FYE March 2012

Financial Briefing
A Technology and Intelligence Oriented Company
that Turns Wisdom into Business

Nagase & Co., Ltd.
May 25, 2012 Contents • FYE March 2012 Results• FYE March 2013 Earnings Projections• Mid-Term Management Plan “CHANGE” 11 Overview• New Mid-Term Management Plan「」2FYE March 2012 Results3Consolidated Results
Despite signs of recovery from the March 11 earthquake and tsunami
tsunami, income and profit decreased
for reasons that include historical highs in the yen valuation, declining demand in the U.S. andEurope, the flooding in Thailand and stagnating business for LCD manufacturers in Japan.
(Gross profit ratio increased by 0.2%.)(Billions of yen)

11/03

12/03

Changevs. PY

-28
28.3
3

96%

-1.3

98%

Forecast(As of Oct.)

Net sales

660 2
660.2

631 8
631.8

630 0
630.0

Gross profit

73.0

71.6

(GP ratio)(11.1%)(11.3%)

SG&A expenses

-54.2

-58.2

3.9

107%

-56.4

Operating profit

18.7

13.4

-5.3

72%

15.5

Ordinary income

20.6

15.6

-4.9

76%

17.0

Net income

12.8

8.5

-4.2

67%

10.0

Net income per share\99.76\66.69Exchange rate

@87.31@79.62

71.9(11.4%)New consolidated companies: FUKUI YAMADA KAGAKU KOGYO Co., Ltd., Sofix Corp., Nagase Filter Co., Ltd., CAPTEX Co., Ltd., Hayashibara Co., Ltd. (1month), Engineered Materials Systems Inc. (3 months)
New affiliates accounted for using the equity method: ON Co-Labo Corporation, Nagase Colors & Chemicals Co., Ltd., (As of the fourth quarter this company
accounted for using the equity method.)4

Net Sales by Region (Domestic, Overseas)
Net sales ¥631.8¥631 8 bil (Domestic ¥366.3¥366 3 bil; Overseas ¥265.4¥265 4 bil) ¥28.3¥28 3 bil decrease from the previous fiscal year
(Domestic: -¥23 .0bil; Overseas -¥5.3 bil)(Billions of yen)
750

603.9

Overseas

660.2

Domestic

631.8

Overseas Sales by Region (vs. PY)
300

600

270.8
450

265.4

243.5

(Billions of yen)

270 8
270.8

250

15.2
18.9

200

77.1

265.4
15.6
21.2
72.8
Europe and
other

300
150

150

360.3

389.3

North America

366.3

Southeast Asia

100

0

Northeast Asia

159.4

155.6

11/03

12/03

50

10/03

11/03

12/03
0
Overseas

Domestic

100%

40

41

42

60%

40%
60

59

58

国内・
海外構成比

80%

 Overseas Net Sales Ratio Increase (41% 42%) 
Since domestic sales decrease was larger, overseas
sales ratio increased.

USD-JPY Avg. Exchange Rate over Three Fiscal Years
FY2009 Avg.

FY2010 Avg.

FY2011 Avg.

93 71
93.71

87 31
87.31

79 62
79.62

-9.1(rise)-6.4(rise)-7.7(rise)

20%

0%

10/03

11/03

12/03

5

Net Sales by Segment
Net Sales by Segment(660.2)

700

Chemicals ¥251.9 bil (-¥18.3 bil, -7%)
49.1

116.6

Other

110 5
110.5

500
400

222.1

Life Sciences
Electronics

219.2

300

Plastics

200

Chemicals

100

270.2

251.9

11/03

12/03

0

Change in Net Sales by Segment((vs. PY))
(Billions of yen)
Other
Life Sciences-1.0

Electronics-6.1

Plastics-2.8

Chemicals
-18.3

-20

-15

Net Sales by Segment (vs. PY)(631.8)50.2

600(Billions of yen)

-10

-5

0

 In Japan, sales of display-related functional dyes, precision abrasive materials for
HDD and semiconductor industries, etc. decreased Overseas sales decreased due to sluggish sales of game machine related items in
Northeast Asia
 Sales increased in Southeast Asia and North America mainly due to favorable
sales of automotive-related paint

Plastics ¥219.2¥219 2 bil ((-¥2¥2.8
8 bil,
bil -1%)
1%)
 In Japan, exports of injection molding equipment to China decreased.
 In the second half, sales slightly improved due to recovery in automotive-related
business.
 Overseas sales increased in Northeast Asia, Southeast Asia and North America
due to favorable business conditions in the automotive industry.
 DemandDd ffor householdhh ld appliancesliin
i EuropeE
declined
d li d due
d to theh economicidownturn in Europe, and the OA related high pricing strategy was ailingElectronics ¥110.5 bill (-¥6.1 bil, -5%)
 Sales were favorable for formulated epoxy resin for heavy electrics and mobile
phones Sales of TV LCD panels and chemicals for semiconductor production decreased
 Sales were favorable for optical films, touch panels, smartphones and materials for
LCD panels Our pull-out from the domestic TV LCD panel components processing businessresulted in an overall sales decline

Life Sciences ¥49.1 bill (-¥1.0 bil, -2%)
 Sales of injection medicines, etc. in the pharmaceutical area increased
 Sales of pharmaceutical raw materials and intermediates and daily commodities
decreased as did sales of agricultural-related products
 Sales of cosmetics steadily increased (new business from this period) Overall sales decreased due to sales decline in health foods and make-up products*Consolidated PL for Mar. alone for Hayashibara (Net sales: ¥2.07 bil)6

Gross Profit by Segment
Gross Profit: ¥71.6 bil -¥1.3 bil -1.9%(Billi(Billions
off yen))

80

73.0

71.6

0.6
7.8

0.5
8.3

20.4

21 2
21.2

Gross Profit by Segment (vs. PY)
Chemicals¥22.3 bil-¥1.7 bil

-7.4%

Plastics¥18.9 bil-¥0.8 bil

-4.4%

Electronics¥21.2 bil

+0.7 bil+3.9%Life Sciences¥8.3 bil+0.5 bil

+6.8%

60
40
19.8

18 9
18.9

20
24.1

0

11/03

22 3
22.3
12/03

Chemicals

Plastics

Life Sciences

Other

Electronics

7

Operating Profit by Segment
Operating Profit: ¥13.4 bil -¥5.3 bil -28.3%<Operating Profit by Segment>

Operating Profit by Segment (vs. PY)(Billions of yen)

10
8

9.0

11/03

12/03

Ch i lChemicals¥7 1 bil
¥7.1

-¥1.9
¥1 9 bil-21.3%
21 3%

Plastics¥3.0 bil-¥1.6 bil

-35.5%%

Electronics¥6.0 bil +¥0.1 bil+3.3%

Life Sciences¥0.7 bil-25.7%

7.1
5.8 6

6

4.7

4

3

2

0 9 0.7
0.9
07

0
-2

-1.9
1.9
-3.5

-4
Chemicals

Plastics

Electronics

Life
Sciences-¥0.2 bil

Other,
Corporate8Factors that Influenced Operating Income(100 millions of yen)

200

+5
-11

180

-19

160

Personnel expenses(actuarial losses etc.)
Depreciation and amortization
Provisions for doubtful
accounts, etc.

187

+3

-7

+4
4
-29

140

+2

120

134

100
FYE Mar.
2011

Selling, generalandNewadministrative
consolidated
expenses of newcompanies
consolidated
companies

Japan

Greater
China

ASEAN

Europe/U.S.

Other Selling,
general and Eliminationsetc
administrativep
expensesFYE Mar.
2012: Change in sales profit: Change in selling, general and administrative expenses

9Ordinary Income and Net Income
Ordinary Income:¥15.6 bil-¥4.9 bil -24.3%

Net Income:¥8.5 bil-¥4.2 bil -33.6%(Billions of yen)

20
16

20.6

12

12.8
15 6
15.6

8

8.5
4
0
11/03

12/03

Ordinary Income

11/03

12/03

Net Income

10Changes in Major Balance Sheet Accounts
For reasons including the acquisition of Hayashibara non-current
non current assets/intangible fixed assets anddebt , etc. increased and total assets increased by ¥75.5 bil
For reasons including the month-end holiday effect , notes and accounts receivable increased and due
to inventory increase, etc., working capital increased by ¥12.6 bil(Billions of yen)

Assets

11/03

12/03

ChangeLiabilities and Net Assets

11/03

12/03

ChangeNotes and accounts payable

101.6

109.1

+7.4

Short term loans
Short-term

16 1
16.1

50 1
50.1

+34 0
+34.0

+8.5

Other current liabilities

20.6

22.3

+1.6

10.1

+2.8

Long-term debt

10.5

38.2

+27.6

39.9

56.7

+16.8

Accrued retirement benefits
for employees

7.2

10.0

+2.7

Intangible fixed assets

3.6

57.4

+53.7

Other fixed liabilities

9.6

8.1

-1.4

Investments in securities

50.7

49.0

-1.7

Shareholders’ equity

195.9

201.1

+5.2

3.7

5.3

+1.6

(Portion less treasury stock,at cost)(-5.4)(-5.4)(-0.0)Net unrealized holding gain
on securities

13.1

12.7

-0.4

T
Translationl ti adjustment
dj t
t

-7.6
76

-9.1
91

-1.5
15

Stock acquisition rights

0.2

0.1

-0.1

Minority interests

7.5

7.9

+0.3

Total net assets

209.3

212.7

+3.4

(Equity ratio)(53.7%)(45.4%)(-8.3%)

Total liabilities and net assets

375.3

450.8

+75.5

Cash and time deposits

47.2

29.1

-18.0

Notes and accounts
receivable

186.1

197.7

+11.5

Inventories

36.7

45.2

Other current assets

7.2

Property plant andProperty,equipment

Other fixed assets

Total assets

375.3

450.8

+75.5

１１
11

Impact of Consolidation of
Hayashibara Co., Ltd. on BS and PL(Billions of yen)

Investment
70.2

Loans
58 0
58.0
Cash on hand
12.2

Working capital

7.9

Property, plant andequipment, otherassets and debts

9.0

Deferred tax
assets9.0

Intangible fixed
assets21 8
21.8

Deferred tax
liabilities-7.8

Goodwill
30.3(Impact in the fiscal year)
Paid off for each primary productTo selling, general andadministrative expenses*Straight
Straight-line
line depreciation over 13 -17
17 years-¥1.5 bil

To deferred taxes+¥0.5 bil

To Selling, general andadministrative expenses*Straight-line depreciation over 20 years-¥1.5 bil

Impact of consolidation of Hayashibara on PL
FYE Mar. 2012
(1 month)FYE Mar. 2013(12 months)

Sales¥2.0 bil¥27.3 bil

Operating profit-¥0 1 bil-¥0.1

¥3 0 bil¥3.0

Net income-¥0.1 bil

¥2.6 bil

１２
12Cash FlowsOOperatingti
cash
h flows:flEven though
E
th
h the
th company earnedd ¥23.7¥23 7 billion
billi
iin ttotalt l iincome b
beforefincome
i
taxes
t
and
d
addition of depreciation and amortization, the increase in working capital and income tax
payments, etc. led to ¥5.6 billion in net cash provided by operating activities.
 Investment cash flows: Invested ¥81.0 billion in Hayashibara and others.
 Financing cash flows: Borrowed ¥56.9 billion for investment in Hayashibara and others.
(Billions of yen)

12/03
Net cash provided by (used in)operating activities

11/03

Main breakdown+5.6

Income before income taxes
Depreciation and amortization
Working capital
Corporate tax, etc.

16.5
7.2
-10.8
-7.8

+10.9

-81.0

Purchases of p
property,
p y, pplant and equipment
q p
Purchases of intangible fixed assets
Payment for acquisitions, etc.

-11.2
-1.4
-67.7

-9.1

Net cash provided by (used in)financing activities

+56.9
56.9

Increase in short-term loans
Increase in long-termgdebt
Payment of dividends

+22.9
+39.2
-3.2

+3.5
3.5

Net increase (decrease) in cash andcash equivalents

-18.8

+4.1

Increase (decrease) in cash andcash equivalents accompanying
consolidation

+0.1

+0.2

Cash
C
h and
d cashh equivalents
i l
at thehend of the period

28.5

Net cash provided by (used in)investing activities

Cash and cash equivalents on the balance sheet ¥29.1¥29 1 bil
– ¥0.6 bil in certificates of deposit due after three months =¥28.5 bil

47.2

13

Earnings of Major Consolidated Subsidiaries(10 millions of yen)

Net Salesvs. PY

Operating
Profitvs. PYNet Income

vs. PY

Nagase & Co., Ltd.

43,599.0

95%

257.8

48%

762.8

100%

Nagase ChemteX Corp.

2,719.1

88%

274.8

72%

154.0

67%

Nagase Medicals Co.,
Co Ltd.
Ltd

363 1
363.1

106%

19 2
19.2

162%

89
8.9

181%

*Total for manufacturing*

7,653.9

112%

420.9

77%

190.8

51%

Nagase Plastics Co., Ltd.

2,971.2

105%

27.2

142%

13.2

142%

Nagase Chemical Co., Ltd.

1,348.8

97%

20.5

92%

10.4

84%

750.3

105%

17.8

132%

9.3

116%

*Total for domestic sales*

8,255.4

95%

112.8

92%

59.7

76%

Nagase (Hong Kong) Ltd.

4,952.1

93%

78.3

66%

76.1

78%

Shanghai Nagase Trading
Co., Ltd.

2,402.8

122%

30.1

100%

20.0

105%

Nagase (Thailand) Co., Ltd.

2,368.8

97%

79.4

76%

58.9

78%

*TotalTotal for overseas sales*

23 327 5
23,327.5

101%

475 9
475.9

79%

411 1
411.1

94%

Company Name
ParentCompany
Manufacturinggcompanies

Domestic
sales
companies

OverseasO
sales
companies

Nagase Elex Co., Ltd.

*Note: Category totals are the simple sum of figures for each company and do not match consolidated figures.

14

Dividends
Our basic policy is to continue paying a stable dividend to our shareholders in line with ourconsolidated results as we improve our earnings power and management structure. We look
to improve per-share dividends based on considerations of consolidated payout ratio andconsolidated dividend to equity ratio.
(%, yen)

(%)

40

2

30
20

1

10

18

15

24

22
17

16

16

09/03

10/03

26

10
0

0
05/03

06/03

07/03

Dividend per share

08/03

11/03

Payout ratio (left axis)

12/03

13/03
(Forecast)

DOE (right axis)

05/03

06/03

07/03

08/03

09/03

10/03

11/03

12/03

Payout ratio

12.3

14.9

17.0

21.8

35.4

27.3

22.1

36.0

(%)
13/03
(forecast)
21.6

DOE

0.89

1.25

1.40

1.25

1.13

1.12

1.48

1.54

1.59

*A year-end dividend for FY ended Mar. 2012 will be discussed at shareholders meeting to be held in June 2012.

15

FYE March 2013 Earnings Projections

１６
１６
16

FYE March 2013 Earnings Projections(Billions of yen, except earnings per share)

12/03
ActualNet sales

13/03
Forecast

631 8
631.8

Changevs. PY

700 0
700.0

+68 1
+68.1

111%

+15.8

122%

Gross profit

71.6

87.5

(GP ratio)(11.3%)(12.5%)

SG&A expenses

58.2

68.0

+9.8

117%

OperatingOpeat g profit
p o t

13.4

19.5

+6.0
6.0

145%

Ordinary income

15.6

20.5

+4.8

131%

Net income

8.5

15.5

+6.9

181%

Dividends per share¥24.00¥26.00Assumed exchange rate($1US)¥79.60¥78.00--

The above forecast includes ¥27.3 bil ((net sales),), ¥3.0 bil ((operatingp
gp
profit)) ((*)) and ¥2.6 bil ((net income)) of Hayashibara.
y*¥3.0 bil (general and administrative expenses) was deducted from the above figures as amortization of intangible fixed assets (including goodwill) connected with thepurchase of Hayashibara shares.
The company and its domestic affiliates changed the method of accounting for depreciation of property, plant and equipment from the declining balance method tothe straight-line method. We have also revised our estimate of the useful life of certain assets. Accordingly, we forecast a ¥2.2 bil decrease in depreciation andamortization expenses, and we have reflected this change in the preceding earnings forecast.

１７
17

FYE March 2013 Forecast by Segment<Net Sales Forecast by Segment>(Billions of yen)(Billions of yen)

250

200

<Operating Profit by Segment>

236.0

12/03

13/03

12/03

9

194.0 217.9

7

6.8

6.2 6.3

6.0

5

150

4.5

177.1

100

0.9

1

110.4
77.0
76.1

50

4.1

2.9

3

117.0

13/03

0 6 0.7
0.6

75.0

0.1 0.2

-1

49.1
-3
-3.0
-3.6

1.0 1.0-50FunctionalFtil
Materials

Advanced
A t
Automotive
ti
Lif &
Life
Materials & Electronics& Energy Healthcare
Processing

Other

Functional
Materials

Advanced
Materials &Processing*The figures for 12/03 were calculated using figures from previous segments for new segments.

Electronics

Automotive& EnergyLife &
Healthcare

Other

For all groupcompanies

１８18

Mid--Term Management Plan “CHANGE” 11Mid
Overview

１９19Future Vision under “CHANGE” 11Management Philosophy
The Nagase Group is a member of the world society. As such, it is our duty tomaintaini t i goodd andd fairf i businessb ipracticesti
and,d throughthh continuedti
d growth
th andddevelopment, provide society with the goods and services needed while
improving the welfare of our employees.

O visionOur
i i forf the
th futuref t(For Customers)
Anticipate changes in the market
structure and environment, growing
together with our customers as we offer
unique solutions((For Employees))
Allow stakeholders to realize their dreams
and ideals through our business(For Shareholders/investors)
Continue to grow and increase value,
using our strengths in technology(For Society)Contribute to making a better society andglobal environment

20

“CHANGE” 11 Basic Strategy• Mfg.
M ｃo. revenue growth• HigherH
ration off overseas
sales
• In
ncreasing overrseas
headcount

Awareness ofthe need tochangeChaanges w/iin theGro
oup

Improve the Quality ofBusiness and Operations• Corporate etthics
Major Externaal• Environment/resource
Envirronment Changes
issuesC

Basic strategy

Basic Principle:
Maintaina ta Good anda d Faira Businessus ess Practices
act ces21

Important Initiatives Stemming from “CHANGE” 11(Summary of Topics)
1

Select and concentrate Businesses Acquisition of Hayashibara Co., Ltd., Acquisition of “Color formers (heat-sensitive dyes)” business and a related company
 Pull-out from unprofitable businesses (such as optical wave guide production)

2

Build businesses around environment- and energy-related technologies

 Acquisition of CAPTEX Co., Ltd., a developer and manufacturer of lithium-ion battery modules and commencement ofconstruction of a mass production plant Commencement of activities for the practical application of a rare metal recovery process using microorganisms
 Establishment of organizations dedicated to promoting environment and energy related businesses (Environment &Energy Office and Energy Device Office were integrated in FY2012)

3

Strengthen R&D and manufacturing functions

 Acquisition of Engineered Materials Systems Inc. (U.S.), a formulated epoxy resin production site Improvement of Nagase ChemteX Corp. production facilities (Harima, Fukuchiyama) Establishment
E t bli ht off a coating
ti labl b ini India
I di

4

Promote globalization

 Improvement of overseas business sites (Mexico, Australia, Bangladesh and China)
 Commencement of resin additives business for Petro Rabigh in Saudi Arabia
 Establishment of a production JV (flame laminated materials for automotive applications in Mexico
Mexico, blow
blow-molded
moldedproducts for automotive interiors in the U.S.)

5

Strengthen risk management

 Improvement of BCP (Business Continuity Plan) in each department, relocation of in-house servers to an outside data
center.
center Improvement and enhancement of system to control product and quality risks
 Establishment of Nagase Business Management and Planning (Shanghai) Co., Ltd. to enable rapid decision making andenhance risk management in Greater China.

6

Promote employee diversity and work-life balance Improvement of training for each level of Nagase Group employees in Japan and overseas
 Implementation of work environment improvements (no-overtime-work day, improvement of child-care leave, seminars
with visiting lecturers, etc.)

22Actual Achievements of “CHANGE” 11 (1)Investment(Billionsof yen)ChangePromoteExpand/Improve

Improve the Qualityof Business andOperations

WIT2000

WIT21

WIT2008“CHANGE 11” ¥20.2 bil  ¥23.7 bil ¥27.7 bil  ¥107.4 bil

Initial targets
Net Sales¥720.0 bil
Operating profit¥15 0 bil
¥15.0(Billions(Billiof yen)23

Actual Achievements of “CHANGE” 11 (2)I
Investmenttt (over(
3 years))12%

Mfg. Ratio (Net Sales)(100 millions of yen)Overseas Mfg.
Domestic Mfg.
Mfg Ratio
Mfg.

800

14%

Actual12%¥１０７.４ bil

10%

600

12/03
Actual8%400

6%Initial plan

4%

200

¥30.0 bil2%

New investment
in environment/
energy

0%

0
01/03

02/03

03/03

04/03

05/03

06/03

07/03

08/03

09/03

10/03

11/03

12/03

¥20.0 bil(100 millions of yen)60

Mfg. Ratio (Operating Profit)

OOverseas Mf
Mfg.
Domestic Mfg.
Mfg. Ratio

31%

Renewal of existing
equipment¥10.0 bil

¥16.6
¥16
6 bil
+¥70.2 bil
11/03 Actual¥9.7 bil
10/03 Actual¥10.7 bil

40%
30%

Environment-/Energy-Related Net Sales Ratio

40
20%
20

10%

0
01/03 02/03 03/03 04/03 05/03 06/03 07/03 08/03 09/03 10/03 11/03 12/03-20

Environment
13%

0%

Other
87%

-10%
FYE March 2009

Environment
15%

Other
85%

12/3期2012
FYE March24Outcomes and Challenges of “CHANGE” 11
Outcomes of“CHANGE” 11

 Pervasion of innovative awareness of quality improvementththroughout
h t theth group<Improvement of business quality>
 Expansion of investment in new businesses, mainly manufacturing Improvement of a Group-wide spirit of cooperation and commencement of activities
 Discontinuation of unprofitable businesses and businesses which have departed from thestrategy<Improvement of business management> Strengthening of overseas business infrastructures
 Enhancement
E ht off consolidated
lid t d managementt structuret t
andd improvementit off IT infrastructurei f t t Enhancement of risk management system

Challenges
g for the next midmid-term pplan Accerlating reform Pursuing growth and higher added value in target businesses Creation of more businesses based on cooperative ventures
 Creation of a stronger management matrix at the intersection of businessand geographical location
 Developmentpof more expertisepand resources to respondp
to adiversifying range of business models
25New Mid-Term Management Plan

26

Changes in the External Environment
Changes in the External Environment
Blunted Japanese market growth and expanding emerging markets
Changes in competitive environment due to expansion of FTA
 Impacts on supply chain due to natural disasters
Accelerating relocation of manufacturing overseas
Expectationpof new energy
gy sources triggered
ggby
y issues related tonuclear powerHeightened environmental awareness globally
Escalation
sca at o oof cocompetition
pet t o for
o b
bio,
o, e
environmento e taanddeenergye gy related
e atedtechnologies
Expansion of life science and healthcare market triggered bypopulationppincrease and aging
g g societyy Increase in country risks (U.S., Europe, Arab countries, China, etc.)
Ongoing strong yen

27

New Mid
Mid--Term Management Plan (2012(2012--2014)“CHANGE”11 -- To the Next Stage -[Positioning][Basic Strategy][Positioning]

PERVASION OF CHANGE(changing consciousness to change oneself)
Improvement of the quality of business and operations

ACCELERATION OF CHANGE(accelerating changes by improving functions)[Basic Strategy]*The “S” in

Accelerate the improving quality of our business and operations,bring the total strength of the Nagase Group to bear throughout thevalue chain in our strategic markets, and expand our uniquesolutions globally, creating sustained growthstands for “Speed up,” “Step up,” and “Sustainable growth.”28

28

Realizing ACCELERATION OF CHANGE
with new segments

Through reorganization of business segments in the value chain, businesses to be focused on and theirstrengths will be clarified. The Company aims to grow important businesses, where “bio,” “environment andenergy” and “electronics” technologies are utilized, by combining the above strengths.

<Important areas>
Industries that utilize “bio,”“bio ” “environment and energy” and“electronics” technologies
value chain

Electronics

Functional
Materials

Advanced
Materials &Processing

Automotive & EnergyLife & Healthcare
Important strategies: Globalization  Creation of high-added-value businesses Enhancement of business operations footing

29

Functions of New Segments

Segment

Function (Goal)

Functional Materials

Development of “unique, stable and safe” materials. Supplying
materials to industries related to the three important areas and othersegmentsg

Advanced Materials &Processing

Designing and processing for primary processing (formulations andcompounds) and secondary processing (moldings and functionalfilms) of materials. Development of unique applications of materials.

Electronics

Continuing to deliver highly original products and services by taking
into account potential needs of electronics area in advance.
Provision of information
information, obtained from downstream in the value
chain, to other segments.

Automotive & Energy

Creation of a new business model by focusing on technicalinnovation in environmentally-friendly energy related areas.
D
Developmentlt off global
l b lbbusiness.
iLife & Healthcare

In the spirit of no constraint from existing business areas, creationand development of high value added niche businesses with broad
vision in medical, food and life related areas.

30Changes in Segments(Comparison of New and Conventional Segments)
Conventional segments: Separated into four product groups

New segments:
Conventional segments

Reorganized according to position invalue chain and each primary industry
New segments

31

Bio Initiatives

Commencing realization of synergies from acquisition of Hayashibara
aims to expand
business in life and healthcare related area by combining trading company functions (marketingand global network) and manufacturing functions (R&D, application development and production).

Scale

Change-S2014
Ch
S2014
Future32

Environment and Energy Initiatives

Based on advancement of technicalinnovation, creation of a unique businessmodel and development of global businessby conducting activities related to not only
systems and units but also materials andcomponents suitable for application needs.

Area of final application

Renewable energy
generation
S l power, windSolar
i d power,
biomass

Area offunctional
Materials
Special organic
chemicals
Resin, coating raw
materials

Area of processedmaterials

Engineering plastic
Film seat
Surface treating agent

Smart grid
HEMS/BEMS
High capacity storage
battery

EnvironmentallyEnvironmentallyfriendly vehicle
Car electronics device
Power module
Light weight unit

33

Electronics Initiatives

China (Nagase ChemteX Wuxi)
Production and R&D of products for
the Chinese market which has highgrowth potential

U.S. (Engineered Materials Systems Inc.)
The U
U.S.
S production site that delivers unique
technologies and products worldwide

New R&D Center
will be establishedin FY2012

Japan (Nagase ChemteX Corp.)<Example:
Global development of epoxy business>

Head office functions for global
expansion of epoxy business
R&D for leadingleading-edge epoxy materials
New clean room production building

Based on long accumulated resin modification
technology, expanding Japanese andoverseas production and development sites
for a wide variety of products, primarily epoxy
resins, and realizing provision of furtheril ti
uniquesolutions34Enhancement of Operations Footing Improved Consolidated Management Structure• Establishment of efficient Group operating structure• Encouragement of workforce exchange within the Group• StrengtheningStth i off fifinancial
i l ffootingti Maintaining appropriate balance of debt and capital Enhancement of monitoring system for investment and operating cash flows
 Review of efficient asset utilization• Development of IT infrastructure Stronger Risk Management• Enhancement of internal controls and risk management of the Group companies• Enhancement of transaction risk management for manufacturers

 Human Resource Development• Hiring,
g training
g and utilization of a workforce that can respondp
to the diverse
demands of business35

Numerical Targets in

Numerical targets(1)

FY 2014

Target consolidated net sales¥800.0 billion

Target consolidated operating income¥30.0 billion

ROE
Investment (3 years)

8.0%¥40.0 billion

3636Business Portfolio(Consolidated Net Sales and Operating Profit)

Operating profit

Net sales

FY 2011

Life & Healthcare
Automotive ¥0.8 bil

Life & Healthcare¥49.1 bilAutomotive
Functional& Energy
Materials¥76.1 bil
¥177.1 bil
Electronics& Energy¥0.9 bil¥110.4 bil
Advanced Materials& Processing¥217.9 bil

Electronics¥6.0 bil

Functional
Materials¥6.2 bil

Advanced Materials& Processing¥2.9 bil¥631.8 bil¥13.4 bilTargets for FY 2014
Life & Healthcare¥90.0 bil
Functional
Automotive
Materials& Energy¥220.0 bil¥100.0 bil
El tElectronics
i¥130.0 bil
Advanced Materials& Processing¥260.0 bil¥800.0 bil

Life &
Healthcare¥7.5 bilAutomotive& Energy¥2 2 bil¥2.2
Electronics¥9.4 bil

Functional
M t i lMaterials¥7.8 bil

Advanced Materials& Processing¥7.0 bil¥30.0 bil

*Hayashibara is consolidated in the Life & Healthcare segment.
*The above business segment figures do not include other segments or the Group’s common segments, so the total amount for business segments do notconform to disclosed figures.

37

Numerical Targets in

Investment(Billions of yen)

(2)

ChangePromoteExpand/Improve

Improve the qualityof business andoperations
ti

ＷＩＴ２０００

ＷＩＴ21

ＷＩＴ２００８“ CHANGE” 11 ¥20.2 bil  ¥23.7 bil  ¥27.7 bil  ¥107.4 bil 

ACCELERATECHANGE ¥40.0 bil 

800

35 (Billions of yen)
Net sales

30

Operating income

700

25
20

600
15
10

500

5
400

01/03

02/03

03/03

04/03

05/03

06/03

07/03

08/03

09/03

10/03

11/03

12/03

13/03

14/03

15/03

0
38

A technology- and intelligence-oriented
companyp y that turns wisdom into business

NAGASE & Co.,
Co Ltd.
Ltd
http://www.nagase.co.jp

This presentation materials contain forward-looking projections based on assumptions, forecasts,
and plans as of May 25, 2012. Actual earnings may differ from projections due to risks anduncertainties in the future global economy, competitive landscape, currency exchange rates, etc.