Denka : FY2025 Financial Results Presentation Materials with Script

Q4 Financial Results Briefing for the Fiscal Year Ending March 2026 May 13, 2026

Ikuo Ishida Representative Director, President & CEO Rimiru Hayashida Director, Senior Managing Executive Officer,

Chief Financial Officer (CFO)

Please turn to page two. I will begin with the latest developments on SNECTON and spherical fused silica for CCL applications, two products I would like to cover together. Before discussing each product, allow me to briefly revisit the composition of CCL, which I trust most of you are already familiar with.

The insulating layer of CCL is primarily composed of four materials: soft-type resin, hard-type resin, filler, and glass cloth. To enable AI and other high-speed communications, these materials are required to deliver very high levels of low dielectric loss tangent performance.

Of these four materials, we will provide solutions across three product items: soft-type and hard-type SNECTON, and low dielectric loss tangent spherical silica as the filler. Our ability to offer material approaches from both organic and inorganic perspectives is a significant competitive strength.

The dedicated plant for soft-type SNECTON, as shown in the photo here, is scheduled for completion in mid-May, and we are making steady progress in obtaining certification from CCL manufacturers.

For hard-type SNECTON, development samples are currently under evaluation at CCL manufacturers as we work toward a commercial launch during FY2026. In parallel, we are in the final stages of internal review regarding capacity expansion for hard-type SNECTON. We are also preparing the next addition to the SNECTON lineup beyond the hard-type, continuing to execute what we refer to as our "trickle-out strategy."

As for low dielectric loss tangent spherical silica, sales volume is increasing in line with expanding market demand.

Please turn to page three, where I will discuss spherical alumina used in thermal conductive molding compounds for high-speed memory applications. Our spherical alumina features a broad product lineup covering various particle sizes, enabling us to propose formulations that deliver high thermal conductivity through the optimal combination of these products. We are also capable of producing fine-particle grades to meet the demands of semiconductor miniaturization, which we believe represents a comprehensive strength that sets us apart from competitors.

Leveraging these strengths, we are focused on expanding sales for GDDR and multilayer package applications such as HBM. For GDDR applications, demand for GDDR7, the latest generation, is progressing steadily, and user evaluation for next-generation GDDR is also advancing on track.

For multilayer package applications, adoption has been confirmed for new projects, and we expect sales to begin this fiscal year. As with GDDR, development of grades for next-generation packages is also underway. Beyond simply expanding sales of products that capture these megatrends, and as I have mentioned before, we aim to develop distinctive products by combining our unique organic and inorganic materials and technologies, with the goal of establishing a solid position in the most advanced fields.

Please turn to page four, where I will discuss the financial impact and latest developments following the suspension of production at DPE, our US chloroprene rubber manufacturing subsidiary.

Work to safely idle DPE's manufacturing facilities, including the extraction and disposal of raw materials and intermediate products, is now in its final stages. We are rightsizing our workforce in line with progress on the idling work. The headcount, originally 250, stood at 140 as of the end of December 2025, and approximately 80 as of end of April 2026. We will make every effort to engage with stakeholders in order to reach an early resolution and minimize future cost burdens.

I will now turn to the financial impact. The operating income benefit from our fundamental measures came to +JPY8.8 billion in FY2025 vs. FY2024. Our original plan was +JPY9 billion, so we came in largely on track at JPY8.8 billion. For FY2026, we expect to be in line with the plan at +JPY15 billion vs. FY2024.

On the extraordinary items side, in addition to write-downs on raw materials and intermediate products, we incurred labor costs associated with the extraction work on raw materials and other items mentioned earlier, resulting in a full-year extraordinary loss of JPY18.4 billion. This was offset by a gain of JPY8.2 billion from the sale of land at the Ofuna Plant, as well as JPY12.6 billion in gains on the sale of strategic cross-shareholdings. We expect certain costs to arise in FY2026 as well, and we intend to manage net income by offsetting these with extraordinary gains and other items.