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 six months ended June 30, 2026, consolidated net sales rose 13.3%, to ¥593.0 billion.

• Key global economies continue to be impacted by logistics and supply chain disruptions arising from the escalating tensions in the Middle East, leading to soaring crude oil prices and energy costs, as well as to apprehension regarding supplies of naphtha-derived petrochemicals. Although the situation is gradually easing, an uncertain outlook lingers for both corporate entities and consumers.
• In this environment, operating conditions in customer industries identified as key growth areas diverged. In digital materials, used principally in electrical and electronics equipment, the semiconductor market remained on an upswing, propelled mainly by brisk demand for AI semiconductors, while the display market benefited from an increase in the operating rates of display manufacturers accompanying a surge in demand for flat-screen televisions spurred by the 2026 FIFA World Cup quadrennial international men’s soccer championship, which took place in summer 2026. In industrial materials,* used primarily in mobility solutions, sales remained firm overall despite changes in the demand structure of the automobile market, as sales of EVs were up sharply in European countries, surpassing those of gasoline-powered vehicles on a half-year basis for the first time.
• Against this backdrop, results varied for different products. Shipments of epoxy resins, industrial-use adhesive tapes, ultraviolet (UV)-curable resins and other high-value-added products for digital applications were robust. In the Color & Display segment, shipments of pigments for color filters used in displays also advanced. For certain printing inks and coating resins, customers, particularly in overseas markets, moved to boost inventories amid expectations of a prolonged Middle East crisis.

Operating income climbed 92.2%, to ¥51.8 billion, a new first-half record. In addition to increased shipments of high-value-added products, particularly digital materials, this reflected relentless efforts to promptly revise sales prices and implement rigorous cost management in all three segments to counter higher raw materials prices. Another contributing factor was the positive impact of a weaker yen on operating income in overseas markets.

Ordinary income, at ¥52.3 billion, was up 157.7%. This was due to a decline in foreign exchange losses associated with the application of hyperinflationary accounting in emerging economies.

Net income attributable to owners of the parent soared 184.1%, to ¥37.2 billion.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 64.8%, to ¥80.9 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: In Phase 2 of the Company’s long-term management plan, “DIC Vision 2030”―the first year of which is fiscal year 2026—the Company has identified “Maximizing cash generation by improving capital efficiency” as a priority theme. As one of the metrics to measure its progress toward this goal, the Company has set return on invested capital (ROIC) targets for fiscal year 2030 for each reportable segment and is working to achieve high asset and capital efficiency that exceeds the cost of capital. Accordingly, beginning from the six months ended June 30, 2026, the Company has changed the way it measures segment information to more accurately reflect each reportable segment’s assets and capital efficiency. Segment information for the six months ended June 30, 2025, has been prepared and disclosed based on the revised measurement method.

Packaging & Graphic

Segment sales increased 14.3%, to ¥307.2 billion. In the area of packaging inks, used chiefly on packaging for food products, shipments in Japan were sluggish, as elevated consumer prices led to a decrease in consumption, but sales expanded thanks to efforts to adjust sales prices in response to rising raw materials prices. Sales of these products also rose in the Americas and Europe, thanks to robust shipments in North America, as well as to sales price revisions. In Asia and elsewhere, sales of packaging inks were boosted by a recovery in market conditions since the beginning of the year, as well as by an inventory buildup by customers in multiple countries in anticipation of a prolonged Middle East crisis, which pushed up shipments. Notwithstanding a downward trend in shipments in Japan, as well as in the Americas and Europe, owing to ongoing structural declines in publishing-related demand worldwide, overall sales of publication inks, which center on inks for commercial printing and news inks, were bolstered by efforts to revise sales prices to counter higher raw materials prices. In Asia and elsewhere, shipments of these products rose as customers stockpiled inventories in anticipation of a protracted Middle East conflict. Sales of jet inks, used in digital printing, advanced, as the impact of one-time customer inventory adjustments subsided and shipments remained firm. Sales of polystyrene, applications for which include food trays, were up, thanks to efforts to modify sales prices in response to raw materials price increases.

Segment operating income rose 62.6%, to ¥21.7 billion. While customers around the world stockpiled inventories of a broad range of products, concerned over the situation in the Middle East, steps taken to expand sales of high-value-added products and implement prompt sales price revisions underpinned gains in all geographic operating regions.

Color & Display

Segment sales increased 8.6%, to ¥142.5 billion. Shipments of pigments for coatings, which account for a significant share of sales, rose, particularly in Europe—the principal market for these products—for architectural and industrial applications. Shipments of pigments for plastics rose steadily in Europe, as well as in North America and Asia. Among high-value-added products, shipments of pigments for color filters used in displays advanced as display manufacturers increased operating rates accompanying a surge in demand for flat-screen televisions spurred by the 2026 FIFA World Cup, which took place in the summer. Sales of pigments for cosmetics were down, owing to the strategic decision to discontinue sales of certain products with low added value. In pigments for specialty applications, shipments of products for agricultural use were up, but sales decreased, with causes including product mix. Higher segment sales also reflected the positive impact of a weaker yen on sales in overseas markets after translation.

Segment operating income soared 2.1 times, to ¥12.0 billion, bolstered by the increase in sales, as well as by efforts to reduce costs, primarily through structural reforms. Another contributing factor was a one-time gain in the first quarter stemming from the determination, based on the judgment of a third-party organization, that the recording of a liability for repairs at a pigments production facility in Germany, which had been legally required, was no longer necessary, resulting in a ¥5.9 billion reversal of the liability.

Functional Products

Segment sales rose 13.0%, to ¥161.6 billion. In the area of digital materials, sales of epoxy resins, the foremost application for which is semiconductor packaging substrates and encapsulants, increased, backed by firm demand for AI semiconductors, which led to brisk shipments of active ester curing agents used in insulating materials. Despite concerns over the impact of memory shortages on market conditions, sales of industrial-use adhesive tapes—used mainly in smartphones and other mobile devices—were bolstered by broader adoption, primarily for high-end models, and steady efforts to lock in demand. Sales of industrial materials were also up, underpinned by robust shipments of mainstay polyphenylene sulfide (PPS) compounds for both mobility solutions and architectural interior materials. Shipments of certain coating resins advanced as customers, particularly in overseas markets, moved to boost inventories amid expectations of a prolonged Middle East crisis.

Segment operating income climbed 96.4%, to ¥21.3 billion. Factors behind this included robust shipments overall, as well as expanded sales of high-value-added products, notably digital materials. This steep gain was also due to efforts to adjust sales prices in response to rising raw materials prices, a consequence of the situation in the Middle East.

(3) Operating Results Forecasts for Fiscal Year 2026

DIC has revised its operating results forecasts, published on May 15, 2026, as indicated below.

(Billions of yen)

Note: Forecasts in squared parentheses are those published on May 15, 2026.

Reasons for Revision of Operating Results Forecasts
Although there is currently no prospect of resolution to the crisis in the Middle East, crude oil and naphtha prices have stabilized after a period of sharp increases, while concerns regarding stockpiling and raw materials supplies resulting from supply chain disruptions are subsiding. Nonetheless, downside risks are anticipated in the second half of fiscal year 2026, including a decline in demand for certain products caused by a reversal of the trend toward inventory stockpiling by customers and the impact of higher raw materials prices on costs. In light of a recalculation of full-term expectations based on results in the six months ended June 30, 2026, and on business risks expected in the second half, operating results forecasts for fiscal year 2026 have been revised upward, with net sales, operating income, ordinary income and net income attributable to owners of the parent now expected to reach record-high levels.

Additionally, at a meeting of the Board of Directors held today, a resolution was approved to raise the forecast for the fiscal year 2026 year-end dividend to ¥80.00, from the initial forecast of ¥70.00. (For more information, please see the timely disclosure issued today titled “Notice Regarding Revision (Increase) of the Year-End Dividend Forecast for Fiscal Year 2026.”)

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, among others, the restructuring of its operations.