FY2020 1Q Results

August 11, 2020

1

FY2020 1Q Financial Summary - 1(in billions of yen)

Vs. FY2019 1Q• Revenue declined due to slower sales ofAdvanced Materials and Specialty Plastics,partially offset by higher Construction volume• Core operating profit decreased on lower
Advanced Materials volumes, primarily related toadvanced plastics• Operating profit decreased due to the absence ofother income associated with a discount businesspurchase incurred in FY2019 1Q• Profit for the period decreased on lower profit
before income tax

FY20191Q

FY20201QRevenue

32.0

31.5

Core operating profit

3.1

2.5

Operating profit

4.5

2.5

Profit before income tax

4.6

2.8

Profit attributable toowners of Kureha Corp.

3.8

2.0

ChangeYOY-0.6(-1.7%)-0.6(-18.6%)-2.0(-44.7%)-1.7(-38.2%)-1.8(-46.2%)

Note: FY2019 1Q results (announced in Aug. 2019) have been revised based on
the actual gain from a discount business purchase finalized in FY2019 2Q

Revenue
9.9

FY19 1Q
FY20 1Q

11.0 10.6

8.7

Core operating profit
1.5

1.2
5.3 5.3

4.1 4.30.2 0.3

0.1 0.2

1.8 2.7-0.3
Other
Advanced Specialty Specialty
Materials Chemicals Plastics ConstructionOperations

FY19 1Q
FY20 1Q

1.8

Advanced Specialty
Materials Chemicals

0.6-0.0
OtherSpecialty
Plastics Construction Operations

2

FY2020 1Q Financial Summary - 2
FY2019 1Q
Revenue
Segment operating profit(billions of yen)
AM

9.9
1.2

SC

5.3
0.1

SP

11.0
1.5

CO

1.8
-0.0

OO

4.1
0.3

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

Profit before income tax
Profit for the period

FY2020 1QRevenue
Segment operating profit
Intersegment adjustment
Other income
Other expenses
Operating profit
Finance income
Finance costs
Profit before income tax
Profit for the period

AM

8.7
-0.3

SC

5.3
0.2

SP

10.6
1.8

CO

2.7
0.2

OO

4.3
0.6

Total

32.0
3.1
0.0
1.6
0.2
4.5
0.3
0.2
4.6
3.8
Total

31.5
2.5
0.0
0.1
0.1
2.5
0.4
0.0
2.8
2.0

(Notes)- Other income includes gains fromdiscount business purchase (¥1.5bn)

3Performance by Segment:
Advanced Materials(billions of yen)

FY2019Q1FY2020Q1

Change%Vs. FY2019 1Q
Revenue

Advanced Materials
Advanced plastics

6.4

5.0-22%

Carbon products

1.5

1.4-11%

Other

2.0

2.3

18%

Segment revenue

9.9

8.7-12%

Segment operating profit

1.2-0.3--

Operating Profit

Advanced plastics
Revenue down, operating profit down:- Lower sales volumes of PVDF (LiBbinder applications), PPS and PGA(shale fracking applications)

Carbon products
Revenue down, operating profit down:- Lower carbon fiber insulator sales
volume for use in high-temp furnaces

4

Performance by Segment:
Specialty Chemicals(billions of yen)

FY20191Q

FY2020
1Q

Change%Vs. FY2019 1Q
Revenue

Specialty Chemicals
Agrochemicals

0.9

1.451%

Pharmaceuticals

1.1

1.1-0%

Industrial chemicals

1.7

1.4-20%

Other

1.6

1.4-8%

Segment revenue

5.3

5.30%

Segment operating profit

0.1

0.2

108%

Operating Profit

Agrochemicals & Pharmaceuticals
Revenue up, operating profit up:- Higher sales volumes for agrochemical
fungicides- Flat sales growth for Kremezin(therapeutic agent for chronic kidneyfailure) in pharmaceuticals
Industrial chemicals
Revenue down, operating profit down:- Lower sales volumes of organic andinorganic chemicals

5

Performance by Segment:
Specialty Plastics(billions of yen)

FY20191Q

FY2020
1Q

Change%Vs. FY2019 1Q
Revenue

Specialty Plastics
Home products

5.2

5.45%

Fishing lines

0.9

1.03%

Packaging materials

3.6

2.9-20%

Other

1.2

1.32%

Segment revenue

11.0

10.6-4%

Segment operating profit

1.5

1.818%

Operating Profit

Home products & Fishing lines
Revenue up, operating profit up:- Steady sales growth for NEW Krewrap(plastic wrap) and Seaguar(fluoropolymer fishing lines)
Packaging materials
Revenue down, operating profit down:- Lower sales volume of heat-shrink
multilayer film
- Divestment of the blow-bottle business(sales of ¥0.5bn recorded in FY2019 1Q)

6

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

FY20191Q

FY2020
1Q

Change%Construction

Vs. FY2019 1Q
RevenueConstruction

3.6

4.3

22%

Elimination(Intercompany sale)

-1.8

-1.7

--

Segment revenue

1.8

2.7

50%

Segment operating profit-0.00.2--

Environmental engineering

2.62.99%Logistics

2.0

1.9-6%

Hospital operations

1.0

0.9-6%

Others0.6

0.69%-2.1-2.1--

Segment revenue

4.1

4.3

5%

Segment operating profit

0.3

0.680%

Elimination(Intercompany sale)

Construction
Revenue up, operating profit up,
recovering from operating loss:- Higher construction volumes in bothprivate and public sectors

Revenue

Other Operations

Operating Profit

Operating Profit

Environmental Engineering
Revenue and profit increased due to higher
industrial waste treatment volume
Logistics
Revenue and profit remained at prioryear’s levels
Hospital Operations
Revenue declined, leading to operating
loss

7

Financial Position
Assets(billions of yen)

Liabilities and Equity
Mar. 312020

Jun. 30
Change2020

Mar. 312020

Jun. 30
Change2020

Cash and cash equivalents

7.3

10.0

2.7

Trade and other payables

19.4

17.7

-1.7

Trade and other receivables

28.3

23.9

-4.5

Interest-bearing debt

37.3

41.6

4.3

Inventories

38.2

38.0

-0.3

Provisions

7.8

6.2

-1.6

Other current assets

5.2

5.3

0.1

Other liabilities

15.7

11.8

-3.9

Total current assets

79.0

77.1

-1.9

Total liabilities

80.377.3-2.9

Property, plant and equipment

119.8

119.3

-0.4

Shareholders’ equity

18.2

18.2

--

Intangible assets

0.8

0.9

0.1

Capital surplus

15.0

15.0

--

Investments and other assets

47.3

49.2

1.9

Less: Treasury stock

-8.7

-8.7

-0.0

Retained earnings

135.9

138.0

2.1

Other components of equity

4.6

5.2

0.6

Non-controlling interests

1.6

1.6

-0.0

Total non-current assets

167.9

169.5

1.6

Total equity

166.6

169.3

2.7

Total assets

246.9

246.6

-0.3

Total liabilities and equity

246.9

246.6

-0.3

8FY2020 Outlook
FY2020 financial guidance• As of today, Kureha will not provide its financial guidance for FY2020 (ending March 2021) due to the high levelof uncertain impact of the COVID-19 pandemic on its global businesses• Our FY2020 guidance is announced as soon as we can forecast with reasonable accuracy the extent of theimpact of the pandemic on our business operations and financial performance for the fiscal year
• A dividend forecast is also provided at the same time as our FY2020 guidance is issued

Impact of COVID-19 on our businesses
FY2020 1Q
AdvancedMaterials

Specialty
Chemicals

Specialty
Plastics

Potential risks affecting full-year results

PGA

Frac plugs sales decreased due to a slowdown in the US
shale drilling activities triggered by falling oil prices

Slower PGA sales expected unless the US shale
market rebounds with improved oil prices

PVDF

Steady demand continued in early Q1 from customers
securing raw materials for their post-quarantine production,
but demand slowed later due to their inventory adjustment

Slower sales growth for PVDF LiB binder until
automobile production is fully resumed

No significant impact

Possible risks related to OEM operations

Sales decreased due to the reduction of customers’
manufacturing operation
Sales increased as a cook/eat-at-home trend expanded
during the self-quarantine period
Multi-layer shrink film sales decreased due to reduced meatproduction in EU

Slower domestic sales due to weaker demands inwide-ranging end markets

Agrochemicals &Pharmaceuticals
Industrialchemicals
Home products
Packagingmaterials

Construction &Other Operations

No significant impact

Possible risks related to production and logistics
Slower sales due to weaker demand in the global
meat process industry
Fewer construction projects and lower industrial
waste volume

Dividend policy
Kureha’s basic policy for the distribution of earnings is to strengthen the company overall to realize mid/longterm growth, prepare for future business expansion, enhance retained earnings, and provide a stable andcontinued dividend to its shareholders.

9Updates on PGA and PVDF Businesses
Revenue: PVDF business

Revenue: PGA businessIn billion yen

1.5

In billion yen
151.0
100.5
500.02016

Kureha Degradable Plugs

PGA stockshapes

2017

2018

LiB applications

2019

2019
Q12020Q1Other applications• The shale market has drastically changed due to falling
crude oil prices and slower economy impacted byCOVID-19• Kureha adjusted PVDF production output after its
planned plant maintenance as major customers have
reduced their LiB production since Q1• Field trials for new non-PGA frac plugs were postponed
from Q1 to Q2 due to the pandemic• Kureha Changshu plant (China) began producing
specialty PVDF grades in May• The development of PGA frac plugs for super low-tempwells is ongoing for expected launch in FY2021• While the market slowed due to the pandemic, we
expect continued demand for PVDF in the current
trend of automobile electrification and will prepare tomeet future demand increase10Disclaimer•

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.