Consolidated Financial Results for the Nine Months Ended December 31, 2024

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Consolidated Financial Results

for the Nine Months Ended December 31, 2024

(under Japanese GAAP)

February 5, 2025

1. Consolidated financial results for the first nine months of the fiscal year ending March 31, 2025 (from April 1, 2024 to December 31, 2024)

2. Cash dividends

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2025 (from April 1, 2024 to March 31, 2025)

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1. Qualitative information regarding financial results for the nine months ended December 31, 2024

1. Financial position and operating results
   During the first nine months (April 1, 2024 to December 31, 2024) of the fiscal year ending March 31, 2025, Japanese economy showed a gradual recovery against a backdrop of an improvement in the employment and income environment. In the global economy, while the U.S. economy has remained resilient and the European economy showed a recovery trend, China’s economic recovery has lagged due to factors such as deteriorating real estate market conditions. In addition, resource and energy prices remained high and inflationary against the backdrop of the prolonged situation in Russia and Ukraine and emergence of the geopolitical risk over the Middle East, making the outlook uncertain.
   In the chemical industry, despite wild fluctuations the trend of the forex market was one of yen depreciation, as there was not only a limited tightening of the gap between Japanese and U.S. interest rates but also an expectation that the pace of interest rate cuts would slow, given the risk that the policies of the new administration would reignite inflation. Furthermore, oil prices dropped amid concerns about the future economic outlook in China with rising geopolitical risk over the Middle East on one hand. As such, the business environment has been unpredictable.
   Under these circumstances, net sales for the period under review decreased by 9.0% year on year to
   ¥111,108 million primarily due to the impact of withdrawal from the superabsorbent polymer business. In term of profit, operating profit was ¥6,872 million (an increase of 62.9% year on year), ordinary profit was ¥8,588 million (an increase of 24.8% year on year), and profit attributable to owners of parent was ¥3,640 million (an increase of 22.1% year on year), mainly due to an improvement in profitability associated with the abovementioned business withdrawal, as well as favorable conditions in the advanced semiconductor field.

1. Business performance

*ROA (Return on assets) is calculated based on ordinary profit.

Note: ROA, ROE and ROIC for the nine months ended December 31, 2023 and 2024 are annualized.

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2) Business performance by segment

In the Toiletries segment, both the domestic and global markets for polyethyleneglycol recovered, resulting in strong sales.

In the Health Care segment, sales declined significantly as a result of withdrawal from the superabsorbent polymer business.

As a result, total net sales in this segment decreased by 26.6% year on year, to ¥25,940 million. Operating profit was ¥209 million (compared to operating loss of ¥1,111 million during the same period of the previous fiscal year).

In the Petroleum segment, a recovery in demand for lubricant additives led to favorable sales.

In the Automotives segment, with automobile production flat, sales were sluggish as a result of raw materials for polyurethane foams used in automobile seats and other applications being weak due to the inflow of low-cost products from overseas, in addition to which there was a decrease in polyurethane beads for interior parts of automobiles to overseas destinations.

As a result, total net sales in this segment decreased by 3.1% year on year, to ¥37,536 million. Operating profit was ¥3,092 million (an increase of 44.4% year on year).

In the Plastics segment, sales performed well because sales of permanent antistatic agents grew due to a recovery in demand, and sales of paint coating agents and additives were also strong.

In the Textiles segment, sales were brisk, despite sluggishness in agents for synthetic leather, due to a sharp increase in sales of spin finish oil used in the manufacturing process of tire cord yarns following a recovery in demand, and a rebound in chemicals for carbon fibers used in wind turbines for wind power generation.

As a result, total net sales in this segment increased by 6.5% year on year, to ¥20,432 million. Operating profit was ¥2,256 million (an increase of 19.0% year on year).

In the Information segment, sales decreased significantly, reflecting weak sales of polymerization toner- related materials, mainly due to the withdrawal from production operations in China, despite a recovery trend in demand for toner resins.

In the Electrics/Electronics segment, sales of electrolyte for aluminum electrolytic capacitors were flat, but materials associated with advanced semiconductors performed strongly, and sales increased.

As a result, total net sales in this segment decreased by 7.2% year on year, to ¥15,888 million. Operating profit was ¥2,086 million (an increase of 26.3% year on year).

In the Environmental Protection segment, sales were weak due to sluggish market conditions for cationic monomer for polymer flocculants.

In the Construction segment, a slump in sales of cement agents was offset by a recovery in sales of raw materials for polyurethane foams used in furniture, insulation agents, and other applications, leading to flat sales.

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As a result, total net sales in this segment decreased by 3.9% year on year, to ¥11,311 million. Operating profit was ¥40 million (a decrease of 92.8% year on year).

The Group’s financial position at the end of the period under review was as follows:

Total assets decreased by ¥21,522 million compared with the end of the previous fiscal year, amounting to ¥184,295 million.

Net assets decreased by ¥2,321 million from the end of the previous fiscal year, to ¥139,256 million. Equity ratio rose by 6.5 percentage points from the end of the previous fiscal year, to 74.1%.

1. Cash flows
   Cash and cash equivalents (“cash”) as of the end of the period under review amounted to ¥16,837 million. This marked a decrease of ¥10,351 million compared with the end of the previous fiscal year.
   The cash flow movements during the period under review and the factors influencing them were as follows:
   Cash flows from operating activities
   Net cash provided by operating activities amounted to ¥9,441 million (compared to ¥14,366 million in net cash provided during the same period of the previous fiscal year). This result was mainly due to the cash inflow from profit before income taxes of ¥6,302 million and depreciation of ¥7,381 million, which outweighed the cash outflow mainly from income taxes paid of ¥2,448 million and payment for business restructuring of ¥4,669 million.
   Cash flows from investing activities
   Net cash used in investing activities amounted to ¥8,458 million (compared to ¥4,416 million in net cash used during the same period of the previous fiscal year). This was mainly due to purchase of non-current assets of ¥5,342 million, and payments for sale of investments in capital of subsidiaries and associates resulting in change in scope of consolidation of ¥3,589 million.
   Cash flows from financing activities
   Net cash used in financing activities amounted to ¥11,475 million (compared to ¥4,097 million in net cash used during the same period of the previous fiscal year). This result was mainly due to the cash outflow from net decrease in short-term borrowings of ¥7,007 million and dividends paid of ¥3,748 million.
2. Information concerning future forecast such as consolidated earnings forecasts
   Performance for the nine months ended December 31, 2024 was in line with the forecasts announced on November 12, 2024, and so the Company has left its full-year consolidated earnings forecasts unchanged.
   The rates of progress made during the period under review in comparison to the full-year consolidated earnings forecasts announced on November 12, 2024 are shown in the table below.

• These earnings forecasts were based on information available at the time of announcement. Actual earnings may differ due to various factors occurring in the future.
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2. Quarterly consolidated financial statements and significant notes thereto

1. Consolidated balance sheets

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1. Consolidated statements of income and consolidated statements of comprehensive income Consolidated statements of income (cumulative)

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