Slides
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Nippon Paint Medium-Term Strategy Update Briefing -Our Roadmap as Asset Assembler- April 3, 2025
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2 Today’s Agenda 1. Executive Summary … P3 2. Asset Assembler Model … P4 3. Inorganic Growth … P5 4. Organic Growth … P7 5. FY2025 Guidance Revision … P11 6. Finance Strategy … P12 Appendix Glossary ・CCM ： Computerized Color Matching ・NPHD ： Nippon Paint Holdings ・CC ： Construction Chemicals ・NPAC ： Nippon Paint Automotive Coatings ・ETICS ： External Thermal Insulation Composite System ・NPTU ： Nippon Paint ・SAF ： Sealants, Adhesives & Fillers ・NPIU ： Nippon Paint Industrial Coatings ・Selleys ： Brand for adjacencies products such as adhesives and sealants ・NPSU ： Nippon Paint Surf Chemicals ・c. ： circa (approximately) ・NPCS ： Nippon Paint Corporate Solutions ・PC ： Partner Company: The term that refers to consolidated subsidiaries of NPHD ・NPMC ： Nippon Paint Marine Coatings 7. PER Maximization … P13 8. In Summary … P15
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3 3 1. Executive Summary Advantage of our Asset Assembler model remains unchanged AOC acquisition showcases our limitless aspiration through inorganic initiative • Achieved solid growth despite challenging market in 2024, leveraging our brand and technologies, resulting in maintenance/growth in market share across regions and business segments • Demonstration of steady growth supported by resilient business models ensures medium-term growth forecasts for each partner company attainable • China operations continue to deliver profitable growth despite challenging market conditions, maintaining their appeal as a key growth pillar • We remain committed to low-risk, sustainable EPS compounding through both organic and inorganic growth • Our Group empowers individual assets with autonomy and accountability to unlock their potential, driving Maximization of Shareholder Value (MSV) • AOC secured steady earnings, supported by resilient business model and highly customized products, contributing significantly to our EPS accretion from year 1 • As a new growth pillar following NIPSEA, DuluxGroup, etc., AOC contributes to improving consolidated margins and cash generation, and establishing a more balanced regional revenue composition Our robust organic growth continues
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4 2. How We Leverage Asset Assembler Model to Achieve MSV Sustainable EPS compounding shall enhance PER, achieving MSV over the long term * Including the two India businesses (NPI and BNPA) and Alina (Kazakhstan) Realizing our inorganic growth model through AOC acquisition Consolidated CAGR (medium-term) based on 2023 business portfolio* • Revenue: HSD (c.+8~9%) • EPS: LDD (c.+10~12%) Acceleration of EPS compounding with active pursuit of M&A opportunities Target companies can be of any region, business area, or size, provided they offer low risk and good returns Asset Assembler model MSVEPS compounding through M&A EPS growth through autonomous and decentralized management Inorganic Organic Autonomously sharing and leveraging technologies, channels, sourcing, know-how, brands, etc. across the Group Accumulating excellent assets, including newly acquired brands, talent, and technology
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5 3. Inorganic Growth (Summary) AOC acquisition showcases our Asset Assembler strategy • Acquisition targets are low-risk, good-return, cash-generative assets with no limits on regions, business segments, or scale, with a focus on balancing risk and valuations • Sustainable EPS contribution from year 1 • Acquisition satisfies all the above criteria • Delivery of expected results crucial moving forward • Discerning eye to identify good acquisition targets • Maintaining and enhancing the motivation of talent joining our Group • Continue to acquire “good” assets • Assemble “Nice to Have” assets as opposed to “Must Have” ones ensuring reasonable valuation • Debt financing remains a priority, but with equity financing as an option if sufficient EPS accretion is ensured, enabling pursuit of unlimited upside potential • Autonomy with accountability • Leverage low funding cost benefits Our strengths3 Our future strategies4 Acquisition of AOC2 Our strategy announced in April 20241
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6 FY2024 FY2025 Results Forecast (Reference value) (Annualized/in LCY) (Reference value) (Annualized/in LCY) Revenue 1,355 0～-5% Operating profit 416 - OP margin*2 30.7% → EBITDA 504 - EBITDA margin*2 37.2% - Tanshin AOC 3. Inorganic Growth: AOC’s Acquisition Addition of new growth pillar to NIPSEA, DuluxGroup, etc. significantly transforms margin, cash flow and business profiles Our Group’s margin profile following consolidation of AOC*1 (2024) Maintain margins from 2024 to 2025 US and EU recovery delayed due to higher-for-longer interest rates, tariffs, and overall economic uncertainty Assumptions for 2025 guidance Operating profit breakdown*3OP margin Operating cash flow 11.5% 13.7% JPY167.4bn JPY221.3bn AOC*1 *1 FY2024 results are proforma, representative as if AOC operated as subsidiary for entire 2024 *2 PPA reflects our current assumptions but excludes one-off costs such as inventory step-up. M&A expenses related to the AOC acquisition are excluded. To align with our post-acquisition profit and loss profile, expenses such as payments to India businesses in EMEA and affiliated companies of former shareholders are also excluded *3 Percentages to the total sum of segment profit * ↑：≧+2%, ：+1%~2%, →：-1%~+1%、 ：-1%~-2%、↓：≦-2% 7% 24% 25%16% 3% 25% Japan NIPSEA Except China NIPSEA China DuluxGroup Americas AOC*2 10% 32% 33% 21% 4% Japan NIPSEA Except China NIPSEA China DuluxGroup Americas (USD mm) *1
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7 4. Organic Growth (Summary) Despite challenging market conditions, Group has shown operational resilience and delivered steady growth Medium-Term targets3 Our perspective on China4 Our performance2 Market environment1 • 2024 global economy (GDP) showed some weakness, with declines in regions such as Europe, Japan and Türkiye compared to last year estimates. Paint market estimated to correlate with GDP trends • Achieved solid growth with successful execution of marketing and pricing strategies amid challenging market conditions. As a result, maintained or expanded our market shares largely across regions and business segments • Achieved steady growth driven by resilient performance across regions and business segments, thereby our target remains unchanged, being consistent with our historical track record in each region • China operations continue to deliver growth despite challenging market conditions and remain an attractive key growth pillar, supported by high market potential in the future
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8 8 4. Organic Growth: Our Growth Profile (1) 2024 Results Medium-Term Forecast (in LCY) Market Growth Forecast*2 Primary strategies to deliver market +α growth →For details, please refer to the Appendix.Revenue (YoY) (in LCY) OP margin (Tanshin) Revenue (CAGR) OP margin (vs 2023)*1 Volume basis Value basis Japan +0.1% 9.6% +0~5% -1% (Decorative) +1% (Decorative) Expansion of high-performance and sustainable products, agile pricing policies responsive to price fluctuations, and strengthening supply chains through digitalization NIPSEA China Segment total +6.3% 11.1% c. +10% → Decorative (TUC) +6% +10~15% +3% +1% Defend and grow market share, extending share especially in the Tier 3 to 6 cities Decorative (TUB) -15% c. +5% +1% +2% Diversification and moving beyond the traditional new built residential segment into repainting, other non-residential segments and infrastructure NIPSEA Except China Segment total +13.1%*3 17.2% +5~10% → Malaysia Grp. Singapore Grp. Thailand Grp. +5~10% → Singapore +1% Malaysia +3% Thailand +2% Singapore +1% Malaysia +5% Thailand +2% • Singapore: Invest in advertising and secure stronghold on dealer channel • Malaysia: Dominate Decorative brand Top of Mind, pushing exterior category to achieve category leadership with focus on Ultra Premium and Premium range of products • Thailand: Sales transformation toward technical & value selling (The Coatings Expert), investing in advertising and transforming from a Push (colors, products) to Pull (quality, brand, innovation) approach PT Nipsea (Indonesia) +3.4% 34.9% c. +10% → +3% +6% Driving Nippon Paint brand in the Ultra Premium and Premium products and adding new waterproofing products to complete offering of professional water proofing solutions Betek Boya (Türkiye) +34.9% 13.2% c. +10% (→)*4 +1% +7% Defending and growing market share by leveraging strong brand assets and a robust distribution network in paints while expanding contribution from ETICS in new market tiers NPI/BNPA (India) (For reference) +0.8%*5 (For reference) 4.2%*5 c. +10% → +5% (Decorative) -2% (Decorative) Focusing on brand building and advertising activities to expand channel networks Alina (Kazakhstan) (For reference) +8.1%*6 13.2%*7 c. +10% → +3% +4% Creating and realizing immediate synergies from leveraging the Nippon Paint playbook benefiting from scale and efficiencies on procurement, SAP integration, upgrade of Decorative production capabilities *1 ↑：≧+2%, ：+1%~2%, →：-1%~+1%、 ：-1%~-2%、↓：≦-2% *2 Internal estimates and value basis include the impact of volume changes *3 Excluding India businesses (NPI/BNPA) and Alina *4 Subject to change due to the impact of hyperinflationary accounting *5 Pro-forma figures (unaudited). The 2024 results are annualized figures *6 The 2023 results are Pro-forma figures (unaudited) *7 Including inventory step-up costs (one-off expenses) associated with PPA
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9 9 4. Organic Growth: Our Growth Profile (2) 2024 Results Medium-Term Growth Forecast (in LCY) Market Growth Forecast*2 Primary strategies to achieve “Market +α” growth →For details, please refer to the AppendixRevenue (YoY) (in LCY) OP margin (Tanshin) Revenue (CAGR) OP margin (vs 2023)*1 Volume-basis Value-basis DuluxGroup DGL (Pacific) +4.5% 13.3% c. +5% → ~+1% +2~2.5% Defend and grow our leading market share in paints & coatings and sealants & adhesives, with further growth in other adjacent categories DGL (Europe) -2.3%*3 4.9% +5~10% ↑ ~+1% (France) +1~3% (France) Targeting share growth in paints & coatings and leveraging our sealants & adhesives position Dunn-Edwards +4.8% c. +5% ↑ +2% (overall U.S.) +5% (overall U.S.) Growth driven by both volume and price increases while continuing to focus on existing product sales, bringing new products to market and gaining share in Northern California AOC*4 (For reference) -8.9% (For reference) 30.7% c. +5% → +3% (U.S.) +3% (Europe) +5% (U.S.) +5% (Europe) Strong innovation engine; AOC's pipeline remains strong, especially in areas where solutions can substitute other materials; we expect increased demand as the market recovers. Continued implementation of business systems to drive value for AOC and its customers *1 ↑：≧+2%, ：+1%~2%, →：-1%~+1%、 ：-1%~-2%、↓：≦-2% *2 Internal estimates and value basis includes the impact of volume changes *3 Excluding six-month earnings of NPT *4 FY2024 results are proforma, representative as if AOC operated as subsidiary for entire 2024. PPA reflects our current assumptions but excludes one-off costs such as inventory step-up. M&A expenses related to the AOC acquisition are excluded. To align with our post-acquisition profit and loss profile, expenses such as payments to India businesses in EMEA and affiliated companies of former shareholders are also excluded
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10 4. Organic Growth: Our Outlook on the China Market and Operations China’s growth potential remains unchanged; we continue to focus on China operations as a key growth pillar NIPSEA China 2023 (in LCY) 2024 (in LCY) Medium-term growth forecast (in LCY) Outlook on margin trends Revenue (YoY) TUC +13% +6% +10~15% Tier 0 and Tier 1-2: Tier 3-6: ◆ Positive factors • Operating leverage effects from revenue growth • Higher revenue share of the decorative business in the consolidated China operations • Higher revenue share of the TUC segment within the decorative business ◆Negative factors • Product mix deterioration due to growth in Tier 3-6 cities TUB -7% -15% c. +5% Consolidated basis +5.1% +6.3% c. +10% Percentage of TUC to total decorative revenue in NIPSEA China c. 70% c. 70% OP margin (Tanshin) 12.5% +11.1% → ＜Market’s growth potential＞ ◆ Decorative market: Arrival of the era of stock housing, per-capita paint consumption is around approximately 50-60% developed countries ◆ Automotive market: Per-capita car ownership is around 30% of developed countries
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11 • Revenue: Forecast to grow +11.1% YoY and revised upward by +4.6% from the February guidance, driven primarily by AOC’s 10-month consolidation and an updated FX forecast reflecting yen appreciation. No changes to fundamental factors in existing businesses, except for FX • Operating profit: Forecast to increase +30.1% YoY and revised upward by +23.2％ from the February guidance • Major factors for the guidance revision (figures are estimates): 【Revenue】 AOC consolidation to boost revenue by c. 160.0 billion yen, offset by c. 80.0 billion yen reduction due to yen appreciation vs. February FX assumptions 【Operating profit】 -AOC consolidation to boost operating profit by c. +48.0 billion yen*2, offset by c. 9.0 billion yen reduction due to yen appreciation -Recording c. 7.0 bn yen gain from the sale of property, plant and equipment at Shinagawa Office • EPS forecast revised upward and annual dividend forecast maintained -EPS forecast at 69.0 yen (+27.2% YoY/ +20.9% vs. Feb. forecast) -Annual dividend remains unchanged at 16 yen (+¥1 YoY) 5. FY2025 Guidance Revision: Revenue and OP Expected to Substantially Exceed Records *1 Profit attributable to owners of parent *2 PPA figures are provisional as the PPA process has not yet been finalized *3 Closing rate aligned with hyperinflationary accounting FY2025 Guidance (Tanshin basis) (Billion yen) Feb. guidance Apr. guidance Change YoY Revenue 1,740.0 1,820.0 +4.6% +11.1% Operating profit 198.0 244.0 +23.2% +30.1% OP margin 11.4% 13.4% +200 bps +190 bps Profit before tax 188.0 226.0 +20.2% +24.5% Profit*1 134.0 162.0 +20.9% +27.2% EPS ¥57.1 ¥69.0 +20.9% +27.2% Annual dividend ¥16 ¥16 ±¥0 +¥1
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12 12 6. Our Finance Strategy Updates Pro-forma leverage Net Debt/EBITDA before acquisition Net Debt/EBITDA*3 after acquisition Results Forecast-100 200 500 800 1,100 1,400 1,700 2021 2022 2023 2024 Cash flow*1 generation performance (Billion yen) 31.6 72.4 153.1 116.3 ■ Others ■ DGL (Europe) ■ PT Nipsea ■ Betek Boya ■ DGL (Pacific) ■ NIPSEA (Excluding China, Betek Boya, PT Nipsea) ■ NIPSEA China ■ Dunn-Edwards, Automotive in Americas ■ Japan Group 3.4x*3 3.4x*3 2.2x 1.9x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x End 2021 End 2022 End 2023 End 2024 End 2025 End 2026 c.3.0～3.2x c.2.2～2.4x *1 Calculated as the simple sum of operating cash flow (excl. dividend income from Group companies) and capex (excl. M&A and lease costs) *2 Assuming no additional acquisitions *3 Excluding one-off items Plan to deleverage by 0.6-0.8x p.a. after acquisitions are completed*2 170.0 140.0 110.0 80.0 50.0 20.0 -10.0
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13 7. Our Approach to PER Maximization (1) Share our growth vision with capital markets based on our track of sustainable EPS compounding and conviction in management vision • Achieved EPS growth for five consecutive years despite challenges such as COVID-19 and elevated crude oil prices • Sustaining an outstanding track record in M&A • Notion of Nippon Paint, with MSV as sole mission, being fully committed to delivering both organic and inorganic growth • Our base businesses are resilient, making sustainable growth fully attainable • Continued accumulation of safe M&A with clear contribution to EPS compounding • In addition to bolt-on M&A, we continue to pursue acquisition of good assets like AOC, driving infinite growth +14% CAGR (2016-2025E) Nippon Paint as EPS Compounding Machine1 Enhance market conviction towards our management vision2 Alignment of growth vision with market (limited risk + infinite growth) 3
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14 14 7. Our Approach to PER Maximization (2) 2016-2025E CAGR +14％ CAGR = Organic 10+% + Inorganic 0.0x 30.0x 60.0x ↓ Market’s concerns regarding China risk ↓ M&A is perceived as high-risk activities ↓ Our growth potential is underestimated 2016 2017 2018 2019 2020 2021 2022 2023 2024 Short term Medium term The lowest level in the past nine years ↑ Easing market’s concerns regarding China risk ↑ M&A track record Sufficient upside to PER valuation 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025E Short term Medium term Inorganic EPS growth Our EPS Organic EPS growth EPS track record PER track record Our PER Build EPS track record through organic and inorganic initiatives, fostering capital market conviction to drive PER recovery ↑ Revalue growth 1. EPS delivery ↑ Revalue growth 2. Conviction to management ↑ Revalue growth 3. Alignment of growth vision 0 100 200 300 ～～ 21.7 69.0 ～～ 27.2 17.0 (Yen) 60 30 0 (x)
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15 15 8. In Summary Organic growth driven by resilient business models and unlocking the full potential M&A focus on risk and valuation balance, granting autonomy with accountability to enable sustainable growth post-acquisition Low risk and high sustainability are prerequisites for EPS maximization We shall endeavor to foster market conviction in our capabilities, track record, and vision, resulting in PER maximization MSV is THE one and only mission for Nippon Paint We strive for infinite growth by leveraging our Asset Assembler platform Nippon Paint’s pursuit of Maximization of Shareholder Value continues…
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16 Appendix
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17 Nippon Paint at a Glance Our Group has evolved dramatically over the past 10 years through partnership with Wuthelam and assembly of assets 48 Operating countries/regions (vs. 18 in 2013) 63 Years (est. Asian JVs (NIPSEA business) in Singapore in 1962) 144 Years old (ext. in 1881) 2.73 tr JPY (vs. 0.46 tr JPY in 2013) 58.7 1.82 Established Partnership with Wuthelam Market presence (2025) Revenue (2025 Company guidance) Market cap (as of Apr. 2, 2025) Ownership by Wuthelam % (vs. 14.5% in 2013) tr JPY (vs. 0.23 tr JPY in 2013)
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18 Our History Accelerating revenue and profit growth since 2018 in pursuit of MSV as our sole mission (Bn JPY) ■・・・Revenue (Japan) ■・・・Revenue (overseas) Domestic focus 40-60 Asian JVs WUT ownership ～14.5% 51-49 Asian JVs WUT ownership 39% 100% of Asian JVs (2021-) WUT ownership 58.7% (2021-) 1881- Founding phase 1881 Komyosha (predecessor of NPHD) founded 1967-1994 Active expansion in ASEAN region, starting with Thailand and Malaysia 1962- Start of Asian JVs (NIPSEA business) 1992 Entry into China market 1962 Partnered with Wuthelam Group as distributor in Asia NIPSEA business launched 2014 Transition to a holding company structure and consolidation of Asian JVs 2014- Start of globalization from Asia 2017 Dunn-Edwards (US) 2018- MSV as sole mission 2018 Shareholder Proposal from Wuthelam Group—change in BOD composition 2022 Cromology (Europe) JUB (Europe) 2019 DuluxGroup (Australia) Betek Boya (Türkiye) 2021 Asian JVs fully integrated and Indonesia business acquired Vital Technical (Malaysia) European automotive and India businesses transferred to Wuthelam Group 2024 Buyback of India businesses (NPI/BNPA) Alina (Kazakhstan) 2025 AOC (Americas) 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 1881 1960 1965 1970 2000 2005 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2015-2018 Revenue CAGR： +5.4% 2000-2014 Revenue CAGR： +1.9% 2018-2025 Revenue CAGR： +16.4% 2025E Revenue JPY1.82 tr ～～ ～～ 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0
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19 Advantage of Asset Assembler Model Accelerating EPS compounding through the synergistic benefits of advantages offered by a lean headquarters and autonomous and decentralized management 1. Our ability to harness the low-funding cost 2. Our ability to maintain and boost the EPS contribution from assets companies without intervention 3. Our unique appeal to management-class talents who empathize with our business model 1. Driving autonomous growth of top-tier assets through low cost, strong cash generation, and operating leverage 2. Accelerating growth by leveraging our platform, including financing capabilities and brand strength 3. Realizing synergies and breakthroughs through collaboration projects among excellent assets Advantage of autonomous and decentralized management Advantage of a lean headquarters Asset Assembler model • A model focused on low-risk and steady EPS compounding via organic and inorganic initiatives • Capital markets’ conviction in Asset Assembler model will boost PER, enabling MSV • Unlocks unlimited growth potential for us • Ever-present macroeconomic uncertainty • Low-risk, good-return targets globally • Japan-based advantage (Japan-US interest rate gap, consumer trust in Japanese brands, etc.) is likely to persist Assumptions (Medium- to long- term outlook) Features MSV Organic EPS growth through autonomous and decentralized management Inorganic EPS compounding through M&A Autonomously sharing and leveraging technologies, channels, sourcing, know-how, brands, etc. across the Group Accumulating excellent assets, including newly acquired brands, talent, and technology
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20 20 29% 18% 6% 25% 22% Inorganic Growth: AOC’s Acquisition (1) Coatings & Protective Barriers Colorants & Visual Effects Adhesives & Other Custom Conventional Composite Formulations Non-Custom Conventional Composite Formulations Volume by product line Net sales by segment*2 71% 21% 9% Americas EMEA Key figures at a glance (2024A) *1 % of customized solutions*3 Customized Non-customized CASE & colorants Key operational and financial profile at a glance 1 2 3 4 5 6 AOC is a leading formulator of CASE & colorants solutions Controllable and multi-faceted growth opportunities in excess of the market Scalable business systems poised for further value creation Excellent margin profile consistent with highly-customized products, fragmented customer base, and attractive market structure Best-in-class cash flow generation and financial profile Exceptional management team with a strong track record of value creation Asia ~75% ~25% Strong market presence in the industry AOC is the leader in North America and has a leading presence in the more fragmented European market Source: AOC company materials *1 Percentages may not sum to 100% due to rounding *2 Segments exclude AOC Materials, Corporate & Other *3 Unique formulations for a single customer by SKU AOC at a Glance
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21 Inorganic Growth: AOC’s Acquisition (2) Attractive markets with stable market growth trajectory for both CASE & composite formulations Source: Advancy latest report, AOC company materials *Addressable market, incl Unsaturated Polyester (UP) and Vinyl Ester (VE) formulations, gelcoat, color dispersion volumes ■ CASE ■ Customized Conventional Composite Formulations ■ Non-Custom Conventional Composite Formulations AOC’s addressable market evolution* (bn LBS.) 2018 2019 2020 2021 2022 2023 2024E 2025F 2026F 2027F 2028F Forecast 2.3 2.0 (18%) 10% 72% 12.0 12.1 13.5 12.1 11.3 12.2 +4.1% -8.3% -1.7% 2.1 2.2 2.1 2.2 CASE + Customized Conventional Composite account for 30% of the addressable market AOC’s addressable market is expected to demonstrate resilience and growth 2.0 (18%) 10% 72% 11.1 After experiencing fluctuations in demand due to the pandemic, inflation, and high interest rates, AOC’s addressable market is expected to see resilient growth in the medium to long term, primarily driven by infrastructure investments
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22 Inorganic Growth: AOC’s Acquisition (3) Innovative & sustainable products serve demand driven by secular trends in AOC’s core end markets Source: AOC company materials * End market percentages are based on sale volume AOC product & application examples Substitution & differentiation End markets (Revenue composition*) ◼ Displacement of traditional materials, e.g. steel ◼ Significant weight reduction and lower emissions ◼ Cost effective & increased design flexibility ◼ Formulations for structural and body parts ◼ Ultra-low-density Class A glass fiber & carbon fiber solutions ◼ Patent-protected solutions and partnerships with leading CIPP players ◼ Avoidance of traffic congestion, e.g. urban areas ◼ Opportunities to increase efficiency of wind turbines and displace epoxy ◼ Novel formulations for use in relining ◼ Multiple applications, e.g. potable water, laterals, culverts ◼ Formulations for wind energy ◼ Tailored solutions with ability to adapt recycled content % ◼ Variety of recycled materials ◼ Same properties as materials with virgin inputs ◼ Multitude of applications in construction ◼ Formulations with recycled content Housing shortage & recycled input materials Global infrastructure growth incl. energy transition Lightweighting / EVs Transportation (15%) Construction (33%) Infrastructure (34%)
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23 28.28 22.90 27.38 29.41 33.82 50.45 54.22 -10 0 10 20 30 40 50 60 70 2018 2019 2020 2021 2022 2023 2024 Our Track Record as Asset Assembler Successfully and substantially compounded EPS since 2018 by driving organic and inorganic growth *1 Calculated using simple sum of earnings after excluding one-off factors with major impacts (impairment, M&A expenses, provisions, hyperinflationary accounting, etc.) and dividends received from the Group subsidiaries; for 2018-2020, calculated using the number of shares adjusted for the stock split conducted in 2021 *2 Japan Group, automotive in Americas, automotive in Asia, overseas marine, Dunn-Edwards, European automotive business, NIPSEA business (51% ownership) Adjusted EPS*1 compounding by asset Aug. 2021 European automotive business and two India businesses transferred (yen) ● Unadjusted EPS ■ Adjustments ■ Alina (2024) ■ DGL (Europe) -Cromology (2022) -JUB (2022) -NPT (2023) ■ European automotive business ■ NPI・BNPA (2024) ■ Betek Boya (2019) ■ DGL (Pacific) -DuluxGroup (2019) ■ PT Nipsea (2021) Vital Technical (2021) ■ NIPSEA business 49% additional acquisition (2021) ■ Existing businesses (as of 2018)*2 Total number of shares issued (after stock split): 1,627,012,215 shares Total number of shares issued: 2,370,512,215 shares Adjusted EPS CAGR +12.8% Unadjusted EPS CAGR +11.5% 28.28 29.98 27.67 33.16 44.40 55.84 58.28
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24 -100 200 500 800 1,100 1,400 1,700 2018 2019 2020 2021 2022 2023 2024 Strong Cash Generation from Assembled Assets Our assets demonstrate robust cash generation, characterized by high margins and low CAPEX requirements * Calculated as simple sum of Operating CF (excl. dividend income from Group subsidiaries) – CAPEX (excl. M&A and lease costs) (Billion yen) Once acquired, our assets deliver autonomous growth based on strong cash generation. Additional capital required primarily for bolt-on M&A only ■ Others ■ DGL (Europe) ■ PT Nipsea ■ Betek Boya ■ DGL (Pacific) ■ NIPSEA (Excluding China, Betek Boya, PT Nipsea) ■ NIPSEA China ■ Dunn-Edwards, Automotive in Americas ■ Japan Group Cash flow* generation by asset 42.0 51.8 59.2 31.6 72.4 153.1 116.3 170.0 140.0 110.0 80.0 50.0 20.0 -10.0
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25 Our Capability as Asset Assembler to Deliver the Promise Track record of delivery, despite market turbulence, predicated on the earnings power of each asset * Original guidance announced in May 2020; EPS was calculated using the number of shares after stock split Revenue (billion yen) 2020* ① 2021 ② 2022 2023 2024 Original guidance 720.0 890.0 1,200.0 1,400.0 1,600.0 Year-end results 781.1 998.3 1,309.0 1,442.6 1,638.7 Overachievement rate +8% +12% +9% +3% +2% Operating profit (billion yen) 2020* 2021 2022 2023 2024 Original guidance 63.0 87.0 115.0 140.0 184.0 Year-end results 86.9 87.6 111.9 168.7 187.6 Overachievement rate +38% +1% -3% +21% +2% EPS (yen) 2020* 2021 2022 2023 2024 Original guidance 15.59 29.17 34.49 41.73 52.80 Year-end results 27.83 29.41 33.82 50.45 54.22 Overachievement rate +79% +1% -2% +21% +3% Achievement rate of original guidance (2020-2024) Agile response to rapidly changing environments, maintaining earnings growth and largely meeting original guidance over the past five years ① 2021: Guidance revised downward at mid-term (Factors) COVID, raw material inflation, chip shortage, etc. ② 2022: Guidance revised downward at mid-term (Factors) Increase in provision in China, hyperinflationary accounting in Türkiye, etc.
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26 26 EPS Maximization × PER Maximization Close communication between Co-Presidents allows for substantial EPS compounding, with MSV as the common mission and with split of primary responsibilities Embracing MSV as shared values and judgment basis with us, totally aligned with minority shareholders MSV versed independent directors holding majority (67%), pursuing MSV with the Executives Majority shareholder: Wuthelam Group Board of Directors Our Asset Assembler Model Thrives on Our Management Structure
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27 Growth drivers Sustainability Initiatives That Drive EPS and PER Aim to achieve MSV by increasing the earnings and markets’ expectations through sustainability activities MSV (EPS Maximization × PER Maximization) Sustainability linked to Materiality (Sustainability Teams) Environment & Safety People & Community Innovation & Product Stewardship Corporate Governance Sustainable Procurement Advantage of autonomous and decentralized management Full access to our platform of Asset Assembler (Financing capacity, brands, technologies, know-how, collaborative projects across regions and businesses) Relentless pursuit of technologies, talents Intensive use of IT Vigorous pursuit of higher quality, lower cost, CAPEX efficiency Improve market share and profitability Raise the markets’ expectations Our pursuit Technology Talent IT/DX Develop low-carbon/ eco-friendly products + Ensure safe people and operations Our pursuit Our pursuit Recruit/train diverse employee + Earn the trust of stakeholders Our pursuit Develop sustainable products (NPSI /monitor LCA) + Chemicals of concern Our pursuit Oversee management + Encourage risk-taking Our pursuit Low-cost and sustainable procurement + Reduce environmental and human rights risks
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28 <Contact> NIPPON PAINT HOLDINGS CO., LTD. Investor Relations Email: ir_kouhou@nipponpaint.jp This document is intended to provide information to investors about Nippon Paint Holdings and the Nippon Paint Group and is not prepared and released to solicit investment or any similar act in Japan and other countries. The forward-looking statements including in this document including targets, plans, estimates, forecasts, projections for Nippon Paint Holdings and the Nippon Paint Group represent our judgments and beliefs at the time of preparation. Actual operating results, financial positions, and any other results of Nippon Paint Holdings and the Nippon Paint Group are subject to change due to risks and factors including economic conditions in Japan and other countries, business trends, competition with other companies, changes in laws and regulations, technological innovations and foreign exchange fluctuations. As a result, the actual results and performance, etc. of Nippon Paint Holdings and the Nippon Paint Group may differ significantly from the content presented herein the content inferred from the statements made herein.
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Medium-Term Strategy Update Briefing Appendix Nippon Paint Holdings Co., Ltd. 1. Medium-Term Growth Strategy by Asset 2 2. Market Share Transition by Asset 5 3. Sustainability Teams Approaches and Actions 6 4. Roadmaps of Sustainability Teams 7 April 3, 2025 ーContentsー 1 April 3, 2025 Medium-Term Strategy Update Briefing Appendix
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1. Medium-Term Growth Strategy by Asset Revenue (YoY) (in LCY) OP margin (Tanshin) Revenue CAGR OP margin*1 (vs 2023) TUC +6% ー +10~15% ー ◆Market Growth Forecast Volume basis: +3%/Value basis: +1% ・The Chinese central government has set its 2025 GDP growth target between 5% to 6%, with a clear commitment to the principle of “steady progress” ・A slew of measures has been introduced by the Chinese government to stabilize growth and to lift confidence in the property sector and the larger economy ・Moderate market growth - continue to see stronger growth in the lower-tier and rural cities and demand in the renovation market from the refreshing of older apartment Enriching with new product line-up ・Striving and innovating products, providing solutions and services as a leading brand, bringing greater value to our customers ・Launching new products in the paint and non paint segment to meet different markets needs and demand Continuous brand building ・Investing in branding, building the brand to champion the leading position on decoration effects through Magic Paint ・Continue color promotion and education by launching annual color trend and popular colors, investment in CCMs Optimising & expanding customers and channels ・Channel innovation: Developing customers based on different segment categories. Increasing number of exclusive distributors to better serve multi-brand stores and expand our competitive advantage in the distribution market ・Strengthening NP store operations, increasing the utilisation rate of CCMs and boosting sales TUB -15% ー c. +5% ー ◆Market Growth Forecast Volume basis: +1%/Value basis: +2% ・Property easing measures which include lowering of the down- payment ratios and the extension of deadlines for mortgage repayments are part of government efforts to lend support, stabilize and boost demand in a stagnant housing market ・The People’s Bank of China (PBOC) provided 150 billion yuan worth of low-cost funds for lending to housing and infrastructure projects, further stepping up support for the economy ・To aid completion of stalled projects, city governments are recommending to banks residential projects suitable for financial support, and are coordinating with financial institutions to meet projects' needs under the Project Whitelist mechanism ・Both the Ministry of Housing and Urban - Rural Development (MOHURD) and the People’s Bank of China (PBOC) have proposed support for the government or enterprises to purchase existing commercial housing for use as affordable housing. 15 cities have received the first batch of financial support to implement urban renewal initiatives and will get a fixed subsidy of 800 million to 1.2 billion yuan from the Central Government Diversification of customer base ・Diversification and moving beyond the traditional new built residential segment into repainting, other non-residential segments and infrastructure sectors ・Strengthening of business relationship with strategic construction, project service vendors, government enterprises, high quality, financially stable real estate enterprises and development and cooperation with the Top 200 industrial enterprises Exclusive partners ・Support will be provided to NP exclusive partners in aspects such as credit and rebates, which will help increase the market share of TUB and jointly meet market challenges Leveraging brand and extensive product and solution offering for building and energy saving solutions ・Expanding and promoting scenario based solutions, end to end coating systems, customizing design and solutions ・Capture opportunities for building & energy saving, dual-carbon reduction, green buildings and ultra-low-energy building policies with our wide range of paint offerings Design institute promotion ・Leveraging design institute promotion as a strategic entry point. Business will focus on integrating products into design drawings and achieving sales conversion *1 ↑≧+2%、↗：+1%~2%、→：-1%~+1%、↘：-1%~ｰ2%、↓：≦-2% *2 Market growth forecast is internal estimates. Value basis includes the impact of volume changes 2024 Results Medium Term Forecast (in LCY) Market features and outlook*2 Key strategies to deliver market +α growth NIPSEA China 2 April 3, 2025 Medium-Term Strategy Update Briefing Appendix
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1. Medium-Term Growth Strategy by Asset Revenue (YoY) (in LCY) OP margin (Tanshin) Revenue CAGR OP margin*1 (vs 2023) +3.4% 34.9% c. +10% → ◆Market Growth Forecast Decorative: Volume basis: +3%/Value basis: +6% ・Indonesia's economy expanded by 5%, falling short of President Prabowo Subianto's 8% target. The slowdown can be attributed to a decline in the trade surplus amid weaker global demand ・The new capital city in Nusantara, East Kalimantan is progressing well as efforts to attract foreign investment investment continues and have seen significant development ・Continue to drive the Nippon Paint brand in the Ultra Premium and Premium products by leveraging on product improvement and color leadership communication ・Increase brand awareness and adding new waterproofing products to complete offering of professional water proofing solutions ・Increased penetration of new shops, driving CCM distribution and expanding product offering ・Expanding and focusing on SAFL (Sealants, Adhesives, Fillers and Lubricants) and dry-mix mortar range to complete our offering to customers, tapping on existing and new retail network, to increase sales contribution ・Developing targeted strategies for different city tiers based on product mix, marketing strategies for stakeholders and distribution strategy ・Identifying business partners to further improve our distribution channel ・Driving productivity of CCM dealers, supported by with sales promoters and increasing depth of our full range of products offered by these dealers ・Intensifying efforts on B2B (Decorative Projects, Marine, Protective Coatings, Flooring) segments +34.9% 13.2% c. +10% (→)*3 ◆Market Growth Forecast Decorative: Volume basis: +1%/Value basis: +7% ・Market value growth continue to be driven by inflation albeit at a decreasing rate. Volume growth continues to be challenging amidst the higher inflationary environment ・The Turkish economy grew 3% in 2024, with impact from a year-long monetary tightening campaign aimed at controlling inflation and stabilizing the economy ・The Turkish government revised its economic strategy through the Mid-Term Program for 2025-2027. This program reflects a more cautious approach that underscores the government’s fine balancing act between stimulating the economy and managing inflation. The Turkish Central Bank’s inflation forecast for 2025 is 24%, considerably lower than the 44.3% inflation as at end 2024 ・Promoting solution based offering and driving sales of end to end paint and coating systems - Building up decorative paint strength, leveraging on brand prestige & mass market appeal and marketing to entrench our position as clear top of mind leader - Enhancing specialised segment dealers and expanding contribution from the non-core regions and beyond paint categories (ETICS) - Expanding focus on public sector driving business growth opportunities (For reference) +0.8%*4 (For reference) 4.2%*4 c. +10% → ◆Market Growth Forecast Decorative: Volume basis +5% / Value growth negative 2% ・In 2024, while India GDP was in the range of 6.5% that was primarily driven by Government investments ・The decorative paint market continues to remain subdued due to high food inflation, change in customer spend behaviours and the extended monsoon ・New entrants – Birla Opus launched in mid 2024 with 4 manufacturing units (2 in South / 1 in West & 1 in North). JSW & Pidilite’s paint division (Haisha) was also launched last year. While the demand was generally flat, paint and coatings supply have increased by 40% which led to increased benefits to dealers, painters & other stakeholders ・Continued razor sharp focus on strategic markets in Tamil Nadu and Karnataka, holding on to ground in towns/dealers; NP operate and retaining share of market ・Expanding efforts in exterior textures products, repainting service, home repair & rehabitaliation service, thermal comfort solutions, e-commerce.com & modern trade and retrofitting large projects ・Focusing on core paint products & profitable products in total construction chemicals – water proofing, SAF, flooring & drymix that would drive sustained profitable sales ・Staying focused on revenue maximisation, cost structure improvement, improve operational efficiency to drive sales & profits ・Investing on people talent, empowerment, fostering growth, instilling Lean for Growth VITAL values *1 ↑≧+2%、↗：+1%~2%、→：-1%~+1%、↘：-1%~ｰ2%、↓：≦-2% *2 Market growth forecast is internal estimates. Value basis includes the impact of volume changes *3 Subject to change due to the impact of hyperinflationary accounting *4 Pro-forma figures (unaudited). The 2024 results are annualized figures NPI/BNPA (India) Betek Boya (Türkiye) 2024 Results Medium Term Forecast (in LCY) Market features and outlook*2 Key strategies to deliver market +α growth PT Nipsea (Indonesia) 3 April 3, 2025 Medium-Term Strategy Update Briefing Appendix
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1. Medium-Term Growth Strategy by Asset Revenue (YoY) (in LCY) OP margin (Tanshin) Revenue CAGR OP margin*1 (vs 2023) (For reference) +8.1%*3 13.2%*4 c. +10% → ◆Market Growth Forecast Decorative: Volume basis: +3%/Value basis: +4% ・Kazakhstan's economy grew by 4.0% in 2024, but growth in 2025 may face challenges despite forecasts of 5.1%-5.5%. Inflation, projected at 6.9%, could rise further due to increasing utility and fuel costs. Additionally, uncertainties in oil production and external economic pressures pose significant risks to sustained growth. •Strengthening market dominance in the Decorative segment by enhancing production capabilities and introducing Nippon Paint products, which will enable Alina to expand our product offerings and solidify leadership in the market • Creating added value with “Beyond Categories” approach by diversifying product portfolio and exploring untapped market potential • Digital platform integrations to enable better CRM activities, driving productivity and cost synergies across operations, leveraging procurement synergies with Nippon Paint to improve efficiency and competitiveness • Strategic expansion into Central Asia will unlock new growth opportunities in the region • Strengthening innovative and quality equity in Dry Mix; bringing new products to the market and further driving dry mix market leadership further through system and solutions DGL (Pacific) +4.5% 13.3% c. +5% → DGL (Europe) -2.3%*5 4.9% +5~10% ↑ +4.8% ー c. +5% ↑ ◆Market Growth Forecast Decorative (overall U.S.): Volume basis: +2%/Value basis: +5% ・American Coatings Association (ACA) estimates steady volume growth for both the DIY and Professional customer segments ・Elevated interest rates in the U.S. continue to constrain existing home sales and growth in the housing sector and related industries ・Expand store geographical coverage in underserved areas -Primary focus on Northern California ・Continue to grow alternate channel segments -Domestic and international dealer network ・Increase capabilities to win and better serve the commercial customer (For reference) -8.9%*6 (For reference) 30.7%*6 c. +5% → ◆Market Growth Forecast U.S.: Volume basis: 3%/Value basis: +5% Europe: Volume basis: +3%/Value basis: +5% ・US Housing starts expected to continue to decline in 2025 and return to growth in 2026 ・The medium term outlook remains strong as pent-up demand drives growth in AOC's end markets ・Strong innovation engine; AOC's pipeline remains strong, especially in areas where solutions can substitute other materials; we expect increased demand as the market recovers ・Continued implementation of business systems to drive value for AOC and its customers *1 ↑≧+2%、↗：+1%~2%、→：-1%~+1%、↘：-1%~ｰ2%、↓：≦-2% *2 Market growth forecast is internal estimates. Value basis includes the impact of volume changes *3 The 2023 results are Pro-forma figures (unaudited) *4 Including inventory step-up costs (one-off expenses) associated with PPA *5 Excluding six-month earnings of NPT *6 Pro-forma and unaudited figures, representative as if AOC operated as subsidiary for entire 2024. PPA reflects our current assumptions but excludes one-off costs such as inventory step-up. M&A expenses related to the AOC acquisition are excluded. To align with our post-acquisition profit and loss profile, expenses such as payments to India businesses in EMEA and affiliated companies of former shareholders are also excluded Alina (Kazakhstan) DuluxGroup ◆Market Growth Forecast(3-5 years) Decorative in Pacific: Volume basis: ~+1%/Value basis: +2~2.5% Decorative in France: Volume basis: ~+1%/Value basis: +1~3% ・In Australia, the renovation and repair segment of the Decorative paint market is highly resilient whilst normalizing from its “COVID enhanced" abnormal 2020 peak ・In general, decorative paint market volumes are primarily correlated with GDP, interest rates and to a lesser extent new housing starts. Consumer confidence indicators remain subdued with the persistence of cost of living pressures ie. low GDP growth rate, high inflation and increased interest rates following record lows. Interest rate cuts in the short to medium term will support gains in household spending, with the Australian economy expected to slowly improve in 2025 ・In France, the decorative paint market has continued to contract post the “COVID enhanced" demand due to tighter credit conditions and subdued housing sector. It is expected the market will remain flat in 2025, however will gradually improve from 2026 with the easing of these conditions and gains in consumer confidence ・Continue strong track record of organic growth in DGL Pacific Paints and Coatings by maintaining a focus on the granulatiy of growth and core fundamentals, being consumer engagement, premium brands, innovation and customer service ・Accelerate DGL Europe P&C growth including step changing Cromology France (leveraging Dulux Pacific capabilities) and enabling JUB’s continued focus on fundamentals ・Drive growth in SAF Global markets leveraging our NPT joint venture in Europe, whilst accelerating Selleys ANZ (retail, trade and household cleaning) and enabling growth in Selleys Asia ・Deliver structural step-change growth in B&D and Yates Group and a strategic reset for Lincoln Sentry to drive growth ・Target acquisitions in the Pacific and Europe that enable key strategic growth opportunities 2024 Results Medium Term Forecast (in LCY) Market features and outlook*2 Key strategies to deliver market +α growth Dunn-Edwards AOC 4 April 3, 2025 Medium-Term Strategy Update Briefing Appendix
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2. Market Share Transition by Asset *NPHD's estimates 2021 2022 2023 2024 23% 24% 25% 25% 9% 8% 9% 9% 75% 75% 75% 75% 44% 45% 48% 49% 34% 34% 35% 35% 17% 18% 19% 19% - - Dry-mix mortar - - 56% 57% Decorative (waterbased) - - 23% 23% 50% 50% 50% 50% 2.5% 2.5% 2.5% 2.5% - - NIPSEA China TUC*1 TUB*1 NIPSEA Except China Singapore (TU-Consumer) Malaysia (Decorative) Betek Boya (Türkiye) (Decorative) PT Nipsea (Indonesia) (Decorative) NPI (India) (Decorative) Alina (Kazakhstan) Cromology: No.1 in Italy and No.2 in France and Portugal JUB: No.1 in Interior paints in Slovenia, Croatia, Bosnia and Herzegovina, and Kosovo AOC *1 Our China decorative business has been re-organized into TUC and TUB based on customer segmentation since 2023. The TUC and TUB market shares have been redefined to be consistent with the re-organization *2 Volume basis *3 Value basis No.2 in southern two states (Tamil Nadu and Karnataka) AOC is the leader in North America and has a leading presence in the more fragmented European market DGL (Europe) (Decorative) Dunn-Edwards (Decorative)*3 DuluxGroup DGL (Pacific) (Decorative in Australia)*2 5 April 3, 2025 Medium-Term Strategy Update Briefing Appendix
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3. Sustainability Teams Approaches and Actions Approaches for boosting EPS Actions and Examples Leading to higher EPS Environment & Safety ・Reduced carbon emissions and increased renewable energy consumption ・Reduced waste generation, increased resource recovery (reuse, recycling), and increased sustainable water consumption ・Management of high-consequence safety risks to protect people, assets, and supply ・Solar system installations in DGL Pacific & Europe and in NIPSEA China ・Renewable power purchase in DGL Europe and in Nippon Japan ・Various recovery and reuse projects for waste and water across all PCGs ・Implementation of high potential safety incident reporting across all PCGs People & Community ・Dynamic and open corporate culture, as well as a pleasant and rewarding work environment that encourages every employee to take on challenges and fully showcase their unique qualities and abilities in generating new value and business ・Senior Management in Japan Group playing multiple roles and taking initiatives for enhancing Group synergies and expanding market share ・NIPSEA Technology Leadership Council and Japan Segment Technology Leadership Team sharing and integrating Expertise and R&D Strategy for more sustainable business Innovation & Product Stewardship ・Drive Sales of Sustainable Products ・Improve Productivity by introducing innovative process ◆Low temp. Fast curing platform Since launching the first project (Automotive) in 2016, over 30 projects have been launched and are still ongoing. Expect to see its significant business expansion till 2030. It will continue to foster sustainable business growth and deliver enhanced value to our customers; ◆LSI (Leveraging, Sharing, and Integration) To improve Nippon Paint Group efficiency by identify best practice products, projects, process from different NPXs, then encourage sharing, leverage and integration. For an instance, one Joint conference was held and many topics covers from sustainable feedstocks to applications and services, which enhance our future sustainable business Governance ・Board considers the discussion of the Group‘s growth strategy as a key issue and encourages timely and appropriate risk- taking by the management without slowing down the speed of decision making on management proposals ・Simple and efficient internal Control framework in the Asset Assembler Model (framework being enforced through Nippon Paint Group Global Code of Conduct, Basic Policies of Global Risk Management (GRM) and Global Basic Policies of Whistleblowing Hotline) ・Flexible use of off-site meetings, and others*, to enhance growth strategy discussions *Almost doubled between 2023 and 2024 ・Operation being sophisticated based on Control-Self-Assessment (CSA) in accordance with the GRM of each PCG Sustainable Procurement ・Realize sustainable and optimized procurement cost and mitigate the risk of supply chain disruption ・It reduces the disruption and production cost, leading to stable MSV expectation ・Adopt a risk-based approach to supply chain management, aiming to improve processes by - promoting multi-sourcing and reducing reliance on single suppliers which mitigate the impact of natural disasters - tracking high-risk and high-impact raw materials across the group using a standardized matrix ・Conduct Supplier Sustainability Survey based on our Supplier Code of Conduct to identify suppliers that are compliant with our Code and those with weakness in certain areas *PCG: Partner Company Group, referring to the group of companies by region and business 6 April 3, 2025 Medium-Term Strategy Update Briefing Appendix
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4. Roadmaps of Sustainability Teams Step1 Step2 Step3 Step4 Climate Change ◆2024 ・Established collaboration group for understanding and improving carbon mitigation, such as: - Scope 3 footprint calculation and insights - Reduction opportunities and improvement initiatives - Engagement with PCG innovation and sourcing teams ・Reviewed and action carbon disclosures (TCFD, IFRS/CDSB) as appropriate ◆2025 ・Enable Carbon collaboration group for understanding and improving carbon mitigation, such as: - Scope 1 & 2 improvement - Scope 3 data approach & evolution - Scope 3 Improvement program in collaboration with procurement - Share of experience for data collection & reporting tools ・NIPSEA Group: 15% Scope 1 & 2 reduction (2021 baseline) ・DuluxGroup (Europe): GHG reduction targets to be established ◆-2030 ・DuluxGroup (Pacific): 50% renewable electricity consumption and 50% Scope 1 & 2 reduction 2030 (2020 baseline) ・Japan Group: 37% Scope 1 & 2 reduction 2030 (2019 baseline) ◆2050-2060 ・Net zero carbon (Scope 1 & 2) Resources & Environment ◆2024 ・Reviewed circularity best practice (waste, water) and identify improvement opportunities ・Reviewed emerging nature-related disclosure standards (TNFD) and action as appropriate ◆2025 ・Embed adopted reporting metrics and leverage from PCG initiatives and insights to promote learning and identify opportunities ・Review emerging nature-related disclosure standards (TNFD) and action as appropriate Safe People & Operations ◆2024 ・Established process safety collaboration group ・Supported implementation of high potential incident reporting and improvement action across PCGs ◆2025 ・Enable collaboration group to share, review, and align technical and operating standards across PCGs for management of high- consequence process safety risks (i.e. flammable solvents, combustible dusts) DE&I ◆2024 ・NIPSEA Group: - Continued to build a Strong Leadership Pipeline Across Regions - Developed future-ready leaders through our Group-level Leadership Development programs ・DuluxGroup: Under a leader-led approach, efforts drove toward gender balance, emphasized areas where women were under- represented, and focused on broader inclusion initiatives, such as disability and inclusive leadership practices ・Dunn-Edwards: Diversity training for all levels, follow-up survey ・Japan Group: - Initiated a development program targeting female employees - Introduced employee engagement survey ◆2025 ・NIPSEA Group: Achieve 35% female representation in management and emerging leaders - Launching the career portal - Strengthen leadership diversity by enhancing career pathways, leadership programs, and the Women Mentorship Program ・DuluxGroup: Drive gender balance - Embedding inclusion initiatives tailored to each country - By hiring, developing, and advancing talented women ・Dunn-Edwards: Shape initiatives based on survey feedback (career growth) and shift committee from DEI to Engagement focus ・Japan Group: - Continue improving the ratio of women in managing positions and resetting the mid-term target for the future - Continue employee engagement survey Growth with Community ◆2024 ・Developed Nippon Paint Group CSR Website ・DuluxGroup: - Launched the 'Dulux Communty Donations' portal - Significantly increased social media coverage of CSR projects and scaled-up the 'Colour your Club' program ・Dunn-Edwards: Creation of Dunn-Edwards Foundation ◆2026- ・NIPSEA Group: Invest at least US$5 million to support CSR initiatives each year Environment & Safety ◆-2060 ・Significantly improve the circularity of our supply chains (e.g. renewable resources, waste, water) ◆-2060 ・Enable effective control of high-consequence safety risks to reduce high-potential incidents and prevent all disasters and fatalities People & Community ◆2026- ・NIPSEA Group: Sustain long-term progress in talent development - Further development of career pathways - Integrate inclusive leadership practices - Expand mentorship initiatives - Leverage data insights from employee engagement survey ・DuluxGroup: Leaders in all countries, regardless of statutory requirements, track and address gender pay gaps. Ongoing focus on inclusion and belonging initiatives ・Japan Group: Recruitment and training of women and, creation of an environment that draws out individual potential ◆-2025 ・NIPSEA Group: Invest at least US$5 million to support CSR initiatives each year ・DuluxGroup: - Invest at least $1.5M in CSR projects each year - Continue to increase the number of employee volunteer hours by at least 10% (Yoy) 7 April 3, 2025 Medium-Term Strategy Update Briefing Appendix
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4. Roadmaps of Sustainability Teams Step1 Step2 Sustainable Products ◆2024 ・Developed methodologies & modeling of LCA (PCF *, software, database) ・IT Tool implementation for product sustainability scoring in system ・Sustainable products portfolio optimization ・DuluxGroup: - Developed recommendation for Scope 3 reduction target and roadmap - Continued implementation of sustainable products sales and packaging roadmaps ◆2025- ・Implement the LCA tool into daily operations in Japan and China, with plans to extend its use to other regions, including Southeast Asia and the DuluxGroup business ・Optimize our sustainable product portfolio and drive sustainable business growth by engaging the entire value chain Chemicals of Concern ◆2024 ・Proceeded the CoC phasing out plan by regions and business units based on local status ・Continuously evaluated other CoC restriction requirements and implementing action plans ・DuluxGroup: Continued development of positions statement for 95% of CoC ◆2025- ・Continue to proceed the CoC phasing out plan by regions and business units based on local status ・Continuously evaluate other CoC restriction requirements and implementing action plans ・DuluxGroup: Continue development of Group CoC position statements R&D ◆2024 ・Initiated and drove flagship projects in Sustainability ・Created sustainable project portfolio and drove sustainable business growth ◆2025- ・Throughout the entire value chain, we are committed to reducing carbon emissions and delivering additional value to our customers - Developing bioplatfoms on the upstream side - Developing low-temperature fast-curing solutions and long-life platforms on the customer side Product Stewardship ◆2024 ・Monitored, recorded and communicated the change of global regulations ・Assessed raw materials introduction, registered new substance and ensured SDS and GHS label generation, registration hazard chemical permits correctly and precisely ・Responded to customers requests, i.e., RoHS, IMDS etc. ◆2025- ・Continue to monitor, record and communicate the change of global regulations ・Continue to assess raw materials introduction, register new substance and ensured SDS and GHS label generation, registration hazard chemical permits correctly and precisely ・Continue to respond to customers requests, i.e., RoHS, IMDS etc. Step3 Innovation & Product Stewardship ◆-2030 ・Manage the performance of Sustainability Scoreboard of each PCG every quarter ・Promote creation of more innovative sustainable products ・Implement sustainable products and Scope 3 roadmaps ・DuluxGroup: Deliver 2030 Best in Class sustainable product sales target ◆-2030 ・Create sustainable products based on phase out plan ・Phase-out 4 heavy metals before the end of 2030 globally ◆-2030 ・Drive innovation towards UN SDGs and carbon neutrality ◆-2030 ・Implement inquiry management database Inquiry response training ・Training for customers and business partners ・DuluxGroup: Implement packaging roadmaps * Product Carbon Footprint 8 April 3, 2025 Medium-Term Strategy Update Briefing Appendix
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4. Roadmaps of Sustainability Teams Step1 Step2 Board of Directors Governance ◆2024 ・Enrichment of discussion on growth strategy ・Improvement of the operational efficiency of Board meetings ・Thorough engagement in succession planning ・Further fine tuning of the "Audit on Audit" framework ◆2025 ・Enrichment of discussion on growth strategy ・Thorough engagement in succession planning ・Further upgrading of the “Audit on Audit” framework Execution Governance ◆2024 ・Proactive improvement tailored to the situation of each PCG through voluntary self-inspections by CSA (Control Self- Assessment) List ・Operating and enhancing the effectiveness of internal reporting channels tailored to the situation of each PCG ・Strengthening collaboration within the Sustainability Team to respond to changes in social demands such as "human capital" and others ◆2025 ・Effectively utilise the CSA list as a tool for voluntary inspections and promote the penetration of an autonomous, exhaustive risk identification to countermeasure implementation system in each PCG ・On the Whistleblowing Hotline, share best practice from each PCG to ensure more effective and efficient operation ・Extend and brush up various measures and initiatives to new AOCs joining the Group in order to maintain and improve governance and internal controls across the Group Strengthen Internal Mindset and Enhance Understanding of Sustainable Procurement ◆2024 ・Supported Group Environment, Health, and Safety (EHS) to compile Scope 3 for the NIPSEA group progressively ・Improved understanding of Scope 3/ESG among the group’s procurement through training ・Developed supplier ESG audit program with NIPSEA China ◆2025 ・Conduct supplier ESG assessment ・Develop supplier ESG engagement framework - Supplier awareness/training workshop - Supplier ESG audit program ・Compile RM Life-cycle Assessment (LCA) data ・Support compilation of Scope 3 carbon emission ・Update country & region of origin of RM in the SAP system (for climate risk assessment) Sustainable Procurement Actions with Suppliers ◆2024 ・Conducted supplier questionnaire (94% by value) ・Engaged suppliers to provide primary data to improve Scope 3 data quality Sustainable Procurement ◆2026- Continue to strengthen internal mindset for sustainable procurement ◆2025- ・Strengthen internal capabilities, reduce GHG emissions, and conduct due diligence to ensure supply chain sustainability ・Collaborate with key suppliers to innovate sustainable products and processes via the Global Key Account Management (GKAM) strategy - define our supplier assessment methodology - engage suppliers on defining lower carbon feedstocks and raw material - set expectations for supplier GHG emissions reductions Step3 Governance ◆-2026 ・Further sophistication of growth strategy discussions ・Enhance and implement succession plans ◆-2026 ・Verify effectiveness and refine -risk management system -whistleblowing hotline ・Upgrading the governance framework (Including compliance and risk management) to respond to changes in social demand 9 April 3, 2025 Medium-Term Strategy Update Briefing Appendix