Now we'd like to start the full-year financial results briefing for FY25 for AGC. The moderator is myself, and my name is Tamaki of Corporate Communications and IR.

Let me introduce the participants from AGC. We have Mr.

Yoshinori Hirai, the President and CEO; Executive Vice President and CFO, Yoshio Takegawa; General Manager of Finance and Control Division, Tomoyuki Shiokawa. Today, first, our CFO, Takegawa, will present the financial results for the full year 2025, and then our CEO, Mr.

Hirai, will talk about toward profitability improvement, and then we take questions. We plan to end this session around 4:45 PM, I'd like to ask for your cooperation.

Now we'd like to invite Mr. Takegawa to you.

Good afternoon. This is Takegawa, CFO.

Thank you very much for joining us today. Let me get started.

Please go to page 3. This shows the key points of FY25 results and FY26 outlook.

For the FY25 full-year results, net sales were flat, and operating profit rose slightly year-on-year. Improvement of Automotive contributed the operating profit increase.

Profit attributable to owners of the parent improved significantly. ROE improved to 4.7%.

Outlook for FY26: operating profit is expected to increase, driven by a recovery in Life Science. Profit attributable to owners of parent is also expected to improve.

ROE is expected to improve to 5.2%. Please go to page 6.

I'd like to explain further on the results. Net sales were ¥2,058.8 billion, down ¥8.8 billion year-on-year.

Net sales increase factors include product mix improvement and pricing policies effect in Automotive, pricing policies effect and higher shipments in Performance Chemicals, and pricing policies effect in Architectural Glass in Europe and Americas. Decrease factors include lower sales price of PVC, decrease in shipments of EUV mask blanks, and lower sales prices in Architectural Glass in Asia.

Operating profit was ¥127.5 billion, up ¥1.6 billion. Despite the higher raw materials and fuel prices and deterioration in manufacturing costs and others, the realization of the earnings improvement measures in Display and others pushed up the profit, in addition to the earlier mentioned factors.

Profit before tax was ¥124.8 billion, up ¥174.8 billion, significant increase. In addition to the earlier mentioned factors, disappearance of the losses from share sales in connection with the Russian business transfer and large impairment losses related to biopharmaceutical CDMO booked last year.

Please go to page 7. This is the performance by segment.

Sales and profit of Architectural Glass and Automotive increased, while the sales and profit of Electronics, Chemicals, and Life Science declined. Please turn to page 8.

Regarding operating profit, I would like to explain the factors contributing to the difference year-on-year. Sales volume, price, and product mix contributed positively, ¥19.9 billion YoY.

PVC price and shipments of semiconductor-related materials were down, but the product mix for automotive glass improved. Pricing policy had positive impact, and also pricing policy for architectural glass in Europe and America and Performance Chemicals contributed.

Raw materials and fuel costs of ¥4.6 billion and other costs of ¥13.7 billion both had negative impacts. Resulting OP increased by ¥1.6 billion year-on-year to ¥127.5 billion.

Please turn to page 9. This is the balance sheet.

Total assets amounted to ¥2.9501 trillion, an increase of ¥60.4 billion from the end of last year. D/E ratio stood at 0.37.

Please turn to page 10. Operating cash flow was at ¥274.5 billion.

Investment cash flow was -¥178.4 billion, and resulting free cash flow was ¥96.1 billion. Please turn to page 11.

I would like to explain CAPEX, depreciation, and R&D expenditure on this page. CAPEX amounted to ¥251.3 billion, depreciation ¥179.8 billion, and R&D expenses ¥60.3 billion.

Main CAPEX projects are listed on this slide. We will now move on to the explanation by segment.

Please turn to page 13. Starting with Architectural Glass segment, net sales increased by ¥3.2 billion to ¥441.1 billion, while OP rose by ¥0.9 billion to ¥17.3 billion.

In Asia, net sales decreased by ¥4.4 billion due to lower shipments and lower sales prices in Indonesia and other regions. In Europe and Americas, although shipments declined in Europe and there was a revenue reduction impact due to the transfer of Russian business in February of the previous fiscal year, net sales increased by ¥7.6 billion, benefiting from the effects of pricing policy and weaker yen.

OP increased by ¥900 million despite higher costs such as labor costs due to the aforementioned sales growth factors. Subsegment ratio of OP was approximately 20% for Asia and 80% for Europe and Americas.

Please turn to page 14. Next is the Automotive segment.

Net sales increased by ¥21.8 billion to ¥520.6 billion, and OP increased by ¥15.3 billion to ¥29.3 billion. Shipments declined in Europe but increased in Japan.

In addition to improvements in product mix and the pricing policies impact, the weak yen also contributed. OP increased by ¥15.3 billion, driven by the revenue growth factors which was mentioned before, despite increases in costs such as raw materials and labor expenses.

Please refer to page 15. Next is the Electronics segment.

Net sales decreased by ¥9.5 billion to ¥355.1 billion, and OP decreased by ¥6.9 billion to ¥47.5 billion. The Display segment saw a ¥5.5 billion increase in net sales due to higher shipments in LCD glass substrates.

Electronic materials saw a ¥15.1 billion decrease in revenue due to the transition period towards higher functionality of optoelectronics, coupled with a decrease in shipments in EUV mask blanks. OP decreased by ¥6.9 billion, reflecting the negative drivers that were explained, and the costs associated with the withdrawal from the specialty glass for chemical strengthening business.

The breakdown of OP was approximately 70% from electronic materials and 30% from displays. Please turn to page 16.

Next is Chemicals segment. Net sales were ¥584.2 billion, down ¥9.4 billion.

Operating profit was ¥53 billion, down ¥3.7 billion. Essential chemicals net sales were down by ¥28.4 billion due to lower PVC sales price.

In Performance Chemicals, pricing policies effects and higher shipments of fluorine-related products for electronics and mobility applications contributed to the net sales increase of ¥18.2 billion. Operating profit was down by ¥3.7 billion due not only to the lower essential chemicals sales, but also to manufacturing cost deterioration related to the facility repairs and others.

Subsegment ratio to operating profit is 20% for from the essential chemicals and 80% Performance Chemicals. Please go to page 17.

This is Life Science segment. Net sales were ¥133.1 billion, down ¥8.1 billion.

Operating loss ¥22.3 billion, down ¥1.1 billion. Net sales of the small molecule pharmaceuticals and agrochemicals CDMO remained steady.

Net sales of biopharmaceutical CDMO were affected by disappearance of one-off revenues associated with the settlement of contracted projects booked last year and the negative impact of the closure of US Colorado sites. Although fixed cost reduction measures taken at the biopharmaceutical CDMO in the US have shown positive effects, fixed costs increased due to the facility expansion in Europe, which started operation last year, in addition to the negative factors on the sales mentioned before.

Please go to page 18. Strategic businesses net sales were ¥501.5 billion, down ¥1.8 billion year-on-year.

Operating profit was ¥58.7 billion, down ¥8.6 billion. Overall operating profit decreased year-on-year due to the lower shipments of electronics and decreased net sales of Life Science, although the net sales of Performance Chemicals and Mobility increased.

Please go to page 20. This is outlook for FY2026.

Let me explain the assumptions for the major economies and markets in '26. While some markets continue to face challenging conditions and despite the uncertain geopolitical situation, global economy is expected to grow moderately with expanding AI-related investments and monetary easing of major economies.

Stagnation is expected for Europe and China, while the US economy will trend strongly. Looking at market environment: auto, smartphone, TV—we cannot expect the production growth; however, we expect that the shift to high function and larger size will continue.

Caustic soda, PVC prices in Southeast Asia remain low, and semiconductor market is continuing to grow, driven by AI-related demand. Biopharmaceutical CDMO market is expected to gradually recover.

Please go to page 21. I'd like to explain the outlook for the full year.

Although the business environment remains challenging, we forecast net sales of ¥2.2 trillion, an increase of ¥141.2 billion YoY, and the OP of ¥150 billion, an increase of ¥22.5 billion. ROE is forecast to improve to 5.2%.

Exchange rates are assumed to be ¥155 to the US dollar and ¥180 to the euro. Please turn to page 22.

Outlook breakdown by segment is shown on this slide. Improvements in Life Science are expected to contribute.

Further details will be explained on the following pages. Please turn to page 23.

Starting with Architectural Glass, in Asia, shipments are expected to increase due to recovering demand in Thailand and Indonesia. We will continue our pricing policy and productivity improvement initiatives.

In Europe and Americas, the economic downturn is expected to continue with only limited recovery in shipments anticipated. We will focus on maintaining price levels and reducing costs.

Next is Automotive glass. Shipments are expected to decline due to decrease in automotive production.

In addition to improving product mix and pricing policy, we will continue our efforts towards structural reform and productivity improvements. Moving on to Electronics.

In Display, shipments of LCD glass substrates are expected to decline slightly. We will continue our profit improvements measures.

Within electronic materials, shipments of semiconductor-related materials such as EUV mask blanks are expected to increase. Shipments of optoelectronic materials are expected to remain at the same level as the previous year.

Please turn to page 24. Moving on to Chemicals.

Integrated chemicals is expected to increase the shipment of fluorine-related products for electronics and chlor-alkali products. Essential chemicals, Southeast Asia is expected to see increased shipments due to the full operation of expanded facilities.

Moving on to Life Science. Sales for synthetic pharmaceuticals and agrochemical CDMO are expected to increase by launch of expanded facility.

This is increase of net sales. In addition to the increased sales, the biopharmaceutical CDMO is expected to see a significant reduction in losses due to the closure of the Colorado site in the United States.

Please turn to page 25. This is the full-year performance outlook for Strategic Businesses for 2026.

Net sales is projected to reach ¥560 billion, driven by growth across all strategic businesses. OP is forecast to reach ¥80 billion, primarily driven by profit improvement in Life Science.

Please turn to page 26. CAPEX for 2026 is forecast to be ¥190 billion, depreciation ¥183 billion, and R&D expenditure ¥62 billion.

CAPEX will be smaller in 2026 as the major capacity expansion investment concluded in 2025. 2026 and beyond, that concludes my explanation.

Thank you very much for your kind attention. Thank you very much.

Next, I'd like to invite Mr. Hirai.

This is Hirai speaking, CEO. As Takegawa-san explained, last year, slight increase for 3 year in a row, the profit declined, but we turned it around.

As a result of the various initiatives, I think we have hit the bottom to some extent. However, what is important is that how can we go to the full-fledged recovery.

From our side, from my side, I'd like to talk about how drastically we—I try to improve the profitability. That will be the major part of my presentation.

Let's look at the business performance, the operating profit. At the beginning of the year, we did not achieve the forecast, and we revised it downwards.

That's one of the major regrets. Last year, finally, we increased the profit; however, our expectations were not good enough.

That was one of the major issues. The major issue is that the stability of earnings.

There was a major impairment, Display in '22 and biopharmaceutical CDMO in '24. Those major impairments made us fail to increase the ROE.

Now, what about the ROCE? This is last year's results.

ROE of 8%—ROCE is considered to be around 10%, so that is the basic level. Electronics on the left and the Performance Chemicals, which is strategic, and the Integrated Chemicals—Electronics, Integrated Chemicals have had high profitability, 15% or higher ROCE.

Last year, among the core businesses, Automotive achieved higher than 10% ROCE. That's the result of the initiatives that we have taken.

The major impairment was booked in '22 in Display, and we have also taken the initiatives to improve the profitability, and we are seeing the improvements. The major challenge that we see is the Essential Chemicals, Southeast Asia.

The stagnation continues, and Life Science still is in red. We want to turn it around, and we are still not able to do so.

Now, for this fiscal year, financial targets is 5% of ROE. We will make sure that we achieve that.

'27 and onwards, as soon as possible, we would like to achieve 8% or higher ROE above the shareholder capital cost. Operating profit of ¥150 billion, Strategic Business operating profit ¥80 billion, and as a result, 5.2% or higher ROE is something that we would like to achieve.

Now, ROCE improvement: what kind of measures? In all the businesses, the way of thinking is same.

First is to increase R that's shown on the left. To lower the cost, clearly.

It's not just cost cutting, but because that's not sustainable, we want to have a stable production and improve the productivity, and then we would like to reduce cost. That is important.

The next is the pricing policy. A price which is suitable for the value is something that we'd like to offer to the customers and agree with the customers.

I think that's very important. The third, clearly, is to increase the value of products.

At the same time, denominator side, that is the CE, operating asset. We want to be meticulous in selecting investments, and also the major portion is the inventory, we want to reduce the inventory level as much as possible.

Another thing is to consider the exit from some of the businesses, and we want to make sure that if there are any questions about the growth potential, we will make a big decision to exit or sell such businesses. On the right-hand side, in 2025, those are the major exits that were announced.

Now, earlier I talked about the ROCE chart. On the left, I showed the Electronics, Integrated Chemicals with a high level, and Life Science on the right-hand side.

Let me explain each one of them. First, about the Electronics.

Last year, unfortunately, optoelectronics was changing one generation of the product to another, the growth was stagnant. EUV mask blanks, the demand was coming down for us.

Because of those reasons, there was a negative growth in terms of the profit. From now on, optoelectronics, the new generation will be starting, and we intend to expand our added value.

For the semiconductor EUV mask blanks, compared to last year, will become a positive. Last year it was down for both, but we think that we can go back to the growth trajectory.

A key for that is the EUV mask blanks. The leading-edge node, we want to make sure that we can deliver our products which are suitable for them to the customers.

The 2-nano, we have already completed development and moving toward mass production, and also the next, 1.4-nano, is what we are focused upon. As for the Integrated Chemicals, mainly the Performance Chemicals, the upstream, the chlor-alkali in Japan were integrated to the Integrated Chemicals.

Here, in the chain of the production or the chemical chain, there are upstream and downstream, and we should really not separate them clearly. We want to have an integrated operation to have a total optimization.

That's why we made this organizational change. Now, highly performing—the profitable Performance Chemicals: electronics, energy, mobility, those are the three major areas, especially electronics.

As shown on the right-hand side, one of them is the semiconductor manufacturing equipment use, and another is semiconductor process application. Those are high-value that we can offer to have a high profitability.

Now moving on to the Automotive, 2020 because of the pandemic, due to the lockdown, it almost stopped in western markets. It came down and could not recover.

We struggled for about 3 years. We have taken the various measures to improve.

Profitability has been increasing. ROCE of 10% is something that we achieved last year.

Far, we have taken the measures to improve the profitability, and we will continue to make those initiatives and achieve 15% ROCE. To set the pricing policy is important, and also to improve the productivity, we need to look into the structural reform, and to have higher functionality and higher added value.

Through those, we would aim for ROCE of 15%, and what becomes important is to increase the percentage of the high-function mobility products. It's not just shifting to the EVs, but the next-generation cars, the autonomous driving at different levels are being promoted, and it's not just the EV, but hybrid and plug-in hybrid, various cars are emerging.

New technologies need to be deployed. Now, as for the Architectural Glass, this is really the regional businesses.

In Europe, the market condition is not very good right now, but supply is being controlled. Supply-demand balance is good, and the price has been kept at a high level.

The South American market is strong. Now, the Japanese market is not growing, but the refurbishment or renovation is strong, and with that, a certain level of the demand exists.

Southeast Asia is the most difficult region, the price competition is happening right now. In each region, we have to look into the different strategies.

For Europe and Japan, we need to increase the percentage of the highly value-added products so that we can have a stable prices. As for the Southeast Asia, we have to enhance the competitiveness so that we need to work on the structural reform.

Now, we have been implementing measures that we decide in 2020 when we had a major impairment, and ROCE is improving every year. We expect ROCE to exceed 10% by 2027.

Stopping low productivity line and large glass substrate G11 line, we want to concentrate on this high-performance line. We also want to present a price that is proportional to the value that we provide, this is pricing policy, a new attempt in display industry.

Thirdly, by introducing new technologies, we want to improve productivity of manufacturing as well. Now, this third part, the technology part, will start contributing fully from this fiscal year.

ROCE 10% is a target for 2027. Now, in terms of challenges, we have Essential Chemicals Southeast Asian situation.

Capacity expansion in Thailand has been finished, and it started in operation in fourth quarter last year and full year operation this year. In Southeast Asia, the markets themselves are growing continuously, there is strong demand, and PVC and caustic soda, we can basically sell as we produce, as we manufacture.

The problem, the challenge is the Chinese economic stagnation, especially surrounding real estate. Whatever is not sold in China is coming out of that country at a very low price.

There is demand in Southeast Asia, but the price is being pushed down because the products are coming in from outside of these Southeast Asian countries. Demand is strong, and within this region we have 50% share, and that's our strength.

Including logistics, we will be trying to reduce the cost and improve the margin through better relationship with our customers so that we can achieve higher profitability. Lastly, Life Science current status.

Please look at the left-hand side. This is the AGC status by modality.

70% on the right-hand side, this is biopharmaceutical, and then we have small molecule pharmaceuticals and agrochemicals 30%. Half of the biopharmaceuticals is mammalian antibody business.

Then within bio, there is microbial, viral, and also cell/gene therapy, leading-edge modality as well. Now, microbials and cell/gene therapy and small molecule pharmaceuticals, these are stable and always producing profit.

The biggest challenge is mammalian cells, which is about half of this total. What has been challenging about mammalian cells?

As you can see at the bottom left, cost was big, and it was generating huge losses. Majority of this ¥20 billion loss was generated from mammalian business.

As for last year, Colorado large SS-based mammalian production was the biggest challenge. We were basically running loss of more than ¥10 billion.

We announced last August to withdraw from this business, and also the fact that we were entering divestiture process. The production is completely suspended.

There is no more fixed cost being generated, basically. This loss should be resolved in '26.

As for the divestiture, we wanted to conclude this before the end of last year, but still this is ongoing. Now, cost reduction: so we stopped Colorado, and also we reorganized headcounts dramatically.

Using the AGC Group's capabilities, we stabilized the production. As was mentioned before, in Copenhagen in Europe, capacity was increased, and there was increased fixed costs related to the facility, we want to increase the orders and improve utility, utilization of this line.

This is very important for profitability improvement. We stopped Colorado, we stopped the major bleeding, the production is now stable, and now we want to make sure that the utilization of the expanded capacity will increase.

We wanted to be profitable before the end of '26, and we made such announcement, but unfortunately, after we get the order and the actual production starts and that's reflected into the profit, it takes time. We get inquiry and something goes in the pipeline, and the actual manufacturing starts maybe 1.5 years later.

For the full year, we will not be profitable for this business in '26. We have to wait until 2027.

Now, R&D investment policy. We have market and technology perspectives.

We have existing market and customers. We want to innovate the production engine, new capabilities, and the basic technology.

We also want to create next-generation products. We also are focusing on new markets, introducing new technologies, creating new businesses.

These are two different directions. In terms of R&D investment breakdown, since I was CTO of this organization, we have been always being focusing on the scope of strategic business.

We have an example of automotive mobility at the top. In January this year, CES was held in Las Vegas, and we received the Innovation Award at that conference.

This is a new type of head-up display. As for the bottom, this is drilling really, really tiny holes on the glass at a very high speed, and this is a joint research with the University of Tokyo.

This is actually 1 million times—it's hard to believe, but it's 1 million times faster than the conventional methodology. It's really, really fast.

On the next page, you can see the semiconductor-related, especially back-end process technologies, and this is where this new technology can be leveraged. In semiconductor business, well, we have Electronics and also Performance Chemicals, and in both we are providing the latest, leading-edge materials as a strategic business to semiconductor.

Not just the front end, but the back end is now attracting a lot of attention these days. As you can see at the bottom of the slide, multiple chips can be mounted on top of each other in order to increase the density, because each chip is as dense as they can be.

Now the idea is to mount multiple chips on single substrate so that they can increase the density. Our organic materials and inorganic materials can be effectively leveraged in this effort.

The accurately processed and also stably produced, we have this technology, and this is the new area of industry, semiconductor packaging. We can provide solutions to this industry and contribute to the semiconductor industry as a whole.

I talked about making tiny holes. Substrate basically means glass, and you need to drill multitude of holes, very long vias, on these glass substrates, and how fast you can do would determine the cost reduction.

Now, in terms of CAPEX, in 2025, we have basically completed major investments for capacity expansion, 2026 and beyond, new expansion will be dramatically shrunk, we will focus on collecting the return for investment. As for shareholder return policy, DOE of, say, 3%, which we announced in '24, we are still maintaining this.

In '26, we will keep the dividend level flat from '25, but from '27 and beyond, going into the future, depending on the level of recovery of performance, we may take another look at our shareholder return policy. Moving on to corporate governance.

In order to further enhance corporate governance and to that end, we will become a company with Audit and Supervisory Committee, and this will be is expected to be approved at the AGM at the end of March. We started inviting outside director, two of them in 2002.

This is how the corporate governance reform started. Then we started established voluntary Nominating and Compensation Committee.

Now, Chairman of the Board as well as the Chairman of the Nomination and Compensation Committee are external directors. By transitioning to company with Audit and Supervisory Committee, majority of the board will be outside directors, which will strengthen the supervisory function, overseeing function of the board.

In line with the change of this governance, we have redefined the role of Board of Directors. Setting the overall direction of management from a long-term perspective, this is policy direction.

Another is to encourage appropriate risk-taking by the management, this is a supporting function. Further, overseeing the management toward the realization of value creation and evaluating and appointing executive officers, this is the oversight function.

Board would have these three functions to help support the management and also we will endeavor to further enhance corporate value based on a competitive advantage. Thank you.

Now we'd like to take questions. First, we take questions from those people who are here with us, and then after that, we would take questions which were asked beforehand.

If we still have time, we will come back to this room. At the beginning, we will get the questions from this room, but we would like to ask you to ask one question per person.

Thank you very much for your cooperation. Any questions?

The person sitting in the first row, is it Maeda-san?

Yes, Maeda from SMBC Nikko. Thank you very much for your presentation.

One question: ROE, ROCE, current situation and the challenges in future were explained, I have a question on that point. Life Science and Essential Chemicals, those are some of the challenges that you are faced with.

Drastic review of the business is also possible. What is the timeframe or the size, and what kind of options or menus are you considering?

Also looking at your forecast, the pre-tax profit, operating profit is probably a little bit weak, before going moving on to the next medium-term plan, are there any actions that you will be taking? Thank you.

I would ask Hirai-san, CEO, to respond.

Those Essential Chemicals and Life Science on the right-hand side, those are the challenges. As for Life Science, if it becomes normal condition, ROCE of 15% to 20% is possible, because in the past we had those numbers.

That's the tiger part business, so that's why it is included in the Strategic Businesses. The issue is what is the timeframe.

Fiscal '26, by the end, it will be difficult. By closing the Colorado sites, there was major reduction of the fixed cost, we'd like to see the higher orders, and it would take 1.5 year to 2 years before we see that impacting our performance.

Maybe within 2027 we should be able to recover to some extent. Otherwise, that would become a very serious matter.

Another is the Essential Chemicals in terms of the timeline. It will probably take longer.

Now, right now, I think it is the bottom, and China, the product coming from China, I think that they are lower than the cash cost. Currently we are at the bottom, and with the improvement initiatives, we can take advantage of the relationship with the customers and increase the margin and to improve the profitability.

It will take time. That's the key here.

50% share is what we have, and even the market condition is so poor, it is the business that would give us some kind of profit. Going beyond the shareholder capital cost, how do we make sure that we can maintain such profitability would be the key.

FY26 pre-tax profit you mentioned, yes, I would ask the CFO or the General Manager of the Finance.

Yes. Fiscal '25, other revenue, other expenses, there were some sale of the assets, net a plus was the condition, and the foreign exchange fluctuations also was quite volatile.

It was slightly profitable, this would be the plus side, a positive side. FY26, as of now, other expense, we do not expect any major ones.

Normal fixed asset, depreciation, and also the removal and so forth. In some cases, the FX loss will emerge, but we do not expect any specific ones, but it's just normal factors or the items.

Thank you very much.

Any other questions from the floor?

This is Nishiyama from Citigroup Securities. Thank you for the opportunity.

I have a question about Life Science. For the new year, top line, net sales increase of 20% is forecast, this seems to be quite aggressive.

In the United States, bio-related financing is getting better, I heard. However, in Europe, your peers are struggling.

Considering the current status of business environment and also based on current pipeline, what is the likelihood of your achieving this top-line target? Also your assumption for the profit change, I think you're just looking at the increase in marginal profit only, but what about cost?

Are there any changes, differences year-over-year? Can you please supplement?

On page 55, when I look at this graph, '27 OP is expected at ¥5 billion or so, but net sales grows at the market pace, and then depreciation cost increase is maybe incorporated. Is that the correct way of reading this?

Thank you.

This year's top line, as you have mentioned, industry is recovering in the United States. However, the interest rate cut is slow, this is still uncertain, but we believe that our Seattle site can be recovered this year.

Last year we increased the capacity, and we now have fixed cost in Copenhagen. How much recovery can we see in terms of order and production in Copenhagen, I think this is going to be the key for profitability improvement.

With the exiting pipeline, it's not just Seattle, but it's also Copenhagen, but we need to see recovery in and the sales increase at. That's part of the plan.

However, we are not achieving overall profitability in '26 because compared to the increase in fixed cost, we have not been able to saw the difference just by a higher level of top line. I hope you understand the situation.

Rather than looking at the overall growth, we are doing this bottom-up of what's happening at each site. As you may know, marginal profit is quite big, and once you cross a threshold, the profit that can generate is can be quite huge.

Profitability improvement is totally dependent on the order recovery, order expansion, we are really focusing on the order expansion.

Any other questions from this room? No?

Let's move on to the questions that we received beforehand. First, 2025 Q4 results, were they in comparison to your expectations?

Could you comment on that? That was one of the questions that we received, we would ask Takegawa-san, CFO, to respond.

Yes, '25 fourth quarter, our expectations compared to that, sales and operating profit overall company base, it was higher. That was the results.

The reasons for that, basically, first of all in terms of net sales, Automotive, the volume were higher, and the product mix was also another factor. Another is Electronics.

Optoelectronic products volume increased in Q4. Higher sales, those two.

As for the profit, the major ones is the Architectural, Auto, and Chemicals. About the Architectural, Europe price policy effect, it was one of them, and also in the Architectural, the raw materials cost was lower than what we expected, the cost came down, and with that, profit was positive.

Also about Auto, said that the higher sales led to higher profit. Lastly, the Chemicals: the Performance Chemicals demand was stronger than what we expected, so that contributed to the profit.

As a whole, sales and profit both were positive or higher than expected. Thank you.

Next question: 2026 full-year forecast, how does it compare against 2025? What are some of the key differences?

2026 forecast, how does it relate to the actual '25? For the overall company,

sales increase and profit increase. With specific factors in terms of net sales, Architectural Glass, Chemicals, and Life Science would contribute positively.

Architectural Glass: Japan, Asia, pricing policy, but also demand in Asia will increase from the second quarter onwards, and we believe that will push up the sales. Chemicals: fluorine-related product shipment is expected to increase, and also chlor-alkali capacity increase in Thailand now this is operational, therefore we can increase the shipment there.

As for Life Science, biopharmaceutical CDMO sales is expected to increase, and also in Spain, small molecule pharmaceuticals and agrochemical CDMO capacity was increased and it will become fully operational, contributing to increase sales. With regard to profit, some of the positive factors will come from Architectural Glass, Science, and Life Science.

Architectural Glass: we have a pricing policy in Europe, and also we expect to see the demand in Asia to grow, and the cost reduction in Europe will continue to progress. As for Auto, structure reform and productivity improvements are the key points.

In Europe and Americas, we should be able to recover from the lower production, and profit-wise, this should be a positive contributor as well. For Chemicals, shipment will increase, and in Thailand, chlor-alkali expanded capacity has started operating, contributing to profitability.

We also expect fluorine-related products to increase in shipment. Life: improvement of profitability due to the closure of Colorado and also overall sales increase.

About the future investments, the policies is the next question. I'd ask Hirai-san to respond.

Thank you. About the materials investment, it's difficult to understand, but after making one investment, maintaining and updating would also require investment.

Roughly speaking, half of the investment is for the maintenance and updating, it does not lead to the capacity expansion. After making that environment, in order to maintain it, half of that investment needs to be kept or maintained.

Up to last year, up to '25, what we did was expansion investment that was higher than the maintenance and the updating. From this year, we would only focus on the expansion investment to the necessary ones, high productivity of the Auto, Electronics investment will continue, but the major investment for expansion have already been done.

From now on, we will focus on the updating and maintaining. Roughly speaking, our future investments will be within the depreciation/amortization, and half of that will be for the maintenance and updating.

Thank you. Next question:

for 2026, OP of ¥150 billion, is this the company's commitment? Is it the right way to understand it?

This will be responded by Hirai, CEO.

Whenever we announce the number externally, we intend the number to be a commitment, but I know that we have not achieved our commitments for so years in a row, we have to really apologize. This year, based on our past experience of not meeting the target, we believe that this is a level that the market would require us at the minimum level, and also this is the level that we believe that we can achieve.

Yes, it is okay to see this as commitment line. I know that we have failed in the past, but it's like this year.

Related question: so for this year, operating profit of ¥150 billion, are there any upside potential or downside risks? If there are, could you talk about what they are?

I would ask Mr. Shiokawa to comment.

Yes,

upside and downside were the questions. We have various businesses, and each one of them, there are both upside and downside risks usually.

Among them, this fiscal year expectations, as Hirai-san mentioned, this is a commitment, and especially about the downside, as of now, what we can are already factored in. In that sense, the further upside or rather downside is not something that we expect as of now.

Thank you.

Next question is about Electronics. OP forecast for this year, ¥2.5 billion down in profit, this is the plan.

Can you please explain the drivers, factors behind this? This is going to be answered by Mr.

Takegawa.

Yes. We predict that we will have reduced profit in Electronics.

This is for Display and electronic materials both. For Display, slight decline in shipment is the general factor.

It's not that the total market is coming down, but there is a slight decline overall, this is one factor. Also impact of weaker yen, and this is why we have lower profit in Display.

Electronic materials is the same. Optoelectronics had an impact.

Optoelectronics materials is currently in a transitional period moving into higher value-added products, there is a flattening, and this is why there is a slight decline in profit. It's not that the whole market is declining or our production is disappearing.

This is due to some transitional period, and there is only a slight decline within the normal range of slightly decline or increase.

Next is about the EUV mask blanks from '25 to '26, the shipment outlook, etc. There's a question.

I'd ask CEO Hirai-san to respond.

Yes, before talking about '25, I'd like to look at '24. We expected ¥40 billion sales in '25, but it was brought forward to '24.

Last year, in comparison, the sales came down. In terms of percentage, we cannot give you the details, but double-digit decline in percentage was what we saw.

For this year, it's not the lower profit, but the higher profit is what we expect. Is this going to happen very quickly?

The recovery would be moderate or weak. The major customers recovery and also other extension of the customer base, but the profit is going to increase year-on-year, but it's not going to be a big growth.

That is our view. Moving on to the next question: Life Science, bio, Colorado site divestiture,

can you please update us on the progress? Hirai-san will answer this question.

In the middle of last year, we announced the withdrawal and sales of this business, and since then, we have been discussing with multiple candidates, buyer candidates, but it hasn't been concluded. We're still discussing with multiple potential partners, and hopefully within the first quarter, we want to conclude the deal.

Please understand that the negotiation is still underway.

Next question: Southeast Asia, PVC and caustic soda market conditions, could you talk about the outlook from the AGC's perspective, and also what would a change or turn the market condition around?

Takegawa-san will respond. As of now, the caustic soda and PVC '26 expectations: right now, market, we believe, is at the bottom.

At the beginning of or in Q1 '26, it was the bottom, and in Q2 and onwards, a gradual recovery is what we expect, but for the full year, it'll be much higher than the year before. We do not think that it would be much higher than the year before.

What could trigger the turnaround of the market? As of now, there are some uncertainties, but the major ones would be the exports from China to Southeast Asia.

What would happen to that flow?

I think that would be one of the keys. It is not definite, but April this year and onwards, export from China, there will be a abolition of some of the tax-related matters, and also the production cost of China is increasing.

We have that information. From China to Southeast Asia, the flow will come down or the price will go up.

If that happens, our Chemicals market Southeast Asia for us, that would be a positive impact on us. Thank you.

Thank you very much.

Now we want to come back to the venue and receive questions from the audience. Maeda-san, please.

Thank you.

This is Maeda, SMBC Nikko. Question about Electronics over mid to long-term.

Page 57, page 58 show strategy for semiconductor and multiple items. In 2026 and beyond, or thinking about 2028 or 2030, right now it's EUV mask blanks and optoelectronics are being the key.

Over the mid to long-term, do you think the drivers will change? For example, glass core substrate or maybe the laser that you have shown us today, and how soon will they ramp up, and what kind of size should we expect?

Yes, this will be answered by Hirai-san.

We believe that the back-end process, centering on packaging, will definitely grow, but it doesn't mean that the front-end will disappear. EUV mask blanks and CMP slurry demand are expected to grow over time, these are still growth drivers.

What's important is what will be the next pillar. Glass interposers or glass cores, yes, we do have some additional expectations there, but not just that, because if you look at the packaging materials, you can see that a whole variety of different materials are used in the packaging process for semiconductor.

We want to get in there based on the relationship that we have with the customers. Now, glass core and glass interposer is attracting the most attention right now, but in the beginning, we expect this to actually materialize in 2027, but you cannot do this alone.

All the different companies need to get aligned, there's a possibility that it could be later than '27. Clearly, 2030 and beyond, this is going to be one of the pillars of the materials for the next generation of semiconductors.

Yes, next question. Nishiyama-san.

Nishiyama from Citi. Capital allocation is my question.

A year ago, you showed us cash allocation slide, and we did not see that this time. Is there any change?

Strategic framework, ¥100 billion M&A and share buyback, could you talk about your views on that? On page 60, shows that '27 and onwards, it says that the return policy could be revisited.

What is the direction? Cash allocation and the shareholder return policy: okay, I would ask Takegawa-san, CFO, to respond.

About the cash allocation: strategic investments, we had that until now. The repayment of the loan and the shareholder return, strategic investments, there are different applications.

As of now, the destination or allocation have not been finalized. In comparison to cash in, it is being declining, and the strategic total framework is becoming smaller, we need to wait and see what happens.

As for the share buyback, we'd like to look at the potential investments and also the cash situation to make a comprehensive decision. We have not yet decided whether to do the buyback or not.

We'd like to look into the situations. We do not plan to buy or we purchase our own shares just to push up the share prices.

That is not something that we plan to do, because that would only have a short-term impact. In any ways, we would like to look at the total picture comprehensively before making a decision.

Any further questions from the room? Yes, please.

This is Nishiyama, Citi. Electronics assumptions for the new fiscal year, I would like to get more information.

Display shipment is expected to go down, but page 20 shows that the size will be larger according to the market outlook. Is our market share going to go down?

Is that your outlook? Page 52 shows you will continue to implement policy pricing policy in '26, are you expecting price increase?

For optoelectronics, you said that the profit will go down, but on page 23, I can see that the shipment of optoelectronics is actually flat. Is there a downward pressure on the price?

Also high-value-added products, you mentioned that the product is a transitional period, foldable, mechanical aperture, I know that there are many changes happening, can you please elaborate a little bit more?

Yes, this is going to be answered by CFO Takegawa-san.

Yes, with regard to Display, shipment slightly down, but profit decline will not be very big. Basically, we will be promoting larger size more and more.

The profit looks down slightly, this is due to product mix. This is transitional period to larger size, this is just due to product mix.

Optoelectronics is in the same situation, basically. It's not the question of the volume going up or down.

There's going to be slight increase and slight decline, and that cycle gets repeated. This is not a big drastic decline in profit or increase in profit.

Now, we want to connect this to the next high-functionality products, right now we are in the transitional period. The number is not going up or down dramatically.

In other words, it's a little bit on the stagnant side. I hope that that's how you can interpret it.

That's all from me.

Those of you who are joining online, if you have any questions, please use the Q&A box and enter your question succinctly into the box. The questions that we already received, I'd like to introduce: rare metal procurement risk, the higher precious metal price, the impact from it, and those are not factored into the forecast of the performance?

I would ask Shiokawa-san to respond. Yes,

it is true that recently the precious metal prices are at high level, and so the procurement risk exists, but in our case, as of now, we do not expect this becoming the major risk or major issue. If it becomes a long-term issue, it is possible that we'll be impacted, but as of now, we do not expect this to be a major factor.

If you have a question, please forward your question through the Q&A button on the Zoom screen. We have already received another question: you mentioned that 2-nanometer level of EUV mask blanks has been developed, development is completed.

What about the status of certification? This is going to be answered by CEO Hirai-san.

Development is completed, and with some customers, certification is also completed, and with other customers, we are in the middle of being certified. We cannot really comment on the specific status of each customer.

So 2-nano already completed, and next is 1.4-nanometer, this is the development process that we have just entered.

Questions from the online participants, we have already covered all the questions. Are there any other questions from the participants in the room?

Nishiyama-san. Thank you.

Nishiyama from Citi.

About Life Science, top line 20% increase in the new fiscal year, I think that's the sum of each site, and based upon the backlog, is it likely to get to that level? You mentioned that the deficit is likely to continue for the fiscal year, but it will be higher in the second half.

When do you think that you can expect to turn it around?

CEO will respond.

About the top line, with the CAPEX, line investment is done in Seattle and Copenhagen. As for Copenhagen, as mentioned, right now we are starting it up, and we plan to increase the orders.

From this year, it will start to contribute, but the major contribution is expected for Seattle, so that's about top line. Yes, you said correctly, for the full year, turnaround will start from fiscal 2027.

Before that, second half of this year, I don't know whether it will be monthly or quarterly, but we need to turn it around based on that. Cost reduction and expansion of the orders will be something that we'll be working on.

Boulder, the handling of that is over, the regular order expansion and the regular production base would be starting. We'd like to make sure that we do this well.

It's time to close the Q&A session at this point in time.

If there are further questions, please contact the IR representatives or contact us at the following phone number: 03-3218-5096, 03-3218-5096. When you close the Zoom screen, you will be directed to a questionnaire screen.

Please respond to the questionnaire so that we can improve our IR activities going forward. That concludes full-year earnings call for 2025.

Thank you very much for joining us despite your very busy schedule.