Consolidated Financial Results for the First Quarter

Consolidated Financial Statements for the First Quarter of FY2025 (Ending June 30, 2026)

GUNZE LIMITED

TSE Prime (Code:3002)

1. Financial Statements for the First Quarter of FY2025
2. Structural Reform of the Apparel Business
3. Business Summary of the First Quarter of FY2025
4. Overview by Business Segment
5. Forecast for FY2025

1. Financial Statements for the First Quarter of FY2025 (Ending June 30, 2026)
   
   
   

   I-1. Consolidated Financial Statements for FY2025 1Q

   Consolidated Operating Results

   
   
   

   (millions of yen)

   	FY2025 1Q Bottom: Profit Margin	FY2024 1Q Bottom: Profit Margin	Y over Y
   			Increase (Decrease)	Change (%)
   Net Sales	32,240	33,382	(1,142)	(3.4)
   Operating profit	1,806 5.6	2,083 6.2	(277)	(13.3)
   Operating profit	1,838 5.7	2,272 6.8	(434)	(19.1)
   Profit attributable to owners of parent	(1,473) (4.6%)	1,600 4.8	(3,074)	-

   4

   
   
   

   (Major extraordinary gains and losses)

   Apparel business restructuring expenses (3,434)

1. Structural Reform of the Apparel Business
   
   
   

   Timely Disclosure (August 6)

   
   
   

   In the Medium-term Management Plan "VISION 2030 stage2" restructure the business to generate profits on a sustainable basis. In line with this Apparel business structural reform plan, the Company has decided to consolidate and reorganize the production and distribution centers, and streamline the workforce mainly in indirect divisions through voluntary retirements, which we believe is essential to continuously strengthening our Apparel business structure

II-1(1). Restructuring of the Apparel Business

1. Consolidation and reorganization of production facilities

1. Closure of Yanase Factory and Yabu Apparel Co., Ltd. (a consolidated subsidiary): Targeted for March 31, 2026

2. Closure of Tohoku Gunze Co., Ltd. (a consolidated subsidiary) and Yashima Tsusho Co., Ltd. (a consolidated subsidiary): Targeted for December 31, 2026

   → For employees, we plan to relocate them to other Group facilities, including the Miyazu Factory,

   which will consolidate the functions of the above-mentioned plants, or provide job placement assistance

   Timely Disclosure (August 6)

   
   
   

   II-1(2). Restructuring of the Apparel Business

   2. Consolidation and reorganization of logistics facilities

   1. Closure of the Ayabe Branch of the Kyoto Logistics Center of Gunze Logistics Co., Ltd. (a consolidated subsidiary): Targeted for December 31, 2025

   2. Closure of the Fukuchiyama Branch of the Kyoto Logistics Center of Gunze Logistics Co., Ltd. (a

consolidated subsidiary): Targeted for December 31, 2026

→ For employees, we plan to offer transfers to other locations within our group or support for reemployment

3. Implementation of Voluntary Retirement Program

Implementation of the "Next Challenge Program" (voluntary retirement) to support career transitions for employees aged 40 or older in the indirect and sales departments of the Apparel Company

→ Preferential measures: Payment of severance pay and implementation of reemployment

support for those who wish to participate

II-2. Restructuring of the Apparel Business

1. Business Summary of the First Quarter of FY2025
   
   
   

   III-1(1). First Quarter Financial Summary

   (April 1, 2025 to June 30, 2025)

   Reduced revenue due to stagnant domestic and international demand for plastic films and the impact of sales from the discontinued electronic components business at the end of the previous fiscal year. Operating profit and ordinary profit decreased due to the impact of reduced sales volume and increased costs in the apparel business. Due to business restructuring costs in the apparel business, the company recorded a net loss attributable to parent company shareholders for the quarter

   Key Points of Segment Performance
   Functional Solutions	Decrease in revenue and profit components business

   • In plastic films, sales in Japan struggled due to sluggish consumption caused by increased food prices and unfavorable weather conditions, and overseas sales were also affected by the downward pressure on prices in the market

   • In engineering plastics, products for the office equipment fields performed strongly, although products for semiconductor market were affected by the sluggish market conditions.

   • Net sales decreased by approximately ¥700 million due to the wind-down of the electronic

   Key Points of Segment Performance

   Increased revenue, decreased profit

   (April 1, 2025 to June 30, 2025)

   Medical

   Apparel

   Lifestyle Creations

   • While expansion of sales of adhesion prevention agent and absorbable medical materials including bone

     fixation devices progressed in Japan, purchased products such as medical lasers struggled due to

     intensifying competition

   • Sales of products in China expanded with a focus on the bioabsorbable reinforcement felt, however, they were affected by regulations on high-cost medical care

     Decreased revenue and profit

   • While expansion of apparel-related sales through e-commerce progressed driven primarily by Asedoron

     and differentiated ladies' innerwear, sales through physical retail channels, including mass retailers, were affected by unfavorable weather conditions, the reduction in sales floor space and consumers' reluctance to make purchases

   • The business was affected by the impact of higher costs due to lower sales volume and higher labor

     and other costs

     Decreased revenue, increased profit

   • The real estate category performed well, as the number of visitors increased due to the effects of commercial facility renovations

   • The sports club business improved the profitability due to the reduction of unprofitable stores

   III-1(2). First Quarter Financial Summary

   	Net Sales			Operating Profit Bottom: Profit Margin
   	FY2025 1Q	FY2024 1Q	YoY	FY2025 1Q	FY2024 1Q	YoY
   Functional Solutions	11,515	12,650	(9.0%) (1,135)	1,582 13.7	1,665 13.2%	(5.0%) (83)
   Medical	3,145	3,109	1.1 35	540 17.2	594 19.1	(8.9%) (53)
   Apparel	14,763	14,795	(0.2%) (31)	363 2.5	563 3.8	(35.6%) (200)
   Lifestyle Creations	3,018	3,024	(0.2%) (5)	246 8.2	150 5.0	64.0 96
   Total	32,240	33,382	(3.4%) (1,142)	1,806 5.6	2,083 6.2%	(13.3%) (277)

   III-2. FY2025 1Q Performance by Segment

   Consolidated Performance

   (millions of yen)

   
   
   

   Lifestyle Creations

   Net sales

   13%

   9%

   3.0

   9%

   0.2

   Operating

   profit

   35%

   11.5

   (Billions of yen)

   
   
   

   III-3. Consolidated Financial Statements for FY2024 by Segment

   Functional Solutions

   Apparel

   46%

   0.4

   20%

   0.5

   Net Sales

   ¥32.2billion

   Operating profit

   ¥1.8billion

   58%

   1.6

   14.8

   10%

   3.1

   Medical

   III-4. Net Sales & Operating Profit for FY2024 1Q

   Net Sales: 32,240 YoY: -3.4% (millions of yen)

   Operating profit: 1,806 YoY:-13.3%

   ＜Sales by Business Segment ＞

   ＜Operating Profit by Business Segment＞

   540

1,582

1,665

150

172

6.2

2,083

Operating profit margin: %

1,806

5.6

4.8

1,515

3.9

1,252

1,423

The total amount includes all corporate expenses not included in segment income.

31,868 31,706 33,382

32,240

Functional Solutions 35%

Medical 10%

Functional Solutions 58%

FY2022 FY2023 FY2024 FY2025

Apparel 46%

Lifestyle Creations 9%

F△Y202262 FY2023 FY2024 FY2025

Medical 20%

Apparel 13%

Lifestyle Creations 9%

III-5. Consolidated Financial position for FY2025 1Q

(millions of yen)

III-6. Details of Changes in Assets

• Difference from the end of the previous period (Unit: billions of yen)

Cash and Deposits

Decrease of 1.0

△0.5

△0.6

Accounts

△0.7

Property, Plant and equipment

0.3

receivable

0.4

△0.1

0.1

Others

159.6

Inventories

Others

Investment in securities

158.6

End of FY2024 Total assets

＜ Current assets (1.3) ＞

＜ Fixed assets 0.3 ＞

End of June, 2025 Total assets

1. Overview by Business Segment
   
   
   

   	IV-	1. Business Overvie	w for the First Quarter of FY2025
   		c t i o n a l S o l u t i o n s	B u s i n e s s 1 Business Direction
   	Plas	tic film Actively intr and promote recycling fact	oduce new environmentally friendly products to the market the establishment of a resource recycling model centered on Growth & ories. expansion
   	Category	Product Details	Overview
   	Shrink film domestic
   	Flexible packaging	(resistant to holes)
   	Industrial packaging
   	OPP films
   	Shrink film overseas

   • F u n

   • Hybrid film with a laminated structure of PET and PS. It has excellent shrinkability and beautiful appearance.

   • Olefin labels are easy to separate by specific gravity and are easy to recycle

   • The beverage sector has seen a decline in volume due to price increases in final products

   • Expansion of sales of environmentally friendly HCX-type products has not been sufficient to offset the decline

   • Gas barrier properties and pinhole resistance

   • Applications for frozen foods and other food products are being impacted by reduced volumes due to price increases.

   • General-purpose nylon remains robust due to improved cost competitiveness

   • Industrial materials such as those used in semiconductor manufacturing and EV batteries, as well as used in wallpaper

   • Increased advance demand to avoid the impact of U.S. tariffs is driving expanded shipments

   • Excellent anti-fog characteristics for food package

   • Affected by deteriorating market conditions and inventory shortages due to production delays

   • Shrink films contraction at three sites in the U.S., China, and Vietnam

   • U.S.: Hybrid products are performing well,but are affected by market price declines

   • Vietnam: Profit deterioration due to loss of high-end products for India, etc.

   • China: Cost reduction efforts amid intensifying price competition

   18

   
   
   

   Global

   Flat shrinkage

   OPP

   Industrial Products

   Nylon

   
   
   
   
   
   

   IV-2. Business Overview for the First Quarter of FY2025

   • Func t i o na l So l ut i o ns Bus i ne s s 2

     Business Direction

     Engineering Plastics

     While aiming to expand the market share of products for the OA market, striving to strengthen non-OA categories such as semiconductors, medical, and energy fields to drive business growth.

     Growth &

     expansion

     Category	Product Details	Overview
     OA Functional Products
     Non-OA	used in industrial manufacturing processes	downturns

     • Fluorine thin film tubes for fixing belts/rolls Intermediate transfer belts hold the top global market share

     • Products for multifunction printer are performing well in commercial printing, boosting overall sales

     • Manufacturing and sales of functional parts

     • Semiconductor-related products are affected by market

     
     
     
     
     
     
     
     
     
     
     
     

     For OA

     • Seamless Belts ■ Fluorine Thin-Wall

       Tubes

     • Semiconductor

   manufacturing

   Filter Support Materials

   • Tear-resistant

   Fluoropolymer

   Tubing

   Non-OA

   
   
   

   IV-3. Business Overview for the First Quarter of FY2025

   • M e d i c a l B u s i n e s s

   By offering innovative 'biomaterials × devices' and steadily expanding

   Business

   Direction

   Medical
   
   

   sales-especially of absorbable products, we aim to grow into a globally expanding medical device company

   Growth &

   expansion

   Category	Product Details	Overview
   Bioabsorbable reinforcement felt		key regions, but Medical insurance cuts are intensifying
   Bone fixation devices
   Artificial dermis
   Absorbable Adhesion Barrier sheet	gelatin in film form with an uneven surface	investments
   Purchased products

   • Suitable for reinforcing sutures during surgery and preventing air leaks

   • Effective as a scaffold material for tissue regeneration

   • Japan: Sales are progressing smoothly with additional benefits from new product launches

   • China: Penetration is progressing in major comprehensive hospitals in

   • Bioabsorbable bone grafting material with special processing

   • Japan: Stable expansion of case acquisition in oral surgery

   • China: Purchasing adjustments aimed at reducing high medical costs are having an impact

   • Collagen-based absorbable artificial skin

   • China and the United States: New market development is progressing and expanding

   • Absorbable anti-adhesion material consisting of

   • Sales are steady, but impacted by increased costs associated with

   • Medical devices for aesthetic, reconstructive, and wound care applications

   • Medical lasers: Restructuring and consolidation driven by intensifying industry competition and changes in the business environment

   Domestic

   Overseas

   IV-4. Business Overview for the First Quarter of FY2025
   Focusing on the value-added category, we are strengthening initiatives such as production and logistics restructuring and improving efficiency in indirect departments to enhance capital efficiency and revitalize the business into a sustainable one	Business Direction
   	Restructure

   • A p p a r e l B u s i n e s s

   
   
   
   Innerwear Segment
   
   

   • While advancing the prioritization of comprehensive brands,

     cost increases since the beginning of the year, resulting in a decline in profits

   • Focusing on key brands, consolidating brands, and reducing SKUs

   • Centering on e-commerce, we're accelerating the shift to D2C

     • ASEDORON: As a brand targeting summer demand, promotional activities have been

       strengthened, and sales are progressing steadily

     • YG: The T-shirt-specific innerwear "in·T" continues to perform steadily, primarily through the EC channel

     
     
     

     ASEDORON

     Legwear category
     
     

   • Sales have been sluggish due to deteriorating market

   conditions, and price adjustments are being implemented

   • The flagship product "SABRINA" is being strengthened as a legwear total brand with

     expanded sock offerings

   • Stockings: While e-commerce is growing, existing distribution channels are struggling due to the deteriorating market conditions

     
     
     
     
     
     
     
     
     

     YG "in·T"

     
     
     
     
     
     

     SABRINA

     Foot Covers

     BODYWILD

     KIREILABO

     Legwear

     KIREILABO

     Men's Lady's Leg

     IV-5. Business Overview for the First Quarter of FY2025
     	Business Direction
     	Restructure

     • L i f e s t y l e C r e a t i o n s B u s i n e s s

     
     
     

     Real Estate Business

     Strengthen property-specific management focused on investment efficiency, and

     improve low-yield assets or shift them to growth areas and new fields

     • Current status of SC business

       ・Tsukashin (Nishinomiya City, Hyogo Prefecture): In addition to the effects of the renovation, the number of visitors has significantly increased and steady performance due to efforts to attract customers from nearby

     • Current Status of Real Estate Leasing Business

       
       
       

       • Both sales and profits are showing steady growth

         Sports Club Business

         Enhance support for underperforming stores, expand the school business, and develop differentiated services and new formats aligned with local and store-specific needs

       • The School Business is progressing smoothly due to price revisions accompanying service improvements

       • The fitness business aims to expand sales through program revitalization and a review of the pricing structure

         
         
         

       • We are undertaking school swimming lessons and health support services for local governments

   Green Business

   Capture greening demand in development plans and pursue new business

   initiatives for CO2 reduction

   • The tree sales business will be affected by the aftermath of large-scale projects such as the previous fiscal year's Osaka Expo

2. Forecast for FY2025

V-1. FY2025 Forecast

※No Revision of forecast

(millions of yen)

※A decrease in profit is planned due to the expected occurrence of special losses related to structural reforms

V-2. FY2024 Forecast by Segment

※No Revision of forecast (millions of yen)

V-3. Distribution of Earnings to Shareholders

Dividend Per Share and Dividend Payout Ratio

(Unit: JPY)

Forecast

450.0

250.5%

300.0%

400.0

350.0

250.0%

300.0 200.0%

250.0

200.0

150.0%

150.0 100.0%

100.0

50.0

0.0

102.8%

ordinary dividend

commemorative divident

Special dividend

Dividend payout

ratio

48.8%

46.9%

95.1%

82.9%

56.2%

50.8%

44.7%

0.0%

5.0

45.2%

47.5%

37.5

147.0

50.5

69.0

2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3 2022/3 2023/3 2024/3 2025/3 2026/3※

50.0%

0.0%

V-4. Distribution of Earnings to Shareholders

treasury stock

2,727

260 ▼1,700

(Unit: thousands of shares)

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

Treasury stock ratio

,000

,500

,000

,500

,000

500

0

1,831 1,843

2,297 2,297

50

340

1,546 1,605

Acquisition 535 ▼1,000

Cancellation

10.9% 10.9%

13.0%

1,220

421

100

1,018

247 ▼1,000

386

923※▼32※ 2,117※

1,008

2,116※

8.7% 8.8%

6.3%

8.0% 8.3%

5.6%

244

1.4%

3.6% 6.4%

613

6.5%

0.0%

※As of April 1, 2025, a stock split will be conducted at a ratio of 2 shares for

each ordinary share

Calculated assuming that the stock split was implemented at the beginning of the previous fiscal year

2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3 2022/3 2023/3 2024/3 2025/3※ 2025/6※

The contents of this document, including performance forecasts,are based on information currently available and do not guarantee any future planned figures or measures.