FYE March 2019
Financial Briefing
NAGASE & CO., LTD
May 24, 2019

Copyright © 2019 NAGASE & CO., LTD.

Summary■FYE March 2019 Results- Net sales, profit measures continue to grow from prior period, marking record highs- Manufacturing and processing businesses report gains, serving as major driver of NAGASE growth(withdrawal from unprofitable businesses also contributed)- Steady profit contributions from measures executed under our ACE-2020 mid-term management plan
■FYE March 2020 Outlook- We are watching the market environment carefully due to the lack of clarity in the external environment,
including U.S.-China trade frictions and problems in the Middle East
- Increased sales focused on core businesses, with the forecast anticipating record high sales and 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 update of ACE-2020 mid-term management plan
- Establishing overseas regional companies aiming for stronger governance and medium- and longterm growth- Dividend expected to increase for the 10th consecutive period
Copyright © 2019 NAGASE & CO., LTD.

2

ContentsFYE March 2019 Results

P.4

FYE March 2020 Earnings Projections

P.15

Progress of Mid-Term Management Plan ACE-2020 P.20
NAGASE Group Initiatives for Advanced Technologies

P.31(Reference) Information by Segment

P.44

Copyright © 2019 NAGASE & CO., LTD.

3

FYE March 2019 Results

Copyright © 2019 NAGASE & CO., LTD.

4

Consolidated Statements of Income✓ NAGASE recorded record highs for sales and profits■ Net sales: Higher sales overall, due to strong performance in Advanced Materials & Processing, and Automotive & Energy
segments■ Operating income: Higher profits, mainly due to higher revenues and improved profitability at manufacturing subsidiaries■ Profit attributable to owners of the parent: Higher, due to an increase in profit categories and higher gains on sale ofinvestment securities(10 0 million s of yen )

18/03

19/03

ChangeVs. PY

Orig. Forecast

Achievement

Net sales

7,839

8,077

+ 238

103%

8,280

98%

Gross profit

1,026
1026

1,054

+ 27

103%

1,073

98%

<GP ratio>

13.1%

13.1%

△ 0.0%

－

13.0%

－

SG&A expenses

785

802

+ 16

102%

818

－

Operating income

241

252

+ 11

105%

255

99%

Ordinary income

259

266

+6

103%

275

97%

Profit attributable to owners of
the parent

171

201

+ 29

117%

186

108%

@ 110.85@ 110.92@ 0.07

weak yen@105－@ 16.7@ 16.5@ 0.2 strong yen@ 16.5－

US$ Exchange rate
(period average)
RMB Exchange rate
(period average)[Foreign exchange rate impact on 19/03 net sales and operating income results]
Net sales:△ ¥1.6 billion (approx.);Operating income: △ ¥40million

Copyright © 2019 NAGASE & CO., LTD.

[Per-yen exchange rate impact on net sales and operating income]
Impact of US$ /yenImpact of RMB/yen
Net sales¥0.69 billion (approx.) ¥7.6 billion (approx.)
Operating income¥20 million (approx.) ¥220 million (approx.)5

Net Sales by Region (Domestic, Overseas)■ In addition to domestic businesses, performance was strong overseas, particularly in ASEAN and theAmericas (overseas ratio of total sales at 48.9%)
Overseas Sales by Region (100 millions of yen, %)Domestic & Overseas Sales (100 millions of yen, %)Greater China

Domestic（Left axis）

Overseas（Left axis）

Overseas Net sales ratio（Right axis）

3,500

8,000
49.6%
7,000
6,000

4,000

3,885

50%
48.9%
3,951

ASEAN

3,885
199
141
365

Americas

Europe

Other

3,951
(V:85%)

168
152(V:108%)394(V:108%)

3,000

40%
2,500

1,103

1,181
(V:107%)5,000
30% 2,000
4,000
1,500

20%

3,000
2,000

3,954

1,000

4,126

2,074

2,054
(V:99%)

10%
500

1,000
0%

0
18/03

Copyright © 2019 NAGASE & CO., LTD.

19/03

0

18/03

19/03

V:Vs 18/03

6

Net Sales: Two-Year Comparison (by Segment)■ Advanced Materials & Processing : Higher sales in Japan and overseas, mainly due to increased sales of plastics and digitalprint processing materials■ Electronics: Lower sales, mainly due to sales declines in display-related products and photolithography material, despite
growth in the formulated epoxy resins segment■ Automotive & Energy: Higher sales due to demand driven by automation and electrification of automobiles, increased sales ofengineering plastics and car electronics-related products, and even stronger sales of battery materials.

Net Sales by Segment (100 millions of yen)
Functional Materials
Electronics
Life & Healthcare
8,000
7,000
6,000
5,000

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

Advanced Materials & Processing
Automotive & Energy
Others7,839

Advanced
Materials &Processing
+123

8,077

865

907

1,297

1,392

1,293

1,223

2,628

2,752

Functional
Materials+47

Automotive &Energy
+95

Other
△0

Life &
Healthcare+42

Electronics
△70

8,077

4,000
3,000

7,839

2,000
1,000

1,749

1,796

18/03

19/03

0

18/03

19/03

*1 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 fiscal 2018 have been reclassified for comparison.
*2 As of April 1, 2019, the Automotive & Energy Segment has been renamed the Mobility & Energy Segment

Copyright © 2019 NAGASE & CO., LTD.

7

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

Gross Profit by Segment (100 millions of yen)

1,026

1,054

1,000
223

230

110

117

267

252

800

600

Change in Gross Profit by Segment (100 millions of yen)Life &
Healthcare+6

Advanced
Materials & Electronics△14
Functional Processing+21
Automotive &Materials
Energy
+5
+7

1,026

400
254

276

167

173

18/03

19/03

Other
+0

550

555

562

562

569

575

1,054

200

0

18/03

19/03

*1 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 fiscal 2018 have been reclassified for comparison.
*2 As of April 1, 2019, the Automotive & Energy Segment has been renamed the Mobility & Energy Segment

Copyright © 2019 NAGASE & CO., LTD.

8

Operating Income: Two-Year Comparison (by Segment)■ Higher profits in all segments except Electronics■ Advanced Materials & Processing: Higher profits, mainly due to improved profitability among manufacturing subsidiaries in Japan and overseas■ Electronics: Lower profits due to lower revenue and a major decline in spot business (sales of electronics component production equipment for
smartphones) that had seen a dramatic increase in the prior year

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

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

300
270
240
210
180
150

Advanced Materials & Processing
Automotive & Energy
Others/Corptrate

241
42
24
89

252

Advanced
Materials &Processing+13
Electronics
△15

46
30

Functional
Materials+374Life &
Healthcare+4
Other/
Corporate△1

Automotive &Energy
+6

120
90

67

252

80

60
30

51

54

△33

△34

18/03

19/03

241

0
(30)

18/03

*1 The Company reclassified reportable segments during the current fiscal year (certain businesses in the Functional Materials segment reclassified to the Life & Healthcare
segment). Results for fiscal 2018 have been reclassified for comparison.
*2 As of April 1, 2019, the Automotive & Energy segment has been renamed the Mobility & Energy segment

Copyright © 2019 NAGASE & CO., LTD.

19/03

9

Earnings at Major Consolidated Subsidiaries■ Nagase Plastics Co., Ltd. recorded higher sales and profits driven by favorable performance of new trade
rights acquired in the prior year
■ Nagase (Thailand) Co., Ltd. recorded higher sales and profits driven by strong performance in sales ofautomotive engineering plastics(100 millions of yen)Overseas Sales
Companies

Domestic Sales
Companies

Manufacturing
Companies

Company Name

Net sales

Vs. PY

Operating Income(Note 2)

Vs. PY

Hayashibara Co., Ltd.

254

104%

51

102%

Nagase ChemteX Corporation

260

100%

28

95%

1,087

101%

116

102%

Nagase Plastics Co., Ltd.

370

103%

9

103%

Nishinihon Nagase Co., Ltd.

92

114%

5

128%

Nagase Chemical Co., Ltd.

188

102%

3

105%

946

104%

28

113%

Nagase (Thailand) Co., Ltd.

401

106%

13

111%

Shanghai Hua Chang Trading Co., Ltd.

360

94%

9

107%

Shanghai Nagase Trading Co., Ltd.

447

109%

9

118%

Total for overseas sales (Note 1)

3,835

105%

90

102%

Total for manufacturing (Note 1)

Total for domestic sales (Note 1)

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 © 2019 NAGASE & CO., LTD.

10

State of Two Major Manufacturing Subsidiaries■ Hayashibara: Higher sales and profits as the company recorded increased sales of TREHA™ and AA2G™, while bolstered byincreased sales due to new adoptions of Hayashibara Hesperidin S and Fibryxa™. (Net sales marked record highs since becoming
part of the NAGASE Group)■ Nagase ChemteX: Lower profits despite favorable performance in the Epoxy Resin Business, the Performance Chemicals
Business, and the Bio Chemicals Business. The impact of lower customer operating rates resulted in lower sales in the
Photolithography Materials Business with flat sales volume with higher R&D costs for new development.

Hayashibara Co., Ltd.

Nagase ChemteX Corporation(100 millions of yen)

18/03

19/03

ChangeVs. PY(100 millions of yen)

18/03

19/03

ChangeVs. PYNet sales

243

254

+10

104%

Net sales

259

260

+1

100%

Operatingincome

50

51

+1

102%

Operatingincome

29

28

△1

95%

• High sales of TREHA™, due to favorable sales to the staple foods(bread, etc.) industry• Sales of AA2G™ were higher because of capture of domestic
inbound demand, and cultivation of new overseas customers• New applications in the food industry led to higher sales ofHayashibara Hesperidin S and Fibryxa™
• Higher sales of pullulan for use in hard capsules for medical andhealth food products, and in mouth-refreshing film
• Operating income was slightly higher due to rising raw materials
costs and increased general and administrative expenses
incurred to bolster the company’s sale structure for future growth

Copyright © 2019 NAGASE & CO., LTD.

• The Epoxy Resin Business recorded higher sales, mainly due to strong
performance in smart phone-related products in the first half of the year,
and strong performance in the heavy electrical/light electrical industries andsemiconductor applications throughout the year
• The Photolithography Materials Business recorded lower sales and profits,
mainly due to the impact of lower customer capacity utilization (we expect tolaunch a new business during the second half of FY2019)• The Performance Chemicals Business recorded higher sales, driven bysolid sales of conductive materials to the LCD industry, and epichlorohydrin
derivatives for use in 3D printers and tires• The Bio Chemicals Business recorded higher sales, driven by solid sales ofactinomycete-derived enzymes and other products for the health food andfood industries• The Photolithography Materials Business saw a large drop in sales, withsales volumes level with the previous year. Increased R&D costs targeting
new development have led to lower operating income.

11

Consolidated Balance Sheets■ Shareholders’ Equity Ratio down 0.9 points to 54.2%

Assets
18/03

Liabilities and Net Assets
19/03

Change

18/03

Total current as sets

3,533

3,658

+ 125

Total current liabilities

Cash and time deposits

433

440

+7

Notes and accounts payable

2,259

2,304

+ 44

Inventories

736

810

+ 73

Other

103

102

+0

Total non-current assets

2,161

2,015

Property, plant and equipment

672

Intangible fixed assets( 100 millions of y en)

19/03

Change

1,929

2,018

+ 88

1,180

1,172

△7

Short-term loans and current portion of CP

480

579

+ 99

Other

269

266

△2

Total long-term liabilities

676

528

△ 147

△ 146

Long-term loans and Bonds

379

275

△ 103

664

△7

Net defined benefit liability

145

124

△ 20

410

372

△ 38

Other

152

128

△ 23

Investments, other assets

1,078

977

△ 100

Total liabilities

2,606

2,547

△ 59

Investments in securities

1,004

902

△ 101

Total net assets

3,088

3,126

+ 38

74

75

+0

Shareholders’equity

2,502

2,628

+ 126

Accumulated other comprehensive income

533

447

△ 85

Net unrealized holding gain on securities

507

418

△ 89

Translation adjustment

29

32

+3
△

Other

△3

△2

+0

Non-controlling interests

51

49

△2

5,694

5,673

△ 21

Notes and accounts receivable

Other

Total assets

5,694

Copyright © 2019 NAGASE & CO., LTD.

5,673

△ 21

(Deferred tax liabilities, etc.)

Total liabilities and net assets

12Consolidated Cash Flows
Cash Flows
19/03

Net cash provided by (used in) operating activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

Effects of exchange rate changes on cash andcash equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of the year
Dec reas e in c as h and c as h equiv alent s res ult ing
f rom ex c lus ion of s ubs idiaries f rom c ons olidat ion

Cash and cash equivalents, at end of the period

Copyright © 2019 NAGASE & CO., LTD.

(100 millions of yen)

18/03
Profit before income taxes ＋282
Depreciation and amortization other than amortization of goodwill,
173 amortization of goodwill +111
Working capital ▲125
Income tax paid ▲48
Proceeds from sales of investments in securities +54▲ 73

Purchases of tangible and intangible fixed assets ▲107
Purchases of investment in securities ▲25

Net increase (decrease) in commercial papers ＋70
Repayments of long-term loans ▲111
▲ 89
Cash dividends paid ▲51

210

▲ 144

▲ 31

1

▲1

12

32

428

Japan 226 、Greater China 105 、 , ASEAN 46 、 Europe 30 、Americas 4 、Other 12

▲0
440

397
▲1

Japan 225 、Greater China 123 、ASEAN 47 、Europe 21 、Americas 3、Other 18

428

13

Working Capital and Investments■ Working Capital: Increased sales led to increased working capital■ Investments: Growth investment, mainly in focus areas of Life & Healthcare and Electronics

運転資金 （億円）
1,816

売掛金
2,259

Investment (100 millions of yen)

1,942

売掛金
2,304
250
144

在庫
736

在庫
810

買掛金
△1,180

買掛金△1,172

18/03

19/03

Copyright © 2019 NAGASE & CO., LTD.

19/03
Actual20/03
Forecast

14

FYE March 2020 Earnings
Projections

Copyright © 2019 NAGASE & CO., LTD.

15

FYE March 2020 Earnings Projections■ While uncertainty continues due to global factors such as U.S.-China trade frictions and problems in the Middle
East, we are seeing increased sales among core businesses. Accordingly, we anticipating record-high year-onyear sales and profits.
(100 millions of yen)

19/03

20/03
Full Year Forecast(B)

Actual (A)Vs. PY(B/A)

Net sales

8,077

8,500

105%

Operating income

252

260

103%

Ordinary income

266

270

101%

Profit attributable toowners of the parent

201

205

102%

US$ Exchange rate
(period average)@110.9@110.0―RMB Exchange rate
(period average)

@16.5

@16.0

―

Copyright © 2019 NAGASE & CO., LTD.

16

Net Sales Forecast (by Segment)■ Functional Materials: Forecasting increased sales as we establish new environmental businesses in addition to existing businesses■ Advanced Materials & Processing: Forecasting increased sales stemming from favorable sales of resins and digital print processing materials
both in Japan and overseas■ Mobility & Energy: Expecting increased sales in car electronics-related products and functional materials as we capture demand driven by
automation and electrification in the mobility sector

Net Sales by Segment (100 millions of yen)

8,077
8,000

907
1,392

Change in Net Sales by Segment (100 millions of yen)
Other
Automotive &+0
Energy+58
Electronics
Life &
Advanced+39
Healthcare
Materials &+44
Processing
+198

8,500
952
1,451

6,000
1,223

1,263

Functional
Materials
+80

8,500

4,000
2,752

2,951

2,000

8,077
1,796

1,877

19/03

20/03(Forecast)
20/03見通し0
19/03

20/0320/03
見通し(Forecast)*As of April 2019, the Automotive & Energy Segment has changed its name to the Mobility & Energy Segment.

Copyright © 2019 NAGASE & CO., LTD.

17

Operating Income Forecast (by Segment)■ We forecast an increase of 800 million yen in profits in all segments except Electronics■ Improvements in manufacturing and processing business revenues should contribute to profits■ Other/Corporate: Expecting a 1.5 billion yen decline year on year due to increased costs required to create new businesses andexecute other measures for medium- to long-term growth

Operating Income by Segment(100 millions of yen)

Change in Operating Income by Segment(100 millions of yen)
Advanced
Materials &Processing
+16

260
300
250

252

49

Electronics
△2

46
30

200

33

74

Functional
Materials
+4

80

97

260

50
0

Other/
Corporate
△15

72

150
100

Life &
Healthcare
Automotive &＋2
Energy
+2

54

59

△34

△50

19/03

20/03(Forecast)
20/03見通し

252(50)*As of April 2019, the Automotive & Energy Segment has changed its name to the Mobility & Energy Segment.

Copyright © 2019 NAGASE & CO., LTD.

19/03

20/03
20/03見通し(Forecast)18

Dividends■ Current period: Total annual dividend of ¥42 per common share (¥18 interim dividend, ¥24 year-end dividend)■ Next period: Total annual dividend of ¥44 per common share (¥22 interim dividend, ¥22 year-end dividend)(Dividend expected to increase for 10th consecutive period)*1 18/03 dividends include a special dividend of ¥5 per share.
*2 19/03 year-end dividend will be an agenda item for the 104th Shareholders' Meeting planned for June 21, 2019.

Copyright © 2019 NAGASE & CO., LTD.

19

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

R&D

Logistics

Business
Business
Business
Designer
GlobalNetwork

Designer
Designer

Trading
Manufacturing

NAGASE Transforms from Shosha/Trading to Business Designer

Copyright © 2019 NAGASE & CO., LTD.

20

Positioning of ACE-2020
To achieve our goal by 2032, the last year of Long-Term Management Policy,
we divide 17 years of its term into 3 and start stage 1 as the beginning of the Mid-Termmanagement Plan ACE-2020.
In FY2019 we will continue the fourth year of ACE-2020 and continue reforming thebusiness aiming for significant growth.
*Our goal: Normalization of the profit more than tripled.

/RQJ7HUP 0 DQDJHP HQW3ROLF\

6WDJH

Environmental
Adaptability)<

6WDJH
6WDJH
｢5HIRUP 
RI3URILWVWUXFWXUH｣｢5HIRUP RIFRUSRUDWHFXOWXUH｣【Reform】
2016〜2020

Change-S 2014
Copyright © 2019 NAGASE & CO., LTD.

ACE-2020

The stage that
two reforms permeated
and accelerated thegrowthThe stage that rapidly
growing towards to thegoal【Growth】
2021〜2025【Jump】
2026〜2032

Time
21

ACE-2020 Basic Policy
NAGASE Transforms from “Shosha/Trading”
to “Business Designer”.
NAGASE strings all the groups together to create and provide new value
to the world through 6 key functions.

Investment

R&D

Logistics

Business
Designer

Leverage Group functions to achieve the quantitativeand qualitative targets.

GlobalNetwork

Trading
Manufacturing

Reform Profit Structure

Reform Corporate Culture

Portfolio Optimization

MindsetCategorization of business and executionof strategy that matches with the area

Breed independence and responsibility

Replacement of asset and reallocationof resources

Share the management’s message

Acceleration in investment that createscore business of group

Thorough monitoring and PDCA

Expand and Strengthen Revenue
Base

Strengthen Management Platform

Accelerate globalization ” G6000”

Pursue efficiency

Improve manufacturing profitability

HR development

Copyright © 2019 NAGASE & CO., LTD.

【6 Functions】

22

Profit Structure Reform: Portfolio Optimization
FY2018 Accomplishments
Categorize businesses and execute strategies suitable for each category/ Asset replacement and reallocation
Focus Expected further increase in profit[Electronics]○ Investment in 3D Glass Solutions, Inc.
Roll out products for high-frequency products compatible
with 5G standard and expand semiconductor business○ Integration of Electronics segment divisions
Look out over the entire industry, responding flexibly tochanges in technology, applications, and industry structure[Life & Healthcare]○ Hayashibara signed long-term partnership contract with
Lonza launching new plant for pullulan and enzymes
Stronger strategically cooperative relationship for
expanding the pullulan capsule market○ New Food Division Strategy Office
Companywide strategic structure and business expansion forfood materials market

Base Contributed to stably increase the corporate value○ Respond to stronger global environment regulations, risk
chemicals team activity○ Tritan™ material utensils adopted in all Saizeriya restaurants○ Pat!naLock™ won Infrastructure Maintenance Grand Award,
continue to promote sales

Copyright © 2019 NAGASE & CO., LTD.

Growth/Emerging Transform to “Focus” in 3 years○ Launched joint development for materials informatics
Search for new, alternative materials using AI○ Participate in autonomous driving technologies (LiDARrelated)
Launched joint projects with TriLumina (U.S.) andLeddarTech (Canada)○ Established Infinite Material Solutions LLC
Aiming to commercialize water-soluble support materials
for 3D printers○ Continuing development work with Axonerve™
FPGA implementation solutions for content addressable
memory in the 5G and IoT era

Improvement Immediately required drastic
improvement in profit structure○ China: Withdrew from synthetic resin hose manufacturingbusiness

Non-Business Asset Replacement○ Sold idle assets

23New Initiatives to Achieve KGIs (1)FY2018 Accomplishments

Manufacturing

Investment

Overseas

GrowthCopyright © 2019 NAGASE & CO., LTD.

Establish regional headquarters in China
and the Americas• Devise a plan to strengthen the governance ofoverseas operations and accelerate the locallydriven creation of new business• China, including Taiwan and Hong Kong;
Americas, including Mexico and Brazil

Overseas

Manufacturing

An image ofthe new factory

Focus

Target Market

Target Market
Markets requiring new (alternative) materials

Strengthening thestrategic collaboration

Overseas

Food materials market

Materials informatics joint development• Joint development with IBM in the USA• Utilizing artificial intelligence and the latest
data processing technology• Save cost and time to develop new (alternative)
materials• Aiming to begin services FY2020• Pullulan is a natural polysaccharide produced byenzymes.
• Preparing the latest equipment for increased
demand• Construction scheduled to start inFeb. 2019 and end in Sep. 2020

Target Market

5G, IoT, semiconductor markets

Focus
Investment

Overseas

Manufacturing

Target Market

Hayashibara: Entered into a long-term partnershipagreement with Lonza Co., Ltd. and will launch a newfactory for pullulan and enzymes

Trading•Start-up company designing andmanufacturing high-frequency 5G
devicesContinue joint framework by applying
NAGASE’s mass production
technology and quality management
systemInvestment

•

Focus

Investment

Invested in 3D Glass Solutions, Inc.

Independent area markets in China and the Americas
An image of the platform

24

New Initiatives to Achieve KGIs (2)FY2018 Accomplishments

Target Market

Mobility market

Target Market
5G, IoT markets

GrowthOverseas• Hyper-FiRe: Ultra-fast text search andreplacement accelerator• Uses regular expressions to perform text searchand replace on Linux OS software; more than
2,000-times speed improvement

3D Printer Market

Manufacturing

Continued Axonerve™ R&D activities• Japanese distributor of Tritan™, a plastic
manufactured by Eastman Chemical (U.S.A.)• Superior transparency, durability, and design• Sponsoring joint research with product-design
students (Musashino Art University and Tama Art
University)

OverseasAwarded the 2018 Best
Development
in 3D Printing Award

Introducing Tritan™ tableware at all Saizeriya
restaurants and cafes

Base

Target Market
Household goods and medical device markets

Copyright © 2019 NAGASE & CO., LTD.

Manufacturing• Joint venture with Interfacial Consultants LLC• Aimed at making products with water-soluble
support filament using the FDM (fused
deposition modeling) method• AquaSys ® : Industry’s first water-soluble
support material that also supports superengineering plastic

GrowthOverseas

Target Market

Establish Infinite Material Solutions, LLC

Trading

Overseas

Trading

Investment• Begin cooperative partnership with TriLumina
in the USA and Leddar Tech in Canada• Become sales agent for critical autonomous
driving technology; expand lineup andshorten development time for autocomponents manufacturers

GrowthInvestment

Entry into the autonomous driving
technology sector (LiDAR-related)

Joint research withTama Art University

25

Reform Corporate Culture:
Mindset/Strengthen Management Platform
ACE-2020 Issues
Mindset○ Build Accountability,
Responsibility and Risk AwarenessInstill a shared vision of the midterm management plan

FY2016 to FY2018

FY2019Delegation of authority, review organizations company-wide
Strengthen monitoring system, create dashboard, review meeting structureACE-2020 Rolling update, company-wide questionnaires; identify and address new issues○ Thorough Monitoring and PDCA
Improve investment quality○ Share Management’s Message
Create better communication

Strengthen governance at overseas manufacturing operations

Update investment guidelines, M&A promotion project

Branding activities (implement Top Management Tour), publish president videos, hold town meetings
Strengthen Management Platform○ Pursue efficiency
Eliminate excess/duplication andincrease efficiency of theorganization/function○ HR Development

Begin studying ESG activity disclosure policies

Back Office Functionality and Efficiency Project

Sustainability management policies, set materialities

Consolidate operations to NAGASE Business Expert for greater efficiency

Run operations under new HR system
Develop new technology through company-wide crossdepartmental efforts

DO IT
PosterCorporate Newsletters
Left: NAGASE & CO., LTD.
Right: NAGASE ChemteX Corporation

Copyright © 2019 NAGASE & CO., LTD.

President Video(New Year’s Message)

Top Management Tour
(China: Shenzhen)

Town Meeting(Hayashibara Co., Ltd.)26

ACE-2020 Rolling Update
Consolidated Operating Income

ACE-2020 Rolling Plan

(100 millions of yen)•

No changes to the framework of the mid-term
management plan or qualitative andquantitative targets

300•

Enhance effectiveness in achieving targets
by reviewing external factors and carefully
examining measures to bridge any gaps

280

48

260
Qualitative Issues of Newly Arising
Importance

Measures to Bridge Gaps240

• Supply issues caused by tightened
environment regulations around the world• Global governance addressing expanding

252

252

220

overseas business opportunities

Copyright © 2019 NAGASE & CO., LTD.

FY2020Efficiency/Streamlining

Expand Regional Areas

New Business Models

New Trade Rights

New Markets

New Products

200
Organic

manufacturing businesses

FY2018• Further enhancement of compliance systems at

27

KGI& KPIKGI(Key Goal Indicator)
KGI

FY2017FY2018FY2019 (Plan)

FY2020Consolidated Sales Amount
Consolidated Operating
IncomeROE

783.9 Billion Yen

807.7 Billion Yen

850.0 Billion Yen

1.0 Trillion Yen or more

24.1 Billion Yen

25.2 Billion Yen

26.0 Billion Yen

30.0 Billion Yen or more

5.8%

6.6%

6.5%

6.0% or more

KPI(Key Performance Indicator): Factor index to achieve KGIReform/Strategy

Measures
Increase Focused
Business(Portfolio Optimization)

Profit Structure
Reform Indicator

Accelerate
Globalization(Expand and Strengthen Profit
Structure)

KPI (Index)*Operating Profit in Focus Area
Growing Investment Distribution Ratio
in Focus Area

*Overseas Group Sales
Sales Growth Rate in USA

Increase Manufacturing * Operating Profit from Manufacturing
Profitability(Expand and Strengthen Profit* Break-Even Point Sales Ratio
Structure)
Corporate Culture
Reform Indicator
Financial Strategy
Indicator• Pursue efficiency(Strengthen Management
Platform)

Consolidated Selling, General and
Administrative Ratio

Investment**Growth Investment

Financial Structure

Rating (R&I)

FY2017FY2018FY2019(Plan)FY202013.1B Yen

12.6B Yen

13.1B Yen

16.9B yen

52%

82%

46%

35% <

389B Yen

405.3B Yen

420.5B Yen

600 B Yen

103%

118%

125%

170%

11.4B Yen

11.6B Yen

12B Yen

14.4B Yen

76%

76%

76%

73%

10.0%

9.9%

10.0%

9.4%

23.5B Yen

32.4B Yen

52.9B Yen

100B Yen[A][A][A] or more

[A] or more

* The figures in this document are all management accounting data (simple sums)
It is different from the figures disclosed on the consolidated financial statement.
** Total numbers in 5 years

Copyright © 2019 NAGASE & CO., LTD.

28

Appendix : Past Results and ACE-2020 Target
Consolidated Sales/Operating Income

ROE

1.0 Trillion Yen/30 Billion Yen or more

Normalize Over 6％ at early stage

Sales(100 millions of yen)

Consolidated operating Income(100 millions of yen)

10,000241

252

300 300

260

ROE (%)
8.0%
6.6%

6.5%
6.0%

5.8%

180

4.4%

Copyright © 2019 NAGASE & CO., LTD.

Target

FY2019(Forecast)

0.0%

FY20180

3.7%

FY20174.0%

FY2016150

FY2015

Target

FY2019(Forecast)

FY2018FY2016FY20150

FY2017

150

5,000

29

Corporate Governance
1. Establish a Nomination Committee
We will establish a nomination committee consisting of a majority independent
directors. This committee will increase the objectivity and transparency in nominating
directors and executive officers.

2. Reduce number of directors (from ten to seven)
We have decided to reduce the number of our directors from ten to seven (eliminating
three inside director positions). This move is intended to revitalize and improve theeffectiveness of the board of directors.
*A resolution to elect directors is scheduled to be presented at the 104th General Shareholders' Meeting scheduled for June 21, 2019.

3. Decision to repeal anti-takeover measures
We have had anti-takeover measures in place since 2007. However, we have decided
to repeal these measures as of the conclusion of the 104th General Shareholders'Meeting scheduled for June 21, 2019.

Copyright © 2019 NAGASE & CO., LTD.

30

NAGASE Group Initiatives for Advanced
Technologies
Executive Officer
Takahiro Okumura

Copyright © 2019 NAGASE & CO., LTD.

31

Contents
Overview of Latest innovations

P.33

Overview of 5G

P.34

5G Communications Module Market Trends

P.35

New Developments for 5G

P.36

Overview of 3D Glass Solutions, Inc

P.37

3D Glass Solutions, Inc Application Development

P.38

NAGASE Group Technology Network

P.39

NAGASE Group Creating Synergy

P.40

NAGASE Group Global Manufacturing Bases

P.41

Mobility Solutions

P.42

Summary

P.43

Copyright © 2019 NAGASE & CO., LTD.

32

Overview of Latest innovations
Development of
5G-Related Materials

Mobility Solutions

Electrification
Weight-saving

Environmentally-friendly

Intelligent

Existing Businesses
Functional
Materials

Advanced Materials& Processing

Copyright © 2019 NAGASE & CO., LTD.

Electronics

Mobility & EnergyLife & Healthcare

33

Overview of 5G
Deep Learning

Edge Computing
LPWA

5G

A

6 to 28 GHz

Latency: 1 ms
Speed: 10 Gbps

I

IoT
EV

ADAS

AR/VR

Blockchain

Connections: 1 million/km2[Breakthroughs in achieving 5G][5G Issues]
Transmission loss in highfrequency bands

4G

 Big Data through IoT ⇒ Total data usage up to 44 ZB by 2020
 Reduced load on cloud ⇒ Edge computing diversity
 Requires high-speed, large capacity communications
methods ⇒ Transition to high frequency (5G) band

1 to 3 GHz

Latency: 10 ms
Speed: 1 Gbps
Connections: 100,000/km2
Copyright © 2019 NAGASE & CO., LTD.

Low loss substrate technologies are necessary[Features of 5G]
Low latency

Highspeed/
capacity

Multipleconnections
34

5G Communications Module Market Trends
The 2025 Global Market for 5G Communications Modules will Grow to 1 Trillion Yen[5G-related Equipment]
Smartphones

Smart speakers

In-car infotainment Surveillance cameras

Smart watches

Base stations

Small cells

Communication module market
forecasts (global)

Copyright © 2019 NAGASE & CO., LTD.

[5G Modules]

Smart glasses[100 millions of yen]Created in reference to Navian Incorporated. data

35

New Developments for 5G

Features

Enhanced Mobile
Broadband(eMBB)

Ultra-Reliable and
Low LatencyCommunications(URLLC)

Massive Machine Type
Communications(mMTC)

TargetHigh-resolution imaging, VR,
etc.

Autonomous driving, remotesurgery, control of drones, etc.

Bit rate: 10 GB/sec.

Latency: About 1 ms

Low-DielectricMaterials

Interposer Materials

Smart cities, smart factories, emergency
batteries, etc.

Number of connected
devices: 1 million/km2

Embedded
Antennas

Storage
Batteries

Focus
Technologies

Copyright © 2019 NAGASE & CO., LTD.

36

Overview of 3D Glass Solutions, Inc

Company name:

3D Glass Solutions, Inc.

Established:
Location:

2006
Albuquerque, NM, U.S.A.

Number of employees: 20
Business overview:

Production and sales of semiconductor packages and devices using
photosensitive glass

Technologies:

Low-cost, 3D glass processing technologies using patented glass compositions
High-frequency device and module design technologies using specialized CAD[Parts design technologies]

Copyright © 2019 NAGASE & CO., LTD.

[Photosensitive glass technologies][Device processing technologies]37

3D Glass Solutions, Inc Application Development

Application
development

RF modules

Image sensors

Opticalcommunications
modules

Power modules

CPU/Memory
modules

Applicable devices

3D Glass Solutions
Core Technologies

Copyright © 2019 NAGASE & CO., LTD.

38

NAGASE Group Technology Network 5G-compatible base stations using photosensitive glassprocessing technology and electronic device antennas forcommunications modules

 Insulation, conducting, and optical materials for electronic devices supporting 5G
 Microlens, nanomaterials for recordable media, low-temperature burning-type
wiring inks

 Bumping process, bonding technologies, and equipment for 5Gcompatible electronic devices

 Insulation, conducting, and optical materials for 5Gcompatible electronic devices
 Stretchable conductive inks for wearables

 High-performance lithium-ion storage battery systems
 Emergency-use power supply systems using renewable energy

 Siloxane insulation and conducting materials for 5G-compatible electronic devices
 Functional inks and optical coating materials containing nanoparticles and dispersedmaterials

Copyright © 2019 NAGASE & CO., LTD.

39

NAGASE Group Synergies
5G-related product application examples

Low dielectricmaterials

Wiring forming

Glass substrates

Passive glass
components

Embeddedantennas

CPU/GPU

High-speed image processing board
Copyright © 2019 NAGASE & CO., LTD.

40

NAGASE Group Global Manufacturing Bases
NESCO

Next-generation insulation andconducting materials
Next-generation optical materials

Next-generation insulation andconducting materials
Next-generation optical materials

Next-generation chemical solution
management devices and coating
devices

Next-generation bonding
technologies and devices andprocesses

Photolithographymaterials for displays
Next-generation power
supply and energy
management

Next-generation bonding
technologies,
devices and processes

Next-generation chemicalsolution management devices
and coating devices

Next-generation insulationand conducting materials

Next-generation high-frequency
devicesand board production technologies

Materials

Next-generation bonding
processes

Copyright © 2019 NAGASE & CO., LTD.

Next-generation insulation andconducting materials
Next-generation optical materials

Photolithographymaterials for displays

Devices andprocesses

41

Mobility Solutions
Developing new businesses for sensors and peripheral devices required in
anticipation of an autonomous driving society
Keywords in advanced mobility

LiDAR sensing systems forautonomous driving*LiDAR: Light Detection and Ranging

Autonomous driving-related product examples[TriLumina]
Plane emission laser modules for 3D sensing

Copyright © 2019 NAGASE & CO., LTD.

[LeddarTech]
Semiconductors for high-precision
distance calculations

42

Summary■Building 5G high-frequency device-related businesses
 Develop and commercialize low-loss materials technologies for highspeed and high capacity, low delay, and multiple simultaneousconnections
 Develop and commercialize substrate materials and glass antenna
technologies through the synergy of NAGASE Group technologies andthe high-precision glass processing technologies from 3D Glass
Solutions, Inc.

■Providing mobility solutions
 Grow sensor and peripheral device businesses required for anautonomous driving society
Sell LiDAR-related products for autonomous driving throughcooperation between TriLumina and LeddarTech

Copyright © 2019 NAGASE & CO., LTD.

43

(Reference) Information by Segment

Copyright © 2019 NAGASE & CO., LTD.

44

Functional Materials Segment
FYE March 2019 Actual<Net Sales/Operating Income by Location>(100 millions of yen)

FYE 03/19

Operating Income

Net salesYear Actual

FYE 03/20

Vs. PYYear Forecast

Vs. PYNet sales¥179.6 billion (103%)◆The Performance Chemicals business recorded higher sales year on
year, mainly due to improved sales of coating raw materials andurethane materials, spurred by strong automotive production, as wellas naphtha price increases. Another contributing factor was the
additional sales of U.S. company FitzChem acquired in the second
quarter of the prior fiscal year, reflected through all quarters of thecurrent consolidated fiscal year.

Domestic

1,662

103%

1,730

104%

Overseas

587

104%

614

104%

Eliminations

▲454

-

▲467

-

Total

1,796

103%

1,877

104%

Domestic

42

105%

44

106%

Operating income

Overseas

14

90%

16

109%

◆Higher profits due to higher revenues

Eliminations

▲2

-

▲1

-

Total

54

106%

59

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)

Copyright © 2019 NAGASE & CO., LTD.

◆The Specialty Chemicals business recorded slightly higher sales year
on year, mainly due to an increase in sales of electronics chemicals
and plastic materials/plastic additives for the semiconductor and otherrelated electronics industries in Japan. However, overseas sales
dropped slightly.

¥5.4 billion (106%)FYE March 2020 Outlook◇We project higher revenues and profits due to increased sales of
coatings and urethane materials as a result of customer strategies
and the development of new products, higher sales of electronics
chemicals for semiconductors and other electronics industries and of
epichlorohydrin derivatives for 3D printers, and as a result of
establishing environment-related businesses.
45

Advanced Materials & Processing Segment
FYE March 2019 Actual<Net Sales/Operating Income by Location>(100 millions of yen)

FYE 03/19

Net salesYear Actual

Vs. PYYear Forecast

Vs. PY

Domestic

1,760

106%

1,918

109%

Overseas

1,717

108%

1,822

106%

Eliminations

▲725

-

▲789

-

Total

2,752

105%

2,951

107%

50

131%

57

112%

Domestic

Operating Income

FYE 03/20

Overseas

30

106%

39

127%

Eliminations

▲1

-

1

-

Total

80

121%

97

120%

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

Copyright © 2019 NAGASE & CO., LTD.

Net sales¥275.2 billion (105%)◆The Colors & Advanced Processing business recorded
higher sales as a whole, driven by growth in Japan forplastic resins for industrial and packaging applications anddyes/additives, as well as growth in digital print processing
materials in both Japan and overseas.
◆The Polymer Global Account business recorded higher
sales overall, driven by growth in Japan, Greater China,
and ASEAN.
Operating income¥8.0 billion (121%)◆Higher profits, mainly due to higher revenues and improved
profitability at manufacturing subsidiaries

FYE March 2020 Outlook◇We project higher sales and profits as a result of increased
sales of resins and digital print processing materials both inJapan and overseas, with a production recovery in ourcompound business and other improvements in
manufacturing and processing business revenues
contributing to profits
46

Electronics Segment
FYE March 2019 Actual<Net Sales/Operating Income by Location>(100 millions of yen)

FYE 03/19

Operating Income

Net salesYear Actual

FYE 03/20

Vs. PYYear Forecast

Vs. PY

Domestic

1,189

92%

1,274

107%

Overseas

744

99%

735

99%

Eliminations

▲710

-

▲746

-

Total

1,223

95%

1,263

103%

Domestic

38

77%

44

117%

Overseas

35

88%

30

86%

Eliminations

+0

-

▲2

-

Total

74

83%

72

97%

*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)

Copyright © 2019 NAGASE & CO., LTD.

Net sales¥122.3 billion (95%)◆Despite favorable performance in formulated epoxy resin
sales to the semiconductor industry, lower photolithographymaterials and device sales drove Electronic Chemicals
business sales down
◆The Electronic Materials business recorded lower sales due
to decreases in display-related products, despite strong
performance in our business for abrasives used inconnection with interim processing in semiconductors
Operating income¥7.4 billion (83%)◆Lower profits, due to lower revenue, and a large decline inspot business (sales of equipment) that had seen adramatic increase in the prior year

FYE March 2020 Outlook◇We forecast strong formulated epoxy resin sales for semiconductors,
heavy electrical, and light electrical industries, despite a decrease inequipment-related sales. Sales of photolithographic materials should
recover due to the start of new businesses and an improvement incustomer operation rates. Sales of display related products will also
remain strong leading to an increase in sales. However, performanceat certain manufacturing businesses will be slow, resulting in lower
profits.
47

Mobility & Energy Segment
FYE March 2019 Actual<Net Sales/Operating Income by Location>(100 millions of yen)

FYE 03/19

Net salesYear Actual

FYE 03/20

Vs. PYYear Forecast

Vs. PY

Domestic

786

117%

839

107%

Overseas

856

102%

880

103%

Eliminations

▲250

-

▲268

-

Total

1,392

107%

1,451

104%

Net sales¥139.2 billion (107%)◆The Automotive Solutions business recorded higher sales,
driven by strong performance in our resins business inJapan, Greater China, and ASEAN. Sales growth for car
electronics-related products was another positive factor.

Operating income¥3.0 billion (126%)

Operating Income◆Higher profits due to higher revenues
Domestic

10

377%

13

121%

Overseas

19

90%

20

104%

Eliminations

0

-

0

-

Total

30

126%

33

108%

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

Copyright © 2019 NAGASE & CO., LTD.

FYE March 2020 Outlook◇While automotive production is expected to remain flat,
we project increased sales of engineering plastics as wellas car electronics-related products as a result of
expanded sales of materials both within Japan andoverseas. We also expect improved profitability at our
manufacturing subsidiaries
48

Life & Healthcare Segment
FYE March 2019 Actual<Net Sales/Operating Income by Location>(100 millions of yen)

FYE 03/19

Net salesYear Actual

FYE 03/20

Vs. PYYear Forecast

Vs. PY

Domestic

1,047

104%

1,097

105%

Overseas

147

109%

152

103%

Eliminations

▲287

-

▲297

-

Total

907

105%

952

105%

Net sales¥90.7 billion (105%)◆Overseas sales of TREHA™ and other products in the foodingredients field grew, with slight increases in Japan. Sales of
AA2G™ to customers in the skin care and toiletries sectors werehigher both in Japan and overseas. In the medical andpharmaceutical field, sales of pharmaceutical raw materials andintermediates, medical materials, and pharmaceutical businessproducts increased, driving increased revenue for the business as awhole.
◆The Beauty Care Products business recorded lower sales stemmingfrom weak performance across all product categories.

Operating Income

Operating income
Domestic

72

102%

74

103%

Overseas

6

206%

7

112%

▲32

-

▲32

-

46

111%

49

105%

Eliminations

Total*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 and technology-based assets)

Copyright © 2019 NAGASE & CO., LTD.

¥4.6 billion (111%)◆Higher profits due to higher revenues

FYE March 2020 Outlook◇Although we expect sales in the medical and pharmaceutical fields todecline, sales of TREHA™ in the food materials field should rise inJapan and overseas. We also forecast higher sales resulting from theadoption of Hayashibara Hesperidin S and Fibryxa™. Meanwhile,
sales of AA2G™and raw materials should continue to perform well,resulting in increased sales. As a result, we forecast overall sales andprofit growth for the segment.
49https://www.NAGASE.co.jp/

These presentation materials contain forward-looking projections based on assumptions,forecasts, and plans as of May 24 , 2019. Actual earnings may differ from projections due torisks and uncertainties in the future global economy, competitive landscape, currency
exchange rates, etc.
Copyright © 2019 NAGASE & CO., LTD.