Fiscal 2013

- Apr 1, 2013 to Mar 31, 2014 -Financial Results
Apr 30, 2014

CONTENTS
1 Financial Results for FY2013
2 Performance Forecasts for FY2014
3 Rolling Three-Year Plan
４ Supplementary Data2

1 Financial Results for FY2013

1. Financial Highlights
2. Net Sales/Operating Income
by Business Segment
3. Changes in Operating Income
4. Results for Companywide
Profitability Improvement

31 Financial Results for FY2013

1. Financial Highlights

Consolidated (year-on-year change)

FY2012FY2013

Net sales
Operating income
Ordinary income
Net income (loss)

258.6
6.7
3.2
(37.9)

287.3
20.2
14.9
10.2

Net income per share (yen)(108.98)
83
57,50029.37
100
67,300Exchange rate (¥/$)
Domestic naphtha price (¥/kl)(Billions of yen)

Difference
Amount

+28.6
+13.4
+11.7
+48.1

%

+11
+199
+363
-

Qualitative information(Net sales) ¥287.3 billion, up 11%
Pluses: increased sales volume of cement and related products, selling price revisions of petrochemicals and other products,
increased sales volume of vinyl chloride monomer (VCM) as a result of resolution of plant difficulties that occurred in
the previous year
Minus: decreased sales volume of polycrystalline silicon(Operating income) ¥20.2 billion, up 199%
Plus:
companywide thoroughgoing cutbacks in expenditure
Minus: domestic naphtha price hikes
4

1 Financial Results for FY2013

1. Financial Highlights

Consolidated (year-on-year change)

FY2012FY2013

Net sales
Operating income
Ordinary income
Net income (loss)

258.6
6.7
3.2
(37.9)

287.3
20.2
14.9
10.2

Net income per share (yen)(108.98)
83
57,50029.37
100
67,300Exchange rate (¥/$)
Domestic naphtha price (¥/kl)(Billions of yen)

Difference
Amount

+28.6
+13.4
+11.7
+48.1

%

+11
+199
+363
-

Qualitative information(Ordinary income) ¥14.9billion, up 363%
Plus:decrease in costs of idle operations
Minus: borrowing-related costs which arose from the procurement of funds through a subordinated loan
(Net income) ¥10.2 billion, back into the black
Pluses: extraordinary gains/losses improved, because the Company posted neither impairment loss on polycrystalline silicon
manufacturing facilities nor loss from inventory revaluation, both of which were posted in the previous fiscal year;
income tax expenses decreased, because the Company did not post a reversal of deferred tax assets in the period underreview, which was posted in the previous fiscal year5

1 Financial Results for FY2013

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

Total assets
Shareholders’ equity
Shareholders’ equity ratio
Interest-bearing debt
D/E ratio
Net D/E ratio*
Net assets per share (yen)As of Mar 31, 2013

As of Mar 31, 2014

Changes

518.2
217.5
42.0%
187.7
0.86

576.3
229.6
39.9%
240.7
1.05

+58.0
+12.1
(2.1 pts)
+53.0
+0.19

0.59

0.74

+0.15

625.29660.18

Qualitative information*Net D/E ratio: (Interest-bearing debt – Cash and deposits, Cash equivalents, Money held in trust)/Shareholders’ equity(Total assets)
Increase factors: increase in tangible fixed assets due to construction of polycrystalline silicon manufacturing facilities in Malaysia;
increased securities (negotiable certificates of deposit) due to the procurement of funds through a subordinated loan
(Shareholders’ equity)
Increase factor: increase in retained earnings and improvement of foreign currency translation adjustments arising from the weakeryen(Interest-bearing debt)
Increase factor: increased long-term loans payable as a result of the procurement of funds through the subordinated loan
6

1 Financial Results for FY2013

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

FY2012FY2013Difference

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeChemicals

77.3

0.4

86.4

2.2

+9.1

+12

+1.8

+424

Specialty Products

52.8

0.3

52.4

6.0

(0.3)

(1)

+5.6

+1457

Cement

69.9

5.3

78.9

6.6

+9.0

+13

+1.3

+25

Life & Amenity

51.0

2.9

57.0

4.8

+6.0

+12

+1.9

+66

Others

40.1

2.6

47.2

4.1

+7.1

+18

+1.5

+59

Total

291.3

11.6

322.2

24.0

+30.9

+11

+12.3

+105

Inter-segment eliminations
and corporate-wide
expenses(32.6)(4.9)(34.9)

(3.7)

(2.2)

-

+1.1

-

Consolidated results

258.6

6.7

287.3

20.2

+28.6

+11

+13.4

+199

%

(Note 1) Sales and operating income shown above include inter-segment transactions.
(Note 2) From Fiscal 2013, the Advanced Components segment has been renamed the Life & Amenity segment.
(Note 3) From FY 2013, the Company has changed its accounting method of allocating costs to each segment. Net sales and operating income for FY2012
have been recalculated reflecting this change.

7%

1 Financial Results for FY2013

3. Changes in Operating Income(Year-on-year change)

By Business Segment(Billions of yen)•Selling price increase due to the weaker yen and other factors (+)•Decrease in depreciation owing to the loss on impairment offacilities (+)•Transfer of costs of idle operations (non-operating expenses) (+)•Decrease in sales volume of polycrystalline silicon (-)•Increase in the cost of sales due to a drop in the operating rate (-)•Companywide cost reduction (+)•Companywide cost reduction (+)•Other differences (+)•Increased sales volume (+)•Increased fuel cost due to the weaker yen (-)•Companywide cost reduction (+)

20.2
+2.7

+1.9
•Resolution of problems at the VCM Plant (+)•Selling price revisions of petrochemicals (+)•Price rise of domestic naphtha (-)•Companywide cost reduction (+)

6.7

FY20128+1.3+5.6•Increase in sales volume of plastic lens-related materials
and other products (+)•Selling price increase due to the weaker yen (+)•Restructuring of the plastic window sash business (+)•Companywide cost reduction (+)+1.8

Chemicals

Specialty
Products

CementLife &
Amenity

Corporate
and others

FY2013

1 Financial Results for FY2013

3. Changes in Operating Income(Year-on-year change)(Billions of yen)

By Factor

20.2

Profit Improvement Plan

+3.0
+3.2
6.7

FY2012

Increased sales volume (+)
Selling price revision (+)
Other differences (+)+7.2

Companywide
cost reduction

Impairment loss andvaluation loss

Others

FY2013

Note: The amounts of Companywide cost reduction and impairment impact represent the amounts by which operating income excluding inventory differences are affected.

9

1Financial Results for FY2013

4. Results for Companywide Expenditure Reduction
Expenditure reduction in FY2013

Overhead
Purchasing
Distribution
Repairs
Personnel

:
:
:
:
:

¥0.3 billion¥1.7 billion¥0.5 billion¥0.5 billion¥2.0 billion(Billions of yen)

8.3

Overhead
Purchasing
Distribution
Repairs
Personnel

:
:
:
:
:

¥1.2 billion¥2.9 billion¥0.7 billion¥1.5 billion¥1.8 billion

1.6 (Q4)5.0

0.8 (Q3)

3.2 (Q2)

2.7 (Q1)
Targeted amount of expenditure reduction for FY2013(compared with FY2012 forecasts, as of Feb. 28, 2013 when weannounced the Plan)

Amount of expenditure reduction
achieved in FY2013

Note 1: As for purchasing and distribution expenses, increase or decrease arising from quantity or currency exchange rates are excluded.
Note 2: The amount of expenditure reduction achieved in FY2013 means a year-on-year decrease in expenses that are subject to our reduction policy.

10

2 Performance Forecasts for FY2014

1. Future Business Environment
2. Basis for Performance Forecasts
3. Performance Forecasts
4. Performance Forecasts
by Business Segment
5. Operating Income Change112Performance Forecasts for FY2014

1. Future Business Environment
Chemicals◆ Anticipate to confront a persistently harsh operating environment due largely to domestic naphtha prices that are likely to remain
at high levels.
- We will look to secure earnings through selling price revisions as well as cost reductions, while we will review the chlorine
derivatives portfolio.

Specialty Products◆ Although the market is on the path of recovery in both semiconductor and solar cell fields, the polycrystalline silicon business is
forecast to confront a persistently harsh operating environment due to the glut in supply.
- At Tokuyama Malaysia, we will start selling solar cell-grade polycrystalline silicon, while we endeavor to optimize production
conditions of semiconductor-grade polycrystalline silicon.

Cement◆ Public- and private-sector demand for cement is anticipated to remain robust.
- Although distribution costs are expected to increase due mainly to the reinforcement of transportation capability, we will work
to secure earnings by securing sales volume and maintaining stable supply.

Life & Amenity◆ In the domestic market, demand is expected to bottom out owing to economic recovery. On the other hand, in overseas markets,
demand is anticipated to grow mainly in emerging nations.
- We will work to secure earnings by focusing on developing new products that meet customer needs and expanding sales ingrowing markets.

12

2

Performance Forecasts for FY2014

2. Basis for Performance Forecasts
1H FY2013
Results
Domestic naphtha price(¥/kl)
Exchange rate
(¥/$)

13

2H FY2013
Results

FY2013Results

FY2014
Forecasts

64,70069,90067,30067,000

99

102

100

100

2

Performance Forecasts for FY2014

3. Performance Forecasts

Consolidated(Year-on-year change based on FY2014 forecasts)(Billions of yen)

FY2013 Results

FY2014 Forecasts

Net income

287.3
20.2
14.9
10.2

303.0
16.5
10.0
6.5

Net income per share (yen)Exchange rate (¥/$)
Domestic naphtha price (¥/kl)

29.37
100
67,30018.68
10067,000Net sales
Operating income
Ordinary income

Difference
Amount

+15.6
(3.7)
(4.9)
(3.7)

Qualitative information(Net sales)
Pluses: increased sales volume of polysilicon and other products;
selling price revisions of caustic soda, vinyl chloride resinand other products(Operating income)Plus:
increased net sales
Minus: increase in overhead and repair expenses
14(Ordinary income)
Minus:
increase in interest expenses(Net income)Plus:
improved extraordinary gains/losses
Minus:
increased income tax expenses

%

+5
(19)
(33)
(36)

2

Performance Forecasts for FY2014

4. Performance Forecasts by Business Segment(Year-on-year change based on FY2014 forecasts)
FY2013 Results

Difference

FY2014 Forecasts

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

86.4

2.2

91.5

4.0

+5.0

+6

+1.7

+79

52.4

6.0

60.5

3.0

+8.0

+15

(3.0)

(51)

78.9

6.6

81.0

5.5

+2.0

+3

(1.1)

(18)

57.0

4.8

58.0

4.0

+0.9

+2

(0.8)

(18)

47.2

4.1

49.5

5.0

+2.2

+5

+0.8

+20

322.2

24.0

340.5

21.5

+18.2

+6

(2.5)

(11)

Inter-segment eliminations
and corporate-wide
expenses(34.9)(3.7)(37.5)

(5.0)

(2.5)

-

(1.2)

-

Consolidated Results

287.3

20.2

303.0

16.5

+15.6

+5

(3.7)

(19)

Chemicals
Specialty Products
CementLife &
Amenity
Others
Total(Note) Sales and operating income shown above include inter-segment transactions.

15(Billions of yen)

Operatingincome%%2

Performance Forecasts for FY2014

5. Operating Income Change(Year-on-year change based on FY2014 forecasts)(Billions of yen)

By Business Segment•Increased depreciation cost in Tokuyama Malaysia (-)•Increase in overhead and repair cost (-)•Increase in sales volume of polycrystalline silicon (+)

20.2

+1.7

(3.0)

+3.0
•Increased overhead cost (-)• Other differences (+)•Selling price revisions (+)•Increase in overhead and repair cost (-)

(1.1)

+1.3
(0.8)
(0.3)

+3.5

16.5

•Decreased sales volume of equipments (-)•Increase in sales volume of microporous film(+)+1.0•Increase in depreciation and distributions cost (-)•Increased sales volume (+)

FY2013Chemicals

Specialty
Products(Note) All numbers are discarded after the first decimal place.

16

CementLife &
Amenity

Corporate
and others

FY2014
Forecast

3 Rolling Three-Year Plan
1. Outline of Our Centennial Vision
and Profit Improvement Plan
2. Progress under the Profit Improvement
Plan and Initiatives Going Forward
3. Business Strategies
4. Future Vision of
Tokuyama Factory
5. Financial Policy

17

3

Rolling Three-Year Plan

1. Outline of Our Centennial Vision and Profit Improvement Plan
(1) Centennial Vision (Tokuyama 100th Anniversary: February 2018）
Centennial Vision

As a prominent manufacturer, we will continue to be responsive to society and help create
a better future through the vitality of our human resources and the creativity of chemistry.

zStrengthen Strategically Growing Businesses

Basic Strategies

Tokuyama Factory: As a “Mother Factory” in terms of its ability to provide human resources
and technology
Malaysia: As a manufacturing base for products that excel on the world stage
China: As a manufacturing base for products that adapt to the needs of the market

zBolster International Competitiveness
Polysilicon Business: Secure a leading position in the global market
Life & Amenity Business: Tap into new customer-oriented markets

18

Support Structure

Strengthen governance; accelerate the pace of management decision-making through the effective useof the new information line of business (LOB) system; strengthen organization functions (the venturespirit & innovation project), and; promote diversity & inclusion management (DIM)

Slogan:Venture Spirit &Innovation

Rather than an extension of our current capabilities and business course, we will work
diligently to become an internationally competitive company based on a venture spirit &innovation.

3

Rolling Three-Year Plan

1. Outline of Our Centennial Vision and Profit Improvement Plan
(2) Profit Improvement Plan
The Group as a whole put in place the Profit Improvement Plan in response to the sharp and rapid deterioration inpolycrystalline silicon business earnings.

1. Rebuild the Polycrystalline Silicon BusinessProfit Improvement Plan
(Announced in Feb 2013)•Bring online the Malaysia Factory and reduce costs•Streamline manufacturing costs at Tokuyama Factory while ensuring optimal balance inproduction

2. Improve Profits in Existing/New Businesses•Restructure the Group’s existing businesses
and improve profits•Establish new businesses

With a total of no less than 10, create new
businesses and implement
structural reforms that are capable ofgenerating ¥0.5 to ¥1.0 billion in profits.

3. Improve Companywide Profitability (Cost Reduction)
Undertake profit improvement measures based on rolling-three-year plans that reexamine targets and measures on acontinuous three-year cycle

FY 2012

2013

2014

2015

2016

Rolling Three-Year Plan (FY13 -15)
Reexamine measuresto achieve the targets
19

2017
Tokuyama's 100th
anniversary(FEB 2018)

Rolling Three-Year Plan (FY14 -16)
Rolling Three-Year Plan (FY15 -17)

Renewedgrowth strategies

3

Rolling Three-Year Plan

2. Progress under the Profit Improvement Plan and Initiatives Going Forward
Progress to FY2013

Initiatives during and after FY2014

1. Rebuild the PolysiliconBusiness(Tokuyama Factory) Loss on impairment of manufacturing
facilities recorded as of the end of FY2012(Tokuyama Malaysia) Construction completed and trial
operations commenced(Tokuyama Factory) Ensure optimal balance in production(Tokuyama Malaysia) Commence operations

2. Improve Profits in
Existing/New Businesses

Construction of a liquid hydrogen factory completed
A soda ash joint venture established
Construction of a waste gypsum board recycling factorycompleted

Expand propylene oxide manufacturing facilities
Bolster clinker export infrastructure
Optimize the fumed silica business3. 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 structuralreforms, and implementing various measures

Net Sales(Billions of yen)

258.6

Operating Income

287.3
20.2

2.6% 6.7
FY2012(Result)
20

Operating Margin

303.0

320.5

25.0
16.5

18.0

7.1%

FY2013(Results)

358.0

7.0%
5.4%

5.6%

FY2014(Forecast)

FY2015(Target)

FY2017(Target)Targets for
FY2015 andFY2017 inthis rolling planremain unchanged

3

Rolling Three-Year Plan

3. Business Strategies (1) Chemicals Segment
Basic PolicyzIn addition to recording stable profits and providing the underlying strength to support theCompany’s earnings as a whole, work toward further growth by reviewing the business portfolio

Measures<Soda Ash and Calcium Chloride Business>zTokuyama reached an agreement with Central Glass Co., Ltd.
to establish a soda ash and calcium chloride joint venture<Chlor-Alkali and Vinyl Chloride Business>
zCommenced the production of liquid hydrogen at Yamaguchi Liquid
Hydrogen Corporation, a joint venture formed with Iwatani Corporation
zReview the chlorine derivatives portfolio
The Company’s soda ash plant21

3

Rolling Three-Year Plan

3. Business Strategies (1) Chemicals Segment
Establishment of a Soda Ash Calcium Chloride Joint-Venture BusinessTokuyama reached an agreement with Central Glass Co., Ltd. toestablish a joint-venture business while transferring and consolidated
marketing activities in connection with the sales of soda ash andcalcium chloride.
The production of soda ash in Japan will be undertaken under a single
company structure from June 2015.
(Soda ash production capacity: 340,000 tonnes)
Company name: TOKUYAMA & CENTRAL SODA Inc.
Date of establishment: March 24, 2014

FY2012 Soda Ash Domestic Demand:
590,000 tonnes(including captive consumption)

Imports:
Domestic
270,000 tonnes production:
320,000 tonnes

Commencement of operations: October 1, 2014 (Plan)
Paid-in capital: ¥10 million(65% Tokuyama Corporation 35% Central Glass Co., Ltd.)
Source: Japan Soda Industry Association

22

3

Rolling Three-Year Plan

3. Business Strategies (1) Chemicals Segment
Start Production of Liquid Hydrogen
The production of liquid hydrogen began at Yamaguchi Liquid Hydrogen Corporation, a joint venture formed with
Iwatani Corporation, from June 2013.
In addition to rocket fuel, liquid hydrogen is used in the manufacture of solar cells and LEDs. Looking ahead,
demand is projected to expand substantially as use is extended to such areas as fuel-cell powered vehicles.
While liquefaction capacity currently stands at 3,000L/h, sights are being set on enhancing capacity.
Trends in Liquid Hydrogen Demand

Millions of ㎥

70
60
50
40
30
20
10

26

35

39

35

2010

2011

2012

42

0
2009

2013
Forecast

2014
Forecast

2015
Forecast(Note) Iwatani and Tokuyama estimate

23

3

Rolling Three-Year Plan

3. Business Strategies (1) Chemicals Segment
Review the Chlorine Derivatives Portfolio
Against the backdrop of such factors as the recovery in automobile production in Asia, steps will be taken to
expand production facilities of propylene oxide, a major chlorine derivative with various applications including
as a raw material in urethane, in July 2014. Plans are in place to increase production capacity by 10,000 tonnes
to 89,000 tonnes per year.
Propylene Oxide Balance in Japan

Thousands of tonnes
600
500
103
Exports
Domestic
Demands

110

400

181
103

157

300
200

200
399

399

370

352

100
0
2010

2011

2012

2013

NIHON OXIRANE
CO., LTD. plans todiscontinue use of
the styrene
monomer (SM) coproduction method
around May 2015.
Company B

110

Company A

89

Tokuyama

Capacity at theend of 2015

(Note) Tokuyama estimate based METI and Treasury trade statistics

24

3

Rolling Three-Year Plan

3. Business Strategies (2) Specialty Products Segment
Basic Policy
zPromote a sales strategy that serves to maximize profits in line with demand while building an
optimal production structure

Measures<Polycrystalline Silicon Business Reconstruction>
zCommence sales at Tokuyama Malaysia
zRationalize operations at Tokuyama FactoryzOptimize fumed silica business activities at the two bases of Japan and China<Shapal (Aluminum Nitride) Business>
zDrawing on its high heat dissipation properties, expand sales of aluminum nitride through applicationin power device and LED fields where demand is projected to increase

Polycrystalline Silicon
25

Fumed Silica

Aluminum Nitride

3

Rolling Three-Year Plan

3. Business Strategies (2) Specialty Products Segment
Polycrystalline Silicon Business Reconstruction【Tokuyama Malaysia】<Semiconductor-Grade>
In the process of confirming optimal production conditions
from both the facility and quality perspectives in the lead-up
to certification
Shipments of samples for customer certification scheduled
to commence from FY2015<Solar cell-Grade>
Sales to major solar cell manufacturers in China, Korea,
Taiwan, and Japan scheduled to commence fromthe middle of 2014
【Tokuyama Factory】
Impairment loss on manufacturing facilities recorded as ofthe end of FY2012

26

Tokuyama Malaysia

3

Rolling Three-Year Plan

3. Business Strategies (2) Specialty Products Segment
Polycrystalline Silicon Business Reconstruction
Work toward optimizing business operations of fumed silica, a co-product with polycrystalline silicon, at the twobases of Tokuyama Factory and Tokuyama Chemicals (Zhejiang) Co., Ltd.
The decision made to transfer a portion of Tokuyama Factory’s annual production capacity of 2,000 tonnes toTokuyama Chemicals (Zhejiang) Co., Ltd. with the aim of further expanding the rapidly growing fumed silica(surface treatment grade) business in China and other Asian markets. Fumed silica (surface treatment grade) has
a wide range of application including as a viscosity control agent, an anti-settling agent, and an agent to improve
the flow of paint, adhesives, ink, and other products. Looking ahead,
this product is expected to enjoy an increase in demand.
[Outline of the Plan]
Investment: 8.4 million US dollars (Approx. 900 million yen)
Commencement of Construction: May 2014 (Planned)
Start of Operations: June 2015 (Planned)
Tokuyama Chemicals (Zhejiang)27

3

Rolling Three-Year Plan

3. Business Strategies (2) Specialty Products Segment
Polycrystalline Silicon Market Conditions
Forecasts of installed PV capacity by region
Unit:GW

90
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) Q1 2014

28

ROW

Conditions by Country＜China＞
Upward revision in the cumulative installation target to 35GW by 2015
Announcement of policy measures aimed at ensuring sound growth in
the photovoltaics industry＜Japan＞
Growing trend toward the use of renewable energy as a result of the
Fukushima nuclear power station disaster in the immediate wake of theGreat East Japan Earthquake and other factors
Sudden surge in volumes following the introduction of the current
feed-in tariff system in July 2012
＜The U.S.＞The existence of wide-ranging photovoltaic power generation
proliferation policy measures providing the underlying strength for market
growth: policy measures at the state level in particular serving as adriving force for further expansion in the large-scale photovoltaics market＜Germany＞
Signs of more affordably priced sources of electric power through theuse of grid-connected power as a result of the trend toward lower prices
photovoltaic power generation systems; expectations of the shift to selfsupporting growth and renewed increase in demand going forward

3

Rolling Three-Year Plan

3. Business Strategies (3) Cement Segment
Basic Policy

zPut in place an optimal production, sales, and distribution structure that is capable of addressingchanges in the business environment while cultivating and strengthening overseas as well as new
businesses

Measures
Tokuyama Factory<Cement Business>

Mizushima Riverment Co. (Manufacturing Portland blast furnace slag cement)

zExpand transportation capacity in Japan (two new tanker
ships)

Service station

zEstablish a clinker export structure and ensure stable
operations at Tokuyama Nouvelle Calédonie S.A.

Sales officeTokuyama Factory

zUpgrade and expand the infrastructure maintenance andreinforcement business through Tokuyama Mtech Corp.
<Recycling and Environment Business>zExpand the business for recycling waste gypsum boards
through Tokuyama Chiyoda Gypsum Co., Ltd.
29

Cement related offices and service stations of the company

3

Rolling Three-Year Plan

3. Business Strategies (3) Cement Segment
Waste Gypsum Board Recycling Business
For the most part, the growing volume of waste gypsum board is subject to landfill disposal.
As a result, recycling is a major issue•Utilizing its proprietary crystallization technology, Tokuyama was the first in the world to successfully achieve a 100%rate in the recycling of waste gypsum into its gypsum raw material form. Tokuyama Chiyoda Gypsum Co., Ltd., a jointventure company, was newly established by Chiyoda Ute Co., Ltd., a manufacturer of gypsum boards, and theCompany in August 2011 for the purpose of developing a waste gypsum board recycling business.
•In addition to solving a major social issue, this initiative is also expected to provide both companies with a valuable
source of supply of raw material gypsum. Plans are in place to expand the business on a nationwide basis going
forward.
(Thousands of tonnes) Long-Term Projection of Waste Gypsum Board Volum

Waste gypsum board

Re-grown gypsum
Source: Gypsum Board Association of Japan

30

3

Rolling Three-Year Plan

3. Business Strategies (4) Life & Amenity Segment
Basic PolicyzSecure a position of advantage in markets both in Japan and overseas, pursue business expansion,and contribute to improving people’s quality of life by establishing and strengthening
a customer-oriented development, manufacturing, and sales structure

Measures<NF Business>
zImplemented various measures including the establishment of Shanghai Tokuyama Plastics Co., Ltd. and Tianjin
Tokuyama Plastics Co., Ltd.; taking ongoing steps to strengthen both companies, and to expand business with anincreased sense of speed in conjunction with trends in disposable diaper demand<Fine Chemical Business>zExpand orders for pharmaceutical ingredients for generic drugs; expand market share in photochromic dyematerials for use in eyeglass lenses<Polyolefin Film Business (Sun・Tox)>zIncrease profits by expanding sales of products for use in everyday items, which continue to enjoy robust growthat convenience stores, tapping into new markets, and reducing costs<Plastic Window Sash Business (Excel Shanon)>zExpand market share by strengthening alliances with building contractors and major home builders; promoteincreased use of plastic window sashes<Dental Materials/Equipments Business (Tokuyama Dental)>zDevelop new products and accelerate the pace of overseas business development31

3

Rolling Three-Year Plan

3. Business Strategies (4) Life & Amenity Segment
NF Business (Microporous film)
Sudden and rapid growth in disposable diaper consumption in China and Asia,
which continue to enjoy remarkable economic growth•Addressing the sudden and rapid growth in demand by promoting ties with disposable diaper manufacturers, whopossess factories in China; working to meet requirements through the expansion of the Company’s manufacturing basein Shanghai (2011) and the establishment (2011) and expansion (2013) of manufacturing facilities in Tianjin•Annual production capacity of microporous film for disposable diapers in China stands at 480 million m2(Tokuyama’s Group-wide annual production capacity stands at 720 million m2)
Infant Disposable Diaper Consumption in China(billions of pcs)
4030
20
Microporous film

Projected annual average growthrate of 8% through to 2020

10

Nonwoven fabric
Moisture and air

Function of microporous film
32

Tianjin Tokuyama Plastics

20

19

18

17

16

15

14

13

12

11

10

09

08

2007

0

(Note) China Paper Association estimate

3

Rolling Three-Year Plan

4. Future Vision of Tokuyama Factory
Tokuyama Factory’s VisionzA factory that remains competitive on the world stagezA central feature of the internationally competitive Shunan industrial zone

Tokuyama Factory’s Policies
A vibrant manufacturing basezA fully integrated factoryzA factory that is capable of playing a central role in the Shunan industrial
zone that has been strengthened through collaborationzA factory that is friendly to people and the local community

Tokuyama Factory
Unit Energy Consumption Index*

Initiatives

Reduction
rate (%)
90

08

‐18.6

‐16.4

09

10

11

12

0

zReduce the unit of energy consumption

0.0

zBuild an integrated production system‐10

zPromote businesses that contribute to the local community insuch areas as energy and waste treatment as a company thatplays a central role in industrial complex cooperation

‐20

‐24.6
‐22.4

‐30

33

07

‐24.2

‐21.8

20

3

Rolling Three-Year Plan

5. Financial Policy
zTake steps to restore the Company’s financial position, pursue stability, and make the necessary preparations topromote a new growth strategy for the foreseeable future through a variety of initiatives including the drawdown ofhybrid (subordinated) loans, selective investment (less than 75% of depreciation), and the completion of the Profit
Improvement Plan.

Interest-bearing debt trend (non-consolidated)
Interest-bearing debt

D/E ratio

2015/3 (Plan)Net D/E ratio(Billions of yen)

(D/E ratio)

300.0

1.40

250.0

1.15

200.0

0.90

150.0

0.65

100.0

0.40

50.0

0.15

0.0

‐0.10
11/3

12/3

13/3

14/3

15/3
(Plan)

16/3(Plan)

17/3(Plan)

18/3(Plan)

Interest-bearing
debt¥264.0 billion

D/E ratio

1.28

Net D/E ratio*

0.97

2018/3 (Plan)
Interest-bearing
debt¥200.0 billion

D/E ratio

0.87

Net D/E ratio*

0.66*Net D/E ratio: (Interest-bearing debt – Cash and deposits, Cash equivalents, Money held in trust)/Shareholders’ equity34

4 Supplementary Data
1. Consolidated Financial Statements
2. Cash Flows
3. Non-Operating Income/Expenses
4. Extraordinary Gains/Losses
5. Principal Indicators
6. Performance Trend
7. Price Trend of Main Raw Material and Fuel
8. Price Trend of Polysilicon in China
9. CAPEX and Depreciation Trend
10. Interest-bearing Debts Trend
11. Free Cash Flow Trend
12. Net Sales/Operating Income by
Business Segment
13. Performance Forecasts by Business
Segment (1H/2H)
35
14. Business Category and Positioning

4

Supplementary Data

1. Consolidated Financial Statements Income Statements(Billions of yen)
FY2012

258.6

287.3

+28.6

+11

Cost of sales

191.4

206.9

+15.4

+8

Selling, general andadministrative expenses

60.3

60.0

(0.2)

(0)

6.7

20.2

+13.4

+199

(3.5)

(5.3)

(1.7)

-

3.2

14.9

+11.7

+363

Extraordinary income/expenses(31.2)

(2.0)

+29.2

-

Income before income taxes
and minority interests(28.0)

12.9

+41.0

-

9.8

2.7

(7.1)

(72)

(37.9)

10.2

+48.1

-

Net sales

Operating income
Non-operating income/expenses

Ordinary income

Income taxes and minority interests

Net income/loss
36

Difference
Amount%

FY2013

4

Supplementary Data

1. Consolidated Financial Statements Balance Sheets (Billions of yen)
3/31/2013

3/31/2014

%

518.2

576.3

+58.0

+11

Current assets

186.1

191.6

+5.5

+3

Tangible fixed assets

274.3

323.1

+48.7

+18

Intangible fixed assets

7.9

10.1

+2.1

+27

Investments and other assets

49.8

51.4

+1.6

+3

Total assets

3/31/2013

3/31/2014

ChangesAmount

%

294.3

339.8

+45.4

+15

Current liabilities

115.6

99.2

(16.3)(14)

Long-term liabilities

178.7

240.5

+61.8

+35

223.8

236.4

+12.5

+6

Total liabilities

Total net assets
37

ChangesAmount4

Supplementary Data

2. Cash Flows

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

FY2012FY2013

Cash flows from operating activities (1)

17.0

34.1

Cash flows from investing activities (2)(60.6)(64.4)

Free cash flows (3) ((1)+(2)）(43.6)(30.2)Cash flows from financing activities (4)

36.4

45.9

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

0.6

1.4

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

(6.4)

17.1

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

58.4

52.4

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

0.4

0.4

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

52.4

69.9

38

4

Supplementary Data

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

FY2012

ChangesInterest and dividend
income

0.5

0.5

+0.0

Other income

2.4

2.4

(0.0)

Total

3.0

3.0

+0.0

Interest expenses

2.3

2.7

(0.3)

Other expenses

4.2

5.6

(1.3)

Total

6.5

8.3

(1.7)

Non-operating
income/expenses

(3.5)

(5.3)

(1.7)

Non-operating income
Non-operating
expenses
39

FY2013

Notes

Borrowing-related costs(1.9)
Decrease in costs of idle operations +0.4

4

Supplementary Data

4. Extraordinary Gains/Losses

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

FY201240

FY2013

Changes

Notes

Extraordinary
gains

1.0

0.6

(0.3)

Decrease in gain on sales of fixed assets(0.4)

Extraordinary
losses

32.3

2.7

+29.6

Decrease in impairment loss for fixed assets
Decrease in valuation loss on inventory

+26.8
+2.4

Extraordinary
gains/losses(31.2)

(2.0)

+29.2

4

Supplementary Data

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

FY201241

FY2013

Changes

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Capital expenditures

97.5

15.9

61.0

5.1

(36.4)(10.8)

Depreciation andamortization

23.2

18.4

16.7

11.3

(6.4)

(7.1)

R&D expenses

10.0

7.7

8.7

6.4

(1.3)

(1.3)

Financial income andexpenses

(1.7)

(0.2)

(2.1)

1.9

(0.3)

+2.1

4

Supplementary Data

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

3/31/201342

3/31/2014

Changes

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Interest-bearing
debts

Billionsof yen

187.7

167.2

240.7

220.0

+53.0

+52.8

Number of
employees

Persons

5,651

2,122

5,756

2,041

+105

(81)

4

Supplementary Data

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

FY2014 Forecasts

43

FY2013 Results

Changes

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Consolidated

NonConsolidated

Capital expenditures

30.5

9.1

61.0

5.1

(30.5)+4.0

Depreciation andamortization

22.4

11.5

16.7

11.3

+5.6

+0.1

R&D expenses

10.5

7.9

8.7

6.4

+1.8

+1.5

4

Supplementary Data

6. Performance Trend

Consolidated (Annual)
Income (Billions of yen)

Net sales (Billions of yen)
350

75
307.4
292.7

300

300.9
273.1

289.7

303.0
282.3

263.3
250
24.3
200

50

258.6
34.7

35.3

31.6

30.3

21.4
18.4

150

287.3

18.8

22.7
16.4
20.3

13.9

20.2

20.1
13.7

15.3

17.3

7.4

9.7

11.5
9.3

16.5
6.7
3.2

25

14.9
10.0
10.2

6.5

0

(5.5)

100

-25
50
(37.9)
0

-50
05

06

Net sales

44

07

08

09

Operating income

1011

Ordinary income

12

13

14
forecast

Net income

4Supplementary Data

6. Performance Trend(Quarter)

Consolidated(Billions of yen)

90.0

9.00

80.0
70.0

70.6

69.5
63.8

62.0

72.8

79.4 7.76

7.00

64.3

63.0

60.0

6.00
4.70

50.0

4.69

4.01

40.0

3.10

30.0

0.0

1.96

4.00

2.00

0.72

1.00

0.07

0.00

Q1/FY12 Q2/FY12 Q3/FY12 Q4/FY12 Q1/FY13 Q2/FY13 Q3/FY13 Q4/FY13
Net Sales
45

5.00

3.00

20.0
10.0

8.00

Operating Income

4Supplementary Data

6. Performance Trend(Quarter)

Chemicals(Billions of yen)

25.0
20.3
20.0

18.1

19.7

19.0

21.1

22.4

22.4

2.50

20.4
2.00
1.50

15.0
10.0

0.83

1.00

0.61
5.0

0.36

0.30
0.12

0.42

0.50

0.06
0.00

0.0
(0.07)(0.50)(5.0)
Q1/FY12 Q2/FY12 Q3/FY12 Q4/FY12 Q1/FY13 Q2/FY13 Q3/FY13 Q4/FY13
Net Sales
46

Operating Income

4Supplementary Data

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

3.78
17.2

20.0
16.2
15.0

12.9

12.3

13.1
11.2

10.2

10.0

3.00
11.8
2.00

1.63
1.05

5.0

4.00

0.54

0.71

1.00

0.11
0.0

0.00
(0.28)(5.0)(1.00)(1.08)(10.0)(2.00)
Q1/FY12 Q2/FY12 Q3/FY12 Q4/FY12 Q1/FY13 Q2/FY13 Q3/FY13 Q4/FY13
Net Sales

47

Operating Income

4Supplementary Data

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

25.0

2.50

20.0
17.1

16.9

18.8
1.74

19.1
17.0

15.0

1.34
1.13

21.7
1.99

20.8
1.90

17.3
1.33

1.44

1.50

1.11

10.0

1.00

5.0

0.50

0.0

0.00
Q1/FY12 Q2/FY12 Q3/FY12 Q4/FY12 Q1/FY13 Q2/FY13 Q3/FY13 Q4/FY13
Net Sales

48

2.00

Operating Income

4Supplementary Data

6. Performance Trend(Quarter)

Life & Amenity(Billions of yen)

20.0

2.00
1.77
16.4
14.2

15.0
11.7

12.7

12.2

1.17

12.5

14.5
1.33 13.4
1.02

10.0
0.77
5.0

0.43

1.00

0.73
0.54
0.50

0.0

0.00
Q1/FY12 Q2/FY12 Q3/FY12 Q4/FY12 Q1/FY13 Q2/FY13 Q3/FY13 Q4/FY13
Net Sales

49

1.50

Operating Income

4Supplementary Data

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

Domestic naphtha price(¥/KL)

75,000130
Australian thermal coal

120

70,000110

65,000100
90

60,00080

55,00050,00045,00050

70
60

Domestic naphtha
FY201150FY2012FY201340

4Supplementary Data

8. Price Trend of Polysilicon in China

51

4

Supplementary Data

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

non consolidated

depreciation
97.5

100.0
90.0
77.6

80.0
70.0

61.0

60.0

52.5

50.0

4.8

40.0
30.0
20.0
10.0
0.0

52

81.6

20.9

22.6

37.0

37.6

9.6

26.5

22.9

63.6

35.8
31.4

28.4

22.5

55.9

23.2
16.7

30.5
22.4

2.5

2.5

18.1

18.1

18.4

20.1

27.4

47.7

15.4

13.3

13.9

15.9

5.1

9.1

06/3

07/3

08/3

09/3

10/3

11/3

12/3

13/3

14/3

15/3
(forecasts)

11.1

21.4

21.3

4

Supplementary Data

10. Interest-Bearing Debts Trend Consolidated(Billions of yen)

Short‐term debt

Long‐term debt

Unsecured bonds

D/E ratio
1.05

300.0

0.86
250.0
200.0

0.52

0.47
150.0
100.0

0.37
83.5

0.0

53

100.0

50.0

50.0
35.1

165.2

15.1

20.0

30.0

25.0

58.8

68.3

28.5

23.1

17.0

20.1

18.8

22.2

17.0

06/3

07/3

08/3

09/3

50.0

148.6

50.0

126.2

0.32
64.2

34.8

187.7

0.52
0.42

95.9
72.0

0.60

240.7

102.3
68.6

73.7

16.5

22.5

24.9

35.3

25.5

10/3

11/3

12/3

13/3

14/3

4

Supplementary Data

11. Free Cash Flow Trend

Consolidated(Billions of yen)
60.0
40.0
20.0

47.6

42.4

34.2

25.7

22.0
2.9

37.0

29.3

34.1

27.0
17.0

11.6

0.0
(20.0)(22.7)(14.0)(22.5)(40.0)(7.0)(30.6)(25.6)(30.2)(36.4)(51.4)(60.0)(56.5)(43.6)(57.6)(60.6)(64.4)(80.0)(88.5)(100.0)
FY05

FY06

FY07

FY08

Operating Cash Flow
54

FY09

FY10

Investing Cash Flow

FY11

FY12

Free Cash Flow

FY13

4

Supplementary Data

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

ChemicalsHigher earnings on higher sales
Net Sales

Operating Income(Billions of yen)

86.4

(Vinyl chloride monomer (VCM))•Sales volume recovery resulting from resolution of plant’s
difficulties that occurred in the corresponding period of theprevious year
•Rise in export price resulting from the weaker yen

77.3

2.2
0.4
FY2012

55

Qualitative information

FY2013(Caustic soda)•Domestic sales volume recovery due to improved operating rateof electrolysis facilities resulting from resolution of difficulties
at VCM plant mentioned above(Vinyl chloride resin)•Selling price revision•Increased cost of raw materials due to price rise of domestic
naphtha4Supplementary Data

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

Specialty Products

Higher earnings on lower sales

Net Sales

Operating Income(Billions of yen)

6.0
52.4

52.8

56

(Polycrystalline silicon)•Decreased sales due to a price slump in the supply chains•Lower sales volume of solar-grade polycrystalline silicon resulting
from the adoption of a sales strategy that focused on profits undersluggish market conditions due to excess supply•Improvement of average selling price resulting from the change inproduct mix and weaker yen(Fumed silica, High-purity chemicals for electronics manufacturing)•Selling price revision•Export price hikes arising from the weaker yen

0.3
FY2012

Qualitative information

FY2013(Aluminum nitride)•Increased sales volume due to semiconductor market recovery

4

Supplementary Data

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

CementHigher earnings on higher sales
Net Sales

Operating Income(Billions of yen)

78.9
69.9

6.6
5.3

Qualitative information(Cement)•Increased sales volume due to the recovery in demand in Japan•Increased sales due to the factor that the Company madeTokuyama Nouvelle Calédonie S.A. a subsidiary in June 2013
(Recycling and environment-related business)•The Company accepted a larger volume of waste as a result of
its higher cement production

FY201257

FY2013

4

Supplementary Data

12. 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)

57.0
51.0

4.8
2.9

FY2012

Qualitative information(Plastic lens-related materials)•Increased sales volume due to the recovery from damage tosupply chains caused by the flooding in Thailand that occurredin 2011(Polyolefin film)•Increase sales volume resulting from sales expansion•Selling price revision

FY2013(Dental materials and equipment)•Increase sales volume resulting from overseas sales
expansion•Rise in export prices resulting from the weaker yen(Plastic window sashes)•Increase sales volume on the back of the recovery in housing
starts•Improved profitability owing to business reconstruction

58

4

Supplementary Data

13. Performance Forecasts by Business Segment (1H/2H)(Billions of yen)(year-on-year change based on FY14 forecasts)
FY2013 Results
1H
Net
sales

FY2014 Forecasts

2H

Operatingincome

Net
sales

Total

Operatingincome

Net
sales

1H

Operatingincome

Net
sales

2H

Operatingincome

Net
sales

Total

OperatingincomeNet
sales

OperatingincomeChemicals

41.5

0.7

44.8

1.4

86.4

2.2

44.0

2.0

47.5

2.0

91.5

4.0

Specialty
Products

23.4

1.5

29.0

4.4

52.4

6.0

26.0

1.0

34.5

2.0

60.5

3.0

Cement

36.4

2.7

42.5

3.9

78.9

6.6

40.0

2.5

41.0

3.0

81.0

5.5

Life &
Amenity

27.1

2.0

29.8

2.8

57.0

4.8

29.5

2.0

28.5

2.0

58.0

4.0

Others

23.2

2.1

24.0

2.0

47.2

4.1

24.5

2.5

25.0

2.5

49.5

5.0

Total

151.8

9.3

170.3

14.6

322.2

24.0

164.0

10.0

176.5

11.5

340.5

21.5

Inter-segment
eliminations andcorporate-wide
expenses(16.8)(1.5)(18.0)(2.2)(34.9)(3.7)(18.0)(2.5)(19.5)(2.5)(37.5)(5.0)

Consolidated
Results

135.0

7.8

152.2

12.4

287.3

20.2

146.0

7.5

157.0

9.0

303.0

16.5

59

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

4

Supplementary Data

14. Business Category and Positioning
Business Category and Positioning

Segmentation
C Chemicals B Cement

L Life & Amenity

Strategically growing businesses(Global, Profit expansion-type）

Businesses in which we aim to improve
profitability (Domestic, Profit stability-type)Growing Materials Business- Polycrystalline silicon S- Fumed silica S
S- Shapal (Aluminum nitride)- IC Chemical S
Growing Components Business- NF (Microporous film) L- Fine Chemicals (Pharmaceutical bulks, Plastic lensmaterials for glasses) L- Clinical analyzers (A&T Corp.) L- Dental materials/equipments (Tokuyama Dental Corp.) L- Gas sensors (Figaro Engineering Inc.,) L

Foundation Business- Cement B- Recycling and environment B- Soda ash and calcium chloride C- Chlor-alkali and vinyl chloride C- New organic chemicals (IPA:PA： Isopropyl Alcohol) C- Polyvinyl Chloride (Shin Dai-ichi Vinyl Corp.) C
Independent Component Business- Polyolefin film（Sun・Tox Co., Ltd.） L- Plastic window sashes (Excel Shanon Corp.) L

New Businesses
60

Specialty
S Products

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