Mid-term Management Plan

ZEON CORPORATION
Kimiaki TanakaPresident

2018年4月27日
October 31, 2018

Current Status

Contents

1. Consolidated Net Sales by Segment
2. Business Topics

2©ZEON CORPORATION. All rights reserved.

Consolidated Result
Reported higher sales and lower profits in 1st Half of FY2018
Decisions made for building new plants for manufacturing synthetic rubbers
and optical films in FY2020
JPY売上高（億円）(Billions)500

Net sales by Segment
OthersSpecialty materials

400

Elastomers

300

200

1000

SZ-20 Phase II

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

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)
4©ZEON CORPORATION. All rights reserved.

Corporate Philosophy and CSR Policy
Corporate Philosophy
Zeon is contributing to the preservation of the Earth and the prosperity of
the human race.
Zeon, with its name from the words signifying the Earth (geo) and eternity (eon), is committed
to responsible stewardship of the global environment as the foundation for human prosperity
through the development and application of unique, world-leading technologies.

Zeon CSR Policy• We will ensure compliance and meet society’s needs for safety and security• We will contribute to sustainably developing society and protecting the global environment
through our corporate activities• We will ensure that each and every Zeon person is aware of CSR and acts accordingly

5©ZEON CORPORATION. All rights reserved.

SZ-20 Phase III: Groupwide Strategy

SZ-20 Phase III: Groupwide Strategy

Growth

1. Reinforce the combined strengths of the Zeon Group.
Explore ways of going beyond boundaries andcollaborating 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: Groupwide Strategy 2Accelerate new business creation and product development in key development areas

Key development areas: high potential for growth and innovation
Global Environment

Energyconservation

Batteries

Health and Living
Agriculture

Reduction offossil fuel use

Self-driving
cars
Daily
necessities

Medicalmaterials

AutomotivePowergeneration

Medicaldevices

IoT

Smart Devices
7©ZEON CORPORATION. All rights reserved.

Phase III: Strategy by Business Segment

StrategyStrategy byby BusinessBusiness SegmentSegment

Elastomer Business• Reinforce competitive businesses by responding globally to growthmarkets and raising cost effectiveness.
• Explore new opportunities and achieve growth based on theZeon’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
and stronger collaboration with outside players.

8©ZEON CORPORATION. All rights reserved.

Phase III: Strategy by Business Segment

Strategy
Strategy byby BusinessBusiness Segment
Segment

Elastomer Business• Reinforce competitive businesses by responding globally to growthmarkets and raising cost effectiveness.
• Explore new opportunities and achieve growth based on theZeon’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
and stronger collaboration with outside players.

9©ZEON CORPORATION. All rights reserved.

EnergyConservation

S-SBR: Developing New Products and Leveraging
Technological Synergies

Reinforce

Leveraging synergetic effects in technology and production derived fromSumitomo Chemical and Zeon for creating value;ZS Elastomers is committed to providing products that meet Tire Customers’ requirements such as
Low fuel consumption (Low rolling resistance)
Safety (Good wet grip)
Longer service life (Good abrasion resistance)
Cornering stability (Good mechanical properties)

Wear resistanceGood

Reference
product 1
Reference
product 2

Fuel efficiency＊2017年を100とした場合の指数
Index:
Sales (actual) for FY2017 = 100

Good
10©ZEON CORPORATION. All rights reserved.

Automotive

Established new subsidiary companyfor Acrylic Rubber manufacture and sale in Thailand

Reinforce

Reinforce Acrylic Rubber production in Asia to capture growing market demand

Cover the demand expected to expand steadilyin the Asian region, led by production growth of internal
combustion and turbo charged engine powered automobiles.

The Thailand operation joins Zeon’s existing Acrylic Rubber
manufacturing capabilities in Japan and USA.

118

Company Name : Zeon Chemicals Asia Co., Ltd.
 Location :Rayong Province, Thailand
 Paid-in capital :THB 1,250 million
 Capacity:
5,000 tons/year Mechanical completion: 2020 Spring (plan)

ThailandRayongSource:
1. For ASEAN, East Asia, and China, “2018 In-depth Analysis Survey of HEV,
EV-related markets” was published by Fuji Keizai Co., Ltd.
(a total of HEV, PHEV, 48 V M-HV, and internal combustion engine vehicles).
2. For India, the figures are based on Zeon’s estimate.

Zeon Chemicals
Asia Co., Ltd.

Numbers :Index as sales (actual) of each region for FY2016 = 100

Source: Pixta

11©ZEON CORPORATION. All rights reserved.

Dailynecessities

Increasing Production Capacity forHigh-solids NBR Latex for Foam Rubber

Reinforce

To meet to demand in the growing cosmetics market
Characteristics of Zeon’s high-solids NBR latex✔ High oil resistance

Powder puffs that use
Zeon’s high-solids NBR latex
Trillion USD

Sales Forecast forHigh-solids NBR Latex

Index: Sales (actual) for FY2015 = 100

FY2015FY2016FY2017FY2018FY2019(estimate) (forecast)

FY2020(forecast)

Based on Zeon’s survey
12©ZEON CORPORATION. All rights reserved.

Dailynecessities

Expanding the SIS Business

Reinforce

Aiming to expand business scale with our asymmetric SISExtended for disposable diapers. Start a full-scale

Characteristics of Asymmetric SIS

expansion in the 2nd half of 2018.
Progressed the adoption for labels and flexographicplates.

Sales Forecast for Asymmetric SIS

Index: Sales (actual) for FY2017 = 100
2019

2020

ForecastForecast
13©ZEON CORPORATION. All rights reserved.

Dailynecessities

Zeon Kasei Launched a New Siding Material

ExploreLaunching “GRAYNE®,” the new series ofresin-based siding “ZEON Siding”
Excellent design featuring realistic wood patterns and colors by hybrid structure.

High durability against freezing and salt damage compared to ceramic siding materials.

Superior impact resistance, which enables to resist a golf ball flying at a speed of 120 km/hr.

Sales Forecast for “ZEON Siding”

GRAYNE® is the registered trademark of TAPCOInternational Corporation.

(forecast)Index: Sales (actual) for FY2017 = 100
14©ZEON CORPORATION. All rights reserved.

Phase III: Strategy by Business Segment

StrategyStrategy byby BusinessBusiness Segment
Segment

Elastomer Business• Reinforce competitive businesses by responding globally to growthmarkets and raising cost effectiveness.
• Explore new opportunities and achieve growth based on theZeon’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
and stronger collaboration with outside players.

15©ZEON CORPORATION. All rights reserved.

IoT

Succeeded in Developing New COP(code for new product: L-24)

New Business Creation

Characteristics of “L-24”• Low water absorption andexcellent hydrolysis resistance• Low transmission loss
• Low specific gravity (approx. 1.0)
• High heat resistance (meltingpoint: 265°C)• High chemical resistance(insoluble in acid, alkali, andorganic solvent)• High flexibility

Heat resistance (heat distortion temperature, °C)

Completely new type of resin with excellent features

LowHighLow
Amorphous

Crystalline

Polarity (water absorption, %)Applications

Antenna (77 GHz)

Flexible Flat Cables (FFC)

Non-woven fabric, filter

Case

Cassette

Bottles
16©ZEON CORPORATION. All rights reserved.

IoT

Expanding the Production Capacity for ZeonorFilm®

Reinforce

Determined to expand the production capacity for extruded films
Respond to growing demand for high-definition displays (mobile devices, largescreen TVs, etc.)

Millions ㎡

Location:Optes Inc. (Takaoka site of theHokuriku Plant)
Start of mass production:
October, 2019 (scheduled)

Source: 35th IHS Display Japan Forum / July 2018 (© 2018 IHS）
17

©ZEON CORPORATION. All rights reserved.

IoT

Expanding the Production Capacity for ZeonorFilm®

Reinforce

Determined to construct a new production line for optical films forlarge-screen TVs
Respond to growing demand for ultra-wide, higher-definition displays
mainly for large-screen TVs

Million UnitsWorld’s Demand Forecast for Flat-panel TVs (by Size)

Location: Optes Inc.
(Tsuruga site of the Hokuriku Plant)
Production capacity: 50 million m2/year
Start of mass production: April 2020(scheduled)World’s greatest width (approx. 2,500 mm)
2015

2016

2017

2018

2019

2020

2021

2022

Source: 35th IHS Display Japan Forum / July 2018 (© 2018 IHS）
18

©ZEON CORPORATION. All rights reserved.

Batteries

Energy Materials

Solution

Applying a “functional layer” (heat-resistant layer) to lithium-ion batteries
Separators featuring functional layers are fast
becoming widely used to improve the safety ofbatteries• Higher capacity• Larger numbers of cars with LiB

Current
collector

Active material

CathodeFunctional layer

Source: “2018 In-depth Analysis Survey of HEV, EV-related markets,” published by
FUJI KEIZAI CO., LTD.

Thermal Contraction Test of separator (150°C for 1 hr)
Examples:• Ceramics• Functional layerbinderAnodeCurrent
collector

Substrate separator

19©ZEON CORPORATION. All rights reserved.

Energy Materials

Batteries

Solution

Example of Safety Assessment (Pin Crush Test)
PinWithout functional layer
Cell
Substrate separator

With functional layer
Functional layer
Substrate separator

Functional layer will contribute to improving safety of lithium-ion batteries.
20©ZEON CORPORATION. All rights reserved.

MedicalDevices

Medical Devices: Launch of New Products

ProductDevelopment

Expanding sales by launching new gastrointestinal system devices
Balloon Catheter for
Removing Bile Duct Stones
Released on May 30, 2018

HILZO
Biliary Stent Products

Zeon Sales ofMedical Devices

Released on August 22, 2018
(Index)

Short-wire lumen typethat allows the operator
to replace catheters
easily while the guidewire is in use

We are aiming for thesecond largest market
share in Japan.

CardiovascularEndoscopic

Moving cell structurethat allows cells toexpand easily(interweaving type)

We are aiming for larger
market share by selling bothstents of this braided typeand the laser cut-type.

(FY)(Index) Sales for FY2016 = 10021©ZEON CORPORATION. All rights reserved.

Energy
Conservation

DCP-RIM: Contributing to the lighter
weight of automobiles

Reinforce

Growing demand in large trucks and buses
Advantage of DCP-RIM

Enables the manufacture of a single-piece large-size molding
product with a good physical balance, without using
reinforcement metal or glasses.

Enables a wide variety of distinctive designs that take note of
aerodynamic characteristics, which respond to market needs.

Enables to replace from metals and FRP materials forweight reduction to improve fuel efficiency and comply withthe regulations against overloading.
大型成形
Large-scalemolding
A trackrecordof
200kgを超える
more than
200kg/item
成形品実績ありAdvantage of DCP-RIM
Large-thickness
molding
厚肉成形
Thicknessof over 100
100mm超のmmcapable
肉厚成形品も可能

Low-pressure
低圧成形
molding
金型コストのCapable of reducing
低減化が図れる
mold costs

Low低粘度viscosity××Thermosetting
olefin resin
熱硬化性オレフィン樹脂

Index: Sales (actual) for FY2016 = 100
Impact耐衝撃性
resistance

Required for body panels
in a 低温環境下で使用
low-temperature
されるボディパネルにenvironment

Heat耐熱性
resistance

Required for the engine
高温に晒されるhood(against highエンジンフードなどにtemperatures)

Chemicalresistance
耐薬品性
Requiredfor industrial
耐食性の求められる
use (for high corrosion
産業用途にresistance)
22©ZEON CORPORATION. All rights reserved.

IoT

Thermal Interface Material (TIM)with High Thermal Conductivity

New Business Development

A solution in thermal management for power devices
Developed a high-performance pad-type thermal interface material (TIM) with high thermal conductivity.

Achieving lower heat resistanceunder wider range of pressure

Higher temperature

Requirements• High thermal conductivity
in thickness direction• Tight adhesion & softness

Appearance of TIM

23©ZEON CORPORATION. All rights reserved.

New Application Fields for Carbon Nanotubes

New Business Creation

Developed and launched SGOINT® O-rings that incorporate ZEONANO® SG101
The result of R&D activities by the Team of Application for Carbon nanotubes Composite (TACC),
jointly established by Zeon, SUNARROW, and the AIST. (The AIST published a news release about
the product on September 13, 2018.)
Superior resistance to high temperatures and pressure
Cost effective
Continuous Heat-Resistance
Temperature

Compression set (%)••

Mechanical Strength(Pressure Tightness)

Chemical Resistance

SGOINT
Conventional CNT-compound(CNT/FKM)

Conventional CB-compound(CB/FKM)

Compression Set(Long term Durabilityof Seal Performance)

SGOINT Compound(SGCNT/FKM)

100 hrs.

500 hrs.
Time (hrs.)(CommercializedAppearance ofCB formulation)

Durability(Safety)

Price1,600 hrs.
(SGOINT formulation)

Source: The news release of the AIST

TIM• Manufacture the composite of ZEONANO® SG101 and ternary-compound-type PO cross-linked fluorinated rubber.
• Provide high-performance O-rings at a reasonable price by eliminating “compression set,” a major problem inmanufacturing CNT composite.
• Built a mass production system for SGOINT O-rings at SUNARROW LIMITED using a master batch provided by Zeon.
24©ZEON CORPORATION. All rights reserved.

PowerGeneration

Developing New Application Fields for
Carbon Nanotubes

New Business Creation

Project LNES

LNES
Creating a new lifestyle by offering new energies and environments that lead to the next connected society.
(Leading, Next, Engaging, Society) (Leading, New, Energy/Environment, Solution)

New printing technology that enables to createof Nanocarbon Hybrid Solar Cells

Conventional paste

Solar Card

New paste

Change solar light into small light (sensory value)

Connected (functional value)

Offer creative lives and cultures using a small amount of energy, which we tend to ignore.
25©ZEON CORPORATION. All rights reserved.

Summary: Elastomer Business
Further reinforce Zeon’s strengths by responding to growth markets globally andenhancing cost competitivenessJapanThailandAcrylic rubber plant(complete in spring 2020)•Specialty cross-linked Zetpol®
New drying facility(complete in Sep. 2019).

•Expand the production
capacity for high-solids NBR
latex(complete in Apr. 2018)•Hydrogenation facilities for
petroleum resin (Sep. 2017)

MexicoJapan/Singapore

Singapore•

S-SBR joint venturewith Sumitomo Chemical(Apr. 2017)

S-SBR plant・ Oil extension facility (Aug. 2017)

Singapore
Asia Technical Support Labfor Specialty Rubber (Aug. 2017)

PSC plant
Full-scale operations(Jan. 2018)

Older plants
New plants
New sales offices, etc.

26
©ZEON CORPORATION. All rights reserved.

Summary: Specialty Materials Business
Expand the business through a focused investment of resources and stronger collaboration
with outside partners
Sales of Specialty Materials

Topics on Specialty Materials(FY2011 = 100) consolidated★ Expand Production Capacity for Optical Films(Index)■ Retardation films for LCD TVs• Himi Plant: 24 million m2/year (began operations in
October 2017）• Tsuruga Plant: 50 million m2/year (scheduled to
begin operations in April 2020)■ Extruded films
Takaoka Plant (scheduled to begin operations in
October 2019)★ Development of New Products(FY)■ COP resins• ZEONEX®T-62R for highly heat-resistant optical lenses• L-24 (new product): Highly heat-resistant/ low waterabsorption resin■ Medical devices
Large-diameter balloon catheter for removing bile
duct stones■ Carbon nanotubes
O-rings, SOLAR CARD
27
©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 Effect
JPY (Billions)Top-down approach

Strengthening costcompetitivenessApprovedthemes

Developing human resources
Reforming corporate culture
Bottom-up approachＺΣ Activities★ Cost reduction activities★ Small group activities★ Raising cost awareness andeducation

(FY)
28

©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

29©ZEON CORPORATION. All rights reserved.

SpeedDialogueSocialContribution
Mutual trust and confidence among Zeon members
30