AGC (5201) IR Day 2024 Day 2 summary

Financial targets and capital allocation

• Aims to achieve ROE of 8% by 2026 and 10% by 2030, requiring JPY 300 billion in operating profit by 2030.

• Group-wide ROCE target is 10% or higher, with operating profit targeted at JPY 230 billion by 2026 and strategic business OP at JPY 130 billion or more.

• Strategic investment budget set at JPY 200 billion for growth businesses, with capital allocation prioritizing strategic business investment, stable dividends, and selective share buybacks.

• Dividend payouts will rise compared to the previous midterm plan, with share buybacks considered if surplus capital remains.

• D/E ratio to be kept at 0.5 or less, and EBITDA to reach JPY 440 billion by 2026.

Chemicals business strategy and outlook

• Essential Chemicals will focus on Southeast Asia, expanding chlor-alkali and PVC capacity, aiming for over 50% market share post-expansion.

• Performance Chemicals targets growth in semiconductor and hydrogen markets, with semiconductor/hydrogen sales to rise from 5% to 20% by 2030.

• ROCE targets: 10% for Essential Chemicals, 20%+ for Performance Chemicals, with operating profit goal of JPY 86 billion in 2026.

• PFAS regulations pose a challenge, but most problematic substances have been eliminated from products.

• Demand for chlor-alkali in Southeast Asia expected to grow long-term, driven by regional economic development.

Electronics business strategy and performance

• Electronics sales reached JPY 313.2 billion in 2023, with Display segment recovering and Electronic Materials showing steady growth.

• Display business is undergoing structural reform, reducing capacity by 20% by end-2024 and focusing on large panel substrates.

• Electronic Materials segment leverages both organic/inorganic materials, with strong positions in EUV mask blanks, CMP slurry, and IR cutoff filters.

• EUV mask blanks sales target of JPY 40 billion, originally set for 2025, is expected to be achieved in 2024 due to strong demand.

• 2026 targets: JPY 380 billion net sales, JPY 53 billion operating profit, and 10% ROCE for Electronics.