Nippon Paint Hldgs Co Ltd

Thank you very much for joining us today for our fiscal year 2021 third quarter financial results presentation. I would like to start with today's summary on page 3. In the third quarter, both on Tanshin and Nongyaku basis, revenue increased but profit decreased. In China and in other regions, basically, business revenue increased, but all in all, low material price impact was huge, and the price increase and other measures are not catching up with it. And the situation, unfortunately, has not changed so much from the one that I communicated in October. As to the gap between Tanshin and Nongata, a new consolidation and effects are the major reasons. As to the provisioning of about 2.7 billion yen in China, which is a little bit smaller from the amount that we expected in October, is included in Tanshin but excluded from non-GAAP basis. The bottom of this page illustrates the accounting treatment of business transfer of Europe and India businesses. As to the other details, please go to page 4. So on August 10th, this business transfer was announced. On IFAS basis, these businesses are classified as discontinued operations, and so the retrospective adjustments going back to 2020 are made. The point here is that the net profit remains unchanged, but those businesses are excluded from revenue and operating profit. First, at the bottom of this page, FY21 shows the results of seven-month-worth results of the three businesses. They were running in the red. So, once they excluded the revenue decrease, it is an increase for the OP profit. One of the factors of OP profit include sales process, but even with that, losses remain. And as to the other net profit, there is 1 billion yen contribution from the transfer due to currency translation, which is a non-operating other factor. In the middle, we have FY 2020. Back then, the NBI, the decorative business in India, was the 50-50 joint venture with Ultron. and it was not consolidated. So it was not included in the consolidated revenue nor of the profit. So this is just the sum of automotive related businesses in Europe and India. Let me repeat that the net profit, which is the sum of continuing operation and discontinued operation remains unchanged. The guidance change in August was announced on the same day as the announcement of this deal. And in October, another revision of the other guidance, at that time the numbers are not finalized yet. So those numbers were included. the seven months' worth of probation of these transferred businesses. But all in all, the impact was judged ignorable, so we have not changed the guidance considering other factors as well. Page 5, as to raw material, continuous oil price increase and raw material increase and disrupted supply chain giving negative impact on the demand, and the price hikes and cost reduction efforts are not catching up with it. And of course, it is our important short-term challenge to make a catch-up. Page six, please. I'd like to move on to major topics. We have worked hard to improve our integrated report and issued it at the end of September, but we are still in the process of improvement, and we'd appreciate your feedback. We also announced our endorsement to the recommendations by TCFD at the end of September. Page 7. About the chronology, we already had industry review. And I'm happy to take any questions if the deal is going very well.

Moving on to page 8. JGV is new. UVE has very long history and it has broad footprint in former Yugoslavia. It has high market share and talented management and they are in total agreement to joining our group. In terms of the acquisition price, it is multiple of 14 times to this term's EBITDA. Completion is expected to be in the first half of next year, but it will be completed once approval by development authorities is made, and we don't see anything that would hinder this process. For this transaction, DGL team had invested and will be acquiring. After the acquisition, just like Chromology, we would like to have them utilize the brand present And we utilize our platform so that they can accelerate autonomous growth. As for Youve, they are close to Vitek Boya more than Chromology. So that's why they participated in the deliberation of acquisition. After the completion of the transaction, there will be more synergy because they will be working together. Dulac Group, Vitek Boya, they have joined the group in 2019. they would not have been able to do a lot of the things if they were standing alone. But with Synergy, they would be able to do more. So we can have higher expectations. As for these acquisitions in Europe, it's not bundled together. They can each contribute to our improvement in the MSC through increase in the EPM. It coincidentally was announced around the same time, but we would like to continue this kind of M&A in regions. Even after the announcement, the credit rating companies maintained our A rating, and as we have already announced, there is no financing that accompanies new share issuance. Next, page 9. This is the reorganization of Chinese business for automotive. In the past, the body it was handled by nipsey and plastic and part was nippon b chemical so these were separate for nipsey we had a 5149 joint venture with woodland and as for as for the chemical it was 60 40 joint venture with taiwan's ty group in january we have acquired 100 percent stake in Nipsey in January, and in order to have more efficient operation of the Chinese business, with the understanding of TY Group, we decided to dissolve the joint venture. We have another joint venture in Taiwan, but there is no change in that, and we continue to have friendly partnerships with TY Group. Please move on to page 10, at the end of these topics. I would like to talk about the FY22 structure, which we have announced on October 28th. Nippon Paint corporate solution establishment deliberation had already been announced in September. Towards the start of January 1st, we conducted the resolution for a company split. There are two points. One is through the establishment of Nippon Paint corporate solutions. We would like to separate the functions which are handled by Nippon Paint Holdings, which are the Japanese business, the global business, and the functions of the listed company. We will clarify the accountability, and we will prevent the self-propagation of the organization, of centrally managed organizations, and we would like to improve It's the expertise and efficiency. Also, we would like to minimize the functions of Nippon Holdings so that people would be able to make on-site decisions. Now, we are viewing the world in a centralized manner, but we would like to maximize autonomy of our excellent partners. Nippon Paint Group is an aggregation of excellent companies. So we would like to reduce the intervention of the headquarters as much as possible. Through this, we believe that we can eliminate waste and bureaucratic thinking, which often happens in big companies. While becoming robust and pursuing the growth at the same time, we would like to realize the MSV that our management hopes We would like to now move on to Q&A. Thank you very much for your kind attention.