Nagase & Co., Ltd. · TSE:8012

Nagase & — Q2 FY2023 Earnings Presentation

41 slides from Nagase &'s earnings presentation, Nov 27, 2023

Slide 1: FY2023 Second Quarter Financial Briefing
FY2023 Second Quarter Financial Briefing NAGASE&CO.,LTD. Stock exchange listing : Tokyo (Prime Market) Code number : 8012 November 27, 2023 Copyright © 2023 Nagase & Co., Ltd.
Slide 2: Executive Summary
Executive Summary Profitability of the digital print processing materials business deteriorated due to falling unit prices caused by intensifying competition FY2023 Second Resin sales were sluggish due to a decline in global demand and weak market conditions Quarter Results Profit contribution by th
Slide 3: Business Environment by Segment
Business Environment by Segment Full-Year Projections First Segment Dept. Markets Initial Assumption First Half vs. Projections Second-Half Projections vs. (vs. Initial Half Projections) Supply chain inventory adjustments resolved, Automotive-related recovery, but Coatings Recovery compared to first
Slide 6: Consolidated statements income
Consolidated statements income ▶ Gross profit : Profit decreased mainly due to lower profitability of the resin sales business under Advanced Materials & Processing ▶ Operating income : Profit decreased due to lower gross profit and increases in selling, general and administrative expenses in connec
Slide 7: Gross Profit By Region
Gross Profit By Region ▶ Domestic business profit increased while overseas business profit declined, resulting in an overall decrease in profit ▶ Increase in domestic business sales, mainly due to higher sales of cosmetic materials and formulated epoxy resins ▶ Despite higher profits overseas due to
Slide 8: Gross Profit By Business & Segment
Gross Profit By Business & Segment ▶ Functional Materials posted lower sales of coating raw materials and raw materials for semiconductor-related products and other electronics industry products ▶ Advanced Materials & Processing posted lower sales due to decreased demand for resin sales in the offic
Slide 9: Operating Income by Business & Segment
Operating Income by Business & Segment ▶ Functional Materials and Advanced Materials & Processing posted lower operating income due to a decrease in gross profit ▶ Electronics & Energy posted higher operating income with increased gross profit ▶ Life & Healthcare recorded higher gross profit; howeve
Slide 10: Functional Materials Segment Operating Income Overview
Functional Materials Segment Operating Income Overview ▶ Decrease in sales of coating raw materials due to sluggish sales for architectural applications, despite recovery in sales to the automotive and other industries ▶ Sales decreased for raw materials for semiconductor-related products and other
Slide 11: Advanced Materials & Processing Segment Operating Income Overview
Advanced Materials & Processing Segment Operating Income Overview ▶ Lower profit due to decreased demand for resin sales in the office equipment, appliance, and video game device market, as well as the impact of inventory adjustments by customers ▶ Lower digital print processing materials sales due
Slide 12: Electronics & Energy Segment Operating Income Overview
Eｌectronics & Energy Segment Operating Income Overview ▶ Despite weakening semiconductor market conditions, sales of materials to the semiconductor industry increased due to growth in product sales ▶ Sales of formulated epoxy resins increased mainly for server applications and mobile device applicat
Slide 13: Mobility Segment Operating Income Overview
Mobility Segment Operating Income Overview ▶ Sales increased for resins, mainly due to an increase in automobile production and expanded market share to existing customers ▶ Sales increased in functional materials and functional components for interior and exterior fittings and electrification ▶ Ope
Slide 14: Life & Healthcare Segment Operating Income Overview
Life & Healthcare Segment Operating Income Overview ▶ Overall, the Prinova Group recorded higher sales due to the impact of the weaker yen and operations at the new plant in Utah; however, food ingredient sales profitability declined due to falling market prices ▶ Hayashibara posted increased sales,
Slide 15: State of Major Manufacturing Subsidiaries
State of Major Manufacturing Subsidiaries ▶ Nagase ChemteX : Despite the transfer of the biochemicals business, profit rose due to increased sales of highly profitable formulated epoxy resins ▶ Hayashibara : Higher profit due to the wider advancement of price increases and strong sales of cosmetic m
Slide 16: Consolidated Balance Sheets
Consolidated Balance Sheets ▶ Current assets : Decrease due to reduced inventories ▶ Net assets : Increase, despite dividend payments and share buybacks, as we posted a profit for the period, as well as increases in net unrealized holding gain on securities and translation adjustments due to the wea
Slide 17: Consolidated Cash Flows
Consolidated Cash Flows ▶ Operating CF : Net operating cash flow of ¥38.2 billion, mainly due to a decrease in working capital ▶ Investing CF : Net cash used of ¥6.4 billion, mainly due to purchase of property, plant and equipment and intangible assets, offset in part by proceeds from the sales of i
Slide 18: FY2023 Earnings Projection (Changed)
FY2023 Earnings Projection(Changed) ▶ While certain businesses, such as the automobile-related, semiconductor-related, and Life & Healthcare have been performing solidly, we lowered our full-year earnings forecast in light of the following conditions ▶ Resin sales declined due to lower demand for el
Slide 19: FY2023 Earnings Projection By Segment (Changed)
FY2023 Earnings Projection By segment(Changed) ▶ Sales of Functional Materials should increase due to a transfer of business from the Advanced Materials & Processing segment; however, we revised our forecast for operating income downward due to the negative impact of the digital print processing bus
Slide 20: FY2023 Earnings Projections by Segment (1st half Actual, 2nd half forecast)
FY2023 Earnings Projections by Segment (1st half Actual, 2nd half forecast) ▶ All figures below reflect organizational changes effective October 1, 2023 ▶ We expect operating income overall to increase versus the first half in respect to a certain degree of easing in inventory adjustments by custome
Slide 21: FY2023 Earnings Projection By Major Manufacturing Subsidiaries (Changed)
FY2023 Earnings Projection By Major Manufacturing Subsidiaries (Changed) ▶ Nagase ChemteX : While we expect overall sales to decrease, we made an upward revision to operating income due to strong sales of high-profit products ▶ Hayashibara : We made an upward revision to operating income, mainly due
Slide 22: Shareholder Returns
Shareholder Returns ▶ We plan to pay an interim dividend of ¥40 per share and a year-end dividend of ¥40 per share for an annual dividend of ¥80 per share for fiscal 2023 (expected 14th consecutive fiscal year of dividend increases) ▶ We are proceeding as planned with the repurchase of ¥８ billion in
Slide 26: Medium-Term Management Plan ACE 2.0 Quantitative Targets
Medium-Term Management Plan ACE 2.0 Quantitative Targets (No Changes) We made certain revisions in the third year of ACE 2.0 based on progress  We made no changes to quantitative targets, aiming to build a structure for growth with an ROE of 8.0% or more and operating income of 35 billion yen as th
Slide 27: ACE 2.0 Basic Policies (No Changes)
ACE 2.0 Basic Policies (No Changes) Become a true “Business designer” ACE 2.0 “Pursuit of Quality” With a mindset focused on Accountability (A), Commitment (C) and Efficiency (E), and to enable its sustained growth, NAGASE will work to give concrete shape (business, mechanisms, culture) (Pursuit) to
Slide 28: ACE 2.0 Pursuit of Quality
Medium-Term Management Plan ACE 2.0 Progress ACE 2.0 Pursuit of Quality Results to Date (Through March 2023) Issues as of April 2023 Reform of Profit Structure ・Invested capital in Focus Areas (food and semiconductors) to expand earnings ・Developed and began marketing new Bio-Related materials ・ Nee
Slide 29: QUICK WIN Status
QUICK WIN Status Maximize the Use of Resources (People, Money, and Time) and Generate Greater Efficiencies QUICK WIN Measures Initiated Over the Past Six Months Evolve Our Business and Financial Portfolios •• • Established WACC for each business division to Manage Manage andand execute execute busin
Slide 30: Strengthen Management Governance
QUICK WIN Strengthen Management Governance • Launched new organization in October (consolidated 11 Dept. to 7 Dept.). • Improved decision-making speed and business productivity by streamlining organizational operations Creating an Organizational Structure for Rationality and Efficiency Functional Ma
Slide 32: Who is NAGASE?
Who is NAGASE? A Company Whose Mission is to Solve Manufacturing Issues Through Materials NAGASE Bio-Materials Chemicals Materials Resin Inorganic Social and Materials Environmental Solutions Creating Issues Sustainable Societies Consumer Needs Solving Social Issues Fulfilling Consumer Needs Markets
Slide 33: NAGASE Group Strengths
NAGASE Group Strengths A Company Whose Mission is to Solve Manufacturing Issues Through Materials Bio-Materials Chemicals Materials Resin Trading Manufacturing Inorganic Functions Materials Functions Solving Issues Together Solving Issues Using In- With Partners House Products ・Ability to discern ・U
Slide 34: Growth Strategies for the Future: Potential
Growth Strategies for the Future Reorganize every Area based on the functional axis between trading company, manufacturing, and R&D functions. (1) Base Area Potential investments (Approximately 80 billion yen) Obtain cash and information to enhance in Focus and Develop businesses after 2023 manufact
Slide 35: Improve Business Initiatives
Improve Improve Business Initiatives Reduce unprofitable and impaired businesses Improvement Targets (1) Operating loss among subsidiaries and equity in losses of affiliates Develop and implement improvement plans as early as possible. Study withdrawing from businesses not expected to improve. (2) I
Slide 36: Manufacturing Functions in the Food Area
Focus Manufacturing Functions in the Food Area Expand the High-Profit Manufacturing and Processing Business [Social Issues] ・ Growing global health consciousness NAGASE × Prinova × Hayashibara ・ Awareness of food loss issues ・ Contact points with the high-growth sports nutrition market Sports Nutrit
Slide 37: Manufacturing Functions in the Semiconductor Area
Focus Manufacturing Functions in the Semiconductor Area [Social Issues] Expand Sales of High-Value-Added Products in the Advanced Semiconductor Market ・Increasing demand for advanced semiconductors NAGASE × Nagase ChemteX ・Multipolarization of production bases necessitated for reasons ・ Spec-in resu
Slide 38: Manufacturing Functions in the Life Sciences Area
Focus Manufacturing Functions in the Life Sciences Area Provide in-house materials that meet market trends and customer needs in [Social Issues] the life sciences market, where concerns about sustainability are rising ・Aging society and growing health consciousness NAGASE × Hayashibara × Nagase Chem
Slide 39: Research and Development (Biotechnology)
Develop Research and Development (Biotechnology) Strengthen R&D to develop new core bio-materials [Social Issues] ・Climate change NAGASE (Nagase Bio Innovation Center) × Hayashibara ・Resource circulation Bioprocesses Serving as the Foundation of NAGASE ・Healthy life expectancy Microbial Design Enzym
Slide 40: Leveraging Materials to Take on the Social Issue of Diaper Disposal
Leveraging Materials to Take on the Social Issue of Diaper Disposal *Appeared in the Culture section of the Nihon Keizai Shimbun, October 31, 2023 Copyright © 2023 Nagase & Co., Ltd. 40
Slide 41: Inquiries and Investor Relations Website
■Inquiries: https://www.nagase.co.jp/english/contact/ir/ ■NAGASE Group Investor Relations Website: https://www.nagase.co.jp/english/ir/ These presentation materials contain projections based on forward-looking assumptions, forecasts, and plans as of November 27, 2023 Actual earnings may differ from

Nagase & — Q2 FY2023 Earnings Presentation on 6ix

Nagase & — Q2 FY2023 Earnings Presentation

Slide 1: FY2023 Second Quarter Financial Briefing

Slide 2: Executive Summary

Slide 3: Business Environment by Segment

Slide 4: Contents

Slide 5: FY2023 Second Quarter Results and FY2023 Earnings Projections

Slide 6: Consolidated statements income

Slide 7: Gross Profit By Region

Slide 8: Gross Profit By Business & Segment

Slide 9: Operating Income by Business & Segment

Slide 10: Functional Materials Segment Operating Income Overview

Slide 11: Advanced Materials & Processing Segment Operating Income Overview

Slide 12: Electronics & Energy Segment Operating Income Overview

Slide 13: Mobility Segment Operating Income Overview

Slide 14: Life & Healthcare Segment Operating Income Overview

Slide 15: State of Major Manufacturing Subsidiaries

Slide 16: Consolidated Balance Sheets

Slide 17: Consolidated Cash Flows

Slide 18: FY2023 Earnings Projection (Changed)

Slide 19: FY2023 Earnings Projection By Segment (Changed)

Slide 20: FY2023 Earnings Projections by Segment (1st half Actual, 2nd half forecast)

Slide 21: FY2023 Earnings Projection By Major Manufacturing Subsidiaries (Changed)

Slide 22: Shareholder Returns

Slide 23: Medium-Term Management Plan ACE 2.0

Slide 24: Contents

Slide 25: Medium-Term Management Plan ACE 2.0 Progress

Slide 26: Medium-Term Management Plan ACE 2.0 Quantitative Targets

Slide 27: ACE 2.0 Basic Policies (No Changes)

Slide 28: ACE 2.0 Pursuit of Quality

Slide 29: QUICK WIN Status

Slide 30: Strengthen Management Governance

Slide 31: Growth Strategies for the Future

Slide 32: Who is NAGASE?

Slide 33: NAGASE Group Strengths

Slide 34: Growth Strategies for the Future: Potential

Slide 35: Improve Business Initiatives

Slide 36: Manufacturing Functions in the Food Area

Slide 37: Manufacturing Functions in the Semiconductor Area

Slide 38: Manufacturing Functions in the Life Sciences Area

Slide 39: Research and Development (Biotechnology)

Slide 40: Leveraging Materials to Take on the Social Issue of Diaper Disposal

Slide 41: Inquiries and Investor Relations Website