Mitsubishi Chemical Group Corporation

Thank you very much for joining Mitsubishi Chemical Group, a corporation's earnings briefing. As we have now reached this time to start, we would like to begin the meeting. To start, President and CEO, Mr. Manabu Chikumoto, will give the opening remarks, followed by a presentation on the fiscal year ending March 2026, second quarter financial results by CFO, Mr. Minoru Kida. After that, we will proceed to question and answer sessions. We are planning to have a meeting for 16 minutes. Before we begin the conference, we would like to share the following information with the investors. In the presentation today, we may refer to forward-looking statements based on the current expectations. Please be advised that all such statements involve risks and uncertainties, and actual results may differ significantly from those projections. And also, this conference is going to be posted in our website later, and I hope you understand. I would like to start the conference. Mr. Tsukamoto, please. Yes. Good afternoon. I am Chiku Mocha, President and CEO of Mitsubishi Chemical Group. Thank you very much for joining us for today for earnings call. Our CFO Chida will provide more detailed explanations later. For FY2025 results, core property income is down 2% to 225 billion yen. However, due to the substantial amount of non-recurring items totaling 194.9 billion yen, operating income declined 79% to 30.1 billion yen, and the profits attributable to owners of the parental sale, 74% to 11.8 billion yen, resulting in extremely challenging results. However, these results reflect our strong determination to fully carry out what must be done by FY2025. For the company's future growth, as a result, we made decisive structural reforms such as essential substantial sustainable growth, the withdrawal of the coke and carbon material business, Ethereum restructuring in Western Japan, the solution of overseas MMA joint ventures, and voluntary refinement. And the next stage is support a programmer. We also almost completed to recognize major impairment losses associated with the structural reform within the FY25. On the other hand, in our Soano business, which is one of the company's growth drivers, we recorded substantial impairment loss of approximately 30 billion yen following the review of the planned construction in the UK. Furthermore, FY25 results fell short of our previous forecast. We take these matters very seriously. We would like to sincerely apologize to our shareholders and all our stakeholders for the concerns that we have caused you. We recognize that this is quite exceptional in nature, and at this point, similar impairment risks have not materialized in any of our other investment projects. Going forward, management will implement even stricter oversight and monitoring than before to ensure investment plans progress. as scheduled. In addition, with regard to this matter, we determined that it was necessary to take responsibility for our failure to uphold the three principles of disciplined business management that we had pledged. Accordingly, Aitsuka Mocha, the President and CEO, and Egao, the Management Executive Officer responsible for the Soano business, is going to have a 20% voluntary decline in compensation for six months. In 26, while continue to pursue structural reform and the cost reductions, we expect a significant growth in a specialist material business. In Germany, and in Europe we have commenced operations of a large-scale investment project for the polyester film business and it will contribute to earning contribution. In the semiconductor and battery business we expect to continue to expect existing businesses such as sensitized quartz and precision cleaning for semiconductors and other materials along with significant growth in new projects In the carbon, further business operations will begin in full scale for existing mobility applications, but also business related to robotics. robot taxis and a new type of mobility solution. In addition, we have an aerospace industry to bear fruit. By capturing a steady growth in specialty material businesses, the core operating income will increase substantially, and operating income and profit are to be bootable owners of the parents in FY26. We need to continue to closely monitor uncertainties in the external environment, including the one in Middle East, and we will carefully assess this potential impact. CFO Keda will provide more detailed explanation on this point later. A detailed explanation of the growth strategy for each business will begin, will be provided at the investor briefing on May 25th. Now CFO Keda will explain FY2025 financial results and FY2026 earnings forecast.

Mr. Keda, CFO, please.

I am Keda of CFO. First of all, I would like to summarize the results of FI 2025. Business conditions in specialty materials remained generally solid. However, MMA and basic materials and polymers continue to face challenging conditions. and market is soft, and since March, uncertainty have also increased due to the rising geopolitical risks, particularly in the Middle East. Core operating income in the chemical segment was positive, 24.3 billion yen. In addition to earnings growth, driven mainly by improved margins and higher volumes in specialty materials, we also benefited from better margins and cost reductions resulting from structural reform in the coke business. On the other hand, worsening MMA monomer market conditions together with impairment loss related to ethanol assets in the UK had a significant impact resulting in a 43% decline year on year. supported by solid performance in industrial gases. However, the group as a whole limited the decline to 2% year-on-year. Profit attribute for owners of the parent decreased 74% year-on-year, Although we recorded gains related to the transfer of Mitsubishi Tanabe Pharma, this was outweighed by losses associated with the decline to withdraw from the coke and carbon material businesses, as well as special retirement payment related to the next stage support program at Mitsubishi Chemical Corporation. Now let me go to the 2026. The co-operating income is expected to be $300 5.0 billion yen. Corporate income in the chemical segment is expected to increase 75.7 billion yen to 100 billion yen. This reflects the higher sales volume across products in specialty chemicals continue to cost reduction and recover in MMR market conditions. And industrial gas is expected to be solid. The cooperating income is projected to be 44.3 billion yen year-on-year to 205 billion yen. But this does not include the Middle East impact. We would like you to refer to page 20 for that. Profit at revertible owners of the parent is forecasted to increase to 115.2 billion yen year-on-year to 127 billion yen compared with the previous year when we recorded substantial no recurring losses. related to asset optimization. Asset for shareholder returns, we forecast a dividend of 60 per yen and annual dividend of 32 per share. We will thoroughly implement measures based on the three principles of discipline, the business management, further concentrate management resources on next generation and growth driver businesses, and a steadily execute initiative for the chemical segment.