Slides
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Fiscal Year Ending January 2025 3rd Quarter (Aug. – Oct. 2024) Earnings Results Presentation W-SCOPE Corporation 12 December 2024
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Index 1. FY25 Q3 Earnings Results 2. Outlook for FY25 3. Group’s business situation 4. Corporate Profile
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1. FY25 Q3 Earnings Results
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Summary of FY25 Q3 Earnings Results 4 Sales FY25 Q3 vs FY24 Q3 YoY JPY 30.7bn JPY -5.6bn -15.3％ • Automotive batteries: 22.2 billion yen (down 0.6% YoY) – due to sluggish demand in Europe • Consumer batteries (excl. IEM): 7.2 billion yen (down 43.5% YoY) – weak demand continues • IEM business: sales of 1.3 billion yen for Argentine • Sales of WCP are no longer included in consolidated sales as it is treated as an equity- method affiliate after Q3. OP FY25 Q3 vs FY24 Q3 YoY JPY 0.8bn JPY -2.8bn -76.4％ • Sales down by 5.6 billion yen while the sales volume are declining after Q3 • COGS: -2.9billion yen by controlling the production volume RP FY25 Q3 vs FY24 Q3 YoY JPY 0.7bn JPY -3.8bn -83.7％ • Non-operating loss of 1.0 billion yen - interest expenses of 0.3billion yen, exchange losses of 0.2billion yen • Equity losses of affiliates of 0.4 billion yen (WCP)
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Consolidated Financial Summary * the first half of fiscal year for consolidated subsidiaries are from January to June. 5* YoY(%) = 2025 Q3 Actual / 2024 Q3 Actual, rounded to the first decimal place The applied exchange rate is the average value between January 2024 to September 2024. (Mil. JPY) 2024 Q3 (’23 1~9) 2024 Q4 (’23 1~’24 1) 2025 Q1 (’24 2~4) 2025 Q2 (’24 2~’24 7) 2025 Q3 (’24 2 ~ ′24 10) Actual Actual Actual Actual Actual YoY Sales 36,265 48,043 14,471 29,062 30,700 84.7% OP 3,627 3,865 554 1,070 854 23.5% (OPM, %) (10.0) (8.0) (3.8) (3.7) (2.8) EBITDA 9,137 11,487 2,607 5,338 5,562 60.9% RP 4,578 4,600 937 1,751 747 16.3% NP 4,218 4,504 960 1,728 715 17.0% NP attributed to the parent’s shareholders 797 939 722 1,280 268 33.6% Depreciation 5,510 7,622 2,080 4,267 4,708 85.4% R&D 672 1,000 262 697 850 126.5% CAPEX 37,444 50,551 19,153 27,017 31,332 83.7% AR:¥/$ 137.79 140.18 148.25 151.93 151.16 109.7% AR:¥/1,000KRW 106.0 107.4 111.6 112.6 111.7 105.4% AR:KRW/$ 1,300.32 1,305.41 1,328.45 1,349.50 1,352.85 104.0% No. of employees 1,310 1,508 1,647 1,584 341 26.0%
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36.27 -62.64 -28.81 7.00 14.08 2.70 8.26 1.16 11.61 0.06 14.77 4.08 -60 -50 -40 -30 -20 -10 0 10 20 30 40 50 6 単位：億円 Decrease in sales volume Change in sales mix (incl. IEM) Increase in COGS due to the change in inventories Decrease in material costs Decrease in personnel costs Decrease in depreciation costs Reversal of inventory valuation loss Decrease in energy costs Decrease in freight costs Decrease in other manufacturing costs (incl. IEM) Decrease in other SG&A costs 2024 Q3 2025 Q3 8.54 -13.31 (Ref. ) WCP consolidated base -21.86 Waterfall chart – YoY change in OP FY24 Q3: JPY 3,627 million FY25 Q3: JPY 854 million YoY Changes in Sales: JPY -5,564 million OP: JPY -2,772 million Increase Decrease (100mil. JPY)
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9 11 20 23 8 7 9 10 12 9 13 9 8 3 113 124 124 124 53 0 20 40 60 80 100 120 140 160 180 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2025 Q3 負債・純資産 Payables Short-term Debt Long-term Debt Other Liabilities Net Assets 26 20 21 12 1 13 13 12 11 5 10 11 11 10 2 85 107 114 130 13 6 7 7 7 43 0 20 40 60 80 100 120 140 160 180 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2025 Q3 資産 Cash & Cash Equivalent Sales Receivables Inventories Tangible Fixed Assets Other Assets (Investment securities 41) ASSETS LIABILITIES & EQUITY 7 Upon deconsolidation of WCP, those assets and liabilities are no longer reflected in our balance sheet. BS Summary (Bil.JPY) (Bil. JPY)
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2. Outlook for FY25
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Earnings Forecasts for FY25 On November 26, 2024, we announced the revision of earnings forecasts for FY25 Comparison to the original forecasts 9 Mil. JPY Original New Reasons for the changes Sales 50,000 31,000 1. Deconsolidation of WCP in H2 2. Sluggish demand in European EV market OP 4,000 △850 1. Deconsolidation of WCP in H2 2. Increase in fixed costs 3. Loss in inventory valuation RP 800 △1,800 Reflects the 36.23% of WCP profits NP attributed to the parent’s shareholders 500 △2,300 Sales: does not reflect the sales of WCP OP: does not reflect OP of WCP (there will be an adjustment of unrealized profit) RP: reflects 36.23% of WCP’s profits Changes along with deconsolidation of WCP
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H1 vs H2 forecasts / forecast assumptions 10 Mil. JPY New full year forecasts H1 actual H2 forecasts Sales 31,000 29,062 1,938 OP △850 1,070 △1,920 RP △1,800 1,751 △3,551 NP attributed to the parent’s shareholders △2,300 1,280 △3,580 １.Sales • WCP not included. • Expects weak sales due to sluggish European EV market as the business relied on European EV market for approx. 74% of its sales (H1). • Expect the market situation will be normalized in the second half of 2025. ２.Operating Profit • WCP not included. • Fixed costs, such as personnel costs and depreciation costs, is expected to be a burden due to the decline in sales. • Reflect inventory valuation loss of 1 billion yen as we expect the market recovery will take some time.
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３.Recurring profit and NP attributed to the parent’s shareholders • Reflect 36.23% of WCP’s net profit as an equity method investment gain/loss. • The schedule for WCP’s bank loan has been changed and interest expense is expected to be lower than initially expected. ４.Outlook for the Global EV market Europe • The European economy in general has slowed down significantly, partly due to the situation in Ukraine and Middle East. This has resulted in the reduction of both EV and traditional motor vehicles. • Regarding BEV, the sales in Germany , the biggest market, has been significantly reduced due to the change in its subsidy policy. However, the sales are increasing slightly in both Great Britain and France. On the other hand, the sales of HEV is showing a steady growth. We also expect that the new CAFÉ requirements, effective in 2025, would further assist in EV market growths. US • In the US, the new administration’s policy on EV in general is still unclear. We believe that the trend would be positive in mid to long term, when we see the new investments being made by the auto manufacturers and the ongoing governmental push towards battery-charging infrastructure. • President Biden has previously announced that he aims to have 50% of new car sales to be EV by 2030. It seems that achieving this target would be delayed by several years. • On the other hand, the new Trump administration could give further assistance to the new investments in US manufacturing capacities. 11
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Our strategic focus area in 2024 To capture the business opportunities in the growth market In response to customers’ regional expansion Production site: Asia: South Korea Europe: Hungary North America: TBD To develop new customers To approach EV battery manufacturers in South Korea, the US, Europe, Japan and Asia ex-Japan To enhance product competitiveness Production innovation New technology to improve production efficiency Enables to reduce the cost of production and meet the growth in demand Development and introduction of automated equipment Enables to achieve stable product quality for multi area production and manage rising labor costs To develop new initiatives IEM business Lithium deposition business By-product removal Other newly developed products PFAS-free breathable waterproof functional fiber Special separator for All Solid State batteries 12
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3. Group’s Business Situation
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Ref. Group’s Performance (incl. WCP) 14 (Mil. JPY) 2024 Q3 (’23 1~9) 2024 Q4 (’23 1~’24 1) 2025 Q1 (’24 2~4) 2025 Q2 (’24 2~’24 7) 2025 Q3(Ref.) (’24 2 ~ ′24 10) Actual Actual Actual Actual - YoY Sales 36,265 48,043 14,471 29,062 36,811 101.5% OP 3,627 3,865 554 1,070 △1,331 － OPM% (10.0) (8.0) (3.8) (3.7) (△3.6) EBITDA 9,137 11,487 2,607 5,338 5,090 55.7% RP 4,578 4,600 937 1,751 △1,518 － NP 4,218 4,504 960 1,728 △1,177 － NP attributed to the parent’s shareholders 797 939 722 1,280 △110 － Capex 37,444 50,551 19,153 27,017 44,905 119.9% Number of employees 1,310 1,508 1,647 1,584 1,499 114.4% *1 YoY(%) = 2025 Q3 Actual / 2024 Q3 Actual, rounded to the first decimal place *2 Financial figures for FY25 Q3 are for reference purpose only *3 RP, NP and NP attributed to the parent’s shareholders do not match with reported consolidated figures due to the adjustment of unrealized profit
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15 Sales by Product Type and Application (excl. IEM) (mil. JPY) 0 2,000 4,000 6,000 8,000 10,000 12,000 FY22 1Q FY22 2Q FY22 3Q FY22 4Q FY24 1Q FY24 2Q FY24 3Q FY24 4Q FY25 1Q FY25 2Q FY25 3Q Consumer Non-coating Consumer Coating Automotive Non-coating Automotive Coating
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Global Business Development The French Industrial Property Office (INPI), Alteo (a French chemical manufacturer) and WCP are coordinating to build a supply chain for EV batteries in Europe. Establishment of W-SCOPE HUNGARY PLANT Limited as a wholly owned subsidiary of WCP , with a membrane deposition and coating lines capable of producing 1,200 square kilometre per year by 2025. Once the market shows signs of recovery, we will start the full-scale production. In May, WSK completed shipment ofBPED Sub-stacks (ion exchange membrane stack modules) to POSCO Argentina, a wholly owned subsidiary of POSCO HOLDINGS. Production and sales of separators for consumer and EV applications ,and of IEM related products at existing sites of WCP and WSK. 16 Started high-volume production for some EV battery manufactures in US. Continues new deal discussions with several customers. Expect the change in subsidy policy for EV supply chain under new administration. Will establish an appropriate supply system once the details of new policy are confirmed. The above development includes both currently operated development and potential future development
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Korea Separator business: halting some of the production lines temporarily to prevent overproduction. Started US shipments in H2 We intend to supply from the Korean factory until a recovery in demand in Europe is confirmed. In the mid to long term, we pursue a strategy to enhance our production competitiveness (please see the next page for details), IEM business: we are expanding our applications, in conjunction with POSCO, and samples are already sent to our potential new customers. Hungary Once the European EV battery market shows signs of recovery, we will start the full-scale production. US Under the new administration, the growth in EV market may slowdown. Expected FEOC restrictions give us an opportunities for new customer acquisition. 17 Our Strategy and Sales/Profit Outlook We expect the market situation of the global rechargeable battery will be normalized in the second half of 2025. We are well positioned for growth when market situation improves.
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Enhancement of Product Competitiveness To realize the strong future growths in the EV market, price reduction is essential. We, as a part of supply chain, continues to innovate and improve cost efficiency by promoting concrete measures based on the strategy. • Completion of pilot testing for full-scale production • Shipment/evaluat ion of the sample product Modificatio n complete for mid-size production line • “Our strategic focus area in 2024” • Customer approval Modification of large-size production line • Reduction of investment cost • Ensure the higher production capability within a short period Implemen tation for overseas factory 2. Promote in-house development of automated equipment and mass production capabilities to manage rising labor costs. Reduction of labor costs: rising labor cost, shrinking talent pools Quality stabilization of shipping products: yield enhancement, quality control across the manufacturing site 18 1. Improve production efficiency to manage initial investments/depreciation costs, labor costs and utility costs. Introduced new technology to double the production capabilities for membrane deposition. As the production capability expands, the operating cost per production volume is expected to gradually drop.
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4. Corporate Profile
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20 Corporate Profile Company Name W-SCOPE Corporation Representative Won-Kun CHOI, President and CEO HQ Address Gotanda Sakura Building 8F, 1-22-6 Higashi Gotanda, Shinagawa-ku, Tokyo Founded / Listed in Oct 2005 / Dec 2011 Listing Market TSE Prime Market（6619 JP） Business Membrane film specialist manufacturer →develop, manufacture and sell separators, a core material in replacement Li-ion battery FY24 Earnings (consolidated) Sales:¥48,043mil, OP:¥3,865mil, EBITDA:¥11,486mil No. of Employees 1,508 (As of the end of Jan 2024)
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21 W-SCOPE CHUNGJU PLANT CO., LTD. (WCP) Listed in KOSDAQ since Sept 2022 (393890） • Production and sale of separator films for consumer and electric vehicle (EV) applications using membrane deposition production lines (separator film production lines) and coating production lines (lines for coating the surface of separator films). • Intends to increase ownership ratio which diluted with KOSDAQ IPO. W-SCOPE HONGKONG CO., LIMITED W-SCOPE HUNGARY PLANT Ltd. Group supervision, financing, product sales and material and technology development. W-SCOPE Corporation 100% 36.23% 100% 100% W-SCOPE KOREA CO.,LTD. (WSK) • Production and sale of separator films for consumer and electric vehicle (EV) applications using membrane deposition production lines (separator film production lines) and coating production lines (lines for coating the surface of separator films). • Research, development, production and sales of ion exchange membranes (IEM). Corporate Structure Sales Subsidiary
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22 Disclaimer This presentation includes predictions and forecast of W-Scope Corporation’s business and market trends in which it operates. These predictions and forecast are made based on currently available information. Therefore, the actual result may differ due to various factors. W-Scope Corporation makes no representations or guarantees regarding predictions and forecast in this presentation. Investment decision should be made using investors’ own judgement.