Results Presentationof FY2020 2Q

Denka Co.,LtdNovember 2020

Table Of Contents
1 FY2020 Forecast Revision① Summery (vs Forecast at the beginning)02② Growth of Specialty Businesses

03

2 FY2020 1st Half Results① Summery (year on year)04② Variance Analysis ( year on year)05③ By Segments ( year on year)07④ Summery（vs Forecast as of August）

08⑤ By Segments（vs Forecast as of August）

09

3 FY2020 Forecast① Summery (year on year)10② Assumptions used to formulate forecast

11③ Economic Precondition

12④ Variance Analysis （year on year）

13⑤ By Segments (year on year)

15⑥ By Segments（vs Forecast at the beginning）

16⑦ Shareholder Return

171

FY2020 Forecast Revision ① Summery(vs Forecast at the beginning)in billion Yen

Revised
Forecast

Previous
Forecast

Sales

350.0

360.0 △ 10.0

Operating Income

33.0

Incr.
△Decr.

31.0 + 2.0

Elastomer & Performance Plastics
Infrastructure & Social Solutions
Electronics & Innovative Products
Living & Environment ProductsLife Innovation
Others

△ 4.5△ 1.5△ 0.5+ 0.5+ 8.0+ 0.0+ 2.0
Operating Margin

Ordinary Income

9.4%

30.0Net income
attributable toowners of parent

22.0

Dividend per share¥125（Yen）

Payout Ratio(interim: ¥60;year-end: ¥65)

49％

8.6%

+ 0.8%

29.0 + 1.0
21.0 + 1.0

Interest rates,
non-operating income, etc.

△ 1.0+ 1.0
Extraordinary gains and losses
and corporate tax etc.

+ 0.0

+ 1.0

interim: ¥60;
year-end: TBD（previous year）¥125

──（previous year）48％

2

FY2020 Forecast Revision ②Growth of Specialty Businesses
FY2017 Actual
Operating
IncomeOperatingMarginFY2018 Actual

33.7 billion

Operating
Income8.5 %OperatingMarginSpecialty ratio

50％

FY2019 Actual34.2 billionOperatingIncome

8.3 %OperatingMarginSpecialty ratio

54％

FY2020 Forecast

31.6 billion

OperatingIncome

33.0 billion

8.3 %OperatingMargin

9.4 %Specialty ratio

63％

Specialty ratio

88％

The environment
and energy

Operating Income
Operating Incomeof specialty business16.7billion
FY2017（Actual）

Operating Incomeof specialty business18.5billion
FY2018（Actual）

Operating Incomeof specialty business20.0billion

13.0billion
Healthcare

Operating Income

15.0billion
FY2019（Actual）

OperatingIncomeof specialty
business
Subtotal

29.0billion

FY2020（Forecast）

Steady growth of specialty business
3FY2020 1st Half Results ① Summery (year on year)

in billion Yen

Sales

Operating Income

FY 2020
FY 2019
1st Half Act 1st Half Act

Incr.
△Decr.

160.3 192.0 △ 31.7

12.1

15.3 △ 3.3

Elastomer & Performance Plastics
Infrastructure & Social Solutions
Electronics & Innovative Products
Living & Environment ProductsLife Innovation
Others

△ 4.8△ 0.1+ 0.8+ 0.7△ 0.1+ 0.2△ 3.3
Operating Margin

Ordinary Income
Net income
attributable toowners of parent

7.5%

12.3
10.0

8.0%

△ 0.5%

14.5 △ 2.2
10.9 △ 0.8

Interest rates,
non-operating income, etc.

+ 1.0

△ 2.2
Extraordinary gains and losses
and corporate tax etc. (△2.3←△3.6)+ 1.4△ 0.84

FY2020 1st Half Results ② Variance Analysis ( year on year)

Sales

160.3billion

year on year
（in billion Yen）

△31.7

1. Decrease in sales volume ：Impact of the novel coronavirus pandemic, etc.

△ 18.8

2. Differences in sales prices：impact of downward revisions of sales prices ofstyrene-based products in step with plunges inraw material prices△ 12.8Operating
Income12.1billion

1. Changes in sales volume：Impact of the novel coronavirus pandemic △ 9.1
Other +3.9year on year
（in billion Yen）

△3.3

（Electronic & Innovative Products, Influenza Vaccine, etc.）△ 5.2

2. Spread：decrease in cost +11.8
vs products price revision △ 11.7

+ 0.1

3. Yen depreciation：products price demerit in yen △ 1.1
vs decrease in cost + 0.7△ 0.4

4. Other costs：Other administrative and manufacturing costs, etc.

+ 2.3

5. Costof upfront investment：R&D expenses△ 0.2

except yen depreciation

5FY2020 1st Half Results ② Variance Analysis ( year on year)

Operating Income Variation factors
in billion Yen

15.3△ 9.1+ 2.3+ 3.9

FY2019 1st Half
ActualImpact of
the novel
coronavirus
pandemic

Electronic &Innovative
Products,
Influenza
Vaccine,etc.

Decreased
shipment

Increased
shipment

+ 0.1

△ 0.2

12.1

△ 0.4

Cost +11.8
vsPrice △11.7

Price △1.1
vs
Cost +0.7

Spreadexcept yen
depreciation

Yen
depreciation

Other
administrative
andmanufacturingcosts,
etc.

Other costs

R&D
expenses

Cost ofFY2020 1st Halfupfront
Actualinvestment
6FY2020 1st Half Results ③ By Segments ( year on year)
Salesin billion yen

FY 2020
FY 2019
1st Half Act 1st Half Act

Incr.
△Decr.

Price

VolumeElastomers & Performance Plastics

54.6

78.7

△ 24.1△ 11.9△ 12.2

Infrastructure & Social Solutions

24.5

26.9

△ 2.5+ 0.2△ 2.7

Electronic & Innovative Products

33.3

33.5

△ 0.2

△ 0.5+ 0.2

Living & Environment Products

16.6

18.6

△ 2.0

△ 0.5

△ 1.4

Life Innovation

16.2

15.0+ 1.2

△ 0.1+ 1.3

Others

15.2

19.2△ 4.0-

△ 4.0

Total

160.3

192.0

△ 31.7△ 12.8△ 18.8

FY 2020
FY 2019
1st Half Act 1st Half Act

Incr.
△Decr.

Price

VolumeCost &Others

Operating Incomein billion yen

Elastomers & Performance Plastics

2.16.9△ 4.8△ 11.9△ 5.7+ 12.8

Infrastructure & Social Solutions

0.2

0.3

△ 0.1+ 0.2△ 0.7+ 0.4

Electronic & Innovative Products

6.6

5.8+ 0.8△ 0.5+ 0.6+ 0.7

Living & Environment Products

0.5△ 0.2+ 0.7△ 0.5△ 0.6+ 1.9

Life Innovation

2.42.5△ 0.1△ 0.1+ 1.2△ 1.1Others

0.30.2+ 0.2-+ 0.1+ 0.0

Total

12.1

15.3

△ 3.3

△ 12.8△ 5.2+ 14.77

FY2020 1st Half Results ④ Summery（vs Forecast as of August）

in billion YenSales

Operating Income

Forecast
FY 2020
as of1st Half Act AugustIncr.
△Decr.

160.3 160.0+ 0.3

12.1

12.0+ 0.1

Elastomer & Performance Plastics
Infrastructure & Social Solutions
Electronics & Innovative Products
Living & Environment ProductsLife Innovation
Others

△ 0.9△ 0.8+ 0.1△ 0.0+ 1.4+ 0.3+ 0.1
Operating Margin

Ordinary Income
Net income
attributable toowners of parent

7.5%

12.3
10.0

7.5%

12.0
10.0+ 0.0%

+ 0.3
+ 0.0

Interest rates,
non-operating income, etc.

+ 0.2+ 0.3
Extraordinary gains and losses
and corporate tax etc. (△2.3←△2.0)

△ 0.3

+ 0.0
8

FY2020 1st Half Results ⑤ By Segments（vs Forecast as of August）
in billion yen

FY 2020
1st HalfActForecast
as ofAugustIncr.
△Decr.

Price

VolumeElastomers & Performance Plastics

54.6

55.0

△ 0.4

△ 0.2

△ 0.3

Infrastructure & Social Solutions

24.525.0

△ 0.5

△ 0.1

△ 0.4

Electronic & Innovative Products

33.3

33.0+ 0.3+ 0.1+ 0.2

Living & Environment Products

16.6

16.0+ 0.6

△ 0.1+ 0.7

Life Innovation

16.2

15.0+ 1.2

△ 0.0+ 1.2

Others

15.2

16.0

△ 0.8

-△ 0.8

Total160.3

160.0+ 0.3△ 0.3+ 0.7

FY 2020
1st HalfAct

Forecast
as ofAugustIncr.
△Decr.

Price

VolumeCost &Others

Elastomers & Performance Plastics

2.1

3.0

△ 0.9

△ 0.2+ 0.2△ 0.9

Infrastructure & Social Solutions

0.2

1.0

△ 0.8

△ 0.1+ 0.0△ 0.8

Electronic & Innovative Products

6.66.5+ 0.1+ 0.1+0.1△0.1

Living & Environment Products

0.50.5△ 0.0△ 0.1+ 0.0+0.1

Life Innovation

2.41.0+ 1.4△ 0.0++ 0.3

Others0.3

0.0+ 0.3-Total12.1

12.0+ 0.1

△ 0.3

Sales

Operating Income
in billion yen

1.2+ 0.2+0.1+

△1.3

1.7

9

FY2020 Forecast ① Summery (year on year)

FY 2020
Forecast
in billion Yen

FY2020
Forecast

FY 2019
Actual

1st Half
Actual

2nd Half
Forecast

At the beginning

Sales

350.0

160.3

189.7

360.0380.8

Operating Income

33.0

12.1

20.9

31.0

31.6

Operating Margin

9.4%

7.5%

11.0%

8.6%

8.3%

Ordinary Income

30.0

12.3

17.7

29.0

30.0

Net income
attributable toowners of parent

22.0

10.0

12.0

21.0

22.7
10

FY2020 Forecast ② Assumptions used to formulate forecast

Forecast
at thebeginning

Forecast
as ofAugust

Expected
Operating Income

TBD

FullYear31.0billion

Assumption of the novel coronavirus pandemic
ー The effect of the pandemic would gradually taper off from the second quarter
onward and economic activity would be largely normalized in the 2nd half.

Expected
Operating Income

1stHalf

12.0 billion FullYear 31.0billion (Initial forecast unchanged)

Upside ー Growth in data centers-related demandpotential ー Contribution of Rapid Antigen Test for COVID-19
Downside ー The pandemic’s impact on the performance of some mainstay products,
risksuch as CR, would get worse than initial forecasts.

Expected
Operating Income

RevisedForecast

1stHalf

UpsideFactors

1stHalf

12.1 billion

FullYear33.0billion (Upward revision)

ー The launch of Rapid Antigen Test for COVID-19
ー Review of head office and factory fixed costs

Downside ー Infectious disease impact on some mainstay products, such as CR, wasFactors
higher than expected.
11FY2020 Forecast ③ Economic Precondition
EconomicPrecondition

FY2020
Forecast

1st Half
Actual

2nd Half
Forecast

FY2019Actual

1st Half
Actual

2nd Half
Actual

Forex

106.4

106.8

106.0

109.1

109.2

109.1

Naphtha price[Yen/Kl]

30,40028,25032,50042,65042,80042,500

Reference

FY2020
Forecast

1st Half
Actual

2nd Half
Forecast

FY2019Actual

1st Half
Actual

2nd Half
ActualInvestment

45.0

17.1

27.9

36.9

18.9

18.0

Depreciation

23.0

11.511.5

22.5

11.0

11.5

R&D

16.0

7.4

8.6

15.0

7.3

7.7

Debt with interest

141.0

140.5

141.0

134.3

123.3

134.3

[USD 1.0 = Yen]in billion yen

12

FY2020 Forecast ④ Variance Analysis ( year on year)

Sales

350.0billion

year on year
（in billion Yen）

△30.8

1. Decrease in sales volume ：Impact of the novel coronavirus pandemic △37.6（The pandemic’s impact in FY2019: △1.4; FY2020: △39.0）

Other +32.1（Rapid Antigen Test for COVID-19, xEV-related products, etc）

2. Differences in sales prices：impact of downward revisions of sales prices ofstyrene-based products in step with plunges inraw material prices

OperatingIncome33.0billion△ 5.5△ 25.3

year on year
（in billion Yen）

+1.4

1. Changes in sales volume：Impact of the novel coronavirus pandemic △ 15.0
（The pandemic’s impact in FY2019: △1.0; FY2020: △15.9）

Other +20.1（Rapid Antigen Test for COVID-19, xEV-related products, etc）

+5.1

2. Spread：products price revision △ 22.9
vs decrease in cost +18.5△4.4

3. Yen depreciation△0.8

4. Other costs：products price demerit in yen △ 2.4vs decrease in cost + 1.6：Other administrative and manufacturing costs, etc.

+

2.4

5. Costof upfront investment：R&D expenses△1.0

except yen depreciation

13

FY2020 Forecast ④ Variance Analysis ( year on year)

Operating Income Variation factors
in billion Yen+ 20.1

31.6

FY2019Actual

△ 4.4
△ 0.8

△ 15.0

Impact of
the novel
coronavirus
pandemicDiagnostic
Reagents ,xEV-related
products,
etc.

Decreased
shipment

Increased
shipment

Price △22.9vsCost +18.5

Price △2.4vsCost +1.6

Spreadexcept yen
depreciation

Yen
depreciation+ 2.4

Otheradministrativeandmanufacturingcosts,etc.
Other costs△ 1.033.0

R&D

expenses
Cost ofupfront
investment

FY2020
Forecast
14

FY2020 Forecast ⑤ By Segments (year on year)
Sales

FY2020
Forecast

FY2019ActualIncr.
△Decr.

Price

VolumeElastomers & Performance Plastics

115.0

149.3

△34.3

△ 22.4△ 11.9Infrastructure & Social Solutions

52.054.8△ 2.8+ 0.4△ 3.2

Electronic & Innovative Products

70.068.0+ 2.0△1.8+ 3.8

Living & Environment Products33.037.0

△ 4.0

△ 1.4

△ 2.5

Life Innovation

46.035.5+ 10.5

△ 0.0+ 10.5

Others34.036.2△ 2.2-△ 2.2

Total

350.0

380.8

△ 30.8△ 25.3△ 5.5

FY2020
ForecastFY2019
ActualIncr.
△Decr.

Price

VolumeCost &Others

Elastomers & Performance Plastics

3.010.9

△ 7.9

△22.4

△ 5.1+ 19.6

Infrastructure & Social Solutions

0.50.3+ 0.2+ 0.4△ 0.8+ 0.7

Electronic & Innovative Products

13.012.4+ 0.6△ 1.8+ 2.4△ 0.0

Living & Environment Products

1.00.1+ 0.9△ 1.4△ 1.1+ 3.4

Life Innovation

15.07.0+ 8.0△ 0.0+ 9.8△ 1.7

Others

0.50.9△ 0.4-△ 0.1

△ 0.3

Total

33.0

31.6+ 1.4

△ 25.3+ 5.1+ 21.6

in billion yen

Operating Income
in billion yen

15

FY2020 Forecast ⑥ By Segments（vs Forecast at the beginning）
in billion yen

FY2020ForecastForecast
at thebeginning

Incr.
△Decr.

Price

VolumeElastomers & Performance Plastics

115.0125.0△ 10.0

△ 4.2

△ 5.8

Infrastructure & Social Solutions

52.055.0

△ 3.0

△ 0.4

△ 2.6

Electronic & Innovative Products

70.073.0

△ 3.0

△ 1.1

△ 1.9

Living & Environment Products

33.033.0-△ 0.4+ 0.4

Life Innovation

46.0

38.0+ 8.0

△ 0.1+ 8.1

Others

34.0

36.0△ 2.0-

△ 2.0

Total

350.0

360.0

△ 10.0

△ 6.0

△ 4.0

FY2020
Forecast

Forecast
at thebeginning

Incr.
△Decr.

Price

VolumeCost &Others

Elastomers & Performance Plastics

3.0

7.5

△ 4.5

△ 4.2

△ 4.5

+ 4.2

Infrastructure & Social Solutions

0.5

2.0

△ 1.5

△ 0.4

△ 0.5

△ 0.5

Electronic & Innovative Products

13.013.5

△ 0.5

△ 1.1

△ 0.5+ 1.1

Living & Environment Products

1.00.5+ 0.5△ 0.4+ 0.2+ 0.7

Life Innovation

15.07.0+ 8.0△ 0.1+ 7.4+ 0.6

Others

0.50.5--+ 0.7

△ 0.7

Total

33.0

31.0+ 2.0

△ 6.0+ 2.7+ 5.4

Sales

Operating Income
in billion yen

16

FY2020 Forecast⑦ Shareholder Return

Net income

Dividend per share *Total Dividend

FY2016
Actual

FY2017
Actual

FY2018Actual

FY2019ActualFY2020Forecast（in billion Yen）

18.1

23.025.022.722.0（Yen）

70.0

105.0

120.0

125.0

125.0

（in billion Yen）

6.2

9.2

10.5

10.8

10.8

34%

40%

42%

48%

49%

（in billion Yen）

2.9

2.3

2.1--

（in billion Yen）

9.1

11.5

12.6

10.8

10.8

50%

50%

50%

48%

49%

Payout Ratio
Share buyback
Total Shareholder Return
Total Return Ratio
Depreciation（in billion Yen）

24.4

24.6

22.9

22.5

23.0

Capital expenditure（in billion Yen）

26.9

27.0

32.8

36.9

45.0

8.3%

10.0%

10.3%

9.1%

ROE

*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 account the impact of the said share consolidation.

We will remain committed to a targeted total
shareholder return ratio of 50%.
17

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 subjectto known 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.

18