麻豆番外篇

To Our Shareholders

In Phase 2 of the “Mission 2030” management plan, we will focus on “rebuilding earning capacity” and “strengthening the foundation for a new growth stage,” aiming to achieve record-high operating income and 8% ROE during this period.

In FY2025, the Japanese economy moved toward a moderate recovery as personal consumption and capital investment showed signs of improvement. The global economy as a whole showed a rebound. However, the outlook is uncertain due to factors such as developments in U.S. trade policy and escalating tensions in the Middle East.
Amid such circumstances, the Group focused on expanding business and securing profit by promoting initiatives based on the three growth strategies set forth in “Mission 2030,” the eight-year management plan launched in FY2023: Business Value Creation, Human Resources Value Creation, and Management Value Creation.
As a result, for the fiscal year under review, sales volume of electronics and innovative products increased. However, net sales were ?384.2 billion, down ?16.0 billion year on year. This was mainly due to lower proceeds from sales price reviews in response to falling raw material and fuel prices. In terms of earnings, operating income was ?26.2 billion (up ?11.8 million year on year), and ordinary income was ?19.3 billion (up ?11.7 billion year on year). Profit attributable to owners of parent was ?15.7 billion (compared with a loss of ?12.3 billion in the previous fiscal year), due to the recording of the gain on transfer of factory land at the Ofuna Plant and gain on sale of strategic cross-shareholdings as an extraordinary income, despite also recording an extraordinary loss related to Denka Performance Elastomer LLC (DPE), a U.S.-based subsidiary that has elected not to restart production at its chloroprene rubber manufacturing facilities for an indefinite period.
The Group’s earning power has declined due to rapid changes in the business environment and other factors since the establishment of the “Mission 2030” management plan, making it imperative that business performance be rebuilt. In fiscal 2025, the Group prioritized “acceleration of portfolio transformation” and “recovery of earning capacity” while carefully selecting investments and controlling financial discipline in order to overcome revenue issues and return to a growth trajectory.
In terms of drastic measures for the U.S. chloroprene rubber business, the top priority for portfolio transformation, DPE has temporarily shut down its chloroprene rubber manufacturing facilities for an undetermined period of time. DPE is in the final stages of removing and disposing of raw materials, intermediate products, and other materials in order to safely deactivate its manufacturing facilities. A certain amount of extraordinary losses on a consolidated basis is expected in the future as well; in addition to considering compensation for these losses through asset sales and other means, we are steadily promoting discussions with stakeholders, including the relevant authorities, in order to minimize the burden of these losses. In addition, as part of its liquidation of unprofitable businesses, the Company stopped cement production, withdrew from the CARALYAN film and tape business, and consolidated its synthetic fiber wig yarn business into a Singapore subsidiary. Furthermore, as part of business restructuring, we have decided to consider spinning off the styrene-related business, aiming for April 2027. The spin-off will enhance the independence and profitability of the business, enhance the ability to promote structural reforms, and establish a structure that allows for a variety of strategic options, including collaboration with external partners and capital alliances. We then made Kainos, a manufacturer of clinical diagnostic reagents, a subsidiary through joint investment with the Development Bank of Japan in order to maximize synergies, including overseas expansion.
In fiscal 2025, operating income was 26.2 billion yen, exceeding the must-achieve target of 25.0 billion yen. This was due in part to the forceful company-wide push for cost reduction and other measures, an innovative approach fully utilizing outside expertise, in addition to the acceleration of portfolio transformation mentioned above.

We have recently reviewed the “Mission 2030” management plan. We have positioned the period from FY2023 to FY2025, when we liquidated unprofitable businesses, implemented business restructuring, and invested upfront in growth areas, as Phase 1, and the three-year period from FY2026 to FY2028 as Phase 2, in which we will focus on “rebuilding earning capacity” and “strengthening the foundation for a new growth stage” to achieve further growth. During this period, we aim to achieve record-high operating income and 8% ROE.

Initiatives in Phase 2 will be based on a balance of growth strategies, structural reforms, and financial discipline, with a clear directionality in which the business domains serve respectively as growth driver, stable growth source, and cash cow. In each area, the Company will classify its operations into three categories: “strategic expansion,” “reaping the benefits of prior investments,” and “improving capital efficiency and transforming business models,” and will execute them in balance based on business strategies for each domain.
In addition, in order to create new businesses, which are indispensable for further growth, with a view to fiscal 2030 and to realizing rapid business creation, we will develop initiatives focusing on the “trickle-out strategy” to uncover apparent needs around existing businesses based on our technological expertise in organics, inorganics, and biotechnology, among our strengths.
In Phase 2 of the “Mission 2030” management plan, which began this fiscal year, we will rebuild our earning capacity and strengthen the foundation for a new stage of growth by implementing these measures with determination to achieve solid results.
From Phase 3 onward, we will achieve sustainable growth unique to DENKA and help resolve social issues through an optimal mix of growth trends balanced from different angles, including vigorous growth areas in “ICT & Energy” that capture market expansion and stable and steady growth areas in “Healthcare,” in addition to carefully selecting businesses with the strength to survive in “Sustainable Living.”

We request our shareholders to grant us ongoing understanding and support.