Fiscal 2015

- Apr 1, 2015 to Mar 31, 2016-

Presentation for IR Meeting
May 12, 2016

CONTENTS
1 Financial Results for FY2015
2 Performance Forecasts for FY2016
3 Medium-Term Management Plan
4 Business Strategies

5 Supplementary Data2

1 Financial Results for FY2015

1. Financial Highlights
2. Net Sales / Operating Income
by Business Segment

3

1

Financial Results for FY2015

1. Financial Highlights Consolidated (year-on-year change)
FY2014

Net sales
Operating income
Ordinary income
Profit (loss)

attributable to owners of parent
Basic earnings per share (yen)Exchange rate (¥/$)
Domestic naphtha price (¥/kl)

FY2015(Billions of yen)

Difference
Amount

302.0
19.5
12.9

307.1
23.0
17.7

+5.0
+3.5
+4.8

+2
+18
+37

(65.3)(100.5)(35.2)-(187.85)110
63,500(289.10)120
42,800Qualitative information(Net sales) ¥307.1 billion, up 2%
Pluses: increased sales volumes of soda ash and calcium chloride as well as solar-grade polycrystalline silicon
Minus weak selling prices of petrochemicals on the back of downturn in domestic naphtha prices(Operating income) ¥23.0 billion, up 18%
Plus:
improved profitability owing to drop in domestic naphtha prices and the weaker yen
Minus: expansion in loss at Tokuyama Malaysia
4

%

1

Financial Results for FY2015

1. Financial Highlights Consolidated (year-on-year change)
FY2014

Net sales
Operating income
Ordinary income
Profit (loss)

attributable to owners of parent
Basic earnings per share (yen)Exchange rate (¥/$)
Domestic naphtha price (¥/kl)

FY2015(Billions of yen)

Difference
Amount

%

302.0
19.5
12.9

307.1
23.0
17.7

+5.0
+3.5
+4.8

+2
+18
+37

(65.3)(100.5)(35.2)-(187.85)110
63,500(289.10)120
42,800Qualitative information(Ordinary income) ¥17.7 billion, up 37%
Pluses: increase in operating income; change from foreign exchange losses, posted in the previous year, to foreign exchange gains(Loss attributable to owners of parent) loss of ¥100.5 billion (deficit expansion)
Pluses: Increase in gains from the sale of fixed assets
Minus: posting of impairment loss on the polycrystalline silicon manufacturing facilities of Tokuyama Malaysia

5

1Financial Results for FY2015

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, 2015

As of Mar 31, 2016

Changes

554.5
162.5
29.3%
283.1
1.74

401.3
51.4
12.8%
244.1
4.74

(153.1)(111.1)(16.5 Pts)
(39.0)
+3.00

1.03

2.38

+1.36

467.36147.98

Qualitative information*Net D/E ratio: (Interest-bearing debt – Cash and deposits, Cash equivalents, Money in trust)/Shareholders’ equity(Total assets)
Decrease factor: decrease in property, plant and equipment resulting from the impairment of polycrystalline silicon manufacturing
facilities of Tokuyama Malaysia(Shareholders’ equity)
Decrease factor: decrease in retained earnings resulting from the posting of loss attributable to owners of parent(Interest-bearing debt)
Decrease factor: decrease in long-term loans payable and bonds payable6

1

Financial Results for FY2015

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

FY2014FY2015Difference

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeChemicals

91.9

5.0

87.8

8.9

(4.1)

(4)

+3.8

+76

Specialty Products

55.4

4.1

60.9

(1.1)

+5.4

+10

(5.2)

-

Cement

81.2

4.4

85.4

5.8

+4.2

+5

+1.3

+31

Life & Amenity

58.4

5.1

57.6

6.5

(0.7)

(1)

+1.4

+28

Others

51.4

6.0

53.6

5.6

+2.2

+4

(0.3)

(6)

Total

338.5

24.8

345.5

25.8

+7.0

+2

+1.0

+4

Inter-segment eliminations
and corporate-wide
expenses(36.4)(5.2)(38.4)

(2.7)

(1.9)

-

+2.5

-

Consolidated results

302.0

19.5

307.1

23.0

+5.0

+2

+3.5

+18

+4.4

+102

(5.9)

%

%

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

(Reference)

Tokuyama Malaysia
7

4.3

(4.3)

8.8

(10.2)-

2 Performance Forecasts for FY2016

1. Future Business Environment andCountermeasures
2. Performance Forecasts
3. Performance Forecasts
by Business Segment82Performance Forecasts for FY2016

1. Future Business Environment and Countermeasures
Chemicals◆Earnings conditions throughout the Chemicals segment are expected to be affected by the persistent and significant risk of afluctuation. While raw material and fuel costs are down owing mainly to a drop in the market prices of such commodities
as crude oil and coal, this drop also adversely affects petrochemicals selling prices.
・Tokuyama will endeavor to strengthen its cost competitiveness including its unit consumption of raw materials and energy and fixed
cost efficiency, thereby securing stable earnings.

Specialty Products◆Demand for semiconductors for use in electronics equipment is forecast to experience a mild recovery. Customers’ requests for higher
quality in line with miniaturization as well as stable supply are expected to increase even further.
・In working to secure earnings, Tokuyama will also endeavor to increase the pace of efforts aimed at improving the quality ofsemiconductor-related products while focusing on the reduction of costs.

Cement◆Private-sector demand is anticipated to exhibit a modest recovery on the back of Olympic-related construction. Public-sector
demand is expected to decline due mainly to a downturn in public-sector investment and the extension of construction periods.
Trends in domestic demand are forecast to remain essentially unchanged.
・We will strive to secure earnings through a variety of initiatives including efforts to expand the volume of exports, accept a higher
volume of waste, and thoroughly reduce manufacturing costs
Life & Amenity◆The market in Japan is expected to continue along a path of modest recovery. In overseas markets, however, there are concernsof a slowdown in the pace of economic growth especially in emerging nations including China and resource-rich countries.
・Tokuyama will work to boost earnings by focusing on developing and marketing products that meet customer needs and changes in
the market

92

Performance Forecasts for FY2016

2. Performance Forecasts

Consolidated(Year-on-year change based on FY2016 forecasts)(Billions of yen)

FY2015 Results

FY2016 Forecasts

307.1
23.0
17.7

302.0
32.0
27.0

Profit (loss)

attributable to owners of parent(100.5)17.0

Basic earnings per share (yen)Exchange rate (¥/$)
Domestic naphtha price (¥/kl)(289.10)120
42,80048.87
11035,000Net sales
Operating income

Ordinary income

Difference
Amount

(5.1)
+8.9
+9.2
+117.5

%

(2)
+39
+52
-

Qualitative information(Net sales)
Plus:
increased sales volumes of polysilicon and cement for export
Minus: weak trends in selling price of petrochemicals(Operating income)Plus:
improved profitability at Tokuyama Malaysia
Minus: deteriorated profitability of petrochemicals

10(Ordinary income)Plus:
increase in operating income(Profit attributable to owners of parent)
Plus:
Improvement in extraordinary gain/loss due toabsence of the impairment loss posted in theprevious fiscal year

2

Performance Forecasts for FY2016

3. Performance Forecasts by Business Segment(Year-on-year change based on FY2016 forecasts)
FY2015 Results(Billions of yen)

Difference

FY2016 Forecasts

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

87.8

8.9

81.0

10.0

(6.8)

(8)

+1.0

+12

60.9

(1.1)

67.0

7.0

+6.0

+10

+8.1

-

85.4

5.8

87.0

8.0

+1.5

+2

+2.1

+37

57.6

6.5

52.0

5.0

(5.6)

(10)

(1.5)

(24)

53.6

5.6

53.0

4.5

(0.6)

(1)

(1.1)

(21)

345.5

25.8

340.0

34.5

(5.5)

(2)

+8.6

+34

Inter-segment eliminations
and corporate-wide
expenses(38.4)(2.7)(38.0)

(2.5)

+0.4

-

+0.2

-

Consolidated Results

307.1

23.0

302.0

32.0

(5.1)

(2)

+8.9

+39

(4.0)

+2.1

+24

+6.2

-

Chemicals
Specialty Products
CementLife & Amenity
Others
Total

Operatingincome%%(Note) Sales and operating income in each segment shown above include inter-segment transactions.
(Reference)

Tokuyama Malaysia
11

8.8(10.2)

11.0

3 Medium-Term Management Plan
1. Current Understanding of Conditions
2. Management Policy
3. Medium-Term Management Plan
4. Financial Strategy

12

3Medium-Term Management Plan

Results to Date

1. Current Understanding of Conditions~ Performance Trends ~With a business platform that is grounded in inorganic and organic chemicals, Tokuyama weathered the oilcrises of the 1970s and has continued to explore opportunities in the specialty chemicals field, pursue
overseas business development, and steadily expand its operations.
*TMSB: Tokuyama Malaysia

Long-term Performance Trend
Net sales (billions of yen)

Operating income (billions of yen)

400

40.0
(4) Investing in TMSB

350
Net sales300(3) Expanding overseas business

Operating income

30.0(2) Restructuring of business

250

35.0

25.0

(1) Commenced new businesses

200
150
100

20.0

Expansion of the organic
chemicals business

15.0

Expansion of the inorganic
chemicals business

10.0

2015

2013

2011

2009

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

1971

1969

1967

1965

1963

1961

1959

FY

1957

0.0

1955

0

1953

5.0
1951

50

(1) Commenced new businesses(2) Restructuringof business(2) 事業再構築期(3) Expanding overseas business(4) Investing in TMSB

1976 Commenced film business1978 Commenced dental products business
1981 Commenced plastic sashes business1983 Commenced high-purity chemicals
business
1984 Commenced polysilicon business1992 Established Sun・Tox Co., Ltd.
1995 Established Shin Dai-ichi Vinyl Corp.
2001 Established Tokuyama
Polypropylene Co., Ltd.
2004 Consolidated membrane businessto ASTOM Corp.

1996 Established Tokuyama Electronic Chemicals Pte. Ltd
1996 Established Taiwan Tokuyama Corp.
2002 Established Shanghai Tokuyama Plastics Co., Ltd.
2005 Established Tokuyama Chemicals (Zhejiang) Co., Ltd.
2013 Established Tokuyama Nouvelle Calédonie S.A.

2009 Established Tokuyama Malaysia
2011 Commenced construction of PS-1
2012 Commenced construction of PS-2
2014 Completed construction of PS-2

13

3

Medium-Term Management Plan

Results to Date

1. Current Understanding of Conditions~ Performance Trends ~Tokuyama reported increased profitability in its Specialty Products business during the second half of the 2000s. In
its general-purpose product activities centered on the Chemicals and Cement businesses, the Company has
witnessed a drop in profitability due to shrinking markets in Japan.
Performance Trend by Business Segment
Operating income (billions of yen)

45.0
40.0
35.0

30.0

Specialty
Products

25.0

Others20.0
OthersLife & Amenity

15.0
Specialty
Products

Cement andbuilding materials

10.0
5.0

Cement andbuilding materials

Chemicals

CementChemicals

Chemicals

0.0
Corporate

14

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

FY

1995

(10.0)

1994

(5.0)

3

Medium-Term Management Plan

1. Current Understanding of Conditions

Results to Date

~ Accumulated Strengths and Technologies towhich the Company Will Entrust Its Future ~Building on its chemicals, cement, and other foundation activities that make the most of the Company’s inherent
strengths including its highly efficient factory and Japan’s leading in-house power generation capacity, Tokuyama has
advanced into the specialty chemicals field and developed new strengths.
New Technology
Strengths

Powder control

Organic andinorganic synthesis

Purification

Crystallization
Deposition

SinteringSpecialty
Business

Specialty chemicals field(Polysilicon, Silica, Ceramic Materials, Organic Functional Materials, Pharmaceutical Intermediates, Other)

Entry Into
Traditional
Businesses

Foundation
Strengths
15

Chemicals

Cement(Electrolysis and Refining Technologies)(Firing and Resource Reprocessing Technologies)

Good natural harborand competitive
industrial complex

Highly efficient
Tokuyama Factorythrough integration

Japan’s 8th leading
in-house power
generation capacity

Employee integrityand perseveranceSound management

Medium-Term Management Plan

3

Reflecting on the Past

1. Current Understanding of Conditions~ Delays in New Product Development ~Unable to fully expand technological capabilities developed in the specialty chemicals field into businesses
outside semiconductor-grade polysilicon operations

Silicon chloride

Polysilicon

Caustic soda

PVC

Plastic window sash

Ion exchange membranes

Medical diagnosis systems

Chlorine
derivatives,
organic
solvent

IPA

Polypropylene

High purity chemicals forelectronics manufacturing
Microporous film

Polyolefin film

CementAlN(alminum nitride）

Dental materials/
equipment
Plastic lens monomer

Photochromic lensGas sensor
Active pharmaceuticalingredients

1970

16

1980

1990

Blank period in the creation of new businesses

Soda ash &Calcium chloride

Fumed silica

Liquid hydrogen

Plaster
Reclaimed dihydrate gypsumBN(boron nitride)

DUV-LED

2010

2020

Medium-Term Management Plan3

1. Current Understanding of Conditions

Reflecting on the Past

~ Substantial Loss in Overseas Operations ~Despite reducing net interest-bearing debt to nearly zero in real terms in 2009, dramatic increase following the
procurement of funds to finance large-scale investment in Malaysia and substantial deterioration in financial position
Long-term Trend of Financial Position and Financial Indicator(billions of yen)

(D/E ratio)

700.0

7.0

D/E ratio (FY2015): 4.7
600.0

6.0

500.0

5.0

Reduce interest-bearing
debt to zero in real terms(taking into account cash inhand and deposits at bank)

400.0

4.0

17

2015

2013

2011

2009

2007

2005

2003

2001

1999

FY
(Note) D/E ratio = Interest-bearing debt / Shareholders’ equity etc.

1997

1995

1993

1991

1989

0.0
1987

0.0
1985

1.0

1983

100.0

1981

2.0

1979

200.0

1977

3.0

1975

300.0

Total Assets
Shareholders' equity
Interest bearing debt
D/E ratio

3

Medium-Term Management Plan

1. Current Understanding of Conditions

Reflecting on the Past
~ Points to be Improved ~Forecasts for traditional businesses indicate that the general-purpose product markets in Japan will contract. At thesame time, a slowdown in electronic materials business growth is also expected. Under these circumstances, it isvital that Tokuyama overcomes the issues mentioned below and creates the necessary driving force to propel new
profit growth.
Reflecting on the Past ― Points to be Improved as Tokuyama Enters the Next Century ―Point to be Improved (1)Point to be Improved (2)Overconfidence in andInward and passive posturedependence on Tokuyama Factoryspread among employees

Point to be Improved (3)Corporate governance

Point to be Improved (4)Uncertainty surrounding the strategic direction of the Group and each department

It is vital that Tokuyama overcomes these issues andcreates the necessary driving force to propel new profit growth.
18

3

Medium-Term Management Plan

2. Management Policy

New Foundation
MissionCentered on the field of chemistry, the TokuyamaGroup will continue to create value that enhances people’s lives

Aspirations
Shift from a focus on quantity to quality
FY2025 Global leader in advanced materials
Leader in its traditional businesses in Japan

ValuesCustomer satisfaction is the source of profits
A higher and broader perspective
Personnel who consistently surpass their predecessors
Integrity, perseverance, and a sense of fun
19

3

Medium-Term Management Plan

2. Management Policy

Medium to Long-term Management Strategies

The Tokuyama Group has positioned the following medium- to long-term management strategies as the driving
force behind its business activities. The goal is to carry out each of these strategies by fiscal 2025.

Management Strategies
Transition to a robust business structure that is resilient
against changes in its operating environment andcapable of sustainable growth・Growth businesses: Become a global leader in advanced materials
through unique technologies
・Traditional businesses: Become a leader in Japan in each of the Cement and Chemicals
businesses through strengthening competitivenessTransition to a Group-wide low-cost structure by undertaking
a comprehensive review of existing work practices
20

3

Medium-Term Management Plan

2. Management Policy

Rebuild Business Strategies

Strive toward definitive profit growth by becoming a global leader in advanced materials through unique
technologies in growth businesses. Work to become a leader in traditional businesses in Japan by strengthening
competitiveness and overcome competition in the domestic general-purpose product market.
Aspirations

Means of Achieving Goals

Key Management
Indicators

Businesses

Become a global leader inadvanced materials throughunique technologies
・Thoroughly understand customers’
needs, and meet requirements
through unique technologies

EBITDA growth rate

Specialty ProductsLife & Amenity
New businesses■ Adhere strictly to customer-oriented
business activities■ Utilize open innovation■ Leverage alliances■ Review the research anddevelopment structure

GrowthBecome a leader in Japan

Traditional
Businesses
Chemicals
Cement21

through strengthening
competitiveness・Overcome competition in thegeneral-purpose products market
・Become an entity that maintains
a thirst for increased efficiency■ Adopt a stringent approach toward
maintaining and renewing investments;
undertake strategic investments aimed
at strengthening competitiveness■ Increase the efficiency of repairs andmaintenance expenses by shortening
the periods of periodic maintenance■ Strengthen cross-departmental
improvement activities■ Leverage alliances

ROA,
Cash conversion
cycle (CCC)3

Medium-Term Management Plan

2. Management Policy

Steadily Expand Growth Businesses

Utilize the Company’s unique technologies that draw on capabilities nurtured in advanced fields and develop
products that address the needs of society
Increasing
environmental awarenessSocial Trends
Growing interestin health
Aging population
Reduction in CO2 emissions
Widespread use of energy-efficient equipment

Widespread mobility
Increased networking
Miniaturization of devices
Reduction in
healthcare expenses

Society’s Needs

Preventive andimproved healthcare

Advanced healthcare
Addressing society’s needs

Addressing society’s needs

Reduction
High
Sintering
nitridization
purification
Crystallization,
Electrode
Powder control
Sol-geldeposition
and membrane
Organic synthesis /Photopolymeri
Molecular
Direct hydration
zationdesignTokuyama’s Unique Technologies
22

3

Medium-Term Management Plan

3. Medium-Term Management Plan

Outline of the Plan

Medium-Term Management Plan Cornerstone of the Group’s Revitalization
Positioning of
the PlanPriority Issues

The Medium-Term Management Plan has been set up as a milestone toward achieving the Group’s aspirations.
Through implementing the Plan, the Tokuyama Group will lay the cornerstone for the Group’s revitalization.

Period: From April 1, 2016 to March 31, 2021
(1) Change the Group’s organizational culture and structure (2) Rebuild the Group’s business strategies(3) Strengthen Group management (4) Improve the Company’s financial position
Consolidated Operating Income Trend

50.0(billions of yen)

Specialty Chemicals (New Products)

Medium-Term Management Plan

40.0
30.0

Specialty Chemicals (Existing Products): Cultivate new markets in advanced chemical material fields; generate
definitive growth

20.0
Traditional Businesses: Maintain a thirst for increased efficiency
and excel in the general-purpose products market

10.0
0.0
TMSB

23

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

FY

2013

(10.0)

3

Medium-Term Management Plan

3. Medium-Term Management Plan

Target Indicators

Set numerical targets for FY2020 as a milestone toward achieving the Group’s aspirations in FY2025
Numerical Targets under the Medium-Term Management Plan

FY2020Target

FY2015Net sales¥307.1 billion

Emphasize quality over quantity¥335.0 billion

Operating income¥23.0 billion

Shift toward high-value-added
products and reduce costs¥36.0 billion

5.7%

Realize Tokuyama Factory’s potential

10%

7.5%

Pursue a thirst for increased efficiency

10%

Total asset
turnover0.77 times

Promote improvements through various
measures including efforts to shorten
the periods of periodic maintenance

1.0 times

CCC

69 days

Reduce inventories,
improve trading terms and conditions

55 daysD/E ratio

4.7

Promote improvement by building up
profits and utilizing external capital

1.0

ROA

OperatingmarginFinancial indicators

Note 1: Cash Conversion Cycle (CCC): Accounts receivable turnover period + Inventory turnover period – Accounts payable turnover period;
ROA: Operating income / Total assets

24(Assumptions)Exchange rate：¥110/US$
Domestic naphtha price：¥58,000/kl

3Medium-Term Management Plan

3. Medium-Term Management Plan

Changes in Operating Income by Factor

Build up the effects of measures implemented by each department including those taken in the Specialty
Products segment and cost reduction efforts at Tokuyama Factory, and target operating income of ¥36.0 billion in
the lead-up to FY2020
Changes in Operating Income by Factor(billions of yen)

40.0
35.0

Decrease in domestic
demand and the growing riskof a surge in resource prices

Upswing in sales mainly ingrowth businesses (Specialty
Products, Life & Amenity)

+2.2

30.0

+5.4

25.0

(13.6)+12.2
Reduction in cross-departmental
costs at Tokuyama Factory, increaselogistics efficiency, and other factors

20.0
15.0
10.0

+6.6

36.0

23.0

5.0

9.5

0.0
FY201525

Risk factors

FY2020
TMSB(before actions) improvement

Sales
expansion

Marginimprovement

Cost
reduction

FY20203Medium-Term Management Plan

3. Medium-Term Management Plan Cross-Departmental Cost Reduction Activities
Adopt a cross-departmental approach that differs from conventional methods and work to reduce costs byundertaking strategic capital expenditures as a part of efforts to cutback principal costs including raw
material, fuel, repairs and maintenance, and distribution expenses
Cross-Departmental Cost Reduction at Tokuyama Factory
Overall Costs at Tokuyama Factory(billions of yen)

Implement a ¥4.0 billion
reduction in cross-departmental
costs in fiscal 2020 comparedwith fiscal 2015

130.0
129.0
128.0

Expansionof portfacilities

Reduce coal stock expenses throughan increase in the amount of coalhandled as a result of large-scale
expansion¥1.1

Repairefficiency

Put in place a project team andpromote activities that utilize external
expertise¥1.0

Unit material
consumption
reduction

Also consider undertaking strategic
renewal investments, continue toimprove the unit consumption of raw
materials and fuels¥0.6

Distribution
cost saving

Strengthen efforts aimed at
optimizing the logistics function as awhole, spearheaded by the
Tokuyama Factory general manager¥0.5

OthersIncrease the selling of electric powerby shortening the periods of periodic
maintenance and reduce other costs

¥0.8

Total

Target amount of Group-wide cost
reduction in fiscal 2020

127.0
126.0
125.0

billonbillonbillonbillonbillon

124.0
123.0
2015

26

2016

2017

2018

2019

2020

¥4.0
billon3

Medium-Term Management Plan

3. Medium-Term Management Plan

Research and Development

Make changes to the Group’s research and develop structure to better reflect the needs of customers as a part ofefforts to expand existing businesses and develop opportunities in new areas by utilizing its unique technologies
Future research anddevelopment activities

Optimize the allocationof human resources
Breakdown of R&D Personnel

Introduce external technologies

Research, development,
andproduction technologies

Undertake performance
management based on results

Manufacturing andquality technologies

Grasp customers’ needs throughdevelopment marketing

Sales and marketing,Priority allocation Utilize open innovationof humantechnical support service resources

63%

Corporate

Fundamental andelement technologies

Business divisions
Group companies

Customer informationPriority allocation Bring onboard external
human resourcesof human
Customer needs
resources

37%

・

80%
76%

Apr. 2015

20%
24%
Apr. 2016

Promote customer-oriented research and development as well as development marketing27

3Medium-Term Management Plan

3. Medium-Term Management Plan

Capital Expenditure Planand Strategic Investment Limit

Build a platform for growth by allocating 26% of capital expenditures to the construction of new and additional
facilities. At the same time, set aside a separate amount of ¥20.0 billion for strategic investments aimed at
expanding growth businesses and enhancing the competitiveness of traditional businesses.

CAPEX Plan
（FY2016 – FY2020: ¥96.0 billion）

R&D, others
17%

Expansion of capacity
and sales
26%
CAPEX

Rationalization,
infrastructure FY2016-2020¥96.0 billion
17%(accumulated)

Maintenance and renewal
40%

Major Capital Investment Plans
・Expand shipping and receiving
facilities (Shunan Bulk Terminal)（~ ¥20.0 billion）

・Expand the coal storage and waste
acceptance facilities of Tokuyama
Factory・Investments aimed at increasing thequality of polysilicon
・Investments aimed at increasing thequality of IPA-SE・Investments aimed at upgrading andexpanding heat dissipation materials
・Investments aimed at upgrading andexpanding healthcare-related products
・Introduction of the latest polyolefin film
facilities (Sun・Tox)
・Investments aimed at increasing thequality of microporous film

28

Strategic Investment Limit

GrowthStrategic
businesses
Investment Limit35%~ ¥20.0 billion
Traditional businesses
65%3Medium-Term Management Plan

3. Medium-Term Management Plan

Strengthen Group Management

Take steps to again clarify the position of each company within the Group. Call on each Group company to boost
its contributions toward carrying out the Group’s growth strategies and reducing costs while further strengthening
management control of the Group as a whole
Clarify the position of each company within the Group and its expected role
Conventional Group Management

Tokuyama
Inadequate management control
Unilateral human resource exchange
Inadequate support from amanagement resource perspective

The position of each Group company is unclear(core or non-core; growth or functional; other)
The strategic direction of eachGroup company is unclear

Group companies

29

Ideal Group Management
Strengthen management control
across the Group as a whole

Tokuyama
Strong support from ahuman resource perspective
Flexible capital policy

Cost reduction activities in unisonwith Tokuyama Factory

Business Subsidiaries

Functional Subsidiaries

Contribute to theGroup’s growth strategies

Contribute to the Groupthrough the reduction of costs

3

Medium-Term Management Plan

3. Medium-Term Management Plan

Tokuyama Malaysia

Schedule Going Forward
FY2015 (ending Mar-16) FY2016 (ending Mar-17) FY2018 (ending Mar-19)

からTokuyama Malaysia

P
S
1

Consider promoting
effective use

Utilize as a backup for
PS-2

P
S
2

(Posted impairment
loss in 3Q)

Implement cost reduction

Achieve profitable
operations

Tokuyama Malaysia Business Plan

30

(Billions of yen)

Net sales

8.8

11.0

18.0

Operating income(10.2)(4.0)

2.0

Spot price of solar-grade polysilicon

US$14.6./kg

US$13.5/kg

US$15.0/kg

Sales Qty

5,000 tonnes

8,000 tonnes

11,000 tonnes

Exchange rate (¥/US$)

120

110

110

Exchange rate (¥/MYR)

30

28

28

3

Medium-Term Management Plan

4. Financial Strategy

Cash Flow Plan

Posted cash inflows of ¥28.7 billion from the sales of assets and investment securities in fiscal 2015. Continue tosecure stable free cash flows by undertaking certain activities including the increase of business profits and thecontrol of investments.
Cash Flow Trend(Billions of yen)

*In addition to the below, we plan to utilize strategic investment limit of ¥20 billion

60.0
43.4
34.1

40.0
20.0

30.0

30.7

17.0

26.7
13.4

5.2

0.0
(20.0)(40.0)

8.8(17.8)(30.2) (25.5)(43.6)

Operating CF
Investing CF
Free CF(60.0)(60.6)(64.4)FY2012FY2013(80.0)

31

FY2014FY2015FY2016Plan

FY2017Plan

FY2018Plan

FY2019Plan

FY2020Plan

3Medium-Term Management Plan

4. Financial Strategy

Issuance of Classified Stock (Preferred Stock)

Issue A-classified stock in a total amount of ¥20.0 billion in order to quickly rebuild a stable financial platform andput in place a robust business operating structure that is capable of carrying out the new Medium-Term
Management Plan.
A-classified stock to be issued to Japan Industrial Solutions Fund 1.
Objectives for the Issuance of Classified Stock

1

2

32

Strengthen
the Group’s
financialplatform

Securestrategic
investment
funds

•

Address substantial deterioration in the Company’s net assets due toimpairment losses on Tokuyama Malaysia PS-1 and PS-2•

Quickly address the Company’s thin capital base and secure a robust business
operating structure•

Secure strategic investment funds aimed at expanding growth businesses andenhancing the competitiveness of traditional businesses•

Undertake investments totaling ¥9.5 billion in capital expenditures aimed at
expanding sales of advanced materials, ¥4.8 billion in rationalization
expenditures aimed at increasing the competitiveness of Tokuyama Factory, and¥5.4 billion in M&As

3

Medium-Term Management Plan

4. Financial Strategy

Issuance of Classified Stock (Preferred Stock)

Avoid the favorable issuance and stock that may have a dilutive effect as much as possible. Design the issuanceof stock that takes into consideration existing shareholders
Features of the Design of Classified Stock•
JIS put option restricted to a period of
three years after issuanceTerms and conditions allow for conversion
to advantageous
C-classified stock

The Company’s call option
takes preference

Partial redemption is allowed•

In principle, JIS cannot exercise its common stock, monetary, and B-classified
stock put options until July 1, 2019
Tokuyama plans to redeem the amount in full after putting in place a robust
financial platform through the buildup of profits•

Tokuyama holds a right of conversion allowing the Company to convert stock to
C-classified stock, which has a lower dividend yield and redemption premiumcompared with A-classified stock in the event that the amount available for
distribution is a certain amount or more* after March 31, 2018•

The Company’s call option will take preference within the scope of the amountavailable for distribution even in the event JIS exercised its common stock put
option•Partial redemption in lots of ¥5.0 billion is allowed. Monetary redemption isallowed on a flexible basis depending on financial conditions*The number of A-classified stock outstanding×¥1 million + ¥40 billion or more

33

3Medium-Term Management Plan

4. Financial Strategy

Shareholders’ Equity and Interest-Bearing Debt

Promote the reduction of interest-bearing debt as previously planned.
Quickly address the substantial deterioration in the Company’s shareholders’ equity attributable to two consecutive periodsof net loss through the sale of assets, buildup of business profits, and the issuance of classified stock totaling ¥20.0 billion
Shareholders’ Equity and Financial Index Trend
Shareholders’
D/E equity
ratio ratio
5.0 50%Share-holders’ equity(Billions of yen)
D/E ratio
4.7

300.0
250.0
200.0

40%

229.6

150.0

Shareholders’ equity ratio
33%
29%

126.0
Loss due toimpairment

13%

51.4

Profit140.0

1.5
1.0 10%1.2

Classified
Stock

0.9

0.5
0.0 0%

0.0
FY 201334

2.5
2.0 20%

87.5

+20.0

4.0 40%
3.5

22%

1.7
1.0

37%

3.0 30%

2.5

162.5

100.0
50.0

4.5

FY2014FY2015FY2016Plan

FY2018Plan

FY2020Plan

3Medium-Term Management Plan

4. Financial Strategy

Basic Policy for Profit Distribution and Dividends

After taking into consideration the negative impact on net assets after posting a net loss
and the decision to prioritize efforts aimed at restoring the Company’s sound financial
position, after accounting for business risks, Tokuyama deeply regrets that it has decided toforego the payment of a year-end dividend for the fiscal year under review.

For the reasons stated above, we have also decided to forego the payment of an interim
and year-end dividend for the next fiscal year. Tokuyama is committed to quickly restoring
its financial condition and to securing stable earnings power. We will work diligently toensure a resumption in the payment of dividends to shareholders at the earliest possible
opportunity.

35

3Medium-Term Management Plan

In Closing
Tokuyama’s Medium-Term Management Plan as well as its associated financial strategies
was determined in a bid to further enhance the Company’s shareholder value after
extensive deliberation at meetings of the Board of Directors.
In order to achieve its Medium-Term Management Plan and to implement the appropriate
financial strategies, Tokuyama will also review its corporate governance structure andsystems going forward.
As we work toward achieving our goals, we sincerely ask for the continued support andunderstanding of shareholders and investors.

36

4 Business Strategies

1. Chemicals Segment
2. Specialty Products Segment
3.Cement Segment
4. Life & Amenity Segment
5. Tokuyama Factory37

4

Business Strategies

1. Chemicals Segment
Basic Policy

Contribute to the development of customers’ businesses by delivering high-quality, cost competitive basic
chemical materials and services that accurately reflect customers’ needs while helping to ensure the Company’s
stable and continuous earnings growth as a core business segment

Measures
Net sales<Soda Ash and Calcium Chloride Business>Ensure stable supply and maintain quality as a single
domestic manufacturer<Chlor-Alkali and Vinyl Chloride Business>(Billions of yen)

10.0
86.4

Expand liquid hydrogen plants

38

91.9

77.3

Strengthen the competitiveness of in-house power
generationand electrolytic chlor-alkali production with the aim of further
reducing the cost of caustic soda and chlorine
Strengthen profitability in the chlorine derivatives business(vinyl chloride, propylene oxide, chloromethane, etc.)

Operating income

87.8

8.9
81.0

5.0

2.2
0.4
FY2012

2013

2014

2015

2016
Forecasts

4

Business Strategies

1. Chemicals Segment
Activities aimed at restructuring businesses and reinforcing competitivenessIntegrating the soda ash and calcium
chloride businesses
Ensure stable supply, maintain quality, andestablish an optimal distribution structure as asingle domestic manufacturer

PO
EDC VCM PVC

Cl2（Chlorine)

Soda Ash andCalcium Chloride

Polysilicon
Electrolysis

H2(Hydrogen)

Power
StationCaustic Soda

Strengthening the competitiveness of in-house power
generation and electrolytic chlor-alkali production
39

Consolidate PVC production at the highly
competitive Tokuyama Factory

Chloride

Tokuyama Factory
Soda and electrolytic
chlor-alkali chain

Crude salt

Chloromethane

Consolidate PVC production

Expand facilities of liquid hydrogen
Expand the production capacity of liquidhydrogen to twofold

4

Business Strategies

2. Specialty Products Segment
Basic Policy
Adhere strictly to a policy of QCD improvement while continuing to put forward development product proposals inorder to remain the preferred supplier of customers

Measures<Semiconductor-grade Polycrystalline Silicon Business>
Accurately grasp the needs of customers with respect to product quality,reflect these requirements in efforts to improve the quality of the Company’s
own products and underpin growth in the semiconductor industry<Solar-grade Polycrystalline Silicon Business >Promptly secure stable operations at Tokuyama Malaysia and work to
expand market share by drawing on the Group’s quality strengths and costcompetitiveness<IC Chemicals Business>
Expand sales and improve the quality of products that target the advanced
semiconductor field<Fumed Silica Business>Upgrade and expand highly functional products; establish optimal
production with Tokuyama Chemicals (Zhejiang) Co., Ltd.
<Shapal (Aluminum Nitride) Business>
Expand business in the heat sink market targeting the power device andsemiconductor equipment fields
40

Net sales

52.8

6.0
52.4

55.4

Operating income(Billions of yen)

60.9

7.0
67.0

4.1

0.3

FY2012

(1.1)

2013

2014

2015

2016
Forecasts

4

Business Strategies

2. Specialty Products Segment
IC Chemicals Business (High-Purity Chemicals for Electronics Manufacturing)
In line with the miniaturization of semiconductor patterns, demand for high-purity chemicals for ultra-low residue
continues to grow in the advanced semiconductor field
・ IPA for electronics manufacturing is an isopropyl alcohol that draws on proprietary manufacturing techniques
to deliver an ultra-high purity level of 99.9999%. For use in the electronics industry, this product boasts
outstanding quality and competitive advantage as a cleaning solution in the advanced semiconductor field・ Tokuyama’s photoresist developer, tetramethylammonium hydroxide (TMAH) also achieves a high level ofpurity on the back of proprietary technologies and is used by a substantial number of advanced semiconductor
users. Moreover, TMAH has a wide range of additional applications as a high-purity alkali
Tokuyama’s Share of the High-Purity Chemicals
Market for Electronics Manufacturing (Asia)

Tokuyama

Tokuyama
IPA
60,000 kl
Other
55%
High-Purity Chemicals for Electronics Manufacturing

41

45%

TMAH
140,000 kl

33%

Other
67%
Note: Company estimate

4

Business Strategies

3. Cement Segment
Basic PolicyPut in place an optimal production, sales, and distribution structure that is capable of addressing changes in thebusiness environment while cultivating and strengthening overseas as well as new businesses

Measures<Cement Business>Cut back costs by focusing on efforts aimed at reducing theuse of coal and increasing the use/intake of combustible waste
Secure earnings by expanding exports that maximize the useof the No.4 kiln
Upgrade and expand the infrastructure maintenance andreinforcement business through Tokuyama Mtech Corp.
<Recycling and Environment Business>
Promote the use of combustible waste and optimize the fuelplant businessExpand the business for recycling waste gypsum boards
through Tokuyama Chiyoda Gypsum Co., Ltd. (Kanto Plant
scheduled to come online in July 2016)42

Net sales

78.9

69.9

81.2

6.6

Operating income(Billions of yen)

85.4

87.0
8.0

5.8

5.3
4.4

FY2012

2013

2014

2015

2016
Forecasts

4

Business Strategies

3. Cement Segment

Reduce manufacturing costs by promoting the use of combustible waste
Steps have been taken to promote the use of combustible waste focusing mainly on waste plastic as analternative to thermal energy.
Waste that is difficult to treat, including chlorinated products as well as flame retardant waste, continues to attract
strong treatment needs in the cement field・ Increase combustibility through the introduction of a highly efficient burner; put in place a structure for the intakeof waste that is difficult to treat by expanding chlorine removal facilities
・ Work to optimize the use of thermal energy sources including valuables as well as combustible waste; strive tothoroughly reduce unit energy consumption and manufacturing costs

43

4

Business Strategies

4. Life & Amenity Segment
Basic PolicySecure a position of advantage in markets both in Japan and overseas, pursue business expansion, andcontribute to improving people’s quality of life by establishing and strengthening a customer-oriented development,
manufacturing, and sales structure

Measures<Microporous Film Business>
Expand earnings at two companies in China<Fine Chemicals Business>
Expand market share in photochromic dye materials for use
in eyeglass lenses; continue to expand sales of active
pharmaceutical ingredients for generic drugs<Dental Materials Business (Tokuyama Dental Corporation)>
Accelerate the pace of overseas business development
focusing mainly on aesthetic filling materials (composite resins)

Net sales

57.0
51.0

4.8

58.4
5.1

Operating income(Billions of yen)

6.5
57.6
52.0
5.0

2.9

<Medical Diagnosis System Business (A&T Corporation)>
Strengthen the OEM business; expand overseas sales
channels<Polyolefin Film Business (Sun・Tox Co., Ltd.)>
Improve productivity by implementing a scrap and build
approach toward manufacturing facilities
44

FY2012

2013

2014

2015

2016
Forecasts

4

Business Strategies

4. Life & Amenity Segment
Dental Materials and Equipment Business (Tokuyama Dental Corporation)
The global dental materials market is projected to expand at an annual rate of around 5% going forward. Thislargely reflects market expansion mainly in emerging nations and growth in the market for cosmetic materials
mainly led by the U.S.
・ Accelerate the pace of sales growth in Japan and overseas focusing mainly on aesthetic filling materials(composite resins), which have been selected as the most outstanding product by US’s dental material
evaluation organization for six consecutive years
・ Work to enhance brand awareness and expand the Group’s share of overseas markets that continue to （百万個）
enjoy growth through a variety of measures. This includes efforts to recruit new distributors and strengthen theability to provide technological support, advance quality assurance, and address pharmaceutical requirements
and regulations in emerging and other countries.
Trends in Dental Materials andEquipment Business Sales

BeforeCase courtesy:
Dr. Noboru Takahashi

Received the outstanding product award

45

After

An example of treatment using composite resins

10 11 12 13 14 15 16 17 18 19 20
Note: Graph with FY2010 as a base of 100.
Forecast data for FY2016 to FY2020.

4

Business Strategies

5. Tokuyama Factory
Initiatives aimed at strengthening competitivenessTokuyama FactoryStrengthen the competitiveness of purchasing andmaritime distribution capabilities that utilize Shunan Bulk
Terminal Co., Ltd. and the Company’s internal 22 berths
・ Expand coal storage yards
・ Increase the depth of anchorage and shipping
routes
Shunan Bulk Terminal Co., Ltd.(200 thousand ㎡)

Higashi Power Station
145 thousand kW

Depth: 14m

Higashi Plant (Organic,electronics)
1020 thousand ㎡

Tokuyama Station

Depth: 12m
Public dockUndersea tunnel (1km)

Pier
Depth: 12m

Tokuyama Plant (Inorganic)
610 thousand ㎡

Tokuyama Factory
1910 thousand ㎡
46

Tokuyama Kudamatsu Port
(designated as an international bulk strategic port)

Nanyo Plant (Cement)
280 thousand ㎡
Central Power Station
407 thousand kW

・ A natural harbor surrounded by islands with considerable
water depth (tsunami countermeasures not required; able
to accommodate large vessels)
・ A leading collection of electrolytic complexes in Asia
Reduce facility maintenance costs through the combined
application of manufacturing and engineering technologies
Improve energy efficiency (unit energy consumption)
through various measures including the recovery of energyloss

5 Supplementary Data
1. Consolidated Financial Statements
2. Cash Flows
3. Changes in Operating Income
4. Non-Operating Income/Expenses
5. Extraordinary Gains/Losses
6. Net Sales/Operating Income by Business
Segment
7. Principal Indicators
8. Performance Trend
9. Price Trend of Main Raw Material and Fuel
10. CAPEX and Depreciation Trend
11. Interest-bearing Debts Trend
12. Free Cash Flow Trend
13. Performance Forecasts (1H/2H)
14. Polysilicon Market
15. PV Market
47
16. Overview of Classified Stock5

Supplementary Data

1. Consolidated Financial Statements Income Statements(Billions of yen)
FY2015Difference
Amount%

FY2016

302.0

307.1

+5.0

+2

Cost of sales

218.9

220.6

+1.7

+1

Selling, general andadministrative expenses

63.6

63.4

(0.2)

(0)

19.5

23.0

+3.5

+18

(6.6)

(5.3)

+1.2

-

12.9

17.7

+4.8

+37

Extraordinary income/expenses(77.9)(104.2)(26.3)-

Income/loss before income
taxes and minority interests(64.9)(86.5)(21.5)

-

0.3

14.0

+13.7

+3777

(65.3)(100.5)(35.2)-Net sales

Operating income
Non-operating income/expenses

Ordinary income

Income taxes and minority interests

Profit (loss)

attributable to owners of parent48

5

Supplementary Data

1. Consolidated Financial Statements Balance Sheets (Billions of yen)
3/31/2015

%

554.5

401.3

(153.1)(28)

Current assets

243.9

243.7

(0.2)

(0)

Tangible fixed assets

253.3

119.7

(133.5)(53)

Intangible fixed assets

9.7

6.3

(3.3)

(35)

Investments and other assets

47.4

31.4

(16.0)(34)

Total assets

3/31/2015

3/31/2016

ChangesAmount

%

385.0

341.1

(43.9)(11)

Current liabilities

117.2

113.2

(4.0)

(3)

Long-term liabilities

267.7

227.9

(39.8)

(15)

169.4

60.2

(109.2)(64)

Total liabilities

Total net assets
49

ChangesAmount3/31/20165

Supplementary Data

2. Cash Flows

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

FY2014FY2015

Cash flows from operating activities (1)

30.7

30.0

Cash flows from investing activities (2)(25.5)

13.4

Free cash flows (3) ((1)+(2)）

5.2

43.4

Cash flows from financing activities (4)40.5(37.6)

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

0.3

(0.7)

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

46.1

5.0

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

69.9

116.1

Increase (decrease) in cash and cash equivalents due to changesof scope of consolidation and change in fiscal period of
consolidated subsidiaries (8)

0.0

0.0

116.1

121.1

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

505Supplementary Data

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

By Segment•Deteriorated profitability of Tokuyama Malaysia (-)•Increase in sales volume (+)•Drop in raw material and fuel cost (+)•Decreased R&D expenses (+)•Increase in sales volume (+)•Drop in raw material and fuel cost (+)

+3.8

+3.0

23.0

+2.1
(5.2)
+1.4

19.5
+1.3
+1.0
•Drop in raw material and fuel cost (+)•Softening of selling prices(-)

FY201451

Chemicals

Specialty
Products•Drop in raw material and fuel cost (+)•Decreased sales volume (-)

CementLife &
Amenity

Corporate
and others

FY20155Supplementary Data

3. Changes in Operating Income (Year-on-year change based on FY2016 forecasts)(Billions of yen)

By Segment•Softening of selling prices (-)+2.1•Effects of business rationalization of soda
ash and vinyl chloride (+)•Drop in raw material and fuel cost (+)

23.0

(1.5)
(0.8)

32.0

•Increase in sales volume (+)•Higher volume of waste accepted (+)•Drop in raw material and fuel cost (+)

+8.1

+1.0
•Increased productivity at Tokuyama Malaysia (+)•Increase in sales volume (+)

FY201552

Chemicals

Specialty
Products

CementLife &
Amenity

Corporate
and others

FY2016
forecast

5

Supplementary Data

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

FY2014Non-operating
incomeNon-operating expenses
53

FY2015

ChangesInterest and dividend
income

0.7

0.5

(0.1)

Other income

2.1

2.7

+0.6

Total

2.8

3.3

+0.4

Interest expenses

4.7

4.6

+0.0

Other expenses

4.7

4.0

+0.7

Total

9.4

8.6

+0.8

Non-operating
income/expenses

(6.6)

(5.3)

+1.2

Notes

Increased foreign exchange gains+0.5

Increase in costs of idle operations (0.3)
Decreased trial production expenses +0.9
Decreased foreign exchange losses +0.4

5

Supplementary Data

5. Extraordinary Gains/Losses

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

FY201454

FY2015

Changes

Notes

Extraordinary
gains

10.5

21.4

+10.9

Gains from the sale of non-current assets
Decreased gain on sales of investment securities

+14.0
(4.2)

Extraordinary
losses

88.4

125.7

(37.2)

Impairment loss for fixed assets
Loss on purchase contract (including provision)(48.6)+10.9

Extraordinary
gains/losses(77.9)(104.2)(26.3)

5

Supplementary Data

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

ChemicalsHigher earnings on lower sales
Net Sales

Operating Income(Billions of yen)

91.9

87.8 8.9

Qualitative information(Caustic soda)•Lower sales due to weak trends in selling prices(Vinyl chloride monomer (VCM))•Improved profitability on the back of a drop in raw material costs
due to the downturn in domestic naphtha prices

5.0(Vinyl chloride resin)•Drop in sales volumes following the closure of the Chiba factory(Soda ash and calcium chloride)•Increased net sales due to commencement of the operation of
TOKUYAMA & CENTRAL SODA Inc.

FY201455

FY20155Supplementary Data

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

Specialty Products

Loss on higher sales

Net Sales

60.9

55.4
4.1

Qualitative information(Billions of yen) (Semiconductor-grade polycrystalline silicon)•Sales unchanged from the previous fiscal year, reflected firm
overall trends in sales volumes, which offset the slowdown indemand for certain semiconductor products targeting various fields
including smartphones

Operating Income(1.1)(Solar-grade polycrystalline silicon)•Despite the increased sales volume, profitability deteriorated owing
to such factors as the marked drop in spot price and sluggish
operating rates at Tokuyama Malaysia(Fumed silica)
Increased sales volume, mainly of its application as a polishingmaterial for semiconductors

FY2014FY2015(High-purity chemicals for electronics manufacturing)•Higher sales volume of such applications as semiconductor
production(Aluminum nitride)•Higher sales volume of such applications as sink materials used for
power devises and LEDs

56

5

Supplementary Data

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

CementHigher earnings on higher sales
Net Sales

Operating Income(Billions of yen)

85.4

81.2

5.8
4.4

Qualitative information(Cement)•Decreased sales volume in domestic market due to decrease inpublic works and delays in construction attributable tounreasonably bad weather•Increased sales volume of ready mixed concrete for large-scale
projects in a certain area
(Recycling and environment-related business)•The Company accepted a higher volume of waste including
construction waste soil

FY201457

FY20155Supplementary Data

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

Life & Amenity

Higher earnings on lower sales
Net Sales

Operating Income(Billions of yen)

58.4

5.1

FY20146.5
57.6

FY2015

Qualitative information(Active pharmaceutical ingredient)•Sales were on per mainly for such applications as genericpharmaceuticals.
(Plastic lens-related materials)•Increased sales volume of photochromic materials(Microporous film)•Sound sales mainly for disposable diapers(Polyolefin film)•Increased sales volume of products mainly for convenience stores•Weak trends in selling price on the back of the decline in raw
material price(Dental materials and equipment)•Increased sales volume of new products and products foroverseas markets(Medical diagnosis system)•Increase sales volume of products for blood testing(Gas sensor)•Increase sales volume of such applications as gas alarm devises

58

5

Supplementary Data

7. Principal Indicators ①

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

FY201459

FY2015

Changes

Capital expenditures

25.3

13.9

(11.4)

Depreciation and amortization

18.8

20.0

+1.2

R&D expenses

10.1

8.5

(1.6)

Financial income and expenses

(4.0)

(4.1)

(0.0)

5

Supplementary Data

7. Principal Indicators ②

Consolidated(compared with the previous fiscal year-end)

3/31/201560

3/31/2016

ChangesInterest-bearing debts

Billions of yen

283.1

244.1

(39.0)

Number of employees

Persons

5,852

5,759

(93)

5

Supplementary Data

7. Principal Indicators ③

Consolidated(year-on-year change based on FY16 forecasts)(Billions of yen)

FY2015Results

61

FY2016
Forecast

Changes

Capital expenditures

13.9

13.4

(0.4)

Depreciation and amortization

20.0

15.3

(4.6)

R&D expenses

8.5

8.7

+0.1

5

Supplementary Data

8. Performance Trend

Consolidated (Annual)
Income (Billions of yen)

Net sales (Billions of yen)
350

120.0
307.4

300

300.9

289.7
273.1

287.3

282.3

302.0

307.1

302.0

80.0

258.6
250

35.3
30.3

200
18.8

22.7
20.3

16.4

20.1

15.3
7.4

17.3
9.7

13.7
11.5
9.3

(5.5)

150

100.0

60.0
20.2

19.5

14.9
10.2

12.9

6.7
3.2

23.0
17.7

32.0 40.0
27.0
20.0
17.0
0.0
-20.0
-40.0

(37.9)

100-60.0(65.3)-80.0

50-100.0(100.5)0-120.0FY07

08

Net sales

62

09

10

11

Operating income

12

13

14

Ordinary income

1516
Forecast

Net income

5Supplementary Data

8. Performance Trend(Quarter)

Consolidated

71.2
5.57

72.6

5.01

(Billions of yen)

10.13

78.1

80.0

73.7

75.3

77.5

80.4

5.39

5.27

4.60
3.66
2.93

Q1/FY14 Q2/FY14 Q3/FY14 Q4/FY14 Q1/FY15 Q2/FY15 Q3/FY15 Q4/FY15Net Sales
63

Operating Income

5Supplementary Data

8. Performance Trend(Quarter)

Chemicals(Billions of yen)

3.27

22.6

1.27

24.1

23.8

21.2

1.18

1.34

22.8

22.0
21.1
2.01
2.11

21.6

1.49
1.25

Q1/FY14 Q2/FY14 Q3/FY14 Q4/FY14 Q1/FY15 Q2/FY15 Q3/FY15 Q4/FY15Net Sales
64

Operating Income

5Supplementary Data

8. Performance Trend(Quarter)Specialty Products

11.1
0.99

1.71
12.9

(Billions of yen)

14.3
0.94

2.62
20.0

16.9

13.0

13.6

14.0

0.47

(0.80)(1.52)(1.45)

Q1/FY14 Q2/FY14 Q3/FY14 Q4/FY14 Q1/FY15 Q2/FY15 Q3/FY15 Q4/FY15Net Sales
65

Operating Income

5Supplementary Data

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

21.6
19.3

19.3

1.47

20.8

22.1

22.4

20.4

20.4
1.84

1.70

1.34

1.31
0.91

0.94

0.73

Q1/FY14 Q2/FY14 Q3/FY14 Q4/FY14 Q1/FY15 Q2/FY15 Q3/FY15 Q4/FY15Net Sales
66

Operating Income

5Supplementary Data

8. Performance Trend(Quarter)

Life & Amenity(Billions of yen)

1.88
1.71

16.0
14.0

1.19

1.39

13.7

1.50
14.6

14.2

14.6

14.3
1.38

1.61
14.3

1.07

Q1/FY14 Q2/FY14 Q3/FY14 Q4/FY14 Q1/FY15 Q2/FY15 Q3/FY15 Q4/FY15Net Sales
67

Operating Income

5Supplementary Data

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

Domestic naphtha price(¥/KL)

75000

100

70000

Domestic naphtha

65000
60000

80

55000
50000

70

Australian thermal coal

45000

60

40000

50

35000
30000

68

90

FY2013

FY2014FY201540

5Supplementary Data

10. CAPEX and Depreciation Trend(Billions of yen)

CAPEX

Consolidated

Depreciation

97.5

100.0
90.0

77.6

80.0
70.0

61.0

60.0

52.5

50.0

30.0

26.5

22.6

20.0
10.0

37.6

37.0

40.0

21.4

35.8
28.4
31.4

25.3

23.2

20.0
15.3

22.9

18.1

16.7

18.8

13.9

13.4

16/3

17/3
(forecasts)

0.0
07/3

69

08/3

09/3

10/3

11/3

12/3

13/3

14/3

15/3

5

Supplementary Data

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

Short-term debt

Long-term debt

Unsecured bonds

D/E ratio
4.74

400.0
350.0
283.1
300.0
250.0

0.37

0.32

0.52

0.42

0.52

0.60

148.6

150.0

50.0
0.0

70

1.74

50.0

1.05

187.7

200.0

100.0

0.86

240.7

244.1
44.4

50.0

50.0

126.2

192.5

50.0

95.9

100.0

64.2

20.0

15.1

68.3

68.6

73.7

58.8

23.1
18.8

25.0
17.0
22.2

17.0

16.5

22.5

24.9

35.3

25.5

40.6

26.7

07/3

08/3

09/3

10/3

11/3

12/3

13/3

14/3

15/3

16/3

72.0
30.0

35.1

173.0

165.2
102.3

5

Supplementary Data

12. Free Cash Flow Trend(Billions of yen)
60.0
40.0

47.6
34.2

42.4
29.3

22.0
20.0

43.4

37.0

34.1

27.0

30.7

30.0

17.0

11.6

5.2

13.4

0.0
(20.0)(22.5)(40.0)(14.0)(7.0)(25.6)(30.6)(30.2)(36.4)(43.6)(51.4)(60.0)(56.5)(25.5)(57.6)(60.6)

FY11

FY12(64.4)(80.0)(88.5)(100.0)
FY06

FY07

FY08

FY09

Operating Cash Flow
71

FY10

Investing Cash Flow

FY13

FY14

Free Cash Flow

FY15

5

Supplementary Data

13. Performance Forecasts (1H/2H)(Billions of yen)(Compared with previous forecasts)
FY2015 Results
1H

2H

FY2016 Forecasts
Total

1H

2H

Total

149.1

157.9

307.1

145.0

157.0

302.0

Operating income

7.5

15.5

23.0

14.5

17.5

32.0

Ordinary income

5.2

12.4

17.7

11.5

15.5

27.0

Profit (loss)

2.7(103.3)(100.5)

7.0

10.0

17.0

Basic earnings per share
(yen)

8.00

(297.10)(289.10)

20.12

28.75

48.87

Exchange rate (¥/$)

122

118

120

110

110

110

48,00037,60042,80035,00035,00035,000Net sales

attributable to owners of parent

Domestic naphtha price(¥/kl)

72

5

Supplementary Data

13. Performance Forecasts (1H/2H)(By business segment, compared with previous forecasts)(Billions of yen)

FY2015 Results

1H
Net
sales

FY2016 Forecasts

2H

Operatingincome

Net
sales

Total

Operatingincome

Net
sales

1H

Operatingincome

Net
sales

2H

Operatingincome

Net
sales

Total

OperatingincomeNet
sales

OperatingincomeChemicals

44.0

3.6

43.7

5.2

87.8

8.9

38.0

5.0

43.0

5.0

81.0

10.0

Specialty
Products

26.7

(2.9)

34.1

1.8

60.9

(1.1)

31.0

2.0

36.0

5.0

67.0

7.0

Cement

42.5

2.2

42.9

3.5

85.4

5.8

42.0

3.5

45.0

4.5

87.0

8.0

Life &
Amenity

28.9

3.6

28.7

2.9

57.6

6.5

27.0

2.5

25.0

2.5

52.0

5.0

Others

26.7

2.5

26.8

3.1

53.6

5.6

27.0

2.5

26.0

2.0

53.0

4.5

Total

169.1

9.0

176.4

16.7

345.5

25.8

165.0

15.5

175.0

19.0

340.0

34.5

Inter-segment
eliminations andcorporate-wide
expenses(19.9)(1.5)(18.4)(1.2)(38.4)(2.7)(20.0)(1.0)(18.0)(1.5)(38.0)(2.5)

Consolidated
Results

149.1

7.5

157.9

15.5

307.1

23.0

145.0

14.5

157.0

17.5

302.0

32.0

73

5

Supplementary Data

14. Polysilicon Market
Supply-demand forecast of polysilicon
Supply capacity/Demand (tonnes)*Tokuyama estimate

700,000<Semiconductor-grade polysilicon demand>•Demand projected to increase on the back of higher functionality ofmobile devices<Solar-grade polysilicon demand>•A new framework regarding reductions on CO2 emissions at
COP21 is expected to generate favorable conditions•Despite a substantial decline in installed PV capacity in Europe andcertain other areas, the projected annual increase in demand isaround 10% largely reflecting forecast growth due to aggressive
installation initiatives in such countries as China, the U.S. and India

600,000

500,000
400,000
300,000
200,000
100,000
02013 2014 2015 2016 2017 2018 2019
Demand (Solar cells)）

Supply capacity of other producers

Demand (Semiconductors)

Supply capacity of major producers(Note 1) Major producers mean Tier1 manufactures in the classification by IHS.
(Note 2) Demand is estimated by Tokuyama based IHS

74

Forecasts<Supply side>•Excess supply capacity expected to continue for the foreseeable
future; cost competitiveness recognized as the key to survival

5

Supplementary Data

14. Polysilicon Market

90

Solar-cell grade Polysilicon Spot Price Trend

50(US$/KG
) 25

70

30
10

24

2009/7/1 2010/7/1 2011/7/1 2012/7/1 2013/7/1 2014/7/1 2015/7/1

23
22
21
20
19
18
17
16
15
14
13
12
11
10

2013/1/2

2013/4/2

2013/7/2

2013/10/2

2014/1/2

2014/4/2

2014/7/2

2014/10/2

2015/1/2

2015/4/2

2015/7/2

2015/10/2

2016/1/2

2016/4/2

Source：PV insights

75

5

Supplementary Data

15. PV Market

Conditions in each country

Forecasts of installed PV capacity by region
Unit:GW

90
80
70
60
50
40
30
20
10
0

<Japan> Since the launch of the existing feed-in tariff system in July 2012, Japan has
witnessed a rapid surge in the amount of solar power generation introduction.
Installed capacity in 2015 came to 9.8GW (8.6GW in 2014)
 In the Long-term Energy Supply-demand Outlook collated by Japan’s Ministry of
Economy, Trade and Industry, solar cells make up 7% (equivalent to approx. 64GW)
of the nation’s ideal power source structure in fiscal 2030
<U.S.>
Investment tax credit (ITC) extension passed by the U.S. Congress; expectationsof an increase in the amount of solar power generation system installation by 20202013 2014 2015 2016 2017 2018 2019

Europe (Big 9)

Asia

N. America

ROW(Note) Tokuyama estimate based on IHS Market Tracker (PVIntegrated) Q1 201676

<China>Achieved a cumulative solar cell output total of 43.18GW as of the end of 2015;
secured the global top position surpassing Germany
Expectations of a rush in demand in the first half of 2016 prior to reductions
attributable to the feed-in-tariff system Identify renewable energy as one of eight major items in the energy field underthe 13th five-year plan; expectations of a further increase in solar cell demand overthe long term

<India> The Modi government announced plans to target an installed capacity of 100GW
by 2022
 Policy in place to authorize new clean energy targets (ratio of renewable energy
in 2030 of 40%: solar cells approx. 250GW)<Europe>Expectations of moderate growth over the medium to long term despite theimpact of the successive shrinking and termination of policy support measures5

Supplementary Data

16. Overview of Classified Stock

The Company’s rights*1

JIS’s rights*2
A-classified stock

B-classified stock

C-classified stock

Issuance Amount¥20.0 billion

Maximum ¥4.4 billion*3

Maximum ¥20.0 billion

Voting Rights

None

None

None

5.0% (Fixed)

5.0% (Fixed)

Preferred Dividend
Yield (Cumulative)

16/6/27～17/3/31
17/4/1～18/3/31
18/4/1～19/3/31
19/4/1～

5.0%
5.5%
6.0%
6.5%

Monetary Redemption
Premium

16/6/27～17/6/30
17/7/1～18/6/30
18/7/1～19/6/30
19/7/1～20/6/30
20/7/1～

7.0%
13.0%
19.0%
25.0%
30.0%

Call
OptionPut
OptionCompensat
ion

・Cash
・Cash as well as C-classified stock

Conversion
Date・Redeemable in cash at any time・Refer to Note 1 below for information regarding
conversion into C-classified stock

Compensat
ion・Cash as well as B-classified stock・Common stock*4

Conversion
Date

Maximum Dilution Rate *5

16/6/27～17/6/30
17/7/1～18/6/30
18/7/1～19/6/30
19/7/1～20/6/30
20/7/1～

7.0%
13.0%
19.0%
25.0%
30.0%

10.0%
16.0%
18.0%
20.0%

～18/6/30
18/7/1～19/6/30
19/7/1～20/6/30
20/7/1～

Cash

Cash

Redeemable in cash at any time

Redeemable in cash at any time

Common stock

Common stock*4

In principle on or after July 1, 2019

Exercisable at any time

In principle on or after July 1, 2019

41.3%

9.1%

41.3%

Notes:1. Rights may be exercised from the fiscal year ending March 31, 2018 in the event that the amount available for distribution as of the end of the fiscal year is more than the number of issued A-classified stock x ¥1 million + ¥40.0 billion.
2. Rights may only be exercised on or after July 1, 2019, or in the event that certain conversion restriction cancellation conditions are met.
3. Issuance of B-classified stock in line with the transitional period following the issuance of A-classified stock in connection with the premium redemption portion.
4. The exercise of rights is not allowed in the event that the amount available for distribution as of the end of each fiscal year is more than the number of issued A-classified (C-classified) stock x ¥1,050,000.
5. Dilution rate when converted at the minimum acquisition price of ¥139.8

77

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.