Nippon Paint : FY2021 4Q Financial Results Presentation Material 1.5MB

February 14, 2022

FY2021 4Q

Financial Results

Presentation Material

Contents

1.	Summary/Topics	・・・ P.3
2.	FY2021 4Q Highlights	・・・ P.14
3.	FY2021 4Q Results (by Region)	・・・ P.17
4.	FY2022 Forecast	・・・ P.27

5. FY2021 Results	・・・ P.35
-Highlights	・・・ P.35
-Results (by Region)	・・・ P.39

(Appendix)Reference

Disclosure policy for this document:

• Both reported base ('Tanshin') and adjusted base ('Non-GAAP') financials are disclosed
• Non-GAAPadjusts for effects of new consolidation through M&A and one-time gains/losses in order to clarify continuing operating trends year on year
• Qualitative comments in this presentation primarily refers to Non-GAAP unless stated otherwise
• Non-GAAPincorporates adjustments mainly for the following items: FX, subsidy, M&A related expenses, new acquisitions, etc.
• Please see the appendix for more information
• Quarterly earnings trends of DuluxGroup, Betek Boya, and PT Nipsea (Indonesia) are provided in Appendix Reference

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1-1．Summary (1): FY2021 4Q Operating Results

FY2021 4Q

YoY Growth Rate

(Tanshin)

Revenue: +21.3%

Operating profit: -8.6%

(Non-GAAP)

Revenue: +8.1%

Operating profit: -23.6%

・Revenue※ increased on a Tanshin basis due to strong growth of decorative business, new consolidation of the Indonesia business, and exchange rate changes. Operating profit※ declined due to higher prices of raw materials and recording a provision at NIPSEA China (c. ¥0.6 bn)

(The analysis below is based on Non-GAAP figures.)

・NIPSEA China achieved decorative revenue growth due to continuing market strength, despite the impact of logistics disruptions and lockdowns. DIY revenue increased by 22% and Project revenue by 16% driven by higher volumes due to marketing efforts and progress in acceptance of selling price increases

・Decorative business other than in China also delivered robust performance and achieved revenue growth in all regions

・Lower automotive revenue in Japan, China, and the Americas because of lower automobile production worldwide due to semiconductor chip shortage and disruptions in parts supply due to COVID impact

・Higher prices of raw materials continued to impact all regions as in the 3Q. Selling price increases, procurement of alternative raw materials, a review of SG&A expenses and other actions did not fully offset the high cost of raw materials, and we will continue to take actions to offset the raw material inflation

※ The earnings for FY2020 and FY2021 have been adjusted retrospectively following the reclassification of the European automotive coatings business	3
and the India business after they were transferred to the Wuthelam Group (announced on August 10, 2021) and a change in accounting policy

regarding cloud computing agreements beginning with 4Q FY2021. The same adjustments are made throughout this presentation.

1-1．Summary (2): FY2021 Operating Results

FY2021

YoY Growth Rate

(Tanshin)

Revenue: +29.2%

Operating profit: +0.0%

(Non-GAAP)

Revenue: +16.6%

Operating profit: -9.9%

・Revenue reached record high on Tanshin basis due to strong growth of decorative business, new consolidation of the Indonesia business, and exchange rate changes. Operating profit was flat from a year earlier on higher revenue and fixed cost savings, despite the impact of higher prices of raw materials, a provision at NIPSEA China, and one-off expenses such as stamp tax and PPA step up depreciation related to the full consolidation of Asian JVs and acquisition of the Indonesia business

・Revenue increased and operating profit decreased on Non-GAAP basis due to exclusion of the effects of new consolidation of the Indonesia business and one-off factors such as subsidies and M&A expenses, etc.

＜Primary reasons＞

• Higher revenue at NIPSEA China, driven by robust market growth and selling price increases
• Higher revenue at Betek Boya due to selling price increases and successful marketing activities
• Higher revenue at DuluxGroup, driven by increased prices (in response to higher raw material costs) and recovery in Trade DIFM※ markets(following COVID restrictions in 2020)
• Higher revenue in Japan due to recovery from COVID impact and

aggressive marketing proposals

• Consistent increases in raw material prices impacted all regions

・Net profit increased by 53.8% to ¥67.6 bn and EPS by 7.4% to ¥29.41 (Tanshin basis) due to the effects of the full consolidation of the Asian JVs and new consolidation

※DIFM (Do It For Me)

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1-1．Summary (3)： FY2022 Forecast※1

FY2022

Consolidated

Earnings Forecast

$

(Tanshin basis)

Revenue: ¥1,200 bn

Operating profit: ¥115 bn

Profit: ¥81 bn

FY2022 EPS Forecast

¥34.49

・Both FY2022 revenue and operating profit are expected to reach record highs due to the strong decorative business performance and recovery of the automotive market worldwide, although raw material prices are expected to continue to increase at least through 1H. We expect c. 20% revenue growth and c. 30% operating profit growth in FY2022, taking into account contribution from the new consolidation of Cromology following its acquisition in January 2022

(Revenue)

・Consolidated revenue from existing businesses is expected to increase by more than 10% from previous year

・Contribution expected from continuing growth of decorative business in all regions including NIPSEA and DuluxGroup, combined with recovery from the pandemic and rebound in the automotive market

・Expect Cromology to achieve around 0-5% growth in the first year following acquisition due mainly to selling price increases

(Expenses)

・Expect operating profit margin in 1Q 2022 to be flat from 4Q 2021 based on our assumption that raw material price inflation will continue at least through 1H of 2022. However, expect the margin to start improving slowly in 2Q by continuing to raise prices and reviewing SG&A

・Expect higher revenue in Japan due to market recovery and aggressive marketing proposals but lower segment operating profit margin due to higher raw material prices and reallocation of HD expenses (See page 8). Accelerate measures aimed to improve margins such as selling price increases, cost savings, and productivity improvement

・EPS forecast is ¥34.49 (+¥5.08 from FY2021)

・Annual dividend forecast is ¥11 per share (+¥2※2 per share from FY2021)

※1 FY2022 forecasts do not include the impact of acquisition not yet closed.	5
※2 Excluding dividend of ¥1 per share to commemorate the 140th anniversary of founding