ＪＳＲ（4185） – (Delayed)JSR 21Q4_Presentation Material for earnings announcement

Q4 2021Financial Results(April 2021 to March 2022)Repost: Management Policy*A briefing for the progress is planned on May 24, 2022 ＜Vision＞・Create value for all stakeholders through sustainable growth.・Strengthen the resilient business structure by responding to changes in the environment.＜Business Portfolio＞・Digital Solutions (DS, especially SEMI) and Life Sciences (LS) as the center of our business portfolio.＜Target＞・DS&LS: Exceed prior peak OP, ROE more than 10%, maximize ROIC (DS more than 25%, LS more than 12%)・Capital allocation:1st priority for future business growth, 50% shareholder return as a guideline.in FY24.＜Strategy＞■Digital Solutions・SEMI: More than 8% of rev. CAGR (Double the growth of silicon wafer input by area). Scale and fields expansion including M&A.・Display materials: Establish business structure as cash cow through selection and concentration. Aim for gradual profit growth.・Edge Computing: Accelerate sales growth.■Life Sciences・Revenue: more than 100 billion yen, ROS: 20%・Sales growth by business expansion through customer pipelines, especially in CDMO and CRO. Strengthen the strategic link among Life Sciences groups for sustainable growth.■Petrochemical (Elastomers, Plastics）・Promote structural reforms of Elastomers business.**Please see the material of Management Policy announced on March 26, 2021 for the detail.1Summaryexpected to drive the growth. ・Both sales and core OP of FY21 were increased significantly YoY. Toward FY22, the Semiconductor materials and Life Sciences business are ・Compared to the projection, sales of FY21 were almost in line, but core OP of FY21 underperformed. ・3.8 billion yen was accounted for impairment loss of the cleans facility in the US in FY21Q4. ・ Sales of SEMI achieved + 16% growth YoY. The growth of EUV resist including Inpria, 100% subsidiary, increased by 90% YoY. ・Due to a delay of a start-up of the cleans facility in the US, impairment loss was accounted in FY21Q4. Stable operations are continuing, and it’s planned to make a quick recovery by increasing operations.・ Although Display materials was affected by operation adjustments of panel manufacture in FY21H2, the restructuring of the business wascompleted, which leads to stable growth.・With continuous strong demand for SEMI, +17% sales growth is expected for FY22. There is no change in the growth story as stated in the management policy. ・Achieved strong sales growth of + 31% YoY. Each sub-segment’s sales expanded due to competitive products and services as well as strong market demand.・Due to a decline in CDMO’s sales and OP in FY21Q4, OP target for FY21 was not achieved. Start up costs increased for the readiness of operations at new facilities.・Strong sales growth is continuously expected for overall LS business in FY22. In particular, new CDMO manufacturing operations in the US and Europe will start contributing and improving FY22’s profit margin.・The separation of the Elastomer business and transfer of stock to ENEOS Corporation were completed in April, 2022. ・We will continue to promote measures to achieve the vision of our management policy.・We announced share buybacks of up to 30 billion yen today, as a part of our shareholder return policy.2Summary 1 – FY21 Result vs Projection(100Mil JPY)*Core OP is calculated by excluding profit or loss caused by non-recurring factors from OP.*Discontinuing business is not shown on the table, except for Profit, attributable to owners of parent.・FY21 result didn’t achieve the projection announced in November, 2021.・Digital Solutions : Sales were mostly in line with the projection. OP didn’t achieve the projection due to impairment loss of SEMI’s cleans facility and profit declines of Display materials and Edge Computing. ・Life Sciences: Sales outperformed the projection driven by CRO and IVD. OP was under the projection due to CDMO’s lower utilization compared to the projection and costs increase including one-off start up costs of new facilities. ・Plastics : Sales and OP were under the projection. A recovery from a semiconductor shortage was slowed down in FY21H2 although auto industry’s operation recovery from COVID-19 was expected . *Please refer to Appendix for valuation gain from acquisition of SEMI’s Inpria and impact of valuation factors due to impairment loss on the cleans facility. 3FY21ActFY21 Pro(as of Nov.8)3,4103,4654335254385233733551,6501,645Semiconductor materials1,1031,090Display materials459460Edge computing8895Core Operating Profit39044572572032609069805365129120-42-45112110Digital SolutionsSalesLife SciencesSalesCore Operating ProfitConsolidatedSalesCore Operating ProfitOperating ProfitProfit, attributable to owners of parentExchange rate (USD/JPY)PlasticsSalesCore Operating ProfitOthers/AdjustmentSalesCore Operating ProfitSummary 2 – YoY, QoQ(100Mil JPY)*Discontinuing business is not shown on the table, except for Profit, attributable to owners of parent.YoY：Both sales and OP increased. Digital Solutions: Sales and OP increased mainly due to an increase in sales of SEMI. Life Sciences: Sales increased with overall strong growth across sub-segments. OP decreased due to profit decline related to a start-up of CDMO’s new facilities. Plastics: Sales and OP increased due to an increase in sales volume in response to a recovery in demand from COVID-19.QoQ：Both sales and OP decreased.Digital Solutions: No change on demands of SEMI. OP decreased due to factors including Inpria’s valuation gain in FY21Q3 and cleans facility’s impairment loss in FY21Q4. Life Sciences: Decline in CDMO’s sales and OP in FY21Q4 resulted in sales and OP reduction. Plastics: Sales and OP decreased due to accounting factors including inventory effect. 4FY20FY21YoY21Q321Q4QoQ3,1203,410+9%884844-4%379433+14%19210-95%342438+28%19217-91%-552373-17819-89%1,5141,650+9%427417-2%346390+13%16727-84%552725+31%196191-3%3532-10%19-7-791906+15%229199-13%4453+20%163-83%263129-51%3236+13%-46-42–10-13-Digital SolutionsSalesCore Operating ProfitLife SciencesSalesOthers/AdjustmentSalesPlasticsSalesConsolidatedSalesOperating ProfitProfit, attributable to owners of parentCore Operating ProfitCore Operating ProfitCore Operating ProfitCore Operating ProfitProjections for FY22(100Mil JPY)****Exchange rate: FY22 Pro’s exchange rate is same as FY21Q4 result. We’ll review it based on result if necessary.**Excluding IFRS16 lease asset depreciation.*Discontinuing business is not shown on the table except for Profit, attributable to owners of parent.Future Outlook■Digital Solutions- SEMIThe significant growth of EUV resist including Inpria is expected. Demand for semiconductor will continue and sales expansion of our advanced products with a broad product portfolio is expected. – Display materialsWe see that operation adjustments of the customer industry will continue for a while. But sales and OP are expected to be the same level as FY21 due to a completion of the Taiwan plant’s withdrawal and sales expansion of alignment films and passivation coats to China. – Edge ComputingA recovery of the smartphone market and gain of new customers are expected. ■Life SciencesExpected strong demands in CDMO, CRO, and BPM contributes to sales growth. And new CDMO facility in the US will ramp up commercial operation in FY22Q1.■PlasticsA recovery of automobile production is expected. We’ll drive a shift to high value-added products. An increase in our price was announced in March in response to costs increase of raw materials and logistics. ■Other adjustments FY22 includes some temporary costs related to a start-up of new EPR. Also, includes a portion of the impact of the decrease in sales and profit associated with the divestment of the Elastomers business. 5FY21ActFY22ProYoY3,4104,100+20%433575+33%438575+31%373460+23%1,6501,870+13%Semiconductor materials1,1031,295+17%Display materials459460+0%Edge computing88115+30%390430+10%7251,150+59%32140+342%9061,000+10%5365+22%12980-38%-42-60-112116+3%194235+21%419360-14%241255+6%Exchange rate (USD/JPY)DepreciationCAPEXRD expensesLife SciencesSalesCore Operating ProfitPlasticsSalesCore Operating ProfitOthers/AdjustmentSalesCore Operating ProfitDigital SolutionsSalesCore Operating ProfitConsolidatedSalesCore Operating ProfitOperating ProfitProfit, attributable toowners of parentSegment Data : Digital Solutions business(100Mil JPY)Core OP analysisYoYQoQSEMI increased (+)SEMI decreased (-)Inpria’s valuation gain 75 (+)Impairment loss of US cleans facility 38(-)Consolidation of Inpria 10(-) Others 80(-)(Costs increase in SEMI)(Costs increase in Display)(Costs increase in Edge Computing)Inpria’s valuation gain 75 (-)Impairment loss of US cleans facility 38(-)Consolidation of Inpria 7(-)Others 16(-)(Loss on disposal in Display)(Timing of expenses)6FY20FY21YoY21Q321Q4QoQSales1,5141,650+9%427417-2%Semiconductor materials9491,103+16%292282-3%Display materials474459-3%110113+3%Edge computing9288-4%2522-11%Core OP346390+13%16727-84%Core OP margin22.8%23.6%39.2%6.4%Exchange rate（USD/JPY）106112+6%114116+2%Appendix: Digital Solutions business – Sales growth rate7SEMIYoY ytdQoQEUVApprox. +90%Approx. -5%ArFApprox. +10%Slightly Under +5%MultilayerApprox. +15%Approx. -5%Other LithographyApprox. +35%Slightly increasedCMPApprox. +10%Approx. -10%CleanerSlightly over +15%Approx. -20%PackagingSlightly Under +10%Approx. +5%DisplayYoY ytdQoQAlignment FilmsSlightly Under +5%Approx. +10%Passivation CoatSlightly Under +15%Approx. -5%Color Pigmented ResistsApprox. -30%Slightly Under -30%EdgeYoY ytdQoQARTONApprox. -5%Approx. -5%Segment Data : Life Sciences business(100Mil JPY)Core OP analysis*BPM: Bioprocess Materials8FY20FY21YoY21Q321Q4QoQSales552725+31%196191-3%Core OP3532-10%19-7-Core OP margin6.4%4.4%9.7%-Exchange rate（USD/JPY）106112+6%114116+2%YoYSalesCore Operating ProfitTotal+31%-10%CDMOApprox. +25%Decrease in OPCROApprox. +45%Increase in OPBPMApprox. +55%Increase in OPIVDApprox. +25%Increase in OPQoQSalesCore Operating ProfitTotal-3%-CDMOApprox. -15%Decrease in OPCROFlatDecrease in OPBPMApprox. +10%Increase in OPIVDSlightly Under +20%Same level as Q3Segment Data : Plastics business(100Mil JPY)Core OP analysisYoYQoQSales volume increased (+)Trading spread shrunk (-)Inventory effect (VC) (+)FC decreased (+)Inventory effect (FC) (+)Inventory effect (FC) (-)Accounting effect(-)9FY20FY21YoY21Q321Q4QoQSales791906+15%229199-13%Core OP4453+20%163-83%Core OP margin5.6%5.9%7.0%1.4%Exchange rate（USD/JPY）106112+6%114116+2%Capital AllocationChanges from 21/3E to 22/3E(100Mil JPY)Changes of Net Cash from 21/3E to 22/3E・The Elastomers business is categorized as items held for sale. ・There was approx. 20 billion yen of cash income from the transfer of Kumho Polychem and sales of cross-shareholdings shares.・ Approx. 46.7 billion yen was paid for the acquisition of Inpria. ・Net Cash is approx. -72.3 billion yen as of 22/3E (Continued business). April, 2022 Assets and liabilities held for sale is separated from our company’s B/S with a closing of transferring the Elastomers business. We receivedproceeds from the transfer.Basic capital allocation policy1.Invest in future business growth, including M&A (mainly in SEMI and Life Sciences)2. Maintaining a strong financial position that can flexibly respond to business investments3. Shareholder return (50% as a guideline)Future capital allocations ・We announced share buybacks of up to 30 billion yen, as a part of our shareholder return policy.・We see no issues with execution of the basic policy of capital allocation as the stable finance position is maintained. *Including both continuing business and discontinued business1021/3E22/3E+/-Current assets3,2932,457-836Cash and cash equivalents854456-398Others2,4392,001-438Non-current assets3,4353,724+289Continuing business Total6,7286,181Non-current Assets held for sale1,913+1,913Total Assets6,7288,094+1,366Bonds and borrowings1,1931,179-14Others liabilities1,8281,611-216Continuing business Total3,0202,791Non-current liabilities held for sale1,156+1,156Total Liabilities3,0203,946+926Equity attributable to owners of parent3,3403,760+420Non-controlling interests367387+20Total Equity3,7074,147+440Appendix: Details of FY22 Projections・FY22’s business profit is expected to increase by 22% with 43 billion yen compared to FY21’s 35.3 billion yen excluding valuation profit and loss amidst an increase in the cost base for future investments.・SEMI’s FC of FY22 includes future investments such as for EUV‘s development and manufacturing, as well as promoting sales by establishing a Taiwan subsidiary. ・Also includes indirect cost increase related to the Elastomers business divestment.（It is planned to be optimized）IVD: FY22 includes sales contribution from COVID-19 antigen kits.CDMO: Sales expansion from new facilities are included.IVD: FY22 includes sales contribution from COVID-19 antigen kits.CDMO: Productivity improvement including sales expansion from new facilities.11(100Mil JPY)FY20 ActFY21 Pro(as of Nov.8)FY21 ActFY22 ProComments on FY22 ProSales1,5141,6451,6501,870Semiconductor materials9491,0901,1031,295Display materials474460459460Edge computing929588115Profit from business346385363430Inpria’s profits and loss (incl.amortization of intangible assets)-15-10Subtotal: Profit from business 346370353430Profit margin23%22%21%23%Valuation gain of Inpria7575Impairment of Celans facility in US-38Core Operating Profit346445390430Sales5527207251,150Core Operating Profit356032140Profit margin6%8%4%12%DigitalSolutionsLifeSciencesAppendix: Overall Statement of P/LBreakdown from Core OP to OP(100Mil JPY)12FY20FY21Core Operating Profit379433Reversal of impairment losses-13 Profit from sales of shares of subsidiariesand affiliated companies-3Business structural reform expenses-35-Loss on valuation of capital investments in subsidiaries–14Special Retirement benefits-2-Others-2Operating Profit342438FY20FY21YoYSales3,1203,410+9%Cost of sales1,9822,149+8%Gross profit1,1381,261+11%Selling, general andadministrative expenses752873+16%Other operating income/expenses-3749-Share of profit of investmentsaccounted for using equity method-72-Operating Profit342438+28%Finance income/cost-918-Income taxes8084+5%Profit from continuing business253372+47%Profit from discontinued business-79923-Profit-545394-Profit, attributable toowners of parent-552373-Profit, attributable tonon-controlling interests621+242%EPS(JPY)-256.73173.49-EPS – continuing business108.65162.52+50%EPS – discontinued business-365.3810.97-Exchange rate(USD/JPY）106112+6%Appendix: Statement of Financial position(100Mil JPY)Equity ratio(Equity attributable to owners of parents)2021/3Ｅ：49.6%2022/3Ｅ：46.5%*Including both continuing business and discontinued business1321/3E22/3E+/-Current assets3,2934,370+1,077Cash and cash equivalents854456-398Trade and other receivables1,253761-492Inventories1,0491,049+1Others137191+53Non-current Assets held for sale1,913+1,913Non-current assets3,4353,724+289Property, plant and equipment1,7041,595-109Goodwill5861,176+590Other intangible assets150246+96Others994706-288Total Assets6,7288,094+1,366Current liabilities1,6882,883+1,195Trade and other payables1,008635-372Bonds and borrowings379692+313Others301400+98Non-current liabilities held for sale1,156+1,156Non-current liabilities1,3321,064-269Bonds and borrowings814487-327Others518576+58Total Liabilities3,0203,946+926Equity attributable to owners of parent3,3403,760+420Non-controlling interests367387+20Total Equity3,7074,147+440Overall Statements of Cash Flows(100Mil JPY)*Including both continuing business and discontinued business14FY20FY21YoY+/-Cash flows from operating activities704183-521Income before income taxes333455+122Depreciation and amortization295225-70Change in working capital86-489-575Others-10-8+1Cash flows from investment activities-527-631-104Purchase of tangible and intangible assets-552-476+76Acquisition of shares of subsidiaries-473-473Sales of shares of subsidaries and affiliates5152+147Others20167+146FCF177-448-626Cash flows from financing activities43230+187Change in treasury stock-0-0-0Cash dividends paid-129-140-11Others172370+198Others14-15-30Net income (decrease) in cash and cash equivalents234-234-468Cash and cash equivalents included in assets held for sale-164-164Cash and cash equivalents at end of period854456-398Appendix: Quarterly Trends by Segments(100Mil JPY)*Core OP is calculated by excluding profit or loss caused by non-recurring factors from OP.*Discontinuing business is not shown on the table, except for Profit, attributable to owners of parent.1520Q120Q220Q320Q421Q121Q221Q321Q4675717845883823859884844808612587126105192108062123771111171921711-1873-618829417819363374384393393413427417Semiconductor materials238229233248261268292282Display materials109118126121111125110113Edge computing16272524212125227891977910491167271261351421481631741961918813612819-7162164225241238240229199521819191616324439510129323236-11-15-4-17-9-10-10-13108106105106109110114116PlasticsSalesDigital SolutionsSalesCore Operating ProfitLife SciencesSalesCore Operating ProfitCore Operating ProfitConsolidatedSalesOperating ProfitProfit, attributable to owners of parentCore Operating ProfitOthers/AdjustmentSalesExchange rate (USD/JPY)Core Operating ProfitAppendix: IR CalendarJSR Management Policy BriefingMay 24, 202210:00-12:00 (JST)FY22Announcement of Earnings ResultsFY22Q1August 1, 2022*Please note that the above is subject to change.NB: The forecasts, future plans and strategies made in this document contain a variety of uncertain factors since it has been prepared based on judgments from information that is currently available. Actual business results may differ from those projected, depending on factors such as the economic status of the market surrounding the company. 16