Sumco Corp Ord

Thank you for your participation today. This is the results briefing for the first quarter of the fiscal year ending December 2026. The announcement regarding revision to dividend forecast and the presentation deck entitled Results for Q1 Fiscal 2026, which we will use now. Next, a disclaimer. The estimates, expectations, forecasts, and other future information discussed here and shown in today's materials were prepared based on the information available to the company as of today and on certain assumptions and qualifications, including our subjective judgment. Actual financial performance or results may differ substantially from the future information contained in this material due to risk factors including domestic and global economic conditions, trends in the semiconductor market, and foreign exchange rates. We will have presentations today from Representative Director and President Jiro Ryuta and Representative Director and Vice President CFO Shinichi Kubozoe. President Ryuta will discuss our forecasts and operating environment to be followed by an explanation of the financial results by CFO Kubozoe. We have set aside time for a Q&A session as well. I will now hand over to President Ryuta. I am President Ryuta. I have recently taken over from Chairman Hashimoto. I am still getting used to this part of my role and apologize if it feels a little awkward. I will start with an overview of the results and comment on the market environment. In Q1, Samco achieved sales of 101.4 billion yen, an operating loss of 5.2 billion yen, an ordinary loss of 7.9 billion yen, and a net loss of 8.4 billion yen. For Q2, we project sales of 112 billion yen, an operating loss of 2.5 billion yen, an ordinary loss of 6.5 billion yen, and a net loss of 7 billion yen. Compared to Q1, our Q2 Forex assumption is 160 yen to the dollar, which is expected to contribute to the improved performance, but we expect the main driver of both higher sales and the narrowing of losses to be an increase in volumes. Next page, please. With regard to dividends per share, our dividend policy is unchanged. Thank you for watching. While we are in the red, factoring in cash flow and other considerations, and given that we have significant retained earnings, we set the interim dividend level at 10 yen per share. This is the projected trend for wafer shipments. Reflecting seasonality and inventory adjustments by customers, the 300mm wafer shipment level was down sequentially, but on an absolute basis was still at a high level for Q1, on the back of rising AI-related demands. Growth in AI-related demand up to this point had been focused on leading-edge logic, but the increase in calculation volumes for AI is now driving growth for high-speed wideband DRAM, HBM. Recently, we have seen a pickup in NAND flash demand as a result of rising demand for SSDs for AI servers as well. Thank you for watching. In contrast, in 200mm, wafer shipments dropped significantly in 2023. Shipment levels remained low in 2024 and 2025. I believe that progress is being made on inventory adjustments, but sluggish growth in end applications such as consumer electronics, industrial machinery, and automotive kept Q1 at low levels. It appears that there are some pockets of favorable demand for such items such as power management ICs for AI, but we think it will be difficult to get back to the high levels of either 2020 or 2021. Next page, please. This is estimated customer wafer inventory. In Q1, customer wafer input volumes increased, leading to a decline in inventory volumes and days. Next page, please. This shows the trend for inventory split into logic and memory. While logic inventory is still high compared to memory, reflecting adjustments to purchase volumes, input volumes are rising. We are now starting to see a decline in inventory. For both logic and memory, backed by a recovery in production and customer capacity expansion, we could see an increase in purchase volumes going forward. Thank you for watching. Shipments for 200mm and smaller diameters remained at low levels. On prices, LTA prices continue to be respected. Sumco does not have many LTAs for 200mm, but spot market prices for 200mm, with the exception of some specialty items, were slightly lower on a sluggish supply-demand balance. On the outlook for Q2, 300mm continues to show favorable trends. Backed by AI-related demand, leading-edge logic and memory trends are strong. For non-leading-edge, customers are still adjusting inventory. Also, AI demand has led to shortages in memory, which appears to be having an effect on end-product production plans, such as consumer products, which is then impacting demand. That said, there are some items such as power management ICs where demand is picking up on AI-related demand. The inventory adjustments are not across the board for 200mm either. Products where progress has been made on inventory adjustments or data center products are showing some signs of increased demand. That said, we believe the overall strength of the recovery is lackluster at this time. LTA prices will continue to be respected. Spot prices had tended to be weak up to now but there are some pockets of recovery. I believe as conditions improve we should start to see some corrections to price. Looking out to the second half of the year our view remains largely unchanged. We expect to see continued strong growth for AI related and a more gradual recovery in non-AI. Transcription by CastingWords In contrast for non-AI logic, there are some products where demand is picking up, but given the variance in progress on inventory adjustments between customers and the impact of shortages of memory used in end products, the conflict in the Middle East, and inflation, we need to monitor the market closely to determine whether we might see a recovery. 300mm overall continues to see strong demand with the recovery trend likely to continue. While 200mm should see some recovery and the mixed picture in terms of customer progress on inventory adjustments, the magnitude of a recovery is likely to be weak.

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Thank you for watching. It is also necessary to train the human resources that will make this a reality. We are currently putting systems in place within the company. We must also engage with both our suppliers and customers, ensuring a solid flow of information to build a robust ecosystem. My aim is to see Sumco build its own success. The second, third, and fourth items are self-explanatory. Our policy remains unchanged. We will continue with the business structural reforms we are currently conducting with the aim of elevating our capabilities in leading edge while taking a selective approach in evaluating the non-leading edge areas to improve profitability and the sustainability of our business. We ask for your continued support. This completes my section of the presentation. I will hand over to CFO Kubozoe to talk about details of our Q1 earnings. I. Kubozoe will present an overview of the results and forecasts. Next page, please. As touched upon at the outset, the results for first quarter fiscal 2026 are shown in the middle of the page. Sales were 101.4 billion yen, operating profit was minus 5.2 billion yen, ordinary profit was minus 7.9 billion yen, and profit attributable to owners of the parents was minus 8.4 billion yen. Lower down on the table, we show CapEx on an acceptance basis of 9.4 billion yen. CAPEX is now declining as we are already past the peak, but the level is a little lower because of some timing pushouts into Q2. However, compared to previous acceptance levels, the amount is much lower. Depreciation was 30.8 billion yen. It is down from the Q4 level of 35.6 billion yen, reflecting the impact of the start to a new fiscal year. Further down on the table, EBITDA was 23.4 billion yen. The forex rate for the quarter was 155 yen to the dollar. Next page, please. This is the analysis of change to operating profits. Starting on the left, in the analysis of sequential changes to quarterly operating profit, Q1 sales fell 3.8 billion yen Q1Q and the operating loss widened by 0.7 billion yen. The yen weakened by 2.3 yen Q1Q from Q4 to Q1. The results were largely in line with our Q1 forecast. As you can see from the chart below showing the components of OP change, costs increased but sales variance was a negative 4.9 billion yen reflecting a decline in volume as well as a lower number of operating days during the quarter which depressed volume. There was also some impact from weaker spot prices. These negatives were offset by the decline in depreciation and a forex tailwind for a net 0.7 billion yen QonQ decline in OP. We show the year-on-year change on the right. Sales were generally flat year-on-year, while OP fell 11.1 billion yen. The change in the forex rate was 1.5 yen year-on-year, a relatively small change. O.P. fell 11.1 billion yen year-on-year. Next page, please. On this slide, I will cover the balance sheet and cash flow. Looking at the middle of the balance sheet on the left, total assets as of the end of March were ¥1,142.8 billion, up ¥14.9 billion compared to the end of December 2025. Cash and deposits increased by 34.7 billion yen to 109.9 billion yen as of the end of March. I will discuss the change in cash and deposits in covering cash flow on the right in a moment. There was a significant change in tangible and intangible assets, falling 21.4 billion yen as of the end of March, with depreciation outweighing CapEx acceptance. Liabilities increased 20.1 billion yen. Thank you for watching. Under Net Assets, I highlight retained earnings. As a result of the net loss at the end of the fiscal year and dividend payments, there was a decline of 11.9 billion yen in retained earnings. There was an increase of 2.3 billion yen to the capital surplus, which reflects the impact of the sale of shares in subsidiary FST. Given FST was a wholly owned subsidiary, the gains of 2.3 billion yen are directly reflected on the balance sheet. As we front-loaded some of our borrowings, the equity-to-asset ratio was 49.8%, and the DE ratio on a gross basis was 0.66 times as of the end of March. This represents a slight deterioration from levels as of the end of December 2025. On the right, we show cash flow. Operating cash flow was a positive 24.1 billion yen. Cash flow for investment activities was an outflow of 13.1 billion yen, reflecting a slight push out of CapEx acceptance into Q2. As a result, free cash flow was a positive 11 billion yen as of the end of March. Reflecting the increase in borrowings, interest-bearing debt rose 20.4 billion yen. Under Other, we show the proceeds from the sale of FSD shares, including the impact of dividends paid. There was a net increase in cash and deposits of 34.7 billion yen, which matches the balance sheet entry touched upon earlier. We show our Q2 earnings forecast on the next page. I will now discuss our earnings forecasts. The projections for Q2 are as shown on the third column from the right. We project sales of 112 billion yen and an operating loss of 2.5 billion yen. We project an ordinary loss of 6.5 billion yen and net loss attributable to owners of the parent of 7 billion yen. Q2 depreciation is projected to rise to 33.7 billion yen. Below, our assumption for Forex in Q2 is 160 yen to the dollar. This assumption underpins our forecast for the quarter. Near term, the yen has appreciated somewhat, but the 160 yen level was based on actual rates in April and May. On this next slide, we show the analysis of change in operating income. On the left, we show the sequential changes. Q2 sales are projected to rise to 112 billion yen, up 10.6 billion yen, driven primarily by 300 mm. Operating losses are projected to narrow by 2.7 billion yen. Our forex assumption of 160 yen to the dollar implies yen depreciation of roughly 5 yen Q on Q. If you look at the waterfall chart below, you can see that we expect positive contributions from increased sales and forex, reflecting our view of improvements in sales variance and forex impact. We expect depreciation to increase by 2.9 billion yen above the line. The expected increase of 1.1 billion yen in costs takes into account a slight increase in unit prices for electrical power and the impact of annual increases in wages. On a net basis, we are expecting a 2.7 billion yen QonQ narrowing of operating losses in Q2. On the right, the year-on-year changes for first half are as shown here. In addition to the factors discussed for the sequential changes, depreciation will rise, but in terms of sales and production, volumes are expected to increase, so if we compare the year-on-year for Q1 last time, the negative for sales variance is slightly lower at minus 4.6 billion yen. On top of this, we project a positive from Forex Impact. On a net basis, first half OP is expected to decline 15.1 billion yen year-on-year. Next slide, please. We have provided reference material at the end of the presentation with historical trends for earnings and EBITDA on the next page. We project sales of 112 billion yen up from the previous 100 billion yen level. In addition, EBITDA margin is expected to improve from the 23.1% of Q1 to 26% in Q2. This completes my section of the presentation. Thank you. Mr. Komori. Thank you. We will now open the floor to questions. We will start with Mr. Enomoto. Mr. Enomoto. I am Enomoto of B of A Securities. I would like to take this opportunity to ask you about your management policy. What are your aims for Sumco as the new president? When I look at Sumco, what comes to mind is the sheer challenge of timing capex, particularly in the past. How are you thinking about addressing this challenge going forward? Will the approach be to specialize in leading edge? or maybe given that you need to go where the opportunities are, there will be times where you will need to invest. Please elaborate on your management vision for Sumco. President Ryuta It is true that CapEx has been very challenging in the past. This is a market where timing and accurately forecasting the market is very difficult. Mr. Enomoto Samco amended its plan to expand capacity at Yoshinogari. Can I confirm that Samco will basically not need to make major investments in the next few years? President Yuta, when we started our greenfield investment program in 2021, our assumption was that the magnitude of market growth would be larger. Subsequently, the trend changed, and it now appears that the market will not grow to the levels we had previously anticipated. Thank you for watching. My view is that only once this site is fully populated would we then potentially revisit Yoshinogari after rigorously studying the then-current market conditions. Mr. Enomoto Understood.