Investor Relations

Message from the CFO

Achieved ROE Target of 18% in FY2024
Semiconductors Materials to Lead Future Growth

In FY2024, our core businesses of Performance Materials and Agricultural Chemicals contributed to profit growth, resulting in an 18% increase in operating profit and a 15% increase in EPS (Earnings per Share) year-on-year. We successfully achieved a new record profit, surpassing the previous peak that had been interrupted in FY2023. Our most important financial indicator, ROE (return on equity), reached 18.7%, exceeding the target of 18%. Free cash flow exceeded 40 billion yen, dividend payout ratio was 55.5%, and total payout ratio reached 82%, all of these indicators were above targets. As the final year of our medium‑term business plan “Vista2027 Stage I,” we fell slightly short of the profit targets set three years ago. However, considering the sharp decline in the overall electronics materials market triggered by the post-COVID rebound from the second half of FY2022, we consider it a major achievement that we have been able to recover from these unexpected events as the entire company.

Regarding the improvement of profitability in the Chemicals business, which had been problematic, we implemented the necessary measures in FY2024. We recorded a 2.8 billion yen impairment loss related to the Fine Chemicals, which has seen a decline in profitability, and began the downscaling of certain manufacturing capacity. By reducing fixed‑cost burdens, we aim to secure 5% of the operating margin by FY2027.

The targets for FY2027, the final year of Vista2027 Stage II, are an operating profit of 65 billion yen, EPS of 366.28 yen and a 5% CAGR (compound annual growth rate) compared to FY2024. Among our business segments, the Performance Materials business, and in particular semiconductor materials is expected to be a growth area, anticipating over 10% CAGR, thereby driving our group profit growth. The Agricultural Chemicals business plans steady sales increase through the expanded sales of general agrochemicals such as GRACIA® and LEIMAY®, as well as VERDAD®, a domestic herbicide launched in early 2025. Additionally, for Fluralaner, an active ingredient for veterinary pharmaceuticals, we expect to offset its decline in royalty income with growth in active ingredient sales.

Accelerating Concentrated Investment in Growth Sectors
Maintain High Profitability by Optimizing the Business Portfolio

During the three‑year period of Vista2027 Stage II, we will accelerate growth investment in the Performance Materials and Agricultural Chemicals businesses. To ensure future profit growth, I regard these investments in the current medium‑term business plan as indispensable. However, we are also introducing a framework based on specific investment‑efficiency standards. We will conduct regular monitoring using ROIC (return on invested capital) standards for each portfolio, aiming to achieve a portfolio management with clear priorities and balance aligned with future forecast positioning.

Our present ROIC sufficiently exceeds WACC (weighted average cost of capital), and we will continue to make investment decisions that preserve Nissan Chemical’s characteristic high profitability and efficiency. We have also presented our vision for sales of next-generation and new materials/APIs/drugs, for FY2030, clearly indicating our medium‑to‑long‑term growth drivers.

The capital allocation (p.43) announced in this medium-term business plan, we will allocate substantial funds to organic growth investments such as capital expenditures and R&D. By clearly indicating the balance with shareholder returns and the sources of funding, we are presenting the direction of our management based on the recognition that the Company is currently in a medium- to long-term growth phase.

In Vista2027 Stage II, we consider this three‑year as a period in which we concentrate management resources on the Performance Materials and the Agricultural Chemicals businesses to secure sustainable growth. The organic growth investment is set at a level of 37% above the cumulative total over the past three years. At the same time we will consistently keep a high level of shareholder returns, with a total payout ratio of at least 75%, and actively consider inorganic strategic investments beyond previous levels. Specifically, we intend to target areas that broaden our business scope, strengthen our supply chains, and create synergies, along with establishing a system to promote strategic investment from a company-wide perspective. Financing will be based on our strong balance sheet, with debt financing and the maintenance of financial discipline as key premises.

Ultimately, it is our people who execute these plans. The primary focus of capital allocation naturally overlaps with the priority allocation areas in our talent portfolio. For example, we will significantly increase researchers, especially in the field of performance materials, to secure our competitive advantage. We will allocate “discerning human resources” to priority areas—individuals capable of converting business potential into actual demand.

Providing Products and Services That Solve Social Problems, and Creating Impact

Regarding sustainability initiatives in FY2024, the first priority is reducing greenhouse gas (GHG) emissions. Currently we are proceeding in line with the initial Vista2027 plan, and are on track to achieve by FY2027 a 30% or more reduction in Scope1+2 emissions compared to FY2018 levels. In addition, centered on the Climate Change Committee, we have drafted a Climate Transition Plan aimed at achieving carbon neutrality by 2050, and are further specifying and disclosing reduction measures for FY2027 and beyond. Of course, technological innovation toward carbon neutrality and social trends will require ongoing future updates to this plan, but drafting the Climate Transition Plan is an important step in reducing the environmental burden from a long-term perspective.

We have set reduction targets for Scope1 and Scope2, but reducing Scope3 emissions are also essential in order to achieve carbon neutrality. Among Scope3 emissions, the largest share comes from Category 1—emissions associated with purchased products and services. Reducing these therefore requires supply‑chain‑wide efforts, especially collaboration with suppliers.

In FY2024, we expanded our existing “Sustainable Procurement Questionnaire” to understand the actual GHG emissions of each supplier. Looking forward, we will advance dialogue with suppliers based on the data obtained, and jointly promote specific initiatives to reduce emissions.

Next, regarding human capital, we established the Diversity Promotion Subcommittee under the Sustainability Promotion Committee. With this, we are advancing more concrete and systematic efforts to further enhance organizational diversity and inclusion, such as improving workplace comfort for a broader range of employees and fostering this culture.

We also believe that promoting sustainability across the entire company, including in plants and research laboratories, is essential for improving sustainability standards, and to this end we have established and continue to hold the Sustainability Subcommittee. Through this subcommittee, we strengthen cross‑departmental discussions and collaboration, raising overall employee awareness of sustainability and improving the effectiveness of our initiatives. As part of these efforts, we have continued to hold internal ESG briefings in FY2024. In particular, by establishing regular meetings for exchanging opinions with the Production Technology Department and the Environment Safety Group, we can further reinforce internal cooperation and lead to the planning and implementation of measures.

In terms of governance, at the general meeting of shareholders held in June 2025, one female outside Audit & Supervisory Board member was appointed, and an outside director who has served as the top executive of a major listed company was also newly appointed. Through active discussions including opinions on management from fresh perspectives, we are striving to further enhance the effectiveness of the Board of Directors.

Sharing Shareholder and Investor Opinions With Management, Utilizing These in Formulating Management Strategies

Dialogue with shareholders and investors requires both “continuity” and “responsiveness to change.” In order to respond to diverse investment needs and styles, I believe it is essential to persistently yet flexibly identify which messages are needed by whom based on feedback from the market and direct meetings, and to continue taking proactive action with a medium- to long-term perspective in a steady and sincere manner. We will continue to update our disclosure content in as much detail as possible, tailoring them to the interests and concerns of our shareholders and investors, ensuring they are persuasive and well-developed.

The CFO and IR group conducted approximately 550 meetings with investors and analysts in FY2024 and also organized a site visit to Biological Research Laboratories. In addition to covering routine inquiries after regular financial results announcements, we hosted events such as presentation on R&D promptly after the medium‑term business plan announcement, received a variety of opinions, providing regular feedback to senior management so that these insights can be more fully incorporated into management strategies.

Our company’s greatest strength lies in introducing a succession of high‑value, proprietary products essential to the market, securing strong market shares, and generating stable, high profits. To consistently achieve an ROE above 18%, it is essential to maintain a well‑balanced portfolio built on this business strategy. Fortunately, we are positioned to further enhance corporate value using this as a starting point. While keeping shareholder returns at an exceptionally high level, we will execute necessary strategic investments in a disciplined manner. We are confident that the newly formulated medium‑term business plan Vista2027 Stage II incorporates strategies essential for future profit growth.

We ask for your continued trust in our strong track record, including our history of forward-looking R&D that anticipates market needs and our consistent operating margins above 20%. It is our hope that you will continue to look forward to our further growth.

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