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 three months ended March 31, 2025, consolidated net sales rose 2.5%, to ¥262.1 billion. Looking at key global economies in recent months, the outlook in the Americas and Europe is showing heightened uncertainty, as consumer spending and other key indicators weaken amid concerns regarding the imposition of increased tariffs, while in the People’s Republic of China (PRC) a protracted real estate slump and trade friction with the United States is casting a cloud over consumer spending and investment trend forecasts. Against such a backdrop, demand trends in core customer industries diverged in the period under review. In the area of digital materials, used principally in electrical and electronics equipment and in displays, the display market saw stable operating rates among display manufacturers and the semiconductor market continued to be driven by demand for use in generative AI, among others, although a full-scale revival in demand for general-purpose products remained elusive. In industrial materials,* used primarily in mobility solutions, no sudden shift was seen in demand in the automobile market, but the potential impact of a tariff hike was a cause of significant anxiety. In this environment, shipments varied for different products. In the Color & Display segment, shipments of pigments for color filters, a high-value-added product, climbed sharply from the first quarter of fiscal year 2024 (January–March 2024), while those of pigments for plastics were firm. The Functional Products segment reported firm shipments of high-value-added products for use in electronics equipment. In the Packaging & Graphic segment, shipments of jet inks—used in digital printing—expanded, particularly for commercial printing applications.

Operating income advanced 54.0%, to ¥13.1 billion. This was due mainly to higher sales in the Color & Display segment, bolstered by a recovery in market conditions, as well as to a return to profitability overseas after an operating loss in the corresponding period of the previous fiscal year, as ongoing structural reforms in the pigments business in the United States and Europe, which pushed down costs.

Ordinary income, at ¥9.9 billion, was up 48.6%.

Net income attributable to owners of the parent was ¥6.1 billion, up from a loss attributable to owners of the parent of ¥2.8 billion from the same period of the fiscal year 2024. This reflected multiple factors, including a steep decrease in extraordinary losses from the previous period, when extraordinary losses soared as a consequence of escalating severance costs arising from restructuring measures, and a loss on sale of shares and investment in capital of subsidiaries and affiliates, led to a net loss attributable to owners of the parent.

Earnings before interest, taxes, depreciation and amortization (EBITDA) soared 87.3%, to ¥24.4 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: Effective from the three months ended March 31, 2025, 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 three months ended March 31, 2024 have been restated.

Packaging & Graphic

Segment sales slipped 0.3%, to ¥134.0 billion. On a local currency basis, however, sales rose 0.3%. In the area of packaging inks, used chiefly on packaging for food products, sales declined in Asia, as both shipments and sales prices faced an uphill battle as a result of various factors, including sluggish market conditions and pricing competition. Nonetheless, overall sales of these products were up, bolstered by increases in Japan, as well as in the Americas and Europe, thanks to efforts to adjust sales prices. Sales of publication inks, which center on inks for commercial printing and news inks, fell, with dwindling demand pushing down shipments worldwide, notably in the Americas and Europe. Sales of jet inks, used in digital printing, advanced significantly, as shipments expanded, mainly for commercial printing applications, in line with market growth underpinned by a continuing shift to digital printing.

Segment operating income edged down 1.1%, to ¥6.7 billion. On a local currency basis, however, operating income was up 4.3%. Operating income in Japan decreased, as steps taken to modify sales prices for packaging inks and publication inks were insufficient to counter elevated costs. Despite tumbling in Asia as a consequence of flagging sales, operating income overseas rose, buttressed by gains in the Americas and Europe attributable to ongoing efforts to maintain sales prices by ensuring stable supplies and services, which countered the impact of exchange rate fluctuations arising from the depreciation of emerging market currencies.

Color & Display

Segment sales rose 8.6%, to ¥68.9 billion. Sales of pigments for coatings expanded, notwithstanding deteriorating shipments, thanks to efforts to improve the product mix and revise product prices. Sales of pigments for plastics were firm, owing to steady demand overall and an increase in shipments, as well as by moves to modify sales prices. Among high-value-added products, shipments of pigments for color filters, used in displays, climbed sharply year on year, reflecting stable operating rates among display manufacturers. Shipments of pigments for cosmetics declined, hindered by listless demand from cosmetics manufacturers in the Americas and Europe, the principal customers for these products, and other factors. In pigments for specialty applications, shipments of products used in building materials were solid, while those of products for agricultural use advanced, boosted by signs of a market rally.

The segment reported operating income of ¥2.8 billion, as sales remained steady amid a market recovery and ongoing structural reforms in the pigments business in the United States and Europe helped trim costs, underpinning a return to profitability overseas.

Functional Products

Segment sales increased 4.0%, to ¥70.8 billion. Despite inventory adjustments for certain epoxy resins, the foremost application for which is electronics equipment, notably semiconductors, sales of digital materials were up, bolstered by solid shipments. Sales of industrial-use adhesive tapes, used mainly in smartphones and other mobile devices, rose as broader adoption and other factors pushed up demand. In the area of industrial materials, no sudden shift was seen in demand in the automobile market, but sales of products for mobility solutions were firm, owing to, among others, success in maintaining level shipments of polyphenylene sulfide (PPS) compounds.

Segment operating income climbed 22.0%, to ¥5.1 billion. Factors behind this included higher sales 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 the First Half of Fiscal Year 2025 and Fiscal Year 2025

(Billions of yen)

Note: Forecasts are unchanged from those published on February 12, 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.