Financial Results for FY2019(Ended March 31, 2020)

April 28, 2020

Index■Main Points in FY2019

P. 2■Summary of FY2019 performance

P. 3■Summary of P/L Elastomer Business

P. 7

 Specialty Materials Business

P. 12■Summary of B/S

P. 21■Summary of C/F

P. 22■Outlook for FY2020

P. 23
1

©ZEON CORPORATION. All rights reserved.

Main Points in FY2019【Elastomers】 Both sales and operating income
decreased YoY due to the impact of the global
economic slowdown and market weakening.

【Specialty Materials】 Both sales and operatingincome increased YoY and had a record in OP by
the steady sales of Specialty plastics and Energymaterials.
The direct impact of Covid-19 on business result
was minor. Our production bases in China restartand continue their operations since Feb. 10 th .
2©ZEON CORPORATION. All rights reserved.

Summary (12 months, YoY)
(Unit : JPY100m)

FY2018Net Sales
Operating Income
Ordinary Income
Net Income

3,375
331
363
185

FY20193,220261287
202

Increase/Decrease
AmountRate-155-5%-70-21%-76-21%+17+9%

 Both sales and operating income decreased YoY due to theslackness in Elastomers business.
 Net income increased due to a decrease in extraordinary losses
such as impairment loss.
3©ZEON CORPORATION. All rights reserved.

Summary (Business environment)【Exchange rate】【Raw materials】

FY2018FY2019¥110.7¥109.1¥128.7¥121.3Naphtha price (JPY/KL)¥49,500¥42,700
Asian Butadine (US$/t) US$1,372 US$1,010
JPY/US$JPY/€

Increase/Decrease
Amount
Rate
-1.6
-1%
-7.4
-6%
-6,800
-14%
-362
-26%
4

©ZEON CORPORATION. All rights reserved.

Summary (by segments)(Unit : JPY100m)

Net Sales
FY2016

Elastomer BusinessSpecialty Materials Biz.

OthersEliminations, etc.
Net sales (consolidated)

1,662
750
490-262,876

FY2017FY2018

1,946865
539-23
3,327

1,981
851
567
-25
3,375

FY2019

1,788
917
535
-21
3,220

Increase/
Decrease-192+66-33+4-155

Rate-10%+8%-6%-5%

Operating Income
FY2016

Elastomer BusinessSpecialty Materials Biz.

OthersEliminations, etc.
Op. Income (consolidated)

2069829-25308

FY2017FY201822216732-32389

177
161
28-34
331

FY20199617321-29261

Increase/Decrease-80+12-7+5-70

Rate-45%+7%-25%-21%

 Elastomers:
Net sales decreased, Operating income decreased.
 Specialty Materials: Net sales increased, Operating income increased.
5©ZEON CORPORATION. All rights reserved.

Index■Main Points in FY2019

P. 2■Summary of FY2019 performance

P. 3■Summary of P/L Elastomer Business

P. 7

 Specialty Materials Business

P. 12■Summary of B/S

P. 21■Summary of C/F

P. 22■Outlook for FY2020

P. 236©ZEON CORPORATION. All rights reserved.

Summary of P/L : Elastomer Business (12 mo. YoY)
(Unit : JPY100m)

FY2018 FY2019

えSales volume (thousand tons)

Rubbers
Latexes
Chemicals
Net sales
Rubbers
Latexes
Chemicals
Others/Eliminations

Operating income

Operating income ratio

616
355
123
138
1,981
1,388
188
383
22
177

598
348
121
129
1,788
1,238
168
348
35
96

9%

5%

Increase/
Decrease-19-7-2-10-192-150-20-35
13-80

Rate-3 %-2 %-2 %
-7 %
-10 %
-11 %
-11 %
-9 %
61 %
-45 %-4 pt Rubbers: Weak demands in automobile and general industry.
Sales prices declined linked to the falling prices of raw material.
 Latexes: Declined demands in cosmetics and general industry.
Sales prices declined linked to the falling prices of raw material.
 Chemicals: Production volume decreased from the regular plant maintenancein the main manufacturing site. Downturn in Asian market.
7©ZEON CORPORATION. All rights reserved.

Elastomers: Operating income variance (12 mo./YoY)(Unit : JPY100m)• Raw material /sales priceformula (Rubbers, latexes)• Market downturn-27-89

Price decreaseof raw material+7+46-18
177-80FY2018Exchange
RateQty.

Price96
Rawmaterialprices

SG&A

FY20198©ZEON CORPORATION. All rights reserved.

Situation in Elastomer: Rubbers (Volume, 12 mo./YoY)

General purpose

Specialty

100

100

10094

FY2018FY2019FY2018FY2019Index: Volume for FY2018=100

 General purpose rubbers (mainly for tires)
Same level as the previous year Specialty rubbers (mainly for automobile industries)
Volume declined due to the sluggish demand
9©ZEON CORPORATION. All rights reserved.

Summary of P/L : Elastomer Business (QoQ)(Unit : JPY100m)

Sales volume (thousand tons)

Rubbers
Latexes
Chemicals
Net sales
Rubbers
Latexes
Chemicals
Others/Eliminations

Operating income

Operating income ratio

Increase/Decrease

3Q

4Q

15085
3332435
297
4187
1026

15088
28
34434
292
40
90
12
116%

3%

0
3-52-2-5-2
32-15

Rate
04-15
60-2-4
3
24-57%%%%%%%%%%-3 pt

 Naphtha price rose QoQ (Zeonʼs index in 3Q: JPY41,300⇒ 4Q: JPY43,700/KL)
 Rubbers: Sales price sunk by the market downturn. Revaluated the inventories.
 Latexes: Sales volume decreased. Manufacturing cost rose.
 Recorded the cost for the regular plant maintenance in FY2020 of the plant forrubbers and latexes.
 The plant in Singapore had stopped its production due to the regular plantmaintenance of the raw material supplier.
…etc.
©ZEON CORPORATION. All rights reserved.

10

Index■Main Points in FY2019

P. 2■Summary of FY2019 performance

P. 3■Summary of P/L Elastomer Business

P. 7

 Specialty Materials Business

P. 12■Summary of B/S

P. 21■Summary of C/FP. 22■Outlook for FY2020

P. 23
11©ZEON CORPORATION. All rights reserved.

Summary of P/L : Specialty Materials (12 mo. YoY)
(Unit : JPY100m)

FY2018FY2019

Increase/Decrease

Operating income

851
276
519
57
161

917
291
568
59
173

66
1549
2
12

Operating income ratio

19%

19%

Net sales
Specialty chemicals

Specialty plastics
Medical devices, etc.

Rate
8 %
5 %
10 %
4 %
7 %0 pt Specialty Chemicals: Energy Materials had steady growth. Both net sales
and OP decreased of Specialty Chemicals and Toner.
 Specialty Plastics: Both Optical Plastics & Films had steady business.

12©ZEON CORPORATION. All rights reserved.

Specialty Materials: Operating income variance (12 mo./YoY)(Unit : JPY100m)

Increased operation of
optical films

Steady sales of opticalplastics, films and energy
materials+34-9-4+25-34• Increased the freight and packaging cost due tothe increased shipment• Increased R&D and trial manufacturing cost of
optical films

161

+12

FY2018Exchange
RateQty.

Price

173
Raw
materialprices

SG&A

FY201913©ZEON CORPORATION. All rights reserved.

Summary of P/L : Specialty Materials (QoQ)(Unit : JPY100m)

3Q

4Q

Operating income

22473137
144023976147
1641

Operating income ratio

18%

17%

Net sales
Specialty chemicals

Specialty plastics
Medical devices, etc.

Increase/Decrease

153
11
10Rate
7 %
4 %
8 %
8 %
1 %-1 pt Specialty Chemicals: Electronics Materials and Toner had steady business.
Energy Materials had slightly declined.
 Specialty Plastics: Both Optical Plastics and Optical Plastics are steady.
 OP difference on QoQ of Specialty Materials Biz was flat due to the R&D trialmanufacturing cost and disposal cost of defective products of Optical Films on4Q.
14©ZEON CORPORATION. All rights reserved.

Situation in Specialty Materials: Energy materials (application)

FY2018FY2019OthersOthersConsumeruse, etc.

Consumeruse, etc.

EVEV

The sales rate of EV had grew in FY2019* Analysis of application is Zeonʼs estimation.
2019 actual basis
15©ZEON CORPORATION. All rights reserved.

Situation in Specialty Materials: Energy materials (volume)

QoQ

YoY

57%

113%

Consumer use, etc.

168%

96%

Total

99%

106%

EV EV: QoQ declined by the postponement of the EV production to wait-to-see
the new NEV regulation in 2020 China, the lunar new year holiday, and lessworking days of Chinese customers due to Covid-19. Steady in YoY.
 Consumer use, etc.: Although QoQ grew significantly, the energy storage
system (ESS) fire in Korea had slowed growth in the first half of FY2019 anddecreased slightly for the whole year.
16©ZEON CORPORATION. All rights reserved.

Situation in Specialty Materials: Optical films (volume)

QoQ

YoY

97%

109%

For big size FPD

106%

109%

Total

104%

110%

For small-to-medium size For small-to-medium size: There was no big drop in 4Q due to theadoption in new models and the increased demand for PCs and tablets(increase of staying home). Solid business in whole year.
 For big size FPD: Solid sales in volume by the new sales channel.

17©ZEON CORPORATION. All rights reserved.

Situation in Specialty Materials: COP (volume)

QoQ

YoY

Optical use

147%

121%

Medical use, etc.

109%

102%

Total

120%

108%

 Optical use: Steady sales for smartphone as QoQ. Solid business in YoY.
 Medical use, etc.: Advanced shipment includes the growth in QoQ, but
the steady growth in YoY.

18
©ZEON CORPORATION. All rights reserved.

Summary of P/L : Others(Unit : JPY100m)

567

535
【Year-on-year】
Net Sales ︓-3.3 billion yen
Operating Income: -0.7 billion yen•

28

Decline in Trading and RIMbusiness

21

FY2018FY2019Net Sales

Operating Income
19©ZEON CORPORATION. All rights reserved.

Index■Main Points in FY2019

P. 2■Summary of FY2019 performance

P. 3■Summary of P/L Elastomer Business

P. 7

 Specialty Materials Business

P. 12■Summary of B/S

P. 21■Summary of C/F

P. 22■Outlook for FY2020

P. 2320©ZEON CORPORATION. All rights reserved.

Summary of B/S(Unit : JPY100m)

Year-on-year variance is in ( )【Current assets】 -128

Currentliabilities
1,124 Account receivable -70 * Accounts due -57*

Currentassets
2,144【Current liabilities】 -176
 Account payable -167 *（-176）
Long-term liabilites 363(+5)
324（-34）（-128）
Fixedassets
1,907【Fixed assets】 -70
 Capital expenditures 291• Enhancement of optical film
facility, etc.
 Depreciation & Amortization-174
 Investment securities -190（-70）

Total netassets
2,604【Total net assets】 +12（+12）

 Net income 202• Retained earnings +156
 Financial indicators

Total assets
4,051(-198)• Interest-bearing debt 210 (-32)• Equity ratio 63.5％ (+3.2％)• D/E ratio 0.08 (-0.01)* = due to holidays around the end of the fiscal year 21©ZEON CORPORATION. All rights reserved.

Summary of C/F(Unit : JPY100m)

404
284

FY2018FY2019CF from Operating Act.

404284

CF from Investing Act.

-214-246

Free CF190

39

CF from Financing Act.

-236

-83

CF-46-44

 CF from Operating act: -120
• Decrease of Account receivable -104*
 CF from Investing act: -31

FY2018FY2019• Increase of capital investment -104

-83

-214 -236-246

CF from Operating Act.

CF from Investing Act.

CF from Financing Act.

• Decrease of purchase of investment securities+60
 CF from Financing act: +153
• Redeemed corporate bond (in FY2018) 100• Purchase of treasury shares (in FY2018) 50* = due to holidays around the end of the fiscal year

©ZEON CORPORATION. All rights reserved.

22

Outlook for FY2020
There is no outlook of the Covid-19 crises ends. It may
have a long-term impact on Zeonʼs business, we had setup “Emergency response headquarters” to respond tounexpected situation.
We continue to implement infection prevention
measures at all business sites, and in the event of aninfection, take prompt action according to thecountermeasures.

The forecast of FY2020 performance and dividend havenot been determined, because to calculate rational
business forecasts is difficult due to the Covid-19 effect.
23©ZEON CORPORATION. All rights reserved.

Zeonʼs plans, forecasts, and other data appearing in this presentation werecalculated based on information which was currently available and therefore
includes risks and uncertainties. Actual results may differ depending on
various factors.

Next Announcement of Financial Statements

The first quarter ofFY2020

July 31st, 2020
Subject to change without noticeThis document is a translation of the original Japanese-language and is provided for convenience only.
In all cases, the original Japanese version shall take precedence.
24©ZEON CORPORATION. All rights reserved.

Reference: Consolidated Statement of Income (Quarterly)(Unit : JPY100m)
FY2018FY2019QoQ

18/2H vs. '19/2H

YoY

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

159

149

145

164

147

150

150

150

00%

-8-3%-19-3%

Rubbers

91

84

80

9985

90

85

88

34%-7-4%-7-2%

Latexes

3129

30

32

30

31

33

28

-5-15%-2-3%-2-2%

Chemicals

3735

34

32

32

30

32

34

26%

11%-10-7%837

854855829

824809792794

20%-99-6%-155-5%

509

493

490

489

471

448

435

434

-20%-109-11%

-192

-10%

Rubbers

363

340

339

345

328

321

297

292

-5-2%-96

-14%

-150

-11%

Latexes

4451

48

45

45

42

41

40

-2-4%

-12-13%-20-11%

Chemicals

98

96

95

94

92

78

87

90

33%

-12-6%-35-9%

Others / Elimitnations

467

5

7710

12

2

24%

1078%

13061%

Specualty Materials Biz.

195

229

223

205

223

232

224

239

157%

358%

668%

116

148

138

117

142

143

137

147

118%

2911%

4910%

Sp. Chemicals

66

687072677573

76

34%

75%

155%

Medical, etc.

14121516

14

14

1416

18%

-1
0-3%

204%

132

132

143

136

131

129

132

122

-11-8%-25-9%-29-5%

85

95

90

61

83

67

65

46

-20-30%

-41

-27%

-70

-21%

10%

11%

11%

7%

10%

8%

8%

6%

51

44

49

33

35

2526

11

Operating income ratio

10%

9%

10%

7%

7%

5%

6%

3%-3 pt

Specualty Materials Biz.

34

53

42

32

51

41

40

41

0

Operating income ratio

17%

23%

19%

15%

23%

18%

18%

17%

Sales volume (thousand tons)

Net sales
Elastoer BusinessSp. Plastics

Others / Eliminations

Operating income
Operating income ratio

Elastoer BusinessChangeRate Change Rate Change Rate

-2 pt
-15-4 pt

-57%

-1 pt

1%-45-55%

-7 pt
-80

-45%

-8 pt

-14 pt81210%

1 pt

7%

1 pt

25
©ZEON CORPORATION. All rights reserved.

Summary (QoQ)(Unit : JPY100m)

QoQ
FY20194Q

Net Sales
Operating Income
Ordinary Income
Net Income
JPY/US$JPY/€
Naphtha price (JPY/KL)Asian Butadiene (US$/t)

Increase/Decrease

3Q794
4652
35Amount792+265
-2075
-2251
-16

¥109.1¥109.1¥121.3¥121.3¥42,700¥42,400
US$1,010 US$1,075

0.00.0300-65Rate+0%-30%-30%-31%+1%-6%
26©ZEON CORPORATION. All rights reserved.

Summary (2019/2H vs. 2018/2H)(Unit : JPY100m)

2019/2H vs. 2018/2H (Oct.-Mar.)
Increase/Decrease
Oct.-Mar.
FY2019FY2018 Change Rate

Net Sales
Operating Income
Ordinary Income
Net Income
JPY/US$JPY/€
Naphtha price (JPY/KL)Asian Butadiene (US$/t)

1,586
111
12787

1,685
152
160
39-99-41-33
47-6%
-27%
-21%
121%

¥109.1¥111.9¥120.5¥128.0¥42,500¥47,700
US$899 US$1,131-2.8-7.5-5,200-232-3%-6%-11%-21%27©ZEON CORPORATION. All rights reserved.

Reference: Capital Expenditures, Depreciation & Amortization
and R&D Expenses(Unit : JPY100m)【Capital Expenditures】【Depreciation & Amortization】

 Capital Expenditures: 291 (+144 YoY)
Optical film manufacturing facility, etc.
 R&D Expenses: 153 (-12 YoY)
The ratio to sales was 4.8% (same level as previous year)
28©ZEON CORPORATION. All rights reserved.

Reference: Capital Expenditures, Depreciation & Amortization
and R&D Expenses(Unit : JPY100m)

2018 Actl.
146

2018 Actl.
188

2019 Actl.
291

2019 Actl.
174

2020
Forecast
200

2020
Forecast
205

2018 Actl.
165
2019 Actl.
153
2020
Forecast
160

29©ZEON CORPORATION. All rights reserved.

Business Environment︓Domestic Naphtha prices(JPY/KL)

100,000
90,00080,00070,00060,00050,00040,00030,00020,00010,00002004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201930
©ZEON CORPORATION. All rights reserved.

Comparative Balance Sheets (Consolidated)
AssetsLiabilities and Net Assets
E/Mar.
2020

E/Mar.
2019

Increase/Decrease

Accounts receivable -other
InventoriesOther current assets
Fixed assets
Property, plant and equipment
Intangible assets
Investment securities
Other fixed assets
Total assets

2,144
320
713
300
732
79
1,907
1,148
37
621
101
4,051

2,272
375
784
357
711
46
1,977
1,023
32
811
111
4,249

-128
-55
-70
-57
21
33
-70
125
5-190
-10-198

Capital expenditures
Depreciation & amortization
Other factors

291-17413

Fixed assets

129

Current assets
Cash and bank deposits
Notes and accounts receivable -trade

E/Mar.
2020

E/Mar.
2019

Increase/
Decrease

Other current liabilities
Long-term liabilities
Long-term interest-bearing debt
Other long-term liabilities
Total net assets
Equity capital
Other net assets

1,124
657
110358
324
100
224
2,604
2,572
31

1,300
824
121
355
357
120
237
2,592
2,562
30

-176
-167
-12
3
-34
-20
-14
12
112

Total liabilities and net assets

4,051

4,249

-198

Total interest-bearing debt
Equity ratio
D/E ratio

210
63.5
0.08

241
60.3
0.09

-32
3.2
-0.01

Current liabilities
Notes and accounts payable -trade
Short-term interest-bearing debt

31©ZEON CORPORATION. All rights reserved.