Nippon Kayaku : Summary of Consolidated Financial Results For the First Quarter of the Fiscal Year Ending March 31, 2023

Summary of Consolidated Financial Results [Japanese GAAP]

For the First Quarter of the Fiscal Year Ending March 31, 2023

July 29, 2022

Listed company: Nippon Kayaku Co., Ltd. (URL https://www.nipponkayaku.co.jp/english/)

Listed stock exchange: Tokyo Stock Exchange

Code No.: 4272

Representative (name, position): Atsuhiro Wakumoto, President

Director in charge of inquiries: Tsutomu Kawamura, Executive Director, General Manager of Finance & Accounting Division, Financial Group

Filing date of quarterly securities report: August 9, 2022

Scheduled date for start of dividend payments: -

Preparation of supplementary materials for quarterly financial results: Yes

Quarterly results presentation meeting: Yes (for securities analysts and institutional investors)

1. Consolidated Business Results for the First Quarter of Fiscal Year Ending March 31, 2023 (April 1, 2022- June 30, 2022)

(Figures shown are rounded down to the nearest million yen.)

(1) Consolidated Operating Results

(Percentages indicate amount of change from the same period of the previous fiscal year.)

	Net sales		Operating income		Ordinary income	Profit attributable to
			owners of parent
First quarter of	Million yen		%	Million yen		%	Million yen		%	Million yen	%
fiscal year ending	48,296		4.0	6,380		8.4			8,634		36.0	5,957	13.1
March 31, 2023
First quarter of
fiscal year ended	46,447		26.1	5,887	112.3			6,348		112.7	5,265	201.2
March 31, 2022
Note: Comprehensive income
First quarter of fiscal year ending March 31, 2023:	10,334	million	yen	(75.3%)
First quarter of fiscal year ended March 31, 2022:	5,894	million	yen	(36.2%)
	Profit attributable to owners of	Profit attributable to owners of
	parent per share-primary	parent per share-diluted
First quarter of				Yen						Yen
fiscal year ending				35.41						35.40
March 31, 2023
First quarter of
fiscal year ended				30.88						30.87
March 31, 2022

Note: The figures in the provisional accounting for a business combination in the second quarter of the consolidated fiscal year ended March 31, 2022 have been confirmed, and the content confirmed in the provisional accounting is reflected in the figures for the first quarter of consolidated fiscal year ended March 31, 2022.

This document is an English translation of the Japanese-language original.

All financial information has been prepared in accordance with generally accepted accounting principles in Japan.

Nippon Kayaku Co., Ltd.

Summary of Consolidated Financial Results [Japanese GAAP]

For the First Quarter of the Fiscal Year Ending March 31, 2023

(2) Consolidated Financial Position

	Total assets		Net assets				Equity ratio
As of June 30,		Million yen		Million yen		%
	325,364			252,525		77.3
2022
As of March 31,		315,459			246,425		77.8
2022
Reference: Equity As of June 30, 2022: 251,535 million yen
	As of March 31, 2022: 245,479 million yen
2. Status of Dividends
				Dividend amount per share
	End of first		End of second	End of third		End of year	Year
	quarter		quarter	quarter
					Yen
Fiscal year ended	-		15.00		-			25.00	40.00
March 31, 2022
Fiscal year ending	-
March 31, 2023
Fiscal year ending
March 31, 2023			20.00		-			20.00	40.00
(forecast)

Note: Changes to the most recent dividend forecast: None

3. Consolidated Business Results Forecasts for the Fiscal Year Ending March 31, 2023 (April 1, 2022- March 31, 2023)

(Percentages indicate amount of change from the same period of the previous fiscal year.)

								Profit attributable to	Profit attributable to
	Net sales		Operating income	Ordinary income	owners of parent	owners of parent per
										share
	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
First half	103,900		17.0	12,600	15.6	15,000	26.8	10,500	14.1	62.41
Full year	210,000		13.6	23,800	13.1	26,600	14.9	19,400	12.9	115.31

Note: Changes to the most recent forecast for consolidated business results: Yes

See the Notice of Revision to the Business Results Forecasts announced today concerning the revision to the dividend forecast.

Notes

1. Significant changes in subsidiaries during the first quarter (changes in designated subsidiaries that result in changes in scope of consolidation): None
2. Adoption of special accounting methods for presenting the quarterly consolidated financial statements: None
3. Changes to accounting policies and estimates and restatement
4. 1. Changes to accounting policies associated with revision of accounting standards or similar items: None
   2. Changes other than [1]: None
   3. Changes to accounting estimates: None
   4. Restatements: None
5. Number of shares issued (common stock)
6. 1. Number of shares issued at end of the fiscal period (including treasury stock) As of June 30, 2022: 177,503,570 shares
      As of March 31, 2022: 177,503,570 shares
   2. Number of treasury stock at end of the fiscal period As of June 30, 2022: 2,258,052 shares
      As of March 31, 2022: 2,257,985 shares

This document is an English translation of the Japanese-language original.

All financial information has been prepared in accordance with generally accepted accounting principles in Japan.

Nippon Kayaku Co., Ltd.

Summary of Consolidated Financial Results [Japanese GAAP]

For the First Quarter of the Fiscal Year Ending March 31, 2023

• 1. Average number of shares during the fiscal period (cumulative)
     First quarter of fiscal year ending March 31, 2023: 168,245,559 shares
     First quarter of fiscal year ended March 31, 2022: 170,528,346 shares
• Quarterly summary financial statements are not subject to audit by a certified public accountant or audit firm.
• Analysis related to appropriate use of the business forecasts, and other notes

(Disclaimer concerning forward-looking statements)

The information in this report constitutes forward-looking statements regarding future events and performance. This information is based on the beliefs and assumptions of management in light of information currently available to it at the time of announcement and subject to a number of uncertainties that may affect future results. Actual business results may differ substantially from the forecasts herein due to various factors. For matters pertaining to business forecasts, please refer to "(3) Analysis of Forward-looking Statements, Including Consolidated Business Forecasts" on page 3 of the Supplementary Information.

(How to obtain the materials for the briefing on quarterly financial results)

We have scheduled a teleconference for securities analysts and institutional investors on Friday, July 29, 2022. The materials for the briefing will be posted on the corporate website.

This document is an English translation of the Japanese-language original.

All financial information has been prepared in accordance with generally accepted accounting principles in Japan.

Nippon Kayaku Co., Ltd.

Summary of Consolidated Financial Results [Japanese GAAP]

For the First Quarter of the Fiscal Year Ending March 31, 2023

Supplementary Information
Contents
1. Qualitative Information Concerning Results for the First Quarter	2
(1) Analysis of Operating Results	2
(2) Analysis of Financial Position	3
(3) Analysis of Forward-looking Statements, Including Consolidated Business Forecasts	3
2. Quarterly Consolidated Financial Statements and Notes to Quarterly Consolidated Financial	4
Statements
(1)	Consolidated Balance Sheets	4
(2)	Consolidated Statements of Income & Consolidated Statements of Comprehensive Income	6
(3)	Notes to Quarterly Consolidated Financial Statements	8
	(Notes Regarding Assumptions for the Going Concern)	8
	(Notes in Case of Significant Change in Shareholders' Equity)	8
	(Segment Information and Other Items)	9

This document is an English translation of the Japanese-language original.

All financial information has been prepared in accordance with generally accepted accounting principles in Japan.

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Nippon Kayaku Co., Ltd.

Summary of Consolidated Financial Results [Japanese GAAP]

For the First Quarter of the Fiscal Year Ending March 31, 2023

1. Qualitative Information Concerning Results for the First Quarter

(1) Analysis of Operating Results

During the first quarter of this consolidated fiscal year (April 1 to June 30, 2022), the global economy saw a return to normalcy from the COVID-19 pandemic, mainly in Europe and the U.S. However, the sense of uncertainty increased even more as a result of the zero COVID policy in China, the Russian invasion of Ukraine, and increasing global inflation caused by high fuel and raw material prices. The Nippon Kayaku Group launched KAYAKU Vision 2025, the new mid-term business plan beginning this fiscal year, amid such conditions. We are working to implement the roadmap to the vision specified for each business while advancing initiatives to address key company-wide issues aimed at achieving the vision.

As a result, net sales for the first quarter of this consolidated fiscal year totaled 48,296 million yen, an increase of 1,849 million yen (4.0%) year-on-year. Sales in the pharmaceuticals and other businesses underperformed while the functional chemicals and safety systems businesses outperformed the first quarter of the previous fiscal year.

Operating income totaled 6,380 million yen, an increase of 493 million yen (8.4%) year-on-year. Ordinary income totaled 8,634 million yen, an increase of 2,285 million yen (36.0%) year-on-year. Profit attributable to owners of parent was 5,957 million yen, an increase of 691 million yen (13.1%) year-on-year.

The figures in the provisional accounting for a business combination in the second quarter of the previous consolidated fiscal year have been confirmed. The content confirmed in the provisional accounting is reflected in the figures for the first quarter of the previous consolidated fiscal year.

Performance by business segment is as described below.

[Functional Chemicals Business]

Sales rose to 21,117 million yen, an increase of 1,027 million yen (5.1%) year-on-year.

The functional materials business as a whole outperformed the first quarter of the previous fiscal year. The outperformance resulted from strong sales of semiconductor materials such as epoxy resins, MEMS, and other resin composites. These materials are used in high-speed (5G) communication devices and IoT, which are proliferating, and IT equipment, where demand increased due to increasingly sophisticated electronic equipment in vehicles.

The color materials business as a whole outperformed the first quarter of the previous fiscal year. This outperformance resulted from strong sales of colorants for inkjet printers for consumer use, which more than compensated for the underperformance of colorants for inkjet printers in industrial applications compared to the first quarter of the previous fiscal year.

The catalyst business underperformed the first quarter of the previous fiscal year despite strong orders both in Japan and exports overseas. The underperformance resulted from delays in freight reaching customer plants due to the lock-downs and logistics chaos that accompanied China's zero COVID policy.

In the Polatechno business, demand for dye-type polarizing films declined due to a shortage of semiconductors at customer plants. This decline exceeded the strong sales of components for X-ray analysis systems and resulted in underperformance of the Polatechno business as a whole, compared with the first quarter of the previous fiscal year.

Segment profit totaled 3,760 million yen, an increase of 361 million yen (10.6%) year-on-year. This increase resulted from growth in sales in the functional materials and color materials businesses.

[Pharmaceuticals Business]

Sales totaled 12,632 million yen, a decrease of 141 million yen (1.1%) year-on-year.

Pharmaceuticals in Japan were impacted by drug price revisions. Despite this, the contribution from the launch of the new generic anti-cancer drug PEMETREXED for I.V. Infusion last year combined with market penetration of the biomedicine PORTRAZZA® for lung cancer and sales of ALAGLIOⓇ granule packets, a photodynamic diagnostic agent that Nippon Kayaku began selling as the domestic agent last year, led to sales nearly on par with the first quarter of the previous fiscal year.

Sales of active pharmaceutical ingredients for the Japanese domestic market and diagnostic drugs outperformed while exports and sales of contract production underperformed the first quarter of the previous fiscal year.

Segment profit totaled 2,374 million yen, an increase of 448 million yen (23.3%) year-on-year.

[Safety Systems Business]

Sales reached 12,385 million yen, an increase of 1,002 million yen (8.8%) year-on-year.

The gradual pace of the rebound in automotive market demand continued during the first quarter of this consolidated fiscal year (April 1 to June 30, 2022) due to the emergence of geopolitical risk on top of the global shortage in the supply of automobile parts.

The domestic business saw sales of airbag inflators and micro gas generators for seatbelt pretensioners underperform year-on-year owing to low demand from automobile production cuts caused by the shortage of semiconductors.

The overseas business outperformed the first quarter of the previous fiscal year in sales of airbag inflators and micro gas generators for seatbelt pretensioners, while underperforming year-on-year in squib sales. The

This document is an English translation of the Japanese-language original.

All financial information has been prepared in accordance with generally accepted accounting principles in Japan.

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