FYE March 2014

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

NAGASE & CO., LTD.
November 26, 2013

◆ Contents ◆• FYE March 2014 Second Quarter Results• FYE March 2014 Earnings Projections• About Plastics Business

2

FYE March 2014 Second Quarter Results3Consolidated Results
・ Weak yen and other factors lead to ¥22.6 billion year-on-year revenue growth・ Net profit of ¥7.2 billion including booking of gain on sale of fixed assets from prior period(100 millions of yen)

12/09

13/09

Change Vs. PY

Orig. Forecast Progress
Rate(full year)

Gross profit

3,355
413

3,582
449

226
35

<GP ratio><12.3%><12.5%><+0.2%>

SG&A expenses

-332

-362

30

109%

-742

49%

Operating profit

81

86

5

106%

192

45%

Ordinary income

86

98

11

114%

210

47%

Net income

80

72

-8

89%

145

50%

@78.96@98.64

Net sales

Exchange rate

107%
109%

-￥19.687,640
934<12.2%>

47%
48%@95.00(Per-yen exchange rate impact on net sales and operating profit)
Impact of dollar/yen rate
Impact on 13/09 Actual
Net sales¥1.8 billion+¥35.7 billion
Operating profit¥40 million+¥800 million

4Net Sales by Region (Domestic, Overseas)
Net Sales ¥358.2 bil (Domestic ¥181.2 bil; Overseas ¥176.9 bil)
¥22.6 bil increase (+6.8%) from the previous fiscal year (Domestic -¥ 3.5 bil (-1.9%), Overseas +26.2 bil (+17.4%))<Domestic/Overseas Net sales><Overseas Sales by Region>(100 millions of yen)(100 millions of yen)Overseas

Domestic

3,582

Jan-JunApr-Sep(V +17%)

Europe and
Other

Apr-Sep

North America
Southeast Asia
Northeast Asia

Apr-Sep

Apr-Sep

Apr-Sep<Domestic/Overseas Share of Net Sales>
Overseas

Domestic− Overseas Net Sales Ratio Increase(44.9% → 49.4%) −Net sales in all regions grew, partly due to weaker yen;Overseas share of net sales higher.

5Net Sales by Segment
Change in Net Sales by Segment(vs. PY)

Net Sales by Segment(100 millions of yen)(100 millions of yen)

Other
Other

Life &
Healthcare

Life &
Healthcare

Automotive &EnergyAutomotive &EnergyElectronics

Electronics

Advanced
Materials &Processing
Functional
Materials

Advanced
Materials &Processing
Functional
Materials

6Gross Profit by Segment
Gross Profit: ¥44.9 bil +¥3.5 bil +8.6%<Gross Profit Ratio：12.5% +0.2%>
Gross Profit by Segment (vs. PY)(100 millions of yen)

600

400

200

0

413
1
93
33

449
2
94
42

117

131

92

104

74

72

12/09

13/09

Functional Materials
機能素材Electronics
電子Life & Healthcare
生活関連Functional Materials¥7.2 bil-¥0.1 bil

-2.5%

¥10.4 bil

+1.2 bil+13.2%¥13.1 bil+¥1.3 bil

+11.4%¥4.2 bil+¥0.8 bil

+26.4%¥9.4 bil+0.1 bil+1.9%<Gross Profit Ratio: 8.6% (+0.2%)>

Advanced Materials & Processing<Gross Profit Ratio: 8.8% (+0.2%)>

Electronics<Gross Profit Ratio: 18.1% (-1.0%)>

Advanced Materials &加工材料
Processing
Automotive & Energy
自動車・ｴﾈﾙｷﾞｰ
Other
その他

Automotive & Energy<Gross Profit Ratio: 8.7% (+0.9%)>Life & Healthcare<Gross Profit Ratio: 25.8% (+0.5%)>

7

Operating Profit by Segment
Operating Profit: ¥8.6 bil ¥0.5 bil +6.4%(100 millions of yen)

50

12/09

Operating Profit by Segment (vs. PY)

13/09

39

40

Functional Materials¥2.2 bil-¥0.3 bil

-11.7%¥1.8 bil+0.1 bil+8.9%

Electronics¥3.9 bil+0.8 bil+28.3%

Automotive & Energy¥0.8 bil+0.2 bil+46.9%

Life & Healthcare¥1.4 bil-¥0.5 bil

-27.6%

31
30
20

25

Advanced Materials & Processing

22
17 18

19
14

10

5

8

0
-10

-16
-17

-20
-30
Advanced
Other,
Functional
Automotive
Life &
Materials & Electronics
Corporate,
Materials& Energy Healthcare
Processing
Eliminations

8Factors Impacting Operating Income
100

90

+2

Fall in Domestic Profits -¥200 million
Nagase ChemteX products lower
Fall in Overseas Profits +¥0

-3

80

70

Decline in Domestic Profits -¥600 million
Higher general & administrative expenses inHayashibara
Higher depreciation and amortization in
enzyme business
Higher Overseas Profits +¥100 million
Higher Hayashibara product sales inNortheast Asia and Europe

Higher Domestic Profits +¥800 million
Smartphones and tablets component
sales higher
Fall in Overseas Profits -¥0
Growth in smartphones and tablets inNortheast Asia
Weak glass panel processing business
Delay in rolling our new co. in China

81

+1

-5

+8

Decline in Domestic Profits -¥0Functional films and sheets sales
lower Improved profits at unprofitablemanufacturing subsidiaries
Higher Overseas Profits +¥0
Higher resin sales, driven by
Southeast Asia

(100 millionsof yen)+0.8

Higher Domestic Profits +¥0
Higher sales in automobile-related
components (eco-car, etc.)
Higher Overseas Profits +¥100 million
Higher sales in automobile-related
components mainly in Southeast Asia
and North America

86

60

50
Sep
FY12

Functional
Materials

Advanced
Materials &Processing

Electronics

Automotive& EnergyLife &
Healthcare

Other,
Corporate,
Eliminations

Sep
FY13

: : Positive Factors: Negative Factors

9Ordinary Income and Net Income
Ordinary Income:¥9.8 bil+¥1.1 bil

+13.7%Net Income:¥7.2 bil-¥0.8 bil

-10.9%(100 millions of yen)

100

75

50

98
86

80

72

25

0

12/09
13/09
Ordinary Income

12/09
13/09
Net Income
10Changes in Major Balance Sheet Accounts(100 millions of yen)
Assets

13/03

13/09

ChangeLiabilities and Net Assets

3,057

3,126

466

426

-40

1,960

2,080

+120

Inventories

518

511

-6

Other current assets

111

107

-4 Total current liabilities

Total non-current assets

1,809

1,893

+83

Property, plant andEquipment

609

613

Intangible fixed assets

552

Investments in securities
Other fixed assets

Total current assets
Cash and time deposits
Notes and accounts
receivable

Total assets

13/03

13/09

Change+69 Total current liabilities

1,658

1,651

-6

Notes and accounts
Payable

1,079

1,078

-1

Short-term loans

354

350

-4

Other current liabilities

224

223

-0

831

880

+49

Long-term debt

326

327

+1

+3

Bonds

300

300

±0

543

-9

Accrued retirement
benefits for employees

102

127

+24

568

651

+82

Other long-termlong liabilities

102

124

+22

78

84

+6

2,489

2,532

+43

Shareholders’ equity

2,117

2,167

+49

(Portion less treasury
stock, at cost)

(-71)

(-69)

(+1)

Net unrealized holding
gain on securities

179

238

+58

Translation adjustment

-12

-1

+11

Cumulative adjustment for
retirement benefits

-

-4

-4

Total net assets

2,378

2,487

+109

(Equity ratio)(46.9%)(47.8%)(+0.9%)

4,867

5,019

+152

4,867

5,019

Total liabilities

liabilities and net+ 152 Total
assets11Cash Flows◆ Operating Cash Flows:

Working capital increase of ¥9.6 billion linked to higher net sales; however, income before
income taxes of ¥10.5 billion and addition of ¥4.1 billion in depreciation and amortization leads
to net cash inflow of ¥4.3 billion.
◆ Investment Cash Flows: ¥1.3 billion inflow from sales of investment securities; ¥3.6 billion in cash used to purchasetangible fixed assets.
◆ Financing Cash Flows: ¥3.4 billion net cash used; ¥4.5 used in repayment of long-term debt; ¥1.6 billion used in
payment of dividends(100 millions of yen)

13/09
Net cash provided by (used in)operating activities

Net cash provided by (used in)investing activities
Net cash provided by (used in)financing activities

12/09

Main breakdown+43

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

+¥10.5 bil+¥4.1 bil+¥0.8 bil-¥9.6 bil-¥3.3 bil

+89

-45

Purchases of property plant and equipment
Acquisition of investments
Sale of investment securities-¥3.6 bil-¥1.1 bil+¥1.3 bil

-49

-34

Increase in short-term loans, net
Inflow from long-term debt
Repayment of long-term debt
Payment of dividends+¥2.4 bil+¥0.5 bil-¥4.5 bil-¥1.6 bil+73

Net increase (decrease) in cash
and cash equivalents-38 (including -¥0.2 bil)

+102

Increase (decrease) in cash andcash equivalents accompanying
consolidation+1 Digital Wire Technology +¥0.0 bil

Kawai Hiryo +¥1.0 bil+9Cash and cash equivalents at
the end of the period

Exchange gains related to cash and cash equivalents

420

Cash and cash equivalents on the balance sheet ¥42.6 bil ¥0.6 bil in certificates of deposit due after three months =¥42.0 bil

433
12

Earnings of Major Consolidated Companies(Millions of yen)Company NameNet Sales

Vs. PY

Operating
ProfitVs. PYNet Income

Vs. PY

220,459

102%

1,705

146%

6,421

79%

Hayashibara Co., Ltd.

11,751

93%

2,284

79%

2,417

92%

Nagase ChemteX Corp.

13,127

99%

1,303

89%

793

111%

1,458

120%

213

96%

145

85%

45,975

103%

3,454

74%

2,918

89%

Nagase Plastics Co., Ltd.

15,390

104%

227

130%

136

138%

Nagase Chemical Co., Ltd.

7,994

100%

101

99%

57

99%

Nagase Beauty Care Co., Ltd.

2,705

101%

78

98%

31

123%

41,468

103%

663

120%

432

134%

Nagase (Hong Kong) Ltd.

32,708

114%

913

170%

793

181%

Nagase (Thailand) Co., Ltd.

16,287

113%

569

124%

456

134%

Nagase Wah Lee Plastics
Corp.+Two other sales co's (Note 2)

24,481

131%

700

104%

783

156%

Total for overseas sales (Note 1)

161,903

118%

3,827

132%

3,592

170%

Manufacturing
Companies

ParentNAGASE & CO., LTD.
Company

Pac Tech (Europe)
Total for manufacturing (Note 1)

Domestic Sales
Companies

Total for domestic sales (Note 1)

Overseas Sales
Companies* Note 1) Category totals are the simple sum of figures for each company and do not match consolidated figures.
Note 2) Nagase Wah Lee Plastics + Shanghai Hua Chang Trading + NWP International Trading (Shenzhen): See P35

13

FYE March 2014 Earnings Projections

14

FYE March 2014 Earnings Projections<Second-Half Outlook>
Sales in automobile-related business, plastics for office equipment and appliances, and Hayashibara products
expected to continue to perform well. However, slowdown in electronics-related business (smartphone/tabletrelated business, and glass panel processing business) sales, challenges in finding profitability at somedomestic manufacturing companies expected to continue(100 millions of yen)

13/03 Actual

14/03
Forecast

14/03
First-Half
Results

Second-Half
Estimate

Full Year Forecast(Revised)

Vs. PYNet sales

6,662

7,640

3,582

3,668

7,250

109%

Gross profit

825

934

449

455

904

<GP rate><12.4％><12.2％><12.5％><12.4％><12.5％>

110%

SG&A

670

742

362

385

747

111%

Operatng profit

155

192

86

71

157

101%

Ordinary income

179

210

98

84

182

102%

Net income

141

145

72

46

118

83%

Dividends per share

￥26

￥28

￥14

￥14

￥28

-

Assumed exchange rate($1US)

￥83.3

￥95.0

￥98.6

￥97.8

￥98.2

15

FYE March 2014 Forecast by Segment (Vs. PY)
Expected higher overall revenues and profits compared to prior period<Operating Profit by Segment><Net Sales Forecast by Segment>
13/03
14/03

2,500

2,000

(100 millions of yen)(100 millions of yen)

3,000

2,400

13/03
14/03

90

70

50

2,142
1,700

64
43

46

1,645

40

40
31

30
1,500

69

27

1,420
1,274

1,000

15
7

10

980
761740

-10

830
500

-30

-32
8 10
0
Functional
Materials

Advanced
Materials & Electronics
Processing

Automotive& EnergyLife &
Healthcare

Other

-50
Functional
Materials

Advanced
Materials &Processing

Electronics

Automotive& EnergyLife &
Healthcare-40

Other,
Corporate,
Eliminations* Beginning FYE March 2014, the abrasives sales business for semiconductors and HDD industry (formerly under Functional Materials) will be moved under
the Electronics business segment. Sales business for cosmetics industry (formerly under Functional Materials) will be moved under the Life & Healthcare
business. FYE March 2013 results have been recalculated to reflect this change.

16

FYE March 2014 Forecast by Segment(Initial Forecast vs. Revised Forecast)
Overall Lower Performance Compared to Initial Forecasts<Operating Profit by Segment><Net Sales Forecast by Segment>

14/03(当初)
14/03(Initial)
14/03(Revised)
14/03(修正)

2,550
2,400

2,500

2,000

(100 millions of yen)(100 millions of yen)

3,000

50

1,490
1,420
980
940

1,000

14/03
(Initial)
14/03(当初)
14/03(Revised)
14/03(修正)

69

70

1,810
1,700

1,500

90

90

52

46

50
40
27 27

30

13 15
10

840
740

-10

500

-30

10 10
0
Functional
Materials

Advanced
Materials & Electronics
Processing

Automotive
Life && Energy Healthcare

Other-40 -40-50Functional
Materials

Advanced
Materials &Processing

Electronics

Automotive& EnergyLife &
Healthcare

Other,
Corporate,
Eliminations

17

Operating Profit Change Factors(PY Actual vs. Initial Forecast vs. Revised Forecast)
Domestic +¥100 million
Higher compact power
supplyOverseas +¥300 million
Automobile-related sales
increase

Domestic +¥1,300 million
Stronger performancein smartphones, tablet
products
Overseas +1,300 million
Same as above

200

Domestic +¥600 million
Unprofitable manufacturing
companies improved
revenues
Overseas +¥1,100 million
Strong sales of plastics
for office equipment andappliances(100 millions of yen)Domestic -¥300 million
Lower profits vs. plan at manufacturing companies
Overseas -¥600 million
Lower sales vs. plan for plastics in Northeast Asia

+5
-14
+26

-7

-6
-10

+18
+8
150

155

Domestic +¥200 million
Higher coating
Overseas +¥600 million
Higher in Northeast andSoutheast Asia

Advanced investment for business expansion
Higher Hayashibara costs -¥500 million(Raw material cost, amortization,
development costs)
Higher overseas development costs-¥300 million
Beauty care products business market
development costs -¥200 million
Higher amortization in Enzymes business-¥200 million
Generics related amortization, development
costs -¥200 million

192

Domestic -¥300 million
Lower smartphone- and tablet-related business insecond half
Lower chemical recycling business in second halfOverseas -¥1,800 million
Lower glass panel processing business-21
Domestic -¥300 million
Weak Nagase Chemtex
Corp. product sales
Overseas -¥200 million
Lower performance inSoutheast Asia regions+2 ±0 ±0

Domestic +¥0
Increased automobile-related components
sales
Delay in compact power systemdevelopment resulted in no sales for theperiodOverseas +¥200 million
Higher automobile-related sales in China

157

Other,
Corporate,
Eliminations

Life & Healthcare

Automotiv
e & Energy

Electronics

Advanced
Materials &Processing

FYE Mar.
2014
InitialForecast

Functional
Materials

Other,
Corporate,
Eliminations

Automotive &EnergyElectronics

Life & Healthcare: Positive Factors: Negative Factors

Advanced
Materials &Processing

FYE Mar.
2013
ActualFunctional
Materials

100
FYE Mar.
2014
Revised
Forecast

18

Medium-term Management Plan

19

Progress[Stronger Business in Important Fields]
1

Fields utilizing bio-related technologies● Hayashibara mainstay product sales trending well. Currently building sales strategy for new product (highly
branched glucan)● Real expansion of Hayashibara overseas business. Developing new applications, new customers through review ofsales agent use and establishment of application labs in each region.
● Nagase R&D Center reorganized to focus on basic research and securing basic technologies in bio-related fields

2

Fields utilizing environment/energy-related technologies● Leverage feed-in tariff scheme for renewable energy to increase sales of PV panels for solar cell systems● Status of project for auxiliary power storage battery system for eco-car at CAPTEX is pending. Working on highcapacity storage battery for BEMS as other development project.

3

Fields utilizing electronics-related technologies● Cross-expansion of smartphone/tablet device electronic components, materials● Developing component materials, raw materials for car electronics[Stronger Operational Foundation]● Continue to assess businesses, including post-investment monitoring in accordance with Investment Guidelines● Strengthen quality assurance systems and execute initiatives to improve worker safety at Group manufacturing
companies● Foster global-minded employees
Improve training systems at headquarters and overseas entities. Standardize human resources systems at overseas
entities[Numerical Targets]
FY2012 Actual

FY2013 Forecast

FY2014 Targets

Net sales¥666.2 billion¥725.0 billion¥800.0 billion

Operating profit¥15.5 billion¥15.7 billion¥30.0 billion

ROE

6.5%

5.0%

8.0%

20

Investments
Investments in manufacturing functions, research and development functions,
technology/information gathering, and global network improvements have led toproprietary and market advantages, strengthening our health and corporate value.
13%

Manufacturing Business Share (Net Sales)

Investment (3-Years)(100 millions of yen)Overseas Manufacturing Co.

1,000

Domestic Manufacturing Co.
Manufacturing Business Share800

Forecast

600¥４０.０ billion

400
200
0
01/3

02/3

03/3

04/3

05/3

06/03

07/03

08/03

09/03

10/03

11/03

12/03

13/03

New Investment in
Important Fields

14/03(Forecast)

24％

Manufacturing Business Share (Operating Profit)(100 millions of yen)80

¥30.0 billion

Actual¥16.0 billion
13/09Actual¥4.0 billion

40%
Overseas Ma nufa cturin g Co.
Domestic Man ufa cturing Co.
Manufactu ring Business Sh are

60

30%

40

20%

20

10%

0

13/03Actual¥12.0 billion

0%
01/3

-20

Facility
Renovations¥10.0 billion

02/3

03/3

04/3

05/3

06/03

07/03

08/03

09/03

10/03

11/03

12/03

13/03

14/03
(Forecast)

-10%

21

Earnings and Investment
Innovate

ＷＩＴ２０００
Investment← ¥20.2 bil →PromoteExpand/Strengthen

Improve Business,
Management Quality

ＷＩＴ21

ＷＩＴ２００８“ CHANGE” 11← ¥27.7 bil →← ¥107.4 bil →← ¥23.7 bil →Accelerate“CHANGE”← ¥40.0 bil →(100 millionsof yen)

8,000

350
Net Sales(100 millionsof yen)300

Operating Profit

7,000

250
200

6,000
150
100

5,000

50
4,000

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
(Forec ast)(Forec ast)

022

Dividends
Our basic policy is to continue to offer consistent dividends to our shareholders, determined byconsolidated earnings, balanced by our intent to improve revenue-generating capacity and tobuild greater corporate strength. We aim to improve our per-share dividend payout, taking into
consideration our consolidated dividend payout ratio and consolidated net asset ratio.
(%, ¥)

(%)

40

2

30
20

22
10

10
0

05/03

15
06/03

18

17

16

16

07/03

08/03

09/03

10/03

Dividend per share (left axis)

11/03

26

24

12/03

Payout ratio (left axis)

28

13/03

1

14/03
(Forecast)

DOE (right axis)

0

(%)

05/03

06/03

07/03

08/03

09/03

10/03

11/03

12/03

13/03

14/03
(Forecast)

Payout ratio

12.3

14.9

17.0

21.8

35.4

27.3

22.1

36.0

23.4

30.1

DOE

0.79

1.06

1.15

1.08

1.07

1.08

1.42

1.52

1.53

1.51

* Year-end dividend for 14/03 to be determined by board resolution in June 201423

About Plastics Business

Executive Officer
GM, Polymer Global Account Department
Ichiro Wakabayashi
24

Contents
 History of the Nagase Plastics Business Scope of Nagase Global Plastics Sales
 Business Segments
 Overview of Polymer Products Department
 Overview of Automotive Solutions Department
 Overview of Polymer Global Account Department
 Features of the Nagase Plastics Business Sales Network in Asia
 Manufacturing and Development Functions
 Chinese Expansion through Equity Investments in
China, Taiwan
 Business Growth Strategy
 Toward Business Growth25History of the Nagase Plastics Business
1961
1966
1968
1969
1971
1974
1975
1980
1985
1990
1998
2001
2004
2006

Established Plastics Division
Began importing Eastman Kodak1) products
Established Setsunan Kasei
Signed agreement to become exclusive sales representative for General
Electric2) in Japan
Began manufacturing GE products at Setsunan Kasei
Established Engineering Plastic Limited3) in Japan as joint venture with GE
Began selling GE products outside Japan
Established Seibu Nagase Plastic Products4)
Signed agreement to become exclusive sales representative for GE in all Asia,
excluding China
Signed agreement to become sales representative for Eastman Kodak
Established Nagase Wah Lee Plastics as joint venture in Taiwan with Wah Lee
Industrial Corp.
Established Shanghai Hua Chang Trading in China
Dissolved exclusive sales representative contract for Japan with GE
Sales representative contract for GE in Asia (excluding China) converted to nonexclusivity
Established Dainichi Color Vietnam as joint venture with Dainichiseika Color &Chemicals Mfg. Co., Ltd. in Vietnam

1) Eastman Kodak Chemicals Division split off in 1994; now Eastman Chemical Company
2) In 2007, SABIC acquired the GE plastics business; now SABIC Innovative Plastics
3) Later, GE Plastics Japan; subsequently SABIC Innovative Plastics Japan (wholly owned SABIC subsidiary since 2007)
4) Now Nagase Plastics Co., Ltd.

26

Scope of Nagase Global Plastics Sales
Nagase Group Global Total: ¥181.0 billion

USA&EU¥5.0 billion

Japan

GC
¥83.0 billion¥55.0 billion

200
150
100
50

¥148.0billion¥181.0billion

ASEAN¥38.0 billion

0
FYE 3/10

FYE3/13

In the Acceleration of client’s manufacturing site moving to overseas,
coordination among Japan, Greater China, ASEAN, and U.S.-EU has becomemuch more important to the Plastics business*GC: Greater China

27

Business Segments
Important Fields (Bio, Environment/Energy, Electronics)
Value Chain
SupplyFunctional
Materials
Performance
Chemicals
Dept.

SupplyAdvanced
Materials &Processing

Electronics
Co-operation Electronic
Chemicals
Dept.

Colors & Imaging
Dept.

Electronic
Materials
Dept.

SupplyCo-operation
Automotive & Energy Segment

Polymer
Co-operation
Global Account
Dept.

Automotive

Co-operation Solutions
Dept.

Specialty
Chemicals Dept.

EnergyBusiness
OfficeSupplyCo-operation
Polymer Products
Co-operation
Dept.

Life & Healthcare

Life & Healthcare
Products Dept.

Beauty Care
Products Dept.

Supply28Overview of Polymer Products Department
 Industry
Electrical/electronics, cosmetics/toiletries, functional films/sheets

Plastics Sales Scope¥6.0 billion

 Products
Plastics (Eastman), films/sheets, functional additives for films/sheets,
surface detection machines Business Format
Revenue foundation is in the traditional brokerage business; moving into development and sales of proprietaryfunctional films and sheet products Features• Sheet and film development in promising plastics, joint development of proprietary products with companies
owning distinctive processing technologies• Sun Delta Corporation (joint venture with Asahi Kasei E-Materials Corporation) taking the lead in developing
joint business opportunities with Asahi Kasei• Scantec film/sheet inspection equipment developed in-house

Film

Resin Products

Machine29

Overview of Automotive Solutions Department
 Industry

Plastics Sales Scope

Automotive (domestic/overseas auto makers, parts makers)¥50.0 billion

 Products
Resin raw materials (PP, engineering plastics), auto parts,
indirect materials (leather upholstery, impact cushioning, paint, etc.)

 Business Format
Marketing and sales of products noted above (mainly plastics)
Operate overseas joint ventures with auto parts makers

 Features• Looking to create relationships and strengthen functions with resin raw materials business/leading parts makers
through manufacturing joint ventures and equity• Expand overseas business (focus on North America, ASEAN, China)• Focus on developing car electronics materials, components

Order
DesignRaw
Material
SupplyTraditional raw
materials sales

Resin
Molding

Paint
Treatment[Technology Adoption]
Plating technology
Treatment technology
Painting technology
JV, Equity, etc.

Sales
Order

Stronger30

Overview of Polymer Global Account Department◆

Industry
Office equipment, Electrical/Electronics, Home Appliances, Packaging◆

Plastics Sales Scope

Products
Functional plastics, General Purpose plastics, Indirect materials, Synthetic
plastic products, Synthetic plastic equipment/devices, Tooling/Patterns◆¥125.0 billion

Business Format
Mainly brokerage; also provide domestic/overseas logistics/inventory functions◆

Features
Strength is our domestic and overseas network
Offer plastics development/manufacturing functions◆

Business Operation System

Advanced Materials & Processing Segemnt
Colors &Imaging Dept.

Polymer Global Account
Dept.

Polymer Products
Dept.

GM
(Overseas)

ASEAN

Greater China

Japan

Region Business
Manager

Region Business Manager

Region Business
Manager

Domestic/Overseas
Affiliates
31

Features of the Nagase Plastics Business

Foundation• Sales bases/network in Japan and overseas• Business expansion in China via Japan-Taiwan partnership• Highly experienced personnel resources

Functions• Logistics services in Japan and overseas• Development, manufacturing, and laboratory functions• Spec-in activities (materials approval) at End Users

Suppliers• Partnerships with global plastics manufacturers
SABIC-IP, Eastman Chemical, Asahi Kasei, Sumitomo
Chemical, Mitsubishi Engineering Plastics, BASF, DuPont,
othersCustomers• Global account coverage via our worldwide network• Numerous customers/transactions with non-Japaneseentities (U.S., Europe, Taiwan, Korea, China, etc.)• Creating partnerships beyond plastics sales
32

Sales Network in Asia
Changchun

Greater China/South Korea:
11 overseas subsidiaries and 29 locations in 20 cities
ASEAN/Middle East:
9 overseas subsidiaries/branches and 16 locations in 15 cities

DalianSeoul

QingdaoSuzhouShanghai
Wuhan
NingboChongqing
ChengduXiamenTaipeiChangshaTaichung
Guangzhou
DongguanGangshanHong Kong
Hanoi
Shenzhen

Gurgaon
Dhaka

Dubai

Tianjin

MumbaiBangkok
Sriracha

ManilaHo Chi Minh

PenangKuala Lumpur

Johor Bahru
Singapore

Jakarta33

Manufacturing and Development Functions:
Plastics Compounds

Setsunan Kasei Co., Ltd.

Dainichi Color Vietnam Co., Ltd.

Established:
Capital:Shareholders:
Main Business:

Established:
Capital:Shareholders:

Factories:

1966¥300 million
NAGASE & CO.,LTD. (100%)
Manufacturing, process, sales ofsynthetic plastics
Kansai Plant (Techno Stage Izumi)
Kanto Plant (Mooka Daini Industrial
Park)

2006
US$8.7 million
Dainichiseika Color & Chemicals
Mfg.Co.,Ltd. (60%)
NAGASE & CO.,LTD. (40%)
Main Business: Manufacturing and sales ofsynthetic plastic compounds andcolorants
Factories:
Hanoi (Vietnam)
Plant No. 1 -Master Batch Blend
Plant No. 2 -Plastic Compounds

Nagase Application Workshop (Amagasaki)
The Nagase Application Workshop consolidates the technologicalservices offered separately for each field to our customers in one
location, developing materials together with end-user clients andproviding detailed technical support. In this way, we have been able
to be more effective in how we sell our traditional raw materials.

34

Chinese Expansion through Equity Investments inJapan, Taiwan – Nagase Wah Lee Plastics Corp.
Company Name NAGASE WAHLEE PLASTICS CORP.
Established1990

Capital

NT$100,000,000

Equity Structure Nagase Group 60% / Wah Lee Industrial Group 40%(Wah Lee Corp. = Listed on Taiwan Stock Exchange)
Main Business

Sales of plastics and related products

Locations

HQ: Taipei (Taiwan)
Sales Offices: Taichung, Gangshan (Taiwan)

Group
Companies

・Shanghai Hua Chang Trading Co., Ltd.
Locations: Shanghai, Suzhou, Ningbo, Chengdu, Chongqing

・NWP International Trading (Shenzhen) Co., Ltd.
Locations: Shenzhen, Guangzhou, Xiamen
 Expand business in the Chinese markets beyond Taiwan through Japan/Taiwan
partnership Grow into a core entity vital to the plastics business in Greater China
 Expand inland as customer production bases in China move from coastal regions
to the interior
35

Business Growth Strategy:
Activities to Link Corporate Entities

Products, Processing Technologies,
Expertise, etc.

Customers

Japanese
Companies

Japanese
Companies

NonJapaneseCompanies

NonJapaneseCompanies

Future Growth Areas

36

Business Growth Strategy:
Deeper Development of GC Emerging Market

Focus in Central China as
emerging market
Expanded coveragein North China

North
China

HarbinChangchun

Urumqi

HohhotShaanxi
Province
Shanxi
Province

Ningxia HuiAutonomous
RegionXiningLanzhou

Tianjin

Jinan

Shandong
Province

Southwest
China

Hubei Province

Guizhou
Province

Hefei

NanjingShanghai

East
CentralWuhan ChinaHangzhou
China

Changsha

Hunan
Province

Nanchang

Jiangxi
Province

GuiyangKunming

YunnanProvince

Existing locations

ChengduChongqing

SichuanProvince

Lhasa

Henan
Province

Shanghai Hua
Chang Trading
Co., Ltd.

Jiangsu
Province

Guangxi Zhuang
Autonomous
RegionShanghai Nagase
Trading Co., Ltd.

Zhejiang
Province

FujianProvince

Xi'an

Anhui
Province

Zhengzhou

XizangAutonomous
RegionTianjin Nagase
International
Trading Co., Ltd.

Guandong
Province

Taipei

Qinghai
Province

Beijing

TaiwanYinchuan

Shenyang

FuzhouGansu
Province

Jilin
Province

Northeast
China

Liaoning
Province

Hebei
Province

Xinjiang Uygur
Autonomous Region

Shijiazhuang

Inner Mongolia
Autonomous
RegionTaiyuan

Northwest
China

Heilongjiang
Province

Nagase Wahlee
Plastics Corp.

Nanning Guangzhou

Nagase (Hong Kong) Ltd.
NWP International Trading (Shenzhen) Co.,Ltd.
Guangzhou Nagase Trading Ltd.
Hainan Haikou

South
China

Province37

Business Growth Strategy:
Respond to Growth in ASEAN Market
 Soaring labor costs in China
 Chilly Japan-China relations
 Securing production bases for
emerging markets
 Securing low-cost labor

China plus One movement⇒ ASEAN, particularly Thailand,
Vietnam, and Philippines focus oflocations for export/processing
manufacturing• Manufacturing moving awayfrom China• Investment in new
manufacturing centers

Invest management resources inpromising Thailand, Vietnam, andPhilippines markets
Build out resources; focus attention

38

Business Growth Strategy: Eco-friendly Businessand Proprietary Product Development
Building an Eco-friendly Business ModelGreater needs for post-consumer recycling using market-recoverable materials for Electronic Product Environmental
Assessment Tool-compatible (comprehensive system to measure effect of electronic products on the environment) TV,
PC, and office equipment.
Our company will respond to customer needs by utilizing development/manufacturing functions within the Group.

Recover

CustomerMarketClean/Break down
Product

PCR
Materials
Sale

NAGASE/NAW/
Setsunan Kasei
Formulation/Manufacture

Proprietary Product Development

Offer solutions through materials
development based on customer needs

NAGASE
Proprietary ProductDevelopment

MarketDevelop applications/offer solutions forinnovation-driven products*NAW: Nagase Application Workshop

39

Toward Business GrowthBusiness Foundation / Our Strengths
Unified Operations Model, including Personnel/Network/
Supply Chain Partnerships/Overseas Business

Growth Strategies
Regional Strategy/Customer Strategy/
Unified Manufacturing & Sales BusinessToward Business Growth Leverage Unique Strengths

40

A Technology and Intelligence Oriented
Company that Turns Wisdom into Business

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

This presentation materials contain forward-looking projections based on assumptions, forecasts,
and plans as of November 26, 2013. Actual earnings may differ from projections due to risks anduncertainties in the future global economy, competitive landscape, currency exchange rates, etc.

(Reference) Information by Segment

Functional Materials<Net Sales/Operating Profit by Location>

Net sales¥83.4 billion (V95%)(100 millions of yen)

FYE3/13

Net salesInterim

FYE3/14Year

Interim

Vs. PY816 100%

Year(Forecast)

Vs. PY

1,659 105%

Domestic

817

1,577

Ov erseas

255

474

219

86%

451

95%

Eliminations

-197

-405

-202

-

-410

-

Total

875

1,645

834

95%

◇ Performance chemicals business reported higher coating
sales and flat urethan materials performance. However,plastic materials and additives were lower, as wererevenues from basic chemicals sales in Southeast Asia,
driving revenues lower overall◇ Specialty chemicals business revenues were down as awhole, due to flat industrial oil solutions- andsurfactants-related sales combined with lower
performance in raw materials for silicone and fluorinerelated products

1,700 103%

Operating profit
Operating profit

87%

38

99%

21

38

18

Ov erseas

2

3

3 134%

7 216%

Eliminations

1

1

-0

-

-0

Total

25

43

22

88%

Domestic-

46 105%* Figures above are a combination of consolidated entities by location.
Inter-region eliminations not reflected; adjustments provided in theeliminations column.
* FYE March 13 figures reflect reorganization beginning FYE March 2014.
* FYE March 14 full-year forecast reflects revisions made during Q2.

¥2.2 billion (V88%)◇ Lower revenues combined with higher general andadministrative expenses in Japan drove profits lower

FYE March 2014 Outlook◇Strong auto and construction demand in Japan◇Strong auto demand overseas→Outlook reflects higher overall revenues and profits

Advanced Materials & Processing<Net Sales/Operating Profit by Location>

Net sales¥118.4 billion (V110%)(100 millions of yen)

FYE3/13

Operating profit

Net salesInterim

FYE3/14Year

Interim

Vs. PYYear(Forecast)

Vs. PY

Domestic

795

1,551

777

98%

1,581 102%Ov erseas

572

1,167

714 125%

1,439 123%

Eliminations

-292

-576

-306

-

Total

1,075

2,142

1,184 110%

2,400 112%

Domestic

8

15

7

91%

17 114%

Ov erseas10

17

11 108%22 125%

Eliminations

-1

-1

0

-0

-

-621

-

◇Colors and imaging business higher overall due tohigher sales of dyes/additives and information printing
materials◇Office automation and customer electronics businesshigher overall due to higher plastics materials businessin Northeast Asia, Southeast Asia and flat sales in Japan◇Functional films and sheets business and plastic
molding products business down overall due to lower
sales of Materials for LCD TV reflectors and antireflective sheets for game consoles

Operating profit¥1.8 billion (V109%)◇Adoption of core systems in Northeast Asia led toincreased general and administrative expenses, buthigher profits overall due to higher revenues.

-

FYE March 2014 Outlook
Total

17

31

18 109%40 126%* Figures above are a combination of consolidated entities by location.
Inter-region eliminations not reflected; adjustments provided in theeliminations column.
* FYE March 13 figures reflect reorganization beginning FYE March 2014.
* FYE March 14 full-year forecast reflects revisions made during Q2.

◇Higher plastics sales in Japan◇Strong sales of plastics for office equipment and appliances
overseas→ Outlook reflects higher overall revenues and profits(Northeast/Southeast Asia particularly strong)Electronics<Net Sales/Operating Profit by Location>(100 millions of yen)

FYE3/13

Net salesInterim

FYE3/14Year

Interim

Vs. PYYear(Forecast)

Vs. PY

Domestic

640

1,281

704 110%

1,365 107%

Ov erseas

337

705

410 122%806 114%

Eliminations

-365

-712

-395

-751

Total

611

1,274

719 118%--

Net sales◇Electronic chemicals business revenues higher overall,reflecting strong sales of formulated epoxy resins forheavy/light equipment industries, higher sales ofchemicals used in the manufacture of LCD panels, andgreater sales of equipment for the hard disc industries in
EU and U.S.
◇Electronic materials business higher overall, driven bysignificantly higher liquid crystal film-related sales and flat
touch-panel materials sales, offsetting lower LED-relatedmaterials revenues.

1,420 111%

Operating profit
Operating profit

Domestic

15

33

24 158%¥71.9 billion (V118%)¥3.9 billion (V128%)

42 127%◇Higher profits driven by higher revenues
Ov erseas

16

33

15

96%

27

81%

FYE March 2014 Outlook
Eliminations

-0

-3

0

-

Total

31

64

39 128%-1-

69 107%* Figures above are a combination of consolidated entities by location.
Inter-region eliminations not reflected; adjustments provided in theeliminations column. (including amortization of goodwill)* FYE March 13 figures reflect reorganization beginning FYE March 2014.
* FYE March 14 full-year forecast reflects revisions made during Q2.

◇Strong first-half smartphone performance to decelerate insecond half, while liquid crystal films and touch-panel
materials sales expected to decline◇Production adjustments in chemicals business will lead tolower sales◇Glass panel processing business to trace weaker sales
performance→ Outlook reflects full-year higher revenues and profits, driven
by strong first-half performance

Automotive & Energy<Net Sales/Operating Profit by Location>

Net sales¥47.4 billion (V112%)(100 millions of yen)

FYE3/13InterimOperating profit

Net sales

Domestic

246

FYE3/14Year

Interim

476

Vs. PY247 101%

Year(Forecast)

Vs. PY509 107%

Ov erseas

255

504

306 120%640 127%

Eliminations

-79

-150

-79

-169

Total

421

830

474 112%

Domestic

-1

-4

-1

Ov erseas

813

9 116%

18 142%Eliminations

-1

-1

-0

-0

-

-

◇Energy business higher overall, driven by greater PV
systems and lithium ion batter materials sales forindustrial use.

-

980 118%-3◇automobile-related business higher overall, reflecting
higher auto production in Japan and associatedautomobile-related components sales (eco-car, etc.), as
well as greater revenues in China and North America.

-

Operating profit¥0.8 billion (V147%)◇Higher profits driven by higher revenues

FYE March 2014 Outlook
Total

5

7

-

8 147%-

15 196%* Figures above are a combination of consolidated entities by location.
Inter-region eliminations not reflected; adjustments provided in theeliminations column.
* FYE March 13 figures reflect reorganization beginning FYE March 2014.
* FYE March 14 full-year forecast reflects revisions made during Q2.

◇ Strong performance in domestic and overseas automobile-related
business to continue first-half trends(higher revenues in Northeast Asia, in particular)→ Outlook reflects higher overall revenues and profits, driven bystrong performance in automobile-related businessLife & Healthcare<Net Sales/Operating Profit by Location>

Net sales¥36.5 billion (V100%)(100 millions of yen)

FYE3/13

Net salesInterim

Year

Interim

Vs. PYYear(Forecast)

Vs. PY

Domestic

431

890

457 106%

934 105%

Ov erseas

35

81

52 148%104 128%

Eliminations

-101

-211

-144

-

-298

-

Total

366

761

365 100%

740

97%

36

72

29

81%

56

78%

Ov erseas

-0

-0

1

-

2

-

Eliminations

-15

-31

-16

-

-31

-

Domestic

Operating profit

FYE3/14

Total

19

40

14

72%

27

66%

* Figures above are a combination of consolidated entities by location.
Inter-region eliminations not reflected; adjustments provided in theeliminations column. (including amortization of goodwill and technology
assets)* FYE March 13 figures reflect reorganization beginning FYE March 2014.
* FYE March 14 full-year forecast reflects revisions made during Q2.

◇Life & healthcare products business lower overall, due
to sell-down of unprofitable products and weak sales
in raw materials and intermediates, despite strong
performance in functional saccharides.
◇Beauty care products business higher overall, driven
by strong performance in new products (health foods,
drinks), offsetting weak sales in existing products.

Operating profit¥1.4 billion (V72%)◇Lower overall profits due to higher general andadministrative expenses at Hayashibara Co., Ltd.

FYE March 2014 Outlook◇ Strong performance in domestic and overseas functionalsaccharides, continuing trend from first-half◇ Higher amortization expense due to adoption of core system at
Hayashibara◇ Higher general and administrative expenses in beauty careproducts business due to advanced investment→ Outlook reflects lower overall revenues and profits