Q2 FY2014 - Apr 1, 2014 to Sep 30, 2014 -Financial Results
October 31, 2014

CONTENTS
1 Financial Results for Q2 FY2014,

Performance Forecasts for FY2014
2 Distribution of Surplus
3 Overview of the Malaysia Project４ Rolling Three-Year Plan
5 Topics
6 Supplementary Data2

1 Financial Results for Q2 FY2014,

Performance Forecasts for
FY2014
1. Financial Highlights
2. Changes in Operating Income
3. Revised Performance Forecasts
for FY2014

3

1 Financial Results for Q2 FY2014, Performance Forecasts for FY2014

1. Financial Highlights for Q2 FY2014
Consolidated (year-on-year change)(Billions of yen)

Q2 FY2013 YTD

Q2 FY2014 YTD

Net sales
Operating income
Ordinary income
Net income/loss

135.0
7.8
6.0
4.5

143.8
10.5
8.2
(80.5)Net income per share (yen)

12.99
99
64,700(231.40)
103
70,400Exchange rate (¥/$)
Domestic naphtha price (¥/kl)

Difference
Amount

+8.8
+2.7
+2.1
(85.0)

Qualitative information(Net sales) ¥143.8 billion, up 7%
Pluses: increased sales volume of cement, caustic soda, active pharmaceutical ingredients and other products,
selling price revisions of petrochemicals, caustic soda and other products(Operating income) ¥10.5 billion, up 36%
Pluses: increased sales volume, profitability improvement of petrochemicals

4

%

+7
+36
+36
-

1 Financial Results for Q2 FY2014, Performance Forecasts for FY2014

1. Financial Highlights for Q2 FY2014
Consolidated (year-on-year change)(Billions of yen)

Q2 FY2013 YTD

Q2 FY2014 YTD

Net sales
Operating income
Ordinary income
Net income/loss

135.0
7.8
6.0
4.5

143.8
10.5
8.2
(80.5)Net income per share (yen)

12.99
99
64,700(231.40)
103
70,400Exchange rate (¥/$)
Domestic naphtha price (¥/kl)

Difference
Amount

%

+8.8
+2.7
+2.1
(85.0)

Qualitative information(Ordinary income) ¥8.2billion, up 36%
Pluses:increased operating income, decrease in costs of idle operations
Minuses: increase in interest expenses, change from foreign exchange gains recorded in the corresponding period of theprevious year to foreign exchange losses(Net loss) (¥80.5 billion), fall into the red
Plus:increased ordinary income
Minus:
posting of impairment loss of on the polycrystalline silicon manufacturing facilities of Tokuyama Malaysia.
5

+7
+36
+36
-

1 Financial Results for Q2 FY2014, Performance Forecasts for FY2014

1. Financial Highlights for Q2 FY2014
Consolidated (compared with the previous fiscal year-end)(Billions of yen, except Shareholders’ equity ratio and D/E ratio)

As of Mar 31, 2014

As of Sep 30, 2014

576.3
229.6
39.9%
240.7
1.05

552.6
148.3
26.8%
295.1
1.99

(23.6)(81.3)(13.0 Pts)
+54.3
+0.94

0.74

1.25

+0.50

660.18426.31

Total assets
Shareholders’ equity
Shareholders’ equity ratio
Interest-bearing debt
D/E ratio
Net D/E ratio*
Net assets per share (yen)Changes

Qualitative information*Net D/E ratio: (Interest-bearing debt – Cash and deposits, Cash equivalents)/Shareholders’ equity(Total assets)
Decrease factor: decrease in property, plant and equipment resulting from the impairment of polycrystalline silicon manufacturing
facilities of Tokuyama Malaysia(Shareholders’ equity)
Decrease factor: decrease in retained earnings resulting from the posting recording of impairment loss
(Interest-bearing debt)
Increase factor:
6

increased long-term loans payable1 Financial Results for Q2 FY2014, Performance Forecasts for FY2014

2. Changes in Operating Income
By Factor(Year-on-year change)(Billions of yen)

Chemicals (+)
Specialty Products (-)
Life & Amenity (+)

Chemicals (+)
Specialty Products (+)
Cement (+)
Life & Amenity (+)

+1.8

(2.5)
10.5

+0.5
+3.4
7.8
Rise in raw material prices (-)
Increased SG&A costs (-)
Other differences (+)

Q2 FY2013 YTD

Sales volume

Selling price

OthersQ2 FY2014 YTD(Notes) Sales volume = (sales volume in Q2 FY2014 – sales volume in Q2 FY2013) x (unit selling price in Q2 FY2013 – unit variable cost in Q2 FY2013)
Selling price = (unit selling price in Q2 FY2014 – unit selling price in Q2 FY2013) x sales volume in Q2 FY2014
Others includes change in unit variable cost , fixed cost and others71 Financial Results for Q2 FY2014, Performance Forecasts for FY2014

3. Revised Performance Forecasts for FY2014
Consolidated (compared with the previous forecast)

Net sales
Operating income
Ordinary income
Net income/loss
Net income per share (yen)Exchange rate (¥/$)
Domestic naphtha price (¥/kl)(Billions of yen)

FY2014Previous Forecast

FY2014
Revised Forecast(Jul 31, 2014)(Oct 31, 2014)

300.5
18.5
13.5
9.5

309.0
21.0
15.0
(75.0)

27.31
101
71,200(215.58)104
69,700Difference

FY2013 Results

+8.5
+2.5
+1.5
(84.5)(reference)

287.3
20.2
14.9
10.2
29.37
100
67,300Reasons for the revision:(Net sales)
Pluses: increased sales volume of semiconductor-related products, active pharmaceutical ingredients and others; and a rise inexport prices resulting from the weaker-than- expected yen; increased net sales of group companies
Minus: decreased sales volume of cement(Operating income, Ordinary income)Plus:
increased net sales(Net income/loss)
Minus: posting of impairment loss of on the polycrystalline silicon manufacturing facilities of Tokuyama Malaysia
8

1 Financial Results for Q2 FY2014, Performance Forecasts for FY2014

3. Revised Performance Forecasts for FY2014(By business segment, compared with the previous forecast)
FY2014Previous Forecast

FY2014
Revised Forecast(Jul 31, 2014)(Oct 31, 2014)

FY2013 Results(Reference)

Deference

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeChemicals
Specialty Products
Cement

96.5

3.5

96.0

4.5

(0.5)

+1.0

86.4

2.2

57.5

4.0

59.5

6.0

+2.0

+2.0

52.4

6.0

80.5

6.0

81.5

5.0

+1.0

(1.0)

78.9

6.6

Life & Amenity
Others
Total

57.0

4.5

58.0

4.5

+1.0

0.0

57.0

4.8

50.0

5.5

51.0

5.5

+1.0

0.0

47.2

4.1

341.5

23.5

346.0

25.5

+4.5

+2.0

322.2

24.0

Inter-segment eliminations
and corporate-wide
expenses(41.0)(5.0)(37.0)

(4.5)

+4.0

+0.5

(34.9)(3.7)

Consolidated Results

300.5

18.5

309.0

21.0

+8.5

+2.5

287.3

20.2

(Note) Sales and operating income shown above include inter-segment transactions.

9(Billions of yen)

2 Distribution of Surplus

1. Distribution of Surplus
2. Decision to Forgo a Portion of
the Compensation Payable
to Executives

10

2

Distribution of Surplus

1. Distribution of Surplus
Tokuyama is projecting a consolidated and non-consolidated net loss of ¥75.0 billion and ¥75.0 billion,
respectively, for the full fiscal year ending March 31, 2015. Taking the above-mentioned net loss into
consideration, regrettably, with a resolution at a meeting of its Board of Directors held on October 31, 2014, theCompany has decided to forgo the payment of an interim dividend to shareholders of record as of September 30,
2014. The Company has also decided to revise its year-end dividend forecast and plans to forgo the payment of ayear-end dividend to shareholders of record as of March 31, 2015.
We extend our deepest apologies to all shareholders for the anxiety caused and ask for their continued supportand understanding.
Dividend per share (yen)interim dividend

11

year-end dividend

total

Previous dividend forecast(Jul. 31, 2014)

3.00

3.00

6.00

Items decided

0.00

0.00 (forecast)

0.00 (forecast)

Dividend paid in previous year

3.00

3.00

6.00

2

Distribution of Surplus

2. Decision to Forgo a Portion of the Compensation Payable to Executives
Tokuyama takes most seriously the posting of an extraordinary loss totaling ¥86,027 million for the second quarter ofthe fiscal year under review (comprised of an impairment loss of ¥74,820 million and related expenses of ¥11,207
million in line with a review of its business plan) in connection with manufacturing facilities at the polycrystalline
silicon PS-1 Plant of its consolidated subsidiary Tokuyama Malaysia Sdn. Bhd. The Company also deeply regrets its
decision to forgo the distribution of surplus (payment of an interim dividend). Accordingly, Group executives havedecided to voluntarily waive (return) their compensation until June 2015 as follows.
Details of the decision by executives to voluntarily waive (return) their compensation:
Monthly compensation: Executive officers and deputy executive officers
Voluntarily waive (return) 20% of their monthly compensation
Bonus

President, senior managing executive officer
Voluntarily waive (return) 100% of their bonuses
Other executive officers and deputy executive officers
Voluntarily waive (return) 50% of their bonuses

123 Overview of the Malaysia Project

1. PS-1 (Semiconductor-Grade Polysilicon)
2. PS-2 (Solar-Grade Polycrystalline Silicon)
3. PV Market Conditions13

3

Overview of the Malaysia Project

1. PS-1 (Semiconductor-Grade Polycrystalline Silicon)【August 2009】
Decision to construct a plant in Sarawak, Malaysia
Initial plan to produce and market solar-grade polycrystalline silicon for theforeseeable future【February 2011】
Work to construct the plant commences【November 2012】
Plan revised to accommodate the shift to the production and sale of mainly
semiconductor-grade polycrystalline silicon【February 2013】
Work on construction of the plant completed with the exception of certain
facilities; trial operations commence thereafter14

3

Overview of the Malaysia Project

1. PS-1 (Semiconductor-Grade Polycrystalline Silicon)
Following a review of its business plan, Tokuyama confirmed the evidence of impairment in connection with thepolycrystalline silicon first plant (PS-1). After taking into consideration the recoverability of the fixed asset inquestion, Tokuyama decided to post a consolidated extraordinary loss of ¥86,027 million for the second quarter ofthe fiscal year under review. This extraordinary loss is comprised of an impairment loss of ¥74,820 million andrelated expenses totaling ¥11,207 million in line with the review of the Company’s business plan.

<Background leading up to the posting of the extraordinary loss>
Particular emphasis is placed on quality as well as extremely high levels of purity in the production ofsemiconductor-grade polycrystalline silicon. Recognizing that the PS-1 Plant was unable to achieve the initiallyprojected levels of quality and production stability, ongoing steps were taken to resolve outstanding technologicalissues, put in place the necessary optimal production conditions, and commence shipments of samples forcustomer certification at some time during fiscal 2015.
Despite these endeavors, both the Company and its subsidiary Tokuyama Malaysia Sdn. Bhd. have recently cometo the understanding that with issues relating to deposition equipment, the shipment of samples for customer
certification is virtually impossible for the present even after resolving outstanding technological issues. Taking into
consideration the inability to put forward a business plan at this time that allows for projected future cash flows, thedecision has been made to post the aforementioned extraordinary loss.
•The book value of the plant after recording an extraordinary loss is ¥3.3 billion•There was no outflow of cash associated with the recording of the extraordinary loss
15

3

Overview of the Malaysia Project

1. PS-1 (Semiconductor-Grade Polycrystalline Silicon)
Production flow of polycrystalline silicon
Enlarged view ofdeposition equipment
RodFurnace

TCS, H2

16

Filament～

Waste gas

3

Overview of the Malaysia Project

1. PS-1 (Semiconductor-Grade Polycrystalline Silicon)<Future Plans>Continue to engage in activities (the development of technologies that enhance the quality ofdeposition processes and productivity) with the aim of producing semiconductor-grade polycrystalline
silicon at the PS-1 Plant
Meanwhile, consider seeking compensation for damages from the manufacturer of deposition
equipment

Production and sale of semiconductor-grade polycrystalline silicon to be undertaken at Tokuyama
Factory17

3Overview of the Malaysia Project

1. PS-1 (Semiconductor-Grade Polycrystalline Silicon)<Future course of action>
An investigative committee, mainly comprising the Audit &Supervisory Board (including external auditors), has been
established within the Company as of today.
After receiving the result of the committee’s investigation,
steps will be taken to put in place and implement remedial
measures.

18

3

Overview of the Malaysia Project

2. PS-2 (Solar-Grade Polycrystalline Silicon)
Production capacity: 13,800 tonnes
Total amount of investment: ¥130 billion (including infrastructure and investments for utilities)
・Commenced production and sale from October 2014
・Plan to operate at full capacity in the fiscal year ending March 31, 2016
・Already concluded contracts with several wafer manufacturers including those in China<Profitability When Operating at Full Capacity>

Target an EBITDA margin of at least 30%
on the assumption of a selling price of $20/kg

Work diligently to reduce costs by promoting a variety of initiatives including efforts to diversify raw
materials procurement, further increase productivity, and promote management staff localization
19

3

Overview of the Malaysia Project

2. PS-2 (Solar-Grade Polycrystalline Silicon)
Sales Plan for the Fiscal Year Ending March 31, 2017: Approx. 13,000 tonnes
Contracts with Customers as of October 2014
Positive consideration to
the purchase ofpolycrystalline silicon
Basic agreement
regarding the purchase ofpolycrystalline silicon

20

Sales contracts of one year
or more that have been
executed or are close to
execution

3

Overview of the Malaysia Project

3. PV Market Conditions
Forecasts of installed PV capacity by region
Unit:GW

80
70
60
50
40
30
20
10
0
2013 2014 2015 2016 2017 2018
Europe (Big 9)

Asia

N. America(Note) Tokuyama estimate based on IHS iSuppli
Market Tracker (PV Integrated) Q3 2014

21

ROW

Conditions in each country<China> In a bid to ensure sound industry growth, the government
announced specific targets for the introduction of solar power
generation facilities: 13GW in 2014 and a cumulative total of
70GW by 2017
 Introduction of solar power generation facilities in the first halfof 2014: 3.3GW (roughly double the capacity introduced during
the corresponding period of the previous year)(Japan> Since the launch of the existing feed-in tariff system in July
2012, Japan has witnessed a rapid surge in the amount of solar
power generation introduction; the introduction of solar power
generation facilities exceeded 6GW in 2013; the figure exceeds
4GW for the first half of 2014 (January to June)<The U.S.> Policy measures aimed at promoting the widespread use of avariety of solar power generation facilities is driving market
growth; in particular, public policy measures at the state level arepushing forward the large-scale solar power generation market<Europe> The solar power generation market is projected to contractslightly in 2014 due the successive shrinking and termination ofpolicy support measures; thereafter, the market is expected toenter a growth trend on the back of a recovery in demand frommajor countries

4 Rolling Three-Year Plan

1. Numerical Targets
2. Progress under the Plan andInitiatives Going Forward
3. Financing Plan
4. Cash Flow Plan
5. Financial Policy

22

4

Rolling Three-Year Plan

1. Numerical Targets
Numerical target(Announced in April 2014)
Net Sales(Billions of yen)

Operating Income

320.5

Current Outlook

Operating Margin

358.0

326.0

352.0
30.0

25.0
19.0

18.0

8.5%
5.6%

7.0%

FY2015FY2017(Target)(Target)(Assumption)
Exchange rate: ¥100/$; Domestic naphtha: ¥67,000/kl

5.8%

FY2015FY2017(Outlook)(Outlook)(Assumption)
Exchange rate: ¥100/$; Domestic naphtha: ¥67,000/kl

Projected increase in operating income largely on the back of successful efforts to alleviate the ratioof fixed costs in line with an increase in the operating rate at Tokuyama Factory and a revision in the
period of depreciation from 15 years to 25 years applicable to facilities at the PS-2 Plant
Plans to announce the numerical targets of the next rolling three-year plan in April 2015
23

4

Rolling Three-Year Plan

2. Progress under the Plan and Initiatives Going Forward
Initiatives

Rebuild thePolysiliconBusiness

Progress during Feb 2013 to Mar 2014

(Tokuyama Factory) Loss on impairment of
manufacturing facilities recorded(Tokuyama Malaysia) Construction completed
and trial operations commenced

Initiatives during and after Apr 2014
Ensure optimal balance in operation as a whole(Tokuyama Factory)
Increase producing and selling volume ofsemiconductor-grade polycrystalline silicon(Tokuyama Malaysia)
PS-1: Review the business plan
(impairment loss on manufacturing facilities)
PS-2: Commence operations(China)Optimize business operations of fumed silica, at thetwo bases in Tokuyama and China

Improve Profits
in Existing/New
Businesses

Liquid hydrogen business commenced
Waste gypsum board recycling business commenced
Expansion of manufacturing facilities of microporous
film in China

Expand propylene oxide manufacturing facilities
Bolster clinker export infrastructure
Start operation of Soda Ash Joint-Venture Business
Structural reform of the vinyl chloride business
Upgrade and expand high purity aluminum nitride
manufacturing facilities

Cost Reduction

Results exceeded plans on the back of emergency
measures aimed at reducing costs including overhead
expenses as well as personnel and purchasing costs

Work toward reducing expenses on a permanent basis
through by increasing productivity, undertaking
structural reforms, and implementing various measures24

4

Rolling Three-Year Plan

3. Financing Plan
(Billions of yen)

Non-consolidated

Amount of debt repayment and bond redemption

Amount of funds procured

80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
11/3

12/3

13/3

14/3

15/3
(Plan)

16/3(Plan)

17/3(Plan)

18/3(Plan)

No plans to procure new funds for the foreseeable future from the fiscal year ending March 31, 2016
Ample cash in hand with continued support from financial institutions

25

4

Rolling Three-Year Plan

4. Cash Flow Plan

Non-consolidated(Billions of yen)
60.0
40.0
20.0
0.0
Investing CF(20.0)

Operating CF(40.0)

Free Cash Flow

(60.0)(80.0)(100.0)

11/3

12/3

13/3

14/3

15/3
(Plan)

Negative free cash flow as a result of investing
activities in Tokuyama Malaysia Sdn. Bhd. (TMSB)

26

16/3
(Plan)

17/3(Plan)

18/3(Plan)

Plans to bring about a positive turnaround in free cash
flows from the fiscal year ending March 31, 2016 through avariety of initiatives including successful efforts to improveexisting and new business profitability while also securing aGroup-wide reduction in expenses

4

Rolling Three-Year Plan

5. Financial Policy
Work toward securing a recovery in the Group’s financial platform while promoting increased stability for theforeseeable future by engaging in such activities as the steady implementation of the Profit Improvement
Plan. At the same time, endeavor to recoup cash through the start of production and sales at the Malaysia
PS-2 Plant and the adoption of a more selective approach toward investment (within 75% of depreciation)

Interest-bearing debt trend (non-consolidated)
Interest‐bearing debt
(Billions of yen)
300.0

D/E ratio

Net D/E ratio(D/E ratio)
2.50

250.0

2.00

200.0

1.50

150.0

1.00

100.0

0.50

50.0

0.00

0.0

‐0.50
11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3
(Plan) (Plan) (Plan) (Plan)

27*Net D/E ratio: (Interest-bearing debt – Cash and deposits, Cash equivalents)/Shareholders’ equity

15/3 (Plan at April 2014)
Interest-bearing debt
D/E ratio
Net D/E ratio¥264.0 billion
1.28
0.97

18/3 (Plan at April 2014)
Interest-bearing debt
D/E ratio
Net D/E ratio¥200.0 billion
0.87
0.66

15/3 (Current plan)Interest-bearing debt
D/E ratio
Net D/E ratio¥264.0 billion
2.10
1.51

18/3 (Current plan)Interest-bearing debt
D/E ratio
Net D/E ratio¥200.0 billion
1.30
1.11

5 Topics

1. Vinyl Chloride Business
Reconstruction
2. Expanding High-purity Aluminum
Nitride Manufacturing Facilities

29

5

Topics

1. Vinyl Chloride Business Reconstruction
Strengthen vinyl chloride activities by rebuilding
manufacturing as well as sales structures and systems
Consolidate the production of vinyl chloride at the highly competitive
Tokuyama Factory
・Shutdown production at the Chiba Factory around September 2015
・Consolidate operations at the Tokuyama Factory and rebuild the
production and shipment structure
Note: Plan to upgrade and expand certain facilities at Tokuyama Factory

Work toward strengthening operating platforms by putting place an
optimal production structure at two bases
・Vinyl chloride: Tokuyama Factory(annual production capacity: 145,000 tonnes)
・Paste vinyl chloride: Ehime Factory(annual production capacity: 30,000 tonnes)
Note: Chiba Factory (annual production capacity: 80,000 tonnes)
・Address the needs of users in the Kanto region through products
manufactured at the Tokuyama Factory
30

Overview of Shin Dai-ichi Vinyl Corporation
・Capital:¥2.0 billion
・Net sales: ¥22.2 billion(Fiscal year ended March 31, 2014)
・Shareholders and percentage of holdings:
Tokuyama Corporation
71%
Sumitomo Chemical Co., Ltd. 14.5%
ZEON Corporation
14.5%

5

Topics

2. Expanding High-purity Aluminum Nitride Manufacturing Facilities
Increase annual production capacity of aluminum nitride
powder to 480 tonnes
・Current annual production capacity:
360 tonnes → 480 tonnes
Growth in global-scale energy conservation activities
・Work to expand business activities by providing aluminum
nitride materials in response to growing demand from the heatdissipation market including PDs, LEDs, and semiconductor
equipment.
・Market trends
Aluminum nitride for PD use: growing demand for worldwide
electric railway as well as EV/HEV use
Aluminum nitride for LED use: growing trend toward LED highoutput illumination in the in-car and related sectors
Semiconductor equipment: increasing demand in line with thegrowing trend toward 3D device design31

High-purity aluminum nitride powder(H-grade product)

6 Supplementary Data
1. Net Sales/Operating Income by Business
Segment
2. Consolidated Financial Statements
3. Cash Flows
4. Non-Operating Income/Expenses
5. Extraordinary Gains/Losses
6. Principal Indicators
7. Performance Trend
8. Price Trend of Main Raw Material and Fuel
9. CAPEX and Depreciation Trend
10. Interest-bearing Debts Trend
11. Revised Performance Forecasts (1H/2H)
12. Polysilicon Market
13. Solar Cell Market
32

6 Supplementary Data

1. Net Sales/Operating Income by Business Segment(Year-on-year change)(Billions of yen)

Q2 FY2013 YTD

Q2 FY2014 YTD

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

Chemicals

41.5

0.7

43.9

2.4

+2.3

+6

+1.6

+212

Specialty Products

23.4

1.5

24.1

2.7

+0.6

+3

+1.1

+69

Cement

36.4

2.7

38.6

2.2

+2.2

+6

(0.5)

(20)

Life & Amenity

27.1

2.0

30.0

2.5

+2.9

+11

+0.5

+25

Others

23.2

2.1

24.9

2.6

+1.6

+7

+0.5

+27

Total

151.8

9.3

161.7

12.6

+9.9

+7

+3.3

+35

Inter-segment eliminations
and corporate-wide
expenses(16.8)(1.5)(17.9)

(2.0)

(1.0)

-

(0.5)

-

Consolidated results

135.0

7.8

143.8

10.5

+8.8

+7

+2.7

+36

(Note) Sales and operating income shown above include inter-segment transactions.

33

Difference
Operatingincome%%6 Supplementary Data

1. Net Sales/Operating Income by Business Segment(Year-on-year change)

ChemicalsHigher earnings on higher sales
Net Sales

Operating Income

43.9

41.5

(Billions of yen)

(Caustic soda)•Sales volume increase in domestic market•Selling price revision in order to absorb a rise in raw material
prices

2.4

0.7

Q2 FY2013 YTD

34Qualitative information

Q2 FY2014 YTD(Vinyl chloride monomer (VCM))•Increase in raw material costs arising from domestic naphtha
price hikes•Improved profitability owing to high export prices against the
backdrop stronger Asian market conditions(Vinyl chloride resin)•Increase in raw material costs arising from domestic naphtha
price hikes•Selling price revision in order to absorb a rise in raw material
prices6 Supplementary Data

1. Net Sales/Operating Income by Business Segment(Year-on-year change)

Specialty Products

Higher earnings on higher sales

Net Sales

Operating Income(Billions of yen)

24.1

23.4

2.7

1.5

Qualitative information(Polycrystalline silicon)•Increased sales volume of semiconductor-grade polycrystalline
silicon owing mainly to strong demand for mobile terminals including
smartphones•Lower sales volume of solar-grade polycrystalline silicon resulting
from the adoption of a sales strategy that focused on profits(Fumed silica)•Increased sales volume, mainly of its application as a polishingmaterial for semiconductors

Q2 FY2013 YTD

Q2 FY2014 YTD(Aluminum nitride)•Higher sales volume of such applications as heat dissipationmaterials used for power devises and LEDs
(High-purity chemicals for electronics manufacturing)•Higher sales volume of such applications as semiconductor andliquid crystal production35

6 Supplementary Data

1. Net Sales/Operating Income by Business Segment(Year-on-year change)

CementLower earnings on higher sales
Net Sales

Operating Income(Billions of yen)

38.6

36.4
2.7

2.2

Qualitative information(Cement)•Sluggish sales volume in domestic market due to unseasonably
bad weather•Increased exports to Asia against the backdrop of steadydemand in the Asian market•Increased distribution costs due to the construction of new
cement tankers.
(Recycling and environment-related business)•The amount of waste the Company accepted remained almost
flat

Q2 FY2013 YTD

36

Q2 FY2014 YTD

6 Supplementary Data

1. Net Sales/Operating Income by Business Segment(Year-on-year change)

Life & Amenity

Higher earnings on higher sales

Net Sales

Operating Income(Billions of yen)

30.0
27.1

2.5
2.0

Q2 FY2013 YTD

37

Q2 FY2014 YTD

Qualitative information(Active pharmaceutical ingredient)•Increased sales volume, mainly of such applications as
generic drugs(Microporous film)•Increased sales volume due to commencement of operation in
Tianjin(Polyolefin film)•Selling price revision in order to absorb a rise in raw material
prices(Gas sensor)•Increase sales volume of such applications as gas alarmdevises and air cleaners(Medical diagnosis system)•Increase sales volume of products for blood testing•Improved profitability resulting from cost reduction efforts(Plastic window sash)•Decreased sales volume arising from reaction to the rush
demand before the consumption tax increase6 Supplementary Data

2. Consolidated Financial Statements Income Statements(Billions of yen)
Q2 FY2014 YTD

135.0

143.8

+8.8

+7

Cost of sales

98.2

102.0

+3.7

+4

Selling, general andadministrative expenses

28.9

31.2

+2.3

+8

7.8

10.5

+2.7

+36

(1.7)

(2.3)

(0.5)

-

6.0

8.2

+2.1

+36

Extraordinary income/expenses(0.3)(87.9)(87.5)-

Income/loss before income
taxes and minority interests

5.7(79.6)(85.3)

-

1.2

(0.8)

(0.3)

(27)

4.5

(80.5)(85.0)-Net sales

Operating income
Non-operating income/expenses

Ordinary income

Income taxes and minority interests

Net income/loss
38

Difference
Amount%Q2 FY2013 YTD

6 Supplementary Data

2. Consolidated Financial Statements Balance Sheets (Billions of yen)
3/31/2014

ChangesAmount

%

576.3

552.6

(23.6)(4)

Current assets

191.6

232.0

+40.4

+21

Tangible fixed assets

323.1

258.1

(64.9)(20)

Intangible fixed assets

10.1

11.3

+1.2

+12

Investments and other assets

51.4

51.0

(0.3)

(1)

Total assets

3/31/2014

9/30/2014

ChangesAmount

%

339.8

397.6

+57.8

+17

Current liabilities

99.2

113.3

+14.0

+14

Long-term liabilities

240.5

284.3

+43.7

+18

236.4

154.9

(81.4)(34)

Total liabilities

Total net assets
39

9/30/2014

6 Supplementary Data

3. Cash Flows

Consolidated (year-on-year change)(Billions of yen)

Q2 FY2013 YTD

Q2 FY2014 YTD

Cash flows from operating activities (1)

11.0

16.5

Cash flows from investing activities (2)(54.9)(29.4)

Free cash flows (3) ((1)+(2)）(43.9)(12.9)Cash flows from financing activities (4)

21.1

53.1

Effect of exchange rate changes on cash and cash equivalents (5)

0.6

0.2

Net increase (decrease) in cash and cash equivalents (6)((3)+(4)+(5))(22.1)

40.5

Cash and cash equivalents at beginning of the year (7)

52.4

69.9

Increase (decrease) in cash and cash equivalents due to changesof scope of consolidation(8)

0.4

0.0

Cash and cash equivalents at end of the year (9) ((6)+(7)+(8))

30.7

110.4

40

6 Supplementary Data

4. Non-Operating Income/Expenses Consolidated (year-on-year change)(Billions of yen)

Q2 FY2014
YTD

ChangesInterest and dividend
income

0.3

0.3

+0.0

Other income

1.3

1.1

(0.1)

Total

1.6

1.5

(0.1)

Interest expenses

1.2

2.3

(1.0)

Other expenses

2.1

1.5

+0.5

Total

3.4

3.8

(0.4)

Non-operating
income/expenses

(1.7)

(2.3)

(0.5)

Non-operating income

Q2 FY2013
YTD

Non-operating
expenses
41

Notes

Decreased foreign exchange gains
Increased share of profit of entities
accounted for using equity method

(0.3)
+0.1

Decrease in costs of idle operations +1.0
Increased foreign exchange losses (0.2)

6 Supplementary Data

5. Extraordinary Gains/Losses

Consolidated (year-on-year change)(Billions of yen)

42

Q2 FY2013
YTD

Q2 FY2014
YTD

Changes

Extraordinary
gains

0.5

0.0

(0.5)

Gain on sales of investment securities(0.3)

Extraordinary
losses0.9

87.9(87.0)

Impairment loss for fixed assets
Provision for loss on purchase contract(75.7)(11.2)

Extraordinary
gains/losses(0.3)(87.9)(87.5)Notes

6 Supplementary Data

6. Principal Indicators ①(year-on-year change)(Billions of yen)

Q2 FY2013 YTD

43

Q2 FY2014 YTD

Changes

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Capital expenditures

38.2

1.9

22.3

4.2

(15.9)+2.2

Depreciation andamortization

8.1

5.5

8.0

5.0

(0.0)

(0.5)

R&D expenses

4.2

3.1

4.4

3.2

+0.1

+0.1

Financial income andexpenses

(0.9)

+2.0

(1.9)

+2.1

(0.9)

+0.0

6 Supplementary Data

6. Principal Indicators ②(compared with the previous fiscal year-end)

3/31/201444

9/30/2014

Changes

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Interest-bearing
debts

Billionsof yen

240.7

220.0

295.1

274.1

+54.3

+54.0

Number of
employees

Persons

5,756

2,041

5,892

2,004

+136

(37)

6 Supplementary Data

6. Principal Indicators ③(year-on-year change based on FY14 forecasts)(Billions of yen)

FY2014 Forecast

Changes

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Approved limit
total

30.5

9.1

-

-

-

-

Estimates (FY14)
Results (FY13)

33.1

9.0

61.0

5.1

(27.9)+3.9

Depreciation andamortization

19.2

10.7

16.7

11.3

+2.4

(0.6)

R&D expenses

9.5

7.1

8.7

6.4

+0.8

+0.6

Capitalexpenditures

45

FY2013 Results

6

Supplementary Data

7. Performance Trend

Consolidated (Annual)
Income (Billions of yen)

Net sales (Billions of yen)

75

350
307.4
292.7

300

250
200

309.0

300.9
273.1

263.3

34.7

35.3

24.3
21.4

31.6

30.3

18.4

18.8

287.3

282.3

50

258.6
22.7
20.3

13.9

16.4

20.1

15.3

17.3
9.7

7.4
150

289.7

20.2
13.7
6.7
11.5
9.3

3.2

21.0

25

15.0

14.9

0

10.2

(5.5)
-25

100
(37.9)-50

50(75.0)

-75

0
05

06

Net sales

46

07

08

09

Operating income

1011

Ordinary income

12

13

14
forecast

Net income

6 Supplementary Data

7. Performance Trend(Quarter)

Consolidated(Billions of yen)

90.0

9.00

80.0
70.0

70.6

72.8

71.2

4.70

8.00
7.00
6.00

5.57

50.0

5.01

4.69

5.00
4.00

3.10

30.0

3.00

20.0

2.00

10.0

1.00

0.0

0.00
Q1/FY13

47

72.6

64.3

60.0

40.0

79.47.76

Q2/FY13Q3/FY13Net Sales

Q4/FY13Q1/FY14
Operating Income

Q2/FY14

6 Supplementary Data

7. Performance Trend(Quarter)

Chemicals(Billions of yen)

25.0
21.1

22.4

22.4

2.50

22.6
21.2

20.4

20.0

2.00

15.0

1.27

10.0

1.50
1.18
1.00

0.83
0.61

5.0

0.36

0.42

0.50

0.0

0.00
Q1/FY1348

Q2/FY13Q3/FY13Q4/FY13Q1/FY14Net Sales
Operating Income

Q2/FY14

6 Supplementary Data

7. Performance Trend(Quarter)Specialty Products(Billions of yen)

20.0

4.00

3.78
17.2

18.0

3.50

16.0

12.0

3.00

13.1

14.0

11.8
10.2

12.9
2.50

11.1

10.0

1.71

8.0

1.50
1.05

6.0
4.0

0.99

1.00

0.71

0.54

2.0

0.50

0.0

0.00
Q1/FY1349

2.00

Q2/FY13Q3/FY13Net Sales

Q4/FY13Q1/FY14
Operating Income

Q2/FY14

6 Supplementary Data

7. Performance Trend(Quarter)Cement(Billions of yen)

25.0

2.50
19.1

20.0

21.7
1.99

20.8
1.90

19.3

19.3

2.00

17.3
15.0

1.33

1.47

1.44

1.50

10.0

1.00
0.73

5.0

0.50

0.0

0.00
Q1/FY1350

Q2/FY13Q3/FY13Net Sales

Q4/FY13Q1/FY14
Operating Income

Q2/FY14

6 Supplementary Data

7. Performance Trend(Quarter)

Life & Amenity(Billions of yen)

2.00

20.0
1.77
16.4
15.0
12.5

14.5
1.33

13.4

16.0
14.0

1.39

1.50

1.19
1.02
1.00

10.0
0.73
5.0

0.50

0.0

0.00
Q1/FY1351

Q2/FY13Q3/FY13Net Sales

Q4/FY13Q1/FY14
Operating Income

Q2/FY14

6

Supplementary Data

8. Price Trend of Main Raw Material and Fuel
Australian thermal
coal spot price ($/t)

Domestic naphtha price(¥/KL)

75000
70000

110
Australian thermal coal

100
90

65000

80
60000
70
55000

52

60

Domestic naphtha

50000

50

45000

40

FY2012FY2013

FY2014

6 Supplementary Data

9. CAPEX and Depreciation Trend(Billions of yen)consolidated

non consolidated

100.0

depreciation (consolidated)
97.5

90.0
77.6

80.0
70.0

61.0

60.0

52.5

50.0

4.8

37.0

40.0
30.0
20.0
10.0
0.0

53

20.9
2.5

22.6
2.5

18.1

18.1

9.6

81.6

37.6

35.8

26.5

31.4

22.9
11.1

21.4

63.6

33.1
28.4

22.5

55.9

23.2
16.7

19.2
24.0

18.4

20.1

27.4

47.7

15.4

13.3

13.9

15.9

5.1

9.0

06/3

07/3

08/3

09/3

10/3

11/3

12/3

13/3

14/3

15/3
(forecasts)

6 Supplementary Data

10. Interest-Bearing Debts Trend Consolidated(Billions of yen)
Short‐term debt

Long‐term debt

Unsecured bonds

D/E ratio
1.99

400.0
350.0

295.1

300.0

1.05
0.86

250.0
200.0

0.47

0.52
0.37

0.32

0.42

50.0
0.0

54

50.0

0.60

187.7
148.6

150.0
100.0

0.52

240.7
50.0

50.0

126.2

205.4
50.0

95.9

100.0

64.2

20.0

15.1

30.0

25.0

68.3

68.6

73.7

28.5
20.1

58.8

23.1
18.8

17.0
22.2

17.0

16.5

22.5

24.9

35.3

25.5

39.7

06/3

07/3

08/3

09/3

10/3

11/3

12/3

13/3

14/3

14/9

83.5
34.8

72.0

35.1

165.2
102.3

6 Supplementary Data

11. Revised Performance Forecasts (1H/2H)(Billions of yen)(Compared with previous forecasts)
FY2014 Previous Forecast (Jul 31, 2014)
1H

2H

Total

FY2014 Revised Forecast (Oct 31, 2014)
1H Result

2H

Total

Net sales

144.0

156.5

300.5

143.8

165.1

309.0

Operating income

10.0

8.5

18.5

10.5

10.4

21.0

Ordinary income

7.5

6.0

13.5

8.2

6.7

15.0

Net income

6.0

3.5

9.5

(80.5)

5.5(75.0)Net income per share (yen)

17.25

10.06

27.31

(231.40)

15.82(215.58)

Exchange rate (¥/$)

101

100

101

103

105

104

71,10071,30071,20070,40069,00069,700

Domestic naphtha price(¥/kl)

55

6 Supplementary Data

11. Revised Performance Forecasts (1H/2H)(By business segment, compared with previous forecasts)
FY2014 Previous Forecast (Jul 31, 2014)
1H
Net
sales

2H

OperatingincomeNet
sales

FY2014 Revised Forecast (Oct 31, 2014)

Total

OperatingincomeNet
sales(Billions of yen)

1H ResultOperatingincome

Net
sales

2H

Operatingincome

Net
sales

Total

OperatingincomeNet
sales

OperatingincomeChemicals

44.0

2.0

52.5

1.5

96.5

3.5

43.9

2.4

52.0

2.0

96.0

4.5

Specialty
Products

25.0

2.0

32.5

2.0

57.5

4.0

24.1

2.7

35.3

3.2

59.5

6.0

Cement

39.5

3.0

41.0

3.0

80.5

6.0

38.6

2.2

42.8

2.7

81.5

5.0

Life &
Amenity

29.0

2.5

28.0

2.0

57.0

4.5

30.0

2.5

27.9

1.9

58.0

4.5

Others

25.0

2.5

25.0

3.0

50.0

5.5

24.9

2.6

26.0

2.8

51.0

5.5

Total

162.5

12.0

179.0

11.5

341.5

23.5

161.7

12.6

184.2

12.8

346.0

25.5

Inter-segment
eliminations andcorporate-wide
expenses(18.5)(2.0)(22.5)(3.0)(41.0)(5.0)(17.9)(2.0)(19.0)(2.4)(37.0)(4.5)

Consolidated
Results

144.0

10.0

156.5

8.5

300.5

18.5

143.8

10.5

165.1

10.4

309.0

21.0

56

6

Supplementary Data

12. Polysilicon Market
Supply-demand forecast of polysilicon
Supply capacity/Demand (tonnes)*Tokuyama estimate

700,000
600,000
500,000

Forecasts<Semiconductor-grade polysilicon demand>•Projected annual increase of 5% on the back of an upswing in
demand for use in tablet terminals and smartphones<Solar cell-grade polysilicon demand>•Despite a substantial decline in installed PV capacity owing mainly
to cutbacks in subsidies in Europe, projected annual increase indemand exceeding 15% largely reflecting forecast growth due
attributable to aggressive installation initiatives in such countries asJapan, China, and the U.S.

400,000
300,000
200,000<Supply side>•Excess supply capacity expected to continue for the foreseeable
future; cost competitiveness recognized as the key to survival

100,000
0
2013

2014

2015

2016

2017

2018

Demand (Solar cells)）

Supply capacity of other producers

Demand (Semiconductors)

Supply capacity of major producers(Note 1) Major producers mean Tier1 manufactures in the classification by NPD Solarbuzz.
(Note 2) Demand is estimated by Tokuyama based on IHS and NPD Solarbuzz.

57

6

Supplementary Data

13. Solar Cell Market
Incentives to introduce solar power generation facilities (over the medium and long term)

1) Issues relating to energy (the depletion of fossil energy resources)
Despite the weakening sense of crisis toward the depletion of fossil energy resources attributable to thedevelopment of low-cost recovery technologies for such unconventional natural gases as shale gas, recognition
toward the impending sense of danger associated with depletion remains strong among countries rich in oil andother conventional energy resources. Against this backdrop, there are indications of a growing emphasis on the
introduction of solar power generation facilities as an alternative source of energy to meet the electric power
demands of home countries

2) Issues relating to energy security
Energy security is a critical issue for countries lacking in natural resources such as Japan; as a result, expectations
toward solar power as a source of energy and alternative to resources imported from other countries continues to
rise

58

6

Supplementary Data

13. Solar Cell Market
Incentives to introduce solar power generation facilities (over the medium and long term)3) Issues relating to the environment(global warming)

PV installation need to ensure a sustainable energy future

Reducing the emission of CO2 is an importantmeasure in addressing the issue of global
warming; the widespread introduction of solar
power generation is attracting increased attention
as a key countermeasure4) Economic rationality
There are signs that power generation costs are
falling below grid-connected power system prices
in certain countries and regions; solar power
generation offers a powerful and effective energy
policy initiative means to balance economic andenvironmental concerns

CoalElectricity generationin 2011Natural gas Nuclear Hydro
Solar thermal
Solar PVWindElectricity generationin 2050(Hi-REN Scenario)(Note) Tokuyama estimate based on IEA Technology Roadmap - Solar
Photovoltaic Energy 2014 edition “ Hi – REN senario”

596

Supplementary Data

13. Solar Cell Market
Trend toward increasing cell efficiency
Cell Efficiency Trend Curve
Cell efficiency

26%

n-type Mono-crystalline Si

p-type Mono-crystalline Si

zCrystalline silicon solar cells offer high levels of
performance and reliability; the crystalline siliconsolar cell market is expected to enjoy continuous
growth on the back of advances in technology going
forwardzBeginning with the n-type single crystal category,the performance of solar cells is projected to further
improve across the entire segment including the ptype single and p-type polycrystal categories

p-type Multi-crystalline Si

17%

2014
(Note) Tokuyama estimate based on SEMI “www.itrpv.net”

60

2024

Tokuyama will contribute to increasing theperformance of crystalline silicon solar cells as wellas market growth by ensuring the stable supply ofhigh-quality polysilicon.

Disclaimer
This material is supplied to provide information of Tokuyama and its Group
companies, and is not intended as a solicitation for investment or other actions.
This material has been prepared based on the information currently available andinvolves uncertainties. Tokuyama and its Group companies accept no liability inrelation to the accuracy and completeness of the information contained in thismaterial.
Tokuyama and its Group companies assume no responsibility whatever for any
losses or deficits resulting from investment decisions based entirely on projections,numerical targets and other information contained in this material.

61