Fiscal Years 2021-2023

New Medium-Term Management Plan

Grow UP 2023
May 13, 2021

Securities Code
4182
©MITSUBISHI GAS CHEMICAL COMPANY, INC.

1

Contents

1. Review of Previous Medium-Term Management Plan,
MGC Advance2020
2. New Medium-Term Management Plan, Grow UP 2023
ー 1. Shift to a Profit Structure Resilient to Environmental Changes:
Business Portfolio Reforms
ー 2. Balance Social and Economic Value:
Toward Sustainable Growth
3. Grow UP 2023 Conceptual Diagram and Reference Materials©MITSUBISHI GAS CHEMICAL COMPANY, INC.

2

Review of Previous Medium-Term Management Plan,
MGC Advance2020©MITSUBISHI GAS CHEMICAL COMPANY, INC.

3

Review of Past Medium-Term Management Plans and Operating Performance
ー Sales remained on a growth track, centered around themes including globalization and technology development
ー While the range of fluctuation in operating income margins shrank compared to the past, volatility remained highー Ordinary income and operating income margins approached similar levels due to a fiscal 2019 change in the scheme
behind an equity method affiliate in Saudi Arabia
MGC Will

Co-creation
Fiscal years 2003-2008

MGC Advance

Fiscal years 2009-2014

Fiscal years 2015-2020

Fiscal years 2002-2020 Sales compound annual growth rate (CAGR): 3.7%
70 000 0

12.8%

Sales (100 mil. JPY)
60 000 0

14 .0 %

6,489

Operating Income Margin

12 .0 %

Ordinary Income Margin
50 000 0

12.7%

5,193

9.9%

Average Operating
Income Margin

10 .0 %

3,845

9.1%

40 000 0

8.4%

8.1%

8.0%

3,121

7.5%

Average for period 7.1%

30 000 0

Average for period 6.4%

6.0%

4.0%

20 000 0

Average for period 2.6%

1.6%

2.0%

10 000 0

2.0%
0.0%

0

0.6%
-0.7%
-2.0%

-10 000 0

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

©MITSUBISHI GAS CHEMICAL COMPANY, INC.

4

Review of Previous Medium-Term Management Plan, MGC Advance2020 (1)ー In core and semi-core businesses, steady growth in products unaffected by market conditions
ー These have led to solving social issues while maintaining their competitive advantage as their markets have grown

Change in ordinary income in growth product lines and other products
Growth Product Lines
Other Products excluding Growth Product Lines

Typical growth products:+ <- Profit and Loss -> -Fiscal 2018

Fiscal 2019

Meta-xylenediamine (MXDA)
Aromatic aldehydes
MX-Nylon
Electronics chemicals
Polyacetal
Optical resin polymers
Semiconductor packaging BT material

Fiscal 2020

Key initiatives • Expansion of optical resin polymers manufacturing plant• Expansion of super-pure hydrogen peroxide manufacturing plants in North America andSouth Korea• Pursuit of leading-edge technology development, including next-generation low-loss BT
materials and others• Capturing of new markets through development of aromatic aldehyde applications©MITSUBISHI GAS CHEMICAL COMPANY, INC.

5

Review of Previous Medium-Term Management Plan, MGC Advance2020 (2)ー Fiscal year 2020 targets: Operating income ¥65 billion, ordinary income ¥80 billion, ROE 12% or higher. Assumes new record highs in both sales and profits
ー Results: At ¥50.2 billion, ordinary income missed its target by ¥29.8 billion. Both segments fell below the scenario established under initial targets
ー Primary factors include failure to reach the targeted sales volumes, and the impact of fluctuations in market conditions on commodity products such as methanol,
meta-xylene, PIA and polycarbonate
ー Of three-year investment target of ¥200 billion, approximately ¥140 billion invested
Consolidated
Performance(100 mil. JPY)

Fiscal 2017
Results

Fiscal 2020
Targets

Fiscal 2020
Results

Targets vs.
Results
Difference

Sales

6,359

7,500

5,957

(1,543)Operatingincome

627

650

445

(205)

Ordinary income

807

800 *

502

(298)

7.1%

(4.9pp)

ＲＯＥ

13.6%

12% or higher

Exchange rate
(JPY/USD)

111

110

106

Crude oil (Dubai)(USD/bbl)

56

60

45

Methanol(USD/MT)

339

355

256

Actual change in ordinary income
800(100 mil. JPY)

73
(144)

502

(73)
Basic -169
Specialty -3
Others +28

2020
targets

Volumefactors

Basic -79
Specialty +6

Pricing andvariable cost
factors

Basic +62
Specialty +11(153)
Basic -59
Specialty -60
Others -35

Fixed cost andSG&A factors

Equity earnings
and otherfactors

2020
results*Initially established target of ¥90 billion revised to ¥80 billion following consideration of the impact of the change inequity holding in the Saudi Arabia equity method affiliate under MGC Advance2020.
©MITSUBISHI GAS CHEMICAL COMPANY, INC.

6

Review of Previous Medium-Term Management Plan, MGC Advance2020 (3):Validation and Issues for New Medium-Term Management Plan
External Factors
for Falling Shortof Previous
Medium-Term
ManagementPlan

1. Oversupply due to the rise of emerging countries, and a downturn in commodity productmarkets associated with US/China trade friction, etc.
2. Decline in demand for some products due to the impact of COVID-19

Internal Factors
for Falling Shortof Previous
Medium-Term
Management
Plan

1. Maturation of existing business structures

Recognition ofIssues for New
Medium-Term
Management
Plan

Bold transformation of business portfolio is essentialーLarge weight still placed on commodity products

2. Delays in developing new businesses and productsーStill midway through development of Neopulim transparent polyimide resin,Life science business, medical packaging materials, etc.

ー Lower dependence on market conditions and other external circumstances,
accelerating expansion of new businesses and high-value-added products©MITSUBISHI GAS CHEMICAL COMPANY, INC.

7

New Medium-Term Management Plan,
Grow UP 2023
“Grow UP 2023,” the title of the new Medium-Term Management Plan, reflects our expectations for Growth for both the MGC Group and its employees
It also incorporates our desire to grow our Uniqueness and Presence as an excellent company©MITSUBISHI GAS CHEMICAL COMPANY, INC.

8

Establishing the “MGC Way”, a New Philosophy System
ー Under our new philosophy system, the “MGC Way”, the MGC Group will work to balance economic and social value, and tocontribute to realizing a sustainable society

Mission

MGC Way

Creating values to share with society

VisionAn excellent company with uniqueness andpresence built on chemistry

Value

Principles of Conduct

As a professional group:
1. Courage that does not shy away from change
2. Aim for lofty goals
3. Perseverance in achieving goals
4. Build team spirit with communication©MITSUBISHI GAS CHEMICAL COMPANY, INC.

9

Positioning of the New Medium-Term Management Plan:
A long-range view and a step closer to our vision
ー The new Medium-Term Management Plan has been formulated with a long-term vision for the future in mind
ー The future is not merely an extension of the status quo, and requires rapid adaptation to a “new normal” and advanced technology
based on achieving discontinuous evolution

The backcasting approach

New Medium-Term
Management Plan

Advanced
medicaltechnology

Expandingpresymptomatic
needs

Grow UP 2023

Fiscal years 2021-2023

The future does not exist
as an extension of thestatus quo

Dealing withtheenvironmentand climatechangeTightened
food supply
and demand

Shift tosmart cities

Dealing withemerging
countries

Fiscal years 2030-2050

The Expected Future

Supply chain
rebuilding

Advanced
semiconductor
technology

Developments
in CASE(Social policy, technological trends)

Circulareconomy©MITSUBISHI GAS CHEMICAL COMPANY, INC

10

MGC Group Target Areas:

Examples of Products That Will Demonstrate Our Strengths in the Expected Future
Target Area

Medical/Food

Expected Future

Products that will demonstrate opportunities and strengths for the MGC Group・ Antibody drugs to become mainstream
in drug discovery field・ Diversification of allergy diagnostics

Allergy testchip

・ Response to food loss problem

ICT/
Mobility

・ Increased demand for raw materials
for components for cameras
and electronic devices
・ Expanded need for materials
that lead to weight savings・ Expanded use of solid-state batteries

Environment/
EnergyInfrastructure

Oxygen absorbers

Contract manufacturingof antibody drugs

・ Shift to renewable energy

Optical resin
polymers

Solid electrolytes

・ Development of CO2
recycling technology

・ Expanded demand for infrastructurein emerging countries

Semiconductor
packaging BT
material

Carbon fiber
composite material

CO2-derived
methanolCO2-derived
polycarbonate

Geothermal
power
generation

・ Progress in use of IoT/AI technology
MXDA©MITSUBISHI GAS CHEMICAL COMPANY, INC.

11

New Medium-Term Management Plan Grow UP 2023 Objectives and Strategies

Pursue sustainable growth after business portfolio reforms
Objective
1

Objective
2

Shift to a profit structure resilient toenvironmental changes
Business portfolio reform

Balance social and economic value

Strategies

Strategies

1-1. Further strengthen competitively
advantageous (“differentiating”) businesses

2-1. Solve social issues through business1-2. Accelerate creation and development of new
businesses
1-3. Reevaluate and rebuild unprofitablebusinesses

Toward sustainable growth2-2. Harmonize value creation withenvironmental protection
2-3. Strengthen discipline and foundation
supporting business activities©MITSUBISHI GAS CHEMICAL COMPANY, INC.

12

Numerical Targets
Fiscal year 2020
results

Fiscal year 2023
targets

Change between fiscal
years 2020 and 2023

Sales

¥595.7 billion¥730.0 billion+¥134.3 billion

Operatingincome¥44.5 billion¥70.0 billion+¥25.5 billion

Ordinary
incomeROIC*

ROE¥50.2 billion

7.7%

7.1%

* ROIC = Ordinary income/invested capital¥80.0 billion

10% or higher

9% or higher

ー Attempt to reach record-high levels of operating income
ー Promote management with an awareness of capitalefficiency(Reference Indices)
Fiscal year
2020

Fiscal year
2023

Changebetween fiscal
years 2020
and 2023

Operating income
margin7.5%

9.6%+2.1ppOrdinary income
margin

8.4%

11.0%

+2.6pp

EBITDA*¥81.7
billion¥120.0billion+¥38.3billion

EBITDA margin**

13.7%

16.4%

+2.7pp+¥29.8 billion+2.3pp+1.9pp* EBITDA = Ordinary income + depreciation expense + interest paid** EBITDA margin = EBITDA/sales©MITSUBISHI GAS CHEMICAL COMPANY, INC.

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Mid- to Long-Term Objective:
Create a structure for sustainably increasing corporate value
ー Set a new record for operating income in fiscal year 2023, then aim to also set a new record for operating income margin
ー Have in sight achieving sales of ¥1 trillion or higher and operating income of ¥100 billion (operating income margin of 10%) or higher
in 10 years, by fiscal year 2030
Set a new record
for operating income margin

Operating income (margin) trend (billion JPY)
1200

1000

Operating
Income

9.9%

9.6%

9.1%

Achieve operating
income of ¥100 billion+

10.0%

10.0%＋
100.0＋

Operating
Income Margin

800

70.0

5.2%

62.7

11.0%

9.0%

7.0%

Set a new record
for operating income

600

5.0%

47.3
400

3.0%

200

1.0%

0

-1.0%

-200

-3.0%

2002

2004
Co-creation

2006

2008

2010

2012

MGC Will

2014

2016

2018

MGC Advance

2020

2023

2030

Grow UP©MITSUBISHI GAS CHEMICAL COMPANY, INC.

14

1．Shift to a Profit Structure Resilient toEnvironmental Changes:
Business Portfolio Reform©MITSUBISHI GAS CHEMICAL COMPANY, INC.

15

Objectives of New Medium-Term Management Plan Grow UP 2023
1-1. Further strengthen competitively advantageous(“differentiating”) businesses• Prioritize allocation of management resources to high-value-added
products defined as differentiating businesses

Objective
1
Shift to a profit structure
resilient to environmental
changes
Business portfolio reform• Shift foundation businesses to differentiating businesses
by making them high-added-value, high-efficiency

1-2. Accelerate creation and development of new businesses• Revise R&D organization and put in place an environmentthat encourages market expansion• Proactive R&D investment, increase in research personnel

1-3. Reevaluate and rebuild unprofitable businesses• Improve business profitability by identifying and reorganizing
unprofitable businesses©MITSUBISHI GAS CHEMICAL COMPANY, INC.

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Business Portfolio Reform
Classify and define each businessunder four stages
Definition
Differentiating
businesses
New/next-generation
businesses

Foundation businesses

Unprofitable businesses or
those needing rebuilding

Businesses that can grow and win

Potential businesses

Business generating a certain level of earnings
Upstream process of differentiating businesses

Businesses with doubts about competitive
advantage or potential for market growth

Position going forward

Core of growth
Proactively apply management
resources

Raise earning power
Promote higher added value,higher efficiency

Business rebuilding
Begin reevaluation, including
withdrawal©MITSUBISHI GAS CHEMICAL COMPANY, INC.

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Moving Forward with Business Portfolio Reforms
STEP

STEP

STEP

1

2

3

Analysis and classification of
status quo

Strategy execution

Achieve reforms
Fiscal year 2023 (image)Status quo (image)
High

High

Differentiating
businesses

Further strengthen competitively
advantageous businesses
Accelerate creation anddevelopment of new businesses

Unprofitablebusinesses or
those needingrebuilding

Identify and reorganize
unprofitable businesses

Foundation
businesses

Low

Room in potential market = “Growth”

Room in potential market = “Growth”

New/nextgeneration
businesses

New/nextgeneration
businesses

Differentiating
businesses

Unprofitablebusinesses or
those needingrebuilding

Foundation
businesses

Low
Weak

StrongCompetitive advantage = “Can win”

Weak

StrongCompetitive advantage = “Can win”
©MITSUBISHI GAS CHEMICAL COMPANY, INC.

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Business Portfolio Reform Classification Criteria
Existing Businesses
Growth potential
Room in potential market

Classification Item

Level of contribution to
profits (short/long term)
Ordinary income, net assets, etc.

Small

Low

New Businesses

Large

Above a certain level

High
Identify competitive
advantage

Capital efficiency

Below acertain level

ROIC

Unprofitable businesses or
those needing rebuilding

Foundation businesses

Above acertain level

Differentiating
businesses

New/next-generation
businesses

Shift management resources todifferentiating businesses andnew/next-generation businesses©MITSUBISHI GAS CHEMICAL COMPANY, INC.

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Classification of Product Lines under New Medium-Term Management Plan
Differentiating
businesses

Classification of
Product Lines
under New
Medium-Term
Management Plan

New/next-generation
businesses(Includes products in thedevelopment stage)

MXDA, aromatic aldehydes, MX-Nylon, electronics chemicals, polyacetal, optical resin polymers, ultra-high refractive lensmonomer, semiconductor packaging BT material...
Medical/Food:
ICT/Mobility:

OXYCAPT, bio-products, contract manufacturing of antibody drugs, factory-produced vegetables ...
Solid electrolytes, cellulose fiber composite materials, Neopulim transparent polyimide resin,semiconductor-related materials...
Environment/Energy: CO2-derived methanol, CO2-derived polycarbonate, methanol fuel cells...

Foundation businesses

Methanol, ammonia and amines, MMA products, energy resources and environmental businesses (geothermal and othertypes of power generation, water-soluble natural gas, iodine), foamed plastic (JSP), hydrogen peroxide,
polycarbonate/sheet film, oxygen absorbers…

Unprofitable businesses or
those needing rebuilding

Formalin and polyol products, xylene separators and derivatives

Status quo (image)High

Further strengthen competitively
advantageous businesses

Percentage of sales 30%

Unprofitablebusinesses or
those needingrebuilding

Identify and reorganize
unprofitable businesses

Foundation
businesses

Percentage of sales 6%

Low

Low
Weak

StrongCompetitive advantage = “Can win”

Accelerate creation and developmentof new businesses

Room in potential market = “Growth”

Room in potential market = “Growth”

Differentiating
businesses

New/nextgeneration
businesses

Fiscal year 2023 (image)High

New/nextgeneration
businesses

Differentiating
businesses
Percentage of sales> 40%(Target)Unprofitablebusinesses or
those needingrebuilding

Foundation
businesses

Percentage of sales< 3%(Target)Weak

StrongCompetitive advantage = “Can win”
©MITSUBISHI GAS CHEMICAL COMPANY, INC.

20

Action Plan for Business Portfolio Reforms
Further strengthen competitively advantageous (“differentiating”)
businesses
Electronics chemicals
Strengthen global expansion in super-pure hydrogen peroxide
Optical resin polymers
Boost production capacity and construct new raw material monomer plant
Semiconductor packaging BT material
Capture new demand as 5G progresses
MXDA
Consider establishing new MXDA production facility in Europe
Aromatic aldehydes
Boost production capacity at Mizushima Plant
MX-Nylon
Improve recyclability
Polyacetal
Enhance market presence through business restructuring
Bring higher added value and higher efficiency to foundation
businesses• Promote higher added value and higher efficiency to shift to differentiating
business• Contributions aimed at realizing a decarbonized society, including throughthe use of methanol and polycarbonate derived from CO2, etc.
• Foamed plastic (JSP)
Differentiation through sales expansion of environmental products;
strengthening the mobility sector

Accelerate creation and development of new businesses
Strategies for encouraging market expansion
Optimize research promotion system through integration
and reorganization of R&D organization
Promote a strategic IP landscape, etc. through the establishment of
a new Intellectual Infrastructure Center
Strengthen ability to generate new products
Plan to increase level of R&D investment by 20% overprevious medium-term management plan
Also plan to increase research personnel

Reevaluate and rebuild unprofitable businesses
Formalin and polyol products
Build an integrated production system extending from formalinto the downstream (adhesives)
Progress with business portfolio reforms to create a basefor stable earnings
Xylene separators and derivatives
Plan to rebuild business structure with the goal of stabilizing earnings fromhigh-volatility product lines©MITSUBISHI GAS CHEMICAL COMPANY, INC.

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Further Strengthen Competitively Advantageous (“Differentiating”) Businesses
Electronics chemicals

Strengthen global expansion in super-purehydrogen peroxide
ー Further strengthen production sites that have
expanded from Japan to South Korea, the U.S.,
Singapore and Taiwan
Establishment of new sites--> China: Establish raw material plant(scheduled to go on line in 2022)
Super-pure hydrogen peroxide plant(sometime by fiscal year 2023)
Strengthening existing sites--> Taiwan: Establish raw material plant(scheduled to go on line in 2023)
Japan: Increase production by eliminatingbottlenecks(sometime by fiscal year 2023)

Optical resin polymers

Ensure a solid response to strong demand
ー Boost production capacity at Kashima Plant(commercial operation scheduled to start inJuly 2022)

Build a strong supply chain
ー Ensure the smooth launch of raw material
monomer plant, a joint venture with Taoka
Chemical Co., Ltd. (commercial operation
scheduled for January 2023)

Promote recycling
ー Reduce environmental impact by collecting andrecycling residual materials generated bycustomers

Semiconductor packaging BT material

Capture new demand as 5G progresses
ー Promote sales expansion strategies, such as byintroducing new BT materials to the expanding
Antenna in Package (AiP) market

Ensure a solid response to strong demand
ー Boost production capacity at Thailand plant(commercial operation scheduled for April 2022)

New product and market development
ー Joint development of IC substrate materials
compatible with the requirements of thesemiconductor market, through a joint venturewith ITEQ of Taiwan©MITSUBISHI GAS CHEMICAL COMPANY, INC.

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Further Strengthen Competitively Advantageous (“Differentiating”) Businesses
MXDA
Advance Sales Expansion Strategy
ー Advance expansion of sales strategy in anticipation of future new construction of
production facility (Europe)
1. Accelerate sales expansion in emerging
markets
ー Promote expansion of MXDA sales targeting inemerging countries in South America and elsewhere
2. Development aimed at environmentallyfriendly products
ー Focus on R&D and expanding sales inenvironmentally friendly products including
wind power generator blades, water-based paints, etc.

MX-Nylon
Expand Sales in Priority Regions
ー Extend existing applications to priority regions, including Europe, the U.S., China,
Southeast and South Asia, the Middle East and Central and South America.

Efforts to Reduce Environmental Impact
ー Efforts aimed at enhancing recyclability
ー Development of materials derived from biomass
ー Contribute weight saving through metal
substitutes

Aromatic aldehydes
Respond to Future Increases in Demandー Demand for aromatic aldehydes is growing at an annual rate of 4-5%
Respond to future increases in demand

Boost production capacity at Mizushima Plant
ー Plan to boost production capacity in
2022 through debottlenecking
ー Consider constructing new production
facilities to respond to mid- to long-term
increases in demand

Polyacetal
Enhance market presence through business restructuring

ー Make Korea Engineering Plastics Co., Ltd. (KEP) a manufacturing company andestablish a new company in Korea to handle sales of KEP products

Develop New Grades and Expand Sales

ー Continuous improvement of low-VOC gradeand expand product line-up to extend sales into
the mobility field©MITSUBISHI GAS CHEMICAL COMPANY, INC.

23

Bring Higher Added Value and Higher Efficiency to Foundation Businesses
Polycarbonate, Sheet Film

MethanolーDefine methanol produced from diverse raw materials
including CO2 as a circular carbon product, and promote
development of manufacturing technologyーStrengthen competitiveness in terms of logistics

ーー

Build technology for efficient mass production ofenvironmentally friendly polycarbonate using CO2
as a raw material
Increase the ratio of sales of high-added-value
polycarbonate

Hydrogen Peroxide

Energy Resources and Environmental Businessesー

Achieve stable operation of low CO2-emitting geothermal
power plants and investigate new promising regions

ーー

Relocation and start of commercial operation ofhydrogen peroxide plant in China

New development of water-soluble natural gas andiodineー

Further development of environmental chemicals suchas peracetic acid and water treatment agentsAmmonia, Amine and MMA-based ProductsーーWork with overseas joint venture companies to cooperate ininvestigations on CCUS* aimed at use of CO2-free ammonia,
and consider preparing infrastructure in Japan to accommodate
Strengthen sales of MMA-based derivatives and expand
offering of new derivatives

Oxygen Absorbers
ーーIncrease ratio of sales overseas and expand adoption in
non-food fields
Reduce environmental impact through more compact
products and through the adoption of environmentallycompatible raw materials

Foamed Plastic (JSP)ー

Increase sales of differentiating environmental products focusedaround the SDGsー

Position new materials and new applications as priority
objectives in developing new markets in the mobility sector*CCUS (Carbon dioxide Capture, Utilization and Storage)
Technology for capturing and storing carbon dioxide emissions, and for using stored carbon dioxide
as a raw material in chemical products©MITSUBISHI GAS CHEMICAL COMPANY, INC.

24

Accelerating New Product Development and Cultivation (Numerical Targets)
ー Proceed with active investment in R&D, with total R&D investment of approximately ¥73.0 billion over the three years of the new Medium-Term Management Plan
(Total R&D investment over the three years of MGC Advance2020: ¥58.1 billion)
ー Plan to increase the Company’s research personnel to over 600 (531 researchers as of the end of fiscal 2020) *Excluding Group companies
ー Plan to continue introducing new products. Aim to increase sales of new products within five years of market launch by more than 20% over fiscal 2020

R&D investment

New product sales/Research personnel(100 mil. JPY)

New product sales
新規製品売上高（2020年度比）

150%(vs. fiscal 2020)

R&D investment

250

199

研究人員
Research personnel

New product sales
100%

100%

70 0

20%+
600+α
60 0

531
Researchpersonnel

50%

50 0

0%

2018年度Fiscal20182019年度Fiscal2019

2020年度Fiscal2020

2023年度Fiscal2023

40 0

2018年度Fiscal20182019年度Fiscal2019

2020年度Fiscal 20202023年度Fiscal2023

New product sales: Sales of new products within five years of market launch
Ratio of sales shown using fiscal 2020 as 100%
©MITSUBISHI GAS CHEMICAL COMPANY, INC.

25

New Product Development Topics: Medical and Food
Allergy Test Chips
Developing an allergy test chip that can predict the severity of pediatric milkallergy

Efforts continue with validation
by various organizations andin preparation for future constructionof a mass production system

Antibacterial Non-woven FabricDeveloped an antibacterial non-woven fabric coated with a special
antibacterial ingredient

Advancing market development insectors including hygiene and disaster
preparedness as well as foodpackaging by leveraging the persistentantibacterial effect and the durability of
non-woven fabric

Antibody Drug Contract Manufacturing Business
Manufacturing equipment deployed at Cultivex Inc. in preparation for contract
manufacturing of antibody drugs
Succeeded in mass cultivation of biosimilar producing cells for Denosumab,
an antibody drug

Continue to secure commercial projects
in order to expand contract manufacturingbusiness of antibody drugs

OXYCAPT
In 2019, began production of OXYCAPT, plastic syringes and vials for use
as an alternative to glass containers for parenteral pharmaceuticals

Working to further expand product line-up
and advance market development©MITSUBISHI GAS CHEMICAL COMPANY, INC.

26

New Product Development Topics: ICT and Mobility
Solid Electrolytes
Development continues as samples are provided to customers for review
and through collaboration with public research institutions

Research system expanding in
anticipation of future market launch

Carbon Fiber Composite Material
Developing carbon fiber composite materials that can contribute to metal
substitutes and weight savings, utilizing the seeds of research from Group
companies as wellMoving forward with market
development through joint researchwith universities and throughcustomer sample reviews

Cellulose Fiber Composite Material
Began development of a manufacturing process for high-strength cellulose fibers
and fiber-reinforced resin

Introducing prototyping equipment
for fiber and resin development,
and moving forward with customer
sample reviews and market development

New BT Material
Capturing 5G smartphone needs through sheet products that contribute tolower dielectric constants and thinner film

Proposing sheet products without glass
fiber cloth, with improved electricalproperties©MITSUBISHI GAS CHEMICAL COMPANY, INC.

27

New Product Development Topics
Research Promotion and Supervisory Organization Revisions
With the organizational revisions in fiscal 2020, the three research laboratories which were previously each under separate business divisions were brought together under the R&D
Promotion Division.
Beginning in fiscal 2021, the R&D Promotion Division and the Advanced Business Development Division were merged under the Research & Development Division with the goal of
exploring portfolio expansion and promoting the creation of new product lines. The Intellectual Infrastructure Center was also established as a new, independent division. They will utilize
digital technology to systematize and standardize intellectual property and promote a strategic IP landscape.

Former organizational structure
R&D Promotion Division

Former Specialty Chemicals
Company
Former Information & Advanced
Materials Company

Advanced Business
Development Division
Under each businessdivision

New organizational structure

Research Promotion andSupervisory Organization
RevisionsTokyo ResearchLaboratory

Former Natural Gas Chemicals
Company

Niigata ResearchLaboratory

Former Aromatic Chemicals
Company

Hiratsuka ResearchLaboratory

Research &Development Division

Intellectual Infrastructure
CenterTokyo ResearchLaboratory
Niigata ResearchLaboratory
Hiratsuka ResearchLaboratory

New research building (N-SEQ) at Niigata Research Laboratory/Niigata Plant
In 2020, a new research building (N-SEQ) was completed at the Niigata Research Laboratory
and Niigata Plant, integrating their R&D and the Quality Assurance Department
This will encourage interaction among researchers and the creation of new ideas©MITSUBISHI GAS CHEMICAL COMPANY, INC.

28

Investment Plan
ー Continue high level of investment. Planning for a total of ¥240 billion over three years, with a focus on strengthening differentiating businesses
and developing new and next-generation businesses
ー Active investments will also be made in R&D, ESG and DX-related areas, advancing both business portfolio reforms and sustainable growth

Maintenance/Improvement
Investments

Differentiating businesses¥70 billion¥90 billion

Sample investment projects in differentiating,new and next-generation businesses and R&D• Aromatic aldehydes

Boosting production capacity (Mizushima Plant)• Electronics chemicals

New raw material hydrogen peroxide plant(Taiwan)New super-pure hydrogen peroxide plant(China)• Optical resin polymers

Boosting production capacity (Kashima Plant)
New raw material monomer plant (Niigata Plant)• Semiconductor packaging
BT material

Boosting production capacity (Thailand Plant)

Grow UP 2023
Investment funds
by business segment

Total ¥240 billion
Others¥5 billion

Strategic investments¥170 billion(including M&A)

Foundation businesses¥60 billion

New/next-generation businesses
and R&D related¥15 billion• Construction of MGC Commons, site for human resource development andinnovation©MITSUBISHI GAS CHEMICAL COMPANY, INC.

29

Financial and Capital Policies
ー Total capital expenditures and investments expected to reach ¥240 billion under the new Medium-Term Management Plan
ー Active utilization of external funds will go to strategic investments (including R&D, ESG and DX-related) that lead to growth

Shareholder returns(Total payout ratio of 40% (target))Continuation of stable dividends
and flexible purchasing oftreasury stock

Operating CF
Three-year cumulative¥210 billion

Active utilization of
external funds

External funds,
etc.

Total capital
expendituresand investments
Three-year cumulative¥240 billion

Make strategic investmentsthat lead to growth©MITSUBISHI GAS CHEMICAL COMPANY, INC.

30

Shareholder Return Policy
ー Basic policy is to continue to provide stable returns while flexibly purchasing treasury stock, with a total payout ratio* of 40%
as a target for medium-term shareholder returns*Total payout ratio against net income attributable to owners of parent, including purchases of treasury stock

Total Dividends

Share Buybacks

Unit: 100 million yen

87
70

74

70

63

126

(Forecast)

149

148

145

145

82

2015

2016

2017

2018

2019

2020

2021

Net income

341

480

605

550

211

360

410

Annual dividend

32

38

59

70

70

70

70

(100 mil. JPY)

(JPY/share)**The Company conducted a two-for-one reverse stock split on October 1, 2016.
Dividend figures predating the share consolidation have been adjusted to show what they would have been had theeffects of the share consolidation also applied to them.

(Fiscal year)©MITSUBISHI GAS CHEMICAL COMPANY, INC.

31

Information by Segment©MITSUBISHI GAS CHEMICAL COMPANY, INC.

32

Numerical Targets by Business Sector
Basic Chemicals Business Sector

Overall PolicyーーTurn products and businesses that respond to societal demands into “Business”
Reduce volatility through portfolio reforms and rebuilding of unprofitable businesses

Specialty Chemicals Business Sector

Overall PolicyーーIncrease ratio of high-added-value products, strengthen cost competitivenessContinue capital investments in growth markets(100 million yen)

Fiscal 2017 results

Fiscal 2020 results

Fiscal 2023 targets

Sales
Basic Chemicals
Specialty Chemicals

3,878

3,228

4,100

2,578

2,678

3,300

Operating income

Fiscal 2020-2023
Key products contributing to sales increase(Basic Chemicals)
MXDA, aromatic aldehydes,
MX-Nylon, methanol(Specialty Chemicals)
Optical resin polymers, semiconductor packaging BT
material, electronics chemicals, polycarbonate
Key products contributing to income increase

Basic Chemicals

311

96

250

Specialty Chemicals

338

348

490

Ordinary income
Basic Chemicals

388

110

310

Specialty Chemicals

435

375

530

*Fiscal 2017 results are total of former segments(Basic Chemicals)
MXDA, aromatic aldehyde, MX-Nylon,
methanol, Xylene separators and derivatives(Specialty Chemicals)
Optical resin polymers, semiconductor packaging BT
material, electronics chemicals, polycarbonate*This slide does not include businesses and adjustments outside these segments©MITSUBISHI GAS CHEMICAL COMPANY, INC.

33

2. Balance Social and Economic Value:
Toward Sustainable Growth©MITSUBISHI GAS CHEMICAL COMPANY, INC.

34

Objectives of New Medium-Term Management Plan Grow UP 2023
2-1. Solve social issues through business• Contribute to development of ICT/mobility society• Solve energy and climate change problems• Solve medical and food problems

Objective
22-2. Harmonize shared-value creation with environmental protection• Air quality control, water and biodiversity conservation• Reduction of industrial waste

Balance social and economic value
Toward sustainable growth2-3. Strengthen discipline and foundation supporting business activities• Cultivating a corporate culture of job satisfaction• Occupational safety and health, process safety and disaster prevention• Highly energy- and resource-efficient production• Promotion of innovative R&D

Implement materiality management around these three perspectives©MITSUBISHI GAS CHEMICAL COMPANY, INC.

35

Materiality Management: Toward Fiscal 2030 (1)S o l ve s o c i a l i s s u e s t h r o u g h b u s i n e s sMateriality

Qualitative Targets and Action Plans

Contribute todevelopment of
ICT/mobility society(Qualitative Targets)
Contribute through business to ICT, AI, robotics,
blockchain, CASE and other digital innovations, and work
to enhance corporate value

ICT/Mobility
Societal Development

Solve energy andclimate change
problems

Solve energy and climatechange problems

Solve medical andfood problems
Solve medical and foodproblems(Action Plan)
Turn out new products that contribute to digital innovationand lighter weight mobility(Qualitative Targets)
Contribute to solving energy and climate change problems
by participating in geothermal and LNG power generation,
by developing products using CO2 and biomass as raw
materials, and through products that contribute to theenvironment, and work to enhance corporate value(Action Plan)
Development of manufacturing technology using CO2
as a raw material(Ex.: CO2-derived methanol, polycarbonate)(Qualitative Targets)
Contribute through business to QOL improvements,
extended healthy life expectancy, anti-aging and reductionof food and beverage waste loss, and work to enhance
corporate value(Action Plan)
Expansion of sales of products that contribute to QOL,
further development of markets in pharmaceutical andmedical fields, etc.

KPI
Fiscal 2020 results

Fiscal 2023 targets

Fiscal 2030 targets

Sales from ICT/mobility applications
Create new businesses that
accelerate digital innovation¥234.2 billion¥320.0 billion

Investment aimed at Solving problems(Three-year cumulative)
Commercialization ofcarbon-negative technology¥8.6 billion¥12.0 billion

Sales from medical and food applications¥39.4 billion¥50.0 billion

Advances in preventive andpredictive medicine, enhanced
healthy life expectancy
Further advances
in food storage technology©MITSUBISHI GAS CHEMICAL COMPANY, INC.

36

Materiality Management: Toward Fiscal 2030 (2)H a r m o n i z e s h a r e d - va l u e c r e a t i o n a n d
e n vi r o n m e n t a l p r o t e c t i o nMateriality

Air quality control
Air quality control

Qualitative Targets and Action Plans(Qualitative Targets)
Under the principles of sustainable development,
corporations have a responsibility to take care that
their business activities are in harmony withprotection of the global environment(Action Plan)
Phased reduction of GHG (Greenhouse Gas)
emissions and introduction of renewable energy, etc.
aimed at achieving carbon neutrality by 2050

Reduction ofindustrial
waste
Reduce waste

KPI
Fiscal 2019 results*1 Final disposal of waste/waste generated

Fiscal 2030 targets

GHG emissions vs. fiscal 2013

23% reduction

28% reduction

36% reduction

Renewable energy as a percentage of electric power purchased

10％

0％

50％

Zero waste emission rate *1(Qualitative Targets)
Consider waste as useful material and energy
resources, moving forward with efforts to makecyclical use of resources and reduce environmental
impact, while promoting resource recycling(Action Plan)
Promote zero emissions, etc.

Fiscal 2023 targets

0.8％

0.3% or lower*Above for MGC on a stand-alone basis

0.15% or lower©MITSUBISHI GAS CHEMICAL COMPANY, INC.

37

Materiality Management: Toward Fiscal 2030 (3)Strengthen discipline and foundations u p p o r t i n g b u s i n e s s a c t i vi t i e sMateriality

Qualitative Targets and Action Plans

Cultivating a
corporate culture of
Nurturinga rewarding
job satisfaction(Qualitative Targets)
Create a highly productive organization by providing
opportunities and an environment in which each employee
can adapt to diverse, flexible styles of working while refining
their own characters and abilities and developing theirstrengths

corporate culture(Action Plan)
Promotion of work-life balance, etc.

Occupational safety
Occupational Health andand Safety
health /Process
safetyandSecurity andDisasterdisasterprevention
Prevention

Highly energy- andResource and energy
resource-efficientsavings
production
High efficiency(Qualitative Targets)
Safety is the foundation of business activities. Companies
have a societal duty to ensure safety.
(Action Plan)
Share and utilize examples of accidents and disasters,
promote process risk assessments, etc.

Fiscal 2019 results

Harmonize business activity with environmental protection
by reducing emissions intensity through ultra-stable
operation of production equipment, utility production throughthe use of highly-efficiency equipment, and processdevelopment and improvements.

(Qualitative Targets)
Engage in R&D aimed at the long-term goal of solving
climate change problems through proprietary technology andcollaboration via open innovation(Action Plan)
Construction of a site for human resource development andcreation of innovation

Fiscal 2023 targets

Fiscal 2030 targets

Percentage taking fewer than 10 days of annual paid leave *10%7.8% *Results for fiscal 2018
Serious occupational accidents

0％* Disability eligible for, or possibly eligible for disability compensation involving
lost work accidents, fatal accidents and accidents resulting in permanent inability
to work, and those involving four or more lost work days00Serious accidents0* Accidents and major workplace accidents which threaten third parties, including localized
environmental pollution and accidents affecting local residents

01(Qualitative Targets)(Action Plan)
DX advancements (SMART-MGC Project), etc.

Promotion of
innovative
Advancements R&D
in R&DKPI

0

GHG emissions intensity vs. fiscal 2013
14.6% reduction

19.9% reduction

28.0% reduction

R&D investments devoted to solving climate change problems *2
3.8%

of R&D expenditures*1 For employees given 20 days of annual leave*2 R&D investments in basic research, pilot plants, proof-of-concept testing, etc.

5% or moreof R&D expenditures*Above for MGC on a stand-alone basis

7% or moreof R&D expenditures©MITSUBISHI GAS CHEMICAL COMPANY, INC.

38

Achieving “Green-MGC”:
MGC’s Roadmap toward its Ultimate Goal of Carbon Neutrality by 2050
Scope

Main initiatives(CO2 reduction)

1２013 － 20192020 － 2023

• Improve energy efficiency• Reconfigure business portfolio
258kt in total

22024 － 2030

• Improve energy efficiency 16kt
• Stop using heavy oil 13kt

• Improve energy efficiency• Improve energy efficiency

28kt• Reconfigure business portfolio• Deploy new energy systems/CCUS, switch feedstocks (R&D/collaboration)• Source 10% of energy from
14kt
renewables• Use transitional energy 10kt

ー2030 － 2050

• Source 50% of energy fromrenewables 55kt

40kt

610kt in total• Source 100% of energy fromrenewables 69kt

Businesses &technologies
Fukushima Gas Power Co.'s
gas power plant

Yuzawa Geothermal Power Corp's
Wasabizawa Geothermal
Power Plant

Circular carbon
methanol pilot plant

Collaboration＊ Scope 1: Direct GHG Emissions from MGC
Scope 2: Indirect GHG Emissions through use of externally sourced energy (mainly electric power)

CO2 emissions (kt/yr)
1107

2013
baseline

Feedstock switching

Carbon neutral
by 2050

23% reduction

28% reduction

36% reduction

258

308

394

45% reduction 502

849

799

714

55% reduction 610

2019
actual

2023

2030

2050

©MITSUBISHI GAS CHEMICAL COMPANY, INC.

39

Achieving “Green-MGC”: MGC’s Vision of Carbon-Neutral World Circa 2050
CO2Green energy

CCS underground storage

Wind farm

Solar panels

Satellite

Water electrolysis plant⑦

Feedstocks/products

Servers

Supply/benefit society① Methanol energy system② Ammonia energy system③ LNG-fired power plant + CCS②
Green/blueammonia plant⑥

LNG tanker

Green/bluemethanol plant⑧

Gas field
CCS undergroundstorage①
Methanol tanker⑤⑥ Specialty amines (DAC adsorbents)⑧ Solid-state batteries (EVs), fuelcells (FCVs),
polycarbonates/polyacetals(lighter-weight auto bodies),
optical materials (better
autonomous-driving sensors)

FC train

FCV⑤ Production of, e.g., polycarbonate
feedstock from CO2 (CCUS)⑦ BT materials, electronic chemicals(energy control systems)⑧③ LNG-fired power plant

DAC④ Geothermal power plant

Products conducive tocarbon neutrality

Data center⑧

Carbon-neutral energy systems,
CO2 usage⑦Semiconductor fab①

Carbon-neutral
products

FC bus
EV/FC truck⑧
Ammonia tanker②

EV

Hydrogen/methanol
power plant⑧

Storagebatteries④

Methanoltanker truck

Geothermal power plant
Hydrogen/ammonia
power plant

MGC carbon-neutral plant©MITSUBISHI GAS CHEMICAL COMPANY, INC.

40

Achieving “Green-MGC”: Examples of Business and Products Contributing to Carbon Neutrality
Geothermal Power Generation

LNG Thermal Power Plant + CCS

Continue stable operation of existing
geothermal power plants as a source ofelectric power with low CO2 emissions

Better control of emissions of CO2 and otherpollutants compared to power generation
using coal or oil

Move ahead with the constructionof the Appi Geothermal Power
Plant, scheduled for completionin 2024, while also investigatingother new, promising regions

Promote technology
development and investigation
into underground storage of CO2
generated during power
generation

CO2-derived Methanol
Work toward a decarbonized society via theconcept of circular carbon methanol

Develop methods forsynthesizing methanol fromdiverse raw materials, including
use of CO2, and contribute torealization of decarbonizedsocietyCO2-derived Polycarbonate
In fiscal 2020, engaged in a research
project led by NEDO for the developmentof innovative technology aimed atachieving carbon neutrality

Establish new polycarbonate
synthesis technology via
carbonate ester applying CO2
fixation technology, and promote
implementation in society©MITSUBISHI GAS CHEMICAL COMPANY, INC.

41

Advance “SMART-MGC” Projectー “SMART-MGC” uses digital technology to improve operational efficiency in production and back-office divisions,and to optimize operations overall
System for reporting accidents
and problems

SMART-MGC••••

Operation data system

Equipment management system

Utilize latest IT
Link data from individual systems
Automate process of creating documents and plans
Generalize specialized work, optimize operations

Flow rate

SMART-FACTORY

Electronic data viewing

Pressure

Integrated
Linkage System

Liquidsurface

Plant

Electronic data

Vibration
CV

Quality control
systemHuman data entry operations

Image

Image
analysis
systemElectric
current

SMART-OFFICE
Other offices and destinations(Headquarters, laboratories, etc.)

Environmental
safety system

Acoustics

Composition

Operationallog system

Temperature Actions

System for detecting signsof abnormality

Production
management system©MITSUBISHI GAS CHEMICAL COMPANY, INC.

42

Working Toward Achieving New Value Creation
Mitsubishi Gas Chemical Innovation Center: MGC Commons
MGC Commons will be established as an innovation center, a place where diverse individuals can interact and learn from one anotherwith the goal of achieving new value creation

MGC Commons: Completion expected at the end of 2022
A multi-purpose facility combining the functions of an innovation center and human resource development
MGC Commons is not for the Group alone but is intended as a place for reaffirming an understanding of social issues
and sharing values through dialogue and collaboration with other organizations and communities, and for developing
individuals who can contribute to solving those issues, leading to the creation of new value
Rendering of completed facility
Planned site: Kiba, Koto-ku, Tokyo

Main concept: Creating values to share with society

Development

Diversity

A place for learning, where individuals and organizations
can refine and advance their skills. A place to encounternew social issues beyond the boundaries of one’s
everyday work and organization

A place where a variety of people can gather, and thatprovides the diversity and flexibility to meet the needs ofdifferent situations

Well-Being
A pleasant, comfortable place that increases physicaland mental health and the motivation to learn, and allows
people to experience a way of working that maximizes
intellectual productivity

Development

Diversity

Well-Being

Communication &Collaboration

New value creation(Innovation and invention)

Communication & Collaboration
A place where people can interact on a daily basis
without regard to the separation between inside andoutside the company. A place for collaboration throughcontacts with a variety of players in society©MITSUBISHI GAS CHEMICAL COMPANY, INC.

43

Grow UP 2023 Conceptual Diagramand Reference Materials©MITSUBISHI GAS CHEMICAL COMPANY, INC.

44

Grow UP 2023 Conceptual Diagram

Social issues
Objective

Changes ininternational situation

1

Shift to a profit structure resilient toenvironmental changes

Demographic changes
Mission

Advancements in
ICT/Mobility
Climate change
Biodiversity crisis

Strengthening
differentiating
businesses

Creating andnurturing new
businesses

Rebuilding
unprofitablebusinesses

VisionAn excellent company with uniqueness andpresence built on chemistry

Value

Principles of Conduct

AchievingsustainablegrowthEnvironmental impact
reduction

MGC Way

Diversity
Behavioral changes
under COVID-19

Solvingsocial issues

Creating values to share with society

Objective

2

Balance social and economic value

Solvesocial issues

Environmental
protection

Strengthen
disciplineandfoundation©MITSUBISHI GAS CHEMICAL COMPANY, INC.

45

[Reference Materials] Indicators (1)Fiscal 2020 results
Fiscal 2018 results

Fiscal 2019 results

First half

Second half

Fiscal 2023
assumptions

Exchange rate
(JPY/USD)

111

109

107

105

105

Exchange rate
(JPY/EUR)

128

121

121

126

125

Crude oil price (Dubai)(USD/BBL)

69

60

37

52

60

Methanol (USD/MT)
Asia spot average price

372

261

194

319

325

©MITSUBISHI GAS CHEMICAL COMPANY, INC.

46

[Reference Materials] Indicators (2) Consolidated Basis
Fiscal 2015
results

Fiscal 2016
results

Fiscal 2017
results

Fiscal 2018
results

Fiscal 2019
results

Fiscal 2020
results

Fiscal 2023
assumptions

Depreciation
expense(100 million yen)

267

256

270

274

295

306

400

R&D expenditures(100 million yen)

189

192

189

186

196

199

250

Employees
at fiscal year end

8,176

8,034

8,009

8,276

8,954

8,998

10,250©MITSUBISHI GAS CHEMICAL COMPANY, INC.

47

Forward-looking Statements
These materials contain performance forecasts and other statements
concerning the future. These forward-looking statements are based on
information available at the time. These materials were prepared and on
certain premises judged to be reasonable. None of these forward-looking
statements are intended to be guarantees of future performance. Various
factors may cause actual performance to differ significantly fromforecasts.
For inquiries regarding these materials, contact:
IR Group, CSR & IR Division
Mitsubishi Gas Chemical Company, Inc.

TEL

03-3283-5041

URL

https://www.mgc.co.jp/ir/
IR Mail Distribution Service
Sign up to be notified via e-mail of timely disclosures andthe latest IR-related information©MITSUBISHI GAS CHEMICAL COMPANY, INC.

48