2021 First Quarter Financial Results: Presentation Material

Consolidated Financial Results

First Quarter, 2021

(May 13, 2021)

SHOWA DENKO K.K.

Motohiro Takeuchi, CFO

Representative Director & Managing Corporate Officer

Overview of CQ1, 2021 Financial Results

Net Sales, Operating Income

Net Sales：¥339.7 bn (vs. CQ4, 2020 up ¥2.0 bn, vs. CQ1, 2020 up ¥167.9 bn)

Sales of petrochemicals increased due to a rise in market prices, and sales figures of Showa Denko Materials increased due to strong demand for semiconductors.

Operating Income：¥20.8 bn (vs. CQ4, 2020 up ¥24.9 bn, vs. CQ1, 2020 up ¥18.3 bn)

Showa Denko Materials contributed to an increase in profit due to good performance of its semiconductor-related business.

Graphite electrode business went into the black due to progress in cost reduction measures including elimination of expensive raw materials.

Influence of COVID-19 shrunk to ¥2.0 bn (Showa Denko Materials)

Costs of the integration with Showa Denko Materials	(Unit: Billions of Yen)
	Item		CQ1, 2021		2021 forecast
	Post-merger integration (PMI)	(Operating expenses)	-0.8		-8.0
	expenses*
	Interest on borrowing related to	(Non-operating expenses)	-2.1		-8.5
	share acquisition, etc.
	Preferred stock dividends	(Net income attributable to	-3.2		-12.9
	non-controlling interests)
		Total	-6.0		-29.4

(2021 forecast was announced on Feb. 17, 2021)
*PMI expenses: expenses related to merger processes such as management and operation to maximize	the effect of integration after merger.	2
(Please refer to page 20 for PPA Results and Amortization of Assets Pertaining to Showa Denko Materials	Co., Ltd.)

Consolidated Companies, Selected Data

Consolidated Companies

Consolidated subsidiaries: 151 (±0 from Dec. 31, 2020)

Equity method applied: 14 (+1 from Dec. 31, 2020)

+1: Change in classification of an affiliate to be an equity-method affiliate

Selected Data			(Average)
			Jan.- Mar.	Oct.- Dec.	Jan.- Mar.
			2020	2020	2021
	Exchange rates
		(¥/US$)	108.9	104.5	105.9
		At March 31,2020	At December 31,2020	At March 31,2021
			108.8	103.5	110.7
		(¥/€)	120.1	124.5	127.7
	Domestic naphtha	44,800	31,300	38,800
	price (¥/KL)
	Aluminum
		LME (US$/T)	1,713	1,931	2,101
		Domestic market*	236	252	277
		(K¥/T)

(*Domestic market: data from Nikkei)

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Summary (CQ4 (Oct.-Dec.), 2020 vs. CQ1 (Jan.-Mar.), 2021)

			(Unit: Billions of Yen)
	CQ4, 2020	CQ1, 2021	Increase/
	decrease
Net sales	337.7	339.7	2.0
Operating income	-4.0	20.8	24.9
Non-operating income and	-3.2	4.3	7.4
expenses, net
Ordinary income	-7.2	25.1	32.3
Extraordinary profit/loss	-14.6	-11.7	2.9
Income before income taxes	-21.8	13.4	35.2
Income taxes	7.3	-4.2	-11.5
Net income	-14.5	9.2	23.7
Net income attributable to	-4.1	-4.0	0.1
non-controlling interests
Net income attributable to	-18.6	5.2	23.8
owners of the parent
EBITDA	28.2	50.0	21.8
(Operating income + Depreciation expense +
Amortization of goodwill, etc.）
EBITDA margin%	8.4%	14.7%	6.3p

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Operating Income Breakdown by Factor

(CQ4, 2020 vs. CQ1, 2021)

(Unit: Billions of Yen)

20.8

factors related to	devaluation	amortization of
naphtha
	of inventory	goodwill,etc.*
	in accordance
	with the
	"lower of cost
	or market"
	accounting
	method

*Oct.-Dec. 2020:Includes inventory step-up costs of 10.9 billion yen

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