IR Briefing For Q1
Fiscal Year Ending March 2024

October 2023
Inabata & Co., Ltd.

Topics◼ Sales and operating profit forecast to reach record highs for thethird consecutive fiscal year（億円）

◼ Disclosure of progress in measures toward “Realizing
management
conscious of cost of capital and share price”（億円）◼ Medium-term management plan NC2023: Invest aggressively
Invested in renewable energy-related and food-related fields◼ Selected as a component of FTSE Blossom Japan Index and
JPX Nikkei Index 400 for the first time in August 2023

2

Contents
P.4-

Progress of Medium-Term Management Plan NC2023

P.14- Returning Profits to Shareholders
P.18- Measures to Realize Management Conscious of Costof Capital and Share Prices
P.26- Regarding ESG
P.36- Summary of Financial Results for Q1 FY03/2024 andFull-Year Outlook

P.42- Reference* In this document, Net income = Net income attributable to owners of parent3◼ Progress of Medium-Term Management Plan
NC2023

4

NC2023: Basic Policies◼ Second-stage medium-term management plan on the way
to our long-term vision, IK Vision 2030

MissionPeople come first, based on the spirit of "love ( ai )" and " respect ( kei )," andtogether we strive towards contributing to the development of society.

VisionIK Values

To continually evolve, serving clients and society, through global
operations and meeting their changing needs.
IK Values
Ethics, aspiration, organization, role, symbiosis

IK Vision 2030
IK Vision 2030 (envisioning ourselves around 2030)

Medium-term management plan

Second stage NC2023 (targets for FY03/2024)
First stage NC2020 (concluding March 31, 2021)
5

NC2023: Basic Policies◆Inabata’s aspirations for itself in around 2030
Function: Further enhancing multifaceted capabilities (such as
manufacturing, logistics, and finance) in addition to trading
Scale:

Reach consolidated net sales of ¥1 trillion at an early stage

Overseas business: 70% or more
Portfolio: At least one-third of business from segments other thanInformation & Electronics and Plastics[ Formulated May 2017 ]6

NC2023: Key Initiatives◼ Six key initiatives are as follows
Key Initiatives for NC2023
1.

Further development of core businesses and horizontal
expansion into growth sectors

２.

Multi-faceted approach to markets with potential for future
growth and steady monetization efforts

3.

Intensification of investment targeting future growth

4.

Further improvement of global management information
infrastructure

5.

Continuous review of assets and further improvement of capitaland asset efficiency

6.

Enhancement of human capital utilization efforts
7

Progress in the Second Year of NC2023◼ Sales reached the target (record high), supported in part by higher selling prices and a weak yen.
◼ Operating profit reached the target (record high), with the increase in SG&A expenses offset by sales growth.
◼ Ordinary profit and profit attributable to owners of parent fell short of the targets, due in part to a sharp
increase in interest rates.

◼ ROE reached the target level, and net D/E ratio remained at the target level.

(Billions of yen)

FY03/23 (2ndyear of NC2023)
Targets (B)Difference

735.6

730.0

+5.6

101%

800.0

Operating profit

20.3

19.5

+0.8

104%

20.5

Operating profit margin

2.8％

2.7％

+0.1％

－

2.6%

Ordinary profit

19.1

20.5

-1.4

93％

21.5

Profit attributable to owners ofparent

19.4

20.5

-1.1

95%

22.5

ROE

11.0%

10% or above

Achieved

10% or above

Net debt/equity ratio

0.16x

0.5x or less－

Achieved

0.5x or less

Equity ratio

47.2%

Approximately－

Achieved

Approximately¥135.50¥120.00－－¥120.00

FY03/23
Actual (A)Net sales

Exchange rate (USD/JPY)

40-50%

Note: Net D/E ratio = (interest-bearing debt – cash and deposits) / equity capital

Achievement rate
(A)/(B)

FY03/24
Targets*

40-50%*Released May 2022

8

Progress in the Second Year of NC2023: By Segment◼ Sales and operating profit in Information & Electronics and Life Industry fell
short of targets due to deterioration of the business environment.
◼ Sales and Operating Profit in Chemicals and Plastics surpassed the targets.
(Billions of yen)
FY03/23(2nd year of NC2023)
Targets (B)FY03/23
Actual (A)Segment

OperatingprofitSales

OperatingprofitSales

Difference(A)-(B)

Sales

OperatingprofitInformation &Electronics

238.0

5.2

273.0

6.2

-35.0

-1.0

Chemicals

89.8

2.7

83.0

2.0

+6.8

+0.7

Life Industry

43.6

1.9

47.0

2.3

-3.4

-0.4

Plastics

363.9

10.2

326.8

8.9

+37.1

+1.3

Other

0.1

0.1

0.2

0.1

-0.1

0

Total

735.6

20.3

730.0

19.5

+5.6

+0.8
9

Outlook for the Final Year of NC2023◼ Operating profit is projected to exceed the target, but ordinary profit and profit attributable to ownersof the parent are expected to fall short of the targets due to higher interest expenses on a sharp risein interest rates.
◼ We expect ROE to reach the target, and net D/E ratio to remain at the target level.
FY03/23
ActualFY03/24
Forecast (A)NC2023
FY03/24
Targets (B)*

Difference(Billions of yen)

Difference(A) - (B)

735.6

800.0

+64.4

800.0

-

Operating profit

20.3

21.0

+0.7

20.5

+0.5

Operating profit margin

2.8％

2.6％

-0.2％

2.6%

-

Ordinary profit

19.1

20.0

+0.9

21.5

-1.5

Profit attributable to ownersof parent

19.4

21.0

+1.6

22.5

-1.5

ROE

11.0%

10% orabove-

10% orabove-

Net debt/equity ratio

0.16x

0.5x or less-0.5x or less-

Equity ratio

47.2%

Approximately

Approximately

40-50%-

40-50%-¥135.50¥130.00¥-5.50¥120.00¥+10.00

Net sales

Exchange rate (USD/JPY)

Note: Net D/E ratio = (interest-bearing debt – cash and deposits) / equity capital*Released May 2022

10

Outlook for the Final Year of NC2023: By segment◼ Information & Electronics is expected to miss the targets due to deterioration of thebusiness environment, while Plastics is projected to exceed the targets owing to yen
depreciation and a rise in resin prices.
(Billions of yen)
FY03/23
ActualFY03/24
Forecast (A)Difference

NC2023
FY03/24
Target (B) *Operatingprofit

Sales

+8.0

-0.06

284.0

3.05

+29.2

+0.28

52.0

2.65

+8.4

10.20

382.8

10.00

0.1

0.13

0.2

735.6

20.31

800.0

OperatingprofitSales

Operatingprofit

6.30

-38.0

-1.10

119.0

2.60

-

+0.45

+0.72

52.0

2.50

-

+0.15

+18.9

-0.20

344.8

9.00

+38.0

+1.00

0.10

+0.1

-0.03

0.2

0.10

-

-

21.00

+64.4

+0.69

800.0

20.50

-

+0.50

OperatingprofitSegment

Sales

Information &Electronics

238.0

5.26

246.0

5.20

Chemicals

89.8

2.77

119.0

Life Industry

43.6

1.93

Plastics

363.9

Other
Total

Sales

Sales

OperatingprofitDifference(A)-(B)*Released May 2022

11

NC2023 Investment Status◼ From FY03/24 onward, we plan to accelerate investment in renewable energy-related
fields in Information & Electronics and compound-related fields in Plastics with an eye tofuture growth.

(Billions of yen)

Growthinvestment

FY03/22
Actual1.20

FY03/23
ActualMajor investments
in FY03/23

NC2023cumulative
results

2.86

Information &Electronics:¥0.34 billion for biomass power generation¥0.43 billion for investments in electronic
components companies
Chemicals:¥0.91 billion for acquisition of Maruishi
Chemical Trading (made a subsidiary)
Plastics:¥0.25 billion for facilities (related tocompound)¥0.27 billion for facilities (related to inflation
molding)

4.07

Plastics segment:¥0.36 billion for facilities (related tocompound)¥0.41 billion for facilities (related to inflation
molding)

4.78

Fixed
investment

2.01

2.78

Total

3.21

5.64

* Digitalization-related investments are included in Fixed investment.

8.85
12

NC2023: Continuous Review of Assets and Further Improvement of Capitaland Asset Efficiency◼ We made greater-than-expected progress in reducing strategic shareholdings,
owing in part to a drop in market prices.
Policy for reducing strategic shareholdings• Reduce the balance of strategic shareholdings at the end of March 2021 by half during the three years of NC2023• Further reduce strategic shareholdings in the medium to long term, curtailing the balance of strategic shareholdings at theend of March 2021 by about 80% by the end of March 2027.

⇒ Funds raised from the sale are in principle allocated to shareholder returns and growth investments.
(Billions of yen)

Strategic shareholdings

Sales value of strategic shareholdings

60.0
600

400
40.0

50% reduction
80% reduction

200
20.0

0

EndEndEndEndFY03/21 FY03/22 FY03/23 FY03/24
NC2023

EndFY03/27

FY03/18¥9,017 million

FY03/19¥5,298 million

FY03/20¥3,026 million

FY03/21¥2,944 million

FY03/22¥9,367 million

FY03/23¥10,076 million*Only includes listed stocks in Japan*The balance of strategic shareholdings in the graph only includes listed stocks in Japan.
*The balance of strategic shareholdings was calculated using share prices at the end of each term.

13◼ Returning Profits to Shareholders

14

NC2023

Returning Profits to Shareholders

Basic Policy on Shareholder Return
During NC2023◼ Progressive dividends
We will ensure that dividend per share does not decline year on year by continually
increasing our dividends◼ Target total return ratio of around 50%
However, in fiscal years when the Company has recorded a considerable amount ofcash inflows from the sale of strategically held shares, instead of being strictly boundedby the target total return ratio, the Company will return profits to shareholders after
comprehensive consideration of various factors including future funding needs, financial
position, stock price, and market conditions.

Note: Total return ratio (%) = (dividend amount + amount of treasury shares acquired) / consolidated net income x 100

15

NC2023

Returning Profits to Shareholders◼ In FY03/24, we plan to pay a dividend per share of ¥120 (interim ¥55, year-end ¥65)

Annual dividends per share and indicatorsof shareholder return
Dividend

Dividend payout ratio

110

115

120

Total return ratio

63
53

48
(Yen)

36

46.5%

34.8%

31.1%

62.2%

40

40

30.0%

36.4%

23.7%

25.6%

FY03/16

FY03/1722.7%

FY03/18

FY03/19

27.6%

28.1%

27.5%

29.4%

33.5%

31.9%

FY03/20

FY03/21

FY03/22

FY03/23

FY03/24(Forecast)

NC2023

FY03/22

FY03/23

FY03/24*2

-

7,499

2,635

2,229

300

-

3,085

1,035

765

(Thousandsof shares）

-

-

2,700

3,685

1,200

(Thousandsof shares）

FY03/16

FY03/17

FY03/18

FY03/19

FY03/20

Acquisition
amount

707

891

679

936

425

No. of shares
Acquired

600

600

400

600

No. of sharescancelled

-

-

-

-

*1 Share buyback based on Board resolution*2 Amounts current as of July 31, 2023

Approx.
50%
target31.9%

NC2020Treasury
Shares*1

47.1%

FY03/21(Millions of yen)

16

Earnings per Share(Yen)

376.14374.23400.00343.31300.00229.13211.36188.82200.00137.20151.91 156.25
109.92100.000.00
FY03/15

FY03/16

FY03/17

FY03/18

FY03/19

FY03/20

FY03/21

FY03/22

FY03/23

FY03/24（actual）（actual）（actual）（actual）（actual）（actual）（actual）（actual）（actual）（forecast）

17◼ Measures to Realize Management
Conscious of Cost of Capital and Share Prices

18

Current Status: Cost of Capital vs. Return on Capital◼ Since the start of NC2023, ROE rose to the level exceeding the cost of equity.
◼ If we can maintain ROE at 10% or higher, the target set forth in NC2023, we can keep
ROE above the cost of equity.

15.0%

ROE and cost of equity
12.8%
ROE

Cost of equity
11.0%

10.0%

8.5%
7.4%

7.1%

8.6%

* Assumptions for calculating cost of equity
Based on CAPM, (The figures below are as ofthe end of March 2023.)

5.0%• β 1.25• Market risk premium 6.5%
• Risk-free interest rate 0.32%

4.7%* Recorded allowance for doubtful accounts
at the Europe business in FY03/18

0.0%
FY03/17

FY03/18

FY03/19

FY03/20
NC2020FY03/21

FY03/22

FY03/23

NC202319

Current Status: Share Price and the Market’s Valuation of the Company◼ Share prices steadily increased, reflecting earnings growth and a substantial improvement in shareholder
returns.
◼ PBR was below 1x, but rose mainly on the back of an increase in ROE (0.97x as of September 29, 2023*).
◼ PER largely remained unchanged at a low level, suggesting that investors have low expectations for our
future profit growth.
*Obtained by dividing the closing price on September 29, 2023 by
BPS at the end of FY03/23

Stock price and market capitalization
ROE

Market cap (hundred millions of yen)

12.8%

Stock price (yen)

1,357
861

1,616

1,505

1,026

955

11.0%

2,687
1,180
749

1,658
1,052

2,063
1,254

8.5%

7.1%
1,534

7.4%

8.6%

4.7%

FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 FY03/23
FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 FY03/23

PBR

PBR of 1x

1.20
1.00

0.40

TSE Prime
wholesaleaverage:
8.7x*

0.84
0.70

0.80
0.60

PER

0.57

14.7

0.67
0.56

0.49

0.57

FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 FY03/23*Recorded allowance for doubtful accounts at the Europe business in FY03/18*All figures are as of the end of the fiscal year

8.7

7.1

6.2

7.2

5.5

7.8

FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 FY03/23*As of March 31, 2023

20

Policies/Targets, and Timeline◼ At a Board of Directors meeting held in May 2023, we have resolvedon the following policies.

 Policies
Increase the share price so that PBR stays above 1x at all times, assoon as possible, through the following four measures:① Firmly implement growth strategies to drive sustainable growth in businessvalue, and foster expectations for future profit growth② Maintain ROE of 10% or above③ Control and/or curtail the cost of capital, including by utilizing financial
leverages④ Continue buying back shares

21

Specific Measures: Increase Business Value and Foster Growth Expectations◼ In line with key initiatives for NC2023, we have implemented the following measures. We
will strive to generate earnings at an early stage.
Key Initiatives for NC2023

Specific measures underway

1. Further development of core businesses and horizontal
expansion into growth sectors• Focus on the automobile, especially EV, field• Acquisition of Maruishi Chemical Trading (made it asubsidiary)（億円）
2. Multi-faceted approach to markets with potential for future
growth and steady monetization efforts

3. Intensification of investment targeting future growth

5. Continuous review of assets and further improvement of
capital and asset efficiency

6. Enhancement of human capital utilization efforts• Participation in biomass power generation business(Fukuyama, Sakaiminato)• Expansion of sales of products that reduce environmental
load• Investment in semiconductor-related companies• Acquisition of Daigo Tsusho (made it a subsidiary)• Establishment of a US subsidiary that manufactureslithium ion battery-related materials• Reinforcement of Business Planning Office functions• Fundraising for growth investment through the sale ofstrategic shareholdings• Issue of straight bonds• Introduction of a restricted stock incentive plan for theemployee shareholding association• Utilization of employee engagement surveys• Revision of HR systems to promote diversity• Enhancement of training systems to nurture global talent22

Latest investments

Establishment of woody
biomass power plant in
Sakaiminato, Tottori Pref.

• Jointly invested in the construction and operation of a wood-fired
biomass power plant in Sakaiminato, Tottori Pref. with Chubu
Electric Power and others (slated to commence operations in 2026)• Will provide a fuel supply service (imported timber, some domestic
timber) for the business（億円）

Establishment of new Liion battery-relatedmaterials company in theUS

Acquisition of shares in
Daigo Tsusho Co., Ltd.
(made it a subsidiary)• Established a manufacturing base in North America for conductive
carbon nanotube (CNT) dispersions for lithium-ion battery
cathodes in a joint venture with Toyo Ink (slated to commence
operations in 2025)• Aim to expand sales of lithium-ion battery-related materials against
a backdrop of growing demand for automotive batteries in the US• Daigo Tsusho is highly esteemed for its sale of processed unagi(Japanese eel) products through e-commerce sites• Aim to expand earnings of the food business by strengthening food
manufacture and processing functions and acquiring retail-related
know-hows23Specific Measures: Maintain ROE of 10% or above◼ Maintain ROE of 10% or above, largely by expanding profits,enhancing profitability, and continuing to control the cost of equity

 Expand profits and increase GPM• Grow mainstay businesses• Increase the share of earnings accounted for by highly profitable businesses• Make aggressive investments, including in M&A, and generate revenue at an
early stage• Steadily dispose of strategic shareholdings

 Control of equity• Continue flexible share buybacks andcancellations• Maintain a progressive dividend
policyMaintain a total return ratio ofaround 50%

24

Specific Measures: Control and Curtail Cost of Capital◼ By promoting indirect measures in addition to direct measures, reducerisks and information gaps with the market and control and/or curb thecost of capital Direct measures• Utilize debt (diversify funding methods, including the issue of corporate
bonds)• Buyback and cancel own shares Indirect measures• Enhance information disclosure• Actively engage in dialogues with investors (step up efforts to provide
explanation)• Strengthen the Board’s monitoring function to continuously monitor
performance• Be selected as a constituent of many ESG indexes by increasing ESG
scores25

◼ Regarding ESG

26

Corporate Governance Structure
June 2022
Transition to Company with Audit and Supervisory Committee
Transition to monitoring-type Board of Directors where independent
outside directors account for more than half
Directors (excluding audit
and supervisory committee
members)

Directors (audit andsupervisory committee
members)

7 persons

5 personsOutsideRatio of independent
outside directors

58％ ( 7 out of 12)

Outside27

Corporate Governance (1)Experience and expected roles of directors
Inabata, a global business operator, has in place a corporate governance structure that supports the Board of
Directors' decision making and enables the Company to fulfill supervisory functions over executive officers'
business execution.

Name

Katsutaro Inabata

Globalmanagement

Business strategy/
Industry knowledge
Electronics/
Energy●Toyohiro Akao

Materials/
Chemicals

Food/
Life

Legal/
risk
FinanceandmanageHR/laboraccountment/Internal
ing
control●●●

Director●●

Takashi Shigemori

●

●

●

Director (Audit
and Supervisory
Committee
Member)●Kenji Hamashima*

●

●

●

●

●
●

●

Satoshi Tamai*
Minoru Sanari*

●

●

●

Osamu Chonan*●●●

Takako Hagiwara*

●

ESG

●

Kenichi Yokota
Masahiro Sugiyama●

IT/digital

●
●

●
●

Tomokazu Fujisawa*●

Noriya Yokota*

●

●
●

●

●

●

(Note) * denotes an independent outside director.
For an explanation of each skill, please refer to p.16-18 of the Notice of Convocation of the June 2023 Ordinary
General Meeting of Shareholders

28

Corporate Governance (2)The following initiatives were implemented to enhance governance

1. Established the Nomination and Remuneration Committee(voluntary) (FY03/2016)
Ensures objectivity, fairness and transparency with respect to theappointment and dismissal of senior management, nomination ofcandidates for directors and executive officers, and determination of
director remuneration• Chairperson : Lead independent outside director• Current membership: 1 internal director and 3 independent outside
directors• Held 10 times during FY 03/2023

2. Evaluating the board of directors (Since FY03/2016)
Objective - To enhance corporate value by increasing theeffectiveness and transparency of the board of directors
29Corporate Governance (3)3. Officer Remuneration
From FY03/2024, adopted ROE and share price as indicators for performance-based
remuneration■Remuneration for directors who are not Audit and Supervisory
Committee members*

1) Fixed remuneration
2) Performance-based remuneration:- Profit before taxes (excluding gains on the sale of a portion of strategically held shares)- Return on invested capital (ROIC and ROE)
- Share price- ESG scores from several outside evaluation agencies (FTSE Russell and MSCI)
Performance-based compensation is calculated by multiplying each of the above coefficients.
3) Board Benefit Trust (BBT)Introduced in June 2018 to enhance motivation to contribute to medium- to long-term
expansion in corporate value

Ratio of performance-based remuneration to fixed remuneration in FY03/2023
Performance-based remuneration
58.2％

Fixed remuneration
41.8%

Target: six directors
Total: 335mn yen■Remuneration for directors who are Audit and Supervisory Committee

members
1) Fixed remuneration only
* Remuneration for directors who are not executive directors is fixed remuneration only.

30

Sustainability Initiatives◼ We accelerated sustainability initiatives in FY03/2023.
October 2021

Established Sustainability Committee
Chaired by the Company president; all directors, including thosefrom outside the Company, participate in the Committee as amember or observer

November 2021

Formulated the Inabata Group Sustainability Basic Policy andthe Code of Conduct

March 2022

Formulated Inabata Group Human Rights Policy

April 2022

Signed UN Global Compact (UNGC)

June 2022

Announced “2050 Carbon Neutrality Declaration”
Defined materiality issues
Began disclosures in accordance with TCFD recommendations

August 2022

Selected as a component of the FTSE Blossom Japan Sector Relative
Index

March 2023

Certified as a Health & Productivity Management Outstanding
Organization 2023

April 2023

Endorsed the recommendations of TCFD

August 2023

Selected as a component of the FTSE Blossom Japan Index
31

Defining Materiality Issues
June 2022
Established materiality for sustainable growth
Contributing to a decarbonized and circular society, sustainable use ofnatural capita

Creating
Sustainable
Value

Contributing to safety, security, and well-being
Providing value through resilience in procurement and supply functions

Strengthening
Foundation for
Business
Continuity

Respecting human rights in the spirit of love (ai) and respect (kei) andgrowing together with local communities
Fostering and strengthening the human capital driving the value creation
Enhancing governance and risk management32

Products that reduce environmental load: Sales by field◼ Sales of eco-friendly (i.e., environmental load-reducing) products steadily expanded as we
strengthened measures targeting the Energy & Power and Resources & Environment fields.
◼ From FY03/24 onward, we will focus on expanding sales of eco-friendly and recycled resins.
(Billions of yen)
Sales

Field

Main contents

FY03/22(actual)

FY03/23(actual)

FY03/24(forecast)

Energy & Power

Renewable energy-related, batteryrelated, etc.

13.4

17.5

27.4

Resources &Environment

Sustainable raw materials, recycling,water-related

4.2

7.5

9.9

Materials & Chemicals

Low carbon materials, reduction ofenvironmental pollutants, etc.

0.7

1.5

4.2

Environmental
certifications

Certified products of FSC, PEFC, MSC,
ASC, etc.

0.3

0.3

0.9

18.7

26.9

42.6

Total** Simple aggregate value

Forest Stewardship Council: FSC certification ensures that products come from responsibly managed forests and recycled resources.
Marine Stewardship Council: MSC certification ensures that marine products obtained through sustainable fishing.
Aquaculture Stewardship Council: ASC certification ensures that marine products produced through sustainable farming.

33

From FY03/23, some product categories have been reclassified (solar cell and EV battery materials were moved from Materials & Chemicals to Energy & Power). FY03/22
sales figures have been retroactively adjusted to reflect this change.

Fostering and Strengthening Human Capital
Our strengths are “human resources” and “information”
Identifying issues through engagement surveys to increase HR capabilities, the source of value
creation✓

In HR systems and training, which were issues in FY2021, further enhanced internal recruitment, career development
support system, and training for managers, and introduced elective training programs open to employees of all positions
FY03/2022

FY03/2023

FY03/2024

1,400(587/813)

1,697（606/1,091）

1,901（652/1,249）

Number of
employees surveyed

Total (Inabata & Co., Ltd. / Main overseas trading companies)

Response rate

Total

49％

73％

72％

【Engagement】
I am satisfied with the work I am doing at Inabata now

70％

73％

76％

【Relationship with superiors 】
I have the necessary collaboration with my supervisor at work

75％

80％

80％

【Organizational culture】
When a problem occurs in the course of my duties, my supervisor
and the people around me provide appropriate support

83％

85％

83％

【Corporate philosophy】
I can relate to Inabata’s philosophy, vision and management
policies, and I want to participate in achieving them

70％

73％

73％

【Human resources system and benefits】
Inabata’s salary standards are satisfactory, compared to othercompanies in the same industry

59％

55％

57％

【Human resources system and training】
Inabata supports employee training to improve their skills

41％

48％

54％

【WLB (work-life balance)】
Overtime is kept to a level that is acceptable for me

64％

69％

75％

Main items**Note: The percentage of respondents who chose either (5) Strongly agree or (4) Agree on a five-point Likert scale.

34

Fostering and Strengthening Human Capital
Institutional improvements
1. Diversity and Inclusion
Diverse workstyles✓ Established remote work and work-from-home systems to accommodate flexible
workstyles (for all employees)

Promoting participation by women✓ Messages from top management communicated through internal
website and newsletters✓ Conducted briefing meetings on changes of positions andinterviews with female employees✓ Expanded work-from-home systems and support in balancing workwith caring for children and seniors, or with treatments for personal
injuries or illnesses

Video message from the
President, posted on theinternal website

Supporting participation by seniors✓ Extended retirement age to 65, established a senior employment contract system and areemployment contract system for employees over 65, and conducted career training
and skills development for employees in their 40s and 50s.

2. Introduced restricted stock units for employee stock ownership plan
35

Summary of Financial Results forQ1 FY03/2024 and Full-Year Outlook

36

Consolidated Results Review－Q1 FY03/2024
Net sales:¥184.5 billion+0.3% YoY

Despite contributions from newly consolidated subsidiaries (through M&A) anda weak yen, net sales were flat YoY due to sales declines in Plastics andInformation & Electronics in Asia.

Operating profit:¥5.0 billion-4.9% YoY

Operating profit declined due to higher personnel and other expenses.

Ordinary profit:¥5.3 billion-0.9% YoY

Ordinary profit was down slightly, despite the absence of equity in losses ofaffiliates booked in Q1 FY03/23, as a result of decreases in operating profit
and dividend income, and higher interest expenses.

Profit attributable to¥billion+69.3% YoY
owners of parent:
Bottom-line profit expanded, owing to gains on negative goodwill (gain on
bargain purchase) in connection with newly consolidated subsidiaries through
M&A.

7.7

37

Consolidated Results Review－Q1 FY03/2024(Billions of yen)
YoY change

Forecast
Achievement
announcedrate
May 10, 2023
（A)/(B)(B)

Q1 FY03/23

Q1 FY03/24(A)

Amount

184.0

184.5

+0.4

+0.3%

800.0

23.1%

Operating profit

5.3

5.0

-0.2

-4.9%

21.0

24.2%

Ordinary profit

5.3

5.3

-0.0

-0.9%

20.0

26.7%

Profit attributable toowners of parent

4.5

7.7

+3.1

+69.3%

21.0

36.8%

129.73137.49+7.76

Net sales

Exchange rate
(USD/JPY)%

130.0038

Net Sales by Business Segment◼ Net sales declined in Information & Electronics due to sluggish sales of FPDrelated products.
◼ Net sales grew in Chemicals and Life Industry, owing in part to contributions fromnewly consolidated subsidiaries.

Net Sales(Billions of yen)

Q1
Q1
YoY
FY03/23 FY03/24 change
Information & Electronics
ChemicalsLife Industry
Plastics
Other
Total

60.4 56.9 -5.8%
22.5 27.2 +21.0%
11.3 13.4 +18.1%
89.6 86.8 -3.1%
0.0 0.0 +2.7%
184.0 184.5 +0.3%*Contributions from newly consolidated subsidiaries in Q1 FY03/24 (simple sum):
Chemicals: +¥7.4 billion, Plastics: +¥3.1 billion, Life Industry: +¥2.5 billion

Information &Electronics:
30.8%

Plastics:
47.1%

Life
Industry:
7.3%

Chemicals:
14.8%

39

Operating Profit by Business Segment◼ Profit declined in Information & Electronics, due to higher SG&A expenses and slow sales of FPDrelated products.
◼ Profit was down in Chemicals, due to difficult comparison with strong performance a year ago.
◼ Profit fell sharply in Life Industry, as a result of lower sales and diminished profitability of seafood
products in the US and one-time M&A expenses.
◼ Profit improved in Plastics, as domestic group companies made progress in revising the selling prices ofplastic bags.

Operating profit（Millions of yen）

Q1
Q1
YoY
FY03/23 FY03/24 change
Information & Electronics
ChemicalsLife Industry
Plastics
Other
Total

1,592 1,525 -4.2%
731
709 -3.1%
776
249 -67.8%
2,203 2,552 +15.9%
31
34 +7.8%
5,335 5,071 -4.9%

Other
0.7%
Information &Electronics
30.1%
Plastics
50.3%

Chemicals
14.0%

Life
Industry
4.9%40

Equity Capital, Net Interest-Bearing Debt,
Net Debt/Equity Ratio(Billions of yen)

Equity capital

Net interest-bearing debt

Net debt/equity ratio

200

173.8
150

0.80

187.1

179.4

174.9

145.9

0.60

100

50

0

(Times)

0.40

0.16
23.4

0.06
9.7

0.17

0.16

0.16

29.1

28.4

29.2

0.20

0.00

End-FY03/20 End-FY03/21 End-FY03/22 End-FY03/23 End-June/23

Notes: Equity capital = Net assets – stock acquisition rights – non-controlling interests
41
Net debt/equity ratio = (Short-term loans payable + Long-term loans payable + Bonds payable – cash and deposits) / equity capitalReference42Summary of the Company

About Inabata:
1. Founded in 1890
Founded in Kyoto in 1890 as Inabata Senryoten – animporter of dyestuffs
The business was later expanded, with the focus on
chemicals

Inabata Dye Shop
(Nishijin, Kyoto)

2. A globally expanding, multi-faceted
trading company
Around 60 locations in across 19 countries
Business functions include market development, manufacturing &processing, logistics, finance, etc.
Planning and proposals based on expertise and know-how of products
and markets
43Summary of the Company

3. 4 Business Segments
Operating in 4 segments:Information & Electronics,
Chemicals, Life Industry and Plastics
Life
Industry

6%
Chemicals
Materials for pharmaceuticals
and household products,
agricultural and marine
products

12%
FY 03/2023 Sales Plastics

735.6 billion JPY

50%

Plastic materials,
compounds, various film andsheet products

Information& Electronics

32%
Resin and rubber materials,
materials and additives forpaints, inks, adhesives
Lumber, laminated timber,housing equipment

LCD components, inkjet andtoner materials, LED materials

44Composition of Products and Materials (FY03/2023)
Information & Electronics

Chemicals

Sales ¥238.0 billion

Sales ¥89.8 billion
Dyes andothersOthersEnvironment andenergyAutomobile component
materials

Functional
chemicals

Displays
Semiconductors
and 5G
Construction
materials

Coating materials

Digital printing

Life Industry

Plastics

Sales ¥43.6 billion

Sales ¥363.9 billion

Home products

Pharmaceuticals

Compounding
and Others

Food products
Films and sheets

Materials forautomobiles
OA, electricaland electronic
products

Molding
materials

45

Regional Development
Conducting business globally at about 60 locations in across 19 countries

IK Group’s sales by region

Japan
40.4%

Southeast Asia
26.6%
FY03/2023
Net sales:¥735.6 billion

Northeast Asia
24.6%
Europe2.7%

Americas
5.7%
46Inabata’s Wide Range of Capabilities
Highly specialized people
empowered with cutting-edge information

47

Inabata’s Strengths [Manufacturing and Processing]Our strategy involves expanding our trading business by swiftly grasping withinformation regarding the development of new products and market trends bydrawing on our worldwide processing bases and trading company offices.
Plastics compounds: Formed by adding flame
retardants and other additives to raw plastic

Plastics
manufacturer
ProposalCompounding facility
Information
Collaboration

Component
manufacturer
Information

Product
manufacturer
ProposalInquiries on plastics andcoating materials

Information onmaterials

Tradingcompany office
Expanding tradingbusiness by leveraging ourmanufacturing capabilities
Trading company capabilities

48

Inabata’s Strengths [Plastic Compounding Facilities]
China

Plastics Compound
Business Office (Japan)

12,600 MT/Y•••

VietnamShares information
Coordinates facilities andraw materials
Reduces costs bypurchasing in bulk

42,000 MT/Y

ThailandPhilippines

37,200 MT/Y

19,700 MT/Y
Building and dismantling plants in line with customers’
relocation strategies
Providing consistent service quality everywhere

Malaysia
28,800 MT/Y

Indonesia
33,000 MT/Y

195,600 MT/Y: 7 sites in 7 countries (As of March 31, 2023)

Mexico22,300 MT/Y
49

Sales and Operating Profit in the Manufacturing Sector
Manufacturing and processing businesses account for 10–15% of consolidated
sales and operating profit
Positioned as a means of expanding trading functions

Sales(Billions of yen)

(Millions of yen)

100.0

Operating profit

3,000

74.9

2,335

74.5

2,155

2,000
50.0
1,000

0

0.0

FY03/22

FY03/23

FY03/22

Note: Results for FY03/22 have been converted at the exchange rate for FY03/23 (USD1=JPY135.50).

FY03/2350

Net Sales and Operating Profit(Operating profit:
Billions of yen)

(Net sales: Billions of yen)
1,200.0

Net sales

40.0

Operating profit
1,000.0

1,000.0(Forecast)

30.0

800.0
800.0
680.9
561.1

600.0

572.1 577.0 586.6

621.1 634.7

469.0 464.4 479.9

14.0

410.7

12.6

400.0

10.9 10.7
7.9

200.0

7.6

600.3

577.5 20.0

735.6
20.3

21.0
20.0

14.9
13.2

11.3
10.0

7.7
5.9

5.5

0.0

0.0
Around 2030
IK Vision 2030
NC2016

NC2020

NC202351

Overseas Sales and Operating Profit(Operating profit:
Billions of yen)

(Net sales: Billions of yen)800

Net sales

Operating profit
18

600

13.3

14

12.0

10
400

6.9
6.1
4.9

4.2
3.3
200

3.6

3.7

3.5

2.3

1.6
150.5

170.9

185.0

159.3

3.9

284.3

294.0

5.1

5.8

7.9
7.3

340.6

305.4 312.9

327.7

316.3

400.4

438.6

6
308.5

2.0
211.6
186.5

2

186.7

(0.7)

152.2

110.2

0

-2
FY03/05FY03/06FY03/07FY03/08FY03/09FY03/10FY03/11FY03/12FY03/13FY03/14FY03/15FY03/16FY03/17FY03/18FY03/19FY03/20FY03/21FY03/22FY03/23

JPY per 104.2
USD

118.0

119.1

114.1

91.0

92.1

81.4

77.7

79.8

100.1

109.7

120.1

108.3

NC2016

110.8

110.9

108.7 106.1

NC2020

112.4

135.5

Around2030(IK Vision 2030)

NC202352

Sales by Segment(Billions of yen)

Information & Electronics

1,200.0

ChemicalsLife Industry

Plastics

Other

1,000.0
1,000.0(Forecast)

800.0
800.0

735.6
621.1

634.7
0.1

0.1

600.0
286.9

300.0

680.9
600.3

270.3

0.1

0.1

0.1

577.5
0.1

0.2

382.8
316.2

363.9

248.8

400.0

52.0
38.2
78.6

43.6

42.3
76.7

39.0
77.5

36.9
74.1

37.3
66.6

214.9

217.9

218.6

224.5

247.7

238.0

246.0

FY03/18

FY03/19

FY03/20

FY03/21

FY03/22

FY03/23

FY03/24

89.8

119.0

200.0

0.0

NC2020Around 2030
IK Vision 2030

NC202353

Operating Profit by Segment(Billions of yen)

Information & Electronics

ChemicalsLife Industry

Plastics

Other

27.50
(Forecast)

22.50

17.50

14.0
0.13
12.50

0.12

0.13

8.67

10.20

14.9
13.2

0.13

21.0
0.10

10.00

0.13

6.34

6.23

0.12
5.54

2.50
1.92
0.41
(2.04)

-2.50

20.3

5.63

5.9
7.50

20.0

1.31
1.42

1.16
1.20

4.81

4.48

2.61
1.56
1.32

2.20

6.32

6.42

1.93

2.65

2.77

3.05

5.26

5.20

FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 FY03/23 FY03/24
NC2020Around 2030
IK Vision 2030

NC202354

Trends in Cash Flow(billions of yen)
30

Operating CF

Real Operating CF*

Investment CF

20
100
FY 3/12FY 3/13

FY 3/14

FY 3/15FY 3/16

FY 3/17

FY 3/18

FY 3/19

FY 3/20

FY 3/21FY 3/22

FY 3/23-10-20(millions of yen)
FY 3/12 FY 3/13 FY 3/14 FY 3/15 FY 3/16 FY 3/17 FY 3/18 FY 3/19 FY 3/20 FY 3/21 FY 3/22 FY 3/23
Operating CF-15,534 19,400-764
8,354 11,866
1,840
5,960 12,510 10,690 17,613 -11,448
9,915
Change in WC-20,357
3,414 -15,244 -11,179
5,821 -9,367 -2,249
7,071
70-1154 -35,050 -12,244
Real Operating CF* 4,823 15,986 14,480 19,533
6,045 11,207
8,209
5,439 10,620 18,767 23,602 22,159
Investment CF-1,629277 -5,467 -3,044
-161
4,504
5,086
743
-525
-423
5,446
8,278
* Cash flows associated with operating activities – Cash flows associated with change in working capital
Working capital = Trade receivables + Inventory – Trade payables

55

Key Initiatives for NC2023

1. Further development of core businesses and horizontal
expansion into growth sectors
Segment
Information &Electronics

Plastics

Key Initiatives•••

Enrich LCD and OLED businesses within the Chinese market
Focus on FPDs for the new generation and peripheral components
Concentrate on the currently expanding business related to industrial inkjet
printers•

Take advantage of global expansion in the plastic compounds business andother operations and achieve business expansion, particularly in theautomotive sector

56

Key Initiatives for NC2023

2. Multi-faceted approach to markets with potential for future
growth and steady monetization efforts
Segment

Key Initiatives

Information &Electronics
Plastics
Chemicals••

Expand our lineup of environmental impact-reducing products
Conduct multifaceted rollout of initiatives supporting business in the newenergy sector, 5G-related business, and business associated with
automotive applications and mobilityLife industry（Food and
agriculture）•

Accelerate upstream and downstream expansion through wide-ranging
investment and other initiatives

Life industry(Life science)•Strengthen focus on the regenerative medicine sector and other markets
with growth potential

57

Key Initiatives for NC2023
3. Intensification of investment targeting future growth◼ We will consider investing in the following sectors and fields to achieve
expansion in the trading business.
Segment
Information &Electronics
Life industry

Key Initiatives•

Batteries and other elements of renewable energy•

Upstream and downstream domains associated with food products andagriculture (especially processing functions)Regenerative medicine and other growth areas (venture investment, etc.)••

Plastics
Chemicals•

Pursue manufacturing functions with the aim of achieving enrichment in theautomotive sector
Automation and labor saving in manufacturing divisions for compounds, etc.

•

Mobility sector

58Key Initiatives for NC2023
4. Further improvement of global management
information infrastructure
Key Initiatives••

Embrace new technological trends and promote further digitalization (digital transformation
initiatives)
Establish a global management information infrastructure that will support security
enhancement, business continuity planning, and new workstyles

59Key Initiatives for NC2023
5. Continuous review of assets and further improvement of
capital and asset efficiency
Key Initiatives•••

Reduce the balance of strategic shareholdings at the end of March 2021 by half during thethree years of NC2023
Further reduce strategic shareholdings in the medium to long term, cutting the balance ofstrategic shareholdings at the end of March 2021 by about 80% by the end of March 2027
The policy is to allocate the funds obtained from the sale of shares held as strategic
shareholdings not to internal reserves but to shareholder returns and investment for future
growth.

60

Key Initiatives for NC2023

6. Enhancement of human capital utilization efforts

Key Initiatives••

Further implement systemic enhancements aimed at supporting global human resource
development and increasing diversity
Strengthen initiatives targeting employee engagement and new workstyle reforms

61Corporate Governance
1. Evaluating the board of directors
Objective - To enhance corporate value by increasing the effectivenessand transparency of the board of directors■FY03/21
Conducted third-party evaluation of all directors and Audit & Supervisory Board
members using surveys and individual interviews■ FY03/22
Performed a self-evaluation using a survey format■ FY03/23
Performed a self-evaluation using a survey format⇒ In April 2023, disclosed summary of evaluation and measures going forward

62

Corporate Governance
2. Evaluating the Board of Directors
FY03/2023（self-evaluation）
Summary of evaluation

・ The operating status of the Board received high marks overall
・ Open and lively discussions were confirmed
・ Outside directors contributed
・ The Nomination and Remuneration Committee and the Audit & Supervisory Board were properly
operated
・ There was sufficient reporting on the status of dialogues with investors and shareholders

Improvements based on issues raised in self-evaluations in FY03/2022

・Discussions on succession planning and sustainability-related issues
・Provision of sufficient information by the Nomination and Remuneration Committee to the Board
・Communication among outside directors, which had been insufficient due to the impact of COVID-19
・Further improvements in communicating information to the capital market

Issues to be addressed in the future

・Further discussions on longer-term management policy and succession plans for CEO and outside
directors
・ Provision of sufficient information by the Nomination and Remuneration Committee to the Board of
Directors and communication between them・ Further improvements in communication among outside directors
・ Further improvements in communicating information to the capital market
63Trends in Share Price
Inabata’s Share Price for the past 10 years
JPY/share

64Trends in Share Price
Inabata’s share price performance vs. TOPIX for the past 10 years(09/2014=100)

INABATA65

 IR queries should be directed to:
IR Department
Financial Management Office

Inabata & Co., Ltd.
E-mail inabata-ir@inabata.com (Contact: Ms. Ryoko Mitsui) A Cautionary Note Regarding Future Estimates
The data and future predictions contained in this document are based on information available and judgments
applicable at the time of the document’s release. Consequently, the data and future forecasts contained herein
may include elements that are subject to change, and the reader should be aware that this document and its
contents are no guarantee of future performance.
 Re:Numerical Format
Units of ‘billion’, ‘hundred million’ and ‘million’ JPY in this document use figures that have been rounded down.
Consequently, there may be some discrepancy between individual values and total values, or values showingchanges between sets of data.