3896.T

• Overall 2025 March Term Financial Performance • Total revenue: 17.124 billion yen, +6.3% YoY, driven by strong North American automotive sales, yen depreciation benefits, and expanded water treatment material sales • Operating profit: 432 million yen, +21.9% YoY; Ordinary profit: 279 million yen, +8.5% YoY; Net profit attributable to parent company shareholders: 35 million yen, -31.6% YoY • Net profit decline was caused by rising raw material prices and inventory reduction impacts, even after pricing adjustments, which were not enough to fully offset cost increases to protect margins • Q4 FY2025 operating profit increased 78 million yen YoY: positive contributions from 615 million yen from volume growth and exchange-driven unit price increases, plus 90 million yen from lower depreciation expenses; partially offset by -317 million yen from raw material/fuel price volatility and -310 million yen from separation membrane support nonwoven inventory reductions

• New Factory Operational Update • The new Komatsushima factory in Tokushima Prefecture completed construction and started operations in March 2025, built as part of the company's SDG initiatives to expand separation membrane support production capacity • The new factory doubles total production capacity for separation membrane supports, which serve global water demand for seawater desalination and pure water production • Expected benefits: reduced production costs, improved price competitiveness, lower per-unit energy consumption, reduced environmental impact, and support for new customer acquisition

• Mid-Term Strategic Priorities • Core product expansion: Prioritize expanded sales of separation membrane supports and achieve stable operation of the new Komatsushima factory to drive future growth • New product development: Co-develop products for electric (non-internal combustion engine) vehicles, develop functional materials that support carbon neutrality, and deepen penetration of existing markets • Domestic production restructuring: Push forward with structural reform including restructuring of the Tokushima plant and updating business continuity plans (BCP) • Intellectual capital and human resources: Catalog and share existing technical know-how, strengthen both offensive intellectual property for new business development and defensive intellectual property to protect new products; focus on talent acquisition, employee engagement, structured training, and improved internal work environments • Open innovation: Expand partnerships with universities, research institutions, suppliers, converters, and industry peers to drive open innovation

• For the 2026 March term, management projects total revenue of 19.4 billion yen, representing continued top-line growth
• Operating profit is projected at 280 million yen (down from 432 million yen in FY2025), ordinary profit is projected at 90 million yen (down from 279 million yen in FY2025), and net profit attributable to parent shareholders is projected at 700 million yen (up from 35 million yen in FY2025)
• The projected near-term profit decline reflects the depreciation expense burden from the new Komatsushima factory, which is partially offset by expected subsidy income
• Key financial metric projections for FY2026: ROA 0.3%, ROS 1.4%, total asset turnover 0.72 turns, EBITDA 15.9 billion yen, D/E ratio 2.29x, ROIC 1.1%
• Management expects water treatment-related materials centered on separation membrane supports to be the primary driver of long-term growth for the company

For the 2025 March term, total company revenue is 17.124 billion yen, a 6.3% increase year-over-year. 1. Automotive-related materials: Revenue contribution is 51.0% of total revenue, with strong sales in North America, positively impacted by a weaker yen. The segment includes engine filter media, friction material base paper for clutch plates, and separator base paper for lead-acid batteries; Awa Paper holds the top domestic market share in automotive engine filter media. 2. Water treatment-related materials: Revenue contribution is 41.5% of total revenue, driven by expanded sales. The segment is led by separation membrane (RO membrane) supports, for which Awa Paper holds the top global market share (per internal company data), plus water purification materials. 3. General industrial materials: Revenue contribution is 7.5% of total revenue, covering materials for food processing, electronic materials, heat diffusion, and thermal insulation applications.

• Rising raw material and energy prices have put pressure on margins, even after sales price adjustments, which have not fully offset cost increases to protect profitability
• The new Komatsushima factory will add significant depreciation expenses in the 2026 March term, creating downward pressure on near-term operating and ordinary profits
• The company identifies securing profits in the automotive-related materials segment and successfully expanding sales of water treatment-related materials as key ongoing business challenges

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