Slides
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Corporate Business Plan Keiichi Iwata – President FY 2025- 2027 March 4, 2025
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2 Agenda FY2022-2024 Review of the Corporate Business Plan Section 01 4 Basic direction 1. Upgrade business portfolio with new growth strategy Basic direction 2. Build greater resilience by executing continued structural reforms Basic direction 3. Improve financial and capital efficiency Basic direction 4. R&D strategy based on 3 X’s Basic direction 5. Strengthen management base supporting new growth strategy Section 04 52 Sector strategies under the new Corporate Business Plan Section 02 10Long-term vision Section 03 21Overall strategy under the new Corporate Business Plan 32 29 36 44 49 FY2025-2027 FY2025-2027
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3 Key points In FY2024 we advanced immediate-term business performance improvements and fundamental structural reforms and expect a v-shaped recovery. Core Operating Income will recover approx. 250 bn. yen year-on-year and the balance sheet and business portfolio have vastly improved. Our new Corporate Business Plan slogan is: Leap Beyond ～Return to a growth trajectory～ Leap higher, beyond today and return to a growth trajectory. FY 2025 will become a new start for a reborn Sumitomo Chemical. Management resources will be allocated with priority to our two growth-driver sectors at the same time we continue to implement structural reforms. In the final year of the new plan (FY2027), as a mid-point in the return toward a growth trajectory, we aim for 200 bn. yen in Core Operating Income, 8% ROE, and 6% ROIC. Achieve sustainable growth beyond FY2030. As a long-term goal, we strive for 350 bn. yen in Core Operating Income, over 12% ROE, and over 10% ROIC by FY2035.
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Section Review of the Corporate Business Plan01 FY2022- 2024
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5 Business performance01 184.5 262.7 204.3 132.7 147.6 234.8 92.8 -149.0 100.0 -30 -20 -10 0 10 20 30 -300 -200 -100 0 100 200 300 Core Operating Income ROE (Forecast) ROE (%)Core Operating Income (Billions of yen) ※ Sectors in parentheses shown for FY2023 and earlier Since FY2022, business performance at Sumitomo Pharma and PetroRabigh deteriorated substantially, and in FY2023 we booked the largest losses in our history. In FY2024, we expect a v-shaped recovery on immediate-term, concentrated measures to improve business performance and fundamental structural reforms. FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 ■ Agro & Life (Health & Crop Sciences) ■ ICT & Mobility (IT-related Chemicals) ■ Advanced Medical ■ Essential & Green (Essential Chemicals) ■ Sumitomo Pharma (Pharmaceuticals) ■ Energy & Functional Materials ■ Other ● ROE
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6 Reasons for and responses to business performance deterioration01 External factors Internal factors Major new plants in China Accelerated commodification of technologies Management resources spread across diversified business Insufficient focus and development capabilities in pharmaceuticals Increasing difficulty of new drug development Insufficient competitiveness in growth drivers New growth strategy: Concentrate resources in growth drivers Revival strategy: Review drug development pipeline New growth strategy: Strengthen investment governance Business rebuilding: Shrink commodity businesses (Commodity P&P, large LCD polarizers, methionine) New growth strategy: Thoroughly re-implement ROIC-oriented management Reasons for business performance deterioration Revival strategy: Re-position Sumitomo Pharma Reasons for business performance deterioration were reflected in measures incorporated into structural reforms and the new plan Measures and responses incorporated into structural reforms and the new plan
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7 Immediate-term, Concentrated Measures to Improve Business Performance01 Immediate-term, Concentrated Measures to Improve Business Performance Business Performance Cash generation: 700 bn. yen Expected results over 2 years (FY2023～2024) Rebuild businesses Reduce inventories More selective investments Other asset dispositions etc. 185 bn. yen 150 bn. yen 170 bn. yen200 bn. yen Chinese polarizers Chinese LCD chemicals Nihon Medi-Physics Sumitomo Bakelite etc. 800 bn. yen 650 bn. yen as of the end of March 2025 FY2022-2024 cumulative investment plan Streamline to 500 bn. yen 700 bn. yen Disposition of cross- shareholdings Disposition of health and wellness facilities Leverage surplus funds Apply best owner perspective to business dispositions (cash basis)
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8 Immediate-term, Concentrated Measures to Improve Business Performance01 0 1,000 2,000 3,000 Entire company worked together to complete immediate-term measures. Balance sheet and business portfolio improved significantly. 1,000 1,200 1,400 1,600 1,800 2,000 2,200 Reduce inventories More selective investments Rebuild businesses Asset dispositions etc. End of FY2022 End of FY2024 (Forecast) End of FY2024 (Theoretical value) 1,270.0 1,461.4 Approx. 2 trn. yen 700 bn. yen financial improvement ROIC -1.3% 1.5%ROIC About 20% leaner in aggregateApprox. 3 trn. yen Approx. 2.4 trn. yen Growth drivers (%)Agro & ICTM 35％ 45％ Loss before taxes, investments (original plan), etc. Essentials Pharmaceuticals, etc. Invested capitalInterest-bearing debt FY2022 FY2024 Essentials, Pharmaceuticals, etc., cut by 30% Up 10 pp ※ Theoretical value assuming we had never implemented the immediate-term measures to improve business performance. ※ (bn. yen) (bn .yen)
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9 Fundamental structural reforms01 Sumitomo Pharma PetroRabigh P&P reorganization Measures to stop the bleeding 3 key products Small molecule drugs (drug discovery) Rebuilding aimed at sustainable growth Financial restructuring Measures to improve earnings Japan upstream (cracker) Japan downstream (polyolefins) Singapore By now, we have set the direction for multiple difficult challenges. Under the new plan, we will continue to work on remaining challenges. : Response
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Section Long-term vision02
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11 Long-term vision02 Innovative Solution Provider Become a company that leverages innovative technologies to solve society’s challenges Food ICT EnvironmentHealthcare Agro & Life Solutions ICT & Mobility Solutions Advanced Medical Solutions Essential & Green Materials Contribute to regenerative agriculture Innovate IT Spread leading-edge medicine Reduce environmental impact Low environmental impact agrochemicals Biorationals and botanical products Cutting-edge photoresist and Semiconductor performance chemicals, Polarizers for OLED Regenerative medicine & cell therapies Small molecule drugs CDMO Various GX technologies Products and services as solutions GX -Green- BX -Bio- DX -Digital- Assets for solutions Catalyst design Precision machining Organic and polymer material functional design Inorganic material functional design Device design Bio-mechanism analysis 6 core technologies
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12 02 Contributions in the field of food Long-term vision Society’s challenges Food Realize and spread regenerative agriculture that recovers natural capital while also maintaining and enhancing agricultural productivity Growing demand for food driven by population growth Stagnant growth in cultivated acreage We need new and sustainable agricultural systems Impact on biodiversity Soil erosion and GHG emissions from agricultural activities Direction for solutions Recover natural capital Agricultural productivity Agricultural profitability Regenerative agriculture
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13 02 Contributions in the field of food Long-term vision Agro & Life Solutions Sector Solutions we provide • Rhizosphere materials that contribute to suppressing climate change through carbon storage Technological assets Business assets • Herbicides that align with carbon storage and soil health recovery, including no-till farming and cover crop systems Global footprint covering major agricultural markets in the Americas, India and other parts of the world 60+ year track record in the biorationals and botanicals business Services and DX platforms that fuse our business experience with our unique technologies A technological base in organic chemistry such as chemical synthesis, chemical analysis, biochemistry, and environmental science Strong drug discovery capabilities leveraging the latest science and technology and AI Strengths ※Cover crop: A crop grown not for harvest, but to protect the soil. ※
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14 Long-term vision Contributions in the field of ICT02 ICT Fuse our proprietary core technologies and developed know-how to contribute to “new” industrial revolutions driven by total solutions that accelerate customer innovations Technological development designed to enable the realization of societal reforms Increased energy consumption resulting from the spread of generative AI Flying cars Connected cars IoT Big data Artificial Intelligence (AI) XR Edge AI Next - generation telecommunications technology Autonomous operation Toward a new society where cutting - edge technologies are incorporated across industries and aspects of society and lifestyles and economic development and the solving of society's challenges are achieved in balance Advanced technological innovations Further increased energy efficiency Cutting-edge technologies for ultrasmart societies where people lead fulfilling lives Total solutions Proprietary core technologies Developed know - how Direction for solutions Society’s challenges
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15 Long-term vision Contributions in the field of ICT02 ICT & Mobility Solutions Sector Solutions we provide Technological assets Business assets Global supply and development infrastructure in Japan, South Korea, China, and the US built on upfront investments High value-added portfolio achieved through structural reforms Capturing growth opportunities through market-in strategy Miniaturization and higher purities Thin-film forming and ultrafine particle processing Photosensitive material design and performance resin design Development team of 1,000 people globally Strengths • Display materials that support our proprietary ultra thin film and higher resolutions (OLED and automotive, etc.) • Cutting-edge photoresist and cleaning agents that support cutting-edge applications • Semiconductor chemicals and back-end process materials that support diverse needs of semiconductors Semiconductor -related materials Display materials
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16 02 Contributions in the field of Healthcare Long-term vision Supporting diversification of medical needs Healthcare • Development of cutting-edge medical technologies such as regenerative medicine & cell therapies • Supporting diverse treatment and pharmaceutical modalities • Longer life spans and enhanced quality of life Supporting individualized medicine Increase in lifestyle- related diseases Multiple comorbidities in aging society Individual differences in treatment effects Progression of resistance to medicines Diversification of treatment and pharmaceutical modalities DNA Molecules Cells Small molecule drugs Antibody drugs Nucleic acid drugs Gene therapy DNA cell therapyCell therapy 1900 2000 2010 2020 (CY)～ Direction for solutions Society’s challenges
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17 02 Contributions in the field of Healthcare Long-term vision Advanced Medical Solutions Sector Solutions we provide Technological assets Business assets Comprehensive capabilities developed in the Life Science business (development, production technology, regulatory affairs, quality management, analysis) Strong synthesis capabilities in advanced small molecule drugs Synthesis technology in high-purity long-chain nucleic acids Leveraging bio-technology in cutting-edge technology inducing stem cell differentiation Strengths New nucleic acid plant (Oita) • Regenerative medicine & cell therapies including world's first iPS cell-derived product • CDMO business leveraging strong synthesis capabilities (advanced small molecule, oligonucleic acid, and regenerative medicine & cell therapies) Front-runner in commercialization of iPS cells • Advanced small molecule and oligonucleic acid CDMO with 3 plants in Japan (Okayama, Gifu, Oita) • Drug discovery: RACTHERA • CDMO: S-RACMO Flexible support of demand
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18 02 Environment Society’s challenges We need technologies that can leverage diverse carbon sources in a circular manner including recycling and biomass Various challenges posed by petrochemical products Global average temperatures (1900-2024) (℃) Intensification of weather-related damages Abnormal weather patterns Loss of biodiversity, etc. Impacts from rising temperatures -0.4 0 0.4 0.8 1.2 1.6 1900 1950 2000 Release of plastics into the ocean Depletion of petroleum resources Greenhouse gas emissions (during manufacture and incineration) （CY） Establish and spread chemical products manufacturing technologies that achieve a reduced environmental impact, including mechanical recycling, high-efficiency chemical recycling, and the use of biomass Direction for solutions Contributions in the field of Environment Long-term vision
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19 02 Contributions in the field of Environment Long-term vision Essential & Green Materials Sector Technological assets Business assets Capabilities bringing together supply chains for a circular economy for resources Track record and alliances with third parties in the licensing business Capabilities running large-scale projects Meguri® branding of environmentally friendly products Catalyst design technology Process development technology Organic and polymer material functional design technology Participation in Green Innovation Fund projects Strengths (Largest scale in chemical industry) Solutions we provide Pilot facilities manufacturing methanol from CO2 Ethanol to propylene CO2 to methanol PMMA chemical recycling • Innovative technologies that reduce environmental impact
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20 Long-term growth scenario02 Innovative Solution Provider 20352030 Growth drivers out to FY 2030 are Agro & Life and ICT & Mobility 2 1 Growth of Advanced Medical and Essential & Green Materials based on market ramp up Aim for sustainable growth in two phases. Return to a growth trajectory and become a newborn specialty chemicals company. Approximate P&L
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Section Overall strategy under the new Corporate Business Plan 03 FY2025- 2027
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22 New Corporate Business Plan slogan03 Leap Beyond (Leap higher, beyond today) ～Return to a growth trajectory～ We are strongly motivated to leap to higher ground on new ideas, which take us beyond conventional businesses, technologies and ways of thinking, and return to a growth trajectory. It expresses our commitment to continue to pursue innovation as a reborn Sumitomo Chemical and realize value creation for sustainable growth. What the slogan means to us
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23 Overview of the new Corporate Business Plan03 Vision for this plan Slogan Upgrade business portfolio with new growth strategy Build greater resilience by executing continued structural reforms R&D strategy based on 3 X’s Strengthen management base supporting new growth strategy Leap Beyond ～Return to a growth trajectory～ Return to a growth trajectory and show the way toward further growth Talent DX Governance Basic direction 01 Basic direction 02 Basic direction 03 Basic direction 05 Core Operating Income 200 bn. yen ROE 8% D/E ratio Approx. 0.8X FY2027 Financial targets ROIC 6% Improve financial and capital efficiency Basic direction 04
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24 Management numerical targets of FY202703 FY2024 Forecast FY2027 Target Change Sales Revenue 2,600.0 2,400.0 -200.0 Core Operating Income 100.0 200.0 100.0 Net Income Attributable to Owners of the Parent 25.0 100.0 75.0 ROE 3% 8% 6pp ROIC 2% 6% 4pp (Billions of yen)
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25 0 100 200 Future outlook 03 Underlying performance improves year by year towards FY2027 Core Operating Income 200.0 bn. Target 2024 2025 2027 （Billions of yen） 2026 （Estimate） （Target）（Forecast） （FY） （Estimate） Capital gains on business dispositions, etc.
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26 FY2027 Core Operating Income Targets by Sector03 FY2024 Forecast FY2027 Target Change Agro & Life Solutions 53.0 80.0 27.0 ICT & Mobility Solutions 65.0 80.0 15.0 Advanced Medical Solutions 3.0 10.0 7.0 Essential & Green Materials -64.0 25.0 89.0 Sumitomo Pharma 24.0 5.0 -38.0 Others 19.0 Total 100.0 200.0 100.0 40.0 200.0 160.0 (Billions of yen) (Excluding capital gains on business dispositions)
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27 Bridge to FY2027 Core Operating Income (vs. FY2024)03 2024年度 （予想） 2024年度 （予想） 2027年度 （計画） 100.0 40.0 200.0 94.0 66.0 60.0 FY2024 (Forecast) The latest forecast announced on February 3 Excluding capital gains on business dispositions FY2027 (Target) Change in Rabigh shareholding ratio Enhance earnings power through continued structural reforms and a new growth strategy (Billions of yen) Growth and Focus Areas Essential & Green Capital gains on business dispositions Business Expansion +38.0 Intensifying Competition -10.0 Expand sales of ICTM core products: +23.0 Semiconductor materials +16.0 New display, etc. +7.0 CDMO (nucleic acid, etc.): +4.0 Agro & Life, ICT & Mobility, Advanced Medical (excludes business dispositions) +66.0 Upgrade ICTM portfolio: +10.0 Shift to polarizers for OLED and automotive Crop protection products (Chemical & Biorational):+28.0 Essential & Green +94.0(excludes business dispositions) Rabigh and Singapore: +80.0 EGM Japan reorganization, etc.: +14.0 - Ties with companies in Japan - Expand licensing - Rationalization, etc. in Japan
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28 Basic direction of the new Corporate Business Plan Upgrade business portfolio with new growth strategy Build greater resilience by executing continued structural reforms Improve financial and capital efficiency Strengthen management base supporting new growth strategy Basic direction 01 02 03 04 03 05 R&D strategy based on 3 X’s Basic direction Basic direction Basic direction Basic direction
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29 Upgrade business portfolio with new growth strategy03 Agro & Life Solutions ICT & Mobility Solutions Essential & Green Materials Advanced Medical Solutions Growth drivers Concentrate management resources to drive companywide business performance Concentrate resources in capex and R&D investments New growth areas Cultivate as the third pillar in the future Fundamental areas Cultivate businesses that reduce environmental impact Upgrade business portfolio by clarifying the positioning of each sector and appropriately allocating resources Cultivate from a long-term perspective Positioning Basic direction 01
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30 Concentrate resources in growth drivers03 Upgrade business portfolio with new growth strategy Under new plan, prioritize financial discipline of 450 bn. yen (within scope of D&A) and appropriately allocate strategic investments, with approximately 80% into growth drivers. Strategic investments 230 bn. yen 78% 22% Agro & Life ICT & Mobility Other Maintenance capex 220 bn. yen Major investments • Technologies that reduce environmental impact approx. 50bn. yen 22% approx. 180 bn. yen Major investments • Agrosolutions M&A • Agrosolutions new products support • Added capacity in semiconductor chemicals • Next-generation displays 78%Agro & Life ICT & Mobility Advanced Medical Essential & Green Other FY2025-2027 Business investments (capex, loans and investments) Capital expenditures, loans and investments plan 450 bn. yen Basic direction 01
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31 03 Concentrate resources in growth drivers Upgrade business portfolio with new growth strategyBasic direction 01 （bn. yen） 0 50 100 150 200 250 2 growth driver sectors R&D investments FY2019-2021 FY2022-2024 FY2025-2027 Agro & Life ICT & Mobility Develop cutting-edge photoresists such as organic molecular resist Upgrade quality and productivity of high-purity chemicals Develop semiconductor back-end process materials Create long-term earnings stream from OLED and automotive polarizers Pangyo Next Generation Center (South Korea) Opened October 2024 ICT & Mobility Solutions Contribute to regenerative agriculture (no-till farming, carbon storage) Accelerate the drug development of next-generation pipeline Expand countries where B2020 & A2020 are registered Differentiate biorationals and expand botanicals Agro & Life solutions Agro & Life Solutions Research Center Main R&D themes R&D investments R&D investments in growth drivers increased by 30% (compared to 2019-2021).
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32 03 PetroRabigh Build greater resilience by implementing continued structural reforms In addition to the agreed upon financial improvement plan, execute Aramco-led rebuilding plan and strengthen fundamental earnings power. Challenges Major action plans under new plan Execute the following near-term measures focused mainly on strengthening earnings power of petroleum refinery Increase olefin production through de-bottlenecking of ethane cracker and HOFCC Strengthen feedstock competitiveness by changing crude oil types, etc. Measures to reduce sulfur content and increase margins in petroleum refinery products Continue to implement measures aimed at strengthening plant reliability, enhancing utilization rates and otherwise improving earnings Strengthen earnings power (Mid- to long-term) Financial improvement (Near-term) Reduce cumulative losses and interest-bearing debt Contribute (alongside an equal contribution from Saudi Aramco) to Rabigh $702 million proceeds from sale of equity Rabigh to use those funds to pay down debt and reduce interest costs Reduce our equity stake from 37.5% to 15% through the sale of shares to Saudi Aramco Accelerate studies of mid- to long-term measures, including upgrades to petroleum refinery equipment Strengthen earnings power (Near-term) Agreed Under way Under study Under study Basic direction 02
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33 Sumitomo Pharma03 Build greater resilience by implementing continued structural reforms • ORGOVYX®: • MYFEMBREE®: • GEMTESA®: 3 key products -40 -30 -20 -10 0 10 20 30 23Q1 23Q2 23Q3 23Q4 24Q1 24Q2 24Q3 24Q4 Recent business performance Sumitomo Pharma Core Operating Income (Billions of yen) Expect to achieve profitability in FY2024 • Effects from business structure improvements and narrower focus of R&D investments • Cut more than 100 bn. yen in costs year on year Cost reductions One-off factors *After reallocating research costs for regenerative medicine & cell therapies Basic direction 02 Steady growth amid launch of rival generics Sales grew substantially on reduced patient burden and promotional successes Pursued product profitability improvements through exclusive sales （Forecast）
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34 03 Sumitomo Pharma Build greater resilience by implementing continued structural reformsBasic direction 02 Future growth and Improve financial standing 0 100 200 2023 2024 2027 Sales for 3 key products （Forecast) Interest-bearing liabilities reductions 0 100 200 300 400 500 2023 2024 2027 Interest-bearing liabilities （Forecast） • Substantially reduced borrowings on sales of Roivant shares • Improve financial standing leveraging operating cash flows from growth in 3 key products （Advanced Prostate Cancer） • Expanding share within ADT* market as the only oral agent ・Overactive Bladder ・Overactive Bladder with Benign Prostatic Hyperplasia • Gaining share in endometriosis 3 key products GEMTESA ® • Aim to expand sales by increasing the range of indications MYFEMBREE ® （Uterine Fibroids/Endometriosis） NEW Limited synergies in field of small molecule drugs. Strongly support the company's reconstruction through the dispatch of executives, etc. At the same time, consider the best partners who can contribute to the company's sustainable growth. Small molecule drugs (drug discovery) business positioning Regenerative medicine & cell therapy Sumitomo Pharma's technology and advanced knowledge as a front-runner in regenerative medicine and cell therapy Our expertise in industrial engineering, analysis and evaluation, and quality management The entire Sumitomo Chemical Group is promoting development and business expansion. *ADT: Androgen Deprivation Therapy (Billions of yen) ORGOVYX® (Billions of yen)
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35 03 Toward further growth Japan and Singapore P&P reorganization Build greater resilience by implementing continued structural reforms 2022 to 2024 2025 to 2027 2030 and beyond Restructuring phase Convert to a complex with a reduced environmental impact Phase for building out structure for carbon neutrality FY2024 EGM Sector Sales makeup FY2027 EGM Sector Sales makeup GX technology development (adopted in GI Fund) See details on p. 47Technological development Singapore Japan Rebuild businesses (exit or sale) Polyolefin collaboration Japan and Singapore Detailed conceptualization of carbon-neutral plantsRationalization at existing ethylene plant Reduce MMA capacity Enhance earnings power of polyolefins Study and establish optimization of makeup of PCS complex GX Solutions business GX technologies Value chain See details on p. 48 Complete structural reforms under the new plan. Solidify standing aimed at commercializing businesses that reduce environmental impact 35 ％ 25 ％ Basic direction 02
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36 03 Agro & Life Solutions ICT & Mobility Solutions Essential & Green Materials Advanced Medical Solutions Growth drivers New growth areas Fundamental areas Concentrate management resources to drive companywide business performance Cultivate as the third pillar in the future Cultivate businesses that reduce environmental impact Thoroughly re-implement ROIC-oriented management. Enhance capital efficiency toward medium- to long-term goals. Improve financial and capital efficiency Thoroughly re-implement ROIC-oriented management Positioning FY2027 (Target) FY2035 (Goal) 8% 7% 11% 4% 11% over 10% 15% Basic direction 03
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37 03 Thoroughly re-implement ROIC-oriented management Improve financial and capital efficiencyBasic direction 03 Simultaneously advance both strengthening of earnings power and optimization of invested capital while we also strengthen management systems. Enhancement of enterprise value. 2024 2027 Strengthen earnings power Launch and expand sales of blockbuster crop protection products Expand business in semiconductor materials Strengthen cutting-edge medicine CDMO Enhance earnings power of P&P Optimize invested capital Actively invest resources into growth drivers Restructure P&P inside and outside Japan Dispose and exit non-core businesses Streamline capex, loans and investments Improve CCC Strengthen management systems Newly establish business portfolio review committee Review processes for deliberating investments Redesign governance institutions 3.8% 8.3% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 0 50 100 150 200 250 2024 2027 Invested capital Growth drivers Core Operating Income and Margin FY2024 1.5% 5.5% FY2027 +4.0pp Improve +2.3pp +1.7pp Improve Improve Essentials, etc. -10% +12% Improve ROIC (bn. yen) (FY)(FY)
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38 -500 -400 -300 -200 -100 0 100 200 300 400 500 1,900 2,000 2,100 2,200 2,300 2,400 2,500 2,600 2,700 2,800 2,900 3,000 3,100 3,200 3,300 FY2027 FY2024 FY2023 Rebuild with V-shaped recovery 00 03 V-shaped recovery at the same time we substantially rein in invested capital. Aim for a stable ROIC of 7%+ after the period under the new plan. Thoroughly re-implement ROIC-oriented management Improve financial and capital efficiency NOPAT* (Billions of yen) Invested capital (Billions of yen) *NOPAT: Net Operating Profit After Tax. *Using IFRS since FY 2017 NOPAT and invested capital Aim for 7%+ on a stable basis FY2017 FY2018 FY2015FY2016 FY2019 FY2020 FY2021 FY2022 Basic direction 03
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39 03 ICT & Mobility Advanced Medical Agro & Life Essential & Green (Excluding Rabigh) ROIC （％） FY2024 (Forecast) FY2027 (Target) 0 500 1,000 1,500 2,000 2,500 0 500 1,000 1,500 2,000 0 3 12 Target: 7% Overall Overall （Excluding SMP, Rabigh and Others） Invested capital (Billions of yen) 2,500 6 9 Overall Overall (Excluding SMP, Rabigh and Others) ROIC （％） 0 3 12 6 9 Invested capital (Billions of yen) Thoroughly re-implement ROIC-oriented management Improve financial and capital efficiencyBasic direction 03
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40 Cash allocation03 Improve financial and capital efficiencyBasic direction 03 Financial measures: Approx. 210 bn. yen Business investment: Approx. 920 bn. yen Capex, loans and investments: 450 bn. yen R&D expenses: 470 bn. yen Shareholder returns: 70 bn. yen Cash generation measures (Effects from asset sales, compression of cash and deposits, and structural reforms) 200 bn. yen Operating cash flows, etc. (Before deducting R&D expenditures) 3-year cumulative 930 bn. yen Total: Approx. 1.13 trillion yen Loan repayments: 140 bn. yen
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41 Cash generation measures03 Improve financial and capital efficiencyBasic direction 03 Continue to generate cash under the new plan. New target of 200 bn. yen along with resilience benefits from continued execution of structural reforms. Asset dispositions and leverage surplus funds Generate 40 bn. yen Rebuild businesses Improve working capital Generate 70 bn. yen Cut 50 bn. yen Projects that were not completed in FY 2024 New rebuilding projects Advance sale of noncore businesses from the perspective of best owner Strengthen asset & liability management: 10 bn. yen Inventory reduction: 40 bn. yen (including effects of business rebuilding) Improvement effects from executing continued structural reforms Generate 40 bn. yen Effects from structural reforms outside of growth drivers Disposition of cross- shareholdings: 20 bn. yen Surplus funds: 10 bn. yen Disposition of other assets: 10 bn. yen
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42 03 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 0 200 400 600 800 1,000 1,200 1,400 1,600 2016 2017 2018 2019 2020 2021 2022 2023 2024 2027 Cash and cash equivalents Net D/E ratio D/E ratio （Forecast) （Target） （(Billions of yen) （times)Interest-bearing liabilities （FY） Interest-bearing liabilities Improve financial and capital efficiencyBasic direction 03
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43 03 Dividend payout ratio during the period under the new plan is expected to be over 30%. Basic direction 03 Shareholder returns Improve financial and capital efficiency 7 10 11 11 6 10 12 6 3 7 12 11 6 9 14 6 3 6 76.5 133.8 118.0 30.9 46.0 162.1 7.0 -311.8 25.0 -400 -300 -200 -100 0 100 200 0 5 10 15 20 25 30 2016 2017 2018 2019 2020 2021 2022 2023 2024 Year-end dividend(left axis) Interim dividend(left axis) Net Income Attributable to Owners of Parent(right axis) （yen） （Billions of yen) （FY） 29.9 89.930.526.9 24.253.3 421.2 （Forecast） ― Dividend payout ratio (%)58.9 1.24 0.570.841.09 0.750.92 0.62 0.57 PBR Aim for 24 yen/share or more per year early FY2025-2027 dividend payout ratio over 30％
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44 03 Basic direction 04 R&D strategy based on the 3 X's Take a long - term view and deliver solutions in the 3 X’s ( GX ・ BX ・ DX ) to solve society’s challenges through our business ICT Healthcare Environment Food DX GXBX (Bio) (Green) (Digital)
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45 R&D strategy based on the 3 X's03 Basic direction 04 Leverage biotechnology to create value for both society and the economy Realize determination of disease risk using our proprietary cell chips embedded with a diverse range of high-sensitivity receptors In 2027, enter testing business for consumers Grow to a 50 bn. yen business in 203X Expand treatment and CDMO businesses in US and Japan mainly in our first 3 products treating Parkinson’s disease and retina FY2027 Mid 2030s Late 2030s *Before adjusting for success rates and assuming the launch of multiple products under development Approx. 350 bn. yen 100+ bn. yen 10+ bn. yen Preparing filing in FY 2025 to be approved as world’s first IPS cell derived product ■ Regenerative medicine & cell therapies business revenue* Disease risk testing kits Regenerative medicine & cell therapies Process designBacteria design Scale up Production White bio Broad coverage at multiple of our research centers, including our Bio-Science Research Center Grow to a 50 bn. yen business in 203X Grow to a 350 bn. yen business in 203X Cut GHG emissions with bio-based manufacturing that does not use petrochemical resources Target: Convert our products to bio-based input materials Bio-manufacturing of rare bio-derived products * Testing develooped based on clinical needs at medical facilities, health and wellness testing sites, etc. ＊ IPS cells Dopamine neuron precursor cells Parkinson’s disease therapy using iPS cells 細胞チップ センサ細胞 発光パターンから 疾患リスクを判定 健常者 疾患A 疾患B Sensor cell Healthy subject Disease A Cell chip Disease B Determine risk of disease from light emission pattern
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46 03 R&D strategy based on the 3 X's Basic direction 04 Compound semiconductors Grow to a business of several tens of billions of yen in 203X, when power semiconductor demand fully ramps up Next-generation power devices (GaN) Support increases in data volumes and energy consumption resulting from advances in AI Semiconductor back-end process materials Performance chemicals Packaging materials Wiring materials In-process cleaners Wafer protectant Next-generation thermal management materials For next-generation processes Photosensitive materials High throughput solutions In 2030 and beyond, aim for 10% of total sales to be semiconductor materials Under development with customer Under development with customer Design and mass-produce resist materials at molecular size to support ultimate miniaturization of semiconductors Target 20% share by volume in cutting-edge resist Concentrate R&D resources and accelerate development of next-generation platform Organic molecular resist Strengths Metal-free Molecule: <1nm Contrast Affinity with existing processes Achieves miniaturization Adopted in mass production Innovate sought-after semiconductor technologies as we further promote DX
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47 R&D strategy based on the 3 X's03 Basic direction 04 Development themes Progress to date Targets under the new plan (out to 2027) Commercializ ation target Chemical recycling① Production of olefins by direct cracking of waste plastics Achieved 60% yield of targeted olefin yield in bench trials Began design of pilot facilities Build and launch pilot facilities Early 2030s ② Highly efficient alcohol production from CO2 Achieved 80% methanol yield in pilot (compared to about 20% under conventional methods) Began design of demonstration facilities Build and launch demonstration facilities ③ Olefin production from alcohols Achieved 80% yield of targeted olefin yield in bench trials Pilot facilities under construction. To be completed first half of 2025. Establish technological feasibility of pilot facilities and design commercial-scale equipment Membrane-based CO2 separation Reclaimed CO2 of 90%+ purity from multiple types of CO2 emission sources Demonstrate on pilot facilities Around 2030 Cathode direct recycling Achieved 98% battery capacity recovery in direct- recycled products on bench equipment Study scale up for continuous operations Early 2030s Leverage the GI Fund to promote the development of technologies that reduce environmental impact Technologies that reduce environmental impact (Green Innovation Fund) Polyolefin-based waste plastic ③ Olefin production from alcohols ② Highly efficient alcohol production from CO2 Conventional flow of carbon ① Production of olefins by direct cracking of waste plastics Fossil resources Olefins Plastic productsResin Separate /Collect Chemical recycling Waste plastic,etc. CO2 CO2 Alcohols Ethylene/propylene can be made from a reaction using one step only (Equipment scale-up order: bench → pilot → demonstration)
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48 03 Create GX Solutions Business based on the licensing of GX technologies R&D strategy based on the 3 X'sBasic direction 04 EtEP: Production of ethylene and propylene from ethanol Deliver solutions that form a value chain for the circular economy for resources, based on granting licenses for the manufacture of GX products Leverage competitive technologies to forge strong relationships with Brand owners, etc. In the future, receive carbon credits for CO2 reduction benefits at customers Summary of the GX Solutions Business Our strengths 2035: Anticipated business earnings Goals for the GX Solutions Business Lineup of GX products and technologies. Track record of adoption in the GI Fund. Catalyst sales where we project stable earnings over the long-term CO2 reduction contribution Approx. equivalent of 2.5 million tons/year Approx. 40 bn. yenCore Operating Income (Equivalent to 0.8 million tons of EtEP etc.) Chemicals and resin makersGX materials suppliers GX product Brand owners Partner tie-up Partner tie-up Cash and carbon credits Deliver total solutions ・ Grant technology licenses ・ Sell catalysts ・ Secure channels for procurement and sales Monetize CO2 reduction benefits Value chain for the circular economy for resources
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49 03 Employ and develop human resources for sustainable growth Strengthen management base supporting new growth strategyBasic direction 05 Human resources systems and measures aimed at strengthening competitiveness • Strengthen engagement through systems and measures that address difficulties securing talent, working couples, changes in how younger generations perceive work, and other factors （Average of other companies 56％） 70% Positive responses in employee surveys Optimize personnel structures that align with our new growth strategy • Build organizations with strong earnings power and prioritize deployment into growth and development areas Reducing administrative and indirect tasks Strengthening DX and AI utilization 20% Strengthen and elevate our ability to attract talent • Diversify employment sources and channels, improve communications, etc. Encourage development and support autonomous career formation • Encourage development and assist autonomous career formation by clarifying cycles of work and learning Targets Employment of experienced hires 40% (Currently 10%) Employees involved in development of capabilities, knowledge or skills 150 (Double vs. today) 100% Direction under the new plan From a long-term perspective, advance the employment and development of talent, our most important management resource. At the same time, strengthen engagement to achieve structural reforms and sustainable growth within our corporate group. Dual internal roles in 3 years:
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50 03 Leverage DX to strengthen competitiveness and create new value Strengthen management base supporting new growth strategy DX NEXT empowered by AI Direction under the new plan Data monetization Strengthen IT base AI native company Strengthen business competitiveness DX戦略 3.0 新しいビジネスモデル による価値創造 New cornerstone AI DX戦略 3.0 新しいビジネスモデル による価値創造 Next steps DX NEXT • AI is embedded within work processes and all employees organically leverage AI 100% Active users of generative AI • Achieve Biondo's business growth and the creation of the next data monetization business. 5Digital product launches • Achieve 10X productivity improvement in work processes leveraging AI, IT and robotics 10 bn. yen Rationalization effect from DX • Strengthen zero trust security countermeasures • Build method and IT infrastructure that can rapidly respond to changes in the business environment DX 1.0 strategy Improve productivity in 4 digital domains DX 2.0 strategy Strengthen business competitiveness DX 3.0 strategy Create value with new business models Basic direction 05
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51 Transition to a company with an Audit and Supervisory Committee03 Strengthen management base supporting new growth strategyBasic direction 05 Strengthen governance structures and deepen discussions of management strategies and the like by redesigning institutions Governance structuresDiscussions and decision-making • Board of Directors can concentrate more on deliberation of priority matters Point ③ • Speeds up decision-making Point ④ • Auditing by Audit and Supervisory Committee Members who are Directors Point ① • Enhance effectiveness of auditing Point ② Board of Directors Resolutions Decision-making matters ③ Board of Directors Resolutions ④ Delegated to Directors Decision-making matters Deepen discussions of management strategies, etc. Board of Directors Board of Corporate Auditors Audit Executive organizations Direct Audit President Audit Strengthen governance and supervisory functions Board of Directors Audit and Supervisory Committee ① Audit Internal Control & Audit Department, etc. Direct ② Direct Audit Executive organizations President Audit Internal Control & Audit Departmen t, etc. Before After
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Section Sector strategies under the new Corporate Business Plan 04 FY2025- 2027
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53 Agro & Life Solutions Sector04 Contribute to the realization of a regenerative society leveraging chemicals, biorationals and botanicals Crop protection and lifestyle environment areas Increasingly stringent regulatory requirements and growing demand for sustainable products. Reformative shift from modern to regenerative agriculture Animal nutrition Business domain Increased demand for livestock businesses that conserve resources and leverage antibiotic-free and other advanced and sustainable technologies Solidly execute growth strategy Globally deploy biostimulants and other new business areas, pursue synergies with existing products, and accelerate sales expansion of biorationals and botanicals Business Environment Priority Initiatives Launch and expand sales of new products and promote pipeline development Launch and expand sales of INDIFLIN and Rapidicil, expand synergies with existing businesses, and promote development of next-generation pipeline Strengthen product supply regime Optimize supply regime inside and outside Japan and secure supply capacity that is stable and competitive Pursue cost competitiveness and capital efficiency Compress working capital, optimize inventories, and strengthen manufacturing cost competitiveness Sector Direction
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54 04 Agro & Life Solutions Sector Accelerate sales expansion leveraging dedicated organizations for biorationals in each country ⇒ Expand business size mainly in Brazil, India, Europe, and US ⇒ Expand sales of botanicals in crop protection, PCO (pest control operators) and other areas Launch new products, deploy to other countries and pursue PLCM (new applications, formulations and mixture products) Global deployment of biostimulants and pheromones business ⇒ Accelerate registration and launch in each country. Pursue synergies with existing products, including mixtures Continue to pursue M&A opportunities to further expand business Biorationals and botanicals business 2X business scale by 2030 2021 2024 2027 2030 150 bn. yen 70 bn. yen 40 bn. yen INDIFLIN® Expand product portfolio (mixtures, etc.) Develop new business opportunities (countries, crops indicated, applications) Tens of billions of yen just a few years from launch 2X by 2030 2021 2024 2027 2030 Rapidicil® Advance registration in countries in North and South America. Expand product lineup by developing mixture products. Build structures for PPO-tolerant crops and next-generation herbicide- resistant weeds by 2030 Sales of several tens of billions of yen 2024 2027 2030 Expand biorationals and botanicals and focus on expanding sales of blockbusters INDIFLIN and Rapidicil ※ ※PLCM：Product Life Cycle Management With the strategic product group including the above two drugs, aim for a sales level of 150 billion yen by 2030. ※ ※ Products launched since 2020 (B2020, A2020)
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55 Agro & Life Solutions Sector04 Core Operating Income Targets Intensifying competition -10 bn. yen Up 27 bn. yen Business expansion 38 bn. yen 53 bn. yen 80 bn. yenChemical volumes up Biorationals Botanicals Expand business Other Chemicals: Expand sales of blockbusters Expand sales further in Brazil and broaden product portfolio (mixture products, etc.) Develop new business opportunities (countries, crops indicated, applications) INDIFLIN Rapidicil Advance registration in countries in North and South America. Expand product lineup by developing mixture products. Build structures for PPO-tolerant crops and next- generation herbicide-resistant weeds Expand biorationals and botanicals business Accelerate global deployment of biostimulants and pheromone products acquired under the current plan Expand sales of botanicals in crop protection, PCO and a variety of other areas Launch multiple pipeline products in animal nutrition FY2024 (Forecast) FY2027 (Target)
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56 ICT & Mobility Solutions Sector04 Semiconductor materials-related business Cutting-edge photoresist Business Environment Business Strategy Semiconductor materials • Stable growth on expanded use of AI and further advances in IoT, etc. • Increased demand for new technologies such as 3D to drive greater sophistication and diversification in materials technologies and needs Display materials • Smartphone market matures. Meanwhile, adoption of OLED advances mainly in tablets and notebooks Mobility • Advances the spread of autonomous driving and smart mobility ：Delve deeper in proprietary core technologies and expand the global supply and development regime ：Build supply capabilities and establish world-class business scale ：Enter back-end leveraging our knowledge in front-end processes, proprietary performance materials and processing technologies Display materials and mobility-related business 1 2 Semiconductor market size FY 2024 FY 2030 1.7X Adoption of OLED in mobile, IT, and automotive applications OLED (%) 1 2FY 2024 FY 2030 2X Sector Direction Maximize efficient use of management resources toward expansion of semiconductor-related businesses Maximize earnings in existing businesses by converting business structures and expanding business geographies Accelerate commercialization of items in advanced development phases Semiconductor chemicals Semiconductor back-end process materials Polarizers for OLED ：Keep No 1 position with industry- leading proprietary technologies ：Design proprietary high durability and rapidly support shift to OLED Automotive polarizers
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57 04 ICT & Mobility Solutions Sector Thoroughly implement upfront investments into cutting-edge areas as semiconductors advance Further expand business geographies Strengthen support of cutting-edge South Korea: Substantially expand plant siteFY2024 Ehime: Support cutting-edge for high-purity sulfuric acid〃 US: Begin prototype production at new Texas plant H2 of FY 2024 NEW Complete structural reforms to polarizers Shift toward high performance areas Halt in succession lines for large-screen LCDsFrom FY2023 China: Sell polarizer business for large-screen LCDs FY2024 South Korea: Convert line to OLED and automotive FY2026 Expand again with technologies that support ultra thin film and high resolution NEW NEW Enter budding India market Osaka: Completed construction of new building for research and mass production FY2024 South Korea: Launched new plant for photoresist 〃 Added capacity for ArF immersion lithography toolsFY2026 Expand leading share by further improving development precision and speed NEW Osaka EUV ArF KrF g,i線 FY2023 FY2030 CAGR 10.2％ Photoresist market demand forecast FY 2024 FY2024 FY2027 FY2030 Differentiated technologies Brush up Expand business geographies Semiconductor materials (high-purity chemicals) Sales plan Sales plan by geography South Korea China US Japan FY 2030 About 2X vs. FY2024 2021年 2027年FY2021 FY2027 Sales makeup by product OLED and automotive, etc. For large- screen LCDs Semiconductor chemicals Display materialsCutting-edge photoresist
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58 ICT & Mobility Solutions Sector04 FY2024 (Forcast) FY2027 (Target) Ｘｘｘｘｘ Core Operating Income Targets Upgrade Portfolio 10 bn. yen Expand sales of core products 23 bn. yen FX Business disposition s and others 65 bn. yen 80 bn. yen Up 15 bn. yen Photoresist Increase share with our proprietary new high-performance materials Ramp up operations at new cutting-edge photoresist plant in South Korea High-purity chemicals: Grow earnings by expanding business geographies Performance chemicals: Deploy into global niches Semiconductor back-end process materials Display materials Enter market leveraging knowledge, key materials, and core technologies from front-end processes Shift toward high performance types Semiconductor chemicals ・Semiconductor materials 16 bn. yen ・New display/ communication materials 7 bn. yen
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59 Advanced Medical Solutions Sector04 Advance organic business growth while we make concrete steps toward an explosive growth strategy in the field of cutting-edge medicine. CDMO Advanced small molecule drugs, long- chain nucleic acids, and regenerative medicine & cell therapies are all areas of high difficulty where tremendous growth is expected Regenerative medicine & cell therapies The global market has surpassed $2 billion and is expected to grow 10% to 15% annually Business Environment Business Strategy Sector Direction Advanced small molecule drugs CDMO Our main target customers will be Japanese semi-major and mid-sized pharmaceutical companies that require our comprehensive capabilities Advance highly prioritized promotions through multi-faceted analysis of customer pipelines and development and buyout directions Encourage growth into a high-profit business with a focus on new drug CDMO Long-chain nucleic acids CDMO Promote our quality standardization in the field of gRNA for genome-editing therapies leveraging our strengths in high-purity long-chain gRNA, advanced analytical technology, and internal sourcing of key materials Regenerative medicine & cell therapies CDMO Expand business by enhancing production equipment Strengthen organizations and build out a base in the US in preparation for explosive future growth 0 10 20 Core Operating Income Targets 20272024 (Bn. yen) (FY) Up 7 bn. yen
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60 04 Essential & Green Materials Sector Rebuild existing businesses and establish earnings foundations insulated from market fluctuations at the same time we establish technological feasibility and prepare structures to support the delivery of solutions that reduce environmental impact in 2030 and beyond Sector Direction Supply & demand trends for petrochemical products Demand within Japan remains stagnant while softness is to continue overseas despite a pause in new capacity Market outlook for overseas product Not expecting a substantial recovery given prolonged softness in the balance between supply and demand Business Environment Business Strategy Complete rebuilding of the businesses Optimize business makeup leveraging corporate ties between Japan and Singapore and further clean up unprofitable or non-core businesses Higher profitability on improve product mix Develop and expand sales of high-earning products, such as PP for batteries at TPC Build a base for delivering solutions that reduce environmental impact Concentrate research resources in establishing technological feasibility, promote activities aimed at expanding markets, and strengthen initiatives to secure input materials not derived from petrochemicals
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61 Essential & Green Materials Sector04 Total 25 bn. yen Licensing and catalysts Japan Other Singapore Medium-term positioning of each business Licensing and catalysts Strengthen business base through collaboration with Lummus and KBR, cultivate main businesses, and become a licensor with a presence in global markets Singapore Strengthen earnings power by optimizing PCS derivative mix and shifting toward higher-profit grades at TPC Japan Maximize benefits of corporate ties upstream and downstream and secure stable earnings through business rationalization Approximation of contributions by business to FY2027 core operating income Turn profitable on Rabigh capital restructuring and structural reforms in Japan and Singapore Aim to improve core operating income approx. 90 bn. yen Core Operating Income Targets 2024年度 事業売却 ライセンス・ 触媒強化 国内 企業連携効果等 ラービグ・ シンガポール 2027年度 -64bn. yen 25bn. yen （予想） （計画） Up 89 bn. yen Change in Rabigh shareholding ratio Expand new projects such as PO-only process Realize benefits for corporate tie-ups Correct product selling prices and thoroughly implement cost reductions (Rabigh) Share change, business performance improvements, etc. (Singapore) Shift toward high-profit products at TPC, improve mix of derivatives at PCS Strengthen licensing and catalysts Benefits from ties with companies in Japan, etc. Rabigh and Singapore FY2024 （Forecast） Strengthen licensing and catalysts Benefits from ties with companies in Japan, etc. Rabigh and Singapore FY2027 （Target） Business dispositions
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62 Summary: Toward Sustainable Growth04 20352030 Growth drivers out to FY 2030 are Agro & Life and ICT & Mobility Approximate P&L 2 1 Growth of Advanced Medical and Essential & Green Materials based on market ramp up Aim for sustainable growth in two phases. Return to a growth trajectory and become a newborn specialty chemicals company FY2035 Target ROE 12％ ROIC 10％ Capital efficiency Core Operating Income Agro & Life ICT & Mobility 250 bn. yen Advanced Medical Essential & Green 100 bn. yen 350 bn. yen over
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Cautionary Statement Statements made in this document with respect to Sumitomo Chemical’s current plans, estimates, strategies and beliefs that are not historical facts are forward-looking statements about the future performance of Sumitomo Chemical. These statements are based on management’s assumptions and beliefs in light of the information currently available to it and involve risks and uncertainties. The important factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to, general economic conditions in Sumitomo Chemical’s markets; demand for, and competitive pricing pressure on, Sumitomo Chemical’s products in the marketplace; Sumitomo Chemical’s ability to continue to win acceptance for its products in these highly competitive markets; and movements of currency exchange rates.