, etc.

■ Administrator of shareholder registry and account

1.0％

Treasury stock

4.8％

management institution for special accounts
Mitsubishi UFJ Trust and Banking Corporation

Financial Institutions
Individuals
and others

Stocks outstanding
Total number of stocks

50.5％

9,696,500 stocks

9.9％

CEO, Representative Director, President

Nobuhiro Sewaki

COO, Director, Senior Managing
Executive Ofﬁcer

Yasuo Sakane

CTO, Director, Managing Executive Ofﬁcer

Hirofumi Fujimoto

CFO, Director, Senior Executive Ofﬁcer

Hiroko Fuji

Outside Director

Mikio Honda

Director, Audit and Supervisory

Kazuo Machigaki

Mikio Nakajo

Hidetoshi Nakatsuka

Osaka Corporate Agency Division

30.5％

Telephone: 0120-094-777 (toll free)■ Listed Stock Exchanges
Tokyo Stock Exchange■ Major Shareholders
Name of shareholders
MATSUMURA OIL Co., Ltd.

Number of stocks Investment ratio
1,067,000

11.5%

COSMO OIL LUBRICANTS CO., LTD.

503,000

5.4%

MORESCO Employee Stock Ownership Plan

410,020

4.4%

The Master Trust Bank of Japan, Ltd. (Trust Account)

394,600

4.2%

STARLITE Co., Ltd.

326,000

3.5%

Outside Director, Audit and Supervisory

NIPPON SODA CO., LTD.

323,300

3.5%

Committee Member

Mizuho Bank, Ltd.

250,000

2.7%

Outside Director, Audit and Supervisory

MUFG Bank, Ltd.

250,000

2.7%

Committee Member

Osaka Small and Medium Business Investment & Consultation Co., Ltd.

209,600

2.2%

Shima Trading Co., LTD.

165,000

1.7%

Committee Member

3-6-3 Fushimi-cho, Chuo-ku, Osaka-shi, Osaka 541-8502 Japan

Other corporations

Committee Member

Outside Director, Audit and Supervisory■ Contact information
Mitsubishi UFJ Trust and Banking Corporation■ Directors (As of May 30, 2023)
Motohisa Morozumi

May every year

3.3％

650-0047 Japan
BranchCompanies trading in
ﬁnancial instruments

Method of Public Notice
Public notice will be made electronically.
URL for public notice:https://www.moresco.co.jp/ir/notice.php(In the event of an accident or other unavoidable
circumstances that preclude electronic public notice,
public notice will be given in the Nihon Keizai Shimbun.)

Note: The investment ratio is computed by excluding 468,970 shares of treasury stock.

Caveats◎ Regarding changes of address, purchase requests and any other such procedures, the basic rule is that shareholders are asked to contact the securities company or otherorganization where they opened their account. Note that the administrator of shareholder registry (Mitsubishi UFJ Trust and Banking Corporation) is unable to process
such procedures.
◎ For any procedures regarding shares recorded in special accounts, please contact Mitsubishi UFJ Trust and Banking Corporation, which is the management institution for
special accounts. The Mitsubishi UFJ Trust and Banking Corporation head ofﬁce and branches nationwide will also be able to assist with these procedures.
◎ Dividends that have not yet been received will be paid at the Mitsubishi UFJ Trust and Banking Corporation head ofﬁce and branches.