Nov 8th, 2019

Summary of Consolidated Financial Results
Denka company Limited
1. Summary
1.1 Overview
In April 2018, the Denka Group launched Denka Value-Up, a new management plan spanning a period offive years, to realize its corporate philosophy enshrined in The Denka Value. Under the plan’s threefold
growth vision designed to create a “Specialty-Fusion Company” capable of achieving “Sustained Growth” and“Sound Growth,” the Group has been promoting two growth strategies, namely, the business portfolio shift
and the introduction of innovative processes, aiming to expand its operations and secure greater profit.
In the first six months of the fiscal year ending March 31, 2020, the Group has seen robust sales of products for use inelectric vehicles (EVs) , such as spherical alumina and acetylene black. At the same time, sales of diagnostic reagents andinfluenza vaccines were up compared with the same period of the previous fiscal year. However, the Group had to
downwardly revise sales prices of styrene-based products in step with plunges in raw material prices while being
affected by the lower sales volume of chloroprene rubber (CR) and semiconductor-related products (highly functionalfilms, spherical fused filler, etc.). Consequently, consolidated net sales totaled ¥192.0 billion, down ¥6.4 billion, or 3.2%,
compared with the same period of the previous fiscal year.
On the earnings front, operating income rose ¥0.7 billion, or 5.1%, year on year to ¥15.3 billion. However, ordinary
income decreased 2.9% to ¥14.5 billion, while profit attributable to owners of the parent was ¥10.9 billion, down 4.7%.
Looking ahead, Denka expects sales of EV-related products to remain robust in the third quarter of the fiscal year
and beyond. On the other hand, at the beginning of the fiscal year, Denka had expected semiconductor demand tobegin recovering in the third quarter, but that recovery is no longer expected to take place until the end of 2019. Inaddition, CR sales are expected to remain stagnant.
Taking the aforementioned factors into account, the Company downwardly revised its full-year forecast foroperating income from ¥38.0 billion, which had been estimated at the beginning of the fiscal year, to ¥35.0 billion.
Nevertheless, the Denka Group will continue striving to achieve record-high profit for the third consecutive fiscal year.
Sparing no efforts, the Group will remain active in executing the initiatives of the Denka Value-Up management plan.

1.2 Results by Segment
Elastomers & Performance Plastics
With the full utilization of styrene monomer plants that underwent periodic shutdown maintenance in the previous
fiscal year, the Group has benefitted from improving spreads of styrene-based resin produced by Denka Singapore
Pte. Ltd. However, the Group saw a decrease in profit due to such factors as lower sales volume of CR.
For the third quarter onward, CR sales volume is expected to decrease year on year. Accordingly, Denka believes
that segment income will decrease even in terms of full-year operating results.

Infrastructure & Social Solutions
Segment income grew year on year thanks mainly to progress in the Group’s efforts to upwardly revise productprices.
The Group also anticipates that its performance will be buoyed by upwardly revised product prices in the thirdquarter onward, expecting its full-year operating results to include growth in segment income.

Electronics & Innovative Products
The Group has enjoyed higher sales of EV-related products, including spherical alumina and ultra-high purity
electro-conductive carbon black. The related need for measures to strengthen production systems, however, caused
the Group to bear higher fixed costs. Moreover, sales of highly functional films and spherical fused filler for use inelectronic components and semiconductors were down year on year. Therefore, segment income was down
compared with the same period of the previous fiscal year.
For the third quarter onward, the Group expects sales in EV-related fields to continue to grow while anticipating
that, from January 2020 onward, demand for semiconductor-related products will begin to recover gradually.
Therefore, the Group believes that segment income will grow year on year in its full-year operating results.

Living & Environment Products
Sales of plastic rain gutters and industrial tapes remained virtually unchanged from the same period of the previous
fiscal year. However, sales of TOYOKALON synthetic wig fibers, food packaging sheets and processed products basedon such sheets, were down year on year, causing segment income to decline. Although sales of industrial tapes areexpected to increase year on year for the third quarter onward, segment income will decrease in the full-year
operating results.

Life Innovation
Sales of diagnostic reagents grew consistently, and influenza vaccine shipments were earlier than previous year.
These factors caused segment income to increase. In terms of full-year operating results, the Group expects segment
income to grow as it believes that sales of influenza vaccines and diagnostic reagents will rise year on year.

2. Consolidated Financial Results and Forecast
FY2019Apr to Sep

Net Sales
Operating Income
Ordinary Income
Net Income

192.0
15.3
14.5
10.9

FY2018Apr to sep

198.3
14.6
15.0
11.4

Billions of Yen
Incｒ.
△Decr.

△ 6.4
0.7
△ 0.4
△ 0.5

3. Net Sales and Operating Income by segments
FY2019Apr to Sep

78.7
6.9
26.9
0.3
33.5
5.8
18.6
△ 0.2
15.0
2.5
19.2
0.2
192.0
15.3

Sales
Elastomers ＆Performance Plastics Operating Income
Sales

Infrastructure ＆Social Solutions

Operating Income

Electronics ＆Innovative Products

Operating Income

Sales

Sales
Living ＆Environment Products Operating Income
Life innovation

Sales
Operating Income

Sales

Others/Companywide

Operating Income

Sales

Total

Operating Income

FY2018Apr to sep

89.0
7.4
26.1
△ 0.1
32.9
5.9
19.6
0.2
12.4
0.5
18.3
0.7
198.3
14.6

FY2019Forecast
Apr to Mar

400.0
35.0
32.0
24.0

FY2018ActualApr to Mar

413.1
34.2
32.8
25.0

Billions of Yen Billions of Yen
Incr.
△Decr.

FY2019Forecast
Apr to Mar△ 10.4
△ 0.6
0.9
0.4
0.6
△ 0.1
△ 1.0
△ 0.4
2.6
2.00.9
△ 0.6
△ 6.4
0.7

4.1 Sales by segments

160.0
12.556.0
1.0
71.0
13.0
38.0
0.5
37.0
7.0
38.0
1.0
400.0
35.0

FY2018ActualApr to Mar

179.2
14.2
54.8
△ 0.3
67.1
11.8
39.0
0.9
34.1
6.3
38.8
1.3
413.1
34.2

Billions of Yen Billions of Yen
FY2019Apr to Sep

78.7
26.9
33.5
18.6
15.0
19.2
192.0

Elastomers & Performance Plastics
Infrastructure & Social Solutions
Electronics & Innovative Products
Living & Environment ProductsLife innovation
OthersTotal

FY2018Apr to sep

89.0
26.1
32.9
19.6
12.4
18.3
198.3

Incr.
△Decr.

Sales price△ 10.40.90.6
△ 1.0
2.6
0.9
△ 6.4

△ 7.0
1.10.4
△ 0.1
△ 0.2
△ 5.9

Sales volume△ 3.4△ 0.20.2△ 0.9
2.70.9△ 0.5

4.2 Operating income by segments

Billions of Yen
Operating income

FY2019Apr to Sep

Elastomers & Performance Plastics
Infrastructure & Social Solutions
Electronics & Innovative Products
Living & Environment ProductsLife innovation
Others
Total

6.9
0.3
5.8
△ 0.2
2.5
0.2
15.3

FY2018Apr to sep

7.4
△ 0.1
5.9
0.2
0.5
0.7
14.6

Incr.
△Decr.

△ 0.60.4△ 0.1△ 0.42.0△ 0.6
0.7

5. Key operating factors

Capital expenditure

M&A etc.

Depreciation
Research and Development
Interest-bearing debt

Yen / USD exchange rate
Naphtha price (yen/ Kl)

△ 7.0
1.1
0.4
△ 0.1
△ 0.2
△ 5.9

Sales volume

Operating cost& others

△ 2.2
△ 0.2
0.1
△ 0.4
1.9
0.0
△ 0.6

8.6
△ 0.5
△ 0.7
0.1
0.3
△ 0.6
7.3

Billions of Yen Billions of Yen
FY2019Apr to Sep

Investment

Sales price

16.2
2.7
18.9
11.0
7.3
123.3
109.2
42,900FY2018Apr to sep

14.3
0.1
14.411.3
7.8
121.5
109.5
50,550Incr.
△Decr.

1.9
2.6
4.5
△ 0.3
△ 0.5
1.8

FY2019Forecast
Apr to Mar

45.0
45.0
23.0
16.0
120.0

FY2018ActualApr to Mar

32.7
0.1
32.8
22.9
14.6
112.1