Sumitomo Chem Co Ltd Ord

It is time to start. We will now begin the conference call for the presentation of the financial results for the first quarter of fiscal year 2024. Thank you very much for your participation. Today, Mr. Sasaki, Managing Executive Officer, will give a briefing on the financial results for the first quarter of fiscal year 2024. Later, he will be joined by Mr. Yamaguchi, Executive Officer and General Manager of Accounting Department to take questions. We plan to conclude the call at 5.50. Mr. Sasaki, over to you. Thank you. I'm Sasaki from Sumitomo Chemical. Thank you very much for attending our conference call despite your very busy schedule. I'd like to thank the investors and analysts for your daily understanding and support to our management. Thank you very much for that. Now, let me start with explanation of financial results for the first quarter of fiscal year 2024. Please turn to slide page 4. This page shows a summary. The core operating income in the first quarter was a profit of 5.7 billion yen, a significant improvement from the 53.6 billion yen lost in the same period of the previous year. This is the first time in six quarters that the company has returned to profitability since falling into the red in the fourth quarter of FY 2024. Net income attributable to owners of a parent for this quarter was ¥24.4 billion, a significant improvement from the loss of ¥33.2 billion in the same period of the previous year. This is the first time in seven quarters that a company has returned to profitability since falling into the red in the third quarter of FY 2022 by a segment. As I will explain the details later, all segments reported year-on-year increase in profit. The consolidated results for this first quarter include petro-rabic results announced locally for the period of January to March with a lag of three months. The loss was approximately ¥20 billion in terms of our shareholdings, which is a big loss. After fully absorbing these losses, we were able to achieve profits. IT-related chemicals had a profit of ¥18.5 billion in core operating income, a record high, as the first quarter thanks to strong shipments of display materials and semiconductor-related materials with a tailwind from the yen's depreciation. Symptomopharma is working to stop the bleeding as soon as possible through sorrel rationalization. The plan is to reduce SG&A and R&D expenses by 108 billion yen per year. And in the first quarter, This fiscal year, 28 billion yen reduction was achieved. Core operating income has recovered to a level where losses have almost disappeared. Looking at these factors as a whole, we feel that the first quarter for this fiscal year got off to a very good start towards achieving the V-shaped recovery of our business performance in FI 2024 that we have set as our goal. Now, please turn to page 5, which is the business environment surrounding us. First, economic conditions. Still, low growth is expected in terms of exchange rate. So, currently, yen is appreciating in this first quarter. Profitability improved in exports and overseas businesses due to the weakening of the yen. And below shows the business environment of our major business areas using weather marks. Let me introduce the business areas that we saw changes. First, the second from the top, automobiles. The first quarter saw a decline in production volume, which had an influence. Under that, displays. There was a strong demand for mobile device-related components. And at the bottom, pharmaceuticals. For the three key products compared to the plan, the performance performed strongly. Business environment of the first quarter was introduced and next, on page 6, let me introduce the outline of the consolidated financial results. Consolidated financial results for first quarter FY2024. Sales revenue was 612.1 billion yen up 49 billion yen year-on-year. Core operating income expressing recurring earnings power was 5.7 billion yen up 59.3 billion yen year-on-year. Non-recurring items not included in core operating income was 5.8 billion yen, improvement of 24 billion yen year-on-year. In addition to ¥10.1 billion gain on sales of fixed assets from sales of land for dormitories and company housing, restructuring costs including reorganization of Simtomo Pharma's North American subsidiary narrowed from ¥19.3 billion in the same period of a previous year to ¥-¥3.5 billion. As a result, operating income was ¥11.5 billion, a large improvement of ¥83.2 billion year on year. Finance income was ¥26 billion, increase of ¥4.1 billion year on year. Out of this, there was The gain of foreign currency transactions of 29 billion yen because of a weakening of a yen, an increase of 5.3 billion yen year on year. As a result, the net income attributable to owners of a parent for this quarter was a gain of 24.4 billion yen, improvement of 57.5 billion yen year on year. The current exchange rate is For 29 billion yen financial income includes a gain of foreign currency transactions that will be eliminated under the current rate, even if this is eliminated because of the The majority is a symptom of farmers' gain of foreign currency transactions, which influences the non-controlled shareholding. But at one moment, even if this foreign currency transaction difference disappears, still 5 billion yen would remain. Next is sales revenue by business segment. I will explain the segments with large changes. Let me skip to page 11.

In the IT related chemical segment, the co-operative income was 18.5 billion yen up 11.9 billion yen year on year. For the first quarter, this was a record high. In the analysis of IONIU comparison, in terms of price variance, selling prices of polarizing films declined in the display-weighted materials. In terms of cost variance, depreciation expenses got higher due to a new semiconductor-related plant coming online at overseas subsidiary. In terms of volume variance, etc., in addition to the increase in shipments of polarizing films and touchscreen panels, recovery trends in the demand for semiconductors led to increased shipments of processing high-purity chemicals and photoresist, Resulting in a significant increase in profits. Please go to the health and crop science segment. The cooperating income was 5 billion yen up 12 billion yen year on year. In terms of price barriers, despite lower selling prices for crop production products in South America, Profit margin improved due to higher market prices for methionine. In terms of volume barriers, the backlog of distribution inventories is being resolved in each region and due to the recovery from extreme weather, shipments increased mainly to India. Now in the pharmaceutical segment, the cooperating income was Minus 0.5 billion yen, an improvement of 32.7 billion yen year-on-year. In comparison to the previous fiscal year, in terms of price variance, selling prices declined due to the impact of NHL drug price revisions in Japan.

In terms of cost variance,