To All Shareholders and Investors

The previous medium-term business plan kicked off in fiscal 2021 in the midst of the COVID-19 pandemic. Benefiting from strong market conditions for information and telecommunication materials based on demand from people staying home, we achieved the expansion of the sales of mobility materials which we define as some of our strategic products, a moderate but steady recovery of the sales of aircraft interior parts, the expansion of our medical device business following the launch of SB-Kawasumi Laboratories, Inc., the revision of prices in response to the surging prices of raw materials, etc., our adaptation to the depreciation of the yen and many other changes in the business environment. Record high revenue, business profit and profit attributable to owners of parent were recorded in fiscal 2023, the final year of the plan.

The Sumitomo Bakelite Group chose a profit standard as a management indicator in our Vision 2030with the goal of continuously increasing our corporate value. We set our financial targets at business profit of 55.0 billion yen, a 13% business profit ratio and a 10% return on equity (ROE). We used a backcasting approach to formulate Medium-Term Business Plan 2024-26, which starts in fiscal 2024, working backward from our vision. It includes a policy which states, "Aiming for niches & top market share, we take on the challenge of our portfolio transformation leading to value creation." It sets the target of achieving business profit of 40.0 billion yen and a 9.0% ROE in the final fiscal year of the plan, 2026. To do this, we will optimize the product mix of our existing businesses referencing SB-ROIC, an internal indicator for measuring the efficiency of the investments we make, in a bid to strengthen the profitability of the existing businesses. We will accelerate creation of new products and solutions with environmental and social value. In terms of the human capital that provides the foundation for implementing these initiatives, we will enhance individual autonomy and organizational unity to maximize companywide capabilities. We will thus incorporate various measures in our action plan for the continuing improvement of corporate value. We regard the return of profit to shareholders and the improvement of corporate value to be key management issues. We will pay dividends stably and continuously. We have adopted a policy increasing the payout ratio target from the conventional 30% or more to around 40% during the period of the new medium-term business plan.

The Sumitomo Bakelite Group will contribute to achieving a sustainable society by expanding the potential of plastics. I am looking forward to the continued support of and guidance from shareholders and investors.