Nippon Kayaku : 【Delayed】Summary of Consolidated Financial Results For the First Quarter of the Fiscal Year Ending March 31, 2022

Summary of Consolidated Financial Results [Japanese GAAP]

For the First Quarter of the Fiscal Year Ending March 31, 2022

July 30, 2021

Listed company: Nippon Kayaku Co., Ltd. (URL https://www.nipponkayaku.co.jp/english/)

Listed stock exchange: First Section, Tokyo Stock Exchange

Code No.: 4272

Representative (name, position): Atsuhiro Wakumoto, President

Director in charge of inquiries: Tsutomu Kawamura, Executive Director, General Manager of Finance & Accounting Division, Financial Group

Filing date of quarterly securities report: August 6, 2021

Scheduled date for start of dividend payments: -

Preparation of supplementary materials for quarterly financial results: Yes

Quarterly results presentation meeting: Yes (for securities analysts and institutional investors)

1. Consolidated Business Results for the First Quarter of Fiscal Year Ending March 31, 2022 (April 1, 2021- June 30, 2021)

(Figures shown are rounded down to the nearest million yen.)

(1) Consolidated Operating Results

(Percentages indicate amount of change from the same period of the previous fiscal year.)

	Net sales		Operating income	Ordinary income	Profit attributable to
		owners of parent
First quarter of	Million yen		%	Million yen	%	Million yen		%	Million yen	%
fiscal year ending	46,447		26.1	5,938	114.1	6,399		114.4	5,295	202.9
March 31, 2022
First quarter of
fiscal year ended	36,825		(14.1)	2,773	(41.5)	2,984		(35.1)	1,748	(44.0)
March 31, 2021
Note: Comprehensive income
First quarter of fiscal year ending March 31, 2022:	5,923 million yen (36.9%)
First quarter of fiscal year ended March 31, 2021:		4,326 million yen (-%)
	Profit attributable to owners of	Profit attributable to owners of
	parent per share-primary	parent per share-diluted
First quarter of				Yen			Yen
fiscal year ending				31.05			31.05
March 31, 2022
First quarter of
fiscal year ended				10.24			-
March 31, 2021

Note 1: The percentage year-on-year change in comprehensive income for the first quarter of the fiscal year ended March 31, 2021 exceeds 1,000% and is therefore indicated with a dash (-).

Note 2: Profit attributable to owners of parent per share-diluted for the first quarter of the fiscal year ended March 31, 2021 is indicated with a dash (-) because the dilutive shares that do exist do not have a significant dilutive effect.

This document is an English translation of the Japanese-language original.

All financial information has been prepared in accordance with generally accepted accounting principles in Japan.

Nippon Kayaku Co., Ltd.

Summary of Consolidated Financial Results [Japanese GAAP]

For the First Quarter of the Fiscal Year Ending March 31, 2022

(2) Consolidated Financial Position

	Total assets		Net assets				Equity ratio
As of June 30,		Million yen		Million yen		%
	297,619			230,812		77.3
2021
As of March 31,		294,535			228,273		77.2
2021
Reference: Equity As of June 30, 2021: 230,029 million yen
	As of March 31, 2021: 227,506 million yen
2. Status of Dividends
				Dividend amount per share
	End of first		End of second	End of third		End of year	Year
	quarter		quarter	quarter
					Yen
Fiscal year ended	-		15.00		-			15.00	30.00
March 31, 2021
Fiscal year ending	-
March 31, 2022
Fiscal year ending
March 31, 2022			15.00		-			15.00	30.00
(forecast)

Note: Changes to the most recent dividend forecast: None

3. Consolidated Business Results Forecasts for the Fiscal Year Ending March 31, 2022 (April 1, 2021- March 31, 2022)

(Percentages indicate amount of change from the same period of the previous fiscal year.)

								Profit attributable to	Profit attributable to
	Net sales		Operating income	Ordinary income	owners of parent	owners of parent per
										share
	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
First half	91,300		13.4	9,800	40.5	10,400	41.7	8,000	63.8	46.91
Full year	184,800		6.6	17,400	14.5	18,400	11.3	14,000	11.3	82.10

Note: Changes to the most recent forecast for consolidated business results: Yes

Notes

1. Significant changes in subsidiaries during the first quarter (changes in designated subsidiaries that result in changes in scope of consolidation): None
2. Adoption of special accounting methods for presenting the quarterly consolidated financial statements: None
3. Changes to accounting policies and estimates and restatement
4. 1. Changes to accounting policies associated with revision of accounting standards or similar items: Yes
   2. Changes other than [1]: None
   3. Changes to accounting estimates: None
   4. Restatements: None
5. Number of shares issued (common stock)
6. 1. Number of shares issued at end of the fiscal period (including treasury stock) As of June 30, 2021: 177,503,570 shares
      As of March 31, 2021: 177,503,570 shares
   2. Number of treasury stock at end of the fiscal period As of June 30, 2021: 7,504,250 shares
      As of March 31, 2021: 6,710,650 shares
   3. Average number of shares during the fiscal period (cumulative)
      First quarter of fiscal year ending March 31, 2022: 170,528,346 shares

This document is an English translation of the Japanese-language original.

All financial information has been prepared in accordance with generally accepted accounting principles in Japan.

Nippon Kayaku Co., Ltd.

Summary of Consolidated Financial Results [Japanese GAAP]

For the First Quarter of the Fiscal Year Ending March 31, 2022

First quarter of fiscal year ended March 31, 2021: 170,793,776 shares

• Quarterly summary financial statements are not subject to audit by a certified public accountant or audit firm.
• Analysis related to appropriate use of the business forecasts, and other notes

(Disclaimer concerning forward-looking statements)

The information in this report constitutes forward-looking statements regarding future events and performance. This information is based on the beliefs and assumptions of management in light of information currently available to it at the time of announcement and subject to a number of uncertainties that may affect future results. Actual business results may differ substantially from the forecasts herein due to various factors. For matters pertaining to business forecasts, please refer to "(3) Analysis of Forward-looking Statements, Including Consolidated Business Forecasts" on page 3 of the Supplementary Information.

(How to obtain the materials for the briefing on quarterly financial results)

We have scheduled a teleconference for securities analysts and institutional investors on Friday, July 30, 2021. The materials for the briefing will be posted on the corporate website.

This document is an English translation of the Japanese-language original.

All financial information has been prepared in accordance with generally accepted accounting principles in Japan.

Nippon Kayaku Co., Ltd.

Summary of Consolidated Financial Results [Japanese GAAP]

For the First Quarter of the Fiscal Year Ending March 31, 2022

Supplementary Information
Contents
1. Qualitative Information Concerning Results for the First Quarter	2
(1) Analysis of Operating Results	2
(2) Analysis of Financial Position	3
(3) Analysis of Forward-looking Statements, Including Consolidated Business Forecasts	3
2. Quarterly Consolidated Financial Statements and Notes to Quarterly Consolidated Financial	4
Statements
(1) Consolidated Balance Sheets	4
(2) Consolidated Statements of Income & Consolidated Statements of Comprehensive Income	6
(3) Notes to Quarterly Consolidated Financial Statements	8
(Notes Regarding Assumptions for the Going Concern)	8
(Notes in Case of Significant Change in Shareholders' Equity)	8
(Changes to Accounting Policies)	8
(Segment Information and Other Items)	9
(Significant Subsequent Events)	10

This document is an English translation of the Japanese-language original.

All financial information has been prepared in accordance with generally accepted accounting principles in Japan.

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Nippon Kayaku Co., Ltd.

Summary of Consolidated Financial Results [Japanese GAAP]

For the First Quarter of the Fiscal Year Ending March 31, 2022

1. Qualitative Information Concerning Results for the First Quarter

(1) Analysis of Operating Results

During the first quarter of this consolidated fiscal year (April 1 to June 30, 2021), the global economy saw economic activity begin to return to normal and signs of economic recovery, due in part to progress on vaccinations for the novel coronavirus (COVID-19). While the Japanese economy continues to experience a slump in consumer spending and other domestic demand relative to Europe and the U.S., business sentiment has improved due to growth in demand accompanying the rebound in overseas economies. However, a sense of uncertainty remains due to concerns about the resurgence of COVID-19 and deterioration in profitability from the steep rise in raw material prices. The semiconductor shortage has also impacted the automotive industry domestically and overseas.

Amid these conditions, the Nippon Kayaku Group worked to implement the key themes and resolve the mid- and long-term key issues outlined in "KAYAKU Next Stage," the mid-term business plan launched in the fiscal year ended March 31, 2020, while also making active use of flextime, telecommuting, and other systems to accommodate the partial restrictions on corporate activity. We took these steps to ensure the safety of employees working in the Company and at Group companies while also implementing a new lifestyle and promote efficient workstyles aimed at minimizing the impact on our business.

As a result, net sales for the first quarter of this consolidated fiscal year totaled 46,447 million yen, an increase of 9,622 million yen (26.1%) year-on-year. Sales in the functional chemicals, the pharmaceuticals, the safety systems, and other businesses outperformed the first quarter of the previous fiscal year in all segments.

Operating income totaled 5,938 million yen, an increase of 3,164 million yen (114.1%) year-on-year. Ordinary income totaled 6,399 million yen, an increase of 3,414 million yen (114.4%) year-on-year.

Profit attributable to owners of parent was 5,295 million yen, an increase of 3,546 million yen (202.9%) year-on-year.

Regarding changes in accounting policies, the Company implemented the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, revised March 31, 2020) and other guidance from the beginning of the first quarter of this consolidated fiscal year. We have therefore used numbers based on calculation methods subject to different standards than in the same period of the previous fiscal year. See 2. Quarterly Consolidated Financial Statements and Notes to Quarterly Consolidated Financial Statements, (3) Notes to Quarterly Consolidated Financial Statements (Changes to Accounting Policies) for further details.

Performance by business segment is as described below.

[Functional Chemicals Business]

Sales stood at 20,089 million yen, an increase of 4,256 million yen (26.9%) year-on-year.

The functional materials business as a whole outperformed the first quarter of the previous fiscal year. The outperformance resulted from strong sales of epoxy resins used in semiconductor encapsulation, circuit boards, and LCD cleaners from increased demand for IT equipment due to teleworking, in addition to the proliferation of high-speed (5G) communications devices and IoT, and the increasingly sophisticated electronic equipment in vehicles.

The color materials business as a whole outperformed the first quarter of the previous fiscal year. This outperformance was due to a rebound in demand for colorants for inkjet printers in industrial applications and developer for thermal paper, in addition to strong sales of colorants for inkjet printers for consumer use.

The catalyst business outperformed the first quarter of the previous fiscal year, both in Japan and exports overseas.

In the Polatechno business, a rebound in demand for polarizing films for LCD projectors and dye-type polarizing films, in addition to strong sales of components for X-ray analysis systems resulted in outperformance of the Polatechno business as a whole, compared with the first quarter of the previous fiscal year.

Segment profit totaled 3,449 million yen, an increase of 1,945 million yen (129.3%) year-on-year. This increase resulted from growth in net sales in each business.

[Pharmaceuticals Business]

Sales stood at 12,773 million yen, an increase of 82 million yen (0.6%) year-on-year.

Pharmaceuticals in Japan underperformed the first quarter of the previous fiscal year due to the impact from drug price revisions, despite market penetration of Portrazza®, a biomedicine; the switch to antibody biosimilars, TRASTUZUMAB BS and INFLIXIMAB BS; and growth in sales of a cancer-related generic, APREPITANT capsule.

Exports and sales of active pharmaceutical ingredients for the Japanese domestic market underperformed while sales of contract production and diagnostic drugs outperformed the same period of the previous fiscal year.

Segment profit totaled 1,925 million yen, a decrease of 225 million yen (10.5%) year-on-year. This resulted from the impact of drug price revisions, in addition to increased expenses related to sales activities adjusted to the new life style and progress on R&D activities.

This document is an English translation of the Japanese-language original.

All financial information has been prepared in accordance with generally accepted accounting principles in Japan.

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