2Q FY2018 Tokuyama Corporation
Investor Meeting Q&A (Excerpts)
Date and time: October 31, 2018 (Wednesday) 14:00 – 15:00
Participants:
Hiroshi Yokota, President and Executive Officer
Akihiro Hamada, Director, Managing Executive Officer, General Manager of the Financial Div.
Taro Kobayashi, General Manager, Corporate Communications & Investor Relations Dept.
1. Questions regarding increases in selling prices
Q1: What is the status of revisions to the prices of caustic soda, polyvinyl chloride, and cement?
A1: While overseas market conditions for caustic soda have deteriorated compared with thebeginning of this year, we do not believe there will be any impact on domestic prices. This islargely due to the lingering tight conditions attributable to environmental regulations in China.
As far as polyvinyl chloride is concerned, we are seeking the understanding of customers given
the upswing in naphtha costs. We will continue to call for increases in the selling price of
cement as we believe the cost of coking coal will remain at a high level.
Q2: What are your thoughts on polycrystalline silicon?
A2: While wafer supply and demand is tight, conditions for polycrystalline silicon are relativelyrelaxed. However, as sales volumes of wafers increase in line with the growth in demand, wecan also expect an upswing in polycrystalline silicon for use in high-end products.
2. Questions regarding operating profit
Q3: As president, you mentioned that the Company is targeting operating income around the samelevel as FY2017 (¥41.2 billion) in FY2018? The Company announced that it was projecting
operating profit to come in at ¥38 billion on April 27, 2018. How do you plan to make up theshortfall of roughly ¥3 billion?
A3: In addition to robust trends in the Life & Amenity segment, we will work to increase selling
prices for chemicals and other products while also lifting sales volumes specialty products.
Moreover, we will actively promote the BRIGHT-II project to thoroughly reduce costs at
Tokuyama factory.
Q4: You stated that the Company incurred temporary expenses of around ¥1 billion because of the1purchase of electricity from power companies as a result of unforeseen repairs following
periodic repairs and maintenance? Did electricity sales total zero in the July-September quarter?
A4: While electricity sales declined from the 1Q, the total was not zero.
Q5: Can you provide a year-on-year breakdown of the increase in costs in the 2Q?
A5: Naphtha made up roughly 50% of the cost increase and coal 30%. The rest was metal silicon
and others.

3. Question regarding the Company’s financial strategy
Q6: It is pleasing to see that the Company has been able to refinance an existing subordinated loan
without any subsequent dilutive effect on its shares and is also able to undertake repayment
using cash on hand. While there is no change in the order of funds application priority, is there
are chance that funds may be applied to further increase the dividend payout ratio?
A6: Our first priority regarding the allocation of funds is investment. This is followed byshareholders’ return. While we are not in a position to elaborate on the actual schedule at thistime, I would like to lift the dividend payout ratio to 30% when we have the necessary surplus
funds.

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