Nissan Chemical Corporation
4Q FY2022 Financial Results Briefing
Presenter:
YAGI Shinsuke Representative Director, President & COO
DAIMON Hideki Director, Senior Managing Executive Officer & CFO

May 15, 2023

Presentation

Yagi: Hello, everyone. I am Yagi, the president. Thank you very much for participating in our financial results
briefing today while you are busy.
I would like to begin by explaining the progress of our mid-term business plan, Vista2027, which was launchedlast April.
First, we would like to explain how we formulated Vista2027 and our long-term business plan Atelier2050.
We launched our previous long-term business plan, Progress2030, in 2016. However, the environment
surrounding our business has changed significantly since Progress 2030 was formulated, and we havereexamined social issues and social changes with an eye toward 2050 and formulated Atelier 2050, whichtakes a more focused view toward 2050. From there, we formulated Vista 2027 as a passage to the view set
forth in Atelier 2050 by backcasting.

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Under Atelier 2050, we have defined our business domains as the growth business domains of Information &Communication, Life Sciences, and Environment & Energy, and the core business domain of Materials &Services, as our vision for the year 2050.
In addition to the existing core technologies, the Company will enter new areas related to the 3 growthbusinesses by acquiring new technologies in microbial control and information science.
We aim to accelerate growth in each business area through the evolution and fusion of core technologies andcontribute to solving social issues.

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In Vista2027, we define our ideal state in 2027 as follows: “while existing businesses are robustly driving thebusiness performance, new core technologies are consistently acquired for expanding and enhancing businessareas”, “organized sustainability-related initiatives are promoted, and related information is offered internallyand externally”, and “as the digital foundation is being established, business activities are conducted basedon the latest information on clients and markets”. We also set the target for 2027 of JPY285.0 billion in sales
and JPY67.0 billion in operating profit.
Based on the challenges identified in the previous mid-term business plan, Vista 2021, and our vision for 2027,
we have set four basic strategies: “deeply exploit business areas and increase marketing ability”, “promotesustainable management”, “strengthen the creation and co-creation process of values”, and “expand market
shares and profits of existing businesses”.

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From this page, we will explain the progress of various measures based on each strategy.
For the first strategy of “deeply exploit business areas and increase marketing ability”, in April last year, weestablished the Biological Group in the Biological Research Laboratories in order to develop new coretechnologies of microbial control.
In April of this year, the Animal Care Planning Group was established in Planning and Development Division
to consider developing animal healthcare drugs and building a sales system.
For promoting R&D by utilizing digital technology, we verified MI, Materials Informatics, in a real theme.
In terms of technology introduction from outside the Company, in April last year, we started a collaboration
with Arieca Inc. and adopted its TIM technology.

4For the second strategy of “promote sustainable management”, we launched the Nissan Chemical Sustainable
Agenda. The goal for each year of the mid-term business plan is to maintain the ratio of sales of products andservices that contribute to solving social issues at 55% or more of total sales.

5These are the results for the last fiscal year.
Sales of products and services covered by the Nissan Chemical Sustainable Agenda accounted for more than
55% of total sales.
In the promotion of sustainable management, a Climate Change Committee was established in June last year
to study the use of ICP as a measure to combat climate change.

6For the third strategy, “strengthen the creation and co-creation process of values”, we reformed thepersonnel system and introduced a Role Grade System to realize more efficient allocation of human resources
based on potentiality and engagement of every workforce rather than seniority.
We are also studying the creation of a career development system to strengthen human resource
development.
To promote management and operation restructuring, in April last year, the Digital Transformation
Department was established. In preparation for the data-driven structure in Stage Ⅱ, the latter 3 years ofVista2027, we have started preparing a company-wide digital transformation platform.

7For the fourth strategy of ”expand market shares and profits of existing businesses”, aiming to accomplish thegoal in FY2027, we will develop new products that should be the source of growth in the next generation, withthe existing core products as the source of growth.
First, for Chemicals, we will promote measures to improve the profitability of ammonia-related products as astructural reform after shutting down melamine.
For Venus®Oilclean, a microbial formulation, in addition to developing the market for use in the treatment ofoil and fat wastewater, we have also participated in a project designed to reduce CO2 emissions.
For Performance Display Materials, in addition to maintaining the market share of Photo IPS and adopting
large-size TV for rubbing IPS, we have strengthened the development of next-generation displays.
For Performance Semis Materials, we strengthened our development capabilities for EUV materials, which
are expected to grow, and made progress in expanding the development and sales of multi-layer materials
and packaging process materials to increase shares.
At NCK Korea, the construction of the Dangjin factory to strengthen the supply system for semiconductormaterials progressed smoothly. And in April of this year, we newly established NCK R&D center semiconductorgroup.

8In the area of Performance Inorganic Materials, certain progress was made in expanding sales of oilfieldmaterials and starting joint research on CCS materials.
In Agrochemicals, an NBR plant was completed and started commercial operation in March this year.
For GRACIA, we promoted global expansion. For ROUNDUP, we expanded sales through dedicated nozzle
ULV5 and social media promotion. In addition, the construction of a new novel herbicide NC-653 Plant, which
will serve as a growth engine for the future, is on schedule.
In Healthcare, we started non-GLP experiments with the development of candidate compounds ofoligonucleotide, therapeutics were initiated.
For biomedical materials, we have seen certain progress with Heartseed Inc. using our material in their cardiac
regeneration for clinical trials.

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The photo shown here is an overall view of the Indian NBR, which began commercial operations this past
March.
As explained above, the management plan that started in April last year is steadily advancing various measures
based on each strategy.

10Based on its corporate philosophy of contributing to the protection of the global environment and the survival
and development of humankind by providing the value society seeks, the Group has formulated Atelier 2050
and Vista2027, and has been implementing various measures based on each strategy.
In order to achieve our management plan, we will continue to steadily implement measures based on ourpolicy of nurturing core technologies and creating new products that will be the next growth engine, reducing
greenhouse gas emissions and contributing to solving social issues through our business activities, developing
human resources, and optimizing our product portfolio and maximizing profits from our existing products.
That is all from me.

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Daimon: Now, I will give you part 2, which is an explanation in line with the financial figures.
I will explain from page 4 of the document. This is the FY2022 full-year financial summary. Starting with theYoY comparison for 2H of the fiscal year.
As you can see in the upper row, net sales increased JPY2.4 billion, or 2%. Net income decreased by JPY5.6
billion, down 19%. This is mainly in Chemicals and Performance Materials. Net income also decreased by
JPY5.1 billion.
Moving onto the full-year results. Compared to the same period last year, net sales increased by 10%, orJPY20.1 billion. Operating profit increased by an additional 3%, or JPY1.3 billion. Net income increased by 6%,
or JPY2.3 billion. As indicated by the blue letters, operating profit, and ordinary income reached record highs
for the 9th consecutive year, while net income reached record highs for the 10th consecutive year.
The third box shows the ratio to the earnings forecast. This is a comparison with the figures recently
announced in February. Specifically, this is in comparison with the forecast for the 3 months from January to
March.
Sales are less JPY1.4 billion and operating profit is less JPY1.1 billion than the forecast. This is mainly due tothe decrease in the performance of Semis Materials. Net income was less than JPY1.0 billion from the forecast.
Lastly, I would like to talk about shareholder returns. The full-year dividend is JPY164, up JPY42 from theprevious year, as announced in February. This marks the 11th consecutive year of dividend increases. In
addition, we have already repurchased JPY9.0 billion of our own shares as announced in February. As a result,12the dividend payout ratio was 56.3%, slightly exceeding the mid-term target of 55%, and the total return was
78%.

Next, please see page 5.
Here are some specific numbers. In particular, you can see the full-year results in the middle, the FY2022
actuals, in white letters on the blue background. Net sales were JPY228.1 billion, operating profit was JPY52.3
billion, and non-operating income and expenses totaled JPY3.5 billion, of which foreign exchange gains andlosses accounted for JPY1.3 billion.
As a result, ordinary income was JPY55.8 billion, while extraordinary gains and losses were JPY0.8 billion,
resulting in a net income of JPY41.1 billion.
As I mentioned earlier, the dividend was increased by JPY42 to JPY164, the dividend payout ratio was 56.3%,
and the OP margin as a whole was 22.9%. ROE was 19.4%, meeting the mid-term goal of 18%.
The exchange rate for the full year was JPY136. Crude oil JCC is at USD103 as you can see. Procurement costs
have increased considerably.

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Page 6 shows comparisons with the previous outlook.
Please check this later.

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Moving onto page 7. This shows an analysis of changes in operating profit by segment.
I will spare you a few comments, but the upper row is for the full year.
First, Chemicals. Profits declined by JPY2.4 billion YoY. Details can be found here. It is less than JPY0.3 million
than the forecast.
Performance Materials also saw a decrease of JPY2.2 billion in profit YoY. This is due to the decrease of 12%
in sales of Display Materials in addition to the increase in fixed costs.
The profit is JPY0.8 billion less than the forecast announced in February. This was mainly in Semis Materials.
The Display Materials were almost as expected.
Profit in Agrochemicals increased by JPY5.0 billion YoY. This was a major driving force. On the other hand, thisis JPY0.4 billion less than the forecast.
Healthcare is as described here.
YoY in 2H of the year in the lower row is also as stated. Please check this later.

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Next on page 9 is a summary of the full-year earnings outlook for FY2023.
Please see the YoY comparison of 1H shown in the upper row. Sales are expected to decrease by JPY0.9 billion,
and operating profit is expected to decrease by 7% or JPY2.1 billion. As indicated in the parentheses, theprofit will decline by JPY2.8 billion in 1Q.
Net income is expected to decrease by JPY4.0 billion. As indicated in parentheses, non-operating income/loss,
especially foreign exchange gains/losses, will decrease by JPY3.0 billion YoY. I will explain this later on page12.
On the other hand, for the full year, net sales are expected to increase by JPY9.2 billion, and operating profit
is expected to increase by 5%, or JPY2.4 billion. Net income will increase by JPY0.4 billion. We expect operating
profit to reach a record high for the 10th consecutive year, and net income for the 11th consecutive year.
Ordinary income is projected to decrease by JPY0.3 billion. We expect ROE to be 18.6%.
Next, we will discuss shareholder returns. As announced today, the Company will repurchase JPY5.0 billion of
its own shares in the future. As indicated in the blue text below, the dividend will be JPY164 per share for thefull year, unchanged from the previous year.
This is a cancellation of treasury stock. 0.7 million shares have already been canceled on May 12. As a result,
the total return target ratio is 75%, as originally promised. At this point, if we add the total of the JPY5.0 billion
share buyback to the JPY164 dividend, the total payout ratio is 67.1% currently.

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Specific numbers are on page 10.
Similarly, if you look at the FY2023 highlighted in yellow in the middle row, net sales will be JPY237.3 billion,
operating profit will be JPY54.7 billion, and foreign exchange gains/losses are set at zero at the beginning of
the period, and non-operating income will be JPY0.8 billion.
As a result, we are expecting an ordinary income of JPY55.5 billion and extraordinary gains and losses of JPY1.2
billion, which I will discuss later. As a result, a net income of JPY41.5 billion is assumed.
EBITDA is expected to increase by JPY4.3 billion to JPY67.6 billion, as shown on the right. OP margin is assumed
to be 23.1%, and the exchange rate is assumed to be JPY128 for the full year. Crude oil JCC will be slightly
lower cost at USD92.

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Next, page 11, is the analysis of changes in operating profit by segment.
The upper row is for the YoY comparison of 1H. It is a decrease of JPY2.1 billion as a company. Performance
Materials are expected to see a decrease of JPY1.2 billion. We expect a decrease in sales, especially of Semis
Materials, as well as an increase in fixed costs.
Moving onto the full-year figures.
As you can see from the bottom row, we expect YoY increases in profits for Chemicals, Performance Materials,
and Agrochemicals, respectively.
As we will discuss later, we assume that Performance Materials will recover from 2H of the year for Display
Materials and Semis Materials as well. We assume that Healthcare profit will decrease by JPY0.7billion in thecurrent fiscal year.

18Moving onto page 12.
This is the non-operating gains and losses that I mentioned a little bit earlier.
The third line from the top, foreign exchange gains/losses, for 1H of FY2022 show a large gain of JPY3.02 billion.
In contrast, as shown in the third row from the far right, it is zero in the forecast for 1H of FY2023. This is a
decline of JPY3.02 billion YoY in 1H.
There is a note with an asterisk below for the US dollar-yen exchange rates at the end of March and at theend of September. As you can see, the dollar appreciated significantly from the end of March 2022 to the endof September 2022 and then returned to JPY133 at the end of March 2023. Please understand that this trend
is shown in the numbers above.
Please see an extraordinary gain or loss. As I mentioned earlier, it is JPY0.81billion for FY2022. Extraordinary
gains totaled JPY1.46 billion, mainly from the sale of strategic shareholdings, while extraordinary losses
totaled JPY0.65 billion. This is described in a little more detail in asterisk 3.
Impairment loss on shares held in a non-listed company in which the Company has invested has occurred. As
you can see on the right, we do not expect to record any extraordinary losses this fiscal year, and plan to post
extraordinary gains of JPY1.20 billion in the sale of strategic shareholdings.

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Continuing onto cash flow on page 13.
Please see the results for FY2022 in the third column from the left. Due to an increase in working capital or
capital expenditures, free cash flow in FY2022 was JPY15.5 billion, a decrease of JPY14.0 billion YoY. The final
cash and cash equivalents balance is JPY29.6 billion, as shown in the last line of the report, and we continue
to have a surplus.
On the other hand, the forecast for FY2023 is as written in the rightmost column.
Free cash flow will be restored, and shareholder returns will also incorporate what I have just mentioned.

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Moving on to the balance sheet on page 14. Let me explain this briefly.
As shown in the upper left-hand corner, the total asset is expected to increase JPY19.0 billion from the end of
March 2022 to that in 2023. This increase is mainly due to the increase of about JPY12.5 billion in inventories.
Half of these are Agrochemicals.
Since sales have increased considerably in Agrochemicals, we do not see any increase in the number of daysof holding inventories in comparison to sales, and we believe that this is a level that is of no concern.
On the other hand, tangible fixed assets have also increased due to the progress of capital investment in South
Korea and India, as explained earlier by President Yagi.
In the upper right-hand corner, net assets increased by JPY13.5 billion. As a result, we continue to maintain asound financial position with an equity ratio of 73.1%.
Below left is a breakdown of investment securities. The number of listed stocks held has been reduced by 4,
to 26. As a result, the ratio of strategic shareholdings to net assets was 7.9%, as shown below.

21Please skip some pages to page 19, where a comparison of sales and operating profit by segment starts.
Although a bit detailed, I will explain the actual results and the forecast for this fiscal year by segment.

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First, chemicals on page 22.
As shown in the graph below, operating profit for FY2022 was JPY1.4 billion, a considerable decrease from theprevious year.
For FY2023, this fiscal year, we expect it to increase by JPY1.8 billion to JPY3.2 billion.

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First, let's look at sales of our main products. We have the usual table of growth rates on page 23.
There are 1H, 3Q, 4Q, 2H, and full year of FY2022 results. Then the one next to it is the 1Q, 2Q, 1H, 2H, andfull-year forecast for the current fiscal year. All of these are YoY growth rates.
As noted at the beginning of this report, sales of Fine Chemicals declined 11% in 2H of FY2022. The decline in
TEPIC revenues had a significant impact. For total Fine Chemicals, sales increased 5% full year in FY2022, andwe expect a 6% increase in sales for the current fiscal year.
Moving onto Basic Chemicals.
Sales decreased by 4% in 2H of FY2022. This is partly due to reduced sales of melamine, whose production
has been discontinued. Sales for full year in FY2022 increased 3%, and we expect a 6% increase in sales for
FY2023.

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Page 24 shows the FY2022 actual YoY comparison of sales and operating profit. Please refer to the table later,
including comments.
Annual sales increased by JPY1.4 billion, but operating profit decreased by JPY2.4 billion.
There are many factors. In terms of sales, the suspension of melamine has had a JPY2.1 billion effect. In
addition, the rising costs of feedstock and raw materials have also had an effect on cost increases during thisperiod. Fixed costs also increased by several hundred million yen.

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The forecast for this fiscal year is shown on page 25.
We expect net sales to increase by JPY2.3 billion YoY and operating profit by JPY1.8 billion.
In 2H of the year, we expect a recovery, especially for TEPIC.

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Please move on to page 28 for Performance Materials.
As shown in the graph below, the FY2022 profit was JPY25.4 billion, a decrease compared to the previous year.
Operating profit for the current fiscal year is expected to be JPY26.5 billion, an increase of JPY1.1 billion.
In terms of operating profit margin, we expect to maintain the 30% level.

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On page 29, you will find the usual sales images by sub-segment.

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On page 30, you can see YoY growth in sales of each major Performance Materials products.
First, Display Materials showed a 12% decrease in sales in 2H of FY2022. The same 12% decline in sales wasseen in full year of FY2022, but we expect a 9% increase in sales this fiscal year.
For Semis Materials, sales increased by 1% in 2H of FY2022 but increased by 13% for the full year of FY2022.
For the current fiscal year, we expect sales to recover mainly from 2H of the year and forecast a 4% increase
for the year.
Inorganic Materials sales increased 9% in 2H of FY2022, increased 9% for the full year of FY2022, and are
expected to increase 5% full year of FY2023.

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SUNEVER sales is shown on page 31.
As stated at the beginning of this report, as I mentioned earlier, due to the slowdown in the display market,
sales for FY2022 were down 12% for the year.
This 4Q is above the previous forecast.
In FY2023, we forecast an 8% annual increase in sales and assume that the conversion of photo IPS willcontinue to progress steadily.

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Please see page 32 for Performance Materials figures. It is as shown.
I will not comment on each of them, but for the year, operating profit decreased by JPY2.2 billion.
Although profits increased in Semis Materials, the decrease in profits in Display Materials exceeded theincrease in profits from Semis Materials. In addition, fixed costs increased by JPY2.8 billion.

31

Page 33, the forecast for the current fiscal year. As stated at the beginning of this report, net sales are
expected to increase by JPY4.9 billion and operating profit by JPY1.1 billion. This includes an overall segment
cost increase of JPY2.3 billion due to higher fixed costs.
Although I will not discuss them individually, we expect an increase in sales and profit from the Display
Materials. For Semis Materials, sales will increase, but with the increase of fixed cost of JPY1.7 billion, profit
is expected to decrease. Inorganic Materials sales and profits are expected to increase. We assume that theincrease in sales will affect us directly.

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Next, page 34 is for the Agrochemicals segment.
As shown in the graph on the lower right, the profit increased significantly by JPY5.0 billion in FY2022. We
expect it to increase by another JPY0.5 billion in the current fiscal year.

33See page 35 for sales growth rates of major products.
As noted at the beginning of this report, total segment sales increased by 12% in 2H of FY2022. Combinedwith a 43% increase in sales in 1H of the year, this resulted in a significant 24% increase in sales for the year
as a whole. For the current fiscal year, we expect a mild 3% increase in sales.
As shown in the graph on the lower left, sales in GRACIA bottomed out in FY2021 and increased in FY2022
with an expectation to continue to increase in FY2023 considerably.
As shown in the second to last line of the table, sales of Fluralaner in Animal Health increased by 37% in theprevious fiscal year. We assume a 3% increase in sales for the current fiscal year.
As explained previously, the previous year's figures are due to the backward movement of APIs shipmentsfrom the 4Q of FY2021 to the 1H of FY2022.

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Specific numbers are shown on page 36.
This is the FY2022 results, with comments for each of the major products.
Overall, net sales increased by JPY15.8 billion YoY and operating profit increased by JPY5.0 billion.

35

As you can see on page 37, our forecast for FY2023 is a JPY2.6 billion increase in net sales and a JPY0.5 billion
increase in operating profit. Comments on major products are as noted.

36

The pipeline on page 38 remains unchanged.

37

Next, please see page 40.
As usual, here are the sales figures for Fluralaner. We have added a few more descriptions this time.
The assumed exchange rate in the green graph on the right is JPY128 for this fiscal year, the figure I mentioned
at the beginning of this presentation.
The last line describes the status of Merck's development. This past May, an external parasite injection fordogs was approved in Australia. Injectables in external parasitic drugs are very rare. It lasts 12 months as aneffect.

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Next, please see page 42.
As President Yagi briefly mentioned earlier, this joint venture, NBR, has already been a consolidated subsidiarysince FY2022.
Commercial operations began in March 2023.

39

Finally, on page 43 is the Healthcare segment.
In FY2022, profit increased by JPY0.2 billion from FY2021.
We expect a decrease of JPY0.7 billion in profit for the current fiscal year.
Please see pages 46 and 47 for specific numbers.

40

41

I will explain a little more about the sales image for FY2026 starting on page 49.
Although we have not reviewed the mid-term business plan, we are presenting an image of sales in FY2026,
which is 4 years from now, including this year, in comparison with FY2022. Since this is an image, it is shownin JPY0.5 billion increments.
As shown here, from JPY228.1 billion in FY2022, sales in Chemicals are expected to increase by 12% in thenext 4 years.
Sales of Performance Materials will increase by 30% to JPY25.0 billion. Sales in Agrochemicals will increase by
10% to JPY8.5 billion. Sales in Healthcare will increase by 22%.
Altogether, we expect the Company as a whole to achieve a 4-year growth rate of 20% per annum.
For reference, one line below shows the growth for the 5 years from FY2021.
As we have mentioned earlier, the figures for Agrochemicals show a significant increase in sales in FY2022.
I will explain the growth by segment.

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First, please see page 50. Now let me explain it briefly.
Sales in Chemicals in the upper row totaled JPY39.0 billion and are expected to increase to JPY43.5 billion in
FY2026.
Fine Chemicals are shown left, with an expected increase in sales of TEPIC or environmental-related products.
In Basic Chemicals, we plan to cover the JPY2.5 billion decrease in sales due to the suspension of melamine
production and expect the figures as shown here.
Performance Materials are in the lower row. The sales were JPY82.6 billion in FY2022.
In the Display Materials, sales are expected to increase 23% over the next 4 years, and in the Semis Materials,
sales are expected to increase 42% over the next 4 years, or JPY15.5 billion, based on the assumption that
double-digit growth will continue over the medium to long term, although the Semis business is currently inan adjustment phase.
Sales of Inorganic Materials are also expected to increase by 16%.

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The next page 51 is for Agrochemicals.
As shown in the upper row, sales increased quite substantially from FY2021 to FY2022. With FY2022 as thelaunch pad, sales will increase by JPY1.0 billion for Fluralaner, and domestic agrochemicals will increase by
JPY4.0 billion with ROUNDUP, ALTAIR, GRACIA, etc. Similar amounts of growth are expected for overseas
agrochemicals. We plan to increase sales of GRACIA, ALTAIR, LEIMAY, and others.
Finally, we discuss the Healthcare Segment. We assume a sales increase of JPY1.5 billion to JPY8.2 billion. I
believe that a reduction in sales in LIVALO is inevitable. In contrast, we plan to increase sales of medical
materials in the Healthcare segment and for Custom Chemicals, we expect sales to increase in the items
described.
As you can see on the right, we plan to generate JPY 3.0 billion in New Businesses by combining some productsin the Information & Communication and Environmental & Energy fields.
I explained this time because I wanted to present an image of a portfolio that can grow sufficiently in the
future, despite the slowdown in Performance Materials since 2H of last year, and the situation with theveterinary drug, Fluralaner.

44

Finally, the ESG topic, page 53.
As indicated in the last line, one female outside director will be added to the current number of outside
directors, making a total of 2, subject to approval at the General Meeting of Shareholders in June.
That’s all from me.

45

Question & Answer<Questioner 1>
Q: You explained earlier about Vista 2027. What is your sense of the progress toward the JPY58.5 billion in
operating profit planned for FY2024 and JPY67.0 billion for FY2027? In the fiscal year just ended, there was aslight downturn in performance due to a shortfall of profit in Semis Materials. What is your outlook for thisarea?
A: Performance Materials are expected to exceed the forecast going forward. In addition, there are next
products in the pipeline for Agrochemicals, and basically, the outlook is that Performance Materials andAgrochemicals will drive the profit. And, new products are being developed and are expected to be launchedduring this mid-term business plan.
Q: Secondly, you mentioned earlier the 2 technologies of microbial control and information science, and you
have just explained the movement of sales up to FY2026. Can you give us some concrete products of what we
can expect from these 2 technologies?
A: For microbial control, it is not in a situation to be launched in this mid-term business plan period, we are ina situation where we are firmly building up our technology and sowing the seeds for the launch of the productduring this mid-term business plan period. However, we have begun some tests involving microbial materials,
and we would like to grow them well in the future.

<Questioner 2>
Q: The first question is related to Chemicals. Since the suspension of melamine production last June, do you
intend to further promote structural reforms in the future? You mentioned earlier that you are promoting
measures to improve the profitability of the ammonia-based business. Are there any possibility that you might
consider revising your product portfolio or production capacity in the Chemicals business? Looking at otherdomestic materials industries, I believe that there has been a noticeable trend toward a reduction in
production capacity. Can you comment on this topic?
A: First, cyanuric acid, which is related to ammonia derivatives, and beyond that, TEPIC which would be
affected by Chinese companies moving, we want to secure production capacity here, and would also like toaim for further price increases and sales expansion. And, in Chemicals, we would like to expand the products
for semiconductor materials, such as high-purity related products like high purity sulfuric acid. And we do nothave a direction for reduction at this time.
Q: The second question is about the establishment of the Animal Care Planning Group in April as you explained
earlier. I think that you have been relied on Fluralaner in veterinary medicine for a while. Can you moreaggressively pursue the development of even different APIs? Can you comment on what changes are likely tooccur with respect to veterinary drug initiatives, including the possibility of acquiring drugs from othercompanies through M&A?
A: For veterinary drugs, one thing we want to do is to develop the next API after the current Fluralaner. We
would also like to discuss with our partner Merck, including joint research on new drugs, with all possibilities,
and we would like to explore various ways to develop veterinary drugs as the next pipeline. This is the
direction we are moving in.

46

<Questioner 3>
Q: First, please think in terms of the year 2050. Should the Trading business be positioned as a continuous
business, or is there an option to focus resources on its function as a manufacturer? Please explain the future
direction of the Trading business and the continuity of the business.
A: Trading is a very important function for us. We are of the opinion that we will continue the business,
including further sales expansion.
Q: The second one is about the Healthcare business. In terms of the scale of sales and operating profit, I think
it is a little less powerful than the scale of sales and profit of other Agrochemicals and Performance Materials.
I think that until FY2026, there will not be that big a leap in profit. What is the story from there, and will the
Healthcare business grow from here? Please tell us what issues you are aware of.
A: First of all, the current LIVALO is gradually decreasing. This has been decreasing with the progress ofgenerics. We would like to explore new uses with our partners and increase what we can.
In addition, we are proceeding with the research and development of oligonucleotide therapeutics. However,as you know, it takes 10 to 15 years from the discovery of a compound to its launch in the market. Aiming forthis target, we are currently focusing our resources on oligonucleotide therapeutics in our development
research. We have an expectation for this project.

<Questioner 4>
Q: The first question concerns the outlook for Agrochemicals in the new fiscal year. The forecast is given on
page 37. There are factors, such as that the price hike in Japan was approved last December and that there is
the effect of the new plant in India to reduce costs. Could you please explain a little more about the factorsthat led to only a JPY0.5 billion increase in profit on a JPY2.6 billion increase in net sales? Could you also briefly
mention the change in the way fixed costs are aggregated?
A: One of the major causes is the increase in fixed costs, as you mentioned. To be more specific about thechange in the method of aggregating fixed costs, we have once again scrutinized some of the figures that werepreviously aggregated and included in fixed costs for overseas subsidiaries. Since the operations of overseas
subsidiaries are gradually becoming larger and larger, we have removed from the fixed cost total those items
that are not pure fixed costs, specifically those that include inventory changes, etc., and reclassified them into
other items such as inventory adjustment, etc. The impact is not so large for Agrochemicals.
The other is a veterinary drug called Fluralaner. In terms of sales, this fiscal year's figures are quite mild, witha 3% increase in sales. As you know, in FY2022, as inventory adjustments up to FY2021 were completed, APIs
shipments increased considerably. In addition, there was also a shipment delay from the 4Q of FY2021 to the
1H of FY2022. In comparison to this, the figures are quite mild.
In any case, as stated in page 37, we will also continue to strive to increase sales of ROUNDUP, ALTAIR, and
GRACIA.
As you know, the price of domestic general pesticides has been raised since last December. We are also
expecting an increase from this to a certain degree. The part of the business that has already raised prices
since last December, especially Agrochemicals, will generate fairly large sales in 2H of the year. We assume
that the increase there is quite limited.

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Q: Can you comment on the contribution of NBR?
A: NBR will start commercial production in this March. Although we expect a certain amount of profit
contribution from this area on a consolidated basis, we have left our assumptions fairly conservative, as
commercial production has just started.
Q: The second question is about the Performance Materials business. Could you please tell us the direction ofsales for Display Materials and Semis Materials?
A: We expect Display Materials sales to increase QoQ both in 1Q and 2Q of FY2023. In addition, in terms of
HoH, sales of 2H of FY2023 will increase compare to 1H of FY2023. In Semis Materials, sales are expected toslightly increase QoQ in 1Q of FY2023 and increase in 2Q of FY2023. On HoH, sales in 2H are expected to
double-digit% increase from 1H of FY2023.
Q: Do you have a feeling that your customers are accumulating inventories of your materials? Can you alsocomment on whether you are seeing some recovery in the 2Q in terms of actual inquiries?
A It is our understanding that the inventory held on the customer side is not accumulating at a level higher
than expected. Then, regarding the curves for the 1Q and 2Q, the Display Materials will grow at about thesame speed in both 1Q and 2Q. This bottomed out in 2Q of FY2022 last year and has been gradually recoveringfrom there, and we do not expect such a trend to change.
For Semis Materials, sales will grow in 2Q from 1Q. We assume that the recovery will start gradually, firstwith logic, and then gradually, with full-fledged recovery beginning in 2H of the year.
Q: Have you confirmed any actual increase in inquiries for your company in Semis Materials at this time?
A: At this point in time, we have presented the figures on our material that was assumed at the time when
our budget was formulated, which was around February of this year. Currently, we are in the process of closely
examining customer trends.

<Questioner 5>
Q: First, I would like to ask about the Fluralaner. It was my understanding that the extension of the US patent
itself has been decided, but how long it will be extended has not yet been determined. Have there been any
updates since then?
A: Regarding the US patent, as stated on page 39, an extension is currently under examination, and there isno specific update after that.
Q: The second point concerns Semis Materials. I would appreciate your comments on the certainty of arecovery in 2H of the year and any factor that the business will outperform the market such as signs of market
share expansion.
A: As for our outlook for 2H of the year, it is difficult to say what will suddenly outperform because of thecomplexity of the process at the leading edge of the industry. We assume that we will maintain our market
share as the business recovers along with the recovery of the market.
Q: I heard earlier that sales are expected to increase QoQ slightly in the 1Q, on the other hand, the largest
memory manufacturers started to reduce production around April. How about the certainty of that forecast?

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A: For Semis Material as a whole, sales are expected to grow slightly in this 1Q. At the time we made a forecast,
we estimated that we expected this level of figures. We are now closely examining the numbers, including the
progress of the actual sale.
Q: At the time you formulated your plan, the largest memory manufacturers had not yet announced
production cuts, is that correct?
A: Yes, that’s correct.
[END]

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