| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥4248.2B | ¥4325.4B | -1.8% |
| Operating Income | ¥324.4B | ¥432.4B | -25.0% |
| Ordinary Income | ¥338.9B | ¥447.9B | -24.3% |
| Net Income | ¥364.8B | ¥446.7B | -18.9% |
| ROE | 9.1% | 11.9% | - |
Daicel Corporation's Q3 FY2025 results (9 months ended December 2025) reported Revenue of 424.8 billion yen (YoY -1.8%), Operating Income of 32.4 billion yen (YoY -25.0%), Ordinary Income of 33.9 billion yen (YoY -24.3%), and Net Income of 36.5 billion yen (YoY -18.3%). The company faced a challenging quarter with nearly flat revenue but sharply compressed operating margins, driven primarily by margin pressure in the Materials segment due to acetate tow inventory adjustments and foreign exchange headwinds, alongside increased depreciation and maintenance costs from new plant startups in the Engineering Plastics segment. Non-recurring gains from investment securities sales of 17.1 billion yen bolstered net income, partially offsetting operating weakness. Management maintained full-year guidance of Revenue 583.0 billion yen, Operating Income 46.5 billion yen, and Net Income 50.0 billion yen, with Q3 cumulative progress rates at 72.9% for revenue and 69.8% for operating income.
Revenue declined 1.8% YoY to 424.8 billion yen, primarily due to an 8.3% decline in the Materials segment (118.4 billion yen) driven by acetate tow sales volume reductions from local customer inventory adjustments and unfavorable foreign exchange effects. The Engineering Plastics segment remained nearly flat at 185.9 billion yen (-0.5%), with strong LCP and PPS sales for AI server applications offset by reduced POM demand. The Safety segment grew 5.8% to 77.0 billion yen on higher inflator sales in China and India supported by government economic stimulus measures.
Operating income fell sharply by 25.0% to 32.4 billion yen despite only modest revenue decline, reflecting severe margin compression. Operating margin contracted to 7.6% from 10.0% in the prior year period. The Materials segment experienced a 45.2% operating income decline to 10.5 billion yen due to moving average inventory valuation differences and costs associated with the full consolidation of Toyama Filter Tow. The Engineering Plastics segment saw operating income decrease 25.6% to 15.3 billion yen, pressured by increased depreciation from new plant startups and higher scheduled maintenance costs. Conversely, the Safety segment delivered strong performance with operating income rising 64.8% to 5.0 billion yen, benefiting from production efficiency improvements in the U.S., cost reductions in China, and volume growth.
The gap between operating income (32.4 billion yen) and ordinary income (33.9 billion yen) was minimal at 1.5 billion yen. However, net income of 36.5 billion yen exceeded ordinary income by 2.6 billion yen, significantly aided by extraordinary gains of 18.8 billion yen, primarily from investment securities sales (17.1 billion yen). This represents a material non-recurring factor supporting net income. The effective tax rate of approximately 28.5% was within normal range.
This quarter demonstrates a revenue flat/profit down pattern, characterized by margin compression from unfavorable product mix, cost inflation in certain segments, and structural issues in working capital efficiency that constrained underlying operating profitability.
Daicel operates five business segments. The Engineering Plastics segment is the largest core business by revenue at 185.9 billion yen (43.8% of total sales), contributing operating income of 15.3 billion yen. Despite representing the largest revenue base, this segment experienced operating margin pressure with income declining 25.6% YoY due to increased depreciation expenses from the Taiwan LCP capacity expansion plant reaching full operation in May 2025, and elevated scheduled maintenance costs. Sales volume growth in LCP, PPS, and PBT products for AI server and 5G applications was offset by lower POM demand and higher fixed costs.
The Materials segment generated revenue of 118.4 billion yen (27.9% share) with operating income of 10.5 billion yen, down 45.2% YoY. This segment faced the most severe profit headwinds from acetate tow sales volume declines driven by local customer inventory adjustments, adverse foreign exchange impacts, moving average cost variances from prior period inventory carryover, and consolidation costs for Toyama Filter Tow. Management plans Q4 production adjustments to compress inventory levels and improve working capital.
The Safety segment produced revenue of 77.0 billion yen (18.1% share) with operating income of 5.0 billion yen, up 64.8% YoY. This segment was the primary profit growth driver, benefiting from inflator sales increases in China and India, U.S. production efficiency gains, Chinese cost reduction initiatives, and logistics outsourcing at the Thailand facility. Operating margin in Safety significantly outperformed other segments.
The Medical & Healthcare segment recorded revenue of 12.0 billion yen (2.8% share) with operating income of 0.6 billion yen, up 75.1% YoY. Growth was driven by chiral column sales expansion in Life Science and Equol product growth in Healthcare. The Smart segment generated revenue of 27.5 billion yen (6.5% share) with operating income of 0.4 billion yen, recovering from a loss of -0.6 billion yen in the prior year, supported by alicyclic epoxy demand and cost reductions following the exit from the organic semiconductor business in December 2024.
Segment margin disparity is notable, with Safety demonstrating superior profitability improvements while Materials and Engineering Plastics faced structural cost pressures. The core Engineering Plastics business remains critical to overall performance but requires operational efficiency improvements to offset rising depreciation burdens.
Profitability: ROE 8.9% (computed from net margin 8.4% × asset turnover 0.481 × financial leverage 2.21), Operating Margin 7.6% (prior year 10.0%), Net Profit Margin 8.4%. ROE declined from prior levels, primarily driven by net margin compression. ROIC deterioration was flagged in quality alerts, indicating declining return on invested capital relative to capital costs.
Cash Quality: Operating cash flow to net income ratio is not disclosed in available data, limiting direct OCF quality assessment. However, working capital metrics reveal significant efficiency concerns. Cash Conversion Cycle extended to 236 days, driven by Inventory Turnover of 214 days and Days Sales Outstanding of 100 days, both substantially elevated. These metrics indicate cash is tied up in working capital, constraining cash generation capacity.
Investment: CapEx to Depreciation ratio and free cash flow figures are not fully disclosed. Construction in Progress represents a high proportion of total assets, indicating significant ongoing capital projects. The Materials and Engineering Plastics segments are experiencing elevated depreciation from recent plant startups, suggesting a growth investment phase. However, delays in COC resin plant commissioning (now postponed to Q4 FY2026 from April 2026) and downward revision of COC sales volume forecasts (FY2025 revised to -4% vs. prior +45% expectation) indicate project execution risks.
Financial Health: Equity Ratio 45.3% (improved from 46.1% prior year due to asset base expansion), Current Ratio 193.5%, Quick Ratio 108.8%. Short-term liquidity indicators are healthy. Debt-to-Equity ratio 1.21 and Debt-to-Capital 35.0% remain within investment-grade territory. However, short-term borrowings increased 30.7% YoY to 46.9 billion yen, raising short-term funding dependency and potential maturity mismatch risks. Cash to short-term liabilities ratio of approximately 1.62x provides adequate near-term coverage, but the trend of rising short-term debt warrants monitoring given working capital pressures.
Operating Cash Flow: Specific OCF figures are not provided in XBRL or PDF data. However, deteriorating working capital metrics strongly suggest constrained operating cash generation. Days Sales Outstanding increased to 100 days, Days Inventory Outstanding to 214 days, and Cash Conversion Cycle to 236 days. These extended cycles indicate cash is locked in receivables and inventory, limiting cash conversion from reported earnings. The absence of disclosed OCF/Net Income ratio prevents quantitative verification, but qualitative assessment points to earnings quality concerns.
Investing Cash Flow: The company is in an active investment phase. Total PPE increased and Construction in Progress remains elevated, reflecting ongoing capacity expansion projects including the LCP Taiwan plant (full operation May 2025), and the delayed COC resin second plant (now scheduled for Q4 FY2026). The postponement of the COC plant commissioning from April 2026 to Q4 FY2026 suggests management is exercising caution on capital deployment timing to align with demand visibility, mitigating investment recovery risks. Capex levels are expected to remain elevated to support growth initiatives in Engineering Plastics and Safety segments.
Financing Cash Flow: Short-term borrowings rose 11.0 billion yen YoY (+30.7%), likely to finance working capital needs and bridge timing gaps in capital expenditures. Treasury stock decreased by 6.3 billion yen (book value reduction), reflecting the ongoing share buyback program authorized at up to 15.0 billion yen (11 million shares) from November 2025 to March 2026. Dividends are maintained at 60 yen annually (30 yen interim, 30 yen year-end), with estimated dividend outflow based on current payout ratio of approximately 44.9%.
Free Cash Flow: FCF cannot be quantified due to lack of disclosed OCF. However, combining elevated capex with deteriorating working capital efficiency suggests FCF is under pressure. Management's Q4 production adjustment plan for acetate tow inventory reduction is critical to improving working capital release and enhancing cash generation in the near term.
Cash Generation Assessment: Needs Monitoring. The combination of extended working capital cycles, rising short-term borrowings, and lack of disclosed OCF raises concerns about underlying cash generation strength despite healthy balance sheet liquidity ratios.
Ordinary vs Net Income: Ordinary income was 33.9 billion yen, while net income reached 36.5 billion yen, a difference of 2.6 billion yen (+7.7%). This gap is explained by extraordinary income of 18.8 billion yen, primarily investment securities sales gains of 17.1 billion yen, partially offset by extraordinary losses of 1.7 billion yen. The extraordinary gain represents approximately 4.0% of revenue, which is material and constitutes a clear non-recurring item. Excluding this one-time benefit, recurring net income would approximate 19.4 billion yen, highlighting significant dependency on non-operating gains to support reported profitability.
Non-operating Income Composition: Non-operating income and expenses contributed a net positive 1.5 billion yen to move from operating income to ordinary income, a relatively modest adjustment indicating stable non-core operations. However, the extraordinary securities sale gain of 17.1 billion yen artificially elevates net income and masks underlying operating earnings weakness.
Accruals and Cash Backing: Although OCF figures are not disclosed, the severe deterioration in working capital metrics—DSO 100 days, DIO 214 days, and CCC 236 days—strongly suggests accrual-based earnings are not fully supported by cash generation. Extended receivables and inventory levels indicate revenue and profit recognition may be outpacing actual cash collection, raising earnings quality concerns. The quality alert flagging ROIC decline and working capital inefficiency corroborates this assessment.
Earnings Quality Conclusion: Earnings quality is compromised by reliance on non-recurring investment gains to bolster net income and by working capital dynamics that constrain cash realization of reported profits. Core operating profitability is under pressure, and structural improvements in inventory and receivables management are essential to restore earnings quality and cash conversion.
Full-Year Guidance: Management maintains full-year FY2025 forecasts of Revenue 583.0 billion yen (YoY -0.6%), Operating Income 46.5 billion yen (YoY -23.8%), Ordinary Income 47.5 billion yen (YoY -23.8%), and Net Income 50.0 billion yen. Annual dividend is maintained at 60 yen per share.
Progress Rate vs. Full-Year: Q3 cumulative progress rates are Revenue 72.9% (424.8 billion yen / 583.0 billion yen), Operating Income 69.8% (32.4 billion yen / 46.5 billion yen), and Net Income 73.0% (36.5 billion yen / 50.0 billion yen). Standard Q3 cumulative benchmark is 75%. Revenue and operating income progress lag the standard benchmark by approximately 2-5 percentage points, indicating modest underperformance in the first nine months. However, net income progress exceeds 73% due to the one-time investment securities gain recorded in Q3.
Implied H2 Performance: To achieve full-year guidance, H2 (Q4 alone) requires Revenue of approximately 158.2 billion yen and Operating Income of 14.1 billion yen. Management's commentary indicates confidence in achieving these targets, supported by Safety segment momentum, planned Q4 acetate tow production adjustments to reduce inventory and improve margins, and absorption of the approximately 1.0 billion yen impact from the January CO plant trouble (which resumed operations on January 20, 2025).
Key Assumptions: Full-year FX assumption is USD/JPY 146 (H1 actual 146, H2 forecast 145). Q3 cumulative average was USD/JPY 149 vs. 153 prior year. Raw material price assumptions for H2 include methanol at 330 USD/ton, crude oil at 70 USD/bbl, and domestic naphtha at 63,000 yen/kl. The CO plant trouble impact of 1.0 billion yen is embedded in guidance. COC resin sales volume for FY2025 has been revised down to -4% YoY from prior expectation of +45%, and FY2026 target also lowered to +32% from +50%, reflecting delayed demand ramp and plant commissioning postponement.
Risks to Guidance: Progress rates slightly below benchmark and continued working capital pressures present execution risks. If acetate tow inventory adjustments extend beyond Q4 or if customer demand recovery delays, revenue and margin targets could face downside risk. Conversely, the Safety segment's strong performance and planned cost controls provide upside buffer. The reliance on H2 improvement and one-time gains in Q3 suggests limited margin for error in Q4 execution.
Dividend Policy: Annual dividend is maintained at 60 yen per share (interim 30 yen, year-end 30 yen), unchanged from prior year. Based on full-year net income guidance of 50.0 billion yen and estimated shares outstanding, the calculated dividend payout ratio is approximately 44.9%, within sustainable range from an earnings perspective. Management's stated policy targets a total payout ratio exceeding 40% and dividend on equity (DOE) exceeding 4%, which the current dividend level supports.
Share Buyback: The company announced a share repurchase program in November 2025 with an upper limit of 15.0 billion yen and 11 million shares, to be executed from November 2025 through March 2026. Progress of this buyback is reflected in the reduction of treasury stock book value by 6.3 billion yen YoY. Combining dividends and buybacks, total shareholder returns are enhanced, aligning with the total return ratio policy.
Total Shareholder Return Assessment: The combination of a 44.9% dividend payout ratio and up to 15.0 billion yen buyback demonstrates strong commitment to shareholder returns despite profit headwinds. However, sustainability of this level of cash returns depends on free cash flow generation. Given the working capital constraints and elevated capex, monitoring cash flow adequacy to support both dividends and buybacks without increasing leverage is critical. Current equity ratio of 45.3% and cash reserves provide cushion, but prolonged earnings weakness or cash conversion issues could pressure future return capacity.
Near-term: Q4 acetate tow production adjustments aimed at inventory reduction and margin recovery; full ramp-up of LCP Taiwan plant supporting AI server demand; resolution and stabilization following January CO plant trouble restart; execution of remaining share buyback program through March 2026; finalization of FY2025 results and clarity on FY2026 earnings trajectory.
Long-term: Commissioning of COC resin second plant in Q4 FY2026 and alignment with medical packaging demand growth targeting 2030; expansion of Safety segment inflator sales in China and India leveraging EV and domestic auto market growth; LCP and PPS capacity utilization improvements capturing AI infrastructure and 5G base station demand; operational excellence initiatives in Materials segment to restore profitability and working capital efficiency; potential strategic portfolio actions to optimize capital allocation and improve ROIC toward management's 7-8% target range.
Industry Position (Reference - Proprietary Analysis)
Profitability: ROE 8.9% exceeds industry median of 5.0% (2025-Q3, manufacturing sector, n=98), placing the company in the upper half of peers. However, ROE has declined from prior levels due to margin compression. Operating Margin 7.6% is below the industry median of 8.3% (IQR: 4.8%-12.6%), indicating below-median operational efficiency in the current period. Net Profit Margin 8.4% compares favorably to the industry median of 6.3% (IQR: 3.2%-9.0%), supported by non-recurring investment gains.
Efficiency: Asset Turnover 0.481 is below the industry median of 0.58 (IQR: 0.42-0.66), reflecting lower revenue generation per unit of assets, consistent with capital-intensive manufacturing and elevated construction in progress. Inventory Turnover 214 days significantly exceeds the industry median of 109 days (IQR: 50-155 days), flagging material inventory management inefficiency. Receivables Turnover 100 days is above the industry median of 83 days (IQR: 68-115 days), indicating slower collection. Operating Working Capital Turnover 236 days (CCC) is well above the industry median of 108 days (IQR: 72-143 days), confirming substantial working capital inefficiency relative to peers.
Financial Health: Equity Ratio 45.3% is below the industry median of 63.8% (IQR: 49.5%-74.7%), indicating higher leverage usage, though still within acceptable range. Current Ratio 193.5% (1.94x) is below the industry median of 2.84x (IQR: 2.10x-3.81x), suggesting relatively lower liquidity cushion compared to industry norms, though absolute levels remain healthy. Financial Leverage 2.21 is above the industry median of 1.53 (IQR: 1.31-1.85), reflecting more aggressive use of debt to amplify ROE.
Growth and Returns: Revenue Growth -1.8% is below the industry median of +2.7% (IQR: -1.9% to +7.9%), reflecting near-term demand headwinds. ROIC is flagged as declining in quality alerts and likely below the industry median of 5.0% (IQR: 3%-10%), indicating suboptimal capital productivity. Return on Assets 4.1% (computed) approximates the industry median of 3.3% (IQR: 1.8%-5.2%).
Industry: Manufacturing sector (n=98 companies). Comparison period: FY2025-Q3. Source: Proprietary analysis of publicly available financial data. The company's profitability metrics rank above median on ROE and net margin, but operational efficiency and working capital management lag industry norms, warranting focused management attention on inventory and receivables optimization.
Inventory and Working Capital Risk: Inventory turnover of 214 days and DSO of 100 days result in a Cash Conversion Cycle of 236 days, more than double the industry median of 108 days. Excessive inventory exposes the company to obsolescence risk, price declines, and cash tie-up. Acetate tow segment is experiencing local customer inventory adjustments, and delayed sales realizations could extend working capital pressure into FY2026. Failure to execute Q4 production adjustments and inventory compression would perpetuate cash flow constraints and margin headwinds.
Capital Investment Execution and Recovery Risk: Construction in Progress and new plant investments (LCP Taiwan, delayed COC resin plant) represent significant committed capital. The postponement of COC resin second plant commissioning from April 2026 to Q4 FY2026 and downward revision of COC sales volume forecasts (FY2025 to -4% from +45%, FY2026 to +32% from +50%) indicate demand visibility challenges and project timing risks. Prolonged delays or lower-than-expected demand ramp could result in underutilized capacity, suboptimal ROIC, and difficulty achieving targeted returns on invested capital (management target 7-8% ROIC). Elevated depreciation from recent plant startups pressures near-term margins, with recovery contingent on volume growth.
Short-term Funding and Financial Flexibility Risk: Short-term borrowings increased 30.7% YoY to 46.9 billion yen, raising dependency on short-term funding markets and potential refinancing or maturity mismatch risks. If operating cash flow generation remains constrained by working capital inefficiency, the company may face liquidity pressure to service short-term debt, fund ongoing capex, and sustain shareholder returns (60 yen dividend plus 15.0 billion yen buyback). While current liquidity ratios and cash reserves provide buffer, prolonged earnings weakness or adverse financing conditions could compress financial flexibility and elevate funding costs.
Margin Compression Amid Flat Revenue Signals Structural Challenges: Q3 results reveal a concerning pattern of nearly flat revenue (-1.8%) paired with sharp operating income decline (-25.0%), compressing operating margin to 7.6% from 10.0% YoY. This margin deterioration stems from segment-specific headwinds in Materials (acetate tow inventory adjustments, FX impacts, consolidation costs) and Engineering Plastics (elevated depreciation and maintenance from new plants), partially offset by Safety segment strength. The reliance on non-recurring investment securities gains (17.1 billion yen) to prop up net income underscores underlying operating profitability weakness. Sustainable earnings recovery requires structural margin improvements through volume growth, cost control, and operational efficiency enhancements rather than one-time financial gains.
Working Capital Inefficiency Constrains Cash Generation and Capital Productivity: Inventory turnover of 214 days, DSO of 100 days, and CCC of 236 days are materially worse than industry medians and represent a critical operational weakness. Excessive working capital lockup limits cash flow generation, pressures ROIC, and necessitates higher short-term borrowing (+30.7% YoY). Management's planned Q4 acetate tow production adjustments are a necessary first step, but comprehensive working capital management improvements across inventory forecasting, customer credit terms, and supply chain optimization are essential for sustained cash conversion and financial health. Investors should monitor quarterly CCC trends and OCF/Net Income ratios (once disclosed) as key indicators of operational turnaround progress.
Strategic Portfolio and Capital Allocation Demand Vigilant Execution: The company is navigating a complex investment cycle with LCP capacity expansion, delayed COC resin plant commissioning, and Safety segment geographic expansion. The downward revision of COC sales forecasts and plant postponement reflect prudent demand alignment but also highlight execution risks and longer payback horizons. The exit from organic semiconductors and focus on high-growth applications (AI servers, 5G, medical packaging) are strategically sound, but realization of returns depends on timely capacity ramp, customer adoption, and cost discipline. The commitment to shareholder returns (60 yen dividend, 15.0 billion yen buyback) is positive, yet sustainability hinges on improving free cash flow generation. Key takeaway: operational excellence in working capital and capital project execution are prerequisites for achieving management's ROIC targets and sustaining value creation.
This report was automatically generated by AI integrating XBRL earnings data and PDF presentation materials as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.
AI analysis of PDF earnings presentation
Daicel Corporation’s cumulative results for the nine months of the fiscal year ending March 2026 landed with lower revenue and earnings: sales of 4,248億円 (down -1.8% YoY) and operating profit of 324億円 (down -25.0% YoY). The Safety segment posted higher revenue and profit on increased inflator sales in China and India, while the Materials segment saw lower sales due to inventory adjustments by local customers for acetate tow and foreign exchange effects, and margins were significantly compressed by the combined impact of carryover inventory from the previous fiscal year. In Engineering Plastics, increased depreciation associated with new plant start-up and higher periodic maintenance costs weighed on profits. The CO plant issue that occurred in January 2026 has been resolved, with an impact of approximately 10億円 on the full-year forecast. The average exchange rate during the period was USD/JPY 149 (153 in the prior-year period), with a full-year assumption of 146. The company maintained its full-year forecast of sales at 5,830億円 and operating profit at 465億円; cumulative 3Q progress rates are 72.9% for sales and 69.8% for operating profit. Shareholder returns: the annual dividend is maintained at 60円, and an upper limit of 150億円 for share repurchases has been approved.
Safety segment operating profit surged to 50億円 (up +64.8% YoY) on increased inflator sales driven by government stimulus in the Chinese market. LCP and PPS in Engineering Plastics exceeded plan as sales volumes rose on robust demand for AI servers. Materials segment operating profit declined sharply to 105億円 (down -45.2% YoY), with contributions from moving average differentials and costs associated with making Toyama Filter Tow a wholly owned subsidiary. Start-up of the new COC resin plant postponed from April 2026 to 4Q of the fiscal year ending March 2027 due to a review of the business plan. The January CO plant issue was restarted on January 20 with an impact of approximately 10億円; the impact of U.S. tariffs was passed through with a half-year lag as planned.
Full-year guidance is maintained at sales of 5,830億円 (down -0.6% YoY) and operating profit of 465億円 (down -23.8% YoY). For the second half, the company projects sales of 3,059億円 and operating profit of 264億円. FX assumptions: USD/JPY 145 for the second half. The approximately 10億円 impact from the CO plant issue has been absorbed. The impact of U.S. tariffs in the Safety segment will be addressed through price pass-through. The sales volume plan for COC resin in FY March 2026 has been revised downward to -4% YoY (previously +45%), and the FY March 2027 plan has also been revised down to +32% (previously +50%).
Management cited cost reductions in the Safety segment and FX effects as reasons why 3Q operating profit exceeded plan, while softer acetate tow sales acted as a drag. To achieve the full-year targets, the Materials segment will implement production adjustments for acetate tow in 4Q and plans to reduce inventories from the end of the previous fiscal year. As COC resin demand expansion is now expected to progress toward a 2030 target, the start-up of the new plant has been postponed, prioritizing a stable ramp-up and supply-demand balance. The company maintains its shareholder return policy of a total payout ratio of 40% or more and DOE of 4% or more, and will execute an annual dividend of 60円 and a share repurchase program of 150億円.
Ongoing cost reduction at Safety segment sites in the U.S., China, and Thailand, and efficiency gains by outsourcing logistics operations at the Thailand site. In Engineering Plastics, the Taiwan capacity expansion plant for LCP is fully on stream as of May 2025; continued expansion into AI servers and 5G. In the Materials segment, implement production adjustments for acetate tow in 4Q to reduce inventories and improve working capital. Postpone the start-up of the second COC resin plant to 4Q of the fiscal year ending March 2027 to align with the timing of demand expansion and avoid the risk of surging investment costs. Decided to withdraw from the organic semiconductor business in December 2024 to reduce expenses and improve profitability in the Smart segment.
COC resin demand expansion is lagging the initial assumption (phased expansion from around 2025), pushed back to a 2030 target, posing a risk of delayed payback on new plant investments. Continued inventory adjustments by local customers in acetate tow within the Materials segment create a risk of deferred sales timing. Increased depreciation and periodic maintenance costs due to the start-up of new plants in Engineering Plastics are profit headwinds in the short to medium term. Short-term borrowings increased by +30.7% YoY (per XBRL analysis), heightening the risk of maturity mismatch due to greater reliance on short-term funding. Inventory days 214, DSO 100 days, and CCC 236 days indicate deteriorating working capital efficiency, posing a risk of pressure on operating cash flow.