Toyo Gosei : FY2023 2Q Business Results Presentation Material (from April 1, 2023 to September 30, 2023)

Business Results for the Second Quarter of

Fiscal Year Ending March 31, 2024

(April 1, 2023 - September 30, 2023)

November 20, 2023

1

Management Philosophy & Vision of the Medium-term Management Plan

Management Philosophy

Toyo Gosei is conducting business to support the advancement of civilization through projects based on human talent, creativity, science, and technologies. Then Toyo Gosei growing itself to increase its contribution.

The concept of Medium-term Management Plan

In the field of electronic materials, where demand is expected to grow further in the future, we will further refine the high-purity synthesis that we have cultivated over many years and our refining technology as well as strengthen a stable supply system that meets customer quality, then achieve growth in people, organizations, and businesses. As the result we contribute to the realization of a sustainable decarbonized society as the world's No.1.

Vision of the Medium-term Management Plan

We will create the future by taking each customer issue and technical issue seriously, solving them from an original perspective, then achieving both ultra-high quality as the world's No. 1 DANTOTSU (outstanding)and productivity

improvement.

2

１． Business Results for the H1 FY 2023

２． Projection for the FY2023

３． Future Outlook

3

Financial Results for the Q1 FY2023

• Sales were 15,055 million yen (YoY -14%) due to the impact of sluggish semiconductor demand and inventory adjustments.
• Operating profit was 1,297 million yen (YoY -55%) due to cost reduction efforts in response to declining demand from the beginning of the fiscal year.
• Compared to initial plans, sales were below target, but operating profit was almost achieved, ordinary profit +8%, and net profit +15%.
• Investments to increase production capacity will continue in preparation for medium and long- term market expansion in the next fiscal year and beyond.

	H1 FY2022	H1 FY2023	YoY	H1 FY2023	Comparison with Forecasts
(Million yen)	Results	Results	Change	%	Projections	Change	YoY
Net sales	17,553	15,055	(2,498)	(14%)	16,000	(944)	(6%)
Operating profit	2,852	1,297	(1,555)	(55%)	1,300	(2)	(0%)
Ordinary profit	3,278	1,354	(1,924)	(59%)	1,250	+104	+8%
Profit	2,247	917	(1,330)	(59%)	800	+117	+15%
EPS	¥283	¥115
Interim Dividends	¥20	¥20
FX Rate (USD)	￥132/$	￥140/$

4

Variance Analysis: Operating profit

• While cost reduction efforts in response to lower sales, the planned 1 billion yen increase in expenses for the first half was limited to approximately 0.4 billion yen as timing adjustments and other arrangement to secure operating income of 1.29 billion yen at the level of the earnings forecast.

(Billion yen)

2.85 +0.11

FX

Operating

profit

(0.20)

Inventory Impact		H1 Plan
(operation and	(1.06)	¥1 billion
valuation)	¥0.59 billion
		Reduction
	Decrease in Sales	(0.41)
		Increase in production

costs such as fuel,

electricity, and

*Investments to increase production personnel capacity are progressing according

to the mid-term plan.

(¥1.56) billion

1.29

Operating

profit

2023.3月期 Q2

2024.3月期 Q2

5

Net sales Composition Ratio

• Net sales of semiconductor and electronic materials-related products accounted for 86% of total sales.

Aroma Logistics

Chemicals

Chemicals Segment		Photosensitive Materials
	62%
38%
（ Including electronic
materials related 24%）	H1 FY2023	IC/FPD/
High-purity	Net sales:	Other electronic application
¥15,055 million	(Photosensitive materials, Polymer)
solvents

6

Semiconductor Market Trend

• WSTS expects the growth rate in 2023 to be -10.3%YoY.
• April-Septemberaverage sales were -14.5%YoY, while semiconductor sales bottomed out in February and are now recovering moderately.

(M$)

60,000

50,000

40,000

30,000

20,000

10,000

0

Semiconductor Market Trend

H1 FY2022

H1 FY2023

YoY

-14.5%

April

May

June

July August

September

October November December January

February March April

May June July August

September

October

November December January

February

March

April May

June

July

August

CY2021

CY2022

CY2023

recovering moderately

Source: WSTS

7

Electronics manufacturing supply chain from our company to the consumer

Photosensitive	Photoresists	Semiconductors	Automobiles
materials &		smartphones
Polymer
			PCs

TOYO GOSEI	Photoresist	Semiconductor /	Finished Product Retailers	Consumers
Manufacturers	Display	Manufacturers
	Manufacturers

excess inventory

OLED/LCD, TVs

High-purity solvent

IoT

VR devices

8

Quarterly Sales, Operating profit & Sales Growth Rate Trend

• Sluggish demand for semiconductors and inventory adjustments in the supply chain will last longer than expected
• Sales had been declining since peaking in Q4 of the fiscal year ending March 2022, but are expected to bottom out in Q2.

Quarterly Sales, Operating profit & Sales Growth Rate

											Sales Growth Rate
								11.1%	12.4%		(YoY)
(Million yen)											(Million yen)
									0.4%
15,000												-10.5%2,000
Net sales									-9.3%	-17.6%
	Operating profit
12,000											1,600
9,000													7,444	1,200
6,000													463	800
3,000														400
0														0
Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2
	FY2020			FY2021			FY2022		FY2023

Decrease in net sales narrowed ➡Bottom out

9

Photosensitive Materials Segment

Net sales & Operating profit

(Million yen)																				Net sales							(Million yen)
12,000									10,922	10,481									Operating profit				2,400	Net sales: ¥9,298 million
												10,373
				9,652
																													9,298
9,000																																											1,800	YoY: (¥1,183) million, (11％)
													1,905
				1,677
				1,620																																	•	Sales of materials for semiconductors decreased due to
6,000																								1,400															1,200
																																					797						sluggish demand and inventory adjustments in the
3,000																																													600		supply chain.
																																														•	In materials for displays, large LCD panel production
0																																													0		remained strong, especially in China.
					H1			H2			H1											H2				H1
									FY2021						FY2022		FY2023
(Million yen)																						Net sales							(Million yen)	Operating profit: ¥797 million
																					Operating profit
6,000		5,511												5,442												1,500
									4,970			4,930								4,832			4,466				YoY: (¥1,108) million, (58％)
		998																																		•	Profit decreased due to decreased sales of materials for
4,000									907								820																							1,000
																								574												advanced semiconductors.
																																											•	Continued to increase production capacity
2,000																																													500
													580																						222				investment as planned in preparation for demand
																																										expanding period.
0																																													0
			Q1	Q2	Q3	Q4								Q1				Q2					10
											FY2022															FY2023