Denka : FY2025 Third Quarter Financial Results Presentation Materials with Script

Q3 Financial Results Briefing for the Fiscal Year Ending March 2026 February 6, 2026

Rimiru Hayashida Director, Senior Managing Executive Officer,

Chief Financial Officer (CFO)

Thank you very much for joining Denka's FY2025 Q3 results presentation today.

First of all, please see page two for an update on DPE, our US chloroprene rubber manufacturing subsidiary, after the production suspension.

We are still in the process of removing and disposing of raw materials and intermediate products from the DPE manufacturing facilities in order to bring them to a safe shutdown. As for progress, in Q2, we have completed the extraction of substances that were determined to be high priority in the safety evaluation. In Q3, the remaining materials were also extracted, and progress was made in cleaning the facilities.

The number of employees has gradually decreased from approximately 250 at the end of March 2025 to approximately 140 at the end of December. As a result of the current progress in deactivation work, we are in the process of optimizing our workforce, and we expect to have approximately 100 employees by April 2026.

Discussions with stakeholders are ongoing to minimize future costs.

Next, please turn to page three for an explanation of the impact on FY2025 results.

The effect of the fundamental measures on operating income was a positive JPY4.2 billion in the cumulative Q3 period. For the full year, we expect an increase of JPY8.6 billion, on par with the plan.

Since the shipment of DPE products was generally completed during H1 of the fiscal year, the benefits from Q3 are contributing to the full benefits. In Q4, we expect a significant improvement in earnings, as results in the same period last year were impacted by factors such as scheduled maintenance.

Regarding extraordinary gains and losses, in addition to the write-down of raw materials and intermediate products recorded in Q1, we incurred expenses such as labor costs associated with the removal of raw materials in Q2 and Q3. This led to a negative impact of JPY13.5 billion for the first nine months. Q4 is also expected to incur an extraordinary loss.

In response, the Company plans to compensate for this by recording a gain on the sale of land for the Ofuna Plant in Q1, as well as by selling strategic cross-shareholdings.

See page four. The following are the key points of today's briefing.

In Q3 of FY2025, the volume difference in electronics and innovative products increased by JPY4.7 billion on higher demand for AI-related products and power infrastructure, as well as a moderate recovery in demand for general-purpose semiconductors.

The DPE production suspension impact of JPY4.2 billion contributed to a significant overall increase in profit of JPY6.4 billion over the previous year.

As explained on the previous page, net income increased by JPY3 billion from the previous year due to a DPE-related loss of JPY13.5 billion and a gain of JPY8.2 billion on the sale of the Ofuna Plant site.

Since each segment has mixed results, we have changed the breakdown of operating income in the full-year forecast, but the overall forecast remains unchanged from the November forecast.

The dividend forecast remains unchanged from JPY100 per share. The Company aims to maintain and increase the dividend per share based on a total return ratio of 50% for the cumulative eight years in the Mission 2030 Management Plan.