Denka Company (4061) Investor presentation summary

Mission 2030 Phase 2 objectives and financial targets

• Phase 2 (FY2026–FY2028) aims to rebuild earning power, targeting operating income of ¥45 billion and ROE of 8% or higher by FY2028, with a focus on sustainable growth in ICT & Energy and Healthcare sectors.

• Key measures include strengthening growth businesses, creating cash cows in Sustainable Living, resolving DPE issues, launching new businesses, and restoring financial health through profitability and selective investments.

• Record-high operating income and improved ROE are set as highly reliable targets, with a total return ratio target of 50% over eight years and a commitment to maintain or increase dividends.

Portfolio transformation and business strategy

• Portfolio transformation prioritizes specialty improvement (ROIC >10%) and focuses on three-star businesses combining specialty, megatrends, and sustainability.

• Low-profit and non-core businesses are being withdrawn or restructured, with investments concentrated in semiconductor, XEV, and diagnostic fields.

• Strategic expansion in ICT & Energy targets advanced thermal management, generative AI, and power infrastructure, while Healthcare emphasizes alliances and M&A in diagnostics.

Capital allocation, investment, and governance

• Investment peaked in FY2025, mainly for a new acetylene black facility in Thailand; Phase 2 will see more selective investments and improved D/E ratio (target ≤0.7).

• Governance enhancements include a majority of outside directors, succession planning, and strengthened ROIC-driven portfolio management.

• Asset sales, improved cash flow, and careful investment selection are key to restoring financial position.