May 15, 2020

Summary of Fiscal 2019
(The Fiscal Year ended March 31, 2020)
Tokuyama Corporation
1. Summary of performance and other corporate data (consolidated)(Unit: Billions of yen, except number of employees)
Fiscal 2019
Fiscal 2018
Changes
316.0
324.6
(8.5)
34.2
35.2
(0.9)
32.8
33.4
(0.5)
19.9
34.2
(14.3)
287.05493.26(206.21)
23.7
18.5
+5.1
16.1
15.0
+1.0
9.1
8.0
+1.1
(1.1)
+0.7
(1.9)

Net sales
Operating profit
Ordinary profit
Profit a t t r i b u t a b l e t o o w n e r s o f p a r e n t
Basic earnings per share (Unit: yen)
Capital expenditures
Depreciation and amortization
R&D expenses
Financial income and expenses

As of March 31,
2020
116.3
5,679

Interest-bearing debt
Number of employees

As of March 31,
2019
128.9
5,471

Changes(12.6)+208

2. Net sales and operating profit by business segment (year on year)(Unit: Billions of yen)

FY2019Operating
Net sales
profit

FY2018Operating
Net sales
profitChanges
Operating
Net sales
ProfitChemicals

93.7

15.3

98.3

16.8

(4.6)

(1.4)

Specialty Products

54.4

7.0

59.6

9.9

(5.2)

(2.8)

Cement

87.2

3.8

92.3

3.2

(5.0)

+0.6

Life & Amenity

56.3

2.8

55.2

3.2

+1.0

(0.3)

Others

65.2

6.9

61.3

4.3

+3.8

+2.5

Total

357.0

36.0

367.0

37.5

+10.0

(1.4)

Inter-segment
eliminations andcorporate-wide expenses(40.9)(1.8)(42.4)

(2.3)

+1.4

+0.4

Consolidated results

316.0

34.2

324.6

35.2

(8.5)

(0.9)

*

The Company changed the management categorizations of a certain subsidiary effective from this fiscal year underreview. Data for the corresponding period of the previous fiscal year has been adjusted to reflect this change to enable
the year-on-year comparison presented as follows.

○ In the Chemicals segment, there were lower earnings on lower sales due to the deterioration inoverseas market conditions.
○ In the Specialty Products segment, there were lower earnings on lower sales due to the weaksales volume.
○ In the Cement segment, although sales volume remained weak, production costs decreased
due to downing raw material prices, resulting in higher earnings on lower sales.
○ In the Life & Amenity segment, although healthcare related products were strong, advertisingexpenses increased and earnings from ion exchange membranes decreased due to decrease1

of large-scale projects. Consequently, the segment reported lower earnings on higher sales.

3. Net sales and operating profit by business segment (forecasts)(1) Net sales and operating profit by business segment (full year comparison)(Unit: Billions of yen)

FY2020 Forecast
Operating
Net sales
profit

FY2019 Results
Operating
Net sales
profitChanges
Operating
Net sales
profitChemicals

87.0

13.0

93.7

15.3

(6.7)

(2.3)

Specialty Products

61.0

7.5

54.4

7.0

+6.5

+0.4

Cement

86.0

3.5

87.2

3.8

(1.2)

(0.3)

Life & Amenity

58.0

3.0

56.3

2.8

+1.6

+0.1

Others

48.0

4.0

65.2

6.9

(17.2)

(2.9)

Total

340.0

31.0

357.0

36.0

(17.0)(5.0)

Inter-segment
eliminations andcorporate-wide expenses(30.0)(3.0)(40.9)

(1.8)

+10.9

+1.1

Consolidated results

310.0

28.0

316.0

34.2

(6.0)

6.2

(2) Assumptions of performance forecasts for fiscal 2020

Domestic Naphtha Price (¥/kl)
Exchange Rate (¥/$)

Fiscal 2020

Fiscal 2019

43,00042,700

110

108

The Tokuyama Group is forecasting decreases in sales and operating income due to the impact of
COVID-19.
○ In the Chemicals segment, the Group has taken into account a decrease in the sales volumesof its major products.
○ In the Specialty Products segment, the Group has taken into account an increase in the sales
volumes of semiconductor-related materials.
○ In the Cement segment, the Group has taken into account a decrease in sales volume.
○ In the Life & Amenity segment, the Group has taken into account an increase in sales.

2Summary of Consolidated Financial Statements for Fiscal 2019 (JP GAAP)(The Fiscal Year ended March 31, 2020)
May 15, 2020
Stock exchange listings:
Tokuyama CorporationTokyo(URL http://www.tokuyama.co.jp/)
Code number:
4043
Representative:
Hiroshi Yokota
President and Representative Director
Contact:
Taro Kobayashi
General Manager, Corporate Communications & Investor Relations Dept.
+81-3-5207-2552
Scheduled date for the Ordinary General Meeting of Shareholders:June 24, 2020
Scheduled date of year-end dividends payout:
June 25, 2020
Scheduled date for the filing of the consolidated financial statements: June 25, 2020
Preparation of supplementary explanatory materials: Yes
Business results IR briefing to be held:
Yes (for institutional investors and analysts)

1. Consolidated results for fiscal year ended March 31, 2020 (April 1, 2019 – March 31, 2020)
Note: All amounts are rounded down to the nearest million yen.
% indicates year-on-year changes.

(1) Performance

Net sales
Fiscal 2019
Fiscal 2018

(millions of yen)

316,096324,661

Operating profit
[%]

(2.6)
5.4

(millions of yen)

34,28135,262(Note) Comprehensive income: FY19: 21,293million yen [(32.0)%]

Profit attributable toowners of parent

Ordinary profit
[%]

(2.8)
(14.6)(millions of yen)

32,83733,400[%](millions of yen)

(1.7)
(7.7)

19,93734,279[%](41.8)
74.0

FY18: 31,321 million yen [14.2%]

Basic earnings per Diluted net income Net income to
Ordinary profit to Operating profit toshare
per shareshareholders’ equity
total assets
net sales(yen)

Fiscal 2019
Fiscal 2018

287.05493.26

(yen)

[%]

[%]

12.4
24.6

－
－

[%]

8.6
9.0

(Reference) Equity in earnings of unconsolidated subsidiaries and affiliates: FY19: 756 million yen

10.8
10.9

FY18: 921 million yen(2) Financial position

Total assets
Mar 31, 2020
Mar 31, 2019
(Reference)

Shareholders’ equity
ratio

Net assets(millions of yen)(millions of yen)

383,447
379,630

180,429
163,525

Shareholders' equity:

FY19:

Net assets per share

[%]

(yen)

2,431.21
2,199.83

44.0
40.2
168,861 million yen

FY18:

152,781 million yen(3) Cash flows

Cash flows fromoperating activities
Fiscal 2019
Fiscal 2018

(millions of yen)

52,36438,531

Cash flows frominvesting activities(millions of yen)

(20,548)(16,174)1

Cash flows fromfinancing activities(millions of yen)

(18,348)(21,104)

Cash and cash
equivalents at the end of
the year(millions of yen)

80,91867,991

2. Dividends（Period）

1st

Annual dividens
3rdYearendquarter quarter
2nd

quarter
(yen)

Total

Total dividends
paid(Total)Dividend
payout ratio(Consolidated)

Dividend on net
assets ratio(Consolidated)

[%]

[%]

(yen)

(yen)

(yen)

(yen)

(millions of yen)

Fiscal 2018-- 25.00

--

25.00

50.00

3,477

10.1

2.5

Fiscal 2019-- 35.00

--

35.00

70.00

4,865

24.4

3.0

Fiscal 2020-- 35.00----（Forecast）(Note) As of now, the dividend forecast for the fiscal year ending March 31, 2021 has not yet been determined.
Prompt notification will be provided when the dividend forecast has been decided based on business trends.

3. Consolidated performance forecast for fiscal 2020 (April 1, 2020 – March 31, 2021)(% indicates the rate of change over the corresponding previous periods respectively)

Net sales(millions ofyen)

Fiscal 2020[%]

310,000 (1.9)

Operating profit

Ordinary profit(millions ofyen)(millions of
yen)

[%]

28,000 (18.3)

Profit attributable to Basic earnings pershareowners of parent[%](millions of
yen)

[%]

28,000 (14.7)

22,000

10.3

(yen)

316.75(Note) Any impact amount factored in for the impact arising due to the spread of COVID-19 is limited to the amount that can beassumed at this stage. We will accordingly revise our earnings outlook as developments unfold.
* Cautions pertaining to the appropriate use of performance forecasts and other particular items
The performance forecast and other forward-looking statements contained in this material have been prepared on thebasis of information available at this point and certain assumptions which are judged to be rational, and may besubstantially different from the actual performance etc. because of various factors that may arise from now on.

*Notes(1) Changes of significant subsidiaries in the scope of consolidation during this period : No
Addition to the scope of consolidation: Reduction from the scope of consolidation: (2) Changes of accounting policies, changes in accounting estimates, and retrospective restatements
i. Changes of accounting policies by revision of accounting standards : No
ii. Changes of accounting policies other than the above: Noiii. Changes in accounting estimates: No
iv. Retrospective restatements: No(3) Number of shares issued (in common stock)
Number of shares issued at end of period
i. (including treasury stock):ii. Number of treasury stock at end of period:iii. Average number of shares over period:

2

FY19:

69,934,375

FY18:

69,934,375

FY19:
FY19:

478,862
69,455,287

FY18:
FY18:

482,765
69,495,230

(Reference) Summary of Non-Consolidated Operating Results
1. Non-consolidated results for fiscal year ended March 31, 2020 (April 1, 2019 – March 31, 2020)
Note: All amounts are rounded down to the nearest million yen.
% indicates year-on-year changes.

(1) Performance

Net sales
Fiscal 2019
Fiscal 2018

(millions of yen)

189,271
195,233

Operating profit
[%]

(3.1)
3.6

Net profit per share(millions of yen)

26,222
27,614(5.0)(17.2)(Reference)

Shareholders’ equity
ratio

Net assets(millions of yen)(millions of yen)

297,999
290,701

124,668
111,884

Shareholders' equity:

2.0(15.6)(millions of yen)[%]

14,908 (48.5)
28,955 (1.0)－－(2) Financial position

Mar 31, 2020
Mar 31, 201925,51925,009Net profit
[%]

(yen)

214.66416.66

Total assets(millions of yen)

Diluted net profit per
share

(yen)

Fiscal 2019
Fiscal 2018

Ordinary profit
[%]

FY19:

[%]

41.8
38.5
124,668 million yen

Net assets per share(yen)

1,794.94
1,610.98
FY18:

111,884 million yen(Note) Notice on the implementation of audit proceduresThis Summary of Consolidated Financial Statements is not subject to audit procedures of the consolidated financial statements in linewith the Financial Instruments and Exchange Act. At the point of disclosure of this Summary of Consolidated Financial Statements, audit
procedures of the consolidated financial statements in line with the Financial Instruments and Exchange Act are underway.

3

Contents for Accompanying Materials
1. Management Policy(1) Basic Management Policy

……………

P. 2

(2) Medium- to Long-Term Management Strategies and Performance Targets

……………

P. 2

(3) Pending Issues

……………

P. 3

……………

P. 5

(1) Analysis of Operating Results

……………

P. 5

(2) Analysis of Financial Position

……………

P. 11

(3) Progress under the Medium-Term Management Plan

……………

P. 14

(4) Basic Policy for Profit Distribution and Dividends for Fiscal 2019 and 2020

……………

P. 14

3. Consolidated Financial Statements

……………

P. 15

(1) Consolidated Balance Sheets

……………

P. 15

(2) Consolidated Statements of Income

……………

P. 17

(3) Consolidated Statements of Comprehensive Income

……………

P. 18

(4) Consolidated Satetements of Cash Flows

……………

P. 19

(5) Segment Information

……………

P. 21

2. Analysis of Operating Results and Financial Position

11. Management Policy(1) Basic Management Policy
Tokuyama Corporation reached an historic milestone in 2018 celebrating its 100th anniversary since theCompany's foundation while embarking on its next century of prosperity and growth.
Under our Medium-Term Management Plan launched in 2016, which we have positioned as the"Cornerstone of the Group's Revitalization," we have once again clarified the Company's role going
forward. In specific terms, our goals are to become a global leader in advanced materials while at the sametime securing a top position through our traditional businesses in Japan. Driven by these goals, we arepromoting a growth strategy in a bid to transition to a robust business structure that is resilient againstchanges in the operating environment and capable of sustainable growth. Moving forward, we willcontinue with efforts to realize a cost competitive business structure while further expanding andstabilizing earnings.
Recognizing the integral link between corporate and social growth, Tokuyama is also committed toresolving major global-scale issues. As one example, we newly introduced reform measures aimed at
substantially reducing CO2 emissions at Tokuyama Factory and promoting the complete reuse of energy
from 2018. Currently, we are endeavoring to identify the key issues (materiality) that have a major impact
on the Group's continuous growth. We have also incorporated the universally shared Sustainable
Development Goals (SDGs) into the Group's activities and are working to provide products that help
resolve a variety of social issues while addressing the ever-changing needs of society.
Looking ahead, we will work diligently to remain essential to society and the preferred choice of customers
for the next 100 years.

(2) Medium- to Long-Term Management Strategies and Performance Targets
Under the Medium-Term Management Plan formulated in May 2016, we have identified the following two
medium- to long-term management strategies, which we intend to carry out over the next decade throughto the fiscal year ending March 31, 2026.
1. Transition toward a robust business structure that is resilient against changes in the Company’s
operating environment and is capable of sustainable growth
The Tokuyama Group has set the goal of becoming a global leader in advanced materials through unique
technologies across growth businesses including the Specialty Products as well as Life & Amenity segment
together with the development of new products. In such traditional businesses as the Cement andChemicals segments, the Group will work to become a leader in Japan through strengthening
competitiveness.
2. Transition to a Group-wide low-cost structure by undertaking a comprehensive review of existing
work practices
The Tokuyama Group will reduce costs by adopting a cross-departmental approach that differs fromconventional methods and undertaking strategic capital expenditures as a part of efforts to cut backprincipal costs including raw material, fuel, repairs and maintenance, and logistics costs.
2

In addition, Tokuyama has identified specific numerical targets as a measure of its success in carrying out
these strategies. The goals are to achieve an ROA (operating profit/total assets), cash conversion cycle, anddebt-to-equity ratio of at least 10%, not more than 55 days, and not more than 1.0, respectively, as of theend of fiscal 2020, the fiscal year ending March 31, 2021.

(3) Pending Issues
With a view to realizing its fiscal 2025 aspirations of becoming “a global leader in growth businesses” and“a leader in Japan in traditional businesses,” the Company will formulate clear management strategies while
accelerating efforts to prioritize issues to change to a corporate structure capable of regrowth.
Contributing to sustainable development goals (SDGs) is also essential to enable the Group to aim forsustainable growth over the long term. Accurately identifying the environmental and social issues, theCompany would like to aim to realize both improvements in the corporate value of the entire Group and asustainable society.
1. Change the Group’s organizational culture and structure
Taking into consideration the growing pace of technical innovation and dramatic changes in global
conditions, all Tokuyama employees are sharing a sense of impending crisis while recognizing the need toalter behavioral patterns and mindsets in a bid to secure sustainable growth going forward. Following on
from the revision of the personnel evaluation system for managers and employees over the age of 60,
steps were also taken to reform the Company’s personnel systems for union members. Through thesemeans, Tokuyama is hoping that employees will adopt a proactive approach and pursue grow by taking on
new challenges. The Company expects that the strengthening of the training of human resources andin-house revitalization will be brought about by the appointment of talented employees at an early stage.
Moreover, Tokuyama is working to energize its organization by actively employing mid-career staff.
2. Rebuild the Group’s business strategies
To strengthen its presence in ICT-related fields, which are its growth businesses, the Company had
completed the construction to increase production plant for high-purity aluminum nitride powder andphotoresist developer. As an integral element of technical innovation, the application of information in its
many forms including the Internet of Things, big data, and artificial intelligence is expected to experiencean upswing in demand. Against this backdrop, Tokuyama has increased its annual production capacity foraluminum nitride powder by 40% and photoresist developer by 75%, thereby further expanding theCompany’s supply structure and systems. In order to consistently meet the expectations of customers,
Tokuyama will continue to engage in in safe and stable operations while further expanding its business.
Looking ahead, the Company will continue to actively inject funds and undertake capital and otherexpenditure mainly targeting growth businesses.
3. Strengthen Group management
The decision has been made for Excel Shanon Corporation, a wholly owned subsidiary that engages in the
manufacture and sale of plastic window sashes and related products as well as various kinds of house
construction materials, to receive an injection of capital through a third-party allocation of shares from
Panasonic Corporation. Moving forward, there is considerable expectation that the companies will utilize
3the construction material sales channels of Panasonic’s Housing Systems Business Division. The goal is topromote increased collaboration across a wide array of areas. This includes the tapping of new markets
and strengthening of manufacturing capabilities. By seamlessly combining the strengths of each company
and bolstering competitive advantage, every efforts will be made to expand the plastic window sash market
and address growing energy conservation needs.
4. Improve the Company’s financial position
Having made progress in reducing its interest-bearing debt, the Company achieved a D/E ratio of 1.0
times or less, one of the goals of the Medium-Term Management Plan, two years ahead of schedule. Thisfiscal year, the D / E ratio increased by 0.69 times due to the continued reduction of interest-bearing debt
and the accumulation of period profit. In addition, the issuer credit rating has returned to a rating, praising
the steady progress of strengthening and expanding the profit base and financial base.
To achieve its financial targets, the Company will promote management efficiency and the reduction of its
interest-bearing debt, while continue its efforts to build a sound financial position.
5. Initiatives toward SDGs
To realize a sustainable society, we extracted the social issues relevant to the Tokuyama Group andidentified the following 9 items as materiality (important issues to be addressed). Addressing theseimportant issues is linked to the Company’s mission of “Centered on the field of chemistry, the TokuyamaGroup will continue to create value that enhances people’s lives.”①Helping to fight global warming②Conserving the environment③Preventing accidents and preparing for disasters④Developing products and technologies that address social issues⑤Managing chemicalsubstances⑥Engaging with localcommunities⑦Promoting CSR procurement⑧Developing human resources⑨Emphasizing diversity4

2. Analysis of Operating Results and Financial Position(1) Analysis of Operating Results<1> Operating results for the fiscal year under review[1] Overview of performance for the fiscal year under review
Against the backdrop of trade friction between the United States and China, which put the brakes on tradeand investment activities, the pace of global economic growth declined in fiscal 2019 (April 1, 2019 to March
31, 2020) due to increased uncertainty over the future. Impacted by the spread of COVID-19, the Japanese
economy subsequently experienced a major downturn due to a decline in exports and drop in consumer
spending.
Under these circumstances, the Tokuyama Group continued to implement the priority measures identified in
its Medium-Term Management Plan.
As a result, both sales and operating profit decreased due to weak sales of major products mainly, despite ofsome success in cost reduction activities at Tokuyama Factory.

Net sales

Operating profit(Unit: Millions of yen)
Profit attributable toOrdinary profit
owners of parerent

Fiscal 2019

316,096

34,281

32,837

19,937

Fiscal 2018324,661

35,26233,40034,279

(2.6)

(2.8)

(1.7)

(41.8)

Rate of change (%)

Net sales
Consolidated net sales decreased 2.6%, or ¥8,564 million compared with the previous fiscal year, to¥316,096 million. This was largely attributable to weak sales of major products.
Cost of sales
Cost of sales decreased 4.1%, or ¥9,218 million compared the previous fiscal year, to ¥217,446 million.
This decrease largely reflected the downswing in raw material and fuel costs as a result of the decrease indomestic naphtha and coal prices.
SG&A expenses
SG&A expenses increased 2.6%, or ¥1,636 million compared with the previous fiscal year, to ¥64,369
million. In addition to the increase in advertising expenses associated with the release of new products tothe market, this increase largely reflected R&D expenses of thermal management material.
Operating profit
Operating profit decreased 2.8%, or ¥981 million compared with the previous fiscal year, to ¥34,281
million. This was largely attributable to a weak sales volume in major products.

5

Non-operating income/expenses, Ordinary profit
Non-operating income/expenses improved ¥418 million compared with the previous fiscal year.
As a result of the above, ordinary profit decreased 1.7%, or ¥562 million compared with the previous
fiscal year, to ¥32,837 million.
Extraordinary income/losses, Profit before income taxes, Profit, Profit attributable to owners ofparentExtraordinary income/losses deteriorated by ¥9,537 million compared with the previous fiscal year. This
was largely attributable to the Company recorded a Loss on valuation of investment securities.
As a result of the above, profit before income taxes decreased 26.6%, or ¥10,100 million compared withthe previous fiscal year, to ¥27,917 million.
Profit after deducting income taxes calculated in an appropriate way decreased 40.1%, or ¥14,036 million
compared with the previous fiscal year, to ¥20,992 million.
Profit attributable to owners of parent decreased 41.8%, or ¥14,341 million compared with the previous
fiscal year, to ¥19,937 million.

6[2] Operating performance by business segment(Operating results by segment)
Sales(Unit: Millions of yen)
Reportable segment
Others

Total

Adjustment

Figures in
consolidated
incomestatement

56,307

65,232357,026(40,929)

316,096

92,36655,27961,370367,065(42,404)

324,661

(5.5)

1.9

6.3

(2.7)

-

(2.6)

Chemicals

Specialty
Products

CementFiscal 2019

93,73054,46687,289Fiscal 2018

98,38059,668

(4.7)

(8.7)

Rate of change (%)

Life &
Amenity

Operating profit(Unit: Millions of yen)
Reportable segment

36,082(1,801)

34,281

4,337

37,564(2,301)35,262

59.9

(3.9)

-

(2.8)

Others

Total

2,885

6,935

3,204

3,236

19.7

(10.8)

Chemicals

Specialty
Products

Fiscal 201915,366

7,058

3,835

Fiscal 201816,850

9,934

(8.8)

(29.0)

Rate of change (%)

Adjustment

Figures in
consolidated
incomestatementLife &
Amenity

Cement(Note) Sales and operating profit in each segment include inter-segment transactions.

Chemicals
Caustic soda earnings declined. Despite firm sales volume trends, this downturn in earnings was largely due
to the increase in raw material prices coupled with a deterioration in overseas market conditions.
Vinyl chloride resin earnings increased due to the Company’s ability to maintain the spread between raw
material prices and selling prices.
Propylene oxide earnings decreased owing to a drop in sales volume for polyurethane, main application.
Calcium chloride earnings declined. This largely reflected weak sales volume due to less snow and anincrease in logistics costs.
As a result of the above, segment net sales decreased 4.7% compared with the previous fiscal year, to¥93,730 million and operating profit decreased 8.8% to ¥15,366 million. The segment reported lower
earnings on lower sales.

7Specialty Products
Despite signs of a recovery in the semiconductor market, earnings from semiconductor-grade
polycrystalline silicon and thermal management materials declined. This largely reflected the downturn insales volumes attributable to inventory adjustments by customers.
In high-purity chemicals for electronic manufacturing, its business result was almost same as thecorresponding period of the previous fiscal year. This was due to sales volume mainly overseas recovered.
As a result of the above, segment net sales decreased 8.7% compared with the previous fiscal year, to¥54,466 million and operating profit decreased 29.0% to ¥7,058 million. The segment reported lower
earnings on lower sales.
CementCement earnings decreased. Despite manufacturing costs decreased due to a down in coal prices, thisdownturn in earnings was largely due to decrease in sales volume and an increase in fixed costs such as
depreciation.
In the resource recycling business, its earnings increased due to the Company accepted a higher volume ofwaste than the corresponding period of the previous year.
As a result of the above, segment net sales decreased 5.5% compared with the previous fiscal year, to¥87,289 million and operating profit increased 19.7% to ¥3,835 million. The segment reported higher
earnings on lower sales.
Life & Amenity
Earnings from plastic lens-related materials increased on the back of the robust shipping trends ofphotochromic materials for eyeglass lenses.
Dental materials earnings decreased. Despite an increase in sales volume mainly overseas, this decrease wasmainly due to the increase in advertising expenses associated with the release of new products to themarket.
Earnings from medical diagnosis systems increased due to firm sales volume of Clinical Testing devices
and Systems
Earnings from ion exchange membranes decreased. This was due to a decrease in large-scale projects.
As a result of the above, segment net sales increased 1.9% compared with the previous fiscal year, to¥56,307 million and operating profit decreased 10.8% to ¥2,885 million. The segment reported lower
earnings on higher sales.

8<2> Outlook for fiscal 2020
[1] Outlook for operating forcasts for fiscal 2020
As the spread of COVID-19 inevitably wreaks havoc on the global economy, the Tokuyama Group will
increasingly face a harsh operating environment. Under these circumstances, we will continue to transition
to a robust business structure that is unaffected by changes in market conditions and movements in supply
and demand, and is capable of sustainable growth. In the traditional businesses of Cement and Chemicals,
we will endeavor to strengthen our competitiveness by thoroughly reducing costs and increasing efficiency.
In such growth businesses as Specialty Products, Life & Amenity, and Newly Developed Products, we will
make every effort to bolster our product and development prowess by enhancing functions as well as
quality in a bid to nurture the necessary driving force to propel new growth.The impact of COVID-19 on
the Company’s operating results is expected to gradually fade from the second quarter, with almost no
impact from the third quarter and beyond. Based on current information, we forecast net sales of ¥310
billion, a decrease of 1.9% (¥6 billion) compared with the fiscal year under review, operating profit of ¥28
billion, a decrease of 18.3% (¥6.2 billion), ordinary profit of ¥28 billion, a decrease of 14.7% (¥4.8 billion)
and profit attributable to owners of parent of ¥22 billion, a decrease of 10.3% (¥20 billion).

Net sales

Operating profit(Unit: Millions of yen)
Profit attributable toOrdinary profit
owners of parerent
28,00022,000Fiscal 2020

310,000

28,000Fiscal 2019

316,096

34,281

32,837

20,494(1.9)(18.3)(14.7)+10.3

Rate of change (%)

These forecasts are calculated based on an exchange rate of ¥110/$ and a domestic naphtha price of¥43,000/kl.
[2] Outlook for segment forcasts for fiscal 2020
Chemicals
The spread of COVID-19 is expected to impact demand both in Japan and overseas.Under suchcircumstances, the Company will secure sales volume of its major products and promote the strengtheningof its cost competitiveness by, for example, reducing unit consumption and fixed costs.
Specialty Products
Despite expectations of a recovery in the semiconductor market due mainly to 5G demand, there areconcerns regarding a delay in 5G introduction due to the spread of COVID-19. Notwithstanding theseconcerns, demand to date has remained steady on the back of moves by end-device manufacturers to build
up inventories from the perspective of stable component procurement. With respect tosemiconductor-grade polycrystalline silicon, we will ramp up our pursuit of quality and work to increase
earnings by expanding sales of high-value-added products that are distinct from the products of othercompanies. In high-purity chemicals for electronic manufacturing, we will focus on putting in place a
supply structure and systems that address growing demand by securing full-scale plant operations wheresteps have been newly taken to increase production capacity in 2020. Turning to heat dissipation materials,
we will reinforce our supply systems while at the same time focusing on development in a bid to expand
our product lineup.
9Cement
While domestic demand was expected to remain at the same level as fiscal 2019, there are concerns about adecline in shipment volumes due to the temporary suspension of construction work, especially in major
cities, as a result of the spread of COVID-19. In addition, demand is also decreasing overseas. This is
triggering anxieties regarding a drop in shipment volumes. Under these circumstances, we will work tosecure earnings by capturing orders after the resumption of construction and thoroughly reducing
manufacturing costs.
Life & Amenity
Shipments of dental materials and other products to the U.S. and Europe are projected to decline due tothe impact of COVID-19. Under such circumstances, the Company will focus on new productdevelopment and sales activities in response to customer needs for healthcare-related products and changes
in the market.
OthersThe “Others” segment includes businesses which are responsible for the Group’s sales, logistics, utilities
and other functions. The segment will work to increase Group-wide earnings by continuing to reduce
costs.

10

(2) Analysis of Financial Position<1> Analysis of assets, liabilities and net assets
Summery of Consolidated Balance Sheets(Unit: Millions of yen)

Mar 31, 2019

Mar 31, 2020

Ammount ofRate of changechange(%)

Assets379,630

383,447

3,817

1.0

Liabilities

216,104

203,017(13,087)(6.1)（Interest-bearing debt）

128,966

116,344(12,622)(9.8)

Net assets

163,525

180,429

17,461

10.3（Shareholders' equity）

152,781

168,861

16,07910.5

Mar 31, 2019

Mar 31, 2020

Ammount of

Financial indicatorschangeD/E ratio

0.84

0.69

(0.15)Net D/E ratio

0.40

0.21

(0.19)

Shareholders’ equity ratio (%)

40.2

44.0

3.8points

Shareholders’ equity ratio based on market price (%)

47.8

37.9

(9.9) points(Note)*D/E ratio: interest-bearing debt / shareholders' equity
Net D/E ratio: (interest-bearing debt - Cash and cash equivalents) / shareholders' equity
Shareholders’ equity ratio (%): interest-bearing debt / total assets
Shareholders’ equity ratio based on market price (%) : market capitalization / total assets(Assets)
Notes and accounts receivable – trade decreased ¥7,428 million, other current assets decreased ¥5,730
million due to receiving of damages claims relating to the plant construction of the Tokuyama Malaysia
Sdn. Bhd. and investment securities decreased ¥2,332 milliondue to devaluation of investment securities,
while cash and deposits increased ¥12,911 million and plant and equipment increased ¥7,087 million due
to capital investment. As a result, total assets amounted to ¥383,447 million, an increase of ¥3,817 million
compared with those as of March 31, 2019.
(Liabilities)
Provision for repairs increased ¥1,589 million, while long-term loans payable and the current portion of
long-term loans payable decreased ¥11,716 million due to scheduled repayments and notes and accounts
payable – trade decreased ¥4,472 million.
As a result, total liabilities amounted to ¥203,017 million, down ¥13,087 million compared with those asof March 31, 2019.
(Net assets)
Retained earnings increased ¥15,764 million as a result of posting profit attributable to owners of parent
mainly. Valuation difference on available-for-sale securities increased ¥1,898 million.
As a result, net assets totaled ¥180,429 million, an increase of ¥16,904 million compared with those as ofMarch 31, 2019.
(Financial indicators)
Under its Medium-Term Management Plan, the Company includes a D/E ratio of 1.0 or less as a11management numerical target for fiscal 2020. With regard to the consolidated fiscal year under review, theD/E ratio improved 0.15 compared with the previous fiscal year to 0.69 times, due to a ¥12,622 million
decrease in interest-bearing debt and a ¥16,079 increase in shareholders’ equity.
The Company has achieved the management numerical target cited in its Medium-Term Management Plan,
but will work to improve the D/E ratio on an ongoing basis from the current fiscal year onward.
<2> Analysis of cash flows
Summery of Consolidated Statements of Cash Flows(Unit: Millions of yen)
Fiscal 2018

Fiscal 2019

Cash flows from operating activities

38,531

52,364

Cash flows from investing activities(16,174)(20,548)

Cash flows from financing activities(21,104)(18,348)

Effect of exchange rate changes on cash and cash equivalents

(49)

(540)

Net increase (decrease) in cash and cash equivalents

1,202

12,926

Cash and cash equivalents at end of year

67,99180,918(Cash flows from operating activities)
Net cash provided by operating activities totaled ¥52,364 million, an increase ¥13,833 million comparedwith the previous fiscal year. Principal items included profit before income tax of ¥27,917 million anddepreciation of ¥16,122 million.
(Cash flows from investing activities)
Net cash used in investing activities totaled ¥20,548 million, an increase of ¥4,374 million compared withthe previous fiscal year.
Major contributory factors were payments for purchases of property, plant and equipment of ¥19,706
million.
(Cash flows from financing activities)
Net cash used in financing activities amounted to ¥18,348 million, a decrease of ¥2,756 million comparedwith the previous fiscal year.
This was primarily attributed to outflow due to repayments of long-term loans of ¥12,739 million.
<3> Procurement of Funds and Liquidity(Procurement of Funds)
The Tokuyama Group has identified efforts to improve its financial structure as one component of thefinancial policy outlined under its Medium-Term Management Plan. Against this backdrop, the Group is
working to build up its shareholders’ equity while reducing its interest-bearing debt. Turning to other policy
targets, the Group is endeavoring to acquire a “single A” rating from relevant agencies by the end of theMedium-Term Management Plan. Under this policy, the Group acquired a “single A-” rating from relevant
agencies on July 19, 2019. The Group will continue to improve its financial position.
Meanwhile, the Tokuyama Group recognizes the need to retain a certain level of funds in order to secure
the working capital required to finance its business activities, expand its growth businesses, undertake12

capital expenditures geared toward strengthening the competitiveness of traditional business, and promotestrategic investments. While the principal method of procuring these funds is to accumulate cash on handthrough the continuous posting of business earnings, the Group will also pursue other avenues. This
includes borrowing from financial institutions and issuing unsecured bonds. In addition, energies are being
directed toward building a financial structure that is capable of engaging in business activities with lessworking capital. To this end, the Group is working to improve its cash conversion cycle (CCC), reduceinventories, and improve trading terms and conditions with business partners, issues raised under the
Medium-Term Management Plan. Furthermore, the Tokuyama Group’s intended investment amount for
the next fiscal year is ¥32.7 billion. Plans are in place to utilize cash on hand and borrowings from financial
institutions.
(Liquidity)
Cash and cash equivalents stood at ¥80,918 million as of the end of the fiscal year under review. On thisbasis, the Tokuyama Group is confident that it maintains more than ample liquidity to promote its businessactivities. In addition, Tokuyama has executed revolving credit facility, overdraft, and credit liquidationagreements with a financial institution. Accounting for these factors, the Company is more than capable ofmaintain a certain level of liquidity should any impediment arise.

13

(3) Progress under the Medium-Term Management Plan
Compared with the previous fiscal year ROA deteriorated by 0.52 of a percentage point to 9.0% due to thedecrease in operating profit brought about by weak sales of major products and the increase in total assets
due to capital investment. . Cash conversion cycle (CCC) deteriorated by four days compared with theprevious fiscal year to 64 days, due to an increase in inventories. The D/E ratio was 0.69 times, animprovement of 0.15 compared with the previous fiscal year, due to the accumulation of profit, thereduction of interest-bearing debt and other factors. The Company has achieved the Medium-Term
Management Plan target value of 1.0 times or less already previous fiscal year.

(4) Basic Policy for Profit Distribution and Dividends for Fiscal 2019 and 2020
As far as the distribution of profits is concerned, Tokuyama’s basic policy is the ensure the continuous andstable payment of dividends to its shareholders. In carrying out this policy, the Company takes into
consideration performance trends and the roadmap established under its Medium-Term Management Plan.
Meanwhile, the Company will apply internal reserves to investment and lending as well as capital
expenditures with the aim of further enhancing its corporate value.
In fiscal 2019, the Company expects to pay out a year-end dividend of ¥35 per share in line with the basic
policy mentioned above.
As far as dividends for the next period are concerned, Tokuyama plans to pay an interim dividend of ¥35
per share for the fiscal year ending March 31, 2021 based on the assumptions outlined in “<2> Outlook
for fiscal 2020 of (1) Analysis of Operating Results.” In contrast, the year-end dividend is yet to be
determined given the uncertainty surrounding the spread of COVID-19.

14

3/31/2019

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Lease receivables
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Goodwill
Leased assets
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Retirement benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

15(Millions of yen)
3/31/2020

68,61380,35830
16,4589,554
17,462
10,554(94)
202,936

81,52472,92934
18,506
10,051
16,0884,823(108)
203,849

106,214(76,233)
29,981
459,535(414,813)
44,721
22,106(19,905)
2,201
32,296
4,548(2,237)2,311
4,592
116,104

108,636(78,109)
30,526
465,761(420,631)
45,12922,488(20,024)
2,463
33,3635,011(2,370)2,641
9,067
123,192

208
71
1,693
1,973

3
59
1,594
1,657

21,7182,444
21,091
9,796
3,621
(57)
58,614
176,693379,630

19,385
2,302
19,164
9,569
4,382
(56)
54,747
179,597
383,447

Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Current portion of long-term borrowings
Lease obligations
Income taxes payable
Provision for bonuses
Provision for repairs
Provision for decommissioning and removal
Provision for product warranties
Provision for loss on compensation for damage
Provision for restructuring
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Lease obligations
Deferred tax liabilities
Provision for retirement benefits for directors (and other officers)
Provision for share-based remuneration
Provision for repairs
Provision for decommissioning and removal
Allowance for loss on compensation for building materials
Provision for environmental measures
Retirement benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

16

3/31/2018(Millions of yen)
3/31/201947,268
4,361
12,667
758
3,816
2,664
3,569
－
137
91
233
17,68093,24842,795
3,082
16,106
870
2,896
3,175
5,159
439
84
84
－
20,545
95,241

109,411
1,767
220
224
48
1,546
－
260
222
2,149
6
6,999
122,856
216,104

94,255
2,028
204
239
86
944
529
158
196
2,277
6
6,848
107,775
203,017

10,00020,018
121,901(1,823)150,095

10,00020,018
137,665(1,809)165,874(1,566)
(61)
1,672
2,640
2,685
10,743
163,525
379,630

332
(35)
703
1,986
2,986
11,568
180,429
383,447

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Outsourcing service income
Rental income from non-current assets
Other
Total non-operating income
Non-operating expenses
Interest expenses
Provision for decommissioning and removals
Fiduciary obligation expenses
Cost of loans payable
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on bargain purchase
Gain on sales of investment securities
Subsidy income
Gain on insurance claims
Gain on step acquisitions
Compensation for damage income
Other
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Impairment loss
Loss on disaster
Loss on tax purpose reduction entry of non-current assets
Loss on disposal of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities
Compensation for damage
Other
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent
17

FY2018324,661
226,664
97,996(Millions of yen)
FY2019316,096
217,446
98,65041,524
21,20862,73335,26242,265
22,10464,36934,281

123
390
921
716
649
2,000
4,802

145
352
756
650
531
1,669
4,105

2,453
－
685
884
2,640
6,664
33,400

1,689
985
676
－
2,198
5,549
32,837

47
964
1
133
169
－
6,006
27
7,351

23
157
8
144
470
56
－
－
861

10
363
30
100
807
－
－
851
569
2,733
38,017
5,074(2,085)
2,988
35,029750
34,279

19
34
82
191
685
1
4,531
－
234
5,781
27,917
4,898
2,026
6,924
20,992
1,055
19,937

FY2018
35,029(Millions of yen)
FY201920,992(2,919)
90
(304)
(434)

1,921
25
(891)
(654)

(139)

(100)

(3,707)31,321300
21,29330,596725

20,2371,055(3) Consolidated Statements of Comprehensive Income
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity
methodTotal other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests18(4) Consolidated Statements of Cash Flows
Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in provisions
Increase (decrease) in retirement benefit liability
Decrease (increase) in retirement benefit asset
Interest and dividend income
Foreign exchange losses (gains)
Loss (gain) on sales of property, plant and equipment
Loss (gain) on sales of investment securities
Share of loss (profit) of entities accounted for using equity method
Gain on bargain purchase
Loss (gain) on step acquisitions
Subsidy income
Interest expenses
Cost of loans payable
Loss on tax purpose reduction entry of non-current assets
Impairment loss
Loss (gain) on disposal of non-current assets
Gain on insurance claims
Loss (gain) on valuation of investment securities
Compensation for damage income
Compensation for damage
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in trade payables
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividends received
Interest paid
Proceeds from insurance income
Compensation for damage received
Compensation for damage paid
Income taxes (paid) refund
Net cash provided by (used in) operating activities

19

FY201838,017
15,093
(693)
58
(761)
(514)
8
(36)
(1)
(921)
(964)
－
(133)
2,453
884
100
363
807
(169)
－
(6,006)851
928(4,071)335(1,090)(403)
943
45,077938(2,529)169－－(5,123)38,531(Millions of yen)
FY201927,917
16,122
2,118
129
(709)
(497)
321
(4)
(6)
(756)
(157)
(56)
(144)
1,689
－
191
34
685
(470)
4,531
－
－
7,343
(1,268)(323)(4,385)752(74)
52,981
1,041(1,709)
470
5,865
(832)
(5,451)
52,364

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from purchase of shares of subsidiaries resulting in change
in scope of consolidation
Purchase of shares of subsidiaries resulting in change in scope of
consolidation
Long-term loan advances
Collection of long-term loans receivable
Subsidies received
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Dividends paid
Dividends paid to non-controlling interests
Decrease (increase) in treasury shares
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Decrease in cash and cash equivalents resulting from exclusion of subsidiaries
from consolidation
Cash and cash equivalents at end of period

20(Millions of yen)
FY2019FY2018(269)
498(16,765)
219
(22)
3

(52)
174
(19,706)
68
(24)
21

583

137

－

(110)

(3)
214
133
(765)
(16,174)

(5)
181
144
(1,376)(20,548)247
59,713(76,512)(3,122)
(357)
(308)
(764)
(21,104)(49)
1,202
66,807(1,403)
1,092(12,739)(4,164)
(276)
(0)
(856)
(18,348)(540)
12,92667,991(18)－

67,99180,918(5) Segment information
1. Summary of reportable segments
The reportable segments of the Tokuyama Group are defined as individual units, where separate financial
information is available and which are subject to regular review by the Board of Directors of the Company
to evaluate their results and decide the allocation of management resources.
The Company has business divisions by product group, and the Tokuyama Group conducts business
operations through each business division devising its comprehensive product strategy for domestic andoverseas markets.
The Tokuyama Group is, therefore, composed of segments by product group based on business divisions,and has four reportable segments, “Chemicals,” “Specialty Products,” “Cement,” and “Life & Amenity.”
Main products and services of each reportable segment are as follows:

Reportable segment

Main products and services

Chemicals

Caustic soda, soda ash, calcium chloride, sodium silicate, vinyl chloride monomer,
polyvinyl chloride resin, propylene oxide, isopropyl alcohol, chlorinated solvents,and hydrogenSpecialty Products

Polycrystalline silicon, fumed silica, tetrachlorosilane, aluminum nitride, high-purity
chemicals for electronics manufacturing, and photoresist developer

CementCement, ready-mixed concrete, cement-type stabilizer, and resourece recycling
business

Life & Amenity

Polyolefin film, plastic window sashes, medical diagnosis systems, dental materials
and equipment, ion exchange membranes, pharmaceutical ingredients andintermediates, plastic lens-related materials for glasses, and microporous film21

2. Information on sales, income, assets and other items by reportable segment
Fiscal 2018 (April 1, 2018 – March 31, 2019)(Millions of yen)
Reportable segments

Sales
Sales to customers
Inter-segment sales/transfer
Total
Segment profit
Segment assets
Other items
Depreciation expenses*4
Increase in tangible and intangible
fixed assets*5

Chemicals

Specialty
Products

97,471
908
98,38016,85053,99547,193
12,474
59,668
9,934
62,91691,491874
92,366
3,204
55,427

2,582
3,375

2,533
5,404

3,359
3,507

CementAdjustment*2

Figures in
consolidated
financialstatements*3

324,661
42,404
367,065
37,564282,938(42,404)(42,404)(2,301)
96,691

324,661
324,661
35,262379,630

14,31517,098777
1,970

15,09319,069Others*1

Total

53,2602,018
55,2793,236
59,19035,243
26,127
61,3704,337
51,408

2,399
2,059

3,441
2,750

Life &
Amenity*1 “Others” segment comprises businesses other than those of the reportable segments. Concretely, the segment includes
overseas sales companies, a distribution company, a real estate business, etc.
*2 Adjustment is as follows:(1) The segment profit adjustment amount consists mainly of basic R&D expenses that are not related to specificreportable segments.
(2) Included in the segment assets adjustment amount are corporate assets that are not allocated to specific reportablesegments (¥123,060million).
*3 With regard to segment profit, operating income in the consolidated financial statements has been calculated byadjusting the sum total of the reportable segments’ income and the “Others” segment’s profit.
*4 Included in depreciation expenses is the long-term prepaid expense depreciation amount.
*5 Included in increase in tangible and intangible fixed assets is the long-term prepaid expense increase amount.
Fiscal 2019 (April 1, 2019 – March 31, 2020)(Millions of yen)
Reportable segments

Sales
Sales to customers
Inter-segment sales/transfer
Total
Segment profit
Segment assets
Other items
Depreciation expenses*4
Increase in tangible and intangible
fixed assets*5

Chemicals

Specialty
Products

92,755975
93,73015,36648,27743,726
10,73954,466
7,058
61,03986,616673
87,2893,835
55,277

2,750
3,106

2,926
8,059

3,422
4,219

CementAdjustment*2

Figures in
consolidated
financialstatements*3

316,096
40,929357,026
36,082
272,551－△40,929△40,929△1,801
110,895

316,096－
316,096
34,281
383,447

15,23921,467882
3,182

16,122
24,649Others*1

Total

54,3471,960
56,307
2,885
57,95538,651
26,581
65,232
6,935
50,001

2,460
2,602

3,679
3,478

Life &
Amenity*1 “Others” segment comprises businesses other than those of the reportable segments. Concretely, the segment includes
overseas sales companies, a distribution company, a real estate business, etc.
*2 Adjustment is as follows:(1) The segment profit adjustment amount consists mainly of basic R&D expenses that are not related to specificreportable segments.
(2) Included in the segment assets adjustment amount are corporate assets that are not allocated to specific reportablesegments (¥137,395million).
*3 With regard to segment profit, operating profit in the consolidated financial statements has been calculated by adjusting
the sum total of the reportable segments’ profit and the “Others” segment’s profit.
*4 Included in depreciation expenses is the long-term prepaid expense depreciation amount.
*5 Included in increase in tangible and intangible fixed assets is the long-term prepaid expense increase amount.
22

(Changes in reportable segments)
In accordance with the change in management categorizations of a certain subsidiary implemented from this fiscal year
under review, a certain subsidiary previously included in the Others segment have now been included in the Life &Amenity segment.
Segment information for the corresponding period of the previous fiscal year has been prepared in accordance with thischange.

23