Mid-term Management Plan

ZEON CORPORATION
Kimiaki TanakaPresident

2018年4月27日
April 27, 2018

Current Status

Contents

1. FY2017 Results and Business Environment
2. Business Topics

2©ZEON CORPORATION. All rights reserved.

Consolidated Results
FY2018 Forecast: Elastomers: Raw materials market will settle down andprices will fall. Specialty Materials Business: Grows steadily.
Net sales
JPY (Billions)

Consolidated Results by Segment

Operating income
JPY (Billions)

500

50

Net sales: Others

40040

Net sales: Elastomers

30030

Net sales: SpecialtyMaterials

500
20020178.9166.2168.0188.8

194.6

184.0

1000

Operating income:Elastomers

1070.9

71.0

75.0

77.0

86.5

85.0

2014
Result2015
Result2016
Result2017
InitialForecast

2017
Result2018
Forecast

2019

2020
Target0

Operating income:Specialty Materials

Operating income:
Total

3©ZEON CORPORATION. All rights reserved.

Business Environment
Butadiene prices fell from a high in FY2016; NBR spread recovers in FY2017
Natural Rubber, Synthetic Rubber
Crude oil priceand BD Markets
BD price(US$/Barrel)(US$/t)Exchange rate (Yen/EUR)

Naturalrubber

NBR
market inSoutheast
Asia (ICIS)
Butadiene
ブタジエンCrude OilBrent (ICE)
原油April
2015

Oct.
2015

April
2016

Oct.
2016

April
2017

Sept.
2017

March2018

Exchange rate (Yen/US$ or Yen/EUR)

Exchange rate (Yen/US

FY2015Natural rubber market: Singapore Commodity Exchange contract price for RSS #3 grade rubber (source: Monthly Statistics Report for Synthetic Rubber)
NBR market: CFR Southeast Asia (source: ICIS)
Spot BD: CFR Southeast Asia (source: IHS)
Crude oil (ICE Brent) (source: IHS)©ZEON CORPORATION. All rights reserved.

FY2016FY2017

4Sphere of New Mid-Term Management Plan

Corporate Philosophy
Zeon CSR Policy
Enterprise Blueprint for 2020
Zeon makes the Future Today through the Power of Chemistry.
Zeon will continue to contribute to the realization of customer dreams
and a prosperous society through employees’ individual growth.

VisionKey Sense of Value
Speed

SZ-20
(2011–13)

DialogueSocialContribution

Phase II(2014–16)

Treasured
Characteristics of Zeon
Mutual Trust and Confidence
among Zeon Members

Phase III(2017–20)
5©ZEON CORPORATION. All rights reserved.

SZ-20 Phase III: Groupwide Strategy

SZ-20 Phase III: Group-wide Strategy

Growth

1. Reinforce the combined strengths of the Zeon Group.
Explore ways of going beyond boundaries bycollaborating with external players to provide solutions
globally, as a contribution to society.
2. Accelerate the pace of new business creation and productdevelopment in key development areas: global
environment, smart devices, and health and living.

Culture3. Cultivate a corporate culture that places value on taking
proactive action by harnessing diverse ideas andimplementing them.

6©ZEON CORPORATION. All rights reserved.

Phase III: Strategy by Business Segment

Strategy by Business Segment

Elastomer Business• Reinforce competitive businesses by responding globally togrowth markets and improving cost effectiveness.
• Explore new opportunities and achieve growth based on
Zeon’s reputation in the market and relationships withcustomers.

Specialty Materials Business• Expand business in step with the speed of market growth
and technological progress through focused investment ofresources and stronger collaboration with outside players.

7©ZEON CORPORATION. All rights reserved.

Phase III: Strategy by Business Segment

Strategy by Business Segment

Elastomer Business• Reinforce competitive businesses by responding globally togrowth markets and improving cost effectiveness.
• Explore new opportunities and achieve growth based on
Zeon’s reputation in the market and relationships withcustomers.

Specialty Materials Business• Expand business in step with the speed of market growthand technological progress through focused investment ofresources and stronger collaboration with outside players.

8©ZEON CORPORATION. All rights reserved.

SSBR: ZS Elastomer

ExploreLeveraging synergistic effects in technology and production deriving from
Sumitomo Chemical and Zeon for creating value;ZS Elastomers is committed to providing products that meet Tire Customers’ requirements such asLow fuel consumption (Low Rolling Resistance)
Safety (Good Wet Grip)
Longer service life (Good Abrasion Resistance)
Cornering stability (Good Mechanical Properties)

S-SBR Sales Forecast
138

146

116
100
Index: Figures are based on ascale where the actual resultsfor FY2017 is 100.

ZS Elastomers’ Solution SBR is used by
Yokohama Rubber in their latest studlesssnow tire.

2017

2018

2019

2020
9

©ZEON CORPORATION. All rights reserved.

Specialty Elastomer: Specialty Cross-linked Zetpol®
Determined to make an investment for new drying facility at Kawasaki Plant■Excellent heat resistance promotes Specialty Cross-linked Zetpol■Newly adopted as the material for an automotive blow-by hose.

to oil seals.

Specialty Cross-linked Zetpol®
Sales Forecast

High
Gasket heat resistance (°C)®

Specialty Cross-linkedZetpol®

249

10°C UP
ConventionalZetpol®

148
Specialty Cross-linked Zetpol®
Production Facility(Kawasaki Plant)

NBR

100

106

Index: Figures are based on a scale where
the actual results for FY2016 is 100.
2016

2017

2018

2019

10©ZEON CORPORATION. All rights reserved.

Accelerate new business creationand product development

Latex: Expansion StrategyNew products for growing “supported glove” market
Global Market for Supported Gloves(Billions of pairs)

40

5–7% annual growth rate

30

その他
Others20

PVCPVC
NBR
NBR

10Growth of Overseas Sales

天然ゴム
Natural rubber

02016

2017

2018

2019

2020

(Source: Industrial Marketing
Consultants, Co., Ltd.)

Zeon Product Sales Plan for Supported Gloves(Index)Japan
Overseas300250(Index)

300

350

Projected annual growth rate of 28%

200
150

200

100

100
050

Index: Figures are based on a scale
where the FY2017 forecast is 100.

2016

2017

2018

2019

02020
©ZEON CORPORATION. All rights reserved.

Index: Figures are based on a scale
where the Japanese market is 100.

2016

20172018

2019

2020
11

SIS/Hydrocarbon Resin: Unique Product Line-up

Reinforce

Further growth on Hydrocarbon Resin and SIS business units with product differentiation

Hydrocarbon Resin

SIS

Hydrogenation system process newly
installed at Mizushima Plant

Steady growth on SIS business withMarket/Application expansion on asymmetric SIS

Conventional grade

Odor
Odor

543210HydrogenatedgradeCampatibility

VOC
VOC

ThermalstabilityColor

Sales plan for hydrogenated800
hydrocarbon resin

820

Sales plan for asymmetric SIS
648408400Index: Figures are based on a scale where
the actual results for FY2017 is 100.

100
2017

2018

2019

248
100
2017

2020
©ZEON CORPORATION. All rights reserved.

2018

2019

2020

12

Powder Slush Compounds

Solution

Meeting the needs of the expanding market from Japan, China, and Mexico
Powder Slush Compounds (PSC)

PSC Production Capacity
 Japan 2,000 t
 China 2,400 t
 Mexico Phase 1: 1,200 t (full-scale production
began in January 2018)
Phase 2: 2nd line - 1,200 t (production tobegin in 2020)• PVC-based powder compounds for slush molding• Superior design, moldability, and low-temperature
properties

PSC application: Automotive interior skins
Instrument
panel

Door upper

PSC Sales Plan (Global)

Glove box
Consol box

Index: Figures are based on ascale where FY2017 is 100.

212
171

11710020172018

2019

2020
PSC plant in Mexico©ZEON CORPORATION. All rights reserved.

13

Phase III: Strategy by Business Segment

Strategy by Business Segment

Elastomer Business• Reinforce competitive businesses by responding globally togrowth markets and improving cost effectiveness.
• Explore new opportunities and achieve growth based on
Zeon’s reputation in the market and relationships withcustomers.

Specialty Materials Business• Expand business in step with the speed of market growth
and technological progress through focused investment ofresources and stronger collaboration with outside players.

14©ZEON CORPORATION. All rights reserved.

COP: FOUP in Semiconductor Manufacturing

Reinforce

Semiconductor Investment Trends in China
Increasing the need forminiaturization and 3D
packaging in device
processes.

Characteristics of ZEONEX® and ZEONOR®
for Wafer-Handling Containers (FOUP)・ Ultra-low amount of out-gassing
・ Low water vapor transmission
15©ZEON CORPORATION. All rights reserved.

COP: Development of VR/AR Applications
Millionunits

25

Reinforce

Production Volume ofHMD Devices

20
1510502015

2016

2017
2018
Projection Forecast

2019
Forecast

Source: Chunichisha FY2018 “Electronic Equipment Yearbook”

Properties of ZEONEX®

Projected Sales for HMD Lens

• Low water absorption• High transparency• Superior optical properties• Precision molding

208
165
100

Ideal as the lens material for Head
Mounted Display (HMD) VR/AR devices.

Index: Figures are based on a scale where
the actual results for FY2016 is 100.
2016

2017

2018
16

©ZEON CORPORATION. All rights reserved.

ZeonorFilm®: Development for Mobile and Tablet
Reinforce

ZeonorFilm® series for LCD and OLED display
Stack up for IPS-mode LCD

Stack up for OLED

(application example of ZeonorFilm®)(application example of ZeonorFilm®)

ZF16

Polarizer

ZD12U
PVA
λ/4 platePosi-CIPSPolarizer

ZF12
PVA
Protect Film

Film sensor material(Available to use underpolarizer as well)

ZF16

Sunglass readable
Polarizer

Viewing angle
compensation
Viewing angle
compensation

Retardation
film

ZD12U
PVA
λ/4 platePosi-C

Film sensor material(Available to use underpolarizer as well)Sunglass readable
Antireflection
Viewing angle
compensation

Retardation
film

Encapsulant/Barrier material

OLED

Isotropic film

Base film for barriermaterial
Encapsulation material

 ZeonorFilm® is being used for both LCD and OLED for display of mobile andtablet.
 We will expand our conventional material, and also accelerate developing
new material for OLED.
 Developing new flexible films for foldable applications.
17©ZEON CORPORATION. All rights reserved.

Specialty Materials for Li-ion Battery

Solution

Expanding business with a wide product lineup
Salesゼオンの電池材料売上of Zeon Battery Materials

Zeon Products for Lithium-ion Batteries
GasketSealant

Net sales (index)

Phase III Target
Cathode active
material

Anode active
material

Conductive
additive
Anode

CathodeNegative
electrodebinderPositiveelectrodebinderAluminum
Al foilfoil

Copperfoil

ResultEstimate
Active materials

Separator

Active materials

Binder for function layer

Functional layer(heat-resistance separator)

Key Benefits of Zeon Products
Binder for longer life
batteries

High
outputBinder to
suppress lithium
deposition

SafeHigh
capacity

Better for better
lithium-ion conductivity

Lithium-ion battery
market growth(FY)
LongevityIndex: Figures are based on a scale where FY2013 is 100.
Source for market data: Report by B3, Inc., December 2016Low cost
18©ZEON CORPORATION. All rights reserved.

Specialty Materials: Li-ion Battery Materials
Expansion of LiB Binder Sales in South Korea and China
1. Expanded business by developing Binders and expanding sales network for the electrified vehicle market→ Compared to 2010, sales growth in 2017 significantly exceeded market growth(Zeon sales quadrupled in automotive LiB market)
2. Increased sales in high-growth consumer electronic markets in China and South Korea→ Compared to 2010, Zeon sales in China rose by 18.5x (market growth: 9x),sales in South Korea rose by 7x (market growth: 4.5x)

Sales of Zeon LiB Materials by Region

Production of LiB Materials by Region
2,000
Japan
日本

Japan
日本

Growth rate (index)

Growth rate (index)

2,000

China
中国

1,500

韓国
South Korea
1,000500

China
中国

1,500

South Korea
韓国

1,000

500

00'10

'11'12'13'14'15'16'17

Index: Figures are based on a scale where FY2010 is 100.

'10'11'12'13'14

'15

'16

'17

Index: Figures are based on a scale where FY2010 is 100.
Source for market data: Report by B3, Inc., January 2016.
19©ZEON CORPORATION. All rights reserved.

Accelerate the pace of new businesscreation and product development

Medical Devices

Expand businesses with FFR* devices, gallstone extraction andgastrointestinal stents
Zeon Medical Sales Trend(Index)

Cardiovascular

Cardiovascular Business:
Advanced accuracy and reliability of pressure
measurement resulting in increased market share

Endoscopic

Aim for 30% of FFR* market share with fiber optic sensing
technology by FY2020
FFR Market in Japan and Zeon’s Share

ZeonproductsProducts ofothercompanies

Endoscopic Business:
Focus on minimally invasive devices

Index: Figures are based on a scale
where sales for FY2016 is 100.

(FY)

Product launched in FY2017:• Large-diameter balloon catheter
Products to be launched in FY2018:• Next generation balloon catheter for
extracting biliary calculus• New type of biliary stents*FFR=Fractional Flow Reserve
20©ZEON CORPORATION. All rights reserved.

Accelerate the pace of new businesscreation and product development

Carbon Nanotubes

New Application of ZEONANO® SG101
Developed caulking material with EMI shielding property based on carbon nanotubes*EMI = Electromagnetic interference

Results of R&D at the Zeon Sunarrow AIST* CNT Composite Material Research Center(Press release issued by AIST in February 2018)
AB• Combined ZEONANO® SG101 withcurable liquid rubber• The caulking material excels in coating
and filling gaps and can be bondedwith metals

Newly developed EMI shielding caulking material
A: Before curing
B: After curing

ZEONANO® SG101 provides EMI
isolation and shielding needs for
熱界面材料外観electronic equipment installations.

• Prevents electromagnetic interference
through gaps in shielding material.
The caulking material absorbs vibrationand strain without cracking*AIST=AIST ; National institute of Advanced Industrial Science and Technology
21©ZEON CORPORATION. All rights reserved.

Strengthening CompetitivenessProduction Innovation*

Continuing efforts forInnovation and Improvement

Intelligent Manufacturing System
Operation Standardization*Production Innovation:
Daicel Production Innovation

Field Load Down,
Unified Wording
Corporate Culture ReformZΣ Activities - Monetary EffectTop-down approach

JPY (Billions)

Strengthening costcompetitiveness
Developing human resources
Reforming corporate culture
Bottom-up approachＺΣ Activities★ Cost reduction activities★ Small group activities(FY)
22©ZEON CORPORATION. All rights reserved.

SZ-20 Phase III

Enterprise Blueprint for 2020
Zeon makes the Future Today
through the Power of Chemistry.
Zeon will continue to contribute to the realization of customer dreams
and a prosperous society through employees’ individual growth.

Targeting consolidated net sales ofover 500 billion yen in FY2020

23©ZEON CORPORATION. All rights reserved.

SpeedDialogueSocialContribution
Mutual trust and confidence among Zeon members
24

ZEON CORPORATION
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.

Department of Corporate Communications, CSR Division
1-6-2 Marunouchi, Chiyoda-ku, Tokyo 100-8246, Japan
Tel: +81-3-3216-2747, Fax: +81-3-3216-0501
25