Kureha Corporation Reports Fiscal 2017 Results (IFRS)Tokyo, Japan – June 2018 – Kureha Corporation (“Kureha”), a leading global supplier of
specialty chemicals and plastics, has reported its results for the fiscal year ended March 31,2018 (FY2017). On a consolidated basis, revenue increased by 11.4% year-on-year to147.3 billion yen, while operating profit climbed by 40.2% to 13.0 billion yen. Profit before
income tax rose by 41.2% to 12.7 billion yen, resulting in a 38.5% increase in profit
attributable to the owners of Kureha to 9.7 billion yen.
Yutaka Kobayashi, President and Chief Executive Officer, said, “FY2017 was a strong year
for Kureha. Revenue and operating profit increased in all business segments, due to strong
performance of key products, continued expansion of growth areas and effective structuralreforms. The yen’s appreciation added to our momentum during the year, as did ourcontinued group-wide cost reduction efforts. In fact, in the five years since FY2013, wehave achieved cost savings of 7.6 billion yen. To show our appreciation to our shareholders
for their continued support, this progress has been reflected in an increase in the yearly
dividend from 110 yen to 125 yen per share.”
Of particular note is the Advanced Materials segment, which is now firmly in profitable
territory following a year-on-year jump in operating profit from 0.1 billion to 1.7 billion yen.
Growth in this segment was mainly driven by solid demand for polyvinylidene fluoride(PVDF), which is used in lithium-ion battery (LiB) binder materials for electric vehicles, andbetter-than-expected gains for carbon products. Demand for polyphenylene sulfide (PPS)
also continued to grow for automotive applications.
In the polyglycolic acid (PGA) business, Kureha did not achieve the full-year results
originally targeted. However, the year’s expansion efforts yielded significant new insights
into the US shale oil and gas industry and its demand for PGA frac plugs. From this year,with newly developed frac plugs that are degradable in lower temperatures and therefore
applicable to a broad range of wells, it has finally become possible to expand into all areasof this market, and PGA for oil and gas exploration applications is expected to make amuch stronger contribution to the Kureha Group’s performance going forward.

Looking ahead to the final year of Kureha’s three-year mid-term management plan,
Kureha’s Challenge 2018, Mr. Kobayashi said, “FY2016-2018 has been designated as aperiod to lay the foundation for Kureha’s future expansion. While the final year will be

Page 1 of 8challenging due to factors such as yen appreciation and rising raw material prices, we areon track to reach the targeted operating profit of 14.0 billion yen. Alongside existing
businesses, we will focus strongly on new business creation and acceleratecommercialization in 11 selected themes. We will also continue our efforts to raise
productivity, promote digitization and enhance the ways in which our employees can growwithin the Kureha Group.”

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 (%)FY2016
132.3
9.3
9.0

FY2017
147.3
13.0
12.7

Change (%)
11.4
40.2
41.2

7.0

9.7

38.5

407.385.8%
3.8%

507.48
7.1%
5.3%

-

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)

FY2016
33.4
0.1
25.9
2.5
42.8
5.0
13.9
1.0
16.3
1.7
132.3
10.4
-1.1
132.3
9.3

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

Page 2 of 8

Advanced Materials Segment
Major product areas: advanced plastics (PPS, PVDF, PGA), carbon materials
Advanced Materials revenue rose 25% year-on-year to 41.6 billion yen while operating
profit jumped from 0.1 billion yen to 1.7 billion yen.

Advanced plastics: Continued growth for PVDF and PPS for automotive applications
Kureha continued to see strong performance for PVDF, a LiB binder material for which ourcompany holds a global market share of 40%. This growth was driven by the expanding
global market for electric and plug-in hybrid electric vehicles, particularly in China.
In the PPS business, Kureha saw demand growth for automotive applications. PPS, which
is both lightweight and has excellent heat stability, has proven to be an excellent
replacement for metals. To meet growing market needs, we have decided to enhance
production capacity at the Iwaki Plant by 5,000 tons/year to a total of 15,700 tons/yearby 2021.
With sales volume increases for PVDF and PPS more than offsetting the slower
performance in the PGA business, advanced plastics revenue rose by 24% to 24.4
billion yen.

Carbon products: Better-than-expected return to profitability
Kureha’s carbon products business continued its recovery on the back of positive demand,
price adjustments and effective structural reforms. The business recorded a 19% increase
in revenue to 4.9 billion yen.
Outlook: In FY2018, Kureha expects the PGA business for oil and gas exploration
applications to make a stronger contribution to segment performance following thedevelopment of a new frac plug type with ultra-low decomposition temperature (50-70° C).
With this new frac plug now part of our offering, it has become possible to expand in allareas of the North American market, and a business launch in the Chinese market is also
being considered.
Additionally, Kureha expects to see increased sales volumes in the PVDF business, with afurther 2,000 tons/year of production capacity coming online in the fall of 2018. The carbon
products business will continue to benefit from the successful restructuring conducted in
FY2017, although revenue and operating profit are expected to decline slightly. Segment

Page 3 of 8revenue is expected to increase by 9% to 45.5 billion yen, while operating profit will climb to
3.9 billion yen.

Specialty Chemicals Segment
Major product areas: industrial chemicals, agrochemicals, pharmaceuticals
Specialty Chemicals revenue grew slightly to 26.2 billion yen from 25.9 billion yen while
operating profit rose by 35% to 3.4 billion yen.

Pharmaceuticals/agrochemicals: Growth in fungicide sales volumes
Kureha saw continued growth in sales volumes and operating profit driven by the
Ipconazole fungicide and favorable currency effects. This momentum offset declines inrevenue and operating profit in the pharmaceutical business that were mainly caused bylower sales volumes for Kremezin, a therapeutic agent for chronic kidney disease, due tocompetition from generics.

Industrial chemicals: Revenue and operating profit rise on volume growth
Kureha saw healthy volume growth for both organic and non-organic chemicals, resulting inhigher revenue and operating profit for this business. The growth was driven by a
combination of higher demand and price adjustments.
Outlook: In FY2018, frontloaded shipments in FY2017 are expected to lead to a decline in
the sales volumes of agrochemicals, affecting revenue and operating profit for this business.
In the pharmaceuticals business, sales volumes and revenue will increase for our newly
launched Kremezin tablets but operating profit will be affected by national drug pricerevisions.
In industrial chemicals, revenue and operating profit will remain at the FY2017 level on theback of measures to improve margins, including price adjustments and cost reductions.
Segment revenue is forecast to rise by 5% to 27.5 billion yen, but operating profit will
decline to an estimated 2.7 billion yen.

Specialty Plastics Segment
Major product areas: household packaging products, food packaging materials,
auto-packaging machinery

Page 4 of 8

Specialty Plastics segment revenue rose by 6% from 42.8 billion yen to 45.4 billion yen
while operating profit increased by 39% to 6.9 billion yen.

Home products: Strong sales volumes for NEW Krewrap and Seaguar
The home products business recorded growth in both revenue and operating profit due tostrong sales volumes for Seaguar fishing lines and NEW Krewrap plastic wrap, the latter
benefitting from strategic price adjustments and increased sales of high-margin products(50m wrap).

Food packaging materials: Global sales growth for heat-shrink multilayer film
This business benefited from a successful restructuring of Kureha’s food packaging sales
and production network within the EU, and the launch of a new business expansion
strategy. Revenue and operating profit increased, driven particularly by rising global salesof heat-shrink multilayer film.

Outlook: In FY2018, Kureha expects to see continued sales growth for NEW Krewrap,
Seaguar and the Kitchinto-san product series. However, higher costs for raw materials andpromotion in the home products business are likely to affect operating profit for thesegment as a whole, although continued healthy global sales of advanced heat-shrink
multilayer film products will soften the decline. Segment revenue is forecast to rise slightly
to 46.0 billion yen, but operating profit will decline by 15% to 5.9 billion yen.

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

Construction: Post-quake reconstruction demand drives growth
The year saw expanded post-quake reconstruction demand, leading to sales volume
increases for both public and private sector construction projects. This growth more thanoffset a slowdown in the engineering business. As a result, revenue for Kureha’sConstruction segment rose by 25% to 17.4 billion yen, while operating profit increased to
1.0 billion yen.

Other Operations: Continued volume growth in the waste treatment business
Kureha’s environmental engineering business saw continued volume growth in the waste
treatment business. In the logistics business, effective cost reduction measures

Page 5 of 8

compensated for lower revenue, leading to an increase in operating profit. In the hospitalbusiness, operating profit declined due to flat revenue. As a result, revenue in Other
Operations increased to 16.8 billion yen while operating income rose to 1.8 billion yen.
Outlook: In FY2018, Kureha expects revenue and operating profit in the Construction
segment to be affected by lower demand for post-quake reconstruction as well as higher
labor and raw material costs. Revenue is forecast to fall to 14.5 billion yen and operating
profit will decline to 0.6 billion yen.
In Other Operations, Kureha expects to see continued demand in the environmental
engineering business, but intensifying market competition will affect revenue and operating
income. Revenue is expected to fall to 16.5 billion yen while operating profit will decline to
1.4 billion yen.

Outlook for FY2018(Billions of yen, except where stated)
Revenue
Operating profit
Profit before income tax
Profit attributable to theowners of Kureha
Earnings per share (yen)FY2017
147.3
13.0
12.7

FY2018
150.0
14.0
14.0

Change (%)
1.8
7.9
10.4

9.7

10.5

8.3

507.48508.4-

FY2018 is forecast to be another year of growth for Kureha, with Advanced Materials being
the main performance driver. Full-year revenue is expected to be 150.0 billion yen, a yearon-year increase of 1.8%. This is lower than the figure targeted in the mid-term
management plan, Kureha’s Challenge 2018, primarily due to the delayed expansion of the
PGA business in the North American market. However, with the PGA business gaining
speed alongside the strong PVDF business and continued momentum for Specialty
Plastics, particularly due to higher sales volumes of NEW Krewrap, Kureha will steadfastly
work to meet the plan’s operating profit target of 14.0 billion yen. Group-wide efforts to raise
operational efficiency, expected to achieve a cumulative 8.8 billion yen in cost reductions in
FY2018, will contribute to this goal. As a result, profit attributable to the owners of Kureha isforecast to increase 8.3% to 10.5 billion yen for the full fiscal year, resulting in a profit per
share of 508.4 yen and rise in the full-year dividend per shareto 140 yen.

Page 6 of 8

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

FY2016
10.3
10.2
4.7
71.0

FY2017
9.8
9.9
5.0
48.1

FY2018
15.0
10.3
5.8
49.0

Capital expenditure in FY2017 decreased slightly year-on-year to 9.8 billion yen, and was
mainly focused on upgrading facilities related to PVDF production. Looking ahead to
FY2018, capital expenditure will be increased to 15.0 billion yen in order to respond tointense demand for PPS in addition to PVDF and to upgrade production processes forexisting products. Depreciation, mostly related to expanded production facilities, fell slightly
to 9.9 billion yen year-on-year and is expected to rise to 10.3 billion yen in FY2018.
R&D spending rose from 4.7 billion yen to 5.0 billion yen year-on-year and will rise further
to 5.8 billion yen in FY2018. While part of this investment will be aimed at upgrading
production processes based on the findings of a dedicated process enhancement facility
set up in October 2017, significant effort will also be devoted to accelerating thecommercialization of 11 promising research themes. As per the direction outlined in
Kureha’s Challenge 2018, we will seek to develop these research themes into nextgeneration products. Where appropriate, Kureha will consider collaborating with third-party
companies, universities and other organizations.
Interest-bearing debt decreased from 71.0 billion yen to 48.1 billion yen, due to factors
including the conversion into shares of 15.0 billion yen in convertible bonds (due March2018). In FY2018, interest-bearing debt will remain at a similar level.
*****
For further information, please contact:
KUREHA CORPORATION
Public & Investor Relations Department Tel. 03-3249-4651

Page 7 of 8

Condensed Consolidated Balance Sheets
As of March 31, 2017 and 2018
(Millions of yen)
AssetsCurrent assets
Cash and cash equivalents
Noncurrent assets
Property, plant and equipment
Intangible assets
Investments and other assets
Total assets
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
Total liabilities and net assets

March 2017

March 201875,272
6,222
159,634
115,911
1,395
42,326234,90776,963
6,475
165,318
114,236
1,336
49,745242,281

80,672
46,68928,261
11,96911,593
108,934

62,59525,75927,644
13,951
7,707
90,240124,297
1,674
125,972

150,193
1,847
152,041

234,907242,281

FY2016132,294
96,791
26,632
9,255
8,981
1,874
7,001

FY2017
147,329
107,300
27,193
12,973
12,6832,869
9,697

Condensed Consolidated Statement of Income
As of March 31, 2017 and 2018
(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 8 of 8

FY2017 Financial Results(Period April 1, 2017 – March 31, 2018)

May 11, 2018

1

Contents
1. FY2017 Results
3-6• FY2017 Highlights• Segment Performance
7
Advanced Materials
8
Specialty Chemicals
9
Specialty Plastics
Construction & Other Operations 1011• FY2017 vs. Initial Projection
12• Key Indicators
13• Financial Position
14• Cash Flow

2. FY2018 Outlook• FY2018 Forecast
16-18• Segment Outlook
Advanced Materials
19
Specialty Chemicals
20
Specialty Plastics
21
Construction & Other Operations 22• Key Indicators
23• Cash Flow24

3. Updates on the Mid-Term
Management Plan

26-31

4. Consolidated Companies

33-34

2

1. FY2017 Results(April 1, 2017 – March 31, 2018)

3

FY2017 Highlights(in billions of yen, except where stated otherwise)

Revenue

FY2016FY2017

132.3

147.3

Change (%)

15.0 (11.4%)

FY2017 vs. FY2016• Revenue grew across all
segments, with largest growth led
by Advanced Materials

Operating profit

9.3

13.0

3.7 (40.2%)

Profit before income tax

9.0

12.7

3.7 (41.2%)

Profit attributable toowners of Kureha Corp.

7.0

9.7

2.7 (38.5%)

ROE

5.8%

7.1%

ROA

3.8%

5.3%

ROS

7.0%

8.8%

¥110.0¥125.0

Dividend per share• Operating profit increased in all
segments, especially in Specialty
Plastics and Advanced Materials• Profit before income tax
increased on higher operating
profit• Profit for the period increased onhigher profit before income tax

Note
ROE=Profit attributable to owners of Kureha/Shareholder’s equity
ROA=Profit before tax/Total assets
ROS=Operating profit/Revenue
Dividend per share: Kureha conducted a ten-to-one share consolidation on October 1, 2016.
Per share values above are represented on the post-consolidation basis for comparison purpose.

4

FY2017 Highlights
Segment Variance: FY2017 vs. FY2016
Revenue
42.8

41.6…FY2016…FY201745.4(billions of yen)

Operating
Profit6.9…FY2016…FY2017

5.0

33.4
25.9 26.2

3.4
13.9

2.5

17.4 16.3 16.8

1.7 1.8

1.7

1.0 1.0

0.1
Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

FY2016: ¥132.3bn

Construction

Other
Operations

FY2017: 147.3bn

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

FY2016: ¥10.4bn

Construction

Other
Operations

FY2017: 14.9bn

Factors affecting FY2017 segment operating profit (vs. FY2016)
Advanced Materials: Higher advanced plastics volumes, improved profitability for carbon products
Specialty Chemicals: Higher agrochemicals volumes and improved margin for industrial chemicals morethan offsetting a volume decline for pharmaceuticals
Specialty Plastics:
Higher volumes of home products, synthetic fiber and heat-shrink multilayer film
Construction:
Higher profit gains in construction, despite a decline in engineering
Other Operations:Improved cost management for logistics, higher volumes in environment businesses

5

FY2017 Highlights(billions of yen)
Advanced Specialty
Materials Chemicals

FY2016
Revenue

33.4

25.9

Specialty
Plastics

Construction

42.8

13.9

Other
Segment
Adjustment
Operations
Total

16.3

132.3

Elimination

Other income
Other expenses
Operating profit*Subsidy income: ¥1bn
*Business withdrawal and restructuring costs: ¥1.9bn, Loss on retirement of
noncurrent assets: ¥0.5bn

0.1

2.5

5.0

1.0

Advanced Specialty
Materials Chemicals

Specialty
Plastics

Construction

45.4

17.4

1.7

10.4

Finance income
Finance costs-----0.1
1.4
2.6

132.3
----------------

-1.1
0.6
0.9

9.3
----------9.0
7.0

Profit before income tax

Profit for the period

FY2017
Revenue

41.6

26.2

Other
Segment
Adjustment
Operations
Total

16.8

147.3

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: ¥1.3bn, Loss on non-current asset
impairment: ¥0.7bn, Environment-related expenses: ¥0.4bn

1.7

3.4

6.9

1.0

1.8

14.9

Total

Total

-----0.2
0.5
2.6

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

-1.9
0.6
0.9

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

6FY2017 Highlights
Other Income and Expenses

FY2016
Other income

FY2017¥1.4 billion

Subsidy income: ¥1.0bn=¥7.8bn (Fukushima Recovery Subsidy) - ¥6.9bn(Loss on reduction of noncurrent assets)¥0.5 billion¥0.2b
Subsidy income: ¥0.3bn*Including subsidies for post-quake restoration
initiatives¥0.2b
Other: ¥0.2bn¥0.5b

Other: ¥0.4bn

Other expenses

Other income¥2.6 billion

Other expenses¥2.6 billion

Loss on retirement of noncurrent assets: ¥0.5bn
Restructuring cost: ¥1.2bn

Loss on retirement of noncurrent assets: ¥1.3bn
Impairment loss: ¥0.7bn*Related to Advanced Materials processed
products and carbon fibers*Related to former PVDC plant and China carbon
fiber facilities

Loss on business withdrawal: ¥0.7bn

Provision for environmental measures: ¥0.4bn
Other: ¥0.2bn*Termination of KRESTIN manufacturing & sales

Other: ¥0.2bn

7

Segment Performance:
Advanced Materials(billions of yen)

FY2016FY2017

Change%FY2017 vs. FY2016
Revenue

Advanced Materials
Advanced plastics

19.7

24.4

24%

Carbon products

4.1

4.9

19%

Revenue: Kureha Co.

23.9

29.4

23%

Revenue: Subsidiaries

24.3

29.6

22%

Elimination

-14.8

-17.3

--

Kureha-G Revenue

33.4

41.6

25%

Kureha-G Operating Profit

0.1

1.7

1994%

Operating Profit

Advanced plastics:
Operating profit increased on revenue
growth driven by PVDF (LiB binder
applications), PPS (automotive) andPGA (oil/gas exploration applications)
Carbon products
Returned to generating profit withimproved revenue for carbon fibers andmaterials

8

Segment Performance:
Specialty Chemicals(billions of yen)

FY2016FY2017

Change%FY2017 vs. FY2016
Revenue

Specialty Chemicals
Agrochemicals

7.2

9.2

27%

Pharmaceuticals

5.6

3.8

-31%

Industrial chemicals

8.8

9.4

8%

Revenue: Kureha Co.

21.5

22.4

4%

Revenue: Subsidiaries

6.9

6.5

-6%

Elimination

-2.5

-2.7

--

Kureha-G Revenue

25.9

26.2

1%

Kureha-G Operating Profit

2.5

3.4

35%

Operating Profit

Agrochemicals
Operating profit increased on higher
fungicides sales volume
Pharmaceuticals
Revenue and operating profit declined
due to lower Kremezin (therapeutic
agent for chronic kidney disease)
volumeIndustrial chemicals
Higher revenue and operating profit
driven by volume growth for bothorganic and non-organic chemicals

9

Segment Performance:
Specialty Plastics(billions of yen)

FY2016FY2017

Change%FY2017 vs. FY2016
Revenue

Specialty Plastics
Home products

19.5

20.7

6%

Packaging materials

7.0

6.3

-9%

Revenue: Kureha Co.

26.5

27.0

2%

Packaging materials

11.1

13.1

19%

Fiber products

3.7

4.2

13%

Others

6.9

7.4

8%

Revenue: Subsidiaries

21.6

24.8

14%

Elimination

-5.4

-6.4

--

Kureha-G Revenue

42.8

45.4

6%

Kureha-G Operating Profit

5.0

6.9

39%

Operating Profit

Home products
Operating profit grew on increased
revenue from NEW Krewrap (plasticwrap) and Seaguar (fishing lines)
Packaging materials
Higher revenue and operating profit
supported by global sales growth ofheat-shrink multilayer film

10

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

FY2016FY2017

Change%RevenueConstruction
Construction

21.2

23.9

13%

Elimination

-7.2

-6.6

--

Kureha-G Revenue

13.9

17.4

25%

Kureha-G Operating Profit

1.0

1.0

1%

Other Operations
Environmental engineering

FY2017 vs. FY2016

Construction
Construction volume increased in bothpublic and private sectors more thanoffsetting a decline in engineeringbusiness

Revenue

Logistics
Hospital operations
Others

10.2
8.5
3.6
1.8

11.0
8.3
3.6
1.8

8%
-2%
-0%
1%

Revenue: Subsidiaries

24.1

24.7

2%

Elimination

-7.8

-7.9

--

Kureha-G Revenue

16.3

16.8

3%

Kureha-G Operating Profit

1.7

1.8

5%

Operating Profit

Operating Profit

Environmental Engineering
Operating profit increased on higher
volume in industrial waste treatment
Logistics
Operating profit improved on reduced
cost, despite lower revenue

Hospital Operations
Operating profit declined on flat revenue

11

FY2017 vs. Initial Projection
Segment Variance: FY2017 Results vs. Initial projection(billions of yen)

Operating profit

Revenue
43.0 45.4

41.0 41.6

6.9…FY2017 Initialprojection…FY2017 results

17.4 17.0 16.8

…FY2017 results

4.1

26.5 26.2
14.5

3.4

3.0

2.6

1.7
0.6

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Initial projection:¥142.0bn

Construction

Other
Operations

Results:¥147.3bn…FY2017 Initialprojection

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Initial projection: ¥11.5bn

1.0Construction

1.2

1.8

Other
Operations

Results: ¥14.9bn*Exchange rates (initial projection): ¥110.9 (¥110)/1USD, ¥129.7(¥115)/1EUR, ¥16.7(¥15.5)/1CHY

Factors affecting FY2017 segment operating profit (vs. Initial projection)
Advanced Materials: A delay in PGA sales expansion, despite better-than-expected gains in carbon fiberSpecialty Chemicals: Improved margins for industrial chemicals, favorable currency effect of for agrochemicals
Specialty Plastics:
Higher home products volumes, lower expenses
Construction:
Higher sales volume
Other Operations:
Higher volume in environmental businesses

12

Key Indicators(billions of yen)

1H

FY20162H
Full year

1H

FY2017
ChangeYOY
2H
Full year

Capital expenditure

4.8

5.5

10.3

4.0

5.8

9.8

-5%

Depreciation

5.1

5.1

10.2

4.9

5.0

9.9

-3%

R&D expenses

2.2

2.5

4.7

2.3

2.7

5.0

6%

Interest-bearing debt

77.8

71.0

71.0

56.0

48.1

48.1

-32%

¥105.2¥101.1¥111.5¥112.2¥108.3¥112.2¥111.0¥112.7¥110.7¥106.2¥110.9¥106.2¥118.0¥113.4¥119.5¥119.8¥118.7¥119.8¥126.3¥132.9¥133.1¥130.5¥129.7¥130.5

¥15.9
¥15.1

¥16.3
¥16.3

¥16.1
¥16.3

¥16.4
¥17.0

¥17.1
¥16.9

¥16.7
¥16.9

(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
Change20172018

Mar. 31 Mar. 31
Change20172018

Cash and cash equivalents

6.2

6.5

0.3

Trade and other payables

20.4

21.5

1.2

Trade and other receivables

29.4

32.7

3.3

Interest-bearing debt

71.0

48.1

-22.9 *

Inventories

36.5

36.0

-0.5

Provisions

6.1

6.6

0.5

Other current assets

3.2

1.8

-1.4

Other liabilities

11.4

14.0

2.6

Total current assets

75.3

77.0

1.7

Total liabilities

108.9

90.2

-18.7

Property, plant and equipment

115.9

114.2

-1.7

Shareholders’ equity

12.5

18.2

5.7 *

Intangible assets

1.4

1.3

-0.1

Capital surplus

9.4

15.3

5.8 *

Investments and other assets

42.3

49.7

7.4

Less: Treasury stock

-4.5

-0.7

3.8 *

Retained earnings

101.7

108.7

7.0

Other components of equity

5.1

8.7

3.6

Non-controlling interests

1.7

1.8

0.2

Total non-current assets

159.6

165.3

5.7

Total equity

126.0

152.0

26.1

Total assets

234.9

242.3

7.4

Total liabilities and equity

234.9

242.3

7.4

*¥15 billion convertible bonds with stock acquisition rights (due March 2018) have been all converted intoshares by February 2018. As a result, with share conversion partly settled by the company’s treasury shares ,the number of shares issued are 20,805,407.

14Cash Flow(billions of yen)

FY2016FY2017

ChangeCash flow from operating activities

9.0
10.2
-6.8
12.4

12.7
9.9
-2.4
20.2

3.7
-0.3
4.4
7.8

Cash flow from investing activities

-1.1

-9.7

-8.6

Cash flow from financing activities

-11.7

-10.4

1.3

Effect of exchange rate changes on cash and cash equivalents

-0.0

0.2

0.2

Increase/decrease in cash and cash equivalents

-0.5

0.3

0.7

Cash and cash equivalents at beginning of period

6.7

6.2

-0.5

Cash and cash equivalents at end of period

6.2

6.5

0.3

Profit before income tax

Depreciation
Other

15

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

16

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

FY2017
Revenue

147.3

FY2018e1H | 2H

150.0

ChangeYOY (%)

2.7 (1.8%)

72.0 | 78.0

Operating profit

13.0

14.0

1.0 (7.9%)

5.0 | 9.0

Profit before income tax

12.7

14.0

1.3 (10.4%)

5.0 | 9.0

Profit attributable toowners of Kureha Corp.

9.7

10.5
3.5 | 7.0

¥507.5¥508.4

Dividend per share

¥125

¥140

Dividend payout ratio

24.6%

27.5%

Number of employees

4,374

4,387

Profit per share

0.8 (8.3%)

FY2018e vs. FY2017• Revenue growth driven by
Advanced Materials• Operating profit to increase on
strong gains in Advanced Materials,
lower operating loss for PGA andfewer ‘other expenses’ more thanoffsetting declines in othersegments and higher cost
• Profit before income tax to improveon higher operating profit• Profit for the period to improve onhigher profit before income tax

17

FY2018 Forecast
Segment Variance: FY2018e vs. FY2017
Revenue
45.5

41.6…FY2017…FY2018e45.4 46.0(billions of yen)

Operating
Profit3.9

26.2 27.5
17.4

14.5

16.8 16.5

6.9…FY2017…FY2018e

5.9

3.4

2.7
1.8

1.7
1.0

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

FY2017: ¥147.3bn

Construction

Other
Operations

FY2018e: 150.0bn

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

FY2017: ¥14.8bn

1.4

0.6

Construction

Other
Operations

FY2018e: 14.5bn

Factors affecting FY2018e segment operating profit (vs. FY2017)
Advanced Materials: Improved margin for PGA business through sales expansion
Specialty Chemicals: Lower agrochemicals volumes and negative effects of national drug price revision forpharmaceuticals offsetting volume growth for newly launched Kremezin tablets
Specialty Plastics:
Higher promotion cost for home products
Construction:
Higher labor and raw materials costs
Other Operations:
Intensified market competition for environmental businesses

18

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

14.5

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

45.5

27.5

Other
Segment
Adjustment
Operations
Total

16.5

150.0

1.4

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

3.9

2.7

5.9

0.6

Total

-----0.0
0.1
0.6
-0.5
0.6
0.6

Total

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

19

Segment Outlook:
Advanced Materials(billions of yen)

FY2017FY2018e

Change%FY2018 vs. FY2017
Revenue

Advanced Materials
Advanced plastics

24.4

28.0

15%

Carbon products

4.9

4.5

-9%

Revenue: Kureha Co.

29.4

32.5

11%

Revenue: Subsidiaries

29.6

36.0

22%

Elimination

-17.3

-23.0

--

Kureha-G Revenue

41.6

45.5

9%

(1H)

(19.8)(22.0)(11%)

Kureha-G Operating Profit

1.7

3.9

134%

(1H)

(1.4)

(0.2)

(-86%)

Operating Profit

Advanced plastics
Higher revenue & operating profit
driven by strong growth of PGA foroil/gas exploration applications,increased volumes of PVDF (for LiB
binder), PPS (for automotive parts)
Carbon products
Lower revenue & operating profit,
despite continued price adjustment
and cost cutting

20

Segment Outlook:
Specialty Chemicals(billions of yen)

FY2017FY2018e

Change%FY2018 vs. FY2017
Revenue

Specialty Chemicals
Agrochemicals

9.2

8.0

-13%

Pharmaceuticals

3.8

5.0

30%

Industrial chemicals

9.4

9.5

1%

Revenue: Kureha Co.

22.4

22.5

0%

Revenue: Subsidiaries

6.5

7.5

16%

Elimination

-2.7

-2.5

--

Kureha-G Revenue

26.2

27.5

5%

(1H)

(12.6)(13.0)(3%)

Kureha-G Operating Profit

3.4

2.7

-21%

(1H)

(1.9)

(1.4)

(-27%)

Operating Profit

Agrochemicals
Lower revenue & operating profit due
to a decline in fungicide volume (frontloaded shipment in prior year)

Pharmaceuticals
Revenue expected to increase on
volume growth for new Kremezin
tablets, operating profit to level off as
impacted by national drug pricerevisions
Industrial chemicals
Revenue & operating profit to maintainat previous year level, continued focus
on margin improvement

21

Segment Outlook:
Specialty Plastics(billions of yen)

FY2017FY2018e

Change%FY2018e vs. FY2017
Revenue

Specialty Plastics
Home products

20.7

21.0

1%

Packaging materials

6.3

6.0

-5%

Revenue: Kureha Co.

27.0

27.0

0%

Packaging materials

13.1

14.5

11%

Fiber products

4.2

4.3

2%

Others

7.4

7.2

-3%

Revenue: Subsidiaries

24.8

26.0

5%

Elimination

-6.4

-7.0

--

Kureha-G Revenue

45.4

46.0

1%

(1H)

(22.2)(22.5)(1%)

Kureha-G Operating Profit

6.9

5.9

-15%

(1H)

(3.3)

(2.8)

(-16%)

Operating Profit

Home products
Revenue expected to increase on
volume growth of NEW Krewrap andKitchinto-san series products,
operating profit to decrease due toincreased cost for sales promotion, etc.
Packaging materials
Higher revenue & operating profit driven
by expanding global sales of advanced
heat-shrink multilayer film products

22

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

FY2017FY2017e

Change%FY2018e vs. FY2017
Revenue

Operating Profit

Construction
Construction

23.9

20.5

-14%

Elimination

-6.6

-6.0

--

Kureha-G Revenue

17.4

14.5

-16%

(1H)

(7.2)

(7.0)

(-3%)

Kureha-G Operating Profit

1.0

0.6

-42%

(1H)

(0.2)

(0.2)

(-8%)

Logistics
Hospital operations
Others

11.0
8.3
3.6
1.8

10.7
8.6
3.7
1.8

-3%
4%
3%
1%

Revenue: Subsidiaries

24.7

24.8

0%

Elimination

-7.9

-8.3

--

Kureha-G Revenue

16.8

16.5

-2%

(1H)

(7.6)

(7.5)

(-1%)

Kureha-G Operating Profit

1.8

1.4

-23%

(1H)

(0.6)

(0.4)

(-33%)

Construction
Revenue & operating profit to decrease
due to a decline in post-quake demand,higher labor and raw materials costs

Other Operations
Environmental engineering

Revenue

Operating Profit

Other Operations
Revenue & operating profit todecrease due to intensifiedcompetition in environment business

23

Key Indicators(billions of yen)

FY2017FY2018e

ChangeYOY(%)

Capital expenditure

9.8

15.0

5.2 (54%)

Depreciation

9.9

10.3

0.4 (4%)R&D expenses

5.0

5.8

0.8 (16%)

Interest-bearing debt

48.1

49.0

0.9 (2%)

Term average¥110.9¥105.0Term end¥106.2¥105.0Term average¥129.7¥130.0Term end¥130.5¥130.0Term average

¥16.7

¥16.5

Term end

¥16.9

¥16.5

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

24

Cash Flow(billions of yen)

FY2017FY2018e

ChangeYOY

Cash flow from operating activities

12.7
9.9
-2.4
20.2

14.0
10.3
-4.2
20.1

1.3
0.4
-1.8
0.0

Cash flow from investing activities

-9.7

-18.0

-8.3

Cash flow from financing activities

-10.4

-2.1

8.3

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

0.0

-0.2

Cash and cash equivalents at beginning of year

6.2

6.5

0.3

Cash and cash equivalents at end of year

6.5

6.5

0.0

Profit before income tax
Depreciation
Other

25

3. Updates on ‘Kureha’s Challenge 2018’
Mid-Term Management Plan

26

Kureha’s Challenge 2018:
Strategic Positioning‘Kureha’s Challenge 2018’
The FY2016-2018 mid-term management plan

Business goals･ Enhance competitiveness and earnings
capacity of existing businesses･ Expand the PGA business･ Explore new business themes

Promote CSR-based management

Strengthen the management foundation
FY2016-2018 is a period to lay the foundation
for Kureha’s future expansion

Strategic direction

As a company built ontechnology, Kureha willdevelop differentiatedproducts in the field ofspecialty chemicals andbecome a high value-added
enterprise that continuallycontributes to global society27

Quantitative targets
Mid-term plan vs. Outlook(billions of yen)

FY2018eMid-term plan
Difference
FY2018targets

Revenue

150.0

160.0

-10.0

Operating profit

14.0

14.0

0.0

Profit attributable toowners of Kureha Corp.

10.5

9.0

Assumption for currency exchange rates
1USD:

¥105

¥120

1EUR:

¥130

¥130

1CHY:

¥16.5

¥18.0

1.5

FY2018e vs. Mid-term plan targets• Revenue lower than targeted in
Advanced Materials (a delay in
PGA business expansion) and
Other Operations (revisingbusiness strategies forenvironment and logistics)• Operating profit growth in Specialty
Plastics (higher NEW Krewrap
volume) and Specialty Chemicals(higher agrochemical volume) tocompensate shortfalls in Advanced
Materials and Other Operations• Profit attributable to owners ofKureha to increase due to changes
in tax expense assumption(effective tax rate: 35%25%)

28

Segment Performance
Mid-term plan vs. Outlook
FY2018e
Revenue

Mid-term plan
FY2018 targets

Ope.
ProfitRevenue

Factors for differences
DifferenceOpe.
profitRevenueOpe.
profitAdvanced
Materials

45.5

3.9

50.0

7.0

-4.5

-3.1

Specialty
Chemicals

27.5

2.7

28.0

2.0

-0.5

0.7

Specialty
Plastics

46.0

5.9

47.0

4.5

-1.0

1.4

Construction

14.5

0.6

13.0

0.3

1.5

0.3

Other
Operations

16.5

1.4

22.0

1.7

-5.5

-0.3

Other income& Expenses
Total

-0.5
150.0

14.0

-1.5
160.0

14.0

1.0
-10.0

0.0

⃝ Performing above target-- Performing as planned△ Performing below target

Advanced Materials
PGA △ △PPS △PVDF △
Carbon products ⃝Specialty Chemicals
Pharmaceuticals -Agrochemicals ○Industrial chemicals -Specialty Plastics
Home products ○○Packaging materials △29

Key Indicators:
Mid-term plan vs. Outlook
FY2018e

FY20162018e
Total

Difference

9.8

15.0

35.1

-14.9

10.2

9.9

10.3

30.4

-4.6

4.7

5.0

5.8

15.5

-4.5

Mid-term plan
FY2016-2018

FY2016FY2017

Capital expenditure

50.0

10.3

Depreciation

35.0

R&D expenses

20.0

Mid-term plan
FY2016-2018
ROE
DE ratioInterest-bearing debt

FY2018e Difference

6.0%

6.8%

0.5

0.3

¥70bn

¥49bn

-¥21bnProgress on Kureha’s Challenge 2018
Initiatives
Enhance competitiveness &Enhance earnings capacity
ＰＰＳ

Progress in FY2016-2017

Challenges in FY2018

Resolved to enhance annual production
by 5000 tons (operational in 2021)

Study for additional production
enhancement

2000t enhancement project underway(operational in Fall 2018)
Carbon products Retuned to generating profit throughstreamlining and strategic reforms

30

Study for production enhancement in
China, Promote quality differentiation
Continue to generate profit, Promote
quality differentiation

AM

ＰＶＤＦ

SC

Phama/Agro

Launched fast-dissolving Kremezin tablets,
Achieved steady growth for agrochemicals

Expand sales of new Kremezin tablets,
Develop new drugs and agrochemicals

Home products

Advanced penetration strategy with higher
prices and increased sale of 50m wrap

Expand global markets, Improve
profitability for Kichinto-san products

Packaging

Reformed EU sales/production framework,
Launched new business expansion strategy

Expand ML film sales by focusing onfunctional differentiation

Synthetic fiber

Expanded PVDF processed productbusiness

Start full operation at new extrusion
facility

CST

Construction

Expanded business for post-quake
restoration demand

Promote cost reduction programs

Other

Environment

Expanded industrial waste treatment
business

Improve competitiveness for industrial
waste treatment

Established Kureha Energy Solutions in US,
Realigned sales/marketing framework,
Launched low-temp dissolving frac plugs,
Developed super low-temp frac plugs

Accelerate US business expansion withnew super low-temp frac plugs,
Business launch in China market

SP

Expand the PGA businessProgress on Kureha’s Challenge 2018
Initiatives
Explore new businessthemes31

Progress in FY2016-2017

Challenges in FY2018

Explored potential themes responding tomarket needs in collaboration withexternal parties

Work on selected 11 themes with proper
gate controls and accelerate theircommercialization

Promote CSR management
Executed appropriate CSR management in line with Kureha
corporate governance guidelines

Maintain the effectiveness ofgovernanceImproved CSR promotion system

Enhance safety and quality assurance
systems

Strengthen the managementfoundation
Established a process experiment lab and pilot plant to improve
production technology

Promote new production processdevelopments

Reduced ¥7.6bn in cost over 5 years (FY2013-2017) throughgroup-wide reforms

Achieve effective and cumulative cost
reductions of ¥8.8bn

Launched productivity improvement projects for manufacturing
and administrative departments

Improve productivity and enhance
departmental functions under individual
projects

Followed up on the Shine-Up Project to promote human resource
development and improve our working environment

Execute measures devised through thefollow-up

32

3. Consolidated Companies

33

Revenues & Assets(billions of yen)

FY2016FY2017

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 Battery Materials Japan Co.

Advanced Kureha Europe Group (4)Materials Kureha America Group (4)Kureha (Shanghai) Carbon Fiber
Materials Co.

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

71.9
20.3
23.9
8.6
2.3
1.7
-1.4
5.4
1.1

188.4
13.6
--2.0
1.6
0.2
1.1
27.2
1.5

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

7.0
2.2
5.5
2.1
-0.1
0.1
-0.7
0.7
0.0

4.3
0.5
--0.1
-0.3
-0.2
-0.3
-1.9
0.0

3.8
-14.8
33.4
21.5
6.9
-2.5
25.9
26.5
4.8
3.7
0.3
1.7
8.0
3.1
-5.4
42.8

13.6
--------4.0
-1.0
6.4
3.8
---

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
---

1.6
-8.3
0.9
-0.4
-0.3
0.5
0.4
0.5
-0.1
0.3
1.8
0.3
-2.6

-3.1
--------0.9
--0.1
1.6
-0.4
---

34

Revenues & Assets(billions of yen)

FY2016FY2017

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
Number of consolidated subsidiaries
Number of equity- method affiliates

18.2
3.0
-7.2
13.9
8.9

10.8
2.1
--8.4

21.9
2.0
-6.6
17.4
9.7

11.3
2.1
--9.2

3.8
-1.0
-3.4
0.8

0.4
0.0
--0.8

1.3
8.5
0.1
0.6
3.6

0.6
6.3
-1.2
3.6

1.3
8.3
0.1
0.5
3.6

0.7
6.1
-1.2
3.4

0.0
-0.2
-0.0
0.0

0.1
-0.2
-0.0
-0.2

1.1
-7.8
16.3

0.6
---

1.2
-7.9
16.8

0.6
---

0.1
-0.4

0.0
---

132.3

234.9

147.3

242.3

15.0

7.4

34
2

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

29
3

35

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.