Consolidated Financial Results for the Second Quarter

Consolidated Financial Statements for the Second Quarter of FY2025 (Ending March 31, 2026)

GUNZE LIMITED

TSE Prime (Code:3002)

1. Financial Statements for the Second Quarter of FY2025
2. Business Summary for the Second Quarter of FY2025
3. Forecast for FY2025

1. Financial Statements for the Second Quarter of FY2025 (Ending March 31, 2026)

   Consolidated operating results

   (Million of yen)

   	FY2025 2Q Bottom Profit Margin	FY2024 2Q Bottom Profit Margin	Y on Y
   			Increase (Decrease)	Change (%)
   Net Sales	65,270	67,329	(2,059)	(3.1)
   Operating profit	3,186 4.9%	3,566 5.3%	(379)	(10.7)
   Ordinary profit	3,205 4.9%	3,667 5.4%	(462)	(12.6)
   Profit attributable to owners of parent	(658) (1.0%)	2,956 4.4%	(3,615)	-

   Apparel Business Restructuring Expenses (3,498)

(Major Extraordinary Loss)

Consolidated operating results

• Net sales: Decreased by ¥2,059 million due to the cessation of operations of electronic components at the end of the previous fiscal year and stagnant domestic and international demand for plastic film.

• Operating and ordinary profit: Operating profit decreased by ¥379 million and ordinary profit decreased by ¥462 million due to increased fixed costs in the Medical and decreased sales volume and increased costs in the Apparel.

• Net loss attributable to owners of parent: Decreased by ¥3,615 million, primarily due to restructuring costs in the apparel business that were recorded in the first quarter.

• Full-Year Forecast: The previously announced financial forecast remains unchanged since the results of the current interim consolidated accounting period are generally within the expected range.

Mid-Term Management Plan VISION 2030 Stage 2

To Be “Company of Choice Globally”, Advance Business Foundation.

Business Process

Reform

Business Structure Reform

Efficiency and speed

Human capital activation

Rebirth into value-creating business

Corporate Culture Reform

Apparel Structural Reform

FY 2024 to 2027

Operating Profit Improvement Target: ¥3.3 billion

Items

Close domestic production sites

Close domestic

logistics sites

FY2025 FY2026 FY2027

Enhance Gunze's original value while improving cost competitiveness.

Yanase Factory: Closed at

the end of March Tohoku Gunze: Closed at the end of December

Reduce inventory and improve functionality by consolidating logistics hubs and restructuring.

Ayabe: Closed at the

end of December

Fukuchiyama: Closed at the end of December

Voluntary retirement

program

Optimize indirect personnel to transform the business model by

specializing in specific areas.

Resigned on January 20

Personnel system reform

Strengthen the company's competitiveness by attracting self-reliant and proactive individuals who embrace challenges.

Personnel system reform

Build-Up Project

-Reduce costs by utilizing external knowledge-

I-5(2). Initiatives to enhance corporate fundamentals

Build-Up Project

-Reduce costs by utilizing external knowledge-

Thorough cost reduction initiatives.

Boost each employee's responsiveness and strengthen competitiveness.

I-6. Second Quarter Financial Summary

Key Points of Segment Performance (April 1, 2025 to September 30, 2025)

Decrease in sales and increase in profit

Functional Solutions

Medical

Apparel

Lifestyle Creations

• Sluggish consumption of plastic films is due to food price hikes and low-price competition in overseas markets.

• Engineering plastics products for the office automation sector generally performed well, while those for the semiconductor market were impacted by the downturn in market conditions.

• Sales decreased by approximately ¥1.6 billion due to the cessation of operations of electronic components business.

  Increase in sales and decrease in profit

• Domestic sales of absorbable medical devices, such as anti-adhesion and bone fixation materials, saw steady expansion. However, sales of purchased items, such as medical lasers, faced challenges due to intensifying competition.

• Sales in China generally progressed smoothly, focusing on tissue reinforcement materials, but were affected by

  costly medical regulations.

• In addition to the impact of the weakening yuan on the exchange rate, fixed costs increased due to capital expenditures for business expansion and personnel growth.

  Decrease in sales and profit

• While retail channels, such as apparel mass retailers, were impacted by unfavorable weather, reduced sales floor space, and consumers' reluctance to purchase clothing, e-commerce channels experienced sales growth, primarily driven by differentiated products, such as ASEDORON and women's underwear.

• The company faced increased costs, including higher material and labor expenses, due to reduced production

  volumes resulting from inventory reduction efforts as part of its business restructuring.

  Increase in sales and profit

• The real estate segment performed well, driven by increased visitor traffic due to the renewal of commercial

  facilities.

• Profitability in the sports club segment improved due to sales recovery at existing stores and reduced unprofitable locations.

Ⅰ-7. FY2025 N2Q Performance by Segment

Consolidated Performance

(millions of yen)

Ⅰ-8. FY2025 N2Q Segment Composition

(Million of yen)

FY2025 2Q

9%

5,838

36%

5%

249

9%

475

23,667

45%

29,785

19%

948

Sales

¥65.2 billion

Operating profit

¥3.1 billion

67%

3,346

Operating Profit

Sales 

10%

6,480

Apparel

Medical

(BM: FY2022 2Q)

Lifestyle Creation Functional Solutions

Lifestyle Creation

Functional Solutions

11%

7,172

4%

4% 198

190

37%

68%

44%

24%

1,078

Sales

¥67.3 billion Operating Profit

¥3.5 billion

24,836

30,082

3,114

Operating profit

Sales

8%

5,631

Apparel Medical

Ⅰ-9. Net Sales & Operating Profit for FY2025 2Q

Net Sales 65,270 YoY (3.1%) (Million of yen)

Operating Profit 3,186 YoY (10.7%)

＜Sales by Business Segment＞

Profit Margin: %

67,350 65,153 67,329

65,270

Functional

3,566

3,230

5.0

3,186

4.2

5.3

3,251

3,346

2,937

3,114

297

303

2,806

4.9

24,836

5,631

24,251

5,492

25,635

6,468

23,667

6,480

Solutions

36%

Medical 10%

Function Solutions 67%

30,082

7,172

29,373

6,428

29,869

5,737

29,785

5,838

Apparel 45%

Life Creation 9%

Medical

19%

Apparel

5%

Life

Creation

15

FY2022 FY2023 FY2024 FY2025

FY2022 FY2023 FY2024 FY2025 9%

I-10. Quarterly Financial Results

(Million of yen)

I-11. Financial Results for FY2025 2Q

(Million of yen)

III-6. Details of Changes in Assets

Difference from the end of the previous period (Billions of yen)

Cash and Deposits

(1.2)

(0.6)

Accounts

(1.0)

Property, Plant and equipment

Decrease of 2.2

0.4

receivable

Inventories

(0.4)

0.5

0.1

Others

159.6

Others

Investment in securities

157.4

End of FY2024 Total assets

＜ Current assets (3.2) ＞

＜ Fixed assets 1.0 ＞

End of Sept., 2025 Total assets

Ⅰ-13. Cash Flow

Cash Flow

(Million of yen)

FY 2025

2Q

FY 2024

2Q

Change

I-14. Capital Expenditures and Depreciation Expenses

(Million of yen)

Engineering Plastics: Capacity expansion and new plant

construction

4,000

20

Medical: Capacity expansion and new plant construction 3,000

Apparel: Overseas production facility relocation due to business restructuring

1,700

21

1. Business Review for the Second Quarter

   Ⅱ-1. Business Review for the Second Quarter

   F u n c t i o n a l S o l u t i o n s 1

   Position

   Plastic films

   Introduce new environmentally friendly products to the market and promote

   the development of recycling factories.

   Profit increased

   Category

   Shrink film domestic

   Flexible packaging

   Industrial Packaging

   OPP film

   Shrink film overseas

   Main Products

   Hybrid styrene shrink film is made by coextrusion of PET and PS.

   It has both well shrinkage and shrink characteristics.

   Olefin shrink film has a low specific gravity and easy to recycle.

   The products have excellent gas barrier and pinhole resistance for food industry.

   For semiconductor manufacturing , EV batteries, and wallpaper industry etc.

   Excellent anti-fog characteristic for food package.

   Shrink films can be supplied world wide. The company has three production site in USA, China, and Vietnam.

   Topics

   Although the beverage sector has been impacted by declining consumer sentiment and increased final product prices, it has expanded its sales channels, particularly for environmentally conscious products.

   Due to rising prices and sluggish domestic consumption, the company launched products that balance functionality and affordability in the general-purpose market to secure new sales channels.

   The market remains robust, driven primarily by increased demand for generative AI-related products and steady demand for semiconductor tapes used in expanding data centers.

   Focusing on high-value products through production consolidation and

   prioritizing profitability.

   The price offensive of Chinese products impacts all locations.

   US: Mitigating the impact of additional tariffs through cost reduction and price pass-through.

   Vietnam: Rebuilding competitiveness through cost reduction. China: Working to improve profitability through cost reduction and

   22

   Shrink film overseas

   Shrink film domestic

   reviewing the production system.

   OPP

   Industrial

   Flexible

   Ⅱ-1. Business Review for the Second Quarter

   Profit increased

   Position

   F u n c t i o n a l S o l u t i o n s 2

   Engineering plastics

   To drive business growth, we will strive to expand our share of the OA market while strengthening our non-OA categories, such as semiconductors, medical equipment, and energy.

   Category	Main Products	Topics
   OA Functional products	Fluorine thin film tubes for fusing belts/rolls. The intermediate transfer belt has the top share in the global market.	Office multifunction devices and commercial printing products continue to grow.
   Non-OA products	Functional parts used in manufacturing processes in the industrial market.

   • Semiconductor products are affected by the market downturn.

   • A new production line begins operation.

   • Seamless belt ■Fluorine thin-walled

     tubing

   • Filter support materials

     • Tear-resistant fluoropolymer tubing

   For OA Non-OA

   Ⅱ-3. Business Review for the Second Quarter

   Position

   Medical

   Medical

   By offering innovative ‘biomaterials × devices’ and steadily expanding sales—especially of absorbable products, we aim to grow into a globally expanding medical device company

   Growth & expansion

   Category

   Bioabsorbable

   reinforcement felt

   Bone fixation devices

   Main products

   Suitable for reinforcing sutures and preventing air leakage during surgery.

   Effective as a scaffold material for tissue regeneration.

   Bioabsorbable bone grafting material with special processing.

   Topics

   Japan: Steady progress, including additional benefits from new product

   launches.

   China: Despite intensifying medical insurance cutbacks at large general hospitals, Focusing on penetration into mid-sized hospitals and regional areas. Impacted by the weak yen.

   Japan: Stable expansion in acquiring cases in oral surgery.

   China: Impacted by purchasing adjustments aimed at reducing high medical costs.

   Artificial dermis

   Absorbable adhesion barrier sheet

   Purchased products

   like medical laser

   Absorbable artificial skin using collagen.

   Absorbable anti-adhesion material consisting of gelatin in film form with an uneven surface.

   Medical devices for cosmetics, plastic

   surgery, wound care and other products.

   Japan: Maintaining current status despite the impact of competitors' new

   product entries.

   Progress is being made in capturing facilities through strengthened sales activities and pricing strategies. However, intense blocking by competitors is intensifying competition. New factory environmental preparations are underway.

   Medical lasers: The hair removal market is showing a recovery trend,

   However, new competition is emerging, including the distribution of used

   and others

   equipment.

   Domestic sales

   Overseas sales

   Business Direction

A p p a r e l

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

• 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, the company is accelerating the shift to D2C.

  ASEDORON

  ASEDORON: Our product line is designed specifically for year-round sweat

  management.

  KIREILABO: Our line of seamless products, which promotes gentleness for healthy skin, is experiencing strong growth.

  Legwear

• Sales have been sluggish due to deteriorating market conditions, and price adjustments are being implemented

Panty hose: Struggled in Q1 due to cautious buying amid unstable weather and rising prices. Implemented partial price revisions starting in NQ2.

Socks: Withdrew from unprofitable categories, which led to a reduction in sales volume. However, profitability is trending upward.

YG "in·T"

SABRINA

Foot Covers

BODYWILD

KIREILABO

Legwear

KIREILABO

Men's Lady's Leg

Ⅱ-5. Business Review for the Second Quarter

L i fe s t yl e Cre at i o ns

- Shopping center business

Strengthen property-specific management focused on investment efficiency, and

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

Tsukashin (Amagasaki, Hyogo): 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.

- Real Estate Leasing Business

Both sales and profits are showing steady growth. Tsukashin shopping center

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

• Close unprofitable stores while maintaining sales and improving profitability.

• The school business aims to enhance satisfaction and expand sales through membership fee revisions driven

  by service enhancements.

• The fitness business is strengthening targeted strategies.

School business

Green Business Capture greening demand in development plans and pursue new business

                                               initiatives for CO2 reduction  

The tree sales business was affected by a decrease in demand for large-scale projects, including those related to last fiscal year's expo. Construction delays caused by intense heat also impacted the business.

26

Ginkgo trees on Midosuji that Gunze donated last year

1. Outlook for FY2025

Ⅲ-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.

Ⅲ-2. FY2025 Forecast by Segment

※No Revision of forecast (millions of yen)

Ⅲ-3. Distribution of Earnings to Shareholders

Dividend Per Share and Dividend Payout Ratio

(Unit: JPY)

Forecast

450.0

400.0

350.0

250.5%

300.0%

50.8%

Dividend payout

ratio

102.8%

ordinary dividend

commemorative divident

Special

dividend

48.8%

46.9%

95.1%

82.9%

56.2%

44.7%

0.0%

5.0

45.2%

47.5%

37.5

147.0

50.5

69.0

250.0%

300.0 200.0%

250.0

200.0

150.0

150.0%

100.0%

100.0

50.0

0.0

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%