FYE March 2017
㻌 Second Quarter Financial Briefing㻌November 25, 2016

Copyright © 2016 NAGASE & CO., LTD.

Conte
nts

Contents

 FYE March 2017 Second Quarter Results

P.3

 FYE March 2017 Earnings Projections

P.13

 Progress of Mid-Term Management Plan ACE-2020

P.19

 Initiatives at Nagase ChemteX Corporation

P.21

 (Reference) Information by Segment

P.35

Copyright © 2016 NAGASE & CO., LTD.

FYE March 2017 Second
Quarter Results

Copyright © 2016 NAGASE & CO., LTD.

3

Consolidated Statements of Income
 Net sales: Lower revenues, mainly due to the impact of the strong yen and naphtha price decreases
 Operating income: Lower, mainly due to ¥1.5 billion in expenses related to retirement benefit accounting actuarial
losses (¥2 billion higher YoY)(100 millions of yen)

15/09

16/09

ChangeVs. PY

Published Forecast

Net sales

3,760

3,508

-251

93%

7,350

Gross profit

464

446

-17

96%

923

<GP ratio>

12.3٫

12.7٫

ٕ

ٔ0.4٫

12.6%

SG&A expenses

-363

-374

-10

103%

-778

Operating income

100

72

-27

72%

145

Ordinary income

101

74

-27

73%

160

Profit attributable toowners of theparent

65

46

-18

72%

95

@¥121.8@¥105.3

US$ Exchange rate
(period average)@¥16.5 revaluation@108(Foreign exchange rate impact on16/09 net sales and operating income results)
Net sales: - ¥32.2 billion (approx.)     Operating income:- ¥1.3 billion (approx.)

Copyright © 2016 NAGASE & CO., LTD.

4

Net Sales by Region (Domestic, Overseas)‫ٹ‬Lower sale in all regions overseas, mainly due to the impact of the strong yen
Domestic & Overseas Sales (100 millions of yen, %)Overseas Sales by Region (100 millions of yen, %)Greater China

Domestic(Left axis)

4,000

Oversales Net sales‫ق‬Right axis‫ك‬Overseas(Left axis)

2,000

ASEAN

79
63

52.5%

163

49.0%

50%

3,500

1,500

3,000

570

40%

1,972

1,718

2,500

Americas

Europe

Other

1,972
1,718
(V:94%)

74
52
140(V:83%)(V:86%)(V:95%)(V:90%)

489(V:86%)

30%

1,000

2,000
1,500
1,000

20%
500

1,095

1,790

1,787

(V:112%)960(V:88%)(V:102%)

10%
500
0

0%
15/09

0

16/09

15/09

16/09
V:Vs 15/09

Copyright © 2016 NAGASE & CO., LTD.

5

Net Sales: Two-Year Comparison (by Segment)

Functional Materials: Lower sales. Despite higher sales of fluorochemicals for the electronics industry, sales of coating raw materials
and urethane materials were down, driven lower by naphtha price decreases and a downturn in the domestic markets.
Advanced Materials & Processing: Lower sales, mainly due to the impact of the strong yen, despite strong performance of plastics for
packaging materials in Japan and plastics in ASEAN and other regions.
Life & Healthcare: Sales level year on year. Despite a slight decrease in sales of Hayashibara products, sales of raw pharmaceuticals,intermediates, and medical materials to the pharmaceuticals and medical industries were higher.

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

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

Advanced MaterialsຍᕤᮦᩱMaterials& Processing

Automotive⮬ື㌴䞉& Energy
䜶䝛䝹䜼䞊

⏕ά㛵㐃
Life & Healthcare

4,000

3,760

3,500

409

3,000

568

㟁Ꮚ
Electronics
䛭䛾௚
Other

Functional
Electronics
Materials- 27Life &-50 Advanced
Healthcare
Materials &+3
Processing
Automotive &
- 131
Other
Energy
-0
- 44

3,508
412
524

2,500

3,760

653
625

2,000

3,508
1,500

1,333

1,202

1,000
500

792

741

15/09

16/09

0

Copyright © 2016 NAGASE & CO., LTD.

15/09

16/09
6

Gross Profit: Two-Year Comparison (by Segment) Lower profits, mainly due to the impact of lower revenues, despite improved profitability andimproved profit ratios at certain manufacturing subsidiaries

Gross Profit by Segment(100 millions of yen)
Functional Materials
Electronics
Life & Healthcare

Change in Gross Profit by Segment(100 millions of yen)

Advanced Materials & Processing
Automotive & Energy
Other

464

$GYDQFHG
)XQFWLRQDO
0DWHULDOV 

0DWHULDOV
3URFHVVLQJ
-3


446

(OHFWURQLFV/LIH 

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104

400

ٔ

106

Other
-0

$XWRPRWLYH (QHUJ\

48



43

118

112

464

1,480

1,430

200

119

114

71

67

15/09

16/09

0

1,380

1,340

1,340

1,360

446

16/09

15/09

Copyright © 2016 NAGASE & CO., LTD.

7

Operating income: Two-Year Comparison (by Segment) Other/Corporate: Lower, mainly due posting ¥1.5billion in expenses related to retirement benefit accounting actuarial
losses (¥2 billion higher YoY)
Posted retirement benefit actuarial loss of ¥3.1 billion occurred at end of prior period, after revising the discount rate to reflect low market interest
rates(fully amortized this year)

Operating Income by Segment(100 millions of yen)
Functional Materials
Electronics
Life & Healthcare

Change in Operating Income by Segment(100 millions of yen)

Advanced Materials & Processing
Automotive & Energy
Other/Corporate)XQFWLRQDO
0DWHULDOV(OHFWURQLFV/LIH 

+HDOWKFDUH$GYDQFHG

110
90

100
72
16
7

0DWHULDOV $XWRPRWLYH 

2ther/

3URFHVVLQJ(QHUJ\Corporate







18
5

70
37

31

50
30

25

26

10

20

18

(10)
(30)

100

72

-7
-28
15/09

Copyright © 2016 NAGASE & CO., LTD.

16/09

15/09

16/09
8

Earnings at Major Consolidated Subsidiaries
 Hayashibara recorded sales level with the prior year. Despite market performance of the new Fibryxa™ product,sales of functional saccharides decreased.
 Nagase ChemteX recorded higher revenues and profits. Sales of epoxy resins for smartphone electronic
components were strong, while company-wide cost reduction efforts resulted in improved profits.

(100 millions of yen)Company NameNet Sales

Vs. PY

Operating Profit

Vs. PY

2,065

97٫

-6

ʊ٫

Hayashibara Co., Ltd.

118

98٫

24

98٫

Nagase ChemteX Corporation

127

108٫

16

213٫

460

96٫

45

114٫

Nagase Plastics Co., Ltd.

152

94٫

3

115٫

Nishinihon Nagase Co., Ltd.

37

91٫

2

95٫

Nagase Chemical Co., Ltd.

77

98٫

1

103٫

401

99٫

9

109٫

Shanghai Hua Chang Trading
Co., Ltd.

173

93٫

5

96٫

Nagase (Thailand) Co., Ltd.

157

85٫

3

87٫

Guangzhou Nagase Trading Ltd.

126

82٫

3

67٫

Nagase Korea Corporation

35

103٫

2

111٫

1,625

87٫

33

78٫

Companies

Total for manufacturing (Note)

Domestic Sales
Companies

Manufacturing

ParentCompany NAGASE & CO., LTD.

Overseas Sales
Companies

Total for domestic sales (Note)

Total for overseas sales (Note)*Note: Totals for each category are simply the sums of each company. These sums do not equal consolidated figures.

Copyright © 2016 NAGASE & CO., LTD.

9

Consolidated Balance Sheets‫ٹ‬Decrease in net assets due to lower translation adjustments impacted by the strong yen‫ٹ‬Shareholders’ Equity Ratio up 0.1 points to 53.6%
       Liabilities and Net Assets

Assets
16/03

16/09

Change(100 millions of yen)

16/03

16/09

Change

1,561

1,668

ٔ106

-50  Notes and accounts payable

978

1,003

ٔ24

Short-term loans
ٔ17  (Including current portion of long-term loans)

341

349

ٔ8

ٕ

100

ٔ100

241

215

-26

768

650

-117

ٔ24  Long-term loans

231

201

-29

427

-18  Bonds

300

200

-100

887

896

ٔ8  Net defined benefit liability

140

141

ٔ1

   Investments in securities

813

833

ٔ19

 Other (Deferred tax liabilities, etc.)

96

106

ٔ10

   Other74

63-11 Total liabilities

2,329

2,318

-11

Total net assets

2,791

2,773

-17

 Shareholdersbequity

2,346

2,361

ٔ15

 Accumulated other comprehensive income

393

367

-25

  Net unrealized holding gain on securities

370

395

ٔ25

  Translation adjustment

44

-17

-61

  Other

-21

-10

ٔ10

 Non-controlling interests

51

44

-7

5,120

5,092

-28

3,123

3,079

432

382

1,963

1,980

 Inventories

629

596

-32  Current portion of bonds

 Other97

119

ٔ21  Other

1,997

2,012

ٔ15 Total long-term liabilities

 Property, plant and equipment

664

689

 Intangible fixed assets

445

 Investments, other assets

Total current assets
 Cash and time deposits
 Notes and accounts receivable

Total non-current assets

Total assets

5,120

Copyright © 2016 NAGASE & CO., LTD.

5,092

-44 Total current liabilities-28 Total liabilities and net assets

10Change in Working Capital While accounts receivable increased slightly in conjunction with higher sales, improved prepaid cost recovery due
to more stringent management and the impact of the strong yen resulted in a ¥4 billion decrease in working capital.

Working Capital (100 millions of yen)
1,614

1,573

Accounts Receivable
1,963

Accounts Receivable
1,980,QYHQWRULHV629,QYHQWRULHV
596

Accounts Payable-978

Accounts Payable-1,003

16/03

16/09

Copyright © 2016 NAGASE & CO., LTD.

11

Consolidated Cash Flows‫ٹ‬Cash and cash equivalents lower by ¥4.8 billion. Despite an increase in cash flows from operating activities,
cash outlays for investments, payments of dividends, and translation differences led to declining cash
balances                            Cash Flows 
16/09(100 millions of yen)
Main breakdown

15/09

Net cash provided by (used in) operating activities

Profit before income taxesٔ70
Depreciation and amortization/amortization of goodwillٔ47 ٔ53
Working capital -20
Income tax paid 44

ٔ94

Net cash provided by (used in) investing activities

Purchases of property, plant and equipment -61
Purchases of intangible fixed assets included in other- 52 assets -6
Purchases of investment in securities -11
Proceeds from sales of investments in securitiesٔ19- 53

Net cash provided by (used in) financing activities- 23 Cash dividends paid -20-8Effects of exchange rate changes on cash and cash
equivalents

- 20

-3

Net increase (decrease) in cash and cash equivalents

- 48

ٔ28

Cash and cash equivalents at beginning of the year

429

405

Cash and cash equivalents at end of year

380

Copyright © 2016 NAGASE & CO., LTD.

Japan251岝 Greater China59岝ASEAN42岝
Europe14岝Americas4岝Other8

433

12

FYE March 2017 Earnings
Projections

Copyright © 2016 NAGASE & CO., LTD.

13FYE March 2017 Earnings Projections
 Sales level with prior year; ¥3.1 billion expense from retirement benefit actuarial losses
result in lower operating income(100 millions of yen)

16/03 Actual

17/03 Forecast

ChangeVs. PYNet sales

7,421

7,350

-71

99%

Gross profit

916

923

ٔ6

101%

<GP ratio>

12.4%

12.6%

ٔ0.2٫

ʊ

SG&A expenses

736

778

ٔ41

106%

Operating income

180

145

-35

80%

Ordinary income

183

160

-23

87%

Profit attributable to ownersof the parent

123

95

-28

77%

@120.1@108@¥12.1appreciation

ʊ

US$ Exchange rate
(period average)
Copyright © 2016 NAGASE & CO., LTD.

14

Net Sales Forecast (by Segment)


The Electronics segment recorded lower revenues due to a contraction in low-margin businesses related to certain touch
panels, combined with the negative impact of the strong yen.
The Life & Healthcare segment recorded higher revenues as a whole. While Hayashibara-related sales were level with theprior year, sales of raw materials to the skincare and toiletries markets were strong, as were sales in the anti-cancer drug
business.

Net Sales by Segment(100 millions of yen)

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

Functional Materials

Advanced Materials & Processing)XQFWLRQDO$GYDQFHG

Electronics

Automotive & Energy

0DWHULDOV0DWHULDOV 

Life & Healthcare

Other

8,000



7,421

7,350

855

881

3URFHVVLQJ(OHFWURQLFV/LIH +HDOWKFDUH




6,000

1,153

1,136

1,279

1,193

7,421

4,000
2,555

2,547

1,571

1,586

2WKHU
$utomotive &Energy
- 17

7,350

2,000

16/ 0317 /03

0
16/03

17/03

Copyright © 2016 NAGASE & CO., LTD.

15

Operating Income Forecast (by Segment)
 Higher profits expected for Advanced Materials & Processing segment due to profit improvements at certain
manufacturing subsidiaries
 Revised discount rate based on lower interest rates, leading to retirement benefit actuarial losses (-¥3.1 billion); expected
to result in increase in retirement benefit expenses (-¥4 billion vs. PY, which was ¥900 million)

Operating Income by Segment(100 millions of yen)200

Functional Materials

Advanced Materials & Processing

Electronics

Automotive & EnergyLife & Healthcare

Other/ Corporate
145

180
38

150

13
62

Change in Operating Income by Segment(100 millions of yen)



11

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64

0

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



100

50

+HDOWKFDUH

0DWHULDOV

37/LIH (OHFWURQLFV)XQFWLRQDO

49

57

36

37

180
145

- 20
- 61

(50)
16/03

17/03

(100)
16/03

Copyright © 2016 NAGASE & CO., LTD.

17/03
16

Investment Results and Manufacturing Business Share   Investments and financing to bolster manufacturing function, R&D function, technical/information-related capacity, and global
networks will create proprietary/competitive advantages; improve business quality and corporate value.
 Manufacturing Business Share (Net Sales)(100 millions of yen)13%㻝㻘㻞㻜㻜㻌
㻝㻘㻜㻜㻜㻌
㻤㻜㻜㻌
㻢㻜㻜㻌
㻠㻜㻜㻌
㻞㻜㻜㻌
㻜㻌

2YHUVHDV0DQXIDFWXULQJ&R
'RPHVWLF0DQXIDFWXULQJ&R
0DQXIDFWXULQJ%XVLQHVV6KDUH

㻞㻜㻑

Investment (17/03 )㻌

㻝㻜㻑

Forecast
12.8 billion㻜㻑㻜㻠㻛㻟 㻜㻡㻛㻟 㻜㻢㻛㻜㻟 㻜㻣㻛㻜㻟 㻜㻤㻛㻜㻟 㻜㻥㻛㻜㻟 㻝㻜㻛㻜㻟 㻝㻝㻛㻜㻟 㻝㻞㻛㻜㻟 㻝㻟㻛㻜㻟 㻝㻠㻛㻜㻟 㻝㻡㻛㻜㻟 㻝㻢㻛㻜㻟 㻝㻣㻛㻜㻟(Forecast)

17/03 Second Half
Forecast
3.5 billion

 Manufacturing Business Share (Operating Income)
(100 millions of yen)

40٫

㻢㻜㻌
㻠㻜㻌
㻞㻜㻌
㻜㻌

㻻㼢㼑㼞㼟㼑㼍㼟㻌㻹㼍㼚㼡㼒㼍㼏㼠㼡㼞㼕㼚㼓㻌㻯㼛㻚㻰㼛㼙㼑㼟㼠㼕㼏㻌㻹㼍㼚㼡㼒㼍㼏㼠㼡㼞㼕㼚㼓㻌㻯㼛㻚㻹㼍㼚㼡㼒㼍㼏㼠㼡㼞㼕㼚㼓㻌㻮㼡㼟㼕㼚㼑㼟㼟㻌㻿㼔㼍㼞㼑

㻡㻜㻑
㻠㻜㻑
㻟㻜㻑
㻞㻜㻑
㻝㻜㻑
㻜㻑

Actual9.3 billion㻜㻠㻛㻟 㻜㻡㻛㻟 㻜㻢㻛㻜㻟 㻜㻣㻛㻜㻟 㻜㻤㻛㻜㻟 㻜㻥㻛㻜㻟 㻝㻜㻛㻜㻟 㻝㻝㻛㻜㻟 㻝㻞㻛㻜㻟 㻝㻟㻛㻜㻟 㻝㻠㻛㻜㻟 㻝㻡㻛㻜㻟 㻝㻢㻛㻜㻟 㻝㻣㻛㻜㻟 (Forecast)
Copyright © 2016 NAGASE & CO., LTD.

17

Dividends
 Forecast: Annual ¥32 per share.(interim: ¥16, year-end: ¥16)
(%,¥)

(%)

45

1.6

40

1.4

35

1.2

30

1.0

25
0.8
20
0.6

15
10

0.4

5

0.2

0
07/03

08/03

09/03

10/03

11/03

12/03

13/03

14/03

15/03

16/03

17/03
䠄ணᐃ䠅
(Forecast)୍ᰴᙜ䛯䜚㓄ᙜ㔠
Dividend per Share(left (ᕥ䝯䝰䝸)
axis)

18

17

16

16

22

24

26

28

30

32

32

㓄ᙜᛶྥ
PayoutRatio䠄ᕥ䝯䝰䝸䠅
(left axis)

17.0

21.8

35.4

27.3

22.1

36.0

23.4

30.5

33.7

33.0

42.8

DOE(ྑ䝯䝰䝸)DOE (right axis)

1.15

1.08

1.07

1.08

1.42

1.52

1.52

1.50

1.44

1.46

1.46

0.0

*The Company conducted a share buyback of approximately 900,000 shares (approximately ¥1.1 billion) in September 2016

Copyright © 2016 NAGASE & CO., LTD.

19
18

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

Copyright © 2016 NAGASE & CO., LTD.

19

Progress of Mid-Term Management Plan ACE-2020‫ٹ‬Allocate management resources to focus areas and regions via asset replacement‫ٹ‬Implement measures toward mindset reform

Expand and Strengthen Revenue Basez Acquisition of Inkron stock: Strengthen business in displays, touch panels, and wearablesz Acquisition of Cytech stock: Strengthen urethane business in North America; respond to market needs foraqueous urethane release agents used in automotive applicationsz Sale of Nagase FineChem Singapore stock: Withdraw from the electronics chemicals business in
Singaporez Introduction of freeze drying line: Strengthen manufacturing functions for Nagase Medicals/high-potency
injection drugsz Completion of trehalose plant extension: Expanded production capacity for Hayashibara by 10,000 tons

Reform Corporate Culturez Launch of the Back Office Functionality and Efficiency Project: Support for improving SG&A ratioz Delegation of Authority: Build a governance structure to foster accountability and speed

Copyright © 2016 NAGASE & CO., LTD.

20

Initiatives at Nagase ChemteX
Corporation

Nagase ChemteX Corporation
Akihiko Isono, President and CEO

Copyright © 2016 NAGASE & CO., LTD.

21

Contents

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22

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Copyright © 2016 NAGASE & CO., LTD.

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Copyright © 2016 NAGASE & CO., LTD.

History
1938 Teikoku Chemical Industries Co., Ltd. Established1970

1970 Nagase CIBA, Ltd. Established1977 Nagase Biochemicals, Ltd. Established1980

1980 Nagase Chemicals, Ltd. Established1987 Nagase Electrochemicals, Ltd. Established

1990

2000 Merger of Nagase Chemicals, Ltd. and Nagase Electrochemicals, Ltd.
Changed the name of Nagase-CIBA, Ltd. to Nagase ChemteX Corporation with capitalfunding from NAGASE & CO., LTD.
2000

2001 Nagase ChemteX Reorganized through a Four-Entity Merger
2002 NAGASE & CO., LTD. and Nagase ChemteX (Wuxi) Corporation Established2008 Sakai Factory Established, Starts Manufacturing and Recycling of Chemicals for Liquid Crystals

20102012 Participated with NAGASE & CO., LTD. to Acquire all Shares of Engineered Materials
Systems, Inc. (formed as subsidiary) 2015 Formed a Joint Venture in China with NAGASE & CO., LTD. : Wuxi Chenghong
Electronic Chemicals Co., LTD.
2016 Participated with NAGASE & CO., LTD. in Equity Investment in Inkron, Ltd.

Copyright © 2016 NAGASE & CO., LTD.

25

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(Reference) Information by Segment

Copyright © 2016 NAGASE & CO., LTD.

35

Functional Materials Segment<Net Sales/Operating Profit by Location>FYE March 2017 Second Quarter Earnings(100 millions of yen)

FYE03/16

Net salesInterim

Net sales

FYE03/17

Year
ActualInterim

Vs. PYYear
Forecast

Vs. PY

Domestic

753

1,501

714

-38

1,524

102%

Overseas

238

465

211

-27

455

98%

Eliminations

-200

-395

-185

+15

-393

-

Total

792

1,571

741

-50

1,586

101%

Domestic

15

27

15

-0

29

106%

Overseas

5

10

4

-1

8

84%

Eliminations

+0

-0

-0

-0

-0

-

Total

20

36

18

-2

37

101%

¥74.1 billion ‫ق‬94٫‫ك‬ The Performance Chemicals Department recorded lower sales. While
sales grew in ASEAN and Mexico, naphtha price decreases, adownturn in the Japanese market, and other factors led to weakness
in coating raw materials and urethane materials sales.
 The Speciality Chemicals Department recorded lower net sales.
While sales of fluorochemicals for the electronics industry in Japanand Korea were strong, sales were weak in plastic additives andother businesses.

Operating profit

Operating income¥1.8 billion ‫ق‬88٫‫ك‬ While cost reduction efforts and higher sales led to improved
profitability at our manufacturing subsidiaries, overall profits werelower.

FYE March 2017 Outlook‫ ٶ‬We project higher revenues and profits for the fiscal year. We expect tosee strong performance in coating raw materials, driven by oururethane release agents business in the U.S., by our filter business,•Figures above are a combination of consolidated entities by location.
Inter-region eliminations not reflected; adjustments provided in theeliminations column

Copyright © 2016 NAGASE & CO., LTD.

and by a recovery in automotive production during the second half ofthe fiscal year.
36Advanced Materials & Processing Segment<Net Sales/Operating Profit by Location>(100 millions of yen)
FYE03/16

Net salesInterim

FYE03/17

Year
ActualInterim

Vs. PYYear
Forecast

Vs. PY

Domestic

778

1,550

755

-22

1,609

104%

Overseas

868

1,617

723

-145

1,567

97%

Eliminations

-313

-613

-276

+36

-629

-

Total

1,333

2,555

1202

-131

2,547

100%

Domestic

11

24

14

+2

30

126%

Overseas

14

24

12

-2

25

107%

Eliminations

+0

+1

+0

-0

+2

-

Total

25

49

26

+0

57

114%

FYE March 2017 Second Quarter Earnings
Net sales¥120.2 billion ‫ق‬90٫‫ك‬ The Colors & Processing Department recorded lower sales overall,
despite increased sales of plastic resins for packaging applications inJapan. Sales of materials for LCD TV reflectors, dyes and additives,and digital print processing materials were down for the period.
 Sales for the Polymer Global Account Department were level withprior year as a whole. Sales in Japan were even with the prior year
due to the impact of the decrease in naphtha prices. While sales ofplastics to the electronics industry were favorable in ASEAN, thestrong yen impacted sales overseas as a whole.

Operating profit

Operating income¥2.6 billion ‫ق‬103٫‫ك‬ Despite lower sales, improved profitability at certain manufacturingsubsidiaries led to higher profits overall.

FYE March 2017 Outlook‫ ٶ‬We project higher profits for the fiscal year. While we expect
plastics to perform well in Japan and ASEAN during the second
half, the impact of the strong yen will likely result in plastics sales•Figures above are a combination of consolidated entities by location.
Inter-region eliminations not reflected; adjustments provided in theeliminations column

level with the prior fiscal year. However, improved profitability at
our manufacturing subsidiaries will contribute to profits.

Copyright © 2016 NAGASE & CO., LTD.

37

Electronics Segment<Net Sales/Operating Profit by Location>(100 millions of yen)

FYE03/16

Operating profit

Net salesInterim

FYE03/17

Year
ActualInterim

Vs. PYYear
Forecast

Vs. PY

Domestic

629

1,259

638

+9

1,256

100%

Overseas

384

731

353

-31

637

87%

Eliminations

-360

-711

-366

-6

-700

-

Total

653

1,279

625

-27

1,193

93%

Domestic

19

38

19

+0

38

99%

Overseas

19

27

11

-7

27

100%

Eliminations

-2

-3

䠇0

䠇2

-1

-

Total

37

62

31

-5

64

102%

FYE March 2017 Second Quarter Earnings
Net sales¥62.5 billion ‫ق‬96٫‫ك‬ The Electronic Chemicals Department recorded increased sales
for the period, driven by sales of formulated epoxy resins to theelectronic components and semiconductor industries.
 The Electronic Materials Department recorded lower sales, mainly
due to lower sales of smartphone components, materials for touch
panels, and thin glass processing.

Operating income¥3.1 billion ‫ق‬86٫‫ك‬ Lower profits, mainly due to lower sales.

FYE March 2017 Outlook‫ ٶ‬We project lower year-on-year sales for the fiscal year. While we
expect our formulated epoxy resin business to continue to perform* Figures above are a combination of consolidated entities by location. Interregion eliminations not reflected; adjustments provided in the eliminations
column (Including amortization of goodwill).


Copyright © 2016 NAGASE & CO., LTD.

well during the second half, we also expect a decrease in low-margin
businesses related to certain touch panels. At the same time, we
forecast higher profits, due to solid profit performance at certain
manufacturing subsidiaries.
38

Automotive & Energy Segment<Net Sales/Operating Profit by Location>(100 millions of yen)

FYE03/16

Operating profit

Net salesInterim

FYE03/17

Year
ActualInterim

Vs. PYYear
Forecast

FYE March 2017 Second Quarter Earnings¥52.4 billion ‫ق‬92٫‫ك‬Net sales

Vs. PY

Domestic

262

546

264

+2

564

103%

Overseas

414

828

360

-54

781

94%

Eliminations

-108

-221

-100

䠇7

-209

-

Total

568

1,153

524

-44

1,136

98%

Domestic

-4

-9

-5

-0

-8

93%

Overseas

11

21

9

-1

19

90%

Eliminations

+0

+1

䠇0

-0

+0

-

Total

7

13

5

-1

11

85%

 The Automotive Solutions Department recorded lower overall sales.
While the strong yen and naphtha price decreases contributed tolower sales in Japan, our resins business grew, resulting in minimal
growth year on year in Japan.

Operating income¥500 million‫ق‬74٫‫ك‬

 Lower profits, mainly due to lower sales.

FYE March 2017 Outlook‫ ٶ‬We project lower revenues and lower profits for the fiscal year. While we
expect to see a recovery in automotive production and a related•Figures above are a combination of consolidated entities by location.
Inter-region eliminations not reflected; adjustments provided in theeliminations column

increase in sales of automobile-related components during the second
half, the strong yen will have a negative impact on performance.

Copyright © 2016 NAGASE & CO., LTD.

39

Life & Healthcare Segment<Net Sales/Operating Profit by Location>(100 millions of yen)

FYE03/16

Operating profit

Net salesInterim

FYE03/17

Year
ActualInterim

Vs. PYYear
Forecast

Vs. PYFYE March 2017 Second Quarter Earnings¥41.2 billion ‫ق‬101٫‫ك‬Net sales The Life & Healthcare Products Department recorded sales levelwith the prior year. While sales of TREHA™ and other products tothe food materials industry in Japan were level with the prior year,
overseas sales of TREHA™ decreased. Sales of AA2G™ to theJapanese skin care and toiletries industry decreased, while salesof this product increased overseas. Sales of raw pharmaceuticals,intermediates, and medical materials to the pharmaceuticals andmedical industries were higher.

Domestic

490

1,022

497

+7

1,063

104%

Overseas

63

127

52

-11

121

95%

Eliminations

-144

-294

-137

䠇7

-303

-

Total

409

855

412

+3

881

103%

Domestic

29

66

33

䠇4

65

97%

¥1.8 billion ‫ق‬112٫‫ك‬Overseas

1

4

0

-1

2

58%

 Higher profits, mainly due to higher sales and improved
profitability at certain manufacturing subsidiaries.

Eliminations

-14

-32

-15

-0

-30

-

Total

16

38

18

+2

37

96%

 The Beauty Care Products Department recorded sales level withthe prior year. This result was mainly due to strong sales of new
products.

Operating income

FYE March 2017 Outlook‫ ٶ‬We project higher revenues and lower profits for the fiscal year. Sales of raw
materials to the skin care and toiletries industries should continue to be strong
throughout the second half of the year. At the same time, performance of our* Figures above are a combination of consolidated entities by location.
Inter-region eliminations not reflected; adjustments provided in theeliminations column (Including amortization of goodwill).

business for pharmaceuticals and medical materials should continue the strong
performance demonstrated during the first half of the year. However, we expectthat costs incurred to strengthen our organization will affect our bottom line.

Copyright © 2016 NAGASE & CO., LTD.

40

http://www.nagase.co.jp

These presentation materials contain forward-looking statements based on assumptions,forecasts, and plans as of November 25, 2016. Actual earnings may differ fromprojections due to risks and uncertainties in the future global economy, competitive
landscape, currency exchange rates, etc.
Copyright © 2016 NAGASE & CO., LTD.