Summary of Consolidated Financial Statements for the Third Quarter Fiscal 2018 (JPGAAP)

January 31, 2019
Tokuyama Corporation
Stock exchange listings:
Tokyo(URL http://www.tokuyama.co.jp/eng/)
Local Code :4043
Representative:
Hiroshi Yokota, President and Representative Director
Contact:
Taro Kobayashi, General Manager, Corporate Communications & Investor Relations Dept.
+81-3-5207-2552
Scheduled date for the filing of the quarterly consolidated financial statements: February 12, 2019
Scheduled date of dividends payout :Preparation of supplementary quarterly explanatory materials: Yes
Quarterly business results IR briefing to be held:
Yes (for institutional investors and analysts)

1. Consolidated results for fiscal third quarter ended Dec. 31, 2018 (Apr. 1, 2018 – Dec. 31, 2018)(1) Performance

Note: All amounts are rounded down to the nearest million yen.

Net sales
Year-on(millions ofyear change
yen)
[%]

Operating profit
Year-on(millions ofyear change
yen)
[%]

Third Quarter Fiscal 2018
238,289
5.4
25,454
Third Quarter Fiscal 2017
226,090
3.7
30,150(Note) Comprehensive income: 3rd Q FY18: 16,648 million yen [7.7 %]3rd Q FY17: 15,454 million yen [(42.0) %](15.6)
6.6

Profit attributable toowners of parent
Year-on-year(millions of yen)change [%]Ordinary profit
Year-on(millions ofyear change
yen)
[%]

23,674
26,477(10.6)
5.2

Basic earnings per
share

Diluted earnings
per share

(yen)

(yen)

Third Quarter Fiscal 2018
19,570166.5
281.56
Third Quarter Fiscal 2017
7,342
(70.5)
82.18* The Company consolidated its common shares at a ratio of one share for each five shares effective as of October
1, 2017. On this basis, basic earnings per share data is calculated on the assumption that the consolidation ofshares was conducted as of the beginning of the preceding fiscal year.
(2) Consolidated financial position

Dec 31, 2018
Mar 31, 2018
(Reference) Shareholders' equity:

2. Dividends（Period）

1st quarter(yen)

Total assets

Net assets(millions of yen)(millions of yen)

363,799
148,952
361,949
136,591
Dec 31, 2018: 138,401 million yen

Annual dividends per share
2nd quarter 3rd quarter
Year-end
(yen)

(yen)

(yen)

Shareholders’Equity ratio(%)

Net assets per
share
(yen)

38.0
1,992.76
34.7
1,806.56
Mar 31, 2018: 125,656 million yen

Total
(yen)

Fiscal 2017, ended
2.00
20.00
Mar 31, 2018
Fiscal 2018, ending
25.00
Mar 31, 2019
Fiscal 2018
25.00
50.00
（Forecast）(Note) Revision of the latest dividends forecast: No* The Company consolidated its common shares at a ratio of one share for each five shares effective as of October 1,
2017. The amount of dividend for the end of the second quarter of the fiscal year ending March 31, 2018 ispresented as the amount of dividend prior to share consolidation. The forecast amount for the year-end dividend
per share for the fiscal year ending March 31, 2018 is stated after taking into the account the impact of the shareconsolidation. The annual dividend amount is presented as “-.” Meanwhile, the interim dividend per share for the
fiscal year ending March 31, 2018 converted after the share consolidation and the annual dividend per share are¥10.00 and ¥30.00, respectively.
1

*Year-end dividend per share for the fiscal year ending March 31, 2018 of ¥20.00, includes ¥10.00 of a 100th
anniversary commemorative dividend.

3. Consolidated performance forecast for fiscal 2018 (Apr. 1, 2018 – Mar. 31, 2019)(% indicates the rate of change over the corresponding previous periods respectively)
attributable to Basic earnings
Net sales
Operating profit Ordinary profit Profit
owners of parent
per share(millions of
yen)

[%]

(millions of
yen)

[%]

(millions of
yen)

[%]

Fiscal 2018
328,000
6.5
38,000 (7.9)
34,000 (6.1)(Note) Revision of the latest consolidated performance forecast: No(millions ofyen)

27,000

[%]

37.1

(yen)

388.15*Notes(1) Changes in significant subsidiaries during this period (Apr. 1, 2018 – Dec. 31, 2018): No(2) Application of accounting methods specific to the preparation of the quarterly consolidated
financial statements: Yes(Note) For more details, please refer to “2. Quarterly Consolidated Financial Statements and (4) Notes on
Quarterly Consolidated Financial Statements (Change of accounting process specific to preparing quarterly
consolidated financial statement)” on page 11 of the Accompanying Materials to this Summary of Quarterly
Consolidated Financial Statement.
(3) Changes of accounting policies, changes in accounting estimates, and retrospective restatements
i. Changes of accounting policies by revision of accounting standards:
ii. Changes of accounting policies other than the above:iii. Changes in accounting estimates:
iv. Retrospective restatements:

No
No
No
No

(4) Number of shares issued (in common stock)
Number of shares issued at end of period
Third Quarteri.
69,934,375
Fiscal 2017: 69,934,375(including treasury stock):
Fiscal 2018:
Third Quarterii. Number of treasury stock at end of period:
481,897
Fiscal 2017:378,378
Fiscal 2018:
Third Quarter
Third Quarteriii. Average number of shares over period:
69,509,684
69,561,756
Fiscal 2018:
Fiscal 2017:* The Company consolidated its common shares at a ratio of one share for each five shares effective as of October
1, 2017. On this basis, number of shares issued at end of period, number of treasury stock at end of period andaverage number of shares over period are calculated on the assumption that the consolidation of shares was
conducted as of the beginning of the preceding fiscal year.
(Note) Notice on the implementation of quarterly review proceduresThis summary of quarterly consolidated financial statements is not subject to quarterly review procedures in linewith the Financial Instruments and Exchange Act. At the point of disclosure of this summary of quarterly
consolidated financial statements, the quarterly consolidated financial statements review procedures in line with the
Financial Instruments and Exchange Act are underway.
(Note) Cautions pertaining to appropriate use of performance forecast and other particular items(Cautions related to Forward-looking statement)
The performance forecast and other forward-looking statements contained in this material have been prepared on
the basis of information available at this point and certain assumptions which are judged to be rational, and may
be substantially different from the actual performance because of various factors that may arise from now on.
2

Contents for Accompanying Materials…………………

P. 2(1) Explanation concerning business results…………………

P. 2(2) Explanation concerning financial position…………………

P. 6…………………

P. 6

2. Quarterly Consolidated Financial Statements…………………

P. 7(1) Quarterly Consolidated Balance Sheets…………………

P. 7(2) Quarterly Consolidated Statements of Income…………………

P. 9(3) Quarterly Consolidated Statements of Comprehensive Income…………………

P. 10(4) Notes on Quarterly Consolidated Financial Statements…………………

P. 11(5) Segment Information…………………

P. 12

1. Qualitative information on consolidated results for this quarter(3) Explanation concerning information related to future
prediction such as consolidated performance forecast

11. Qualitative information on consolidated results for this quarter(1) Explanation concerning business results
Consolidated results for the third quarter fiscal 2018 (accumulated figures, April 1, 2018 December 31, 2018) are summarized as follows:(Unit: Millions of yen)
Net sales

Operating profit

Ordinary profit

Profit attributableto owners ofparentThird Quarter Fiscal 2018

238,289

25,454

23,674

19,570Third Quarter Fiscal 2017

226,090

30,15026,477

7,342

5.4(15.6)(10.6)

166.5

Rate of change (%)

Net sales
Consolidated net sales increased 5.4%, or ¥12,198 million compared with the corresponding
period of the previous year, to ¥238,289 million. This was largely attributable to an increased
sales volume in products such as semiconductor-related products and revision in selling prices of
products such as caustic soda.
Cost of sales
Cost of sales increased 9.3%, or ¥14,114 million compared with the corresponding period of theprevious year, to ¥166,215 million. This was due mainly to a upturn in raw material and fuel costs
as a result of the increase in coal prices and domestic naphtha.
SG&A expenses
SG&A expenses increased 6.3%, or ¥2,780 million compared with the corresponding period of
the previous year, to ¥46,619 million. This was largely attributable to the increase in logistics
costs.
Operating profit
Operating profit decreased 15.6%, or ¥4,695 million compared with the corresponding period of
the previous year, to ¥25,454 million. Despite sales in each business remained steady, the increasein manufacturing costs including the rise in raw material and fuel costs affected the operating
profit of each segment.

2Non-operating income/expenses, Ordinary profit
Non-operating income/expenses improved ¥1,892 million compared with the corresponding
period of the previous year.
As a result of the above, ordinary profit decreased 10.6%, or ¥2,803 million compared with thecorresponding period of the previous year, to ¥23,674 million.
Extraordinary income/losses, Profit before income taxes, Profit, Profit attributable toowners of parent
Extraordinary income/losses improved by ¥2,048 million compared with the corresponding
period of the previous year.
As a result of the above, profit before income taxes decreased 3.1%, or ¥755 million comparedwith the corresponding period of the previous year, to ¥23,808 million.
Profit after deducting income taxes calculated in an appropriate way increased 58.9%, or ¥7,413
million compared with the corresponding period of the previous year, to ¥19,991 million.
Profit attributable to owners of parent increased 166.5%, or ¥12,228 million compared with thecorresponding period of the previous year, to ¥19,570 million.

3

(Operating results by segment)
Net sales(Unit: Millions of yen)

Chemicals

Specialty
Products

CementLife &
Amenity

Others

Total

Adjustment

Figures inquarterly
consolidated
incomestatement

74,232

42,05369,071

39,31245,102

269,773(31,484)

238,289

67,88941,75665,75037,79541,047254,238(28,148)

226,090

9.3

0.7

5.1

4.0

9.9

6.1

-

5.4

Reportable segment

Third Quarter
Fiscal 2018
Third Quarter
Fiscal 2017
Rate of change (%)

Operating profit(Unit: Millions of yen)

Others

Total

Adjustment

Figures inquarterly
consolidated
incomestatement

2,386

2,782

26,947(1,492)25,454

3,656

2,383

5,024

29,777373

30,150(39.2)

0.1(44.6)(9.5)-(15.6)

Reportable segment

Third Quarter
Fiscal 2018
Third Quarter
Fiscal 2017
Rate of change (%)

Chemicals

Specialty
Products

CementLife &
Amenity

12,694

6,862

2,222

11,405

7,306

11.3

(6.1)

(Note) Net sales and operating profit in each segment include inter-segment transactions.

ChemicalsWith regard to caustic soda, the revision of selling prices was progressed. As a result, its
operating profit increased greatly.
Sales volume of vinyl chloride resin was steady. Meanwhile, manufacturing costs increased due toa rise in raw material prices such as domestic naphtha. As a result, its operating profit decreased.
As a result of the above, segment net sales increased 9.3% compared with the corresponding
period of the previous year, to ¥74,232 million and operating profit increased 11.3% to ¥12,694
million. The segment reported higher earnings on higher sales.

4Specialty Products
Sales volume of semiconductor-grade polycrystalline silicon was steady. Meanwhile,
manufacturing costs increased due to a upturn in fuel and raw material costs. As a result, its
operating profit decreased.
With regard to high-purity chemicals for electronics manufacturing, sales volume increased.
Meanwhile, manufacturing costs increased due to a rise in raw material prices such as domestic
naphtha. As a result, its operating profit decreased.
With regard to aluminum nitride, sales volume in such applications used for semiconductor
manufacturing equipment increased and the business did well.
As a result of the above, segment net sales increased 0.7% compared with the corresponding
period of the previous year, to ¥42,053 million and operating profit decreased 6.1% to ¥6,862
million. The segment reported lower earnings on higher sales.
CementWith regard to cement, domestic sales volume was weak and manufacturing costs increased due
to a rise in raw material prices such as coal. As a result, its operating profit decreased.
In the resource recycling business, its business result was almost same as the corresponding
period of the previous year.
Consolidated subsidiary net sales increased. This mainly reflected the robust shipping trends of
cement-related products.
As a result of the above, segment net sales increased 5.1% compared with the corresponding
period of the previous year, to ¥69,071 million and operating profit decreased 39.2% to ¥2,222
million. The segment reported lower earnings on higher sales.
Life & Amenity
With regard to plastic lens-related materials, sales volume of photochromic dye materials foreyeglass lenses increased.
With regard to ion exchange membranes, despite sales volume was steady, its operating profit
decreased due to large-scale project recorded in the corresponding period of the previous year.
As a result of the above, segment net sales increased 4.0% compared with the corresponding
period of the previous year, to ¥39,312 million and operating profit increased 0.1% to ¥2,386
million. The segment reported higher earnings on higher sales.

5(2) Explanation concerning financial position(Status of assets, liabilities and net assets)
As of December 31, 2018, total assets amounted to ¥363,799 million, an increase of ¥1,850
million compared with those as of March 31, 2018.
This increase primarily reflects the increase of property, plant and equipment of ¥5,163 million
due to the inclusion of subsidiaries in the Company’s scope of consolidation from the second
quarter consolidated accounting period for the fiscal year ending March 31, 2019, despite thedecrease of Investment securities of ¥2,090 million due to the fair market valuation of securities
held.
Total liabilities amounted to ¥214,847 million, down ¥10,510 million compared with those as ofMarch 31, 2018.
The principal factors are a decrease in long-term loans payable and current portion of long-termloans payable of ¥10,114 million.
Net assets totaled ¥148,952 million, an increase of ¥12,360 million compared with those as ofMarch 31, 2018.
This mainly reflected the increase of retained earnings of ¥16,428 million, while the valuationdifference on available-for-sale securities decrease ¥2,782 million compared with those as ofMarch 31, 2018. This was primarily due to posting profit attributable to owners of parent.

(3) Explanation concerning information related to future prediction such as
consolidated performance forecast
Although the future business environment is uncertain because of the fluctuations in exchange
rate and raw material and fuel prices, the Company’s results were in line with our expectations at
this time. Therefore, the Company has not revised the performance forecasts, announced on
April 27, 2018.
The performance forecast has been prepared on the basis of information available at this pointand certain assumptions which are judged to be rational, and may be substantially different fromthe actual performance because of various factors that may arise from now on.

6

2. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets
Millions of yen
3/31/201812/31/2018
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Lease receivables
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Goodwill
Leased assets
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Net defined benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

757,22979,66028
10,00014,028
10,075
15,3274,809△127
191,031

61,172
78,07529－
17,791
9,432
17,313
5,896△104
189,608

102,761△73,455
29,305446,278△404,441
41,836
21,887△19,7482,138
30,9953,760△1,753
2,007
3,959
110,242

105,249△75,797
29,451
456,577△412,959
43,61722,042△19,870
2,171
32,197
4,595△2,146
2,448
5,518
115,405

1,158
51
1,556
2,766

359
53
1,557
1,970

24,302
2,627
18,300
9,657
3,162
△141
57,908
170,917361,949

22,2132,530
18,658
10,102
3,368△58
56,814
174,191
363,799

Millions of yen
3/31/201812/31/2018
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Income taxes payable
Provision for bonuses
Provision for repairs
Provision for product warranties
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for directors' retirement benefits
Provision for share benefits
Provision for repairs
Allowance for loss on compensation for building materials
Provision for environmental measures
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

847,6102,549
15,684
641
3,688
2,557
4,332
98
15,87093,032

49,051
3,622
12,279
763
2,281
1,224
3,493
34
15,74988,501

119,521
1,521
298
143
－
1,594
261
253
1,527
5
7,197
132,325
225,357

112,811
1,880
442
209
34
1,375
218
251
2,191
6
6,925
126,346
214,847

10,00020,00890,752△1,472
119,288

10,00020,018107,180△1,821
135,377

1,352
△151
2,093
3,074
6,368
10,935
136,591
361,949△1,430
△59
1,607
2,907
3,024
10,550148,952
363,799

(2) Quarterly Consolidated Statements of Income
Millions of yen
Q3 FY2017 YTD
Q3 FY2018 YTD
226,090
238,289
152,100
166,215
73,98972,074

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Trial products income
Fiduciary obligation fee
Rent income on non-current assets
Other
Total non-operating income
Non-operating expenses
Interest expenses
Cost of loans payable
Loss on bond retirement
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on bargain purchase
Gain on sales of investment securities
Subsidy income
Gain on insurance adjustment
Compensation income for damage
Other
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Impairment loss
Loss on disaster
Loss on reduction of non-current assets
Loss on disposal of non-current assets
Litigation expenses
Loss on transfer of business
Loss on contract cancellation
Other
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

929,385
14,453
43,83930,15031,09015,52846,61925,454

174
253
811
450
317
319
1,017
3,344

75
400
721
533
572
426
1,042
3,770

2,894
－
1,605
2,517
7,017
26,477

2,055
884
－
2,611
5,551
23,674

478
－
－
144
31
7,705
－
8,359

39
964
1
33
46
－
31
1,117

1
－
4
110
489
120
8,059
1,431
56
10,27324,564
11,986
12,577
5,235
7,342

9
125
18
19
600
157
－
－
52
982
23,8083,817
19,991
420
19,570(3) Quarterly Consolidated Statements of Comprehensive Income

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using
equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to
Owners of the Parent
Non-controlling interests

10

Millions of yen
Q3 FY2017 YTD
Q3 FY2018 YTD
12,577
19,991
1,778
135
946
△17

△2,768
92
△431
△167

34

△68

2,877
15,454△3,343
16,648

10,1095,345

16,226421

(4) Notes on Quarterly Consolidated Financial Statements(Change of Accounting Process Specific to Preparing Quarterly Consolidated Financial Statement)(Calculation of Tax Expense)
The Company rationally estimated the effective tax rate after the application of accounting policy
for deferred tax, which was applied to the profit/loss before income tax for the fiscal year underreview including the third quarter consolidated accounting period for the fiscal year ending March
31, 2019, and calculated the tax expense by multiplying the estimated effective tax rate to the
profit/loss before income tax. However, if the application of said estimated effective tax rate
reduces the rationality of the calculation of tax expense, the Company applies the effective
statutory tax rate.
(Additional Information)(Application of the Partial Amendments to the Accounting Standard for Tax Effect Accounting)
Effective from the first quarter of the fiscal year under review, Tokuyama has applied the Partial
Amendments to the Accounting Standard for Tax Effect Accounting (Accounting Standards
Board of Japan (ASBJ) Statement No. 28 issued on February 16, 2018). Accordingly, deferred tax
assets have been reclassified and included in the investment and other assets section of theCompany’s balance sheet, and deferred tax liabilities have been reclassified and included in the
non-current liabilities section of the Company’s balance sheet.
(Adoption of the Consolidated Taxation System)
Effective from the first quarter of the fiscal year under review, the Company and certain of its
consolidated subsidiaries have adopted the consolidated taxation system.
(Performance-linked Share-based Remuneration Plan)
Effective from September 3, 2018, the Company introduced a performance-linked share-based
remuneration plan for Directors (excluding Directors who are Audit and Supervisory Committee
Members, non-executive Directors, External Directors, and persons not resident in Japan) and
Executive Officers (excluding non-residents of Japan).
1. Overview of the Plan
The Plan employs a framework using a trust for officer remuneration plan, which is a
so-called Board Incentive Plan (BIP) (this trust, hereinafter “BIP trust”). As with performance
shares and restricted shares in Europe and North America, a BIP trust is a system whereby
shares in the Company and cash equivalent to the conversion amount of the Company’s
shares will be delivered or paid in accordance with business performance and the recipient’srank.
2. The Company’s Shares Held by the Trust
The Company’s shares held by the BIP trust is included in net assets as treasury stock at bookvalue (excluding associated expenses). There were 100,800 shares with a book value of 340
million yen as of the end of the period under review.

11(5) Segment information
Third Quarter Fiscal 2017 (accumulated figures, Apr. 1, 2017– Dec. 31, 2017)

1. Information on sales and profit by reportable segment(Millions of yen)

Reportable segments

Sales
Sales to customers
Inter-segment sales/transfer
Total
Segment profit

Chemicals

Specialty
Products

Cement67,153735
67,88911,40533,3968,360
41,756
7,306

65,495255
65,7503,656Life &
Amenity

36,194
1,601
37,795
2,383

Others*1

Total

23,851
17,19541,0475,024

226,090
28,148254,238
29,777

Adjustment*2

Figures inquarterly
consolidated
incomestatement*3(28,148)(28,148)373

226,090226,090
30,150*1 The “Others” segment comprises businesses other than those of the reportable segments. Specifically, thesegment includes overseas sales companies, a distribution company, a real estate business, etc.
*2 The segment profit adjustment amount consists mainly of basic R&D expenses that are not allocable to a
specific reportable segment.
*3 With regard to segment profit, operating profit in the quarterly consolidated statement of income has been
calculated by making an adjustment to the sum total of the reportable segments’ profit and the “Others”
segment’s profit.

Third Quarter Fiscal 2018 (accumulated figures, Apr. 1, 2018– Dec. 31, 2018)

1. Information on sales and profit by reportable segment(Millions of yen)

Reportable segments

Sales
Sales to customers
Inter-segment sales/transfer
Total
Segment profit

Chemicals

Specialty
Products

Cement73,592
640
74,232
12,69432,654
9,399
42,053
6,862

68,412659
69,071
2,222

Life &
Amenity

37,764
1,566
39,312
2,386

Others*1

Total

25,883
19,21845,102
2,782

238,289
31,484
269,773
26,947

Adjustment*2

Figures inquarterly
consolidated
incomestatement*3(31,484)(31,484)(1,492)

238,289
238,289
25,454*1 The “Others” segment comprises businesses other than those of the reportable segments. Specifically, thesegment includes overseas sales companies, a distribution company, a real estate business, etc.
*2 The segment profit adjustment amount consists mainly of basic R&D expenses that are not allocable to a
specific reportable segment and the amount of inter-segment eliminations.
*3 With regard to segment profit, operating profit in the quarterly consolidated statement of income has been
calculated by making an adjustment to the sum total of the reportable segments’ profit and the “Others”
segment’s profit.

2. Items related to the changes in reportable segment
The Company posted ¥125 million of Impairment loss in the “Life & Amenity” segment in the third quarter
consolidated accounting period for the fiscal year ending March 31, 2019.

12