Finance Review

(1) Overview of Operating Results

(Billions of yen)

* EBITDA: Net income attributable to owners of the parent + Total income taxes + (Interest expenses - Interest income) +
Depreciation and amortization + Amortization of goodwill

In the fiscal year ended December 31, 2024, consolidated net sales increased 3.1%, to ¥1,071.1 billion. On a local currency basis, however, consolidated net sales edged down 0.1%. Looking at key global economies, the Americas and Europe saw changes in monetary policy in response to the easing of inflationary pressures, including decisions by central banks to reverse course and lower interest rates. In contrast, in the People’s Republic of China (PRC) the economic outlook remained unclear, owing to a persistently sluggish real estate market, waning domestic demand and other factors. Against this backdrop, demand trends in core customer industries varied. In the area of digital materials, used principally in electrical and electronics equipment and in displays, demand in the display market remained firm for the most part, mirroring display manufacturers’ production levels, and picked up in the semiconductor market, driven by growth sectors such as generative AI, although a full-scale revival in demand for general-purpose products remained elusive. In industrial materials,* used primarily in mobility solutions, demand for materials for use in automobiles was steady as vehicle sales remained solid worldwide. In this environment, shipments in the Functional Products segment rallied, led by high-value-added offerings for use in electronics equipment and in mobility solutions. In the Packaging & Graphic segment, shipments of jet inks and of packaging inks in overseas markets advanced, underpinned by firm demand. In the Color & Display segment, sales of high-value-added pigments for color filters were firm, while sales of pigments for coatings and for plastics rallied from the sharp declines seen in the fiscal year ended December 31, 2023, thanks to ongoing moves by customers to replenish inventories. Higher net sales also reflected the positive impact of a weak yen on sales denominated in other currencies after translation. Net sales were negatively affected by withdrawals, including through divestiture, from noncore businesses—chiefly in the Functional Products segment— implemented to drive business portfolio transformation, which resulted in the exclusion of the sales of these businesses, including SEIKO PMC CORPORATION, from consolidated results.

Operating income climbed 148.1%, to ¥44.5 billion. The Packaging & Graphic and Functional Products segments saw steep gains, buttressed by a revival in shipments of high-value-added products and an improved product mix, and by efforts to revise sales prices in response to specific regional and product characteristics. In addition, a recovery in shipments of pigments for coatings and for plastics combined with structural reforms aimed at, among others, optimizing production configurations—particularly in the United States and Europe—and efforts to lower costs to significantly reduce the loss in the Color & Display segment.

Ordinary income soared 311.3%, to ¥37.9 billion.

Net income attributable to owners of the parent was ¥21.3 billion, compared with a net loss in the preceding period. This reflected an increase in total extraordinary income, the result of a gain on sales of non-current assets stemming from the transfer of intellectual property related to the liquid crystal (LC) materials business, and a higher gain on sales of investment securities arising from the reduction of strategic shareholdings, as well as a steep decline in total extraordinary losses due to the absence of ¥33.5 billion in impairment losses recorded in the preceding period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 210.3%, to ¥95.7 billion.

*DIC uses the term “industrial materials” to describe products for use in mobility solutions, namely, automobiles, railroads and shipping, and for general industrial applications such as construction equipment and industrial machinery.

（２）Segment Results

(Billions of yen)

Packaging & Graphic

Segment sales advanced 5.1%, to ¥569.8 billion. In the area of packaging inks, used chiefly on packaging for food products, shipments in Japan declined, as rising prices continued to dampen demand for consumer goods, but sales were buoyed by efforts to pass on elevated costs by adjusting sales prices, and by increased sales overseas, underpinned by a revival in demand for consumer goods in the Americas and Europe, as well as by efforts to cultivate customers in Asia, which boosted shipments. Despite expanded shipments in Asia, owing to the cultivation of customers and other factors, sales of publication inks, which center on inks for commercial printing and news inks, fell as dwindling demand pushed shipments down in Japan, as well as in the Americas and Europe. Sales of jet inks, used in digital printing, climbed sharply as customers completed measures to resolve surplus inventories, spurring brisk demand and elevated shipments.

Segment operating income rose 52.8%, to ¥33.6 billion. In Japan, shipments of high-value-added jet inks were robust, while moves to counter elevated costs in packaging inks and publication inks by modifying sales prices progressed. Operating income was also up sharply worldwide, buttressed by higher shipments of packaging inks and publication inks in Asia, together with efforts to maintain sales prices for packaging inks and publication inks in the Americas and Europe amid falling raw materials prices by ensuring stable supplies and services.

Color & Display

Segment sales, at ¥257.0 billion, were up 13.1%. While demand for pigments for coatings and for plastics failed to recover fully in Europe, a leading market for these products, reflecting a delayed economic revival, notably in Germany, shipments recovered following the completion of inventory adjustments by customers, thanks to ongoing moves to replenish inventories, particularly of pigments for use in building materials and for industrial applications. Among high-value-added products, shipments of pigments for color filters used in displays outpaced the previous fiscal year, as demand remained steady, mirroring display manufacturers’ production levels. Shipments of pigments for cosmetics were down, hindered by listless demand as cosmetics manufacturers in the Americas and Europe, key customers for these products, continued to adjust inventories. In pigments for specialty applications, shipments for agricultural use declined, a consequence of protracted customer inventory adjustments, but shipments for use in building materials recovered, bolstered by various factors, including a revival in demand from the construction industry in Europe and efforts to cultivate new customers in Asia.

The segment reported an operating loss of ¥0.3 billion, a significant improvement from the preceding period. This was despite inconsistent trends in shipments of high-value-added products and resulted from higher shipments of pigments for coatings and for plastics, as well as to the progress of structural reforms aimed at, among others, optimizing production configurations—mainly in the United States and Europe—and efforts to lower costs. The production of LC materials, from which withdrawal was announced in the period under review, concluded as scheduled in December 2024.

Functional Products

Segment sales decreased 6.4%, to ¥286.3 billion. If the impact of business withdrawals, including the divestiture of SEIKO PMC, was discounted, segment sales would have been up 7.8%. In digital materials, sales of epoxy resins—the foremost application for which is electronics equipment, notably semiconductors—advanced, owing to an improvement in the product mix attributable to, among others, a resurgence in demand for use in AI servers, computers and smartphones, which pushed up shipments of related products. Sales of industrial-use adhesive tapes, used mainly in smartphones and other mobile devices, were boosted by steady efforts to lock in demand. In the area of industrial materials, products for use in mobility solutions remained solid, bolstered by an upturn in shipments of polyphenylene sulfide (PPS) compounds, notably in Japan, which was due to firm vehicle sales worldwide.

Segment operating income increased 36.0%, to ¥21.0 billion. Excluding the impact of business withdrawals, segment operating income would have risen 65.9%. Factors behind this significant gain included a recovery in shipments of high-value-added products for use in electronics equipment and in mobility solutions, which contributed to an improved product mix, as well as successful efforts to revise sales prices for all products.

（3）Operating Results Forecasts for Fiscal Year 2025

(Billions of yen)

Against a backdrop of rising trade friction and other geopolitical risks, economic conditions are expected to remain highly uncertain in the fiscal year ending December 31, 2025, with economic, consumer price and resource price trends warranting concern. Given these circumstances, DIC—which in February 2024 took the decision to review certain measures set forth in its DIC Vision 2030 long-term management plan while leaving the vision for DIC in the future and the basic policy set forth in the plan essentially unchanged— will focus on maintaining its current growth trajectory, while paying particular attention to the following priorities:

•　Further accelerate business portfolio transformation and identify a clear path to future growth;
•　Enhance profitability by implementing measures aimed at making newly acquired businesses profitable as swiftly as possible;
•　During the demand recovery phase, work to steadily lock in demand to bolster net sales and operating income; and
•　From the perspective of cost-effectiveness, promote the efficient allocation of resources to measures expected to quickly and reliably yield results.

For details on the revision of DIC Vision 2030, please see the timely disclosure document titled Notice Regarding the Revision of DIC Vision 2030.
Long-Term Management Plan

Having taken these and other factors into consideration, for fiscal year 2025 the Company forecasts increases of 3.6% in net sales, to ¥1,110.0 billion; 7.8% in operating income, to ¥48.0 billion; 16.1% in ordinary income, to ¥44.0 billion; and 12.6% in net income attributable to owners of the parent, to ¥24.0 billion.

（4）Segment Results Forecasts for Fiscal Year 2025

(Billions of yen)

Note:　Effective from fiscal year 2025, the Company revised its segment classification for certain net sales and operating income in “Packaging & Graphic,” “Functional Products” and “Others, Corporate and eliminations.” Accordingly, certain figures for fiscal year 2024 have been restated

Disclaimer Regarding Forward-Looking Statements

Statements herein, other than those of historical fact, are forward-looking statements that reflect management’s projections based on information available as of the publication date. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from such statements. These risks and uncertainties include, but are not limited to, economic conditions in Japan and overseas, market trends, raw materials prices, interest rate trends, currency exchange rates, conflicts, litigations, disasters and accidents, as well as the possibility the Company will incur special losses related to the restructuring of its operations.