FY2022-FY2024

Corporate Business Plan
Change and Innovation~ with the Power of Chemistry ~

Rita

GX
Jiri

March 3, 2022

Today's agenda

Ⅰ Overview of the Current Corporate
Business Plan (FY19-21)
1 Business performance

2 Progress on major action plans

Ⅱ New Corporate Business Plan (FY22-24)
１ Business Environment

２ Basic direction and major action plans
３ Management numerical targets

Ⅲ Business Strategy by Sector
Ⅳ Epilogue
Change and Innovation ～ with the Power of Chemistry ～1

Overview of
the Current Corporate
Business Plan (FY19-21)

Change and Innovation ～ with the Power of Chemistry ～2

Ⅰ

Basic direction of Current Corporate Business Plan
Change & Innovation 3.0

For a Sustainable Future
Accelerating thedevelopment of
next-generation
businesses

Further improvebusiness portfolio

Improveproductivity
through
digital innovation

Basic direction of 2019-2021
Corporate Business Plan

Build a morerobust financial
structure

Ensure full and strict
compliance andmaintain safe andstable operations

Employ, develop andleverage humanresources forsustainable growth
Change and Innovation ～ with the Power of Chemistry ～3

Ⅰ

Summary
Overcame business challenges
faced at the outset of the plan

Cultivated post-Latuda

Secured footprint for
Agrosolutions

Launched PRCII

Major initiatives
Business portfolio

Advanced selection and concentration to bolster
competitiveness of each business

Capex, investments
and loans

Invested 880 bn. Yen mainly in life sciences to fuel future

Next-generation
businesses

Finished building out internal infrastructure and moved toward accelerating the creationof next-generation businesses

Digital innovation

Enhanced productivity by building out an infrastructure and organizations for digitaldomains and began DX 2.0 strategy early

Carbon Neutrality

Established a grand design and a new target of 50% reduction in GHG by FY 2030

PerformanceCore Operating

Achieved solid growth in high-performance and life science fields, recovering to a point justbelow target despite COVID-19 headwinds

CapitalIncreased capital invested on major M&A deals and solidly improved ROI

Overseas

Globalization progressed further with acquisition of business in South America, etc.

Shareholder

Planning to pay out record-high 24-yen DPS in FY 21
Change and Innovation ～ with the Power of Chemistry ～4

1 Business performance
2 Progress on major
action plans

Change and Innovation ～ with the Power of Chemistry ～

5

Ⅰ-1

Business performance
Achieved solid growth in high-performance materials and life sciences,
recovering to a point just below target despite COVID-19 headwinds(Billions of yen)

300

Initial Target

280.0

262.7

245.0

250
200

204.3

184.5

Petrochemicals & Plastics (PC)

147.6

150

High-performance materials

132.7

Energy &Functional Materials (EF)100

IT-related Chemicals (IT)Life Sciences

50

Health & Crop Sciences (HC)
Pharmaceuticals (PH)

0
-50

FY16

FY17

FY18

FY19

FY20

Change and Innovation ～ with the Power of Chemistry ～FY21(F)6

Ⅰ-1

Capital efficiency
Increased capital invested on major M&A deals and solidly improved ROI

ROI %

ROI %

FY 2019

12

12
Company total:

10

2.4%

8

6

6

4

4

2

2

0

0
0

500

Company total:

10

8

-2

FY 2021 (Forecast)Target: 7%0500

1,000 1,500 2,000 2,500 3,000
Capital invested (Billions of yen)

PC

EF

IT

HC

5.7%

PH

Change and Innovation ～ with the Power of Chemistry ～

1,000

1,500

2,000

2,500 3,000
Capital invested(Billions of yen)

7

Ⅰ
Ⅰ-1

Overseas Sales Revenue
Overseas sales revenue grew on expansion of South American crop protection
businesses, achieving further globalization
Overseas Sales Revenue (as a % of total revenue)

1,460.7bn. yen（65.6%）FY2019Approx.

FY2021

1,830.0bn. yen（67.5%）（Forecast）
0
China

500
Asia (ex China)

1,000North America

1,500EuropeCentral & South

Change and Innovation ～ with the Power of Chemistry ～2,000 (bn. yen)
Other overseas
8Ⅰ-1

Shareholder returns
Planning record-high ¥24 annual DPS
（JPY）

25

Interim dividend (left axis)

Year-end dividend (left axis)

Commemorative dividend (left axis)

Net Income attributable to owners of the parent (right axis)

Annual ¥24

20

14

12
134

15

11
118

2
81

10

6

3

3

6

37

6

6

200

160

140

120

9

7

80

77

52

5

6

(Billions of yen)

7

10

11

11

31

46

10

40

6

0

0

2013

2014

2015

2016

2017

2018

2019

2020

39.8

28.2

28.1

29.9

26.9

30.5

89.9

53.3

J-GAAP

IFRS
Change and Innovation ～ with the Power of Chemistry ～2021(Forecast)

28.0

（FY）
Dividend payout
ratio (%)

9

１ Business performance

２ Progress on major
action plans

Change and Innovation ～ with the Power of Chemistry ～

10

Ⅰ-2

Further improve business portfolio: Bolstering competitiveness
Advanced selection and concentration to bolster competitiveness of each business
Strengthen andexpand business

※

PC
IT

Achieved stable operations and finished completion
guarantee for Rabigh Phase II
Strengthened licensing business. Focused on areas
with lower environmental impact.
Accelerated development of materials in areas
such as 5G and EV
Bolstered in-house manufacturing of key materials
in display materials
Added capacity in products related to
semiconductors
Expanded biorationals business※

Secured crop protection products footprintin South America and India※

Pharmaceuticals: Launched 2
blockbuster candidates※Overcame business challenges faced at the outset of the plan

EF
HC

PH

Exited or downsizedbusinesses
Decided to exit EPDM
Halted development of OLED lighting
Shrank film touchscreen panels
Shuttered one line at Methionine plant
Sold European sales network andlicensed out technologies

Change and Innovation ～ with the Power of Chemistry ～

11

Ⅰ-2

Further improve business portfolio: Investment allocation by field
Executed investments aimed at future growth,
including major M&A in life sciences

Sum of investments Approx.
Investment by business area

880 bn. yen

Investment by business division

High-performancematerials

Strategic investments
Approx.

600 bn. yen

Reduceenvironmental impact
Approx.

20 bn. yen

Battery materials & 5G
& Semiconductor
Approx.

South America
crop protection
Approx.

95 bn. yen

Common45 bn. yen

FY 2019-2021
Capex,
investments
and loans

Roivant
Approx.

360 bn. yen

Maintain and strengthen business fundamentals

Approx. 280 bn. yen＊Based on the timing of the decision to invest.

Does not necessarily align with the timing of actual cash outlays or accounting treatments.

Life
Sciences
PC

Change and Innovation ～ with the Power of Chemistry ～

EF

IT

HC

PH
12

Ⅰ-2

Accelerate the Development of Next-Generation Businesses

Finished building base for creating next-generation businesses
Accelerated development and commercialization leveraging innovation ecosystem
Established and launched CVI*
＊Corporate Venturing ＆ Innovation OfficeCambridge, U.K. (CDT*)※ Cambridge Display
Technology

Boston, U.S.

San Francisco, U.S.

Adoption of MI• Train at least one data engineer in eachdevelopment group• Leverage data science in majority ofdevelopment groups

Significantly increased contact
with startups

Researchers leverage MI on a daily basis“MI for all”

Introduced stage-gate management system

Decided to reorganize and strengthen research sites

Incubation stage（Phase0&1）

Reduction ofenvironmental impact
Development of
new materials

Development/Scalability stage（Phase2&3)

Increased projects in incubation stage

26

67

Incubation
Open innovation

Change and Innovation ～ with the Power of Chemistry ～• New research lab in China(Operations to start March 2024)• New research lab in Osaka(Operations to start Autumn of 2024)

13

Ⅰ-2

Improving Productivity through Digital Innovation

Developed infrastructure and improved productivity in four focus areas for DX
and began DX strategy 2.0 earlyDX strategy 2.0 :Consolidate competitivenessof existing businesses

DX strategy 1.0 : Improve productivity in four focus areas for DX
Plant

R&D

SCM

OfficeBegan initiatives early• Deployed MI across all research labs
• Began leveraging MI platform• Deployed multiple digital technologies
validated at individual plants across• Introduced S/4HANA• Greater line of sight into supply
chain information

DX strategy 3.0:
Create new business models• Quickly moved to support remote work
• Increased operational efficiency
through RPA deployment companywide

Promotional organizations
Sumitomo Chemical• DX strategy plan: about 10 people• Advance data science: about 25 people• Advance new digital: about 70 people• Also, DX advocates in mfg, sales and R&D

Link

Create new business models
leveraging services and data andour core technologies

HR development
SUMIKADXACCENT• Data scientists

Corporate Business
20people
Plan target：

Actual：16people

Corporate Business
150people
Plan target：

Actual：160people• Data engineers

Change and Innovation ～ with the Power of Chemistry ～

14

Ⅰ-2

Activities aimed at becoming Carbon Neutrality

Steps taken to achieve circular systems for carbon resources
to pave the way for deployment into society
Formulated grand design achievecarbon neutrality by 2050

Set SBT WB2.0℃ targets
Reduce greenhouse gasses

2021

50

%※ by 2030

Set SBT 2.0℃ targets

Reduce greenhouse gasses

30%※ by 2030

2017

2020
2019

Introduced renewable energy at Oita Works
Established CN Strategy Council

Decided to introduce high-efficiency gas turbine power
generation equipment in Chiba (Begin operation in 2023)
Set up R&D group for the development of technologies
that reduce environmental impact

Introduced city gas: Oita Works2018
Decided to build Ehime LNG thermal power plant (To begin operations in 2022)

2016
2015

Introduced LNG in-house power generation equipment at Misawa

2014
2013

Decided to shutter ethylene plant: Chiba Works
Change and Innovation ～ with the Power of Chemistry ～※Scope 1, 2. Vs. FY 2013 15

New Corporate Business Plan
(FY22-24)

Change and Innovation ～ with the Power of Chemistry ～16

1 Business Environment
2 Basic direction
and major action plans
3 Management
numerical targets

Change and Innovation ～ with the Power of Chemistry ～

17

Ⅱ-1

Business Environment
Rapid and tremendous upheaval
Sustainability• Climate change and carbon
neutrality• Protect ecosystem andstrengthen environmental
regulations

Digital technologies

Geopolitical risks• Society5.0• Economic security• Industry structure changing
from goods to solutions• Supply chain disruptions• Emergence of protectionism• Health awareness

Opportunities for reform and contributions

Bringing together the power of chemistry
to contribute to solving society's challenges
Change and Innovation ～ with the Power of Chemistry ～18

Ⅱ-1-1Ⅱ

Direction for long-term reforms

Contribute to solving society's challenges through our businessactivities by advancing Green Transformation (GX) in a broad sense
The GX we strive to attain
GX as commonly used

Preserving theecosystem

Carbon neutrality

Promoting healthSociety's challenges that we endeavor to solve

Environment

Healthcare

Recover the environment andachieve a world where humans andnature co-exist

Secure healthy lifestyles for people
throughout the world

Food

ICT

Secure stable food supply andachieve harmony withthe environment
Change and Innovation ～ with the Power of Chemistry ～Achieve an inclusive society
leveraging ICT19

FY2022-FY2024 Slogan of New Corporate Business Plan

Change and Innovation～ with the Power of Chemistry ～Change and Innovation ～ with the Power of Chemistry ～20

The thinking behind slogans in the Corporate Business Plan

with the Power of Chemistry
Bringing together the power of chemistry
to contribute to solving society's challenges

Sumitomo
Chemical's strengths

Further growth
opportunities

Diversity of businesses,

Advancing Greentechnologies, geographiesand people
at Sumitomo Chemical

Transformation (GX)
in a broad sense
responded to changes
in society

Change and Innovation ～ with the Power of Chemistry ～21

1 Business Environment

2 Basic direction andmajor action plans
3 Management
numerical targets

Change and Innovation ～ with the Power of Chemistry ～

22

Ⅱ-2

Overview of basic policy••••

Thoroughly implement
ROI management

Companywide projects

Improve cash flow generation andearnings stability
Intelligently allocate resources
Solidly capture returns on investments
Initiatives to improve CCC•••

Deploy DX into the businesses
Deep dive into our innovation
ecosystem
Obligations and contributions toward
becoming Carbon Neutrality

Strengthen
Strengthen businesses through approaches
rooted in technology and rationalize costs

Establish competitive
superiority

ReformPromote metabolism

Structural reforms to the business portfolio
based on GX<Three viewpoints>
Competitive superiority, market growthand sustainability

Change and Innovation ～ with the Power of Chemistry ～23

Change and Innovation～ with the Power of Chemistry ～Basic Direction
Further improve business portfolio (strengthen and reform businesses)
Improve financial standing
Accelerate the Development of Next-Generation Businesses
Obligations and contributions toward becoming Carbon Neutrality
Improve productivity and strengthen businesses through digital innovation
Employ, develop and leverage human resources for sustainable growth
Ensure full and strict compliance and maintain safe and stable operations
Change and Innovation ～ with the Power of Chemistry ～

24

Ⅱ-2

Further improve business portfolio: Reap returns on past investments

Many investments coming into fruition during the termof the new Corporate Business Plan
Current Corporate
Business Plan

2019-2021

New Corporate Business PlanFY 2022

FY 2023

FY 2024

Acquisitions and investments made to date

PMMA chemical recycling
Add production capacity at Tanaka Chemicals
Build expansion at multipurpose plant for electronics materials, etc. (Koei
Chemical)
Add capacity at resin raw material plant (Taoka Chemical)
Added capacity at semiconductor high purity chemicals plants in Changzhou
and Xi’anAdded capacity at semiconductor high purity chemicals plants in Ehime andSouth Korea
Build production and quality assurance system for advanced resist
Add capacity in photoresist in Osaka and South Korea
Strengthen India crop protection business
Acquire NuFarm’s South American subsidiaries
Expand biorationals business
Build new plant for oligonucleotide therapeutics
Strategic alliance with Roivant
Regenerative medicine & cell therapy CDMO (S-RACMO)

Change and Innovation ～ with the Power of Chemistry ～

25

Ⅱ-2

Further improve business portfolio:

Capex, investments and loans by segment
Essentials field with a focus on reducing environmental impact
Also, expand investments in high-performance materials such as
semiconductors and battery materials

FY19-21

New plan: FY22-24
Essentials

FY 2019-2021
2019～21年度
Capex,
investments
設備投資・投融資
and loans
約 Approx. 億円

FY 2022-2024
Capex, investments
and loans

8,800

880.0 bn. yen

PC/Essential Chemicals & Plastics

Approx.
750.0 bn. yen

Life
Sciences

EF

IT

HC

High-performancematerials
PH

Change and Innovation ～ with the Power of Chemistry ～＊Based on the timing of the decision to invest.

Does not necessarily align with the timing ofactual cash outlays or accounting treatments.

26

Ⅱ-2

Further improve business portfolio: Capex, investments and loans
Investment plan under new Corporate Business Plan(based on investment decisions)

Sum of investments Approx.

750 bn. yen

Strategic investments Approx.

450 bn. yen

Reduction ofenvironmental impact

Battery materials,
Super Engineering
Plastics, etc.

5G, Semiconductor,
Next-generation displays,etc.

Approx.

Approx.

Approx.

30 bn. yen

70 bn. yen

crop protection business(including biorationals)

Pharmaceuticals

Approx.

Approx.

90 bn. yen

90 bn. yen

Maintain and strengthen business fundamentals
Change and Innovation ～ with the Power of Chemistry ～90 bn. yen

OthersApprox.

Approx.

80 bn. yen

300 bn. yen
27

Ⅱ-2

Further improve business portfolio: Assumed capital allocation▶ Actively pursue business investment mainly in R&D and strategic investments▶ Maintain dividend payout ratio of 30% and improve debt to equity ratio to 0.7 times
Operating cash flows, etc.

Funding sources(Before deducting R&D expenditures)(asset sales and compress cash and deposits)

Approx. 1.39 trillion yen

Approx. 80.0 bn. yen＜Total＞ Approx. 1.47 trillion yen＜Business investment＞

Approx. 1.29 trillion yen
Capex, investments and loans

R&D expenditures

Approx.

Approx.

750.0 bn. yen

540.0 bn. yen<Financing policies>

Approx. 180.0 bn. yen
Dividend returns

Loan repayments

Approx.

Approx.

130.0 bn. yen

50.0 bn. yen*Dividend payout ratio 30% *Debt to equity ratio: 0.7

Change and Innovation ～ with the Power of Chemistry ～

28

Ⅱ-2

Further improve business portfolio:

Change the name of the Petrochemicals & Plastics sector▶ Provide materials that are Essential to society using manufacturingmethods that are friendly to the environment and a recycling economy▶ An Essential sector for our group in our aim to achieve carbon neutrality

Petrochemicals & Plastics

Essential Chemicals & Plastics

Conventional
petrochemicals & plastics

Next-generation
essential chemicals

A one-way business using fossil
fuels as feedstock and fuelReforms
through GX
and DX

business models geared toward
the environment and a recycling
economyStabilize earnings leveraging intangible
assets such as technology licensing, etc.

Change and Innovation ～ with the Power of Chemistry ～

29

Ⅱ-2

Further improve business portfolio:

Ⅱ
Future direction for Essential Chemicals& Plastics

Integrate operations in Japan and Singapore to accelerate R&D and
deployment into society of carbon neutral technologies and bolster earnings
in existing businesses

Petrochemicals & Plastics

Essential Chemicals & Plastics

Building out a structure across threesites that leverages strengths

Advancing GX in business portfolio

Japan

Finished rebuilding businesses
2015: shut down ethylene

Singapore

High value-added
Strong cashflow generation

Saudi Arabia

Phase 1: Achieve stable operations
Phase 2: Finish launch

Reforms
through GX
and DX

Develop and deploy into society
CN technologies

Integrate
operations
Japan

Develop technologies at Chiba
Research Lab and deploy into society
leveraging domestic and Singapore

Strong cashflow generation
Expand subscription-based businesses

Singapore

Further strengthen
existing priority businesses

Saudi Arabia

Recover investment

Change and Innovation ～ with the Power of Chemistry ～

30

Ⅱ-2

Improve financial standing: Basic direction and main initiatives
Basic direction
Thoroughly practiceROI-oriented management

Strengthen cashflow
generation capabilities

More Selective Investment

Initiatives aimed at improvement
Asset Sales

More Selective Investment

Improve CCC＜ FY 19-24 original target ＞

Selective investments in GX businesses＜ FY 19 → FY 24 ＞

50bn.yen-130bn.yen(Billions of yen)

＜ FY 19-24 projections ＞

100+bn.yen

Already reached 60 bn. yen Sold cross-shareholdings
 Sold tangible fixed assets

50bn.yen＜ Current → New plan ＞

1,000

Maintenance capex

880bn.yen

800

Strategic investments

750bn.yen

600

119

120

119

110

80

400

40

200
0

200
（days）
160

Days Payable Outstanding
CCC
Days Inventory Outstanding
Days Sales Outstanding

FY 21 Forecast

FY 24 Target

Change and Innovation ～ with the Power of Chemistry ～

0

FY 19

FY 21 Forecast

FY 24 Target

31

Ⅱ-2

Improve financial standing: Cash flow plan

Aim for debt to equity ratio of 0.7 times by the end of FY 24(Billions of yen)

FY2016-2018

FY2019-2021(Forecast)

FY2022-2024(Target)Cash flows fromoperating activities

687.2

705.0

805.0

Cash flows frominvesting activities▲541.1▲800.0▲655.0

146.1

▲95.0

150.0

Free cash flows

End of FY2018

End of FY2021(Forecast)End of FY2024(Target)Interest-bearing
liabilities

839.5

1,330.0

1,280.0

D/E Ratio(times)

0.7

0.8

0.7

637.9

960.0

935.0

Net Interest-bearing
liabilities

Change and Innovation ～ with the Power of Chemistry ～32

Improve financial standing：Ⅱ-2

Interest-bearing liabilities and debt to equity ratio(Billions of yen)

1,600

Cash and cash equivalents

Interest-bearing liabilities

D/E ratio（times）
2.2
2.0

1,400

1.8
1,200

1.6
1.4

1,000

1.2

800

1.0

600

0.8
0.6

400

0.4
200
0

0.2

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Change and Innovation ～ with the Power of Chemistry ～20202021 (Forecast)

0.02024 (Target)
33

Ⅱ-2

Accelerate the Development of Next-Generation Businesses:

Initiatives under the new Corporate Business Plan

Multiple projects entering commercialization stage
Environment

Healthcare Polyethylene with reduced environmental impact(Sekisui Chemical)
 High-efficiency manufacture of alcohol from CO2(Shimane University)
 Manufacture olefins via direct breakdown of waste
plastic(Maruzen Petrochemical, Muroran Institute ofTechnology)
 CO2 free hydrogen (Microwave Chemical)

 Regenerative medicine & cell therapy(Sumitomo Dainippon Pharma) Body condition monitoring (NanoScent)

Food

ICT




High-performance feed
New biorational products

 Polymer OLED display materials
 Materials for image sensors

During the new Corporate Business Plan  Projects slated to advance to commercialization or validation phases
 Projects slated to reach development or commercialization
Change and Innovation ～ with the Power of Chemistry ～

34

Ⅱ-2

Accelerate the Development of Next-Generation Businesses:

Development Highlights
Chiba

March 2024: Begin operations at new research lab Strengthen focus on developing technologies that reduce environmental
impactIllustration

 Shift and consolidate development resources from Tsukuba and Osaka
involved in highly challenging polymer materials

Strengthen R&D organization to address technologies and newmaterials that reduce environmental impact

Osaka

Autumn of 2024: Begin operations at new research lab

 Consolidate research functions related to basic research in ICT and life
sciences, incubation and open innovation
 Establish an open laboratory

Accelerate generation of new businesses by building an end-toend development structure, from initial research phases tocommercialization
Change and Innovation ～ with the Power of Chemistry ～

35

Ⅱ-2

Obligations and contributions toward becoming Carbon Neutrality:

Obligations※

Achieve 50% GHG reduction by 2030
and zero in real terms by 2050
2013

2020

2030

※Scope 1, 2. Vs. FY 2013

9,540k tons
7,420k tons
4,770k tons

Reduce by
2,120ktons

Reduce by
2,650k tons50％

 Energy conservation and rationalization in

manufacturing processes Restructured Chiba Works and Ehime Works
Shuttered ethylene plant, closed liquid-phasecaprolactam process, etc.

 Leverage BAT to thoroughly conserve energy andrationalize manufacturing processes
 Fuel Conversion(Introduce LNG, etc. at Ehime Works and Chiba Works)
 Advance introduction of renewable energy sources
 Reduce CO2 and other greenhouse gasses, too

Change and Innovation ～ with the Power of Chemistry ～

36

Ⅱ-2

Obligations and contributions toward becoming Carbon Neutrality:

Contributions

Material
Recycling

ChemicalRecycling

メタン
（CH4）

Alcohol

CO、CO2、H2

H2

CCU

Circular System for Plastics

再エネ
電力

固体炭素
（C）

Turquoise hydrogen

CarbonNeutrality

Mycorrhizal fungi

水素

Membrane CO2
separation systems
CO2

CO2
Lock in soilC

Gas emitted
and others

Waste treatment technology
排水H2

Optimalmicrobial
agentsChange and Innovation ～ with the Power of Chemistry ～

37

Ⅱ-2

Obligations and contributions toward becoming Carbon Neutrality:

Initiatives aimed at achieving carbon recycling in society
Four technology projects selected for Green Innovation Fund
Sumitomo Chemical businesses selected(National Institute ofAdvanced Industrial
Science and Technology/ Shimane University)❸ Alcohols Manufacture

Gasification
CO、
CO2、H2❷ Ethanol manufacture❹ Forming olefins from alcohols(National Institute of Advanced
Industrial Science andTechnology University)❶ Direct route to olefins

Polyolefin-type waste plastic

Mixed waste plastic

Waste plastic
Collection andseparation(Maruzen Petrochemical / MuroranInstitute of Technology)

Monomer

Fossil resources(CO2)(National Institute of Advanced
Industrial Science andTechnology University)

H2（Joint development partner)

Petroleumrefining, etc.

Resin
Polymerization

Plastic product
Processing

Waste
plastic,
etc.

CO2
separation

CO2Conventional carbon flow
Change and Innovation ～ with the Power of Chemistry ～

38

Ⅱ-2

Sumika Sustainable Solutions New revenue target
Designate the SC Group’s products and technologies that contribute to addressing climatechange and the reduction of environmental impact over the product's entire life cycle
and promote their development and widespread use(Billions ofyen)More than double vs FY 2021

New target

Aim for 1.2 trillion yen by FY 2030

Aim for 700 bn. yen by FY 2024

1,000

Double vs. FY 2015

Expect to achieve 560 bn. yen in FY 2021
500

Target set
in 2015• Expand sales of certified products and technologies• Certify new products and technologies in resource
recycling and ICT and expand sales• Strengthen efforts across the entire SC Group
0

2015

2016

2017

2018

2019

2020

2021

2024

Change and Innovation ～ with the Power of Chemistry ～

2030

（FY）

39

Ⅱ-2

Improve productivity and strengthen businesses through digital innovation
Overall strategy

Continue

DX strategy 1.0 :Improve productivity
in four focus areas for DX

Continue efforts aimed atenhancing productivity andgenerate results

Focus

DX strategy 2.0 :Consolidate competitivenessof existing businesses

Bolster business competitiveness throughdata-driven management with a focus on

strengthening customer contact points andenhancing customer satisfaction

Achieve high-quality decision-making
in real time
• Respond to DX challenges according tobusiness characteristics• Prepare environment that makes it easy toutilize and leverage data
Collect

Accumulate

Utilize and leverage

・Plants data
・R&D data
・Business data

Develop data
into asset andlink

Create value by
analyzing and creating
line of sight into data

VisionDX strategy 3.0:
Create new business models
Create new business models
leveraging services and data andour core technologies

Securing DX talent
All levels of all sectors

Implement training to enhance DX literacy

R&D and Production

Increase talent capable of analyzing and leveraging data
in day-to-day work*

Data scientists：30people Data engineers：300people

Business

Begin full-scale personnel development with the aim todispatch DX talent across all divisions
Business** Business data
100people
translators： 150people analysts：＊Dispatch multiple personnel to all business units,
R&D groups and manufacturing departments
Change and Innovation ～ with the Power of Chemistry ～The figures are the cumulative target for 2024

40

Ⅱ-2

Employ, develop and leverage human resources for sustainable growth
Advance recruitment and development of talent—
our most important management resource—from a long-term perspective.
At the same time, achieve sustainable growth for Sumitomo Chemical Groupby strengthening engagement.

Main action plans

Secure and leverage talent amid a shrinking population
Leverage higher-age
employees
Better matching of talent tobusiness.
Talent with diverse abilities.

• Adopt 65-year retirement age and study ways to leverage talent beyond
retirement age• Implement a job-based HR system from end to end (onboarding toretirement)• Expand hiring for clearly defined job descriptions,super-specialized positions in specific areas, etc.
• Achieve KPIs for leveraging female employees, increase women in
executive and director positions

Promote diversity, equity &inclusion (DE&I)

Current KPIs: Achieve the following by FY 2022
・ Women in positions equivalent or higher thansection manager: 10%+ (2014: 3.8%. 2021: 6.3%)• Male employees taking family leave:
70%+ (2014: 9.6%. 2021: 77.6%)

Review existing KPIs
in April 2023 andincorporate more
DE&I

• DE&I training (eliminate unconscious bias, diversity management, LGBTQ, etc.)
Change and Innovation ～ with the Power of Chemistry ～

41

Ⅱ-2

Employ, develop and leverage human resources for sustainable growth
Advance recruitment and development of talent—
our most important management resource—from a long-term perspective.
At the same time, achieve sustainable growth for Sumitomo Chemical Groupby strengthening engagement.

Main action plans
Develop and expand capabilities of employees

Strengthen engagement

Increase investment in people
and expand training

Instill management philosophiesand directions across group• Expand investment in training (Annual 320k yen per person)• Implement re-skilling based on extended retirement age• Conduct engagement survey for all group companies
inside and outside Japan• Respond to decline in real contact and reinforce engagement• Continue global HR measures

Health-building(in collaboration with the health insurance association)

Maintain positive relationships
between labor and management

Strengthen rotations for developing talent andeffectively leverage an open job posting system

Dig deeper Sumitomo Chemical’s“Let’s Do This Declaration”

Change and Innovation ～ with the Power of Chemistry ～

42

Ⅱ-2

Ensure full and strict compliance and maintain safe andstable operations

Aim to continue safe and stable operations
across the Sumitomo Chemical group leveraging
new digital technologies
Promote more sophisticatedequipment preservation• Digital innovation in equipment management

Uniform equipment management digitalplatform companywide
Introduce to all Sumitomo Chemicalplants by 2023
Shift to more efficient preservation
operations and data-driven preservation• Respond to aging equipment, secure work safety andquality and reduce maintenance and repair expenses• Strengthen partnerships

Investments in maintaining andstrengthening business fundamentals

Initiatives

2019-21280

bn. yen2022-24300

bn. yen

Promote smart factories
Smart preservation• Leverage information and new technologies to improve
preservation capabilities

Smart operations• More sophisticated and independent operations linked with digitaltechnologies• More sophisticated decision-making leveraging AI and machine learning

Develop and deploy technologies that prevent
accidents and mishaps• Technologies to predict and detect faults in equipment and processes• Technologies to assess the safety of sophisticated processes andmaterials

Change and Innovation ～ with the Power of Chemistry ～43

1 Business Environment
2 Basic direction andmajor action plans

3 Management
numerical targets
Change and Innovation ～ with the Power of Chemistry ～

44

Ⅱ-3

Management numerical targets(Billions of yen)

FY2021
Forecast

FY2024
TargetChange2,710.0

3,050.0+340.0Core Operating Income

245.0

300.0

+55.0

Operating Income (IFRS)

225.0

285.0

+60.0

Net Income Attributable to
Owners of the Parent

140.0

150.0

+10.0

Naphtha price¥50,300/kl¥50,000/kl

Exchange rate

¥109.91/$¥110.00/$

Sales Revenue

Change and Innovation ～ with the Power of Chemistry ～

45

Ⅱ-3

Core Operating Income by Sector(Billions of yen)

FY2021
Forecast

FY2024
TargetChangeReasons for change

Essential Chemicals &Plastics
Energy & Functional
Materials

64.0

54.0

-10.0

23.0

31.0

+8.0 battery materials

IT-related Chemicals

48.0

58.0 +10.0 Semiconductor materials

Health & Crop
Sciences

Deterioration in petrochemicals
trade terms and conditions
Increase in shipment volumes of
Increase in shipment volumes of

84.0 +41.0

Increase in shipment volumes ofoverseas crop protection products

67.0

73.0

+6.0

Increase in shipment volumes of
new products

Other

0

0

0

Total

245.0

Pharmaceuticals

43.0

300.0 +55.0

Change and Innovation ～ with the Power of Chemistry ～

46

Ⅱ-3

Core Operating Income out to FY 24 (approximation)(Billionsof yen)+Expand SA crop protection
business－

One-off profits in previous FY
in pharmaceuticals
Petrochemical market prices
lose momentum+ Expand SA crop

protection business
Expand semiconductormaterials business－ Latuda cliff+

Expand sales of newpharmaceuticals
Expand SA crop protection business
Expand semiconductor materials
business
Expand battery materials business

350
300
250
200
150
100
50
0

FY 2021

FY 2022

FY 2023

Change and Innovation ～ with the Power of Chemistry ～FY 202447

Ⅱ-3

Financial Metrics
FY2021
Forecast

FY2019FY2024
TargetMedium- to
Long-term Targets
Consistently achieve
the following targets:

ROE

3.2%

13.1%

11.7%

Over 10%

ROI

2.4%

5.7%

7.2%

Over 7%

D/E ratio

0.9times

0.8times

0.7times

Dividend
payout ratio

90%

28%

approx.

30%

Change and Innovation ～ with the Power of Chemistry ～approx.

0.7times

approx.

30%
48

Ⅱ-3
NOPAT※（ Billions of yen ）Capital Efficiency
240

Capital invested and NOPAT

Y

220
200
180

FY2024

ROI > cost of capital

FY2017FY2018160
140

FY2021

ROI < cost of capital120

FY2015FY2016100
80

FY202060

FY2019

40
20
0
1,900

00

2,000

2,100

2,200

2,300

2,400

2,500

※ NOPAT：Net Operating Profit After Tax ※ IFRS from FY2017

2,600

2,700

2,800

2,900

3,000

3,100

3,200

X

Capital invested (Billions of yen)

Change and Innovation ～ with the Power of Chemistry ～

49

Ⅱ-3

ROI by Sector
FY 2021 (Forecast)

FY 2024 (Target)

ROI %

ROI %

12

12

10

Company total:

5.7%

10

8

8

6

6

4

4

2

2

0

0

500

1,000

1,500

2,000

2,500

0

3,000

Company total:

Target: 7%

0

500

1,000

1,500

Capital invested(Billions of yen)

PC/Essential Chemicals & Plastics

EF

IT

7.2%

HC

Change and Innovation ～ with the Power of Chemistry ～

PH

2,000

2,500

3,000

Capital invested(Billions of yen)50

Business Strategy by Sector

Change and Innovation ～ with the Power of Chemistry ～51

Ⅲ

Business strategy: Essential Chemicals & Plastics
Direction for the business division

FY 2024 Target

Activities aimed at becoming Carbon
Neutrality

Sales Revenue

Expand materials recycling businessCore Operating Income

Pursue technology development in chemical
recyclingPractice Japanese technology leveraging
infrastructure in Singapore

Secure stable revenues via licensing
and catalyst business840.0 bn. yen
54.0 bn. yen

Core Operating Income Change
Analysis (FY 2021 vs. FY 2024)(Billions of yen)
Trade terms
and conditions

Expand portfolio and services

Difference in
fixed costsetc.

Brush up technology

Rationalization

Bolster competitiveness via unified
operations with Singapore
Review and evolve structure of MMA andpolyolefin businesses, etc.

FY 2021(Forecast)

Change and Innovation ～ with the Power of Chemistry ～Volumes

FY 2024(Target)52

Ⅲ

Highlights in Essential Chemicals & Plastics: Catalyst business strategy

Basic strategy

Establish stablerevenue base

Expand portfolio• Expand capacity to supply• Quickly establish, license andcatalysts• Expand opportunities to contact

potential customers

expand lineup in technologies that
reduce environmental impact• Diversify business models throughBrush up technology• Bolster competitiveness inprocesses• Catalysts: longer lifespans andoperational support services

cost improvements

Secure stable revenues and achievesustainable business expansion
Contribute to achieving a carbon neutral society
Greenhouse gas reduction effects
PO-only process-30%

Hydrochloric acidoxidation process

More than -90%

PO-only process based on a comparison to industry peer. Hydrochloric acid oxidation process based on a comparison to NaCl electrolysis.
Change and Innovation ～ with the Power of Chemistry ～53

Ⅲ

Business Strategy: Energy & Functional Materials Sector
Direction for the business division
Concentrate investments and expand
business in growth areas
Battery Separators: Development, capacity add and sales
expansion in accordance with advances in battery
capacity Cathode materials :Establish calcination technology
and commercialize
Super Engineering
Plastics

FY 2024 Target

390.0 bn. yen

Sales Revenue

31.0 bn. yen

Core Operating Income

Core Operating Income Change Analysis(FY 2021 vs. FY 2024)(Billions of yen)

 LCP： Expand business with plant capacity add
Expand sales of connectors for applications in
automotive and high-speed telecommunications

Decide direction for low-profit businesses

Trade terms
and conditions

Develop next-generation businesses Advance development of new technologies such as
solid state batteries, membrane-based separation,etc.

Difference in
fixed costs,
etc.

Rationalization

FY 2021(Forecast)

Change and Innovation ～ with the Power of Chemistry ～Volumes

FY 2024(Target)54

Ⅲ

Energy & Functional Materials Highlights:

Contribute to carbon neutrality with proprietary technologies

Battery components
Revenue
Cathodes正極材
materials

2-fold2021年度FY 2021

Battery

耐熱セパレータ
separators

Battery Separator

Support a rapidly expanding EV market
with the technologies we have accumulatedHigh
degree ofsafety2024年度FY 2024High
capacity due
to thin-film
application

Achieved
long lifeand rapid
charging• Develop and expand sales in automotive
applications. Also, strengthen
development for consumer electronics.
• Add further capacity to support demand.

Cathode materials

Enter market for high nickelcontent Cathode materials• Validate technology in highproductivity calcination
process• Develop sustainable cobaltfree cathode materials

Super Engineering Plastics
Production capacity
Decided to add
internal capacity
Today
About

9,000 t2023年

Add 30%*Based on resin. Varies depending on grade mix.

LCP（liquid crystal polymer）

Prepare production regime tosupport strong demand
Compounds
Design and mass
production technologies

Highly stable
quality• Expand sales of connectors forapplications in automotive andhigh-speed 5G telecommunications• Expand functionality of in-housecompounds• Further capacity adds

Change and Innovation ～ with the Power of Chemistry ～55

Ⅲ

Business Strategy: IT-related Chemicals Sector
FY 2024 Target

Direction for the business division
Displays

Maintain competitive edge leveraging
our own core technologies

 Capture demand for materials for next-generation
displays

560.0 bn. yen

Sales Revenue

58.0 bn. yen

Core Operating Income

 Secure market share in existing high value-added areas
 Continue restructuring of commodity LCD materials
business
Semiconductormaterials

Acquire business opportunities in
response to market expansion

 Securely capture growing demand Develop products that support innovations in customer
processes
 Launch next-generation power device materials businessand contribute to evolution in energy conservation
technologies
New businessCore Operating Income Change Analysis(FY 2021 vs. FY 2024)(Billions of yen)

Volumes

Trade terms
and conditions

Difference in
fixed costs,
etc.

Create new businesses for the nextgeneration

 Establish business in materials related totelecommunications and sensors

FY 2021(Forecast)

Change and Innovation ～ with the Power of Chemistry ～Rationalization

FY 2024(Target)56

IT-related Chemicals Highlights:

Ⅲ

Capture growing demand for semiconductor materials
Photoresist

Our strategy

Strengthen development of EUV photoresists
for cutting-edge processes

Photoresist market by light source (Forecast)*（M US dollars)

4,000

Others

ArF

3,000
2,000

EUV
EUV

Construct new lab for
Develop EUV photoresists▶
photoresist evaluationthat support next-generation lithography tools

ArF

Bolster organization to supply ArF resist,
which will continue to drive the market

1,000
0

2021

2024

2030

Add capacity to manufacture
cutting-edge photoresist

 Trends

Growth in market for high-efficiency
power devices and demand for evengreater efficiency gains

Our strategy

Renewableenergy2.5 times

Sumitomo Chemical estimates for 2030

 Comparison of power device characteristics
Type

EV

About

*Source: Fuji Keizai Co., Ltd. “Future Perspective and Reality of Semiconductor Materials Market 2020”

Compound semiconductors .

Datacenter2019 → 2024

Operatingvoltage

Operatingfrequency

Element
size

△～○

△

△

Silicon carbide

◎

△

○

GaN on Si△◎○

GaN on GaN

◎

◎

◎

SiliconTargetValidation equipment
Establish technology for mass-producing
large-wafer GaN substrates for power devices Begin operation in FY 22

Characteristics

Cost
competitivenessAlready in massproduction
For consumer
electronics. In
introduction phase.
At the R&D stage

Aim for supply for mass production to begin by FY 24

Change and Innovation ～ with the Power of Chemistry ～57

Ⅲ

Business Strategy: Health & Crop Sciences Sector
Direction for the business division
Business portfolio reforms aimed atstrengthening a group of sustainable products
 Differentiate from rivals leveraging our strengths
in biorationals, botanicals, etc.
 Develop and launch products that focus on
reducing environmental impact

FY 2024 Target

590.0 bn. yen

Sales Revenue

84.0 bn. yen

Core Operating Income

Secure returns on investments already madeCore Operating Income Change Analysis(FY 2021 vs. FY 2024)

 Achieve ROIC in excess of capital cost

(Billions of yen)

Strengthen global supply chain Achieve stability in quality and supply acrossexpanded global footprint

Trade terms
and conditions

Advances and efficiencies in R&D
 Invest resources in narrow group of priorities
 Actively leverage open innovation

Difference in
fixed costs,
etc.

Rationalization

FY 2021(Forecast)

Change and Innovation ～ with the Power of Chemistry ～Volumes

FY 2024(Target)58

Ⅲ

Health & Crop Sciences Sector Highlights: Business portfolio reform
Strengthen the biorationals business

Revenue

FY24

FY21

Approx.

Approx.

(Billions of yen)

50

30(Billions of yen)

Sales revenue target for crop
protection business(Excludes environmental health business)Studyfurther
expansion
through
M&A

R＆D

Accelerate pipeline development and launch

Sales

Leverage reinforced SSBU

Approx.

430bn. yen
Approx.
340bn. yen

EuropeIndia
SouthAmerica

Manufacture Bolster ability to supply main products

Contribute to a reduced environmental impact
with chemical crop protection

North
America

Supporting no-till
farming*Japan*Agricultural technique that uses no tillage Requires
clearing of weeds before seeding

Contribute to the spread of no-till farming by expanding salesof fast-acting and long-lasting herbicides applied before
seeding.
Change and Innovation ～ with the Power of Chemistry ～FY 2021
Forecast

FY 2024
Targets
59

Ⅲ

Business Strategy: Pharmaceuticals Sector
Direction for the business division
Establish base of earnings to follow Latuda’s
loss of exclusivity in US
 Maximize revenues from ORGOVYX ®,MYFEMBREE® and GEMTESA®
 Improve management efficiency and optimize
business costs
Lay groundwork for growth over the medium
to long term Generate continuous psychoneurotic medicines Pursue faster development, lower risk and quicker
maximization of product value, including actively
working with external resources Pursue and commercialize new therapies including
regenerative and cellular medicines

FY 2024 Target

73.0 bn. yen

Core Operating Income

Core Operating Income Change Analysis(FY 2021 vs. FY 2024)(Billions of yen)

Trade terms
and conditions

Difference in
fixed costs,
etc.

Rationalization

Strengthen CDMO business Actively advance next-generation
biopharmaceuticals including cellular medicines
and alpha-ray antibody-drug conjugates (ADC)

610.0 bn. yen

Sales Revenue

FY 2021(Forecast)

Change and Innovation ～ with the Power of Chemistry ～Volumes

FY 2024(Target)60

Ⅲ

Pharmaceuticals highlights:

Initiatives to maximize profits Post-Latuda
ORGOVYX® /MYFEMBREE®/GEMTESA®※1
Forged development and sales alliance with Pfizer

SEP-363856（Ulotaront）※2• For ORGOVYX® and MYFEMBREE®, conduct
joint development and joint promotion in North
America
Reduce business risk at the same time
we maximize the drug's potential
Sales and distribution tie-ups among group companies• Conduct joint promotion of GEMTESA®
• Sunovion to support distribution of the threedrugs to wholesalers

Forged development and sales alliance with Otsuka
Pharmaceutical
Development
items

Planned indications

Planned launch

Schizophrenia(US) FY 2024
(Japan and Asia)
late 2020s

Second and third
indications

Under study

Bipolar I disorderdepression(US and Japan)
late 2020s

SEP-363856

SEP-4199

Pursue cost synergies by leveraging
Sunovion sales infrastructure

Bring together both companies’ strengths
in psychoneurotic field

Aim for sales from ORGOVYX™,MYFEMBREE and GEMTESA greater than Latuda

Cultivate into new blockbusters to drive growthover the medium to long term

※1 ORGOVYX® : prostate cancer treatment. MYFEMBREE® : uterine fibroids treatment. Filing underway in US for endometriosis for MYFEMBREE®.
※2 Myovant to lead the alliance.
Change and Innovation ～ with the Power of Chemistry ～61

Epilogue

Change and Innovation ～ with the Power of Chemistry ～62

ⅣWhat We Strive to
A visualization of enhancing enterprise value throughJiri-Rita Koushi-Ichinyo
Benefiting
society

Rita

KoushiIchinyoCreating social value

Contributing to realizationof sustainable society

Benefiting society at large,
not just our own interests

GX
Enhancing
Enhancing
corporate
value

corporate value

Creating economic value

Jiri

Sustainable growth of businessChange and Innovation ～ with the Power of Chemistry ～Benefiting
ourselves
63

Ⅳ

Epilogue

Achieving sustained growth for Sumitomo Chemical Group and helping build
a sustainable society by creating both economic value and social value

GX

The Sumitomo Spirit

Carbonneutrality

Basic Principles for Promoting
Sustainability

Core competencies

Business Philosophy

Technology

Charter for Business Conduct
PromotinghealthPreserving
theecosystem

Change and Innovation
with the Power of Chemistry

Human
resources

GlobalSociety's challenges that we endeavor to solve
Environment

Recover the environment and achieve aworld where humans and nature co-exist

Food

Secure stable food supply and achieve
harmony with the environment

Healthcare

Secure healthy lifestyles for people
throughout the world

ICT

Achieve an inclusive society leveraging
ICT- Sharing our aspirations with stakeholdersChange and Innovation ～ with the Power of Chemistry ～64

Reference Materials

Change and Innovation ～ with the Power of Chemistry ～65

Reference Materials


FY2021 Target vs. Forecast

FY2021 Core Operating Income by Sector

FY2024 Sales Revenue by Sector vs. FY2021

Core Operating Income Change Analysis (FY 2021 vs. FY 2024)

Capital invested and NOPATFour priority areas of focus and main business candidates

Development progress and commercialization plans for pipelineof crop protection products
Material Issues that We will Address as Management Priorities
Change and Innovation ～ with the Power of Chemistry ～66

FY2021 Target vs. Forecast(Billions of yen)

FY2021
Forecast

FY2021
Target2,710.0

2,950.0-240.0Core Operating Income

245.0

280.0

-35.0

Operating Income (IFRS)

225.0

260.0

-35.0

Net Income Attributable to
Owners of the Parent

140.0

150.0

-10.0

Naphtha price¥50,300/kl¥51,000/kl

Exchange rate

¥109.91/$¥110.00/$

Sales Revenue

Change and Innovation ～ with the Power of Chemistry ～Change67

FY2021 Core Operating Income by Sector(Billions of yen)

FY2021
Forecast

FY2021
TargetChangePetrochemicals &Plastics
Energy & Functional
Materials

64.0

49.0

+15.0

23.0

31.0

-8.0

IT-related Chemicals

48.0

35.0

+13.0

Health & Crop
Sciences

43.0

75.0

-32.0

Pharmaceuticals

67.0

94.0

-27.0

Other

0

-4.0

+4.0

Total

245.0

280.0

-35.0

Change and Innovation ～ with the Power of Chemistry ～Reasons for change
Market price up in
petrochemicals market
Delayed launch of EV and 5G
markets
Increase in shipment volumesof Semiconductor materials
Depressed crop protection
market and delayed recovery inmethionine market prices
Increased up-front expenses
due to alliance with Roivant.

68

FY2024 Sales Revenue by Sector vs. FY2021(Billions of yen)

FY2021
Forecast

FY2024
TargetChange

810.0

840.0

+30.0

FY2021 periodic plant maintenance in
the Chiba works

305.0

390.0

+85.0

Increase in shipment volumes ofbattery material, etc.

IT-related Chemicals

450.0

560.0

+110.0

Increase in shipment volumes of
Semiconductor materials, etc.

Health & Crop Sciences

470.0

590.0

+120.0

Increase in shipment volumes ofoverseas crop protection products

Pharmaceuticals

610.0

610.0

0

Other

65.0

60.0

-5.0

Total

2,710.0

3,050.0+340.0Essential Chemicals &Plastics
Energy & Functional
Materials

Change and Innovation ～ with the Power of Chemistry ～Reasons for change

69Core Operating Income Change Analysis(FY 2021 vs. FY 2024)

Volumes（Billions of yen）

300
250

245.0

Trade terms
and conditions△107.0Difference in
fixed costs, etc.

Rationalization

+55.0

300.0

+48.0

+59.0

200
150
100
50
0

FY2021（Forecast）

FY2024（Target）
Change and Innovation ～ with the Power of Chemistry ～70Capital invested and NOPAT（Essential Chemicals & Plastics）
NOPAT※（ Billions of yen ）80※ NOPAT：Net Operating Profit After Tax

Y
FY201760
FY201640

FY2021

ROI > cost of capital

ROI < cost of capital

FY2018FY2024FY201520
FY2019

0
300
(20)

400

500

600

700

800

900

X

1,000

FY2020(40)

Capital invested (Billions of yen)
※ NOPAT：Net Operating Profit After Tax ※ IFRS from FY2017
Change and Innovation ～ with the Power of Chemistry ～71Capital invested and NOPAT（Energy & Functional Materials + IT-related Chemicals)
Y

NOPAT※（ Billions of yen ）80

FY202160

FY2024

ROI < cost of capital

FY202040

FY2019FY2017

20

ROI > cost of capital

FY2018

0
300
(20)

400

500
FY2015

600

700

800

900

X

1,000

FY2016(40)

Capital invested (Billions of yen)
Change and Innovation ～ with the Power of Chemistry ～72Capital invested and NOPAT（Health & Crop Sciences）
Y

NOPAT※（ Billions of yen ）80

FY2024

60

ROI > cost of capital

FY201540

FY2016FY2021

ROI < cost of capital

FY201720
FY2020FY2018

0
300
(20)

400

500

600

700

800

900

1,000

X

FY2019(40)

Capital invested (Billions of yen)
Change and Innovation ～ with the Power of Chemistry ～73Capital invested and NOPAT（Pharmaceuticals）
Y

NOPAT※（ Billions of yen ）80

FY2024FY201760

FY2018
ROI > cost of capital40

FY2016
20

ROI < cost of capital

FY2015

FY2020FY2019FY2021

0
300

400

500

600

700

800

900

X

1,000

(20)

(40)

Capital invested (Billions of yen)
Change and Innovation ～ with the Power of Chemistry ～74

Four priority areas of focus and main business candidates
Food

Environment
Area of focus

Main business candidates

EnergyManagement

Next-generation storage
battery materials

GHG
Emission
reductions
Circularsystems
for resources

High-performance membranes
Wastewater treatment systems
Chemical recycling(circular system for plastics)

Area of focus

Sustainable
Food
production
Reducefood loss

Main business candidates

High-performance feed
Biorational materials
Agents to preserve freshness
and reduce harvesting losses

Processes that make effective
use of CO2

Change and Innovation ～ with the Power of Chemistry ～75

Four priority areas of focus and main business candidates
Healthcare
Area of focus
Cutting-edge
medicine
Preventive
Early diagnosis
Health checkups

ICT

Main business candidates
Regenerative medicine &cell therapy
Materials for cell therapies
Sanitary materials

Area of focus
Materials
Materialsand
andcomponents
components
forforedgeedge
equipment
equipmentand
andinformation
information
terminals
terminals

Body condition monitoring
Materials for diagnostic
medicines and image diagnosis

Materials
Materialsand
andcomponents
componentsfor
fortelecommunications
telecommunications
andandsemiconductors
semiconductors

Change and Innovation ～ with the Power of Chemistry ～Main business candidates
Display materials
Sensor materials

Telecommunications andsemiconductor materials
Heat-dissipation and thermalcontrol materials

76Development progress and commercialization plansfor pipeline of crop protection products
CompoundRegistration

MarketlaunchCompleted

Registered

Launched in Japan, America,and Canada in 2020
Scheduled to launchin Brazil in 2022

PAVECTOTM

Agricultural fungicide
e.g. Septoria

Completed

Registered inJapan

Scheduled to launch 2022-23

Completed

Registered inJapan

Launched in Japan in 2022

Completed

Submitted

Scheduled to launchas early as 2023

Completed

Registered in
AmericaScheduled to launchin America in 2022

（methyltetraprole）

Agricultural insecticide
e.g. Major rice pests
etc.
Agricultural fungicide
FUSEKITM
e.g. Field crop and（pyridaclomethyl） vegetable diseases

ALLESTM(oxazosulfyl)

RapidicilTM(epyrifenacil)
Pipeline C

T2030

Full-scale
development

Agricultural fungicide
e.g. Soybean rust

AccedeTM
（ACC）

A2020

Evaluation

INDIFLINTM(inpyrfluxam）

B2020

Use

Pipeline A

Agricultural plant
growth regulator
Next-generation
herbicide effective
againstherbicide-resistantweeds
Botanical insecticide
for agriculture andhousehold hygiene
Agricultural fungicide

Completed

Submitted

Completed

Submitted

Scheduled to launch
in 2025

Evaluation inprogress

Change and Innovation ～ with the Power of Chemistry ～77

Ⅳ

Material Issues that We will Address as Management Priorities
Material Issues for Sustainable Value ※Creation※

Material issues for
future value creation

Material issues forsocial value creation□ Contribute to the environment□ Advance innovation

 Climate change mitigation and adaptation
 Contribute to recycling resources Sustainable use of natural capital□ Bolster competitivenessleveraging DX□ Contribute to the food supply
 Advance sustainable agriculture□ Human resources:
DE&I*, growth & development,
health□ Contribute to healthcare□ Contribute to ICT*Diversity, Equity & Inclusion

Foundation for Business Continuation※
Occupational safety and health,and operational safety and disaster prevention□ Cybersecurity□

Product safety andquality assurance□ Compliance□□

Respect for human rights□

Anti-corruption※Partially revised in March 2022

Change and Innovation ～ with the Power of Chemistry ～78

Cautionary Statement
Statements made in this document with respect to Sumitomo Chemical’s current plans,estimates, strategies and beliefs that are not historical facts are forward-looking
statements about the future performance of Sumitomo Chemical. These statements
are based on management’s assumptions and beliefs in light of the information
currently available to it, and involve risks and uncertainties.
The important factors that could cause actual results to differ materially from those
discussed in the forward-looking statements include, but are not limited to, general
economic conditions in Sumitomo Chemical’s markets; demand for, and competitive
pricing pressure on, Sumitomo Chemical’s products in the marketplace; Sumitomo
Chemical’s ability to continue to win acceptance for its products in these highly
competitive markets; and movements of currency exchange rates.