Sekisui Chemical Co

I am Keita Kato, President and CEO. Thank you very much for joining us today despite your busy schedule. Please turn to page 1. Here are the key points of today's presentation and the messages that I wish to convey. Let me start with the first half results. We started the first half amid an uncertain market environment, partly due to the impact of the U.S. tariff policies. Despite this, we believe our efforts and preparations eyeing next fiscal year and beyond, including our focus to shift toward high-performance products, progressed largely as planned. However, the deterioration in certain markets, particularly the auto sector, was greater than anticipated, resulting in operating profit falling short of the July forecast. For the second half, we continue to anticipate growth in net sales and each profit lines. The full year guidance was revised up based on the first half results. While operating profit will fall short of the target set for the final year of our mid-term plan, we expect to achieve record high profits. We will return to steady growth trajectory in the second half and step up our efforts in development and preparations aimed at sustainable growth for next fiscal year and beyond. Later, I will also talk about the perovskite solar cell business. And our last item on this page is shareholder returns. In the first half, we repurchased and canceled 4 million shares. For dividends, we plan an annual dividend of 80 yen per share as previously announced, achieving a hike of 1 yen per share and 16th year of consecutive dividend increase. Furthermore, at today's Board of Directors meeting, additional share buyback initiative was approved. Our intention is to maintain sufficient cash for future growth while actively returning profits to shareholders. This will bring our total return ratio for the current fiscal year to approximately 100%. Page 2, please. I'd like to share some information on our Provesky Solar Soul business, which we position as a key growth theme. This October, the acquisition of Sharp's Sakai plant and machine installation were underway as planned. The schedule for the production line buildup remains unchanged from what was presented at the previous results briefing. With plans to commence operations of a 100MW production line in FY27. We also plan to start product sales within this fiscal year. At the Expo 2025 Osaka, as noted in the lower left, we confirmed full power generation during the event period and nighttime LED lighting using our film-type solar cells installed on the bus terminal roof. We will continue our efforts on development and production line launch to advance to commercialization. Now that concludes my remarks. Thank you very much. Yes, I am Tatsuya Nishida, head of corporate finance and accounting department. I will walk you through the first half results. Page 3, the actual effects for the first half are as stated. Page 4 is the overview of the profit and loss. In the first half, net sales reached 629.8 billion yen, setting a new record high. OP, however, was significantly impacted by deterioration in some markets, resulting in a profit decline to 45.4 billion yen, falling short of the July forecast. Ordinary profit increased to ¥49 billion year-on-year, benefiting from improved foreign exchange gains. However, net profit decreased to ¥31.7 billion, impacted by the absence of last year's stock sale gains. The interim dividend will be ¥40 per share, an increase of ¥3 as guided in July. Page 5 shows the segment results for the first half. Although the housing company achieved higher profits, it was insufficient to offset declines in HPP and medical business, resulting in sales growth but profit decline for the group. Compared to the July forecast, the slowdown in certain markets within the mobility segment of HPP had a significant impact, leading to results below expectations for the entire group. The segment details will be provided later.

breakdown of the other segment is as shown on the slide and we will continue to invest a next generation business such as perovskite solar cells page 6 shows results for q1 and q2 while july forecast is not shown here the housing segment exceeded both plan and forecast in q2 as well as q1 Moving on to page 7, analysis of the first half results. Left shows net sales, which increased by 700 million yen year-on-year to 629.8 billion yen. The right shows OP analysis. The significant impact of stagnation in the part of auto market and continued downtown in domestic and international market led to a substantial deterioration in sales volume and product mix compared to the July outlook. While we tried to secure spreads between selling price and raw materials to control fixed cost, OP fell below the July outlook, resulting in a decline. Page 8 is revised second half plan. Now, starting with exchange rate assumption, it is set at 148 yen for a dollar. This assumes a slightly stronger yen compared to the initial assumption. Page 9 is outlook for market conditions. Top left, number of global automotive production in Q2 was slightly below the previous year, as expected, for Q3 onward is expected to stay below the April assumption. Bottom left, Smartphone shipments in Q2 were in line with the previous year as expected. Q3 shipments are expected to be slightly below expectations but on par with the previous year, while Q4 is expected to slightly exceed the previous year. Top right is number of visitors. for housing. In the first half, exhibition visitors dropped significantly, and overall visitors remained below previous year level. We don't expect recovery in the second half, and it will remain below the previous year's level. Regarding housing starts, while some said second half of last year have seen a surge in demand, we expect the downward trend to continue. Bottom right is domestic NAFTA. We anticipate Q2 to be in line with expectation, yet fall below expectations from Q3 onward. Page 10 is Second Half Revised Plan by Segment. For the second half, we plan net sales of ¥693.4 billion, NOP of ¥64.6 billion, aiming to new record highs respectively. It's a ¥5.3 billion increase in profit year-on-year, and we plan to secure profit growth across all four segments. The other segment is, as stated, will continue planned investment in the second half. Page 11 is second half revised plan analysis. Left side is net sales, which is projected at 693.4 billion yen, an increase of 24.7 billion yen. The right is OP. Although volume is significantly lower than the April plan, product mix improves due to larger sales of high-performance products, resulting in substantial YOY increase. High-performance plastics and housing will continue to drive its growth. We stay focused on improving selling prices, securing spreads through favorable raw material costs and controlling fixed costs. The revised plan is 64.6 billion yen, up by 5.3 billion yen year-on-year. Page 12 is revised 4-year plan. By segment, we plan growth in revenue and profit in three segments excluding medical business. Company-wide net sales is planned at ¥1,323.3 billion up by ¥25.4 billion YOY and OP plan is ¥110 billion, an increase of ¥2 billion year-on-year. Page 13 is summary of the revised four-year plan. We aim for record high profits in both OP and ordinary income, 110 billion for OP and 112 billion for ordinary income. Net income is expected at 72 billion. Dividend will increase by 1 yen per share as planned to 80%. yen annually, marking the 16th consecutive year dividend growth. Furthermore, we conduct another share buyback of 10 million shares, making total amount of share buyback of this fiscal year to be 14 million shares, finally consolidated performance on page 14. Although this provision makes it not possible to reach our midterm target, we believe our earning power is steadily strengthened as evidenced by the continued expectation of record high EBITDA. Looking ahead into the next MTP, starting next fiscal year, we'll continue to focus on readiness and growth. Thank you.

I am Akira Asano, Company President of HPP. Let me update you on HPP's business. First, on page 16. This shows the trend of the company's performance since FY21. For the first half of FY25, while both the electronics and industrial business performed solidly, mobility was impacted by slower-than-expected growth in the EV market and recovery in Europe. As such, results fell short of the July guidance. For the second half of FY25, we expect continued strength in the electronics and industrial fields. In mobility, growth in head-up display which films is projected to continue, and we project year-on-year growth in both net sales and profit, aiming for record high profits for the second half and the full fiscal year. Next on page 17, I will explain the performance for the first half of FY25 and the year-on-year change. While both the electronics and industrial business performed firmly, mobility was impacted by the slowdown in EV market, resulting in sluggish trend for designed interlayer film. As such, sales volume and product mix contribution did not expand as much as the July projection. Furthermore, to settle a dispute related to resin sales in Europe, we recorded a total one-time expense of 2 billion yen in the second quarter, including the 1.3 billion yen projected at the time of the Q1 results. While selling price factor improved largely as forecast in July, fixed costs such as investments in development and human capital increased. Net sales grew by 2.4 billion yuan a year to 223.5 billion yuan, and OPA declined year-on-year by 1.5 billion to 28.4 billion yuan. However, excluding on the 2 billion won of expense, operating profit actually increased year on year. We therefore view the overall business as expanding steadily. Page 18 shows the analysis of the revised plan for the second half of FY25 and factors behind the change compared to the previous year. We expect continued solid performance in the electronics and industrial fields. In the mobility field, we anticipate further growth for NHPP films, particularly the head-up display wedge films. Furthermore, aircraft-related demand, which is on a recovery trend, is expected to continue growing. Through improvement in selling price, raw materials, and control over the fixed cost, we project sales to be up by 14.1 billion yen or near to 240.4 billion yen and OP to increase by 2 billion to 33.4 billion yen, marking the third consecutive year of record high profit for the second half and the full year. Lastly, on page 19, let me explain the trend in sales and KPIs through the three strategic fields. First, in the electronics field, the smartphone and semiconductor markets remain robust. We anticipate continued growth in the second half of FY25, following the trend in the first half. We'll continue to focus on expanding market share and winning new business in the non-LCD field, mainly driven by advanced semiconductors. For heat release materials, expansion into the electrical equipment application, primarily for chip testers, is progressing and we will pursue further sales growth. In the mobility field, while the slowdown in the EV market is expected to persist, leading to continued weakness in designed films, sales expansion of NPP films, particularly for head-up displays, is projected to continue. In the aircraft business, Sekisu Aerospace is expected to make profit contribution throughout the year, driven by steady progress in customer production rate recovery and securing new businesses. In the industrial field, although the domestic market remains stagnant, we anticipate steady growth in the second half due to progress in improving selling prices and the steady expansion of labor-saving, environmentally-friendly products, including sensors and care materials. We'll continue to focus on maintaining the spread while expanding our strategic business. This concludes my explanation. Thank you very much.