Nippon Paint Hldgs Co Ltd

Good afternoon, ladies and gentlemen. I'm Wakatsuki, co-president of Nippon Paint Holdings. Thank you very much for taking the time to join us today despite your busy schedules. I would now like to explain the outline of our FY 2025 Q3 financial results.

First, please turn to page two.

Let me briefly explain the changes we've made to our disclosures starting this quarter. Regarding the background, as you know, I have held numerous meetings with investors and received various feedback directly and indirectly. And many investors, especially overseas institutional investors comparing us to peers said that while many overseas issuers publish adjusted figures excluding various adjustment items for comparison, Nippon Pen's detailed disclosures are good but often difficult to grasp at a glance. Some feedback also noted that the sheer volume of figures made it difficult to convey even very strong earnings results at first glance. In response to these comments, and with the primary goal of ensuring a correct understanding of our capabilities and proper peer comparison with our overseas competitors, we have now decided to proactively disclose adjusted profits. This is outlined in the upper section of the summary on page two. We also decided to change the terminology for growth rates and similar figures to align with industry standards like LSD, MSD, and HSD, low, mid, and high single digits. and separate them into price mix and volume components in our disclosure. We will continue to disclose information under this policy for the time being and will continue to listen to your constructive feedback to make further upgrades as necessary. Thank you for your continued support. Next, pages three and four are new additions. To help you understand our track record correctly through the long-term trends in RP&L, page 3 shows the historical trend of Q3 revenue, adjusted operating profit, and adjusted EDS since the adoption of IFRS in 2018, and the change to a board composition with MSV as its mission. Page 4 shows the trend in profit contributions from organic and inorganic growth. We believe this clearly demonstrates our strong growth track record and growth both organically and inorganically at a glance. We also plan to continue disclosing this information going forward. Particularly on page 4, While organic profit declined temporarily in 2021 due to COVID-19 and rising raw material costs, it recovered significantly in 2022, minus 34.7 to 83.9%. This clearly demonstrates the robust resilience of our earnings power. Next, page 5, please, Q3 overview. Both revenue and operating profit continued to set new records, with revenue increasing by 19% non-GAAP basis. China trading accounting change is included, and adjusted operating profit and EPS both growing by over 40%. Regarding FX rates, the yen has strengthened overall compared to last year. For example, yen strengthened to 147.8 yen against the U.S. dollar this year from 151.6 yen in Q3 FY 2024, 20.5 yen against Chinese yuan this year versus 21.1 yen last year, and 94.5 yen against the Australian dollar this year versus 100.5 yen last year. Despite these factors, we achieved substantial growth in both revenue and profit. Operating profit saw solid contribution from organic growth plus 8.7% and inorganic growth 33.8%, with margins improving by approximately 3 percentage points. Regionally, AOC continues to contribute strongly to earnings. The U.S. market is showing signs of bottoming out with declining interest rates, which is a positive development. In China, we achieved profit growth by avoiding aggressive sales expansion and firmly securing margins despite the persisting challenging business environment. In Nipsey, except China, both volume and price mix improved overall. Next, page six, please. The outlook for FY 2025 remains unchanged, with revenue expected to reach a new record high. Regarding Q4... While demand is slowing in many regions, organic growth is still positive, but our currency FX outlook anticipates a stronger yen year-on-year. If the current weak yen persists, there could be some upside potential, but for the full year, it falls slightly short of our guidance of 1.82 trillion yen. Operating profit, on the other hand, is expected to largely achieve the guidance on the pre-adjusted basis of 244 billion yen. Page 7. No specific comments on the heat map. Overall market conditions were flat in Q3, except for slightly favorable conditions in China's automotive sector, where we gained market share. The AOC segment shows some signs of bottoming out, so we anticipate nearly flat market conditions for Q4.