Notice Regarding the Recording of Impairment Losses and Revision of Consolidated Earnings Guidance

Regarding the Recording of Impairment Losses

Shinagawa Refractories Co., Ltd. has decided to record impairment losses of approximately 4.3 billion yen at the Ako plant, approximately 3.9 billion yen at its consolidated Brazilian subsidiary Shinagawa Refratários do Brasil Ltda. (SRB), and approximately 1.5 billion yen at Reframax Engenharia S.A. (Reframax) in the consolidated financial results for the fiscal year ending March 2026. The Ako plant's production and sales volume fell short of plan due to declining domestic demand for refractory products; SRB was affected by decreased operating rates of major customers due to the influx of Chinese steel materials; and Reframax is facing deteriorating conditions in the Brazilian steel industry. These impairments reflect a reassessment of asset values in light of changes in the business environment.

Revision of Consolidated Earnings Guidance and Outlook

The consolidated earnings guidance for the fiscal year ending March 2026 remains unchanged for net sales, EBITDA, operating income, and ordinary income; however, due to the recording of impairment losses, the net income attributable to owners of parent has been downwardly revised to 26,000 million yen (a 16.1% decrease from the previous forecast). Meanwhile, the annual dividend forecast of 90 yen per share remains unchanged. Going forward, Shinagawa Refractories will continue efforts to improve production efficiency, expand sales activities, and stabilize the Brazilian market, while strengthening global collaboration and its business foundation.