Message from the President

I would like to thank our shareholders and investors for your continued support.

Nippon Shokubai Group established a Group Mission of “TechnoAmenity: Providing prosperity and comfort to people and society, with our unique technology”, and aim to contribute to the realization of a sustainable society where people can live with peace of mind.
In pursuit of the goals for 2030 set forth in our long-term vision, we will steadily implement the three reforms of “Business transformation,” “Strategic transformation for environmental initiatives,” and “Organizational transformation”, and will lead to sustainable growth in the future.

＜Result in FY2023＞
In FY2023, the supply-demand balance worsened for many chemical products due to sluggish demand and other factors, resulting in a decrease in sales volume and a decline in selling prices, which led to a year-on-year revenue decline.
Although widening spreads and other factors contributed to push up profits in the Solutions business, narrowing spreads due to falling overseas market prices and the impact of inventory valuation differences in the Materials business resulted in an overall decrease a year-on-year operating profits.

＜Outlook for FY2024＞
In FY2024, the effects of sluggish demand and the economic slowdown in China are expected to continue for some time, but a recovery in volume is projected for superabsorbent polymers (SAP), including growth in demand in emerging countries. Demand is also expected to bottom out for electrical materials-related products, with a gradual upturn in the second half of the year.
In the Materials business, sales and operating profit are predicted to decline due to narrowing spreads and other factors, despite a recovery in sales volumes, while in the Solutions business, sales and operating profit are expected to rise due to higher sales volumes and improved spreads as a result of a recovery in demand.

＜Review of management and financial strategies＞
Although FY2024 is the final year of the current medium-term management plan, the targeted operating profit and other financial targets are expected to be missed due to the deteriorating business environment and other factors. Under these circumstances, we have reviewed the management and financial strategies from this fiscal year and accelerate efforts to achieve our long-term vision for 2030.
The management strategy is to concentrate resources on Energy, Electronics, and Life science businesses, where future growth is expected. In addition, ROIC (return on invested capital) will be placed to manage the business and improve profitability.
In the financial strategy, we have set a new target to reduce the shareholder equity ratio to around 60% by the end of FY2027 in order to improve asset and capital efficiency.
To curb the increase in shareholders equity and to further expand and stabilize shareholder returns, for the four-year period from FY2024 to 2027, dividends will be paid out in an amount equal to either a dividend payout ratio of 100% or a DOE (dividend on equity ratio) of 2%, whichever is greater.
In addition, we plan to reduce cross-shareholdings by 50% over four years and use the proceeds to share buyback of approximately 20 billion yen in the same period.

Nippon Shokubai Group will actively invest resources in businesses with growth potential and will continue to transform our portfolio into more profitable businesses, while improving asset and capital efficiency to increase corporate value.
We look forward to the continued support of our shareholders and investors.

June 2024