Financial 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 nine months ended September 30, 2025, consolidated net sales slipped 2.7%, to ¥785.9 billion.

• Looking at key global economies in recent months, a slide into recession was avoided thanks to progress in tariff negotiations between various countries and territories and the United States, combined with the implementation of monetary and fiscal policies tailored to local conditions. However, concerns regarding rising prices and a resurgence of trade friction between the United States and the People’s Republic of China (PRC) persisted, as a result of which an uncertain outlook lingered for both corporate entities and consumers.
• In this environment, demand trends in customer industries identified as key growth areas diverged. In digital materials, used principally in electrical and electronics equipment and in displays, the operating rates of display manufacturers remained on the road to recovery after an adjustment phase, while the semiconductor market remained robust, propelled by growing demand for use in AI applications and semiconductor devices, among others. In industrial materials,* used primarily in mobility solutions, the potential impact of the U.S. tariff policy was a cause of anxiety in the automobile market, but sales in the United States remained firm, as a consequence of which no sudden shift in demand was seen.
• Against this backdrop, results varied for different products. Shipments of jet inks, used in digital printing, and of other high-value-added products, including core chemitronics offerings such as epoxy resins and industrial-use adhesive tapes, remained solid, while polyphenylene sulfide (PPS) compounds and other products used in mobility solutions, were steady. In contrast, sales of packaging inks, pigments for coatings and for plastics and other mass-market consumer-adjacent products trended downward, owing to rising prices and fears over the economic outlook.

Operating income advanced 18.9%, to ¥40.5 billion. This was despite the decline in sales and was due mainly to increased shipments of high-value-added products, ongoing across-the-board sales price revisions and exhaustive cost management efforts. Among factors behind the operating income gain also was an improvement in the Color & Display segment, underpinned by sales price revisions implemented to boost margins, and by a return to profitability in overseas after an operating loss in the corresponding period of the previous fiscal year, thanks to ongoing structural reforms in the pigments business in the United States and Europe, which helped trim costs.

Ordinary income, at ¥32.8 billion, was up 19.1%. While foreign exchange losses mounted, reflecting the application of hyperinflationary accounting and the appreciation of the yen against emerging market currencies, interest expenses fell as a result of U.S. and European interest rate cuts.

Net income attributable to owners of the parent climbed 104.4%, to ¥21.7 billion. This was a consequence of multiple factors, including higher extraordinary income, thanks to, among others, a gain on sales of shares and investments in capital of subsidiaries and affiliates arising from withdrawal from the liquid crystal (LC) materials business, and a decrease in extraordinary losses.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 19.7%, to ¥77.9 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)

Note: Beginning from the first quarter of the current fiscal year, the Group 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 the nine months ended September 30, 2024 have been restated.

Packaging & Graphic

Segment sales declined 3.4%, to ¥406.1 billion. In the area of packaging inks, used chiefly on packaging for food products, shipments deteriorated in Japan, and in the Americas and Europe—the former due to rising prices, which dampened consumption, and the latter particularly reflecting a fall in Europe, which saw an economic slowdown—but sales were up, bolstered by ongoing efforts to adjust sales prices. Shipments and sales prices in Asia and Oceania, and in other regions, were buffeted by flagging market conditions and sales price competition, as a result of which sales waned everywhere except in the PRC, which reported an increase attributable to initiatives aimed at fostering new customers. Sales of publication inks, which center on inks for commercial printing and news inks, decreased, with ongoing structural demand declines worldwide and intensifying sales price competition, notably in the Americas and Europe, pushing down shipments dramatically. Sales of jet inks, used in digital printing, rose, as shipments remained firm amid burgeoning digitization. Shipments of polystyrene, applications for which include food trays, dipped, as higher consumer prices continued to encourage consumer restraint in food purchases.

Segment operating income fell 8.3%, to ¥21.3 billion. Operating income in Japan weakened, as steps taken to modify sales prices for packaging inks and publication inks were insufficient to counter elevated costs. Operating income overseas was also down, tumbling in Asia and Oceania, where sales flagged, as well as in the Americas and Europe, where diminished shipments and exchange rate fluctuations arising from the depreciation of emerging market currencies, among others, undermined ongoing efforts to maintain sales prices by ensuring stable supplies and services.

Color & Display

Segment sales slipped 3.3%, to ¥192.8 billion. Although shipments of pigments for coatings, as well as those for plastics—which together account for a significant share of sales—remained on a downtrend, as the uncertain economic outlook encouraged inventory adjustments by customers, particularly in the United States and Europe, sales of these products expanded, buttressed by ongoing efforts to revise sales prices. Among high-value-added products, shipments of pigments for color filters dwindled, as the operating rates of display manufacturers remained on the road to recovery, although sales were up, thanks to changes in the product mix. Sales of pigments for cosmetics fell, as shipments were hindered by listless demand from cosmetics manufacturers in the Americas and Europe, the principal customers for these products, and other factors. Sales of pigments for specialty applications rose, as shipments of products for agricultural use recovered following the completion of inventory adjustments, and shipments of products used in building materials were up. Lower overall segment sales were also due to the absence of sales of LC materials as a result of withdrawal from this business.

The segment reported operating income of ¥6.9 billion, up 7.7 times. This gain was bolstered primarily by increased sales of high-value-added products such as pigments for color filters and of specialty pigments, as well as by price revisions aimed at improving margins and by ongoing structural reforms in the pigments business in the United States and Europe, which helped trim costs, underpinning a return to profitability overseas.

Functional Products

Segment sales edged down 1.6%, to ¥215.8 billion. In the area of digital materials, sales of epoxy resins, the foremost application for which is electronics equipment—including semiconductors—increased, as demand for semiconductors fueled firm shipments overall. Sales of industrial-use adhesive tapes, used mainly in smartphones and other mobile devices, rose owing to steady efforts to lock in demand, among others, which led to broader adoption. In the area of industrial materials, sales of materials for mobility solutions, including PPS compounds, remained solid, despite concerns regarding a rebound from the last-minute demand rush ahead of the U.S. tariffs. The decrease in segment sales also resulted from reduced sales of architectural interior materials stemming from the April 2025 divestiture of consolidated subsidiary DIC Decor, Inc.

Segment operating income, at ¥16.9 billion, was up 4.0%. This was despite higher costs due to advance investments in the area of chemitronics, and reflected factors such as expanded marketing of high-value-added products for use in electronics equipment and in mobility solutions and successful efforts to maintain sales prices for all products.

（3）Operating Results Forecasts for Fiscal Year 2025

(Billions of yen)

Note: Forecasts are unchanged from those published on August 8, 2025.

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.