Nitto Denko : Quarterly Financial Summary

Date: July 26, 2022

Summary of Consolidated Financial Statements

for the First Quarter Ended June 30, 2022 (IFRS Basis)

Listed company name:	Nitto Denko Corporation
Stock exchange listing:	Tokyo Stock Exchange, Prime Market
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, 2022

-

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, 2022 (April 1, 2022 through June 30, 2022)
(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		216,368		6.2	38,520			29.6	38,674	30.5	26,458	26.8	26,439		26.8	61,159		169.2
June 30, 2022
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
		Basic earnings per share		Diluted earnings per share
					Yen				Yen
First quarter ended					178.63					178.55
June 30, 2022
First quarter ended					140.87					140.80
June 30, 2021
(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, 2022					1,142,860					862,794			861,888					75.4
March 31, 2022					1,094,469					822,105			821,192					75.0
2. Dividends
									Dividends per share
		1Q		2Q		3Q		Year-end	Annual
				Yen				Yen		Yen		Yen			Yen
March, 2022				-				110.00		-		110.00			220.00
March, 2023				-
March, 2023 (Forecast)								120.00		-		120.00			240.00

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

3. Forecast for fiscal year ending March 31, 2023 (April 1, 2022 through March 31, 2023)

(% 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	490,000		15.0	95,000	30.5	95,000	30.8	68,000	30.3	68,000	30.4	459.42
Annual	955,000		11.9	160,000	21.0	160,000	20.9	115,000	18.3	115,000	18.4	776.96

(Note) Revision of consolidated forecast in the current quarter: Yes

• Others
• 1. Changes in significant subsidiaries during the first quarter ended June 30, 2022: 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, 2022:	149,758,428	March 31, 2022: 149,758,428
2.	Number of treasury stock at the end of the period
	June 30, 2022:	1,744,811	March 31, 2022: 1,744,778
3.	Average number of outstanding shares during the period (cumulative from the beginning of the period)
	April-June 2022: 148,013,617	April-June 2021: 147,970,047

• 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 6 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.......................................................................................................................................	5
(3)	Explanation of forecasts and other projections..................................................................................................................	6
2. Quarterly Consolidated Financial Statements and Key Notes................................................................................................	7
(1)	Quarterly consolidated statements of financial position....................................................................................................	7
(2)	Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income............	9
(3)	Quarterly consolidated statements of changes in equity...................................................................................................	11
(4)	Quarterly consolidated statements of cash flows..............................................................................................................	12
(5)	Notes on quarterly consolidated financial statements.......................................................................................................	13
	(Notes on going concern assumption).........................................................................................................................	13
	(Segment information).................................................................................................................................................	13
	(Business combination)...............................................................................................................................................	15
	(Significant subsequent events)...................................................................................................................................	17

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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, 2023 (April 1, 2022 through June 30, 2022), the economic environment was characterized by further price rising in energy, primary commodities, triggered by Russia's military invasion of Ukraine, and the inflation was accelerating worldwide. The U.S., which preceded the response to inflation, is experiencing a pace of monetary tightening, and as a result, the interest rate differential between Japan and the U.S. widened and the yen depreciated more than expected. In China, economic activities were suspended due to strict epidemic control measures, including lockdowns, to control the spread of COVID-19. In addition, the pace of growth in the global economy is slowing rapidly, and uncertainty is increasing.

In the electronics market under this economic environment, sales of CIS (circuit integrated suspension) for data centers, and high-precision circuits for high-end smartphones grew. In the nucleic acid drug market, demand for immunologic adjuvants for vaccines increased in line with the expansion of COVID-19.

In response to COVID-19, Nitto Group (the "Group") is working to continue supplying to customers while prioritizing everyone's health and safety and preventing the spread of infection. The Group will continue to make our utmost efforts to prevent any disruption in the provision of products and services to our customers.

The yen's exchange rate against the U.S. dollar for the first quarter ended June 30, 2022 was 126.0 yen to the dollar, a 15.7% depreciation of the yen compared with the same period of the previous year, and the effect of the weaker yen was to increase operating income by 14.5 billion yen.

As a result of the above, revenue increased by 6.2% from the same period of the previous year (changes hereafter are given in comparison with the same period of the previous year) to 216,368 million yen. Operating income increased by 29.6% to 38,520 million yen, income before income taxes increased by 30.5% to 38,674 million yen, net income increased by 26.8% to 26,458 million yen, and net income attributable to owners of the parent company increased by 26.8% to 26,439 million yen.

Summary of results by segment

• Industrial Tape

For Functional Base Products, sales increased compared to the same period of the previous year. Demand for bonding materials for assembly of high-end smartphones increased due to the movement of customers to secure parts and materials for the production of the current fiscal year's models. In addition, production of semiconductors used in PCs and data centers increased, and thus demands for process materials used to manufacture the products also increased. On the other hand, demand for automotive materials and general industrial materials declined due to a decrease in production of automobiles and consumer electronics in China. Also, the Group was affected by rising raw material prices and transportation costs due to rising crude oil prices.

As a result of the above, revenue increased by 1.3% to 83,626 million yen and operating income decreased by 21.7% to 8,394 million yen.

• Optronics

In Information Fine Materials, revenue did not reach the level of the same period of the previous year. Optical films for smartphones, laptops, and tablet devices were affected by lockdowns due to the spread of COVID-19, which restricted production at the Group's base in China. Meanwhile, the Group minimized the impact by continuing production using the "closed loop" method, which shuts off external contact, and by promoting alternative production at other sites.

In Flexible Printed Circuits, sales increased compared to the same period of the previous year. Demand for circuit materials of CIS increased with an increase in manufacturing of hard disk drives (HDDs) used in data centers with high capacities. The number of models adopting the high-precision circuits for high-end smartphones has expanded from the same period of the previous year, that contributed significantly to the business performance.

As a result of the above, revenue increased by 4.4% to 111,432 million yen and operating income increased by 48.2% to 25,669 million yen.

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• Human Life

In Life Science, sales increased from the same period of the previous year. With the worldwide vaccination of COVID-19, sales of immunologic adjuvants for COVID-19 vaccine grew in the oligonucleotide contract manufacturing business. Demand for polymer beads for nucleic acid synthesis (NittoPhaseTM) also increased in the growing market of nucleic acid drugs. In medical products, demand for surgical tapes and transdermal patches recovered from the impact of COVID-19. In development of nucleic acid drugs, the Group continues to engage in clinical trials of idiopathic pulmonary fibrosis and intractable cancer drugs.

Membranes saw increased demand compared to the same period of the previous year. Demand for high-polymer separation membrane increased in various industrial applications.

As a result of the above, revenue increased by 36.2% to 25,786 million yen and operating income increased by 41.5% to 4,961 million yen.

• Others

Please note that this segment includes new products that have not generated sufficient revenue yet. Major business themes are the development of optical plastic fiber and disposable holter ECG device, EG HolterTM, aiming for early mass production.

As a result of the above, revenue amounted to 0 million yen (no revenue was reported in the same period of the previous year), and operating loss amounted to 1,382 million yen. (operating loss of 1,361 million yen was reported in the same period of the previous year)

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