Sumitomo Bakelite : Mid-term Business Plan（FY2024-FY2026）

Medium-Term Business Plan 2024-26

13.May.2024

Sumitomo Bakelite Co., Ltd.

Contents：

1. Review of Medium-Term Business Plan 2021-23
2. Policy for designing the Medium-Term Business Plan and "Vision 2030"
3. Medium-TermBusiness Plan 2024-26

22

1. Review of Medium-Term Business Plan 2021-23

33

Review of the Medium-Term Business Plan 2021-23

Over all

• Achieved initial financial targets (sales revenue of 250 billion JPY, business profit of 25 billion JPY) ahead of schedule in the first year of the plan.
• In FY2023, the final year of the plan, fell short of the upwardly revised business profit target but achieved a record high of 27.5 billion JPY.

Priority Areas (Semiconductors, Mobility, Healthcare)

• Invested in increased production in response to growing semiconductor demand. Responded swiftly on a global basis and achieved an increase in profit.
• Made investments in increased production of molding compounds for mobility, in which continued growth is expected. Achieved expanded sales of three strategic products for mobility*1 earlier than planned.
• Made progress of integration with Kawasumi Laboratories in the healthcare domain following its acquisition.

*1 Encapsulant for motor magnet fixing, Direct molding compounds for ECU, Molding compounds for power module

Digital transformation

• Formed the MI*2 promotion project. Drove the introduction of MI and development of data scientists.
• Adopted AI, IoT and robotics to strengthen the
  manufacturing foundation.*2 MI: Materials Informatics

Environment

• Achieved targets for the sales revenue ratio of the products which contribute to the SDGs and of GHG*3 emission
  reductions.*3 GHG: Green House Gas

Examples of representative Products in Priority Areas

Semiconductor

Mobility

Healthcare

Epoxy Molding	Cover tape for	Encapsulant for	Phenolic	Blood Bag
Encapsulant	semiconductor	motor magnet	molding
(EME)	packaging	fixing	compounds

*4	The market leader
The market leader worldwide		in Japan*4
	*4 Internal survey

4

Review of the Medium-Term Business Plan 2021-23

Medium-Term Business Plan 2021-23

	FY2020	FY2023	FY2021	FY2022	FY2023
	Results	Target	Results	Results	Results
	(Original→Revised＊）
Sales Revenue	209.0	250.0 → 300.0	263.1	284.9	287.3
(Billion JPY)
Business Profit	16.6	25.0 → 30.0	26.5	25.4	27.5
(Billion JPY)
Profit Ratio	8.0%	10.0%	10.1%	8.9%	9.6%
ROE	7.0%	10.0%	8.5%	8.4%	7.8%
Dividend	26.7%	30% or more	28.3%	30.1%	32.1%
Payout Ratio
Share Buyback	---	---	---	---	3
(Billion JPY)

*On May 16, 2022, we revised our sales revenue and business profit targets upward.

5

Review of the Medium-Term Business Plan 2021-23

Medium-Term Business Plan 2021-23

			FY2020	FY2021	FY2022	FY2023	Review
			Results	Results	Results	Results
	Semiconductor	Sales Revenue	57.3	75.8	79.5	82.9	○Responded swiftly to increased demand in the
	Business Profit(%)	16.5%	21.8%	19.3%	19.5%	(starting operation in 2024)
		(Billion JPY)					semiconductor market and increased our market share
		Business Profit	9.4	16.5	15.3	16.1	○Expanded sales of three strategic products for mobility
		(Billion JPY)					as planned
							○Installed new production lines in China and Taiwan
		Sales Revenue	72.6	92.2	102.4	101.4	×Failed to keep up with changes in the business
		(Billion JPY)					environment following the COVID-19 pandemic leading
	HPP	Business Profit	3.5	5.9	4.6	5.3	to a delayed response
	(Billion JPY)	○Launched heat dissipating materials business
		Business Profit(%)	4.8%	6.4%	4.5%	5.2%
		○Returned the aircraft business to profitability
		Sales Revenue	78.6	94.4	102.3	102.2
	QOL	(Billion JPY)	○Expanded market share in pharmaceutical packaging
	Business Profit	6.6	7.4	9.2	9.7	films
	(Billion JPY)	○Expanded global business for medical devices
		Business Profit(%)	8.4%	7.9%	9.0%	9.5%	○Invested in a venture fund for medical devices

6

2. Policy for designing the Medium-Term Business Plan and "Vision 2030"

77

Designing Policy for the Plan

Increasingly complex external environment surrounding companies

In line with the SDGs, set targets (financial and non-financial) to be pursued as a unified organization by backcasting from "Vision 2030".

• Climate change
• Energy crisis
• Trends in eliminating the use of plastics
• Country risk
• Supply chain manage- ment
• Human capital shortage
• Technological innovation
• Cybersecurity risk

Present

2024

Sustainable society

Issues

Contribution

We aim to be a company

providing dreams for the future

Medium-Term

Business Plan

2027-29

Medium-Term

Business Plan

2024-26

2030

Financial Targets

Shift to "profit-oriented management" to further strengthen the financial base and improve the capital profitability

Non-financial

Targets

Set "material issues" that shall impact on our finance in the future from the view of sustainability

8

Vision 2030

Business Philosophy

Our company places prime importance on trust and sureness, and shall commit itself to contributing to the progress of society and enhancement of people's welfare and livelihood through its business activities

Purpose

Toward a sustainable society through expanding the potential of plastics

Vision

"We aim to be a company providing dreams for the future" through creating value with our customers

Financial Targets

Business Profit

55 billion JPY

Profit Ratio

13 %

ROE

10 %

9

Promotion of Sustainability

Improve the enterprise value and further strengthen our business foundation to achieve "Vision 2030"

Materiality Issues

Creation of environmental and social values

Value creation accelerators

Co-creation with customers	Innovation
Human capital	Digital transformation

Foundation for business continuity

Health and Safety	Cybersecurity
Product liability	Respect for human rights
Compliance	Sustainable procurement
	Corporate governance

Organizational structure of sustainability promotion

Sustainability Promotion Dept. formed in April,2023 drives all activities companywide

Board of Directors

Direction/Supervision	Reporting

Sustainability Promotion

Committee

							（Chairperson: President & CEO)
	Direction/Supervision				Reporting
	SDGs Promotion		CN* Promotion			Risk Management		Compliance
	Committee		Committee			Committee		Committee

*CN: Carbon Neutral	Participation / partnership

Each Dept. / Subsidiaries

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