Financial Results Overview
and Performance Outlook

Masakazu Tokura, President
May 11, 2012

Agenda1 Financial Results Overview and Outlook

3

2 Current Management Priority Issues

11

3 Enhance Financial Strength13

4 Framework of Our Next Corporate Business Plan

23

5 Dividend Policy

39

Financial Results Overview and Performance Outlook

2

1. Financial Results Overview and Outlook

Financial Results and Outlook(Billions of yen)

FY2012FY2011(Forecast)

Change1,947.9

2,230.0+282.1

60.7

90.0

+29.3

2.0

16.0

+14.0

50.7

95.0

+44.3

5.6

40.0

+34.4

Naphtha Price¥54,900/kl¥65,000/kl

Exchange Rate

¥79.08/US$¥82.50/US$¥9/share¥9/share

Sales
Operating Income
Equity in Earnings of Affiliates

Ordinary Income
Net Income

Dividend per Share

Financial Results Overview and Performance Outlook

4

FY2012 Sales by Segment(Billions of yen)

FY2012

Shipping
VolumeVariance

Foreign
Exchange
Translation
Variance

FY2011(Forecast)

ChangeSales Price
Variance

Basic Chemicals

284.3

310.0

+25.7

+5.5

+18.2

+2.0

Petrochemicals &Plastics

672.4

830.0

+157.6

+48.0

+97.6

+12.0

IT-related Chemicals

293.1

360.0

+66.9

-24.0

+85.9

+5.0

Health & Crop
Sciences

264.1

290.0

+25.9

+1.5

+24.4

0.0

Pharmaceuticals

380.5

380.0

-0.5

-10.0

+5.5

+4.0

Others

53.4

60.0

+6.6

-

+6.6

0.0

Total

1,947.9

2,230.0+282.1+21.0+238.1+23.0

Sales Outside of Japan

1,009.0

1,250.0+241.0

52％

56%

+ 4%

Percentage of Sales
Outside of Japan

Financial Results Overview and Performance Outlook

5Change in Operating Income FY2011/FY2012
FY2011 ¥60.7 billion → FY2012 ¥90.0billion(+¥29.3 billion)(¥ billion)

1200

Volumes& others
+52.3

900

600

60.7

90.0

Margins
-51.0
Costs
+28.0

300

0

FY2011

Financial Results Overview and Performance Outlook

FY2012(Forecast)

6

FY2012 Operating Income by Segment(Billions of yen)

FY2011FY2012(Forecast)

ChangeMajor Factors for
Changes in Profit

Basic Chemicals

9.3

9.0

-0.3

• Improvement in margins• Increase in shipping volumes

Petrochemicals &Plastics

6.2

11.0

+4.8

• Increase in shipping volumes• Reduction in margins+13.0• Increase in shipping volumes• Progress in rationalization• Decrease in sales price of
LCD-related materials+7.5• Increase in export sales in yen
terms due to the depreciation of
the yen• Increase in shipping volumes• Decrease in SG & A• Increase in shipping volumes• Impact of NHI drug price revision

IT-related Chemicals

Health & Crop
Sciences

11.0
26.5

24.0
34.0

Pharmaceuticals

20.9

27.0

+6.1

Others

-13.2

-15.0

-1.8

Total

60.7

90.0

29.3

Financial Results Overview and Performance Outlook

7

FY2011 Financial Results and Outlook for FY2012(Billions of yen)

FY2012FY2011(Forecast)

Change1,947.9

2,230.0+282.1

60.7

90.0

+29.3

2.0

16.0

+14.0

50.7

95.0

+44.3

5.6

40.0

+34.4

Naphtha Price¥54,900/kl¥65,000/kl

Exchange Rate

¥79.08/US$¥82.50/US$¥9/share¥9/share

Sales
Operating Income
Equity in Earnings of Affiliates

Ordinary Income
Net Income

Dividend per Share

Financial Results Overview and Performance Outlook

8

Trends in Performance
Sales, Ordinary Income, Net Income
Sales （left axis）

Net Income/Loss （right axis）

Ordinary Income/Loss (right axis）(Billions of yen)
2,500(Billions of yen)
250

2,230

2,000

1,790

1,897

1,000

158
141
91

500

200
150

1,296
124

1,948

1,621

1,557
1,500

1,982

1,788

93

100
61

94

65

95

84
35

50

63
40

24

0

-33

15

0
6

-500

-50
-59

-1,000-100
ＦＹ2004

ＦＹ2005

ＦＹ2006

Financial Results Overview and Performance Outlook

ＦＹ2007

ＦＹ2008ＦＹ2009ＦＹ2010ＦＹ2011ＦＹ2012(Forecast)9

FY 2012 Outlook (comparison with FY 2012 targets)(Billions of yen)

FY 2012FY 2012(Target)*(Forecast)

Sales
Operating Income

2,400.0

2,230.0

190.0

90.0

Major Factors forDifferences in Profit Significant fall indemand due to
weak economy
 Appreciation of

the yenOrdinary Income

220.0

95.0

Net Income

140.0

40.0

Naphtha Price¥50,000/kl¥65,000/kl

Exchange Rate

¥90/US$¥82.5/US$※Targets set in our three year corporate business plan
Financial Results Overview and Performance Outlook

102．Current Management Priority Issues

Current Management Priority Issues
2 to 3 Years

Last 10 Years
Pave the way for future growth

Enhance financial
strength(Tackle Three Management Priority Issues)

RabighProject

EstablishedLaunched DSP, and expanded
IT-related
AcquiredChemicals
Sepracor
SectorNext 10 to 20 Years

Improve profitability
Rigorously selectinvestments
Improve asset
efficiency

Development of New Businesses

Environment
andEnergyFinancial Results Overview and Performance Outlook

ICT

Promote globally integrated management

Globalization

2001

Life
Sciences

2011

2020~30
12

3. Enhance Financial Strength

Current Management Priority Issues
2 to 3 Years

Last 10 Years
Pave the way for future growth

Enhance financial
strength(Tackle Three Management Priority Issues)

RabighProject

EstablishedLaunched DSP, and expanded
IT-related
AcquiredChemicals
Sepracor
SectorNext 10 to 20 Years

Improve profitability
Rigorously selectinvestments
Improve asset
efficiency

Development of New Businesses

Environment
andEnergyGlobalization

2001
Financial Results Overview and Performance Outlook

Life
Sciences

ICT

Promote globally integrated management

2011

2020~30
14

Results Achieved in Major Projects
ThreeManagement
Priority Issues

Major Projects

Investment

Results
Sales(FY00→FY10)

Strengthen
fundamentals of
petrochemicals
business

Gain critical mass inpharma business toachieve strong growth

Developnew core business

Implementation of
Rabigh Project

Launch of Dainippon
Sumitomo Pharma,acquisition of
Sepracor in US

Establishment andexpansion of
IT-related Chemicals
SectorApprox. ¥166.0 bn

Approx. ¥219.0 bn

Approx. ¥355.0 bn(equity investment andlending)
Total project cost $10.1 bn(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)

Financial Results Overview and Performance Outlook

15

Trends in Financial Ratios
Interest-bearing Liabiliies (right axis)

Debt Equity Ratio (left axis)

Shareholders' Equity Ratio(Times)(Billions of yen)

1,200

1.80
998
1.50

1,040
1.37

795

1.20

1,053
1.46 1,000

1.21
800

1.03
0.92

641

0.90

0.90

579

0.80
487

485
0.60

0.30
32%

30%

600

0.70

485

33%

674

0.61

0.62

0.67

471

35%

400

33%

34%

200
33%

27%

24%

22%

21%

FY09

FY10

FY11

0

0.00
FY01

FY02

FY03

FY04

Financial Results Overview and Performance Outlook

FY05

FY06

FY07

FY08

16

Enhance Financial Strength

Quickly maximize returns on major projects
Restructure/exit unprofitable businesses Drastically reduce overhead costs
 Minimize sensitivity of earnings to currency
fluctuations

Improve asset
efficiency

Rigorously selectinvestments

Improve profitability

Keep investment cash flows
within the range of operating
cash flows

Reduce cash conversion
cycle

Enhance Financial Strength＜Financial target by the end of FY2015＞• Interest-bearing debt: under ¥900.0 billion• Debt equity ratio: under 0.9 times

Secure greater strategic freedom to aggressively
pursue growth opportunities
Financial Results Overview and Performance Outlook

17

Improve Profitability: Drastically Reduce Overhead Cost

Increased corporate overhead costs to support the
globalization of our operations (incl. research costs)

Cut overhead costs by 15 billion yen by fiscal 2015,
a 15% reduction from fiscal 2011, with a particularfocus on corporate overhead costs
Streamline
research
activities(increaseproductivity)

Improve the efficiencyof service functions(through shared service
and outsourcing ofadministrative functions)

Financial Results Overview and Performance Outlook

Improve overall
operational efficiency

18

Improve Profitability: Minimize Sensitivity to Currency Fluctuations

Expand overseas production
 Better balance foreign currency denominatedpayables and receivables(e.g., by increasing US$-denominated purchase of raw
materials for products sold in US$, such as polarizer film)Halve sensitivity of operating income to foreignexchange rate fluctuations from over 4 billion yen to
over 2 billion yen per year for each one-yen
movement against US$
Financial Results Overview and Performance Outlook

19Improve Asset Efficiency: Reduce Cash Conversion Cycle (CCC)
CCC = accounts receivable turnover + inventory turnover- accounts payable turnover
Our initiatives

CCC

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

56

73

73

57

58
77

Target

100

55

40

80

FY2010 level by FY2015
126

60
104

40

Reduce CCC by 25% from

87

108

106
92

114
95

84

Estimated cash flow improvement
between FY2011 and FY2015
resulting from these initiatives

FY2015(Target)¥130 billion

69

20
0
FY2008 FY2009 FY2010 FY2011

Financial Results Overview and Performance Outlook

20

Targets on Enhancing Financial StrengthInterest-bearing Liabilities

End of FY2011

By the end of FY2015¥1,053.0 billion

Under ¥900.0 billion

Debt Equity Ratio

End of FY2011

1.5 times
Financial Results Overview and Performance Outlook

By the end of FY2015

Under 0.9 times

21Trends in Financial Ratios
Interest-bearing Liabiliies (right axis)

Debt Equity Ratio (left axis)

Shareholders' Equity Ratio(Billions of yen)(Times)1.8

1200
1,040 1,053

1,070

998

1.5

1.37
795

1.2

1000

1.46

900

1.21
800

1.03
0.92

641

0.90

0.9

579

0.80
487

0.70

485
485

0.6

0.3
32%

30%

33%

0.9

674

0.61

600
0.62 0.67

471

35%

400

33%

34%

200
33%

27%

24%

22%

21%

0.0

0
FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

(Forecast)Financial Results Overview and Performance Outlook

FY13

FY14

FY15

(Target)22

4．Framework for Our Next Corporate
Business PlanFramework for Our Next Corporate Business Plan
Last 10 Years
Pave the way for future growth(Tackle Three Management Priority Issues)

RabighProject

Establishedandexpanded
Launched DSP,
IT-related
AcquiredChemicals
Sepracor
Sector

FY2012

Next Three-Year
Corporate
Business Plan

Next 10 to 20
Years

Step 1:
Enhancefinancial strength
Improve profitability

Step 2:Developa new growth
path

Rigorously
select investments
Improveasset efficiency

Development of New Business
Environment
andEnergyGlobalization
2001
Financial Results Overview and Performance Outlook

Life
Sciences

ICT

Promote globally integrated management2011

2013-15

2020-30
24

Framework for Our Next Corporate Business Plan
FY2012

Next Three-Year Corporate Business Plan

FutureStep 1: Enhance financial strength(short-term management priority issues)
Improve profitability
 Quickly maximize returns on major projects
 Restructure/exit unprofitable businesses Drastically reduce overhead costs
 Minimize sensitivity of earnings to currency fluctuations
Rigorously select investments
 Keep investment cash flows within the range of
operating cash flows

Step 2:Develop a new
growth path
Focus resources onhigh -growth area
Quickly establish new
businesses

Improve asset efficiency
 Reduce cash conversion cycle

Accelerate development of new businesses(medium- to long-term management priority issues)

Promote globally integrated management(ongoing management priority issues)
Financial Results Overview and Performance Outlook

25

Development of New Businesses(Medium- to Long-Term Management Priority Issues)

Promote Creative Hybrid Chemistry and Solution-Oriented Development

Contribute to the sustainable development of society

Environment
andEnergyInformation
andCommunication
Technology

Life
Sciences

Offer products that help solve global challenges = Develop new businesses
Combine and leverage six core technologies
Highprecision
processing

Design offunctionalorganic
chemicals andpolymers

Financial Results Overview and Performance Outlook

Design offunctional
inorganic
materials

DevicedesignGenomics

Catalyst
design27

Commercialization Timeline （Environment and Energy, ICT)
Commercialization Timeline
2011

EnergyCreation

2015

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

Ultra-high-efficiency
photovoltaic(epitaxial wafer)

2020~
Organic thin-film photovoltaics
Proton exchange membrane
fuel cells (automotive
applications)

EnergyStorage

Lithium-ion secondary
batteries (separators)

High voltage lithium-ion secondary batteries(cathode materials)

EnergySaving

LED lighting applications(sapphire substrates andalumina, etc.)

PLED lighting

Power semiconductors (epitaxial wafers)

EnergyManagement
Environment
ICTHigh thermal conductive resin

Diesel particulate filters

CO2 separation

PLED (displays)
Next generation polarizing films

Financial Results Overview and Performance Outlook

Organic semiconductors

28Life Sciences: LATUDALATUDA Sales Projection in the US

Additional indications andexpansion of markets
Schizophrenia(Billions of yen)Canada:Japan:
China:
Europe:NDS submitted in June 2011
New Phase III study under preparation
IND submitted in September 2011
Phase III study underway(Joint development with Takeda Pharmaceutical)

Schizophrenia (change of maximum dose)

50

US:

sNDA submitted in June 2011
Approved in April 2012

Bipolar disorder (depression)
US:

sNDA submitted in 2012
Approval of additional indication expected in 2013

Bipolar maintenance
US, Europe and other:Phase III studies to be initiated in 2Q 2011

MDD with mixed features

0
FY2012(Forecast)

FY2014(Target)Financial Results Overview and Performance Outlook

US:

Phase III studies to be initiated in 2Q 201129

Life Sciences: Mechanisms of Action of BBI608 and BBI503

Treatment by chemotherapy

Recurrence
Development ofheterogeneity by gene andepigenetic changes-Resistance to chemotherapy

Metastasis
Cancer stem cells (CSC) survive(Chemotherapy resistance)

Development of heterogeneity
by gene and epigenetic
changes-Resistance to chemotherapy

The
The “red“red cells
cells (CSC)”(CSC)” areare not
not controlledcontrolled bybyexisting
therapy,andCSC
tumorigenisty
existing therapy, and CSC tumorigenisty(self-renewal(self-renewal activity),
activity), recurrence
recurrence orormetastasis
metastasis takes
takes place.
place.

BBI-608 and BBI-503
Anti-Cancer Stem Cell drugs

Financial Results Overview and Performance Outlook

Drugs targeting cancer stem cells are
expected to offer significant advances overcurrent therapies

30

Life Sciences: Outline of BBI608 and BBI503

BBI608BBI503

First-in class, Molecular Targeted Drugs (small
molecular compound, Oral agent）

First-in class, Molecular Targeted Drugs (small
molecular compound, Oral agent)Excellent efficacy in monotherapy and combination
with chemotherapy by inhibiting both growth oftumor cells and maintenance of cancer stem cellsHighly safe, easy-to-use with existing
chemotherapy. No particular hematologic toxicity
observed

Excellent efficacy in monotherapy and combination
with chemotherapy by inhibiting both growth oftumor cells and maintenance of cancer stem cellsby the different mechanism to BBI608.

Highly safe, easy-to-use with existing chemotherapy.

Product Target Indication
Product

Target Indication

BBI608

Colorectal (2nd/3rd line, monotherapy)

Pre-clinical Phase1

P3 preparation

Colorectal (2nd/3rd line, combo)
Colorectal (1st line, combo)
Solid tumor (2nd/3rd line, combo with Paclitaxel)
BBI503

Solid tumor (monotherapy)

Financial Results Overview and Performance Outlook

Phase2P2 ongoing

Phase3

Predicted
launch year
2015
(earliest)

Pre-P1bP1b/2 ongoingP1 ongoing

31Strategy for Printable Polymer Organic Light Emitting Diodes

Applications in Printed Electronics
Organic
semiconductor

PLED lighting

Organic
photovoltaics

PLED
materials
for displays

Financial Results Overview and Performance Outlook

32

PLED Materials for Displays
Production costs are lower with printable PLEDs because the equipment
needed costs less and the production process is simpler.
(PLEDs)Manufacturing
equipment(SMOLEDs)

Vacuum deposition system equipped with multiple
deposition chambers.

Production process

Polymer light emitting diodes

Dry process
Vacuum deposition
methodWet process
Printing method

Structure of layers

Small-molecule organic light emitting diodes

Many layers

Few layers

Applicable to various types of printing machines asneeded•Inkjet printer•Slit die coater

Financial Results Overview and Performance Outlook

33

PLED Lighting
Participation in “Light+Building” for the first time
Sumitomo Chemical’s exhibit, designed by Motoko Ishii, world-renowned
Japanese lighting designer, will have panels with 60 subtle color variations,taking advantage of the ability of PLEDs to apply a spectrum of colors using asingle-layer process

Date

April 15 -20, 2012

Place

Messe Frankfurt

OulineLight+Building is one of the world’s biggest trade fairs for lighting andintelligent buildings held every two years

Financial Results Overview and Performance Outlook

34

Promote Globally Integrated Management(Ongoing Management Priority Issues)

Promote Globally Integrated Management
Basic Chemicals

IT-related Chemicals

Singapore
Increase methyl methacrylate
production capacity
PolandStudying investments in DPF
production facilities

Korea
Built a touch sensor panel
production facility
Built a sapphire substrate
production facility
China
Built a supply chain

FY2011as ne
rs tioe
Ov ducoPr

40%
Pharmaceuticals
US
Launched LATUDA
Acquired BBI
EuropeLicense agreement with Takeda
Pharmaceuticals for the joint development andexclusive commercialization of lurasidone

Petrochemicals and Plastics

Health & Crop Science

Singapore
Building a S-SBR production plant
Saudi Arabia
Studying Rabigh Phase II project

Australia
Comprehensive business alliance with Nufarm
US
Collaboration with MonsantoFinancial Results Overview and Performance Outlook

36

Globalization in the Last 10 Years
Percentage of overseas production in FY2011: 40%
Asia
EuropeCentral and South America
Percentage of Sales Outside of Japan(Billions of yen)

North America
Middle East and Africa
Oceania and Others

(%)

1,400

70.0

1,200

60.0

1,000

50.0

800

40.0

600

30.0
Decides to implement Rabigh Project;
Completes the 2nd phase expansionof MMA in Singapore

400

Starts production ofpolarizing film in Taiwan

200

Starts production of polarizing
film in South Korea

Starts production of Rabigh complex;
Acquires Sepracor

Completes the 3rd phase
expansion of MMA in Singapore

20.0

Forms comprehensive
business tie-up and makes
strategic investment in Nufarm

10.0

Acquires CDT

0.00FY2001

FY2002

FY2003

FY2004

Financial Results Overview and Performance Outlook

FY2005

FY2006

FY2007

FY2008FY2009FY2010FY2011FY2012(Forecast)37

Globalization

FY2012FY2010FY2011

Overseas sales
to total sales

53%

52%

56%

Overseas production
to total production

40%

40%

43%

Overseas headcountto total headcount

38%

39%

40%

Financial Results Overview and Performance Outlook(Forecast)38

5. Dividend Policy

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.
(Yen)(Billions of yen)

210

16
14

Interim Dividend (left axis)

12

12

12

7

6

10

10
8

6

8

91

Year-end Dividend (left axis)

9

9

9

120

3

6

3

3

90

63

65

4

9
6

6

6

60

24

15

2

3

4

5

180
150

94

5

Net Income (right axis)

6

6

3

0

6

40
6
6

30
0
-30

-2

-59

-4
FY2004

FY2005

FY2006

Financial Results Overview and Performance Outlook

FY2007

FY2008-60
FY2009FY2010FY2011FY2012(Forecast)40

Creative Hybrid Chemistry

Financial Results Overview and Performance Outlook

41

Appendix- Overview of FY2011 Financial Results

Overview of FY2011 Financial Results
FY2011FY2010Change1,982.4

1,947.9-34.6

Operating Income

88.0

60.7

-27.3

Equity in Earnings of Affiliates

10.8

2.0

-8.8

84.1

50.7

-33.4

Extraordinary Gains/Losses

-8.4

-26.8

-18.4

Income Taxes

-34.8

-8.3

+26.5

Minority Interests

-16.4

-10.1

+6.4

Net Income

24.4

5.6

-18.8

Naphtha Price¥47,500/kl¥54,900/kl

Exchange Rate

¥85.74/US$¥79.08/US$¥9/share¥9/share

Sales

Ordinary Income

Dividend per Share
Financial Results Overview and Performance Outlook

43

FY2011 Sales by Segment(Billions of yen)
Shipping
VolumeVariance

Foreign
Exchange
Translation
Variance

FY2010FY2011

ChangeSales Price
Variance

Basic Chemicals

302.3

284.3

-17.9

+6.5

-20.0

-4.4

Petrochemicals &Plastics

649.9

672.4

+22.5

+79.0

-30.3

-26.1

IT-related Chemicals

322.3

293.1

-29.2

-33.5

+16.8

-12.5

Health & Crop
Sciences

250.8

264.1

+13.3

0.0

+23.1

-9.7

Pharmaceuticals

410.6

380.5

-30.1

-

-19.9

-10.2

Others

46.6

53.4

+6.8

-

+6.8

0.0

Total

1,982.4

1,947.9

-34.6

+52.0

-23.6

-62.9

Sales Outside of Japan

1,056.7

1,009.0

-47.7

53％

52％

-1%

Percentage of Sales
Outside of Japan

Financial Results Overview and Performance Outlook

44

Change in Operating Income FY2010/FY2011
FY2010 ¥88.0 billion → FY2011 ¥60.7 billion(-¥27.3 billion)(Billions of yen)

125

100

88.0

Margins
-44.5

75

Costs
+32.5

Volumes& others
-15.3

60.7

50

25

0
FY2010Financial Results Overview and Performance Outlook

FY201145

FY2011 Operating Income by Segment(Billions of yen)

FY2010FY2011

Major Factors for
Changes in Profit

ChangeReduction in margins
 Decrease in shipping
volume

Basic Chemicals

20.6

9.3

-11.3

Petrochemicals&
Plastics

11.1

6.2

-5.0



Decrease in shipping
volumeDecrease in sales prices
of LCD-related materials

IT-related Chemicals

26.1

11.0

-15.2



Health & Crop
Sciences

23.3

26.5

+3.2



Increase in shipping
volumes

Pharmaceuticals

28.7

20.9

-7.7



Decrease in licensing
revenue

Increase in sales ofelectricity due to under
supply of electricity

Others

-21.9

-13.2

+8.7

Total

88.0

60.7

-27.3

Financial Results Overview and Performance Outlook

46

Forward-Looking Statements
Statements made in this material with respect to Sumitomo Chemical’s plans,
projections, strategies, beliefs, and future performance that are not historical facts
are forward-looking statements that are based on information available at the timeof the preparation of this material and include risks and uncertainties. Factors that
could materially affect actual results of Sumitomo Chemical’s future performance
include, but are not limited to, economic conditions in the areas of Sumitomo
Chemical’s business, demand for Sumitomo Chemical’s products in markets,
downward price pressure on Sumitomo Chemical’s products resulting from
intensifying competition, Sumitomo Chemical’s ability to continue to provide
products that are accepted by customers in highly-competitive markets, andmovements of currency exchange rates.

Financial Results Overview and Performance Outlook

47