Kureha Corporation Reports Fiscal 2019 Results (IFRS)Special note: Due to the global uncertainty caused by COVID-19, this report does not contain
forecasts for FY2020. Kureha will provide forecasts at the earliest opportunity.
Tokyo, Japan – May 2020 – Kureha Corporation (“Kureha”), a leading global supplier of specialty
chemicals and plastics, has reported its results for the fiscal year ended March 31, 2020 (FY2019), thefirst year of the FY2019-2020 mid-term management plan Kureha’s Challenge 2020. On a consolidated
basis, revenue fell by 4% year on year to 142.4 billion yen, while operating profit rose by 5.1% to 18.0
billion yen. Profit before income tax rose by 2.9% to 17.9 billion yen, although profit attributable to theowners of Kureha fell to 13.7 billion yen due to increased corporate tax expenses.
Other income and expenses also shaped results for FY2019. In other income, Kureha recorded 13.4
billion yen in profits from the sale of tangible fixed assets, gain on bargain purchases associated with a
new consolidation, and gain on business transfer from the blow bottle business. Other expenses totaled
11.4 billion yen. Of these, structural reform expenses related to the polyglycolic acid (PGA) businessaccounted for 10.6 billion yen, including write-downs of inventory of 5.4 billion yen and an impairment
loss on fixed assets of 5.2 billion yen.
Kureha’s business environment in FY2019 was more challenging than that of the previous year.
External factors shaping market conditions include slowdowns in the semiconductor and industrial
chemicals markets, a reduction in electric vehicle (EV) subsidies in China, plunging crude oil prices,and the unprecedented global economic shock caused by COVID-19. Although performance continued
to be strong in the Construction and Other segments, as well as in the home and fiber products
businesses in the Specialty Plastics segment, these extraordinary circumstances led to a reduction inGroup revenue.
However, as shown by the operating profit increase to 18.0 billion yen and core operating profit of 16.0
billion yen, Kureha’s profit base remains strong. The challenging conditions have also demonstrated theimportance of our continuous efforts to reduce costs, raise operating efficiency, and reinforce ourcapacity for innovation.
Yutaka Kobayashi, President and Chief Executive Officer, commented, “Our strategic direction remains
firm and we are moving to implement the five themes set forth in the extended mid-term management
plan. First, we must further increase profits in the PGA business, which reached profitability in FY2019.
Second, we must improve the polyvinylidene flouride (PVDF) supply system and maintain and expand
Kureha’s 40% market share of this material, which is vitally important for electric vehicles. Third, we will

Page 1 of 8

continue selection and concentration in FY2020 and determine how to best invest resources with a view
to portfolio optimization. Fourth, we must speed up the commercialization of promising seeds ofresearch. We have made considerable progress here but can do more. Fifth, we must continue tostrengthen our management foundation. We will tackle each of these themes resolutely.”
Regarding the PGA business, which Kureha has positioned as a future growth driver, Mr. Kobayashi,
added, “While this business reached profitable territory in FY2019, falling crude oil prices, increasingly
stringent customer demands and fierce price competition all pose risks to further expansion. In
response, Kureha will build a new, solution-based model for this business that offers non-PGA fracplugs alongside our core PGA frac plugs. We have allocated 10.6 billion yen to implement this strategicchange.”“I’m optimistic about the future of Kureha’s PGA business. Degradable frac plugs account for about
10% of the total North American market of about 600,000 plugs, so there is great scope for expansion.
By shifting our strategy, while focusing resources into making frac plugs that are simpler to use, easierto produce and cost-reducing for clients, we will be able to significantly strengthen our competitiveness.”
Summary of Consolidated Full-year Results(Billions of yen, except where stated)

148.3
17.2
17.4

142.4
18.0
17.9

-4.0
5.1
2.9

FY2019(targets)
152.0
26.0
26.0

13.9

13.7

-1.5

19.5

679.6
9.0
7.1

692.6
8.4
7.3

1.9
－
－

962.2
－
－

FY2018
Revenue
Operating profit
Profit before income tax
Profit attributable to theowners of Kureha
Earnings per share (yen)ROE (%)ROA (%)FY2019Change (%)

Note: Due to the global uncertainty caused by COVID-19, forecasts for FY2020 are not provided.

Consolidated Performance by Segment, Other Income and Expenses(Billions of yen)Segment
Advanced Materials
Specialty Chemicals
Specialty Plastics
Construction

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

FY2018
45.7
4.6
27.3
3.3
45.1
6.7
12.4

FY2019
41.8
3.7
24.3
2.1
43.5
6.3
14.5

Page 2 of 8Other Operations
Segment total

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

Adjustments
Other income

Other expenses

Total

Gains on sales of noncurrent assets
Gains on discount business purchase
Gains on business transfer
Subsidy income
Other
PGA business restructuring cost
(Write-downs on inventories)(Impairment loss on fixed assets)
Loss on retirement/sales of noncurrent
assetsOther
Revenue
Operating profit (loss)

0.7
17.6
2.1
148.3
17.4
0.1
0.0
0.3
0.3
0.8

1.1
18.3
2.7
142.4
16.0
0.0
10.2
1.5
1.2
0.3
0.3
10.6
（5.4）
（5.2）
0.6

0.2

0.2
142.4
18.0

148.3
17.2

Advanced Materials Segment
Major product areas: advanced plastics (PPS, PVDF, PGA), carbon materials
Advanced Materials revenue fell 9% year-on-year to 41.8 billion yen. Operating profit decreased by
19% to 3.7 billion yen.
PGA: Profitability attained, Kureha moving to counter adverse market conditions
In the PGA business, Kureha Energy Solutions (KES) successfully expanded sales volumes of PGA
frac plugs for mid- and high-temperature wells. Sales of PGA stock shapes also grew in the second halfof the year once destocking was completed in Q1. This positive momentum took the PGA business into
the black by a slight margin. Kureha’s innovative degradable frac plugs have now been adopted by 32
field operators in the United States, almost doubling year on year, and 51 field trials have been
conducted.
However, challenges remain. Slow sales of frac plugs for low-temperature wells means ourdevelopment of this product will require further effort. In addition, Kureha’s expansion of the PGA
business faces adverse external factors such as falling crude oil prices, increasingly stringent customer
demands, and intensifying price competition. To enhance our competitiveness, Kureha will expand
operations beyond our core PGA-based offering into the development and sales of non-PGA frac plugs.
We will also seek to improve production efficiency throughout the value chain. Here, a key goal will be
to significantly reduce business assets and the fixed cost burden left over from Kureha’s initial, PET
bottle-focused business development of global scope and create a much more agile organization

Page 3 of 8

capable of sustained growth. To implement this change in strategy, Kureha recorded businessrestructuring expenses of approximately 10.6 billion yen in Q4 FY 2019.

PVDF: External factors dampen demand growth in Q4
Demand for PVDF, a binder material for lithium-ion batteries (LiBs) that is vitally important for EV
production, showed rapid growth for most of the fiscal year, leading Kureha to strengthen its customer
base in South Korea and China. However, the reduction of EV subsidies implemented by the Chinese
government in June dampened demand for such vehicles over the latter half of 2019 in China andconsequently lowered demand for PVDF. Demand was further affected by COVID-19 , which led
customers in China and South Korea to halt operations and forced us to temporarily stop production at
our factory in Changshu, China in February. The pandemic also extended the lead times for raw
material delivery to our main factory in Iwaki, Japan, which up until that point had operated at full
capacity. As a result, revenue in the PVDF business remained largely flat year on year while operating
profit decreased.
However, Kureha is taking steps to meet the fierce demand for this material once markets stabilize. The
Iwaki Factory is enhancing its capacity for specialty polymer production in response to growing demand
for advanced binder, and the Changshu Factory will begin volume production of specialty polymer for
use in LiBs in Q1 FY2020. By end-FY2020, Kureha will also determine the location and production
capacity of an additional PVDF plant.

PPS: Slowing automotive industry momentum affects earnings
Revenue and operating profit declined in Kureha’s polyphenylene sulfide (PPS) business due toexchange rate fluctuations and shifts in customer applications that we are now incorporating into ourmarketing strategy. However, Kureha anticipates continued strong demand for automotive applications
and is on track to complete a capacity expansion of 5,000 tons / year at the Iwaki Factory in 2020. The
combination of light weight and heat stability makes PPS an excellent replacement for metals and thematerial is finding wide-ranging application as the automotive industry shifts toward CASE (Connected,
Autonomous, Shared & Electric) models.
Carbon products: Slowing global semiconductor demand affects revenue and profits
Kureha’s carbon products business was affected by lower sales volumes of heat-insulating materials
used in the manufacturing of ingots for semiconductors, leading to reduced revenue and operating profit.
This was mainly due to the general slowdown in the global semiconductor market seen in 2019.

Page 4 of 8

Specialty Chemicals Segment
Major product areas: industrial chemicals, agrochemicals, pharmaceuticals
Specialty Chemicals revenue fell by 11% to 24.3 billion yen while operating profit decreased by 36% to
2.1 billion yen.
Agrochemicals: Adverse weather conditions affect fungicide sales volumes
In the agrochemicals business, adverse weather conditions in Europe and flood damage in North
America in connection with the severe 2019 hurricane season affected sales volumes of the wheat andrapeseed fungicide Metconazole. The resulting reduction in revenue and operating profit more thanoffset continued sales growth of rice seed treatment Ipconazole.
Pharmaceuticals: Sales stable year on year, offsetting mandatory drug price revisions
The new tablet version of Kremezin, a therapeutic agent for chronic kidney disease, maintained thehealthy sales volumes seen in the previous year, offsetting government-mandated drug price revisions.
Improved productivity and reduced research costs led to a rise in operating profit.
Industrial chemicals: Revenue and operating profit down on lower sales volumes
Revenue and operating profit decreased due lower sales volumes of both organic and inorganic
chemicals, although measures taken over the year to improve the operating margin, including priceadjustments and cost reductions, helped to cushion the fall.

Specialty Plastics Segment
Major product areas: household packaging products, food packaging materials,
auto-packaging machinery
Specialty Plastics revenue was down by 4% to 43.5 billion yen, while operating profit decreased by 6%
to 6.3 billion yen.
Home / fiber products: Continued healthy growth for New Krewrap and Kichinto-sanHome products continued to see healthy growth due to expanding sales of Kureha’s flagship NEW
Krewrap plastic wrap and increased profitability for the Kichinto-san product series. The business saw
particularly notable growth during the spring of 2020, with sales rising by over 110% in February andMarch. During this time, pandemic-related restrictions such as school closures, together with the spreadof remote work and people refraining from going out, led to increased meal consumption at home andPage 5 of 8

higher demand for NEW Krewrap. In fiber products, sales volumes of Kureha’s popular fishing line
Seaguar also continued to grow.
Food packaging materials: Lower sales volumes for heat-shrink multilayer film
Slower sales of heat-shrink multilayer film in overseas markets resulted in lower revenue and operating
profit for this business. The main factors were intensifying competition in Russia and Eastern Europe
and lower meat production in Australia due to drought. The transfer of Kureha’s blow bottle business to
Kyodo Printing in November 2019 also affected earnings in this business.

Construction and Other Operations
Major product areas: construction, environmental engineering, transport/warehousing, and tradingrelated businesses
Construction: Higher sales volumes in both private and public sectors
Revenue and operating profit rose on the back of an increase in small and medium-sized private sector
projects and higher sales volumes for public sector projects, the latter driven by reconstruction in theaftermath of Typhoon Hagibis. Continued cost reductions also contributed to the sound performance.
As a result, revenue for Kureha’s Construction segment rose by 16% to 14.5 billion yen, while operating
profit climbed by 72% to 1.1 billion yen.
Other Operations: Solid growth for the waste treatment business
Kureha’s industrial waste treatment business continued to grow due to a significant increase in thenumber of such projects. Kureha was also entrusted with the management and disposal of waste
generated by Typhoon Hagibis. The acquisition and new consolidation of industrial waste treatment
business Himeyuri Total Work Co. also contributed to the results. Meanwhile, the logistics business
saw revenue and profit growth on a par with the previous year. In the hospital business, operating profit
remained largely flat despite a slight revenue growth. As a result, revenue in Other Operations
increased by 4% to 18.3 billion yen while operating profit rose by 30% to 2.7 billion yen.

Capex, Depreciation, R&D and Debt
(Billions of yen)
FY2018
Capital expenditure
Depreciation
R&D
Interest-bearing debt

FY2019
13.2
10.3
5.3
39.0

14.9
12.1
6.0
37.3

Page 6 of 8

Backed by strong financial fundamentals, Kureha continues to invest heavily in future expansion forsustained long-term growth. Capital expenditure in FY2019 increased by 13% to 14.9 billion yen, mainly
to upgrade production processes for existing products and to fortify corporate resources for new
business development.
Depreciation, mainly due to Kureha’s ongoing expansion of production facilities, increased by 17% to12.1 billion yen in FY2019. Kureha also took further steps to reduce interest-bearing debt, which in
FY2019 fell from 39.0 billion yen to 37.3 billion yen, a 4% reduction.
R&D spending rose by 14% to 6.0 billion yen. As a company driven by innovation, Kureha’s R&D
spending is focused on accelerating 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 other organizations.

*****
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, 2019 and 2020
(Millions of yen)March 2019
AssetsCurrent assets
Cash and cash equivalents
Noncurrent assets
Property, plant and equipment
Intangible assets
Investments and other assets
Total assets

March 2020

78,777
5,989
168,574
117,553
1,094
49,926247,352

79,011
7,268
167,879
119,782842
47,253
246,890

63,99523,03821,18815,51485,184

54,121
15,54926,144
18,64880,266

160,551
1,616
162,167
247,352

164,990
1,633
166,623

March 2019
148,265
104,683
28,051
17,172
17,435
3,435
13,933

March 2020
142,398
100,265
28,10518,041
17,944
4,117
13,719Liabilities and net assets
Current liabilities
Corporate bonds and Bank loan
Fixed liabilities
Corporate bonds and Bank Loan
Total liabilities
Net assets
Shareholders’ equity
Minority interest
Total net assets
Total liabilities and net assets

246,890

Condensed Consolidated Statement of Income
As of March 31, 2019 and 2020
(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

FY2019 Financial Results(Period April 1, 2019 - March 31, 2020)

May 13, 2020

1

Contents
1. FY2019 Results
2-4• FY2019 Financial Summary
5-9• Performance by Segment
10• Other Income and Expenses• FY2019 Results vs. Guidance 11-12
13• Financial Position
14• Cash Flow
15-16
• Key Indicators
17• Returning to Shareholders
18-19• Consolidated Companies
20• PGA Business Updates
21• PVDF Business Updates• Impact of COVID-19 Pandemic 22

2. FY2020 Outlook
Notice regarding FY2020 guidance,
dividend payment & capital
investment23

2

FY2019 Financial Summary - 1(in billions of yen)

FY2018 FY2019

ChangeYOY-5.9

FY2019 Difference
Guidance vs. Results

Revenue

148.3

142.4

Core operating profit

17.4

16.0

(-8.0%)

Adjustments
Other income
Other expenses

0.1
0.6
0.9

0.0
13.4
11.4

-0.1
12.8
10.5

10.0
1.0

Operating profit

17.2

18.0

0.9

26.0

0.7
0.4

0.5
0.6

-0.1
0.3

0.7
0.7

17.4

17.9

0.5

26.0

Financial income
Financial expenses
Profit before income tax
Profit attributable toowners of Kureha Corp.

13.9

13.7

(-4.0%)-1.4(5.1%)(2.9%)

0.2(-1.5%)

152.0
17.0

19.5

-9.6
(-6.3%)-1.0(-5.8%)

3.4
10.4
-8.0
(-30.6%)

-0.2
-0.1
-8.1

FY2019 vs. FY2018• Revenue decreased due to declines
in advanced products, specialty
chemicals and packaging materials,
despite steady growth inconstruction, environment
businesses and home products• Higher operating profit resulted fromother income inclusive of gains fromland sales and negative goodwill
more than offsetting structural
expenses• Profit before income tax increasedon higher operating profit(-31.0%)-5.8(-29.6%)• Profit for the period decreased due
to higher tax expenses

3

FY2019 Financial Summary - 2(billions of yen)

FY2018

AM

SC

SP

CO

OO

Total

Revenue

45.7
4.6

27.3
3.3

45.1
6.7

12.4
0.7

17.6
2.1

148.3
17.4
0.1
0.6
0.9
17.2
0.7
0.4
17.4
13.9

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

FY2019

AM

SC

SP

CO

OO

Total

Revenue

41.8
3.7

24.3
2.1

43.5
6.3

14.5
1.1

18.3
2.7

142.4
16.0
0.0
13.4
11.4
18.0
0.5
0.6
17.9
13.7

Segment operating profit
Intersegment adjustment
Other income
Other expenses
Operating profit
Finance income
Finance costs
Profit before income tax
Profit for the period(Notes)- Other expenses include losses onretirement of noncurrent assets(¥0.8bn)- Other income includes gains on salesof noncurrent assets (¥10.2bn), etc.
- Other expenses include businessrestructuring expenses (¥10.6bn), etc.
*See details on page 10

4FY2019 Financial Summary - 3
Segment performance (YoY)(billions of yen)

Revenue
45.7

41.8…FY2018…FY201945.1 43.5

Operating
Profit6.7…FY2018…FY2019

6.3

4.6
27.3

24.3
14.5

17.6 18.3

12.4

3.7 3.3

2.7

2.1

2.1
0.7

Other
Advanced Specialty Specialty
Construction
Operations
Materials Chemicals Plastics

FY2018: ¥148.3bn

FY2019: 142.4bn

Advanced Specialty
Materials Chemicals

1.1

Other
Specialty
Construction
Operations
Plastics

FY2018: ¥17.4bn

FY2019: 16.0bn

Factors attributing to operating profit (vs. FY2018)
AM:
SC:
SP:
CO:
OO:

Declines in PPS, carbon fiber and other advanced products traded by Kureha subsidiaries; profit generationachieved for PGA
Declines in agrochemicals and industrial chemicals; profit improved for pharmaceuticals
Decline in packaging materials; higher home products volumes
Higher public and private construction volumes
Higher industrial waste treatment volume, positive effects of new consolidation

5

Performance by Segment:
Advanced Materials(billions of yen)

FY2018FY2019Change%FY2019 vs. FY2018
Revenue

Advanced Materials
Advanced plastics

28.5

27.4

-4%

Carbon products

6.1

5.6

-9%

Other

11.1

8.9

-20%

Segment revenue

45.7

41.8

-9%

Segment operating profit

4.6

3.7

-19%

Operating Profit

Advanced plastics
Revenue down due to declines in PPS and
PVDF for industrial applications, partly
offset by higher sales volumes of PGA fracplugs and PVDF LiB binder; operating
profit up on improved operating loss for
PGA
Carbon products
Declines in revenue and profit led by lower
carbon fiber sales volume
Other
Revenue and profit down due to declines
in other advanced plastic products tradedby Kureha subsidiaries

6

Performance by Segment:
Specialty Chemicals(billions of yen)

FY2018FY2019Change%FY2019 vs. FY2018
Revenue

Specialty Chemicals
Agrochemicals

8.3

5.8

-31%

Pharmaceuticals

5.0

4.9

-1%

Industrial chemicals

7.6

6.9

-9%

Other

6.4

6.7

5%

Segment revenue

27.3

24.3

-11%

Segment operating profit

3.3

2.1

-36%

Operating Profit

Agrochemicals
Revenue and profit down on lower
fungicides volumes
Pharmaceuticals
Operating profit improved due to fewer
expenses despite flat revenue growth
Industrial chemicals
Revenue and profit down due to slower
sales of both organic and inorganic
chemicals

7

Performance by Segment:
Specialty Plastics(billions of yen)

FY2018FY2019Change%FY2019 vs. FY2018
Revenue

Specialty Plastics
Home products

20.5

21.3

4%

Fiber products

2.9

3.0

4%

Packaging materials

16.2

14.1

-13%

Other

5.5

5.1

-8%

Segment revenue

45.1

43.5

-4%

Segment operating profit

6.7

6.3

-6%

Operating Profit

Home products / Fiber products
Revenue and profit grew on higher NEW
Krewrap (plastic wrap) and Seaguar(fishing lines) sales volumes
Packaging materials
Revenue and profit decreased due toslower sales of heat-shrink multilayer film
and lost blow bottle sales as a result of
business transfer

8Performance by Segment:
Construction(billions of yen)

FY2018FY2019Change%FY2019 vs. FY2018
RevenueConstruction
Construction

20.3

22.4

10%

Elimination(Intercompany sale)

-7.9

-7.9

--

Segment revenue

12.4

14.5

16%

Segment operating profit

0.7

1.1

72%

Operating Profit

Construction
Revenue and profit up on higher
construction volumes in both private andpublic sectors

9Performance by Segment:
Other Operations(billions of yen)

FY2018FY2019 Change

FY2019 vs. FY2018%

Revenue

Other Operations
Environmental engineering

12.0

12.8

7%

Logistics

8.3

8.2

-2%

Hospital operations

3.7

4.0

8%

Others

1.9

2.2

16%

-8.3

-8.9

--

Segment revenue

17.6

18.3

4%

Segment operating profit

2.1

2.7

30%

Elimination(Intercompany sale)

Operating Profit

Environmental Engineering
Revenue and profit improved on higher
industrial waste treatment volume and due
to new consolidation (acquisition of
Himeyuri Total Work Co.)
Logistics
Revenue and profit grew on a level
equivalent with previous year
Hospital Operations
Operating profit remained flat on revenue
growth10

Other Income & Expenses

FY2018Other income

FY2019¥0.6 billion

Other income¥13.4 billion

Subsidy income: ¥0.3bn

Gains on sales of noncurrent assets: ¥10.2bn*Government’s subsidies for post-quake restoration
initiatives, etc.

Gains on discount business purchase: ¥1.5bn*Sales of the land used for Kureha HQ annex office, etc.
*Acquisition and new consolidation of industrial waste
treatment business (Himeyuri Total Work Co.)

Other: ¥0.3bn

Gains on business transfer: ¥1.2bn*Transfer of the blow bottle business

Other: ¥0.6bn

Other expenses¥0.9 billion

Loss on retirement/sales of noncurrent assets:¥0.8bnOther: ¥0.2bn

Other expenses¥11.4 billion

Business restructuring cost: ¥10.6bn* Write-downs on inventory and facilities related to PGA

Loss on retirement/sales of noncurrent assets:¥0.6bnOther: ¥0.2bn

11

FY2019 Results vs. Guidance
FY2019 Guidance
Revenue
Segment operating profit(billions of yen)
AM

SC

SP

CO

OO

Total

50.5
6.0

27.0
2.7

45.0
6.1

12.5
0.4

17.0
1.8

152.0
17.0
0.0
10.0
1.0
26.0
0.7
0.7
26.0
19.5

Intersegment adjustment
Other income
Other expenses
Operating profit
Finance income
Finance costs
Profit before income tax
Profit for the period

FY2019 Results
Revenue
Segment operating profit
Intersegment adjustment
Other income
Other expenses
Operating profit
Finance income
Finance costs
Profit before income tax
Profit for the period

AM

SC

SP

CO

OO

Total

41.8
3.7

24.3
2.1

43.5
6.3

14.5
1.1

18.3
2.7

142.4
16.0
0.0
13.4
11.4
18.0
0.5
0.6
17.9
13.7

(Notes)- Other income includes gains on salesof noncurrent assets (¥9.2bn)- Other expenses include losses onretirement of noncurrent assets(¥0.7bn)- Other income includes gains on salesof noncurrent assets (¥10.2bn), etc.
- Other expenses include businessrestructuring expenses (¥10.6bn), etc.
*See details on page 1012FY2019 Results vs. Guidance(billions of yen)

FY2019 Results vs. Guidance (announced May 2019)
Revenue

Operating profit

50.5
41.8

45.0 43.5…FY2019 Guidance…FY2019 Results…FY2019 Guidance

6.1 6.3

6.0…FY2019 Results

3.7

27.0 24.3
12.5

14.5

2.7

17.0 18.3

2.7

2.1
0.4

Advanced
Materials

Specialty
Chemicals

Other
Specialty
Construction
Operations
Plastics

Guidance: ¥152.0bn

Results: 142.4bn

Advanced
Materials

Specialty
Chemicals

1.1

1.8

Other
Specialty
Construction
Operations
Plastics

Guidance: ¥17.0bn

Results: 16.0bn

Factors attributing to operating profit (vs. Guidance)
AM: Subsidiaries’ advanced products sales impacted by slower economic conditions; PGA performed as expected
SC:
Agrochemicals sales delayed due to weather dented demandSP:
Better-than-expected performance of home products; a delay in improving the EU packaging business
CO: Higher construction demand in typhoon-affected areas
OO: Higher industrial waste treatment volume

13

Financial Position
Assets(billions of yen)

Liabilities and Equity
Mar. 312019

Mar. 31
Change2020

Mar. 312019

Mar. 31
Change2020

Cash and cash equivalents

6.0

7.3

1.3

Trade and other payables

24.0

19.4

-4.6

Trade and other receivables

30.7

28.3

-2.4

Interest-bearing debt

39.0

37.3

-1.7

Inventories

38.3

38.2

-0.1

Provisions

6.8

7.8

1.0

Other current assets

3.7

5.2

1.4

Other liabilities

15.3

15.7

0.4

Total current assets

78.8

79.0

0.2

Total liabilities

85.2

80.3

-4.9

Property, plant and equipment

117.6

119.8

2.2

Shareholders’ equity

18.2

18.2

--

Intangible assets

1.1

0.8

-0.3

Capital surplus

15.0

15.0

--

Investments and other assets

49.9

47.3

-2.7

Less: Treasury stock

-3.7

-8.7

-5.0

Retained earnings

122.4

135.9

13.6

Other components of equity

8.7

4.6

-4.1

Non-controlling interests

1.6

1.6

0.0

Total non-current assets

168.6

167.9

-0.7

Total equity

162.2

166.6

4.5

Total assets

247.4

246.9

-0.5

Total liabilities and equity

247.4

246.9

-0.5

14

Cash Flow(billions of yen)

FY2018FY2019ChangeProfit before income tax
Depreciation
Other
Cash flow from operating activities

17.4
10.3
-4.4
23.4

17.9
12.1
-14.9
15.2

Cash flow from investing activities

-8.4

5.5

13.8

Cash flow from financing activities

-15.5

-19.4

-3.9

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

1.3

1.8

Cash and cash equivalents at beginning of period

6.5

6.0

-0.5

Cash and cash equivalents at end of period

6.0

7.3

1.3

0.5
1.8
-10.5
-8.2

*Cash flow from investing activities in FY2019 includes gains from the sale of noncurrent assets (¥10.8bn)

15

Key Indicators(billions of yen)

FY20181H

2H

FY2019Full year

1H

2H

Full year

ChangeYOY

Capital expenditure

5.8

7.4

13.2

7.4

7.5

14.9

13%

Depreciation

5.0

5.3

10.3

6.0

6.1

12.1

17%

R&D expenses

2.5

2.8

5.3

2.9

3.1

6.0

14%

Interest-bearing debt

45.9

39.0

39.0

48.9

37.3

37.3

-4%

Term average¥110.3¥111.6¥110.9¥108.6¥108.8¥108.7

Term end¥113.6¥111.0¥111.0¥107.9¥108.8¥108.8Term average¥129.8¥127.1¥128.4¥121.4¥120.2¥120.8Term end¥132.1¥124.6¥124.6¥118.0¥119.6¥119.6

Term average

¥16.7

¥16.3

¥16.5

¥15.7

¥15.5

¥15.6

Term end

¥16.5

¥16.5

¥16.5

¥15.1

¥15.3

¥15.3

(Currency exchange rates)
1USD:

1EUR:

1CHY:

16

Key Indicators
Per-share Profit, Dividend Payout Ratio, Total Return Ratio, ROE, ROA, D/E Ratio
70%

800 Yen/share

60%
600

50%
40%

400

30%
20%

200

10%
0%

FY2015FY2016FY2017FY2018FY201910%0

Total return ratio(Left scale)Profit per share(Right scale)

0.8
0.7

8%

0.6

6%

0.5

4%

0.3

0.4
0.2

2%
0%

Dividend payout ratio(Left scale)

0.1
FY2015FY2016FY2017FY2018FY20190

ROE(Left scale)
ROA(Left scale)
D/E ratio(Right scale)17

Returning to Shareholders


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

Recent trend of annual dividend payout and dividend payout ratio
250

(yen)

60%

200
150

165
100

110

120

110

110

170

125

50%
40%

Annual dividend per share(yen)
Dividend payout ratio (%)

30%

100

20%

50

10%

0

0%

FY2012FY2013

FY2014FY2015FY2016FY2017

Notes:- Kureha conducted a ten-to-one share consolidation on October 1, 2016. All figures inthis chart are presented on a post share consolidation basis for comparison purposes.
- Annual dividends for FY2014 and FY2018 each include ¥10 commemorative dividend.

FY2018FY2019¥3bn¥5bn

Treasury stockacquired18

Consolidated Companies(billions of yen)

FY2018
Kureha Corporation
Kureha Trading Group (2)Kureha Corporation
Kureha Trading Group (2)Kureha Extron
Kureha Europe Group (4)Advanced Kureha America Group (3)Materials Kureha (Shanghai) Carbon Fiber
Materials

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 (3)Plastics
Kureha Europe Group (4)Kureha Vietnam
Consolidation adjustments
Total

FY2019ChangeRevenue

Total assets

Revenue

Total assets

Revenue

Total assets

83.0
22.7
32.5
10.6
4.5
2.0
6.5
1.3

198.2
13.2
--3.7
1.1
26.8
1.4

76.3
21.6
30.6
9.1
3.0
2.0
7.5
1.1

192.3
12.3
--4.6
0.9
26.9
1.2

-6.7
-1.0
-1.9
-1.5
-1.5
-0.1
1.1
-0.3

-5.8
-0.9
--0.9
-0.2
0.0
-0.1

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
---

5.7
-17.2
41.8
19.8
7.4
-2.8
24.3
25.9
5.1
4.2
0.1
1.6
8.5
3.1
-5.1
43.5

9.2
--------5.1
-1.0
7.3
3.0
---

-0.7
--3.9
-3.7
0.3
--3.0
-1.2
0.2
-0.2
0.0
-0.1
-0.8
-0.1
--1.7

-0.7
---------0.1
-0.2
0.0
-0.1
---

19

Consolidated Companies(billions of yen)

FY2018
Kureha Nishiki Group (4)Construc- Kureha Engineeringtion
Consolidation adjustments
Total
Kureha Ecology Mgt Group (2)Kureha Special Laboratory
Kureha Unyu Group (2)
Other
Kureha Trading
Operations Kureha Service Group (2)Kureha-Kai Medical Corp.
Consolidation adjustments
Total
Kureha Group Total
Number of consolidated subsidiaries
Number of equity-method affiliates

FY2019ChangeRevenue

Total assets

Revenue

Total assets

Revenue

17.9
2.4
-7.9
12.4
10.6
1.3
8.3
0.1
1.8
3.7
-8.3
17.6

12.0
1.8
--10.6
0.7
6.5
-2.0
3.3
---

19.9
2.5
-7.9
14.5
11.5
1.3
8.2
0.1
2.1
4.0
-8.9
18.3

11.6
1.9
--25.9
0.8
5.7
-2.3
3.5
---

1.9
0.2
-2.0
0.9
-0.1
-0.2
0.0
0.3
0.3
-0.6

-0.4
0.1
--15.4 *
0.1
-0.8
-0.3
0.3
---

148.3

247.4

142.4

246.9

-5.9

-0.5

29
3

Total assets

28
2*Increases in revenue and total assets of Kureha Ecology Management Group are due primarily to the acquisition of Himeyuri Total
Work Co.

20

PGA Business Updates
2016-2019 Revenue & Operating Profit
0.5

5(billion yen)

• Shale oil and gas production continued to grow withapproximately 600,000 frac plugs used in drilling
operations

0.0

4

Kureha Sales/
Stockshapes(Left scale)

-0.5

3

-1.0

2

-1.5

KES Sales/
Frac plugs(Left scale)

-2.0

1
0

FY2019 market review & our progress-2.5
FY2016FY2017FY2018FY2019Consolidated
operating profit(Right scale)-3.0

KES Customer Base
Conducted trials

40

11

8
0

0

17/5

17/11

4
18/5

32

31

22
2

0

38

Adopted PGA frac plugs

20• Kureha’s sale of PGA frac plug stockshapes improvedin the second half of the year after destocking
completed in Q1• Price competition intensified and forced down theprices of PGA frac plugs

Strategic changes in Kureha PGA business
51

Number ofcompanies• Kureha Energy Solutions (KES) expanded the sales of
PGA frac plugs for mid/high-temperature wellapplications; sales expansion for low-temp wells fellbehind schedule17• Decides to extend our shale solution service bydeveloping and selling non-PGA frac plugs in addition to
our core offering of PGA frac plugs while reducing costs
throughout the value chain

22

8
18/11

19/5

19/11

• Increasingly difficult market conditions—stringent
demands for product performance, intensified pricecompetition and plunging oil prices—are making ourbusiness expansion and profit generation difficult

20/5• Business restructuring expenses related to this strategicchanges in the PGA business: Approximately ¥10.6bn(incurred in FY2019 4Q)

21

PVDF Business Updates
Sales



Maintained over 40% LiB binder market share with strong customer base in China and South Korea
Expanded sales and increased product adoption by large LiB makers in China and South Korea, althoughrevenue fell below target due to slower demand as China reduced EV production

Production

Continued full-capacity production at Iwaki Factory which capability was enhanced in Jan. 2019
Reduced production at Changshu Factory due to slower EV production and pandemic prevention
Iwaki Factory-- Initiated monomer process enhancements in order to increase specialty polymer production in
response to growing demand for advanced binder; Changshu Factory-- Starts volume production for specialty
polymer in FY2020 1Q
Continues to study for additional PVDF plant (delayed due to the pandemic) and will determine its locationand production capacity by end FY2020

PVDF revenue and operating profit FY2016-2019
15150（単位:億円）yen)
30
3 (Billion

10
100

20
2

5
50

10
1

0
0

FY20162016

FY20172017

FY20182018

FY2019201900

LiB applications
素材向け
Other industrial
電池向け
applications

22

FY2019: Impact of COVID-19 Pandemic
Production
Kureha Iwaki Factory: Reduced PVDF production due to longer lead time for raw materials exported from China in
March
Kureha Plastic Processing Factory: No impact
Other domestic factories: No impact
Overseas factories: China factories temporarily halted operations from Jan. 30, 2020 under local quarantine order- Changshu PVDF plant: Production resumed on Feb. 11- Shanghai carbon fiber plant: Production resumed on Feb. 13
There was no impact on the production of PGA in US and packaging materials in Netherlands and Vietnam
Presently all factories are operating with pandemic prevention measures advised
by local government

Sales activities and performances
Advanced materials: Profit decreased in the PVDF business due to slower demand in China and South Korea
after Chinese New Year holidays and temporary closures of EV and LiB factories
Specialty chemicals: No impact
Specialty plastics: Segment profit increased due to higher home products volumes in February and March (up
10% YOY) and also strong demand for packaging materials
Construction/Other operations: No impact
Impact of the COVID-19 pandemic was limited to Kureha’s operations in Asia and was marginal
to its consolidated financial results for FY2019

23

FY2020 Outlook
FY2020 financial guidance• Will not be announced today as we are unable to assess the impact of
new coronavirus on our global business operations at this point• Will be announced promptly when we determine a reasonable forecast

Dividend payment• Will be announced at the same time when our FY2020 guidance is disclosed

Capital investment• Will be conducted in accordance with our pre-set mid/long-term growth plan

*Master Service Agreement

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.

24