Kureha Corporation Reports Interim Results
April – September 2018 (IFRS)Tokyo, Japan, December 2018 – Kureha Corporation (“Kureha”), a leading global
supplier of specialty chemicals and plastics, has reported earnings for the first half ofthe year ending March 2019 (FY2018), the final year of the company’s mid-term
management plan, Kureha's Challenge 2018. On a consolidated basis, revenue
increased 4.3% to 72.5 billion yen year-on-year while operating profit decreased 2.5%
to 7.1 billion yen. Profit before income tax rose by 2.1% to 7.3 billion yen. Profit
attributable to the owners of Kureha fell by 7.7% to 5.3 billion yen.
While profits were affected by adverse circumstances, the results also reflect positive
factors including better-than-expected performance in the Advanced Materials segment,
front-loaded delivery recorded in the Specialty Chemicals segment and higher revenue
growth from value-added products. We also recorded fewer expenses in the first half,
although we expect expense spending for the full year to remain unchanged.
In Advanced Materials, Kureha continued to see volume growth in advanced plastics
and carbon products, although profits were affected by temporary costs related to thepolyglycolic acid (PGA) plant operation in the United States. Segment performance
was also affected by Hurricane Florence in the United States in September, which
disrupted production of polyphenylene sulfide (PPS) at Fortron Industries, Kureha’s
joint venture with Celanese in North Carolina.
Specialty Chemicals and Specialty Plastics both saw growth in revenue and profits, theformer due to solid sales volumes of agrochemicals compensating for slower
performance in the pharmaceuticals business, and the latter due to stronger sales
volumes of packaging film. Performance in the Construction segment was impacted bya drop in private-sector construction projects, while Other Operations saw revenue andprofit growth due to higher sales volumes in the environmental business.
Yutaka Kobayashi, President and Chief Executive Officer, said, “I am pleased to reportthat performance in the first half of FY2018, the final year of Kureha’s Challenge 2018,
surpassed forecasts despite continued market challenges and the unexpected force
majeure factor in North Carolina. Looking ahead to the second half, I believe we are on
track to reaching the plan’s target of 14.0 billion yen in operating profit.”“That said, 14.0 billion yen is the minimum line. We are moving forward aggressively
with strengthening Kureha’s product offering, innovative capabilities and operational
efficiency, and have made 2020 the new target year for the mid-term plan’s two central
qualitative targets: expanding the PGA business and enhancing the managementfoundation.”
Elaborating on Kureha’s growth strategy, Mr. Kobayashi added, “Functional products
will be key growth drivers. Accordingly, we are steadily expanding production capacity
in our high-demand businesses, PVDF and PPS. In the PGA business, we took thedecision to further strengthen our product offering in the United States by developing
three new frac plug grades, which break down in different temperatures. One of them,a new ultra-low temperature grade product, was successfully launched this fall.
Following tests and approval by a major operator for full-bore use, we now look forward
to receiving orders.
“While these efforts led to a delay from the initial plan, I believe it is the right strategy tothoroughly establish Kureha’s differentiation in the market. On this foundation, we
predict a return to profitability for the PGA business in the next fiscal year and aredetermined to reach a profit level above 1.5 billion yen by 2020.”
Page 1 of 7

Consolidated interim results(Billions of yen, except where stated)
Sep. 2017

Sep. 2018

Change (%)

Revenue
Operating profit
Profit before income tax
Profit attributableto owners of Kureha
Dividend per share (yen)

69.5
7.2
7.2
5.8

72.5
7.1
7.3
5.3

4.3
-2.5
2.1
-7.7

55.00

70.00

-

Consolidated interim results by segment(Billions of yen)Segment

Sep. 2017

Sep. 2018

Change (%)

Revenue
Operating profit (loss)
Revenue
Operating profit (loss)
Revenue
Operating profit (loss)
Revenue
Operating profit (loss)
Revenue
Operating profit (loss)

19.8
1.4
12.6
1.9
22.2
3.3
7.2
0.2
7.6
0.6
-0.2

22.6
0.7
14.1
2.1
22.8
3.4
5.0
0.1
8.1
0.8
-0.0

14
-53
11
9
2
3
-31
-42
7
29
-

Revenue
Operating profit (loss)

69.5
7.2

72.5
7.1

4.3
-2.5

Advanced Materials
Specialty Chemicals
Specialty Plastics
Construction
Other Operations
Adjustments
Total

Performance by Segment
Advanced Materials
Major product areas: advanced plastics (PPS, PVDF, PGA), carbon materials
In the first-half period, revenue in the Advanced Materials segment increased by 14%
to 22.6 billion yen from 19.8 billion yen. Operating profit decreased by 53% to 0.7 billion
yen, mainly due to temporary PGA-related costs.
Advanced plastics: Revenue up but temporary PGA costs affect profits
Revenue in the advanced plastics business continued to see healthy growth, up 12%.
This growth was spurred in particular by continued strong demand for polyvinylidene
fluoride (PVDF), which is used in lithium-ion battery (LiB) binder materials for electricvehicles. In the PGA business, while revenue continued to grow, temporary costs
resulting from a temporary halt of operation at the resin manufacturing plant in the
United States affected profits. In the PPS business, which continued to enjoy growing
demand for automotive applications, performance was affected by the force majeuresituation caused by Hurricane Florence in the United States.
Carbon products: Continued growth in revenue and profits
The carbon products business continued its upward trajectory during the first-halfperiod. Revenue rose 4% to 2.7 billion yen due to continued demand for heat-insulating
materials used in the manufacturing of silicon ingots for semiconductors, leading to anincrease in operating profit.

Page 2 of 7

Outlook: In the PGA business, Kureha expects to see stronger business growth, which
will lead to a narrowing of the operating loss. We will focus our business expansion on
the Permian Basin and Eagle Ford Shale regions, which are hotspots of U.S. shale oil
production, and expect to see a return to profitability in the next fiscal year. Ourdegradable frac plugs are currently being used by eight oil field operators, with whom
we are working closely to gather feedback for product refinements.
In the PVDF business, demand will continue to be strong. In response, annual
production capacity at Kureha’s Iwaki Plant will increase by 2,000 tons annually fromJanuary next year as new facilities become operational. In China, where Kureha iscurrently capable of producing 5,000 tons annually, we are awaiting official approval toproduce additional grades of LiB binder materials for the rapidly expanding electricvehicle market.
In the PPS business, Kureha expects a significant profit decline, mostly due to theforce majeure disruption seen in the first half in the United States. However, we
forecast continued demand for automotive applications, as PPS, which is bothlightweight and has excellent heat stability, has proven to be an excellent replacement
for metals. Consequently, we are moving forward with plans to raise production
capacity at the Iwaki Plant by 5,000 tons/year to a total of 15,700 tons/year by 2021.
In carbon products, revenue and operating profit are likely to decline slightly althoughprice adjustments and continued cost reductions will have a cushioning effect.
Segment revenue for the full fiscal year is projected to be 47.0 billion yen, up 13%
year-on-year, while operating profit is expected to rise by 74% to 2.9 billion yen.

Specialty Chemicals
Major product areas – industrial chemicals, agrochemicals, pharmaceuticals
In the first-half period, the Specialty Chemicals segment recorded revenue of 14.1
billion yen, an increase of 11%, and operating profit of 2.1 billion yen, up 9% from 1.9
billion yen. These results were driven by revenue increases across all businesses inthe segment.
Agrochemicals: Increases in both revenue and operating profit
Sales volumes of the fungicide Metconazole rose due to front-loaded delivery andsustained market demand, leading to increases in both revenue and operating profit.
Pharmaceuticals: Higher sales volumes, but profits affected by price revisions
Kureha saw increased sales volumes of Kremezin, a therapeutic agent for chronic
kidney disease. However, although revenue increased, operating profit was affected bygovernment-mandated drug price revisions.
Industrial chemicals: Healthy sales, but high costs impact profits
Continued high demand for industrial chemicals led to healthy revenue growth.
However, operating profit remained largely unchanged year-on-year due to high raw
material prices and fuel costs.
Outlook: In the second half of the fiscal year, operating profit from the agrochemicals
business will decrease due to lower sales volumes of fungicides, although yen
depreciation against the US dollar will have a cushioning effect. In the pharmaceuticals
business, sales volumes of Kremezin are expected to grow, although governmentmandated drug price revisions will lead operating profit to remain flat. The industrial

Page 3 of 7

chemicals business will return to revenue and profit growth as a result of priceadjustments and continued cost reduction efforts.
Segment revenue for the full fiscal year is projected to rise by 5% to 27.5 billion yen
year-on-year, while operating profit will decrease by 6% to 3.2 billion yen.

Specialty Plastics
Major product areas – food packaging materials, household products
In the first-half period, revenue increased 2% to 22.8 billion yen from 22.2 billion yen,while operating profit was up 3% from 3.3 billion yen to 3.4 billion yen. These results
were driven by robust growth in synthetic fiber products and packaging materials.
Consumer goods: Higher costs affect profits
In consumer goods, NEW Krewrap plastic wrap and Seaguar fishing lines continued tosee revenue growth, although as expected higher costs for raw materials andpromotion led to a decrease in operating profits.
Packaging materials: Continued healthy sales of heat-shrink film
Commercial-use food packaging materials continued to benefit from last fiscal year’s
restructuring of Kureha’s food packaging sales and production network in the EU andAustralia as well as a revised sales expansion strategy for heat-shrink multilayer film.
Both revenue and operating profit increased, driven by higher sales volumes of heatshrink multilayer film.
Outlook: In consumer goods, Kureha forecasts further healthy sales volume gains for
NEW Krewrap plastic wrap, the Kitchinto-san series, and Seaguar fishing lines,
although high raw material and promotional costs will affect operating profit for thesegment as a whole. In packaging materials, Kureha forecasts continued expansion of
global sales on the back of solid demand for advanced heat-shrink multilayer film
products, leading to increases in both revenue and operating profit.
Segment revenue for the full fiscal year is expected to increase slightly to 46.0 billion
yen, while operating profit is projected to decrease by 10% to 6.2 billion yen.

Construction / Other Operations
Major product areas – construction and engineering, environmental engineering,logistics, trading related businesses
Construction: Drop in private-sector projects affects revenue and profits
Kureha’s Construction segment saw steady growth in public-sector construction
projects. However, a fall in the number of private-sector projects, together with higher
labor and raw material costs, affected revenue and operating profits. As a result,revenue in the Construction segment declined 31% to 5.0 billion yen, while operating
profit fell 42% to 0.1 billion yen from 0.2 billion yen.
Other Operations: Increases in both revenue and profit
In the environmental business, the industrial waste treatment business continued toperform well, leading to increases in revenue and operating profit that more thancompensated for logistics and hospital operations, where operating profit remained flat.
As a result, revenue in Other Operations rose by 7% to 8.1 billion yen, and operating
profit increased 29% to 0.8 billion yen from 0.6 billion yen.

Page 4 of 7

Outlook: In the Construction segment, revenue and operating profit are projected todecrease due to fewer post-earthquake construction projects and continued increases
in labor and raw material costs. Revenue is projected to fall 25% to 13.0 billion yen,while operating profit will decrease 52% to 0.5 billion yen.
In Other Operations, Kureha forecasts that the industrial waste treatment business willcontinue to see strong demand. However, intensifying competition, particularly in the
micro-level PCB waste treatment business, will negatively affect revenue and profit. In
response, Kureha will continue its cost-cutting and efficiency-raising measures.
Revenue is projected to decrease slightly by 2% to 16.5 billion yen, while operating
profit will fall 6% to 1.7 billion yen.

Capex, Depreciation, R&D and Debt
(Billions of yen)Sep. 2017

Sep. 2018

4.0
4.9
2.3
56.0

5.8
5.0
2.5
45.9

Capital expenditure
Depreciation
R&D
Interest-bearing debt

March 2019
(forecasts)
14.5
10.3
5.8
45.4

Capital expenditure during the first-half period increased from 4.0 billion yen to 5.8
billion yen. For the full fiscal year, Kureha expects to allocate 14.5 billion yen, up from
9.8 billion yen in FY2017. This capital will be used to raise Kureha’s PVDF and PPS
production capacity in response to intense demand and upgrade production processes
for existing products. Depreciation, mainly related to expanded production facilities,
rose slightly to 5.0 billion yen and is expected to reach 10.3 billion yen for the full fiscal
year.
R&D expenditure rose slightly to 2.5 billion yen in the first half. For the full fiscal year,
the allocation will rise from 5.0 billion to 5.8 billion yen. As per the mid-term
management plan, Kureha’s Challenge 2018, this additional investment in R&D will
focus on enhancing existing products and processes, and developing next-generation
products through collaboration with companies, universities and organizations.
Kureha continues to successfully reduce interest-bearing debt. In the first-half period,
interest-bearing debt decreased from 56.0 billion yen to 45.9 billion yen. For the full
fiscal year, it is projected to reach 45.4 billion yen

Outlook for the Full Fiscal Year
(Billions of yen, except where stated)
March 2018
Revenue
Operating profit
Profit before income tax
Profit attributable to theowners of Kureha
Earnings per share (yen)Dividend per share (yen)*

147.3
13.0
12.7

March 2019
150.0
14.0
14.0

Change (%)
1.8
7.9
10.4

9.7

10.5

8.3

507.48125.0

508.36140.0

Page 5 of 7

(Billions of yen)
Division
Advanced Materials
Specialty Chemicals
Specialty Plastics
Construction
Other Operations
Adjustments
Total

Revenue
Operating profit (loss)
Revenue
Operating profit (loss)
Revenue
Operating profit (loss)
Revenue
Operating profit (loss)
Revenue
Operating profit (loss)
Revenue
Operating profit (loss)

March 2018

March 2019

41.6
1.7
26.2
3.4
45.4
6.9
17.4
1.0
16.8
1.8
-1.9
147.3
13.0

47.0
2.9
27.5
3.2
46.0
6.2
13.0
0.5
16.5
1.7
150.0
14.0

Change
(%)
13
74
5
-6
1
-10
-25
-52
-2
-6
-0.5
1.8
7.9

FY2016-2018 has been designated as a period to lay the foundation for Kureha’s future
expansion. The performance in the first half of FY2018 puts us on track to raising
operating profit by 7.9% to 14.0 billion yen, which is the target figure stated in Kureha’s
Challenge 2018. Alongside this rise in operating profit, revenue will increase by 1.8% to150.0 billion yen. Profit before income tax is expected to grow 10.4% to 14.0 billion yen.
As a result, profit attributable to the owners of Kureha is forecast to increase 8.3% to10.5 billion yen for the full fiscal year.
Kureha will continue to face a challenging market environment in the second half,
including factors such as higher costs for raw materials and promotion in the Specialty
Plastics segment. Growth will thus be mainly driven by the Advanced Materials
segment. An important goal will be to solidify the revenue base for the PGA business inNorth America, which is positioned to become one of Kureha’s future growth drivers. In
the second half, Kureha expects to successfully narrow the operating loss for thisbusiness. Together with continued strong sales volumes of PVDF, this will more thancompensate for lower gains in the PPS business.
Alongside efforts to strengthen existing businesses, we will focus on new businesscreation and the commercialization of promising R&D themes. We will also continue
our efforts to raise productivity, promote group-wide digitization and enhance the ways
in which we can fully utilize the wide-ranging talent that exists within Kureha Group.

*****
For further information, please contact:
KUREHA CORPORATION
Public Relations and IR Department
Tel. 03-3249-4651

Page 6 of 7

Condensed interim balance sheets
As of March 31 and September 30, 2018
(Millions of yen)Mar. 2018

Sep. 2018

AssetsCurrent assets
Cash and cash equivalents
Noncurrent assets
Property, plant and equipment
Intangible assets
Investments and other assets
Total assets

76,963
6,475
165,318
114,236
1,336
49,745242,281

74,522
5,531
173,666
116,038
1,227
56,401
248,189

Liabilities and net assets
Current liabilities
Short-term borrowings
Fixed liabilities
Corporate bonds and long-term borrowings

62,59525,75927,644
21,65760,89026,026
26,755
19,311

Total liabilities
Net assets
Shareholders’ equity
Minority interest
Total net assets

90,24087,645150,193
1,847
152,041

158,937
1,605
160,543

Total liabilities and net assets

242,281248,189

Mar. 2018
147,329
107,300
27,193
12,973
12,683
2,869
9,697

Sep. 2018
72,46652,386
13,745
7,066
7,327
1,995
5,321

Condensed interim income statement
As of March 31 and September 30, 2018
(Millions of yen)
Revenue
Cost of goods soldSelling, general and administrative expenses
Operating profit
Income before income tax
Taxes and minority interest adjustments
Profit attributable to owners of Kureha

Page 7 of 7

FY2018 Interim Report(Period April 1 – September 30, 2018)

November 7, 2018

1

Contents
1. FY2018 Half-Year Results
3-7• FY2018 1H Overview• Segment Performance
8
Advanced Materials
9
Specialty Chemicals
10
Specialty Plastics
Construction & Other Operations 11
12• Financial Position
13• Cash Flow

2. FY2018 Full-Year Outlook• FY2018 Forecast
15-19• Segment Performance Forecast
Advanced Materials
20
Specialty Chemicals
21
Specialty Plastics
22
Construction & Other Operations 23• Key Indicators Projection
24• Cash Flow Projection25

3. Consolidated Companies

26-27

Supplemental Information

28-30

2

1. FY2018 Half-Year Results(April 1 – September 30, 2018)

3

FY2018 1H Overview
Note: Figures indicated in blue are initialprojections announced in May 2018

(in billions of yen, except where stated otherwise)

Revenue

FY2017 1H FY2018 1H

Change (%)

72.5

3.0 (4.3%)
0.5 (0.6%)

FY2018 1H vs. FY2017 1H-0.2 (-2.5%)
2.1 (41.3%)• Revenue grew on strong
performance in Advanced
Materials and Specialty Chemicals,
while Construction declined

69.5

Operating profit

7.2

Profit before income tax

7.2

Profit attributable toowners of Kureha Corp.

5.8

72.0

7.1
5.0

7.3
5.0

5.3
3.5

0.2 (2.1%)
2.3 (46.6%)-0.4 (-7.7%)
1.8 (52.0%)• Operating profit decreased as
result of temporary cost associatedwith Advanced Materials, morethan offsetting gains driven byhigher volumes

Profit per share¥325.46¥257.63

Profit per share attributableto owners of Kureha¥7,257¥7,695• Profit before income tax rose due
to higher financial income

Ratio of profit attributable toowners of Kureha to revenue

62.0%

64.0%

• Profit for the period increased due
to higher tax cost

Dividend per share*

¥55.0

¥70.0

4

FY2018 1H Overview
FY2018 1H Segment Performance (vs. FY2017 1H)
Revenue…FY2017 1H…FY2018 1H

22.2 22.8

22.6
19.8
12.6

(billions of yen)

Operating
Profit3.3 3.4…FY2017 1H…FY2018 1H

1.9 2.1

14.1
7.6 8.1

7.2

5.0

1.4
0.6

0.7

0.8

0.2 0.1
Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Construction

Other
Operations

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Construction

Other
Operations

Factors attributing to operating profit (vs. FY2017 1H)
Advanced Materials:

Temporary PGA-related cost more than offsetting volume growth in advanced
plastics and carbon products
Specialty Chemicals: Higher agrochemicals volumes compensating for lower gains in pharmaceuticals
Specialty Plastics:
Higher packaging film volume more than offsetting higher cost s associated withhome products and synthetic fiber
Construction:
Fewer construction projects in private sector
Other Operations:
Higher volumes in environmental business5

FY2018 1H Overview(billions of yen)

FY2017 1H
Revenue

Advanced Specialty
Materials Chemicals

19.8

12.6

Specialty
Plastics

Construction

22.2

7.2

7.6

69.5

0.6

7.5

Other
Segment
Adjustment
Operations
Total

Elimination

Other income
Other expenses
Operating profit*Environment-related expenses: ¥0.4bn

1.4

1.9

3.3

0.2

Advanced Specialty
Materials Chemicals

Specialty
Plastics

Construction

Finance income
Finance costs-----0.1
0.2
0.5
-0.2
0.3
0.4

Profit before income tax

Profit for the period

FY2018 1H
Revenue

Other
Segment
Adjustment
Operations
Total

22.6

14.1

22.8

5.0

8.1

72.5

0.7

2.1

3.4

0.1

0.8

7.1

Elimination
Other income
Other expenses
Operating profit
Finance income
Finance costs
Profit before income tax

Profit for the period------0.1
0.2
0.2
-0.0
0.4
0.2

Total

69.5
---------------7.2----------7.2
5.8
Total

72.5
---------------7.1----------7.3
5.3

6

FY2018 1H Overview
FY2018 1H Segment Performance (vs. Initial projection)
Revenue…FY2018 1H
Initial projection…FY2018 1H

22.5 22.8

22.0 22.6(billions of yen)

Operating
Profit2.8

2.1

13.0 14.1
7.0

1.4

7.5 8.1

5.0

0.8

0.7
0.2 0.1

0.2
Advanced
Materials

Specialty
Chemicals…FY2018 1H
Initial projection…FY2018 1H

3.4

Specialty
Plastics

Construction

Other
Operations

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Construction

0.4
Other
Operations

Factors attributing operating profit (vs. Initial projection)
Advanced Materials: PVDF and carbon products volumes growth compensating for lower profit in PPS
Specialty Chemicals: Higher agrochemicals volumes as result of front-loaded delivery (originally scheduled
for 2nd half of FY2018), higher industrial chemicals prices
Specialty Plastics:
Higher home products and synthetic fiber volumes and lower costs
Construction:
Fewer construction projects in private sector
Other Operations:
Higher volumes in environmental business7

FY2018 1H Overview
FY2018 1H
Initial projection
Revenue(billions of yen)
Advanced Specialty
Materials Chemicals

Specialty
Plastics

Construction

Other
Segment
Adjustment
Operations
Total

22.0

13.0

22.5

7.0

7.5

72.0

0.2

1.4

2.8

0.2

0.4

5.0

Advanced Specialty
Materials Chemicals

Specialty
Plastics

Construction

Elimination

Other income
Other expenses
Operating profit
Finance income
Finance costs-----0.0
0.1
0.1
0.0
0.3
0.3

Profit before income tax

Profit for the period

FY2018 1H
Revenue

Other
Segment
Adjustment
Operations
Total

22.6

14.1

22.8

5.0

8.1

72.5

0.7

2.1

3.4

0.1

0.8

7.1

Elimination
Other income
Other expenses
Operating profit
Finance income
Finance costs
Profit before income tax

Profit for the period------0.1
0.2
0.2
-0.0
0.4
0.2

Total

72.0
---------------5.0----------5.0
3.5
Total

72.5
---------------7.1----------7.3
5.3

8

Segment Performance:
Advanced Materials(billions of yen)

FY20171H

FY2018
1H

Change%FY2018 1H vs. FY2017 1H
Revenue

Advanced Materials
Advanced plastics

11.6

13.0

12%

Carbon products

2.6

2.7

4%

Revenue: Kureha Co.

14.1

15.7

11%

Revenue: Subsidiaries

14.0

14.6

4%

Elimination

-8.3

-7.7

--

Kureha-G Revenue

19.8

22.6

14%

Kureha-G Operating Profit

1.4

0.7

-53%

(FY18 1H Initial Projection: Revenue ¥22bn, Ope.profit ¥0.2bn)

Operating Profit

Advanced plastics:
Operating profit decreased due totemporary PGA-related cost and profit
decline for PPS, despite higher revenue
driven by PVDF (as LiB binder) andPGA (applications for oil/gas
exploration)

Carbon products
Operating profit improved on higher
revenue9

Segment Performance:
Specialty Chemicals(billions of yen)

FY20171H

FY2018
1H

Change%FY2018 1H vs. FY2017 1H
Revenue

Specialty Chemicals
Agrochemicals

4.0

4.6

14%

Pharmaceuticals

2.2

2.5

12%

Industrial chemicals

4.8

5.2

9%

Revenue: Kureha Co.

11.0

12.2

11%

Revenue: Subsidiaries

3.0

3.4

13%

Elimination

-1.4

-1.6

--

Kureha-G Revenue

12.6

14.1

11%

Kureha-G Operating Profit

1.9

2.1

9%

(FY18 1H Initial Projection: Revenue ¥13bn, Ope.profit ¥1.4bn)

Operating Profit

Agrochemicals
Revenue and profit increased on higher
fungicides volumes
Pharmaceuticals
Operating profit declined due to lower
prices as result of drug price revisions
despite higher Kremezin (therapeutic
agent for chronic kidney disease)
volumeIndustrial chemicals
Revenue grew but operating profit
remained flat due to increased raw
materials and fuels costs offsetting
higher prices

10

Segment Performance:
Specialty Plastics(billions of yen)

FY20171H

FY2018
1H

Change%FY2018 1H vs. FY2017 1H
Revenue

Specialty Plastics
Home products

10.6

10.7

1%

Packaging materials

3.2

3.0

-6%

Revenue: Kureha Co.

13.7

13.6

-1%

Packaging materials

5.9

6.3

7%

Fiber products

2.2

2.3

4%

Others

3.5

3.2

-6%

Revenue: Subsidiaries

11.5

11.8

3%

Elimination

-3.0

-2.7

--

Kureha-G Revenue

22.2

22.8

2%

Kureha-G Operating Profit

3.3

3.4

3%

(FY18 1H Initial Projection: Revenue ¥22.5bn, Ope.profit ¥2.8bn)

Operating Profit

Home products
Operating profit decreased due tohigher costs, despite revenue growth
driven by NEW Krewrap (plastic wrap)
and Seaguar (fishing lines)
Packaging materials
Revenue and profit grew on higher
heat-shrink multilayer film volumes

11

Segment Performance:
Construction & Other Operations(billions of yen)

FY20171H

FY2018
1H

Change%RevenueConstruction
Construction

FY2018 1H vs. FY2017 1H

10.4

8.1

-22%

Elimination

-3.2

-3.1

--

Kureha-G Revenue

7.2

5.0

-31%

Kureha-G Operating Profit

0.2

0.1

-42%

Operating Profit

Construction
Revenue and profit declined due tofewer projects in private sector morethan offsetting the steady growth inpublic sector(FY18 1H Initial Projection: Revenue ¥7bn, Ope.profit ¥0.2bn)

Other Operations
Environmental engineering

Revenue

Logistics
Hospital operations
Others

4.6
4.1
1.8
0.9

5.3
4.1
1.8
1.0

15%
-0%
0%
4%

Revenue: Subsidiaries

11.5

12.2

6%

Elimination

-3.9

-4.1

--

Kureha-G Revenue

7.6

8.1

7%

Kureha-G Operating Profit

0.6

0.8

29%

(FY18 1H Initial Projection: Revenue ¥7.5bn, Ope.profit ¥0.4bn)

Operating Profit

Environmental Engineering
Revenue and profit increased due
mainly to strong industrial waste
treatment business
Logistics
Operating profit remained flat on lower
revenue
Hospital Operations
Revenue and profit remained flat

12

Financial Position
Assets(billions of yen)

Liabilities and Equity
Mar.31 Sept.30
Change2018
2018

Mar.31 Sept.31
Change2018
2018

Cash and cash equivalents

6.5

5.5

-0.9

Trade and other payables

21.5

20.0

-1.6

Trade and other receivables

32.7

30.9

-1.7

Interest-bearing debt

48.1

45.9

-2.2

Inventories

36.0

33.6

-2.4

Provisions

6.6

6.5

-0.1

Other current assets

1.8

4.5

2.7

Other liabilities

14.0

15.3

1.3

Total current assets

77.0

74.5

-2.4

Total liabilities

90.2

87.6

-2.6

Property, plant and equipment

114.2

116.0

1.8

Shareholders’ equity

18.2

18.2

--

Intangible assets

1.3

1.2

-0.1

Capital surplus

15.3

15.0

-0.2

Investments and other assets

49.7

56.4

6.7

Less: Treasury stock

-0.7

-0.7

-0.0

Retained earnings

108.7

113.1

4.3

Other components of equity

8.7

13.4

4.6

Non-controlling interests

1.8

1.6

-0.2

Total non-current assets

165.3

173.7

8.3

Total equity

152.0

160.5

8.5

Total assets

242.3

248.2

5.9

Total liabilities and equity

242.3

248.2

5.9

13

Cash Flow(billions of yen)

FY20171H

FY2018
1H

ChangeCash flow from operating activities

7.2
4.9
-1.3
10.8

7.3
5.0
-1.9
10.3

0.2
0.1
-0.6
-0.4

Cash flow from investing activities

-5.9

-7.3

-1.4

Cash flow from financing activities

-5.3

-4.0

1.2

Effect of exchange rate changes on cash and cash equivalents

-0.0

0.0

0.1

Increase/decrease in cash and cash equivalents

-0.4

-0.9

-0.6

Cash and cash equivalents at beginning of period

6.2

6.5

0.3

Cash and cash equivalents at end of period

5.8

5.5

-0.3

Profit before income tax
Depreciation
Other

14

2. FY2018 Full-Year Outlook(April 1, 2018 – March 31, 2019)

15

FY2018 Forecast(billions of yen, except where stated otherwise)

ChangeYOY (%)FY2017FY2018e

Revenue

147.3

150.0

2.7 (1.8%)

Operating profit

13.0

14.0

1.0 (7.9%)

Profit before income tax

12.7

14.0

1.3 (10.4%)

Profit attributable toowners of Kureha Corp.

9.7

10.5

0.8 (8.3%)

Earnings per share
Shareholders’ equity per
share
Dividend per share(Interim)(Year-end)

FY2018e vs. FY2017• Revenue growth supported largely
by Advanced Materials• Higher operating profit driven by
Advanced Materials, improved
operating loss for PGA and fewer‘other expenses’ more thanoffsetting profit declines and higher
costs in other segments• Profit before income tax to improveon higher operating profit¥507.48¥508.36¥7,272¥7,731

¥55.0
¥70.0

¥70.0
¥70.0

• Profit for the period to improve onhigher profit before income tax

16

FY2018 Forecast
Segment Performance: FY2018e vs. FY2017
Revenue
47.0…FY2017…FY2018e45.4 46.0

41.6(billions of yen)

Operating
Profit6.2

26.2 27.5

17.4

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

FY2017: ¥147.3bn

13.0 16.8 16.5

Construction

Other
Operations

FY2018e: ¥150.0bn…FY2017…FY2018e

6.9

2.9

3.4 3.2
1.8 1.7

1.7

1.0

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

FY2017: ¥14.9bn

0.5

Construction

Other
Operations

FY2018e: ¥14.5bn

Factors attributing to FY2018e operating profit (vs. FY2017)
Advanced Materials:
Specialty Chemicals:
Specialty Plastics:
Construction:
Other Operations:Improved operating loss for PGA more than offsetting lower gains for PPS
Lower agrochemicals volumes, lower pharmaceutical prices
Higher promotion cost for home products
Higher labor and raw materials costs
Intensified competition in environmental business17

FY2018 Forecast(billions of yen)
Advanced Specialty
Materials Chemicals

FY2017
Revenue

41.6

26.2

Specialty
Plastics

Construction

45.4

17.4

Other
Segment
Adjustment
Operations
Total

16.8

147.3

Elimination
Other income
Other expenses
Operating profit*Subsidy income: ¥0.3bn*Loss on retirement of non-current assets: ¥1.3bn, Loss on non-current asset
impairment: ¥0.7bn, Environment-related expenses: ¥0.4bn

1.7

3.4

6.9

1.0

Advanced Specialty
Materials Chemicals

Specialty
Plastics

Construction

46.0

13.0

1.8

14.9

Finance income
Finance costs-----0.2
0.5
2.6

147.3
----------------

-1.9
0.6
0.9

13.0
----------12.7
9.7

Profit before income tax

Profit for the period

FY2018e
Revenue

47.0

27.5

Other
Segment
Adjustment
Operations
Total

16.5

150.0

1.7

14.5

Elimination
Other income
Other expenses

Operating profit
Finance income
Finance costs
Profit before income tax

Profit for the period*Loss on retirement of non-current assets: ¥0.5bn

2.9

3.2

6.2

0.5

Total

-----0.0
0.2
0.7
-0.5
0.6
0.6

Total

150.0
---------------14.0----------14.0
10.5

18

FY2018 Forecast
Segment Performance: FY2018 Revised vs. Initial Projection
Revenue
45.5

47.0

46.0

…FY2018e Initial…FY2018e Revised

27.5
14.5 13.0

16.5

Operating
Profit(billions of yen)

…FY2018e Initial…FY2018e Revised

5.9 6.2

3.9
3.2
2.9 2.7

1.4 1.7
0.6 0.5

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Construction

Other
Operations

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Construction

Other
Operations

Factors attributing to FY2018 revised projection (vs. Initial projection)
Advanced Materials: A large profit decline for PPS including in US JV operation and lower contributions
from PGA subsidiary in US (while achieving sales target) more than offsetting higher
profit gains for PVDF and carbon products
Specialty Chemicals: Improved operating margin for industrial chemicals, favorable effects of weaker yen
against US dollar in agrochemicals export
Specialty Plastics:
Higher home products volumes and lower costs
Construction:
Fewer construction projects in private sector
Other Operations:
Higher volumes in industrial treatment business19

FY2018 Forecast(billions of yen)
Advanced Specialty
Materials Chemicals

FY2017
Revenue

45.5

27.5

Specialty
Plastics

Construction

46.0

14.5

Other
Segment
Adjustment
Operations
Total

16.5

150.0

1.4

14.5

Elimination
Other income
Other expenses
Operating profit*Loss on retirement of non-current assets: ¥0.5bn

3.9

2.7

5.9

0.6

Advanced Specialty
Materials Chemicals

Specialty
Plastics

Construction

46.0

13.0

Finance income
Finance costs-----0.0
0.1
0.6
-0.5
0.6
0.6

Profit before income tax

Profit for the period

FY2018e
Revenue

47.0

27.5

Other
Segment
Adjustment
Operations
Total

16.5

150.0

1.7

14.5

Elimination
Other income
Other expenses

Operating profit
Finance income
Finance costs
Profit before income tax

Profit for the period*Loss on retirement of non-current assets: ¥0.5bn

2.9

3.2

6.2

0.5

-----0.0
0.2
0.7
-0.5
0.6
0.6

Total

150.0
---------------14.0----------14.0
10.5
Total

150.0
---------------14.0----------14.0
10.5

20

Segment Outlook:
Advanced Materials(billions of yen)

FY2017FY2018e

Change%FY2018e vs. FY2017
Revenue

Advanced Materials
Advanced plastics

24.4

28.2

15%

Carbon products

4.9

4.8

-3%

Revenue: Kureha Co.

29.4

33.0

12%

Revenue: Subsidiaries

29.6

34.0

15%

Elimination

-17.3

-20.0

--

Kureha-G Revenue

41.6

47.0

13%

Kureha-G Operating Profit

1.7

2.9

74%

(FY18 1H Initial Projection: Revenue ¥45.5bn, Ope.profit ¥3.9bn)

Operating Profit

Advanced plastics
Revenue and operating profit expected
to rise on the back of strong PGA
business growth (oil/gas exploration
applications) and higher PVDF (LiBbinder) volume, more than offsetting adecline for PPS
Carbon products
Revenue and profit likely to decline
despite continued price adjustments
and cost reduction

21

Segment Outlook:
Specialty Chemicals(billions of yen)

FY2017FY2018e

Change%FY2018e vs. FY2017
Revenue

Specialty Chemicals
Agrochemicals

9.2

8.3

-9%

Pharmaceuticals

3.8

5.1

33%

Industrial chemicals

9.4

10.1

7%

Revenue: Kureha Co.

22.4

23.5

5%

Revenue: Subsidiaries

6.5

7.0

8%

Elimination

-2.7

-3.0

--

Kureha-G Revenue

26.2

27.5

5%

Kureha-G Operating Profit

3.4

3.2

-6%

(FY18 1H Initial Projection: Revenue ¥27.5bn, Ope.profit ¥2.7bn)

Operating Profit

Agrochemicals
Operating profit to decrease on lower
fungicides volumes

Pharmaceuticals
Operating profit to remain level due tolower prices as result of drug pricerevisions, despite higher revenue
expected from volume growth of new
Kremezin productIndustrial chemicals
Revenue and profit to grow as result ofcontinued margin improvement andprice adjustments

22

Segment Outlook:
Specialty Plastics(billions of yen)

FY2017FY2018e

Change%FY2018e vs. FY2017
Revenue

Specialty Plastics
Home products

20.7

21.1

2%

Packaging materials

6.3

5.9

-7%

Revenue: Kureha Co.

27.0

27.0

0%

Packaging materials

13.1

14.0

7%

Fiber products

4.2

4.5

7%

Others

7.4

7.0

-6%

Revenue: Subsidiaries

24.8

25.5

3%

Elimination

-6.4

-6.5

--

Kureha-G Revenue

45.4

46.0

1%

Kureha-G Operating Profit

6.9

6.2

-10%

(FY18 1H Initial Projection: Revenue ¥46.0bn, Ope.profit ¥5.9bn)

Operating Profit

Home products
Operating profit to decline due to higher
promotion cost despite revenue growth
driven by NEW Krewrap and Kitchintosan series products
Packaging materials
Revenue and operating profit toincrease on the back of global sales
expansion for advanced heat-shrink
multilayer film products

23

Segment Outlook:
Construction & Other Operations(billions of yen)

FY2017FY2018e

Change%FY2018e vs. FY2017
Revenue

Operating Profit

Construction
Construction

23.9

20.0

-16%

Elimination

-6.6

-7.0

--

Kureha-G Revenue

17.4

13.0

-25%

Kureha-G Operating Profit

1.0

0.5

-52%

Construction
Revenue and operating profit todecrease due to a decline in post-quake
demand and higher labor/raw materials
costs(FY18 1H Initial Projection: Revenue ¥14.5bn, Ope.profit ¥0.6bn)

Other Operations
Environmental engineering

Logistics
Hospital operations
Others

11.0
8.3
3.6
1.8

11.0
8.3
3.7
1.8

0%
0%
3%
1%

Revenue: Subsidiaries

24.7

24.8

0%

Elimination

-7.9

-8.3

--

Kureha-G Revenue

16.8

16.5

-2%

Kureha-G Operating Profit

1.8

1.7

-6%

(FY18 1H Initial Projection: Revenue ¥16.5bn, Ope.profit ¥1.4bn)

Revenue

Operating Profit

Other Operations
Operating profit to remain level on flat
revenue, due largely to intensifiedcompetition for micro PCB treatment inenvironment business

24

Key Indicators(billions of yen)

FY20171H

2H

FY2018e

Full-year

1H

2H

ChangeFull-year YOY

Capital expenditure

4.0

5.8

9.8

5.8

8.7

14.5

48%

Depreciation

4.9

5.0

9.9

5.0

5.3

10.3

4%

R&D expenses

2.3

2.7

5.0

2.5

3.3

5.8

16%

Interest-bearing debt

56.0

48.1

48.1

45.9

45.4

45.4

-6%

(Currency exchange rates)
1USD:

Term average
Term end¥111.0¥112.7¥110.7¥106.2¥110.9¥106.2¥110.3¥113.6¥110.0¥110.0¥110.1¥110.0

1EUR:

Term average
Term end¥126.3¥132.9¥133.1¥130.5¥129.7¥130.5¥129.8¥132.1¥130.0¥130.0¥129.9¥130.0

1CHY:

Term average
Term end

¥16.4
¥17.0

¥17.1
¥16.9

¥16.7
¥16.9

¥16.7
¥16.5

¥16.0
¥16.0

¥16.4
¥16.0

25

Cash Flow(billions of yen)

FY2017FY2018e

ChangeCash flow from operating activities

12.7
9.9
-2.4
20.2

14.0
10.5
1.1
25.6

1.3
0.6
3.5
5.4

Cash flow from investing activities

-9.7

-17.7

-8.0

Cash flow from financing activities

-10.4

-8.6

1.8

Effect of exchange rate changes on cash and cash equivalents

0.2

0.0

-0.2

Increase/decrease in cash and cash equivalents

0.3

-0.6

-0.9

Cash and cash equivalents at beginning of year

6.2

6.5

0.3

Cash and cash equivalents at end of year

6.5

5.8

-0.6

Profit before income tax
Depreciation
Other

26

Consolidated Companies:
Revenues & Assets(billions of yen)

FY2017 1H

FY2018 1H

ChangeRevenue Total assets Revenue Total assets Revenue Total assets
Kureha Corporation
Kureha Trading Group (2)Kureha Corporation
Kureha Trading Group (2)Kureha Extron Co.
Kureha Extech Co.
Kureha GmbH
Advanced
Kureha America Group (4)Materials

32.2
8.6
14.1
5.3
0.9
1.1
0.9
3.3
0.4

191.1
13.9
--2.0
1.6
0.7
28.7
1.6

34.3
9.2
15.7
5.7
1.1
1.3
1.1
1.2
0.7

196.9
13.8
--2.1
1.4
1.1
27.2
1.3

1.9
0.6
1.5
0.5
0.2
0.2
0.3
-2.1
0.2

5.8
-0.1
--0.1
-0.1
0.5
-1.5
-0.3

Kureha China Group (2)Consolidation adjustments
Total
Kureha Corporation
Specialty Kureha Trading Co.
Chemicals Consolidation adjustments
Total
Kureha Corporation
Kureha Trading Co.
Kureha Gohsen Co.
Kureha China Group (2)Specialty
Kureha America Group (4)Plastics
Kureha Europe Group (4)Kureha Vietnam Co.
Consolidation adjustments
Total

2.2
-8.3
19.8
11.0
3.0
-1.4
12.6
13.7
2.5
2.2
0.1
0.9
4.2
1.7
-3.0
22.2

11.2
--------4.6
-0.8
7.5
3.8
---

3.5
-7.7
22.6
12.2
3.4
-1.6
14.1
13.6
2.4
2.3
0.1
0.8
4.7
1.6
-2.7
22.8

10.2
--------5.0
-0.8
7.7
3.4
---

1.3
0.6
2.7
1.3
0.4
-0.2
1.4
-0.1
-0.1
0.1
-0.0
-0.0
0.4
-0.0
0.3
0.5

-1.0
--------0.4
-0.0
0.2
-0.4
---

Kureha (Shanghai) Carbon Fiber
Materials Co.

27

Revenues & Assets(billions of yen)

FY2017 1H

FY2018 1H

ChangeRevenue Total assets Revenue Total assets Revenue Total assets
Kureha Nishiki Group (4)Construc- Kureha Engineering Co.
tion
Consolidation adjustments
Total
Kureha Ecology Management
Co.
Kureha Special Laboratory Co.
Kureha Unyu Group (2)Kureha Trading Co.
Other
Kureha Service Co.
Operations
Kureha-Kai Medical
Corporation
Kureha Staff Service Co.
Consolidation adjustments
Total
Kureha Group Total
Total number of consolidated
subsidiaries & equity-method affiliates

9.4
1.0
-3.2
7.2
4.0

10.9
2.3
--8.0

6.7
1.4
-3.1
5.0
4.7

10.0
1.8
--8.8

-2.6
0.4
0.0
-2.2
0.6

-0.9
-0.4
--0.8

0.6
4.1
0.0
0.3
1.8

0.5
5.9
-1.0
3.5

0.6
4.1
0.0
0.3
1.8

0.6
6.2
-1.0
3.3

0.0
-0.0
-0.0
0.0
0.0

0.1
0.3
-0.0
-0.2

0.6
-3.9
7.6

0.6
---

0.6
-4.1
8.1

0.6
---

0.0
-0.2
0.5

0.0
---

69.5

--

72.5

--

3.0

--

32

*Parenthesized numbers indicate the number of consolidated companies for each group.

32

28

Supplemental Information

29

Iwaki Factory Capacity Enhancements
Polyvinylidene fluoride(PVDF)
Electrification of vehicles(EV/PHEV/HEV)

Demand growing for LiB binder

Commercial production at the new Iwaki plant(2000tpa, capex ¥4.7bn, completed in Aug. 2018)begins in January 2019.
Annual PVDF production capacity: 11,000tpa(6,000t in Iwaki, Japan and 5,000t in China)

Polyphenylene sulfide(PPS)
Heat
resistanceElectrification

Mechanicalstrength

Needs

Weldability

Weight reduction

Capacity enhancement of 5,000tpa is underway at
the current Iwaki plant (10,7000tpa) and scheduled
to complete by February 2021 (capex ¥10bn)
Annual PPS production capacity: 15,700tpa

PGA (Frac Plugs) Business Expansion

30

Shale Oil/Gas Exploration
Metal or other non-degradable frac plugs areused and drilled out after use
A horizontal well is short due
to limited drillout technology

2km(PAST)

Degradable PGA frac plugs are used in theextended ‘toe’ part of horizontal well

3km

(Present)(Toe)

PGA frac plugs are used for the entire
horizontal well (and eliminate drillout process)

3km(Future)Present focus markets:
Permian, Eagle FordPGA degradable frac plugs
 Currently adopted by 8 oil field operators
 Continue to expand in the US market
 A new ultra low-temp degradable grade
launched this fall
 Tested and approved by a major operator for
full-bore use – Preparing for orders

Disclaimer•

These materials are supplied to provide a deeper understanding of ourcompany, and are not intended to as a solicitation for investment or otheractions.

•

These materials have been prepared by our company based on theinformation available at this point in time. However, actual performance
may produce results that differ from the plan due to unforeseeable eventsand factors.

•

Please utilize these materials using you own judgment and responsibility.