Resonac Holdings Cp U/Adr

Good evening. I am Hideki Sumemiya, CFO of Resonac Holdings Corporation. I would like to express my sincere gratitude for your continued understanding and support of our company. Today, I will present an overview of the financial results for the first half of the fiscal year ending December 2025. Please refer to the second slide, Key Takeaways. There are two main points I would like to share with you today. The first is the improvement in core operating profit compared to the same period of last year. This was due to the semiconductor and electronic materials segment performing well this year, offsetting the underperformance of the chemicals segment. The second is the steady progress made against the forecast for FY 2025 announced on February 13. Consequently, the annual guidance is kept unchanged at this time. We will now proceed to the explanation of the results for the first half of FY 2025. Please turn to page 3. This slide shows the consolidated results for the first half compared to the same period last year. First, revenue for the sixth month was 642.1 billion yen, while the semiconductor and electronic material segment saw a significant increase in revenue compared to the last year, the mobility segment and the chemical segment saw declines in revenue, resulting in a decrease of 27.5 billion yen. Core OP was 34.6 billion yen, an increase of 1.4 billion yen. From last year, non-recurring items, one line below, caused a significant decrease in profit year-on-year, mainly due to business restructuring costs and the absence of the gain on sale of former head office building and land recorded last year. OP was 2 billion yen less than the core OP at 32.6 billion yen down 17.1 billion yen year-on-year due to the absence of the gain on the sale of the former head office. Profit attributable to owners of the parent was 19.7 billion yen reflecting the absence of the sale of the former head office as well as the impact of foreign exchange losses. Rather than gains, resulting in a decrease of 25.6 billion yen compared to the same period last year, EBITDA was 82.1 billion, nearly unchanged from last year. With EBITDA margin 12.8%, an improvement of 0.5 percentage points year-on-year, EBITDA margin, excluding crisis chemical, which is currently in the process of partial spin-off discussion, was 16.3%. Page 4, please. The graph shows the factors behind the difference between core operating profit of 34.6 billion this year and 33.2 billion last year. Looking at the breakdown of the 1.4 billion yen increase from the same period last year, sales volume contributed 5.7 billion yen, with the improvement in the semiconductor and electronic materials segment accounting for the majority of this. Next, sales price was positive 2.1 billion yen. Although there was a negative impact from the slight yen appreciation, this was offset by price increases implemented to pass on costs. Fixed and variable costs were a negative factor of 6.2 billion yen, primarily due to the increases in fixed costs. such as labor costs and rising raw material costs, resulting in a decrease in profit in all segments. Finally, others was a negative factor of $0.2 billion. The main factor was the impact of inventory valuation difference, with improvements and deteriorations varying by segment. For example, the semiconductor and electronic materials segment. Profit improved in the hard disk media business due to the clearance of high-cost inventory. While in classes chemical, profit deteriorated. Due to the significant decline in NAFTA prices in January-June period, page 5 and 6 show variance analysis of OP by segment. Please refer to them later. Let us move to slide 7, which shows results by segment. You can see year-on-year changes in revenue, core OP, and EBIT margin by segment. The semiconductor and electronic materials segment achieved revenue and profit growth, driving overall performance for the six-month period. On the other hand, other segments saw decreases in revenue and profit, with the chemicals segment experiencing a significant decline due to the downturn in the graphite electrode market. Segment summaries available on slide 8 to 12. First, on slide 8, semiconductor and electronic materials saw a 10% increase in revenue to 230.7 billion yen. Core OP increased by 15.9 billion yen to 42.5 billion yen. The increase in revenue and profit was primarily driven by semiconductor backend materials, which saw increased sales volumes for advanced semiconductors, such as those for AI, and device solutions, which benefited from the recovery in data center demand. including increased sales of hard disk media. The segment's EBITDA margin improved from 22.5% to 27.8%, reaching 28.3% for the most recent quarter. Next, page 9 shows mobility. Revenue increased by 10% year-on-year to ¥89.7 billion. Core OP decreased by ¥1 billion to ¥1.3 billion. The majority of the decrease in revenue was due to the transfer of businesses. such as secondary battery packaging materials and food packaging materials, during the March quarter. Additionally, the downturn in the automotive market in Thailand also contributed to the decrease in revenue for OP. Page 10 shows innovation-enabling materials. Revenue decreased slightly year-on-year to 44.9 billion yen, and core ROP decreased by 0.7 billion yen to 4.9 billion yen. The primary factor was the downturn in the automotive market. Page 11 shows chemicals. Revenue decreased 20% year-on-year to 78.4 billion yen. Core OP decreased by 7.9 billion yen to a loss of 8.2 billion yen. The majority of the decrease in revenue and profit was attributable to the graphite business, which saw deterioration in both sales volume and pricing. due to the sluggish graphite electrode market. Additionally, the absence of the reversal of the inventory write-down recorded last year under the lower-of-cost-or-market method also contributed to the decrease. Finally, page 12, crisis chemical revenue decreased 4% year-on-year to 149.9 billion yen. Core OP is down 2.9 billion to a loss of 0.8 billion yen. The decline in NAFTA prices led to lower selling prices and revenue, and the deterioration in inventory valuation difference also contributed to the decrease in core operating profit. That was my explanation on the segment results. Page 13 shows non-recurring items on the left and the financial income and cost and equity in earnings of affiliates on the right with year-on-year changes. Non-recurring items on the left shows deterioration of 18.5 billion yen. This was due to the recognition of the gain on sale of former head office land and buildings in the same period last year. For the six-month period ended in June, there were no significant changes in those items from the March quarter. We had gain on business reorganization and others of 6.6 billion yen. including the transfer of the secondary battery packaging materials and food packaging materials business, as well as business restructuring expenses and extra retirement payments, together amounting to a negative 5.5 billion yen, mainly from the graphite electrode business. Let me make a clarification here. Non-recurring items shown here were recognized for the January-June period. On August 1st, we announced the loss of approximately 25 billion yen to be recognized in the third quarter or later due to the transfer of Fiam Energy Technology, which primarily operates the lead acid battery business. Please note that this business transfer is already included in the forecast for this fiscal year's guidance announced in February. Next, financial income and costs on the right-hand side deteriorated by approximately 9 billion yen a year. The main factor was foreign exchange losses caused by the yen's appreciation compared with the gains recorded in the previous year. Finally, equity in earnings of affiliates improved 1.9 billion yen compared to the same period last year, partly due to the impact of one-time cost adjustments recorded last year. Slide 14, consolidated statement of financial position. On the left-hand side, total assets were 2 trillion 35.5 billion yen, a decrease of 137.1 billion yen from the end of the fiscal year. The decrease was primarily due to the decline in cash and cash equivalents from bond redemption, as well as the decrease in assets held for sale included in other current assets on this table due to the sale of regenerative medicine business. Total liabilities were 1,361.8 billion yen, a decrease of 118.9 billion yen from the end of the previous fiscal year. This was due to a decrease in interest-bearing debt as well as decrease in liabilities directly associated with the assets held for sale following the completion of business transfers. Total equity decreased by 18.2 billion yen from the previous fiscal year end to 673.8 billion yen. The primary factor was appreciation of the yen against the dollar to 144.8 yen as of the end of June, as shown in the appendix, which reduced FX translation adjustment or exchange differences on translation of foreign operations under IFRS by 24.3 billion yen. Let me comment on the major indicators shown at the bottom of the slide. First, the net DE ratio increased from 0.74 times to 0.97 times, primarily due to the early repayment at the end of April of 137.5 billion yen of subordinated loans recognized as 50% equity by Japan Credit Rating Agency through regular bank loans. We will continue to target a net DE ratio of 1.0 or below on a stable basis and strive to improve our financial structure. Finally, the ratio of equity attributable to owners of the parent to total assets, which was previously called the equity ratio, remained nearly unchanged at 31.8%. Page 15 onwards are appendices. Please refer to them as appropriate. That concludes my explanation. Thank you very much.