For Immediate Release

November 8, 2007

Sumitomo Chemical Reports
Interim Consolidated Financial Results(1)Overview of Interim Results
The Japanese economy continued its moderate growth because of an increase in capital expenditure thanks
to improving corporate profits, as well as solid exports supported by Asian economic growth, particularly inChina. Meanwhile, factors such as rising crude oil prices and a sense of instability in international financial
markets may be causes for concern about their impact on corporate performance and consumer spending.
Although shipments of products such as IT-related products showed signs of a recovery, Sumitomo
Chemical’s overall business faced a challenging operating environment, with prices for naphtha, benzene
and other feedstocks rising sharply and competition in each business area intensifying.
Under these circumstances, the Sumitomo Chemical Group worked to improve business performance bypromoting price increases, cutting costs by streamlining and expanding sales through marketing drives. As
a result, consolidated interim sales increased by ¥77.3 billion over the same period the previous year to¥931.9 billion, while factors such as a steep rise in the price of feedstocks resulted in year-on-year declines inprofits. Operating income was ¥48.4 billion, ordinary income was ¥57.7 billion, and interim net income was¥26.4 billion.
Non-consolidated interim sales were ¥444.9 billion and net income was ¥18.7 billion.
Sumitomo Chemical decided to pay an interim dividend of ¥6 per share.
Consolidated interim financial results by business segment are as follows.
Basic Chemicals
Sales of raw materials for synthetic textile fibers such as caprolactam and acrylonitrile as well as methyl
methacrylate and other products increased because of a rise in product prices on the back of solid demand
and a rise in feedstock costs. As a result, the segment’s sales increased by ¥10.3 billion over the same period
last year to ¥159.8 billion. Operating income increased by ¥2.0 billion year on year to ¥7.9 billion, benefitingfrom rising Asian market prices for methyl methacrylate.
Petrochemicals & Plastics
Sales of synthetic resins increased thanks to price rises in Asia and price increases in Japan that reflected thehigh cost of feedstocks. Sales of petrochemical products such as styrene monomer increased on the back of aprice rise due to rising prices for naphtha and other feedstocks. As a result, the segment’s sales increased by¥30.2 billion over the same period the previous year to ¥290.6 billion, while operating income decreased by ¥5.4
billion year on year to ¥2.0 billion because of rising feedstock costs as well as the economic impact of alarge-scale maintenance shutdown of a manufacturing plant in Japan occurring once every four years.
Fine Chemicals
Sales of pharmaceutical intermediates increased thanks to active marketing drives. As a result, the segment’ssales increased by ¥0.4 billion over the same period last year to ¥47.5 billion. Operating income declined year
on year by ¥1.1 billion to ¥6.1 billion from the impact of high feedstock costs.
IT-related Chemicals
Sales of polarizing film, a liquid crystal display material, increased thanks to factors such as production
capacity expansions in Korea, which resulted in an increase in shipment volumes, and active marketing drives.
Selling prices have seen a large decline compared with the same period last year. However, the price decline
moderated during the interim period. Meanwhile, shipments of light diffusion sheets, semiconductor
processing materials and liquid crystal polymers and other products remained strong, and sales for theseproducts increased. As a result, the segment’s sales increased by ¥9.0 billion over the same period theprevious year to ¥137.7 billion. However, operating income decreased year on year by ¥12.6 billion to a loss of¥6.3 billion on account of a decline in selling prices for polarizing film, in addition to factors such as increased
fixed costs accompanying production capacity expansions as well as decreased yields at the start ofproduction of new products.
Agricultural Chemicals
Sales of feed additives increased thanks to active marketing drives and a rise in selling prices. In addition,
shipments of household insecticides outside Japan remained solid. Meanwhile, in addition to the impact ofinventory adjustments in the Company’s distribution channels in Japan, decreased prices for some of theCompany’s agrochemicals outside of Japan caused a decline in sales. As a result, the segment’s sales
increased by ¥5.4 billion year on year to ¥100.6 billion. Operating income decreased by ¥1.4 billion comparedwith the same period last year, to ¥10.8 billion, because of a decrease in selling prices for agrochemicals
outside of Japan and other factors.

Pharmaceuticals
Sales of the segment’s four main products, Amlodin (therapeutic agent for hypertension and angina),
Gasmotin (gastroprokinetic), Meropen (carbapenem antibiotic) and Prorenal (vasodilator) remained firm. As aresult, the segment’s sales increased by ¥1.8 billion over the same period the previous year to ¥116.4 billion,while operating income remained flat year on year at ¥26.0 billion.
OthersIn addition to the above six segments, the Company operates businesses such as providing electrical powerand steam, design and engineering of chemical plants, transport and warehousing, and materials andenvironmental analysis. Sales in the segment have increased considerably as construction on the integrated
refining and petrochemical complex for the Rabigh Project progresses. As a result, the segment’s sales
increased by ¥20.2 billion year on year to ¥79.4 billion, while operating income decreased by ¥1.2 billioncompared with the same period the previous year, to ¥2.2 billion.
In addition to the decrease in operating income, extraordinary gains on the sale of securities decreased fromthe interim period last year. Net income decreased by ¥26.9 billion compared with the same period theprevious year, to ¥26.4 billion.
Interim operating cash flow was ¥64.5 billion, while investment cash flow became negative ¥135.1 billion due tothe acquisition of a new organic polymer LED business as well as investment in the Rabigh Project. As a result,free cash flow decreased ¥70.4 billion compared to the same period the previous year, to negative ¥70.6 billion.
(2) Full-Year Forecast
Japan’s economy is expected to continue its moderate recovery going forward, buoyed by continued strong
corporate earnings and increasing employment. However, factors such as a slowdown in the US economy andthe direction of crude oil prices remain causes for concern about the effects on the global economy, and haveheightened uncertainty about future economic conditions. In terms of the business climate the Sumitomo
Chemical Group is facing, prices for feedstocks such as naphtha and benzene are forecast to remain high. Inaddition, foreign exchange rates as well as demand from the IT-related industry will continue to merit close
attention.
In response to these conditions, the Company will work promptly and steadily, under its new Three-Year
Corporate Business Plan begun this fiscal year, to review pricing and marketing strategies, actively expand its
businesses, and strive to cut costs in order to improve the Company’s performance. In addition, the Sumitomo
Chemical Group is focusing its efforts on the successful completion of the Rabigh Project for the constructionof a highly cost competitive integrated oil refining and petrochemical complex in Saudi Arabia as scheduled.
Assuming an exchange rate of ¥115/US$ and a naphtha price of ¥62,000/kl for the second-half, the full-year
performance forecast is for an increase in sales of ¥150.0 billion to ¥1,940.0 billion. Taking into accountaggressive investments, including those for R&D, aimed at future growth, in addition to other items, theCompany forecasts full-year operating income of ¥120.0 billion, ordinary income of ¥125.0 billion, and net
income of ¥70.0 billion.
With regard to the IPO of Petro Rabigh, the business entity of the Rabigh Project, on the Saudi Arabian stock
exchange announced on November 5, 2007, the financial impact on the Company has not been incorporated
into the current consolidated forecast because the price of the Petro Rabigh stock issue has yet to be
determined. Upon determination of the issue price, the Company will revise its consolidated performance
forecast as necessary.

Interim Consolidated Statements of Income
Six Months ended September 30, 2007 and 2006
FY2007

FY2006(¥Million)(US$1,000)*

931,896$ 8,073,257

Cost of sales

722,321

6,257,654

633,337

Selling, generaland administrative expenses

161,211

1,396,613

153,070

48,364

418,990

68,214

Interest and dividend income

4,849

42,0083,738Interest expense(6,307)(54,639)(5,156)Equity in earnings of affiliates

9,391

81,357

8,157

Gain on sale of investment securities

900

7,797

23,055

Restructuring charges(631)(5,467)(3,651)

--

(611)

1,367

11,843967

57,933501,889

94,713

Income taxes, net of tax effect

20,652

178,91432,872

Minority interests

10,88594,300

8,558

Sales

¥

Operating income(¥Million)¥854,621

Other income (expenses):

Loss on reform of retirement benefits plan
Other, net
Income before income taxes
and minority interests

Net income¥

26,396$228,675

FY2007

Net income per 1,000 shares¥

53,283

FY2006(Yen)(US dollar)*(Yen)¥

15,984$138.47¥32,256

¥

6,000

$

51.98

¥

5,000

Dividends per 1,000 shares:
Interim dividends(Note)*U.S. dollar amounts are translated from yen, for convenience only, at the rate of¥115.43= $1 prevailing on September 30, 2007.

Industry Segment Results
Six Months ended September 30, 2007 and 2006(¥Million)
Basic
ChemicalsPetrochemicals&Plastics

Fine
Chemicals

IT-related
Chemicals

AgriculturalChemicals

Pharmaceuticals

Others¥ 159,809¥ 290,608¥ 47,461¥ 137,670¥ 100,623¥ 116,350¥ 79,375(Share)(17.1%)(31.2%)(5.1%)(14.8%)(10.8%)(12.5%)(8.5%)(100.0%)(Growth)(6.9%)(11.6%)(0.8%)(7.0%)(5.6%)(1.6%)(34.1%)(9.0%)(6,279)¥ 10,815¥ 25,980

Adjustments&Elimination

Consolidated

FY2007
Sales

Operatingincome (loss)

[a]

¥

7,910

¥

2,044

¥

6,141¥

¥

2,205

¥

¥(452)

931,896¥

48,364[b](5.2%)(4.9%)(0.7%)(12.9%)(-4.6%)(10.7%)(22.3%)(2.8%)¥ 149,491¥ 260,394¥ 47,070¥ 128,705¥ 95,254¥ 114,529¥ 59,178(Share)(17.5%)(30.5%)(5.5%)(15.1%)(11.1%)(13.4%)(6.9%)(100.0%)(Growth)(27.9%)(13.4%)(26.7%)(28.4%)(5.4%)(32.4%)(114.4%)(24.1%)

6,313¥ 12,245¥ 26,242(4.9%)(12.9%)(22.9%)[b] / [a]FY2006
Sales

Operatingincome (loss)

[a]

¥

5,915

¥

7,439

¥

7,276

¥

¥

3,368

¥

¥(584)

854,621¥

68,214[b][b] / [a](4.0%)(2.9%)(15.5%)(8.0%)(5.7%)

Overseas Operations
Six Months ended September 30, 2007 and 2006
FY2007(¥Million)
Overseas
operations¥

404,578($1,000)*$3,504,964

FY2006
Share (%)

Growth (%)

43.4

15.7(Note)*U. S. dollar amounts are translated from yen, for convenience only, at the rate of¥115.43 = $1 prevailing on September 30, 2007.

(¥Million)¥349,621

Consolidated Statements of Cash FlowsSix Months ended September 30, 2007 and 2006
FY2007(¥Million)

FY2006(US$1,000)*(¥Million)

Cash flows from operating activities:
Income before income taxes and minority interests¥

57,933$501,889¥

94,713

Depreciation and amortization

59,134512,293

51,532

Income taxes paid

(33,530)(290,479)(22,077)(900)(7,797)(23,055)

Other, net(18,144)(157,186)(44,157)

Net cash provided by operating activities

64,493558,720

56,956

Gain on sale of investment securities

Cash flows from investing activities:
Acquisition of investments(21,634)(187,421)(414)

Acquisition of property, plant and equipment(73,626)(637,841)(85,153)

Acquisition of shares of newly consolidated subsidiaries(30,561)(264,758)-Other, net(9,291)(80,490)

28,375(135,112)(1,170,510)(57,192)

Dividends paid

(11,568)(100,217)(9,918)Net increase (decrease) in short-term debt

53,311

461,847(11,006)

Net increase (decrease) in long-term debt

(2,559)(22,169)

32,754

Other, net(5,381)(46,617)(4,477)

Net cash provided by (used in) financing activities

33,803292,844

7,353

Net cash used in investing activities
Cash flows from financing activities:

Effect of exchange rate changes
on cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash due to merger of consolidated subsidiaries
Net increase (decrease) in cash resulting fromchanges in the number of consolidated subsidiaries
Cash and cash equivalents at end of period

1,160

10,049(33)

125,990

1,091,484

110,972

98

849

-79¥

90,511$684(102)

784,120¥ 117,954(Note)*U.S. dollar amounts are translated from yen, for convenience only, at the rate of¥115.43= $1 prevailing on September 30, 2007.

(Cautionary Statement)
Statements made in this release with respect to the Company’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 ’ sassumptions 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 inthe marketplace; Sumitomo Chemical ’ s ability to continue to win acceptance for its products in these highly competitive markets; andmovements of currency exchange rates.