New Three-Year Corporate Business Plan
Fiscal Years 2007-2009
Taking a Quantum Leap as a Global Company

Hiromasa Yonekura, President
March 5,, 2007

FY2007-2009 Corporate Business Plan
Today's agenda. Summary of current Business Plan
･Basic Principle･Financial Results. Overview of the New Business Plan
･Basic Principle･Basic Initiativesg･Performance Targets
1Summary of Current Business Plan
Basic Principle
Maximize our strengths
gthroughg selection andconcentration to achieve high profitability
Focus Investment in Life Sciences and IT-Related Chemicals･Founded
Founded Dainippon Sumitomo Pharma (Pharmaceuticals)･Grow LCD materials business aggressively (IT Related Chemicals)
Shift to Higher Value-Added Products.
･LaunchLaunch New Polyethylene,Polyethylene Convert PE Plant into PP Plant
Enhance Global operations･Capacity expansions in Korea, Taiwan, China(IT Related Chemicals)
Capac ty e
expansions
pa s o s in S
Singapore(Basicgapo e( as c Chemicals
C e ca s & Petrochemicals)
et oc e ca s)･Capacity

Significance of Rabigh Project･Strengthen foundation and profitability of the Petrochemicals businessg stable supply
pp y of feedstocks at competitivepp
pricesthrough･Accelerate extending our global reach2

Summary of Current Business Plan
Financial Results(Billions of yen)(Billions of yen)

2,000

1 600
1,600

1,200160
FY01-06 Average growth
Sales :
11.9%
Op Income :16.1%
Net Income :20.0%(Net income growth excluding
non recurring profit）

12080
800
4040000

FY2001

Sales(Left axis)

FY2002

FY2003

FY2004

Operating Income(Right axis)

FY2005

FY2006 (E)Net Income(Right axis)

Non recurring profit (Profit on sales of stock etc.)3Overview of the New Business Plan
Basic Principle
To achieve and consolidate highg profitability
y and secure sustained
growth potential to generate the added value our shareholders
expect in our business as we work to take a Quantum Leap in ourbusiness development as a Global Company.

Basic Initiatives
Successful Accomplishment of the Rabigh Project
Enhancing Global Management
Enlarging the Value-Added Component of Every Business Sector
Expanding the Company’s businesses in the life sciences and ITrelated materials and Strengthening their Competitiveness
Paving the Way for Further Growth4

Overview of the New Business Plan
Successful Accomplishment of the Rabigh ProjectOn schedule completion and seamless transition tostable operations
Current progress on construction･Progressing smoothly since the ground breaking ceremony last March･On schedule for completion in mid-2008

Seamless transition to stable operations･Train local staff at Chiba plant and Singapore subsidiary

Global marketing structures･Founded Sumitomo Chemical Asia to set up global marketing structure5Overview of the New Business Plan
Enhancing Global Management
Strengthen management systems to support global
business expansion
Develop global management system (Personnel, Accounting,Internal Control, etc.)
Restructure IT system
EnhanceEhbbusinessi
supportt systems
tiin ththe corporatet ddepartmentstt(Legal, Human resources, IT System, IP, Accounting, Purchasing,Logistics, etc.)
Assign corporate staff to major overseas offices

6Overview of the New Business Plan
Enlarging the Value-Added Component of Every
Business Sector (1)Basic Chemicals
Complete and start immediate full operation of third phase
expansion of MMA plant in Singapore
StStrengthenth theth costt competitivenesstiti
off caprolactaml tb ibusinessPetrochemicals & Plastics
Developpagglobal optimumpp
production system
yin Japan,p , Singapore
g pand Saudi Arabia
Create high value added by strengthening polypropylene compoundbusiness,, etc.

Fine Chemicals
Strengthen competitiveness of resorcinol and pharmaceuticalchemicals business7

Overview of the New Business Plan
Enlarging the Value-Added Component of Every
Business Sector (2)IT-relatedIT
related Chemicals
Improve profitability of LCD materials business (sales expansion andrationalization)
De elop ne
Develop
new materials

Agricultural Chemicals
Focus on Growth p
products ((DL-methionine, SUMISOYA , OLYSET
NET, etc.)Pursue further synergies through integration of Sumitomo Chemical
Takeda Agrog Co.,, Ltd. ((sales expansionpand rationalization))

Pharmaceuticals
Focus resources on strategic products and maximize new productsales as early as possible
8Overview of the New Business Plan
Expanding the Company’s businesses in thelife sciences and IT-related materials andStrengthening their CompetitivenessContinue focusing resources in Life Science and IT-Relatedmaterials businesses to accelerate growth
Strengthen competitiveness especially in IT-Relatedmaterials business through cost rationalizations and launchof new products

9Overview of the New Business Plan
Paving the Way for Further Growth ‐ Capex
Operating CF¥530 Bn

Capex¥370 Bn

Free Cash Flow

¥160 Bn

Strategic investment
fund for future growthMax ¥200 Bn

10Overview of the New Business Plan
Paving the Way for Further Growth- R&D activity in new areas
Focus on IT, Energy and Life Science
IT:Polymer OLED
Energy:Lithium-ion battery materials
Life Science:Speed up R&D process of exploratory researchsubjects such as an anti-fibrotic agent.
R&D Spending(Billions of Yen)
140120100
806040200
FY2001

FY2002

FY2003

FY2004

FY2005

FY2006(E)FY2009(P)11Overview of the New Business Plan
Performance Targets(Reference)

FY2009 Targets
gSalesOp Income¥2,400 Bn¥200 Bn

Equity in earnings of affiliates¥65 Bn(From Rabigh Project

Ordinary Income¥250 Bn¥50 Bn)(Assumptions)

Net Income¥150 Bn

Exchange rate

¥110/$Naphtha price¥48,000/ｋｌ

Oil price (WTI)$ 55/bbl

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Overview of the New Business Plan
Breakdown of Ordinary Income Growth(Billions of Yen)

Growth in ordinary income

300¥250Bn

FY2006–FY2009
AAveragegrowthth250

20%200¥150BnSales expansion¥170 Bn

Price variance¥160 Bn

100

Equity in earnings
of affiliates¥47 Bn50

Rationalizations¥80 BnOthers¥37 Bn1500
FY2006(E)FY2009(P)13Overview of the New Business Plan
Solidifying our financial strength(Times)
101.0(%)
40

37%
0.8
30
0.6x0 5x0.5
20

15%

0.4

100.2

0.00
FY2001

FY2002

ROE (Right axis)

FY2003

FY2004D/E Ratio (Left axis)

FY2005

FY2006(E) FY2009(P)Shareholders' Equity Ratio (Right axis)(Note: D/E ratio includes minority interests in equity)14

Overview of the New Business Plan
Dividend Policy

We plan to increase our dividend gradually as
profit grows, taking capital needs into account15

Closing Remarks

Taking a Quantum Leap as a Global Company

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((Reference))

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Sales by Segment(Billions of Yen)

FY2006 FY2009
Sales
FY2001 FY2002 FY2003 FY2004 FY2005(Estimate) (Plan)
Basic Chemicals
173.8 193.2 199.1 225.8 252.4 300.0
320.0
Petrochemicals & Plastics
338.6 371.6 362.4 412.6 486.1 540.0
860.0
Fine Chemicals
99.8 103.5
80.6
84.1
79.0
90.0
110.0
IT-relrelated Chemicals
59 859.8
82 5 123.5
82.5
123 5 174.8
174 8 229.2
229 2 275.0
275 0
470 0
470.0
Agricultural Chemicals
134.9 158.1 167.1 171.6 186.2 195.0
230.0
Pharmaceuticals
174 0 168.4
174.0
168 4 166.6
166 6 170.7
170 7 233.1
233 1 235.0
235 0
265 0
265.0
Others
37.5
33.7
59.2
56.7
90.6 150.0
145.0
Total

1,018.4

1,111.1

1,185.4

1,296.3

1,556.6

1,785.02,400.018

Operating Income by Segment(Billions of Yen)

FY2006 FY2009
Sales
FY2001 FY2002 FY2003 FY2004 FY2005(Estimate) (Plan)
Basic Chemicals
3.05.3
2.6
5.2
10.0
15.0
24.0
Petrochemicals & Plastics
-0.4
4.9
-1.6
15.0
17.9
17.0
25.0
Fine Chemicals
8.0
9.2
8.8
11.5
9.8
14.0
15.0
IT-relrelated Chemicals
-6.3
6.3
0.5
14.3
18.7
21.7
17.0
40.0
Agricultural Chemicals
17.9
16.6
10.7
14.8
16.6
24.0
35.0
Pharmaceuticals
42 0
42.0
32 3
32.3
27 8
27.8
34 4
34.4
38 3
38.3
51 0
51.0
51 0
51.0
Others
4.6
4.8
4.0
5.6
6.5
7.0
10.0
Total
68.8
73.5
66.6 105.2 120.8 145.0
200.0
19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’ss assumptions and beliefs in light of the information currently available to it, andmanagement
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, andcompetitivepp
pricing
gp
pressure on,, Sumitomo Chemical’s p
products in the marketplace;p; Sumitomo
Chemical’s ability to continue to win acceptance for its products in these highly competitivemarkets; and movements of currency exchange rates.

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