Slide 1: MORESCO Corporation 66th Term Financial Results Briefing Material
MORESCO Corporation MORESCO Group delivers sustainable one-of-a-kind products The 66th Term Financial Results Briefing Material (From March 1, 2023 to February 29, 2024) Tokyo Stock Exchange Standard Market 5018 (Petroleum and Coal Products) April 22, 2024 Copyright © MORESCO Corporation All Rights
Slide 2: Business Environment - Volume of automobile production
Business Environment - Volume of automobile production Volume of automobile production in areas where our business sites are located 10,000 units (% compared to previous year) (+8.9%) 5,862 5,384 5,381 5,000 907 (+3.0%) Southeast/ 4,728 881 South Asia 1,071 United (+6.0%) States 1,010 959 706 NEV Ch
Slide 3: Business Environment - Trends in crude oil, foreign exchange, and naphtha prices
Business Environment - Trends in crude oil, foreign exchange, and naphtha prices* $/b Dubai crude oil price Exchange rate ¥/$ 120 160 110 148.9 150 100 140 90 130 80 83.4 120 70 110 60 100 50 90 40 80 30 70 20-4Q 21-4Q 22-4Q 23-4Q 1,000 yen/kL Domestic naphtha price 80 73 60 40 20 20-4Q 21-4Q 22-4Q
Slide 4: Consolidated Statement of Income
Consolidated Statement of Income Recorded higher sales and profits thanks to sales price adjustments and an increase in the overseas sales volume, and recognized extraordinary income in association with making an affiliate a wholly owned subsidiary. Year-on-year (Million yen) FY2022 FY2023 change Ne
Slide 5: Net sales by Business Segment
Net sales by Business Segment Sales of products related to automobiles and sanitary materials were robust. On the other hand, investments in data centers continued to be sluggish. Year-on- 31,886 (Million yen) FY2022 FY2023 year change 30,333 Other Liquid Paraffin & Special Lubricants 15,105 16,247
Slide 6: Special Lubricants
Special Lubricants [Net sales] Up 7.6% year on year (¥16,247 million) [Sales volume] Up 1.5% year on year ➢ DC fluids Million yen In addition to an increase in the volume of 5,068 automobile production, shipments of 4,586 minimum-quantity spray-type lubricants 3,772 also increased. 3,292 3,537 3,059
Slide 7: Hot Melt Adhesive
Hot Melt Adhesive [Net sales] Up 10.0% year on year (¥8,430 million) [Sales volume] Up 8.0% year on year Million yen 6,069 ➢Hygiene applications 5,445 Sales of products for disposable diapers applications were favorable in major areas. ➢Adhesive Sales volume increased due to price adjustments as wel
Slide 8: Liquid Paraffin & Sulfonates
Liquid Paraffin & Sulfonates [Net sales] Up 3.1% year on year (¥3,909 million) [Sales volume] Down 4.5% year on year Million yen ➢Liquid Paraffin 2,747 2,845 Net sales increased slightly due to sales price adjustments, despite a decline in sales volume of products for polystyrene plasticizer applica
Slide 9: Synthetic Lubricants
Synthetic Lubricants [Net sales] Down 21.5% year on year (¥1,337 million) [Sales volume] Down 12.4% year on year (Unit: Million yen) 1,069 ➢High temperature lubricating oils 1,038 Sales increased due to price adjustments, as well as the recovery trend seen in the latter half of the fiscal year. 613
Slide 10: Consolidated Statement of Income
Consolidated Statement of Income Year-on-year (Million yen) FY2022 FY2023 change Net sales • Recovery in automobile production Net sales 30,333 31,886 +5.1% +5.1% • Adjustments of sales prices Operating profit Gross profit 8,129 8,984 +10.5% • Securing gross profit by adjusting sales price SG&A 7,60
Slide 11: Net Sales and Gross Profit Margin
Net Sales and Gross Profit Margin Recovery in the margin due to the promotion of price adjustments and an increase in sales of high-value-added products Million yen Net sales 9,000 40% Gross profit margin 8,345 8,155 7,854 7,790 7,596 6,885 6,511 34.9% 34.4% 6,000 33.1% 32.4% 31.6% 31.1% 29.8% 30% 2
Slide 12: Segment Profits and Losses
Segment Profits and Losses [Japan] Recorded higher sales and profits as the sales volume of major products exceeded the previous fiscal year and the price adjustments progressed. [China] Both sales and profits declined due to lower operation rates at Japanese automobile manufacturers and a decline i
Slide 13: Consolidated Balance sheet
Consolidated Balance sheet (Unit: Million yen) Change Change Cash and deposits 5,636 +1,380 Trade payables 4,908 ▲236 Property, plant and equipment Interest-bearing Trade receivables 7,942 +346 liabilities 6,105 +3,252 • Buildings and structures +1,119 Other current • Machinery and equipment, etc. I
Slide 14: Consolidated Cash flow
Consolidated Cash flow (Unit: Million yen) Operating cash flow • Profit before income taxes ＋2,934 2,055 • Depreciation 1,188 • Gain on bargain purchase ＋2,819 ▲285 ▲123 Investment cash flow • Purchase of property, plant and equipment ▲2,527 5,566 • Acquisition of businesses 4,186 ▲4,250 ▲1,224 Fina
Slide 15: Topics for Fiscal Year Ended February 2024
Topics for Fiscal Year Ended February 2024 Strengthening of global business MORESCO (ZHEJIANG) FUNCTIONAL CROSS TECHNOLOGIES GROUP, INC. MATERIAL CO., LTD. expansion ➢ Acquisition of businesses in North America ✓ Strengthening of stable supply by securing production bases ✓ Sales expansion of Americ
Slide 16: FY2024 Earnings Forecast
FY2024 Earnings Forecast Forecasts for the FY2023 fiscal year ending (Million yen) Estimate February 2025 YoY ➢Premises of the full- year forecasts Net sales 31,886 34,000 6.6% Crude oil price: 97$/b Exchange rate: $145 dollars/¥1 Operating profit 1,225 1,500 22.5% ➢Dividend/share (forecasts) Ordina
Slide 17: Medium-Term Management Plan
Medium-Term Management Plan MORESCO Group delivers sustainable one-of-a-kind products FY2024-FY2026 February 2024 Copyright © MORESCO Corporation All Rights Reserved. 17
Slide 18: Summary of the 9th Medium-Term Management Plan - Business performance
Summary of the 9th Medium-Term Management Plan - Business performance [Net sales] Increased due to an increase in shipments resulting from recovery in automobile production, as well as the weaker yen [Operating profit] Remained at a certain level due to a time lag between soaring raw material prices
Slide 19: Summary of the 9th Medium-Term Management Plan - Major achievements and ongoing issues
Summary of the 9th Medium-Term Management Plan - Major achievements and ongoing issues Medium-Term Corporate Policies Major achievements Ongoing issues ⚫ Start of the certification system for MORESCO Green SX ⚫ Expansion of MORESCO Green SX products 1) Contribute to realization of a sustainable ⚫ Ac
Slide 20: 10th Medium-Term Management Plan - Basic policies and major initiatives
10th Medium-Term Management Plan - Basic policies and major initiatives Theme of the 10th Medium-Term Management Plan Achieving both “realization of a sustainable society” and “increasing added value of business” Basic policies Major initiatives • Promotion of carbon neutrality・Increasing MGS produc
Slide 21: 10th Medium-Term Management Plan - Business targets
10th Medium-Term Management Plan - Business targets FY2023 FY2024 FY2026 Million yen Estimate Forecast Plan Net sales 31,886 34,000 38,000 Sales growth rate - 7% 6% Performance Operating profit 1,225 1,500 2,700 Operating profit margin 3.8% 4% 7% Ordinary profit 1,826 1,850 3,000 ROE 6.6% - 8% level
Slide 22: 10th Medium-Term Management Plan - Net sales by business segment
10th Medium-Term Management Plan - Net sales by business segment FY2023 FY2024 FY2026 Million yen Division 38,000 Estimate Forecast Plan Other 34,000 Special Lubricants 17,584 19,500 21,600 Liquid 31,886 Paraffin & Sulfonates (Synthetic Lubricants) （1,337） （1,350） （1,700） Hot Melt Adhesive Hot Melt
Slide 23: 10th Medium-Term Management Plan - Priority measures
10th Medium-Term Management Plan - Priority measures Priority measures by division Division Japan Overseas ➢ Expanding efforts for circular economy from the raw material perspective, ➢ Capturing demand from the new energy vehicle market, which is expected to Special Lubricants further utilizing biom
Slide 24: Growth strategy and capital/financial strategy - Measures to improve PBR
Growth strategy and capital/financial strategy – Measures to improve PBR ➢ Advance both growth strategy and capital/financial strategy to achieve “improvement of the return on capital” Promotion of Sustainability Management/Enhancement of Our Product Portfolio/Creation of Growth strategy Next-Genera
Slide 25: Promotion of Sustainability Management - MORESCO Green SX products sales ratio
Promotion of Sustainability Management- MORESCO Green SX products sales ratio ➢ Promoting efforts to improve existing products and develop new products to achieve 2030 targets ➢ Promoting enhancement of a product portfolio by expanding sales of MORESCO Green SX products which is high- value-added pr
Slide 26: Creation of Next-Generation Business - Corporate R&D system
Creation of Next-Generation Business - Corporate R&D system ➢ Establish a development system across Divisions, based on collaborations within the company and with industry, government, and academia. Flexibly review priority projects. ➢ Promote MOLGADC*, a company-wide project, and achieve results. P
Slide 27: Creation of Next-Generation Business - Life science business
Creation of Next-Generation Business - Life science business Commercialization of nanoemulsion Patent applications in the drug development field ➢ Establish a mass production system in response to ➢ Invested in AutoPhagyGO, a venture started from a adoption by major cosmetics manufacturers universit
Slide 28: Creation of Next-Generation Business - Development of technology to create non-petrochemical materials
Creation of Next-Generation Business - Development of technology to create non-petrochemical materials ➢ Promote the establishment of technology to synthesize non-petrochemical hydrocarbons from methane, which has a high global warming potential, as a raw material 当社の合成・精製技術を活用 ➢ Produce 10 tons of
Slide 29: Creation of Next-Generation Business - Sealant for perovskite solar cells
Creation of Next-Generation Business - Sealant for perovskite solar cells ➢ Participating in a consortium launched by Prof. Miyasaka, Toin University of Yokohama Contributing to the commercialization of perovskite solar cells within 2026 by providing high-performance sealants Participating in the co
Slide 30: Innovation of Business Processes - Improving sulfonate production efficiency
Innovation of Business Processes - Improving sulfonate production efficiency ➢ Developing new manufacturing processes that lead to shortened production processes and reduced industrial wastewater and wastes, among others Conventional New manufacturing manufacturing method method Sodium Shortened Raw
Slide 31: Innovation of Business Processes - Driving R&D with informatics
Innovation of Business Processes - Driving R&D with informatics ➢ Innovate MORESCO’s material development process across business divisions centered on the R&D division ➢ Develop and improve products quickly and efficiently by incorporating a data-driven approach Realizing “MORESCO Informatics,” a f
Slide 32: Head Office / R&D Center
Head Office / R&D Center Kobe City Kobe Airport ➢ Performance outlook and other information related to future forecasts and strategies contained in this material is based on the Company’s decisions at the time of preparation of this material and is subject to change in the future without prior notic