COMPANY RESEARCH AND ANALYSIS REPORT

SAKATA INX CORPORATION
4633
Tokyo Stock Exchange Prime Market

28-Apr.-2022
FISCO Ltd. Analyst

Masanobu Mizuta

FISCO Ltd.
https://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Packaging printing ink and digital & specialty products are its main businesses. ........................................
2. Distinctive strengths include global business deployment and environmentally friendly products. ..............
3. In FY2021/12, sales increased, and operating and ordinary income increased. ...........................................

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01
01

4. For FY2022/12 the Company forecasts a decrease in profits due to increase in raw materials costs,
but profits should recover in 2H due to revision of sales prices...................................................................

02

5. The Mid-term Business Plan is the stage to build a foundation to achieve the long-term strategic
vision...........................................................................................................................................................

02

6. Entering a new growth stage from its strength of environmentally friendly products and businessdeployment in new areas. . ...........................................................................................................................

02■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company profile.. ................................... ......................................................................................................
2. History................................................... ......................................................................................................
3. TPM activities........................................ ......................................................................................................

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05

■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 05
1. Business introduction............................ ......................................................................................................
2. Composition of net sales and operating income by segment......................................................................
3. Features and strengths.......................... ......................................................................................................
4. Risk factors and measures. . .........................................................................................................................

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■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 09
1. Summary of the FY2021/12 consolidated results.........................................................................................
2. Trends by segment.. .....................................................................................................................................
3. Financial position.........................................................................................................................................

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■Business outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 14
1. FY2022/12 consolidated results outlook. .....................................................................................................
2. Forecasts by segment. . .......................... ......................................................................................................

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15■Growth strategy----------------------------------------------------------------------------------------------------------------------------------------------------------- 17
1. Business theme...........................................................................................................................................
2. Long-term strategic vision...........................................................................................................................
3. Mid-term Business Plan 2023 (CCC-I)... ......................................................................................................
4. Investment plan...........................................................................................................................................
5. A new growth stage............................... ......................................................................................................

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■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 21■Initiatives for ESG management and for SDGs----------------------------------------------------------------------------- 22

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/█ SummaryEntering a new growth stage through development in new areas
leveraging strengths in environmentally friendly products
SAKATA INX CORPORATION <4633> (hereafter, “the Company”) is the world’s third largest printing ink manufacturer
with a history of 125 years since it was founded in 1896. With the business theme of the “Creation of Visual
Communication Technology,” it is entering a new growth stage through developments for new business areas.
1. Packaging printing ink and digital & specialty products are its main businesses
The Company’s businesses include a printing ink business and a digital & specialty products business. In the printing
ink business, the main products are packaging printing ink (for printing on paper packaging, such as corrugatedcardboard, paper bags, and containers; on packaging film for food, cosmetic, toiletries, daily goods and otherproducts; and on metal-deco cans, such as beverage cans). In the digital & specialty products business, the main
products are digital printing materials (industrial printer inkjet ink, and color and monochrome toners for laser
and multifunction printers) and image display materials for LCD panels (pigment dispersions for color filters). The
Company also has a business in printing ink for information media (ink used for newspapers and offset ink used
for a variety of commercial printing applications, such as books, magazines, catalogues, posters, brochures, andvouchers, etc.).
2. Distinctive strengths include global business deployment and environmentally friendly products
The Group’s distinctive strengths are in its global business deployment and its environmentally friendly, high-function,
high-value-added products. Currently, the Group operates manufacturing and sales bases in 20 countries andregions in Japan, Asia, the Americas, and Europe. The Americas and Asia have become its main pillars of earnings.
In environmentally friendly, high-function, high-value-added products, the Group has acquired a high market shareby utilizing the strengths it has cultivated over its 125-year history since its founding. These include development
capabilities and extensive lineup, including its original brand “Botanical Ink” series containing plant-derived components, as well as products with high levels of reliability and quality.
3. In FY2021/12, sales increased, and operating and ordinary income increased
In the FY2021/12 consolidated results, net sales increased by 12.4% year over year (YoY) to ¥181,487mn, operating
income increased by 2.8% to ¥7,414mn, ordinary income increased by 9.2% to ¥8,506mn, and net income attributable to owners of parent decreased by 6.5% to ¥4,933mn. Sales benefitted from a steady increase in ink sales
volume and a double-digit increase in digital & specialty products driven by a recovery in demand. In profits, from 2Q
onwards, the rise in raw materials and logistics costs was noticeable, but on a full-year basis, these increases wereabsorbed by increased sales volume, improvement in product mix, revisions to sales prices, and cost reductions in
the Group as a whole. Net income attributable to owners of parent decreased due to the recording of extraordinary
losses.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Summary

4. For FY2022/12 the Company forecasts a decrease in profits due to increase in raw materials costs, but
profits should recover in 2H due to revision of sales prices
The Company’s full year consolidated results forecasts for FY2022/12 is for net sales to increase by 9.1% YoY
to ¥198,000mn, operating income to decrease by 5.6% to ¥7,000mn, ordinary income to decrease by 2.4% to¥8,300mn, and net income attributable to the owners of the parent to grow by 15.5% to ¥5,700mn. Despite aforecast for sales growth reflecting increased sales volumes due to sales expansion and so forth, in profits, operating
income and ordinary income are forecast to decrease due to impacts such as high raw materials and logistics costs,
as well as increases in expenses associated with strategic investments such as digital transformation. Nevertheless,looking at the situation by half-year, 1H net sales are forecast to rise by 9.2% YoY to ¥96,800mn, with operating
income to fall by 46.5% to ¥2,700mn. 2H net sales are expected to increase by 9.0% to ¥101,200mn, and operating
income is expected to increase by 81.5% to ¥4,300mn. In 1H, the impact of high raw materials and logistics costs
will emerge first; however, in 2H, this impact will be mitigated by progress on sales price revisions and the impact ofincreased sales volumes, with profits expected to begin recovering. We consider it highly possible that results willbottom out in FY2021/12 2H and FY2022/12 1H, and then begin to recover.
5. The Mid-term Business Plan is the stage to build a foundation to achieve the long-term strategic vision
As the strategic direction in its long-term vision SAKATA INX VISION 2030, the Company has set “Strengthen our
ESG /sustainability efforts emphasizing the global environment and local community,” “Expand printing inks/digital &specialty products,” and “Meet new market challenges.” It has positioned the Mid-term Business Plan 2023 CCC-I
as the first stage to build the foundation toward achieving the long-term strategic vision, and is actively working tostrengthen sustainability management and commercialize new business areas with a focus on four chemical fields(environmental and biochemicals, energy chemicals, electronics chemicals, and optochemicals).
6. Entering a new growth stage from its strength of environmentally friendly products and businessdeployment in new areas
Against the backdrop of rising interest in global environmental problems and SDGs, global demand in the printing inks market is also shifting to environmentally friendly products. Therefore, plenty of room remains for theenvironmentally friendly products market to expand and develop. The Company is acquiring high market sharesfrom its strengths of development capabilities for and an extensive lineup of environmentally friendly products, so
the business environment can be said to be excellent for the Company. In addition, to respond to these market
developments, its policy is to develop and market launch environmentally friendly products and to be even more
active in deploying businesses for new areas. It has a track record of global business deployment in advance of its
industry peers and an abundance of expertise in launching products tailored to the regional characteristics of eachcountry. As it is entering a new growth stage, we, at FISCO, think that its growth potential is significant.
Key Points
Main products are packaging printing ink and digital & specialty productsDistinctive strengths include global business deployment and environmentally friendly products• FY2022/12 forecast for decrease in profits due to high raw materials and logistics costs, with recovery in 2H• Significant growth potential with entry into a new growth stage••

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION

28-Apr.-2022

4633 Tokyo Stock Exchange Prime Market

http://www.inx.co.jp/english/

Summary

Results trend
Net sales (left)(¥mn)

Operating income (right)
198,000

200,000

181,487
162,056

167,237

15,000161,507160,000

12,000120,000
7,212

7,414

6,225
80,000

(¥mn)

9,000
7,000
6,000

5,112

40,0003,000

00FY2018/12

FY2019/12

FY2020/12

FY2021/12

FY2022/12 E

Source: Prepared by FISCO from the Company’s financial results█ Company profile
A major global printing ink manufacturer with strengths inenvironmentally friendly products
1. Company profile
The Company is the world’s third largest printing ink manufacturer with a history of 125 years since its establishment
in 1896 and its strengths include environmentally friendly products. With the business theme of the “Creation ofVisual Communication Technology,” it is entering a new growth stage through business deployment in new areas.
The locations of the Company’s head offices are the Osaka Head Office (Nishi Ward, Osaka City) and the Tokyo Head
Office (Bunkyo Ward, Tokyo), while its production bases in Japan are the Tokyo Plant (Noda City, Chiba Prefecture),
the Osaka Plant (Itami City, Hyogo Prefecture), the Shiga Plant (Maibara City Shiga) and the Hanyu Plant (Hanyu City,
Saitama Prefecture). In 1960, the Company established its first overseas office in the Philippines (Manila), followed
by a succession of establishments of local subsidiaries in key overseas bases.
The Group (as of the end of FY2021/12) is comprised of 26 consolidated subsidiaries and 4 equity-method affiliates,
and it operates manufacturing and sales bases in 20 countries and regions in Japan, Asia, the Americas and Europe.
It has also added a Germany-based A. M. Ramp & Co. GmbH (hereafter, “RUCO”) to its consolidated subsidiaries
from FY2021/12 following completion of the acquisition in June 2020. SIIX Corporation <7613>, an independent
spin-off of the Company in 1992, is an equity-method affiliate.
At the end of the FY2021/12, total assets were ¥166,899mn, net assets were ¥92,465mn, capital was ¥7,472mn,
the equity ratio was 51.8%, and the number of issued shares was 62,601,161 shares (including 4,164,408 treasury
shares).
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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Company profile

2. History
Founded in 1896 in Osaka as a small business under the name of SAKATA INK SEIZOUSHO, the Company started
manufacturing and selling newspaper ink. In 1920, it was incorporated as a limited company. In 1961, the Company
listed its shares on the Second Section of the Osaka Securities Exchange and was reassigned to the First Sectionin 1962. In 1987, it changed its corporate name to SAKATA INX CORPORATION. In 1988, it listed its shares on theFirst Section of the Tokyo Stock Exchange. Subsequently, the Company also utilized M&A to accelerate its global
business deployment to Asia, the Americas, and Europe. On April 4, 2022, the Company transferred its listing to
the Prime Market under the new market classification of the Tokyo Stock Exchange.
HistoryYear

Main Event

1896

Founded (under the name SAKATA INK SEIZOUSHO) as a private company in Osaka City, and started manufacture and sales ofprinting ink for newspapers

1906

Name changed to SAKATA SHOKAI

1911

Successfully industrialized the production of varnish for printing ink using linseed oil for the first time in Japan

1920

Changed to limited company

1947

Established SAKATA SANGYO, LIMITED by spinning off the industrial chemicals division into an independent company

1959

Constructed and commenced operation of Itami Plant (now Osaka Plant) in Itami City, Hyogo Prefecture

1960

Opened an overseas office in the Philippines (Manila) (a succession of major overseas offices and subsidiaries were establishedthereafter)

1961

Listed on the Second Section of the Osaka Securities Exchange

1962

Reassigned to the First Section of the Osaka Securities Exchange

1969

Constructed and commenced operation of Noda Plant (now Tokyo Plant) in Noda City, Chiba Prefecture

1982

Established SAKATA GENZOUSHO CO., LTD. (now SAKATA LABOSTATION CO., LTD.)1987

Established SAKATA INX ESPANA, S.A. in Spain
Corporate name changed to SAKATA INX CORP.

1988

INX INTERNATIONAL INC. (now THE INX GROUP LTD.) established in the U.S.A. as a holding company
Acquired ACME PRINTING INK CO. in the U.S.A.
Listed on the First Section of the Tokyo Stock Exchange

1989

Established PT. SAKATA INX INDONESIA as a joint venture in Indonesia that manufactures and sells printing ink
Acquired MIDLAND COLOR CO. in the U.S.A.
Acquired CHEMICAL PROCESS SUPPLY in the U.S.A.

1992

Consolidated ACME PRINTING INK CO. and MIDLAND COLOR CO. in the U.S.A. under the name of INX INTERNATIONAL INK CO.
Established SAKATA INX INTERNATIONAL CORP. (now SIIX CORPORATION <7613>), and transferred businesses related tointernational trading of electronic components and other products to the Company
Established THE INX GROUP (UK) LTD. that manufactures and sells printing ink (now INX INTERNATIONAL UK LTD.) in the U.K.

1993

Established MEGA FIRST SAKATA INX (now SAKATA INX (MALAYSIA) SDN. BHD) in Malaysia

1994

Constructed and commenced operation of Hanyu Plant in Hanyu City, Saitama Prefecture
Renamed Tokyo Branch to Tokyo Head Office, and instituted a dual Osaka and Tokyo Head Office system

1995

Established MONTARI SAKATA INX LTD. (now SAKATA INX (INDIA) PRIVATE LTD.) in India

1996

Acquired ISO9001 certification at Tokyo Plant (Osaka Plant, Shiga Plant and Hanyu Plant later acquired certification)

1997

Completed construction of the Technology Building at Osaka Plant

1999

Agreed to strategic alliance with TOYO INK MFG. CO., LTD. (now Toyo Ink SC Holdings Co., Ltd. <4634>)

2000

Established the 50-50 joint venture company LOGI CO-NET CORP. with TOYO INK MFG. CO., LTD. (now Toyo Ink SC Holdings Co.,Ltd.)
Agreed to a capital alliance with TOYO INK MFG. CO., LTD. (now Toyo Ink SC Holdings Co., Ltd.)

2001

Acquired ISO14001 certification at the three main plants (Tokyo, Osaka and Hanyu) (subsequently also acquired for the Shiga Plant)

2002

Established ETERNAL SAKATA INX CO., LTD. in Thailand
Established SAKATA INX SHANGHAI CO., LTD. in China (Shanghai)

2003

Completed construction of the Technology and Laboratory Building at Osaka Plant
Established SAKATA INX VIETNAM CO., LTD. in Vietnam

2004

Established a holding company INX EUROPE LTD. in the U.K.
Established MAOMING SAKATA INX CO., LTD. in China (Guangdong Province)
The three main plants (Tokyo, Osaka and Hanyu) earned the Award for TPM Excellence, Category 1, in the 2004 TPM ExcellenceAwards

2005

Established TRIANGLE DIGITAL INX CO. in the U.S.A. (absorption merger with INX INTERNATIONAL in 2013)2008

Acquired MEGAINK DIGITAL A.S. in Czech (now INX DIGITAL CZECH, A.S.)
Acquired ANTEPRIMA S.R.L. in Italy (now INX DIGITAL ITALY S.R.L.)
Acquired OSHMS certification at Tokyo Plant (including Hanyu Plant, subsequently also acquired for the Osaka and Shiga plants)

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Company profile

Year

Main Event2009

Acquired OSHMS certification at Osaka Plant

2010

The three main plants (Tokyo, Osaka and Hanyu) earned the Award for Excellence in Consistent TPM Commitment in the 2010 TPM
Excellence Awards

2012

The three main plants (Tokyo, Osaka and Hanyu) earned the Award for TPM Achievement in the 2012 TPM Excellence Awards

2014

Commenced operation at Shiga Plant in Maibara City, Shiga Prefecture

2015

Changed fiscal year-end from March to December

2016

Celebrated the120th founding anniversary
Acquired CREATIVE INDUSTRIA E COMERCIO of Brazil (currently INX DO BRASIL) as its first production base in South America

2017

Received the certification as a leading company in Osaka City for empowering women
Earned the TPM Advanced Special Award for its four main domestic plants (in Tokyo, Osaka, Shiga, and Hanyu)

2019

The plant in China (Maoming City, Guangdong Province) was certified as a “clean production-certified company.”Completed the second plant in Ho Chi Minh City, Vietnam

2020

Acquired a German company A.M. Ramp & Co. GmbH (hereafter, “RUCO”)
Collaboration with Shiga University in the data science field
Capital participation in R Plus Japan, Ltd.

2021

Started the long-term strategic vision “SAKATA INX VISION 2030”

2022

Shifted listing to the Tokyo Stock Exchange Prime Market

Source: Prepared by FISCO from the Company’s website, securities reports, news releases, and long-term strategic vision briefing materials

3. TPM activities
For the Company’s TPM (Total Productive Maintenance) activities, which it has been conducting continuously formore than 20 years, in December 2017, it received the TPM Advanced Special Award for its four main domestic
plants (Tokyo, Osaka, Shiga, and Hanyu). TPM is advocated by the Japan Institute of Plant Maintenance, which has
highly evaluated the Company for building innovative production methods and its business deployment overseas.

█ Business overview
Conducts the printing ink business, whose main products arepackaging printing inks, and the digital & specialty products
business
1. Business introduction
The Company’s businesses are the printing ink business that manufactures and sells packaging printing ink andink for information media, and graphic arts materials business, digital & specialty products business and otherbusinesses.
In the printing ink business, the SAKATA INX Group focuses primarily on packaging printing ink (for printing on
paper packaging, such as corrugated boards and paper containers; packaging film for food, cosmetics, toiletries,
daily goods, and other products; and metal-deco cans, such as beverage cans) for each market in Japan, Asia,
the Americas and Europe. The percentage of total sales provided by printing ink for information media (ink used forprinting newspapers and offset ink used for a variety of commercial printing applications, such as books, magazines,
catalogues, posters, brochures, vouchers, etc.) is declining and its impact on results as a whole has lessened.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Business overview

In the digital & specialty products business, the Company manufactures and sells digital printing materials (industrial
inkjet ink used for large output items and textiles, and toners used for laser and multifunction printers), image display
materials for LCD panels (pigment dispersions for color filters), and functional coating materials for each market in
Japan, Asia, the Americas and Europe.
In the graphic arts materials business, the SAKATA INX Group procures and sells plate-making materials and related
equipment, mainly in the Japanese market. Products include computer-to-plate (CTP) setters, CTP plates, inkjet
proofers, inkjet proof paper, editing software, color management systems and ink dispensers.
In the other businesses, the SAKATA INX Group primarily conducts chemicals business (SAKATA SANGYO, LIMITED)and a display-related service business (SAKATA LABOSTATION Co., Ltd.) mainly in the Japanese market.

Asia and the Americas are pillars of earnings in the Company’s
global development
2. Composition of net sales and operating income by segment
In its consolidated accounts, the SAKATA INX Group has adopted the following reportable segments: printing
inks and graphic arts materials (Japan), printing inks (Asia), printing inks (Americas), printing inks (Europe), digital& specialty products and other businesses. Looking at the percentages of total operating income by segment, asa result of its early progress on global expansion after establishing its first overseas representative office in 1960
(Manilla, Philippines), Asia and the Americas, in which there remains plenty of room to open-up the markets, haveprovided at least 50% in total from an early stage and are the main pillars of earnings.
Trends in percentages of net sales and operating income by segment(before consolidated adjustments)
FY2017/12

FY2018/12

FY2019/12

FY2020/12

FY2021/12

Printing inks and graphic arts materials (Japan)

33.4%

32.3%

29.6%

28.4%

26.4%

Printing inks (Asia)

18.4%

18.9%

20.2%

19.3%

20.1%

Printing inks (Americas)

26.4%

26.5%

27.9%

29.3%

28.7%

Printing inks (Europe)

5.3%

5.5%

5.6%

6.0%

8.3%

Digital & specialty products

6.9%

7.2%

7.1%

7.0%

7.5%

Other businesses

9.6%

9.6%

9.6%

10.0%

9.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Printing inks and graphic arts materials (Japan)

28.4%

25.2%

15.0%

14.9%

19.1%

Printing inks (Asia)

29.5%

34.2%

44.0%

37.2%

31.4%

Printing inks (Americas)

23.0%

22.2%

35.4%

44.8%

20.5%

Printing inks (Europe)

0.3%-17.7%-17.9%

-6.6%

-2.6%

Digital & specialty products

14.3%

27.4%

16.8%

7.3%

26.6%

Net sales

Totals before consolidated adjustments
Operating income

Other businesses
Totals before consolidated adjustments

4.4%

8.7%

6.7%

2.4%

4.9%

100.0%

100.0%

100.0%

100.0%

100.0%

Note: Printing inks (North America) was changed to printing inks (Americas) from FY2019/12 onward
Source: Prepared by FISCO from the Company’s financial results

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Business overview

For the percentages of operating income by segment in FY2021/12 (before consolidated adjustment), printing inks
and graphic arts materials (Japan) provided 19.1%, printing inks (Asia) 31.4%, printing inks (Americas) 20.5%,
printing inks (Europe) -2.6%, digital & specialty products 26.6% and other businesses 4.9%. In Japan, profits
increased, partly from the contribution of cost reductions, and its percentage increased. The percentages of Asia andthe Americas declined due to a decrease in profits caused by the impacts of the rise in raw materials and logistics
costs. In Europe, losses narrowed, partly reflecting the effects of a new consolidation in Germany and the effects ofthe structural reforms. The digital & specialty products segment saw demand recover from the impacts of the novel
coronavirus pandemic of FY2020/12 (“COVID-19 pandemic”) and its percentage also rose.

Has high market shares of environmentally friendly products, its
strength
3. Features and strengths
The Company’s strengths lie in the development capabilities and extensive line-up of environmentally friendly,
high-function and high-value-added products that it has amassed a 125-year history since it was founded in 1896,
as well as the high reliability and quality of its products.
The Company has an abundant line-up of environmentally friendly, high-function and high-value-added products.
These include Botanical Ink, which contains 10% or more of plant-derived components in its ink solid constituents;
plant oil ink, which replaces mineral oil with various vegetable oils (such as soybean oil); non-VOC ink, which contains
less than 1% high-boiling-point petroleum solvent among its constituents; non-toluene, non-MEK ink, which does notuse organic-solvent toluene or MEK (methyl ethyl ketone); and water-based flexo ink, which offers high performance
while being water based. In particular, the Company’s original brand Botanical Ink, launched at the end of 2016, uses
plant-derived ingredients and is being used in the packaging of major convenience stores and food manufacturers.
Furthermore, the product line-up in the Botanical Ink series is expanding. EcoPlata, a water-based flexo ink forpaper bags, and EcoPino, a water-based gravure ink for paper cartons, have been launched. Printed items that use
Botanical Ink can have the Company’s registered trademark printed on their packages.
Botanical Ink markSource: Reprinted from the Company’s website

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Business overview

In ink for information media, the percentage of environmentally friendly products has reached more than 95%. In
newspaper ink, the Company has greatly earned the trust of newspaper companies, including for its high-coloration
ink called NEWS WEBMASTER Ecopure (Eco Mark certified), and its color management system that manages colors
in response to the shift to high quality color paper. For offset ink as well, it aims to introduce environmentally friendly
products to the market as an industry pioneer, and it is progressing the development of the Dream Cure series of
UV curable inks that are compatible with the high-sensitivity UV printers that have become popular in recent years.
Both domestically and overseas, the Company’s mainstay products are its environmentally friendly, high-function andhigh-value-added products positioned above midrange. It has acquired high market shares for its environmentallyfriendly products. In terms of market shares in the packaging printing ink field (the Company’s estimates), it has theleading share in Japan for flexo ink for printing on packaging such as corrugated boards, which it began developingat an early stage ahead of others in the industry. Also, it has the second leading share in Japan for gravure ink for
printing on film packaging, such as for food, daily goods, and other items, and the leading share worldwide formetal-deco ink for printing on beverage cans and other cans.

Strengthening measures for Group synergies to respond to theincreases in raw material prices
4. Risk factors and measures
The major risk factors that could affect earnings include rise in raw material prices, decline in demand due to an
economic downturn and the trend of digitalization having to respond to environmental constraints and societal issues,
the intensification of competition, and the effects of exchange rates alongside the global business deployment.
In particular, with regard to high raw material prices, there is time lags between the time of increases in raw material
prices and their reflection in sales prices, which may impact results. Main raw materials are affected by conditionsin China, which supplies the majority of global production, while resins and solvents are affected by the prices
of crude oil and naphtha. Looking at the trends in raw material prices, with regard to pigment prices, from 2017
onwards factors such as the impact of stronger environmental regulations and changes in energy polices in China
sharply lowered the supply capacity of Chinese manufacturers, resulting in continued high prices. Regarding pricesof petroleum-derived materials, a temporary downtrend occurred in 2020 due to the drop in oil prices under the
impact of the COVID-19 pandemic; however, the trend must be monitored carefully going forward as oil prices arerising with the subsequent easing of COVID-19 impacts and economic sanctions on Russia. The impact of raw
material prices tends to have a time lag depending on the region (for example, in Japan it takes around six months
longer than other areas). To respond to these fluctuations in the prices of raw materials, the Company is advancing
optimization through revisions to sales prices, while it is also reducing raw material costs through Group synergies(including joint purchases of raw materials) and strengthening initiatives to improve productivity to mitigate the impactof the rise in the prices of raw materials.
With regard to the responses to environmental constraints and societal issues, against the backdrop of the global
trend to strengthen initiatives for environmental issues, a movement to impose environmental regulations is strengthening in the major countries. However, this means there is still plenty of room for the environmentally friendly products
market to grow. This can be said to be a good business environment for the Company, which has acquired highmarket shares from its strengths of development capabilities and an extensive line-up of environmentally friendly
products.

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08 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/█ Results trends
In FY2021/12, sales increased, and operating and ordinary income
increased
1. Summary of the FY2021/12 consolidated results
In the FY2021/12 consolidated results, net sales increased by 12.4% YoY to ¥181,487mn, operating income roseby 2.8% to ¥7,414mn, ordinary income grew by 9.2% to ¥8,506mn, and net income attributable to owners of parent
decreased by 6.5% to ¥4,933mn. Moreover, under extraordinary losses, the Company recorded loss on disposalof fixed assets of ¥425mn and provision of allowance for doubtful accounts of ¥565mn arising from inappropriate
transactions occurring at a consolidated subsidiary (Sakata Sangyo, Limited). As a result, net income attributableto owners of parent decreased.
Summary of the FY2021/12 consolidated results(¥mn)
FY2020/12

FY2021/12

Results

Results

YoY

Rate of change
after excluding
foreign currencytranslation
impactPrevious forecast
dated November
12, 2021

Achievement
rate of previous
forecast

161,507

181,487

12.4%

9.8%

181,000

100.3%

Operating income

7,212

7,414

2.8%

1.6%

7,500

98.9%

Ordinary income

7,789

8,506

9.2%

8.8%

8,600

98.9%

Net income attributableto owners of parent

5,275

4,933

-6.5%

-7.1%

6,000

82.2%

Net sales

Note: Average exchange rates during the period ¥106.82 (FY2020/12) and ¥109.80 (FY2021/12) to US$1
Source: Prepared by FISCO from the Company’s supplemental results briefing materials and news releases

The average exchange rate for the fiscal year was ¥109.80 to US$1 (¥106.82 to US$1 in FY2020/12) and after
excluding the effects of exchange rates, net sales increased by 9.8% YoY, operating income rose by 1.6%, ordinary
income grew by 8.8%, and net income attributable to owners of parent decreased by 7.1%. Net sales, operating
income, ordinary income, and net income attributable to owners of parent were all more or less at the forecast levelcompared to the previous forecast (issued on November 12, 2021, with net sales revised upward and all profit levels
revised downward at net sales of ¥181,000mn, operating income of ¥7,500mn, ordinary income of ¥8,600mn, andnet income attributable to owners of parent of ¥6,000mn).
Sales benefitted from a steady increase in ink sales volume and a double-digit increase in digital & specialty
products driven by a recovery in demand. In profits, from 2Q onwards, the rise in raw materials and logistics costs
were noticeable, but on a full-year basis these increases were absorbed by increased sales volume, improvementin product mix, revisions to sales prices, and cost reductions in the Group as a whole. Gross profit increased by
6.3%. The gross profit margin decreased by 1.2 percentage points (pp) to 20.8%. SG&A expenses increased only
by 7.2%, but the SG&A expenses ratio decreased 0.8 pp to 16.7%. In non-operating income, equity in earnings ofaffiliates increased by ¥678m (FY2020/12 ¥314mn, FY2021/12 ¥992mn).

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09 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION

28-Apr.-2022

4633 Tokyo Stock Exchange Prime Market

http://www.inx.co.jp/english/

Results trends

The factors causing operating income to increase and decrease were as follows. The operating income increase
factors were ¥4.35bn from the rise in the printing ink unit price (improvement in product mix and price revisions),¥4.03bn from the increase in printing ink sales volume, ¥1.33bn from the sales of digital & specialty products,¥0.16bn from the sales of graphic arts materials, ¥0.19bn from the sales in other businesses, ¥0.08bn due to theimpact of foreign currency translations. The decrease factor was ¥9.93bn from the rise of printing ink costs (rise of
raw materials prices and logistics and other costs), and ¥0.01bn as the adjustment amount.
The operating income YoY change factors in FY2021/12

Source: Reprinted from the Company’s results briefing materials

Looking on a half-year basis, in the 1H, net sales were ¥88,676mn and operating income was ¥5,045mn, while inthe 2H net sales were ¥92,811mn and operating income was ¥2,369mn. Sales were steady due to increase in sales
volume resulting from sales expansion; however, in the 2H, operating income was impacted by higher-than-expected
increases in raw materials and logistics costs, which could not be offset by increase in sales volume, revision ofsales prices, and controls on expenses.

Trends in net sales and operating income on a quarterly basis(¥mn)

Net sales (left)

Operating income (right)

60,000

(¥mn)
3,000

2,772

50,00041,189 41,978 41,445 42,625 41,269
40,00038,203

2,237
39,9452,273
43,223

1,589 1,462

1,349

20,000

2,000

1,794

1,908

1,825

47,850 2,500

45,45342,09030,00044,961

1,500

1,273

1,211 1,158

10,000

1,000
500

0

0
1Q

2Q

3Q

FY2019/12

4Q

1Q

2Q

3Q

FY2020/12

4Q

1Q

2Q

3Q

4Q

FY2021/12

Source: Prepared by FISCO from the Company’s financial results

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10 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION

28-Apr.-2022

4633 Tokyo Stock Exchange Prime Market

http://www.inx.co.jp/english/

Results trends

Printing inks (Americas) experienced a sharp decrease in profit due
to the impact of high costs
2. Trends by segment
FY2021/12 net sales and operating income by segment(¥mn)
FY2020/12

FY2021/12

YoY

Net sales
Printing inks and graphic arts materials (Japan)

48,07150,4444.9%

Printing inks (Asia)

32,597

38,574

18.3%

Printing inks (Americas)

49,51054,93010.9%

Printing inks (Europe)

10,164

15,92956.7%

Digital & specialty products

11,844

14,32821.0%

Reportable segment total

152,187

174,207

14.5%

Other businesses

16,984

17,229

1.4%

Total

169,171

191,437

13.2%-7,664-9,949-161,507

181,487

12.4%

Printing inks and graphic arts materials (Japan)

1,252

1,366

9.1%

Printing inks (Asia)

2,451

2,244

-8.4%

Printing inks (Americas)

2,953

1,464

-50.4%

Printing inks (Europe)

-432

-188

-

Digital & specialty products

549

1,901

245.9%

Reportable segment total

6,774

6,788

0.2%

157

350

123.0%

Total

6,931

7,139

3.0%

Adjustments

281

275

-

7,212

7,414

2.8%

Adjustments
Consolidated net sales
Operating income

Other businesses

Consolidated operating income
Source: Prepared by FISCO from the Company’s financial results(1) Printing inks and graphic arts materials (Japan)
In printing inks and graphic arts materials (Japan), net sales increase by 4.9% YoY to ¥50,444mn and operating
income rose by 9.1% to ¥1,366mn. Sales increased overall due to growth in sales of packaging printing ink (gravure ink used for flexible packaging, flexo inks for corrugated boards, etc.) driven by increases in demand for eating
at home and e-commerce purchases, and so forth, as well as a contribution from an increase in machinery sales;
although newspaper ink sales decreased due to impacts such as the COVID-19 pandemic and the progress ofdigitalization. Profits increased overall, mainly reflecting the contribution from favorable performance in packaging
printing inks, improvement in the product mix, including due to the growth of sales of environmental-responsivefunctional varnish and cost reductions (controlling SG&A expenses such as travel expenses). Furthermore, inJapan raw material cost increases tend take around six months longer to take effect than other regions, so theimpact of the increase in raw materials costs was comparatively smaller than in other regions.

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11 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Results trends(2) Printing inks (Asia)
In printing ink (Asia), net sales increased by 18.3% YoY to ¥38,574mn and operating income decreased by 8.4%
to ¥2,244mn. Sales increased sharply, mainly reflecting growth in sales volume for gravure ink used for flexible
packaging due to a recovery in demand from the COVID-19 pandemic and the effects of sales expansion, while
the sales price revision also contributed. Nevertheless, profits decreased due to the impact of high raw materials
and logistics costs. Looking at demand trends by region, in India and Thailand, sales expansion of gravure ink
made good progress. In India, newspaper ink saw a gradual recovery in demand, which had fallen due to theimpact of the COVID-19 pandemic, while printing ink for packaging made steady progress. In China, demand
flagged temporarily for a certain time in the 3Q, but sales expansion progressed on a full-year basis.
(3) Printing inks (Americas)
In printing ink (Americas), net sales increased by 10.9% YoY to ¥54,930mn and operating income fell by 50.4%
to ¥1,464mn. In sales, sales volume increased from sales expansion in packaging-related, mainly environmentallyfriendly products (flexo and gravure inks for flexible packaging and UV offset ink for paper containers). Against the
backdrop of the movement to reduce the burden on the environment, demand is rising for aluminum cans. As
such, sales of metal-deco ink for printing on cans were also favorable. Overall sales demonstrated double-digit
growth, but profits decreased sharply due to impacts including a rapid rise in raw material prices from the 3Q
onward, high logistics costs resulting from logistics turmoil at ports, and a rise in personnel expenses, despite
positive factors such as increase in sales volume, improvement in the product mix, and revision of sales pricing.
(4) Printing inks (Europe)
In printing ink (Europe), net sales increased by 56.7% YoY to ¥15,929mn and operating loss was ¥188mn(compared to a loss of ¥432mn in the previous fiscal year). For sales, in addition to the effects of the growth ofsales of packaging-related, mainly environmentally friendly products (flexo and gravure inks for flexible packaging,
UV offset ink for paper containers, and metal-deco ink for printing on cans) there was also a contribution fromthe new consolidation of RUCO in Germany, and sales increased significantly. In profits, the operating loss was
narrowed compared to the previous fiscal year, thanks to the effects of the increase in sales volume and alsoof the structural reforms (productivity increase and cost reductions through rebuilding the production system),
despite the impact of high raw materials prices.
(5) Digital & specialty products
In digital & specialty products, net sales increased by 21.0% YoY to ¥14,328mn and operating income increased
by 245.9% to ¥1,901mn. Results fell significantly in the previous fiscal year due to the major impact of COVID-19,
but alongside the restart of economic activities, demand is recovering, mainly overseas, and both net sales
and operating income are on a recovery trend. Sales volume of inkjet ink, pigment dispersions for color filters
and toners increased. For profits, in addition to the effect of the increase in sales volume, the increase is also
due to other factors, including improvements to the cost structure in the Europe business (sales expansion ofhigh-value-added products), the completion of an inventory valuation write-down, and a longer than expected
delay in the impact of increased raw materials and logistics costs.

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12 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Results trends

The Company’s financial position is healthy
3. Financial position
At the end of FY2021/12, total assets were up ¥21,626mn compared with the end of FY2020/12 to ¥166,899mn.
Alongside the increase in sales, trade receivables and inventories also increased, while following the capital investment, buildings and structures increased. Total liabilities increased ¥10,583mn to ¥74,434mn. Loans payable did
not have large difference, but accounts payable increased in conjunction with the increase in sales. Total net assets
increased ¥11,043mn to ¥92,465mn. This mainly reflected an increase in retained earnings and a decrease in foreign
currency translation adjustment (a negative account).
As a result, the equity ratio decreased 0.8pp to 51.8%. Net assets per share increased ¥171.05 to ¥1,478.18. The
equity ratio decreased slightly, but overall no major problems can be seen and it can be said that the Company ishighly financially sound.
Financial statements(¥mn)
FY2017/12

FY2018/12

FY2019/12

FY2020/12

FY2021/12

Net sales

157,302

162,056

167,237

161,507

181,487

Cost of sales

120,371

128,824

131,507126,049

143,803

Gross profit

36,931

33,23235,73035,45837,684

23.5%

20.5%

21.4%

22.0%

20.8%

28,35828,12029,50428,24530,269

18.0%

17.4%

17.6%

17.5%

16.7%

8,573

5,112

6,225

7,212

7,414

5.5%

3.2%

3.7%

4.5%

4.1%

3,048

2,476

1,693

1,172

1,835

Gross profit margin
Selling, general and administrative expenses
Selling, general and administrative expenses ratio
Operating income
Operating income margin
Non-operating income
Non-operating expenses
Ordinary income

371

678

600

596

743

11,249

6,910

7,319

7,789

8,506
4.7%

7.2%

4.3%

4.4%

4.8%

1,424

285

311

187

290

317

71

448

221

1,013

Income before income taxes

12,356

7,125

7,181

7,755

7,784

Total income taxes

3,466

2,155

2,427

1,849

2,153

Net income attributable to owners of parent

8,383

4,692

4,114

5,275

4,933

5.3%

2.9%

2.5%

3.3%

2.7%

9,946

756

5,339

1,839

12,829Ordinary income margin
Extraordinary income
Extraordinary loss

Margin on net income attributable to owners of parent
Comprehensive income

145,489

145,495

148,292

145,272

166,899(Current assets)

76,19975,78579,064

77,64092,860(Noncurrent assets)

69,29069,70969,227

67,632

74,03966,72368,097

66,852

63,85074,434(Current liabilities)

47,96849,23346,31742,31555,258(Noncurrent liabilities)

18,754

18,864

20,535

21,535

19,17678,766

77,397

81,43981,421

92,46574,737

77,52879,494

83,035

86,104

7,472

7,472

7,472

7,472

7,472

58,399,679

58,399,218

58,398,924

58,418,536

58,436,753

Total assets

Total liabilities

Total net assets(Shareholders’ equity)
Capital
Total number of issued shares at the end of period, excluding
treasury shares
Cash flows from operating activities

9,201

5,239

9,819

10,5997,556

Cash flows from investing activities-2,737-7,279-5,106-7,010-5,352

Cash flows from financing activities-6,259-122-3,821-980-2,875

Cash and cash equivalents at the end of period

9,351

6,788

9,361

11,678

12,115

Source: Prepared by FISCO from the Company’s financial results and materials

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13 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/█ Business outlook
For FY2022/12 both operating income and ordinary income areforecast to recover in the 2H with the effect of sales price revisions
1. FY2022/12 consolidated results outlook
For the FY2022/12 full-year consolidated results, the Company forecasts net sales to increase by 9.1% on
FY2021/12 to ¥198,000mn, operating income to fall by 5.6% to ¥7,000mn, ordinary income to fall by 2.4% to¥8,300mn and net income attributable to owners of parent to increase by 15.5% to ¥5,700mn.
Overview of FY2022/12 consolidated results forecasts(¥mn)
FY2021/12

FY2022/12 (E)

YoY

1H

2H

Full year

1H

2H

Full year

1H

2H

Net sales

88,676

92,811

181,487

96,800101,200

198,000

9.2%

9.0%

9.1%

Operating income

5,045

2,369

7,414

2,700

4,300

7,000

-46.5%

81.5%

-5.6%

Ordinary income

5,852

2,654

8,506

3,350

4,950

8,300

-42.8%

86.5%

-2.4%

Net income attributable to ownersof parent

4,039

894

4,933

2,200

3,500

5,700

-45.5%

291.5%

15.5%

EPS (¥)

69.14

-

84.43

37.64

-

97.52

-

-

-

-

-

109.80--115.00---The exchange rate (US$ / ¥)Full year

Note: The exchange rate (US$) was ¥109.80 in FY2021/12 and ¥115.00 in FY2022/12
Source: Prepared by FISCO from the Company’s financial results and supplemental results briefing materials

Overall, demand is expected to be firm, with sales volumes increasing due to sales expansion, while the yen’s
depreciation is also expected to contribute to higher sales. However, in profits, operating income and ordinary
income are forecast to decrease, mainly due to the impact of increased raw materials and logistics costs, andimpacts including an increase in expenses associated with strategic investments such as digital transformation.
The expected exchange rate (US$) is ¥115.00 (¥109.80 in FY2021/12).
The forecast operating income change amounts by factor are as follows. The increase factors are ¥8.67bn fromthe rise in the printing ink unit price (improvement in product mix and price revisions), ¥2.40bn from the increasein printing ink sales volume, ¥0.19bn from the impact of foreign currency exchange rates, and ¥0.06bn fromadjustments. The decrease factors are ¥0.55bn from functional materials, ¥0.10bn from graphic arts materials,¥0.17bn from other, and ¥10.95bn from the rise in printing ink costs.
Looking at net sales and operating income by half-year, 1H net sales are forecast to rise by 9.2% YoY to ¥96,800mn,
with operating income to fall by 46.5% to ¥2,700mn. 2H net sales are expected to increase by 9.0% to ¥101,200mn,
and operating income is expected to increase by 81.5% to ¥4,300mn. In 1H, the impact of high raw materials andlogistics costs will emerge first; however, in 2H, this impact will be mitigated by progress on sales price revisions
and the impact of increased sales volumes, with profits expected to begin recovering. We consider it highly possiblethat results will bottom out in FY2021/12 2H and FY2022/12 1H, and then begin to recover.

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14 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION

28-Apr.-2022

4633 Tokyo Stock Exchange Prime Market

http://www.inx.co.jp/english/

Business outlook

Trends in net sales and operating income by half year
Net sales (left)(¥bn)

Operating income (right)

(¥bn)

120.0

6.00
5.05

100.0

5.00

4.30

4.03
80.0
3.05

3.17

4.00

3.18

2.70

60.0
40.0

2.37
83.2

84.1

79.4

88.7

82.0

92.8

3.00
101.2
2.00

96.8

20.0

1.00

0.0

0.00
1H

2H

1H

FY2019/12

2H

1H

FY2020/12

2H

FY2021/12

1H

2H

FY2022/12 E

Source: Prepared by FISCO from the Company’s results briefing materials

2. Forecasts by segment
Net sales and operating income forecast by segment for FY2022/12(¥mn)
FY2021/12

FY2022/12 (E)YoY

Printing inks and graphic arts
materials (Japan)

50,44451,8002.7%

Printing inks (Asia)

38,57444,80016.4%

Printing inks (Americas)

54,93063,50015.6%

Printing inks (Europe)

15,92916,8005.8%

Digital & specialty products

14,328

15,100

5.6%

Reportable segment total

174,207

192,200

10.3%

Net sales

Other businesses

17,22915,100-11.8%

Total

191,437

207,300

8.3%

Adjustments-9,949-9,400-181,487

198,000

9.1%

Printing inks and graphic arts
materials (Japan)

1,366

500

-57.4%

Printing inks (Asia)

2,244

2,200

-0.9%

Printing inks (Americas)

1,464

2,400

65.2%

Consolidated net sales
Operating income

Printing inks (Europe)

-188

-100

-

Digital & specialty products

1,901

1,300

-28.2%

Reportable segment total

6,788

6,600

-4.4%

350

100

-49.1%

Total

7,139

6,700

-6.1%

Adjustments

275

300

-

7,414

7,000

-5.6%

Other businesses

Consolidated operating income

Source: Prepared by FISCO from the Company’s financial results and results briefing materials

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15 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Business outlook(1) Printing inks and graphic arts materials (Japan)
In printing inks and graphic arts materials (Japan), net sales are forecast to increase by 2.7% YoY to ¥51,800mn
and operating income to decrease by 57.4% to ¥500mn. In sales, packaging printing ink is expected to perform
strongly, while profits are projected to decrease sharply due to the impact of increasing materials and logistics
costs. The impacts of higher raw materials prices tend to emerge later in Japan than in other regions, andthe impact for 1H has been comparatively smaller than other regions, however, for FY2022/12, a significant
impact is expected, which sales volume increase and sales price revisions are not expected to be able to offset.
Furthermore, an increase in expenses is also forecast due to strategic investments, such as digital transformation.
(2) Printing inks (Asia)
In printing ink (Asia), net sales are forecast to increase by 16.4% YoY to ¥44,800mn and operating income to fallby 0.9% to ¥2,200mn. The Company expects a significant increase in sales with an increase in sales volume due
to sales expansion for packing printing ink and progress on sales price revisions. However, the Company expects
profits to trend sideways, being offset by increased raw materials and logistics costs.
(3) Printing inks (Americas)
In printing ink (Americas), net sales are forecast to increase by 15.6% YoY to ¥63,500mn and operating income
to increase by 65.2% to ¥2,400mn. The Company expects a significant increase in sales with an increase in sales
volume due to sales expansion for packing printing ink and progress on sales price revisions. In profits, however,in FY2021/12 the impact of increased raw materials and logistics costs had a direct and significant impact on
reducing profit, but in FY2022/12, profit is expected to follow a recovery trend due to the effects of sales pricerevisions.
(4) Printing inks (Europe)
For printing inks (Europe), net sales are forecast to increase by 5.8% YoY to ¥16,800mn, and operating income to
be a loss of ¥100mn (loss of ¥188mn in FY2021/12). The Company expects sales to increase with sales expansionof packaging printing ink. On the profit front, the effects of increased sales volume and structural reforms are
expected to absorb the impact of increased raw material and logistics costs to narrow the segment’s losses.
(5) Digital & specialty products
In digital and specialty products, net sales are forecast to increase by 5.6% to ¥15,100mn and operating income todecrease by 28.2% to ¥1,300mn. While sales are expected to increase due to a recovery trend in demand, profits
are projected to decrease due to the impact of high raw materials and logistics costs and aggressive investment
in development expenses, and so forth, looking ahead to the high-end market.

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16 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/█ Growth strategy
Currently promoting the Mid-term Business Plan for achieving thelong-term vision for FY2030/12
1. Business theme
As its corporate philosophy, based on the business theme of “Creation of Visual Communication Technology” andthe Group’s purpose of “Develop a communication culture that makes people’s lives more enjoyable,” the Company
formulated and started the long-term strategic vision “SAKATA INX VISION 2030” and Mid-term Business Plan 2023
(CCC-I) in FY2021/12.
With “Create and Innovate, Care for the Earth, Color for Life” as a catch phrase, it is aiming to be a group that
“Creates innovations and new opportunities, with earth-friendly technology that adds color and happiness to life.”

Promoting new business fields, sustainable management, andDigital Transformation to achieve long-term strategic vision
2. Long-term strategic vision
The Company’s awareness of the changes to the business environment are as follows: changes in the markets
and the competitive environments in Japan and overseas (downward in demand for ink because of digitalization,
intensifying competition in markets in emerging countries, and rising awareness of consideration for the environment,such as using less plastic), changes in the value chain due to digitalization (significant increase in digital media andthe diversification and customization of printing), and responding to environmental constraints and societal issues(consideration of long-term sustainability, rising importance of measures for SDGs, increase in risks relating toresource constraints and rising prices of raw materials, and the growing influence of ESG (environmental, society,and governance) investment).
To respond to these sorts of changes to its business environment, in the long-term strategic vision “SAKATA INXVISION 2030,” the Company has set “Strengthen ESG/sustainability efforts emphasizing the global environment andlocal community,” “Expand printing inks/digital & specialty product businesses” and “Meet new market challenges,”
while it has also launched three innovation projects, “Strengthen global management cooperation,” “Strengthen
relationships with stakeholders” and “Strengthen human resource development and reform corporate culture.” Forthese, its policy is to work on management with an awareness of capital costs and promoting digital transformation.
It is aiming to reach net sales of around ¥300bn and an operating income margin of 8% by FY2030/12.

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17 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Growth strategy

Image aiming to become by 2030

Source: Reprinted from the Company’s long-term strategic vision briefing materials

In the printing ink business, centered on the mainstay packaging printing field, the Group will work to promote
environmental management, fortify the value chain as a whole, strengthen relations with global partners, develop
and deploy high-value-added products, bolster optimized management that crosses countries and businesses, andinvest management resources in growth markets and new markets.
In the digital & specialty products business, the Group will work to globally deploy high-value-added products thatare tailored to social trends, further strengthen collaborations globally, enhance sales and profitability, and improve
brand power in each market.
In new businesses, the Company aims to respond to social issues by utilizing core competencies based on thestrategic keywords of “safety and security, convenient and comfortable, health maintenance, low-carbon society, andsustainability.” With a focus on four chemical fields (environmental and biochemicals, energy chemicals, electronics
chemicals, and optochemicals), it is promoting open innovation toward the commercialization of strategic products,
including biomass-related digital & specialty products, CO2 absorbing materials, semiconductors and sensitizing
materials, conductive materials, insulating materials, conductive bonding materials, low dielectric materials, sensor
materials, refraction index adjustment materials, and LED sealing materials.
An example of an initiative for a new business is the societal implementation of printed electronics. Through acollaboration between three companies, the Company, the equity-method affiliate SIIX Corporation, and Wonder
Future Corporation (a non-equity method affiliate) that develops and sells IH (induction heating) reflow devices andother products, the policy is to utilize the technologies of each company to put to practical use of innovative process
technologies and new designs in the electronic-chemicals field.

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18 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Growth strategy

New Business Initiative 1(Providing societal implementation of printed electronics through Sakata Inx and SIIX Corporation)

Source: Reprinted from the Company’s results briefing materials

Moreover, the Company aims to use technology of the Carbon Recovering Research Agency (CRRA), and build aresource cycling system that recovers CO2 and uses it for chemical products such as bioethanol and fuel.
New Business Initiative 2(Building a resource recycling system that contributes to a recycling society)Source: Reprinted from the Company’s results briefing materials

Mid-term Business Plan 2023 is the stage of building a foundation
toward achieving the long-term strategic vision
3. Mid-term Business Plan 2023 (CCC-I)
The Company has positioned Mid-term Business Plan 2023 (CCC-I) as the first stage to build the foundation towardachieving the long-term strategic vision “SAKATA INX VISION 2030.” The plan’s targets for FY2023/12 are net salesof ¥195bn, operating income of ¥11.5bn, ordinary income of ¥13bn and ROE of 10% or more.

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19 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION

28-Apr.-2022

4633 Tokyo Stock Exchange Prime Market

http://www.inx.co.jp/english/

Growth strategy

Consolidated net sales and profit targets in the Mid -term Business Plan
Net sales (left)(¥bn)

Operating income (right)
195.0

200.0

181.4

180.0

155.5

160.0

151.1

157.3

162.0

167.2

11.0

120.0

11.8

16.0

11.2

80.0

9.3

60.0

6.9

7.3

7.7

5.1

6.2

7.4

11.5

10.0
8.0

8.5

40.0

14.0
12.0

100.0
10.1

20.0
18.0

161.5
13.0

140.0

(¥bn)

7.2

8.5

6.0
4.0

20.0

2.0

0.0

0.0
FY2015/12 FY2016/12 FY2017/12 FY2018/12 FY2019/12 FY2020/12 FY2021/12
Mid-term Business Plan 2017

Mid-term Business Plan 2020

FY2023/12E

Mid-term Business Plan 2023

Note: Due to the change of fiscal period from 2015, based on the fiscal periods of each company in the past, from 2016
onwards the values have been adjusted so that the consolidated periods are the same 12 month fiscal period.
Source: Prepared by FISCO from content in the long-term strategic vision “SAKATA INX VISION 2030” and the Mid-term
Business Plan 2023 CCC-I

The targets for printing inks and graphic arts materials (Japan) are net sales of ¥51.8bn and operating income of¥1.8bn. As its initiatives to respond to the environment and for societal issues, the Company is actively developing
environmentally friendly products such as ‘Botanical Ink’ series, improving the efficiency of the information media
business, developing SDGs-compliant recycling-type inks for packaging, and continuing to propel TPM activities
and activities to improve occupational health and safety.
The targets for printing inks (Asia) are net sales of ¥45bn and operating income of ¥2.9bn. The Company isactively developing environmentally friendly and sustainable products, entering into new markets, conducting capital
investments and growing sales, and promoting stable supply of raw materials through global purchasing.
The targets for printing inks (Americas) are net sales of ¥53.5bn and operating income of ¥3bn. The Company isactively developing environmentally friendly and sustainable products, strengthening sales to global customers,
strengthening sales to and actively investing in the South America market, and propelling capital investments andsales growth.
The targets for printing inks (Europe) are net sales of ¥17.5bn and operating income of ¥0.2bn. The Company isactively developing environmentally friendly and sustainable products, strengthening sales to global customers,
improving profitability by rebuilding production bases, entering into new markets, and propelling capital investments
and sales growth.
The targets for the digital & specialty products business are net sales of ¥17.2bn and operating income of ¥2.3bn.
The Company is developing high-value-added products tailored to social trends (developments of inkjet inks for
growth industries centered on clothing, food and housing; development of high value-added flat panel display
materials; business expansion of digital products into peripheral areas, such as the touch-panel market), and it ispromoting local production of digital & specialty products in growth markets.
The targets for other businesses are net sales of ¥17.1bn and operating income of ¥0.6bn.

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20 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Growth strategy

Plans to invest a cumulative total of ¥30bn over three fiscal periods
4. Investment plan
The investment plan calls for a cumulative total of ¥30bn to be invested during the three fiscal periods (capital
investment of ¥15bn and a strategic investment framework to accelerate growth of ¥15bn). The breakdown of thecapital investment plan by region is ¥4.9bn for Japan, ¥5.6bn for Asia, ¥3.8bn for the Americas, and ¥0.7bn for
Europe. The forecast of investment from FY2021/12 to Y2022/12 is ¥4bn for Japan, ¥6.1bn for Asia, ¥2.9bn for
the Americas, and ¥0.6bn for Europe.
The main items in the capital investment plan as of December 31, 2021, were as follows. In Japan, the renewal of the
Osaka Plant and its backbone systems, in Asia, reinforced facilities for packaging ink in Indonesia and Vietnam, in theAmericas, strengthened metal decorating ink facility in the state of New York, in the United States, and constructing
a new plant for packaging ink in Brazil.
5. A new growth stage
Against the backdrop of rising interest in global environmental problems and SDGs, global demand in the printing
inks market is also shifting to environmentally friendly products. Therefore, plenty of room remains for the environmentally friendly products market to expand and develop. The Company is acquiring high market shares from its
strengths of development capabilities and extensive line-up of environmentally friendly products, so the businessenvironment can be said to be good for the Company.
In addition, to respond to these market trends, the Company’s policy is to develop and market launch environmentallyfriendly products and to be even more active in deploying businesses for new areas. It has a track record of global
business deployment in advance of other companies and a wealth of expertise in launching products that are
tailored to the regional characteristics of each country. At FISCO, we think its growth potential is significant with theCompany entering a new growth stage.

█ Shareholder return policy
Targeting a consolidated dividend payout ratio in the range of about
20% to 30%, and implements a shareholder benefit program
With regards to distributing profits, the Company considers returning profits to shareholders, including dividends,
to be an important management issue, in conjunction with working to strengthen its financial position and business
infrastructure. The basic dividend policy is to steadily return profits to shareholders through dividend payments,
while targeting a consolidated dividend payout ratio in the range of around 20% to 30%.

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21 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION

28-Apr.-2022

4633 Tokyo Stock Exchange Prime Market

http://www.inx.co.jp/english/

Shareholder return policy

In accordance with this basic policy, in FY2021/12, the annual dividend per share was ¥30 (end of 2Q dividend¥15, period-end dividend ¥15), which is the same as FY2020/12. The dividend payout ratio was 35.5%. The
forecast for FY2022/12 is for the same dividend as FY2021/12, with an annual dividend per share of ¥30 (end of
2Q dividend ¥15, period-end dividend ¥15). The forecasted dividend payout ratio is 30.8%. The Company alsooffers a shareholder benefit program to shareholders who own one trading unit (100 shares) or more of shares asof June 30 and December 31 every year. Under this program, eligible shareholders receive a QUO card after the
Annual General Meeting of Shareholders with a value corresponding to the period of time they have held their shares.

Divided per share and dividend payout ratio
Dividend per share (left)

(¥)
50.00

Dividend payout ratio (right)

（%）
50.0

42.6
37.3

40.00

33.2

40.0

35.5
30.8

30.00

30.0

20.00

20.0

30.00

30.00

30.00

30.00

30.00

10.00

10.0

0.00

0.0
FY2018/12

FY2019/12

FY2020/12

FY2021/12

FY2022/12 E

Source: Prepared by FISCO from the Company’s financial results█ Initiatives for ESG management and for

SDGs
In the long-term strategic vision, the Company recognizes the importance of responding to environmental constraints
and societal issues (consideration of long-term sustainability, rising importance of measures for SDGs, increasing
risk of tightened resource constraints and rising raw material prices, and growing influence of ESG investment), andits policy is to strengthen measures for ESG and SDGs.
In environmentally friendly products, which are the Group’s strengths, packaging that is considerate to the environment is required, and in this situation, its proprietary “Botanical Ink” series, which contains 10% or more ofplant-derived components in its ink solid constituents, is already being widely used in various paper packaging.
Furthermore, the Company’s policy is to push R&D forward to improve the ratio of the botanical components (theratio of inclusion of plant-derived components). For the problem of food loss, it is working to develop products thatwill contribute to longer preservation periods of food using gas-barrier agents that prevent oxidation of food whencoated on a film surface by controlling the passage of oxygen through the film.

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22 23

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange Prime Market

28-Apr.-2022
http://www.inx.co.jp/english/

Initiatives for ESG management and for SDGs

In January 2019, the Company’s stock was selected for the S&P/JPX Carbon Efficient Index, which is a stock index
for ESG investment newly adopted by the Government Pension Investment Fund (GPIF). It is also participating in
the Japan Clean Ocean Material Alliance, which was established by the Ministry of Economy, Trade and Industry
in January 2019. In November 2020, the Company undertook a capital participation in R Plus Japan, Ltd. (started
business in June 2020), which is a joint venture that is propels the development and commercialization of recycling
technologies for used plastics.
In March 2021, the Company concluded an underwriting contract with MUFG Bank, Ltd., for the issue of ESG evaluation-type unsecured private-placement bonds (issuance amount, ¥1bn) and it issued ESG management-support
private-placement bonds. In June 2021, it concluded an agreement with The HAVI Group, LP (hereinafter, HAVI),
which is a food packaging supply chain partner company, on strengthening global initiatives toward realizing asustainable society. “Eco Plata” in the Botanical Ink series and “INXhrcTM Ink,” which was developed in the UnitedStates, have been designated environmentally considerate products in HAVI’s supply chain.
In relation to sustainability, the Company has set respective issues and targets for Environmental, Society andGovernance. In order to achieve these targets, it has launched and is working on multiple innovation projects. In
terms of the progress to be made in the future, these projects will be conducted through its websites and reports,
and also by increasing opportunities for dialogue with stakeholders and feedback to management.
Sustainability targets and progress madeSource: Reprinted from the Company’s results briefing materials

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23 23

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
This report is provided solely for the purpose of offering information, and is not a solicitationof investment nor any other act or action.
FISCO prepared and published this report based on information which it considered reliable;
however, FISCO does not warrant the accuracy, completeness, fitness nor reliability of thecontents of this report or the said information.
The issuers’ securities, currencies, commodities, securities and other financial instruments
mentioned in this report may increase or decrease in value or lose their value due to influence
from corporate activities, economic policies, world affairs and other factors. This report does
not make any promises regarding any future outcomes. If you use this report or any information
mentioned herein, regardless of the purpose therefor, such use shall be made based on yourjudgment and responsibility, and FISCO shall not be liable for any damage incurred by you asa result of such use, irrespective of the reason.
This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
the hypotheses, conclusions and all other contents contained herein are based on analysis
by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
The intellectual property rights, including the copyrights to the main text hereof, the data
and the like, belong to FISCO, and any revision, reprocessing, reproduction, transmission,
distribution or the like of this report and any duplicate hereof without the permission of FISCO
is strictly prohibited.
FISCO and its affiliated companies, as well as the directors, officers and employees thereof,
may currently or in the future trade or hold the financial instruments or the securities of issuersthat are mentioned in this report.
Please use the information in this report upon accepting the above points.

◾ For inquiry, please contact: ◾

FISCO Ltd.
5-13-3 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (IR Consulting Business Division)
Email: support@fisco.co.jp