Kureha Corporation Reports Fiscal 2018 Results (IFRS)Tokyo, Japan – June 2019 – Kureha Corporation (“Kureha”), a leading global supplier of
specialty chemicals and plastics, has reported its results for the fiscal year ended March 31,
2019 (FY2018), the final year of the FY2016-2018 mid-term management plan Kureha’s
Challenge 2018. On a consolidated basis, revenue increased slightly year-on-year to 148.3
billion yen, while operating profit climbed by 32.4% to 17.2 billion yen. Profit before income
tax rose by 37.5% to 17.4 billion yen, resulting in a 43.7% increase in profit attributable tothe owners of Kureha to 13.9 billion yen.
Factors that contributed to this strong result include higher sales volumes in the Advanced
Materials segment, particularly the polyglycolic acid (PGA) business and the high-demand
polyvinylidene fluoride (PVDF) business; drastically reduced asset retirement andimpairment losses; and continued Group-wide efforts to improve operational efficiency.
Yutaka Kobayashi, President and Chief Executive Officer, said, “We are pleased to be able
to finish Kureha’s Challenge 2018 on such a strong note. We surpassed the plan’s
operating profit target of 14.0 billion yen by a significant margin, and also achieved a returnon sales exceeding 10%, a level typically required for specialty chemicals companies. I
would like to express my deep gratitude to all Group employees for their diligent efforts
over these three years. To show our appreciation to our shareholders for their continuous
support, we have increased the yearly dividend from 125 yen to 165 yen per share.”However, while Kureha made much progress, several key strategic goals were not fulfilled.
These include the expansion of the PGA business and the exploration of new businessthemes to underpin Kureha’s future growth. To complete the measures remaining from
Kureha’s Challenge 2018, Kureha has extended the mid-term management plan by two
years. The extended plan, named Kureha’s Challenge 2020 (FY2019–2020), will solidify
the foundation for Kureha’s future expansion through significant increases in capital
investment and R&D expenditure to expand production capacity and explore new
businesses.
Mr. Kobayashi added, “We will take a close look at our operations, particularly the PGA
business, which is gaining momentum but still not performing satisfactorily, and the PVDF
business, where we are planning capacity expansion due to fierce demand for bindermaterials for lithium-ion batteries (LiB) used in electric vehicles. These two businesses will

Page 1 of 10

be our pillars for long-term growth. Other key focus areas include further differentiating
existing businesses from competitors. Here, development of new downstream applications
for various markets and fields will be important. We will also be more aggressive in seeking
new business opportunities around the globe, and strengthen our Group-wide managementfoundation through a range of measures to improve efficiency, corporate governance,
quality and safety. While there are challenges ahead, our ambition is to achieve a newtarget of 18.0 billion yen in operating profit by FY2020.”
An important part of the plan will be to address key issues that are shaping Kureha’s
operational environment, particularly the rapid digitization of the world and rising global
concerns regarding the use of plastics. In response, Kureha will introduce “smart” operation
models across production and R&D, and explore ways in which the Group can contribute toresolving the challenges facing the plastics industry.
Mr. Kobayashi comments: “As a producer of advanced plastics, the Kureha Group must do
everything it can to help resolve the plastics challenge and preserve the environment for
future generations. In addition to measures within our corporate group, I believe ourinnovative capabilities can contribute significantly toward a solution. This issue goes to theheart of the kind of corporation Kureha aspires to be – a high-value-added enterprise built
on technology that is not only leading-edge in the field of specialty chemicals, but also
actively contributes to global society.”

Summary of Consolidated Full-year Results(Billions of yen, except where stated)

Revenue
Operating profit
Profit before income tax
Profit attributable to theowners of Kureha
Earnings per share (yen)ROE (%)ROA (%)

148.3
17.2
17.4

Change
(%)
0.6
32.4
37.5

FY2018(targets)
160.0
14.0
14.0

FY2020(targets)
157.0
18.0
18.0

9.7

13.9

43.7

9.0

14.0

507.5
7.1%
5.3%

679.6
9.0%
7.1%

-

6%-

8%
7%

FY2017FY2018

147.3
13.0
12.7

Page 2 of 10

Performance by Segment
Consolidated Performance by Segment(Billions of yen)Segment
Advanced Materials
Specialty Chemicals
Specialty Plastics
Construction
Other Operations
Segment 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)

Adjustments
Total

Revenue
Operating profit (loss)

FY2017
41.6
1.7
26.2
3.4
45.4
6.9
17.4
1.0
16.8
1.8
147.3
14.9
-1.9
147.3
13.0

FY2018
45.7
4.6
27.3
3.3
45.1
6.7
12.4
0.7
17.6
2.1
148.3
17.4
-0.2
148.3
17.2

Advanced Materials Segment
Major product areas: advanced plastics (PPS, PVDF, PGA), carbon materials
Advanced Materials revenue rose 10% year-on-year to 45.7 billion yen while operating
profit jumped from 1.7 billion yen to 4.6 billion yen.

Advanced plastics: Continued momentum for PGA and PVDF
In the PGA business, higher sales volumes of frac plugs for shale gas and oil extraction
enabled revenue of 4.4 billion yen and a significant decrease in the operating loss. While
this business is still not performing as originally envisaged, it is clearly gaining momentum.
Kureha’s innovative degradable frac plugs have now been adopted by 17 field operators in
the United States, up by 13 since the beginning of FY2018. Full-bore trials with major
operators are ongoing, and contract negotiations are under way. The first field trial for an
improved ultra-low temperature grade frac plug has been successfully completed, andother location trials are being prepared.
Demand for PVDF, an LiB binder material for which Kureha holds a 40% worldwide market
share, continued to grow at a rapid rate due to the expanding global market for electric andplug-in hybrid electric vehicles, particularly in China. All of Kureha’s PVDF plants are now
operating at full capacity, including the latest addition in Iwaki launched in 2019. The

Page 3 of 10

continued high demand led operating profit in the PVDF business to increase 166.7% to 2.4
billion yen year-on-year.
The polyphenylene sulfide (PPS) business continued to see demand growth for automotive
applications, since its combination of light weight and heat stability makes it an excellent
replacement for metals. However, operating profit continued to be affected by Hurricane
Florence, which in September 2018 severely disrupted production at Fortron Industries,
Kureha’s joint venture with Celanese in North Carolina.

Carbon products: Continued healthy growth
The carbon products business continued to see healthy growth, driven by demand forheat-insulating materials used in the manufacturing of ingots for semiconductors, as well as
the positive benefits of higher prices and operational improvements during the previous
fiscal year. Revenue increased by 4% to 5.1 billion yen, leading to a rise in operating profit.

Outlook: In FY2019, Kureha expects to grow the PGA business in the North American
market by expanding the product line-up with frac plugs that degrade at various
temperatures. This is key to expanding the number of customers and raising sales volumes.
Revenue from the PGA business is estimated to reach 6.4 billion yen, which will enableprofitability and put Kureha on track to reaching the target of 1.0 billion yen in operating
profit in FY2020.
In the PVDF business, the intense demand is expected to continue, leading to further
growth in revenue and operating income. To ensure adequate supply, an additional
capacity increase of at least 5,000 tons/year is scheduled to come online in 2023.
The PPS business is forecast to recover fully from the effects of the hurricane in 2018,
benefitting from solid demand from the automotive industry for weight-reducing metal
substitutes. To capture this demand, a new production facility is under construction at the
Iwaki Factory and will be operational in February 2021.
The carbon products business will see further demand for insulation materials, but sales ofother types of carbon materials are forecast to decline, which will affect profits.
Segment revenue is expected to increase by 10% to 50.5 billion yen, while operating profit
will climb by 30% to 6.0 billion yen.

Page 4 of 10

Specialty Chemicals Segment
Major product areas: industrial chemicals, agrochemicals, pharmaceuticals
Specialty Chemicals revenue grew by 4% to 27.3 billion yen while operating profit
decreased by 4% to 3.3 billion yen.

Agrochemicals: Lower sales volumes of fungicide
In the agrochemicals business, inventory adjustments affected sales volumes of fungicides,
leading to reduced revenue and operating profit.

Pharmaceuticals: Revenue and operating profit growth for Kremezin tablets
In the pharmaceuticals business, sales volumes increased for the new tablet version of
Kremezin, a therapeutic agent for chronic kidney disease, which was launched in FY2017,leading to a rise in operating profit that more than offset the negative effect of national drug
price revisions.

Industrial chemicals: Revenue and operating profit rise on volume growth
The industrial chemicals business saw increases in both revenue and operating profit
following measures to improve the operating margin including price adjustments and cost
reductions.
Outlook: In FY2019, Kureha expects to see strong sales of the new Kremezin tablets,
which will mitigate the effects of national drug price revisions. In the agrochemicals
business, inventory adjustments will continue to weigh on revenue and operating profit.
In industrial chemicals, sales volumes for certain products are forecast to decline, which willaffect revenue and operating profits. However, Kureha will continue its efforts to improve
the operating margin.
Segment revenue is forecast to decline slightly to 27.0 billion yen, while operating profit will
fall by 18% to 2.7 billion yen.

Page 5 of 10

Specialty Plastics Segment
Major product areas: household packaging products, food packaging materials,
auto-packaging machinery
Specialty Plastics segment revenue fell to 45.1 billion yen from 45.4 billion yen. Operating
profit also decreased slightly to 6.7 billion yen.

Home products: Higher costs offset sales volume growth
While the home products business saw higher sales volumes of Kureha’s flagship NEW
Krewrap plastic wrap and the Kichinto-san product series, operating profit growth was morethan offset by rising costs related to raw materials and sales promotion.

Fiber products: Continued growth momentum for Seaguar fishing lines
Kureha continued to enjoy strong sales volumes of Seaguar fishing lines in North America,
leading to an increase in operating profit for this business.

Food packaging materials: Lower earnings for heat-shrink multilayer film
Lower sales volumes of heat-shrink multilayer film in overseas markets, caused by intensecompetition, led to decreases in revenue and operating profit

Outlook: In FY2019, Kureha expects to see continued sales growth for NEW Krewrap andthe Kichinto-san series in the home products business, although higher costs, including forsales promotion, will negatively affect operating profit. Likewise, sales of Seaguar fishinglines are forecast to maintain their healthy momentum although higher depreciation
expenses will weigh on operating profit. In food packaging materials, Kureha will continue
its strategy of expanding sales of value-added film products in the Europe and Oceania
regions. However, market competition is expected to remain fierce, causing revenue toremain flat and operating profits to decrease.
Segment revenue is forecast to remain nearly unchanged at 45.0 billion yen, while
operating profit will decline by 9% to 6.1 billion yen.

Page 6 of 10

Construction and Other Operations
Major product areas: construction, environmental engineering, transport/warehousing, andtrading-related businesses

Construction: Earnings affected by lower demand for private sector projects
In FY2018, lower demand for private sector construction projects affected earnings, morethan offsetting healthy sales volume growth for public projects in the engineering business.
As a result, revenue for Kureha’s Construction segment fell by 28% to 12.4 billion yen,while operating profit decreased to 0.7 billion yen.

Other Operations: Waste treatment business continues its growth trajectory
In the environmental engineering business, Kureha’s industrial waste treatment business
continued on the growth trajectory seen since the previous year. In the logistics business,
operating profit continued to rise despite lower revenue, primarily due to successful
measures to boost operational efficiency and cut costs. In the hospital business, revenue
returned to a growth track, leading to an increase in operating profit. As a result, revenue in
Other Operations increased by 5% to 17.6 billion yen while operating profit climbed by 15%
to 2.1 billion yen.
Outlook: In FY2019, earnings in the Construction segment is expected to be affected bylower demand for post-quake reconstruction, while higher labor and raw material costs will
weigh on operating profit. Segment revenue is forecast to remain largely unchanged at 12.5
billion yen while operating profit will decline by 40% to 0.4 billion yen.
In Other Operations, Kureha expects to see continued healthy growth in the logistics andhospital businesses, but intensifying competition in the industrial waste treatment businesswill affect revenue and operating profit. Segment revenue is expected to fall slightly to 17.0
billion yen while operating profit will decline by 14% to 1.8 billion yen.

Outlook for FY2019(Billions of yen, except where stated)
Revenue
Operating profit
Profit before income tax
Profit attributable to theowners of Kureha
Earnings per share (yen)FY2018
148.3
17.2
17.4

FY2019
152.0
26.0
26.0

Change (%)
2.5
51.4
49.1

13.9

19.5

39.9

679.6

962.2

-

Page 7 of 10

In FY2019, Kureha expects revenue growth to be driven mainly by the Advanced Materials
segment. Alongside the fast-growing PVDF business, the PGA business is projected to pickup further momentum and achieve profitability. The PPS business will also fully recoverfrom the hurricane damage to make a full-fledged contribution to earnings. In the Specialty
Chemicals segment, continued healthy sales volumes for the new Kremezin tablets will
also contribute to overall earnings.
Together with a rise in other income from asset sales, this growth will more than offset profit
declines and cost increases projected for other segments. In addition, Kureha will also
continue to reap the benefits of its group-wide program to raise operational efficiency andreduce costs.
As a result, while revenue for the Kureha Group will rise only slightly, operating profit isexpected to climb by 51.4% to 26.0 billion yen. Profit attributable to the owners of Kureha isforecast to increase 39.9% to 19.5 billion yen for the fiscal year, resulting in a profit per
share of 962.2 yen and a full-year dividend per share of 170 yen.

Capex, Depreciation, R&D and Debt
(Billions of yen)
Capital expenditure
Depreciation
R&D
Interest-bearing debt

FY2017
9.8
9.9
5.0
48.1

FY2018
13.2
10.3
5.3
39.0

FY2019
17.0
11.5
6.4
39.5

Backed by strong financial fundamentals, Kureha continues to invest heavily in future
expansion for sustained long-term growth. Capital expenditure in FY2018 increased yearon-year to 13.2 billion yen, mainly for upgrades to PVDF and PPS production facilities andprocesses. Looking ahead to FY2019, capital expenditure will be substantially increased by
29% to 17.0 billion yen to enable continued expansion of PPS production, upgrade
production processes for existing products and fortify resources for new businessdevelopment.
Depreciation, mainly due to Kureha’s ongoing expansion of production facilities, roseslightly to 10.3 billion yen year-on-year and is projected to rise to 11.5 billion yen in FY2019.
Kureha also successfully continued its reduction of interest-bearing debt, which fell from
48.1 billion yen to 39.0 billion yen year-on-year. In FY2019, interest-bearing debt willremain at a similar level.

Page 8 of 10

R&D spending, which rose from 5.0 billion yen to 5.3 billion yen year-on-year, will bestrengthened to 6.4 billion yen in FY2019. The main purposes of this investment will be toaccelerate the development of new products and promising research themes, and to
improve process technologies and develop downstream businesses. Where appropriate,
Kureha will seek to collaborate with third-party companies, universities and otherorganizations. By FY2020, R&D investment is projected to reach 6.6 billion yen.

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

Page 9 of 10

Condensed Consolidated Balance Sheets
As of March 31, 2018 and 2019
(Millions of yen)
AssetsCurrent assets
Cash and cash equivalents
Noncurrent assets
Property, plant and equipment
Intangible assets
Investments and other assets
Total assets

March 2018

March 201976,963
6,475
165,318
114,236
1,336
49,745242,281

78,777
5,989
168,574
117,553
1,094
49,927247,352

Liabilities and net assets
Current liabilities
Short-term borrowings
Fixed liabilities
Corporate bonds
Long-term borrowings
Total liabilities
Net assets
Shareholders’ equity
Minority interest
Total net assets

62,59525,75927,644
13,951
7,707
90,24063,99523,03821,188
11,9493,565
85,184150,193
1,847
152,041

160,551
1,616
162,167

Total liabilities and net assets

242,281247,352

March 2018

March 2019

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

148,265
104,683
28,051
17,172
17,435
3,435
13,933Condensed Consolidated Statement of Income
As of March 31, 2018 and 2019
(Millions of yen)
Revenue
Cost of goods soldSelling, general and administrative expenses
Operating profit
Profit before income taxes
Taxes and minority interest adjustments
Profit attributable to the owners of Kureha

Page 10 of 10

FY2018 Financial Results(Period April 1, 2018 – March 31, 2019)

May 14, 2019

1

Contents
1. FY2018 Results
3-6• FY2018 Highlights
7-10• Segment Performance• FY2018 Results vs. Initial Projection 11
12• Key Indicators
13• Financial Position
14• Cash Flow

2. Review and Extension of
the Mid-Term Management Plan
• KC2018 Review, KC2020 Outline
16-20• KC2020 Quantitative Targets
21-22• KC2020 Capital Expenditures, R&D 23• KC2020 Action Plans
24-25• Expansion of PGA Business• Expansion of PVDF Business• Returning to Shareholders

26-27
28
29

3. FY2018 Outlook• FY2018 Forecast• Segment Outlook• Key Indicators• Cash Flow Outlook

31-33
34-37
38
39

4. Consolidated Companies

41-42

2

1. FY2018 Results(April 1, 2018 – March 31, 2019)

3

FY2018 Highlights(in billions of yen, except where stated otherwise)

Revenue

FY2017FY2018

147.3

148.3

Operating profit

13.0

17.2

Profit before income
tax

12.7

17.4

Profit attributable toowners of Kureha Corp.

9.7

13.9

ROE

7.1%

9.0%

ROA

5.3%

7.1%

ROS

8.8%

11.6%

EPS

¥507.5¥679.6Per-share dividend¥125.0¥165.0Note:

ChangeMid-term
YOY(%) Plan Targets

0.9(0.6%)

4.2(32.4%)

4.8(37.5%)

4.2(43.7%)

ROE=Profit attributable to owners of Kureha/Shareholder’s equity
ROA=Profit before tax/Total assets
ROS=Operating profit/Revenue
EPS=Profit attributable to owners of Kureha/Number of shares (term average)

160
14
14
9
6.0%

8.8%

FY2018 vs. FY2017• Revenue growth driven by
Advanced Materials more thanoffsetting a sharp decline inConstruction• Higher operating profit led by
Advanced Materials and fewer‘Other Expenses’• Profit before income tax
increased on higher operating
profit and improved net financial
income• Profit for the period increased onhigher profit before income tax

4

FY2018 Highlights
Segment Performance: FY2018 vs. FY2017
Revenue
41.6

45.7

45.4 45.1

26.2 27.3…FY2017…FY2018

Operating
Profit6.9 6.7…FY2017…FY2018

4.6
3.4 3.3

17.4 16.8 17.6

12.4

Other
Advanced Specialty Specialty
Construction
Operations
Materials Chemicals Plastics

FY2017: ¥147.3bn(billions of yen)

FY2018: 148.3bn

1.8 2.1

1.7

1.0

Advanced Specialty
Materials Chemicals

0.7

Other
Specialty
Construction
Operations
Plastics

FY2017: ¥14.9bn

FY2018: 17.4bn

Factors attributing to operating profit (vs. FY2017)
AM: Higher earnings in advanced plastics and carbon products
SC: Lower agrochemicals earnings; higher earnings generated by pharmaceuticals and industrial chemicals
SP: Lower earnings in home products and packaging materials; higher fiber products earnings
CO: Lower earnings in private sector construction business
OO: Higher earnings in logistics and hospital operations, flat growth in environmental engineering

5

FY2018 Highlights(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

45.1

12.4

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

FY2018
Revenue

45.7

27.3

Other
Segment
Adjustment
Operations
Total

17.6

148.3

2.1

17.4

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

Profit for the period*Subsidy income: ¥0.3bn*Loss on retirement of non-current assets: ¥0.8bn

4.6

3.3

6.7

0.7

Total

-----0.1
0.6
0.9
-0.2
0.7
0.4

Total

148.3
---------------17.2----------17.4
13.9

6

FY2018 Highlights
Other Income and Expenses

FY2017
Other income

FY2018¥0.5 billion¥0.2b
Subsidy income: ¥0.3bn*Includes government’s subsidies for postquake restoration initiatives¥0.2b
Other: ¥0.2bn¥0.5b

Other expenses

Other income¥0.6 billion

Subsidy income: ¥0.3bn*Includes government’s subsidies for postquake restoration initiatives

Other: ¥0.2bn¥2.6 billion

Loss on retirement/sales of noncurrent assets:¥1.3bnImpairment loss: ¥0.7bn*Related to former PVDC plant and China carbon
fiber facilities

Provision for environmental measures: ¥0.4bn
Other: ¥0.2bn

Other expenses¥0.9 billion

Loss on retirement/sales of noncurrent assets:¥0.8bnOther: ¥0.1bn

7

Segment Performance:
Advanced Materials(billions of yen)

FY2017FY2018Change%FY2018 vs. FY2017
Revenue

Advanced Materials
Advanced plastics

24.4

27.3

12%

Carbon products

4.9

5.1

4%

Revenue: Kureha Co.

29.4

32.5

10%

Revenue: Subsidiaries

29.6

31.3

6%

Elimination

-17.3

-18.1

--

Kureha-G Revenue

41.6

45.7

10%

Kureha-G Operating Profit

1.7

4.6

176%

Operating Profit

Advanced plastics
Revenue up; Ope. profit up:- Higher PVDF (LiB binder applications)and PGA (oil/gas drilling applications)sales volumes- Lower profit gains for PPS
Carbon products
Revenue up; Ope. profit up:- Higher carbon fiber volume

8

Segment Performance:
Specialty Chemicals(billions of yen)

FY2017FY2018Change%FY2018 vs. FY2017
Revenue

Specialty Chemicals
Agrochemicals

9.2

8.3

-9%

Pharmaceuticals

3.8

5.1

32%

Industrial chemicals

9.4

10.1

7%

Revenue: Kureha Co.

22.4

23.5

5%

Revenue: Subsidiaries

6.5

7.1

9%

Elimination

-2.7

-3.3

--

Kureha-G Revenue

26.2

27.3

4%

Kureha-G Operating Profit

3.4

3.3

-4%

Operating Profit

Agrochemicals
Revenue down, Ope. profit down:- Lower fungicides volumes
Pharmaceuticals
Revenue up, Ope. profit up:- Higher Kremezin volume more thanoffsetting the negative effect of
mandatory price revisions

Industrial chemicals
Revenue up, Ope. profit up:- Higher prices penetrating amongcustomers

9

Segment Performance:
Specialty Plastics(billions of yen)

FY2017FY2018Change%FY2018 vs. FY2017
Revenue

Specialty Plastics
Home products

20.7

20.8

0%

Packaging materials

6.3

6.2

-1%

Revenue: Kureha Co.

27.0

27.1

0%

Packaging materials

13.1

12.6

-4%

Fiber products

4.2

4.4

5%

Others

7.4

6.7

-9%

Revenue: Subsidiaries

24.8

23.8

-4%

Elimination

-6.4

-5.7

--

Kureha-G Revenue

45.4

45.1

-1%

Kureha-G Operating Profit

6.9

6.7

-2%

Operating Profit

Home products
Revenue up, Ope. profit down:- Volumes growth for NEW
Krewrap (plastic wrap) and Seaguar(fishing lines) more than offset byincreased costs

Packaging materials
Revenue down, Ope. profit down:- Lower heat-shrink multilayer film
volumeFiber products
Revenue up, Ope.profit up:- Higher fishing line sales volume

10

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

FY2017FY2018Change%RevenueConstruction
Construction

23.9

20.3

-15%

Elimination

-6.6

-7.9

--

Kureha-G Revenue

17.4

12.4

-28%

Kureha-G Operating Profit

1.0

0.7

-36%

Other Operations
Environmental engineering

FY2018 vs. FY2017

Construction- Fewer construction projects in private
sector more than offsetting steady
volume growth in public engineeringbusiness

Revenue

Logistics
Hospital operations
Others

11.0
8.3
3.6
1.8

12.0
8.3
3.7
1.9

9%
0%
3%
5%

Revenue: Subsidiaries

24.7

25.9

5%

Elimination

-7.9

-8.3

--

Kureha-G Revenue

16.8

17.6

5%

Kureha-G Operating Profit

1.8

2.1

15%

Operating Profit

Operating Profit

Environmental Engineering
Revenue up, Ope. profit up:- Volume growth in industrial waste
treatment business
Logistics
Revenue down, Ope. profit up:
Hospital Operations
Revenue up, Ope. profit up:

11

FY2018 Results vs. Projection(billions of yen)

FY2018 Results vs. Projection (May 2018)
Revenue Projection: ¥150bn
45.5 45.7

Operating profit Projection: ¥14bn

Results: ¥148.3bn

46.0 45.1

6.7…FY2018 Projection…FY2018 Results

27.5 27.3

5.9
3.9

14.5

Results: ¥17.2bn…FY2018 Projection…FY2018 Results

4.6

16.5 17.6

2.7

12.4

3.3
0.60.7

Advanced
Materials

Specialty
Chemicals

Other
Specialty
Construction
Operations
Plastics*Exchange rates: Initial assumption  Actual
1USD = ¥105  ¥110.9
1EUR = ¥130  ¥128.4
1CHY = ¥16.5  ¥16.5

Advanced
Materials

Specialty
Chemicals

Segment total
Other income/expenses

1.42.1

Other
Specialty
Construction
Operations
Plastics

Projection: ¥14.5bn, Results: ¥17.4bn
Projection: ▲¥0.5bn, Results: ▲¥0.2bn

Factors attributing to operating profit (vs. Projection)
AM: Higher earnings generated by PVDF and carbon products, lower earnings by PGA and PPS
SC: Favorable currency effect for agrochemicals, higher earnings in industrial chemicals
SP: Lower cost related to home products, higher earnings in fiber products
CO: (Performed as planned)
OO: Sales volume growth in industrial waste treatment business12

Key Indicators(billions of yen)

1H

FY20172H
Full year

1H

FY2018ChangeYOY
2H
Full year

Capital expenditure

4.0

5.8

9.8

5.8

7.4

13.2

35%

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

2.8

5.3

6%

Interest-bearing debt

56.0

48.1

48.1

45.9

39.0

39.0

-19%

¥111.0¥112.7¥110.7¥106.2¥110.9¥106.2¥110.3¥113.6¥111.6¥111.0¥110.9¥111.0¥126.3¥132.9¥133.1¥130.5¥129.7¥130.5¥129.8¥132.1¥127.1¥124.6¥128.4¥124.6

¥16.4
¥17.0

¥17.1
¥16.9

¥16.7
¥16.9

¥16.7
¥16.5

¥16.3
¥16.5

¥16.5
¥16.5

(Currency exchange rates)
1USD:

1EUR:

1CHY:

Term average

Term end
Term average
Term end
Term average
Term end

13

Financial Position
Assets(billions of yen)

Liabilities and Equity
Mar. 31 Mar. 31
Change20182019Mar. 31 Mar. 31
Change20182019

Cash and cash equivalents

6.5

6.0

-0.5

Trade and other payables

21.5

24.0

2.5

Trade and other receivables

32.7

30.7

-1.9

Interest-bearing debt

48.1

39.0

-9.1

Inventories

36.0

38.3

2.3

Provisions

6.6

6.8

0.2

Other current assets

1.8

3.7

1.9

Other liabilities

14.0

15.3

1.3

Total current assets

77.0

78.8

1.8

Total liabilities

90.2

85.2

-5.1

Property, plant and equipment

114.2

117.6

3.3

Shareholders’ equity

18.2

18.2

－

Intangible assets

1.3

1.1

-0.2

Capital surplus

15.3

15.0

-0.2

Investments and other assets

49.7

49.9

0.2

Less: Treasury stock

-0.7

-3.7

-3.0

Retained earnings

108.7

122.4

13.6

Other components of equity

8.7

8.7

-0.1

Non-controlling interests

1.8

1.6

-0.2

Total non-current assets

165.3

168.6

3.3

Total equity

152.0

162.2

10.1

Total assets

242.3

247.4

5.1

Total liabilities and equity

242.3

247.4

5.1

14

Cash Flow(billions of yen)

FY2017FY2018ChangeCash flow from operating activities

12.7
9.9
-2.4
20.2

17.4
10.3
-4.4
23.4

4.8
0.4
-2.0
3.2

Cash flow from investing activities

-9.7

-8.4

1.3

Cash flow from financing activities

-10.4

-15.5

-5.1

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

-0.5

-0.7

Cash and cash equivalents at beginning of period

6.2

6.5

0.3

Cash and cash equivalents at end of period

6.5

6.0

-0.5

Profit before income tax

Depreciation
Other

15

2. Review and Extension of
the Mid-Term Management Plan

16

Kureha’s Challenge 2018 Review“Kureha's Challenge 2018” (FY2016-2018 Mid-term Management Plan)~ Product Differentiation & New Business Creation ~Strategic Direction

Management Goals
Business strategies:- Enhance competitiveness and earnings capacityof existing businesses- Expand the PGA business- Explore new business themes
Promote CSR-based management
Strengthen management foundations

Qualitative target: ¥14 billion in operating profit
FY2016-2018 is a period to lay the foundation
for Kureha’s future expansion‘As a company built ontechnology, Kureha willdevelop differentiatedproducts in the field ofspecialty chemicals andbecome a high valueadded enterprise that
continually contributes toglobal society’17

FY2018 Results vs. FY2015 Results
FY2018 Results vs. FY2015 Results (Final year of FY2012-2015 Mid-term Management)
Plan)

Operating profit

Revenue
FY2015: ¥140.8bn

45.7
35.6

30.6

FY2018: ¥148.3bn

42.3 45.1

FY2015: ¥7.4bn

FY2018: ¥17.2bn…FY2015 results…FY2018 results…FY2015 results

6.7

27.3

4.6
16.2

(billions of yen)

4.8

16.1 17.6

3.3 3.2

12.4

1.5

1.4
Advanced Specialty
Materials Chemicals

Other
Specialty
Construction
Operations
Plastics…FY2018 results

Advanced
Materials

Specialty
Chemicals

Segment total
Other income/expenses

1.5 2.1

0.7

Other
Specialty
Construction
Operations
Plastics

FY2015: ¥12.4bn, FY2018: ¥17.4
FY2015: ▲¥5bn, FY2018: ▲¥0.2bn

Factors attributing to operating profit (vs. FY2015)
AM: Earnings expanded for PVDF, improved operating margin for carbon products, Lower PPS earnings
SC: Higher earnings generated by pharmaceuticals and agrochemicals
SP: Higher earnings in home products and fiber products, improved operating margin for packaging
materials
CO: Lower earnings due to a decline in post-quake reconstruction demand
OO: Higher earnings in environmental engineering, improved operating margin in logistics and hospital
operation
Other income/expenses: Structural reform cost (¥4.5bn/FY15), Loss on retirement of non-current assets(¥1.1bn)

18

FY2018 Results vs. KC2018 Targets
FY2018 Results vs. KC2018 Initial Targets (FY2016-2018 Mid-term Management Plan)
Operating profit

Revenue
KC2018 Targets: ¥160bn

50

FY2018 Results: ¥148.3bn

47 45.1

45.7…KC2018 targets…FY2018 results

28 27.3

KC2018 Targets: ¥14bn

FY2018 Results: ¥17.2bn…KC2018 targets

7

6.7
4.6

22

13 12.4(billions of yen)

…FY2018 results

4.5

3.3

17.6

1.7 2.1

2

0.3 0.7
Advanced Specialty
Materials Chemicals

Other
Specialty
Construction
Operations
Plastics

Advanced
Materials

Specialty
Chemicals

Segment total
Other income/expenses

Other
Specialty
Construction
Operations
Plastics

KC2018t: ¥15.5bn, FY2018: ¥17.4bn
KC2018t: ▲¥1.5bn, FY2018: ▲¥0.2bn

Factors attributing to operating profit (vs. KC2018 targets)
AM: PVDF and carbon products exceeded earnings targets; PPS and PGA below targets
SC: Higher-than-targeted profit achieved in all product groups (agrochemicals, pharmaceuticals, industrial
chemicals)
SP: Home products and fiber products exceeded targets; packaging materials below target
CO: Construction exceeded target due to lower cost
OO: Logistics and hospital operation exceeded targets; environmental engineering performed as planned
Other income/expenses: Loss on retirement of non-current assets decreased

From ‘Kureha’s Challenge 2018’
To ‘Kureha’s Challenge 2020’

19

Kureha’s Challenge 2018 (KC2018)

Kureha’s Challenge 2020 (KC2020)

Kureha exceeded its quantitative target(achieved ¥17.2bn in operating profit)
but was unable to complete thefollowing strategic measures:Complete the strategic measuresremaining from KC2018 PGA business expansionAddress emerging issues in
response to changing businessenvironment

 New business development
 Strengthening of managementfoundations
2 more years
FY 2 0 1 6 — 1 8..and further solidify thefoundation for Kureha’s
future expansion
FY 2 0 1 9 — 2 0

20

Kureha’s Challenge 2020 Overview“Kureha's Challenge 2020”~ Product Differentiation & New Business Generation ~Strategic Direction

Management Goals
Expand the PGA business and generate earnings
Strengthen the PVDF business for further expansion
Optimize business model for existing businesses
Globally explore and develop new businesses
Strengthen management foundations

Qualitative target: ¥18 billion in operating profit
FY2018-2020 is a period to solidify thefoundation for Kureha’s future expansion‘As a company built ontechnology, Kureha willdevelop differentiatedproducts in the field ofspecialty chemicals andbecome a high valueadded enterprise that
continually contributes toglobal society’21

KC2020: Qualitative Plan(in billions of yen, except where stated otherwise)

FY2018Results

FY2020Targets

Revenue(% revenue overseas)

148.3
(30%)

157.0
(33%)

8.7

Operating profit(% operating margin)

17.2(11.6%)

18.0(11.5%)

0.8

13.9

14.0

0.1

Profit attributable toowners of Kureha Corp.
Currency exchange rates
1USD:
1EUR:

1CHY:

(presumptions)¥110.9¥128.4¥16.5¥110.0¥125.0¥16.5

FY2018Results

FY2020Targets

ROE

9.0%

8.0%

ROA

7.1%

Same level
as FY2018

FY2018Results

FY2019-2020
Targets

Capitalinvestment

13.2

38.0

R&D
investment

5.3

13.0

Change

22

KC2020: Qualitative Plan
FY2018Results
Ope.
Revenue
profitFY2020Targets
Ope.
Revenue
profitChange2020 vs. 2018
Ope.
Revenue
profitAdvanced
Materials

45.7

Specialty
Chemicals

27.3

3.3

26

2.1

-1.3

-1.2

Specialty
Plastics

45.1

6.7

46

6.2

0.9

-0.5

Construction

12.4

0.7

12.5

0.3

0.1

-0.4

Other
operations

17.6

2.1

17.5

1.8

-0.1

-0.3

4.6

Adjustment,
Other income &expenses

148.3

0.7 2.1

4.6

Ope.
profit

FY2018Results

7.6

9.3

17.2
AM

0.2

157

18

SC

6.2

CO
Other

0.8

AM

SC
SP

3.3

8.7

0.3 1.8

FY2020TargetsOpe.
profit2.1

7.6

FY2020 vs. FY2018
Operating profit in
key businesses:

3.0

-0.2

Total

6.7

55

(billions of yen)

SP
CO
Other

(AD)
PGA ↑
PPS ↑
PVDF ↑
Carbon ↓(SC)
Agrochemicals ↓Pharmaceuticals ↑Ind. Chemicals ↓(SP)
Home products ↓Packaging ↓23

KC2020: Capital Expenditure, R&D
Kureha actively invests for its future expansion utilizing both
operating cash flow and cash gained through effective use of assets
FY2019-20 Capital expenditure: ¥38bn

FY2019-20 Research &Development: ¥13bn• PPS 5000t capacity increase (FY18-20):¥5.6bn (of total ¥10bn)• Accelerate the development of new businesses• Improve process technologies and develop
downstream businesses• Accelerate the development of new azole-type
agrochemicals• Promote collaborative work with other companies
and universities• PVDF capacity increase, 5000t or more (FY20-22):¥5bn (of total ¥10bn or more)• New business development/R&D facilities, etc.:¥2.6bn

21

17
10.3

6.4

4.7

13.2

5.3

9.7

¥13bn

¥38.0bn¥14.9bn¥33.2bn
FY20164.9

FY2017FY2018FY2019e

FY2020e6.6

FY2016FY2017FY2018FY2019e

FY2020e

24

KC2020: Action Plans
Developments in FY2016-2018 (KC2018)

Actions in FY2019-2020 (KC2020)

Expanding & Generating Profit in PGA Business
Established U.S. Kureha Energy Solutions to boost
local sales & marketing functions; Launched low-temp
degradable PGA frac plugs

Improving Competitiveness & Profitability in Existing
Businesses
PVDF: Completed 2000t capacity increase (Jan 2019)
AM

PPS: Determined 5000t capacity increase
Carbon Products: Achieved profitability by undertaking
structural reforms

SC

Pharmaceuticals/Agrochemicals: Launched new easyto-dissolve Kremezin tablets; Maintained steadyagrochemicals sales
Home Products: Promoted higher prices for added
value among customers

SP

Packaging Materials: Restructured the manufacturing
and sales framework in EU

Achieve profitability; accelerate sales expansion for
ultra low-temp frac plugs in the US; Initiate businessdevelopment in China

Enhancing PVDF Business for Further Expansion
Determine additional capacity increase; continue topromote quality differentiation

Optimizing Business Model for Existing Businesses
Start up a new PPS plant in Feb. 2021
Continue to make profit and promote quality
differentiation in the Carbon Product business
Achieve sales expansion for new Kremezin tablets;develop new agrochemicals
Secure steady profit and explore East Asia markets
for Home Products
Revise the business strategy for Packaging
Materials

Fiber Products: Expanded the product lineup

Launch new process technologies and develop new
PVDF fiber products

COConstruction: Achieved growth on increased postquake reconstruction demand

Execute measures to strengthen the businessfoundation

Other

Environmental Engineering: Achieved volume growthin post-quake and low-level PCB wastes treatment

Achieve volume growth for difficult-to-treat industrial
waste treatment

25

KC2020: Action Plans
Developments in FY2016-2018 (KC2018)
Exploring New Business Themes
Identified and developed new business themes
derived from market needs while collaborating withexternal parties

Actions for FY2019-2020 (KC2020)
Exploring & Cultivating New Businesses Globally
Explore new business themes in Japan and overseas
Allocate resources to accelerate the development ofdownstream businesses and technology innovation
Speed up business launch by utilizing external
resources

Promoting the CSR Management

Strengthening the Management Foundation

Continued management in line with the corporate
governance guidelines

Establish a value chain management system led bybusiness divisions

Improved the CSR management system

Improve efficiency of group management and enhance
its control system

Strengthening the Management Foundation
Reinforcing corporate governance: Established
Nomination and Remuneration Committees;
terminated executive/senior corporate advisers;
revised the Director’s compensation system
Improving manufacturing process technologies:
Established a process laboratory and pilot plant
Reform Project: Achieved the cumulative cost
reduction of ¥8.8bn (over FY2013-18 period)

Strengthen the systems to secure workplace safety,
product quality and environmental sustainability
Further enhance operational efficiency and divisional
functions through the Reform Project with a two-year
cost reduction target at ¥1.5bn
Improve operations by utilizing digital technologies;
Promote smart operation models for manufacturing and
R&D

Launched a project to improve productivity of
manufacturing and administrative divisions

develop products to solve social issues including thosetargeted as the SDGs

Improved training and education to cultivate humanresources

Develop human resources required for global business
operations and new business development

Expansion of PGA Business

26(PGA Frac Plugs for Shale Oil & Gas Drilling)
By expanding sales of Kureha original
degradable frac plugs (KDPs), we aim to:- Achieve profitability in FY2019- Generate ¥1bn operating profit in FY2020
100(¥ billion)

8.8

80
40

4.4

2.8

20

0

10

6.4

60

1.0
0.2

-2.5
FY2018

0
(10)
(20)

-1.0
FY201720FY2019e FY2020e(30)

Present target markets:
Permian and Eagle Ford regions

Kureha Degradable Plugs (KDPs)
Currently adopted by 17 field operators (5 more sincelast February), sales also expanding in Bakken,
Application of KDPs is expanding from partial (toeOklahoma, and Haynesville areaspart) to full-bore use in a horizontal well.
Are on full-bore trials with major operators– contract
negotiations ongoingToe
3km1st field trial for improved ultra low-temp grade
completed with positive results, other location trials
under preparation
Revenue

Ope. Profit

27

Expansion of PGA Business(PGA Frac Plugs for Shale Oil & Gas Drilling)
Kureha Energy Solutions: KDP Quarterly Sales FY2018-2019(billions of yen)

1.5

1.0

0.5

0.0
１Ｑ

２Ｑ

３Ｑ

FY2018 Sales: ¥1.5 billion

４Ｑ

１Ｑ

２Ｑ

３Ｑ

４Ｑ

FY2019 Sales Outlook: ¥3.5 billion

28

Expansion of PVDF Business Demand for lithium-ion battery is growing rapidly due to vehicle electrification
 Kureha is a leading supplier of PVDF binder for LiBs with over 40% market share, selling
primarily to large LiB makers in China and South Korea
 Our challenge is to secure suppliability for higher quality LiBs and growing market
 All our PVDF plants, including the latest Iwaki plant launched in January 2019, are runningat full capacity, shifting production focus to LiB application
 We are planning on additional capacity increase of 5,000tpa or more with scheduled
operational launch in FY2023
250(¥ billion)

21.0

200
150

17.5

100
50
0

3.0
2.4

2.5

20
10

0.9
FY2017

40
30

13.3

11.8

50

FY2018FY2019e

FY2020e

Revenue

Ope. Profit

0

Kureha’s annual PVDF production is 11,000 tons
(6,000t/Japan, 5,000t/China), including 2000 tons
manufactured at its latest Iwaki facility shown above.

29

Returning to Shareholders
 Kureha’s basic policy for the distribution of earnings is to strengthen the company
overall to realize longer-term growth, prepare for future business expansion, enhanceretained earnings, and provide a stable and continued dividend.
 Kureha will consider the acquisition of its own shares as an option to flexibly adjust tovarying financial conditions.
Recent trend of annual dividend payout and dividend payout ratio
250
200
150

50%

125
100 110 120* 110 110

165* 170 170

40%
30%

100

20%

50

10%

0

0%
2012

2013

2014

2015

*Includes ¥10 commemorative dividend(FY2014, FY2018)

2016

2017

2018

2019e

2020e

Treasury stock acquisition
¥3bn

¥5bn
(plan)

Annual per-share
dividend (yen)Dividend payout ratio (%)
Note:- Kureha conducted a ten-toone share consolidation on
October 1, 2016. All figures inthis chart are presented on a
post share consolidation basis
for comparison purposes.
- Kureha has adopted theInternational Financial
Reporting Standards since
FY2016.

30

3. FY2019 Outlook(April 1, 2019 – March 31, 2020)

31

FY2019 Forecast(billions of yen, except where stated otherwise)

FY2018
Revenue

148.3

FY2019e1H | 2H

152

ChangeYOY (%)

3.7 (2.5%)

75 | 77

Operating profit

17.2

26

8.8 (51.4%)

8.0 | 18.0

Profit before income tax

17.4

26

8.6 (49.1%)

8.0 | 18.0

Profit attributable toowners of Kureha Corp.

13.9

19.5
6.1 | 13.4

5.6 (39.9%)

FY2019e vs. FY2018• Revenue growth driven by
Advanced Materials• Operating profit to increase on
earnings growth in Advanced
Materials, including profitability
achieved for PGA, and increased
other income related to asset sale,more than offsetting profit declines
and higher costs in other segments• Profit before income tax to improveon higher operating profit

Profit per share¥679.6¥962.2

Dividend per share

¥165*

¥170

Number of employees

4,299

4,360

*Includes ¥10 commemorative dividend• Profit for the period to improve onhigher profit before income tax

32

FY2019 Forecast
Segment Performance: FY2019e vs. FY2018
Revenue
45.7

50.5…FY2018…FY2019e(billions of yen)

Operating
Profit6.7

6.0

45.1 45.0

6.1…FY2018…FY2019e

4.6

27.3 27.0

3.3

17.6 17.0

2.7

2.1

12.4 12.5

1.8

0.7 0.4
Other
Advanced Specialty Specialty
Construction
Operations
Materials Chemicals Plastics

FY2018: ¥148.3bn

FY2019e: ¥152bn

Advanced
Materials

Specialty
Chemicals

Other
Specialty
Construction
Operations
Plastics

FY2018: ¥17.4bn

FY2019e: ¥17bn

Factors attributing to operating profit (vs. FY2018)
AM: Higher PGA sales volume leading to profit generation, higher earnings generated by PPS and
PVDF; lower carbon fiber earnings
SC: Earnings to decrease in agrochemicals and industrial chemicals; higher pharmaceuticals earnings
SP: Higher cost related to home products, intensified competition for packaging materials
CO: Higher labor and raw materials costs
OO: Intensified competition in the industrial waste treatment business33

FY2019 Forecast(billions of yen)
Advanced Specialty
Materials Chemicals

FY2018
Revenue

45.7

27.3

Specialty
Plastics

Construction

45.1

12.4

Other
Segment
Adjustment
Operations
Total

17.6

148.3

2.1

17.4

Elimination
Other income
Other expenses
Operating profit*Subsidy income: ¥0.3bn*Loss on retirement of non-current assets: ¥0.8bn

4.6

3.3

6.7

0.7

Advanced Specialty
Materials Chemicals

Specialty
Plastics

Construction

45.0

12.5

Finance income
Finance costs-----0.1
0.6
0.9
-0.2
0.7
0.4

Profit before income tax

Profit for the period

FY2019e
Revenue

50.5

27.0

Other
Segment
Adjustment
Operations
Total

17.0

152.0

1.8

17.0

Elimination
Other income
Other expenses

Operating profit
Finance income
Finance costs
Profit before income tax

Profit for the period*Gain on sale of non-current assets: ¥9.2bn*Loss on retirement of non-current assets: ¥0.7bn

6.0

2.7

6.1

0.4

-----0
10.0
1.0
9.0
0.7
0.7

Total

148.3
---------------17.2----------17.4
13.9
Total

152.0
---------------26.0----------26.0
19.5

34

Segment Outlook:
Advanced Materials(billions of yen)

FY2018FY2019eChange%FY2019e vs. FY2018
Revenue

Advanced Materials
Advanced plastics

27.3

29.8

9%

Carbon products

5.1

4.7

-8%

Revenue: Kureha Co.

32.5

34.5

6%

Revenue: Subsidiaries

31.3

35.5

13%

Elimination

-18.1

-19.5

--

Kureha-G Revenue

45.7

50.5

10%

(1H)

(22.6)(24.0)(6%)

Kureha-G Operating Profit

4.6

6.0

30%

(1H)

(0.7)

(2.0)

(200%)

Operating Profit

Advanced plastics
Revenue up, Ope. profit up:- PGA volume growth leading to profit
generation- Higher PVDF volume to more thanoffset higher cost
- Improved earnings for PPS, including
equity gains
Carbon products
Revenue up, Ope. proft down:- Carbon fiber full-capacity production
propelled by continued strong demand- Other carbon materials volumes likely
to decline

35

Segment Outlook:
Specialty Chemicals(billions of yen)

FY2018FY2019eChange%FY2019e vs. FY2018
Revenue

Specialty Chemicals
Agrochemicals

8.3

6.7

-20%

Pharmaceuticals

5.1

5.3

5%

Industrial chemicals

10.1

9.8

-3%

Revenue: Kureha Co.

23.5

21.8

-7%

Revenue: Subsidiaries

7.1

7.5

6%

Elimination

-3.3

-2.3

--

Kureha-G Revenue

27.3

27.0

-1%

(1H)

(14.1)(14.0)(-0%)

Kureha-G Operating Profit

3.3

2.7

-18%

(1H)

(2.1)

(1.7)

(-18%)

Operating Profit

Agrochemicals
Revenue down, Ope. profit down:- Lower sales volumes due to inventory
adjustment
Pharmaceuticals
Revenue up, Ope profit up:- Volume growth for new Kremezin
tablets
Industrial chemicals
Revenue down, Ope profit down:- Sales volumes for certain products
expected to decline- Continued efforts to improve operating
margin36

Segment Outlook:
Specialty Plastics(billions of yen)

FY2018FY2019eChange%FY2018e vs. FY2017
Revenue

Specialty Plastics
Home products

20.8

21.4

3%

Packaging materials

6.2

4.8

-23%

Revenue: Kureha Co.

27.1

26.2

-3%

Packaging materials

12.6

13.6

8%

Fiber products

4.4

4.4

-1%

Others

6.7

6.8

1%

Revenue: Subsidiaries

23.8

24.8

4%

Elimination

-5.7

-6.0

--

Kureha-G Revenue

45.1

45.0

0%

(1H)

(22.8)(23.5)(3%)

Kureha-G Operating Profit

6.7

6.1

-9%

(1H)

(3.4)

(3.5)

(2%)

Operating Profit

Home products
Revenue up, Ope. profit down:- Volumes growth for New Krewrap andKichinto-san series products morethan offset by increased cost related
to sales promotion, etc.
Packaging materials
Revenue flat, Ope. profit down:- Intensified competition in global multilayer shrink film market, despite
continued sales expansion efforts.
Note: The sales rights for certain
packaging materials are transferredfrom Kureha to its subsidiary in
FY2019.

37

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

FY2018FY2019eChange%FY2019e vs. FY2018
Revenue

Operating Profit

Construction
Construction

20.3

19.5

-4%

Elimination

-7.9

-7.0

--

Kureha-G Revenue

12.4

12.5

1%

(1H)

(5.0)

(5.5)

(10%)

Kureha-G Operating Profit

0.7

0.4

-40%

(1H)

(0.1)

(0.2)

(59%)

Logistics
Hospital operations
Others

12.0
8.3
3.7
1.9

11.4
8.5
3.9
2.2

-5%
2%
5%
17%

Revenue: Subsidiaries

25.9

26.0

0%

Elimination

-8.3

-9.0

--

Kureha-G Revenue

17.6

17.0

-4%

(1H)

(8.1)

(8.0)

(-1%)

Kureha-G Operating Profit

2.1

1.8

-14%

(1H)

(0.8)

(0.8)

(4%)

Construction
Operating profit expected to fall on flat
revenue growth due to higher labor andraw materials costs

Other Operations
Environmental engineering

Revenue

Operating Profit

Other Operations
Revenue and operating profit inEnvironmental Engineering expected
to decline due to intensifiedcompetition in the industrial waste
treatment business

38

Key Indicators(billions of yen)

FY2018FY2019eChangeYOY(%)

Capital expenditure

13.2

17.0

3.8 (29%)

Depreciation

10.3

11.5

1.2 (12%)

R&D expenses

5.3

6.4

1.1 (21%)

Interest-bearing debt

39.0

39.5

0.5 (1%)

Term average¥110.9¥110.0Term end¥111.0¥110.0Term average¥128.4¥125.0Term end¥124.6¥125.0Term average

¥16.5

¥16.5

Term end

¥16.5

¥16.5

(Currency exchange rates)
1USD:
1EUR:
1CHY:

39

Cash Flow(billions of yen)

FY2018FY2019eChangeYOY

Cash flow from operating activities

17.4
10.3
-4.4
23.4

26.0
11.6
-19.7
17.9

8.6
1.3
-15.3
-5.5

Cash flow from investing activities

-8.4

-5.3

3.0

Cash flow from financing activities

-15.5

-13.2

2.3

Effect of exchange rate changes on cash and cash equivalents

-0.0

0.0

0.0

Increase/decrease in cash and cash equivalents

-0.5

-0.6

-0.1

Cash and cash equivalents at beginning of year

6.5

6.0

-0.5

Cash and cash equivalents at end of year

6.0

5.4

-0.6

Profit before income tax
Depreciation
Other

40

4. Consolidated Companies

41

Revenues & Assets(billions of yen)

FY2017FY2018ChangeRevenue Total assets Revenue Total assets Revenue Total assets
Kureha Corporation
Kureha Trading Group (2)Kureha Corporation
Kureha Trading Group (2)Kureha Extron
Kureha Extech
Kureha Europe Group (4)Advanced
Kureha America Group (4)Materials

78.9
22.5
29.4
10.7
2.2
1.9
2.2
6.2
1.1

192.7
14.1
--2.1
1.4
0.8
25.3
1.5

83.0
22.7
32.5
10.6
2.5
2.0
2.0
6.5
1.3

198.2
13.2
--2.3
1.4
1.1
26.8
1.4

4.2
0.2
3.1
0.0
0.3
0.1
-0.1
0.3
0.2

5.5
-1.0
--0.2
0.1
0.3
1.6
-0.1

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

5.4
-17.3
41.6
22.4
6.5
-2.7
26.2
27.0
5.2
4.2
0.2
2.0
9.7
3.4
-6.4
45.4

10.6
--------4.9
-0.9
7.9
3.4
---

6.4
-18.1
45.7
23.5
7.1
-3.3
27.3
27.1
4.9
4.4
0.1
1.7
9.4
3.2
-5.7
45.1

10.0
--------5.1
-0.8
7.3
3.1
---

1.0
-4.1
1.1
0.6
-1.1
0.0
-0.3
0.2
-0.1
-0.3
-0.4
-0.2
--0.2

-0.6
--------0.2
--0.1
-0.6
-0.4
---

Kureha (Shanghai) Carbon Fiber
Materials

42

Revenues & Assets(billions of yen)

FY2017FY2018ChangeRevenue Total assets Revenue Total assets Revenue Total assets
Kureha Nishiki Group (4)Construc- Kureha Engineeringtion
Consolidation adjustments
Total

21.9
2.0
-6.6
17.4

11.3
2.1
---

17.9
2.4
-7.9
12.4

12.0
1.8
---

-4.0
0.4
--4.9

0.7
-0.3
---

Kureha Ecology Management
Kureha Special Laboratory
Kureha Unyu Group (2)Kureha Trading
Other
Kureha Service
Operations
Kureha-Kai Medical Corp.
Kureha Staff Service

9.7
1.3
8.3
0.1
0.5
3.6
1.2

9.2
0.7
6.1
-1.2
3.4
0.6

10.6
1.3
8.3
0.1
0.6
3.7
1.3

10.6
0.7
6.5
-1.4
3.3
0.6

0.9
0.0
0.0
0.0
0.0
0.1
0.1

1.4
0.0
0.4
-0.1
-0.2
0.0

-7.9
16.8

---

-8.3
17.6

---

-0.9

---

147.3

242.3

148.3

247.4

0.9

5.0

Consolidation adjustments
Total
Kureha Group Total
Number of consolidated subsidiaries
Number of equity- method affiliates

29
3*Parenthesized numbers indicate the number of consolidated companies for each group.

29
3

43

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.