FYE March 2019 Second
Quarter Financial Briefing
NAGASE & CO., LTD.
November 30, 2018

Copyright © 2018 NAGASE & CO., LTD.

SummaryFYE March 2019 Second Quarter Results- Net sales, profit measures continue to grow from prior period- Manufacturing and processing businesses report gains, serving as major driver of Nagase growth(withdrawal from unprofitable businesses also contributes)- Steady profit contributions of measures executed under our ACE-2020 mid-term management planFYE March 2019 Earnings Projections- Keeping an eye on impact of U.S.-China trade frictions, lack of clarity in external factors- Results progressing in line with initial forecasts- Earnings improvements at unprofitable business contributing to profits
Progress of Mid-Term Management Plan ACE-2020- Accelerating investments in focus areas- Steadily executing measures in growth areas looking toward medium- and long-term expansion- Rolling implementation of ACE-2020 mid-term management plan
- Reviewing overseas management control functions, aiming for stronger governance andmedium- to long-term growth
Copyright © 2018 NAGASE & CO., LTD.

2

ContentsFYE March 2019 Second Quarter Results

P.4

FYE March 2019 Earnings Projections

P.15

Progress of Mid-Term Management Plan ACE-2020

P.20

Hayashibara Co., Ltd. Business Strategy

P.24(Reference) Information by Segment

P.39

Copyright © 2018 NAGASE & CO., LTD.

3

FYE March 2019 Second Quarter Results

Copyright © 2018 NAGASE & CO., LTD.

4

Consolidated Statements of Income
 Net sales : Higher, mainly due to strong performance in base areas (Functional Materials, Advanced Materials &Processing) Operating income 䠖 Higher, mainly due to higher revenues and increased profitability at manufacturing subsidiaries

䛆Foreign exchange rate impact on18/9 net sales and operating income results䛇
Net sales:䠇¥1.4 billion (approx.)
Operating income: 䠇¥60 million (approx.)

Copyright © 2018 NAGASE & CO., LTD.

䛆Per-yen exchange rate impact on net sales and operating income䛇Impact of US$ /yenImpact of RMB/yen
Net sales¥900 million (approx.) ¥4 billion (approx.)
Operating income¥40 million (approx.)¥120 million (approx.)5

Net Sales by Region (Domestic, Overseas) In addition to domestic businesses, performance was strong overseas, particularly in ASEAN and the Americas (overseas
ratio of total sales at 50.0%)

Copyright © 2018 NAGASE & CO., LTD.

6

Net Sales: Two-Year Comparison (by Segment)
 Functional Materials : Higher sales, driven by (1) increase in sales of coating raw materials and urethane materials, spurred bystrong automotive production and naphtha price increases; (2) increased sales of electronics chemicals, etc.; and (3) acquisitionof a US-based distributor in the second quarter of the prior consolidated fiscal year Advanced Materials & Processing : Higher sales in Japan and overseas, mainly due to increased sales of plastics and digital print
processing materials

Net Sales by Segment (100 millions of yen)
ᶵ⬟⣲ᮦ

ຍᕤᮦᩱ

㟁Ꮚ

⮬ື㌴䞉䜶䝛䝹䜼䞊

4,500
4,000
3,500


424

3,000



2,500



⏕ά㛵㐃

Change in Net Sales by Segment (100 millions of yen)
(Note)

䛭䛾௚
Advanced
Materials &Processing+96
429(Note)



Functional
Materials
+52





-38

3,875

1,000
500

Electronics

4,044

2,000
1,500

Automotive &Life &
Other
EnergyHealthcare
+0
+55
+4









0
* The Company reclassified reportable segments in the current fiscal year (certain businesses in the Functional Materials segment
reclassified to the Life & Healthcare segment). Results for the first six months of fiscal 2017 have been reclassified forcomparison.

Copyright © 2018 NAGASE & CO., LTD.

17/09

18/09

(Note) The Company transferred the car electronics-related business from the Electronics segment to the Automotive & Energy
segment. Eliminating the impact of this transfer, the Electronics segment performed generally level with prior-year results.

7

Gross Profit: Two-Year Comparison by Segment
 Higher profits, mainly due to the impact of increased revenues

Gross Profit by Segment (100 millions of yen)

ᶵ⬟⣲ᮦ

ຍᕤᮦᩱ

㟁Ꮚ

⮬ື㌴䞉䜶䝛䝹䜼䞊⏕ά㛵㐃

Change in Gross Profit by Segment (100 millions of yen)
Advanced
Materials &Processing
+17

䛭䛾௚

600



400





Automotive &Energy+3Life &
Healthcare+0Electronics
-1



Other
+0

Functional
Materials
+7




925

925

960

968

529

200




780
502









700

0
17/09

18/09

*The Company changed segment classifications during the current period (certain businesses moved from under Functional Materials
segment to the Life & Healthcare segment). Results for 17/09 have been reclassified to reflect these changes.

Copyright © 2018 NAGASE & CO., LTD.

8

Operating Income: Two-Year Comparison (by Segment) Advanced Materials & Processing: Higher profits, mainly due to improved profitability among manufacturing subsidiaries
in Japan and overseas

Operating income by Segment(100 millions of yen)
ᶵ⬟⣲ᮦ

160

130

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㟁Ꮚ

⮬ື㌴䞉䜶䝛䝹䜼䞊





100


⏕ά㛵㐃

Change in Operating Income by Segment(100 millions of yen)
Advanced
Materials &Processing+10඲♫䞉䛭䛾௚



Automotive &Energy+0Electronics-3 (Note)Other/Corporate+1Life &
Healthcare-1Functional
Materials
+0

70


40



10





-17

-15





(20)
* The Company reclassified reportable segments in the current fiscal year (certain businesses in the Functional Materials segment
reclassified to the Life & Healthcare segment). Results for the first six months of fiscal 2017 have been reclassified for comparison.

Copyright © 2018 NAGASE & CO., LTD.

(Note)

134

126





(Note) The Company transferred the car electronics-related business from the Electronics segment to the Automotive & Energy
segment. Eliminating the impact of this transfer, the Electronics segment performed slightly below prior-year results.

9

Earnings at Major Consolidated Subsidiaries
 Nagase Plastics Co., Ltd. recorded higher sales and profits, mainly due to solid performance by new business acquired in the prioryear
 Nagase (Thailand) Co., Ltd. recorded higher sales and profits, mainly due to solid sales of engineering plastics for the automotive
industry(100 millions of yen)

Net sales

Vs. PY

Operating Income(Note 2)

Hayashibara Co., Ltd.

126

104%

25

97%

Nagase ChemteX Corporation

132

103%

16

118%

537

105%

60

110%

Nagase Plastics Co., Ltd.

185

107%

5

120%

Nishinihon Nagase Co., Ltd.

42

109%

2

124%

Nagase Elex Co., Ltd.

52

100%

1

124%

465

104%

14

109%

Nagase (Thailand) Co., Ltd.

197

107%

6

112%

Shanghai Hua Chang Trading Co., Ltd.

196

100%

6

117%

Shanghai Nagase Trading Co., Ltd.

232

110%

5

105%

1,954

106%

49

103%

Overseas Sales
Companies

Domestic Sales
Companies

Manufacturing
Companies

Company Name

Total for manufacturing (Note 1)

Total for domestic sales (Note 1)

Total for overseas sales (Note 1)

Vs. PY

Note 1: Totals for each category are the simple sums of each company in the category. These sums do not equal consolidated figures.
Note 2: Operating income does not reflect amortization of goodwill and depreciation of technology-based assets.

Copyright © 2018 NAGASE & CO., LTD.

10

State of Two Major Manufacturing Subsidiaries
 Hayashibara: Higher sales, despite level sales of TREHA™, as the company recorded increased sales of AA2G™ and Hayashibara
Hesperidin S. Profits slightly lower due to increase in raw materials costs and increased expenses incurred to bolster thecompany’s sales structure for future growth Nagase ChemteX: Higher sales and profits due to solid sales of epoxy resin and Performance Chemicals Business, despite lower
sales in the Photolithography Materials Business caused by the impact of lower customer capacity utilization and other factors
Hayashibara Co., Ltd.
Nagase ChemteX Corporation(100 millions of yen)

17/09

18/09

ChangeVs. PYNet sales

121

126

+5

104%

Operatingincome

26

25

-0

97%

࣭Sales of TREHA™ were even year on year due to inventory
adjustments other factors overseas, despite solid sales to thedomestic staple foods (bread, etc.) industry in Japan
࣭Sales of AA2G™ were higher, mainly due to inbound tourist
demand in Japan and new customers overseas
࣭High-function materials Hayashibara Hesperidin S and Fibryxa™
sales were higher, driven by new applications in the food industry
࣭Higher sales of pullulan for use in hard capsules for medical andhealth food and mouth-refreshing film
࣭Operating income was slightly lower due to rising raw materials
costs and increased SG&A incurred to bolster the company’s salestructure for future growth

Copyright © 2018 NAGASE & CO., LTD.

(100 millions of yen)

17/09

18/09

ChangeVs. PYNet sales

129

132

+3

103%

Operatingincome

14

16

+2

118%

࣭The Epoxy Resin Business recorded higher sales, mainly due tosolid performance of ceiling electronic components embeddedin smartphones and sales to the heavy electrical and lightelectrical industries
࣭The Photolithography Materials Business recorded lower sales,
mainly due to the impact of lower customer capacity utilization(we expect to launch a new business during the second half)
࣭The Performance Chemicals Business recorded higher sales,
driven by solid sales of conductive materials to the LCD industry
epichlorohydrin conductors for use in 3D printers, tires
࣭The Bio Chemicals Business recorded higher sales, driven bysolid sales of actinomycete-derived enzymes and other products
for the health food and food industries11Consolidated Balance Sheets Assets: Increase of ¥23.8 billion, mainly due to increases in accounts receivable, inventories, and rising investments in securities due to gains
in fair market prices
 Liabilities: Increase of ¥13.3 billion due to increases in and short-term loans and current portion of CP
 Net assets: Increase of ¥10.5billion, mainly due to profit attributable to owners of the parent of ¥10.3 billion and increase in net unrealized
holding gain on securities
 Shareholders’ Equity Ratio down 0.3 points to 53.0%

Copyright © 2018 NAGASE & CO., LTD.

12

Consolidated Cash Flows

Main breakdown

Copyright © 2018 NAGASE & CO., LTD.

13

Working Capital and Investments Increase in working capital resulting from sales growth and planned accumulation of inventories to ease ongoing supply inresponse to tight supply conditions in certain industries
Working capital increased as a result

Working Capital (100 millions of yen)
1,816

Investments (100 millions of yen)

2,012

200
SecondHalf

Accounts
Receivable
2,259(Budget)Accounts
Receivable
2,377

118

186

Inventories
736

Inventories
830

Accounts
Payable-1,180Accounts
Payable-1,195

18/03

18/09

Copyright © 2018 NAGASE & CO., LTD.

First
Half
(Actual)82

18/03
Actual19/03
Forecast

14

FYE March 2019 Earnings Projections

Copyright © 2018 NAGASE & CO., LTD.

15

FYE March 2019 Earnings Projections
 U.S.-China trade frictions and other global factors contribute to ongoing difficulty in predicting the future direction of theeconomy. However, measures under our ACE-2020 mid-term management plan will contribute to steady second-half
performance, leading us to forecast increased sales and profits(100 millions of yen)

18/03 Actual

19/03 Forecast

ChangeVs. PYNet sales

7,839

8,280

+440

106%

Gross profit

1,026

1,073

+46

105%

<GP ratio>

13.1%

13.0%

-0.1%

SG&A expenses

785

818

+32

104%

Operating income

241

255

+13

106%

Ordinary income

259

275

+15

106%

Profit attributable to owners of
the parent

171

186

+14

108%

US$ Exchange rate
(period average)@110.9@105@¥5.9revaluation

RMB Exchange rate
(period average)

@16.7

@16.5

@¥0.2
revaluation

Copyright © 2018 NAGASE & CO., LTD.

16

Net Sales Forecast (by Segment) Advanced Materials & Processing: Higher sales continuing in the second half, mainly due to expanding trade rights (new areas, newsuppliers), as well as increasing sales of digital print processing materials and other products Automotive & Energy: Higher sales in response to increasing automobile production and capture of demand related to the automation andelectrification of automobiles. Continuing into the second half, we expect solid sales of high-function materials and car electronics-related
products both in Japan and overseas to also contribute

Net Sales by Segment (100 millions of yen)ᶵ⬟⣲ᮦ⮬ື㌴䞉䜶䝛䝹䜼䞊

ຍᕤᮦᩱ
⏕ά㛵㐃

Change in Net Sales by Segment (100 millions of yen)㟁Ꮚ䛭䛾௚(Note)

8,280
8,000

7,839

Advanced
Materials &Processing
+261

886

865

6,000

1,297
1,293

Automotive &Energy
+127

Other
+0

Life &
Healthcare
+20

1,425
Electronics
-58

1,235

(Note)
Functional
Materials

8,280

+87

4,000
2,628

2,890

2,000

7,839
1,749

1,837

0
18/03

(Forecast)
19/03ぢ㏻䛧

*The Company changed segment classifications during the current period (certain businesses moved from under Functional Materials
segment to the Life & Healthcare segment). Results for 18/03 have been reclassified to reflect these changes.

Copyright © 2018 NAGASE & CO., LTD.

18/ 03(Forecast)
19 /03ぢ㏻(Note) The Company transferred the car electronics-related business from the Electronics segment to the Automotive & Energy
segment. Eliminating the impact of this transfer, the Electronics segment performed level with prior-year results.

17

Operating Income Forecast (by Segment) We forecast an increase of ¥1.3 billion in operating income; all segments should record higher profits, with the exception of
the Electronics segment
 Asset replacement (withdrawal from unprofitable businesses) and improvements in manufacturing and processing businessrevenues should contribute to profits

Operating Income by Segment(100 millions of yen)
ᶵ⬟⣲ᮦ

300
250

ຍᕤᮦᩱ

㟁Ꮚ

⮬ື㌴䞉䜶䝛䝹䜼䞊⏕ά㛵㐃

Change in Operating Income by Segment(100 millions of yen)
䛭䛾௚䞉
඲♫ඹ㏻

(Note)

255
241

Automotive &Energy+1143

Advanced
Materials & (Note)
Processing Electronics
-4
+13

42
24

35

200
150

89

Life &
Healthcare
䠇184Functional
Materials

Other/
Corporate
-11

+3

100

67

80

255

50
0

51

55

-33

-44

18/03

(Forecast)
19/03ぢ㏻䛧

241(50)*The Company changed segment classifications during the current period (certain businesses moved from under Functional Materials
segment to the Life & Healthcare segment). Results for 18/03 have been reclassified to reflect these changes.

Copyright © 2018 NAGASE & CO., LTD.

18/03

19/03(Forecast)
ぢ㏻

Note: The company has moved the car-electronics related business from the Electronics segment to the Automotive & Energy segment.
Electronics performance should be level with the prior year when eliminating the relevant impact of the move.

18

Dividends Current period: The Company plans an interim dividend of ¥18 and a year-end dividend of ¥19 for a total
annual dividend of ¥37 per share (¥2 per common share increase)
䠄䠂䚸෇䠅
䠄%
,yen䠅

SpecialDividend

䠄䠂䠅

45

1.8

40

1.6

35

1.4

30

1.2

25

1.0

20

0.8

15

0.6

10

0.4

5

0.2

0
10/03

11/03

12/03

13/03

14/03

15/03

16/03

17/03

18/03

19/03
19/03
䠄ணᐃ䠅
(Forecast)୍ᰴᙜ䛯䜚㓄ᙜ㔠(ᕥ䝯䝰䝸)

16

22

24

26

28

30

32

33

40

37

㓄ᙜᛶྥ
䠄ᕥ䝯䝰䝸䠅

27.3

22.1

36.0

23.4

30.5

33.7

33.0

40.4

29.3

24.9

DOE(ྑ䝯䝰䝸)

1.08

1.42

1.52

1.52

1.50

1.44

1.46

1.48

1.69

1.49

0.0

*19/03 year-end dividend to be submitted for approval to the general meeting of shareholders scheduled for June 2019.

Copyright © 2018 NAGASE & CO., LTD.

19

Progress of Mid-Term Management Plan ACE-2020
Accountability / Commitment / Efficiency
Investment

R&D

Logistics

Business
BusinessBusiness
Designer
GlobalNetworkD
esigner
Designer
Trading
Manufacturing

NAGASE Transforms from Shosha/Trading to Business Designer

Copyright © 2018 NAGASE & CO., LTD.

20

Progress of Mid-Term Management Plan ACE-2020
Reform Profit Structure

Overseas

Manufacturing

Investment
Investmentz Investment in 3D Glass Solutions, Inc.
Expand semiconductor business through high-frequency products conforming to 5G
communications specz Hayashibara signed long-term partnership agreement with LONZA
Strengthen strategic partnerships to grow the pullulan capsule market

Manufacturing

Business Designer Functions

Focus Area

Distribution

z TritanTM utensils adopted in all Saizeriya restaurants
Expanding sales agent business, commercial-use utensil market

Trading

Base Area

Manufacturing

Overseas

Manufacturing

Overseas

Investmentz Joint venture: Established Infinite Material Solutions
Aiming to commercialize water-soluble printing support filament used in 3D printerfused deposition modelingz Presented AxonerveTM at Intel FPGA Technology Day 2018
Providing FPGA implementation solutions for content addressable memory (CAM) in
the 5G, IoT era

Investment

Growth Area

Reform Corporate Culturez Rolling implementation of mid-term management planz Strengthen governance overseas, revise regional management control functionsz Strengthen NAGASE Business Expert services for domestic group companies
Copyright © 2018 NAGASE & CO., LTD.

21

Example of Asset Replacement Under Mid-Term Management
Plan ACE-2020
Glass Thin Processing BusinessMoving Assets From Taiwan to China, Uncovering More Value-Added Business by Delivering Expertise
Sales (¥ hundred million)

Company Name

Nagase Electronics Technology Co., Ltd.

Established

November 2005

Capital Stock

NT$230 million(wholly owned by Nagase)

60

NET

NEX

30

Company Name

Nagase Electronics Technology (Xiamen) Co., Ltd.

Established

December 2012

Capital Stock

RMB134 million(wholly owned by NET)

䛆New Glass Thin Processing Business Structure䛇z Consolidated production bases under NEX (Xiamen, China)z Completed transfer of expertise and technology in chemicals,
automated sheet thickness measurement, etc.
z Possesses metal film and organic coating facilities, as well as
technological expertisez Conforms to the high-end specification market in China
Copyright © 2018 NAGASE & CO., LTD.

0Regional shift in the then processing market (dĂŝǁĂŶїŚŝŶĂ)Improved profitability through greater added value
Secured stable revenues

22

Progress of KGIs Under Mid-Term Management Plan ACE-2020
Net Sales/Operating Income

ROE¥1 trillion or more/¥30 billion or more

Normalize over 6%

Operating Income (¥hundred million)

Sales (¥ hundred million)㻟㻜㻜㻝㻜㻘㻜㻜㻜

ROE (%)
㻤㻚㻜㻑

㻟㻜㻜㻌
㻞㻡㻡㻌
㻡㻚㻤㻑

㻞㻠㻝㻌

㻢㻚㻜㻑

㻠㻚㻠㻑

㻝㻤㻜㻌
㻡㻘㻜㻜㻜

㻢㻚㻜㻑

㻝㻡㻜㻌

㻜

Copyright © 2018 NAGASE & CO., LTD.

㻝㻡㻜

㻠㻚㻜㻑

㻜

㻜㻚㻜㻑

㻟㻚㻣㻑

23

Hayashibara Co., Ltd.
Business Strategy
Naoki Yasuba
Representative Director and President
Hayashibara Co., Ltd.
Hayashibara
Co., LTD.
Ltd.
Copyright © 2018 NAGASE& CO.,

24

Company Overview
Sales Composition FYE March 2018

Company Name

: Hayashibara Co.,Ltd

Head Office: Nihon-Seimei Okayama Bldg. II Shinkan
1-1-3 Shimoishii, Kita-ku, Okayama: 1883

Founded: 1883

Capital: 7.5 billion JPY(100 millions of yen)

19 6
㣗ရ⣲ᮦ
Food Ingredients
Cosmetic໬⢝ရ⣲ᮦIngredients

45
173

Pharmaceutical་⸆ရ⣲ᮦ
Ingredientsᶵ⬟ᛶⰍ⣲
Functional Dyes

Number of Employee : 667
Business: Development, manufacture and sales of food, pharmaceutical,
cosmetic, and health food ingredients and functional dyes.

Sales: 24.3 billion JPY㸦fiscal year ended March 2018㸧

Operating income: 5.0 billion JPY ‫ق‬fiscal year ended March 2018‫ك‬

Associated Company : NAGASE & CO., LTD. (wholly owned subsidiary as of February 2012)(As of April 1, 2018)
Copyright © 2018 Hayashibara Co., Ltd.

25

Core Technologies

Material
Development

EnzymeScreening

Application
Development

Development of Functional
Saccharide Utilizing Our
Biotechnologies
Manufacturing

Copyright © 2018 Hayashibara Co., Ltd.

Searching
Functions
Identifying
Physical
Properties

26

Business Lines
Food Ingredients

Health Food
Ingredientsg

Cosmetic
IngredientsgPharmaceutical
IngredientsgFunctional Dyes

TREHA™

GLUCOSYL HESPERIDIN

AA2G™

HIGH PURITY MALTOSE

Dyes for recordable media

SUNMALT ™

Fibryxa™

TornareTREHALOSE SG

Dyes to produce data
images in LCDs

PULLULAN

Ascofresh™

ALPHA GLUCOSYL HESPERIDIN

LUMINTM-A

Dyes as test agents and dyeswith medicinal and bioactive
applications

Copyright © 2018 Hayashibara Co., Ltd.

27

Locations/Sales Offices
Locations in Okayama

Sales Offices in JapanL’ Plaza

Okayama Station
Head Office

Supports sales team fromapplication technology
aspects

Sapporo Office

Okayama Functional
Saccharide Plant
L’ Plaza
Okayama Plant II

Sendai Office

R&D Center
Niigata Office

Okayama Plant I
Fujita Pharmaceutical
Plant

Tokyo Branch
L’ Plaza (Tokyo Lab.)

Okayama Office
L’ Plaza (Okayama Lab.)

Nagoya Office
Fujita Plant

Osaka Branch
Fukuoka Office

Copyright © 2018 Hayashibara Co., Ltd.

28

Earnings Performance
Net sales

OperatingႠᴗ฼┈
income(100 millions of yen)

Operatingincome኎ୖ㧗Net sales(100 millions of yen)

㻟㻜㻜

㻢㻜

㻞㻤㻜㻌
㻞㻡㻟㻌
㻞㻡㻜

㻞㻠㻞㻌

㻞㻟㻣㻌

㻞㻠㻞㻌

㻞㻟㻥㻌

㻡㻡

㻞㻠㻠㻌
㻡㻜

㻡㻡㻌

㻞㻜㻜

㻠㻥㻌

㻡㻜㻌
㻠㻣㻌

㻠㻡㻌

㻡㻜㻌

㻠㻡

㻠㻢㻌

㻝㻡㻜

Copyright © 2018 Hayashibara Co., Ltd.

21/03

㻞㻝㻛㻜㻟ᮇ㻔ண
(Forecast)㻕

19/03

㻝㻥㻛㻜㻟ᮇ㻔ண
(Forecast)㻕

㻝㻤㻛㻜㻟ᮇ
18/03

㻝㻣㻛㻜㻟ᮇ
17/03

㻝㻢㻛㻜㻟ᮇ
16/03

㻝㻡㻛㻜㻟ᮇ
15/03

㻝㻠㻛㻜㻟ᮇ
14/03

㻠㻜

29

Key Policies
Global Expansion: Restructure Business Infrastructure
Strengthen Japan Sales: Respond to Inbound Tourist
DemandExpand Applications in Foods with Function
ClaimsIntroduce New Ingredients (for the anti-aging
market)Pullulan: Accelerate Partnerships with Major
Customers Overseas
Copyright © 2018 Hayashibara Co., Ltd.

30

Global Expansion: Current Status and Issues
Shipment
Volume (t)TREHA™ Overseas Sales Volume

㻝㻜㻘㻜㻜㻜

㻥㻘㻡㻜㻜

㻥㻘㻜㻜㻜

㻤㻘㻡㻜㻜

㻞㻝㻛㻜㻟ᮇ㻔ண 㻕㻝㻥㻛㻜㻟ᮇ㻔ண 㻕㻝㻤㻛㻜㻟ᮇ

㻝㻣㻛㻜㻟ᮇ

㻝㻢㻛㻜㻟ᮇ

㻝㻡㻛㻜㻟ᮇ

㻝㻠㻛㻜㻟ᮇ

㻤㻘㻜㻜㻜• Lack of awareness of Hayashibara/TREHA brand• Left to sales agents• Lack of solutions proposals
Copyright © 2018 Hayashibara Co., Ltd.

31

Key Policies: Global Expansion Restructure Business Infrastructure

Europe࣭Revise policy toward sales agents
࣭Strengthen relationships withmajor customers
࣭Focus greater efforts in France,
Spain, and Italy

North A
Americai

China/ASEAN
࣭Launch solution facilities
࣭Differentiate from thecompetition through stronger
solutions proposals

࣭Revise policy toward sales
agents࣭Communicate productinformation via IT
࣭Launch solution facilities

Strengthen structure in each area э Resource Allocation
Strengthen solutions proposals э Set up overseas solution facilities
Investigate future overseas production
Copyright © 2018 Hayashibara Co., Ltd.

32

Key Policies: Strengthen Domestic Sales Respond to Inbound Tourist Demand
K

Respond to the growing Japan market of inbound tourist demand
Strengthen proposals to major domestic confectioners
Japan Inbound Tourist Purchases ofFood Products(100 millions of yen)

3,500

Confectioneries䛭䛾௚㣗ᩱရ䞉㣧ᩱ䞉㓇䞉䛯䜀䛣
Other foods, beverages, alcohol, tobacco
ⳫᏊ㢮

3,000
2,500
2,000

1,390

1,868

Strengthen TREHA™ functional proposals tomajor confectioners, expand applications

1,589

Raise awareness of trehalose~Common Denominator in Flavor and Quality~

1,589

1,500
795
1,000
500

835

1,212

1,308

2015
2015ᖺ

2016
2016ᖺ

0
2014
2014ᖺ

2017
2017ᖺ

Source: 2017 Report on Food Purchasing by Inbound Tourists,
Ministry of Agriculture, Forestry and Fisheries
Copyright © 2018 Hayashibara Co., Ltd.

Attention to TREHA™ by overseas foodcompanies
33

Key Policies: Expand Applications in Foods with Function Claims
Hayashibara Hesperidin S: More active expansion of successful applications
Fibryxa™: Prepare evidence for three main claims~strengthen rollouts to customers*Three main claims: Improves bowel movements, attenuates postprandial blood glucose and triglyceride

Foods with Function Claims Market Growth(Manufacturer Shipping Price Base)(100 millions of yen)

1,800‫ٻ‬Hayashibara Hesperidin S

1,600‫ٻ‬Fibryxa™

1,400
1,200

Nagase Products in Food with Function Claims Products

1,000(Cumulative)
1,649

800

1,365

600
400
200
0

33

446
24
2015
2015ᖺ

2016
2016ᖺ

2017
2017ᖺ(ぢ㎸)(Forecast)

Source: (press release) Health Foods Market 2018, Yano
Research Institute15
3
FY20152015ᖺᗘ

FY20162016ᖺᗘ

FY20172017ᖺᗘ

FY20182018ᖺᗘ
(As of October 2018)

Copyright © 2018 Hayashibara Co., Ltd.

34

Key Policies: Introduce New Materials (for the Anti-Aging Market)
Introduce new plant-derived materials to the market (planned for next spring)Anti-Aging Cosmetics Market Growth

Plant-Derived Raw Materials(Sales by Japanese Cosmetics Makers)
New Anti-Aging Materials(100 millions of yen)

4,000
3,500
3,000
2,500
2,000
1,500

3,205

3,270

FY20152015ᖺᗘ

FY20162016ᖺᗘ

3,620

3,845
Hayashibara Research andDevelopment

1,000
500
0
FY20172017ᖺᗘ

FY20182018ᖺᗘ(ぢ㎸)(Forecast)

Source: Anti-Aging Cosmetics Market Survey Results, TPC
Marketing Research
Copyright © 2018 Hayashibara Co., Ltd.

35

Key Policies: Pullulan Accelerate Partnerships With Major Customers Overseas

Long-Term Partnership Agreement Signed with LONZA (Basel,
Switzerland) to Expand the Pullulan Capsule Market
Expanding needs for plant-derived raw
ingredients in the supplement market

Growing demand for pullulan capsulesLong-term agreement to supply
Hayashibara pullulan
andjoint development of new products

Copyright © 2018 Hayashibara Co., Ltd.

‫ٻ‬Signing Ceremony, Held September 25, 2018
(Right) Erasmo Schutzer, President, Lonza Consumer Health(Left) Naoki Yasuba, Representative Director and President, Hayashibara

36Capital Investment: New Plant Okayama Plant II P Building

P Building (manufacturing enzymes and pullulan) renovation andexpansion; scheduled to begin construction early spring 2019
Artist’s Conception

Response to need for stable enzyme supply
and future business expansion
Copyright © 2018 Hayashibara Co., Ltd.

37

Newspaper Ad(10/8 THE SANYO SHIMBUN; 11/24 The Nikkei)

ᄂ⅛䜎䛥䛻ย䜢◊䛠䛾䛸䝞䜲䜸䛿䜘䛟ఝ䛶䛔䜎䛩䚹ย໶䛻䜘䛳䛶㘫䛘ୖ䛢䜙䜜䚸࿨䜢྿䛝㎸䜎䜜䛯ย๢䚹䛭䛾㨩ຊ䜢ᘬ䛝ฟ䛩䛯䜑䚸⢭ᕦ䛺ᢏ⾡䜢ᣢ䛴◊䛞ᖌ䛜䚸ย䛸ᑐヰ䛧䛺䛜䜙ᑡ䛧䛵䛴ᑡ䛧䛵䛴◊䛞⃈䜎䛧䛶䜖䛟䚹ᯘཎ䛾䝞䜲䜸䛾◊✲㛤Ⓨ䜒ྠ䛨䛷䛩䚹᪥䚻◊㛑䜢㔜䛽䛶䛔䜛◊✲ဨ䛜䚸⣲ᮦ䛸ྥ䛝ྜ䛔䚸ᑐヰ䛧䛺䛜䜙◊✲䛻ྲྀ䜚⤌䜣䛷䛔䜎䛩䚹୍ぢ䚸ྠ䛨䛣䛸䛾⧞䜚㏉䛧䛾䜘䛖䛻ᛮ䛘䜛䛛䜒䛧䜜䜎䛫䜣䚹䛷䛩䛜䚸୍Ṍ䛪䛴୍Ṍ䛪䛴╔ᐇ䛻๓䛻㐍䜣䛷䛔䜛䚹䛭䛾Ṍ䜏䛜䚸᫂᪥䛾೺ᗣ䛸ᖾ⚟䛻䛴䛺䛜䜛䛸ಙ䛨䛶䚹

Copyright © 2018 Hayashibara Co., Ltd.

38

(Reference) Information by Segment

Copyright © 2018 NAGASE & CO., LTD.

39

Functional Materials<Net Sales/Operating Income by Location>FYE March 2019 Second Quarter Results(100 millions of yen)
FYE 03/18

Operating Income

Net SalesInterim

FYE 03/19

Full-Year

Interim

Year
Forecast

Vs. PY

Vs. PY

Domestic

785

1,617

826

105%

1,700

105%

Overseas

271

565

297

109%

579

102%

Eliminations

-213

-433

-227

-

-442

-

Total

844

1,749

896

106%

1,837

105%

Domestic

19

40

20

106%

41

103%

Overseas

7

16

7

99%

16

97%

Net sales¥89.6 billion (106%) The Performance Chemicals business recorded a higher sales
due to improve the sales of coating and urethane materials,
spurred by strong automotive production and rising naphtha
prices. Another contributing factor was the acquisition of a
distributor in the United States during the second quarter ofthe prior consolidated fiscal year.
 The Speciality Chemicals business recorded higher sales
overall. Sales of electronics chemicals and plastic
materials/plastic additives were higher for the semiconductor
and other electronics industries in Japan. Overseas, sales werelevel with the prior year.
Operating income¥2.7 billion (101%)

 Higher profits due to higher revenues.
Eliminations

-0

-5

-1

-

-2

-

Total

26

51

27

101%

55

107%

*Figures above are a combination of consolidated entities by location.
Inter-region eliminates are not reflected; adjusted provided in the eliminations column.
(Includes amortization of goodwill)*The Company changed segment classifications during the current period (certain businesses
moved from under Functional Materials segment to the Life & Healthcare segment). Resultsfor 18/03 have been reclassified to reflect these changes.

Copyright © 2018 NAGASE & CO., LTD.

FYE March 2019 Outlook
˘ We project higher revenues and profits due to increased salesof coating and urethane materials, spurred by rising
automotive production during the second half. Further, we
expect to see higher sales of electronics chemicals for thesemiconductor and other electronics industries.
40

Advanced Materials & Processing<Net Sales/Operating Income by Location>FYE March 2019 Second Quarter Results(100 millions of yen)
FYE 03/18

Net SalesInterim

Full-Year

Interim

Year
Forecast

Vs. PY¥141.4 billion (107%)

Vs. PY The Colors & Advanced Processing business recorded higher
sales, driven by growth in plastic resins for industrial andpackaging applications and dyes/additives in Japan, as well as
by increased sales of digital print processing materials in both
Japan and overseas.

Domestic

813

1,661

888

109%

1,831

110%

Overseas

809

1,596

900

111%

1,758

110%

Eliminations

-304

-628

-374

-

-699

-

1,318

2,628

1,414

107%

2,890

110%

 The Polymer Global Account business recorded higher sales
overall, driven by growth in Japan, Greater China, and ASEAN.

Domestic

19

38

27

141%

43

111%

Operating income

Overseas

16

29

20

122%

37

127%

Eliminations

-0

-1

-2

-

+0

-

Total

Operating Income

Net sales

FYE 03/19¥4.6 billion (129%)

 Higher profits, mainly due to higher revenues and improve
profitability at manufacturing subsidiaries.

FYE March 2019 Outlook
Total

35

67

46

129%

80

120%

*Figures above are a combination of consolidated entities by location.
Inter-region eliminations are not reflected; adjustments provided in the eliminations column.

Copyright © 2018 NAGASE & CO., LTD.

˘ Our outlook calls for higher revenues and profits due toincreased sales of plastics and digital print processing
materials in Japan and overseas.
41

Electronics<Net Sales/Operating Income by Location>FYE March 2019 Second Quarter Results(100 millions of yen)
FYE 03/18

Net SalesInterim

FYE 03/19

Full-Year

Interim

Year
Forecast

Vs. PY

Vs. PY

Domestic

650

1,297

608

94%

1,283

99%

Overseas

385

753

368

95%

697

93%

Eliminations

-379

-757

-358

-

-745

-

Total

657

1,293

618

94%

1,235

95%

Net sales¥61.8 billion (94%)

 Despite solid performance of formulated epoxy resins andequipment-related sales, lower sales of photolithographymaterial resulted in the Electronic Chemicals businessrecording slightly lower sales.
 The Electronic Materials business recorded lower sales. Thisdecrease was due to lower performance of display-relatedmaterials, despite steady performance in our business forabrasives used in intermediate semiconductor processing.

Operating Income

Operating income¥4.0 billion (93%)

Domestic

24

49

23

97%

48

96%

 Lower profits, mainly due to lower revenues.

Overseas

19

40

17

87%

37

92%

FYE March 2019 Outlook

Eliminations

-0

-1

-0

-

-1

-

Total

43

89

40

93%

84

95%

*Figures above are a combination of consolidated entities by location.
Inter-region eliminations are not reflected; adjustments provided in the eliminations
column. (Includes amortization of goodwill)

Copyright © 2018 NAGASE & CO., LTD.

˘ Sales and profits should be level with the prior year, after eliminating theimpact of moving certain businesses to the Automotive & Energy
Segment.
˘ We forecast a recovery over the second half. Despite expected lower
sales of display-related materials due to model changes, our epoxy resinand equipment-related business should continue to be solid. We also
expect improved capacity utilization among our photolithographymaterial customers and the launch of new businesses to contribute
positively.
42

Automotive & Energy<Net Sales/Operating Income by Location>FYE March 2019 Second Quarter Results(100 millions of yen)
FYE 03/18

Operating Income

Net SalesInterim

Net sales

FYE 03/19

Full-Year

Interim

Year
Forecast

Vs. PY

Vs. PY

Domestic

316

674

377

119%

795

118%

Overseas

416

840

425

102%

875

104%

Eliminations

-106

-218

-121

-

-245

-

Total

627

1,297

682

109%

1,425

110%

Domestic

2

2

4

222%

12

425%

Overseas

12

21

9

80%

23

109%

Eliminations

-0

-0

0

-

-0

-

Total

14

24

14

104%

35

147%

*Figures above are a combination of consolidated entities by location.
Inter-region eliminations are not reflected; adjustments provided in the eliminations column.

Copyright © 2018 NAGASE & CO., LTD.

¥68.2 billion (109%) The Automotive Solutions business recorded higher sales,
driven by solid performance in our resins business in Japan,
Greater China, and ASEAN, as well as increased sales of car
electronics-related products.
Operating income¥1.4 billion (104%)

 Higher profits due to higher revenues.

FYE March 2019 Outlook
˘ We forecast higher sales and profits, even when eliminating theimpact of moving certain businesses from the Electronics
Segment.
˘ We forecast higher revenues and profits due to expected solid
sales of high-function materials and car electronics-related
products in Japan and overseas, driven by expectations ofincreased automotive production compared to the first half.
Improved profitability at our manufacturing subsidiaries should
also make a positive contribution.
43

Life & Healthcare<Net Sales/Operating Income by Location>FYE March 2019 Second Quarter Results(100 millions of yen)
FYE 03/18

Operating Income

Net SalesInterim

FYE 03/19

Full-Year

Interim

Year
Forecast

Vs. PY

Vs. PY

Domestic

497

1,006

495

100%

1,033

103%

Overseas

68

135

64

94%

140

104%

Eliminations

-140

-276

-129

-

-287

-

Total

424

865

429

101%

886

102%

Domestic

36

70

34

94%

69

99%

Overseas

1

3

2

171%

5

167%

Eliminations

-15

-31

-16

-

-31

-

Total

23

42

21

93%

43

104%

*Figures above are a combination of consolidated entities by location.
Inter-region eliminations are not reflected; adjustments provided in the eliminations column.
(Includes amortization of goodwill and technology-based assets)*The Company changed segment classifications during the current period (certain businesses
moved from under Functional Materials segment to the Life & Healthcare segment). Results for
18/03 have been reclassified to reflect these changes.

Copyright © 2018 NAGASE & CO., LTD.

Net sales¥42.9 billion (101%)

 Sales of TREHA™ and other products to the food materials
industry overseas were lower; however, sales grew in Japan.
Sales of AA2G™ to customers in the skincare and toiletries field
were higher both in Japan and overseas. In the medical andpharmaceutical field, sales of pharmaceutical raw materials andintermediates, medical materials, and pharmaceutical businessproducts were slightly lower than the prior year.
As a result, the business recorded sales level with the prior year.
 The Beauty Care Products business recorded lower sales, driven
down due to weak performance across all product categories.
Operating income¥ 2.1 billion (93%)

 Lower profits, mainly due to decreased sales at certain
domestic manufacturing subsidiaries and expenses associatedwith upfront investments.

FYE March 2019 Outlook
˘ We forecast overall sales and profit growth for the segment.
Despite expected decreases in business related to the medical andpharmaceutical field, we project increased sales of TREHA™ andsolid performance of raw materials to the skincare and toiletries
fields.
44

https://www.nagase.co.jp/english

These presentation materials contain forward-looking projections based on assumptions,forecasts, and plans as of November 30, 2018. Actual earnings may differ from projections due torisks and uncertainties in the future global economy, competitive landscape, currency exchange
rates, etc.
Copyright © 2018 NAGASE & CO., LTD.