Daicel : 1st Quarter Consolidated Financial Results for the Year Ending March 31, 2023

1st Quarter Consolidated Financial Results for the Year Ending March 31, 2023

(All financial information has been prepared in accordance with Generally Accepted Accounting Principles in Japan)

August 4, 2022

Company name	: DAICEL CORPORATION
Stock Exchange on which the shares are listed	: Tokyo Stock Exchange in Japan
Code number	: 4202
URL	: https://www.daicel.com
Representative	: Yoshimi Ogawa, President and CEO
Contact person	: Masahiko Hirokawa, Executive Officer, Deputy General Manager, Corporate Support
	Headquarters, General Manager-Investor Relations & Corporate Communications
	Phone [phone]
Scheduled date for submitting financial statements	: August 10, 2022
Scheduled date for dividend payment	: -
The additional materials of the Financial Results	: Yes
The briefing session of the Financial Results	: Yes (for institutional investors and analysts)

1. Consolidated Financial Results for the Three Months Ended June 30, 2022	(Amounts are rounded down to the nearest million)
(1) Consolidated Operating Results						(% of change from previous year)
	Net sales		Operating profit	Ordinary profit		Profit attributable
			to owners of parent
	Millions of Yen	%	Millions of Yen	%	Millions of Yen		%	Millions of Yen	%
Three months ended Jun. 30, 2022	127,981	14.9	12,989	(6.8)	15,447		1.4	8,903	(27.5)
Three months ended Jun. 30, 2021	111,358	34.3	13,944	350.7	15,235		293.3	12,283	1,834.3

(Note) Comprehensive income: 24,514 millions of yen [28.6%] for the three months ended June 30, 2022 and 19,069 millions of yen [3,231.6%] for the three months ended June 30, 2021

	Profit per share	Diluted profit
	per share
	Yen	Yen
Three months ended Jun. 30, 2022	30.11	-
Three months ended Jun. 30, 2021	40.76	-

(2) Consolidated Financial Position

	Total assets	Net assets	Capital adequacy ratio	Net assets per share
	Millions of Yen	Millions of Yen	%	Yen
As of Jun. 30, 2022	740,589	298,686	39.2	982.36
As of Mar. 31, 2022	698,836	279,544	38.9	919.88

(Reference) Shareholders' equity: 290,489 millions of yen as of June 30, 2022 and 272,017 millions of yen as of March 31, 2022 2. Dividends

			Cash dividends per share
(Reference data)	1st quarter	2ｎd quarter		3rd quarter		4th quarter	Annual
	Yen	Yen		Yen		Yen	Yen
Year ended Mar. 31, 2022	-	16.00		-		18.00	34.00
Year ending Mar. 31, 2023	-
Year ending Mar. 31, 2023		18.00		-		18.00	36.00
(Forecast)
(Note) Revisions to the latest announced dividend forecast: Not Applicable

3. Forecast of Consolidated Financial Results for the Year Ending March 31, 2023

(% of change from same period of previous year)

	Net sales		Operating profit	Ordinary profit	Profit attributable	Profit
		to owners of parent	per share
	Millions of Yen		%	Millions of Yen	%	Millions of Yen	%	Millions of Yen	%	Yen
Six months ending Sep. 30, 2022	266,000		18.3	23,000	(15.6)	24,000	(19.6)	18,500	(16.1)	62.56
Year ending Mar. 31, 2023	540,000		15.4	46,500	(8.3)	48,500	(15.3)	37,000	18.4	125.12

(Note) Revisions to the latest announced forecast of consolidated financial results: Not Applicable

*Notes

1. Changes in significant subsidiaries during the three months ended Jun. 30, 2022: Not applicable (Note) Changes in specified subsidiaries that caused a change in the scope of consolidation
2. Adoption of specific accounting methods for presenting quarterly financial statements: Not applicable
3. Changes in accounting policies, changes in accounting estimates and restatements
4. • Changes in accounting policies due to revisions of accounting standards: Not applicable

• Changes in accounting policies other than (3)-i: Not applicable ⅲ Changes in accounting estimates: Not applicable

ⅳ Retrospective restatements: Not applicable

1. Number of issued shares (common share)

ⅰ Number of issued shares at the end of each period	As of Jun. 30, 2022	302,942,682 shares	As of Mar. 31, 2022	302,942,682 shares
(including treasury shares)
ⅱ Number of treasury shares at the end of each period	As of Jun. 30, 2022	7,235,445 shares	As of Mar. 31, 2022	7,234,296 shares
ⅲ Average number of shares during each period	Three months ended	295,708,227 shares	Three months ended	301,333,049 shares
(Cumulative from the beginning of the fiscal year)	Jun. 30, 2022		Jun. 30, 2021

*This Quarter Consolidated Financial Results report is not subject to quarterly review.

*Explanations or other special matters to appropriate use of the forecast of consolidated financial results

The forecast of consolidated financial results and certain other statements contained in this document are forward-looking statements, which are rationally determined based on information currently available to the company. For a variety of reasons, actual performance may differ substantially from these projections.

4. Qualitative Information on the Period under Review

(1) Overview of the operating results

Looking at the world trends during the consolidated first quarter of the fiscal year ending March 2023 (three months ended June 30, 2022), although economic stagnation caused by the spread of COVID-19 has been recovering to some extent, the global economy remained uncertain and has been affected by a decline in automobile production from the shortage of semiconductors and the lockdown of cities in China due to COVID-19, soaring raw material and fuel price and global inflation affected by Russia's prolonged

military invasion of Ukraine etc. and logistics disruption.

Amid such circumstances, the Daicel Group has steadily seized sales opportunities of the products for which demand is growing and increased sales volume, in addition, we have passed on the soaring raw material and fuel prices and distribution costs to the selling prices and have implemented thorough cost reductions although the sales volume of some products of the Daicel Group decreased due to the impact of the lockdown of cities in China and the reduction in automobile production.

The sales revenue for the consolidated first quarter of the fiscal year under review totaled 127,981 million (up 14.9% year-on- year). On the income front, operating income amounted to 12,989 million (down 6.8% year-on-year), ordinary income was 15,447 million (up 1.4% year-on-year) and net income attribute to owners of the parent was 8,903 million (down 27.5 % year-on-year).

Segment information is summarized as follows.

From the current consolidated fiscal year, the company has changed the method of allocating corporate expenses to each business in order to shift to a system in which each business bears the costs to be borne and manages them responsibly. For the year-on- year comparison, the figures for the same period of the previous year are compared by rearranging the figures based on the changed allocation method.

[Medical / Healthcare]

The healthcare business decreased in sales revenue due to a decrease in sales volume of cosmetic ingredients due to the lockdown of cities in China although the sales volume of health food ingredients increased.

The life science business increased in sales revenue due to an increase in sales volume of chiral separation related products resulting from the recovery in demand and strong sales at other overseas bases despite the effects of the lockdown in China.

The overall segment sales came to ¥5,418 million (up 13.1% year-on-year). Operating income amounted to ¥672 million (up 17.5% year-on-year) due to an increase of sales volume.

[Smart]

The display business, such as cellulose acetate for optical films, and high-performance films, registered growth in sales revenue due to higher sales volume of high-performance films although sales volume of cellulose acetate for optical film decreased as a result of LCD panel inventory adjustment by customers.

The IC/Semiconductor business, which includes solvents for printed electronics and resist materials, increased in sales revenue driven by higher sales volume for semiconductor materials, for which demand remained strong, and an increase in sales prices due to a rise in raw material and fuel prices although sales volumes for LCD panel materials decreased.

The overall segment sales came to ¥9,561 million (up 19.7% year-on-year). Operating income amounted to ¥1,139 million (down 24.1% year-on-year), due to the soaring raw material and fuel prices and an increasing of research and development expenses.

[Safety]

The automobile airbag inflator (gas-generation devices) and other mobility business increased in sales due to an increase in sales volume compared to the same period of the previous year, which was on a recovery trend from the effects of COVID-19 and due to the impact of foreign exchange although it was affected by the reduction in automobile production due to the shortage of semiconductors and the lockdown of cities in China.

Consequently, overall segment sales came to ¥17,786 million (up 9.4% year-on-year). Operating loss came to ¥360 million (operating loss of 31 million in the same period of the previous year) due to the soaring raw material prices and distribution costs.

[Material]

Sales revenue of acetic acid decreased due to sales adjustments associated with regular repairs and the softening of the acetic acid market, which had soared the previous year.

Sales of acetic acid derivatives increased due to an increase in sales volume of ethyl acetate.

Sales revenue of acetate tow increased due to an increase in sales volumes from the securing of inventory by customers caused by distribution disruptions and due to the impact of foreign exchange. In addition, it is also no longer affected by changes in accounting standards, which was a factor in the decrease in sales in the same period of the previous year.

Caprolactone derivatives and alicyclic-epoxy-resin recorded increased sales revenue driven by higher sales volume due to a strong demand for polyurethane and electronic material applications and correction of sales prices due to rising raw material and fuel prices.

Consequently, overall segment sales amounted to ¥34,661 million (up 22.5 % year-on-year). Operating income amounted to ¥4,864 million (up 11.0% year-on-year), due to an increase of sales volume.

[Engineering Plastics]

In the business of Polyplastics Co., Ltd., such as polyacetal (POM), polybutylene terephthalate (PBT) resin, and liquid crystal polymer (LCP), sales revenue increased due to continuous sales prices revision from the rise in raw material and fuel prices and the influence of exchange rates although the sales volume decreased due to lockdown of cities in China and compared to the same period of the previous year when the sales volume increased sharply due to the recovery of demand from the influence of COVID-19.

In the business of Daicel Miraizu Ltd., including ABS and engineering plastic alloy resins, film barriers for food and water-soluble polymers, sales revenue increased due to the revision of sales prices because of the rise in raw material and fuel prices despite the lockdown of cities in China.

Consequently, overall segment sales amounted to ¥58,744 million (up 14.1% year-on-year). Operating income was ¥6,570 million (down 8.1% year-on-year) due to a decrease of sales volume.

[Other Businesses]

Sales revenue of other businesses decreased due to lower sales volume of defense-related business.

Consequently, overall segment sales amounted 1,808 million (down 29.3% year-on-year). Operating income amounted to 102 million (down 72.7% year-on-year).

(2) Overview of financial position for the fiscal year under review

Total assets as of June 30, 2022, were 740,589 million, an increase of 41,753 million from March 31, 2022, due to increases in Cash and deposits and inventory.

Total liabilities were 441,902 million, an increase of 2,2610 million from March 31, 2022, due to an increase in Short-term borrowings.

Total net assets were 298,686 million. Total shareholders' equity, which is calculated as the net assets minus non-controlling interests, was 290,489 million. Shareholders' equity ratio was 39.2%.