Toyo Seikan : Summary of Q&A Session of FY2022 Full-Year Financial Results Briefing

Toyo Seikan Group Holdings, Ltd.

Summary of Q&A Session of FY2022 Full-Year Financial Results Briefing

Date:	Monday, May 22, 2023
Venue:	Conference room of the head office of Toyo Seikan Group Holdings
Speaker:	Ichio Otsuka, President and Representative Director
	Masakazu Soejima, Director and Executive Officer

Passing on raw material and energy cost increase to customers

Q1. What is the progress in your efforts to pass on cost increases?

A1. Of our aluminum can sales, 85% to 90% is covered by sales contracts that determine our product prices by linking them to LME prices. For PET bottle preforms (semi-finished PET bottles), we have managed the price fluctuation risk by procuring raw materials from customers. For plastic products other than PET bottles, we are switching to contracts that allow us to link our product prices to the market prices of domestically sourced naphtha.

Q2. Please explain the energy cost pass-through in more detail.

A2. We expect a significant rise in energy expenses, particularly electricity expenses, for fiscal 2023 (ending March 2024). Although linking product prices to electricity rates is technically difficult, we are continuing negotiations with customers over price increases to reflect higher energy costs in a patient manner.

Future outlook

Q3. What are the risk factors for volatility in earnings for fiscal 2023?

A3. Because of heavy reliance on imported raw materials, our business is particularly prone to currency fluctuations. There is concern over a weaker yen against the US dollar due to the difference in domestic and foreign interest rates.

Q4. What is the environment surrounding the packaging business in Japan?

A4. Japan's aging and shrinking population will reduce the demand for packaging containers, while environmental concerns will create shifts in packaging materials. Assuming these conditions, we see that the current production capacity of the Group could lead to an oversupply of certain products. We are looking for appropriate levels of production capacity while closely watching shifts in packaging materials.

Q5. What is the outlook for magnetic disk aluminum substrates?

A5. The market recovery will be slower than expected, and, at this point, we expect that the business for these products will remain sluggish during fiscal 2023.

Capital Efficiency Initiative 2027

Q6. Please explain your approach to optimizing your business portfolio in more detail.

A6. We will expand operations for automotive rechargeable battery materials of the steel plate related business and for products of the functional materials related business by capitalizing on our technologies in these fields. We will also seek M&A opportunities to expand our filling and

packaging operations, particularly in South East Asia. Our domestic packaging business will continue its efforts to pass on higher raw material and energy costs, and, by the end of fiscal 2023, we will identify unprofitable operations in the segment.

Q7. Please explain your approach to optimize your human resource portfolio in more detail.

A7. We need to restructure our human portfolio to optimize our business portfolio. We will work to promote the mobility of human resources across the Group.

Mid-Term Management Plan 2025

Q8. How will the new service Future Foods Labo (total service to help food and beverage businesses develop new recipes and commercialize them in small quantity) contribute to the Group?

A8. We expect that this service, which utilizes our long-term experience and knowledge in food preservation, will create a new business model in the future. Using our packaging containers in solutions provided by Future Foods Labo will also help our packaging business achieve better business performance.

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