Mid-term Management Plan

ZEON CORPORATION
Kimiaki TanakaPresident

2018年4月27日
October 30, 2020

Current Status

Contents

1. Overall Progress of SZ-20 Phase III
2. Business Topics
3. Response to Covid-19©ZEON CORPORATION. All rights reserved.

2

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 aprosperous society through employees’ individual growth.

Targeting consolidated net sales ofover 500 billion yen in FY2020©ZEON CORPORATION. All rights reserved.

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Phase III: Strategy by Business Segment

Strategy by Business Segment

Elastomer Business• Reinforce competitive businesses by responding globally to growthmarkets and raising cost effectiveness.
• Explore new opportunities and achieve growth based on the Zeon’s
reputation in the market and relationships with customers

Specialty Materials Business• Expand business in step with the speed of market growth andtechnological progress through focused investment of resources andstronger collaboration with outside players.

©ZEON CORPORATION. All rights reserved.

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Zeon Group Financial Results
Both sales and operating income (OI) decreased YoY due to the deterioration of the global economy
by the languishing US-China trade friction and the spread of Covid-19.
• Elastomers: Sluggish in automobile and general industry. Both sales and profit decreased.
• Specialty Materials: Increased sales and profit by the steady business in specialty chemicals andoptical films. Reached sales and profit record as half-year result.
(Unit : JPY100m)
Net Sales

Second Quarter Results

OI

Net Sales

Results by Fiscal YearOI

Net sales

Other andEliminations
Specialty Materials
ElastomersOperating income
Elastomers
Specialty Materials
Consolidated basis
2016
ResultsPhaseⅡ

SZ-20 PhaseⅢ

PhaseⅡ

2017
Results

2018
Results

2019
Results

2020
Forecast

SZ-20 PhaseⅢ©ZEON CORPORATION. All rights reserved.

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ROE and Shareholder Returns
Paid dividends in line with corporate policy despite decline in ROE
ROE (%)

Dividend(JPY/share)

SZ-20 Phase II©ZEON CORPORATION. All rights reserved.

SZ-20 Phase III
6

Contents

1. Overall Progress of SZ-20 Phase III
2. Business Topics
3. Response to Covid-19©ZEON CORPORATION. All rights reserved.

7

Progress of Investments
Elastomer Business

Capacity

Progress

Acrylic rubber (ACM)
manufacturing plant in Thailand

5,000t/Y

Construction completed
in May 2020
Sales starts in Apr. 2021(Plan)

Specialty Materials Business

Capacity

Progress

New manufacturing line ofretardation films for large-screen
TVs in Tsuruga

50 million
m2/Y

Operation started in Apr.
2020
Sales stared in Oct. 2020

Expand COP production capacity inMizushima

4,600t/Y

Construction completionin Jul. 2021 (plan)©ZEON CORPORATION. All rights reserved.

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Outlook on Automobile Production
120

Forecast for Global Automobile Sales

Total number of vehicles produced
 Peaked in 2017
 Production to return to 2019 levels in 2023

100

80

Vehicles withbatteries

 Production of electric vehicles topick up from 2020 onward

60

Vehicles withIC engines40 Production of internal combustion
engine vehicles: estimatedreturning to 2019 levels by 2027,
followed by a gradual decline

20

IC Only
PHEV
FHEV
MHEV
BEV
FCEV
IC搭載車計（台）Total number of vehicles withinternal combustion engines

EREV
MHEV (48V)PFCEV

CY2032

CY2031CY2030CY2029CY2028CY2027

CY2026

CY2025

CY2024

CY2023

CY2022

CY2021

CY2020CY2019CY2018CY2017

0CY2016(millions of unit)

Production volume of internal combustion (IC) engine vehicles expected to returnto FY2019 levels in 2027

Vehicles with IC engines will continue to be themainstream Zeon will provide specialty rubber products
and technical support to meet market
demand for key components*Source: LMC Automotive’s “Global Hybrid and EV Forecast” for 2nd quarter of 2020 (issued in June 2020)©ZEON CORPORATION. All rights reserved.

9Market Trends for Electric Vehicles and Plug-in Hybrid Vehicles(Number of Vehicles Sold)
Rapid growth in China
and Europe

Uphill battle in the first half of the year due to Covid-19, but
annual sales expected to exceed FY2019
Thousandunit

2020実績/見込
2020 result/forecast
150

50002020
Chinese Market

Showing steady recovery from the impact ofCovid-19 and government’s decision toexpand scope of subsidies to purchase ofgasoline vehicles.

Europe欧州
North America
北米
China
中国
Japan, South Korea
日韓他

150

and others

10050

EU Market

2020

Despite the impact of Covid-19, annualsales are expected to exceed the previousyear due partly to the effect of governmentsubsidies.

Source: China: Data provided by MarkLines Co., Ltd. and forecast by Zeon’s sales department based on the data;EU; monthly data on EV sales and forecast by Zeon’s sales department based on the data.
©ZEON CORPORATION. All rights reserved.

02021

50

1月
Jan.
2月
Feb.
3月
Mar.
4月
Apr.
5月
May
6月
Jun.
7月
Jul.
8月
Aug.
9月
Sept.
10月
Oct.
11月
Nov.
12月
Dec.

100

Jan.
1月
Feb.
2月
Mar.
3月
Apr.
4月
May
5月
Jun.
6月
Jul.
7月
8月
Aug.
9月
Sept.
10月
Oct.
11月
Nov.
12月
Dec.

1002002020

2020 result/forecast
2020実績/見込

150

2020年初見込
2020 initial forecast

20192002018

2020年初見込
2020 initial forecast

2019実績
2019 result

2017200

2019実績
2019 result

By Region (Annual)

250

2016Thousandunit

EU (Monthly)250

Total number of vehicles sold (ten thousand)

China (Monthly)

250

Bolster sales with a focus
on the growth markets ofEurope and China
Source: LMC (July 2020)10

Specialty Materials—Market Trends for Optical Film and Zeon’s Response
TV: Larger screens, higherresolution
Forecast for TV panels, share ofhigh-resolution units and average(million units)
panel size
350
300

80

Smartphones: sales torecover two years from now;
replacement demand for 5G

Tablets: expansion due totelework and educational
needs

Forecast for shipment ofsmartphone panels

Forecast for tablet panels by size

2,500.00

300.0(million units)(million units)

250.0

70 2,000.00

250

60

200

200.0
1,500.00
150.0

50
150

1,000.00
40

100

30500

2018 2019 2020 2021 2022 2023 2024
LCD TV

OLED TV

4K&8K(%)

20Average
panel size
パネルAve(inch)(inch)

Will meet demand for larger
screens with the Tsuruga
Plant’s 2,500 mm-wide line

100.0
500.000.00

50.0201820192020

LCD

20212022

OLED

2023

Support the market with our films for
touch sensors, anti-reflection, andretardation film for OLED

2024

0.0

2018 2019 2020 2021 2022 2023 2024
5''-7.9''
8''-9''
9.4''-10.8''
11''+

Expect steady demand tocontinue

Source: OMDIA, Display Long Term Demand Market Tracker Q2 ’20©ZEON CORPORATION. All rights reserved.

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News Releases in the First Half of FY2020 (Products)
Launched sales of positive-tone photosensitive insulating dielectric (July 17, 2020)
ZEOCOAT®ZC100
Alkaline developable type
Curable at temperatures below 200˚C
High resolution, High insulation reliability
Application: next-generation wafer-level packaging

Via hole diameter
10 μm

5 μm

3 μm

Resolution of ZC100 at 10 μm thickness cured at 180°C

Sale of new product for fractional flow reserve systems (August 3, 2020)
OptoMonitor® 3
Increased connectivity and convenience in the catheterization lab (operation by touch paneland other features)

Research on adhesives for labels based on asymmetric SIS received theTechnology Award from the Adhesion Society of Japan (June 22, 2020)• Received award for research on SIS-based hot-melt adhesives that enable high-speed die
cutting by applying a new block structure• Recognized for successfully balancing good adhesive property, high-speed die cutting
property, and anti-seepage of softening agent (oil retention)©ZEON CORPORATION. All rights reserved.

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News Releases in the First Half of FY2020 (Other topics)
Endorsement of the Task Force on
Climate-related Financial Disclosure(TCFD) (September 4, 2020)

Participation in the IP Open Access
Declaration Against COVID-19(October 19, 2020)

Received the Excellence Award andProgress Award for FY2020 from theNational THP Promotion Council

Established a new organization topromote digital transformation(September 30, 2020)

Zeon Group activities were recognized by theJapan Industrial Safety and Health Association.
• Excellence Award: Takaoka Plant, ZeonCorporation• Progress Award: Zeon Opto Bio Lab Co., Ltd.

Digital Transformation Promotion Division• Set up with the aim of supervising andpromoting initiatives on digital transformation
to strengthen the competitiveness of theZeon Group while also creating andexpanding new businesses.

©ZEON CORPORATION. All rights reserved.

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Contents

1. Overall Progress of SZ-20 Phase III
2. Business Topics
3. Response to Covid-19©ZEON CORPORATION. All rights reserved.

14

Response to Covid-19
Ensuring the health and safety of employees and their families Stringently monitoring body temperature, enforcing mask wearing and disinfection,
avoiding large gatherings, and restricting non-essential business travel
 Introduced telework program at the head office and R&D Center
Stable production and current status of the supply chain Plants in Japan and production bases overseas are maintaining normal operations
 No particular cause for concern regarding immediate funding needs
Future actions
 Will continue to take appropriate action to comply with instructions, guidance, andother requirements issued by national governments
 Implement stringent measures to prevent infections and maintain operations inaccordance with the circumstances of suppliers The head office will gather information on business sites in Japan and overseas, andbusiness sites will be encouraged to share information©ZEON CORPORATION. All rights reserved.

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SpeedDialogueSocialContribution
Mutual trust and confidence among Zeon members
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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.

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