Kansai Paint : Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023

1. Number of shares of common stock issued

1. Number of shares of common stock issued at period-end (including treasury stock):

*Status of the implementation of audit procedures

These financial statements are not subject to quarterly review procedure of certified public accountant or audit firm.

*Explanation for appropriate use of forecasts and other notes

The forward-looking statements such as operational forecasts contained in this document are based on information currently available to the Company and certain assumptions which are regarded as legitimate. However, it does not mean that we guarantee its achievement. Actual results may differ from such forward-looking statements for a variety of reasons.

Overview of financial results

During the fiscal period under review, the world economy was on a gradual recovery trend in general. However, we continued to face significant uncertainties partly on the back of the impact of global inflation in addition to limited supplies and soaring prices for raw materials on the back of emerging geopolitical risks. Under these circumstances, the Chinese economy slowed down due to lockdowns following the spread of COVID-19. In Europe and the United States, the economy continued to pick up gradually despite monetary tightening policy causing downward pressures on the economy. In other regions, the economy was on a recovery trend or showed signs of recovery. The Japanese economy, under the impact of a rise in resource prices, observed a recovery in line with the ongoing control of COVID-19 and economic activities.

The Group’s net sales for the first six months of the consolidated fiscal year under review was 250,700 million yen (up 23.3% year on year). Operating income remained at 15,762 million yen (down 6.4% year on year) despite our efforts to improve profits by passing on to selling prices the selling cost, which rose due to an increase in sales amid continued impact of soaring prices for raw materials. Ordinary income was 21,041 million yen (up 1.3% year on year), reflecting an increase in foreign exchange gains arising from the weaker yen despite the decline of equity in earnings of affiliates and the impact of application of the hyperinflationary accounting standard in Turkey. Net income attributable to owners of the parent for the period under review amounted to 12,371 million yen (up 7.7% year on year) due to an increase in gains on sale of investment securities as a result of reducing cross-shareholdings.

Segment overviews are as follows.

In the automotive coatings sector, sales increased year on year due to a year-on-year increase in car production. The industrial coatings sector recorded a year-on-year increase in sales due to efforts to improve selling prices despite the sluggish market conditions. In the decorative coatings, automotive coatings (for refinishing) and protective coatings sectors, sales increased year on year thanks to efforts to improve selling prices, although the market failed to achieve a full-fledged recovery. The marine sector saw higher sales than in the previous year due to a recovery of the market. Profits increased year on year due to foreign exchange gains despite the impact of higher prices for raw materials.

As a result of those factors, net sales and ordinary income in the segment were 73,537 million yen (up 7.1% year on year) and 8,859 million yen (up 33.6% year on year), respectively.

In the automotive coatings sector, both sales and profits increased year on year due to a year-on-year increase in car production, together with the decorative coatings sector, following a one-time decline due to the effect of lockdowns to prevent the spread of COVID-19, and thanks to our efforts to improve selling prices.

As a result of those factors, net sales and ordinary income in the segment were 68,156 million yen (up 49.8% year on year) and 6,268 million yen (up 58.8% year on year), respectively.

In Turkey, net sales increased year on year, due to our efforts to improve selling prices in the automotive coatings sector and the industrial coatings sector. In other European countries, there was also a year-on-year increase in sales due to strong demand, mainly in the industrial coatings and the decorative coatings sectors, resulting in year-on-year growth in net sales in Europe as a whole. On the other hand, profits fell from the previous year due to soaring prices for raw materials and energy costs, in addition

to the impact of the application of the hyperinflationary accounting standard in Turkey.

As a result of those factors, net sales and ordinary income in the segment were 54,467 million yen (up 31.6% year on year) and 1,286 million yen (down 67.6% year on year), respectively.

In China, sales in the automotive coatings sector decreased year on year, reflecting a year-on-year decline in car production. In the industrial coatings sector, sales of paints for industrial machinery recorded a year-on-year decrease due to weaker demand from major customers. As a result, net sales decreased year on year in China as a whole. In Indonesia, Thailand and Malaysia, net sales recorded a year-on-year increase on the back of a recovery in car production. Meanwhile, profits decreased year on year due to the impact of higher prices for raw materials, a decrease in equity in earnings of affiliates and other factors.

As a result of those factors, net sales and ordinary income in the segment were 32,168 million yen (up 11.3% year on year) and 3,263 million yen (down 30.7% year on year), respectively.

Amid sluggish demand in South Africa and neighboring countries due to a delay in economic recovery, sales in the South African region increased on the back of efforts to improve selling prices. In the East African region, sales grew in the decorative coatings sector by absorbing strong demand, resulting in year-on-year sales growth in Africa as a whole. Profits increased year on year due to reduced fixed costs through efforts to liquidate unprofitable businesses, which have been continuing from previous years, and the receipt of COVID-related insurance.

As a result of those factors, net sales and ordinary income in the segment were 19,098 million yen (up 18.9% year on year) and 883 million yen (up 71.8% year on year), respectively.

In North America, sales increased year on year as car production exceeded the previous year’s level. On the other hand, profits fell from the previous year due to the impact of the soaring prices for raw materials and a decrease in equity in earnings of affiliates.

As a result of those factors, net sales and ordinary income in the segment were 3,271 million yen (up 16.5% year on year) and 480 million yen (down 52.5% year on year), respectively.

Consolidated financial statements