Toyo Ink SC : Consolidated Quarterly Financial Results (Japanese Accounting Standards)for the First Half of the Fiscal Year Ending December 31, 2023

(Percentages indicate year-on-yearchanges)

TRANSLATION:

This is an English translation of Consolidated Quarterly Financial Results (Japanese Accounting Standards) for the First Half of the Fiscal Year Ending December 31, 2023. This is an English translation of the Japanese original, prepared only for the convenience of shareholders residing outside Japan. The original Japanese version will prevail should there be any difference in the meaning between the English version and the Japanese version.

Consolidated Quarterly Financial Results (Japanese Accounting Standards)

for the First Half of the Fiscal Year Ending December 31, 2023

				August 7, 2023
Name of Listed Company: TOYO INK SC HOLDINGS CO., LTD.	Listings: Tokyo Stock Exchange
Code:	4634		URL:	https://schd.toyoinkgroup.com
Representative:	Satoru Takashima, President and Representative Director, Group CEO
Contact:	Takeshi Arimura, Operating Officer and General Manager of Finance & Accounting Department
	Tel: [phone]
Scheduled date of submission of quarterly report:	August 10, 2023
Scheduled date of commencement of dividend payments:	September 1, 2023
Supplementary documents for quarterly results:	Yes
Quarterly results briefing:	Yes (for institutional investors and analysts)

(Amounts of less than million yen are omitted.)

1. Consolidated business results for the First half of fiscal 2023 ending December 31, 2023 (From January 1, 2023 to June 30, 2023)

(1) Business results (cumulative totals)

		Net sales			Operating profit	Ordinary profit	Profit attributable to
				owners of parent
		Million yen			%		Million yen			%	Million yen			%	Million yen			%
First half, Fiscal 2023		153,676			-0.7		4,752			3.0	5,365			-20.2	3,842			-54.3
First half, Fiscal 2022		154,758			11.1		4,615			-36.2	6,728			-22.3	8,410			33.1
(Note) Comprehensive income:	First half, fiscal 2023: 20,128 million yen (4.5%)	First half, fiscal 2022:19,266 million yen (49.8%)
		Profit per share (Basic)		Profit per share (Diluted)
							Yen			Yen
First half, Fiscal 2023						72.50					72.45
First half, Fiscal 2022						151.60					151.41

(2) Financial position

Total assets

Net assets

Net worth/Total assets

First half, Fiscal 2023

Fiscal 2022

Million yen

426,072

411,177

Million yen

245,378

227,877

%

55.5

53.3

(Note) Net worth:First half, fiscal 2023: 236,392 million yenFiscal 2022: 219,047 million yen

2. Dividends

					Dividends per share
			End of Q1	End of Q2		End of Q3	Year-end	Total
			Yen	Yen		Yen	Yen	Yen
	Fiscal 2022		-	45.00		-	45.00		90.00
	Fiscal 2023		-	45.00
	Fiscal 2023 (Forecast)					-	45.00		90.00

(Note) Revisions to the most recently announced dividend forecasts: None

3. Forecasts for the year ending December 31, 2023 (From January 1, 2023 to December 31, 2023)

(Figures in percentages denote the year-on-year change.)

Net sales

Operating profit

Ordinary profit

Profit attributable to

Profit per share

owners of parent

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

Full-year

330,000

4.5

11,000

60.2%

9,500

20.1

6,000

-35.5

113.19

(Note) Revisions to the most recently announced earnings forecasts: None

* Notes
(1) Important changes of subsidiaries during the term	No

1. Application of special accounting treatment to the preparation of quarterly consolidated financial statements: No
2. Changes in accounting policies and changes or restatement of accounting estimates

(i)	Changes in accounting policies due to the modification in accounting methods:	Yes
(ii)	Changes in accounting policies other than (i):	No
(iii)	Changes in accounting estimates:	No
(iv)	Restatement:	No

(4) Numbers of shares issued (ordinary shares)

1. Numbers of shares issued at the end of the terms (including treasury shares):

First half, fiscal 2023:	58,286,544 shares
Fiscal 2022:	58,286,544 shares

1. Numbers of treasury shares at the end of the terms:

First half, fiscal 2023:	5,267,814 shares
Fiscal 2022:	5,298,507 shares

1. Average numbers of shares issued during the terms (consolidated accumulation periods):

First half, fiscal 2023:	53,000,712 shares
First half, fiscal 2022:	55,474,737 shares

• These quarterly financial results are not subject to quarterly audits by certified public accountants or audit corporations.
• Explanations about the proper use of financial forecasts and other important note

1. The above forecasts are based on the information available on the date these materials are released and incorporate assumptions about uncertainties that may affect future earnings. The forecasts do not constitute an assurance that the Company promises to achieve the earnings. Actual earnings could differ materially from these forecasts due to various factors in the future. For notes about assumptions of earnings forecasts and the use of earnings forecasts, refer to "(3) Information on the consolidated earnings forecasts and other future forecasts" of "1. Qualitative Information on Financial Results, etc., for the First Half Ended June 30, 2023" on page 4 of the accompanying materials.
2. Supplementary documents for financial results will be posted on the Company's website on August 7, 2023 (Monday).
3. The Company will hold a financial results briefing for investors as follows. Reference materials for financial results and forecasts used in the briefing will be posted on the Company's website before the opening of the briefing.

- August 22, 2023 (Tuesday): Briefing for institutional investors and security analysts.

TOYO INK SC HOLDINGS CO., LTD. (4634) Financial Results for First Half of FY2023

Accompanying Materials - Contents
1. Qualitative Information on Financial Results, etc. for the First Half Ended June 30, 2023	2
(1)	Details of operating results	2
(2)	Details of financial position	4
(3)	Information on the consolidated earnings forecasts and other future forecasts	4
2. Consolidated Financial Statements and Primary Notes	5
(1)	Consolidated balance sheet	5
(2)	Consolidated statements of income and consolidated statements of comprehensive income	7
(3) Consolidated statements of cash flows	9
(4)	Notes on consolidated quarterly financial statements	10
(Notes on assumption of going business)	10
(Notes on significant changes in the amount of shareholders' equity)	10
(Changes in accounting policies)	10
(Additional information)	10
(Segment information, etc.)	11

-1-

TOYO INK SC HOLDINGS CO., LTD. (4634) Financial Results for First Half of FY2023

1. Qualitative Information on Financial Results, etc. for the First Half Ended June 30, 2023

(1) Details of operating results

In the first half of the consolidated year under review, the global economy recovered modestly, bolstered by various policies amid improvement in the employment and income situation; however, the outlook remains uncertain, with consumers pulling back on spending because of higher prices and energy prices remaining stubbornly high due to the protracted Ukraine conflict.

In this environment, the Toyo Ink Group worked to achieve its policies for the year of enhancing the profitability of its businesses, creating and expanding priority development areas, and enhancing the value of management resources for sustainable growth.

As a result, net sales for the first half of the fiscal year under review decreased to 153,676 million yen (down 0.7% year on year). Operating profit increased to 4,752 million yen (up 3.0% year on year). However, due to the decreases of foreign exchange losses and gain on sale of investment securities, ordinary profit fell to 5,365 million yen (down 20.2% year on year) and profit attributable to owners of parent dipped to 3,842 million yen (down 54.3% year on year).

Operating results by segment are as follows.

(i) Colorants and Functional Materials Related Business

In materials for LCD color filters, production at LCD panel manufacturers started to recover during the second quarter and shipments also trended upward, in addition to increased sales in China and expansion of market share in Taiwan.

Sales of plastic colorants for containers and construction material films were sluggish in Japan due to consumer pullbacks and a drop in housing construction starts; however, sales of plastic colorants for solar cells were strong overseas.

Sales of inkjet inks were impacted by inventory adjustments in overseas markets but started to recovery in the second quarter. Sales of lithium-ion battery materials for automotive applications grew through the ramp-up of supply in the U.S. and Europe, and the Group is expanding facilities to meet further expansion in demand in the U.S. and China.

As a result, net sales for this segment as a whole slightly decreased to 39,364 million yen (down 0.0% year on year), and operating profit decreased to 1,465 million yen (down 2.4% year on year).

(ii) Polymers and Coatings Related Business

Among functional films and tapes, sales of electromagnetic shielding films and heat-resistant film material with low adhesion were lackluster, amid continued adjustment in the smartphone and LCD panel markets.

Slow growth in domestic sales of pressure sensitive adhesives for labels and displays was offset by increased sales of pressure sensitive adhesives in the U.S. and India, driven by facility expansion. Domestic sales of adhesives for packaging held firm; however, growth in overseas sales of adhesives for food packaging was slow due to decline in consumption.

Domestic sales of can coatings were sluggish, reflecting slow growth in customer operations, and overseas sales of can coatings for food cans were also weak mainly due to decline in fish catches; however, the Group expanded its network aiming for business expansion through the acquisition of a Thai coating manufacturer in Thailand.

As a result, net sales for this segment as a whole decreased to 36,349 million yen (down 4.7% year on year), but operating profit increased to 1,917 million yen (up 28.1% year on year) partly due to the effect of selling price revisions.

-2-

TOYO INK SC HOLDINGS CO., LTD. (4634) Financial Results for First Half of FY2023

(iii) Packaging Materials Related Business

In the liquid ink products market in Japan, consumer pullbacks due to rising prices spread to daily necessities, leading to slow growth in demand for packaging materials for food products; however, demand for packaging materials for seasonal products and souvenirs was solid, reflecting the lifting of COVID restrictions. Sales of products for cardboard boxes used in beverage and processed food applications were also lackluster as consumers became more thrifty.

Overseas, demand in India was solid and sales also held firm; however, in China sales of products for food packaging were weak due to sluggish consumption. Profitability also improved both in Japan and overseas thanks to progress with the revision of selling prices in response to rising raw material prices.

In the gravure cylinder platemaking business, while sales of products for packaging were firm partly due to demand for new plates, sales of precision platemaking related to electronics were weak.

As a result, net sales for this segment as a whole increased to 40,361 million yen (up 0.9% year on year), and operating profit increased to 1,418 million yen (up 201.2% year on year).

(iv) Printing and Information Related Business

While domestic sales of products for flyers, advertising, and publishing were sluggish due to the continued structural contraction of the information-related printing market, sales of products for paper containers and packaging were firm partly due to an upturn in consumption driven by travel-related demand. In face of persistently high energy and raw material costs, the Group continued to reduce costs through collaboration with competitors and business structure reforms while at the same time making revisions to selling prices to cover cost increases the Group could not absorb through its own efforts.

In overseas markets, sales were lackluster, partly due to economic downturn in China caused by property market woes and weak exports; however, progress was made in expanding sales of functional coatings for paper containers and packaging.

As a result, net sales for this segment as a whole increased to 36,344 million yen (up 0.0% year on year); however, the segment reported an operating loss of 41 million yen (compared with operating profit of 588 million yen in the same period of the previous year) due to stubbornly high energy costs and raw material prices.

1. Other

This Other segment includes businesses not included in the above segments, services provided by Toyo Ink SC Holdings Co. Ltd., etc., and other businesses. Net sales for the first half under review increased to 2,834 million yen (up 13.6% year on year), but operating profit decreased to 12 million yen (down 97.7% year on year) mainly due to a decrease in revenue from the rendering of services.

-3-