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 tIn the six months ended June 30, 2025, consolidated net sales slipped 2.9%, to ¥523.2 billion.

• Looking at key global economies in recent months, attention remained focused on the progress of negotiations among countries and regions following the United States’ announcement of a reciprocal tariffs policy. Corporate and consumer behavior varied, reflecting an increasing wariness attributable to the uncertain economic outlook, with pre-tariff demand surges seen in some areas and tariff-induced buying restraint in others.
• In this environment, demand trends in core customer industries diverged. In the area of digital materials, used principally in electrical and electronics equipment and in displays, the display market saw a slight decline in operating rates among display manufacturers, but the semiconductor market was firm, propelled by growing demand for use in AI and semiconductor devices, among others. In industrial materials,* used primarily in mobility solutions, the potential impact of the U.S. tariff policy continued to be a cause of anxiety in the automobile market, but sales benefited from a temporary demand surge ahead of tariff imposition, as a result of which no sudden shift was seen.
• Against this backdrop, results varied for different products. The Packaging & Graphic segment reported a year-on-year decrease in overall sales of inks from the second quarter (April–June 2025) forward. Sales in the Color & Display segment also trended downward, particularly of pigments for coatings and for plastics. In the Functional Products segment, sales of high-value-added products for use in electronics equipment, including epoxy resins and industrial-use adhesive tapes, remained solid, while sales of polyphenylene sulfide (PPS) compounds and other products for mobility solutions were steady.

Operating income advanced 22.9%, to ¥27.0 billion. This was due mainly in the Color & Display segment, bolstered by sales price revisions implemented to boost margins, and to a return to profitability 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 pushed down costs.

Ordinary income, at ¥20.3 billion, was up 1.3%. Owing to the application of hyperinflationary accounting and other factors, including the rapid appreciation of the yen, foreign exchange losses mounted.

Net income attributable to owners of the parent climbed 104.0%, to ¥13.1 billion. This was a consequence of multiple factors, including a steep decrease in extraordinary losses compared with the six months ended June 30, 2024, when escalating severance costs arising from restructuring measures, together with a loss on sale of shares and investment in capital of subsidiaries and affiliates, caused extraordinary losses to soar.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 12.0%, to ¥49.1 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 six months ended June 30, 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 six months ended June 30, 2024 have been restated.

Packaging & Graphic

Segment sales declined 4.3%, to ¥268.8 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 reflecting concerns regarding tariffs—but sales were up, bolstered by ongoing efforts to adjust sales prices. Shipments and sales prices in Asia and Oceania were buffeted by flagging market conditions and sales price competition, as a result of which sales waned everywhere except in the People’s Republic of China (PRC), which reported an increase attributable to initiatives aimed at fostering new customers and expanded marketing. Sales of publication inks, which center on inks for commercial printing and news inks, decreased, with dwindling demand pushing down shipments, notably in the Americas and Europe. Sales of jet inks, used in digital printing, rose, as shipments remained firm. Sales of polystyrene, applications for which include food trays, were sluggish, hampered by customer buying restraint.

Segment operating income fell 11.9%, to ¥13.4 billion. Operating income in Japan decreased, 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, falling in Asia and Oceania, where sales flagged, as well as in the Americas and Europe, where falling 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. On a local currency basis, however, operating income in the Americas and Europe was up 1.6%.

Color & Display

Segment sales edged down 1.7%, to ¥132.0 billion. On a local currency basis, however, segment sales were up 0.5%. Although shipments of pigments for coatings and for plastics decreased in the Americas and Europe, as concerns regarding U.S. tariff–driven inflation prompted temporary buying restraint, sales of these products expanded, underpinned by ongoing efforts to revise sales prices. Among high-value-added products, pigments for color filters, used in displays, advanced, notwithstanding a slight decline in operating rates among display manufacturers and shipments remaining flat, thanks to sales price adjustments. Sales of pigments for cosmetics fell, 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, despite slowing shipments of products used in building materials, as shipments of products for agricultural use continued to recover following the completion of inventory adjustments. Lower segment sales were also due to the absence of sales of liquid crystal materials as a result of withdrawal from this business.

The segment reported operating income of ¥5.7 billion, up 13.1 times, bolstered 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 slipped 1.2%, to ¥143.0 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. Sales of industrial-use adhesive tapes, used mainly in smartphones and other mobile devices, rose owing to 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 polyphenylene sulfide (PPS) compounds, remained solid, thanks to a last-minute demand rush in the automobile market ahead of the U.S. tariffs.

Segment operating income, at ¥10.9 billion, was up 0.8%. This was despite an increase in costs due to advance investments in the area of chemitronics, and reflected factors such as the progress of efforts to expand 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

DIC has revised its operating results forecasts, published on May 15, 2025, as indicated below.

(Billions of yen)

Note: Forecasts in squared parentheses are those published on May 15, 2025.

Reasons for Revision of Operating Results Forecasts

The outlook for the global economy is expected to remain uncertain for the foreseeable future, given the current status of the U.S. tariffs and the outcome of trade deal negotiations. In this environment, with demand failing to meet expectations in the automotive and other markets, shipments are expected to decline, even in key customer industries. As a result, net sales are now expected to fall short of initial forecasts.

Operating income is expected to exceed initial forecasts thanks to efforts to expand sales of high-value-added products, adjust sales prices and reduce costs, among others. However, ordinary income is likely to be lower than anticipated, owing to the application of hyperinflationary accounting and other factors, including the rapid appreciation of the yen, which are expected to push up foreign exchange losses.

In light of these circumstances, forecasts for net sales, operating income and ordinary income have been revised. The forecast for net income attributable to owners of the parent remains unchanged.

At a meeting of the Board of Directors held earlier today, DIC resolved to revise its year-end dividend forecast for fiscal year 2025 to ¥150.00 (comprising an ordinary dividend of ¥70.00 and a special dividend of ¥80.00), up from its initial forecast of ¥50.00. (For more information, please see the press release published today titled “Notice Regarding Revision of Year-End Dividend Forecast for Fiscal Year 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.