FY2021 3Q Results

February 4, 2022

1

Contents

I. FY2021 3Q Results• FY2021 3Q Overview• Segment Results• Financial Position

3-5
6-10
11

II. FY2021 Full-Year Forecast (Updated)• FY2021 Financial Forecast

13 -17

III. Supplementary Materials• PVDF Business Updates• PGA Business Updates• Returning to Shareholders• ESG Information

19
20
21
22-26

2

I.

FY2021 3Q Results(Period April 1 – December 31, 2021)

3

FY2021 3Q Overview(in billions of yen, except per-share value)

FY2020 FY2021
3Q
3Q

Vs. FY2020 3Q
ChangeYOY

17.4

Revenue

105.7

123.1

Core operating profit

14.6

17.9

(+22.5%)Adjustments
Other income
Other expenses

0.0
0.5
0.6

0.1
0.7
0.5

0.0
0.2
-0.1

Operating profit

14.6

18.2

3.6

0.5
0.2

0.5
0.1

-0.0
-0.0
3.6

Financial income
Financial expenses
Profit before income tax

14.9

18.5

Profit attributable toowners of Kureha Corp.

11.8

13.3

Basic profit per share¥603.64¥682.48(+16.5%)

3.3(+24.9%)(+24.4%)

1.5(+13.1%)• Revenue growth driven by Advanced
Materials, Specialty Chemicals andSpecialty Plastics more than offsetting
slower sales in Construction and Other
Operations• Higher core operating profit resulting from
improved gains in Advanced Materials,
Specialty Chemicals and Specialty
Plastics, partially offset by a decline in
Other Operations• Operating profit increased as a result ofhigher core operating profit• Profit attributable to the Company
increased as a result of higher operating
profit and profit before taxes

4

FY2021 3Q Overview(in billions of yen)Segment performance (vs. FY2020 3Q)
RevenueCore operating profit
FY20 3Q
FY21 3Q

45.0
32.7

31.2
17.6

35.3

6.5
4.2

20.6
9.3 8.5

Advanced
Materials

FY20 3Q
FY21 3Q

8.5

14.9 13.7

Other
Specialty Specialty Construction
Operations
Chemicals Plastics

1.9

3.6
2.5

1.9 2.2

0.7 0.5
Advanced
Materials

Specialty
Chemicals

Other
Specialty Construction
Operations
Plastics

Factors attributing to changes in operating profit
AM: Higher sales volumes of PVDF, PPS and other plastic products
SC: Higher organic chemicals volumes
SP: Higher home products and fishing lines volumes
CO: Impact of delays in civil engineering projects, partially offset by a higher number of
construction projects in the private sector
OO: Absence of post-typhoon waste treatment projects

5

FY2021 3Q Overview(in billions of yen)

FY2020 3Q

AM

SC

SP

Revenue

31.2
1.9

17.6
1.9

32.7
6.5

FY2021 3Q

AM

SC

SP

Revenue

45.0
4.2

20.6
2.2

35.3
8.5

Core operating profit

CO

9.3
0.7

OO

Total

14.9
3.6

105.7
14.6
0.0
0.5
0.6
14.6
0.5
0.2
14.9
11.8

OO

Total

13.7
2.5

123.1
17.9
0.1
0.7
0.5
18.2
0.5
0.1
18.5
13.3

Intersegment adjustment
Other income
Other expenses

Operating profit
Finance income
Finance costs
Profit before income tax
Profit for the period

Core operating profit
Intersegment adjustment
Other income
Other expenses
Operating profit
Finance income
Finance costs

Profit before income tax
Profit for the period

CO

8.5
0.5

6

Segment Results: Advanced Materials
Vs. FY2020 3Q(billions of yen)

FY20203Q

FY2021
3Q

Change%Advanced Materials
Advanced plastics

20.1

30.9

+53%

Carbon products

3.8

4.4

+17%

Other

7.3

9.7

+32%

Segment revenue

31.2

45.0

+44%

Core operating profit

1.9

4.2

+119%

Revenue

Operating Profit

Advanced plastics
PPS: Revenue up, operating profit up
Increased production capacity and sales
volume; an increase in equity in PPS-related
affiliate earnings
PVDF: Revenue up, operating profit up
Higher sales volume; improved production
volume for value-added specialty polymers;
pricing efforts to align with rising costs for
raw materials and fuels
PGA: Revenue up, operating profit downHigher frac plug sales volume; increased
costs associated with the U.S. PGA
manufacturing plant (due to the lack of
production activity)
Carbon products
Revenue up, operating profit up
Increased carbon fiber volumes forapplications as automotive sliding materials
and insulation materials for industrial highheat furnaces
Other
Revenue up, operating profit up
Higher sales volumes of plastic products
manufactured by Group companies

7

Segment Results: Specialty Chemicals
Vs. FY2020 3Q(billions of yen)

FY20203Q

FY2021
3Q

Change%Specialty Chemicals
Agrochemicals

5.6

6.3

+13%

Pharmaceuticals

3.1

3.4

+9%

Industrial chemicals

4.3

5.5

+27%

Other

4.6

5.4

+18%

Segment revenue

17.6

20.6

+17%

Core operating profit

1.9

2.2

+15%

Revenue

Operating Profit

Agrochemicals & Pharmaceuticals
Revenue up, operating profit flat
Sales volume growth for agrochemical
fungicides and a therapeutic agent forchronic kidney failures (‘Kremezin’); impact
of mandatory drug price revisions; higher
raw material costs
Industrial chemicals
Revenue up, operating loss narrowed
Sales of organic chemicals and other key
products recovered in the industries
resuming production activities

8

Segment Results: Specialty Plastics
Vs. FY2020 3Q(billions of yen)

FY20203Q

FY2021
3Q

Change%Specialty Plastics
Home products

17.5

18.8

+8%

Fiber products

2.9

3.5

+23%

Packaging materials

8.7

9.8

+12%

Other

3.5

3.1

-13%

Segment revenue

32.7

35.3

+8%

Core operating profit

6.5

8.5

+31%

Revenue

Operating Profit

Home products & Fiber products
Revenue up, operating profit up
Increased sales volumes of ‘NEW Krewrap’
and ‘Seaguar’ fishing lines
Packaging materials
Revenue up, operating profit up
Robust sales of PVDC film in Asia markets
leading to profit growth; sales expansion ofheat shrink multilayer film in Europe offset
by higher raw material costs, resulting inoperating loss on par with prior year

9

Segment Results: Construction
Vs. FY2020 3Q(billions of yen)

FY20203Q

FY2021
3Q

Change%Construction
Construction

14.5

13.4

-8%

Elimination(Intercompany sale)

-5.2

-4.9

--

Segment revenue

9.3

8.5

-9%

Core operating profit

0.7

0.5

-28%

Revenue

Operating Profit

Construction
Lower revenue and profit impacted by delays
in civil engineering projects, despite a higher
number of construction projects in the private
sector10

Segment Results: Other Operations
Vs. FY2020 3Q(billions of yen)

FY20203Q

FY2021
3Q

Change%Other Operations
Environmental
engineering
Logistics
Hospital
operations
Others

10.9

9.9

-9%

5.8

6.2

+7%

3.0

3.1

+3%

1.8

1.7

-3%

-6.5

-7.2

--

Segment revenue

14.9

13.7

-8%

Core operating profit

3.6

2.5

-30%

Elimination(Intercompany sale)

Revenue

Operating Profit

Environmental engineering
Lower revenue and profit impacted by theabsence of post-typhoon waste treatment
projects, despite volume growth for lowlevel PCB wastes treatment
Logistics
Revenue and operating profit remained atprior year’s levels
Hospital operations
Revenue and operating profit remained atprior year’s levels

11

Financial Position
Assets(billions of yen)

Liabilities and Equity
Mar. 312021

Dec. 31
Change2021

Mar. 312021

Dec. 31
Change2021

Cash and cash equivalents

17.8

22.2

4.3

Trade and other payables

19.2

24.4

5.2

Trade and other receivables

28.2

36.1

7.9

Interest-bearing debt

29.5

28.4

-1.1

Inventories

36.5

36.2

-0.3

Provisions

7.8

6.2

-1.6

Other current assets

3.7

5.0

1.2

Other liabilities

14.9

16.0

1.1

Total current assets

86.2

99.4

13.2

Total liabilities

71.4

75.1

3.7

Property, plant and equipment

120.2

118.4

-1.8

Shareholders’ equity

18.2

18.2

-

Intangible assets

2.2

3.4

1.2

Capital surplus

14.9

14.7

-0.2

Investments and other assets

48.3

51.7

3.4

Less: Treasury stock

-8.7

-8.7

-0.0

Retained earnings

154.2

165.1

10.9

Other components of equity

5.3

7.1

1.8

Non-controlling interests

1.7

1.5

-0.2

Total non-current assets

170.7

173.5

2.8

Total equity

185.5

197.9

12.3

Total assets

256.9

272.9

16.0

Total liabilities and equity

256.9

272.9

16.0

12

II. FY2021 Full-Year Forecast(Period April 1, 2021 – March 31, 2022)

13

FY2021 Financial Forecast
Notice: FY2021 financial forecast has been updated as of February 4, 2022.

(in billions of yen, except per-share values)

FY2020

FY2021e

ChangeYOY

21.4

Vs. FY2021• Revenue expected to rise on higher sales
volumes of PVDF, PPS, PGA, home
products and fishing lines, despite slower
sales in construction and environment
businesses

Revenue

144.6

166.0

(+14.8%)Core operating profit

18.9

23.5

(+24.7%)

Adjustments
Other income
Other expenses

0.1
0.9
2.5

-0.8
1.3

-0.1
-0.1
-1.2

Operating profit

17.3

23.0

Financial income
Financial expenses

0.7
0.2

0.4
0.4

-0.3
0.2

• Operating profit to increase as a result ofhigher core operating profit

Profit before taxes

17.7

23.0

5.3

• Profit before taxes to increase as a resultof higher operating profit

Profit attributable toowners of Kureha Corp.

13.5

16.5

Basic profit per share¥691.33¥845.40

¥85.0
¥85.0

¥85.0
¥125.0Interim dividend per share
Year-end dividend per share

4.6

5.7
(+33.2%)(+29.6%)

3.0(+22.3%)• Higher core operating profit likely
supported by Advanced Materials andSpecialty Plastics, more than offsetting
declines in environment and otherbusinesses• Profit attributable to the Company toincrease as a result of higher profit before
taxes

14

FY2021 Financial Forecast(in billions of yen)Segment performance (vs. FY2020)
Revenue
64.0

FY2020
FY2021eCore operating profit
9.5
9.0
7.7

FY2020
FY2021e42.4 45.0

44.5

23.5 26.0

Advanced
Materials

20.3 18.5
13.9 12.5

Other
Specialty Specialty Construction
Operations
Chemicals Plastics

FY2020: ¥144.6bn

FY2021e: ¥166.0bn

4.4

3.5

2.6

2.2 1.7
Advanced
Materials

Specialty
Chemicals

1.1 0.7
Other
Specialty Construction
Operations
Plastics

FY2020: ¥18.9bn

FY2021e: ¥23.5bn

Factors attributing to changes in operating profit
AM: Continued strong demand for PVDF binder in the automotive sector, production and sales
volume increase for PPS, sales volumes recovered for carbon fiber and other products inpost-pandemic industries
SC: Higher raw material cost, impact of mandatory drug price revisions
SP: Sales volume growth for home-use wrap film and other plastic products
CO: Fewer high-margin construction projects, intensifying market competition
OO: Absence of post-typhoon waste treatment projects

15

FY2021 Financial Forecast(in billions of yen)

FY2020

AM

SC

SP

CO

OO

Total

Revenue

44.5
3.5

23.5
2.2

42.4
7.7

13.9
1.1

20.3
4.4

144.6
18.9
0.1
0.9
2.5
17.3
0.7
0.2
17.7
13.5

Core operating profit
Intersegment adjustment
Other income
Other expenses

Operating profit
Finance income
Finance costs
Profit before income tax
Profit for the period

FY2021e

AM

SC

SP

CO

OO

Total

Revenue

64.0
9.0

26.0
1.7

45.0
9.5

12.5
0.7

18.5
2.6

166.0
23.5

Core operating profit[FY2020]- Other expenses include an
impairment loss (¥1.6bn)
and a loss on retirement of
non-current assets (¥0.4bn)

Intersegment adjustment
Other income
Other expenses
Operating profit
Finance income
Finance costs

Profit before income tax
Profit for the period

0.8
1.3
23.0
0.4
0.4
23.0
16.5

[FY2021e]- Other expenses include an onetime increase in retirement
benefit obligations (¥0.55bn)

16

FY2021 Financial Forecast(in billions of yen)Segment performance (vs. Previous forecast)
Revenue

60.0

FY2021e:Previous forecast
Current forecast

64.0

8.5

26.0
12.5

Advanced
Materials

9.5

9.0

FY2021e:Previous forecast
Current forecast

6.5

44.0 45.0

25.0Core operating profit

18.5

Other
Specialty Specialty Construction
Operations
Chemicals Plastics

Previous: ¥160.0bn

Current: ¥166.0bn

2.6

1.7
Advanced
Materials

Specialty
Chemicals

0.7
Other
Specialty Construction
Operations
Plastics

Previous: ¥20.0bn

Factors attributing to changes in operating profit
AM: Higher sales volumes of PVDF, carbon fiber and other functional resin products
SC: (No change from previous forecast)
SP: Higher sales volumes of home products, fishing lines and packaging film
CO: (No change from previous forecast)
OO: (No change from previous forecast)

Current: ¥23.5bn

17

FY2021 Financial Forecast
FY2021e Previous forecast
RevenueCore operating profit(in billions of yen)
AM

SC

SP

CO

OO

Total

60.0
6.5

25.0
1.7

44.0
8.5

12.5
0.7

18.5
2.6

160.0
20.0
0.0
0.8
1.3
19.5
0.5
0.5
19.5
14.0

Intersegment adjustment
Other income
Other expenses

Operating profit
Finance income
Finance costs
Profit before income tax
Profit for the period

FY2021e Current forecast
RevenueCore operating profit

AM

SC

SP

CO

OO

Total

64.0
9.0

26.0
1.7

45.0
9.5

12.5
0.7

18.5
2.6

166.0
23.5

[Previous forecast]Other expenses include an
one-time increase inretirement benefit obligations(¥0.55bn)

Intersegment adjustment
Other income
Other expenses
Operating profit
Finance income
Finance costs

Profit before income tax
Profit for the period

0.8
1.3
23.0
0.4
0.4
23.0
16.5

(Current forecast)Other expenses include an
one-time increase inretirement benefit obligations(¥0.55bn)

18

III. Supplementary Materials

19

PVDF Business Updates
PVDF: Revenue (FY2016 – 2021e)
35• A roughly 40% market share held by Kureha PVDF in
the automotive cathode binder segment; primarycustomers including major Chinese and South Koreanlithium-ion battery manufacturers(¥ billion)

30
25• Full-capacity production continuing at both Japan Iwaki
Factory and China Changshu facility since mid 2020
- The Changshu plant begins production and shipmentof specialty PVDF polymers in May 2020

20
15
10
5
0
FY2016 FY2017 FY2018 FY2019 FY2020 FY2021e

LiB binder application
Other applications

Production Enhancement Plans
Year
FY2022

FY2024

Capacity increase
Increase production of specialty grade
polymers at the Iwaki Factory(Nameplate capacity unchanged)
Start up a new plant in Changshu, China(Capacity increase of 11,000tpa)• FY2021business revenue and profit expected toincrease vs. FY2020- Effective pricing efforts to reflect rising raw material
cost, including price formula agreements signed bymajor customers- Increased production and sale of high value-added
specialty polymers- Improved overall productivity• Will complete upgrading the Iwaki plant and increase
the production of specialty polymers in 4QFY2021,
commercial operations scheduled to start in FY2022• Kureha Group’s total PVDF production capacity toreach 21,000tpa in FY2024- Will start up the 2nd PVDF plant (10,000tpa) in
Changshu, China by Summer 2024

20

PGA Business Updates
PGA: Quarterly Revenue

Yearly Revenue (FY2016- 2021e)(¥ billions)(¥ billion)

1.5
4

1.0

2
0.5

0
0

FY2016FY2017FY2018FY2019FY2020 FY2021e• Shale oil and gas production activities are gradually returning in the post-pandemic economy• Kureha continues to focus on expanding its frac plug market share in mid- and high-temperature shale fields
by ways such as strategic pricing, product improvement and expanded sales of full-bore frac plugs, while also
accelerating the development of new PGA plugs suitable for ultra low-temperature fields

21

Returning to Shareholders
Revised Forecast for FY2021 Dividend➢ Kureha’s basic policy regarding dividend distribution is to pay a steady dividend to shareholders over a long
period of time, while strengthening the Company’s financial structure to sustain long-term growth and futurebusiness development. Based on this policy, Kureha has maintained a consistent dividend payout over theyears regardless of occasional swings in its financial performance.
➢ As the Company’s current earnings forecast for FY2021 exceeds its previous forecast, which has been
upwardly revised and announced on November 9, 2021, Kureha will raise the annual dividend to 210 yen, up
from 185 yen of its most recent forecast.
Annual Dividends and Dividend Payout Ratio
(JP¥)

53.4%

200

100

110
25.7%

120
22.4%

110
25.7%

110

27.0%

125
24.6%

165

170

170

24.3%

24.5%

24.6%

210

50%
40%

24.8%

30%

年間配当
Annual dividend
per share (¥)（円/1株）

100

20%
10%

配当性向
Dividend payout
ratio (%)

（％）
0

0%
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021e(Forecast)

Notes:- Kureha conducted a ten-to-one share consolidation on October 1, 2016. All figures in this chart arepresented on a post share consolidation basis for comparison purposes- Accounting standards: Japanese GAAP (before and in FY2015); IFRS (in and after FY2016)- Commemorative dividends of ¥10 are included in the annual dividends of FY2014 and FY2018- Share repurchases completed: ¥3bn in FY2018, ¥5bn in FY2019

22

ESG Information
Strengthening ESG management in line with the United Nations’ Sustainable
Development Goals and toward carbon neutrality is one of our priority measures inthe ‘Kureha’s Challenge 2022’ mid-term management plan (FY2021-2022).

Our initiatives and progress in the areas of climate change response, diversity in corehuman resources and Board Directors selection have been updated in our CSR
Report and Corporate Governance Report published last year.

CSR Report 2021
https://www.kureha.co.jp/en/csr/ (CSR Report ESG Data Collection)
https://www.kureha.co.jp/en/csr/pdf/data.pdf
Corporate Governance Report *Updated on Dec. 22, 2021
https://www.kureha.co.jp/en/ir/pdf/20211222_CG%20Report.pdf

23(1) Climate Change Response◼ Responding to climate change aimed at the achievement of net zero is a top priority challenge in the KurehaGroup as well. Kureha Group has established a basic policy for climate change response and is addressing thischallenge across the entire Group.
◼ Target of GHG emissions reduction and Carbon Neutrality ProjectIn FY2020, the Company investigated the state of energy use and CO₂ emissions for the entire Group, estimated futureenergy demand, and conducted a survey to obtain information about the situation and various responses in the countries
and regions where Group companies are located. Based on these investigations, the Company formulated CO₂ emissions
reduction targets for FY2030.
In addition, due to the Japanese government’s announcement of new GHG emissions reduction targets in April 2021, theKureha Group also further reviewed its own CO₂ emissions reduction targets and decided to strengthen and accelerate its
company-wide initiatives. To this end, a new Carbon Neutral Project was established in October 2021 as a company-wide
project, under which initiatives for the Kureha Group to achieve carbon neutrality in 2050 are managed and promoted.

◼ Disclosures under the TCFD or equivalent frameworks
Kureha has now commenced scenario analyses in line with the TCFD Recommendations.
It is evaluating the climate change-related risks and opportunities for the Kureha Group, reflecting them inmanagement strategies and risk management, identifying their financial impact, and proceeding with preparations
for the appropriate disclosure of information.
60
40

Kureha Group CO₂ Emissions from Energy Use
55.6
47.0 44.6 45.4
41.5 43.7 42.3 42.8 41.2

(10KT/Y)

37.6

20
0

2013 2014 2015 2016 2017 2018 2019 2020

2030
BAU*

*Business as usual

2030
Target24(2) Diversity in Core Human Resources
Policy, Targets◼ Ensuring Diversity in Promotion, etc. of Core Human Resources- Kureha employs and promotes diverse human resources who have different knowledge and experiences,
based on their personal attributes, including abilities and achievements, to meet management andbusiness needs.
- It promotes personnel to management positions based on whether or not they will be able to sufficiently
fulfill the roles and responsibilities required as executives or department managers, while taking diversityof human capital into account.

◼ Status of and voluntary, measurable targets for ensuring diversity- Women, foreign nationals, and mid-career hires currently account for 5.4%, 0.4%, and 8.3% ofmanagement positions respectively in FY2021.
- To ensure diverse human capital, Kureha has set a target of 20% or more for the percentage ofwomen recruited for career-track positions, and it will also strive to increase the percentages ofwomen, foreign nationals, and mid-career hires in management positions to above the current levels.

20

Number of women employed for potential management positions
and their representation in management (Kureha Corp.)
New hires女性総合職採用

15

Managers
女性管理職

10
5

Numbers of total employees andthose above manager levels(Kureha Corp., as of March 2021)
Employees

1,676 (367)Managers

277 (15)*Parenthesized numbers are female

0

2016

2017

2018

2019

2020

25

(3)The Board of Directors
Policy & Procedure: Appointment of Directors◼ The Board of Directors makes decisions on the appointment of Directors and Vice Presidents appropriately
based on the evaluation of factors such as the Company’s business performance while ensuringtransparency and fairness of the Company’s decision-making. When appointing Directors, achieving abalance of knowledge, abilities, and experience within the Board of Directors as a whole, as well as diversity
and the maximum number of Directors are taken into account, with most emphasis being given to experiencein corporate management.
◼ Based on the above policy, the Nomination Advisory Committee, non-mandatory advisory board to the Boardof Directors deliberates on the appointment of Directors and Vice Presidents, and the chairperson of theNomination Advisory Committee proposes to the Board of Directors the results of the review of thedetails for the resolution of the appointment.

View on the Balance between Knowledge, etc. of the Board of Directors and on Diversity & Board Size
◼ Based on the size and details of businesses of Kureha and Group companies, the Board of Directors consistsof up to ten individuals, of which at least one-third shall be Independent Outside Directors.
◼ In appointing Directors, the Company places the highest priority on their experience in corporate
management. And by creating a skills matrix that lists candidates’ areas of expertise and experience, andcombining different specialist areas and backgrounds, the Company comprehensively takes into accountfactors such as the balance of knowledge, skills and experience within the Board of Directors as a whole; itsdiversity including gender, international character, career background, and age aspects; and the appropriate
size of the Board to make the final decision.

26(3)The Board of Directors
Nomination Advisory Committee and Remuneration Advisory Committee◼ With regard to matters concerning the appointment and remuneration of the Chairman of the Boardof Directors, President & Chief Executive Officer, Representative Director, Directors, Vice
Presidents with Title, and Vice Presidents in order to ensure transparency in the decision-making
process of the Board of Directors and strengthen accountability to stakeholders, Kureha
established the Nomination Advisory Committee and the Remuneration Advisory Committee on
June 26, 2018 as a non-mandatory advisory board to the Board of Directors.
◼ Each of the Committees consists of three or more Directors, the majority of whom are Outside
Directors, and is chaired by an Outside Director.
◼ The Nomination Advisory Committee deliberates on matters concerning the appointment anddismissal of the Chairman of the Board of Directors, President & Chief Executive Officer,
Representative Director, and Directors, candidates to succeed the President & Chief Executive
Officer and plans for their training, and matters concerning the appointment and dismissal of Vice
Presidents with Title and Vice Presidents, and reviews the details of matters to be referred for
discussion and resolution at the Board of Directors.
◼ The Remuneration Advisory Committee deliberates on matters related to policies on the structuresand systems of remuneration for Directors and Vice Presidents, the details of remuneration, etc. forindividual Directors and other matters, and reviews the details of matters to be referred for
discussion and resolution at the Board of Directors.

27

Disclaimer•

This document is supplied to provide a deeper understanding of ourcompany, and is not intended for soliciting investment or other actions.

•This document has been prepared by Kureha Corporation based on theinformation currently available and acquired by the Company. Actual
performance may produce results that differ from the plans presented inthis document due to unforeseeable events and factors.

•

Please utilize this document using you own judgment and responsibility.