Quarterly Financial Results for the 1st Quarter, Ended June 30, 2020
(Japanese GAAP, Consolidated)
August 12, 2020
Name of Listed Company: Kaneka Corporation
Stock Exchange Listings: Tokyo, Nagoya
Code Number:
4118
URL https://www.kaneka.co.jp/en/
Representative: Minoru Tanaka Title: President, Representative Director
Contact Person: Osamu Ishida Title: Executive Officer – Investor & Public Relations Department
Phone: +81-3-5574-8090
Scheduled date for submitting financial statements: August 13, 2020 Scheduled date of dividend distribution: －Note: Figures have been rounded down to the nearest million yen.

1. Consolidated Business Performance for the 1st Quarter, Ended June 30, 2020
(from April 1, 2020 to June 30, 2020)(1) Consolidated business performance (cumulative)(% indicates year-on-year change)
Net sales

Operating income¥ million% ¥ million

income attributable
Ordinary income Net
to owners of parent% ¥ million% ¥ million

Apr. 2020 – Jun. 2020
126,644 (14.9)
2,029 (71.0)
823(85.0)
437
Apr. 2019 – Jun. 2019
148,822 (2.3)
7,004 (30.0)
5,495(39.9)
3,491
Note: Comprehensive income: ¥3,448 million (158.0%) for the three months ended June 30, 2020%

(87.5)(44.5)¥1,336 million (-81.9%) for the three months ended June 30, 2019

Net income
per share
Apr. 2020 – Jun. 2020
Apr. 2019 – Jun. 2019

Fully diluted net
income per share

¥

¥

6.70
53.53

6.69
53.45

Total assets

Net assets(2) Consolidated financial position¥ million

As of June 30, 2020
As of March 31, 2020

Shareholders’equity ratio¥ million%

650,630
653,262354,178
354,09450.9
50.7(Reference) Shareholders’ equity: ¥331,316 million as of June 30, 2020
¥331,483 million as of March 31, 2020

2. Dividends
Annual dividends
1st Quarter¥

2nd Quarter¥

Apr. 2019 – Mar. 2020－

3rd Quarter
¥

50.00

Year-end¥－

Annual¥50.00

100.00

Apr. 2020 – Mar. 2021－
Apr. 2020 – Mar. 2021
50.00
50.00
－
(Forecasts)
Note: Changes in dividend forecast during the quarter under review: Yes

100.003. Forecast for Consolidated Business Performance for the Year Ending March 31, 2021
(from April 1, 2020 to March 31, 2021)(Percentage figures represent changes from the corresponding periods of the previous fiscal year)
Net income
Operating
Ordinary
Net income
attributable to
Net sales
incomeincomeper shareowners of parent¥ million

Full year% ¥ million

560,000 (6.9)% ¥ million% ¥ million%¥

21,000 (19.3) 16,400 (18.7) 10,000 (28.6)

153.31
Note: Revisions to consolidated business performance forecasts during the quarter under review : Yes

4. Other(1) Changes in principal subsidiaries during the term: No(2) Application of simplified methods of accounting and specific accounting methods: No(3) Changes in accounting principles, changes in estimates, or restatements
1. Changes owing to revisions in accounting standards: No
2. Changes other than 1. above: No
3. Changes in accounting estimates: No
4. Restatements: No(4) Number of shares outstanding (common stock)
1. Number of shares issued at the end of the period(including treasury stock):
2. Number of shares of treasury stock at the end of
the period:
3. Average number of shares during the period (calculated
cumulatively from the beginning of the fiscal year)

June 30, 2020

68,000,000

March 31, 2020

68,000,000

March 31, 2020

2,774,049

June 30, 201965,221,484

sharesJune 30, 2020

2,774,187

June 30, 2020

65,225,922

sharessharessharessharesshares(These financial statements are exempt from audit procedures)(Explanations or other items pertaining to appropriate use of business performance forecasts)
The business performance 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 substantiallyfrom these forecasts. They do not constitute a guarantee that the Company will achieve these
forecasts or other forward-looking statements. For cautionary items used in business performance
forecasts, please refer to the section entitled “(3) Consolidated Business Forecasts” under “1.
Quarterly Consolidated Business Performance” on page 4.

Quarterly Financial Results for the 1st Quarter, Ended June 30, 2020, Kaneka Corporation (4118)

Supplementary Materials
Contents
1. Quarterly Consolidated Business Performance ------------------------------------------------------ P. 2
(1) Consolidated Business Performance -------------------------------------------------------------- P. 2
(2) Consolidated Financial Position ---------------------------------------------------------------------- P. 4
(3) Consolidated Business Forecasts ------------------------------------------------------------------ P. 4
2. Quarterly Consolidated Financial Statements ------------------------------------------------------- P. 7
(1) Quarterly Consolidated Balance Sheets ---------------------------------------------------------- P. 7(2) Quarterly Consolidated Statements of Income and Comprehensive Income ------------ P. 9(3) Notes to the Consolidated Financial Statements ----------------------------------------------- P.11
(Notes on the Premise of a Going Concern) ----------------------------------------------------- P.11
(Notes in the Event of Significant Changes in the Amount of Shareholders’ Equity) --- P.11
(Segment Information) -------------------------------------------------------------------------------- P.11

－1－

Quarterly Financial Results for the 1st Quarter, Ended June 30, 2020, Kaneka Corporation (4118)

1. Quarterly Consolidated Business Performance(1) Consolidated Business Performance
In topics for the quarter under review (April – June 2020), the most prominent is the COVID-19
pandemic. The COVID-19 threat has spread around the world, causing an unprecedented situationin which economic activity across all industries has been hit reversely, almost to the point of stopping.
Unfathomable shocks continue to rock the global economy.
Crude oil briefly dipped to negative $37.63. U.S. GDP growth dropped to negative 32.9% year on
year, the steepest decline on record. GDP in Japan was also recorded negative 27%, the largest fallsince World War II. The scars of an extremely deep, serious depression are spreading across theglobe.
In this business environment, the Kaneka Group’s business performance for the first quarter (April 1,2020 to June 30, 2020) was as follows. Consolidated net sales amounted to ¥126,644 million (down
14.9% year on year), operating income was ¥2,029 million (down 71.0% year on year). Ordinary
income was ¥823 million (down 85.0% year on year). Net income attributable to owners of parent
was ¥437 million (down 87.5% year on year).
Net sales and operating income by segments for the first quarter (April 1, 2020 to June 30, 2020)(Millions of yen)
Net sales

Operating income

FY2019FY20201Q(Apr.-Jun.)

1Q(Apr.-Jun.)

FY2019FY20201Q(Apr.-Jun.)

1Q(Apr.-Jun.)

Material SU

60,17648,894△11,281(△18.7%)

5,590

2,855

△2,734(△48.9%)Quality of Life SU

38,46829,738△8,729(△22.7%)

3,728

1,236

△2,492(△66.8%)

Health Care SU

10,949

11,698748(6.8%)

1,905

2,298

393
(20.6%)

Nutrition SU

38,90835,938△2,969(△7.6%)

1,200

827

△373
(△31.1%)

320

373

53
(16.8%)

180

248

67
(37.7%)

Adjustment

-

-

-

△5,600△5,436

163
(-)

Total

148,822

126,644△22,178(△14.9%)

7,004

2,029

△4,975(△71.0%)

OthersDifference

Difference

The Company’s business results for the first quarter, ended June 30, 2020 have been analyzed fromthe perspective of its business portfolio. The notable features of the results are as follows.
The first feature is that the leading-edge business group (E & I Technology ・ PV & Energy
management・Medical・Pharma・Supplemental Nutrition・Agricultural production support ) which
has been the priority for investment of R&B resources, has continued to record year on year growthin sales and profits, despite the severe downturn of the global economy due to the COVID-19 crisis.
The second feature is that core business group belonging to the Material and Quality of Life Solutions
Units (Vinyls and Chlor-Alkali・Performance Polymers (MOD)・Performance Polymers (MS)・
Foam & Residential Techs・Performance Fibers ) experienced a sharp decrease in demand whichcaused a drop in production as a result of the COVID-19 pandemic. This is the largest factor behindthe significant decrease in sales and profits in the first quarter.
According to recent announcements by the American Chemistry Council and business sentiment
surveys of the global manufacturing industry, the global chemical sector has seen a contraction in
production during the COVID-19 crisis in the same way as other manufacturing industries, but the
production decrease is reported to have bottomed out in March, with a contraction in April and May ,－2－

Quarterly Financial Results for the 1st Quarter, Ended June 30, 2020, Kaneka Corporation (4118)

before production began to increase in June.
Incidentally, the Company’s core business group belonging to the Material and Quality of Life
Solutions Units, which had seen production drop, began to improve and increase production from
June after hitting bottom in May.
While production is not likely to return to pre-COVID-19 levels right away, production in the corebusiness group is expected to improve at a gradual pace in the third and fourth quarters, withearnings increasing through the year thanks to production increases.
Furthermore, the Company has taken the paradigm change during the COVID-19 crisis as anopportunity to implement measures to boost productivity by strengthening back office functions.
These include applying “select and concentrate” of R&B initiatives and introducing a new work culture,
exemplified by remote working. (Cost cuts: ¥500 million in the first quarter)

Operating performance by business segment was as follows:①Material Solutions Unit
➢ PVC resins and caustic soda: Sales and profits decreased due to a lockdown in India.
➢ MOD and MS: Sales and profits decreased due to a drop in demand in Europe and the U.S.
➢ Epoxy masterbatch: Application development continued and facilities for boosting capacity
operated as planned.
➢ Kaneka Biodegradable Polymer PHBH: Joint development continued steadily with a large numberof brand holders in Japan and overseas. The conclusive works for productivity increases and cost
reductions are proceeding toward a decision on constructing a plant with a 20,000 t production
capacity.
②Quality of Life Solutions Unit
➢ Performance Fibers: Demand for hair accessories fell sharply due to lockdowns in Africa. Demandfor pile and flame retardance materials is also sluggish due to the COVID-19 crisis.
The newly established Product Development Center in Ghana will be used to achieve an earlyrecovery in sales.
➢ Foam & Residential Techs: Expandable polystyrene resin and extruded polystyrene foam boards
slumped due to a decrease in fishing coolers and construction and civil engineering activity.
Polyolefin foam demand was heavily impacted by the global decrease in automobile production.
➢ PV & Energy management: High-efficiency photovoltaic module products for residential use saw
firm sales.
Proceeded with joint development of wall surface and see-through photovoltaic modules forbuildings and automobiles.
➢ E & I Technology: Polyimide films and graphite sheets saw a gradual recovery in the smartphonemarket. Sales is strong. The Group bolstered development of original products for OLEDs and
5G applications.
③Health Care Solutions Unit
➢ Medical: Sales of catheters are increasing after a temporary halt due to the COVID-19 crisis.
Embolism coils performed well, and the Group plans to sell them in the U.S.
The Group decided to triple the current production capacity at its Vietnam plant.
The Group is proactively advancing technology and capital alliances in new therapeutic fields.
The Group started breast reconstruction treatment that uses culture adipose derived from stem－3－

Quarterly Financial Results for the 1st Quarter, Ended June 30, 2020, Kaneka Corporation (4118)➢➢

cells.
Pharma: Capacity expansion at Osaka Synthetic Chemical Laboratories, Inc. and Kaneka
Eurogentec S.A. contributed to sales. The Group started supplying active pharmaceuticalingredients for Avigan® Tablet and reagents, both for COVID-19.
The Group is engaged in contracted production of vaccine intermediates for AnGes, Inc. using
leading-edge advanced technology such as plasmid DNA.
The Group started an infection research team to focus on the infectious diseases domain.

④Nutrition Solutions Unit
➢ Foods & Agris: Demand for bread and confectionery slumped due to a downturn in restaurant dining
and inbound tourism. An increase in people eating meals at home drove favorable performance at
Kaneka Sun Spice Corporation. Dairy product sales were firm, and the Group commenced organic
dairy farming. The Group established a dairy farming agricultural production company in Betsukai,
Hokkaido Prefecture.
➢ Supplemental Nutrition: Reduced form of coenzyme Q10 performed strongly in the U.S. due toincreased awareness of preventative care.
Sales of probiotics were favorable in Europe and the Group started sales in the U.S.
The Group will strengthen dissemination of scientific information and develop its brand strategy
through diverse supplements.

(2) Consolidated Financial Position
Total assets were ¥650,630 million as of June 30, 2020, down ¥2,631 million compared with March
31, 2020, due to a decrease in notes and accounts receivable-trade. Liabilities totaled ¥296,452
million, down ¥2,714 million due to a decrease in notes and accounts payable-trade. Net assets were¥354,178 million, up ¥83 million due to an increase in valuation difference on available-for-salesecurities.

(3) Consolidated Business Forecasts①World Economic Outlook

The impact of COVID-19 is expected to have peaked during the first quarter, with businessperformance to begin gradually improving from the second quarter, making a full recovery from thesecond half of the fiscal year ending March 31, 2022.
－4－

Quarterly Financial Results for the 1st Quarter, Ended June 30, 2020, Kaneka Corporation (4118)②Forecast for Consolidated Business Performance for the Fiscal Year Ending March 31, 2021
Forecast for Consolidated Business Performance for the Fiscal Year Ending March 31, 2021
(April 1, 2020 to March 31, 2021)
FY2019 result

FY2020 forecast

Difference

Net sales（Millions of yen）

601,514560,000△41,514

Operating income（Millions of yen）

26,01421,000△5,014

Ordinary income（Millions of yen）

20,166

16,400△3,766

Net income attributable toowners of parent（Millions of yen）

14,003

10,000△4,003

Net income per share(Yen）

214.70153.31△61.39The forecasts are based on exchange rates of ¥108 to the U.S. dollar, ¥120 to the euro and adomestic naphtha price of ¥28,000 per kiloliter.
※The above performance forecasts for the Kaneka Group are based on information available atthe time of the announcement. Readers should be aware that actual results might varysignificantly from these forecasts due to various factors.

Forecast for Consolidated Business Performance by segments for the Fiscal Year Ending March 31, 2021
(April 1, 2020 to March 31, 2021)（Billions of yen）
Net sales

forecast

Difference

FY2019FY2020resultforecast

Difference

241.8

215.5

△26.3

20.6

15.5

△5.1

Quality of Life SU

154.8

136.6

△18.2

14.2

9.4

△4.8

Health Care SU

46.4

52.5

6.1

8.9

11.5

2.6

Nutrition SU

157.4

154.4

△3.0

5.6

5.3

△0.3

1.1

1.0

△0.1

0.5

0.6

0.1

-

-

-

△23.9

△21.3

2.6

601.5

560.0

△41.5

26.0

21.0

△5.0

Adjustment
Total

➢

FY2020resultMaterial SU

Others➢

FY2019Operating income

The core business group (Vinyls and Chlor-Alkali ・ MOD・ MS・ Foam & Residential Techs ・Performance Fibers) stopped production in the COVID-19 crisis, but production is now expected to
improve at gradual pace in the third and fourth quarters, with revitalized production to drive an
improvement in earnings for the year.
The leading-edge business group (E & I Technology・PV & Energy management・Medical・
Pharma・Supplemental Nutrition・Agricultural production support), a driving force for growth isexpected to continue a strong earnings growth trend.

－5－Quarterly Financial Results for the 1st Quarter, Ended June 30, 2020, Kaneka Corporation (4118)➢

Furthermore, the Company will engage in high productivity business management, such as
strengthening back office functions. These include applying “select and concentrate” of R&B
initiatives and introducing a new work culture, exemplified by remote working. (Cost cuts: ¥3,000
million)③Dividends forecasts for the Fiscal Year Ending March 31, 2021
➢ Based on the above performance forecasts for the fiscal year ending March 31, 2021 and a basic
policy of continuing to make stable profit returns, the Company has maintained its annual dividend of¥100 (interim ¥50, year-end ¥50).
④Growth toward the fiscal year ending March 31, 2023
➢ From the second half of the fiscal year ending March 31, 2022, the Company expects to see
production activities surpass to pre-COVID-19 levels.
➢ Amid a rapid paradigm shift in society sparked by the COVID-19 crisis, the Company will bolster thecompetitiveness of the leading-edge business group (E & I Technology・Medical・Pharma・PV &Energy management・Supplemental Nutrition, etc.). The Company will invest resources intensively
in its focal new large-scale business group, such as Kaneka Biodegradable Polymer PHBH, andaccelerate reaping the fruits of its R&B initiatives.
➢ The Company will hone the unique business characteristics of its core business group (Vinyls andChlor-Alkali・MOD・MS・Foam & Residential Techs・Performance Fibers・Foods & Agris), andbuild them into a strong platform supporting management as a business base.
➢ New large-scale business
Kaneka Biodegradable Polymer PHBH:
This is the large-scale business opportunity of the group in its history. Amid a multitude of new
business groups, this project will receive a prioritized investment of management resources.
The Company will expedite the development of technology for uniquely combining its two technology
sources (yeast fermentation technology and high molecule polymer technology) to realize large scalecommercial operations at an early stage.
➢ Expedite management digital transformation
The Company will convert to a robust corporate structure by making efficient investments ofmanagement resources.

－6－

0123453679 2 26516434540123453 51 52 523324  !
"#$%&'()*(+,$-./0.+12')*2$31/'/41'+$5)')*6*/)0789$%&'()*(+,$-./0.+12')*2$:'+'/4*$5;**)09=>?53@5 5<23

A54
1335 4254
22 54E452 2 1 4355F2G65H4325I34H453@F54@5 45 1345
<532 52  5J
K335
2L@2453262 165M453A66L2 531G4162 1 4
?4261335 4254
E 1335 4254
N3534762 42 5O1@5 4
P16 J2 431413554<2 5375O1@5 42 F5 6554
M45354?4263534762 42 5O1@5 4
Q42 JG65254
RL66
M453?42642 JG65254
QF54@5 42 453254
QF54@5 45 1345
M453
A66L2 531G4162 1 4
?426F54@5 42 453254
?426 1335 4254
?426254

STUTS

<66 75 !

9=40123453?53@5 5
1 5 B
>
DDCB
BB
B
BC!
DC

C D C>

DD
>B

 D
!
>>>B
D >B
DCD

C>
> D
BCDC

D>B 

>
>B>
> >

 C
C>
!
BDDD
DCD

CBCB>
!
B
CD
DCD

0123453679 2 26516434540123453 51 52 523324  !

9#$%53&5 5"23

'2(645
1335 462(645)452 2 1 4272(65*4325.34*453&62 272(65/ &54205272(65132
3453%4261335 462(645) 1335 462(645
4 272(65' 5*453&62 272(65132
)5455(5 5462(6473453%426 1335 462(645%42662(645)54254
.235653657147
2426424261361
542 5523 5
%3521374 %426235653657147
8 1&16245453&355 25 &5926124 535 5 22262(65*3*26551345
:5533552 365 555
9355 1335 7432 624 2;14&5 4
5&52135&5 455(5 5462 %4262 1&16245453&355 25 &5.1(34 3544235
)  4366545354%42654254
%42662(6452 54254<=>=<

"66 75 !

9#40123453%53&5 5
1 5

+,$,+
-+$
,$$-,
$- ,+,,$+
$
+
 
,-
+,$$-+,

+$-,++
$-,

$- -,
, !
-$$-
++$, !
$

!
+$,!
+$,-!
 !
,$-,--,+
+!
+!
+-,!
++,+-,-

0123453679 2 26516434540123453 51 52 523324  !
"#$%&'()*+),-%./01/,23(*+3%4*(*+5+0*1%/6%708/5+%(03%./59)+:+012;+%708/5+
012345367 6245<4245=5 4> =5C542654265
F334<566HH5 53262 2= 4324I55J5 5K5324H =5C L5324H =5
MI5  =5
N147523 H26245
K453
O426 L5324H =5C L5324H5J5 5>453545J5 5P 35435=5 4 1335 4254
935H 5J2 H565
K453
O426 L5324H5J5 5
K3 237 =5
J4323 23765
Q245 43454 1344O4265J4323 23765> =5R535 =542J5
> =542J5L1335 4> =542J5L55335
O426 =542J5
C54 =5
C54 =52443R142R654 L 4366H45354
C54 =52443R142R654S 53235 4

?66 75 !

9@A401234539@40123453
93=B36A
41 5A

93=B36
41 5

E

E
AE

E
D
DD


E

GEG

E
GAG

E
A
A
E
 A


D
D
G
ED
 E!
G
EE

A

AG
AG
EE
G
AG!

DG

E

 
EAEA
E
E

TUVUT

DDADA
AG
A
A

0123453679 2 26516434540123453 51 52 523324  !
012345367 6245"4245#5 4#355 $5% #5

&66 75 !

9'(401234539'40123453*54 #5.453#355 $5 #5/26124 535 5 2$26206513126551345
25533532 365 535
9353 1335 7432 624 2414#5 4
5#52135#5 45505 5462 54425"235453#355 $5 #52 2452 1 4531 356147#54
7426453#355 $5 #5
#355 $5 #5
#355 $5 #5244301420654
#355 $5 #52443014206548 53235 4
#355 $5 #5244301420654  4366345354

9:;<:993#)36(41 5(++

93#)36
41 5

,-

+ -!
+!
!



!

-

!
-!
,





+
,,

+


Quarterly Financial Results for the 1st Quarter, Ended June 30, 2020, Kaneka Corporation (4118)(3) Notes to the Consolidated Financial Statements(Notes on the Premise of a Going Concern)
Not applicable(Notes in the Event of Significant Changes in the Amount of Shareholders’ Equity)
Not applicable(Segment Information)
Ⅰ Term from April 1, 2019 to June 30, 20191) Sales and Income (Loss) by Segments(Millions of yen)Segment information
Material Quality of Life Health Care
Solutions
Solutions
Solutions
Unit
Unit
Unit

Nutrition
Solutions
Unit

Total

Others(Note 1)

Total

Figures in
consolidated financial
Adjustment
statements(Note 2)

Sales
Customers

60,176

38,468

10,94938,908148,502320

148,822―

148,822

Intersegment

252

3

―

5

260

285

546

(546)

―

Total

60,42938,471

10,94938,913

148,763606

149,369(546)

148,822

Segment profit

5,590

3,728

1,905

1,200

12,424180

12,605(5,600)7,004

Notes: 1. “Others” is a business segment that is not included in the reporting segments and includes property
insurance and life insurance business.
2. Segment profit is reconciled with operating income in the quarterly consolidated financial statements.
2) Reconciliation between Segment Totals and Amounts on Quarterly Consolidated Financial Statements(Adjustments)(Millions of yen)
IncomeAmountSegment total

12,424

Segment profit of Others

180

Elimination of intersegment transactions

4

Companywide expenses (Note)(5,623)

Other adjustments

18

Operating income in the quarterly consolidated
statements of income

7,004

Note: Companywide expenses primarily are expenses for basic R&D that are not allocable to any
reporting segment.

－11－Quarterly Financial Results for the 1st Quarter, Ended June 30, 2020, Kaneka Corporation (4118)

Ⅱ Term from April 1, 2020 to June 30, 2020
1) Sales and Income (Loss) by Segments(Millions of yen)Segment information
Material
Solutions
Unit

Quality of Life Health Care
Solutions
Solutions
Unit
Unit

Nutrition
Solutions
Unit

Total

Others(Note 1)

Total

Adjustment

Figures in
consolidated financial
statements(Note 2)

Sales
Customers

48,89429,738

11,69835,938126,270373

126,644―

126,644

Intersegment

213

6

―

7

227

271

499

(499)

―

Total

49,10829,745

11,69835,946

126,498

645

127,144(499)

126,644

Segment profit

2,855

1,236

2,298

827

7,217

248

7,466

(5,436)2,029

Notes: 1. “Others” is a business segment that is not included in the reporting segments and includes property
insurance and life insurance business.
2. Segment profit is reconciled with operating income in the quarterly consolidated financial statements.
2) Reconciliation between Segment Totals and Amounts on Quarterly Consolidated Financial Statements(Adjustments)(Millions of yen)
IncomeAmountSegment total

7,217

Segment profit of Others

248

Elimination of intersegment transactions

5

Companywide expenses (Note)(5,440)

Other adjustments(1)

Operating income in the quarterly consolidated
statements of income

2,029

Note: Companywide expenses primarily are expenses for basic R&D that are not allocable to any
reporting segment.

－12－