Mid-term Management Plan
Response to Covid-19

ZEON CORPORATION
Kimiaki TanakaPresident

2018年4⽉27⽇
April 28, 2020

Current Status

Contents

1. Overall Progress of SZ-20 Phase Ⅲ
2. Response to Covid-19(1) Ensuring the health and safety of employees andtheir families(2) Securing stable funding(3) Maintaining the supply chain(4) Future actions

2©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 employeesʼ individual growth.

Targeting consolidated net sales ofover 500 billion yen in FY2020

3©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 raising cost effectiveness.
• Explore new opportunities and achieve growth based on theZeonʼs 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.

4©ZEON CORPORATION. All rights reserved.

Zeon Group Financial Results
Both sales and operating income (OI) decreased YoY due to the global
economic slowdown• Elastomers: Both sales and OI decreased due to the weak demands inautomobile and general industry.
• Sp. Materials: Record sales and OI due to robust sales in COP,
optical film and battery materials.
Impact of Covid-19: Minor within FY2019, but a big impact is inevitable in
FY2020.
Net salesResults by Fiscal Year

Operating Income(OI)
Net sales(Billions of JPY)

Operating Income

SZ‐20 PhaseⅢ

PhaseⅡ
JPY/USD

108.9

111.2

110.7

109.1

©ZEON CORPORATION. All rights reserved.

5

ROE and Shareholder returns••

ROE had recovered to around 8% (Impairment losses at theSingapore subsidiary had done in 2017 and 2018).
Offering stable and consistent dividend payments to shareholders
ROE(%)

Dividend (JPY/share)

SZ-20 PhaseⅡ

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

SZ-20: Results in nine yeas

(Billions of JPY)

Steadily expanding business through continuous investment in both segments
Net Sales (Consolidated)

SZ-20

Operating Income

SZ-20 PhaseⅡ

SZ-20 PhaseⅢ

Elastomers• S-SBR (Singapore)• “New” Zetpol (Kawasaki)• Hydrocarbon resin cap.
increased (Thailand)• Acrylic rubber cap. increased(USA)• ZS Elastomer established (Tokyo)• Oil-extended S-SBR (Singapore)• SIS cap. increased (Mizushima)• Hydrogenerated Hydrocarbon
resin (Mizushima)• New PSC plant (Mexico)• Specialty cross-linked Zetpol cap.
increased (Kawasaki)• Acrylic rubber plant installed(Thailand)• Asia Technical Support Centerestablished (Singapore)

SpecialtyMaterials• COP cap. increased(Mizushima)• Plant installation of diagonal
stretching film (Himi,Tsuruga)• COP cap. increased (Mizushima)• Film for TV cap. increased (Himi)• Microfluidic prototyping service
started (Sano)• COP cap. increased (Mizushima)• Extruded film cap. increased(Takaoka)• Film for TV cap. increased (Tsuruga)• Zeon Specialty Materials (CA, USA)©ZEON CORPORATION. All rights reserved.

SZ-20: Results in nine yeas (Specialty Materials)(Billions of JPY)

Capacity increased (mainly with COP), achieved the record sales andoperating income.
Net Sales (Consolidated)

SZ-20
SpecialtyMaterials• COP cap. increased(Mizushima)• Plant installation of diagonal
stretching film (Himi,Tsuruga)

Operating Income

SZ-20 PhaseⅡ

SZ-20 PhaseⅢ• COP cap. increased (Mizushima)• Film for TV cap. increased (Himi)• Microfluidic prototyping service
started (Sano)• COP cap. increased (Mizushima)• Extruded film cap. increased(Takaoka)• Film for TV cap. increased (Tsuruga)• Zeon Specialty Materials (CA, USA)©ZEON CORPORATION. All rights reserved.

Phase Ⅲ: Investments in Elastomers (Specialty Rubbers)
Unit sales of internal combustion engine vehicles to remain constantin the near future⇒ We support the industry with a stable supply of specialty rubbers
M. unitsZetpol®

Light Vehicle Sales Forecast120

 Steady growth in specialty crosslinked type

100

Acrylic Rubber80

 Currently producing 17,000 tons/year
at 3 bases in Japan and the US Spring 2020: a new plant in Thailand(5,000 tons/year) to be completed6040

Asia Technical Support Lab.

2001 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16系列4系列3系列2系列1(started in 2017)
 Actively engaged in customer supportand related sales of Zeonʼs rubbers(IC=Internal combustion engine)“Source︓LMC Automotiveʼs quarterly Global Hybrid and EV Forecast (published in December 2018)
9©ZEON CORPORATION. All rights reserved.

Phase Ⅲ: Investments in Sp. Materials (Optical films, COP)
Capacity
Expand COP production capacity inMizushima(Sep.2019 press released)

4,600t/Y

Expand production capacity for extruded
film in Takaoka (Oct.2018 press released)-New manufacturing line of retardation
films for large-screen TVs in Tsuruga(Oct.2018 press released)

Production capacity ofCOP and Film

50 million
m2/YCompletion
Jul. 2021
Spring 2020 (plan)

operation starts

1Q FY2020 (plan)

operation starts

41,600t/Y

10©ZEON CORPORATION. All rights reserved.

Strengths of Zeon’s Optical Film Business
Raw Materials
 Dicyclopentadiene produced byZeonʼs own GPI Process

Polymer itself
 Resistant to heat and moisture Easy to process

Processing Technology
 Melt extrusion and film stretchingIntegrated Production
 Integrated production of polymer design,
film manufacturing and processing
 Market needs are reflected in polymerdesign11©ZEON CORPORATION. All rights reserved.

Phase Ⅲ: Investments in Sp. Materials (sales)
Established new base of Specialty materials business in
Silicon Valley, USA

To respond more quickly to market needs by entering
Silicon Valley, the center of IT industry
 Zeon Specialty Materials Inc.（ZSM）
 Business fields
1. Specialty plastics (COP)
2. Optical films
3. Energy materials (LiB binders)
4. Electronics materials(insulator, photo resists, etching gas) Marketing and perceive the market needs

ZSM

 October 2017: office opening
January 2018: starting business
12©ZEON CORPORATION. All rights reserved.

Phase Ⅲ: Investments summary
Elastomers: Expanding global sites
Sp. Materials: COP capacity increased in Japan
Established US sales officeUSA
ZSM (new sales office)ThailandAcrylic rubber plant

Elastomers
Sp. Materials■ Production sites■ New/ cap. added plants● New sales offices, etc.

Singapore
Asia TechnicalSupport Lab.
(Specialty rubber)Japan• Drying facility for Zetpol®
specialty cross-linked type
• COP capacity increased• Extruded film capacity increased• Film for TVs capacity expanded
13©ZEON CORPORATION. All rights reserved.

Topics: Exploring Medical Devices/Materials
Investment in a Venture Fund
 Zeon uses this investment to collect information on advanced
medical technologies and to seek and discover potential joint
projects with startup companies and direct investment opportunities.
MPI-2 Investment Limited Partnership of MedVenture Partners, Inc.
Press release dated April 16, 2020

Boosting business further
by collaborating with outside partners

14©ZEON CORPORATION. All rights reserved.

Contents

1. Overall Progress of SZ-20 Phase Ⅲ
2. Response to Covid-19(1) Ensuring the health and safety of employees andtheir families(2) Securing stable funding(3) Maintaining the supply chain(4) Future actions

15©ZEON CORPORATION. All rights reserved.

Response to Covid-19: Summary The novel coronavirus has become a global pandemic, and astate of emergency was declared in Japan.
 Demand has evaporated worldwide, resulting in an acuteslowdown of the global economy. Economic losses could exceed
the impact caused by the bankruptcy of Lehman Brothers in2008 and result in a large-scale contraction of the global
economy.
 In an environment where the economy faces great uncertainty,
with no clear view of when the pandemic may subside, Zeon
has implemented measures with a focus on the following items,with speed and precision.
(1) Ensuring the health and safety of employees and theirfamilies(2) Securing stable funding(3) Maintaining the supply chain

16©ZEON CORPORATION. All rights reserved.

Response to Covid-19(1) Ensuring the health and safety of employees and their families
 Zeon began implementing infection prevention measures in January, placing top priority on
ensuring the health and safety of employees and their families as well as on serving society.
 The president sent a video message and letter to employees around the world to provide
encouragement and advise them to remain vigilant.
Infection prevention measures include:
Teleworking and staggered commuting hours, event postponements/cancellations; ban oninternational business trips; restrictions on transport, including domestic business trips;
repatriation of employees; HQ support for overseas bases; self-restriction during holiday
activities
Number of Office Workers and Telework Ratio(Scope: Marunouchi Head Office)200100%18090%

16080%

Telework ratio rose to 95%

14070%

12060%

10050%

8040%

60

Number of office workers

30%

4020%

2010%

00%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
17©ZEON CORPORATION. All rights reserved.

Response to Covid-19: (2) Securing stable funding

No cause for concern regarding immediate funding needs
Reference (as of end-March 2020)• Current ratio: 191%
(current assets: 214.4 billion yen; current liabilities: 112.4 billion yen)
• On-hand liquidity ratio: 1.2 months(cash and deposits: 32 billion yen; average monthly sales: 26.8 billion yen)

Response to liquidity risk
 Current issuance limit for CP: 50 billion yen (outstanding balance: 0 yen)
 Zeon plans to secure a commitment line (scheduled amount: 50 billion yen)
to address possible liquidity risk in case of a prolonged economic downturn.
It is an effective measure not only for responding to the ongoing crisis but
also for maintaining the supply chain.

18©ZEON CORPORATION. All rights reserved.

Response to Covid-19: (3) Maintaining the supply chain Plants in Japan and production bases overseas are maintaining near-normal
operations by stringently implementing infection prevention measures.
 Overseas sales bases are stringently implementing infection prevention
measures, including teleworking, and are continuing operations insofar as thecircumstances of their suppliers and other factors allow.

Zeon Chemicals L.P.

Zeon Advanced Polymix Co., Ltd.
Zeon Chemicals Singapore Pte. Ltd.

Zeon Chemicals (Thailand) Co., Ltd.

19
©ZEON CORPORATION. All rights reserved.

Response to Covid-19: (3) Maintaining the supply chain

Infection prevention measures at production bases
 Stringent infection prevention measures, particularly essential at production
bases where staff are required onsite to maintain operations, continue to be
implemented.
 The president sent video messages to production bases to express his
appreciation for their continued operations and provide encouragement.
 Information on the business bases in Japan and overseas was compiled by thehead office in a timely manner while information-sharing between bases waspromoted.
 Appropriate actions were taken to comply with instructions, guidance, andother requirements issued by national governments.
Infection prevention measures include:◆Measurement of body temperature prior to entering worksites ◆promotion ofmasks and hand washing ◆cleansing and disinfection of common areas◆cafeteria management (staggered hours, installation of partitions, proper
distancing, etc.) ◆increased ventilation ◆self-restrictions and a ban on outings,
meetings, and dining together ◆employee guidance and information-sharing◆ request that outside personnel cooperate with infection prevention measures,etc.
20©ZEON CORPORATION. All rights reserved.

Future Actions

Implementing emergency measures
 Zeon has established an emergency response headquarters to collectinformation on the business environment. Moreover, it is
implementing emergency measures, including inventory and cost
reductions, in preparation for risks such as a dramatic decline in sales
amid a rapidly deteriorating global economy.
Enhancing the risk management system
 Zeon intends to use this experience to enhance its risk management
and other systems.

21©ZEON CORPORATION. All rights reserved.

SpeedDialogueSocialContribution
Mutual trust and confidence among Zeon members
22

Zeonʼs plans, forecasts, and other data appearing in this presentation were calculated basedon information which was currently available and therefore includes risks and uncertainties.
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.
23