Nitto Denko : Quarterly Financial Summary

Date: August 6, 2021

Summary of Consolidated Financial Statements

for the First Quarter Ended June 30, 2021 (IFRS Basis)

Listed company name:	Nitto Denko Corporation
Stock exchange listing:	First Section of Tokyo Stock Exchange
Code Number:	6988	URL	https://www.nitto.com/
Company Representative:	Hideo Takasaki, President
Contact Person:	Yasuhiro Iseyama, Executive Vice President, Director of Corporate Accounting & Finance
Division
Phone:	[phone]

Filing date of quarterly financial statements: Estimated starting date of dividend paying: Preparation of supplementary explanatory materials: Holding of quarterly earnings release conference:

July 28, 2021

-

Yes

Yes (for investment analysts and institutional investors)

									(All monetary values noted herein are rounded down to the nearest million yen)
1. Consolidated financial results of the first quarter ended June 30, 2021 (April 1, 2021 through June 30, 2021)
(1) Operating results										(% of change from same period in the previous year)
														Net income		Total
						Operating	Income before			attributable to
			Revenue		Net income		comprehensive
				income	income taxes	owners of the
									income
														parent company
			Millions		%	Millions		%	Millions	%	Millions	%	Millions	%		Millions		%
			of yen		of yen		of yen	of yen	of yen		of yen
First quarter ended		203,715		24.7	29,720			70.4	29,643	72.0	20,870	73.2	20,844		73.2		22,716		100.9
June 30, 2021
First quarter ended	163,310		-7.9	17,442			17.2	17,230	16.0	12,053	17.1	12,038		17.1	11,307		-
June 30, 2020
			Basic earnings per share	Diluted earnings per share
						Yen				Yen
First quarter ended					140.87					140.80
June 30, 2021
First quarter ended				80.03					79.97
June 30, 2020
(2) Financial position
												Equity attributable to owners	Ratio of equity attributable to
			Total assets					Total equity		owners of the parent company
								of the parent company
													to total assets
					Millions of yen			Millions of yen		Millions of yen						%
June 30, 2021					972,322					724,637			723,812						74.4
March 31, 2021				965,901					716,686			715,868						74.1
2. Dividends
										Dividends per share
			1Q		2Q		3Q		Year-end	Annual
					yen				yen		yen		yen			yen
March, 2021				-				100.00		-		100.00			200.00
March, 2022			-
March, 2022 (Forecast)								110.00		-		110.00			220.00

(Note) Revision of dividend forecast in the current quarter: No

3. Forecast for fiscal year ending March 31, 2022 (April 1, 2021 through March 31, 2022)

(% of change from same period in the previous year)

										Net income
	Revenue		Operating income	Income before	Net income	attributable to	Basic earnings
		income taxes	owners of the	per share
										parent company
	Millions		%	Millions	%	Millions	%	Millions	%	Millions	%	yen
	of yen		of yen	of yen	of yen	of yen
First half	400,000		11.8	60,000	41.6	60,000	43.5	42,000	37.4	42,000	37.5	283.85
Annual	785,000		3.1	105,000	11.9	105,000	12.5	75,000	6.7	75,000	6.8	506.87

(Note) Revision of consolidated forecast in the current quarter: No

• Others
• 1. Changes in significant subsidiaries during the first quarter ended June 30, 2021: No
  2. Changes in accounting policies applied and changes in accounting estimates
  3. 1. Changes in accounting policies required by IFRS: No
     2. Changes in accounting policies other than the above: No
     3. Changes in accounting estimates: No
  4. Number of shares outstanding (Common stock)
  5. 1. Number of shares outstanding at the end of the period (including treasury stock)

	June 30, 2021:	149,758,428	March 31, 2021: 149,758,428
2.	Number of treasury stock at the end of the period
	June 30, 2021:	1,779,781	March 31, 2021: 1,792,681
3.	Average number of outstanding shares during the period (cumulative from the beginning of the period)
	April-June 2021: 147,970,047	April-June 2020: 150,422,040

• These quarterly financial results are not subject to quarterly review procedures by Certified Public Accountants or audit firm.
• Explanations for adequate utilization of the forecast and other special matters

The forward-looking statements shown in this report, including the forecast, are prepared based on information available to the Company and on certain assumptions deemed reasonable as of the issuing date of the report. Consequently, the statements herein do not constitute promises regarding actual results by the Company. Actual results may differ materially from forecasted figures due to various unknown factors. For conditions regarding this forecast and precaution for use, please refer to "1. Qualitative Information Regarding Quarterly Settlement of Accounts (3) Explanation of forecasts and other projections" on page 3 of the Attachment to this summary of consolidated financial results.

(Attached Documents)
Index
1. Qualitative Information Regarding Quarterly Settlement of Accounts...................................................................................	2
(1)	Explanation of operating results........................................................................................................................................	2
(2)	Explanation of financial position.......................................................................................................................................	3
(3)	Explanation of forecasts and other projections..................................................................................................................	3
2. Quarterly Consolidated Financial Statements and Key Notes................................................................................................	4
(1)	Quarterly consolidated statements of financial position....................................................................................................	4
(2)	Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income............	6
(3)	Quarterly consolidated statements of changes in equity...................................................................................................	8
(4)	Quarterly consolidated statements of cash flows..............................................................................................................	9
(5)	Notes on quarterly consolidated financial statements.......................................................................................................	10
	(Notes on going concern assumption).........................................................................................................................	10
	(Segment information).................................................................................................................................................	10
	(Significant subsequent events)...................................................................................................................................	11

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1. Qualitative Information Regarding Quarterly Settlement of Accounts

1. Explanation of operating results

During the first quarter of the fiscal year ending March 31, 2022 (April 1, 2021 through June 30, 2021), due to the distribution of COVID-19 vaccines and the adoption of economic support measures, global economy progressed toward recovery, although there are differences in its strength among countries.

In the key markets of Nitto Group (the "Group") under this economic environment, demands of optical films for laptop and tablet device continuously remained strong, and materials for smartphone saw increased demands of optical films for OLED, assembling materials, and high-precision circuits. Supported by increasing demand of semiconductor, demands for materials used in its manufacturing process also remained strong. In businesses related to nucleic acid drug, acceleration of COVID-19 vaccine development has increased the demands of the Group's oligonucleotide contract manufacturing and its related materials. In addition, in development of oligonucleotide therapeutics, the Group achieved predefined milestone based on license agreement.

In response to COVID-19, the Group is working to continue supplying to customers while prioritizing everyone's health and safety and preventing the spread of infection. As a part of such efforts, the Group utilized information and communication technology and actively promoted new work style such as telework and web conferencing.

As a result of the above, revenue increased by 24.7% from the same period of the previous year (changes hereafter are given in comparison with the same period of the previous year) to 203,715 million yen. Operating income increased by 70.4% to 29,720 million yen, income before income taxes increased by 72.0% to 29,643 million yen, net income increased by 73.2% to 20,870 million yen, and net income attributable to owners of the parent company increased by 73.2% to 20,844 million yen.

Summary of results by segment

• Industrial Tape

For Functional Base Products, demand increased compared to the same period of the previous year. With the evolution of displays, the production of high-end smartphone increased, and thus, demands for assembly parts increased. From the background of expanding telework, demands expanded for ceramic condenser and semiconductor used for electronic devices such as tablet device and server, and thus demands for related materials used in their manufacturing process also increased. In addition, automobile materials, general industry materials, and protective materials for metal plates recovered from the impact of COVID-19 from the same period of the previous fiscal year, and demands for these materials increased.

As a result of the above, revenue increased by 41.0% to 82,542 million yen and operating income increased by 549.4% to 10,717 million yen.

• Optronics

In Information Fine Materials, demand increased compared to the same period of the previous year. The demands of optical films for laptop and tablet device continuously remained strong from the background of expanding telework. As for materials used in smartphones, adoption of optical films for OLED expanded. Revenue from materials for TV decreased in comparison to the same period of the previous year which recorded a royalty income from the licensing of technologies.

In Flexible Printed Circuits, demand increased compared to the same period of the previous year. Production of hard disk drive (HDD) for high-capacity HDD used in data center, with its steady demand, increased in comparison to the same period of the previous year which was impacted by COVID-19. In addition, sales of high-precision circuits for smartphones grew due to the expansion of models adopted.

As a result of the above, revenue increased by 11.0% to 106,727 million yen and operating income decreased by 2.3% to 17,315 million yen.

• Life Science

In Life Science, demand increased compared to the same period of the previous year. Materials for COVID-19 vaccine clinical trials in oligonucleotide contract manufacturing business, and the expanding demand of materials for oligonucleotide synthesizing (NittoPhase), contributed to the operating results. Demand for medical adhesive tapes recovered moderately from the impact of COVID-19, although that for transdermal therapeutic patches decreased due to the declined outpatient visits.

In development of oligonucleotide therapeutics, the Group achieved predefined milestone based on the exclusive license agreement of ND-L02-s0201(BMS-986263) for advanced liver fibrosis. In addition, the Group continues working on the clinical trials of idiopathic pulmonary fibrosis and intractable cancer drugs.

As a result of the above, revenue increased by 69.0% to 11,901 million yen and operating income amounted to 3,113 million yen. (operating loss of 518 million yen was reported in the same period of the previous year)

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• Others

Membranes (polymer separation membrane business) saw increased demand compared to the same period of the previous year. Demands recovered mainly in various industrial applications and energy field. Please note that this segment includes new business that has not generated sufficient revenue yet.

As a result of the above, revenue increased by 30.5% to 7,037 million yen and operating loss amounted to 969 million yen. (operating loss of 1,021 million yen was reported in the same period of the previous year)

(Reference) Segment Information

(Yen in Millions)

				First quarter ended June 30, 2020		First quarter ended June 30, 2021
				(April 1, 2020		(April 1, 2021
				through June 30, 2020)		through June 30, 2021)
				Revenue		Revenue		Y-o-Y (%)
Industrial Tape		Revenue		58,533		82,542		141.0
	Operating income		1,650		10,717		649.4
		Information Fine Materials	85,782	89,163	103.9
Optronics		Flexible Printed Circuits		10,390		17,563		169.0
	Total		96,173		106,727		111.0
		Operating income		17,717		17,315		97.7
Life Science		Revenue		7,043		11,901		169.0
	Operating income		-518		3,113		-
Others		Revenue		5,392		7,037		130.5
	Operating income		-1,021		-969		-
Corporate/Elimination		Revenue		-3,832		-4,493		-
	Operating income		-385		-457		-
Total		Revenue		163,310		203,715		124.7
	Operating income	17,442	29,720	170.4

(Note) Previously, Industrial Tape was divided into Functional Base Products and Transportation. However, as a result of changes in the management structure that have been made during the fiscal year 2021 under review, Functional Base Products and Transportation have been integrated and described as Industrial Tape. Such changes have also been reflected in the figures for the first quarter ended June 30, 2020.

(2) Explanation of financial position

The Group's financial position at the end of the first quarter of the fiscal year ending March 31, 2022 was as follows. Compared with the end of the fiscal year ended March 31, 2021, total assets increased by 6,421 million yen to 972,322

million yen and total liabilities decreased by 1,529 million yen to 247,685 million yen. Total equity increased by 7,950 million yen to 724,637 million yen. As a result, the ratio of equity attributable to owners of the parent company to total assets changed from 74.1% at the end of the fiscal year ended March 31, 2021 to 74.4% at the end of the first quarter of the fiscal year ending March 31, 2022.

The main changes in assets were a decrease in cash and cash equivalents of 13,655 million yen, an increase in trade and other receivables of 2,763 million yen, an increase in inventories of 4,872 million yen, an increase in other current assets of 5,962 million yen, an increase in property, plant and equipment of 5,038 million yen, an increase in financial assets of 1,120 million yen. In terms of liabilities, trade and other payables increased by 1,409 million yen, income tax payables decreased by 3,043 million yen, other current financial liabilities increased by 1,263 million yen.

(3) Explanation of forecasts and other projections

The consolidated full-year forecasts for the year ending March 31, 2022 have not been changed from those announced on April 26, 2021. We will disclose the revisions immediately, if required due to changes in the business results.

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