Results Presentationof FY2019

Denka Co.,LtdMay 2020

Table Of Contents

Table Of Contents
1. FY2019 Outlook①Denka Value-Up②Summery （year on year）③Variance Analysis （year on year）④By Segments (year on year)

2. FY2020 Forecast① Summery (year on year)② Economic Precondition③ Variance Analysis (year on year)④ By Segments (year on year)➄ Shareholder Return

P.
P.
P.
P.

2
3
46

P. 7
P. 8
P. 9
P. 11
P. 12

3. Accelerate Growth of Specialty Businesses① Growth of Specialty Businesses
P. 13② Key Themes of Specialty Businesses
P. 141FY2019 Outlook①Denka Value-Up

Operating Income

Operating Income

Operating Income¥33.7 billion¥34.2 billion¥31.6 billion

Operating Margin

Operating Margin

Operating Margin

8.5 %

8.3 %

8.3 %
FY2019 Previous Forecast
Operating Income 38.0 billion

Operating
Income ofspecialty
business¥16.7 billion

Operating
Income ofspecialty
business¥18.5 billion

Operating
Income ofspecialty
business¥20.0 billion

Specialty ratio
50％

Specialty ratio
54％

Specialty ratio
63％

FY2017
Actual

FY2018Actual

FY2019Actual2FY2019 Outlook②Summery （year on year）
in billion YenSales

FY 2019

FY 2018

ActAct380.8 413.1

Incr.
▲Decr.
▲32.3

Overseas sales
to total sales

41.0 ％

42.６％

Operating
Income31.6

34.2 ▲2.6▲１.６ ％

Operating Marign

8.3 ％

8.3 ％

Ordinary
Income30.0

32.8 ▲2.8+ 0.0 ％Elastomer & Performance Plastics▲ 3.3

Infrastructure & Social Solutions+ 0.5

Electronics & Innovative Products+ 0.6

Living & Environment Products▲ 0.8Life Innovation
Others

+ 0.7
▲ 0.4

← ▲ 2.6
Loss on disposal of non-current assets
and profit of equity method affiliates etc.
（▲1.6 ← ▲1.4）←
Extraordinary gains and losses
and corporate tax etc.
（▲7.3 ← ▲7.8）

Profit attributableto owners of parent

22.7

25.0 ▲2.3

←

▲ 0.2

▲ 2.8+ 0.5▲2.33

FY2019 Outlook

Sales③Variance Analysis （year on year）

380.8 (▲ 32.3 )① Decrease in sales volume② Differences in sales prices

in billion Yen（▲ 16.1）（▲ 16.3）

Operating Income
31.6 (▲ 2.6 )① Decreased Shipment :（▲ 5.9）② Spread except yen depreciation ：（ + 6.2）③ Yen depreciation ：（▲ 0.9）④ Other costs ：（▲ 1.6）⑤ R&D expenses（▲ 0.5）Chloroprene rubber, etc.▲4.9
Impact of the novel coronavirus pandemic ▲1.0

products price revision +20.1 vs increase in cost ▲13.9
Increase in cost ▲2.3 vs products price merit in yen +1.5

Absence of periodic shutdown maintenance of SM +1.4
Absence of damage previously incurred due to cold wave
and the restoration of hydroelectric power generation output +1.6
Other administrative and manufacturing costs, etc. ▲4.6

4FY2019 Outlook③Variance Analysis （year on year）

in billion YenFY2018
ActualDecreasedshipmentSpread
except yen
depreciation

34.2

▲5.9

CR, etc.

▲4.9

Impact of thenovel coronavirus
pandemic ▲1.0

depreciation

Othercosts

Cost ofupfront
investment

FY2019Actual+6.2

▲0.9

▲1.6

▲0.5

31.6

Cost +20.1

Price ▲2.3

R&D ▲0.5

Price ▲13.9

Absence ofSM shutdown
maintenance ＋1.4

Cost +1.5

Yen

Resolution of frost
damage anddrought damage＋1.6
Otheradministrative andmanufacturingcosts etc.
▲4.65

FY2019 Outlook④By Segments (year on year)
in billion Yen

FY 2019
ActFY 2018
Act▲Decr.

PriceVolumeElastomers & Performance Plastics

149.3

179.2

▲29.9

▲ 17.5▲ 12.4

Infrastructure & Social Solutions

54.854.8▲ 0.0+ 1.5▲ 1.6

Electronic & Innovative Products

68.0

67.1+ 0.9+ 1.1▲ 0.1

Living & Environment Products

37.0

39.0

▲ 2.1

▲ 0.9

▲ 1.1

Life Innovation

35.5

34.1+ 1.4

▲ 0.4+ 1.8

Others

36.2

38.8

▲ 2.6

─

▲ 2.6

Total

380.8

413.1

▲32.3

▲ 16.3▲16.1

FY 2019

FY 2018
ActIncr.
▲Decr.

Price

VolumeSales

Operating IncomeAct

Incr.

Cost &Others

Elastomers & Performance Plastics10.914.2▲ 3.3▲ 17.5▲ 6.2+ 20.4

Infrastructure & Social Solutions

0.3▲ 0.3+ 0.5+ 1.5

▲0.5

▲ 0.5

Electronic & Innovative Products

12.4

11.8+ 0.6+ 1.1+ 0.4▲ 0.8

Living & Environment Products

0.1

0.9

▲ 0.8

▲ 0.9

▲ 0.7+ 0.8

Life Innovation

7.0

6.3+ 0.7▲ 0.4+ 1.0+ 0.0

Others

0.9

1.3

▲ 0.4

─

+ 0.0

▲ 0.5

Total

31.6

34.2

▲ 2.6

▲ 16.3▲ 5.9+ 19.56

FY2020 Forecast① Summery (year on year)
in billion YenFY 2020
ForecastFY2019
ActualIncr.
▲Decr.

360.0

380.8

▲ 20.831.031.6▲ 0.6

Operatingincome to sales（8.5 ％）（8.3 ％）（+ 0.2 ％）Ordinary
Income29.030.0

▲ 1.0

Sales

Operating
IncomeElastomer & Performance Plastics
Infrastructure & Social Solutions
Electronics & Innovative Products
Living & Environment ProductsLife InnovationOthers←▲ 3.4+ 1.7+ 1.1+ 0.4+ 0.0
▲ 0.4

▲0.6

Loss on disposal of non-current assets
and profit of equity method affiliates etc.

（▲2.0 ← ▲1.6）←▲ 0.4▲ 1.0corporate tax etc.

（▲2.0 ← ▲1.3）
Profit attributable toowners of parent

21.022.7

▲ 1.7

←

▲ 0.7

▲ 1.77

FY2020 Forecast

EconomicPrecondition
Forex [USD 1.0 = Yen]
Naphtha price [Yen/Kl]

reference
Investment

Capital expenditure
M & A etc.

Depreciation
R&D
Debt with interest② Economic Precondition

FY2020FY2019108.0
32,000109.1
42,650

FY2020FY2019

47.0
47.0

24.0
16.0

152.0

36.9
34.2
2.7

22.5
15.0

134.3

in billion Yen

Incr.
▲Decr.

+10.1+10.1+1.5+1.0+17.78

FY2020 ForecastSales③ Variance Analysis (year on year)

360.0(▲20.8 )① Decrease in sales volume② Differences in sales prices

Operating Income① Increased Shipment :31.0 (▲0.6 )Electronic & Innovative products , etc. +8.9
Impact of the novel coronavirus pandemic （▲1.0→▲6.0） ▲5.0

in billion Yen（+ 3.5）（▲24.3）（+ 3.9）② Spread except yen depreciation :（▲ 1.5）③ Yen depreciation :（▲ 0.0）

Products price revision ▲ 24.2 vs Decrease in cost ＋ 22.7
Products price demerit in yen ▲ 0.1 ｖｓ decrease in cost + 0.1④ Other administrative and manufacturing costs etc（▲ 2.0）（▲ 1.0）⑤ R&D expenses
9FY2020 Forecast③ Variance Analysis (year on year)

in billion Yen

FY2019ActualIncreased
shipment

Spreadexcept yen
depreciation

31.6+ 3.9

▲1.5

Electronic &Cost +22.7
Innovative
products etc. +8.9 Price ▲24.2
Impact of the novel
coronavirus
pandemic▲5.0

Yen
depreciation

Other
costs

Cost ofupfront
investment▲ 0.0▲ 2.0 ▲ 1.0

Price ▲ 0.1

Otheradministrativeandmanufacturingcosts etc. ▲2.0

Cost + 0.1

FY2020Forecast

31.0R&D ▲1.010

FY2020 Forecast④ By Segments (year on year)
in billion Yen

FY 2020
Forecast

FY 2019
Act▲Decr.

Price

VolumeElastomers & Performance Plastics

125.0

149.3

▲ 24.3

▲23.7

▲0.6

Infrastructure & Social Solutions

55.0

54.8+ 0.2+0.9▲0.7

Electronic & Innovative Products

73.068.0+ 5.0▲0.5+5.4

Living & Environment Products

33.0

37.0

▲ 4.0

▲1.1

▲2.9

Life Innovation

38.0

35.5

+ 2.5+0.1+2.4Others

36.036.2▲ 0.2

─

▲0.2Total

360.0

380.8

▲ 20.8▲24.3+3.5

Operating Income

FY 2020

FY 2019ActIncr.
▲Decr.

Price

VolumeCost &Others

▲ 3.4

▲23.7

▲0.0+20.3+0.2+0.7▲0.5+3.1

▲1.5

▲1.1

▲0.9+2.3+2.2▲0.6▲2.2+3.9+19.8

Sales

Forecast

Elastomers & Performance Plastics

7.5

Infrastructure & Social Solutions

2.0

Electronic & Innovative Products

13.5

12.4

Living & Environment Products

0.5Life Innovation

7.0

0.1

Others

0.5

Total

31.0

10.9
0.3

7.0
0.9
31.6

Incr.

+ 1.7+ 1.1+ 0.4+ 0.0▲ 0.4▲ 0.6+0.9+0.1
─▲24.3+0.2
11FY2020 Forecast

Net Income➄ Shareholder Return

FY2016
Actual

FY2017
Actual

FY2018Actual

FY2019ActualFY2020
Forecast

18.1

23.0

25.0

22.7

7.0

10.5

12.0

6.2

9.2

10.5

12.5
10.8

21.0

34 ％

40 ％

42％

48％

in billion Yen

2.9

2.3

2.1

in billion Yen

9.1

11.5

12.6

10.8

50 ％

50 ％

50 ％

48％

in billion Yen

Dividend per share ※Total Dividendin billion Yen

Payout Ratio
Share buyback
Total Shareholder Return
Total Return Ratio
Depreciationin billion Yen

24.4

24.6

22.9

Capital expenditure, M&Ain billion Yen

26.9

27.0

32.8

22.5
36.9

8.3 ％

10.0 ％

10.3 ％

9.1 ％ROETBD※ The Company consolidated its shares in the proportion of 5 common shares to one common share, effective as of October 1, 2017.

As for the forecast of the year-end dividends for the fiscal year ending March 31, 2018, we quote the amount that takes into accountthe impact of the said share consolidation.

12Accelerate Growth ofSpecialty Businesses①Growth of Specialty Businesses

FY2017 Actual

FY2018 Actual

FY2019 Actual

FY2020 Forecast

Operating Income

Operating IncomeOperating Income

Operating Income¥34.2 billion¥31.6 billion¥31.0 billion

Operating Margin

Operating Margin

Operating Margin

Operating Margin

8.5 %

8.3 %

8.3 %

8.5 %

Operating
Income ofspecialty
business
スペシャリティー事業¥16.7 billion
営業利益 167 億円
Specialty ratio
スペシャリティー化率
50％50％Operating
Income ofspecialty
business¥18.5 billion

Operating
Income ofspecialty
business¥20.0 billion

Operating
Income ofspecialty
business¥21.5 billion

Specialty ratio
54％

Specialty ratio
63％

Specialty ratio
69％¥33.7 billion

Steady growth of specialty business
13Accelerate Growth ofSpecialty Businesses ②Key Themes of Specialty Businesses①Contribution to countermeasures against the novel coronavirus
・Develop rapid test kits for the novel coronavirus(antigen/antibody detection employing the immunochromato-method)・Develop measures for testing the disease other than those using the immunochromato-method(applying for emergency approval in Taiwan, U.S. and Japan by acting in collaboration withPlexBio, in which Denka holds a 33.4% equity stake)・Provide raw material for AviganⓇ (diethyl malonate)・Launch basic research with an eye to developing a vaccine for the disease・Expand CR marketing to supply medical glove materials②New businesses in the healthcare field・Commercialize the G47Δ oncolytic virus

・Promote CANCERPLEXⓇ, a genome-based panel examination method for cancer diagnosis
・Develop panel examination methods and diagnostic devices to detect pathogenic microorganisms
and drug resistant bacteria genes
・Develop norovirus vaccines (phase I clinical testing started in Europe)③New products to be delivered in response to needs arising frommegatrends in the field of the environment and energy

・Expand our capacity to supply EV-related products(spherical alumina, ultra-pure acetylene black and ceramics-based electronic circuit substrates)
・Develop and release new products designed to meet needs associated with the introduction of
the 5G communications infrastructure and the emergence of “CASE” next-generation automobiletechnologies (LCP films, high dielectric constant fillers and low dielectric loss tangent fillers)* Avigan is a registered trade name of FUJIFILM Toyama Chemical Co., Ltd.
* CANCERPLEX is a registered trade name of KEW, Inc.

14

< Cautionary statement regarding forward-looking information >Target figures in this material are not forecasts of business results.
In addition, any description relating to the future in this material is subject toknown or unknown risks and uncertainties, although it is base on management's
current assumptions and beliefs in light of the information currently available to it.
Please be cautioned that a number of important factors could cause actual results
to differ significantly from the description in the material.
Such risks and uncertainties include adverse economic conditions, currency
exchange rate fluctuations, adverse legislative and regulatory developments,
delays in new product launch, pricing, and product initiatives of competitors,
the inability of the Company to market existing and new products effectively,interruptions in production, infringements of the company's intellectual property
rights and the adverse outcome of material litigation.