1Q FY2019 Tokuyama Corporation Investor Meeting
Q&A (Excerpts)

Date and time: July 29, 2019 (Monday) 12:00 – 12:45
Participants:
Hideo Sugimura, Director, Managing Executive Officer, General Manager, Corporate Planning Div.
Taro Kobayashi, General Manager, Corporate Communications & Investor Relations Dept.

1.

Questions regarding 1Q FY2019 operating profit

Q1:

Why did profit fall in the Chemicals Business Division?

A1:

Our policy is to expand exports of caustic soda over the medium to long term. In this context, weare increasing export volumes as a means to establish sales channels. While our export ratio in the
1Q of FY2019 came in at 20%, up from 5% in the corresponding period of the previous fiscal year,
profit declined due to a deterioration in overseas caustic soda market conditions. Moreover, sales
volumes of propylene oxide, which is a feedstock for urethane, fell more than 10% as a result of aslowdown in the automobile industry in China.

Q2:

Have you resumed the export of caustic soda to India?

A2:

Not as yet. We plan to resume exports from the latter half of the 2Q

Q3:

Why did operating profit in the Specialty Products Business Division fall below the internal budget
ratio of ¥700 million?

A3:

Chemicals for the electronics industry as well as fumed silica for chemical mechanical polishing are
feeling the effects of a downturn in demand from semiconductor customers. We are, however, seeing
sales volumes of semiconductor-grade polycrystalline silicon and heat dissipation materials such asaluminum nitride. Quantities of semiconductor-grade polycrystalline silicon are in line with theprevious year. In overall terms, prices are also rising compared with the corresponding period of theprevious fiscal year.

Q4:

Looking at your analysis of changes by factor, operating profit in the others category came in at ¥1.7
billion. Can you provide breakdown details?

A4:

Among a variety of factors, increases in fixed costs as well as selling, general and administrative
expenses accounted for 50% and 30%, respectively. By segment, the year-on-year downturn of ¥1.7
billion in the others category was made up of ¥300 million in the Cement Business Division and1¥300 million in the Life & Amenity Business Division. The remaining amount of roughly ¥1 billion
was spread across Companywide infrastructure capital investment, depreciation as well as plantmaintenance, renewal and repairs.

2.

Questions regarding the outlook for each product

Q5:

What are your thoughts on coal prices?

A5:

Coal prices in the 1Q exceeded forecasts on a cost basis. Looking ahead, we anticipate the price ofcoal will trends between US$75-80 per tonne from the 2Q. We will work to lower costs by adopting
various purchasing methods. This includes placing orders while the spot price is low.

Q6:

What are your plans for final semiconductor-grade polycrystalline sales volumes in the current fiscalyear?

A6:

We are projecting a year-on-year increase of 10%, which is in line with forecasts at the start of theperiod.

Q7:

What are your thoughts on cement from the 2Q?

A7:

We see cement as currently in a transition period. Coupled with the increase associated with such
future events as the World Expo in Western Japan, signs of a pickup in disaster recovery demand arebeginning to emerge. We are confident in our ability to boost sales volumes in Western Japan to thesame levels as the eastern region.

Q8:

Will power sales increase from the 2Q?

A8:While generating capacity will increase compared with the previous year during which large-scale
periodic maintenance was undertaken, the potential for a substantial upswing in profit as a result ofpower sales is low. This is because of plans to also increase product manufacturing volumes.

3.

Question regarding our financial strategy

Q9:Will you revise your stance toward the return of profits to shareholders following the Company’s
return to an “A” credit rating?

A9:

We have not made a decision at the moment, but will consider going forward.

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