Corporate
Business Plan
FY2013 - FY2015

Change and Innovation―for the next hundredth anniversary―
Masakazu Tokura
President
February 12, 2013

Contents

1. Current Situation
2. Overview of Corporate Business Plan
FY2013 - FY2015

3. Initiatives Under Corporate Business Plan
FY2013 - FY2015

4. Shareholder Return

Corporate Business Plan FY2013 – FY2015

2

Contents

1. Current Situation(1) Priority Management Issues & Business Strategy since
the Beginning of the Century(2) Where We Have Been Heading(3) Results of Corporate Business Plan FY2010 - FY2012(4) Sumitomo Chemical’s Current Situation

2. Overview of Corporate Business Plan
FY2013 - FY2015

3. Initiatives Under Corporate Business Plan
FY2013 - FY2015

4. Shareholder Return
Corporate Business Plan FY2013 – FY20153

(1) Priority Management Issues & Business Strategy
since the Beginning of the Century

Priority
Issues

Major
Projects

Results:
Sales Increase
FY2000 vs.
FY2010

Radically improve
competitiveness of
petrochemicals
business

Gain critical mass inpharmaceuticals
business to achievestrong growth

Implementation of Rabigh
Project

Launch of Dainippon Sumitomo
Pharma & Acquisition of
Sepracor (Sunovion) in US

Developnew businesses
with potential to
become corebusinesses

Approx. ¥219.0 bn

Establishment and expansionof
IT-related Chemicals Sector
Approx. ¥355.0 bn(equity investment and lending)(increased shareholding
and acquisition)(cumulative capital expendituresin 10 years since inception)

Petrochemicals &Plastics Sector

Pharmaceuticals
SectorIT-related Chemicals
Sector(¥375.5 bn → ¥649.9 bn)(¥156.7 bn → ¥365.9 bn)(¥60.2 bn → ¥322.3 bn)

Approx. 1.7 times

Approx. 2.3 times

Approx. 5.4 times

Approx. ¥166.0 bn

Corporate Business Plan FY2013 – FY20154(2) Where We Have Been Heading

Last 10 Years

2 to 3 Years

Next 10 to 20 Years

Enhance financial
strength
Pave the way for
future growth(Tackle threepriority management issues)
Implemented Rabigh
Project
Launched DSP and
acquired Sepracor
Established and expanded
IT-related Chemicals Sector

Improve profitability

Rigorously selectinvestments
Improve asset
efficiency

Develop new businesses
Environment and EnergyLife Sciences
ICT

Globalization
Corporate Business Plan FY2013 – FY2015

Promote globally integrated management5(3) Results of Corporate Business Plan FY2010 - FY2012① Basic Initiatives and Results

Quickly maximize profits and cash flows
from major investments



Launched initiatives to enhance financial
strength

Increased production capacity for methyl
methacrylate and high-purity aluminaRabigh Phase I project: completion
guarantee under the project financing
agreements lifted

Launched Rabigh Phase II project

Expanded the business of polarizing film
for smartphones and tablet PCs

Started manufacturing and selling
touchscreen panels in South Korea

Business alliances with Nufarm andMonsanto



Launched LATUDA (atypicalantipsychotic) in North AmericaAcquired Boston Biomedical Inc. (BBI) toobtain a pipeline of innovative anticancer drugs

Enhance financial strength
Strengthen cost competitiveness of coreand commodity businesses
Accelerate business growth

Implement climate change strategy

Strengthen global management system
Ensure full and strict compliance andmaintain safe and stable operations
Corporate Business Plan FY2013 – FY20156(3) Results of Corporate Business Plan FY2010 - FY2012② Consolidated Financial Performance Trends(Billons of Yen)

2,500

Sales (left axis)

Operating income (right axis)

Ordinary income (right axis)

Net income (right axis)(Billons of Yen)

250

2,000

200

1,500

150

1,000

100

500

50

0

0

-500

-50

-1,000-100
FY2001 FY2002 FY2003

FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012(Forecast)

Corporate Business Plan FY2013 – FY20157(3) Results of Corporate Business Plan FY2010 - FY2012③ Extraordinary Factors in FY2012• Reversal of deferred tax assets• Business restructuring expense andimpairment loss (related to restructuring of
petrochemical operations at the Chiba Works)

Financial health improved and now readyfor new Corporate Business Plan

Corporate Business Plan FY2013 – FY20158(3) Results of Corporate Business Plan FY2010 - FY2012④ Interest-bearing Liabilities and Debt to Equity Ratio(Billons of Yen)

Interest-bearing liabilities (left axis)(Times)Debt to equity ratio (right axis)

1,600

1.6

1,400

1.4

1,200

1.2

1,000

1

800

0.8

600

0.6

400

0.4

200

0.2

0

0
FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012(Forecast)

Corporate Business Plan FY2013 – FY20159(4) Sumitomo Chemical’s Current Situation

Initiatives

Implemented major strategic projects
 Promoted globally integrated management
Worsened market conditions(Lehman shock, Europe's sovereign debt crisis)
 Appreciation of the yenDeterioration inbusiness environment

Delay in realizing
expected returns on
major investments

Weak businessperformance

Downturn infinancial strength

We need to make a real change, with a sense ofcrisis, to turn things around
Corporate Business Plan FY2013 – FY2015

10Contents

1. Current Situation
２. Overview of Corporate Business Plan
FY2013 - FY2015(1) Key Ideas of Corporate Business Plan FY2013 - FY2015(2) Performance Targets(3) Priority Management Issues

３. Initiatives Under Corporate Business Plan
FY2013 - FY2015
４. Shareholder Return
Corporate Business Plan FY2013 – FY201511(1) Key Ideas of Corporate Business Plan FY2013 - FY2015① Sumitomo Chemical’s Long-Term Goal

Solving Pressing Issues Facing Human Society

Seeking Better
Lives

Energy andResources

ICT and
HealthEnvironment

Food

Power of Chemistry
Chemistry: Alchemy of themodern era

Create innovative newmaterials and capabilities

Sumitomo Chemical’s Long-Term goal
Help solve the major problems facing the world andachieve sustainable growth together with society
as a diversified global chemical company
Corporate Business Plan FY2013 – FY201512(1) Key Ideas of Corporate Business Plan FY2013 - FY2015② Corporate Vision

Create new value based on technologies
accumulated over the years

Through the power of chemistry, help solve global
challenges (e.g. problems related to energy, theenvironment and food)Develop a corporate culture full of can-do spirit andalways be a company that society can trust

Corporate Business Plan FY2013 – FY201513

(1) Key Ideas of Corporate Business Plan FY2013 - FY2015③ Purpose of the Corporate Business Plan FY2013 – FY2015

Sumitomo Chemicalfounded in 1913

Corporate Business Plan
FY2013 - FY2015

Present

Three years to be devoted tostrengthening the foundations of ourbusiness, with the aim of achieving
sustained growth over the next 100 years

Become a more resilient
Sumitomo Chemical
FutureCorporate Business Plan FY2013 – FY201514

(1) Key Ideas of Corporate Business Plan FY2013 - FY2015④ Slogan of the Corporate Business Plan―for the next hundredth anniversary―

Change & Innovation

Change & Innovation

Change & Innovation

Business
Structure

Business
Development

Corporate
Culturestructure Corporate
Downsize/exit
underperforming
businesses
 Improve businessportfolio Develop nextgeneration businesses Accelerate thedevelopment ofprinted electronics
 Develop new
businesses in the areaof life sciences Demonstrate ―can-do‖
spirit See what’s happening
on the ground and beproactive andpragmatic
 Promote diversity→ Build business structure
resilient to changes inexternal environment
Corporate Business Plan FY2013 – FY201515

(2) Performance Targets① Performance Targets for FY2015

Targets for FY2015
Sales¥2,400 Billion

Operating Income¥140 Billion

Ordinary Income¥150 Billion（Equity in Earnings of Affiliates

Net Income
Interest-Bearing Liabilities¥25 Billion¥90 Billion
Below ¥900 Billion【Assumptions】
Exchange Rate

Naphtha Price¥80 /$US¥60,000 /kl

Sensitivity of operating income to currency fluctuations is approximately ¥2.5 billion per year
for each one-yen change in the exchange rate of the yen against US$
Corporate Business Plan FY2013 – FY201516

(2) Performance Targets② Change in Operating Income: FY2012 vs. FY 2015

Volumes & others(Billions of Yen)

＋140

150

140

100
Margins

50
50

-95

Rationalization

Fixed
costs

+80

-35

0

-50

FY2012(Forecast)

Corporate Business Plan FY2013 – FY2015

FY2015(Target)17

(2) Performance Targets③ Consolidated Financial Performance Targets

Sales (left axis)
Ordinary income (right axis)(Billons of Yen)

2,500

Operating income (right axis)
Net income (right axis)(Billions of Yen)

250

2,000

200

1,500

150

1,000

100

500

50

0

0

-500

-50

-1,000

-100

(FY)

2001

2002

2003

2004

Corporate Business Plan FY2013 – FY2015

2005 2006

2007

2008

2009 2010

2011

2012
2013 2014 2015
(Forecast) (Plan) (Plan) (Target)18

(2) Performance Targets④ Interest-bearing Liabilities and D/E Ratio Targets

Interest-bearing liabilities (left axis)(Billions of Yen)

(Times)Debt to equity ratio (right axis)

1,600

1.6

1,400

1.4

1,200

1.2

1,000

1

800

0.8

600

0.6

400

0.4

200

0.2

0

0
2001

2002

2003

2004

(FY)

Corporate Business Plan FY2013 – FY2015

2005

2006

2007

2008

2009

2010

2011

2012

2015

(Forecast)(Target)19

(2) Performance Targets⑤ Cash Flows Targets

FY 2010 – FY2012

FY2013 - FY2015

Current Corporate
Business Plan

New Corporate
Business Plan

(Forecast)(Target)Cash flows
from operating activities¥475 billion¥540 billion

Cash flows
from investing activities¥-450 billion

Below ¥-400 billion¥25 billion* Over ¥200 billion

Free cash flows* (Note) Includes decreases in cash and cash equivalents

Interest-bearing liabilities
Corporate Business Plan FY2013 – FY2015

End of FY2012

End of FY2015(Forecast)(Target)¥1,070 billion¥900 billion
20(3) Priority Management Issues

EnhanceFinancial Strength
Ensure Full and Strict
Complianceand Maintain
Safe and Stable
Operations
PromoteGlobally
Integrated
Management
Corporate Business Plan FY2013 – FY2015

Restructure
Businesses

Five Priority
Management
IssuesDevelop
Next-Generation
Businesses
21

Contents
1. Current Situation
２. Overview of Corporate Business Plan
FY2013-FY2015

３. Initiatives Under Corporate Business Plan
FY2013-FY2015(1) Five Priority Management Issues(2) Priority Initiatives by Sector

４. Shareholder Return

Corporate Business Plan FY2013 – FY201522(1) Five Priority Management Issues
Restructure Businesses

EnhanceFinancial Strength
Ensure Full and Strict
Complianceand Maintain
Safe and Stable
Operations

PromoteGlobally
Integrated
Management
Corporate Business Plan FY2013 – FY2015

Restructure
Businesses

Five Priority
Management
IssuesDevelop
Next-Generation
Businesses23(1) Five Priority Management Issues
Restructure Businesses

Downsize/exit
underperforming
businesses

Improve businessportfolio

Develop a high-performancebusiness structure
Corporate Business Plan FY2013 – FY201524

(1) Five Priority Management Issues
Restructure Businesses: Petrochemicals and Plastics(Strengthen Global Business Base)Japan
Develop new technologies, products andknow-how and roll them out globally, playing
the role as ―mother plant,‖ ―motherlaboratory‖

Singapore
Deliver high value-added products, meetingthe needs of key customers in Asian markets

Saudi Arabia
Produce cost competitive products, taking
advantage of low-cost feedstocks and fuels

Corporate Business Plan FY2013 – FY201525

(1) Five Priority Management Issues
Restructure Businesses: Petrochemicals and Plastics(Restructuring of Chiba Works)

Restructuring of Chiba Works• Shut down Sumitomo
Chemical’s ethylene plant• Procure ethylene supplies
from Keiyo Ethylene
Ethylene Production Capacity in Japan

Review of
unprofitable derivatives

600
500
400

415

100

Start-up of
operation

Annualproduction
capacity

Keiyo Ethylene

1994

768,000 tons*

Sumitomo Chemical

1970

415,000 tons

* Includes 192,000 tons of allotment to Sumitomo Chemical

300

Increase of allotment

200

Ethylene Plants

Keiyo Ethylene
Sumitomo Chemical(Thousand tons per year)

700

Downsize/exit underperforming
businesses

192

192

Present

After restructuring0

Corporate Business Plan FY2013 – FY2015• Keiyo Ethylene’s plant is the newest and largest ethylene
production facility in Japan.
• Sumitomo Chemical’s ethylene plant came on stream
more than 40 years ago.
26

(1) Five Priority Management Issues
Restructure Businesses: Petrochemicals and Plastics(Implementation of Rabigh Phase II Project)

1. Investment

Approx. US$ 7 billion

2. Feedstock

Ethane (approx. 400,000 tons/year)
Naphtha (approx. 3 million tons/year)

3. Products

Ethylene propylene rubber (EPDM);
thermoplastic polyolefin (TPO); methyl methacrylate (MMA)
monomer; methyl methacrylate (MMA) polymer; low-density
polyethylene/ethylene vinyl acetate (LDPE/ EVA); paraxylene/benzene; cumene; phenol/acetone

4. Start ofoperationsFirst half of 2016

5. Products under Acrylic acid; superabsorbent polymer (SAP);
caprolactam; nylon-6; polyols
consideration
Corporate Business Plan FY2013 – FY201527

(1) Five Priority Management Issues
Restructure Businesses:
Expand Specialty Businesses (ICT & Life Sciences)
Specialty businesses:
Stable and highperformance

Improve business portfolio byexpanding the specialty area

Sales

Establish robust
business foundations

Operating Income
OthersOthers(Billions of Yen)
3,000

Bulk Chmicals
Specialty (ICT and Life Sciences)(Billions of Yen)

Bulk Chemicals

160

Specialty (ICT and Life Sciences)

140

2,500

120
100

2,000
80

1,500

60

40

1,000
20

500

0

-20

0
FY2009FY2012(Forecast)

Corporate Business Plan FY2013 – FY2015

FY2015(Target)-40

FY2009FY2012(Forecast)

FY2015(Target)28

(1) Five Priority Management Issues
Enhance Financial Strength

EnhanceFinancial Strength
Ensure Full and Strict
Complianceand Maintain
Safe and Stable
Operations

PromoteGlobally
Integrated
Management
Corporate Business Plan FY2013 – FY2015

Restructure
Businesses

Five Priority
Management
IssuesDevelop
Next-Generation
Businesses29(1) Five Priority Management Issues
Enhance Financial Strength

Improvefinancialstrength

Improve asset
efficiency(Improve CCC)

Rigorously
selectinvestments

Enhance financial strength＜FY2015 target＞
Interest-bearing liability balance
below ¥900 billion

Secure greater strategic freedom toaggressively pursue growth opportunities
Corporate Business Plan FY2013 – FY201530

(1) Five Priority Management Issues
Enhance Financial Strength: Improve Profitability

Priority management issues since early 21st century
Radically improve
competitiveness of
petrochemicals business

Gain critical mass inpharmaceuticals businessto achieve strong growth

Develop new businesses
with potential to becomecore businesses

Major initiatives under Corporate Business Plan
FY2013 - FY2015
Petrochemicals& Plastics


Maximize profits from
Rabigh project

Corporate Business Plan FY2013 – FY2015

IT-related
Chemicals

Pharmaceuticals
Expand sales of LATUDA
 Enhance product pipelines(anti-cancer stem cell drugs,etc.) to prepare for expirationof LATUDA patents

Develop new businesses
such as touchscreen panels
 Improve profitability ofpolarizing film business Launch PLED business

31

(1) Five Priority Management Issues
Enhance Financial Strength: Improve Profitability

Rationalization targets for FY2015: ¥80 billion (vs. FY2012)
Item

TargetMajor contributor

Variable manufacturing costs¥57 billion

IT-related Chemicals
Petrochemicals & Plastics

Fixed manufacturing costs¥8 billion

Petrochemicals & Plastics
IT-related Chemicals

SG&A expenses¥15 billion

Pharmaceuticals
Corporate

Total¥80 billion(Note) Rationalization targets for SG&A expenses include ¥15 billion cut in overhead costs
between FY2011 and FY2015
Corporate Business Plan FY2013 – FY201532

(1) Five Priority Management Issues
Enhance Financial Strength: Improve Profitability

Foreign Exchange Sensitivity

Increase overseas production
Expand business globally(Billions of Yen)

4.5

Better balance foreign
currency-denominatedpayables and receivables

4.0
3.5

3.0

e.g. by increasing US$-denominatedpurchasing of raw materials for products
sold in US$, such as polarizer film

2.5

2.0
1.5
1.0

0.5
0.0
End of
End of
End of
FY2010 FY2011 FY2012

Corporate Business Plan FY2013 – FY2015

TargetHalve sensitivity of operating income tocurrency fluctuations from over 4 billion
yen to over 2 billion yen per year foreach one-yen change in the exchange
rate of the yen against US$
33

(1) Five Priority Management Issues
Enhance Financial Strength: Rigorously Select Investments

Investment Cash Flow in the Past
Corporate Business Plan Periods(Billons of Yen)
700

Restrict the amount ofinvestments decided
FY2012 to FY2014
to below 400 billion yen

600
500
400
300
200

100
0
FY2001FY2003

FY2004FY2006

FY2007FY2009

Corporate Business Plan FY2013 – FY2015

FY2010FY2012(Forecast)

FY2013FY2015(Target)

Limit investment
cash flow
for FY2013 to FY2015
to below
400 billion yen

34

(1) Five Priority Management Issues
Enhance Financial Strength: Rigorously Select Investments

Cash Conversion Cycle (CCC) = accounts receivable turnover +inventory turnover - accounts payable turnover

Sumitomo Chemical’s CCC

Our initiatives
Shorten accounts receivable terms
 Reduce and optimize inventory levels
 Extend accounts payable terms


Accounts payable

Accounts receivable
Inventory(Days)

CCC

200
180
160

56
76

140
120

73

56

73

57

Target

58
77

61

80
55

100

40

80
60
40

126
104 106
87

108

92

114
95

103

84

69

84

20
0

FY2008 FY2009 FY2010 FY2011 FY2012

FY2015(Forecast)(Target)Corporate Business Plan FY2013 – FY2015

Reduce CCC by 25% from
FY2010 level by FY2015
Estimated total cash flow improvement
between FY2011 and FY2015 throughthese CCC reduction initiatives

130 billion yen
35

(1) Five Priority Management Issues
Develop Next-Generation Businesses

EnhanceFinancial Strength
Ensure Full and Strict
Complianceand Maintain
Safe and Stable
Operations

PromoteGlobally
Integrated
Management
Corporate Business Plan FY2013 – FY2015

Restructure
Businesses

Five Priority
Management
IssuesDevelop
Next-Generation
Businesses36(1) Five Priority Management Issues
Develop Next-Generation Businesses:
Implement Creative Hybrid Chemistry

Develop next-generation businesses by developing
innovative new products that help solve global challenges
Catalyst
designDesign offunctional
inorganic
materials

Combineand leverage

six coretechnologies
DevicedesignHighprecision
processing

Design offunctionalorganic
chemicals andpolymers

Analysis of
bio-mechanisms

Environment
and Energy

Life
Sciences

Contribute to
the sustainable
developmentof society

ICT

Stimulate open innovation
through collaboration withexternal resources
Corporate Business Plan FY2013 – FY201537(1) Five Priority Management Issues
Develop Next-Generation Businesses:
Environment and Energy, ICT, Life Sciences
Launch2011

2015

Silicon solar cells(HEVA, electrode paste, etc.)

Environment
and Energy

Lithium-ion secondary
batteries (separators)
LED lighting applications(sapphire substrates andalumina, etc.)

Ultra-high-efficiency
photovoltaic(epitaxial wafer)

2020～
Organic thin-film photovoltaics
Lithium-ion secondary
batteries (cathode materials)

PLED lighting

Power semiconductors (epitaxial wafers)

High heat-resistant and high thermal-conductive resin
Diesel particulate filters
CO2 separation

PLED (light emitting materials)

ICT

Organic semiconductors

Next-generation polarizing films
Encapsulation material for optical use
Drug for Schizophrenia (LATUDA)
Drug for bipolar disorder (LATUDA)

Life Sciences

Anticancer drugs targetingcancer stem cells

Screening using ES and iPS Cells
Corporate Business Plan FY2013 – FY2015

Crop stress management
Regenerative treatment
and cell treatment38

(1) Five Priority Management Issues
Develop Next-Generation Businesses: Sales Forecast(Billions of Yen)
Environment and energy

ICTLife Sciences

1,000

500

0

FY2012

Corporate Business Plan FY2013 – FY2015

FY2015

FY202039

(1) Five Priority Management Issues
Promote Globally Integrated Management

EnhanceFinancial Strength
Ensure Full and Strict
Complianceand Maintain
Safe and Stable
Operations

Restructure
Businesses

Five Priority
Management
IssuesPromoteGlobally
Integrated
Management
Corporate Business Plan FY2013 – FY2015

Develop
Next-Generation
Businesses40(1) Five Priority Management Issues
Promote Globally Integrated Management: Conduct each Business
Function, from R&D to Production to Sales, in the Best Location in the World

Basic Chemicals

Petrochemicals & Plastics

IT-related Chemicals

Korea
 Building high-purity alumina
production facilities

Singapore Building S-SBR production
facilities

Korea Increase touchscreen panel
production capacity

Poland Building DPF production
facilities

Saudi Arabia Rabigh Phase II Project

China Enhance supply chain

Overseas
FY2015Sales
58％

FY201255％

Health and Crop Science

Overseas
Production FY2015
４３％

FY2012４０％

Pharmaceuticals

Australia
 Comprehensive business alliancewith Nufarm

US Expand indications of LATUDA
 Develop anti-cancer stem cell drugs

US Collaboration with MonsantoEurope Joint development and launch of LATUDA
with Takeda Pharmaceuticals

Corporate Business Plan FY2013 – FY201541

(1) Five Priority Management Issues
Ensure Full and Strict Compliance and Maintain Safe andStable Operations

EnhanceFinancial Strength
Ensure Full andStrict Complianceand Maintain
Safe and Stable
Operations

PromoteGlobally
Integrated
Management
Corporate Business Plan FY2013 – FY2015

Restructure
Businesses

Five Priority
Management
IssuesDevelop
Next-Generation
Businesses42(1) Five Priority Management Issues
Ensure Full and Strict Compliance andMaintain Safe and Stable Operations

Ensure full and strict compliance Strengthen compliance systems across the Sumitomo
Chemical Group, including subsidiaries and affiliates athome and abroad

Maintain safe and stable operations

 Ensure safe コンプライアンスの徹底
and stable operations by enhancing ourculture of safety and increasing safety assurance
安全・安定操業の維持・継続
capabilities
Corporate Business Plan FY2013 – FY201543

(2) Priority Initiatives by Sector
Basic Chemicals Sector

Basic Policy

Sales (left axis)(Billions of Yen)

Operating income (right axis)

400



300

Change and Innovation

200

Quickly develop our environment- andenergy-related businesses—including
high-purity alumina and ceramic filters
for diesel engine exhaust gas (diesel
particulate filters (DPF))—into profitablebusinesses Strengthen the foundations of thesector’s businesses by stepping up R&D
efforts
 Enhance cost competitiveness via
thorough rationalization
Corporate Business Plan FY2013 – FY2015

40

350.0

Expand and strengthen businesses
through aggressive structural reform(Billions of Yen)

284.3

30

265.0

20

15.0
100

9.3

10

0

0

-7.0
－10

-100

FY2011FY2012(Forecast)

FY2015(Target)

FY2015 Targets
Sales¥350 billion

Operating Income¥15 billion

44(2) Priority Initiatives by Sector
Basic Chemicals Sector

Develop next-generation businesses in the area of inorganic
materials for use in environmental and energy applications
High-purity aluminum

Expand supply capacity
Meet the needs for use as lithium-ion secondary battery
material
Establish global business and development operations

Ceramic filters for diesel
engine exhaust gas (diesel
particulate filters (DPF) andothersAchieve full operation of new DPF plant immediately after
completion of the facilities (Startup: FY2013; Capacity: c.a.
1 million units/year)
Further expand business
Establish global operations

Improve the competitiveness of caprolactam andMMA businessesIncrease cost competitiveness (production, logistics and purchases of raw
materials)

New production processes are being studied

Corporate Business Plan FY2013 – FY201545

(2) Priority Initiatives by Sector
Petrochemicals and Plastics Sector

Basic Policy

Sales (left axis)(Billions of Yen)

(Billions of Yen)

Operating income (right axis)

Maximize profits from major investments
 Strengthen business structure, taking
account of future changes in businessenvironment

900

Change and Innovation

300



Restructure domestic operations(exit underperforming businesses, review
the management of production
operations) Strengthen competitiveness of operationsin Singapore (shift toward higher valueadded products)
Maximize Petro Rabigh’s profitability(achieve more stable operations)

Corporate Business Plan FY2013 – FY2015

30

805.0
672.4

24.0

700.0

20

600

10

6.2

0

0

-4.5
－10

-300

FY2011FY2012(Forecast)

FY2015(Target)

FY2015 Targets
Sales¥805 billion

Operating Income¥24 billion46

(2) Priority Initiatives by Sector
IT-related Chemicals Sector

Basic PolicyDevelop innovative new products andtechnologies
Respond to changes in market structure
through market-oriented approach(Billions of Yen)

Sales (left axis)(Billions of Yen)

Operating income (right axis)

480

30

360

295.0

293.1

20

240

Change and Innovation

Develop next-generation businesses
 Touchscreen panels
 PLED-related materials, battery
materials and others
Develop high-performance polarizing films
for smartphones and tablet PCs
Improve profitability by restructuring
photoresist and color resist businesses

Corporate Business Plan FY2013 – FY2015

40

435.0
34.0

11.0

11.5

120

10

0

0

FY2011FY2012(Forecast)

FY2015(Target)

FY2015 Targets
Sales¥435 billion

Operating Income¥34 billion

47

(2) Priority Initiatives by Sector
IT-related Chemicals Sector: Touchscreen Panels

Touchscreen Panel BusinessEntered capacitive on-cell touchscreen
panel business Began mass production in South Korea
in 2012
 Supply touch screens for OLED panels
to Samsung Display
Touchscreen Panel Demand
by Applications（Billion units）
1.5
1.2

Tablet PCs
Smartphones

0.9
0.6
0.3
0.0
2011

2012
2013
2014
2015
（Source： Display Search 2013.01）

Corporate Business Plan FY2013 – FY2015

Growing demand for touchscreen panels
Demand is growing for use in smart
phones and tablet PCs
Decided to increase touchscreen
panel production capacity

Production capacity:
Up 70% from current level
Start of operation of new capacity:
First half of FY2013

Consider building additional
capacity, carefully watching
technology and demand trends
48

(2) Priority Initiatives by Sector
IT-related Chemicals Sector:
Light Emitting Materials for PLED Displays

PLED display panel using ourluminescent materials was exhibitedat CES

Progress on material
development
Achieved performance level
required for use in PLED televisions
 Constructed a mass production
plant for luminescent materials at
Sumitomo Chemical’s Osaka Works PLED display panel with our luminescent materials

was exhibited at the 2013 International CES in
January 2013
 56-inch 4k2k PLED display panel produced by the

RGB all-printing method
 Superb picture quality with high resolution, a wideviewing angle, fast response and excellent color
reproduction
 Ultra-thin, light weight and low power consumption

PLED
display panel
exhibited(photo by
Panasonic Corp.)
Corporate Business Plan FY2013 – FY2015

Challenges
Establish a stable supply chain Further improve the performance ofluminescent materialsMarket outlook
We expect the PLED television market
to take off in 201549

(2) Priority Initiatives by Sector
Health & Crop Sciences Sector

Basic Policy(Billions of yen)

Sales (left axis)(Billions of Yen)

Operating income (right axis)

Further strengthen the foundations of
the sector’s businesses to pursue
globalization
Strengthen highly-profitable businesses

Change and Innovation


Expand into downstream and related areasPursue synergy with Nufarm and broaden
alliance with overseas major company.

Continuously launch new products.

Commercialize crop stress management
technology

Corporate Business Plan FY2013 – FY2015

500

50

45.0
40

400

350.0
300

270.0 30.0
264.1 26.5

30

200

20

100

10

0

0

FY2011FY2012(Forecast)

FY2015(Target)

FY2015 Targets
Sales¥350 billion

Operating Income¥45 billion

50(2) Priority Initiatives by Sector
Health & Crop Sciences Sector: Expand Collaboration with
Monsanto for Soybean Herbicides

World Soybean Production
the United States

BrazilArgentina

China

OthersUnited States
Started collaboration with
Monsanto in 2010

(%)

Japan

100

Doubled production capacity
for active ingredient ofsoybean herbicide in 2012

90

80
70
60

Brazil and Argentina

50

Preparing to expand
collaboration with Monsanto

40

30
20
10
0
2007/2008 2008/2009 2009/2010 2010/2011 2011/2012

Covers about
70% of theworld market

Source: compiled from data by USDA
Corporate Business Plan FY2013 – FY201551

(2) Priority Initiatives by Sector
Health & Crop Sciences Sector: Expand Business Domain to
Downstream and Other Surrounding Areas

Seeds

Seeds
•Sunflower•Rapeseed•Sorghum

Seed treatment

Agricultural chemicals•Insecticide, fungicide
Formulation andapplication technology•Insecticide and plant
growth regulator for seedtreatment•Seed treatment
technology

In-season
Pest control
Fertilization
Agricultural chemicals• Insecticide, fungicide,herbicide
Bio-rational• Microbial pesticide• Plant growth regulator

Fertilizer• Coating fertilizer

Postharvest

Products• Fungicide• Preservative• Coating agent• Plant growth regulator
Services• Postharvest treatment• Pre-shipment treatment• Residue analysis

Formulation technology• Microcapsule

Strategic entry into seed treatment and postharvest businessCorporate Business Plan FY2013 – FY201552

(2) Priority Initiatives by Sector
Pharmaceuticals Sector

Basic Policy

Sales (left axis)(Billions of Yen)

(Billions of Yen)

Operating income (right axis)
500

Effectively invest resources andexpand global operations

400

380.5

380.0
33.0

Change and Innovation


Establish a robust revenue base inJapan
Further expand overseas business andmaximize earnings



Expand global pipelineEnhance the profitability of diagnostic
radiopharmaceutical businessCorporate Business Plan FY2013 – FY2015

50

40
385.0
35.0
30

300

20.9
200

20

100

10

0

0

FY2011FY2012(Forecast )FY2015(Target)

FY2015 Targets
Sales¥385 billion

Operating Income¥35 billion53

(2) Priority Initiatives by Sector
Pharmaceuticals Sector: LATUDA sales expansion

LATUDA Sales Projections in
U.S. and Canada¥6.9
billion
FY2011¥16.0
billion

FY2012FY2015(Forecast)(Target)Corporate Business Plan FY2013 – FY2015

Additional indications andexpansion of markets
Schizophrenia
U.S., Canada : On saleJapan
: New Phase III study initiated in
April 2012
China
: IND submitted in September
2011
Europe: New drug application submitted
by Takeda Pharmaceutical in
September 2012
Schizophrenia (change of maximum dose)
U.S.
: Approved in April 2012
Bipolar I depression
U.S., Canada : sNDA submitted in August 2012
Bipolar maintenanceU.S., Europe and others:
Phase III studies initiated in 2Q
2011
MDD with mixed features
U.S.
: Phase III studies initiated in 2Q
201154

(2) Priority Initiatives by Sector
Pharmaceuticals Sector: Anti-cancer Stem Cell Drugs

Recurrence
Treatment bychemotherapy

Cancer stem cells(CSC) survive

Metastasis

and develop
chemotherapy resistance

Existing therapies cannot control
the ―red cells‖ or CSC
so that CSC tumorigenicity(self-renewal activity), recurrence ormetastasis takes place.

Treatment by anti-cancer
stem cell drugs
BBI-608 and BBI-503
Corporate Business Plan FY2013 – FY2015

Drugs targeting cancer stem cells are
expected to offer significant advances
over current therapies
55

(2) Priority Initiatives by Sector
Pharmaceuticals Sector: Anti-cancer Stem Cell Drugs

Development Schedule＜U.S./ Canada＞
Product

BBI608* on Phase 1 of Phase 1/2 study

Target Indication

Phase1

Phase2Phase3

Submitted

Colorectal (2nd/3rd line, monotherapy)
Colorectal (3rd/4th line, combo)
Solid tumor (2nd/3rd line, combo with Paclitaxel)

BBI503※

Solid tumor (monotherapy)＜Japan＞••

Begin Ph1 clinical trials by March 2013 (submit a notification of clinical trial plan)
Participate in Ph3 international joint clinical trial to minimize development timeTarget Launch Year for
BBI608
Corporate Business Plan FY2013 – FY2015

U.S./Canada: FY2015 Japan: FY2016
56

Contents

1. Current Situation

２. Overview Of Corporate Business Plan
FY2013-FY2015
３. Initiatives Under Corporate Business Plan
FY2013-FY2015
４. Shareholder Return(1) Dividend Policy

Corporate Business Plan FY2013 – FY201557

(1) Dividend Policy
We consider shareholder return as one of our priority management issues and have madeit a policy to maintain stable dividend payment, giving due consideration to our businessperformance and a dividend payout ratio for each fiscal period, the level of retained
earnings necessary for future growth, and other relevant factors.
(Billions of Yen)

(Yen)

16

210
Interim dividend (left axis)

Year-end dividend (left axis)

Net income (right axis)

14

180

12

7

10

6

8
6
4

5
3
30

3
31

3
34

94
63

65

2

3

3

3

91
5

3

150

6

3

6

6

6
6
15

4

3

90

0

90
60

24
6

6

30

3

0

0

6

-2

-59

-4
(FY) 2001

2002

2003

2004

2005

2006

2007

2008

2009

-30

-50
2010

2011

-60
2012

2013

(Forecast)

Corporate Business Plan FY2013 – FY2015

120

2014

(Plan)

2015(Target)58

Final Words

Corporate Business Plan FY2013 – FY2015

59

Toward the Sustainable Development of Society

Support the sustainable
development of society withthe power of chemistry

Products
High-value-added
useful to
products
society Environmentally
High-quality
friendly andproducts
safe products

Participated in
the UN Global
Compact

Made Eco-First
Commitments
to the Ministerof theEnvironment

Participated in
the Japan
Business andBiodiversity
PartnershipSocially responsible investment (SRI) recognitions
Society
EconomyResponsible
Care

Sumitomo Chemical recognized by CDP for Climate
Change Disclosure Leadership
Other major SRI indices in which Sumitomo Chemical isincluded:

CSR Management

Corporate Business Plan FY2013 – FY2015

60

Creative Hybrid Chemistry

Corporate Business Plan FY2013 – FY2015

61

Cautionary Statement
Statements made in this document with respect to Sumitomo Chemical’s current

plans, estimates, strategies and beliefs that are not historical facts are forwardlooking statements about the future performance of Sumitomo Chemical. Thesestatements are based on management’s assumptions and beliefs in light of theinformation currently available to it, and involve risks and uncertainties.

The important factors that could cause actual results to differ materially fromthose discussed in the forward-looking statements include, but are not limited to,

general economic conditions in Sumitomo Chemical’s markets; demand for, andcompetitive pricing pressure on, Sumitomo Chemical’s products in themarketplace; Sumitomo Chemical’s ability to continue to win acceptance for its
products in these highly competitive markets; and movements of currency
exchange rates.

Corporate Business Plan FY2013 – FY2015

62