2Q FY 2019 Financial Results Conference Call
Q&A Session Summary
Date: Friday, November 8, 2019: 4:00 p.m. to 5:00 p.m.
Presenter: Junichi Miyazaki, Director, Senior Executive Vice President & CFO,
Head of the Finance & Accounting Department
Presentation materials: https://www.nissanchem.co.jp/eng/ir_info/library/pdf/AM/am2019_09.pdf■ Overall
Q1: For Chemicals and Performance Materials, both capital investment and R&D
expenses have decreased more than expected in May. Are you moving toward
reducing investments in the future?
A1: Regarding Performance Materials, we plan to review capital investments and otherexpenses centered mainly on semiconductors, and postpone some investments. Basically,
the decrease is only temporary. For Chemicals as well, we delayed some investment plansin light of market conditions in the first half.

Q2: Nissan Chemical has continued to repurchase its own shares. In the event of alarge-scale M&A, at the 300- or 400-billion-yen level, would you consider a capitalincrease instead of just loans alone?
A2: While we have told each business division to feel free to engage in M&As, there are limits
on the amounts. Since we have only about 1,200 professional employees in total on anunconsolidated basis, we believe that even if we were to acquire a firm on the scale of 300
or 400 billion yen, we would not be able to manage it. Our limits on the scale of acquisitions
are calculated based on the approach of tolerating loans up to a degree that would reduce
our rating by one rank. We also have a surplus of cash. We expect to be able to acquire
firms valued at tens of billions of yen through supplementing these surplus funds with theloan amount referred to earlier.
■ Chemicals Segment
Q3: Performance of Chemicals overall was considerably below expectations in thefirst half (April - September). Would you please describe what's behind yourexpectations of a recovery in the second half?
A3: While performance was stable through the first half of last year, it decreased rapidly inthe second half due to the impact of U.S.-China trade friction and other factors. For thisreason, we expect a relatively large increase in profits in the second half of this fiscal year.
These plans also incorporate expectations of a recovery in the business environment forour leading export products, such as TEPIC and melamine. With regard to other products,
the first half was impacted strongly by factors such as lower utilization by main users, andwe expect a recovery from that impact in the second half.

Q4: Conditions in the melamine market remain weak. Have you seen any signs of arecovery recently?
A4: The melamine price has decreased by about 30% compared to October of last year.
While this trend remains unchanged, we do expect a small rebound in the second half.
■ Performance Materials Segment
Q5: Conditions in the LCD panel market are expected to be quite difficult in the secondhalf. What about SUNEVER?
A5: We expect SUNEVER's performance in the third quarter to be roughly in line with its
second quarter performance, probably followed by a slight decrease in the fourth quarter.

Q6: SUNEVER's VA mode sales in the first half appear to show very strong growthcompared to competitors and market conditions. What's behind that? Also, what is
the trend in prices?
A6: In addition to maintaining our share among existing customers, we also are securing anew customer for the VA mode. Since utilization by this new customer is stronger thanexpected, our sales have shown strong growth amid a bearish trend among competitors
and in the market as a whole. The price trend has been largely as was expected in May.

Q7: SUNEVER's photo-alignment IPS mode sales are strong. Is this due to major
contributions from smartphones?
A7: While sales for smartphone use are strong, a major factor behind this growth is theincreasing penetration of photo-alignment IPS for applications other than smartphones,
such as laptop computers and monitors. Smartphones account for about one-half of theexpected increase in the full-year sales outlook this fiscal year, while other applications
account for the remainder.

Q8: SUNEVER's photo-alignment IPS mode prices are higher than the outlook in May,for both actual first-half performance and second-half forecasts. What's behind thistrend?
A8: We have been able to contain the downward trend in prices better than initially expected.
The strongest factor behind this is the fact that our materials offer performance superior tothat of competing materials. We are ahead of the competition in development, and webelieve that this leads to quick ascertaining of new needs and swift commencement ofdevelopment activities.
■ Agrochemicals Segment
Q9: You've revised the sales outlook for Fluralaner slightly downward from the initial
May forecast. What's behind this revision? Also, how are Bravecto inventory
adjustments proceeding?
A9: This revision was due mainly to the high yen. Although our view is that the Bravecto
inventory adjustments at MSD* probably are not completed because of numerous
uncertainties, we project Fluralaner sales in the fourth quarter to grow compared to lastyear.

Q10: Zoetis plans to bring to market a triple compound called the Simparica Trio. Willthat pose a competitive threat?
A10: While we do recognize it as a new competing product, since Bravecto has a large shareof the global market, and the market as a whole continues to grow, we do not necessarily
consider the Simparica Trio to be a threat. In addition, in its conference call on financial
results the other day, MSD clearly stated that it is developing a similar triple compound.
We have heard that MSD also believes that it is important to offer a wide-ranging lineup ofveterinary medical products and is diligently advancing development efforts.

Q11: To what extent is the introduction of Bravecto to the China market incorporated
in second-half projections as sales of Fluralaner?
A11: Since we have not spoken with MSD about its sales plans by country, sales to China
are not included in company plans, including medium-term business plans.

Q12: What is the size of the veterinary medical product market for pets in China?
A12: Although we have heard that it is potentially very large, since we have not received
solid information from MSD, we cannot provide you with quantitative information.
According to our own survey, there are about 50 million dogs kept as pets in the country.
We believe that we can expect a corresponding sales volume.
* MSD: MSD Animal Health, the global animal health business unit of Merck (US)