Nippon Paint Hldgs Co Ltd

I am Wakatsu Ghibli, co-president of Nippon Paints. Thank you very much for joining us despite the busy schedule. I would like to start to share the FI 2022 quarter financial results and full year results as well as the 2023 forecast. Thank you very much. Starting from this time, we are inviting the mass media as well as the marketing participants. Let's move on to the page three. the full third quarter financial results. On a touching basis, revenue stands at $329.1 billion, an increase by 25.6% year-on-year, and operating profit was $29.5 billion, up by 36.8%, substantial increase in revenue and profit, as you find at the bottom. For positive impact on revenue, quantity of pains was down, but other factors, including price mix adjacencies, foreign exchange on new consolidation contributed on the profit front and while the impact of raw materials price at least selling price increase prevailed when margin showed improvement in the fourth quarter usually demand goes down on the chinese business space a very severe station there was also a one of course was in card due to next career plan in japan which amounted to some 2.4 billion yen on that basis that given one of the events i should say each region performed solidly for your information there was no additional credit loss provision for China projects. However, the local JV made additional provision for real estate developers. Since it is a minority investment, those on equity method investment was recorded under the operating process. That resulted in 1.9 billion yen, those on equity method investment, combining other JVs' P&Ls. On non-GAFA basis, that includes new consolidation foreign exchange and one of course, the existing business showed increase in revenue by 11.7% for profit, increase of 49.9%, OPM improved by 10.7%, 2.7 points better than previous year, showed improvement trend. With respect to Chinese... Decretive business, DIY revenue down by 4% year-on-year due to the impact from the higher COVID cases in the fourth quarter, which hampered economic activities following the wider relaxation of lockdown measures, projects revenue decreased by 22%. Supply chain disruption, recognised September and October last year, abated. It served as mitigating measures during demand debt season, thus actual figures were better than the expectation in last November. As of the FY22 year end, record data of listing criteria of the prime markets are TSE. All the criteria were met, including the ratio of floating stock. On page 4, that is the four-year basis for FY22. On Tanshin, both revenue and operating income showed substantial increase. Net profit increased close to 20% level. Comparing to the guidance in August last year, revenue was a little better shortfall However, operating profit, net profit, and EPS overachieved vis-à-vis estimates. Year-end dividend of 6 yen combined annual dividend is 11 yen, payout ratio 32.5%. For your information, for the revenue, operating profits, and record high showed based on the IFRS on a net basis since December 2018, it showed the highest record. As for the unachieved contributor of sales, Basically, it is in China, the second half, especially in September, October, where the demand was expected. However, there was impact of COVID-19. For other reasons, there are some differences. However, it is almost as expected. For the professor, we had prevalence of the selling price increase. And also, they had some roll prices. And also, real estate did not require further. credit loss provision, so the operating profit, there is upward region, but equity method investment had a lot. For non-GAAP basis increase in revenue and profit on the very severe business environment, however, with the organic growth added, we showed the company's growth model shows resilience for 2023. For year forecast, still opaque situation continues. And like you to think this just guidance for the revenue 1.4 trillion operating profit 140 billion yen and the net profit is 98 billion and EPS 41.73 yen. And annual dividend 13 yen and payout ratio is 30% plus for the revenue. From overall market perspective, we think it is very difficult, however, Under the low growth rate, we would like to do the sophistication or the step-up, and we think that selling price is going to fully contribute to enjoy some solid growth. Comparing with 2022 on Forex, we expect it will be yen appreciation. On a yen basis, it would be a negative contribution. However, there is no big MRJ, and if we think of the Forex constant, in substance, the growth is close to 10%. On the profit front, it is increased by 20%. So we think that there will be a substantial increase in revenue. And due to the increase in revenue and margin improvement, it is plus 21 billion yen. On China, there is no one-off cost or subsidies for the Chinese credit loss business. Therefore, it would be a positive 10 billion yen. However, for the forex, there is a negative 3 billion yen or so. And on a net basis, in total of 28 billion yen increase in profit. So that's how I'd like you to think based on this assumption. There are four major elements that I'd like to talk about. One is the stabilization of the raw materials market. For example, the oil market, it is in a range of 70 to 80 dollars, and that's 72,000 yen. I think it is going to continue. On the forex, a further yen appreciation will be the negative factor. However, if we want the depreciation of yen, it is a positive factor. On the other hand, for China, there is the mitigation of COVID-19, and we think that the stabilization market is expected at the moment, especially TUC. Later, I'm going to cover, but that is the general consumer and retail distributors, and It is very favorable compared with the last year. And TUD, that is for a project on the distributor segment, it is almost flat. And in January and February, while the Chinese New Year was enjoyed, and we think that traditionally it is a quiet season, but March and beyond, we think that we would like to share the update, the second half and beyond, for the autos. There is a slight impact of the semiconductor as well as the supply shortage of the parts, but we think there will be a recovery of the market. Page 6. Now, this is the assumption for each factor based on the four years. Now, China, for DIY and projects, that is the decorative parts we addressed. whether it's the DIY or the project. This is just a part of the business, starting from last year. According to the classification, internal classification, it is not by-products, but it is managed by a distribution channel. It's not just a painting for DIY or the project customers. Starts include semi-finished goods or the adjacencies So they are thinking about the total solution to provide. Moving forward, the TUB, the project customer, will be the central part for the management segment on the TUC. And that is another segment that we are going to use as a presentation for your information for 2022. Year-on-year-based growth, TUB, TUCY, centered on the IY, TUCY, 10% growth comparing with the last year. TUB is a negative 14% decrease in revenue. And also TUC, TUB, and that is the decorative business. The others, so we do have those segments. The split is 6, 2, 3, 2, 1. That is the image. Please do understand that.

I'd like to ask for your understanding for this page 7. Other than China Nipsey, Indonesia, we expect a continuous and smooth growth, but the profitability may come down slightly because of the strength of the promotion. But generally, we expect the revenue up and profit up. And BTK, that is Turkey, denominated by the local currency, the growth by 30% is expected. Assuming the high inflation rate, not the quantity, but the price increase is attributable to the growth. And page 80, the real material market conditions, as you can read here, that basically that flat, leveling off with a slight improvement. Globally, that the stagnant of economic conditions and demand decrease. But the zero corona mitigation will push up the demand in China. We have to balance this out. that the full contribution of the price increase and also that the reduction of the cost part of the materials will contribute to the margin increase so that the last year's second quarter is bottom and this year it's growing that gradually. Okay, we skip the page 7 and save 10 and this is the result of the each segment of fourth quarter. And the detailed information you can find on the page 19 and on. And we would like to come back to this Q&A session. There are several points. China first. And the third quarter of the November, I said that September and December, the high demand month. However, the logistic disruption that we have seen that caused that the opportunity lost and a minus 3.1 of the revenues. especially that the decorative minus 8.6% of the China, a Tanshin base that the Forex contribute to the plus side. But under this condition, and also despite that low demand that the month, however, that the cost control gave us that the reasonable, the performance, and also that the Chinese automobile industry is growing more than we expected. Japan segment, 2.2 billion, the special severance that payment B contributed to the operating profit ratio was 6.1%. And CS cooperates a solution in this allocation. This is for the allocation to the Japanese companies is that, well, this thanks to the effect of the CS over all companies of the cost and which garnered the 400 million compared with that the year-on-year 1.3 billion of the last year of the third quarter and therefore on the base of the same base of that the comparison operation profit 1.3 to that of the ratio 2.9 percent and there are 3.5 billion yen and the ratio 6.9 percent so that it is an increase of that the improvement and I would like to expand this gap to the positive Indonesia quite favorable in December but the December was demanding. So that was our prediction in November. But we recovered. And in the second quarter is the high demand season of Indonesia. And thanks to the cost control that we secured that the revenue up and the profit up Turkey. That continuously hyperinflation accounting procedure is applied and therefore on the local currency base that the sales turnover is greater than the reality, and also that the profit, because of the cost inflation adjustment, is long-term. Therefore, it goes down. The profit goes down, however. But this here, that increase of the revenue is offset by the real depreciation, and therefore, the result is a minus in the calculation. So that's how you read this formula. and a dulex group and acquisition and also considering the forex effect before this and this is a known gap that is australia new zealand centering around this the dulex was acquired and that was at the base basically that revenue increase and upset by the chief and also that because of the control of the fourth quarter that we achieved that the increasing increase of the profit but chromology well, that the low demand, winter is a low demand term. And so that the price increase is a major element. And throughout the term that they are contributing to the increase of the profit growth, the opportunity proliferates profitable points. And this is a topic DJP and NPT was acquired, which was reported on the 6th of February. And the sales turnover of these companies are 7 billion yen. Of course, this is a part of the European strategy and also it's a part of the global growth opportunity strategy. And so that T-Land and ATF, these are the or peripherals of the paints, and that is the global growth opportunity that we are trying to raise the first fiscal year profit. And on the 7th of February, the Okayama plant was safely completed and profitability and safety will be increased. And for the energy saving and low carbon production will be contributed. We are going to operate from autumn that I do want you to come to the Okayama to observe this. Page 12, the brand, that power, that acquiring the prices in China and also the Asia, the ANC, that I would like to show our brand, fortify our brand images, perceptions. Page 13, and this is a governance-related disclosure. and independent outside directors that will be the center of our plan to be the center of the disclosure. And about more than half of the directors, the independent outside directors and the nomination compensation auditing chairmen or outside. And also that the BOD chairmanship is assumed by the lead independent outside director so the disclosures featuring around them will deepen the understanding of our company. And if you have requests and opinions of this independent outside director activities disclosure that we would like to hear, this concludes the presentation that we would like to entertain your questions. This year is the last year of MTP, and for the progress report that we plan after that shareholders meeting from 3 p.m. of April the 7th, Please fill in your schedule. Thank you for your cooperation.