Nissan Chemical Corporation
1Q FY2020 Financial Results Briefing
August 11, 2020

Miyazaki: This is Miyazaki.
Please see page two.
In the first quarter of FY2020, sales were JPY49.3 billion, operating profit was JPY9.8 billion, and net income
was JPY7.6 billion.

1Please look at page three for an overview. Shown here are the results highlights.
First, in terms of comparisons with year-earlier results, operating profit of JPY9.8 billion was up JPY0.5 billion
from JPY9.3 billion in the first quarter of FY2019.
Segment sales and profits are described on pages nine and ten.
Profit for Chemicals was down, due to significant sales decreases in melamine, TEPIC, and environmentalrelated products.
Profit for Performance Materials was up, thanks to solid sales for display and semiconductor materials and adecrease in fixed costs.
Profit for Agrochemicals were down, chiefly due to a decline in Fluralaner shipments, which had already been
expected, despite an increase in ALTAIR sales. Other factors that contributed to the profit decline included
the decrease in ROUNDUP sales and an increase in fixed costs such as R&D expenses.
Profit for Pharmaceuticals was down owing to a decrease in LIVALO sales despite an increase in Custom
Chemicals sales.
Net income of JPY7.6 billion was down JPY0.2 billion from JPY7.8 billion in the first quarter of FY2019 due tothe absence of extraordinary income. In the first quarter of FY2019, we posted a gain on sales of investment
securities amounting to JPY0.9 billion.

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Next is the comparison with our forecasts.
Operating profit of JPY9.8 billion was up JPY1.3 billion compared to the JPY8.5 billion forecast.
Profit for Chemicals fell below the target due to lower-than-anticipated sales for melamine, TEPIC, andenvironmental-related products.
Profit for Performance Materials came in ahead of the target thanks to solid sales for display andsemiconductor materials coupled with lower-than-anticipated fixed costs.
Profit for Agrochemicals exceeded the target owing to lower-than-expected fixed costs offsetting lower-thananticipated sales.
Profit for Pharmaceuticals surpassed the target attributable to solid sales for Custom Chemicals.
Net income of JPY7.6 billion was up JPY0.8 billion compared to the JPY6.8 billion forecast.
Third, we have made no revision to our forecasts this time. We stick to the announcement made on May 15
regarding second-quarter and full-year earnings and thus have made no changes.
Last time, we stated that we had not reflected the impact of COVID-19 into our forecasts. At the moment, we
expect the total impact to be limited.
Next, in terms of shareholder returns, we completed buybacks of 1.334 million shares, amounting to JPY7
billion as of July 28.

3Next, please see page five.
As for non-operating income and expenses, when netting the income and expenses, the non-operating
income came to JPY640 million in the first quarter of FY2019. When netting the income and expenses in thefirst quarter of FY2020, the non-operating income came to JPY600 million, down JPY40 million from the firstquarter of FY2019.

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Next, please see page six. This page is on cash flows.
We continue to have abundant cash flows. Compared to the first quarter of FY2019, net cash provided byoperating activities increased JPY2.4 billion in the first quarter of FY2020. Net cash used in investing activities
increased by JPY0.9 billion to JPY1.5 billion. This was attributable to proceeds from the sale of investment
securities amounting to JPY1.7 billion in the first quarter of FY2019.
Next, in terms of shareholder returns, please look at both the categories for payout to shareholders and others.
In the first quarter of FY2019, net cash used in share buybacks amounted to JPY3.8 billion as we were still inthe middle of the buyback period. The upper limit of buybacks was JPY6 billion, and the remaining JPY2.2
billion is included in others because it is itemized as a deposit with a trust bank.
The upper limit of buybacks is JPY7 billion in FY2020, and the amount of shares we have actually purchased is
JPY4.1 billion. The remaining JPY2.9 billion is consigned to a trust bank, so it is included in others.
As a result, cash and cash equivalents at the end of the first quarter of FY2020 amounted to JPY16.6 billion,
up JPY1 billion from the first quarter of FY2019.

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Next, please look at page seven for the balance sheet.
As in typical years, the first quarter ending in June is a period in which we collect accounts receivables, so thishas decreased considerably.
As of the end of June last year, intangible assets amounted to JPY1.4 billion, but this has increased to JPY7.2
billion this year. This was chiefly attributable to the increase in intangible fixed assets, such as goodwill
associated with the acquisition of the Quinoxyfen product line.
Looking on the right side, the equity ratio written outside the borders indicates 78.8% as of end-June 2020
compared to 80% as of end-June 2019.

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Next, on page nine, we show sales by segment.

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On page 10, we show profits by segment.
In the middle of the page, we show a section that says Change (B)-(A). The numbers there are comparisonswith the first quarter of FY2019.
Profit was down JPY0.2 billion for Chemicals, up JPY1.3 billion for Performance Materials, down JPY0.5 billion
for Agrochemicals, and down JPY0.5 billion for Pharmaceuticals. Overall, profit was up JPY0.5 billion.
The column to the right of this shows the forecasts for the first quarter issued in May.
We forecast profit of JPY1.2 billion for Chemicals, JPY4.2 billion for Performance Materials, JPY3.6 billion forAgrochemicals, and a loss of JPY0.1 billion for Pharmaceuticals.

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Next, we’ll move on to an explanation of each segment.
First, please see page 12 for the Chemicals Segment.
In the bottom left, we describe the YoY comparison for each key product. In the bottom right, we describe
whether results came in above or below the target.
First, please look at the explanation on the bottom, including the first quarter FY2020 results and the YoY
comparison, along with the table shown above.
For Fine Chemicals, sales were down for TEPIC in general applications chiefly due to the impact of COVID-19
in overseas markets. Sales were also down for TEPIC in electrical materials due to sluggish printed wiring board
sales for automotive applications. As a result, TEPIC sales were down 9% YoY.
For Fine Chemicals, inventory adjustment had a positive impact of approximately JPY0.1 billion. As a result,sales were up slightly, and operating profit also increased slightly.
Next, for Basic Chemicals, sales were up 19% YoY for high-purity sulfuric acid. This was because the market
for semiconductor cleaning applications was good.
Meanwhile, sales were down for domestic melamine, largely due to a decline in housing starts. As for exports,
our focus has been on spreads. We have been working to reduce unprofitable transactions under a policy of
reducing the sales volume in FY2020. Looking at the first quarter alone, sales volume decreased by about 60%,
and the unit price fell slightly. In terms of our initial assumptions, we expected the sales volume to decline byabout 60%, so we are roughly in line with the plan. Consequently, sales for domestic and overseas melamine
combined were down 55%.

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On the other hand, for urea, including AdBlue, sales were down 5%, mainly owing to sluggish sales of AdBlue
for trucks and construction equipment. For nitric acid products, sales were down 2%. Overall, sales for Basic
Chemicals were down 19%.
Both sales and operating profit were down for Basic Chemicals.
In terms of the total for the Chemicals Segment, written on the very bottom, sales were down JPY1 billion andoperating profit was down JPY0.2 billion.
Comparisons with the targets as of May are shown on the top right of the same table.
First, in Fine Chemicals, TEPIC and environmental-related products came in below the target. As a result, bothsales and profit fell short of the plan.
In Basic Chemicals, the majority of melamine, urea including AdBlue, high-purity sulfuric acid, and nitric acidproducts came in below the target. Consequently, sales fell JPY1.1 billion short of the plan, while profit was
JPY0.5 billion behind the plan.

Next, we will proceed to the Performance Materials. Please see page 14.
This page shows sales for the three sub-segments: first-quarter FY2019 results, first-quarter FY2020 plan andfirst-quarter FY2020 results. The weighting of Performance Materials to overall sales has not changed much.

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Next, please see page 15. This page shows the sales trends for key products in the Performance Materials
Segment.
First, in the table on the left, SUNEVER sales were up 14% YoY and came in ahead of the target.
As for semiconductor materials, sales were up 26% for KrF and 19% for ArF. For the total ARC, sales were up
23%. Sales exceeded the targets for KrF, ArF, and total ARC.
For other semiconductor materials, sales were up 20%. Sales came in below the target.
Overall, sales for semiconductor materials were up 22%, exceeding the target.
On the right sight, sales for the SNOWTEX inorganic materials were up 8%, slightly ahead of the target. Sales
for Organo and Monomer Sol were down 9%, falling short of the target.
Sales for oilfield materials dropped 84%, coming in behind the target.

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Next, please see page 16. This page describes SUNEVER sales by mode.
As shown by the arrows in the bottom left, TN sales were down YoY. VA sales were up. IPS sales, including forphoto and rubbing, were up and came in well ahead of the target. As a result, total sales were up 14% andexceeded the plan.

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Next, please see page 17. This page describes the sales and profit trends for Performance Materials.
First, on the left side is shown the YoY comparison. For displays, both sales and profit increased. In particular,
photo IPS sales were up. Although smartphone sales increased, non-smartphone sales were very strong,particularly for PCs and tablets.
The downtrend in rubbing IPS sales has continued up to now, but sales turned up in the first quarter. This
upturn was also the result of strong non-smartphone sales.
VA sales were up, while TN sales were down.
For semiconductor materials, both sales and profit increased. ARC sales were up, and other material sales
were also up, as explained earlier. Logic sales remained solid with a robust recovery in DRAM and flash
memory sales, coupled with a decline in fixed costs centered on R&D expenses.
For inorganic materials, both sales and profit decreased. SNOWTEX sales were up, particularly for polishingmaterials. Sales increased for polishing silicon wafers and CMP but remained flat for general applications.
Organo and Monomer Sol sales decreased slightly.
Sales for oilfield materials declined due to the sluggish shale oil market.
In the overall segment, fixed costs fell by JPY0.4 billion. As a result, sales increased JPY2 billion and operating
profit rose JPY1.3 billion.

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Comparing sales and profit with the outlook shown on the right, first, sales and profit for displays exceeded
the targets. The breakdown shows that photo IPS for smartphones fell behind the target. Meanwhile, rubbing
IPS sales for non-smartphones such as PCs and tablets were strong and increased considerably.
Both VA and TN sales came in slightly behind targets. Meanwhile, fixed costs were also below the target,
serving as a positive factor. Fixed costs were JPY0.3 billion lower than expected.
Next, sales and profit for semiconductors exceeded the targets. Although results surpassed the target for ARC,
they fell short of the target for other materials. The performance of semiconductor materials overall wasstronger than expected, coupled with fixed costs that were JPY0.5 billion less than anticipated, resulting in avery large overshoot in profit.
For inorganic materials, SNOWTEX sales were slightly above the target. Sales for Organo and Monomer Sol
were below the target. Oilfield materials underperformed the target, but fixed costs were lower than
anticipated. Overall, inorganic material sales fell below the target, while profit came in above the target.
In the overall segment, fixed costs were JPY1 billion lower than anticipated. Sales only exceeded the target by
JPY0.2 billion, but operating profit surpassed the target by JPY1.1 billion.

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Next, we will look at the Agrochemicals Segment. Please see page 20. The key products are shown on the leftin order.
Fluralaner sales were down 16% YoY. However, sales were above the target. ROUNDUP sales were down 6%
and were below the target. ALTAIR sales were up 20%, indicating robust growth, but came in below the target.
TARGA sales were up 36%, showing a large growth, and came in above the target.
GRACIA sales were up 3%. In Agrochemicals, GRACIA sales were a major disappointment, coming in below thetarget. PERMIT sales were down 42% and fell short of the target. LEIMAY sales were up 26%.
In the bottom left, we show a small bar graph in orange to illustrate GRACIA sales. As shown here, you can
see that sales were significantly lower than the target for the first quarter.

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Next, please see page 21.
As for Fluralaner, I’d like to go over one point. Although we already announced this in a press release, I’d liketo explain the third point under the section on BRAVECTO. In July, our chewable tablet for dogs received
marketing approval in the US for monthly chews for puppies through Merck.
As you know, BRAVECTO’s main chewable is a three-month chew for dogs, so this is a very short-term productfor puppies.
Also, below that, we show the Fluralaner quarterly sales trends. We haven’t changed our targets for thesecond quarter onwards, and we expect a decline in sales in FY2020 from FY2019. That said, we expect larger
sales for the third quarter and the fourth quarter compared to FY2019.

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Next, on page 22, we describe the sales and profit trends for the Agrochemicals Segment.
First, on the left side, we explain the results in comparison with the first quarter FY2019. Products that saw
an increase in sales include TARGA. Positive impacts came from exports being pushed forward and new moves
such as the product’s use in mixtures with major manufacturers in overseas markets.
As for ALTAIR, we introduced a second-generation product group in Japan, and this had a positive impact.
QUINTEC, LEIMAY, and GRACIA for export also increased.
Meanwhile, sales were down for Fluralaner, due to scheduled inventory adjustments. GRACIA for domestic
sales were down chiefly due to a prolonged period of very low temperatures domestically from April to Juneand very little occurrence of pests.
PERMIT sales were down as expected mainly due to the pullback from increased shipments in the previous
fiscal year. In FY2019, PERMIT for use in corn was registered in the EU, resulting in a large volume of shipments.
Sales declined this year as a pullback from that increase.
ROUNDUP Maxload sales were down for agriculture market due to a decrease in distribution inventory. Whileit can be said that this was due to the impact of COVID-19, a major part of marketing activities is to sell
ROUNDUP to each distributor, and after that, to newly stock up inventories by supplying products one moretime. However, progress was slow on this front, and distribution inventory has continued to decrease.
AL sales were up, as progress was made in shifting to the high-priced III product line. However, total sales
were down.

17Fixed costs increased by JPY0.3 billion, mainly owing to increases in R&D expenses and amortization costs of
Quinoxyfen. Meanwhile, lower inventory adjustment costs had a positive impact of JPY0.2 billion. In total,sales were down JPY0.1 billion, while profit was down JPY0.5 billion.
In comparison to the plan, shown on the right, sales came in ahead of the target mainly due to TARGA. In
addition, progress is being made in inventory adjustments for Fluralaner. Although sales were down YoY,
shipments pushed forward from the second quarter led to an overshoot versus the target. Sales for LEIMAY
came in above the target due to a simple misestimation.
Sales were below the target for domestic GRACIA. For ROUNDUP, sales were below the target for Maxload
and above the target for AL for the reasons stated earlier.
For ALTAIR, sales were below the target partly due to a slight absence of domestic supply. Also, sales fell shortof the target for domestic PERMIT, mainly due to a shift in ALTAIR.
Meanwhile, lower-than-expected fixed costs had a positive impact of JPY0.5 billion. Inventory adjustment
costs also had a positive impact of JPY0.3 billion. In total, sales came in JPY0.6 billion below the plan, while
operating profit was JPY0.4 billion above the plan. Thus, sales and profit moved in opposite directions versus
the plan.

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Next, we’ll go over the Pharmaceuticals Segment. Please see page 24.
On the left side, we show the YoY performance for LIVALO and Custom Chemicals.
As for LIVALO, I’d like you to also look at the explanation of performance trends described on the bottom.
Domestic sales were down slightly, while exports fell considerably. As a result, sales were down 48%. This
result is still above the target.
Meanwhile, sales for Custom Chemicals were up 49%, and this was also above the target.
For the total Pharmaceutical Segment, sales were down 20% but came in ahead of the plan.
Described below is the YoY comparison. LIVALO sales were down, while Custom Chemicals sales were up. In
total, sales were down JPY0.37 billion and operating profit was down JPY0.46 billion.
If you look at the table on the right, we show the sales and profit trends for both drug discovery (written asD.D), which is equivalent to LIVALO, and Custom Chemicals.
Compared to the target, shown on the right, LIVALO sales came in ahead of the target. Domestic sales andexports both exceeded the target. Custom Chemicals sales also surpassed the target in part due to shipments
being pushed forward, but also thanks to a net increase and some price increases.
In total, sales surpassed the plan by JPY0.31 billion, and operating profit exceeded the plan by JPY0.07 billion.
As for the performance trends for Custom Chemicals, profit declined by JPY0.01 billion from the first quarterof FY2019 to the first quarter of FY2020, despite a JPY0.25 billion increase in sales. This is mainly attributable19to a significant impact from reductions in raw material prices that led to an inventory valuation loss of about
JPY0.12 billion.

Next, please see page 25 for an explanation of matters related to ESG.
In terms of ESG index, we were selected for inclusion in the S&P/JPX Carbon Efficient Index in June 2020,
marking the second consecutive year of inclusion. We were also selected as a constituent of FTSE4Good IndexSeries and FTSE Blossom Japan Index.

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Please see page 26.
On this page, we show our forecasts announced in May divided into 1H and 2H. As stated earlier, we have leftthese figures unchanged.

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From page 27 onwards, we would like to go over the characteristics of our Company. I think people who
participated in our briefing meeting in the past already know this information, but we’d like to give an
overview for first-time participants.
First, on page 27, we show our operating profit margin trends.
Even though the chemicals industry is subject to severe fluctuations, our Company has consistently
maintained an operating profit margin above 10% since 2003. In particular, the operating profit margin has
been above 18% in the last three years.

22Please see page 28.
The most important KPI in our Company is ROE. Under our current medium-term plan, we target a ROE of
16% or higher. In FY2019, ROE was 16.9%.

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Next, please see page 29.
We are committed to our shareholder return policy. We currently commit to a total payout ratio of 75% in
FY2020 under the medium-term plan. We achieved a total payout ratio of 75.1% in FY2019, one year aheadof the plan.

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Next, on page 30, we explain the dividend payout ratio.
We have been gradually raising the dividend payout ratio. Our target was 42.5% for FY2019 and 45% for
FY2020. We achieved 42.8% in FY2019.
Thus, in terms of the 75% total payout ratio target in FY2020, our underlying targets are 30% in share buybacks
and 45% in dividends.

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Please see page 31.
We have been conducting share buyback every year except in FY2009 and 2011.
Every year, repurchased shares are all retired during the period. In total, until FY2019, we repurchased roughly
41 million shares and retired 41.6 million shares.
In FY2020, up to this point, we repurchased 1.33 million shares, amounting to JPY7 billion.

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Next, please turn to page 33.
Lastly, another characteristic of our Company is that we have consistently kept R&D expenses between 8%
and 9% of sales.

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In addition, about 40% of regular employees are assigned to R&D positions. As shown in the donut graph in
the bottom left of page 34, about 450 of the 1,165 regular employees are researchers.

28This concludes my explanation, but before I end, I’d like you to return to page 26, where we describe theannual forecasts, one more time.
As for the operating profit forecast for FY2020, we target JPY16.1 billion in 1H and JPY23.2 billion 2H.
Compared to FY2019, we expect lower profit in 1H and higher profit in 2H, and we project higher profit overthe full year.
Accordingly, our 1H forecast is a decline in profit. We have now finished the first quarter, and I ask that you
will not be surprised even if we were to finish the second quarter with a lower profit than the previous year.
The characteristic of FY2020 is that we expect higher profit in 2H.
This concludes my explanation of the first-quarter results.

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Question & Answer<Questioner 1>
Q: In your explanation earlier, you talked about fixed costs several times. Let me organize the information one
more time. Fixed costs were lower than planned by JPY1 billion in total for Performance Materials and by
JPY0.5 billion for Agrochemicals. Tell us the reasons for this one more time.
In terms of fixed costs over the full year, do you think the reduction of fixed costs will last for the rest of the
fiscal year? Or do you think there will be a bounce back up in fixed costs? Tell us a little more about this.
A: As for fixed costs, we think there will be certain costs that will remain lower than expected, such as travel
and entertainment expenses. But we don’t know for sure about the undershoot in fixed costs stemming fromR&D expenses. Part of the R&D costs is lower than expected, but part of it is also due to delays. This is an areathat is still unclear. Overall, we expect fixed costs to come in below expectations, but we aren’t sure about
the extent.
Q: Would you say the JPY1.5 billion reduction in the first quarter will remain for the rest of the year? Putanother way, is it correct to understand that the burden of fixed costs will be JPY1.5 billion less than the initial
plan?
A: I don’t think it will be that much. Part of the lower costs is due to delays, such as the absence of businesstravel and slow progress in customer communications. Some of these activities will recover. But part of the
reduction also comes from cost savings. These matters are unclear at this stage, but we don’t think the JPY1.5
billion will remain as savings.
Although part of it will remain, we don’t know at this point how much of it will remain.
Q: Okay. My second question is about SUNEVER. Sales grew 14% in the first quarter. In particular, sales
expanded for photo IPS and increased for rubbing IPS. Even though sales growth for rubbing IPS has been on
a downtrend, it has turned up.
In addition, sales growth for photo IPS remains strong. Tell us a little more about the status of rubbing andphoto IPS in the first quarter.
Also, tell us your views on the second quarter. For example, let me confirm whether there was any impact
from users stockpiling inventories in the first quarter.
A: First, in terms of photo IPS, YoY sales growth was robust for non-smartphones. Sales growth forsmartphones was minimal compared to non-smartphones.
As such, photo IPS sales significantly exceeded expectations for non-smartphones and fell below expectations
for smartphones. In terms of rubbing IPS, sales were solid for tablets and other small and medium-sized
devices. These areas were solid.
In the second quarter, we expect non-smartphone sales to remain robust for PCs, monitors, and tablets.
In terms of smartphones, we expect replacement demand to be weak in the second quarter. But new models
will be rolled out after that, so we expect a recovery.

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Q: Were there any users stockpiling inventories in the first quarter?
A: No, not much. We think most demand was real demand, not stockpiling demand.

<Questioner 2>
Q: My first question is also about SUNEVER. You mentioned that sales for smartphones came in below
expectations, but what kind of expectations did you have at the beginning of the year, and what are thereasons for falling short of expectations? Could you tell us about this point in more detail?
A: We base our expectations on the demand from each customer. At the beginning of the fiscal year, weestimated that end-user demand would fall by about 10% YoY. We think part of this was due to the global
impact of COVID-19, but in reality, the drop was weaker than expected.
OLED demand wasn’t particularly strong, and it is dependent on current conditions, so we look forward to 2H.
Breaking out of this state has been the growth in non-smartphones.
Q: Okay. So, your judgment is that there’s no need to change the initial expectation of around 10% decline indemand?
A: Yes, that’s right.
Q: Okay, thanks. My second question is about Agrochemicals. First, I’d like to ask about the low temperaturesand scarce occurrence of pests in Japan, which was cited as a factor behind GRACIA’s underperformanceversus the plan. Do you think GRACIA will underperform over the full year? Do you think the negative impactthat emerged will remain for the rest of the year?
A: We’ll work hard to recover the shortfall because there is timing in which we can do so. Recovery is possible
if insects start coming out because GRACIA is for vegetables and tea. But it remains doubtful whether we canrecover the shortfall entirely, albeit we’ll do our best to make a recovery.
Q: Okay, thanks. I’d also like to ask about Fluralaner, regarding how shipments were made ahead of schedule.
I believe you expect inventory adjustments over the next two to three years. Do you have any plans to changeor review the inventory adjustments?
A: No. We think the impact is on a quarterly basis, so we have no such plans. We haven’t changed our fullyear outlook, and we don’t think our plans beyond that need to be changed, either.

<Questioner 3>
Q: If things remain as they stand now, profit will decline JPY3.5 billion from the first quarter to the second
quarter, but you haven’t revised the outlook. Is this attributable to a likely increase in fixed costs in the second
quarter?
Also, inventories have increased considerably overall. You mentioned there was an impact on someinventories. Do you think inventory adjustments in the second quarter will cause a considerable decline inprofit? Could you tell me your views on changes in fixed costs and inventories from the first quarter to thesecond quarter?

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A: We haven’t made calculations yet, but we think delayed fixed costs will emerge and hurt profit. As you
pointed out, inventories increased in the first quarter, so they will probably be worked down in the second
quarter, resulting in a negative impact.
By segment, we think the negative situation in the first quarter for Chemicals will continue in the second
quarter. Meanwhile, we expect solid results to continue for both displays and semiconductors for
Performance Materials.
We expect Agrochemicals to be on par with or slightly ahead of the plan. In addition, when considering factors
such as fixed costs and inventories, we think exceeding the target for the second quarter will be somewhat
difficult. Although we have savings of JPY1.3 billion versus the 1H target, the question will be how much of
the savings will be able to preserve.
Q: In terms of large inventories, you mentioned earlier about JPY0.1 billion in excess inventories for Chemicals.
What is the situation in the other segments?
A: There’s also about JPY0.2 billion in excess inventories for Agrochemicals that have had a positive impact on
profit.
Q: Excess inventories for both segments combined are around JPY0.3 billion.
A: Right.
Q: I understand. As for semiconductor materials, results have been very good overall. Under other new
materials, you write about EUV materials. How was the growth rate for these materials compared to the plan?
A: The section on other new materials under semiconductor materials, right? EUV sales didn’t grow much andfell short of the target, but this was a technical accounting issue.
I think we’ve explained this before, but this was attributable to the deduction of trial products rather thansales. We adopt an accounting system where we deduct shipments of samples from R&D expenses rather
than booking them as sales. Thus, when looking at sales, the growth wasn’t strong. But considering the trial
products that were deducted, shipments have grown reasonably.
Q: Does that play a part in the lower-than-expected sales?
A: Yes. This part is a simple comparison of sales versus the plan, so the trial product shipments that werededucted are expressed as the lower-than-expected sales.
Q: I see. Earlier, you talked about inventory stockpiling at customers for display materials. What about
semiconductor materials? What are your views on inventory stockpiling from July to September?
A: As for semiconductor materials, we believe customers are operating near full capacity, so there is little
likelihood of inventory stockpiling.
We think sales at customers will remain robust from July to September, and that will also trickle through to
our sales as well.
Q: The same can be said of chemical products related to semiconductors, correct?
A: Yes.

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<Questioner 4>
Q: Regarding ARC of semiconductor materials, tell me the reason why growth for KrF outpaced ArF? Also, giveme a more granular explanation of sales by region. Tell me if there were certain regions with stronger sales
than others.
A: As for the growth in KrF, it reflects how sales had long been declining but reversed that trend and turned
up in this quarter. The growth rate probably looks high because sales had been declining before turning to anincrease. But, in terms of the actual numbers, ArF is still larger.
Region-wise, sales growth was very strong in Korea, Taiwan, and China.
Q: Does that mean there wasn’t much difference by region?
A: Yes, that’s right.
Q: Okay. My second question is about Fluralaner. Was the overshoot in the first quarter attributable to higherthan-expected royalties?
A: No, royalties were zero in the first quarter. Royalties are booked in second quarter as they come in August
on BRAVECTO sales from January to June. The overshoot in the first quarter came entirely from sales of active
pharmaceutical ingredients.
Q: You mean the overshoot was from active pharmaceutical ingredients, correct?
A: Yes. Some shipments for active pharmaceutical ingredients were brought forward from the second quarterto the first quarter.
Q: Some media outlets have reported a considerable increase in pet demand as part of the increase in stayat-home consumption. Do you see any positive impacts from that?
A: That’s very difficult for us to know.

<Questioner 5>
Q: Have you been able to increase inventories of ROUNDUP in the distribution stage? I assume demand for itis very strong. What are your thoughts on this?
A: The reason why the YoY growth of ROUNDUP was negative in the first quarter was that marketing activities
could not be carried out as usual. Normally, when inventories start running out at stores, we visit the storesand replenish their inventories, but that couldn’t be performed properly because we couldn’t visit the stores
due to COVID-19.
Currently, distribution inventory is steadily decreasing. Thus, we intend to make up for that from the second
quarter.
Q: So, you haven’t been able to replenish much of the inventories yet?
A: No.

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Q: Regarding the movement of Fluralaner explained earlier, I thought perhaps pet demand is very strong
globally, and that might have been part of the reason why some shipments were brought forward. Would it
be too early to assume that? Are there any signs that the inventory adjustments, which is expected to take
two to three years, will end earlier?
A: No. We think it’s simply attributable to production schedules at clients, and we haven’t heard anything
about inventory adjustment forecasts being revised.

<Questioner 6>
Q: Based on your explanation of the Chemicals section earlier, I got the impression that the situation willremain challenging in the second quarter.
In the second quarter, the Toyama factory will undergo regular repairs, resulting in deterioration in earnings.
Do you think earnings will deteriorate even further from the first quarter to the second quarter even whenexcluding the impact of regular repairs?
Could you also tell me the latest information on TEPIC and melamine?
A: We only look at the results versus the target, so I’ll answer your question with regards to the target. The
target already factors in the repairs, but we think results will come in lower than that.
This is attributable to TEPIC, melamine, and environmental-related products. In terms of melamine, our export
price assumption for melamine in Asian markets was USD1,000 in the first quarter.
In reality, the price was USD1,000 in April and May but fell to USD940 in June, marking a slight decline. The
price drop wasn’t sharp, but we think prices will trend at this level.
Also, in terms of TEPIC, general overseas demand is correlated with construction demand, and activities in the
US have been weak. We expect demand to remain weak for automotive applications, particularly for printed
wiring boards. Accordingly, we think the situation will be more or less the same.
Environmental-related products will likely be affected by sluggish demand for pools. There isn’t any quick fix
to that, so growth will likely be negative.
Q: Regarding melamine export prices, which fell to USD940 in June, is there an impact from China where
demand has been recovering to some extent? Conversely, do you think Chinese capacity utilization has been
rising, and cheap products have been penetrating Asia again, thereby ravaging the market?
I’d also like to ask about TEPIC in the US market. I believe the overall economy will head for a modest recovery
in July-September compared to April-June. What is your outlook on the US market?
A: As for the question on melamine, low-priced products from China have continued to take a toll on themarket.
We hope the economy will recover in the US, but we’re not confident about that yet.
[END]

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