Nissan Chemical Corporation
2Q FY2023 Financial Results Briefing
Presenter:
DAIMON Hideki Director, Senior Managing Executive Officer & CFO
November 10, 2023

Daimon: I am Daimon of Nissan Chemical. Thank you all for taking time out of your busy schedules to join us
today. Let me begin the explanation.
Please take a look at page four of the presentation materials for this financial results briefing.
This page shows a financial summary for 1H, and I will explain four points.
First of all, in 1H, as compared to the same period of the previous fiscal year, sales decreased by JPY3.8 billion,
or down 4%, as indicated here.
Operating profit was decreased by JPY4.1 billion, or down 14%, and net income was decreased by JPY4.2
billion, or down 18%.
However, in 1H of the last year, FY2022, we saw a particularly large increase, and compared to 1H of FY2021,
operating profit in FY2022 was up approximately 32%.
At the same time, you can see comparisons to the 1H outlook figures initially announced in May 2023. As
described here, sales were below the target by JPY2.9 billion with JPY3.0 billion lower in 2Q, operating profit
was below the target by JPY2.0 billion with JPY2.5 billion lower in 2Q, and net income was below the target
by JPY0.2 billion with JPY1.5 billion lower in 2Q.
As for shareholder returns, the interim dividend of JPY70 was unchanged from the previous year. In addition,
share buybacks of JPY5.0 billion have already been completed by June.

1Here is also a revision of outlook. We will revise downward our initial outlook for the full year, announced inMay, as I will explain later.

Next, specific numbers are shown on page five.
These are YoY figures for 1H. If you look at the section of 1H, a little to the right of the center, you can see
sales of JPY105.7 billion, operating profit of JPY24.1 billion, and net income of JPY19.5 billion.
The exchange rate was JPY141 for this 1H.
The price of crude oil was USD83 per barrel in JCC.

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The next page six shows a comparison against the 1H outlook announced in May.
As I mentioned earlier, if you look at the figures with a background color of blue, slightly to the right of the
middle, we were expecting the exchange of JPY128 to the US dollar at the beginning of the year, against
JPY141 this 1H actual. As for crude oil, we were expecting USD92 per barrel, but the actual price was USD83
per barrel.

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Next, please move on to page seven.
This is an analysis of changes in operating profit by segment for 1H.
As shown in the figures in bold at the top of this page, profit was down JPY4.1 billion YoY, or down 14%, ofwhich semis materials accounted for negative JPY3.9 billion.
As I mentioned earlier, the result was down over the outlook by JPY2.0 billion. I will explain this by segment.
As for Chemicals, in 1H, profit decreased by JPY1.2 billion YoY due to the end of sales of melamine, lower salesof TEPIC, and higher costs of feedstock and raw materials.
This segment also recorded a decrease of JPY1.3 billion against the outlook. In addition to lower sales of main
products, the impact of inventory adjustments was a factor in the decrease in profit, which I will explain later.
In Performance Materials, profits declined sharply by JPY2.8 billion YoY.
As a breakdown of the results, as described in the comments, sales and profits increased in Display Materials,
but in Semis Materials, where sales were very strong in 1H of FY2022, sales decreased YoY, and fixed costs
increased by about JPY1.8 billion YoY for Performance Materials as a whole, resulting in a total decrease inprofits.
The segment also recorded a decrease of JPY1.6 billion over the outlook. As you can see from the comments,
Display Materials have increased profits, but Semis Materials have decreased, which accounts for a significant
portion of the downward swing.

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Next, Agrochemicals decreased profit by JPY0.5 billion. While sales of GRACIA increased significantly, sales of
ROUNDUP, ALTAIR, and other domestic agrochemicals declined, and fixed costs also increased. The JPY0.4
billion downward compared to the outlook is also shown here.
Finally, as for Healthcare, the 1H results showed an increase of JPY0.3 billion, or an upward swing.
For your reference, we have included segment-by-segment figures for 2Q, or the three months from July to
September, below, which I hope you will see later.

Please turn to page nine. This is the outlook for the full year.
This page focuses on operating profits, showing the figures from the past. In conclusion, based on the 1H
results explained so far and the 2H outlook, we have revised our previously announced outlook. For the fullyear, we would like to set the operating profit at JPY48.6 billion.
The graph below, including the table, shows the changes since FY2018. The revised figure, JPY48.6 billion in
operating profit, is shown in the second column from the right.
As shown in the balloon in the upper right corner, we expect a JPY3.7 billion YoY decrease in profit for theCompany as a whole in FY2023, due to the sluggish semiconductor market, as well as increased capital
investment and research and development.
Of this JPY3.7 billion, the Semis segment's profit decline is JPY4.2 billion as shown in the figure in parentheses
in the rightmost column.

5The next page 10 shows a summary of this outlook.
The revised outlook for the full year is a JPY 0.6 billion decrease YoY in sales, a JPY3.7 billion or 7% decrease
YoY in operating profit, and a JPY2.7 billion or 7% decrease YoY in net income. The ROE outlook is 17.1% for
the full year, which is 1% below the current mid-term plan target of 18%.
Compared to the May outlook for the full year, sales decreased by JPY9.8 billion, operating profit decreasedby JPY6.1 billion, or about 11% down, and net income decreased by JPY3.1 billion, or about 7% down. As for
2H, a comparison to the outlook is as stated here.
Next is shareholder returns. As indicated in the lower part, there has been no change since the announcementin May with a total payout ratio target of 75% and a dividend payout ratio target of 55%, based on the midterm targets. Accordingly, the annual dividend will remain unchanged from the previous outlook of JPY164,
which is shown in blue. The breakdown is JPY70 for the interim period and JPY94 for the year-end period, as
I mentioned earlier, resulting in a dividend payout ratio of 59.6%, slightly higher than the mid-term target.
The total payout ratio target, as stated in the bottom line, is 75%, which remains unchanged.

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I will continue with the specific figures on page 11.
First, this is a YoY comparison, and the middle column shows the figures after the current revision. There are
1H results, and then the 3Q, 4Q, 2H, and the full year figures.
In terms of operating profit, in the second line from the top, 1H results were JPY24.1 billion, as mentioned
earlier, and the 2H figures are JPY24.5 billion, and JPY48.6 billion for the full year.
In terms of ordinary income, the annual figure is JPY51.3 billion, and net income is 38.4 JPY billion.
EBITDA is JPY63.0 billion, which is not much changed from the previous year, due to an increase indepreciation against a decrease in operating profit.
As a result, ROE is 17.1%, as indicated in the third line from the bottom.
The exchange rate for 2H is JPY142. Since in 1H it was JPY141, so the US dollar-yen exchange rate is expected
to be almost the same as 1H.
Crude oil is assumed to be USD88 per barrel.

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Page 12, as the second part of the outlook summary, shows a comparison to the previous outlook announced
in May.
I would like you to see the figures here later, but in the second line from the bottom, as for the exchange rate,
in May it was set at JPY128 as we expected a slightly stronger yen, but this time, as I mentioned earlier, it isassumed to be JPY142 for 2H and JPY142 for the full year as well.

8I will continue on page 13, where is the analysis of changes in operating profit by segment.
The upper part shows YoY figures and comparisons to the outlook figures for 2H, and the lower part shows
YoY figures for the full year.
For 2H, we expect a slight increase of JPY0.4 billion in profit YoY. On the other hand, the 2H profit is JPY4.1
billion lower than the outlook.
From the top, Chemicals is up JPY0.6 billion YoY due to the increase in sales of main products, but down JPY1.1
billion from the outlook. The impact of inventory adjustment, which will be discussed later, is also a factor in
the decrease in profit, in addition to the lower-than-expected sales in TEPIC.
In Performance Materials, a YoY increase of JPY0.7 billion is expected, and although there is a decrease insales of Semis Materials and an increase in fixed costs, the increase in sales and profit of Display Materials is
expected to ensure an overall increase in profit YoY. On the other hand, compared to the outlook, profit isbelow the outlook by JPY1.6 billion. While we expect an increase for Display Materials, we estimate a decrease
for Semis Materials, where sales are expected to decrease by 10% over the initial outlook. Also, fixed costs
will increase, resulting in a decrease of JPY1.6 billion, the majority of which is attributable to Semis Materials.
In Agrochemicals, profit is expected to increase by JPY0.7 billion YoY, mainly due to an increase in sales in
GRACIA and Fluralaner. Compared to the outlook, it is almost in line with the target.

9In Healthcare, the profit over the outlook is in line with expectations, but in terms of YoY, the decrease in
Custom Chemicals sales due to the postponement of some sales to the next fiscal year will result in a decreaseof JPY0.7 billion in profit.
These are for 2H, and the lower part shows the figures for the full year.
As I mentioned earlier, the profit will decrease by JPY3.7 billion, of which JPY4.2 billion is attributable to Semis
Materials.
Below that are a decrease of JPY0.6 billion in Chemicals, a decrease of JPY2.1 billion in Performance Materials,
an increase of JPY0.2 billion in Agrochemicals, and a decrease of JPY0.4 billion in Healthcare.

On page 14, here is a breakdown of non-operating income/expenses and extraordinary income/loss. First, I
will talk about YoY changes.
The middle column, in blue, shows the results for 1H and the figures for the full year, and the rightmost column
shows the YoY changes. We expect a slight positive foreign exchange gain or loss for the year.
As for extraordinary income or losses, there is no change from the previous forecast made in May, and for 1H,
we have already recorded an extraordinary income of JPY0.6 billion, which is a gain on sales of securities, as
planned. The annual plan of JPY1.2 billion remains unchanged.

10Please see page 15, which shows comparisons of non-operating income/expenses and extraordinary
income/loss to the outlook as of May. I hope you will look at this later.
One point I would like to touch on is that the rightmost column of non-operating income/expenses shows anincrease of about JPY1.9 billion from the previous forecast for the full year. Normally, foreign exchange
gains/losses are set flat at zero at the beginning of the year, but the appreciation of the US dollar in 1H has
resulted in a gain of about JPY1.9 billion. Extraordinary gains/losses remain unchanged.

11Page 16 shows cash flows.
A little to the right of the middle, you will see the total in the November 2023 announcement. The column tothe left is 1H results, and if you compare it YoY, as indicated to the right of it, you will see that free cash flow
remained almost unchanged YoY.
Cash flow from operating activities is JPY35.1 billion, while cash flow from investing activities is an outflow ofabout JPY20.0 billion. As for cash flow from financing activities, due to payout to shareholders and a slight
cash-in in borrowings, we expect to have JPY26.0 billion in cash and cash equivalents at the end of the fiscal
year, which will indicate continuously sufficient cash flow.

12Page 17 is the balance sheets.
If I explain it briefly, inventories have increased by about JPY9.0 billion compared to the end of March, asshown in the asset section in the upper left-hand side.
In addition, PPE has increased at NCK, the Semis Materials plant in Korea, but accounts receivables havedecreased because 1H is the collection period as usual. As a result, the Company's assets decreased by about
JPY6.0 billion.
On the other hand, with regard to the liabilities side and net assets on the right, borrowings decreased by
JPY15.3 billion from the end of March, but this is also a normal operation in that we are reducing borrowings
in accordance with collections of accounts receivable. As a result, equity ratio was 76.1% at the end of
September.
In the lower left-hand corner, the breakdown of investment securities shows that as of the end of September
this year, the strategic shareholdings on net assets were 8%, and as you can see, this has almost halved fromthe figure at the end of March 2018.

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I would like you to see page 18 later, but as you will see in the footnote for *1 Capex, we have changed theway we tabulate the figures this time to be based on cash flow.

14Please see page 19 later as well.
From page 20, we provide a series of numbers as segment performance. Pages 21 and 22 show the 1H YoYchange and comparison to outlook by segment, while pages 23 and 24 show the YoY change and comparison
to outlook for the full year. Please refer to them later.

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Now, I will briefly explain the 1H results and the revised outlook for FY2023 for each segment.
The first is Chemicals, which is on page 25 for overview.

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On page 26, these are the growth rate figures for sales in main products. The left-hand side shows the previous
outlook announced in May, and the right-hand side shows the revised outlook in blue.
In Fine Chemicals, 1H sales declined 22% and are below the outlook, because sales of TEPIC declined. For 2H,
the figures have been downwardly revised mainly in TEPIC, which results in an expectation of 4% decrease for
FY2023 full year.
For Basic Chemicals, we saw a 1% sales decline in 1H and a downward swing compared to our outlook, as we
expect a 1% increase in sales for the full year.
The result would be an overall 1% decrease in sales for the full year.

17The next page, page 27, is an analysis of the increase/decrease in Chemicals, which has seen a large downward
revision in operating profit. This is shown as the upper graph.
As you can see in the graph, the volume and price increases seen at the beginning of the year were offset bya decrease in the volume of TEPIC and the impact of inventory adjustments, resulting in the downward swing
shown on the far right.
The graphs below show the inflows of Chinese products at low prices into the market, and as for TEPIC, theleft graph shows the market price of competing Chinese products from 1Q of FY2022 to 2Q of this fiscal year,with 1Q of FY2022 as 100.
Also, on the right side, the market price of competing products in China for Urea is shown.
As you can see, there was about a 50% reduction in TEPIC on the left, and about a 40% reduction in Urea on
the right. Against this backdrop, the revision to Chemicals, has incorporated the downward swing in bothvolume and the impact of inventory adjustments.

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The following pages are a brief description of the situation and figures for each major product in Chemicals,for 1H from pages 28 to 29, and for the full year and 2H from pages 30 and 31. Please take a look at themlater.
Page 28 is 1H actual YOY change.

19Page 29 is a 1H comparison with the outlook.

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Page 30 is a full year YOY change.

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Page 31 is a 2H comparison with the previous outlook.

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Next is Performance Materials. On page 34, this is a segment overview.

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Please skip to page 35 to see the sales trend, focusing on Display materials and Semis materials.
Incidentally, the three subsegments as a percentage of Performance Materials sales in FY2022 are shown inthis doughnut-shaped chart.
The graph in the middle shows the sales trend of Display Materials from FY2019 to FY2023. As you can see,we expect a 16% growth this fiscal year compared to the FY2022 results. This is a 6% increase over the May
outlook. The market bottomed out in FY2022 and is now showing signs of recovery. We also believe that theconversion from other modes to photo IPS will proceed smoothly.
The bottom graph shows the sales trend of Semis Materials. As this graph shows, we assume an 8% decreasein sales this fiscal year compared to the FY2022 results. At the beginning of the year, we had planned a 4%
increase over the FY2022, but in light of the current situation, we have decided to set the YoY figure at minus
8%. However, while FY2023 is a temporary adjustment phase, we recognize that the medium- to long-term
growth trend will remain unchanged.
In addition, EUV materials, in particular, have been growing due to customers' production and other factors
even during this adjustment phase.

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The next page 36 shows the growth rate of sales of main products in Performance Materials.
In the table below, the blue area shows the figures after the current review. Display Materials recorded a 17%
YoY increase in sales for a 1H, and an increase compared to the outlook. For the FY2023 annual period, as I
mentioned earlier, we expect a 16% increase in sales.
On the other hand, sales in Semis Materials fell 19% in a 1H, and will be also lower than our outlook, with an
8% decline for the full year, as I mentioned earlier. I think the results in 1H of FY2023 would be the bottom.
Finally, Inorganic Materials are as described here.

25For a 1H, as you can see at the top of this page 37, there was an increase of JPY1.8 billion in fixed costs for
Performance Materials as a whole. Among them, Semis Materials, as you can see in the lower right-handcorner, account for the majority of the increase, or JPY1.4 billion up. This is primarily a cost increase in NCK,
our subsidiary in Korea.

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Page 38 is a 1H comparison with the outlook.

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Next, page 39 is also about fixed costs, and as you can see at the beginning of this page, the annual increasein fixed costs is JPY2.9 billion, which is the overall figure for Performance Materials. Of this amount, JPY2.1
billion is attributable to Semis Materials in an increase in fixed costs.

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Please see page 40 later for a comparison to the outlook.

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Finally, regarding Performance Materials, especially Semis Materials, one of the materials that we are focusing
on for the future is 3D packaging process materials or temporary adhesive materials.
As shown in the upper part, the forecast for the AI server market indicates that it will grow considerably. In
this context, it is natural to expect an increase in demand for generative AI. We expect that sales of temporary
adhesive materials for HBM will increase along with the growth of the market. We expect a growth of demandfor HBM in servers and data centers, where they need high-spec memories that can handle large amounts ofdata at once.
The details of our materials are shown in the pictures below.

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Next is Agrochemicals. On page 42, this is a segment overview.

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On page 43, this shows the sales growth rate of our main products as always. In 1H, sales decreased 1% YoY.
They were also lower than the outlook.
On the other hand, we are forecasting a 3% increase in sales for the full year of FY2023, which is unchanged
from our May outlook.
If you look at the details, domestic sales of ROUNDUP and ALTAIR, in the upper rows, showed a relatively large
decrease in 1H. As a reference, the data from the Japan Crop Protection Association shows that shipments inthe domestic agrochemical market from April to August were below the previous year's level, which meansthat we are also affected by the overall market's YoY decline.
On the other hand, in GRACIA, as shown in the bar graph on the lower left, we are planning steady growth forthe current fiscal year. We revised upward with a 61% increase YoY.
As for the Animal Health products, Fluralaner, at the beginning of the year, we assumed an annual growthrate of 3%. In fact, the 1H results were up 5% YoY. In 2H, it is also expected to be positive, so the annual
growth rate is expected to be 9%.

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As in the past, the figures for Agrochemicals for 1H and full year are shown on pages 44, 45, 46, and 47, withcomments for each main products. Page 44 is a 1H YoY.

33

Page 45 is a 1H comparison with the outlook.

34

On page 46, this shows a full year outlook YoY.

35

Page 47 is a 2H comparison with the previous outlook.

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If you skip down to page 51, you will see the sales trend of Fluralaner. We have updated the FY2023 outlook
on the left side to the figures announced in November. We have updated the green bar graph on the right as
well.

37

On page 52, we have updated the status of NBR, our joint venture company in India.
NBR was added to consolidated subsidiaries in FY2022, but there is no change in the fact that commercial
operation started in March of this year. In FY2023, we expect to be profitable on non-consolidated basis, as
we have assumed.

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Next, here is the Healthcare segment. Page 53 is a segment overview.

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Page 56 is a 1H actual YoY.

40

Page 57 is a 1H comparison with the outlook.

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On the page 58, the figures on the far right, in the yellow box, in the bold line, show a decrease of JPY0.4
billion in operating profit for the full year.
However, as noted in the lower right-hand corner, there is some impact in that shipments have been shifted
to FY2024.

42

On the other hand, compared to the outlook at the beginning of the year, as shown on page 59, the annual
profit will be higher by slightly less than JPY0.3 billion.

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Finally, on the ESG topics, if you skip to page 62, you will see that we have updated some of the information
here. As for the S&P Carbon Efficient Index in the upper right corner, the Company has been selected as aconstituent for 5 consecutive years in June.
As for MSCI, in June, our ESG rating was upgraded by one notch, although it is still a single A rating.

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Page 64 is about reducing GHG emissions, and we have not changed this section from the previous description
we presented.
This is all I have to say.

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Question & Answer<Questioner 1>
Q: The overall performance of the Company, unfortunately, was a bit of a break in the continuous increase inprofit, and the target of the mid-term plan is JPY58.5 billion in operating profit in FY2024, and JPY67.0 billion
in FY2027, which seems to be quite far away. What measures would you like to take?
A: At this point, we do not think it is necessary to change these figures in our mid-term plan, but the businessenvironment has changed considerably from the time the assumptions were made. At the same time, thisadjustment phase in semiconductors market will not continue into the future, so we would like tocontinuously discuss this matter in line with these changes and forecasts.
Q: Inventory levels as a whole seem to be a bit high, but aren’t you concerned that they might drop all at onceand become even worse profit?
A: Regarding inventories, as you pointed out, there was a considerable increase at the end of September
compared to a year ago, especially in the Agrochemicals. We are also considering this as a temporary situation
as a new factory, such as NBR, is being launched as a future sales strategy.
I don’t think it will drop all at once. In any case, we will operate our businesses in light of the appropriate
inventories and impacts on operating profit.
Q: I understand. Thank you very much.

<Questioner 2>
Q: First, in Chemicals, you have reduced profits more than expected. What are the measures for improvementin the future? The market price for TEPIC and Urea in particular have declined. In terms of price competition
with Chinese manufacturers, it is probably not a temporary situation and will continue, so please tell me about
your improvement measures in this area.
A: For general applications, TEPIC is widely used as a material for powder coating, and is widely used in China
and North America. This is greatly affected by construction demand.
On the other hand, for electronic materials, TEPIC is used in solder resist ink and LED sealants, which isrelatively linked to the demand for electric materials and semiconductors.
For general applications, in China, there are many rival manufacturers, but a large number of products havebeen consumed in China.
However, with construction demand declining, perhaps due to a significant drop in domestic demand for
TEPIC, there is now a phenomenon of many TEPIC made in China being sold at low prices outside of China. It
is difficult to say how much longer this will continue, but we expect prices to pick up somewhat in responseto changes in construction demand in China.
In addition, we are in the process of examining ways to reduce costs within the plant and to switch to lessexpensive raw materials, assuming that the situation will actually continue for a long period.

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Q: In terms of intensified competition with Chinese products, in terms of TEPIC, have Chinese manufacturers
entered the market for both general applications and electronic materials?
A: Yes, that is right.
Q: I understand. With regard to what you just said, it seems to me that nothing will change unless the economy
in China recovers and consumption in China increases. Can we expect an improvement of profits through cost
reduction or other measures?
A: We are currently studying the possibility of slightly modifying the raw materials, and we are also making
adjustments to how to reduce costs by adjusting operations.
Q: One more point, please. As for Semis Materials, if we look at it in terms of quarters, do you expect arecovery from around 3Q, or do you expect a delay until 4Q with 3Q as being on par with 2Q? What is thestatus of recovery at the semiconductor market?
A: In terms of QoQ, in 3Q it is expected to be up by low double-digit percentages compared to 2Q for
semiconductors as a whole, and then in 4Q it is expected to be up by high single-digit percentages compared
to 3Q on a QoQ basis.
Q: So, are you saying that the growth rate is higher from 2Q to 3Q?
A: 2Q results were tough, so that would be the result.
Q: I understand. Thank you very much.

<Questioner 3>
Q: I would also like to ask two questions. The first question is about Fluralaner, I was a little concerned about
the performance of Fluralaner because Merck's financial results showed a decline in sales for BRAVECTO in
the July-September period, but from what you said today, your company's Fluralaner has been revised upwardfrom the initial plan and appears to be doing well.
Does this mean that you have received some production plans from Merck and that they are better than theinitial estimates with a high degree of certainty?
A: As you pointed out, Merck's figures for the July-September period were slightly down, but our sales of
Fluralaner are expected to increase slightly.
There are positive factors such as the start of sales of some products for cattle, with competition for internaland external parasites having settled down to some extent, sales of BRAVECTO are becoming more stable.
Q: Thank you very much. I think development has been accelerated with the establishment of a new Animal
Care Planning Group. Do you have any updates in that area?
A: The Animal Care Planning Group is considering advancing comprehensive agreements, such as joint
research, to advance research. However, we do not expect it to show up as a number in a few years, so we
believe that the most important thing is to expand Fluralaner first.
There are topics such as the registration of injectable drugs in Australia, and we are hoping that this will spreadto other countries.

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Q: You mentioned products for cattle, but compared to the past, is there a certain amount of increase in
EXZOLT for livestock animals, and can you give us some idea of what the ratio has been for dogs, cats, andlivestock in the recent past?
A: Compared to BRAVECTO for dogs and cats, the number of EXZOLT products themselves is still far fewer.
We are still in the process of spreading the use of these products. I would like you to understand that theoverwhelming majority of these products are for dogs and cats.
Q: Secondly, I would like to ask you about Agrochemicals. The demand environment is becoming very toughglobally. Regarding the domestic market, however, three months ago, you said that the distribution inventory
had been cleared by the end of June. How do you see about the current distribution inventory? Also, could
you explain the factors behind the movements by product, especially on GRACIA, ALTAIR, ROUNDUP, andLEIMAY?
A: The global demand for agrochemicals has been sluggish overall, with North America being the hardest, but
I think there is a slight upward trend in Brazil and other countries.
In the domestic market, the inventory situation has been affected by producers' reluctance to buy due to last
year's price hike. Our sales have been influenced. However, the current inventory level from our point of viewis quite low at the user level, and the inventory level of our customers is not so high either, so I think that the
impact from the reluctance to buy on users is large.
This is especially true in the field of rice herbicides such as ALTAIR. As for GRACIA, sales have been strong, andthe inventory level has been very low as users are very positive.
As for ROUNDUP, due to a series of typhoons and other things like rain that seemed to target holidays, sales
did not grow. In addition, this also occurred in 1Q, but the hot August and September heat waves caused a
decline in customer traffic to home centers, and this had a significant impact on sales. The level of inventory
in the distribution channel has decreased, and we intend to promote the performance of ROUNDUP and large
scale products in ROUNDUP in order to achieve a recovery in 2H.
As for LEIMAY, the impact was more significant overseas than in Japan, as the summer in Europe wasextremely hot and dry, and the use for potatoes decreased significantly, resulting in a decrease in sales.
Q: Can you also comment a little more on the factors behind the upward revision of GRACIA?
A: The upward revision in GRACIA is due to the fact that most of the domestic distribution inventory has beencleared, and although new competing agents have been introduced, GRACIA has been highly evaluated for its
effectiveness, as well as the sales boost from the launch of new packages.
In South Korea, the distribution inventory was temporarily high, but it has been cleared and sales increased.
In India, the product has been very effective and highly evaluated, and in addition, we were able to launch amixed product this year.
Q: I understand. Thank you very much.

<Questioner 4>
Q: As for Semis Materials, is there some specificity to the fact that you are moving toward recovery in 2H,
based on the inquiries from customers? In the area of Displays, with panel makers' utilization rates also
declining, could you comment on the probability of achieving the plan?

48

A: We recognize that what we should do in times of economic downturn is to firmly maintain, secure, andincrease our market share, and we have been taking sufficient measures to achieve this. Consequently, we
believe that we will be able to achieve our outlook for 2H if the market recovery proceeds as expected.
As for Displays, I think that accurate information is difficult to obtain in this area. The unit price of panels iscurrently on a slight downward trend, and the utilization rate is slightly declining, but we have set the 2H
budget based on our expectation that we will be able to maintain the 1H figure or add on top of the figuresof 1H.
Q: Thank you very much. The second point is also related to Performance Materials, and I understand thatyou have increased fixed costs for full year. Could you explain this part in detail?
A: We are assuming that fixed costs for Performance Materials as a whole will actually be about JPY0.6 billion
higher than the outlook at the beginning of the year. This includes, in particular, costs in Semis Materials,
which account for more than half of the total, such as increased costs for research laboratories and increased
amortization of plant and equipment.
Q: In the past, your company's fixed costs have tended to be lower than initial estimates, and it seems quite
unusual to see an increase in fixed costs. I would appreciate it if you could give me some more details on the
background. Are there, for example, strong inquiries for EUV or something?
A: As I just mentioned, the increase in fixed costs for research laboratories and other items is a figure thatemerged as we review our research activities on a daily basis, and we think that this level of increase is likely.
Q: I understand. Thank you very much.

<Questioner 5>
Q: As for the balance sheets, the inventory is building up. Could you please explain this? Also, what are yourthoughts on the risk of inventory write-offs or losses at the end of the fiscal year?
A: Regarding the inventories, as you pointed out, they have increased compared to the end of March andcompared to a year ago, and the majority of this increase is in Agrochemicals.
One of the reasons for this increase is that, for example, we are currently establishing new production bases
for NBR in India, and in such case it is necessary to purchase various raw materials in advance. As I mentioned
earlier, there is a part of our sales strategy to prepare for future sales expansion by acquiring inventories ofmajor products for the domestic and overseas markets ahead of schedule, so this is a temporary situation and
we are not worried about it.
As for whether there will be inventory write-offs or losses at the end of the fiscal year, we believe that there
will be no such possibility.
Q: Is there any kind of inventory buildup in the Chemicals area, such as TEPIC?
A: In Chemicals, we have conversely been reducing production considerably, and the year-end inventory isplanned to be considerably lower than at the beginning of the period.
Q: I understand. Thank you very much. That is all.
[END]

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