Inabata & Co., Ltd. Financial Results for the Fiscal Year Ended March 2024
Online Financial Results Briefing - Summary of Q&A Session
Date and Time: Monday, June 3, 2024, 13:00-14:00
Presenter: President Inabata[Information & Electronics Segment]
Q: Could you share your outlook for the business environment of flat panel display (FPD)related products going forward?
A (Inabata): Concerning FPD-related products, we believe that while we have moved out of
the inventory adjustment phase, a full-fledged recovery may still take some time. Also, interms of smartphone replacements, the length of the replacement cycle for small andmedium-sized flat models has grown substantially, and this is one reason why overall
demand is sluggish. Accordingly, we expect the market to remain stagnant for the time
being, and even if it does recover, it will probably be from the summer of 2024 onward.

[Plastics Segment]
Q: Could you share your outlook for naphtha prices and the market environment for plastics
going forward?
A (Inabata): Domestic naphtha prices have been slightly higher, reflecting risks such as therecent situation in the Gaza Strip in the Middle East. In addition, given factors such as theweak yen, we expect prices to exceed 75,000 yen per kl in Japan. Moreover, labor andother various costs are also rising, but some of these costs still need to be factored into
price revisions, and we expect prices to rise further once they have been factored in. As
I explained earlier, the office automation market environment was particularly sluggish in
the fiscal year ended March 2024 (FY03/24). Still, I believe that this was due to an overrecovery in office demand, which fell sharply after the COVID-19 pandemic, and that thecurrent situation is a backlash against that recovery. Although we have already seen a
gradual recovery, the office-less and paperless trend will likely continue to a certain extent
even after the pandemic. Therefore, I believe that in the long term, the market will probably
decline a bit more. In the short term, we see a recovery compared to last year. In addition,
the office automation industry is very proactive about recycling materials, and we expect

that demand for recycled materials will pick up rapidly.

[Resin compound investment]
Q: What is the location and completion date of your plan to expand production bases in thecompound business during the three years of the new NC2026 medium-term
management plan? In the plastics business, you mentioned that you plan to expand in
India and Mexico, high-growth regions in the automotive field. Do you also plan toestablish a compounding production base in India?
A (Inabata): Regarding the expansion plan for resin compound production bases, we have yetto decide on the specific timing, etc. Still, the expansion will probably take place during
NC2026, as orders in Mexico, where capacity utilization has been increasing, arecurrently strong. In Southeast Asia, the office automation-related business was sluggish
last year and is recovering, but there is still no need to expand production capacity at thisstage. As for India, we have yet to make any definite plans.
In addition, we are preparing to establish a resin compound joint venture with Daicel
Corporation, with plans to set up the company in July 2024. We expect to roll out newtechnologies and production items from the joint venture to each of our compound
production bases in the future.
In the compound business, sales volume was 128,000 tons and sales amounted to about
37 billion yen in FY03/24. We anticipate a slight increase in sales volume to about 135,000
tons and a recovery of sales to about 41 billion yen in FY03/25.

[Business performance]
Q: With regard to the NC2023 medium-term management plan that came to a close, what
factors enabled you to achieve record-high sales and operating profit for the threeconsecutive fiscal years?
A (Inabata): Sales benefited from a tailwind of the continued weakening of the yen during theperiod. There was also a positive impact from newly consolidating subsidiariesS in the
final year of the plan. Other factors included higher-than-expected sales to the automotive
sector in the plastics business, for example. On the other hand, we also had negative
factors such as the weaker-than-expected office automation-related market environment

in the plastics business in the last year of the current fiscal year. In addition, while theFPD market was recovering, utilization at panel manufacturers remained sluggish forconsiderably longer than expected when we prepared the initial plan. Overall, although
there were some unexpected factors in each area, we were able to grow what we needed
to grow steadily.

[New NC2026 medium-term management plan]
Q: What were your intentions in newly presenting a capital allocation plan in NC2026?
A (Inabata): This is because we have received many questions about capital allocation in thepast. For example, in IR interviews, we have often been asked whether the new mediumterm plan will place more emphasis on growth investment or shareholder return, and what
the scale of growth investment will be. Accordingly, we presented the plan in an easy-tounderstand format beforehand. The operating cash flow of about 65.0 billion yen shownin the plan represents the cumulative net income forecast for three fiscal years (roughly
53.5 billion yen) plus the estimated depreciation and amortization for three fiscal years(about 11.5 billion yen).

Q: What are some of the key points of the company-wide growth strategy under NC2026?
A (Inabata): Previously, some have commented that our company ’ s characteristics andadvantages lie in our tendency to grow in a rather organic manner, growing steadily but
not rapidly. However, based on our understanding that organic growth alone is not enoughto ultimately achieve our long-term vision, we included aggressive investment in particular,
among the pillars of our growth strategy in this medium-term plan. This means that, inaddition to organic growth, we want to aggressively make investments, including acquiring
majority stakes in companies, and we have made these types of investments to someextent, even during the NC2023 plan period. We will continue to target investment
opportunities and steadily incorporate these into our operations to accelerate growth.

[Sustainability Mid-term Plan]
Q: You newly unveiled a Sustainability Mid-term Plan. What are some of the critical points ofthe plan?

A (Inabata): We announced our Sustainability Mid-term Plan alongside our financial results
announcement in May 2024. The critical point is that we have set specific KPIs and targets
in line with the materiality that we previously announced. For example, the plan describes
what we must do, such as reducing GHG emissions. Still, at the same time, there areaspects of sustainability where taking action leads to business opportunities. Accordingly,
from the perspective of gaining business opportunities, we have set specific targets,including achieving sales of at least 100 billion yen in environment-related businesses in
FY03/27. In addition, we have also set detailed KPIs and targets for human capital, which
we consider to be the most important capital, and we plan to work on utilizing it.