FY2008 Financial Resultsand Outlook for FY2009

June 2009Today’s Agenda
 FY2008 Financial Results Outlook for FY2009
 Rabigh Project Lurasidone for Schizophrenia & Bipolar Disorder Polymer Organic LEDs
 Battery-related Materials

FY2008 Financial Results

FY2008 Financial Results
FY2007

FY2008¥1,896.5 Bn¥1,788.2 Bn- ¥108.3 Bn

Operatingincome¥102.4 Bn¥2.1 Bn- ¥100.3 Bn

Ordinaryincome¥92.8 Bn

- ¥32.6 Bn- ¥125.4 Bn

Net income¥63.1 Bn

- ¥59.2 Bn- ¥122.2 Bn

Net income
excl. one-time
factors¥34.3 Bn

- ¥45.3 Bn- ¥79.6 Bn

Dividend pershare¥12¥9Naphtha
price¥61,500/kl¥58,900/kl

Exchangerate¥114.44/US$¥100.71/US$【 連Sales結 】

ChangeFY2008 Sales by Segment
Unit: Billions of yen

FY2007

FY2008ChangeSales
pricevariance

Shipping
volumevariance

Basic Chemicals

314.7

240.0

-74.7

-18.0

-56.7

Petrochemicals &Plastics

603.3

553.0

-50.4

+11.0

-61.4

Fine Chemicals

92.9

80.8

-12.2

+2.0

-14.2

IT-related Chemicals

297.5

307.1

+9.6

-21.0

+30.6

Agricultural Chemicals

200.4

222.2+21.8+9.0+12.8

Pharmaceuticals

237.6

235.6

-2.0-10.5+8.5

Others

150.1

149.5

-0.5

0-0.5

Total

1,896.5

1,788.2-108.3

-27.5

-80.8

Sales outside of Japan

788.8

749.8

-39.0

Percentage of sales
outside of Japan

42%

42%

‐

Change in Operating Income FY2007/2008
FY2007 ¥102.4Bn → FY2008 ¥2.1Bn（（- ¥100.3Bn））（Billions of yen））

120

FY2007
operatingincomePrice variance: - ¥41.0Bn
・Decrease in selling prices for IT-related Chemicals,
Pharmaceuticals and Basic Chemicals

Shipping volume variance: - ¥24.8Bn
90

102.4

・Decrease in shipping volumes for Petrochemicals
and Plastics, Basic Chemicals and Fine Chemicals
・Increase in shipping volumes for IT-related Chemicals
and Pharmaceuticals
・Inventory write-downs

60

Fixed cost variance: - ¥56.0Bn
30

・Increase in depreciation
・Decrease in profit from retirement
benefit adjustment
・Increase in R&D expenses for thedevelopment of schizophrenia drug andother projects

Variable costvariance: + ¥21.5Bn
・ IT-related Chemicals, etc.

FY2008operatingincome2.10FY2007

FY2008

FY2008 Operating Income by Segment（Unit: Billions of yen））

FY2007

FY2008ChangeMajor factors forchanges in profit

Basic Chemicals

10.6-15.3-25.9

・Significant decline in demand・Lower market prices

Petrochemicals &Plastics

4.5-30.3-34.9

・Significant decline in demand・Inventory write-downs

Fine Chemicals

11.4

1.6-9.8

・Decrease in sales volumes
・Stronger yen

IT-related
Chemicals

6.3-1.0-7.3

・Lower selling prices
・Temporary increase in R&D expenses

AgriculturalChemicals

20.9

24.4+3.5

・Increase in sales volumes
・Higher selling price for feed additivesPharmaceuticals

46.5

32.4

-14.1

・NHI drug price revision
・Increase in R&D expenses

Others

2.2-9.7-11.8

・Increase in R&D expenses

Total

102.4

2.1-100.3

FY2008 Financial Results
FY2007

FY2008¥1,896.5 Bn¥1,788.2 Bn- ¥108.3 Bn

Operatingincome¥102.4 Bn¥2.1 Bn- ¥100.3 Bn

Ordinary
income¥92.8 Bn

- ¥32.6 Bn- ¥125.4 Bn

Net income¥63.1 Bn

- ¥59.2 Bn- ¥122.2 Bn

Net income
excl. one-timefactors¥34.3 Bn

- ¥45.3 Bn- ¥79.6 Bn

Dividend pershare¥12¥9Naphtha
price¥61,500/kl¥58,900/kl

Exchangerate¥114.44/US$¥100.71/US$【 連Sales結 】

ChangeOne-time Factors

Before taxes

After taxes

Gain on contribution of securities
to retirement benefit trust+¥14.8 Bn+¥8.9 Bn

Impairment losses on fixed assets-¥20.8 Bn-¥12.5 Bn

Reversal of deferred tax assets－-¥19.6 Bn

Reversal of deferred tax debts－+¥9.3 Bn-¥6.1 Bn-¥13.9 Bn

Extraordinary gains and losses

Deferred taxes

Total

Outlook for FY2009

Outlook for FY2009
FY2008FY2009¥1,788.2 Bn¥1,620.0 Bn- ¥168.2 Bn

Operatingincome¥2.1 Bn¥35.0 Bn

+ ¥32.9 Bn

Ordinary
income- ¥32.6 Bn¥30.0 Bn

+ ¥62.6 Bn

Net income- ¥59.2 Bn¥10.0 Bn

+ ¥69.2 Bn

Net income
excl. one-time
factors- ¥45.3 Bn¥10.0 Bn

+ ¥55.3 Bn

Dividend pershare¥9【 連Sales結 】

Not determined

Naphthaprice¥58,900/kl¥35,000/kl

Exchangerate¥100.71/US$¥95.00/US$

ChangeChange in Operating Income FY2008/2009
FY2008 ¥2.1Bn → FY2009 ¥35.0Bn（（+¥32.9Bn））
5 0 （Billions of yen））

Shipping volume variance, etc.: + ¥29.9Bn
・ Increase in shipping volumes for IT-related Chemicals
and Petrochemicals & Plastics
・Inventory write-down losses not expected in FY2009

25

Price variance: - ¥20.0Bn･Decrease in selling prices for
IT-related Chemicals･Improvement in margins for
Petrochemical & Plastics

35.0

Variable costvariance: + ¥20.0Bn･Lower material costs for
IT-related Chemicals

2.10FY2008
operatingincomeFY2009operatingincomeFixed cost variance: + ¥3.0Bn-25FY2008･Decrease in depreciation･Increase in loss from retirement
benefit adjustment

FY2009（projected））

FY2009 Sales and Operating Income by Segment（Unit: Billions of Yen））

Basic
ChemicalsPetrochemical& Plastics
Fine
Chemicals
IT-related
Chemicals
AgriculturalChemicals
Pharmaceuticals
OthersTotal

FY2008FY2009ChangeMajor factors for changes in profit

Sales

240.0

200.0

-40.0

OI-15.3

-8.5

+6.8

No inventory write-downs expected,
improvement in margins

Sales

553.0

505.0

-48.0

OI-30.3

2.0

+32.3

Sales

80.8

75.0

-5.8

OI

1.6

4.0

+2.4

307.1

255.0

-52.1

-1.001.0

Sales

222.2

210.0-12.2

OI

24.4

25.0

0.6

Sales

235.6

230.0

-5.6

OI

32.4

17.0

-15.4

Sales

149.5

145.0

-4.5

-9.7

-4.5

+5.1

1,788.2

1,620.0-168.2

2.1

35.0

+32.9

Sales
OI

OI
Sales
OI

No inventory write-downs expected,
increase in shipping volumes,
improvement in margins
No inventory write-downs expected,
increase in shipping volumes
Increase in shipping volumes,
rationalization, decrease indepreciation, lower selling prices
Increase in shipping volumes,
stronger yen
Increase in loss from retirement
benefit adjustment, increase in R&Dexpenses
Decrease in depreciation

Outlook for FY2009
FY2008FY2009¥1,788.2 Bn¥1,620.0 Bn- ¥168.2 Bn

Operatingincome¥2.1 Bn¥35.0 Bn

+ ¥32.9 Bn

Ordinary
income- ¥32.6 Bn¥30.0 Bn

+ ¥62.6 Bn

Net income- ¥59.2 Bn¥10.0 Bn

+ ¥69.2 Bn

Net Income
excl. one-time
factors- ¥45.3 Bn¥10.0 Bn

+ ¥55.3 Bn

Dividend pershare¥9【 連Sales結 】

Not determined

Naphthaprice¥58,900/kl¥35,000/kl

Exchangerate¥100.71/US$¥95.00/US$

ChangeFinancial Position Outlook（Unit: Billions of yen）

Capital investments
FY2008：：¥134.1Bn
FY2009：：¥110.0Bn （-¥24.1Bn from FY2008））

Inventories
End of Dec 2008：： ¥370.4Bn
End of Mar 2009：： ¥335.7Bn （-¥34.7Bn from End of Dec 2008））
End of FY2009：： Increase in inventories expected because ofthe start up of Rabigh complex

Interest-bearing debt
End of Mar 2008：： ¥673.9Bn
End of Mar 2009：： ¥795.4Bn（（+¥121.5Bn from end of Mar 2008 ）End of Mar 2010：： ¥850.0Bn（（+¥54.6Bn from end of Mar 2009 ）Increase in working capital due to the start upof the Rabigh complex

Progress on the Rabigh Project
Production•Commenced
commercial operation•Ramping up productionand expecting toachieve full capacity
production shortlySales• Petrochemical products being shipped out to Sumitomo
Chemical Asia
• Sumitomo Chemical Asia’s sales expected to get intofull swing in Q3 2009

Rabigh Phase II Project Conducting feasibility study for Phase II with Saudi
Aramco Feasibility study to be complete by Q3 2010
Planned feedstocks
Ethane: 30M standard cubic feet per day (newly allocated)
Naphtha: 3M tons per year (to be supplied from Phase I complex)Planned products
Ethylene propylene rubber, thermo plastic olefin, methyl
methacrylate monomer & polymer, low-density polyethylene,
ethylene vinyl acetate, caprolactam, polyols, cumene, phenol,acetone, acrylic acid, superabsorbent polymer and Nylon-6

 When its viability confirmed, Phase II to be
implemented with a plan to start up by Q3 2014

Research and Development

Lurasidone for Schizophrenia & Bipolar Disorder Phase III clinical trials underway globally, in US, EU, Japan andother countries for schizophrenia
 Anticipating efficacy & safety matching or exceeding current major

products on the market
 In May 2009 DSP announced positive results in the first Phase III

clinical trials:• In 6-week, double-blind, placebo-controlled trial, significantly
more effective than placebo for acute schizophrenia• Well-tolerated and a relatively low discontinuation rate Expected to be launched in US in 2011--- US schizophrenia and bipolar disorder drug market:
US$13.9 bn (2008)
 DSP expanding development capabilities and planning to build its
own sales operations in US Global Phase III for bipolar disorder started in December 2008

Polymer Organic LEDs
 PLEDs’ advantages over LCDs
 Superior contrast, resolution, response speeds & viewing angle
 Lower energy consumption
 Self-luminescent and simpler display structure, no backlights

required Flexible displays and roll to roll processing under development

 PLEDs’ advantages over Small Molecular LEDs
 Greater potential to realize more cost-effective production,

particularly when applied to large displays—“printing methods” vs. “vacuum deposition method”

Polymer Organic LEDs
Efforts toward commercialization
 Acquired Cambridge Display
Technology in 2007
 Established Device Development
Center in 2008
 Accelerating development of
PLED panel manufacturing
technologies
 Light emitting materials improving
significantly in lifetime & efficacy
 Projects underway with partners
to develop PLED displays &lighting

Battery-related MaterialsHeat-resistant separators for lithium-ion secondary batteries










Outstanding safety and durability
Growing demand for applications
in mobile devices
Expanded capacity to 16 mil m2
in FY08, and will further expand
to 25 mil m2 during FY09
Established Battery Materials Division inIT-related Chemicals Sector, Jan 2009
Accelerating development targeting
automotive applications

Cobalt-free cathode material for lithium-ion secondary batteries
 Higher output than conventional
materials, suitable for applications
in hybrid and electric vehicles
 Achieved high performance without
using cobalt, which is in short supply
worldwide Evaluation by customers underway
 Planning to start commercial production in fiscal 2009

Formulating New Business Strategies
 Analyzing business climate and developing our long-term corporate vision
 To formulate a medium-term corporate business planfor FY2010 and onward based on new corporate vision
 To formulate new business strategies to improve ourcompetitive position
 Restructure business portfolio Improve production technologies
 Develop energy and environmental strategy
 Accelerate R&D projects in priority areas by taking fulladvantage of “Creative Hybrid Chemistry”

Reaching New Heights as a Global Company

Cautionary Statement
Statements made in this document with respect to the 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, andinvolve 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, andcompetitive 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 competitivemarkets; and movements of currency exchange rates.