As it is time to start, we will now begin the conference call for the presentation of the financial results of FY2025 Q1. Thank you very much for your participation. Today, Mr. Yamauchi, Executive Officer and General Manager of Accounting Department, will give a briefing of the financial results for FY2025 Q1, and he will later take questions. We will conclude the call at 4

50 PM. Mr. Yamauchi, over to you.

Good afternoon. I'm Yamauchi, responsible for the accounting department. Thank you very much for attending our conference call today despite your busy schedule. I would like to thank the investors and analysts for your daily understanding and support to our management. Thank you very much for that. Now, let me start with the briefing of the financial results for FY2025 Q1. Please turn to the slide, page four. Before explaining the details of our financial results, I'd like to give a brief update on the status of profit and loss for Q1. On the left, the core operating income in 2023, 2024, 2025 for five years, you can see the figures. In FY2023, we had a large loss ever since the start of the Company. We faced a very difficult situation for Q1. For FY2024, we achieved the V-shaped recovery, and we're able to secure profitability in Q1. This fiscal year, Q1, the profit we made last year was further expanded. For Q1, Sumitomo Pharma performed well, and essential and green materials improved its profitability. In addition, shipments of agro and life solutions and, ICT and mobility solutions were strong. On the right, you can see the net income attributable to owners of the parent for the quarter for the three years. With appreciation of the yen in this quarter, we had a slight loss. For each term, there was a big impact from foreign currency, as you can see in parentheses. Excluding the impact of foreign currency transactions, just like the core operating income, we're able to achieve steady improvements. Now, next, please turn to page five. Let me begin by explaining the business environment around our Company in Q1 of FY2025. With regards to economic situation, although the global economy is continuing to show signs of gradual recovery, uncertainty is high due to such factors as policy management. Because of this, the future continues to remain uncertain, and below are our perceptions of the business environment in our major business fields using weather symbols. The first one, crop protection. Although Q1 is an off-season for demand, there was solid growth in India. The methionine market bottomed out at the end of the last fiscal year and currently shows signs of recovery. For displays, there is still no impact from the backlash of shipments brought forward because of the tariffs. There was solid growth in mobile device-related components. In semiconductors, demand for semiconductors varied by field, but there are signs of gradual recovery. Petrochemicals and raw materials, the market continues to have low margins. Next is the outline of the consolidated financial results, page six. Sales revenue was JPY526.1 billion, down JPY86 billion YoY. Core operating income, expressing recurring earnings power, was a profit of JPY27.7 billion, up JPY22 billion YoY. Non-recurring items not included in core operating income was a loss in total of JPY2.2 billion. In the same quarter of the previous year, there was JPY10.1 billion gain on sales of fixed assets from the sale of land for dormitories and company housing, leading to a total profit of JPY5.8 billion. Compared to the same quarter of the previous year, non-recurring items worsened by JPY8.1 billion. As a result, operating income was a profit of JPY25.5 billion, up JPY14 billion YoY. Finance income had a loss of JPY19.6 billion, down JPY45.6 billion YoY. Gain or loss on foreign currency transactions included in finance income or expenses had a loss of JPY16.4 billion because of a strengthening of the yen, worsening by JPY45.4 billion YoY. Income tax expenses had a loss of JPY1.9 billion, down JPY1.7 billion YoY. As a result, the net income attributable to owners of the parent for the quarter was a loss of JPY4.5 billion, down JPY28.9 billion YoY. Exchange rate and naphtha price, which impact our performance; average rate of US dollars during the term was JPY144.59 to USD1, and naphtha price was JPY65,500 per kiloliter, yen appreciated and feedstock price declined compared to the same period of the previous year. Next, sales revenue by business segment, page seven. Total sales revenue was down JPY86 billion YoY. By segment, sales revenue decreased in all segments, except Sumitomo Pharma. As for YoY changes of sales revenue by factor, sales price decreased by JPY12.5 billion. Volume decreased by JPY47.6 billion. Foreign exchange transactions, variance of foreign subsidiary sales revenue, decreased by JPY25.9 billion. Next is page eight. Total core operating income increased by JPY22 billion YoY. Analyzing by factor, price was minus JPY500 million. Cost, plus JPY9.5 billion. Volume variance, including changes in equity in earnings of affiliates, was plus JPY13 billion. Next is performance by segment, page nine. Agro and life solutions segment, core operating income was a profit of JPY2.2 billion, down JPY2.7 billion YoY. Price variance, profit margin deteriorated as the methionine market price dropped. Volume variance, there was lower income from exports due to stronger yen centered on overseas crop protection products and stronger yen effect. Next page. ICT and mobility solutions. Core operating income was a profit of JPY18.4 billion, down JPY2.8 billion YoY. Price variance, selling prices of polarizing films dropped. Volume variance, there was a one-time gain on the sale of the large LCD polarizing film business, but lower income from exports due to stronger yen offset the gain. Next page, please. As for the advanced medical solutions segment, core operating income was a loss of JPY1 billion, a decrease of JPY1.5 billion YoY. Shipments decreased due to a change in the shipping timing of some active pharmaceutical ingredients and intermediates compared to the same quarter of the previous fiscal year. Please go to the next page. With regards to essential and green materials segment, core operating income was a loss of JPY5.5 billion, an improvement of JPY14.1 billion YoY. As for the price variance, profit margins improved in synthetic resins due to the drop in price of main ingredient, naphtha. As for the volume variance, et cetera, there was an improvement in refining margins at Petro Rabigh, an equity method affiliate, resulting in an improvement in profitability in investments accounted for using the equity method. Next page, please. As for the Sumitomo Pharma segment, core operating income was JPY21 billion, an increase of JPY20.1 billion YoY. With regards to price variance, sales prices has decreased due to NHI drug price revisions in Japan. As for the cost variance, due to the progress of operational streamlining, SG&A expenses decreased. With regards to volume variance, shipments increased due to the expansion of sales of ORGOVYX, a therapeutic agent for advanced prostate cancer, and GEMTESA, a treatment for overactive bladder. This concludes the overview of the business performance by business segment. On the next page, I will explain the consolidated statement of financial position. Total assets at the end of June 2025 amounted to JPY3,329.5 billion, a decrease of JPY110.2 billion YoY. Decrease in cash and cash equivalents due to repayment of interest-bearing debt, seasonal factors affecting the crop protection chemicals, and a decline in sales due to the impact of scheduled maintenance at Petro Rabigh were the main factors behind the decrease in notes and accounts receivables. Interest-bearing debt amounted to JPY1,248.1 billion. This was a decrease of JPY38 billion YoY. Equity was JPY1,061.4 billion, down by JPY13 billion compared to the end of the previous fiscal year. Next, I will explain the consolidated statement of cash flows. Please go to page 15. Cash flows from operating activities resulted in a positive inflow of JPY24 billion, up by JPY36.3 billion YoY. Mainly due to an increase in collections of accounts receivable for crop protection chemicals caused by seasonal factors and a decrease in sales associated with scheduled maintenance at Petro Rabigh, accounts receivables decreased, resulting in an improvement in working capital. Cash flows from investing activities resulted in a negative JPY45.9 billion, a decrease of JPY128.4 billion YoY. During the same quarter of the previous fiscal year, there were incomes from the sale of investment securities and fixed assets. As a result, free cash flows was negative JPY21.9 billion, a deterioration of JPY92.2 billion compared to the JPY70.2 billion positive in the same quarter of the previous fiscal year. Cash flows from financing activities resulted in a negative JPY49.2 billion due to repayment of borrowings, a decrease of JPY13.8 billion spending YoY. Next, I will explain the outlook for FY2025 H1. Please go to page 17. At the time of the previous financial results announcement on May 14, the impact of tariffs was highly uncertain. Therefore, we only disclosed a full-year forecast for FY2025 and did not disclose forecast for H1. At this time, [annually], we are going to disclose the H1 forecast. As for the full-year financial forecast for FY2025, announced on May 14, have not been revised. We will be reviewing it at the H1 and disclose it for the announcement of the H2. For H1 of FY2025, the forecast is sales revenue JPY1.1 trillion, down JPY141.4 billion YoY. Core operating income, JPY90 billion, up by JPY60.5 billion YoY. Operating income, JPY85 billion, down by JPY36.2 billion. Net income for the quarter attributable to owners of the parent, JPY25 billion, up by JPY31.5 billion YoY. These are the forecasts. As for the exchange rate and naphtha price assumptions, they are as listed on the slide. I will explain the core operating income in the next slide by business segments. Please go to page 18. For the H1 performance, if we look at the segment, Sumitomo Pharma sold the businesses, and ORGOVYX milestone income will be recorded. On a YoY basis, we are forecasting a large increase. For the other segments, essential and green materials is expected to see an increase in operating income YoY due to the improved profitability at Petro Rabigh and improved profit margins for synthetic resins. With regards to ICT and mobility, the impact of a decrease in export earnings due to the strong yen and a decline in profit due to the conversion of overseas subsidiary profits into Japanese yen will be significant, and profits are expected to decline compared to the same period of previous year, which was extremely strong. Agro and life solutions will be affected by the strong yen. However, we expect profits to remain at the same level as last year due to an increase in shipments. Furthermore, for the other segments, experiencing a decrease in profit YoY is due to the recording of significant profits associated with the sales of businesses in H1 of FY2024. Next page, page 19. This will be the last slide. This will be the summary of the performance forecast. Regarding the outlook for H1 of the fiscal year, as I have explained, agro and life solutions, and ICT and mobility solutions segments, they will remain strong in shipments in Q2. In addition, we expect the gain from selling Sumitomo Pharma business will also contribute. Therefore, against the H1 forecast, it is a 60% progress, what is in the parentheses. In the outlook, excluding gains on the sales of businesses, we are making progress towards improvement compared to FY2024. The net income attributable to owners of the parent company, despite the adverse impact of foreign exchange losses, remains positive and is progressing steadily towards the achievement of the annual forecast. That concludes my explanation.

Thank you very much.

Now we would like to go into the Q&A session. Then the first question is from Mr. Watanabe from Morgan Stanley MUFG Securities.

Thank you. I'm Watabe from Morgan Stanley MUFG Securities. I have one question. But from Q1 to Q2, for each segment, what is your way of thinking, excluding Sumitomo Pharma and Agro, ICT, essential chemicals, in particular, in these places, what is the movement? In particular, for essential chemicals, deterioration is expected because of Rabigh’s periodic plant maintenance. The [inaudible] market in China is getting better? What is your situation in South America as well?

Thank you very much. For confirmation. South America recovery and the ratio of investments into Rabigh, what is the percentage that you are using in calculating in Q1 and H1?

How about Q2?

Thank you very much Mr. Watabe. We would like to take the next question from Mizuho Securities. Mr. Yamada, please go ahead.

The full-year forecast, you said that you have not revised it. H1, you made the forecast. However, for the full year, you have not revised it. If you subtract the H1 from the full year, there is no meaning is what I wanted to confirm at the start. After I confirm that point, for agro and life solutions, and ICT and mobility solutions, in these two business segments, the current situation against the forecast at the start of the year, how different is it, is what I would like to know.

If that is so, agro and life solutions, methionine on a YoY basis, it's deteriorating. But against Q1 of the previous year, it is improving. It's not going to do anything bad. Regarding the new drugs or new drug material, [inaudible], it is steadily performing. For ICT and mobility solutions, even though you consider tariff impact, the business performance is going to steadily expand. Is that the correct understanding? Sorry, I wanted to confirm that as an addition.

Thank you very much. That is all.

Thank you very much. Next is Mr. Miyamoto from SMBC Nikko Securities.

Thank you. I'm Miyamoto from SMBC Nikko Securities. I have a question about agro and life sciences. Towards Q2, on a QoQ basis, you expect an increase of JPY11.4 billion. You mentioned about seasonality. But last year or compared to the previous year, it seems that the increase is larger. What are the factors for such a large increase? In your presentation material, page 27, North America, you mentioned that sales is being carried backwards. How much is that impact? In Central and South America, there's a drop because of price competition. How will that trend going forward? And for [EndoPrime], you made a comment about for biorationals, is that expanding steadily? For distribution inventory, you mentioned about the situation in South America, but what is the situation of inventory in other areas?

But stronger competition in South America? How about the situation of biorationals?

Thank you very much. In terms of inventory by region, do you have any information of improvements by region?

Thank you very much.

Thank you very much Mr. Miyamoto. We would like to take the next question from Daiwa Securities. Mr. Umebayashi, please go ahead.

I am Umebayashi from Daiwa Securities. I have a question related to ICT and mobility solutions. It may overlap with the explanation you have provided up to now. YoY explanation was given to us right now. Regarding the polarizing film, there is the sales gain that came in of TV and that disappeared, I understand. But for the used mobile devices, the polarizing film volume YoY, how did it perform? Also, regarding the semiconductor materials, though there may be an impact of the FX in terms of the volume, how did it perform? I would like to receive the performance. Towards Q1 to Q2, ICT and mobility, it's going to increase about JPY5 billion in revenue, but profit is going to decline by about JPY5 billion. On a QoQ basis, can you explain the reason of the decline in profit and also increase in revenue?

If that is so, so the Q1 one-time profit was quite of a size, you mean?

Okay, thank you very much.

Next question is from UBS Securities, Omura-san.

Thank you. I'm Omura from UBS. I have a question about the essential and green materials. In Q2, you expect losses, Petro Rabigh maybe is a factor. In Q2 and for the full year, as fundamentals, non-Petro Rabigh businesses, how should that be considered? On page 12, the step chart you have on page 12, improvement of profit margin of synthetic resins, is that a one-time effect? Or do you expect gradual improvement? Could you explain that?

Overseas, for confirmation, on page 26, the polyolefin company and the PCS, the direction of the profit are different. For this direction, as you have explained, you don't expect large changes. So, PCS will be facing difficulties, and the polyolefin company is in an improvement trend?

Thank you very much. I understand.

Mr. Omura, thank you very much. We would like to take the next question from JPMorgan Securities, Mr. Nakada.

This is Nakada. I just wanted to confirm of the one-time factors. Last time, you looked at JPY50 billion, the Sumitomo Pharma part is Q2, agro is Q2, and ICT is only Q1. From what you saw at the beginning of fiscal year, the amount has not changed. But from the [middle of the] year, you'll start to see the effect of it. Is that the correct understanding?

Okay. No change. Thank you very much.

Thank you very much. Next, from Morgan Stanley MUFG Securities, Mr. Watabe.

I wanted to ask a question about that one-time factor, and the non-recurring item was negative JPY5 billion for H1 and minus JPY45 billion for the full year. This figure remains unchanged? Singapore and the domestic market, you didn't discuss about restructuring of the sector. What is the situation?

Do you expect a decline? Or do you mean you will review?

Thank you very much. We would like to take the next question. SMBC Nikko Securities, Mr. Miyamoto, please go ahead.

This is Miyamoto from SMBC Nikko Securities. Regarding the inventory at Q1, it seems that it has increased by JPY21 billion. With what kind of products is this naphtha-related product building up this much?

Okay. Understood. So, naphtha and from the FX situation, it seems that it is at a higher level than the other years. But is there a particular product that has a high level of inventory or special factor why it's built up?

The next question is from UBS Securities, Mr. Omura.

Thank you very much. For agro, for confirmation, you mentioned about distribution inventory. The level of inventory in your case, what is the level that you expect for each region? This distribution inventory, you said is improving. But currently, when do you expect there will be improvements from the situation of excessive inventory?

Well, not in concrete terms, I know it may be difficult. But compared to last year or the previous year, what is the level of improvement? Is that information also difficult?

I understand. So basically, the salespeople for your company, I think, would collect that information qualitatively, and you gather that information, and that is the basis of your comments.

I understand. Thank you very much.

Thank you very much Mr. Omura. From JPMorgan Securities, Mr. Nakamura, please go ahead.

This is related to Mr. Watabe's question asked before. Recently, I read the interview articles of your CEO and President, even for the petrochemical, from the proprietary production to outsourcing and looking for the best partner. It seems that there seems to be a deeper structural reform that will be going ahead compared to the medium-term plan. So, within the initiatives within the medium- term plan, are there areas that you can go even further?

That your CEO said he's going to be focusing on the winning route and from proprietary internal, in-house production to outsourcing.

But Sumitomo Pharma, there are a listed company may be difficult. But when you look for the partner, if your corporate value or the stock value goes up, it's easier to find a partner. Can you comment on that?

Sorry, I asked a difficult question, but thank you very much.

Thank you very much. It's now time to conclude the conference call. There are still some people raising their hand. But with this, we would like to conclude the Q&A session. So, this concludes today's conference call. Thank you very much for your participation. [END]