Financial Report

The 1st Half of FY2019(From Apr. 1 to Sep. 30)

Oct. 31, 2019

Index Overview

P. 2

 Summary and business environment

P. 3

 Summary of P/L

P. 4

 Summary of B/S

P. 13

 Summary of C/F

P. 14

 Forecast of operating performance forP. 15

FY20191©ZEON CORPORATION. All rights reserved.

Overview Both sales and operating income decreased YoY due to theimpact of the global economic slowdown caused by the USChina trade friction.
(Net sales -3%, Operating income -17% YoY) Elastomers: Net sales decreased, operating income decreased
 Specialty Materials: Net sales increased, operating income
increased. Optical resin and films, and Energy Materials aresteady.
 Financial indicators remain solid.
 The outlook of the global economy is uncertain after 3QFY2019 with US-China trade friction and Brexit, etc. We will
steadily secure profits by assessing the market environment.
2©ZEON CORPORATION. All rights reserved.

Summary and business environment(Unit : JPY100m)

FY18/1HNet Sales
Operating Income
Non-operating income & expensesOrdinary income
Gain or loss on extraordinary item

Income before income taxes
Net income
JPY/US$JPY/€
Naphtha price (JPY/KL)Asian Butadiene (US$/t）

FY19/1H

Increase/Decrease Ref. Projected
performance
Amount
Rate

1,690
180
23
203
-2
200
145

1,634
150
10160
-2
158
116

-57
-30
-13
-42
+0-42-30¥109.5¥129.5¥51,100
US$1,614¥109.2¥122.0¥42,800
US$1,121-0.3-7.5-8,300
-493

-3%
-17%
-55%
-21%
-21%
-21%

1,600
145
155
110

¥105.0-6%¥120.0-16%¥39,000-31% US$1,250

3©ZEON CORPORATION. All rights reserved.

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

1,002【Year-on-year】

919

Net Sales: -8.3 billion yen, -8%
Operating Income: -3.6 billion yen, -37%

95

2018/1HNet Sales

60
2019/1H

 Rubbers: Both net sales andoperating income decreased dueto the sluggish business inautomobile and general industry.
 Chemicals: Both net sales andoperating income decreased due
to production volume decrease
from the regular plantmaintenance.

Operating Income4©ZEON CORPORATION. All rights reserved.

Elastomers: Net sales variance by business unit
Sluggish all in domestic, export
and oversea subsidiaries by theglobal economic slowdown

1,002-55+4-9(Unit : JPY100m)

919

-24
Low sales because of the regular plantmaintenance. Petroleum resins areaffected by the Asian market decline.

-83
2018/1H Rubbers

Latexes Chemicals

Others /Eliminations

2019/1H5©ZEON CORPORATION. All rights reserved.

Elastomers: Operating income variance(Unit : JPY100m)

Sales volume down inrubbers and chemicals

95

Selling price down mainly due to theformula by raw material price-14+19-39+360

SG&A

2019/1H-5-36

2018/1HQty.

Price

ExchangeRate

Rawmaterialprices

6©ZEON CORPORATION. All rights reserved.

Situation in Elastomer Business: Rubbers（Index) Volume for FY2018/1H=100

General purpose

100

103

2018/1H

2019/1H

 Specialty rubbers (mainly forautomobile industries)-9% due to global demand decline
and sluggish market conditions

Specialty

100

2018/1H

 General purpose rubbers(mainly for tires)+3% by the growth of BR and SSBR, regardless the demand fortires was weak.

91
2019/1H

7©ZEON CORPORATION. All rights reserved.

Summary of P/L : Specialty Materials Business【Year-on-year】(Unit : JPY100m)

Net Sales ：+3.1 billion yen, +7%

455

42487

2018/1HNet Sales

Operating Income: +0.4 billion yen, +5%92

2019/1H
Operating Income

 Specialty Plastics: Both net sales
and operating income increased
due to the steady business in
Optical resin and films.
 Specialty Chemicals: Specialty Chemicals Unit:
Both net sales and operating
income decreased due to
production volume decrease
from the regular plantmaintenance.
 Energy Materials: Both netsales and operating incomeincreased by steady business.
8©ZEON CORPORATION. All rights reserved.

Specialty Materials: Net sales variance by business unit
(Unit : JPY100m)+7+3455+20
Steady in Energy
Materials

424

Steady in optical resinsand films+31
2018/1H

Sp. Plastics Sp. Chemicals Medical etc.

2019/1H
9©ZEON CORPORATION. All rights reserved.

Specialty Materials: Operating income variance(Unit : JPY100m)+12+2-4-192

Increased the shipmentof optical films andenergy materials

87

Increased operationof optical films-4+4
2018/1HQty.

PriceExchangeRateRawmaterialprices

SG&A

2019/1H
10©ZEON CORPORATION. All rights reserved.

Situation in Specialty Materials: Energy materials（Index) Volume for FY2018/1H=100

For EV For EV: +23%
Sales grow to the automobile
manufacturers in Japan, Europeand USA.

123
100
2018/1H

2019/1H

Other than EV

1001092018/1H

2019/1H Other than EV: +9%
The model numbers of power tools
which adopted our products
increased.

Volume analysis of usage is Zeon’s estimation.
11©ZEON CORPORATION. All rights reserved.

Summary of P/L : Others(Unit : JPY100m)276

270【Year-on-year】
Net Sales ：-0.5 billion yen, -2%
Operating Income: -0.1 billion yen, -8%

Sluggish in Trading and RIMbusiness

13

12

2018/1H

2019/1HNet Sales

Operating Income
12©ZEON CORPORATION. All rights reserved.

Summary of B/S(Unit : JPY100m)【Current assets】 -187

【Current liabilities】 -223

 Declined by the quarterend-holiday

 Declined by the quarter-endholiday• Accounts receivable others -119
• Notes and accounts
receivable -trade -52

Currentliabilities
1,077（-223）

Currentassets2,086

 Affected by regularmaintenance of Mizushima （-187）
Plant• Inventories -34

Fixedassets
2,025【Fixed assets】 ＋48
 Capital expenditures 130（+48）• Notes and accounts payabletrade -204

Long-term liabilites 363 (+5)

Total netassets
2,671（+79）

【Total net assets】 +79
 Net income 116• Retained earnings +94
 Financial indicators• Interest-bearing debt 241 (±0)
• Equity ratio 64.2％ (+3.9％)• Enhancement of opticalfilm facility, etc.

• D/E ratio 0.09 (±0.00)
Year-on-year variance is in ( )©ZEON CORPORATION. All rights reserved.

13Summary of C/F(Unit : JPY100m)

2018/1H 2019/1H

197
112

2018/1H-73

2019/1H-24

-106
-188

CF from Operating Act.

CF from Investing Act.

CF fromOperating Act.

197

112

CF fromInvesting Act.

-73

-106

Free CF124

5

CF fromfinancing Act.

-188

-24

CF-65

-18

CF from Operating Activities:
Declined YoY bases by thequarter-end-holiday

CF from Financing Act.
14
©ZEON CORPORATION. All rights reserved.

Forecast of operating performance for FY2019(Unit : JPY100m)

3,300

3,375
Progress
rate 50%

1,634
Progress
rate 50%824
331
FY2018(Actual)

832019-1QNet Sales

150
2019-1H300
FY2019(Forecast)

Operating Income

The Company is predicting no change in the forecast disclosed as of Apr. 26, 2019.
15©ZEON CORPORATION. All rights reserved.

Next Announcement of Financial Statements

The third quarter ofFY2019

Jan. 30, 2020
Subject to change without notice

Zeon’s plans, forecasts, and other data appearing in this presentation were calculated
based on information which was currently available and therefore includes risks anduncertainties. Actual results may differ depending on various factors.
This document is a translation of the original Japanese-language and is provided for convenience only.
In all cases, the original Japanese version shall take precedence.
16©ZEON CORPORATION. All rights reserved.

Business Environment

Increase/Decrease

FY20191H

FY20181H

AmountRate

JPY/USD
109.2
JPY/Euro
122.0($/bbl)Crude Oil66(JPY/kl) 42,800
Naphtha price($/ｔ)
Asian Butadiene
1,121($/ｔ)
Isoprene
1,360
($/ｔ)
Natural rubber
1,430

109.5
129.5
75
51,000
1,614
1,540
1,364

-0.3
-7.5
-9-8,200-493-180
67-0 %-6 %
-11 %
-16 %
-31 %
-12 %
5 %Ave. for 6 mo.

17©ZEON CORPORATION. All rights reserved.

Reference: Consolidated Statement of Income (Quarterly)
2018

2019

(Unit : JPY100m)

1Q→2Q

Q1

Q2

Q3

Q4

Q１

Q2

159

149

145

164

147

150

32%

Rubbers

91

84

80

99

85

90

55%

Latexes

312930

3230

31

01%

Chemicals

3735

34

32

32

30

-2-5%

837

854

855

829

824

809

-15-2%

Elstomers Business

509

493

490

489

471

448-22-5%

Rubbers

363

340

339

345

328

321

-6-2%

Latexes

4451

4845

45

42-3-6%

Chemicals

98

96

95

94

92

78-14-15%

Others / Eliminations

46757703%

Specialty Materials Biz.

195229223205

223

232

104%

Sp. Plastics

116

148138

117

142

143

11%

Sp. Chemicals

66

6870

7267

75

812%

Medical, etc.

141215161414-00%

Ohters / Eliminations

132

132

143

136

131

129

-2-1%

85

95

90

61

83

67

-16-20%

10%

11%

11%

7%

10%

8%

Elastomer Business

51444933

35

25-10-30%

Specialty Materials Biz.

3453

42

32

51

41-9-18%

Others

-1-2-0-3-2

13-Sales Volume (thousand tons)

Net Sales

Operating income
Operating income ratio

Amount Rate-2 pt

18©ZEON CORPORATION. All rights reserved.

Reference: Capital Expenditures, Depreciation & Amortization
and R&D Expenses

2018Actl.
146
2019
Forecast
330(Unit : JPY100m)

2018 Actl.
188
2019
Forecast180

2018 Actl.
165
2019
Forecast
165

19©ZEON CORPORATION. All rights reserved.

Business Environment【Exchange rate】【Raw materials】

20©ZEON CORPORATION. All rights reserved.

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

1,690

1,634

【Year-on-year】
Net Sales ：-5.7 billion yen, -3%
Operating Income: -3 billion yen, -17%

 Elastomers:
Net sales: decreased
operating income: decreased
 Specialty Materials:
150
Net sales: increased
Operating income: increased

180

2018/1HNet Sales

2019/1H
Operating Income
21©ZEON CORPORATION. All rights reserved.