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 three months ended March 31, 2026, consolidated net sales rose 7.8%, to ¥282.5 billion.

• Key global economies continue to be impacted by logistics and supply chain disruptions arising from the escalating tensions in the Middle East, which have led to soaring crude oil prices and energy costs, as well as to concerns regarding supplies of naphtha-derived petrochemicals. Owing to multiple factors, including the impact of this situation on consumer prices, an uncertain outlook persists 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 robust, propelled mainly by brisk demand for AI applications, while the display market benefited from an upswing in the operating rates of display manufacturers in expectation of higher demand for flat-screen televisions ahead of the 2026 FIFA World Cup quadrennial international men’s soccer championship, which is scheduled to take place in June and July 2026. In industrial materials,* used primarily in mobility solutions, the automobile market was affected by changes in the demand structure, caused by the situation in the Middle East, which spurred higher sales of EVs worldwide at the same time as it pushed down Japanese automakers’ exports to the region.
• 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. Results for inks for packaging applications and for certain resins reflected a trend among customers, particularly in overseas markets, to boost inventories amid apprehension about the prolonged Middle East crisis.

Operating income climbed 87.7%, to ¥24.5 billion. This was due mainly to rising shipments of high-value-added products, particularly for digital applications, as well as to relentless efforts to revise sales prices and implement appropriate cost management in all three segments. Other factors included a one-time gain stemming from the fact there was no longer a need to record a liability for repairs at a pigments production facility in Germany, which had been legally required in previous years, resulting in a ¥5.8 billion reversal of the liability.

Ordinary income, at ¥23.9 billion, was up 141.4%, as foreign exchange losses associated with the depreciation of emerging market currencies declined.

Net income attributable to owners of the parent soared 214.7%, to ¥19.2 billion. This was a consequence of higher extraordinary income, pushed up by the sale of works of art.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 61.0%, to ¥39.3 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 three months ended March 31, 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 three months ended March 31, 2025, has been prepared and disclosed based on the revised measurement method.

Packaging & Graphic

Segment sales increased 8.4%, to ¥145.2 billion. In the area of packaging inks, used chiefly on packaging for food products, sales were down in Japan, as rising consumer prices led to a decrease in consumption, which pushed down shipments. In contrast, sales of these products rose in the Americas and Europe, despite flagging shipments attributable to waning economic conditions, thanks to efforts to adjust sales prices. Sales of packaging inks were also up in Asia and elsewhere, despite temporary inventory buildup by customers—particularly in the People’s Republic of China (PRC)—in anticipation of tensions in the Middle East, supported by moves to expand sales in individual regional markets. In publication inks, which center on inks for commercial printing and news inks, sales advanced, notwithstanding ongoing structural declines in publishing-related demand worldwide, bolstered by, among others, expanded shipments of UV-curable inks for printing trading cards and other applications and by the acquisition of market share from competitors in Europe. Sales of jet inks, used in digital printing, rose, despite one-time customer inventory adjustments, as shipments remained robust. Shipments of polystyrene, applications for which include food trays, were up, as the situation in the Middle East encouraged customers to stockpile inventories.

Segment operating income rose 25.0%, to ¥8.3 billion. Amid inventory buildup by customers attributable to the situation in the Middle East, steps taken to expand sales of high-value-added products and implement appropriate sales price revisions prompted gains in all geographic operating regions.

Color & Display

Segment sales edged up 1.5%, to ¥69.7 billion. On a local currency basis, however, sales declined 5.1%. Shipments of pigments for coatings and for plastics—which together account for a significant share of sales—diverged, with those of pigments for coatings falling, as a cold snap in North America dampened orders, while those for plastics rose, bolstered by expanded sales, particularly to customers in Europe and North America. Among high-value-added products, shipments of pigments for color filters used in displays were up, as the operating rates of display manufacturers picked up. In contrast, sales of pigments for cosmetics were down, owing in part to a strategic decision to discontinue sales of certain products with low added value. In pigments for specialty applications, shipments of products for agricultural use advanced, 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 3.0 times, to ¥8.5 billion. This was despite the decline in segment sales on a local currency basis and reflected such factors as a one-time gain stemming from the fact there was no longer a need to record a liability for repairs at a pigments production facility in Germany, which had been legally required in previous years, resulting in a ¥5.8 billion reversal of the liability.

Functional Products

Segment sales rose 8.4%, to ¥76.7 billion. In the area of digital materials, sales of epoxy resins, the foremost application for which is semiconductor packaging substrates and encapsulating materials, increased, bolstered by firm demand for semiconductors for AI-related applications, which drove 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 buttressed by steady efforts to lock in demand, which led to broader adoption, primarily for high-end models. Sales of industrial materials were also up, underpinned by robust shipments of mainstay polyphenylene sulfide (PPS) compounds for both mobility solutions and housing equipment. Results for other resins, particularly in overseas markets, were affected by customer efforts to stockpile inventories in expectation of a prolonged Middle East crisis.

Segment operating income climbed 75.3%, to ¥9.1 billion. This gain reflected robust shipments overall, as well as expanded sales of high-value-added products, notably digital materials.

（3）Operating Results Forecasts for the First Half of Fiscal Year 2026 and Fiscal Year 2026

(Billions of yen)

Note: Forecasts are unchanged from those published on February 16, 2026.

In response to raw materials procurement risks and pricing pressures anticipated as a result of the Middle East crisis, the DIC Group will take steps to, among others, secure necessary raw materials, address rising raw materials prices in a timely manner, and implement additional cost-cutting measures, thereby minimizing the impact of this situation on its performance. Because it is difficult to reasonably quantify the impact on its performance at this time, DIC has maintained its initial first-half and full-term forecasts published on February 16, 2026. Revised forecasts will be announced as soon as reasonable quantification becomes possible.

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.