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

(under Japanese GAAP)

November 12, 2024

1. Consolidated financial results for the first six months of the fiscal year ending March 31, 2025 (from April 1, 2024 to September 30, 2024)

2. Cash dividends

Note: Revisions of the latest forecasts for cash dividends announced: None

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 six months ended September 30, 2024

1. Financial position and operating results
   During the first six months (April 1, 2024 to September 30, 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, the forex market, after a phase of yen depreciation, switched to a trend of yen appreciation, reflecting interest rate cuts in the U.S. and Europe and an interest rate hike by the Bank of Japan. Furthermore, oil prices dropped amid concerns about the future economic outlook in the U.S. and 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 2.8% year on year to
   ¥77,030 million primarily due to the impact of withdrawal from the superabsorbent polymer business, etc. In term of profit, operating profit was ¥4,453 million (an increase of 120.5% year on year), mainly due to an improvement in profitability associated with the abovementioned business withdrawal, as well as a recovery in demand in the automotive industry and the semiconductor field. Meanwhile, ordinary profit was ¥4,991 million (an increase of 0.9% year on year), mainly due to the foreign exchange gains recorded in the same period of the previous fiscal year turning into foreign exchange losses for the period under review. Profit attributable to owners of parent was ¥940 million (a decrease of 78.6% year on year), mainly reflecting the extraordinary losses recorded in relation to the conclusion of an agreement on transfer of equity interest in a consolidated subsidiary, and the absence of a gain on sale of investment securities recorded in the same period of the previous fiscal year.

1. Business performance

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

Note: ROA, ROE and ROIC for the six months ended September 30, 2023 and 2024 are annualized.

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2) Business performance by segment

In the Toiletries segment, the market for polyethyleneglycol recovered, causing a rise in 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 12.5% year on year, to ¥20,729 million. Operating profit improved and was ¥252 million (compared to operating loss of ¥973 million during the same period of the previous fiscal year).

In the Petroleum and Automotives segment, despite an increase in sales of lubricant additives driven by a recovery in demand, sales overall were flat due to the flat sales of raw materials for polyurethane foams used in automobile seats and other applications due to the inflow of low-cost products from overseas, even with a recovery trend in automobile production, and sluggish sales of polyurethane beads for interior parts of automobiles to overseas destinations.

As a result, total net sales in this segment increased by 1.2% year on year, to ¥25,112 million. Operating profit was ¥2,113 million (an increase of 96.6% year on year).

In the Plastics segment, sales increased because sales of permanent antistatic agents grew due to a recovery in demand for semiconductors and electronic components and sales of paint coating agents and additives were also favorable.

In the Textiles segment, although there was a sharp increase in sales of spin finish oil used in the manufacturing process of tire cord yarns following a recovery in automobile production, in conjunction with a recovery trend for sales of chemicals for carbon fibers used in wind turbines for wind power generation, sales were flat overall due to sluggish sales of synthetic leather.

As a result, total net sales in this segment increased by 9.5% year on year, to ¥13,384 million. Operating profit was ¥1,426 million (an increase of 25.1% 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. However, the recovery of the semiconductor market drove increased sales of related materials, and sales increased.

As a result, total net sales in this segment decreased by 7.5% year on year, to ¥10,484 million. Operating profit was ¥1,206 million (an increase of 9.6% 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, sales remained steady, as a slump in sales of cement agents was offset by brisk performance in sales of raw materials for building sealants.

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As a result, total net sales in this segment increased by 1.5% year on year, to ¥7,318 million. Operating loss was ¥2 million (compared to operating profit of ¥338 million during the same period of the previous fiscal year).

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

Total assets decreased by ¥18,703 million compared with the end of the previous fiscal year, amounting to ¥187,114 million.

Net assets decreased by ¥2,436 million from the end of the previous fiscal year, to ¥139,141 million. Equity ratio rose by 5.3 percentage points from the end of the previous fiscal year, to 72.9%.

1. Cash flows
   Cash and cash equivalents (“cash”) as of the end of the period under review amounted to ¥21,722 million. This marked a decrease of ¥5,466 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 ¥4,905 million (compared to ¥10,055 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 ¥2,212 million, the decrease in trade receivables of ¥6,469 million, and depreciation of ¥5,119 million, which outweighed the cash outflow mainly from the decrease in trade payables of ¥5,228 million, payment for business restructuring of ¥3,668 million and income taxes paid of ¥1,227 million.
   Cash flows from investing activities
   Net cash used in investing activities amounted to ¥3,475 million (compared to ¥3,222 million in net cash used during the same period of the previous fiscal year). This result was mainly due to a cash outlay of ¥3,877 million for purchase of non-current assets.
   Cash flows from financing activities
   Net cash used in financing activities amounted to ¥6,777 million (compared to ¥2,698 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 ¥4,437 million and dividends paid of ¥1,880 million.
2. Information concerning future forecast such as consolidated earnings forecasts
   In terms of earnings for the period under review, operating profit, ordinary profit, and profit attributable to owners of parent exceeded the earnings forecast announced on September 27, 2024 (“previously announced forecast”). Accordingly, the Company announced “Notice of Differences between Consolidated Earnings Forecasts and Actual Results for the Six Months Ended September 30, 2024” on November 12, 2024.
   The full-year consolidated earnings forecast for the fiscal year ending March 31, 2025 remains unchanged from the previously announced forecast.

• 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. Semi-annual consolidated financial statements and significant notes thereto

1. Semi-annualconsolidated balance sheets

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