FY2019 2Q Financial Results Presentation Summary(Held on November 8, 2019)(1) Overview of Financial Results for FY2019 First Half (year-on-year changes)(Billions of yen)
① Net sales:

192.0〔-6.4〕 Decrease in sales volume(-0.5)

Differences in sales prices (-5.9)② Operating income:

15.3〔+0.7〕

Decrease in sales volume 〔－0.6〕 chloroprene rubber (CR), etc.
Improvement in spread〔+1.8〕 Decreases in raw material prices, etc. (+7.9)
Sales prices (-6.1)
Effect of foreign exchange 〔－0.1〕 Raw material prices, etc. (-0.4)
Sales prices (+0.2)
Other cost elements〔－0.8〕
Absence of periodic shutdown maintenance (SDM) ofstyrene monomer (SM) plant (+1.4)
Resolution of damage previously incurred by Denka
Performance Elastomer (DPE) in the United States due tocold wave and the restoration of the Omi Plant’shydroelectric power generation output (+1.3)
Other administrative and manufacturing costs (-3.5): Labor
costs, etc.
Forward-looking investments〔+0.5〕 R&D expenses, etc.

--------------------------------------------------------------------------------Net increase due to factors listed above 〔+0.7〕① Net sales decreased due to lower CR sales, which reflected a decline in demand, and the
downward revisions of sales prices of styrene-based products in step with plunges in raw material
prices; these factors outpaced year-on-year growth in sales of xEV-related products, diagnostic
reagents and influenza vaccines.
② Operating income grew \0.7 billion thanks to higher sales of xEV-related products and offerings
produced by the Life Innovation as well as the absence of periodic SDM of SM plant, despite ayear-on-year decrease in the sales volume of CR and semiconductor-related products.

Denka Co., Ltd(2) Full-Year Operating Results Forecasts for FY2019 (year-on-year changes)(Billions of yen)
① Net sales:

400.0〔-13.1〕 Growth in sales volume( +2.5)Differences in sales prices (-15.6)② Operating income:

35.0〔+0.8〕

Growth in sales volume〔+0.9〕 Diagnostic reagents and Electronics &Innovative Products, etc.

Improvement in spread〔+5.0〕 Decreases in raw material prices, etc. (+17.9)
Sales prices (-12.9)

Effect of foreign exchange〔－1.0〕 Sales prices (－2.7)
Raw material prices, etc. (+1.8)

Other cost elements〔－2.8〕
Absence of periodic SDM of SM plant (+1.4)
Resolution of damage previously incurred by DPE in theUnited States due to cold wave and the restoration of theOmi Plant’s hydroelectric power generation output (+1.6)
Other administrative and manufacturing costs (-5.8)

Forward-looking investments 〔－1.4〕 Rise in R&D expenses--------------------------------------------------------------------------------Net increase due to factors listed above 〔+0.8〕
Denka expects operating income to total \35.0 billion as it believes that sales of diagnostic
reagents, influenza vaccines and xEV-related products will grow and offset the negative impactsof lower CR sales volume and growing costs arising from forward-looking investments and otherexpenses(3) Shareholder Returns

Policy on shareholder returns under the Denka Value-Up management plan: Remain committed
to a targeted total shareholder return ratio of 50%; place stronger focus on cash dividends; andflexibly execute share repurchases
Forecasts for dividends per share for fiscal 2019:
Interim: \60; year-end: \65; full-year: \125; (dividend payout ratio: 45%)

Denka Co., Ltd（ 4 ） Topics Current situation of and Future Outlook for Denka’s Operationsin Singapore
1. Positioning of and roles assigned to these operations under Denka Value-Up
History of Denka’s expansion into Singapore and its current position■ From the first entry into Singapore to the present
1984 Initiated the manufacture of special electro-conductive carbon black→2003 Initiated the production of granule carbon black products and began supplying themfor use in high-voltage transmission cables
1991 Initiated the manufacture of molding compound fillers for semiconductor packages (fusedsilica), with Denka becoming the world’s largest supplier supported by two facilities,including the Omuta Plant
1997 Initiated the manufacture of polystyrene (PS)2006 Considerably boosted PS production capacity while initiating the manufacture ofhigh-value-added resins (MS and SBC)
2012 Initiated the manufacture of Maleimide Type Heat Resistance Modifier “Denka IP” in line withan overseas production policy aimed at meeting demand from Japanese automakers
expanding globally and local makers gaining prominence
2015 Established Denka Life Innovation Research (DLIR), an institution charged with thedevelopment of vaccines for tropical infectious diseases, etc.
■ As for operations in Singapore, we aim to raise the ratio of specialty businesses to 80% byexecuting the following measure.
2. Specialize Our Key Operations
In 2021 Switch PS production facilities to MS resin to increase its production volume■MS resin: A transparent resin consisting of copolymer of methyl methacrylate (MMA) andstyrene monomer (SM). MS resin boasts features of both MMA and SM in terms of
optical properties and low moisture absorption and is used as light guiding substrates
for LCD backlight and cosmetics containers. Going forward, MS resin will be sought
after by manufactures of large-size LCD televisions and others seeking glass
substitutes in such regions as ASEAN.
■PS resin:

A commodity product that is difficult to differentiate from other general-purpose resins.
Currently, PS resin markets are faced with oversupply. Although the sum of annual
production capacities possessed by PS manufacturers worldwide totals 15 million tons,
on the other hand, that of Denka’s facilities in Singapore is only 200,000 tons. Our
share is therefore extremely small. In addition, we have no downstream processing
facilities in Singapore and thus sell all PS output directly to external customers.

■ Net sales are expected to decrease upon terminating PS production. Considering the low
profitability of PS, however, shifting our resources to the production of value-added MS resin will
position us to achieve a considerable improvement in the profitability of styrene-related
operations in Singapore.

Denka Co., Ltd3. Business strategies for Acetylene Black and Spherical Alumina
Current situation of and future outlook for Acetylene Black-related operations■Current: We started out supplying Acetylene Black for use in manganese batteries. Then, we
began producing granule Acetylene Black that can easily be compounded with resinand marketing these for use in the semiconductor layers of high-voltage transmission
cables. Today, these products are widely used, especially in the EU’s transmission
networks thanks to the trade bloc’s policy of raising the ratio of renewable energy.
■Future:We expect demand to grow in step with the rapid progress in power grid development
projects now under way in Europe. We will also initiate the full-fledged production ofAcetylene Black in Singapore in 2020 for use as a LiB material, with the aim ofsupplying products of even superior value.

An initiative to be undertaken in connection with Spherical Alumina■Applications: Thanks to its superior thermal conductivity, Spherical Alumina is supporting LiB
cooling mechanisms for electric vehicles (EVs). Other applications include use as athermal dissipating material in 5G communication base stations.
■Strengths: Unique fusing technologies that Denka has cultivated as a leading manufacturer ofspherical fused silica; sophisticated particle design technologies; stable quality backed
by robust production process; and an extensive product lineup■Initiative: Boost our Spherical Alumina production capacities in Singapore, with plans calling forbringing additional facilities on line in the first half of 2021. By doing so, we willestablish a supply structure capable of meeting growing demand in the global market.
In tandem with the Omuta Plant, our manufacturing base in Singapore will also
support the Denka Group to formulate more resilient BCPs supported by a dual plantstructure.
4. Process reforms employing digital technologies
A “digital plant” initiative■Establish a value chain management system
Consolidate our value chains connecting upstream functions (procurement and logistics)
supported by physical facilities and downstream functions (supply-demand planning andcustomer inventory management) supported by data analysis and management systems. To thisend, we will digitize these operations, with the aim of employing real-time data connectivity tooptimize costs and speed up the formulation or revision of manufacturing and marketing plans forthe entire supply chains.
■Features of a “digital plant”
Reduce energy consumption via the analysis of operational data from steam traps; predict thephysical properties of resulting products to curb the occurrence of defects; and analyze vibrationand electrical current to perform real-time device diagnosis. These functions are managed in an
integrated manner by employing the cloud.
■Staggered roll out in JapanWe are better positioned in Singapore to introduce a “digital plant” thanks to governmental
support offered by Singapore’s Economic Development Board and the concentrated locations ofour production facilities. Accordingly, we will push ahead with this initiative in Singapore while
introducing individual technologies in our facilities in Japan.

Denka Co., Ltd

5. DLIR taking on challenge of achieving further breakthroughs in Singapore
Denka Life Innovation Research (DLIR) established
Opened in February 2017, DLIR is the Denka Group’s first overseas research base specializing in thelife innovation field. Taking advantage of Singapore’s location, which attracts excellent humanresources from regions around the globe, DLIR is engaged in the research of vaccines for tropicalinfectious diseases and diagnostic reagents.

（5）Summary of Q&A Sessions
1. Operating results and Forecast of fiscal 2019
1-1 Outlook for chloroprene rubber (CR)-related operations
Although CR is used in a range of fields, including automotive parts, industrial equipment,
conveyer belts and agricultural machinery, overall demand decreased in the first half. Moreover, asignificant recovery in demand cannot be expected in the second half. However, despite externalpressures toward downward price revisions due to weak demand, our policy of maintaining
current product prices is unchanged as we have positioned CR as a specialty rubber.
In addition, a decrease in sales volume granted us some leeway in production capacity.
Taking advantage of this situation, we are promoting the optimization of our CR production
structure encompassing two production bases, giving due consideration to product types,
marketing areas and profitability, etc.
Denka Performance Elastomer (DPE), a subsidiary in the United States, is striving toaddress environmental concerns. Since the acquisition, DPE has operated the plant strict
compliance with the currently prevailing legal regulations and emission standards. In line withthe Denka Group’s environmental policies, which include “minimizing emissions and waste,” DPE
carried out investment totaling approximately \4 billion toward voluntary measures aimed at
reducing emissions of environmental load substances. This move enabled DPE to achieve its goalof curbing the emission of such substances by 85%.

1-2 Expansion into overseas markets with special cement additives
Having clarified targeted customer segments in China, Southeast Asia and Europe, we have seen
steady progress in the user evaluation of these products. However, it will take some time until ourinitiatives yield notable results in terms of consolidated business performance.
1-3 Operating results forecasts for Electronics & Innovative Products
From January 2019 to the present, we have been affected by stagnant demand for spherical fusedsilica, which is used in semiconductors and electronic components, and highly functional films for
carrier tapes. However, we expect demand to gradually recover from January 2020 onward as wehave seen an upturn in the number of orders for some products.
Thanks to mega trends in xEV and communications fields, we anticipate that growth indemand for Spherical Alumina and Acetylene Black will continue in these fields. As Denka
established de facto standards for these two products, we recognize that the popularization ofxEVs will directly result in sales growth.
As for Acetylene Black, we expect growing demand for products for both LiB andtransmission cable applications. In Singapore, our 2022 plan for products for transmission cableapplications calls for achieving sales equivalent to sales of LiB use products.

Denka Co., Ltd1-4 Factors contributing to growth in profit from Life Innovation
In fiscal 2019, shipments of some influenza vaccines were accelerated to the first half (in contrastto shipments of the majority of these products carried out in the second half of fiscal 2018), whilesales of diagnostic reagents grew in China and other markets overseas. Thanks to these factors,
segment results for the first half of fiscal 2019 included a year-on-year increase in profit.
Our Diagnostic reagents for inflammatory markers enjoyed growth in demand in thetargeted Chinese market. With this in mind, discussion is now under way with regard to measures
aimed at boosting supply capacities by, for example, stepping up raw material procurement andexpanding production facilities.
Sales of our reagent for measuring sd LDL-C, however, has been stagnant in theUnited States. This is due in part to financial trouble besetting local small- and medium-size
checkup centers, which are our targeted customers. We are therefore reviewing our regional
strategies. Meanwhile, in China we have seen ongoing growth in demand for this reagent. InJapan, we are under way to obtain approval from relevant authorities for its use as an in-vitro
diagnostic reagent.
2. Current status of and future outlook for Denka’s operations in Singapore
2-1 Risk associated with fluctuations in demand after increasing MS production volume
In Southeast Asia, we expect demand for LCD televisions with LED backlight, rather than demand
for those adopting OLED, to grow, as consumer preferences toward affordable prices areprevalent due to rapid population growth. We are thus expecting an increase in demand for MSresin. It can also be used in construction materials and lighting equipment as a glass substitutewhile functioning as an alternative for PMMA and polycarbonate used in PCs and other devices.
Because of this, we assume that we are well-positioned to develop potential demand for MS resin
outside such conventional applications as light guiding substrates.
2-2 Trend in operational profitability in Singapore
Previously, Denka saw growth in net sales due to the commencement of manufacturing PS, ageneral-purpose resin, and the expansion of its production capacity. On the other hand, thesemeasures resulted in a decline in profitability. From 2013 onward, however, profitability has
improved thanks to growing demand for MS resin for use in light guiding substrates and anincreasingly significant proportion of sales accounted for by Acetylene Black for use intransmission cables.
2-3 Negative factors Denka faces in Singapore
Although Denka faces such negative factors as carbon taxation and higher wages, the Companybelieves that these are insignificant compared with a number of benefits it enjoys, including stable
accessibility to raw materials, the trustworthy government and an advantageous location as alogistics hub. Accordingly, we do not consider the aforementioned factors matters of concern.

Denka Co., Ltd