Sekisui Chemical Co

This is Futoshika Miwaki, representative director and senior managing executive officer of Sekisui Chemical. I'd like to go over the financial results for the first quarter of FY23. Page 1 shows the currency assumptions, the actual results for Q1, and the outlook for the first half, as well as the sensitivity of the business to foreign exchange. Compared to the same period last year, both euro and US dollar were stronger and expected to remain stronger against the yen. The earnings forecast reflects the benefit of the weaker yen. Page 2 is a snapshot of the first quarter results, with net sales achieving 285.4 billion yen, operating profit 15.3 billion, ordinary profit 22.2 billion, and net profit 24.1 billion yen. Net sales as well as operating profit and ordinary profit all achieved positive growth. Net profit also increased significantly owing to the sale of cross-share holdings.

Operating profit was slightly ahead of the plan. Page 3 summarizes the Q1 results by segment.

For HPP or the high-performance plastics company, the business and electronics field continued to be sluggish, and the industrial field struggled a little as well. On the other hand, the mobility business secured an increase in profit thanks to the improvement in selling prices and recovery in aircraft-related demand. All in all, HPP tracked on par with their plan, achieving a profit level comparable to last year. In the housing company, while new housing orders were below our expectation, Q1 results outperformed the business plan calling for sales and profit growth on the back of our efforts to smooth the sales fluctuation as well as achieving higher unit prices. In Urban Infrastructure and Environmental Products Company, or UIEP, despite the lower-than-expected domestic housing demand, both sales and profit increased owing to our relentless efforts to secure the spreads. Q1 performance exceeded the plan. The medical business fell short of the plan, resulting in decline in sales and profit as the Q1 performance was impacted by the delay in new product launch in the U.S. Next, page 4 illustrates the market outlook. The global auto production volume is almost in line with the April forecast. Aggregating Q1 and Q2, the first half of the fiscal year is expected to be nearly in line with the forecast. The smartphone shipment is also trending in line with the projection from the outset of the year. Our expectation is that the market will gradually recover from Q2 and beyond. After a significant drop in the number of visitors to the housing exhibit in Q1, we are now seeing a gradual recovery and expect the second quarter to be level compared to the same period last year. New housing stats continue to be weaker than expected, and the domestic NAFTA price is expected to trend lower than the assumption in the second quarter. Next on page 5, you will find the first half forecast by segment. The first half of P is projected to be 42.2 billion yen, which is in line with the April forecast. However, there are some upward and downward revisions by segment. In HPP, we expect the industrial field to continue to be challenged slightly in the second quarter, but we are focusing on expanding the spread and expect profits to increase nearly in line with the plan. While the housing business has been affected by a significant decrease in the number of houses sold due to the lingering decline in orders, the renovation business has been progressing as planned. Having said that, the OP outlook for the housing company has been revised down. Similarly, the housing market environment is not necessarily good for UIEP, but we have revised up the OP projection on the back of our ongoing tenacious efforts to secure spreads. Although the medical business has been impacted by the delay in the launch of new products, we expect the recovery of diagnostic demand in Japan and the growth of the pharmaceutical sciences business to offset that impact, resulting in profit growth as planned. Page 6 shows the quarterly numbers by segment, and I'd like to draw your attention to the projection for Q2. we expect a certain level of demand recovery in the second quarter and project for a strong profit growth in HPP. On the other hand, we expect a profit decline for the housing business due to the significant impact of the decline in orders.