Q2 FY2016 Tokuyama Corporation Earnings Conference Call (October 28, 2016)
Q&A (Excerpts)

Participants:
Akihiro Hamada, Director, Managing Executive Officer, General Manager of the Financial Div.
Taro Kobayashi, General Manager, Corporate Communications & Investor Relations Dept.

1. Question regarding 2Q financial results

Q1: Revenue and earnings in the Life & Amenity segment declined year on year. Which area ofbusiness saw the most change?
A1: The drop in sales was almost entirely due to the removal of Figaro Engineering Inc. from theCompany’s scope of consolidation. In addition to the removal of Figaro, the downturn inearnings reflected corrections following the surge in shipments of generic pharmaceuticals andmedical diagnosis systems in the corresponding period of the previous fiscal year.

2. Questions regarding full fiscal year forecasts

Q2: Can you elaborate on why 2H operating income forecasts in each of the Specialty Products andCement businesses were revised downward in the 2H?
A2: In the Specialty Products business, we have factored in a decline in operating income due
mainly to the forecast deterioration in earnings at Tokuyama Malaysia Sdn. Bhd. and the impactof fluctuations in foreign currency exchange rates on semiconductor-grade polycrystalline
silicon. In the Cement business, the decision to revise downward 2H forecasts reflects theanticipated slight drop in sales volume as well as increases in raw material and fuel costs.

Q3: You mention that the effects of movements in raw material and fuel prices as well as foreign
currency exchange rates have been factored into current forecasts. To what degree will each
impact results?
A3: We estimate domestic naphtha prices will climb from ¥31,400/kl in the 1H to ¥33,000/kl in the2H. While we believe that the upswing in naphtha prices can ultimately be absorbed through theincrease in product prices, a movement of ¥1,000/kl in domestic naphtha prices will impact thecost of petrochemicals by between ¥500 to ¥600 million a year. Taking into consideration ouruse of around 2 million tonnes of coal each year, a change in procurement prices of say US$10
will have an impact of roughly ¥2 billion. Accounting for such factors as the level of inventory,
practically the effects will be gradual. Looking at the Tokuyama Group as a whole, we are not1

overly affected by fluctuations in foreign currency exchange rates. This largely reflects theoverall balance between the Group’s export and import activities. In the event of a major shift
in foreign currency exchange rates over the short term, net sales will be the first to be affected.

Q4: Can you explain once again your reasons for revising forecasts for ordinary income and profit
attributable to owners of parent?
A4: We estimate ordinary income will come in at ¥27.0 billion. The Company reported anextraordinary gain of approximately ¥6.0 billion in the 1H. However, we are looking at anextraordinary loss of between ¥9.0 to ¥9.5 billion including roughly ¥8.5 billion attributable tothe transfer of Tokuyama Malaysia in the 2H. Accounting for each of these factors, income
before income taxes is expected to total around ¥23.5 billion. Meanwhile, tax expenses areanticipated to come in at ¥2.0 billion, roughly ¥8.0 billion lower than our initial estimate. Thisdecrease is due to the transfer of Tokuyama Malaysia. As a result, profit attributable to ownersof parent is forecast to total ¥21.0 billion.

Q5: Non-operating trial production expenses totaled ¥1.7 billion in the 1Q with virtually no increasein the 2Q. Can we assume that there will no further expenditure in this area in the future?
A5: The vast majority of 1Q trial production expenses were for periodic maintenance and repairs
conducted at the PS-1 Plant from March through to April. Operations at the Plant wereterminated as of the end of September. Looking ahead, a small amount of expenditure will be
incurred in October. We are not anticipating any further major expenditure in the future.

3. Question regarding the Company’s capital policy

Q6: What are your thoughts regarding the resumption of common stock dividends? Can you
elaborate on the Company’s capital policy including the early redemption of preferred stock
totaling ¥20.0 billion?
A6: The timing of a resumption in the payment of cash dividends will depend on three broad factors.
First, we will look at results for the fiscal year under review and our outlook for fiscal 2017.
Second, we will work toward the redemption of preferred stock and third, we will confirm
completion of the transfer of Tokuyama Malaysia.

4. Question regarding the transfer of Tokuyama Malaysia to OCI Company Ltd. (OCI)

Q7: Should you experience a delay in the transfer of Tokuyama Malaysia as a result of such concerns
as competition law, will we see any major change in performance forecasts for the fiscal year2

under review?
A7: Should the transfer be postponed beyond the end of March due to such concerns as competition
law, we are confident that any impact of results will be immaterial. This is because of theabsence of the forecast extraordinary loss attributable to the transfer as well as the decrease inincome tax expenses.

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