Nagase : Consolidated Financial Statements for the Six Months Ended September 30, 2024

3. Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2025 (April 1, 2024 to March 31, 2025)

(% = year-on-year change)

(Note) Revisions to the latest consolidated earnings forecast: No

* Notes

1. Changes in major subsidiaries during the period (changes in specified subsidiaries accompanying changes in the scope of consolidation): Yes

(Note) For details, please refer to 2. Semi-Annual Consolidated Financial Statements and Notes, (4) Notes Related to Semi-Annual Consolidated Financial Statements (Changes in the scope of consolidation and application of the equity method), on P.13 of this document.

(2) Application of special accounting methods to the preparation of semi-annual financial statements: Yes

(Note) For details, please refer to 2. Semi-Annual Consolidated Financial Statements and Notes, (4) Notes Related to Semi-Annual Consolidated Financial Statements (Special Accounting Treatment Applied in the Preparation of Interim Consolidated Financial Statements), on P.13 of this document.

1. Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements after error corrections
1. Changes in accordance with revisions to accounting and other standards: Yes
2. Changes in items other than (i) above: No
3. Changes in accounting estimates: No
4. Restatement of prior period financial statements after error corrections: No

(Note) For details, please refer to 2. Semi-Annual Consolidated Financial Statements and Notes, (4) Notes Related to Semi-Annual Consolidated Financial Statements (Change in Accounting Policy), on P.13 of this document.

1. Number of shares issued and outstanding (common stock)
   i. Number of shares issued and outstanding as of the fiscal period end (including treasury stock)

1. Number of treasury stock as of the fiscal period end

1. Average number of shares during the period

(Note) The number of treasury shares as of the fiscal period end includes Company shares held by the Stock-Granting Trust for Directors (282,400 shares as of September 30, 2024). Treasury stock deducted from the calculation of the average number of shares during the period includes Company shares held by the Stock-Granting Trust for Directors (286,757 shares as of September 30, 2024).

• Semi-annualfinancial results reports are exempt from review conducted by certified public accountants or an audit firm.
• Cautionary Statement with Respect to Forecasts of Consolidated Business Results

The earnings forecasts presented in this document are based upon currently available information and assumptions deemed rational. A variety of factors could cause actual results to differ materially from forecasts.

For matters related to earnings forecasts, please refer to 1. Qualitative Information, (3) Qualitative Information Related to Consolidated Earnings Forecasts, on P.6 of this document.

NAGASE & CO., LTD. (8012)

Consolidated Financial Statements for the Six Months Ended September 30, 2024

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NAGASE & CO., LTD. (8012)

Consolidated Financial Statements for the Six Months Ended September 30, 2024

1. Qualitative Information

1. Review of Business Performance

1. General Summary of Results

The global economic outlook remained uncertain during the six-month period ended September 30, 2024 amid unstable global conditions. Such conditions include soaring resource prices and energy costs due to heightened geopolitical risks, and logistical disruptions stemming from natural disasters.

Looking at the regions where the NAGASE Group operates, the Greater China economy saw continued sluggishness due to the weak real estate market and continued weak consumer spending. Continued monetary easing has supported the economy in the Americas, despite uncertainties about the impact of the presidential election on politics and the economy. Economic conditions remain firm, driven by a declining unemployment rate and robust consumer spending. In ASEAN, the economy has been steady, mainly due to domestic and inbound demand. The economy in Japan continues to recover moderately despite concerns over sharp exchange rate fluctuations and the prospect of higher interest rates. This recovery is mainly due to strong corporate earnings, improved real wages, and sustained inbound demand.

In this environment, earnings for the six-month period ended September 30, 2024 are as follows.

・All stages of profit increased partly due to the yen depreciation.

・Operating income increased due to an increase in gross profit. For details, see b. Segment Summary.

・Profit attributable to owners of the parent increased ¥5.7 billion to ¥15.9 billion, mainly due to the increase in gain on sales of investment securities as well as the increase in operating income.

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NAGASE & CO., LTD. (8012)

Consolidated Financial Statements for the Six Months Ended September 30, 2024

1. Segment Summary

The following describes performance by segment.

Note that as of October 1, 2023 of the previous consolidated fiscal year the categorizations for reportable segments have been partially amended. Year-on-year amounts and ratios for the six-month period ended September 30, 2023 are calculated after rearranging reportable segment classifications to match those of the six-month period ended September 30, 2024.

*For the details of the changes in business segmentation, please refer to (Segment Information Etc.) on P.15 of this document

As of the the first half of the current consolidated fiscal year, we changed the method of allocating corporate expenses to more appropriately reflect the performance of reportable segments. Segment information in the table below for the six-month period ended September 30, 2023 is based on the allocation method after the change.

Functional Materials

・Gross profit increased mainly due to the following factors.

• Coating materials sales increased due to higher market prices, despite sales volume remaining flat for automotive and

architectural applications

・Sales increased for raw materials for semiconductor materials

・Losses narrowed in the color former business due to the suspension of production in the U.S. and business restructuring and streamlining of manufacturing bases in Japan

・Operating income increased due to an increase in gross profit

Advanced Materials & Processing

・Gross profit increased mainly due to the following factors.

・Resin sales increased due to recovery in demand in the electrical and electronics industry, including office automation equipment

・Sales of industrial hoses and civil engineering pipes increased in the manufacturing sector at Totaku Industries, Inc. ・Operating income increased due to an increase in gross profit

Electronics & Energy

・Gross profit increased mainly due to the following factors.

・Sales of materials to the semiconductor increased due to a moderate market recovery

・Sales of formulated epoxy resins increased due to strong demand for semiconductors for high-end servers, stemming from robust demand in the generative AI market

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NAGASE & CO., LTD. (8012)

Consolidated Financial Statements for the Six Months Ended September 30, 2024

・Sales of materials for high-end smartphones, tablets, and other electronic devices increased due to a recovery in demand ・Operating income increased due to an increase in gross profit

Mobility

・Gross profit increased mainly due to the following factors.

・Resin sales, which account for about half of gross profit, increased due to yen depreciation and rising market prices, despite a decline in automobile production volume

・Sales increased for functional materials and functional components for interior and exterior fittings and electrification ・Operating income increased due to an increase in gross profit

Life & Healthcare

・Gross profit increased mainly due to the following factors.

・Sales of Nagase Viita increased overall due to strong sales of food ingredients, despite lower sales of cosmetic materials stemming from sluggish sales overseas

・Sales increased for pharmaceutical raw materials and intermediates

・The Prinova Group saw an increase in food ingredient sales and an improvement in gross profit margin compared to the same period last year, when market conditions were weak

・Operating income decreased, despite an increase in gross profit, mainly due to higher selling, general and administrative expenses stemming from allowance for doubtful accounts and higher personnel expenses at the Prinova Group

Others

No special matters to disclose.

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NAGASE & CO., LTD. (8012)

Consolidated Financial Statements for the Six Months Ended September 30, 2024

1. Review of Financial Position
   a. Assets, Liabilities and Net Assets

・Current assets increased due to an increase in inventories, etc., despite a decrease in accounts receivable

・Non-current assets increased due to an increase in property, plant and equipment and intangible fixed assets, despite a decrease due to a decline in the fair values of investments in securities

・Liabilities decreased due to the repayment of commercial paper and short-term loans, along with a reduction in accounts

payable, despite an increase in long-term borrowings

・Net assets increased mainly due to the recording of interim profit attributable to owners of the parent and an increase in translation adjustments, despite decreases from purchases of treasury stock and payments of dividends

・As a result, the Company recorded a shareholders’ equity ratio of 50.8%, up 1.1 points compared to 49.7% from the end of the prior consolidated fiscal year

b. Consolidated Cash Flows

・Net cash provided by operating activities was mainly the result of ¥23.0 billion income before taxes and ¥7.6 billion in reserve of funds due to depreciation and amortization, offset in part by a ¥8.8 billion decrease in cash due to an increase in working capital, and ¥6.8 billion in income taxes paid, and ¥2.0 billion in interest paid

・Net cash used in investing activities was mainly the result of cash outlays of ¥6.5 billion for the purchase of property, plant and equipment and ¥6.2 billion for net increase of time deposits, offset in part by ¥3.2 billion in proceeds from the sales of investments in securities

・Net cash provided used in financing activities was mainly the result of cash outlays of ¥9.4 billion due to purchases of treasury stock, ¥4.5 billion in dividend payments, and ¥3.0 billion net decrease in commercial papers, offset in part by ¥7.0 billion in proceeds from long-term loans

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NAGASE & CO., LTD. (8012)

Consolidated Financial Statements for the Six Months Ended September 30, 2024

(3) Qualitative Information Related to Consolidated Earnings Forecasts

The full-year consolidated earnings forecast for the current consolidated fiscal year (April 1, 2024 to March 31, 2025) remains unchanged from the figures announced on May 8, 2024.

The manufacturing performance of the Prinova Group in the Life & Healthcare segment for the six-month period ended September 30, 2024 fell short of initial expectations. Despite this result, sales of coating materials in Functional Materials increased due to rising market conditions and sales of raw materials for semiconductor materials remained strong. Sales of semiconductor materials exceeded expectations in the Electronics & Energy segment. Semiconductor materials for high-end server semiconductors in particular exceeded our initial forecast due to strong demand in the generative AI market. Resin sales in the Advanced Materials & Processing segment also boosted Group performance, driven by a stronger-than-expected recovery in demand from the electrical and electronics industries, including office automation equipment.

The Company forecasts a moderate recovery in automobile production in Japan in the second half of the year, along with stronger demand for semiconductors for high-end servers. While the Prinova Group works to improve productivity and acquire new customers in the manufacturing sector, these efforts will take time to impact profits. To this end, the Company forecasts challenging conditions to persist in the second half of the fiscal year.

The Company has not revised our full-year consolidated earnings forecast at this time, despite some intersegment transfers, in light of current conditions.

These forecasts have been developed based on foreign exchange rates of ¥148 to the U.S. dollar and ¥20 to the RMB.

Revised full-year earnings forecasts by segment (April 1, 2024 to March 31, 2025)

(*) Full-year consolidated earnings forecast announced on May 8, 2024

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NAGASE & CO., LTD. (8012)

Consolidated Financial Statements for the Six Months Ended September 30, 2024

2. Semi-Annual Consolidated Financial Statements

(1) Semi-Annual Consolidated Balance Sheets

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NAGASE & CO., LTD. (8012)

Consolidated Financial Statements for the Six Months Ended September 30, 2024

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