Business Results for theSecond Quarter of the Fiscal Year Ending
December 31, 2022 (Unaudited)

August 10, 2022
Kuraray Co., Ltd.

August 10, 2022
Kuraray Co., Ltd.

Consolidated Earnings Report for the Second Quarter of the Fiscal Year Ending
December 31, 2022
Name of listed company:
Stock code:
Stock exchange listing:
URL:

Kuraray Co., Ltd.
3405
Tokyo Stock Exchange, Prime Market
https://www.kuraray.com/

Representative:
Title:
Name:

Representative Director and President
Hitoshi Kawahara

Contact:
Title:

Senior Manager, Corporate Communications Department, Corporate
Management Planning Office
Shinichi Takizawa+81-3-6701-1070

Name:
Tel:

Preparation of supplementary documentation for the quarterly earnings report: Yes
Holding of quarterly earnings results briefing: Yes (for securities analysts and institutional investors)(Millions of yen rounded down unless otherwise stated)

1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending
December 31, 2022 (January 1, 2022 to June 30, 2022)(1) Consolidated Operating Results(Percentage changes displayed for net sales, operating income, ordinary income and net income attributableto owners of the parent are comparisons with the corresponding period of the previous fiscal year.)(Millions of yen)
Net Sales

Operating Income(%)

Fiscal 2022 2Q
Fiscal 2021 2Q

358,040
302,296―15.4

Note: Comprehensive income:Net Income per
Share (Yen)
Fiscal 2022 2Q
Fiscal 2021 2Q

71.32
34.04

Ordinary Income(%)

38,08930,398―55.0

For the fiscal 2022 second quarter:
For the fiscal 2021 second quarter:

37,89628,496

―

(%)

61.6

Net Income
Attributable to Ownersof the Parent(%)―
24,20727.8
11,710¥95,477 million¥36,011 million

(―%)
(―%)

Fully Diluted Net
Income per Share
(Yen)
71.26
34.02

Note: Due to the adoption of the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29;
March 31, 2020) from January 1, 2022, the figures for the second quarter of fiscal 2022 reflect the applicationof the newly applied accounting standard. Therefore, the rate of change from the same quarter of the previous
year is not shown.

(2) Consolidated Financial Position(Millions of yen)
Total Assets
1,185,520
1,091,014

As of June 30, 2022
As of December 31, 2021

Net Assets
657,669
579,602

Equity Ratio (%)
53.7
51.3

[Reference] Equity attributable to owners of the parent:
As of June 30, 2022:¥636,249 million
As of December 31, 2021: ¥559,984 million
Note: Due to the adoption of the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29;
March 31, 2020) from January 1, 2022, the figures for the second quarter of fiscal 2022 reflect the applicationof the newly applied accounting standard.

2. Dividends(Yen)
Record Date
Fiscal 2021
Fiscal 2022
Fiscal 2022
(Forecast)Mar. 31――

Cash Dividends per ShareJun. 30
Sep. 30
Dec. 31
20.00
20.00
―
21.00
―

Annual
40.00

21.00

42.00

Note: Revisions to cash dividend forecast during this period: No

3. Forecasts of Consolidated Financial Results for the Fiscal Year Ending December
31, 2022 (January 1, 2022 to December 31, 2022)(Percentage changes displayed for net sales, operating income, ordinary income and net income attributableto owners of the parent are comparisons with the previous fiscal year.)(Millions of yen)
Net Sales

Full Fiscal Year740,000

Operating
Income― 78,000

Ordinary
Income― 75,000Net Income
Attributable to Ownersof the Parent―
45,000―Net Income
per Share(Yen)
134.45

Notes: 1. Revisions to forecasts of consolidated financial results during this period: Yes
2. Due to the adoption of the “Accounting Standard for Revenue Recognition” (ASBJ Statement No.
29; March 31, 2020) from January 1, 2022, the figures for fiscal 2022 reflect the application of the
newly applied accounting standard. Therefore, the rate of change from the previous fiscal year is
not shown.

[Reference](1) Changes in Important Subsidiaries during the Period (Changes in Special Subsidiaries
Involving Changes in the Scope of Consolidation)
Added: No companies
Excluded: No companies(2) Adoption of Special Accounting Practices in the Preparation of Quarterly Consolidated
Financial Statements
No(3) Changes in Accounting Principles, Procedures and Presentation Methods in Connection with
the Preparation of Quarterly Consolidated Financial Statements
1. Changes following revision of accounting standards: Yes
2. Changes besides 1. above: No
3. Changes in accounting estimates: No
4. Restatement: No

(4) Number of Shares Issued and Outstanding (Common Shares)
1. Number of shares issued and outstanding (including treasury shares) as of the periodend:
As of June 30, 2022
354,863,603 shares
As of December 31, 2021
354,863,603 shares
2.

Number of treasury shares as of the period-end:
As of June 30, 2022
20,170,207 shares
As of December 31, 2021
10,858,263 shares

3.

Average number of shares for the period (cumulative):
As of June 30, 2022
339,408,563 shares
As of June 30, 2021
343,968,281 shares

Note: It is not required that this type of earnings report be audited.

Cautionary Statement with Respect to Forecasts of Consolidated Business Results(Cautionary note regarding forward-looking statements)
The results forecasts presented in this document are based upon currently available information andassumptions deemed rational. A variety of factors could cause actual results to differ materially from forecasts.
Please refer to “1. Qualitative Information regarding Business Results (3) Basis for the Revision in Forecasts,
Including Consolidated Operating Results Forecasts” on page 7 of the Attachment for the assumptions used.

Index of the Attachment
1. Qualitative Information regarding Business Results ...................................................

2(1) Overview of Consolidated Business Results ............................................................

2(2) Overview of Financial Position .................................................................................

6(3) Basis for the Revision in Forecasts, Including Consolidated Operating Results
Forecasts ..................................................................................................................

7

2. Quarterly Consolidated Financial Statements and Notes ...........................................

8(1) Quarterly Consolidated Balance Sheets...................................................................

8(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated
Statements of Comprehensive Income ....................................................................

10(3) Quarterly Consolidated Statements of Cash Flows ..................................................

12(4) Notes regarding Quarterly Consolidated Financial Statements ...............................

14

Notes regarding Going Concern Assumptions .........................................................

14

Material Changes in Shareholders’ Equity ...............................................................

14

Changes in Accounting Principles ............................................................................

14

Segment Information, etc..........................................................................................

151

1. Qualitative Information regarding Business Results(1) Overview of Consolidated Business Results
In the second quarter of fiscal 2022 (January 1, 2022–June 30, 2022), the world
economy continued to recover on the whole as restrictions on economic
activities were eased. However, the economic outlook grew unclear due to a
global semiconductor shortage, logistics disruptions, accelerating inflation, arise in interest rates, and the prolonged Russia-Ukraine crisis. Amid thesecircumstances, consolidated operating results for the second quarter of fiscal
2022 are as follows: net sales were ¥358,040 million (¥302,296 million in thesame period of the previous fiscal year); operating income was ¥38,089 million(¥30,398 million in the same period of the previous fiscal year); ordinary income
was ¥37,896 million (¥28,496 million in the same period of the previous fiscal
year); and net income attributable to owners of the parent was ¥24,207 million(¥11,710 million in the same period of the previous fiscal year). Furthermore, inthe second quarter, we recorded an extraordinary loss of ¥4,915 million as
costs related to the suspension of operations due mainly to the suspension ofsome production facilities at a U.S. subsidiary.
On January 1, 2022, the Company revised its organizational structure andchanged the segment classification of the aqua business from “Others” to“Functional Materials.” In addition, the method of allocating eliminations ofprofits from some internal transactions among segments and the corporate has
been changed. Figures used in comparisons and analyses of the second
quarter reflect these changes. Furthermore, from January 1, 2022, we haveadopted the Accounting Standard for Revenue Recognition (ASBJ Statement
No. 29; March 31, 2020). In line with the transition provisions set out in therevision to paragraph 84, the new accounting principle was not retroactively
applied to the consolidated second quarter of the previous fiscal year. Net sales
for the Trading segment and elimination & corporate for the second quarter offiscal 2022 have significantly changed compared to the second quarter of fiscal
2021, mainly due to changes in accounting methods for revenues attributable toagent transactions in the Trading segment as a result of the adoption of the
Accounting Standard for Revenue Recognition and other factors. Because of
these changes, revenues from such transactions, which have previously beenrecorded on the basis of total transactional value, are now recorded on a net
basis. Due to this change, net sales in the Trading segment was ¥44,672 million
lower compared with the original method.
To realize its long-term vision, Kuraray Vision 2026, the Group launched a
medium-term management plan, “PASSION 2026,” from January 1, 2022. Inline with “PASSION 2026,” we set three challenges to tackle: 1) Sustainability
as an opportunity, 2) Innovations starting from networking, and 3)
Transformation of people and organizations. Through these initiatives, we aim
to establish an upgraded business portfolio and, in fiscal 2026, the centennial ofKuraray’s founding, achieve net sales of ¥750.0 billion and operating income of¥100.0 billion.

2

(Millions of yen)
FY2021 2Q

FY2022 2Q

Consolidated Period

Consolidated Period

Net sales

Operating

Net sales

incomeOperatingincomeChangeNet sales

OperatingincomeVinyl Acetate

148,426

25,180185,440

33,61737,0148,436

Isoprene

30,462

3,278

31,905

2,477

1,443

(800)

Functional Materials

66,1202,921

77,791

3,311

11,670390

Fibers and Textiles

29,8902,223

31,795

3,795

1,905

1,572

Trading

69,137

2,325

29,705

2,776(39,432)

451

Others

20,355307

23,668

1,221

3,312

913

(62,096)(5,837)(22,266)(9,110)39,830(3,272)302,296

30,398358,040

38,08955,743

7,691

Elimination &Corporate
Total

Results by Business Segment
Vinyl Acetate
Sales in this segment were ¥185,440 million (¥148,426 million in the same
period of the previous fiscal year), and segment income was ¥33,617 million(¥25,180 million in the same period of the previous fiscal year).

(1) The sales volume of PVOH resin decreased due to the suspension of someproduction facilities at a U.S. subsidiary due to malfunctions and logistics
disruptions. Shipments of optical-use poval film were on par with the same
period of the previous fiscal year despite concerns about the impact of LCD
panel inventory adjustments. In addition, to meet needs for larger TV panel
sizes, we decided to make a capital investment at the Kurashiki Plant(slated to begin operating in mid 2024), announcing this intention on May 9,2022. As for Advanced Interlayer Solutions, the sales volume of PVB film
fell year on year due to effects from a decrease in the production of
automobiles and distribution bottlenecks due to lockdowns in China. Salesof water-soluble PVOH film expanded for use in unit dose detergent
packets, which include laundry and dish detergents.
(2) As for EVAL™ ethylene vinyl alcohol copolymer (EVOH resin), the sales
volume increased overall as steady performance for use in food packaging
applications offset a decrease for use in automotive applications.

3Isoprene
Sales in this segment were ¥31,905 million (¥30,462 million in the same periodof the previous fiscal year), and segment income was ¥2,477 million (¥3,278
million in the same period of the previous fiscal year).

(1) The sales volume of isoprene chemicals and elastomer decreased due to atemporary difficulty in procuring raw materials despite steady demand forboth.
(2) The sales volume of GENESTAR™ heat-resistant polyamide resin
decreased for automotive applications due to shortages of semiconductors
and other parts and lockdowns in China. Despite steady demand, the sales
volume also decreased for electric and electronic device applications due tologistics disruptions and a decrease in production caused by the
malfunctions of some production facilities.
Functional Materials
Sales in this segment were ¥77,791 million (¥66,120 million in the same periodof the previous fiscal year), and segment income was ¥3,311 million (¥2,921
million in the same period of the previous fiscal year).

(1) In the methacrylate business, the sales volume decreased due to a temporarydifficulty in procuring raw materials and lockdowns in China.
(2) In the medical business, demand for dental materials was strong, especiallyin Europe and the United States, and sales expanded.
(3) In the environmental solutions business, demand increased, especially inEurope, and sales of activated carbon expanded.
(4) In the aqua business, demand for hollow fiber membranes for water
treatment remained steady.
4Fibers and Textiles
Sales in this segment were ¥31,795 million (¥29,890 million in the same periodof the previous fiscal year), and segment income was ¥3,795 million (¥2,223
million in the same period of the previous fiscal year).

(1) Sales of CLARINO™ man-made leather remained steady, especially for use
in luxury products.
(2) In fibers and industrial materials, KURALON™ was affected by a decreasein the production of automobiles, while sales of VECTRAN™ remained
stable, especially for exports.
(3) In consumer goods and materials, demand for KURAFLEX™ in therestaurant industry was weak.
Trading
Sales in this segment were ¥29,705 million (¥69,137 million in the same periodof the previous fiscal year), and segment income was ¥2,776 million (¥2,325
million in same period of the previous fiscal year). As a result of the adoption of
the Accounting Standard for Revenue Recognition and other factors, net sales
decreased by ¥44,672 million.

(1) In fiber-related businesses, sales of sportswear and other products were brisk.
(2) Sales of resins and chemicals remained brisk in the Asian market.

5Others
In Others, domestic affiliates saw sales recover. As a result, segment sales
were ¥23,668 million (¥20,355 million in the same period of the previous fiscal
year), and segment income was ¥1,221 million (¥307 million in the same periodof the previous fiscal year).

(2) Overview of Financial Position
Total assets increased ¥94,506 million from the end of the previous fiscal year to¥1,185,520 million mainly because of a ¥45,493 million increase in inventories, a¥28,679 million increase in construction in progress, and a ¥16,211 million
increase in notes and accounts receivable–trade, and contract assets (notes andaccounts receivable–trade in the previous fiscal year) despite a ¥34,687 million
decrease in cash and deposits.
Total liabilities increased ¥16,439 million to ¥527,850 million due to factors that
included an issuance of ¥20,000 million in commercial paper, a ¥13,427 million
increase in notes and accounts payable–trade, and an issuance of ¥10,000
million in bonds despite a ¥40,273 million decrease in current portion of long-termborrowings.
Net assets rose ¥78,067 million to ¥657,669 million. Equity attributable to ownersof the parent amounted to ¥636,249 million, for an equity ratio of 53.7%.

6

(3) Basis for the Revision in Forecasts, Including Consolidated Operating
Results Forecasts
Despite concerns of economic recession due mainly to the prolonged RussiaUkraine crisis, a resultant rapid rise in energy prices, and accelerating inflation,
based on progress on price revisions, the forecast of consolidated operating
results for the full fiscal 2022 (January 1, 2022 to December 31, 2022) is asfollows.
Revised Consolidated Operating Results Forecast for Fiscal 2022
(Millions of yen)
Net Income
Net Operating Ordinary
Attributable toSales Income Income
Owners of the Parent
Original Forecast (A)680,000
78,00075,00045,000
Revised Forecast (B)740,000
78,00075,00045,000
Amount Adjusted (B − A) 60,000———
Percent Adjusted
8.8%
—
—
—
(Ref.)
629,370
72,256
68,76537,262
Fiscal 2021 results(Yen)

Net Income
Per Share
132.30134.45108.32

Figures for fiscal 2021 are presented without applying the “Accounting Standard
for Revenue Recognition” (ASBJ Statement No. 29; March 31, 2020).
Note: The above forecasts are based on the best information currently
available. Actual operating results may vary significantly due to various
factors.

7

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheets

ASSETS
Current Assets
Cash and deposits
Notes and accounts receivable–trade
Notes and accounts receivable–trade, andcontract assets
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current Assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
LandConstruction in progress
Other, net
Total property, plant, and equipment
Intangible assets
Goodwill
Customer-related assets
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Retirement benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total Assets

8(Millions of yen)

December 31, 2021

June 30, 2022

151,942
135,768

117,254――

151,979

3,855
103,505
15,69938,10021,745(443)
470,174

4,847
134,794
17,91450,09024,781(523)
501,140

88,801
200,500
22,648117,319
25,997455,266

93,392
210,748
23,468145,998
28,071
501,681

52,63529,17632,243
114,055

59,86232,96936,284
129,117

25,689121
3,066
13,9808,686(26)51,517620,839
1,091,014

23,965
124
3,398
14,764
11,355(26)
53,582
684,380
1,185,520

(Millions of yen)
LIABILITIESCurrent Liabilities
Notes and accounts payable–trade
Short-term borrowings
Commercial paper
Current portion of bonds payable
Current portion of long-term borrowings
Accrued expenses
Income taxes payable
Provision for bonuses
Other provisions
Other
Total current liabilities
Non-current Liabilities
Bonds payable
Long-term borrowings
Deferred tax liabilities
Provision for retirement benefits for directors(and other officers)
Provision for environmental measures
Retirement benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total Liabilities
NET ASSETS
Shareholders’ Equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated Other Comprehensive Income
Valuation difference on available-for-salesecurities
Deferred gain or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeShare Acquisition Rights
Non-controlling Interests
Total Net Assets
Total Liabilities and Net Assets

9

December 31, 2021

June 30, 2022

49,641
34,480――55,013
19,863
13,133
7,996
89
39,246
219,464

63,06934,58020,00010,00022,21922,612
10,5016,582
125
46,279235,971

60,000157,945
12,02260,000150,466
13,602

375

346

365
25,6294,821
30,787
291,947
511,411470
27,526
5,286
34,179291,879
527,850

88,95587,166359,898(15,885)
520,134

88,95587,152376,838(25,734)
527,211

7,273

5,825

219
34,648(2,291)

1,177
103,725(1,689)39,850109,038

414
19,203579,602
1,091,014

341
21,078657,669
1,185,520

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated
Statements of Comprehensive Income
Quarterly Consolidated Statements of Income(Millions of yen)
Fiscal 2021 2Q
Fiscal 2022 2Q(January 1, 2021 – (January 1, 2022 –June 30, 2021)
June 30, 2022)
Net sales
302,296
358,040
Cost of sales
208,258
247,326
Gross profit
94,038110,713
Selling, general and administrative expenses
Selling expenses
18,427
22,146
General and administrative expenses
45,21250,477
Total selling, general and administrative expenses
63,64072,623Operating income
30,39838,089Non-operating income
Interest income
64115
Dividend income
292
320
Share of profit of entities accounted for using
137
142
equity method
Other
622
1,962
Total non-operating income
1,116
2,540
Non-operating expenses
Interest expenses
759
722
Other
2,258
2,011
Total non-operating expenses
3,018
2,734
Ordinary income
28,49637,896Extraordinary income
Gain on sale of investment securities
201
2,260
Insurance claim income―
1,089
Subsidy income
510―
Compensation for transfer
422―
Total extraordinary income
1,134
3,349
Extraordinary losses
Costs related to the suspension of operations―
4,915
Loss on litigation
3,422
1,549
Loss on disposal of non-current assets
862
135
Loss on disaster
3,222―
Loss on tax purpose reduction entry
423―
Total extraordinary losses
7,931
6,600
Income before income taxes and non-controlling
21,69934,645interests
Income taxes—current
8,695
10,322
Income taxes—deferred
708
(588)
Total income taxes
9,403
9,733
Net income
12,29524,911
585
704
Net income attributable to non-controlling interests
11,71024,207
Net income attributable to owners of the parent
10

Quarterly Consolidated Statements of Comprehensive Income(Millions of yen)

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Total other comprehensive income
Quarterly comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

11

Fiscal 2021 2Q(January 1, 2021 –June 30, 2021)
12,295

Fiscal 2022 2Q(January 1, 2022 –June 30, 2022)
24,911646(1,448)437
22,507

1,317
70,094

123

602

23,71536,011

70,56595,47735,334676

93,3952,081

(3) Quarterly Consolidated Statements of Cash FlowsNet cash provided by (used in) operating
activities
Income before income taxes and noncontrollinginterests
Depreciation and amortization
Loss (gain) on sale of investment securities
Loss on litigation
Loss on disposal of tangible fixed assets
Decrease (increase) in notes and accounts
receivable – trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable – trade
Other, net
Subtotal
Income taxes (paid) refund
Loss on litigation paid
Other, net
Net cash provided by (used in) operating
Netactivities
cash provided by (used in) investing
activities
Net decrease (increase) in time deposits
Net decrease (increase) in short-term investment
securities
Purchase of tangible fixed assets and intangible
fixed assets
Proceeds from sale and redemption of
investment securities
Other, net
Net cash provided by (used in) investing
Netactivities
cash provided by (used in) financing
activities
Net increase (decrease) in short-term loansNet(decrease) increase in commercial paper
payableProceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury shares
Cash dividends paid
Proceeds from stock issuance to noncontrollinginterests
Other, net
Net cash provided by (used in) financing
Effectof Exchange Rate Changes on Cash andactivities
Cash Equivalents

12

Fiscal 2021 2Q(January 1, 2021 –June 30, 2021)(Millions of yen)
Fiscal 2022 2Q(January 1, 2022 –June 30, 2022)

21,69934,64528,801
(201)
3,422
862

31,201(2,260)1,549
135(8,479)(4,708)

1,191(28,455)

5,206

9,611

(2,496)50,007(5,624)(22,840)(412)
21,128(9,101)
32,617(10,670)
(183)
(400)
21,362

(842)

3,420

6,000

―

(37,447)(31,842)

777

2,749

(1,123)(32,635)(1,668)(27,340)―(20,000)
3,870
(23)
―
(10,000)(1)(6,534)100
20,00011,828(55,007)
10,000―(10,001)(6,880)924

502(1,020)(32,785)(1,725)(31,183)

2,754

6,750

Net Increase (Decrease) in Cash and Cash
Equivalents
Cash and Cash Equivalents, Beginning of the
PeriodIncrease in Cash and Cash Equivalents from Newly
Consolidated Subsidiaries
Cash and Cash Equivalents, End of the Period

13(41,538)(30,411)

182,084

151,487―136

140,545

121,212(4) Notes regarding Quarterly Consolidated Financial Statements
Notes regarding Going Concern Assumptions
None
Material Changes in Shareholders’ Equity
At the Board of Directors meeting held on February 9, 2022, Kuraray resolved to undertakea share buyback, and has acquired 9,424 thousand shares. As a result, treasury shares
increased ¥9,849 million in the second quarter and totaled ¥25,734 million as of June 30,
2022.
Changes in Accounting Principles
Adoption of Accounting Standard for Revenue Recognition
Kuraray has adopted the Accounting Standard for Revenue Recognition (ASBJ Statement
No. 29, March 31, 2020) from January 1, 2022, and recognizes revenue for goods orservices based on the amount estimated to be received in exchange for such goods orservices at the point when control of the promised goods or services is transferred to thecustomer.
The main changes resulting from the adoption of the standards are as follows.
(1) In supply transactions with repurchase obligations, we changed the method by which
the elimination of supplied goods is not recognized and changed the method by which
liabilities related to supply transactions regarding consideration received fromsuppliers are recognized.
(2) In contracts with customers that include a variable consideration among theirconsiderations, when the uncertainty related to the amount of the variableconsideration is eventually eliminated (restricted to portions that have a highprobability of not generating a significant drop in revenue until the uncertainty iseliminated), the variable consideration is included in the transaction price. In addition,a portion of such variable considerations was formerly presented under selling,
general and administrative expenses, however, the presentation method has beenchanged so that it is now presented after being excluded from net sales.
(3) Regarding transactions where the role of providing products or goods corresponds tothat of an agent, we have changed the previous method of recognizing the total
consideration received from the customer as revenue to a method in which we
recognize the net amount received from the customer, excluding the amount paid tothe buyer, as revenue.
Regarding the adoption of the revenue recognition standards, in line with the transition
provisions set out in the revision to paragraph 84, the cumulative effect of retroactively
applying the new accounting principle before January 1, 2022, is added or subtracted toretained earnings as of January 1, 2022, and the new accounting principle is adopted fromJanuary 1, 2022.
As a result, net sales in the second quarter decreased ¥2,646 million. The effect on
operating income, ordinary income, and income before income taxes and non-controllinginterests was minimal. In addition, the balance of retained earnings as of January 1, 2022,
decreased ¥388 million.
14

Because we adopted the revenue recognition standards, in the consolidated balance sheet
for the previous fiscal year, “notes and accounts receivable–trade” previously presented
under current assets is included in “notes and accounts receivable–trade and contract
assets” from January 1, 2022. Furthermore, in line with the transition provisions set out inParagraph 89-2 of the revenue recognition standard, we have not revised the presentation
method for the previous fiscal year.
Adoption of Accounting Standard for Fair Value Measurement
Kuraray has adopted the Accounting Standard for Fair Value Measurement (ASBJ
Statement No. 30, July 4, 2019) from January 1, 2022. The Company has prospectively
adopted new accounting policies based on the Accounting Standard for Fair Value
Measurement in accordance with the transition provisions in Paragraph 19 of the
Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the AccountingStandard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). These changes
have no impact on quarterly financial statements.
Segment Information, etc.
● Segment Information
I. Second Quarter of Fiscal 2021 (January 1, 2021 to June 30, 2021)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
Vinyl Isoprene Functional
AcetateMaterials
Net sales(1) Outside
124,039
customers(2) Intersegment
sales and
24,386transfers
Total
148,426
Segment income
25,180(loss)

Others 1

FibersandTextilesTrading

Total

Adjustment2 Consolidated
Statements
3of IncomeTotal

15,86855,43722,351 68,076 285,773

16,523 302,296—

302,296

14,594

10,683

7,538

1,061 58,264

3,832 62,096(62,096)—

30,462

66,12029,890 69,137 344,037

20,355 364,393(62,096)

302,296

3,278

2,921

2,223

307 36,236(5,837)30,3982,325 35,928

Notes:
1. The “Others” category incorporates operations not included in business segment
reporting, including the engineering business.
2. Adjustment is as follows: Included within segment loss of ¥5,837 million is theelimination of intersegment transactions of ¥88 million and corporate expenses of¥5,749 million. Corporate expenses mainly comprise the submitting company’s basic
research expenses.
3. Segment income is adjusted to agree with operating income in the consolidated
statements of income.

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II. Second Quarter of Fiscal 2022 (January 1, 2022 to June 30, 2022)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
Vinyl Isoprene Functional
AcetateMaterials

Net sales(3) Outside
177,920
customers(4) Intersegment
sales and
7,519
transfers
Total
85,440
Segment income 33,617(loss)

FibersandTextilesOthersTrading

Total

Adjustment2 Consolidated
Statements
3of Income

Total

25,37076,13230,063 28,907 338,394

19,646 358,040—

358,040

6,535

1,658

1,732

797 18,244

4,022 22,266(22,266)—

31,90577,791

31,795 29,705 356,638

23,668 380,307(22,266)

358,040

2,477

3,311

3,795

1,221 47,199(9,110)38,0892,776 45,978

Notes:
1. The “Others” category incorporates operations not included in business segment
reporting, including the engineering business.
2. Adjustment is as follows: Included within segment loss of ¥9,110 million is theelimination of intersegment transactions of ¥1,208 million and corporate expenses of¥7,901 million. Corporate expenses mainly comprise the submitting company’s basic
research expenses.
3. Segment income is adjusted to agree with operating income in the consolidated
statements of income.
2. Matters related to changes in reporting segments
Changes in methods for estimating net sales and profit for reporting segments
As detailed in changes to accounting principles, because we adopted revenue recognition
standards from January 1, 2022, and changed the accounting treatment method related torevenue recognition, the method for estimating the net sales and profit of businesssegments changed accordingly. Due to these changes, in comparison with previous
methods, net sales to outside customers in the second quarter increased ¥19,775 million in
Vinyl Acetate, increased ¥4,849 million in Isoprene, increased ¥9,659 million in Functional
Materials, increased ¥5,419 million in Fibers and Textiles, decreased ¥42,652 million in
Trading, and increased ¥301 million in Others.
In addition, intersegment net sales or transfers decreased ¥20,583 million in Vinyl Acetate,decreased ¥5,525 million in Isoprene, decreased ¥9,765 million in Functional Materials,
decreased ¥5,804 million in Fibers and Textiles, decreased ¥2,020 million in Trading, anddecreased ¥493 million in Others, and adjustments increased ¥44,191 million.
The impact on segment income was minimal.
Furthermore, from January 1, 2022, regarding the elimination of some intersegment
transaction profit, we changed the method for allocating it to each segment and theCompany. Segment information in the second quarter of the previous fiscal year ispresented based on the changed allocation method.

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Changes in reporting segments
Following the revision to our organizational structure, from January 1, 2022, the aquabusiness was transferred from Others to Functional Materials. Furthermore, the segment
information for the second quarter of the previous fiscal year is presented based on thechanged reporting segments.

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