Nissan Chemical Corporation
2Q FY2020 Financial Results Briefing
Presenter: MIYAZAKI Junichi Director, Senior Executive Vice President, CFO
November 12, 2020

Miyazaki: This is Miyazaki. Thank you in advance.
This is page two of the material explaining the highlights of the first half. First, as compared to the same periodof the previous fiscal year, operating income remained unchanged from JPY18 billion for the same period of
the previous fiscal year. Net income was JPY14.5 billion for the same period of the previous fiscal year, andJPY13.9 billion for the current fiscal year, a decrease of JPY600 million. Second, compared with the forecast,
the forecast for operating income was JPY16.1 billion, so the result was JPY1.9 billion above the target. Net
income exceeded the forecast by JPY1.4 billion because the forecast was JPY12.5 billion.

1See page three. This is our forecast for the second half. First of all, as compared to the same period of theprevious fiscal year, operating income is expected to increase by JPY1.7 billion to JPY22.3 billion from JPY20.6
billion of the same period of the previous fiscal year. Net income is expected to be JPY17.5 billion, an increaseof JPY1.2 billion from JPY16.3 billion of the same period of the previous fiscal year. Compared to the previous
forecast in May, operating income is expected to decrease by JPY900 million. Net income of the May forecast
was JPY18.3 billion, and it is expected to be JPY17.5 billion, which is JPY800 million lower than the forecast.

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See page four. This is full year forecast, the sum of the first half and the second half. First, compared to thesame period of the previous fiscal year, operating income for the current fiscal year is expected to increaseby JPY1.7 billion to JPY40.3 billion from the previous fiscal year of JPY38.6 billion. Net income is expected to
be JPY31.4 billion, an increase of JPY600 million from JPY30.8 billion in the same period of the previous fiscal
year.
This is a comparison with the previous forecast of May. The revised operating income forecast is increased by
JPY1 billion and the revised net income forecast by JPY600 million.
Third, about shareholders return. The annual dividend will be JPY98 with an interim dividend of JPY46 and a
year-end dividend of JPY52, an increase of JPY8 from the previous year of JPY90. In addition, since the forecastof May was JPY96, this is increased by JPY2.
Based on this budget, dividend payout ratio is 45.1%. We completed the JPY7 billion share repurchaseprogram in July. The target for the total payout ratio is 75% as promised, but if we take into account only the
JPY7 billion repurchase program, it will be 67.2%.

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See page five. The table shows the results for the first half of the current fiscal year. In the first half of thecurrent fiscal year, we recorded sales of JPY94.5 billion, operating income of JPY18 billion, and net income of
JPY13.9 billion.

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Page six shows the status of each segment. In operating income, Performance Materials and Trading increased
YoY, but Chemicals, Agrochemicals, and Pharmaceuticals decreased. Regarding extraordinary income andlosses, there was a gain on sales of investment securities of JPY1.1 billion in the first half of the current fiscal
year. We sold shares of 11 listed companies. We sold 100% of our shareholdings of seven listed companies
out of these 11.
Concerning shareholders return listed below, the interim dividend was JPY46, an increase of JPY4 from theprevious year.
Then, below, it is a comparison with the forecast of May. Concerning operating income by segment,
Performance Materials, Agrochemicals, and Trading increased and Chemicals and Pharmaceuticals decreased.

5See page seven for full year forecasts. As usual, forecasts for third quarter and fourth quarter are also
disclosed in the second half. The exchange rate is assumed to be JPY105 in the second half as shown on thesecond last row. Regarding foreign exchange risk, in the second half of the year it will be around USD104
million, and this will be the amount by which exports exceed imports on a net basis.

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Our forecast for the second half is on page eight. Operating income is expected to increase YoY, excluding
trading.
Compared to the operating income forecast of May, Performance Materials and Pharmaceuticals are
expected to increase, and Chemicals, Agrochemicals and Trading are to decrease.

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This is followed by full year forecasts on page nine. As highlighted in red, operating income and ordinary
income is expected to reach record high for the seventh consecutive year. Net income is expected to hit arecord high for the eighth consecutive year.
In terms of shareholders return, as I mentioned earlier, the annual dividend is JPY98. We completed the JPY7
billion share repurchase program and cancelled one million shares.

8Please refer to the table of non-operating income and expenses and extraordinary income and loss on page
10 later.

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Then, page 11 is about cash flows. In the first half of FY2020, we had ample cash flows, the same as in thesame period of the previous fiscal year. This year's full year forecast is on the second column from the right.
Free cash flow is JPY25.6 billion, which was JPY19.9 billion last year, so we have more leeway in cash flows.
The balance of cash and deposits at the end of period shown on the bottom is currently expected to be JPY31.1
billion.

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Please refer to the balance sheet on page 12. First of all, about listed shares as shown in the margin, it
increased from JPY20.7 billion in March to JPY23.7 billion in September of 2020. As I mentioned earlier, we
made efforts to reduce cross-shareholdings, but the evaluation difference increased due to the rise in thelevel of stock prices. As a result, here is an increase of JPY3 billion.

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This is followed by sales and operating income by segment. Sales are listed on page 13, followed by operating
income on page 14.

Then, page 15 and after, we provided the table of future growth engines which was presented in May forreference. Figures have not been changed from May. This continues from page 15 to page 21.

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Then, we will report on the status of each segment. This is for Chemicals. On page 23, this is common to all
segments, but on the first page, we have included FY2019 sales, operating income distribution, and recent
financial performance.

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Page 24 shows the flow of main products.

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Page 25 shows the sales trends of the Chemicals Segment. As shown in the note in the margin, FINEOXOCOL,
which sales are approximately JPY1.4 billion or JPY1.5 billion was in FY2020 transferred from Basic Chemicals
to Fine Chemicals. This makes reading some figures of Basic and Fine Chemicals a little complicated.

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Profit overview of Chemicals Segment comes next. There is a table on the top of page 27. We don’t have muchtime, so for each segment, I will explain the results for the first half of FY2020 and the forecast for the second
half of FY2020.

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Please refer to page 28 for the first half of Chemicals. About Fine Chemicals, compared with the first half of
FY2019, sales of TEPIC for general applications declined due to the impact of COVID-19, and sales of TEPIC forelectronic materials for automotive applications were also sluggish due to the slump in the automobile
industry.
Concerning the environmental related products, although exports increased, domestic sales declined in poolsand spas, resulting in a decrease on a net basis. However, for the impact of the transfer of FINEOXOCOL as
mentioned earlier, sales increased, and operating income decreased.
Next, Basic Chemicals. Only sales of high purity sulfuric acid increased, and sales of other major products
declined. In particular, domestic sales of melamine declined due to a decrease in the number of domestic
housing construction. Originally, our policy for export melamine was to reduce volume with an emphasis on
spreads. As for nitric acid products, sales of capacitors and other products are sluggish. In addition, sales of
AdBlue for trucks have been sluggish, resulting in a substantial decline in sales here and a decline in operating
income.
Overall, segment sales were down JPY2.1 billion and operating income was down JPY400 million.
Compared to the forecast of May, as I just mentioned, sales of Fine Chemicals were down, and as a result,profits were also down. Basic Chemicals had the same negative factors as YOY and additional negative factors
for inventory fluctuations, resulting in sales and profits below the forecast. As a result, sales were down JPY2.3
billion and operating income was down JPY1.3 billion, a significant underachievement.
Next is the forecast for the second half on the right. Compared to 2H FY2019, as for Fine Chemicals, sales of
TEPIC for general applications are expected to increase in anticipation of a recovery from the impact of COVID19. We expect a sales of environmental related products increase because export increases and domestic

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increases with capacity expansion for isocyanuric acid. TEPIC for electrical materials are on a flat trend. On
the other hand, there are negative and positive factors, such as an increase in fixed costs and a decrease in
raw material and fuel costs. Accordingly, we expect sales and operating income increases.
Concerning Basic Chemicals, we are seeing an increase in sales of high-purity sulfuric acid and also nitric acidproducts, partly due to the withdrawal of competing manufacturers. On the other hand, about sales decrease,the situation is expected to remain very unchanged from the first half of FY2020. Decrease in sales ofmelamine, AdBlue, et cetera. This will result in sales decrease and operating income increase, which was partly
attributable to lower raw material and fuel prices, as well as positive inventory fluctuations.
As the segment, total sales are expected to be down JPY500 million and operating income to be up JPY300
million.
Compared with the forecasts of May for the second half, in Fine Chemicals, sales are expected to rise in TEPIC
for general applications and environmental related products. Sales of TEPIC for electronic materials are
expected to be below the target. In addition, there are negative factors for inventory fluctuations, but there
are also positive factors for raw materials and fuels. Sales are expected to be below target and profits are also
expected to be below target.
In Basic Chemicals, only high-purity sulfuric acid sales are expected to increase, while sales of other products
are expected to be below target. However, despite lower sales thanks to positive factors in inventory
fluctuations and cheaper raw materials and fuels, we forecast higher profits.
In total, sales are expected to be down JPY1.6 billion and operating income is expected to be down JPY200
million.

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Next is Performance Materials. Its performance trends are shown on page 29 and changes in sales distributionof Display Materials, Semis Materials, and Inorganic are shown on page 30.

Please see page 31. This shows sales growth rate of major products. First of all, about SUNEVER, the results
for the first half are 7% up, which is exactly the same as the initial forecast for FY2020. Looking at a slight
slowdown in the second half of FY2020, we see 3% up for full year, slightly below the target of 4% forecasted
in May.
For Semis Materials in the middle, the initial forecast for the first half of FY2020 was up 15%, but the result of
the first half was 25%, which was well above the forecast. We expected to be 16% up for full year.
On the other hand, for Inorganic Materials at the bottom, at the beginning of FY2020, we had projected a 1%
up in the first half, but this was down 8% due to a general downturn.

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Page 32 shows SUNEVER sales distribution by mode. IPS mode including rubbing and photo are still driving
forces.

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Next, page 33 shows the profit overview of Performance Materials Segment.

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Move on to page 34. I will explain YoY comparison for the first half.
First of all, Display Materials sales and profits increased. Photo IPS sales were extremely strong and grewsignificantly for non-smartphones. For rubbing IPS, sales for non-smartphones, tablets, et cetera, werefavorable, but net sales declined due to a large shift to Photo. Although we have succeeded in expanding sales
of VA, sales have declined due to a significant decrease in production by a customer. Like in the past, TN was
down due to switching to other modes. Fixed costs for Display Materials increased by JPY200 million.
Next, Semis Materials increased in sales and profits. Sales of ARC, other multi-layer materials and newmaterials increased, reflecting the strong performance of the overall market. In addition, its fixed costs
decreased by JPY600 million.
Inorganic Materials sales decreased but profits increased. Although sales of SNOWTEX for general applications
declined due to the impact of COVID-19, sales of semiconductor-related polishing materials increased.
Organo/Monomer Sol sales were down. Oilfield materials sales were down due to the sluggish shale-oil
market. On the other hand, the decrease in fixed costs was also large, at JPY300 million, and as I mentioned
earlier, sales decreased but profits increased.
Overall segment, with a decrease in fixed costs of JPY700 million, the sales increased by JPY3.2 billion and theoperating income increased by JPY2.3 billion.
Compared to the forecast of May, firstly concerning Display Materials, sales were in line with the forecast, but
operating income was above forecast. The major factor behind this is the reduced fixed costs of JPY500 million.
About Semis Materials, both sales and profits were well above target. In addition to strong sales, fixed costs
fell below the target by JPY700 million.

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Sales of Inorganic Materials was below target, but operating income increased thanks to a JPY300 million
lower fixed costs.
As a result, compared to the May forecast, sales were up JPY500 million and operating income was up JPY2
billion.
Next is the outlook for the second half on the right.
For Display Materials, we expect YoY sales increase and profit decrease. Photo IPS continues to perform well,mainly for non-smartphones. On the other hand, the shift from rubbing IPS to Photo IPS continues. As I
mentioned earlier, VA sales decrease because of the production suspension and decrease in our customer
which are occurring ahead of schedule. Fixed costs are also JPY100 million plus due to the completion of the
new facility.
Semis Materials will remain unchanged from the first half, and a further decrease in fixed costs of JPY300
million will be added. Therefore, both sales and profits are expected to increase.
We expect Inorganic Materials sales decrease but profits increase. SNOWTEX sales remain flat, sales ofOrgano/Monomer Sol sales may decrease, and Oilfield materials sales also may decrease. Looking at thedetails, we expect profits to increase as a result of lower sales of low-profit products in general and an increase
sales highly profitable products.
For the segment as a whole, sales will increase by JPY1.1 billion and operating income by JPY1.3 billion.
Compared to the forecast of May as shown on the bottom of page 34, Display Materials and Semis Materials
are expected to generate higher profits and Inorganic Materials are expected to be below target. Comparedto the first half of FY2020, the gap in fixed costs becomes smaller with JPY200 million, but sales are down
JPY800 million, and profit is up JPY500 million.

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Next is Agrochemicals. Page 35 shows the recent financial performance, followed by page 36 for sales YoYchanges in major products.
The results of the first half are shown by product with “above” or “below” remark, and the revised YoY fullyear outlook is listed on the right-hand side.
Fluralaner was expected to be down 9% at the beginning of the year, but now down 11%. ROUNDUP remains
unchanged from the initial forecast. ALTAIR initially was expected up 13% at the beginning of the year, but
now up 16%. We expected GRACIA to be up 33% at the beginning of the year. However, since April, there has
been an extremely low number of pests observed, and flowers are not sold well due to the impact of COVID19. As a result, the growth ratio here was modified to up 10%. QUINTEC shown in the last, we expected up
36%, but modified today up 25%.
The situation of GRACIA is shown on the bottom left. As you can see, the revised figures in November is slightly
lower than the announced forecasted figures in May.

The trend of our main products is shown on page 37

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Next, see page 38 for special remarks on Fluralaner. About the third black bullet point in BRAVECTO, chewable
tablet for dogs, sales of its monthly chews were approved in July 2020 in the US. In addition, sales of spot-on
solution for dogs and cats were approved in August in Japan. For BRAVECTO Plus listed below, we also received
approval in August for the sale in Japan.

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Concerning the Fluralaner situation, as we have seen, the sales decrease more than expected at the beginningof the year. This is because of requests from Merck. Some shipments will be delayed from the fourth quarterto the next fiscal year. As I explained in May, we expect the sales recovery in FY2023 to the level of FY2019.
This has not changed at all, and we expect to recover from the bottom of FY2022 years to FY2023.

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See page 40 for joint venture companies in India. Currently planning their construction proceeds smoothly.

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Profit overview for Agrochemicals is shown on page 41.

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Next, I will explain the situation of the first half listed on page 42.
In the first half of FY2020, ALTAIR, which performance was dramatically improved in the second-generation
product was sold well and increased sales. The addition of new products to the ALTAIR lineup also contributed
to the increase in sales. Export of QUINTEC increased. LEIMAY and export of GRACIA also increased.
On the other hand, the sales decrease of Fluralaner was not as bad as expected at the beginning of the year,
but sales declined significantly due to the inventory adjustments at BRAVECTO. As mentioned earlier,
GRACIA's domestic sales were also decreasing due to the fact that there are fewer pests. Sales of TARGA
declined due to the impact of generics. ROUNDUP was slightly down, ML sales declined slightly, although AL
sales for households rose, but the ROUNDUP total sales declined slightly.
Fixed cost increased by JPY600 million. Of this amount, about JPY300 million was due to the amortization of
QUINTEC’s goodwill.
As a result, sales were down JPY2.2 billion and operating income was down JPY1.6 billion.
However, when comparing these with the forecasts, sales of Fluralaner, especially its royalties were above
target. Then TARGA, LEIMAY, are QUINTEC were above target. Those below target were, as I mentioned earlier,
GRACIA, ROUNDUP and ALTAIR, plus fixed costs of JPY1 billion below expectation, which resulted in JPY300
million down in sales and JPY1.1 billion up in operating income.
Please see the outlook for the second half on the right-hand side. First, the increase in sales is attributable tothe successful introduction of new products for ALTAIR, as I mentioned earlier. In addition, GRACIA's exports,
TARGA's exports, and Fluralaner mainly from royalties also saw an increase in sales, as well as LEIMAY,ROUNDUP, QUINTEC and PERMIT, so many items are expected to increase sales.

32With the addition of a decrease in fixed costs, although inventory adjustment cost has a negative impact of
JPY500 million, we expect sales to be up JPY2.8 billion and operating income to be up JPY1 billion.
Comparison with the forecast of May is shown below. Those which sales are above target are ALTAIR, TARGA,ROUNDUP, LEIMAY and PERMIT. Those which sales are expected below target are Fluralaner for delayed
shipments, while royalties are expected to rise and GRACIA. Sales are expected to be down JPY600 million andoperating income is expected to be down JPY800 million.

Next is Pharmaceuticals. Page 43 shows the recent financial performance.

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Page 44 shows LIVALO’s domestic end and API sales status and the growth rate for both domestic and export
sales.

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Next, page 45 shows the status of the pipeline, and this has not changed.

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Page 46 shows the situation of Custom Chemicals. As you can see with these figures, the business has grownsteadily.

36Page 47 shows our future business strategies for Pharmaceuticals, and data shown here is the same in thematerials provided in May.

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Page 48 explains our investment in PeptiStar Inc. This situation has not changed, either.

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Next, see page 49 for Pharmaceuticals. Basically, the situation is not much different from that in May. Looking
at this table, operating income for FY2019 totaled JPY0.93 billion with a negative profit of JPY0.12 billion in
Drug Discovery and a positive profit of JPY1.05 billion in Custom Chemicals. In May, the forecast was JPY0.43
billion, consisting of a negative profit of JPY0.95 billion for Drug Discovery and a positive profit of JPY1.38
billion for Custom Chemicals.
Currently, we are forecasting improvements of around JPY0.1 billion as shown in the fourth column from theright side and total operating income of JPY0.56 billion, minus JPY0.85 billion for Drug Discovery and plus
JPY1.41 billion for Custom Chemicals.

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Page 51 to page 56 introduces the rough image of FY2023 sales, which data is the same and was announced
in May and copied.

Then, page 57 shows the status of Capex, depreciation, and R&D expenses. As you can see, R&D expenses
were estimated to be JPY18.2 billion at the beginning of the year in May, but currently we expect JPY16.8
billion at the end of period.

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Figures on pages 59 and 60 are based on the current medium-term management plan.

Page 61 shows our effort on ESG.
In August 2020, we announced our support for recommendations of TCFD. And see the last item, we finally,
for the first time, won the Awards for Excellence in Corporate Disclosure in the chemicals and fiber sector.
Thank you very much for your support.

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From page 63 and after, we have listed our characteristics. Page 63 is for operating income margin, page 64
is for ROE, page 65 is for shareholders return and total return ratio, page 66 is for dividend payout ratio, andpage 67 is for share repurchase.

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Pages 69 and 70 are explaining our focus on R&D.
Thank you for your patience. My explanation now comes to an end.

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Question & Answer<Questioner 1>
Q: First, for Performance Materials. I am concerned about SUNEVER. Please tell us about performance bymajor mode from the first quarter to the second quarter. In addition, I would like to ask you to provide yourview for the second half of FY2020.
A: IPS are performing well both in the first and second quarters. This mode including rubbing IPS still goesstrong. On the other hand, with regard to VA, although there is no change in our market shares itself, it ispartly affected by a decline in production at a customer.
In the second half of FY2020, we expect IPS in total to maintain this strong performance. Between rubbing IPS
and Photo IPS, we forecast that the shift to Photo IPS will accelerate through the second half of FY2020.
On the other hand, we are seeing a decline in VA due to the fact that the customer production decrease likethe first half will have a larger impact in the second half.
Q: About SUNEVER total, First quarter sales growth is up 14% and the first half growth is up 7%, so if only thesecond quarter is taken, the growth is almost unchanged. I think the growth in the second quarter slowed
down.
A: Overall, the balance of inventory adjustments at the customers creates a slight gap between the first andthe second quarters, but we think that the operation itself is going strong. For the second quarter, about IPS,
both rubbing and Photo performed above target compared to the forecasts of May. So, this is within our
expectations.
Q: I see. Regarding Photo IPS, the strongest performers are for non-smartphones, especially tablets, laptops,
monitors, and so on, right?
A: That’s correct. In particular, with regard to tablets as well as notebook PCs, the shift to Photo from rubbing
is accelerated, and I think that this is another factor for this good performance.
Q: Yes, I understand. Second, I would like to sort out the fixed costs once. At the beginning of the term, I think
you were talking that fixed costs of JPY900 million would increase in this year compared with last year. Looking
at this time, in terms of Performance Materials, it will be decreased by JPY900 million in FY2020, in comparison,
it will be down about JPY1.8 billion, which can be regarded as a factor behind the increase in profits from theinitial forecast?
A: Yes, you can.
Q: I would like to ask you how you can break down the difference of JPY1.8 billion among Display Materials,
Semis Materials, and Inorganic. Could you tell us about the content of the difference? Why the forecast was
turned to positive?
A: The breakdown of JPY1.8 billion is JPY700 million for Display, JPY 700million for Semis, JPY300 million for
Inorganic, and JPY100 million for others. The background to this is basically travel expenses and transportation
expenses. This is largely due to the fact that we are unable to move due to the impact of COVID-19 and to thefact that our research and development expenses are getting smaller.

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Q: Do you mean that the impact of COVID-19 is a little positive around here?
A: I think that is correct.
Q: You didn’t make extra effort to save expenses, especially by cutting fixed costs?
A: We haven’t forced our staff members to reduce expenses.
Q: OK. Do you intend on further reduction?
A: There is no particular plan for further reduction. In the current situation, the situation remains that we are
not able to actually visit local markets, and we are doing so while devising sales and R&D methods in thissituation. So far, I do not think that there are any major disadvantages to this situation.

<Questioner 2>
Q: My first question is about Agrochemicals. Looking at YoY ratio of increase or decrease on page 42, or the
movement of profit compared to the plan, particularly at Fluralaner I think that the royalties are up, but theplan was revised downward in this period due to the delayed shipment. The fact that royalties are risingsuggests that end-use demand is stronger than expected, but what is the situation in which shipments arebeing pushed back?
Considering customers and downstream side, as the procurement of raw materials is decreasing while
product sales are increasing, do you think inventory adjustments are proceeding at a faster pace thanoriginally expected? Or, unlike electronic materials, I think this kind of thing is unlikely to happen, but for
example, the original unit has been changed at the downstream side because of production innovation? First,
let me confirm this point.
In addition, regarding fixed costs of Agrochemicals. In the first half of the fiscal year, it was decreased by JPY1
billion compared to the plan, while in the second half, we particularly did not see any changes compared tothe plan. However, if the number of business trips has decreased in the first half of the fiscal year, as in thecase of Performance Materials, it is possible to assume a certain decline in expenses in the second half of the
fiscal year. How about that?
A: Fluralaner is still strong for end users and the royalties will increase. There is no particular technicalinnovation in that production, as you just mentioned. I think this is the result that Merck would like to makesome more inventory adjustments.
Then, about fixed costs. Some research and development expenses were delayed from the first half to thesecond half. There are some rooms to decrease or to increase. I'm looking at the figures for the second half,
which is almost unchanged from the budget for the beginning of the year on a net basis.
Q: I heard that the impact of COVID-19 is increasing the demand for pets as the backdrop of the strong
performance with end users. Did you agree to that?
Originally, you will continue inventory adjustments until FY2022. If Merck is accelerating the pace at which it
will reduce inventories a little more, could this outlook be a little more accelerated depending on thesituation?
A: I have some information in it, but it is still fragmentary information, so I am uncertain and cannot give you
the details. However, on the figures, as we mentioned earlier, the royalties are improving, so I guess we are52

progressing, but I don't know if it is temporary movement or not. We have not yet obtained accurate
information on trend of end users.
Q: How about, whether or not it will be earlier or not regarding the outlook for the time when inventory
adjustments will end, I think it is still early at this stage.
A: As originally predicted. It does not change.
Q: My second question is about Semis Materials of Performance Materials Segment. This figure has beenmuch higher than the initial forecast, and how can you divide it into Logic and Memory? Please tell us a little
more about in which region it performs particularly good and the background to the upward movement of
this Semis Material.
A: Overall, both Logic and Memory in Semis Materials are performing well. Quick recovery of DRAM
contributed to exceed our expectations and contributed significantly. As for the region, The Peninsula is themain. I expected it would take a little longer at the beginning of the year.
Q: I understand. At the same time, how is the state of sales expansion of EUV under layer in line with theinitial forecast?
A: Slightly upward movement.

<Questioner 3>
Q: Movements in profit of Performance Materials, Display Materials were flat to second quarter from the firstquarter, and Semis Materials were increasing. Under such circumstances, operating income increased by only
JPY100 million, is this due to an increase of fixed costs? Please tell us about the direction of this profit,
including the movement of fixed costs to the second half from the first half?
A: Fixed costs have increased by about JPY400 million from the first quarter to the second quarter. On theother hand, inventory adjustment cost had a positive impact of about JPY300 million. By division, QoQ trends
in operating income were down JPY100 million for Display, up JPY200 million for Semis, and zero for Inorganic,
which were up JPY100 million.
Then, the movement from the first half to the second half. We are currently forecasting operating income
JPY800 million down, but we are assuming that fixed costs will increase by JPY1.9 billion from the first half tothe second half. Then, in sub-segments, HoH operating profit is down JPY100 million for Display, down JPY600
million for Semis, down JPY100 million for Inorganic Materials, in total expected down JPY800 million.
Q: I feel that when sales increase by JPY600 million to the second half from the first half and fixed costs
increase by JPY1.9 billion, there is a little drop in profit. This means you will increase inventory?
A: There will be a difference in the composition of sales, so first of all, the marginal profit will increase byalmost JPY600 million. Increase to the same level as sales. Then, fixed costs will increase by JPY1.9 billion, but
for the inventory, the figure will be plus JPY500 million.
Q: My second question is about the current inventory level, which seems to be a bit too high. There are somesegments in which the inventory factor is written, Chemicals and Agrochemicals. Can you tell us whether thiswill probably push up slightly in the first half of the fiscal year, reducing inventory in the second half andlowering profits, or what the movement of inventory is on this side?

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A: As for the movement of inventory, it is quite different for each segment, so I can't say anything. I don’t feelthat there is too much inventory.

<Questioner 4>
Q: My first question is joint ventures for Agrochemicals in India. This briefing material says that the joint
venture partner sells TARGA, PULSOR, and PERMIT in India. Are these three products already approved forsale in India?
A: Sales approval has already been approved. However, although it would be misleading, basically we are notthinking of selling the products made by these joint ventures in India. In the first few years, the idea now isthat we will take the products in Japan and sell them.
Q: I see. They are your manufacturing base. Don’t you think India is the market to promote these products?
A: That's not something we will think about for a few years. This is a second manufacturing base, because thedomestic production and supply capacity are somewhat bottlenecked, or sales are expected to increase.
Q: I understand. The second is about Photo IPS. You said that the shift from rubbing to Photo is acceleratingon tablets. Either in the sense that the brands that have originally adopted Photo IPS are increasing theirmarket shares or in the sense that the number of models that have been adopted is increasing in the firstplace?
A: There is an increasing number of models.
Q: The number of models is increasing means that the number of models which used rubbing before and now
switched to Photo IPS is increasing?
A: Yes, yes. That's it.
Q: Together with that, I think the growth of Photo IPS for notebooks and cars was probably higher, but is it
doubling?
A: Not double, but we believe the ratio has risen more than expected.
Q: Do you think it is sustainable? Notebook PCs are selling well for telework, which may not last long. Or, forautomobiles, perhaps it could be longer, but how about sustainability?
A: We estimate that there will be continuity for a certain period of time.
Q: I understand.
A: I would like to give an additional explanation. The usage of notebook PCs and tablets has changed steadily,
when we use them to watch television, watch movies, and play games, we still want high-definition ones. I
think there is a big change in demand.
Q: I see, that's what you mean. If that's the case, the bottom line is that it lasts quite a long time, doesn't it?
A: Yes.
[END]

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