FY2007 Financial Resultsand Outlook for FY2008

May - June 2008

FY2007 Financial Results

FY2007 Financial Results
Sales increased, but all income figures declined
FY07vs. FY06

FY2006

FY2007

Sales¥1,790.0 Billion¥1,896.5 Billion+6.0％％

Operating
Income¥139.6 Billion¥102.4 Billion-26.7％％

Ordinary
Income¥158.0 Billion¥92.8 Billion-41.3％％Net Income¥93.9 Billion¥63.1 Billion-32.8％％Net Income
without onetime gains(¥75.2 Billion)(¥34.3 Billion)(-54.4％％)

Dividend per share

FY2006 ¥12FY2007 ¥12FY2007 Net Sales by Segment
Unit; billions of yen

FY2006

FY2007

FY07
vs. FY06

Sales
Price
Variance

Shipping
VolumeVariance

Basic Chemicals

314.0

314.7

+0.7

16.0

-15.3

Petrochemicals &Plastics

539.1

603.3

+64.3

60.0

4.3

Fine Chemicals

90.9

92.9

+2.1

0.0

2.1

IT-related Chemicals

266.4

297.5

+31.1

-40.0

71.1

Agricultural Chemicals

198.3

200.4

+2.1

0.5

1.6

Pharmaceuticals

234.5

237.6

+3.0

0.0

3.0

Others

146.8

150.1

+3.3

0.0

3.3

Total

1,790.0

1,896.5+106.536.5

70.0

Sales outside of Japan

747.8

788.8+41.0

Percentage of sales
outside of Japan

42%42%0%

FY2007 Change in Operating Income
FY2006 ¥139.6Bn → FY2007 ¥102.4Bn (-¥37.2Bn)(Billions of yen)

200

Sales Price
Variance +¥36.5Bn

Purchase Price Variance-¥99.5Bn

175

150

Shipping Volume
Variance +¥ 35.8Bn

125

139.6

Decrease invariable cost+¥32.0Bn

100

102.475

Increase in fixedcost -¥42.0Bn

50

250

FY2006

FY2007

FY2007 Operating Income by Segment
Unit; Billions of yen

Basic Chemicals

FY2006

FY2007

FY07
vs. FY06

Major factors forchanges in profit

13.5

10.6

-2.9

・Increased feedstock costs

Petrochemicals &Plastics

23.6

4.5-19.1

・ Increased feedstock costs
・ Periodic maintenanceshutdown at Chiba WorksFine Chemicals

13.1

11.4

-1.7

・ Increased feedstock costs

IT-related Chemicals

3.5

6.3

+2.8

・Increased sales volume
・Rationalization-2.3

・Cost of Integration of Sumitomo
Chemical Takeda Agro Co., Ltd.
・ Increased feedstock costs

AgriculturalChemicals

23.3

20.9

Pharmaceuticals

56.2

46.5

-9.8

・Increased R&D costs
・Decreased profit fromretirement benefit adjustment

Others6.5

2.2-4.3

・Cost of Acquisition of CDT

Total

139.6

102.4-37.2

Long Term Trends in Earnings（Billions of yen））

（Billions of yen））

2,000150

1,600120

1,20090※※80060※400030

FY2001

Sales(Left axis)

FY2002

FY2003

FY2004

Operating Income(Right axis)

FY2005

FY2006Net Income(Right axis)※ Net Income from one-time gains （Net gain on sale of securities etc.））

FY20070Trends in Financial Ratios(Times)

(%)

1.0

50

0.8

400.6

30

0.4

200.2

100.00FY2002

FY2003

FY2004

ROE (Right axis)
Shareholders' Equity Ratio (Right axis)

FY2005

FY2006

FY2007

D/E Ratio (Left axis)（Note: D/E ratio includes minority interests in equity））

Outlook for FY2008

Outlook for FY2008
FY2007

FY2008

Sales¥1,896.5 Billion¥2,080.0 Billion+9.7％％

OperatingIncome¥102.4 Billion¥95.0 Billion-7.2％％

Ordinary
Income¥92.8 Billion¥100.0 Billion

+7.8％
％

Net Income¥63.1 Billion¥55.0 Billion-12.8％％Net Income
without onetime gains(¥34.3 Billion)(¥55.0 Billion)(+60.3％％)(Projected)

FY08
vs.FY07

FY2008 ¥100.0/US$ Naphtha Price ¥67,000/ｋｌｋｌ
Dividend per share

FY2007 ¥12FY2008 ¥12（projected））

FY2008 Change in Operating Income
FY2007 ¥102.4Bn → FY2008 ¥95.0Bn （-¥7.4Bn））（Billions of Yen）
）

125.0

Sales Price
Variance +¥6.0Bn

Purchase Price
Variance -¥51.5Bn

Shipping Volume
Variance etc. ＋¥64.6Bn
＋

100.0

Impact of higher Yen-¥14.0Bn

102.4
75.0

95.0

Decrease in variable
cost +¥24.5Bn

50.0

Increase in fixed
cost -¥51.0Bn

25.00.0

FY2007

FY2008（projected））

FY2008 Sales and Operating Income by Segment
Unit: Billions of yen

FY2007

FY2008

Y-o-Y

Basic
Chemicals

Sales314.7

325.0+3%

OP

10.6

10.0

- 6%

Petrochemicals & Plastics

Sales

603.3

720.0

+19%

OP

4.5

11.0

+144%

Fine
Chemicals

Sales

92.9

100.0+8%

OP

11.4

9.0

-21%

IT-related
Chemicals

Sales

297.5

340.0

+14%

OP

6.3

22.5

+257%

Agricultural
Chemicals

Sales

200.4

205.0

+2%

OP

20.9

16.5

-21%

Sales

237.6

240.0

+1%

OP

46.5

31.0

-33%

Sales

150.1

150.00%

OP

2.2

-5.0

Sales

1,896.5

2,080.0

+10%

OP

102.4

95.0

-7%

Pharmaceuticals

OthersTotal－Major factors for changes in profit・Increased feedstock costs, higher yen
・Improved margins for caprolactam
・Improved margins for Plastics in Japan・Periodic maintenance shutdown in Chiba Worksin FY2007
・Increased feedstock costs, higher yen
・Increased sales volume
・Rationalization
・Increased sales volume
・Increased feedstock costs, higher yen
・Drug price reduction
・Increased development costs for Lurasidone
・Decreased profit from retirement benefit
adjustment
・Increased development cost for OLED
・Increased costs for lithium-ion secondary
battery separator

Progress in FY2007-2009
Corporate Business Plan

The Rabigh ProjectExpanding our core businesses andstrengthening their competitiveness
Paving the Way for Further GrowthThe Rabigh Project
Progress on construction
40,000 construction workers on site
95% of the EPC completed as of March 31, 2008
Operation started in part of the plants

Commercial operations planned tostart by 4th quarter of 2008
Sales network
Sumitomo Chemical Asia Pte Ltd.(Singapore)・Established a global sales network
・ Pre-marketing progressing smoothly

Expanding our existing core businesses
and strengthening their competitiveness• Basic Chemicals：：・ Capacity expansions of MMA（Completed the phase three capacity expansions of MMA plants
in Singapore and achieved full capacity production）
・ Strengthen the cost competitiveness of caprolactam business• Petrochemicals and Plastics：：
・ Optimize our global production system leveraging the advantagesof our production base in Japan, Singapore and Saudi Arabia
・ Establish and expand our global production bases forpolypropylene compounds：• Fine Chemicals：
・ Strengthen the competitiveness of resorcinol and pharmaceuticalchemicals businessExpanding our existing core businesses
and strengthening their competitivenessIT-related Chemicals：：・ Expand production capacity and sales, as well as rationalize LCDmaterials business・ Develop new materials
Agricultural Chemicals：：・ Enhance marketing activity to expand the sales of ourgrowth products (DL-methionine, SUMISOYA、OLYSET NET, etc.)
・ Integrated Sumitomo Chemical Takeda Agro with Sumitomo
Chemical to pursue further synergies
Pharmaceuticals:・ Expand sales of major products
・ Maximize new product sales as early as possible

Paving the Way for Further GrowthPolymer-OLED
2008 Performance of polymer light emitting materials expected toreach the level suitable for large screen displays
2010 Commercialize large screen TV

Energy related materials
Lithium-ion secondary battery separator
2009 Expand production capacity to 25Million ㎡
Material for cathode2008 Developed Cobalt-free cathode material for
hybrid-automobiles

Towards achieving our Performance Targets
Business Environment

Financial Performance（Billions of yen））
3,000

300

●
2,080

2,000

1,790

250

200

1,557
1,500

150

158.0
141.1

150
92.8

1,000

●

100

100
90.7

500

93.9
63.1

50

55.0

retirement benefits● Change in depreciation method

2,400

1,897

● Rising yen● Increase in expenses associated with250
2,500● Feedstock costs remaining highSpeedy execution of our Corporate Business
Plan’s initiatives● Expanding our core businesses andstrengthening their competitiveness● Enhance thorough rationalization throughout our business● Accelerate research and development
・ Pharmaceuticals
・ Polymer-OLED・ Energy related materials
Investments for achieving great growth00FY2005

Sales

FY2006

FY2007

FY2008（projected））

Ordinary Income

FY2009（plan））Net Income

during our next corporate business plan
（Utilize strategic investment fund for futuregrowth））

Reaching New Heights as a Global CompanyFY2007-2009

Achieve and consolidate highprofitability and secure sustained
growthReaching New
Heights as a Global
FY2004-2006
Enlarge the scale of ourCompany
business and grow profits

FY2001-2003

Becoming a Truly Global
Chemical Company

Establish abasis for growth
Toward a New
Path for GrowthCautionary Statement
Statements made in this document with respect to the Sumitomo Chemical’s
current plans, estimates, strategies and beliefs that are not historical facts areforward-looking statements about the future performance of Sumitomo
Chemical. These statements are based on management’s assumptions andbeliefs in light of the information currently available to it, and involve risks anduncertainties. The important factors that could cause actual results to differ
materially from those discussed in the forward-looking statements include, but
are not limited to, general economic conditions in Sumitomo Chemical’smarkets; demand for, and competitive pricing pressure on, Sumitomo
Chemical’s products in the marketplace; Sumitomo Chemical’s ability tocontinue to win acceptance for its products in these highly competitive markets;and movements of currency exchange rates.