Mitsubishi Chemical Group Corporation

I'm Minoru Keda, the CFO. Thank you very much for joining us in this hot weather. First, I'd like to explain the financial results summary for the first quarter fiscal year March 2027. During the first quarter for FY March 2027, I'd like to give you the summary. During the first quarter, specialty materials continue to perform steadily. amid unstable situations in the Middle East, the business environment remained challenging, with NAFTA price soaring and risk of raw materials procurement rising. However, we're seeing inventory valuations gain and a temporary increase in demand. The co-operating income for the chemicals business increased year-on-year by 48.4 billion to 60 billion yen. Contributing factors to corporate income were the effects of sustained pricing strategies and strong performance of semiconductor-related products and specialty materials, and improved conditions in the MMA market. In basic chemicals, inventory valuation gains resulting from rising raw material prices contribute to higher profits, Despite the expanded scale of scheduled maintenance where we had scheduled maintenance in Ibaraki, this year, a production slowdown to prioritize continued operation of cracker plants in response to the situation in the Middle East and a decrease in sales volume caused by an influx of lower prices of overseas products. Partly due to the solid performance of industrial gases, the overall cooperating income for the group increased year-on-year by 57.5 billion yen to 114.1 billion yen. Net income attributable to owners of the parents increased year-on-year by 38.1 billion yen to 57.7 billion yen. Next, I'd like to discuss our earnings forecast. In light of the first quarter results and current business environment, we have revised upwards Our first half forecast for core operating income and net income attributable to owners of the parents from 139 billion to 194 billion yen and from 59 billion to 86 billion yen respectively. Meanwhile, our full year forecast remains unchanged from the previously announced figures due to uncertainties in trends and raw material prices. We have not created any new forecast and there is no change. From the previously announced figures, our dividend forecast also remains unchanged. A year-end dividend of 16 yen per share and annual dividend of 32 yen per share. We will continue to regularly adhere to the three disciplined approaches in business operations, concentrated our management resources on areas that serve as next-generation growth drivers, Instead, we implement proactive growth initiatives to achieve sustainable growth and enhance corporate value. I will now explain the overview of the first quarter of FI March 2037. The average exchange rate for the full year was 160.7 yen to the dollar, representing a 12% depreciation of the yen year-on-year. The NAFTA unit price was The breakdown of the increase was as follows. ¥88 billion increase due to higher selling prices ¥33 billion decreased due to lower sales volume, and ¥68 billion increased due to foreign exchange effects. The core operating income was ¥114.1 billion, up ¥57.5 billion year-on-year. This represents 82% of the first half earnings forecast announced in May. I will explain the details of this later. Special items amounted to positive 4.3 billion yen. Operating income was 118.4 billion yen and income before taxes was 111.8 billion yen. Portly net income attributable to owners of the parent was 57.7 billion yen, up 38.1 billion yen year-on-year. Next, I will explain sales revenue and cooperating income by business segment. For the chemical business as a whole, revenue increased by 76.5 billion yen and profit increased by 48.4 billion yen year-on-year. As for revenue, despite shipment restrictions at some sites due to the situation in the Middle East and expansion in scale of scheduled maintenance and repairs, Compared to the previous period, there was an increase of 76.5 billion yen due to soaring product market prices, an increase in sales volume driven by customers' efforts to secure inventory against the backdrop of the situation in the Middle East, higher selling prices for various products, particularly in specialty materials, and the impact of foreign exchange rates. The corporate income for the chemicals business increased by 48.4 billion yen, driven largely by strong performance of specialty materials, as well as significant inventory valuation gains in basic materials, resulting from rising NAFTA prices.

Industrial gases segment showed steadily progress,

steady progress with revenue up 15% and profit up 20% year-on-year. Details for each segment will be explained later on a separate page. The following is a breakdown of the 57.5 billion yen year-on-year increase in the core operating income. The price gap was positive at 4.6 billion yen. Well, the price gap deteriorated for polyolefins in the basic materials amid raising NASCAR prices. It improved due to improved selling prices in specialty materials and raising market prices for MMA monomers in MMA and derivatives. The volume resulted in a drop of 1.2 billion yen, and specialty materials, although sales of various products were expanded, the volume worsened due to restrictions on shipments from certain MMA sites caused by the situation in the Middle East, as well as an increase in the scale of scheduled maintenance and repairs in the basic chemicals. Cost reductions resulted in a positive impact of 13.8 billion yen with industrial gases and chemical segments, each achieving cumulative effects. Others resulted in a positive impact of 40.3 billion yen. This figure includes a 48.5 billion yen gain on inventory valuations due to soaring NAFTA prices. I will now explain the details by segment. Specialty Materials posted an year-on-year profit increase of 20.9 billion yen. The sales gap was positive at 11.9 billion yen, improving across all sub-segments, including semiconductor-related products. The volume contributed to a rise of 9.1 billion yen. In films and performance materials, the volume improved due to increased sales of polymers for barrier packaging materials and films for multi-layer ceramic capacitors. In composites and shapes, The volume improved due to increased sales of high-performance engineering plastics for semiconductor manufacturing equipment and carbon fiber composite parts, primarily for robotaxis. Cost reductions totaled 4.9 billion yen, driven by the cumulative effects of rationalization measures such as the next stage support program and the review of production sites across business units. The others of negative 5 billion yen was attributable to cost increases resulting from inflation. MMA and derivatives posted 4.3 billion yen increase in profit year-on-year. The sales gap was positive at 7.7 billion yen. Market prices for MMA monomers improved from a year before, leading to a widening of spreads, as I said before. In functional chemicals as well, sales gap improved due to higher sales prices for additives. The volume resulted in a drop of 5.5 billion yen, on the other hand. In the MMA segment, the volume deteriorated due to shipping restrictions at some sites and sluggish operating rates caused by the situation in the Middle East.