FY 2025 Second Quarter Financial Results Presentation Materials with Script (Financial Results and Topic: Direction of Management Plan Mission 2030 Revision)

Q2 Financial Results Briefing for the Fiscal Year Ending March 2026 November 10, 2025

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

Thank you very much for attending Denka Co., Ltd.'s Q2 financial results briefing for FY2025.

First, please see page two for an explanation of the latest situation at DPE, our US chloroprene rubber manufacturing subsidiary, following its production suspension.

In order to bring the DPE manufacturing facilities to a complete shutdown in a safe condition, we are still in the process of extracting and disposing of hazardous materials including raw materials and intermediate products that remain in the manufacturing facilities.

As for progress, we have completed the extraction and treatment of several substances classified as the most hazardous with the highest priority. However, there are still some hazardous materials in the facilities that pose a risk of disaster, so these materials are being extracted and disposed of, and the facilities are being cleaned in turn.

Discussions with stakeholders are ongoing to minimize future costs. Unfortunately, we do not have any details that we can disclose at this time, but we will steadily proceed with the discussions.

As for shipments to users, the switchover from DPE to Denka's Omi Plant products has been completed, and most of the DPE inventory has been shipped out during H1 of the fiscal year.

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

The impact of fundamental measures on operating income was plus JPY1.8 billion in H1 compared to FY2024. The full-year impact is estimated to be plus JPY8.6 billion, on par with the plan. As we mentioned earlier, since the shipment of DPE product inventory was largely completed during H1, the benefits have been fully contributed from H2.

On the other hand, extraordinary losses amounted to minus JPY8.4 billion in H1 due to the write-down of raw materials and intermediate products recorded in Q1, as well as labor and other expenses incurred in Q2 in connection with the removal of raw materials and other items.

We expect to incur extraordinary losses in H2 and beyond, including labor and other costs associated with the extraction of raw materials and other materials.

In addition to the gain on the sale of the Ofuna Plant site in Q1, we aim to compensate for this to the extent possible through extraordinary gains, such as the sale of shares held in the Company's strategic holding.

Please see next page, page four. Here are today's presentation highlights.

In Q2 of FY2025, the electronics & innovative products division was plus JPY3.4 billion in volume, reflecting the expansion of demand for generative-AI-related products and power infrastructure and a gradual recovery in demand for general-purpose semiconductors, while fixed costs, mainly depreciation expenses, were minus JPY1.1 billion and the impact of foreign exchange rates was also minus JPY1.1 billion. As a result, overall sales increased slightly by JPY0.4 billion from the previous year.

Net income attributable to owners of parent also increased slightly by JPY 0.5 billion YoY due to a DPE-related loss of JPY8.4 billion and a gain of JPY8.2 billion on the sale of the Ofuna plant site.

Although H1 saw an upward swing in the electronics & innovative products division, resulting in an overall increase over the initial forecast, we expect a downward swing in the life innovation division in H2; therefore, we have left the forecast for FY2025 unchanged.

The dividend forecast remains unchanged from the initial forecast of JPY100 per share. The Company aims to maintain or increase the dividend per share based on a total return ratio of 50% over the eight-year period of the "Mission 2030" management plan.

Lastly, as a topic of this financial results presentation, I will explain the direction of the review of the "Mission 2030" management plan. The revised version of the plan is scheduled to be released in February 2026.

As a major direction in the formulation of the plan, we have positioned the period from FY2026 to FY2028 as Phase 2, aiming to achieve a highly probable numerical target of ROE of 8.0% or more. In addition, we have pushed back our targets for operating income of JPY100 billion and ROE of 15% for FY2030 to a more realistic time frame, and we will continue to pursue our ideal of the best mix of ICT & energy and healthcare.

In this briefing, CFO Hayashida will provide a detailed explanation of the financial results. I will explain the direction of the review of the "Mission 2030" management plan.