Business Results for theThird Quarter of the Fiscal Year Ending
December 31, 2017 (Unaudited)

November 8, 2017
Kuraray Co., Ltd.

November 8, 2017
Kuraray Co., Ltd.

Consolidated Earnings Report for the Third Quarter of the Fiscal Year Ending December 31,
2017

Name of listed company:
Stock code:
Stock exchange listing:
URL:

Kuraray Co., Ltd.
3405
Tokyo, first section
http://www.kuraray.com/

Representative:
Title:
Name:

Representative Director and President
Masaaki Ito

Contact:
Title:

Manager, Corporate Communications Department, Corporate Management Planning
OfficeFumio Uegaki+81-3-6701-1070

Name:
Tel:

Preparation of supplementary documentation for the quarterly earnings report: No
Holding of quarterly earnings results briefing: No(Millions of yen rounded down unless otherwise stated)

1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending December
31, 2017 (January 1, 2017 to September 30, 2017)(1) Consolidated Operating Results(Percentages displayed for net sales, operating income, ordinary income and net income attributable to owners of the parent
are comparisons with the corresponding period of the previous fiscal year.)(Millions of yen)
Net Sales

Operating Income(Change)

Fiscal 2017 3Q
Fiscal 2016 3Q

379,663360,787

5.2%(7.9)%

Note: Comprehensive income:(Change)

58,411
52,562(Change)

57,146
51,682For the fiscal 2017 third quarter:
For the fiscal 2016 third quarter:

Net Income per Share(Yen)
Fiscal 2017 3Q
Fiscal 2016 3Q

11.1%
6.6%

Net Income Attributable to
Owners of the Parent

Ordinary Income

10.6%
6.2%

(Change)

37,512
34,352¥39,328 million(¥2,937 million)

―
―

9.2%
7.8%

Fully Diluted Net Income per
Share (Yen)106.63
97.78

106.34
97.60(2) Consolidated Financial Position
Total Assets(Millions of yen)
Net Assets

Equity Ratio (%)

As of September 30, 2017

756,062546,659

71.2

As of December 31, 2016

725,433

520,978

70.7[Reference] Equity attributable to owners of the parent: As of September 30, 2017: ¥538,329 million
As of December 31, 2016: ¥512,959 million

2. Dividends
Cash Dividends per ShareJun. 30 Sep. 30 Dec. 31
20.00
―
21.00
20.00
―

(Yen)

Record Date
Mar. 31AnnualFiscal 2016―
41.00
Fiscal 2017―
Fiscal 2017
(Forecast)
22.00
42.00
Note: Revisions to cash dividend forecast during this period: No

3. Forecasts of Consolidated Financial Results for the Fiscal Year Ending December 31, 2017
(January 1, 2017 to December 31, 2017)(Percentages displayed for net sales, operating income, ordinary income and net income attributable to owners of the parent
are comparisons with the previous fiscal year)(Millions of yen)
Net Sales
Operating
Ordinary
Net Income
Net Income per
IncomeIncomeAttributable to Owners
Share (Yen)of the Parent
Full Fiscal
510,000(%) 75,000(%) 73,000(%)
46,000(%)
130.71
Year
5.1
10.6
10.3
13.9
Note: Revisions to forecasts of consolidated financial results during this period: Yes[Reference](1) Changes in Important Subsidiaries during the Period (Changes in Special Subsidiaries
Involving Changes in the Scope of Consolidation)
Added: No companies

Excluded: No companies(2) Adoption of Special Accounting Practices in the Preparation of Quarterly Consolidated
Financial Statements
No(3) Changes in Accounting Principles, Procedures and Presentation Methods inConnection with the Preparation of Quarterly Consolidated Financial Statements
1. Changes following revision of accounting standards: No
2. Changes besides 1. above: No
3. Changes in accounting estimates: No
4. Restatement: No(4) Number of Shares Issued and Outstanding (Common Shares)
1.

Number of shares issued and outstanding (including treasury stock) as of the period-end:
As of September 30, 2017354,863,603 shares
As of December 31, 2016
354,863,603 shares

2.

Number of treasury stock as of the period-end:
As of September 30, 2017
2,799,732 shares
As of December 31, 2016
3,363,405 shares

3.

Average number of shares for the period (cumulative):
As of September 30, 2017
351,812,027 shares
As of March 31, 2016
351,325,829 shares

Indication of quarterly review procedure implementation status
This quarterly earnings report is exempt from the quarterly review procedure based upon the Financial
Instruments and Exchange Act.
Cautionary Statement with Respect to Forecasts of Consolidated Business Results(Cautionary note regarding forward-looking statements)

The results forecasts presented in this document are based upon currently available information andassumptions deemed rational. A variety of factors could cause actual results to differ materially from forecasts.
Please refer to “Basis for the Revision in Forecasts, Including Consolidated Operating Results Forecasts” onpage 4 of the Attachment for the assumptions used.

Index of the Attachment
1. Qualitative Information and Financial Statements .................................................................................

2(1) Qualitative Information and Overview of Consolidated Business Results ........................................

2(2) Basis for the Revision in Forecasts, Including Consolidated Operating Results Forecasts ............

4

2. Quarterly Consolidated Financial Statements and Notes ......................................................................

5(1) Quarterly Consolidated Balance Sheets ....................................................................................................

5(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements ofComprehensive Income ..............................................................................................................................

7

Quarterly Consolidated Statements of Income .......................................................................................

7

Quarterly Consolidated Statements of Comprehensive Income ..........................................................

9(3) Notes regarding Quarterly Consolidated Financial Statements............................................................

10

Notes regarding Going Concern Assumptions .......................................................................................

10

Material Changes in Shareholders’ Equity................................................................................................

10

Additional Information................................................................................................................................

10

Segment and Other Information ...............................................................................................................

121

1. Qualitative Information and Financial Statements(1)Qualitative Information and Overview of Consolidated Business Results
In the third quarter of fiscal 2017 (January 1, 2017–September 30, 2017), consumption andinvestment continued to expand despite lingering concerns about the economic impact ofpolitical instability, and the world economy remained favorable overall. The Japanese
economy maintained its upward trend due to higher corporate profits backed by steadyexports and a gradual recovery in overall consumption as employment levels improved.
The U.S. economy continued to expand, buoyed by stable corporate profits and personal
consumption. In Europe, the economy remained favorable as corporations and consumers
maintained a bright outlook. In China, the economy continued to grow on the back ofsolid personal consumption despite worries about the economic impact of thegovernment’s tightening of monetary policy. Economies in emerging countries continued
to gradually recover.
Under these circumstances, the Kuraray Group has been successively implementing thebusiness strategies outlined in GS-STEP, its medium-term management plan that started infiscal 2015, to realize “a high-profit specialty chemical company with a global presence.”
Consequently, cumulative consolidated operating results for the third quarter of fiscal 2017
are as follows: net sales rose ¥18,875 million, or 5.2%, compared with the corresponding
period of the previous fiscal year to ¥379,663 million; operating income grew ¥5,848
million, or 11.1%, to ¥58,411 million; ordinary income increased ¥5,463 million, or 10.6%,
to ¥57,146 million; and net income attributable to owners of the parent rose ¥3,160
million, or 9.2%, to ¥37,512 million.
In the previous fiscal year, the activated carbon business and energy materials businesswere included in the Other Business segment. However, due to the absorption-type mergerof Kuraray Chemical Co., Ltd. on January 1, 2017, the Company decided to merge thesebusinesses into the carbon materials business and move said business to the Functional
Materials segment in fiscal 2017. Comparisons and analyses for the third quarter of fiscal
2017 are based on the segmentation following this change.
Results by Business Segment
Vinyl Acetate
Sales in this segment increased 2.5% year on year to ¥195,396 million, and segment income
grew 6.4% year on year to ¥47,904 million.
(1) Sales of PVA resin were brisk, increasing mainly in the U.S. market. Sales of
optical-use poval film rose. In addition, newly installed equipment at the Saijo Plant
commenced operations from the second quarter. Sales of water-soluble PVA film were
healthy due mainly to continued robust demand for unit dose detergent applications.
In PVB film, sales of high added-value products expanded.
(2) The sales volume of EVAL ethylene vinyl alcohol copolymer (EVOH resin) grew for
both automotive gas tank and food packaging applications.

2Isoprene
Sales in this segment increased 8.8% year on year to ¥41,782 million, and segment income
rose 16.8% year on year to ¥6,449 million.
(1) In isoprene chemicals, the sales volume of fine chemicals, SEPTON thermoplastic
elastomer and liquid rubber expanded and was favorable.
(2) The sales volume of GENESTAR heat-resistant polyamide resin for automotive,
connector and LED reflector applications expanded and was healthy.
Functional Materials
Sales in this segment climbed 3.7% year on year to ¥52,055 million, and segment income
jumped 67.7% year on year to ¥5,729 million.
(1) Sales of methacrylic were healthy mainly due to improvement in earnings backed byhealthy market conditions.
(2) In the medical business, sales remained favorable with contributions from sales of new
zirconia-based dental materials.
(3) For CLARINO man-made leather, sales of products made with both the conventional
and the new production process remained favorable.
(4) In the carbon materials business, sales remained favorable as the sales volume ofhigh-value-added activated carbon products increased.
Fibers and Textiles
Although sales of KURALON continued to expand, the effects of higher raw material andfuel costs were felt. Sales of consumer goods and materials were favorable as sales of thehigh value-added product KURAFLEX continued to rise. As a result, sales in this segmentrose 8.7% year on year to ¥38,558 million while segment income fell 1.0% year on year to¥4,632 million.
Trading
In fiber-related businesses, domestic clothing sales were firm for sportswear and uniforms,
but exports struggled. The overseas sewn products business expanded due to the effects ofincreased investment in Vietnam in the previous year. In addition, sales of materials weresteady overall, and sales of resins and chemicals were favorable, particularly for exports. As
a result, segment sales increased 8.5% year on year to ¥94,636 million, and segment income
climbed 8.7% to ¥2,863 million.
OthersIn other businesses, overall performance remained healthy. As a result, segment sales grew
11.3% year on year to ¥37,576 million, and segment income jumped 127.6% to ¥2,003
million.

3

(2)Basis for the Revision in Forecasts, Including Consolidated Operating Results
Forecasts
Kuraray has revised its consolidated operating results forecasts for the full fiscal year
ending December 31, 2017 as shown below in the table to reflect the trend in businessperformance up to the third quarter of fiscal 2017.
The revised cumulative consolidated operating results forecasts for the full fiscal year
ending December 31, 2017 (January 1, 2017 to December 31, 2017) are as follows.

Original Forecast (A)(Announced August 9, 2017)
Revised Forecast (B)Amount Adjusted (B − A)
Percent Adjusted(Yen)(Millions of yen)
Net Sales Operating Ordinary Net Income Attributable Net Income
Income Income to Owners of the Parent
Per Share
530,000

75,00073,00046,000130.71510,000(20,000)(3.8)

75,000-73,000-46,000-130.71[Reference] Results Forecasts by Segment for the Fiscal Year Ending December 31, 2017
(Billions of yen, rounded to the nearest hundred million)
Vinyl Acetate
Isoprene
Functional Materials
Fibers and Textiles
Trading
Other BusinessElimination & Corporate
Total

Net Sales

Operating Income

2,630
550
700
500
1,280
520

625
85
75
55
40
25

(1,080)
5,100

(155)
750

Note: The above forecasts are based on the best information currently available. Actual
operating results may vary significantly due to various factors.

4

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheets

ASSETS
Current Assets
Cash and cash deposits
Notes and accounts receivable–trade
Short-term investment securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent Assets
Tangible fixed assets
Buildings and structures, net
Machinery, equipment and vehicles, net
LandConstruction in progress
Other, net
Total tangible fixed assets
Intangible fixed assets
Goodwill
Customer-related assets
Other
Total intangible fixed assets
Investments and other assets
Investment securities
Long-term loans receivable
Net defined benefit assets
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

5(Millions of yen)

December 31, 2016

September 30, 2017

51,437105,01039,06473,504
12,26025,504
5,974
12,669(451)
324,974

43,415110,044
52,32983,438
14,23325,703
7,065
11,600(475)
347,354

54,343
162,963
19,52629,904
5,090
271,827

58,865
165,544
19,57733,284
5,388
282,659

26,25628,88024,401
79,53724,921
26,49525,30876,72634,023
260
827
7,097
6,929
(43)
49,093
400,458
725,433

32,726
246
1,041
7,995
7,354
(43)
49,321
408,707756,062(Millions of yen)
LIABILITIESCurrent Liabilities
Notes and accounts payable–trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for bonuses
Other provision
Other
Total current liabilities
Noncurrent liabilities
Bonds payable
Long-term loans payable
Deferred tax liabilities
Provision for directors’ retirement benefits
Provision for environmental measures
Net defined benefit liabilities
Asset retirement obligations
Other
Total noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gain or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares
Noncontrolling interests
Total net assets
Total liabilities and net assets

6

December 31, 2016

September 30, 2017

36,424
7,626
10,719
7,635
5,296
4
28,43096,136

31,961
7,703
10,862
9,475
8,543
6
29,64598,19810,00042,17225,442
209
3,580
11,542
4,192
11,178108,318
204,454

10,00042,10024,310207
6,561
13,066
4,393
10,565111,203
209,402

88,95587,178304,277(3,972)476,439

88,95587,223
327,573(3,309)500,444

10,913(110)
30,054(4,336)36,520719
7,300
520,978
725,433

11,313(883)
31,371(3,915)37,885555
7,774
546,659
756,062(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements ofComprehensive Income
Quarterly Consolidated Statements of Income(Millions of yen)
Fiscal 2016 3Q(January 1, 2016 –September 30, 2016)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in earnings of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange loss
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on transfer of know-how
Gain on sale of investment securities
Total extraordinary income
Extraordinary loss
Loss on provision for environmental measures
Loss on anti-monopoly act
Acquisition expenses
Loss on valuation of investment securities
Disaster loss
Total extraordinary loss
7

Fiscal 2017 3Q(January 1, 2017 –September 30, 2017)

360,787
234,581
126,206

379,663244,469
135,194

19,99253,65073,64352,562

20,85855,92476,78258,411

169
2,491
12
1,362
4,035

261
1,334
10
928
2,534

587
532
3,795
4,915
51,682

543
1,042
2,214
3,799
57,146

―
―
―

2,500
1,352
3,852

―
―
―
―
―
―

3,146
1,019
901
556
417
6,041

Income before income taxes and noncontrolling interests
Income taxes—current
Income taxes—deferred
Total income taxes
Net income
Net income attributable to noncontrolling interests
Net income attributable to owners of the parent

8

Fiscal 2016 3Q(January 1, 2016 –September 30, 2016)(Millions of yen)
Fiscal 2017 3Q(January 1, 2017 –September 30, 2017)

51,682
16,345289
16,63535,047694
34,352

54,957
18,848(2,097)
16,751
38,205692
37,512

Quarterly Consolidated Statements of Comprehensive Income(Millions of yen)
Fiscal 2016 3Q(January 1, 2016 –September 30, 2016)
Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Quarterly comprehensive income
Comprehensive income attributable to:
Owners of the parent
Noncontrolling interests

9

Fiscal 2017 3Q(January 1, 2017 –September 30, 2017)35,047

38,205(2,909)(15)(35,729)669(37,984)(2,937)

400
(764)
1,065
421
1,122
39,328(3,631)
693

38,626701

(3) Notes regarding Quarterly Consolidated Financial Statements
Notes regarding Going Concern Assumptions
None
Material Changes in Shareholders’ Equity
None
Additional Information
Application of the Guidance on Recoverability of Deferred Tax Assets
The Accounting Standards Board of Japan (ASBJ) issued ASBJ Guidance No. 26 “Guidance on
Recoverability of Deferred Tax Assets” on March 28, 2016. This guidance is applied from the firstquarter of the fiscal year ending December 31, 2017.
Provision for Environmental Measures
From the second quarter, Kuraray records within the provision for environmental measures theestimated costs associated with soil protection measure-related construction and the disposal of PCBs
and other waste.
Furthermore, in the cumulative consolidated second quarter, Kuraray recorded an estimated¥3,146 million for relevant construction as a loss on provision for environmental measures within
extraordinary loss.
Business Combination through Acquisition
Kuraray and Calgon Carbon Corporation (Headquarters: Pennsylvania, USA; listed on NYSE) signed anagreement on September 21, 2017, whereby Kuraray will acquire all the shares of Calgon Carbon (“thePurchase”), making it a wholly owned subsidiary.
1. Summary of the business combination(1) Company name and description of acquired businessCompany name:Calgon Carbon Corporation
Description of acquired business: Manufacture and sale of activated carbon and water
processing equipment(2) Main reason for the business combination
Kuraray is developing its activated carbon business, focusing on high-performance activatedcarbon for such applications as energy, water resources, and air purification.
Calgon Carbon is a global leader in activated carbon with production bases in sevencountries worldwide and sales bases in 16 countries, providing cutting-edge solutions for a wide
variety of applications and industries.
After the Purchase, Kuraray will position the activated carbon business as one of its future
core businesses and steadily implement a raft of strategic measures, including further expanding
its business by leveraging Calgon Carbon's solid worldwide business base, accelerating thetechnological revolution by bringing together both companies' technical and developmental
capabilities, and paring down costs by optimizing production systems. Through its supply ofhigh-performance activated carbon materials, Kuraray will continue to contribute to people's
health and comfort as well as the sustainability of the planet's environment and resources.
(3) Closing date
To implement the Purchase, it is necessary to gain approval at Calgon Carbon's general meetingof shareholders as well as the approval of the regulatory authorities. The Purchase is expected tobe completed by the end of 2017.
10

(4) Legal form of business combination
Cash purchase of shares(5) Name of acquired company after business combination
Undecided(6) Percentage of voting rights acquired
100%(7) Structure of acquisition
A Kuraray-established merger subsidiary will acquire 100% of the voting rights through theacquisition of shares in exchange for cash payment.
2. Cost of acquisition for the acquired business and breakdown
Acquisition price (estimate):
US$1,107 million (¥121,755 million)
Note: The yen figure was calculated at a rate of ¥110 per U.S. dollar.

11Segment and Other Information(Segment Information)
I. Third Quarter of Fiscal 2016 (January 1, 2016 to September 30, 2016)
1. Net sales, income and loss by reporting segment
Reporting Segment
Vinyl Isoprene Functional Fibers and Trading
AcetateMaterials Textiles

Net sales(1) Outside
168,860
customers(2) Inter-segment 21,739
sales andtransfers
Total
190,599
Segment income(loss)

45,012

Total(Millions of yen)

Other
Total Adjustment2 Consolidated
Statements
Business1
3
of Income

20,83236,00827,12885,068 337,898

22,889 360,787―

360,787

17,586

14,208

8,345

2,189

64,06910,865 74,935(74,935)―

38,41950,21735,47487,257 401,968

33,754 435,722(74,935)

360,787

5,520

3,417

4,677

2,634

880 62,142(9,579)52,562

61,262

Notes:
1. The “Other Business” category incorporates operations not included in business segment reporting,including the environmental business and engineering business.
2. Adjustment is as follows: Included within segment loss of ¥9,579 million is the elimination ofintersegment transactions of ¥1,195 million and corporate expenses of ¥10,774million. Corporate
expenses mainly comprise headquarters’ general and administrative expenses and the submitting
company’s basic research expenses.
3. Segment income is adjusted to agree with operating income in the consolidated statements of income.
II. Third Quarter of Fiscal 2017 (January 1, 2017 to September 30, 2017)
1. Net sales, income and loss by reporting segment
Reporting Segment
Vinyl Isoprene Functional Fibers and Trading
AcetateMaterials Textiles

Net sales(3) Outside
171,695
customers(4) Inter-segment 23,701
sales andtransfers
Total
195,396
Segment income
47,904(loss)

Total

Other
Total
Business1(Millions of yen)
Adjustment2 Consolidated
Statements
3of Income

22,42736,98029,54591,800 352,449

27,213 379,663―

379,663

19,354

15,074

9,013

2,836

69,98010,363 80,343(80,343)―

41,782
6,449

52,055
5,729

38,558
4,632

94,636 422,429
2,863 67,578

37,576 460,006
2,003 69,581(80,343)(11,170)

379,663
58,411

Notes:
1. The “Other Business” category incorporates operations not included in business segment reporting,including the environmental business and engineering business.
2. Adjustment is as follows: Included within segment loss of ¥11,170 million is the elimination ofintersegment transactions of ¥1,018 million and corporate expenses of ¥12,189 million. Corporate
expenses mainly comprise headquarters’ general and administrative expenses and the submitting
company’s basic research expenses.
3. Segment income is adjusted to agree with operating income in the consolidated statements of income.
12

2. Change in Reporting Segments
On January 1, 2017, Kuraray absorbed its consolidated subsidiary Kuraray Chemical Co., Ltd. Following
this, the Company revised the organization of its business segments in the first quarter of fiscal 2017.
The activated carbon business and energy materials business, which had been included in Other Business,were merged into the Carbon Materials Business. This business is now listed under Functional Materials.
Segment information for the third quarter of fiscal 2017 is based on the segmentation following
the revision.

13