Sekisui Chemical Co

Hi, I am Kato. Thank you very much for participating in today's session despite your busy schedule. Starting on page 1, I would like to explain some of today's highlights, the message to stress. The result for FI2024. In FI2024, net sales increased by 41.2 billion yen to 1 trillion and 297.8 billion yen. Operating profit grew by 13.6 billion yen, exceeding the 100 billion yen and landing at 108 billion yen. Profits at all levels exceeded the January forecast and recorded highs. ROE was 10.2%. We plan to continue to grow sales and operating profit in FY 2025. Operating profit is set at 115 billion yen as per the mid-term plan, and we aim to record highs at each level of profit. There are some uncertainties such as the impact of tariffs and FX fluctuations, which I will explain later. But we've managed to set a profit plan as of the end of March to achieve the final year target of the midterm management plan. We believe our earning power is steadily growing and is driving our growth. As for shareholder returns, since the final profit for FI 2024 was 81.9 billion yen, as per our shareholder return policy, we increased the year-end dividend by 2 yen from the January forecast to 42 yen per share, or annual dividend of 79 yen per share. For FY2025, we plan to increase the annual dividend by ¥1 to ¥80 per share, the 16th consecutive FY of dividend growth. We've set a limit of 4 million shares for the share buyback and will cancel 4 million shares. Page 2 is progress of the mid-term plan. First, the investment plan. The cumulative total for the two years until FY2024 on the resolution basis was 195.8 billion yen. We had capacity expansion in high-performance plastics and capex for the launch of mass production lines for perovskite solar cells, and so increase in gross investment projects. As such, strategic capex is expected to exceed the budget set in the mid-term plan. We will also continue to watch several M&A projects, mainly in gross areas. Below left is strategic innovation. Regarding perovskite solar cells, we said a new company in January are making good progress toward the launch of a 100 MW scale production line. In the bottom right, for strengthening the ESG management platform, the sales ratio of products enhancing sustainability grew steadily to 77%. will continue our efforts to contribute to the natural environment and to solving social issues while achieving profitability and sustainable growth. Page 3. This page explains our shareholder return track record, policy, and plans for FY2025 for your reference. In FY2025, we continue to actively make return to shareholders aiming to increase dividends for the 16th consecutive fiscal year with a focus on increasing profits and dividend. And that's all from myself. Thank you.

This is Ikutsuka Shimizu, Head of Business Strategy. I will cover the FY20 for financial results and the plan for FY25. Please turn to page 4. The FX rates are indicated on the slide. Page 5 is the overview of the FY24 results. As Mr. Kato explained at the outset, all profit lines grew, marking record highs. The blue star marks indicate record high figures. Operating profit reached 108 billion yen. Page 6 illustrates the segment results. In HPP, growth was driven by high-performance products, mainly in the electronics field, resulting in higher sales and a substantial increase in operating profit. In housing, despite the delay in the new housing market recovery in some rural areas, we were able to halt the decline in profits and achieved a significant profit growth through measures to strengthen profitability and growth of the renovation business. In UIEP, although the market remains sluggish, we achieved sales and profit growth by improving the selling price and expanding sales of prioritized products. The medical business achieved higher sales and profits by growing the sales of testing kits overseas in the pharmaceutical ingredients business. HPP, UIEP, and medical renewed the previous record high profits. The other segment results were as indicated on the slide. Page 7 illustrates the segment results breakdown for the first and the second halves. The second half results are indicated on the right. HPP housing and medical achieved significant profit growth again in the second half. Steady OP growth was sustained in UIEP as well. The other segment and consolidated figures were all as illustrated on the slide. Page 8 shows the analysis of the FY24 results. The factors behind the OP change are indicated on the right. Due to the sluggish domestic and overseas markets, sales volume and the product mix contribution fell short of the January forecast, but sales increased significantly year-on-year, owing to expanded sales of high-performance products. Despite the impact of higher fixed costs and raw material costs, operating profit was upped by 13.6 billion yen, surpassing the January forecast to 108 billion yen. Let me switch the topic to the FY25 plan from page 9. The FX assumptions are as stated. The FY25 plan was formulated in March before the announcement of the U.S. reciprocal tariff measures, and I will cover the potential impact later in my presentation. Page 10 is the business plan and shareholder returns for FY25. As stated by Mr. Kato at the outset, we are guiding for operating profit of 115 billion yen and net profit of 82 billion yen in line with our medium-term plan. We will raise the annual dividend by 1 yen to 80 yen per share, marking the 16th consecutive year of dividend hikes. Page 11 illustrates our outlook for market conditions. The global auto production volume in the upper left slightly exceeded our expectation in the fourth quarter of FY24. For FY25, we expect the volume to be roughly on par with the previous year. The smartphone shipment volume in the lower left was in line with our expectation and on par with the previous year in Q4 of 2024. For FY25, we expect the shipments to slightly exceed the previous year. Upper right, total visitors with housing business in the second half of FY24 were down year-on-year, and we expect modest year-on-year decline for FY25 as well. As indicated below the table, we expect new housing stats to continue to decline, falling below 800,000 units in FY25. Lower right, domestic NAFTA price was slightly above the forecast in Q4 of FY24. We expect the price to drop slightly year-on-year in FY25. Page 12 demonstrates the FY25 plan by segment. We project to achieve higher sales and profits for all segments, with the three segments excluding housing expected to achieve record high profits. For HPP, we'll continue to focus on expanding sales of high-performance products, aiming for sales and profit growth as well as a new record high profit. For housing, while the number of orders is expected to remain nearly flat year-on-year, we plan to achieve sales and profit growth on the back of higher unit prices and growth in the renovation business. In UIEP, we plan to achieve new record high profits by continuing to expand sales of prioritized products, increasing overseas sales, and thoroughly securing spreads. In medical, we aim to achieve record profits by securing domestic and overseas diagnostic demand and strengthening new orders in the pharmaceutical science business. In other segment, we'll focus on making steady progress through the perovskite solar cell business in particular. Page 13 is the FY25 segment outlook for the first half and the second half. In the first half, we plan to increase profits in HPV and housing. In the second half, we aim to grow the profits in all segments. Page 14 shows the analysis of the FY25 plan. Please take a look at the waterfall chart on the right. FY25 plan calls for another significant profit growth from the sales volume and the product mix component. On the other hand, we expect an increase in fixed cost due to investments in human capital and the new ERP system that went live this fiscal year. However, we plan to cover these increases through improvements in selling prices and CR, etc., aiming for 115 billion yen in OP up by 7 billion year-on-year. Please turn to page 15. As FY25 is the final year of the current midterm plan, let me also highlight the progress. The upper section shows the FY25 plan against the targets outlined in the midterm plan. Due to changes and downturns in market conditions, sales will fall short of the medium-term plan, but nevertheless, sales continue to grow steadily. Profits are in line with the medium-term plan. The lower section indicates the progress of profit plan by segment. While the housing and medical segments will not meet the targets in the midterm plan, HPP and UIEP are expected to achieve the midterm targets. Page 16 provides a gap analysis versus a midterm plan. Due to changes in market conditions, sales volume and product miscontribution will fall short of expectation, but this will be offset by improvements in selling price, control over fixed costs, as well as FX gains, resulting in projecting profits in line with the mid-term plan. Page 17 is a historical trend of consolidated performance. Through our efforts to date, we believe we have made solid progress in enhancing your earnings capability and improving profitability while also achieving steady growth. With our eyes on the future growth, we'll focus on our OP target of 115 billion yen for FY25 to renew the record high profit for two years in a row and achieve the mid-term plan targets. Page 18 will be the last page from me. As we all know, the outlook remains uncertain due to the impact of U.S. reciprocal tariff policy and volatile FX market. I'd like to take this opportunity to reiterate the assumptions and thinking behind your FY25 plan. First, as we typically formulate our plans for the next fiscal year around February and March, the impact of tariffs and other factors has not been reflected. As shown at upper right, we estimate the direct impact of reciprocal tariff measures to be approximately negative 2.5 billion yen on OP. However, we plan to offset this by the measures outlined here. The lower right table outlines the other potential impacts, such as weaker demand, retaliatory tariffs by other countries, and FX fluctuations, and forecasting is extremely difficult. That said, we'll respond appropriately as circumstances change and focus on taking all possible measures within the company's capacity to minimize the impact. That concludes my part. Thank you for your attention.

Yes, this is Nishida speaking. Please allow me to explain the FY2024 result. Page 20 shows changes in consolidated subsidiaries and their impact on financial figures. Sekisui Solar Film in charge of perovskite business has been consolidated from fourth quarter of FY2024 upon its establishment. For consolidated P&L on page 21, I will explain the items below ordinary profit. Ordinary profit was 111 billion yen, up by 5 billion yen. The smaller increase than operating profit is mainly due to a 7.4 billion yen deterioration in FX gains and losses. Throughout FY 2023, the Japanese yen depreciated by around 18 yen. against the dollar, resulting in FX gain of 7 billion yen, whereas in FY2024, the yen appreciated by about 2 yen. In both fiscal years, extraordinary profit included a gain on sales of policy shareholdings of slightly more than 14 billion yen. The main extraordinary loss in FY2024 was an impairment loss of 2 billion yen as a result of review of future plans for a portion of the diagnostics business in the U.S. Net income increased 4.0 billion yen to 81.9 billion yen, the historical high. Next is the balance sheet on page 22. Total assets increased by 7.5 billion yen. Excluding foreign exchange and changes in consolidated companies, total assets grew by 16.7 billion yen. Inventories increased by 15.6 billion yen. The main changes include a decrease in inventories of ready-built housing in the housing company, an increase in working process for construction, and increase in raw materials in the non-residential division. Investment securities decreased by 22.3 billion yen mainly due to sales. Next is page 23. Net interest bearing liabilities was negative 31.8 billion yen and remained virtually debt-free. Retained earnings increased due to net income and decreased due to shareholder returns. We purchased and canceled 4 million treasury shares respectively in FY2024. Valuation differences on available for sale securities decreased by an amount equivalent to unrealized gains due to the sale of stock holdings. ROIC ROE equity to asset ratio and DE ratio are also shown on the list. ROIC was 8.1%, an improvement of 0.8%. ROE was 10.2%, a slight decrease year-on-year. This is because the percentage increase in shareholders' equity was higher than the percentage increase in net income. In addition to the increase in retained earnings, foreign currency translation adjustments at the beginning of the year were larger than in the previous year since equity capital is calculated as an average of the beginning and end of the year. Next is consolidated cash flow, page 24. Operating cash flow was 119.2 billion yen, a 12.6 billion yen improvement year on year. In addition to improved profits, working capital also improved, but cash outflows from tax payment increased. This was due to higher than normal tax payments in FY2024 due to the sale of securities in FY2023. Investment cash flow was a cash out of 61.5 billion yen. Cash out increased due to CapEx increased by 9.9 billion yen from the previous year, while cash in from sales of marketable securities decreased by 23 billion yen. Free cash flow, including dividend payments, was a cash in of 24.8 billion yen. On top of this, there was a cash out of 8.9 billion yen for a share buyback, resulting in a decrease in interest-bearing debt and an increase in cash on hand. Depreciation, capital expenditures, and EBITDA by segment are shown on page 25. Depreciation and capex are on an increase. And in the previous fiscal year, we executed capital expenditures of about 1.3 times depreciation and amortization. EBITDA source of funds increased by 14.6 billion yen to a record high. The plan for depreciation, capital expenditures, and R&D expenses are shown on page 26. We plan to significantly increase CapEx in FY2025 to support capacity expansion and other activities. The 105 billion yen includes 15 billion yen expenditures related to the Pabroskite Sakai plant, less subsidies. Investment at Sakai will continue in FY2026. That's all from me. Thank you.