Financial Strategy

Through KAYAKU Vision 2025 (KV25), the four-year medium-term business plan that began in FY2022, we at the Nippon Kayaku Group will maintain our solid financial structure, which is our strength, at a certain level as we contribute to the realization of a sustainable society by providing economic value and environmental and social value through mitigation of climate change and other measures.
In June 2023, we defined promising market areas and reorganized our segments into three business units: ーMobility & Imaging^*1 , Fine Chemicals^*2 , and Life Science^*3. While maintaining a balanced portfolio with the sustained growth of these three main business units, we will aim to achieve KV25 management targets and subsequent growth over the medium and long terms by leveraging synergies within each business unit and actively investing in growth areas.
In addition, we will continue striving to build a strong financial base by properly managing business resources through balance sheet management with an awareness of optimal capital structure, so that we can flexibly respond to changes in the market environment and business and other risks.

• *1 Safety Systems Group (Automotive Safety Components), Polatechno Group (Optical films for automotive, etc.)
• *2 Functional Materials Group, Color Materials Group, Catalysts Group
• *3 Pharmacueticals Group, Agrochemicals Group

The Nippon Kayaku Group focuses on cash flow management and balance sheet management. We recognize the need to maintain ROE, a KPI set as a company-wide target, at around 8%. This is the minimum condition for the Nippon Kayaku Group to command presence.
　ROE in the FY2023, the second year of KV25, was 1.6% due to a decrease in profits that reflecting a delay in recovering the semiconductor market and investing for the future in the pharmaceuticals business. The equity ratio was 74.2%, down from the previous fiscal year. During the period of KV25, we will strive to secure profits by increasing sales of each product, coping with rising raw material prices, and reducing costs, and endeavor to shorten and appropriately manage the days of receivables and inventories on hand as operating capital. We will also examine the reasons for cross-shareholdings every year and sell those we have deemed as no longer needed, while taking the impact on the market into consideration. In addition to this, we will consider other measures, including the appropriate timing for reducing holding of idle assets, mainly consisting of former plant premises, as we drive business management with cash and equivalents maintained at an appropriate level and pursue ROE at an appropriate level from a comprehensive perspective by considering shareholder return as well.