Quarterly Financial Summary
2nd Quarter, Ended September 30, 2020

November 10, 2020

Kaneka Corporation

ContentsSummary

１Net Sales , Operating Income by Segment

２Business Performance by Segment

３

Consolidated Balance Sheet

７

Consolidated Cash Flow８

Performance Forecasts

９

The operating results forecasts and certain other statements contained in this document are forward-looking statements, which are rationally determinedbased on information currently available to the company. For a variety of reasons, actual performance may differ substantially from these projections. They
do not constitute a guarantee that the Company will achieve these forecasts or other forward-looking statements.

Summary(Billions of yen)

FY2019
1Q2Q

148.8

151.0

299.9

Operating income

7.0

5.8

12.8

Ordinary income

5.5

4.2

9.7

Net income attributable to owners of parent

3.5

2.6

6.0

Net sales

Differences between

FY2020
1st half

1Q

2Q

126.6
2.0
0.8
0.4

140.1
5.0
3.2
2.0

the 1st half
1st half

266.7
7.0
4.0
2.5

Amount%△ 33.1△11.1%△ 5.8△45.1%△ 5.7△58.5%△ 3.6△59.0%◼ The Kaneka Group’s business performance for the first six months (April 1, 2020 to September 30, 2020) of the fiscal year ending March 31,2021 has seen steady improvement in the second quarter (July-September 2020; “2Q”) though it was hit by the COVID-19 pandemic in thefirst quarter (April-June 2020; “1Q”). The business performance is expected to rapidly expand in the second half. There has been no change tothe consolidated business forecasts announced on August 12, 2020.
◼ The global economy rebounded from the serious downturn it experienced in 1Q and showed increasingly strong signs of recovery in variousindustries in 2Q, primarily in China and the U.S. From October onward, the pace of recovery is expected to increase overall, despite somelingering uncertainty about factors such as the impact of a second wave of COVID-19 in Europe and the U.S.
◼ The Kaneka Group delivered steady growth in earnings in the leading-edge business group (E & I, PV, Medical, Pharma, Supplement,Agricultural production support) which has benefited from an expanding range of business opportunities during the COVID-19 crisis.
◼ The core business group (Vinyl, MOD, MS, Foam, Fiber, Foods) which had been primarily responsible for the downturn in business results in
1Q, has seen steady improvement in stagnant production levels. The Kaneka Group is expected to achieve further improvement in businessperformance in the second half of the fiscal year.
◼ The Kaneka Group will implement rigorous cost rationalization, realize “Smart Work,” a Company-wide initiative to maximize productivity andaccelerate the transformation of the business portfolio.
ⓒ2020 Kaneka Group All rights reserved.

1Net Sales, Operating Income by Segment(Billions of yen)

Net sales
FY20191Q

Operating incomeDifferences between

FY20202Q

1st half

1Q

FY2019the 1st half

2QAmount

1st half%

1Q

2Q

Differences between

FY2020
1st half

1Q

2Q

the 1st half

1st half

Amount%Material Solutions Unit

60.2

60.2

120.4

48.9

55.6

104.5

△ 15.9△13.2%

5.6

4.6

10.2

2.9

4.5

7.4

△ 2.8

△27.7%

Quality of Life Solutions Unit

38.5

40.4

78.9

29.7

33.9

63.7

△ 15.2△19.3%

3.7

3.9

7.6

1.2

2.7

3.9

△ 3.7

△48.2%

Health Care Solutions Unit

10.9

11.0

22.0

11.7

12.8

24.52.5

11.4%

1.9

2.1

4.0

2.3

2.7

5.0

0.9

22.7%

Nutrition Solutions Unit

38.9

39.1

78.0

35.9

37.6

73.5

△ 4.5

△5.8%

1.2

1.2

2.4

0.8

0.6

1.4

△ 0.9

△39.3%

Others

0.3

0.2

0.6

0.4

0.2

0.6

0.1

9.6%

0.2

0.1

0.3

0.2

0.1

0.3

0.1

18.9%

--------

△ 5.6

△ 6.1

△ 11.7

△ 5.4

△ 5.6

△ 11.0

0.7

-

148.8

151.0

299.9

126.6

140.1

266.7

△ 33.1△11.1%

7.0

5.8

12.8

2.0

5.0

7.0

△ 5.8△45.1%

Adjustment
Total◼ The Kaneka Group’s net sales and operating income has improving sharply in 2Q, especially from the latter half of 2Q.
◼ In 2Q, Material solutions unit returned to the previous year’s level and Health Care solutions unit expanded net sales and operating
income during the COVID-19 crisis.
◼ From the second half, the core business group will steadily improve and see a clear path for the core business group to return to a
trajectory for additional growth. The leading-edge business group such as Pharma, E & I Technology and so on will see stronger
momentum than expectation.
◼ The Company is working to improve productivity and create new business value by applying a “select and concentrate” strategy toResearch & Business (R&B) initiatives and by promoting digital transformation (DX).

ⓒ2020 Kaneka Group All rights reserved.

2

Business Performance by Segment¥ 104.5 billion 【year-on-year △13.2％】

Material

Net Sales

Solutions Unit

Operating Income¥ 7.4 billion 【year-on-year △27.7％】

Composition
ratio of sales

Vinyls and Chlor-Alkali

Net Sales

Operating Income(Billions of yen)(Billions of yen)•••

Exports of general PVC resins increased sharply to India and China and shipments of chlorinated
PVC also began.
Emulsion PVC for hygiene gloves performed well, with the Malaysia plant operating at full capacity.
In 2Q, profits increased year on year.

Performance Polymers（MOD）••

Demand recovered in Europe, the U.S. and Asia as economic activity restarted.
From the latter half of 2Q, sales volume has returned to the previous year’s level.
Performance Polymers（MS）

Operating income
breakdown into 1Q and 2Q(Billions of yen)(Billions of yen)••

Demand recovered in Europe and the U.S., in addition to demand for construction applications inChina.
In 2Q, performance returned to the previous year’s level.
New Business•ⓒ2020 Kaneka Group All rights reserved.

Kaneka Biodegradable Polymer PHBH: Conclusive work continue to proceed toward a decision onconstructing a plant with a 20,000-t production capacity.

3Business Performance by Segment¥ 63.7 billion 【year-on-year △19.3％】

Quality of LifeNet Sales

Solutions Unit

Operating Income¥ 3.9 billion 【year-on-year △48.2％】

Composition
ratio of sales

Performance Fibers

Operating Income

Net Sales•(Billions of yen)(Billions of yen)

•Demand for hair accessories and flame retardance materials for Africa and the U.S. slumped in1Q. Demand for hair accessories in Africa have been recovering since July.
There have been delays in the recovery of demand for flame retardance materials and pile forapparel applications.
Foam & Residential Techs••
Operating income
breakdown into 1Q and 2Q(Billions of yen)(Billions of yen)

Spreads were maintained for expandable polystyrene resin and extruded polystyrene foamboards despite sluggish domestic demands.
Polyolefin foam saw products for automobiles follow a recovery trend.
PV & Energy management•Sales volume of high-efficiency photovoltaic module products for homes was firm due to anincrease in the adoption rate.
E & I Technology••ⓒ2020 Kaneka Group All rights reserved.

PIXEO products recorded an all-time high level of shipments because demand for smartphones
increased and materials for tablets and laptop PCs were favorable.
Sales increased for 5G products. New product development is also progressing steadily.

4

Business Performance by Segment¥ 24.5 billion 【year-on-year 11.4％】

Health CareNet SalesSolutions Unit

Operating Income¥ 5.0 billion 【year-on-year 22.7％】

Composition
ratio of sales

MedicalNet Sales

Operating Income(Billions of yen)(Billions of yen)•••

The domestic and overseas markets both expanded.
Coils for embolization of brain aneurysms performed well. Sales of this new product began in theU.S. in September and contributed to earnings growth.
Sales of a new blood purification system for treatment of arteriosclerosis obliterans (ASO) is
scheduled for 2021.

PharmaOperating income
breakdown into 1Q and 2Q(Billions of yen)(Billions of yen)•••ⓒ2020 Kaneka Group All rights reserved.

Earnings rose sharply year on year, due to growth in earnings driven by factors such as the startof the supply of active pharmaceutical ingredients for Avigan® Tablet and Kaneka Eurogentec
S.A.’s reagents for PCR tests.
Kaneka Eurogentec S.A. has received a growing number of inquiries from major global
pharmaceutical companies, beginning with its contracted production of vaccine intermediates forAnGes, Inc.
New facilities for enhanced biologics capacity started operation in October. Kaneka Eurogentec
S.A. is considering implementing the next phase of capacity enhancement at an early stage.

5

Business Performance by Segment¥ 73.5billion 【year-on-year △5.8％】

Nutrition

Net Sales

Solutions Unit

Operating Income¥ 1.4 billion 【year-on-year △39.3％】

Composition
ratio of sales

Supplemental Nutrition

Net Sales

Operating Income(Billions of yen)(Billions of yen)••

Strong sales were posted for the reduced form of coenzyme Q10 (Kaneka QH ) and Kaneka
Coenzyme Q10 due to heightened awareness of the importance of increasing immunity in the U.S.
The Group plans to start sales of lactic acid bacteria in Japan from autumn 2020. These lactic acidbacteria have proven effective in improving the intestinal environment.

Foods & Agris

Operating income
breakdown into 1Q and 2Q(Billions of yen)••(Billions of yen)•ⓒ2020 Kaneka Group All rights reserved.

Sales of spice products were firm.
Although demand for bread and confectionery is on a recovery track, the pace of recovery has
been slow due to the sizable impact of sluggish inbound tourism demand.
The Group opened an online shop for Kaneka Group products. Progress is being made on
measures to add value to businesses, through such means as expanding e-commerce sales.

6Consolidated Balance Sheet(Billions of yen)March 31,
2020
AssetsCurrent Assets
Noncurrent Asssets
Total assets
Liabilities
Interest bearing debt
OthersTotal liabilities
Net assets
Shareholders' equity
OthersTotal net assets
Total liabilities and net assets
Shareholders' equity ratio
Net assets per share

September 30,
2020

Difference

306.9
346.4
653.3

292.0
352.3
644.3

△ 14.9
5.9
△ 9.0

130.8
168.3
299.2

132.1
155.0
287.1

1.2
△ 13.3△ 12.1

331.5
22.6
354.1
653.3

334.3
22.9
357.2
644.3

2.8
0.3
3.1
△ 9.050.7%

51.9%¥5,082.08¥5,124.40* Shareholders' equity ： Net assets deducting Noncontrolling interests and Subscription rights to shares◼ Total assets decreased due to a decrease in notes and accounts receivable-trade.
◼ Liabilities decreased due to a decrease in notes and accounts payable-trade.
◼ Net assets increased due to an increase in valuation difference on available-for-sale securities.
ⓒ2020 Kaneka Group All rights reserved.

7

Consolidated Cash Flow
(Billions of yen)

FY2019FY2020(Apr.-Sep.)(Apr.-Sep.)

Cash flows from operating activities

16.2

Cash flows from investing activities△ 20.9

Free cash flow

△ 4.8

28.2
△ 22.8
5.4

Cash flows from financing activities

△ 3.3

△ 3.0

Net increase (decrease) in cash and cash equivalents (*)

△ 8.2

2.3

Cash and cash equivalents at end of period

31.8

39.9

* Including Effect of exchange rate change on cash and cash equivalents and Increase (decrease) in cash andcash equivalents resulting from change of scope of consolidation◼ Net cash provided by operating activities was ¥28.2 billion, mainly due to income before income taxes and depreciation and amortization.
◼ Net cash used in investing activities amounted to ¥22.8 billion, mainly owing to the purchase of property, plant and equipment.

◼ Net cash used in financing activities came to ¥3.0 billion, mainly owing to cash dividends paid.

ⓒ2020 Kaneka Group All rights reserved.

8Performance Forecasts◼ The core business group, which was heavily impacted by the COVID-19 crisis in 1Q, has seen a faster pace of recovery in demand
every month since 2Q. In the second half of the fiscal year, the core business group is expected to achieve full-scale earnings growth.
◼ The leading-edge business group is expected to steadily expand business in the second half.

◼ The Company anticipates that business results from October onward will see stronger momentum, driven by a shift from improvement
to a stage of resurgent growth.
◼ The Group will continue applying a “select and concentrate” strategy to R&B initiatives, as it intensively allocate resources to speedingup the adoption of its businesses by society and scaling up businesses.
◼ People are putting a higher value on health and security amid an unprecedented paradigm shift due to the COVID-19 crisis. The Groupwill drive dramatic growth in businesses involving healthcare and electronics, where it has intensively allocated resources to date.
◼ The Group will take steps to establish a robust corporate structure, beginning with cost rationalization measures. At the same time, theGroup will intensively allocate management resources to the leading-edge business group and the new business. In the process, theGroup will seek to accelerate the transformation of its portfolio.
◼ There has been no change to the consolidated business forecasts announced on August 12, 2020.
The operating results forecasts and certain other statements contained in this document are forward-looking statements, which are rationally determined based on information
currently available to the company. For a variety of reasons, actual performance may differ substantially from these projections. They do not constitute a guarantee that theCompany will achieve these forecasts or other forward-looking statements.
ⓒ2020 Kaneka Group All rights reserved.

9KANEKA CORPORATION
https://www.kaneka.co.jp/en/