For Immediate Release

May 15, 2019

Sumitomo Chemical Announces
Consolidated Financial Results for FY2018
The state of the world economy for this fiscal year, continued to be strong, due to factors
such as rising employment numbers and strong consumer demand in the US. At the sametime, clouds can be seen in the growth of the Chinese economy, due to the impact of factors
such as the trade conflict with the US and deleveraging by the government, while in Europe,
the economy has been rapidly slowing down since the autumn of last year, due to a varietyof factors, particularly the economic slowdown in China.
The Japanese economy continues to see improvements in wages and the job market, andconditions have remained generally favorable, but there have been negative influences fromfactors including the slowdowns in the economies of China and Europe, among others,
deteriorations in the domestic market due to a weakness in Asian market conditions for
petrochemical products, and the sudden slump in IT-related demand, particularly insmartphones.
Under these circumstances, the Sumitomo Chemical Group undertook group-wide efforts toimprove business performance. At the same time, the Group worked to further accelerate its
transformation into a more resilient Sumitomo Chemical that continues to grow, based on
the current three-year Corporate Business Plan for fiscal 2016 to 2018 that has a basic policy
of further improving its business portfolio, generating more cash flow, and accelerating thelaunch of next-generation businesses.
As a result, the Sumitomo Chemical Group’s sales revenue for this fiscal year totaled ¥2,318.6
billion, an increase of ¥128.1 billion compared with the previous fiscal year. The Group posted
core operating income of ¥204.3 billion, operating income of ¥183.0 billion, and net income
attributable to owners of the parent of ¥118.0 billion, all of which fell short of the results forthe previous fiscal year.
The Sumitomo Chemical Group’s financial results by business segment for the fiscal year
are as follows.
“Core operating income” is a gain and loss concept that reflects recurring earning capacity.
It excludes gains and losses from non-recurring factors from operating income, including theshare of profit from investments accounted for using the equity method.

Petrochemicals & Plastics
Market conditions for petrochemical products rose because of higher feedstock prices.
Market conditions for raw materials for synthetic fibers and methyl methacrylate (MMA) also
improved. In addition, shipments of products increased from the Rabigh Phase II project inthis fiscal year. As a result, the segment’s sales revenue grew by ¥83.4 billion compared withthe previous fiscal year, to ¥757.5 billion. Core operating income declined by ¥33.0 billion
compared with the previous fiscal year, to ¥61.6 billion, due to factors such as the impact ofperiodic plant maintenance at the Chiba Works in Japan and in Singapore, as well as margin
erosion for petrochemical products.
Energy & Functional Materials
Shipments of separators for lithium-ion secondary batteries rose on higher demand.
Shipments of high purity alumina also increased, primarily for use in battery materials. As aresult, the segment’s sales revenue increased by ¥31.9 billion compared with the previous
fiscal year, to ¥282.9 billion, and core operating income grew by ¥3.8 billion, to ¥23.0 billion.
IT-related Chemicals
Although selling price of polarizing film declined, shipments increased due to growth indemand for TV and mobile applications. Shipments of touch sensor panels also increased
due to growth in demand. As a result, the segment’s sales revenue increased by ¥28.1 billion
compared with the previous fiscal year, to ¥396.8 billion, and core operating income rose by¥13.9 billion, to ¥26.2 billion.
Health & Crop Sciences
Shipments of crop protection chemicals decreased due to factors such as frequent extreme
weather in North America toward the end of this fiscal year, and revenue from feed additive
methionine fell due to declining market conditions. Moreover, while there was an increase insales due to the recent consolidation of agriculture-related retail businesses in Japan,
depreciation of emerging market currencies had a negative effect on sales from subsidiaries
outside Japan in yen terms. As a result, the segment’s sales revenue fell by ¥1.6 billion
compared with the previous fiscal year, to ¥338.1 billion. Core operating income declined by¥24.2 billion, to ¥19.7 billion, compared with the previous fiscal year, due to factors including
margin erosion in methionine and reduced shipments of crop protection chemicals.
Pharmaceuticals
In North America, sales of Latuda® (atypical antipsychotic), Aptiom® (antiepileptic drug), andother treatments increased. On the other hand, results in Japan were adversely impacted bydrug price revisions instituted by Japan’s National Health Insurance. As a result, thesegment’s sales revenue declined by ¥8.1 billion compared with the previous fiscal year, to¥492.1 billion. Because of the impact of the drug price revisions, and because a one-time gain
was recorded in the previous fiscal year on the transfer of a business, core operating income
declined by ¥14.0 billion, to ¥80.8 billion.
OthersIn addition to the above five segments, the Sumitomo Chemical Group engages in supplying
electrical power and steam, providing services for the design, engineering, and construction
management of chemical plants, providing transport and warehousing, and conducting
materials and environmental analysis. The segment’s sales revenue declined by ¥5.6 billion
from the previous fiscal year, to ¥51.1 billion, and core operating income declined by ¥1.6billion, to ¥9.4 billion.

The Company has decided to pay a year-end dividend of ¥11 per share. As a result, theCompany’s annual dividend for fiscal 2018 is ¥22 per share, including an interim dividend of¥11 per share.
Net cash provided by operating activities in fiscal 2018 was ¥208.1 billion, a decrease of ¥85.1billion compared to the previous fiscal year, due chiefly to a rise in working capital and adecrease in income before taxes. Net cash used in investing activities was ¥180.8 billion, anincrease in cash outflows of ¥26.3 billion compared to the previous fiscal year, due mainly toan increase in outflows for the purchase of fixed assets. This resulted in free cash flow of¥27.3 billion for fiscal 2018, compared with ¥138.7 billion for the previous fiscal year. Net cashused in financing activities was ¥60.9 billion. The balance of cash and cash equivalents at
the end of the fiscal year fell by ¥30.3 billion from the previous fiscal year, to ¥201.7 billion.
For fiscal 2019, the Company forecasts that sales revenue will increase by 5.2% compared tofiscal 2018, to ¥2,440.0 billion, while core operating income and operating income areprojected to be ¥205.0 billion and ¥190.0 billion, respectively, and net income attributable toowners of the parent to be ¥100.0 billion, assuming an exchange rate of ¥110.0/US$ and anaphtha price of ¥43,000/kl.
The Company plans to pay an interim dividend of ¥11 per share and a year-end dividend of¥11 per share, making the Company’s annual dividend for fiscal 2019 ¥22 per share,unchanged from the previous fiscal year.

Consolidated statements of profit or loss
Years ended March 31, 2019(FY2018) and 2018(FY2017)
Millions of yen
FY2018FY2017

Thousands of
US dollars*FY2018

Sales revenue

2,318,572

2,190,509

20,889,918

Cost of sales(1,576,299)(1,440,635)(14,202,171)

742,273

749,874

6,687,747(590,062)(557,888)(5,316,353)

Other operating income

11,15425,262

100,496

Other operating expenses(17,594)(21,644)(158,519)

Share of profit of investments accounted forusing the equity method

37,201

55,319335,174

Operating income

182,972

250,923

1,648,545

Finance income

16,615

11,542

149,698

Finance expenses(11,217)(21,654)(101,063)

Income before taxes

188,370240,811

1,697,180(35,904)(62,653)(323,489)

152,466

178,158

1,373,691

Owners of the parent

117,992

133,768

1,063,087

Non-controlling interests

34,474

44,390310,605

Net income

152,466

178,158

1,373,691

Gross profit
Selling, general and administrative expenses

Income tax expenses
Net income
Net income attributable to:Yen
FY2018FY2017US dollars*
FY2018

Earnings per share:
Basic earnings per share

72.17

81.81

0.65

Diluted earnings per share

72.12

81.77

0.65

Yen
FY2018FY2017US dollars*
FY2018Dividends per share:
Interim dividends

11.00

10.00

0.10

Year-end dividends

11.00

12.00

0.10

For the year

22.00

22.00

0.20

(Note)*U.S. dollar amounts are translated from yen, for convenience only, at the rate ofࠉࠉ¥110.99= $1 prevailing on March 31, 2019.

㻌䚷Consolidated statements of comprehensive income
Years ended March 31, 2019(FY2018) and 2018(FY2017)
Thousands ofUS dollars*FY2018

Millions of yen
FY2018Net income

FY2017

152,466

178,158

1,373,691(7,341)

18,236(66,141)

667

4,975

6,010

1,496

455

13,478(5,178)23,666(46,653)

Other comprehensive income䠖䚷Items that will not be reclassified to profit or loss
Remeasurements of financial assets measured at fair value
through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of investments accounted forusing the equity method
Total items that will not be reclassified to profit or loss
䚷Items that may be subsequently reclassified to profit or loss
Cash flow hedge
Exchange differences on translation of foreign operations
Share of other comprehensive income of investments accounted forusing the equity method
Total items that may be subsequently reclassified to profit or loss

561

2,349

5,055

4,782

(16,907)43,085(4,485)(2,705)(40,410)858(17,263)

7,730

Other comprehensive income, net of taxes(4,320)6,403(38,922)

Total comprehensive income

148,146

184,561

1,334,769

Owners of the parent

110,448

142,421995,117

Non-controlling interests

37,69842,140339,652

Total comprehensive income

148,146

184,561

1,334,769

Total comprehensive income attributable to䠖(Note)*U.S. dollar amounts are translated from yen, for convenience only, at the rate ofࠉࠉ¥110.99= $1 prevailing on March 31, 2019.

㻌Consolidated statements of cash flows
Years ended March 31, 2019(FY2018) and 2018(FY2017)
Thousands ofUS dollars*
FY2018Millions of yen
FY2018Cash flows from operating activities:
Income before taxes

FY2017

188,370

240,811

1,697,180

Depreciation and amortization

112,495

107,103

1,013,560

Impairment loss

24,63912,378221,993

Reversal of impairment loss

(2,969)(3,477)(26,750)

Share of profit of investments accounted for using the equity method(37,201)(55,319)(335,174)Interest and dividend income(10,849)(10,101)(97,748)

Interest expenses

10,623

10,646

95,711Business structure improvement expenses

9,067

14,21081,692

Changes in fair value of contingent consideration(8,950)(8,383)(80,638)

Gain on sale of property, plant and equipment(1,434)(6,801)(12,920)

Increase in trade receivables(26,600)(24,617)(239,661)

Increase in inventories(35,613)(55,626)(320,867)

Increase in trade payables(18,673)

73,607(168,240)

Increase in provisions

4,124

10,51437,157

Others, net

38,041(7,170)342,742Subtotal

2,208,037

245,070

297,775

Interest and dividends received

32,99941,742

297,315Interest paid

(10,940)(10,534)(98,567)

Income taxes paid

(50,161)(28,747)(451,942)

Business structure improvement expenses paid

(8,825)(6,986)(79,512)Net cash provided by operating activities

208,143

293,250

1,875,331(1,575,061)

Cash flows from investing activities:
Purchase of property, plant and equipment, and intangible assets(174,816)(149,207)

Proceeds from sale of property, plant and equipment, and intangible assets

4,01010,200

36,129Purchase of investments in subsidiaries(3,348)(13,236)(30,165)

Purchase of other financial assets(9,126)(14,276)(82,224)

Proceeds from sales and redemption of other financial assets

2,420

6,092

21,804

23

5,907

206

(180,837)(154,520)(1,629,309)

Cash flows from financing activities:
Net (decrease) increase in short-term borrowings

3,180(82,586)

28,651

Net increase (decrease) of commercial paper(4,000)34,000(36,039)

Others, net
Net cash used in investing activities

Proceeds from long-term borrowings89,190

81,690803,586

Repayments of long-term borrowings(67,871)(58,984)(611,506)

Proceeds from issuance of bonds

49,72539,790448,013

Redemption of bonds(77,000)(55,000)(693,756)

Repayments of finance lease obligations(3,175)(3,281)(28,606)

Cash dividends paid

(37,606)(27,797)(338,823)

Cash dividends paid to non-controlling interests(13,521)(15,569)(121,822)

Payments for acquisition of subsidiaries' interests from non-controlling interests(2,205)(6,588)(19,867)

Others, net
Net cash used in financing activities

2,417

61

21,777(60,866)(94,264)(548,392)

3,309(5,832)29,813

Net increase (decrease) in cash and cash equivalents(30,251)

38,634(272,556)

Cash and cash equivalents at beginning of year

231,929

193,295

2,089,639

Cash and cash equivalents at end of year

201,678

231,929

1,817,083

Effect of exchange rate changes on cash and cash equivalents(Note)
䚷䚷*U.S. dollar amounts are translated from yen, for convenience only, at the rate ofࠉࠉ¥110.99= $1 prevailing on March 31, 2019.

Segment information
Years ended March 31, 2019(FY2018) and 2018(FY2017)
Millions of yen
Reporting segments
Petrochemicals&Plastics

Energy &Functional
Materials

IT-related
Chemicals

Health &Crop Sciences

Pharmaceuticals

TotalOthers

Adjustments

Consolidated

FY2018
Sales revenue
Sales revenues fromexternal customers
Inter-segment
sales revenues

757,529

282,850

396,839

338,094492,130

2,267,442

51,130㸫

2,318,572

6,161

7,892

952

5,648

13

20,66662,265

ᶭ82,931㸫

Total sales revenue

763,690

290,742

397,791

343,742

492,1432,288,108

113,395

ᶭ82,9312,318,572

Segment profit(core operating income)

61,61022,95926,227

19,71680,764211,276

9,422

ᶭ16,446

204,252

Segment assets

756,996

312,096389,744591,995

896,7022,947,533

282,911

ᶭ58,826

3,171,618

22,047

15,43731,087

18,714

16,260103,545

5,647

3,303

112,495

31,23020

5

ᶭ1,10727

30,175

6,909

117

37,201

Impairment loss

535

878

200

㸫

22,996

24,60919

1124,639

Reversal of impairment loss

㸫

2,969

㸫

㸫

㸫

2,969

㸫

㸫

2,969

Investments accounted
for using the equity method

165,455

214

455

26,8531,055

194,032

108,286

ᶭ3,274

299,044

Capital expenditures

31,46624,281

33,55039,931

16,861

146,089

12,302

5,272

163,663

674,116

250,988368,709339,698

500,227

2,133,738

56,771

㸫

2,190,509

6,461

6,449

885

3,650

10

17,45570,776(88,231)㸫

Total sales revenue

680,577

257,437

369,594

343,348500,237

2,151,193

127,547(88,231)2,190,509

Segment profit(core operating income)

94,567

19,18912,341

43,964

94,786

264,847

11,052(13,205)

262,694

Segment assets

769,570

290,920357,697555,598

869,658

2,843,443

295,625(70,383)

3,068,685

Depreciation andamortization

22,963

13,916

29,571

16,181

15,084

97,715

5,925

3,463

107,103

Share of profit (loss) ofinvestments accounted
for using the equity method

48,373(46)(1,897)

1,625

(10)

48,045

7,086

188

55,319Impairment loss

3,192

132

4,045

2,846

2,147

12,36216

㸫

12,378

Reversal of impairment loss

㸫

3,477

㸫

㸫

㸫

3,477

㸫

㸫

3,477

Investments accounted
for using the equity method

157,504

194

6,848

31,114686

196,346

101,415(3,391)

294,370

Capital expenditures

17,40822,521

24,49856,334

21,238141,999

12,6204,220

158,839

Other items
Depreciation andamortization
Share of profit (loss) ofinvestments accounted
for using the equity method

FY2017
Sales revenue
Sales revenues fromexternal customers
Inter-segment
sales revenues

Other items(Note)㻌㻌㻌㻌㻌*Segment information of the previous fiscal year is reclassified in accordance with the change in reported segments.

Segment information
Years ended March 31, 2019(FY2018) and 2018(FY2017)
Adjustments to income before taxes from segment profit were as follows:
Millions of yen
FY2018Segment profit

FY2017204,252

262,694

Impairment loss

(24,639)(12,378)

Restructuring charges(9,067)(14,210)

Changes in fair value of contingent consideration

8,950

6,146

Reversal of impairment loss

2,969

3,477

Gain on sale of property, plant and equipment

1,434

6,801

Others, net(927)(1,607)

Operating income

182,972

250,923

Finance income

16,615

11,542Finance expenses(11,217)(21,654)

Income before taxes

188,370

240,811

Overseas operations
Years ended March 31, 2019(FY2018) and 2018(FY2017)

Millions of yenOverseasoperations

1,505,711

FY2018
Thousands ofUS dollars*

FY2017
Share (%)

Growth (%)

Millions of yen

64.9

8.7

1,384,749

13,566,186(Note)
䚷䚷*U.S. dollar amounts are translated from yen, for convenience only, at the rate ofࠉࠉ¥110.99= $1 prevailing on March 31, 2019.

(Cautionary statement)This release of financial results is exempt from audit procedures.
Statements made in this release with respect to the Company’s current plans, estimates, strategies and beliefs that are not historical facts are forwardlooking statements about the future performance of Sumitomo Chemical. These statements are based on management’s assumptions and beliefs in lightof the information currently available to it, and involve risks and uncertainties.
The important factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited
to, general economic conditions in Sumitomo Chemical’s markets; demand for, and competitive pricing pressure on, Sumitomo Chemical’s products inthe marketplace; Sumitomo Chemical’s ability to continue to win acceptance for its products in these highly competitive markets; and movements ofcurrency exchange rates.