“Providing affluence and comfort to people
and society, with our unique technology”

Annual Report

2018

B

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Nippon Shokubai Group Mission:
Providing afﬂuence and comfort to people and society, with our unique technology.

Management Commitment:
We conduct all of our corporate activities based upon a deep respect for humanity.
We aim at coexisting with society, and working in harmony with the environment.
We pursue technologies that will create the future.
We act on the global stage.

Corporate Credo
Safety takes priority over production.

Code of Conduct:
In the belief that it is our social responsibility to conduct business based upon the principles of complianceand self-responsibility for the sake of proper social development, we have set forth the following basic
corporate behavior guidelines in the "Nippon Shokubai Code of Conduct."
1. Guided by Nippon Shokubai Group Mission of", we will conduct all of our"actions as a good corporate citizen.
2. We will comply with relevant laws both inside andoutside of Japan, and act in accordance with in-house
regulations.
3. We will create and nurture a sound, vibrant workplace,where each individual can hone their professional
competence and find fulfillment in their career.
4. We will develop and market products and services
that are both safe and useful, based upon an accurate
understanding of social demands.
5. We will commit ourselves to eliminating labor hazards
and accidents, and constantly strive to protect the
global environment.

6. We will conduct business based on fair and open
competition.
7. We will take a firm stance when dealing with unlawfulor antisocial groups.
8. We will ensure frequent communications with ourshareholders and members of society in general, andguarantee the appropriate disclosure of corporate
information.
9. With respect for the culture and customs of every
nation/region we serve, we will contribute to theirdevelopment and wellbeing through community-based
business undertakings.
10. We will ensure the solid and sustainable developmentof the company through business undertakings based
soundly upon the above action guidelines.

Contents

01 Consolidated Financial Highlights
02 Messages from President
03 Special Feature
06 Description of Business
08 Governance System

Based on Responsible Care
11 CSR
Concept
14 Ten-Years Summary
Discussion and
16 Management
Analysis of Operation
20 Financial Statements
54 Corporate Data

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

Governance
SystemCSR Based on
Responsible
Care Concept

Management
Discussion
and Analysis ofOperation

Ten-Years
Summary

Financial
Statements

Corporate Data

Consolidated Financial Highlights
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Net sales

Operating profit

322,801
million¥¥

9.8% Up

26,727
million26.4% Up

Total assets¥
Net assets

310,762
million¥470,102
million8.4% Up

7.1%

1.2points Up

6.3% Up

Increase in sales of basic chemicals
and functional chemicals to exceed
decrease in sales of environment andcatalyst segment

ROA

Net sales are projected to increase as sales volume is forecast
to increase, centered on functional chemicals, and due tohigher selling prices in line with higher costs of raw materials
in both basic chemicals and functional chemicals

Increase in production and sales volume, and the spread between
raw materials and sales prices to exceed increase in processing
costs and selling, general, and administrative expenses

Decrease in share of profit of entities
accounted for using equity method

01

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NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Messages from President

Under the Nippon Shokubai Group’s Mission of “
— Providing affluence and comfort to people and society, with our unique
technology,” we are implementing reforms while taking a leap forward to a better
future in the new era. To fulfill this mission, we set our sights on becoming
an innovative chemical company that provides people with new value under
our “Vision for 2025.” During the period from fiscal 2017 to 2020, we will bepromoting our Medium-term Business Plan titled “Reborn Nippon Shokubai
2020 NEXT.” Even as we strive to further strengthen our existing businesses, wewill continue to prioritize sustainable growth with a concerted effort across a rangeof new business sectors that will enable us to leverage our strengths. These include
the life sciences, ICT, and energy and environment.
Our corporate credo — “Safety takes priority over production” — was adopted
to reflect our ongoing commitment to ensuring safe and reliable operations. We
remain dedicated to reconfirming our stature as a responsible chemical company
that succeeds at retaining the public’s trust. Moreover, we will strive to achievesustainability by linking all our business initiatives to the Sustainable Development
Goals as a means of resolving social issues through our business operations.
President

Yujiro Goto

We welcome your continued support and candid opinions as we pursue ourvarious objectives, and we greatly appreciate your support of our Group’s
initiatives.

Consolidated
Financial
Highlights

Messages fromPresident

Description ofSpecial Feature Business

CSR Based on
Responsible
Care Concept

Governance
SystemTen-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

Special Feature

Nippon Shokubaiʼs Commitment to
Sustainability
We will continue to demonstrate the essence of the corporate DNA we have inherited from our companyʼs second president, Taizo Yatagai,
renowned as the “passionate entrepreneur.” Specifically, with our attitude of “pioneering spirit and vision,” we will further promote sustainability
management through two avenues: addressing social issues through our business operations, and pursuing issues that form the foundation of
our business operations.

Conceptual Diagram of Our Commitment to Sustainability
Nippon Shokubaiʼs Advantage:
Corporate DNA inherited from the passionate entrepreneur, Taizo Yatagai

A Company-wide Dedication
to Creating Value
A company that provides afuenceand comfort to people and society by
developing “amazing materials”

Pioneering spirit and vision

Management committed to leveraging its
strengths

R&D capabilities closely focused on end users

Worldwide adoption of Nippon Shokubaiʼs
production technology

Achieving Sustainability◎ Initiatives for social issues

Consumer Products andConstruction Materials
Disposable diapers
Detergents
Paints & adhesives
Concrete

Environmental
Remediation
Catalysts for environmental
purification
Greening the desert

ICT

Businesssegments focusedon developing“amazing materials”

Semiconductor
Imaging

Life Sciences

Energy and Resources

Medical materials
Healthcare
Cosmetics

Mobility
Energy conversion
Water

Promoting open innovation

through our business operations◎ Initiatives for issues that form the foundation of our business operations (expectations of stakeholders)
Corporate
GovernanceDefinition

Corporate
EthicsRisk
Management

Information
Disclosure

The Passionate Entrepreneur
Taizo Yatagai, our company’s second president, was the inspiration for the main character in the business novel
Hono-o no Keieisha (“The Passionate President”) written by Ryo Takasugi.

Responsible
Care

Human Resource
Management

03

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NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Reborn Nippon Shokubai 2020 NEXT ̶
Achieving Progress with Our Medium-term
Business Plan
Our medium-term business plan — titled Reborn Nippon Shokubai 2020 NEXT — takes the form of an action plan intended to achieve our “Targets
for 2020” in order to realize our “Vision for 2025.” By fiscal 2020, the final year of the plan, we intend to have established the foundation for ourGroupʼs sustainable growth over the subsequent ten years.

Plan Outline
Vision for 2025

An innovative chemical company that provides new value for peopleʼs lives
Business Policies

Priority Challenge○ Focusing on proﬁtability over sales○ Safe, reliable production activities○ Survival of SAP* business○ Launch of new businesses in high-growthpotential markets for our future key driver

Basic Posture
Create products and services that the market needs, andprovide the products and the services when the market needs.

Social issueMarket needs* Superabsorbent polymer

Policies to priority challenge

Target to sustainable growth○ Strengthen competitiveness of SAP business
Improve proﬁtability (Survival project）
Strengthen R&D○ Accelerate creation of new businesses and products

Sales
Numerical
targets for 2020

○ Develop an active corporate team and organization○ Enhance the condence of stakeholders○ Strengthen our Group management

400 billion yen

Sales increase during the period: 106 billion yen
16 → Sales

Ordinary income 40 billion yen
ROA

on sales: 10%)

7.5%

Existing
products

29

New
businesses38

New products
from existing
businesses

39

Breakdown of
106 billion yen sales
increase (Billions of yen)Consolidated
Financial
Highlights

Messages fromPresident

Description ofSpecial Feature BusinessGovernance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

Achievements
Strengthen competitiveness of SAP business
Implementing the SAP Survival Project
Summer 2018: New plant in Belgium enters commercial
operation.

SAP Plant in Belgium

Develop an active corporate team and organization
July 2017: Work Innovation Committee establishedAccelerate creation of new businesses and products
Collaboration with Sirrus, Inc. of the U.S.A. to commercialize
new methylene malonate monomers
July 2017: Cosmetics Business Preparation Ofﬁce established.
Commercialization of AOMA, a new functional monomer
Start of construction of laboratory for synthesizing middlemolecule active pharmaceutical ingredients, with operation
scheduled to begin
in April 2019

Laboratory for synthesizing middle-molecule active
pharmaceutical ingredients (artistʼs rendering)

05

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NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Description of Business

Descriptionof Business•Ethylene oxide (EO)
•Ethylene glycol•Ethanolamine•Secondary alcohol
ethxylates•Polymers forconcrete admixture•Water-soluble
polymers•Acrylic acid
•Acrylates•Specialty acrylates•Specialty methacrylates•Superabsorbent
polymers•Process catalysts

Basic Chemicals
Sales of acrylic acids and acrylates
increased due to a revision in sales
prices accompanying rising raw
materials costs and market conditions
for products outside of Japan, as well as
increased sales volume.
Sales of ethylene oxide andethanolamine increased due to a revisionin sales prices accompanying higher
raw materials costs and increased sales
volume.

Sales of ethylene glycol increased
due to a revision in sales prices
accompanying rising market conditions
for products outside of Japan, despite
declined sales volume.
Sales of secondary alcohol
ethoxylates increased due to increased
sales volume and a revision in sales
prices accompanying higher raw
materials costs.
As a result of the above, net sales in•Maleic anhydride& Derivatives•Resins for paints& adhesives•Acrylic resin for
optical materials•Electrolyte Sheets for SOFC
(Solid Oxide Fuel Cell)•Electrolyte for lithium-ion
batteries “LiFSI” (IONEL)•Automotive catalysts•De-NOx & dioxins
decomposition catalysts

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusinessthe basic chemicals segment increased
11.6% year-on-year to 120,025 million
yen. Operating profit rose 57.3% year-

Governance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

on-year, to 12,912 million yen. This wasdue to factors such as an increase inproduction and sales volume, widening

Functional Chemicals
Sales of superabsorbent polymers
increased due to a revision in sales prices
accompanying higher raw materials costs
and increased sales volume.
Sales of ethyleneimine derivatives,
resins for paints, adhesive products andelectronic information material increased
due to higher sales volume.
Sales of special acrylates increased
due to a revision in sales prices
accompanying rising raw materials
costs and market conditions for products
outside of Japan, as well as increased
sales volume.
Sales of maleic anhydride increased
due to a revision in sales prices
accompanying higher raw materials costs

and increased sales volume.
Sales of polymers for concrete
admixture fell due to a drop in sales
prices, despite increased sales volume.
Sales of water-soluble polymers
for raw materials of detergents, resin
modifiers and iodine compounds fell due
to a decline in sales volume.
As a result, net sales in thefunctional chemicals segment rose 8.8%
year-on-year to 173,965 million yen.
Operating profit increased 15.0%
year-on-year to 13,935 million yen. Thiswas due to factors such as increased
production and sales volume, despite acontraction in the spread and an increasein processing costs.

Environment & Catalysts
Sales of automotive catalysts increased
due to the appreciation of sales prices
of precious metals and increased sales
volume.
Sales of process catalysts increased
due to higher sales volume.
Sales of fuel cell materials,
materials for lithium-ion batteries,
dioxins decomposition catalysts and wet
oxidation catalysts fell due to lower sales
volume.

Sales of De-NOx catalysts andwaste gas treatment catalysts rose due
to higher sales volume.
As a result of the above, net sales
in the environment & catalysts segmentrose 9.0% year-on-year to 28,811 million
yen. Operating profit in the segment
fell 64.2% year-on-year to 268 million
yen, on account of an increase inprocessing costs and selling, general,and administrative expenses.

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Dataof the spread, and lower processing
costs.

07

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Governance System

Under Nippon Shokubai Groupʼs Mission of— “Providing affluence and comfort to people and society, with
our unique technology” — our goals are to emerge as an innovative chemical company that provides new value for peopleʼs lives,to earn the greater confidence of the public as a responsible chemical company, and to become a company that all can take pridein, including our varied stakeholders. In this way we will increase our corporate value and achieve sustainable growth.
We consider the achievement of viable corporate governance as essential and have adopted initiatives toward that end: weare securing the rights and equality of shareholders and maintaining open dialogue; collaborating with various stakeholders as
appropriate; disclosing information as appropriate and ensuring transparency; ensuring the roles of the board of directors andmanagement teams related to their appropriate execution of duties; ensuring appropriate supervision of the execution of theseduties; and strengthening and enhancing internal control systems.

Our Corporate Governance System (as of April 2018)
General Meeting of Shareholders

Auditors
Meeting

Consults

Reports

Corporate Managing Committee
CSR-related committees(Chair: President)

RC Promotion Committee

Internal
ControlCommittee(Chair: President)

Risk Management Committee(Chair:President)(Chair: President)

Social Contribution
Promotion Committee

Auditor Office(Chair: President)

Disclosure Committee

Executive Officers

Internal
Audit OfficeInternal
audit

Administration &Finance

Sales &
MarketingInnovation &Business
Development

Production &Technology

CSR Promotion Council

Compliance Committee

AuditsCollaborates

Nominating andCompensation Committee

President▲

ProvidessupportAccounting
Auditors

Board Meeting
Members of the Board:
9 in total(6 internal, 3 external)

AuditsAuditors:
4 in total(2 internal,
2 external)
Collaborates

Reports

08

Legal
Advisors

Consultation

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

Governance
SystemBoard Meeting
Comprising the nine members, including three external
members, the Board Meeting supervises business operationsof each member of the Board through reports, deliberations,and resolutions regarding important matters. In general, it
convenes monthly under the chairmanship of a member ofthe Board selected from the members of the Board who are
not executive officers by a resolution of the Board Meeting.
Four auditors — two external and two internal — also attend
to give advice and state their opinions as appropriate whennecessary.

Corporate Managing Committee
Comprising the president and executive officers appointed by
the president, this committee generally convenes twice monthly(with all executive officers in attendance at one of thesemeetings) to deliberate items related to the implementation ofbasic policies and important management issues. In addition,
regarding proposals discussed by the Corporate Managing
Committee, important issues involving those proposals areforwarded to the Board Meeting for their consideration.

CSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

more efficiently and effectively.

Compliance Committee
Chaired by the president, this committee improves andstrengthens the company-wide system for addressing
corporate ethics issues and compliance with laws andregulations.

RC Promotion Committee
Chaired by the president, this committee promotes thecompanyʼs Responsible Care initiatives. It formulates the
RC Promotion Basic Plan and focuses on further improving
safety and quality while addressing environmental issues.

Risk Management Committee
Chaired by the president, this committee implements
measures as appropriate in response to various wideranging risks to which our Group is exposed.

Social Contribution Promotion Committee
Auditors Meeting
Comprising two external auditors and two internal auditors, thismeeting convenes monthly in general, submits reports, andengages in discussions and deliberations on important matters.

Chaired by the president, this committee promotes social
contribution initiatives by focusing on further strengthening
company-wide social contribution policy and by formulating
annual, medium-term, and long-term activity plans.

Nominating and Compensation Committee

Disclosure Committee

An advisory body of the Board Meeting, this is a voluntaryorganization comprising three or more members of the Board(including a majority of external members). It advises on draft
nominations of candidates for the member of the Board andauditor positions and on compensation and bonuses for themembers of the Board.

In order to contribute to management transparency
and fulfill our social responsibilities while ensuring thatall stakeholders have a better understanding of ourcompany, this committee supports our efforts to disclose
information on our company and Group companies fairly andappropriately and in a timely manner.

Internal Control Committee

CSR Promotion Council

Under the chairmanship of the president, this committee
has established a system to ensure the reliability of financial
reporting as enforced by the Financial Instruments andExchange Act. It also seeks to process company operations

This council investigates and discusses issues related to our
CSR, formulates plans, and organizes the progress of thevarious CSR-related committees.

09

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NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Principal Activities of Outside Members of the Board and Outside Corporate Auditors

Koichi Miura(Outside Member of the Board)
Mr. Koichi Miura attended all of the 14 Board meetings that were held during the fiscal year 2017. From his viewpoint as a specialist
in chemical engineering who is familiar with the chemical industry, he provides useful opinions and proposals that contribute to theCompanyʼs management and supervises the Companyʼs management from an independent perspective.

Takashi Sakai(Outside Member of the Board)
Mr. Takashi Sakai attended all of the 14 Board meetings that were held during the fiscal year 2017. Due to his experience as an
executive of a company that is a manufacturer and has a strong commitment to public interest, he provides useful opinions andproposals that contribute to the Companyʼs management and supervises the Companyʼs management from an independent
perspective.

Kozo Arao(Outside Member of the Board)
Mr. Kozo Arao attended all of the 14 Board meetings that were held during the fiscal year 2017. Based on his highly professional
expertise and a wealth of experience as attorney-at-law and achievements as outside officers of other companies, he provides
useful opinions and proposals that contribute to the Companyʼs management and supervises the Companyʼs management froman independent perspective.

Yoichiro Komatsu(Outside Corporate Auditor)
Mr. Yoichiro Komatsu attended 12 of the 14 Board meetings that were held during the fiscal year 2017. At these meetings, heprovides his views from the perspective of an attorney as required.
Mr. Komatsu also attended all of the 13 Corporate Auditors meetings that were held during the fiscal year 2017, exchanged
opinions with respect to the results of audits and discussed important issues regarding such audits. Furthermore, he periodicallyexchanged opinions with the senior management.

Katsuyuki Ota(Outside Corporate Auditor)
Mr. Katsuyuki Ota attended 10 of the 11 Board meetings that were held during the fiscal year 2017 following his election as a
Corporate Auditor. At these meetings, he provides his views from the perspective of a corporate executive as required.
Mr. Ota also attended all of the 10 Corporate Auditors meetings that were held during the fiscal year 2017 following his election
as a Corporate Auditor, exchanged opinions with respect to the results of audits and discussed important issues regarding suchaudits. Furthermore, he periodically exchanged opinions with the senior management.

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

Governance
SystemCSR Based on
Responsible
Care Concept

Management
Discussion
and Analysis ofOperation

Ten-Years
Summary

Financial
Statements

Corporate Data

CSR Based on Responsible Care Concept

CSR Concept
Our Corporate Credo, “Safety takes priority over production,”guides us in all our activities. In accordance with our Group
Mission,, we have established ourManagement Commitment and Code of Conduct. We take acomprehensive view of our corporate actions that encompasses
the economy, society, and the environment. We therefore prioritize
corporate ethics, Responsible Care, risk management, humanrights and labor, information disclosure, social contribution,and corporate governance. In implementing sustainable actions
to increase corporate value, we emphasize dialogue with ourcustomers, business partners, shareholders and investors, public
administrators, employees, the communities we serve, and all otherstakeholders.
This CSR concept is the foundation underpinning our Vision
for 2025. We intend to achieve this vision by implementing
Reborn Nippon Shokubai 2020, our long-term business plan, andcontributing to the emergence of a sustainable society.

Visionfor
for 2025
2025
Vision“An
innovative
chemicalcompanyAninnovative
chemicalcompany
thatthatnew
providesnewvalue lives
providesvalue forpeople’sfor people’s lives”

Long-term
BusinessPlan
Plan
Long-term Business
RebornNipponShokubai
2020
RebornNipponShokubai

2020

SocietySociety

Environment
Environment

EconomyEconomyCommunity
Community

Government
Government

Shareholders,Shareholders
Investors
Investors

Suppliers
Suppliers
Employees
Employees

Customers
Customers

Nippon Shokubai
Code of Conduct
Nippon Shokubai

Code of Conduct
Gro
Gruoupp MMi
atedo
MaM
n gaenmeageisssiosnion
edrCoreorrapto
C
Cao
o
m
n
t
p
C
r e
mm omment
itmeitment Co Cr
nt

Formulation of CSR Medium-term Targets and Initiatives (2017–2020)
Under “Reborn Nippon Shokubai 2020 NEXT” (2017–2020), onepriority issue that is intended to strengthen the companyʼs
management foundation is to become “a company gaining
further public trust as a responsible chemical company.”
Toward that end, we have highlighted the importance ofpromoting company-wide CSR activities; therefore, we haveformulated CSR medium-term targets and initiatives spanning
the same four years, envisioning this period as the age of the“Reborn Nippon Shokubai 2020 NEXT.”
We will do our best to achieve our CSR medium-termtargets and initiatives, and we will announce our achievements
and progress in our annual CSR Reports.

CSR Implementation Structure
Compliance Committee
RC Promotion Committee
Risk Management Committee
Social Contribution Promotion Committee
Disclosure Committee

Implementing
CSR
Management

11

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NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

CSR Medium-term Targets and Initiatives
Stakeholder

Subject

Medium-term Targets & Initiatives

Corporate Ethics

To continue to emphasize corporate ethics whilestrengthening our regulatory compliance structure andenhancing various training programs

Risk Management

To endeavor to expand our risk management while regularly
analyzing risk, including undertaking a review of our current
Business Continuity Plan

Corporate GovernanceTo further strengthen and enhance corporate governance,
including improving the functioning of the Board Meeting, inorder to enhance corporate value and achieve sustainablegrowthCompanywide

Information Security

Environment
Environmental
Protection

Preventing
GlobalWarming

Waste
PRTR
Quality
Customers
Chemical Safety
Suppliers

Logistics Safety
Procurement

Shareholders& Investors

Community

Information Disclosure

Social Contribution
Process Safety andDisaster Prevention
RC Communication

Human Resources
Employees
Occupational Safety

Occupational Health

Government

Collaboration

Achievements (Fiscal 2017 Results)• Implemented corporate ethics training for general employees,
and training in various regulations (cross-border competition
laws, cross-border trading risk, loan management, cross-borderanti-bribery laws, insider trading regulations).
• Implemented corporate ethics training for officers andmanagerial staff of affiliated companies in Japan.
• Reviewed risk survey forms in order to more accurately clarify
risks to be addressed.
• Reviewed the Business Continuity Plan regarding our response tolarge-scale earthquakes.
• Early publishing of the convocation notice for the General Meetingof Shareholders on our website (about four weeks in advance)
prior to the mailing• Enhanced provision of information to attendees of the Board
Meeting based on implementation of board effectivenessevaluation and results.

To revise regulations covering information management inorder to focus on the utilization of electronic data
Formulated basic information security regulations and related
To establish an information security system to implement the regulations.
above1) To reduce energy consumption by an amount equivalent to1) Reduced energy consumption by 2,168 kL of crude oil equivalent
8,000 kL of crude oil (over 4 years)
2) Reduced energy intensity by 9.3% from fiscal 2015 levels.
2) To reduce energy intensity by 5% from fiscal 2015 levels by
3) Reduced CO2 intensity (energy origin) by 11.1% from fiscal 2015
fiscal 2020
levels.
3) To reduce CO2 emissions intensity (by energy origin) by 5%
4) Increased fuel consumption intensity by 0.7% from fiscal 2015
from fiscal 2015 levels by fiscal 2020
levels.
4) To reduce fuel consumption intensity for road transport by 5%
Continued to promote modal shift.
from fiscal 2015 levels by fiscal 2020; to promote modal shift
To maintain zero emissions (Quantity of final off-site landfill)
Continued to implement zero emissions policy.
≤ (Total amount of waste generated × 0.1%)
To reduce emissions of substances subject to the PRTR Law Reduced emissions of substances subject to the PRTR Law by 9.8%
by 25% from fiscal 2015 levels by fiscal 2020
from fiscal 2015 levels.
Promotion of company-wide quality initiatives
Company-wide quality initiatives implemented:
1) To improve customer satisfaction 2) To attain more trust
1) Improved customer satisfaction. 2) Implemented initiatives tofrom customers 3) To achieve “Zero quality complaints”
increase customer trust. 3) One serious quality complaint was filed.
To achieve zero problems related to chemical safety (legal or
Registered zero legal or social problems related to chemical safety.
social problems)
To achieve zero accidents and disasters related to logistics
Registered zero accidents and disasters related to logistics.
Implemented continual surveys on green procurement andTo continue implementing green procurement
prepared for a change in survey tools. Initiated formulation of CSR
To promote CSR procurement.
procurement policy.
• Posted our corporate governance system and various reports on
To continue to disclose information in accordance with ourour corporate website.
corporate governance code and to aim for more relevant• Continuously disclosed financial results and other materials.
responses in order to maintain high-quality constructive• Conducted IR meetings for analysts and institutional investors
dialogue with shareholders and investors.
in May and November and held an IR meeting for individual
investors in December.
To enhance the social contribution initiatives of the Nippon• Group companies also took part in forest development initiatives.
Shokubai Group as a whole• Formulated our Third-term Five-year Plan (fiscal 2018–2022) with
To formulate and implement the Third-term Plan (fiscal 2018–the addition of new initiatives for Indonesia.
fiscal 2022) addressing our forest development initiatives
To achieve zero severe process safety accidents

Registered zero severe process safety accidents.

To promote dialogue on Responsible Care initiatives with local Participated in a dialogue on Responsible Care with local residents
residents and implement appropriate information disclosure (Kawasaki).
• Implemented new company-wide training for division managers,
manufacturing managers, and line managers in order to
To identify and train leaders who can lead the organization; to strengthen the development of leadership personnel.
promote Diversity & Inclusion• Implemented training for female leaders and their supervisors asa measure to promote womenʼs participation and advancement in
the workplace.
To achieve zero injuries with or without loss of workdays,
Target not reached: Registered 4 injuries with loss of workdays andincluding contractors
9 injuries without loss of workdays.
• Implemented planned reduction of overtime hours throughregular meetings of Labor-Management Committee.
To provide all workers with a supportive and ideal work
• Organized the Working Reform Group under the Work Innovation
environment; to promote a healthy work-life balanceCommittee and initiated policy review to support employeesʼ
diverse work styles.
To continue to cooperate with the administration throughParticipated in a plan to contribute to emergence of a low-carbon
industrial associations and other avenues
society and reported the results.

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

Governance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

Basic Policy on Responsible CareIn conformity with the Nippon Shokubai Group mission, Management commitment , Corporate credo and the Nippon Shokubai
Code of Conduct, we rank it as an important management measure to provide products and technologies that contribute tosociety and environmental protection. In addition, while paying due respect to the principle of Sustainable Development, weare determined to conduct all activities in accordance with the following policy related to environmental protection, safety andproduct quality that will bring our business operations into harmony with the global environment.

1

Aim at environmental protection and reduction of negative environmental impact throughout the entire life cycle of a
product, from development to disposal.

2

Ensure the safety of our employees and our communities by targeting zero accidents and zero disasters with acommitment to the principle “Safety takes priority over production.”

3

Confirm the safety of chemical materials, intermediates and products, and consider the health of our customers,
employees of our logistics subcontractors, our employees, and others.

4

Stably supply products and associated services that meet customer satisfaction and inspire their trust.

5

Publicly announce the results of these activities and make an effort to communicate for proper understanding.

We will implement this RC Policy in all our business operations by ensuring all employees have a thorough understanding andawareness of its importance. The president shall be the person with the ultimate responsibility for implementing this policy.

13

14

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Ten-Years Summary

FY2008FY2009FY2010¥289,102622-5,307¥244,317
13,881
10,832¥288,345
29,813
21,119302,948
151,662

310,946
163,781329,332
194,266

17,613-16,675
8,099
29,45044,346-23,850-21,772
28,23431,706-16,696-3,05039,17460.85
898.3314.0¥ 110.30
938.6722.0

Operating results
Net sales .......................................................................................................................
Operating income .........................................................................................................
Net income (loss) .........................................................................................................
Financial position
Total assets ...................................................................................................................
Net assets .....................................................................................................................
Cash flows
Cash flows from operating activities ...........................................................................
Cash flows from investment activities .........................................................................
Cash flows from financing activities ............................................................................
Cash and cash equivalents ..........................................................................................
Per share
Earnings per share .......................................................................................................
Net assets .....................................................................................................................
Cash dividends..............................................................................................................

¥ -29.61
831.11
15.5¥

Shareholders' equity ratio (%) .....................................................................................
ROE (%) ........................................................................................................................
ROA (%) ........................................................................................................................
Liquidity ratio (%) .........................................................................................................
PER (%) ........................................................................................................................
Dividend payout ratio (%) .............................................................................................

48.8
-3.3
0.2
159
－
－

51.4
7.0
4.9
155
13.9
23.0

57.9
12.1
9.7
197
9.5
19.9

100.5858,900
622
866
442

92.88
41,200
845
920
600

85.72
47,500
1,042
1,047
682

Market data
Exchange rate, average (¥/$) .......................................................................................
Naphtha price (¥/kl) .....................................................................................................
Share Price (¥) (Closing) .............................................................................................
(High) ......................................................................................................................
(Low) .......................................................................................................................

*As the Company conducted a reverse stock split at a ratio of one share for every five shares on October 1, 2015,
figures for the dividends per share for FY 2015 are amounts that take into account the reverse stock split.

Consolidated
Financial
Highlights

Messages fromPresident

FY2011

Special Feature

FY2012

Description ofBusiness

FY2013Governance
SystemCSR Based on
Responsible
Care Concept

FY2014

Ten-Years
Summary

FY2015

Management
Discussion
and Analysis ofOperation

FY2016

Financial
Statements

FY2017

Corporate Data

FY2017(Millions of U.S. dollars)¥320,704
31,10021,257¥269,520
10,0348,401¥302,136
13,752
10,503¥374,873
26,13319,089¥323,124
31,23426,003¥293,970
21,151
19,361¥322,801
26,72724,280$3,038252229

356,407
209,070

352,373
220,248

398,396
242,193419,634
270,128

407,997
282,485433,610292,275

470,102
310,762

4,425
2,925

43,857-21,747-9,67150,812

27,322-31,87881
47,801

16,992-25,141-2,51939,61932,697-18,941-10,237
44,33653,264-12,963-20,01264,05537,474-44,515-3,53351,70038,823-27,498-9,762
51,612

365
-259
92
486

¥ 104.71
1,006.48
22.0¥ 41.38
1,059.85
16.0¥ 51.74
1,164.10
16.0¥ 94.06
1,307.13
24.0¥ 640.69
6,870.84
150.0¥ 478.36
7,238.33
150.0¥ 608.84
7,705.05
160.0

57.3
10.8
9.7
174
9.2
21.0

61.1
4.0
3.9
189
19.9
38.7

59.3
4.7
4.4
168
23.6
30.9

63.2
7.6
7.3
205
18.7
25.5

68.3
9.6
8.3
241
8.9
23.4

66.6
6.8
5.9
212
15.9
31.4

65.4
8.1
7.1
218
11.9
26.3

−
−
−
−
−
−

79.07
54,900
959
1,100
764

83.09
57,500825
987
738

100.21
67,300
1,219
1,286
791

109.8863,500
1,763
1,832
1,093

120.1442,8005,730－－

108.36
34,700
7,580
8,020
5,140

110.82
41,900
7,220
8,650
6,670

−
394.4
68
81.4
62.8

$

5.7
72.5
1.5

Notes: Conversions into USD are just for indication only. The exchange rate is the rate at March 31, 2018. (¥106.24 / $1.00) Figures are rounded off.

15

16

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Management Discussion and Analysis of Operation

Fiscal 2017 Performance
The world economy in the current fiscal year saw the UnitedStates economy continuing to recover, the situation in Europe
also recovering moderately, and a pickup continuing in China
and other emerging countries in Asia.
As for the Japanese economy, the country saw amoderate recovery trend due primarily to an increase incapital investment and steady employment conditions.
In the chemicals industry, although costs of raw
materials are tracking upwards, the business environment
was generally firm, supported by an increase in demand.

Segment Sales(¥billion)

8.9%
28.8
120.0

37.2%

Total
322.8
53.9%

174.0

■ Basic Chemicals■ Functional Chemicals■ Environment & Catalysts

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

CSR Based on
Responsible
Care Concept

Governance
SystemManagement
Discussion
and Analysis ofOperation

Ten-Years
Summary

Financial
Statements

Corporate Data

Financial position
Under these conditions, the Groupʼs consolidated net sales
in the current fiscal year increased 9.8% year-on-year to322,801 million yen, up 28,831 million yen. Contributing
factors included a revision in sales prices on account ofrising raw material costs and market conditions for products
outside of Japan, as well as increased sales volume.
With regard to profits, in spite of a contraction in the
spread owing to a hike in raw material costs in excess of
the increase in sales prices, increased production and sales
volume resulting in volume effects led to higher operating
profit, which was up 26.4% year-on-year to 26,727 million
yen, up 5,576 million yen.

Non-operating income increased 2,053 million yen
due to an increase in share of profit of entities accounted
for using equity method. As a result, ordinary profit was up
30.9% to 32,293 million yen, 7,629 million yen higher than theprevious fiscal year.
Extraordinary income rose 112 million yen year-on-year
due to the absence of loss on closing of laboratory, while gainon sales of investment securities decreased and impairment
loss and loss on removal of non-current assets were posted.
As a result, profit attributable to owners of parent rose 25.4%
to 24,280 million yen, up 4,919 million yen.

Shareholdersʼ Equity and Total Assets(¥billion)

470.1
419.6

265.3

433.6

408.0

400

278.8

288.7

307.3

200

0
FY2014FY2015FY2016FY2017■ Shareholders’ Equity■ Total Assets

17

18

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Cash FlowsNet cash provided by operating activities in the current
fiscal year amounted to 38,823 million yen (37,474 million
yen was provided in the previous fiscal year). This was due
primarily to increased profit before income taxes, which led
to increased inflows of 1,349 million yen compared to theprevious fiscal year.
Net cash used in investing activities totaled 27,498
million yen (44,515 million yen was used in the previous fiscal
year). Outflows decreased for the purchase of property, plantand equipment and the purchase of shares of subsidiaries
and associates, which led to decreased outflows of 17,017
million yen compared to the previous fiscal year.
Net cash used in financing activities amounted to 9,762
million yen (3,533 million yen was used in the previous fiscal
year). This was an increase of 6,229 million yen in cash
outflows compared to the previous fiscal year. Contributing
factors included the absence of the proceeds from issuanceof bonds recorded in the previous fiscal year.

■ Operating activity■ Investments activity■ Free cash flows

Cash Flows(¥billion)

53.0
50
40

40.3
32.7

38.8

37.5

30
20

13.8

11.3

10
0
-7.0

-10
-20

-13.0
-18.9

-30

-27.5

-40
-50

-44.5
FY2014FY2015FY2016FY2017

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

Governance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

Basic Policy on the Distribution of Profits, and Dividends
The Company has positioned the return of profits toshareholders as the most important management task, and,in consideration of the dividend payout ratio, etc., distributes
dividends under a basic policy of aiming to improve mediumto long-term dividend levels in line with projected trends inconsolidated earnings, while at the same time taking an overall
view to expand the business and strengthen the corporate
structure. In addition to dividend distributions, the Company
intends to consider stock buybacks as one of the options toraise the value per share.
Meanwhile, aggressive investments in equipment,
strategies, and R&D are also necessary for the maintenance ofcompetitiveness and continued growth. As such, the Company
regards retention of internal reserves also essential; therefore

we will continue to distribute profits by carefully considering
the balance of above factors.
The Company pays dividends twice a year, once at the endof the interim period and once at the end of the fiscal year.
Based on the above basic policy, the Company plans to pay a
year-end dividend of 85 yen per share for FY 2017, taking into
consideration the business environment, results and future
prospects for business growth. As a result, annual dividends
will total 160 yen per share, marking a record-high, for a
consolidated payout ratio of 26.3%.
For FY 2018, based on the above basic policy, annual
dividends are scheduled to be 160 yen (interim dividends of 80
yen and year-end dividends of 80 yen), taking into consideration
the state of achievement of profit forecasts.

Fiscal 2018 Outlook
The Japanese economy is expected to remain on a moderate
recovery trend, due to an improvement in the employment
environment, an increase in capital investment and the
expansion of exports in line with the global economic
recovery. Meanwhile, it is predicted that the management
environment surrounding the Company will be unpredictable,
owing to factors such as trends in the policy operation in
the United States and China, and uncertainty in the politicalsituation in Europe.
Under such conditions, projected earnings in the next
fiscal year are based on exchange rates of 110 yen to the U.S.
dollar and 130 yen to the euro, and naphtha prices of 46,000
yen/kl. Sales volumes are projected to increase centeredaround functional chemicals, and sales prices are expected
to increase due to higher raw material prices. We therefore
forecast consolidated net sales to increase 8.4% to 350,000
million yen (up 27,199 million yen), with 170,000 million yen
in the first half compared to the current fiscal year.

With regard to profits, while fixed costs such as
depreciation expense accompanying the reinforcement offacilities at overseas subsidiaries will increase, the Company
projections incorporate the expected effect of increased
sales volumes and widening of the spread, that will lead toan increase in operating profit by 1.0%, to 27,000 million yen(up 273 million yen), with 12,000 million yen in the first half
compared to the current fiscal year.
Non-operating profit is projected to decrease 65 million
yen due to a decrease in share of profit of entities accounted
for using equity method, despite an absence of foreignexchange losses. As a result of these, the Company projects
an increase in ordinary profit by 0.6%, to 32,500 million yen(up 207 million yen), with 15,000 million yen in the first half,
and an increase in profit attributable to owners of parent by
0.9%, to 24,500 million yen (up 220 million yen), with 11,500
million yen in the first half, compared to the current fiscal
year.

19

20

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Financial Statements
Consolidated Balance Sheet

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

March 31,
2017

2018

(Thousands of U.S. dollars)(Note 2)

(Millions of yen)

Assets2018

Current assets:
Cash and cash equivalents (Note 4) ……………………………………

¥Time deposits (Notes 4 and 7) …………………………………………
Notes and accounts receivable (Notes 3 and 4) :Unconsolidated subsidiaries and afﬁliates …………………………

Trade ……………………………………………………………………
Allowance for doubtful accounts ……………………………………

Inventories (Note 6) ……………………………………………………
Deferred income taxes (Note 9) ………………………………………

Other current assets ……………………………………………………

Total current assets ………………………………………………………

Property, plant and equipment, at cost (Notes 7 and 22) :Land ………………………………………………………………………
Buildings and structures ………………………………………………

Machinery and equipment ………………………………………………
Construction in progress ………………………………………………

Leased assets ……………………………………………………………

Accumulated depreciation ………………………………………………

Property, plant and equipment, net………………………………………

51,612
4,308¥

51,7004,439$

485,806
40,5509,426
68,612(9)57,014
3,129
7,440
201,532

7,590
56,611(11)
51,1093,154
9,917
184,50988,724645,821(85)
536,653
29,45270,0301,896,951

32,609105,155
375,447
44,470615(383,055)
175,241

32,607
104,509
370,429
25,664580(370,629)
163,160

306,937
989,787
3,533,951
418,581
5,789(3,605,563)
1,649,482

41,46036,438
2,239
6,160
7,032
93,32937,48832,603
1,868
7,298
6,684
85,941

390,248
342,978
21,07557,982
66,190878,473433,610$ 4,424,906

Investments and other assets:
Investments in securities (Notes 4 and 5) ……………………………

Investments in unconsolidated subsidiaries and afﬁliates …………
Deferred income taxes (Note 9) ………………………………………

Asset for retirement beneﬁts (Note 8) …………………………………
Other assets (Note 7) ……………………………………………………

Total investments and other assets ……………………………………

Total assets (Note 22) ……………………………………………………

¥

470,102¥

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

Governance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

March 31,
2017

2018

(Thousands of U.S. dollars)(Note 2)

(Millions of yen)

Liabilities and Net Assets

2018

Current liabilities:
Short-term bank loans (Notes 4 and 7) ………………………………

Current portion of long-term debt (Notes 4 and 7)

Notes and accounts payable (Notes 3 and 4) :¥…………………

Unconsolidated subsidiaries and afﬁliates …………………………

Trade ……………………………………………………………………

Lease obligations (Note 7)……………………………………………

Income taxes payable (Note 9) …………………………………………

Accrued bonuses to employees ………………………………………
Accrued bonuses to directors and audit and supervisory board members …

Reserve for periodic repairs ……………………………………………
Other current liabilities …………………………………………………

Total current liabilities ……………………………………………………
Long-term liabilities:
Long-term debt (Notes 4 and 7) ………………………………………
Lease obligations (Note 7)……………………………………………

Deferred income taxes (Note 9) ………………………………………
Liability for retirement beneﬁts (Note 8) ………………………………
Other ……………………………………………………………………

Total long-term liabilities …………………………………………………

8,244
4,438

¥

9,976
11,583$77,59841,7737,182
50,884
28
5,489
3,405
172
2,442
10,352
92,636

5,758
38,857
25
3,378
3,065
159
2,525
11,51986,84567,602478,953264
51,66632,0501,619
22,98697,439871,950

45,301
52
5,087
13,607
2,657
66,70436,37483
4,971
12,072990
54,490426,402489
47,882
128,078
25,010627,861

25,03822,400248,158(6,263)289,333

25,03822,395229,091(6,249)270,275

235,674
210,843
2,335,825(58,951)
2,723,391

14,7864,868
3(1,719)17,938
3,491
310,762
470,10212,248
6,153
11
(16)
18,3963,604
292,275
433,610

139,175
45,821
28(16,180)
168,844
32,8602,925,095$ 4,424,906

Contingent liabilities (Note 19)
Net assets:
Shareholdersʼ equity (Note 10) :Common stock:
Authorized – 127,200,000 shares in 2018 and 127,200,000 shares in 2017
Issued – 40,800,000 shares in 2018 and 40,800,000 shares in 2017 …
Capital surplus…………………………………………………………
Retained earnings ……………………………………………………

Less treasury stock, at cost …………………………………………

Total shareholdersʼ equity ………………………………………………
Accumulated other comprehensive income (loss):
Net unrealized holding gain on securities …………………………
Translation adjustments ………………………………………………

Net unrealized deferred gain on hedges ……………………………

Retirement beneﬁt liability adjustments ……………………………

Total accumulated other comprehensive income, net ………………

Non-controlling interests ………………………………………………

Total net assets ……………………………………………………………

Total liabilities and net assets ……………………………………………

See accompanying notes to consolidated ﬁnancial statements.

¥

¥

21

22

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Consolidated Statement of Income

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Years ended March 31,
2017

2018

Net sales (Note 22) ………………………………………………………

(Thousands of U.S. dollars)(Note 2)

(Millions of yen)¥

Cost of sales (Note 11)

Gross profit …………………………………………………………

Selling, general and administrative expenses (Note 11) ………………
Operating income (Note 22) ………………………………………

322,801
256,664
66,137

2018

293,970
233,499
60,471$ 3,038,413
2,415,889
622,524

39,41026,72739,32021,151

370,952
251,572

1,384
(387)
570
4,405
1,174
(393)
(167)
(472)
589
36
–
(465)
(198)
(36)
–
–
–
(555)
32,212

1,456
(445)
347
2,150
1,108
(630)
(267)
(47)
1,199
3
136
–
–
(3)
(797)
(159)
(115)
(616)
24,471

13,027(3,643)
5,365
41,463
11,050(3,699)(1,572)(4,443)
5,544
339–(4,377)(1,864)(339)–––(5,223)
303,200

8,322
(435)
7,887
24,325(45)
24,280

5,631
(519)
5,112
19,3592
19,361

78,332(4,095)74,237228,963(424)
228,539¥

Other income (expenses):

Interest and dividend income …………………………………………
Interest expense …………………………………………………………

Royalty income …………………………………………………………

Equity in earnings of an unconsolidated subsidiary and afﬁliates …

Rent income from real estate …………………………………………

Foreign exchange losses, net …………………………………………
Technology transfer study related expenses …………………………

Loss on disposal of property, plant and equipment …………………
Gain on sales of investments in securities ……………………………
Government subsidies …………………………………………………
Gain on sales of property, plant and equipment (Note 12)…………

Loss on impairment of property, plant and equipment (Notes 13 and 22) …

Removal cost of property, plant and equipment ………………………

Loss on reduction of non-current assets ………………………………
Loss on closing of research center (Note 14) …………………………

Loss on liquidation of business (Note 15) ……………………………
Loss on devaluation of investments in other securities ………………

Other, net (Note 16) ……………………………………………………
Proﬁt before income taxes …………………………………………

Income taxes (Note 9) :Current …………………………………………………………………

Deferred …………………………………………………………………
Proﬁt …………………………………………………………………

(Proﬁt) loss attributable to non-controlling interests ………………

Proﬁt attributable to owners of parent…………………………………

See accompanying notes to consolidated ﬁnancial statements.

¥

¥

$

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

Governance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

Consolidated Statement of Comprehensive Income

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Years ended March 31,
2017

2018

Proﬁt ………………………………………………………………………

¥

Net unrealized holding gain on securities ……………………………

Net unrealized deferred loss on hedges ………………………………

Translation adjustments ………………………………………………

Retirement beneﬁts liability adjustments ……………………………
Share of other comprehensive income (loss) of an unconsolidated
subsidiary and afﬁliates accounted for by the equity method ………
Total other comprehensive (loss) income ……………………………

Comprehensive income …………………………………………………

¥Total comprehensive income (loss) attributable to:
Owners of parent ………………………………………………………

¥

Non-controlling interests ………………………………………………

See accompanying notes to consolidated ﬁnancial statements.

(Thousands of U.S. dollars)(Note 2)

(Millions of yen)

Other comprehensive (loss) income (Note 17)

24,3252018¥

19,359$228,9632,538(8)(2,537)(1,765)4,641(6)(4,526)2,980

23,888(75)(23,880)(16,613)

1,170
(602)
23,723(913)
2,176
21,535

11,013(5,667)223,296

23,823(100)¥¥

21,569(34)$$

224,238
(942)

23

24

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Consolidated Statement of Changes in Net Assets

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Shareholdersʼ equity
Commonstock
Balance at April 1, 2017 ……………

CapitalsurplusLess treasury
Total
stock,
shareholdersʼ
equityat costRetainedearnings(Millions of yen)¥

¥ 229,091

Disposal of treasury stock …………

–
–
–
–

–
–
–
0

(5,982)
24,280
–
–

–
–
(14)
0

(5,982)
24,280(14)
0Effect resulting from change of accounting
period of consolidated subsidiaries ………

–

–

769

–

769

Change in equity resulting from transaction
with non-controlling shareholders ………

–

5

–

–

5

–
–
25,038–5
22,400–19,067¥ 248,158

Proﬁt attributable to owners of parent …

Purchases of treasury stock ………

Net changes in items other thanshareholdersʼ equity ………………

Total changes during the year ……

Balance at March 31, 2018 …………

¥

¥

¥

¥

(6,249) ¥ 270,275

22,395

Changes during the year:
Cash dividends ……………………

25,038¥––(14)
19,058(6,263) ¥ 289,333

Accumulated other comprehensive income (loss)

Balance at April 1, 2017 ……………
Changes during the year:
Cash dividends ……………………

Net
unrealized
holding gain
on securities

Retirement Total accumulatedNet
beneﬁtunrealizedotherliability
Translation deferred gain
comprehensive
adjustmentson hedges
adjustments
income, net¥¥

Noncontrollinginterests

Total net
assets¥3,604¥ 292,275(Millions of yen)

12,248

6,153

¥

11

¥

(16) ¥

18,396

Purchases of treasury stock ………
Disposal of treasury stock …………

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

(5,982)
24,280(14)
0Effect resulting from change of accounting
period of consolidated subsidiaries ……

–

–

–

–

–

–

769

Change in equity resulting from transaction
with non-controlling shareholders ……

–

–

–

–

–

–

5

(1,703)(1,703)(1,719) ¥

(458)
(458)
17,938 ¥Proﬁt attributable to owners of parent …

Net changes in items other thanshareholdersʼ equity ………………

Total changes during the year ……

Balance at March 31, 2018 …………

¥

2,538
2,538
14,786¥(1,285)(1,285)
4,868 ¥

(8)
(8)
3 ¥

(113)
(571)
(113)
18,487
3,491 ¥ 310,762

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

CSR Based on
Responsible
Care Concept

Governance
SystemManagement
Discussion
and Analysis ofOperation

Ten-Years
Summary

Financial
Statements

Corporate Data

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Shareholdersʼ equity
Commonstock
Balance at April 1, 2016 ……………

CapitalsurplusLess treasury
Total
stock,
shareholdersʼ
at costequityRetainedearnings(Millions of yen)¥

25,038¥¥ 216,223

Disposal of treasury stock …………

–
–
–
–

–
–
–
0

(6,493)19,361––––(5,239)0(6,493)19,361(5,239)0Change in equity resulting from transaction
with non-controlling shareholders ……

–

–

–

–

–

–
–
25,038–0
22,395–
12,868¥ 229,091

Changes during the year:
Cash dividends ……………………

Proﬁt attributable to owners of parent …

Purchases of treasury stock ………

Net changes in items other thanshareholdersʼ equity ………………

Total changes during the year ……

Balance at March 31, 2017 …………

¥

¥

¥

(1,010) ¥ 262,646

22,395¥––(5,239)7,629(6,249) ¥ 270,275

Accumulated other comprehensive income (loss)

Balance at April 1, 2016 ……………

Net
unrealized
holding gain
on securities

Net
Retirement Total accumulated
unrealized
beneﬁtother
Translation deferred gain
liability
comprehensive
adjustmentson hedges
adjustments
income, net¥¥

Noncontrollinginterests

Total net
assets¥3,650¥ 282,484(Millions of yen)

7,614

11,474¥16¥(2,916) ¥16,188Changes during the year:

Disposal of treasury stock …………

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

(6,493)19,361(5,239)0Change in equity resulting from transaction
with non-controlling shareholders ……

–

–

–

–

–

–

–

(5,321)(5,321)
6,153 ¥

(5)
(5)
11 ¥

2,900
2,900
(16) ¥Cash dividends ……………………

Proﬁt attributable to owners of parent …

Purchases of treasury stock ………

Net changes in items other thanshareholdersʼ equity ………………

Total changes during the year ……

Balance at March 31, 2017 …………

¥

4,634
4,634
12,248

¥

2,208
2,208
18,396

¥

(46)
2,162
(46)
9,791
3,604 ¥ 292,275

25

26

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Shareholdersʼ equity
Commonstock

Capitalsurplus

Balance at April 1, 2017 …………… $ 235,674
Changes during the year:
Cash dividends ……………………

Less treasury
Total
stock,
shareholdersʼ
equityat costRetainedearnings(Thousands of U.S. dollars) (Note 2)$ 210,796 $ 2,156,354 $(58,820) $ 2,544,004

Disposal of treasury stock …………

–
–
–
–

–
–
–
0

(56,306)
228,539
–
–

–
–
(131)
0

(56,306)
228,539(131)0Effect resulting from change of accounting
period of consolidated subsidiaries ……

–

–

7,238

–

7,238

Change in equity resulting from transaction
with non-controlling shareholders ……

–

47

–

–

47

Proﬁt attributable to owners of parent …

Purchases of treasury stock ………

Net changes in items other thanshareholdersʼ equity ………………

–
–
–
–
47
179,471
Balance at March 31, 2018 ………… $ 235,674 $ 210,843 $ 2,335,825 $Total changes during the year ……

–
–
(131)
179,387(58,951) $ 2,723,391

Accumulated other comprehensive income (loss)
Net
unrealized
holding gain
on securities

Retirement Total accumulatedNet
beneﬁtunrealizedotherliability
Translation deferred gain
comprehensive
adjustmentson hedges
adjustments
income, net

Balance at April 1, 2017 …………… $ 115,286 $Noncontrollinginterests

Total net
assets(Thousands of U.S. dollars) (Note 2)(151) $ 173,155 $

57,916 $104 $Purchases of treasury stock ………
Disposal of treasury stock …………

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

(56,306)
228,539(131)0Effect resulting from change of accounting
period of consolidated subsidiaries ……

–

–

–

–

–

–

7,238

Change in equity resulting from transaction
with non-controlling shareholders ……

–

–

–

–

–

–

47

(12,095)(12,095)
45,821 $

(76)
(76)
28 $

Changes during the year:
Cash dividends ……………………
Proﬁt attributable to owners of parent …

Net changes in items other thanshareholdersʼ equity ………………

23,88923,889Balance at March 31, 2018 ………… $ 139,175 $Total changes during the year ……

See accompanying notes to consolidated ﬁnancial statements.

(16,029)(4,311)(16,029)(4,311)(16,180) $ 168,844 $

33,923 $ 2,751,082(1,063)(5,374)(1,063)174,01332,860 $ 2,925,095

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

Governance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

Consolidated Statement of Cash Flows

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Years ended March 31,
2017

2018

2018
(Thousands of U.S. dollars)(Note 2)

(Millions of yen)

Operating activities:
Proﬁt before income taxes ………………………………………………

¥

32,212¥

24,471$

303,200

Adjustments to reconcile proﬁt before income taxes to net cash
provided by operating activities:
Depreciation and amortization …………………………………………
Gain on sales of investments in securities ……………………………

Gain on sales of property, plant and equipment ………………………
Government subsidies …………………………………………………

Loss on closing of research center ……………………………………

Loss on liquidation of business …………………………………………
Loss on devaluation of investments in other securities ………………

Loss on reduction of non-current assets ………………………………
Loss on impairment of property, plant and equipment ………………
Removal costs of property, plant and equipment ……………………

Loss on sales of property, plant and equipment ………………………
Loss on disposal of property, plant and equipment …………………

Increase in asset for retirement beneﬁts ……………………………

Increase in liability for retirement beneﬁts ……………………………

Interest and dividend income …………………………………………
Interest expense …………………………………………………………

Equity in earnings of an unconsolidated subsidiary and afﬁliates …
Other, net ………………………………………………………………
Changes in operating assets and liabilities:
Notes and accounts receivable ………………………………………

Inventories ……………………………………………………………
Notes and accounts payable …………………………………………
Other current liabilities ………………………………………………
Subtotal ………………………………………………………………

Interest and dividends received …………………………………………

Interest paid ………………………………………………………………

Proceeds from government subsidies …………………………………
Income taxes paid …………………………………………………………

Net cash provided by operating activities ………………………………
Investing activities:
Purchases of property, plant and equipment ……………………………

Proceeds from sales of property, plant and equipment ………………
Purchase of intangible assets ……………………………………………
Purchases of investments in securities …………………………………

Proceeds from sales of investments in securities ………………………
Payments for purchases of shares of afﬁliates …………………………
Collection of loans receivable ……………………………………………

Other, net …………………………………………………………………

Net cash used in investing activities ……………………………………

¥

16,997
(589)
–
(36)
–
–
–
36
465
198
7
472
(1,060)372(1,384)387(4,405)
1,516

17,957(1,199)
(136)
(3)
797
159
115
3
–
–
–
47
(1,153)245(1,456)445(2,150)563

159,987(5,544)
–
(339)
–
–
–
339
4,377
1,864
66
4,443
(9,977)
3,502(13,027)
3,643(41,463)
14,268(12,399)(3,339)12,412590
42,452
3,159
(401)
36
(6,423)38,82353(2,796)
6,712(773)
41,901
2,847
(430)
3
(6,847)37,474(116,707)(31,429)
116,830
5,553
399,586
29,735(3,774)339(60,457)
365,429(27,126)
58
(213)
(733)
1,553
(1,277)
119
121(27,498)(36,228)
150
(320)
(558)
1,668
(9,588)127234(44,515)(255,328)
546(2,005)(6,899)14,618(12,020)
1,120
1,139
(258,829)

¥

$

27

28

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Years ended March 31,
2017

2018

(Thousands of U.S. dollars)(Note 2)

(Millions of yen)

Financing activities:
Net decrease in short-term bank loans …………………………………

¥Proceeds from long-term debt …………………………………………
Repayment of long-term debt ……………………………………………

Issuance of bonds …………………………………………………………

Purchases of treasury stock ……………………………………………
Cash dividends paid ………………………………………………………
Cash dividends paid to non-controlling shareholders …………………

Other, net …………………………………………………………………

Net cash used in ﬁnancing activities ……………………………………

Effect of exchange rate changes on cash and cash equivalents ………
Increase (decrease) in cash and cash equivalents ……………………
Cash and cash equivalents at beginning of year ………………………

Decrease in cash and cash equivalents resulting from change ofaccounting period of consolidated subsidiaries …………………………
Cash and cash equivalents at end of year ………………………………

See accompanying notes to consolidated ﬁnancial statements.

¥(1,928)
8,826(10,631)–(14)(5,982)(2)(31)(9,762)(237)
1,326
51,700(1,414)
51,6122018¥¥(3,035)
9,262(7,999)10,000(5,239)(6,494)(13)(15)(3,533)(1,781)(12,355)
64,055–51,700$$(18,148)
83,076(100,066)–(132)(56,306)(19)(291)(91,886)(2,233)
12,481
486,634(13,309)
485,806

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

Governance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

Notes to Consolidated Financial Statements
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

March 31, 2018
1. Summary of Significant Accounting Policies(a) Basis of presentation
The accompanying consolidated financial statements of Nippon Shokubai Co., Ltd. (the “Company”) and its consolidated
subsidiaries (the “Group”) are prepared on the basis of accounting principles generally accepted in Japan, which are different incertain respects as to the application and disclosure requirements of International Financial Reporting Standards (“IFRS”), andare compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments andExchange Act of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications and rearrangements have been
made to the consolidated financial statements issued domestically in order to present them in a format which is more familiar toreaders outside Japan.
Certain reclassifications of previously reported amounts have been made to conform the consolidated financial statements
for the year ended March 31, 2017 to the 2018 presentation. Such reclassifications had no effect on consolidated profit and cashflow.
(b) Basis of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its significant subsidiaries. All
significant intercompany items have been eliminated in consolidation.
Until the year ended March 31, 2017, the overseas consolidated subsidiaries that settled their accounts in December 31 wereconsolidated with the financial statements as of December 31. Accordingly, necessary adjustments were made for any significant
intercompany transactions which took place during the period between the year end of these consolidated subsidiaries and theyear end of the Company.
Effective April 1, 2017, to present the consolidated financial statements more appropriately, NIPPON SHOKUBAI EUROPE
N.V. and other 4 overseas consolidated subsidiaries have changed the fiscal year end date to March 31. Furthermore, NISSHOKUCHEMICAL INDUSTRY (ZHANGJIAGANG) CO., LTD. has been consolidated using provisional financial statements at March 31.
As a result, profit or loss of these subsidiaries for the three months from January 1 to March 31, 2017 has been recognized inretained earnings. Corresponding changes in cash and cash equivalents are indicated as “Decrease in cash and cash equivalents
resulting from change of accounting period of consolidated subsidiaries” in the consolidated statement of cash flows.
Investments in an unconsolidated subsidiary and significant affiliates are accounted for by the equity method.
Investments in unconsolidated subsidiaries and affiliates not accounted for by the equity method are carried at cost.
(c) Foreign currency translation
The financial statements of the overseas consolidated subsidiaries are translated into yen at the rates of exchange in effect at thebalance sheet date, except that the components of net assets excluding non-controlling interests are translated at their historicalexchange rates. Differences resulting from translating the financial statements of the overseas consolidated subsidiaries are
not included in the determination of profit but are reported as translation adjustments and non-controlling interests in theaccompanying consolidated balance sheets at March 31, 2018 and 2017.
Revenue and expense items arising from transactions denominated in foreign currencies are generally translated into yen at
the rates of exchange in effect at the respective transaction dates.
All monetary assets and liabilities denominated in foreign currencies are translated into yen at the rates of exchange in effectat the consolidated balance sheet date and gain or loss on each translation is credited or charged to profit.
(d) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, cash in banks which can be withdrawn at any time and short-term
investments with a maturity of three months or less when purchased which can easily be converted to cash and are subject tolittle risk of change in value.

29

30

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018(e) Allowance for doubtful accounts
The Company and its consolidated subsidiaries provide an allowance for doubtful receivables at an amount calculated based on
their historical experience of bad debts on ordinary receivables plus an additional estimate of probable specific bad debts from
customers experiencing financial difficulties.
(f) Inventories
Inventories are stated at the lower of cost or net selling value, cost being determined primarily by the moving average method.
(g) Property, plant and equipment
Depreciation is computed by the straight-line method over the estimated useful lives of the respective assets except for leased
assets.
(h) Leases
Leased assets under finance lease transactions that do not transfer ownership to the lessee are depreciated to a residual value ofzero by the straight-line method using the contract term as the useful life.
For finance lease transactions that do not transfer ownership to the lessee, those that started on or before March 31, 2008
continue to be accounted for as operating lease transactions.
(i) Investments in securities
Securities are classified into three categories: trading securities, held-to-maturity debt securities and other securities. Trading
securities, consisting of debt and marketable equity securities, are carried at fair value. Gain and loss, both realized andunrealized, are credited and charged to income. Held-to-maturity debt securities are carried at amortized cost. Marketablesecurities classified as other securities are carried at fair value, with any changes in unrealized holding gain or loss, net ofthe applicable income taxes, reported as a separate component of net assets. Non-marketable securities classified as othersecurities are carried at cost. Cost of securities sold is determined by the moving average method.
(j) Research and development costs and computer software
Research and development costs are charged to income when incurred.
Expenditures relating to the development of computer software intended for internal use are charged to income as incurred,
except if these are deemed to contribute to the generation of future income or cost savings. Such expenditures are capitalized asassets and amortized by the straight-line method over their respective estimated useful lives, generally a period of 5 years.
(k) Income taxes
Income taxes are calculated based on taxable income and charged to income on an accrual basis. Deferred income tax assets
and liabilities are computed based on the temporary differences between financial reporting and the tax bases of the assets andliabilities which will result in taxable or tax-deductible amounts in the future. The calculation of deferred income tax assets andliabilities is based on the enacted tax laws.
(l) Hedge accounting
Gain or loss on derivatives positions designated as hedges is deferred until the loss or gain on the respective underlying hedged
items is recognized.
(Change in accounting policy)
Until the year ended March 31, 2017, forward foreign currency exchange contracts which met certain criteria were previously
accounted for by the allocation method which requires that recognized foreign currency receivables or payables be translated at
the corresponding contract rates. In addition, under the allocation method, interest rate swaps which meet certain conditions areaccounted for as if the interest rates applied to the swaps had originally applied to the underlying debt.
Effective April 1, 2017, the accounting treatment has been changed to the principle method, in which forward foreign currency
exchange contracts and interest rate swaps are measured at the market value as of the year end, in order to reflect the actual
conditions of derivative transactions more accurately.

Consolidated
Financial
Highlights

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Description ofBusiness

Governance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

As the effects of these changes on earlier periods were immaterial, no adjustment has been made retrospectively. In
addition, the effect of these changes on profit or loss were immaterial for the year ended March 31, 2018.
(m) Accrued bonuses to employees
Accrued bonuses to employees are provided based on the estimated amount of bonuses to be paid to employees which is charged
to income in the current year.
(n) Accrued bonuses to directors and audit & supervisory board members
Accrued bonuses to directors and audit & supervisory board members are provided at an estimate of the amount to be paid in thefollowing year which has been allocated to the current fiscal year.
(o) Reserve for periodic repairs
The Company and certain consolidated subsidiaries provide a reserve for the cost of periodic repairs to production facilities atplants based on their estimates of the future cost of such repairs.
(p) Retirement benefits
The liability for retirement benefits is provided based on the retirement benefit obligation reduced by the pension plan assets atfair value at the end of the year.
The retirement benefits are attributed to periods corresponding to the service years of eligible employees based on thebenefit formula method.
Actuarial gain or loss is amortized in the year following the year in which the gain or loss is recognized by the straight-line
method principally over a period of 10 years, which is within the estimated average remaining years of service of the eligible
employees.
Prior service cost is amortized by the straight-line method principally over a period of 5 years, which is within the estimatedaverage remaining years of service of the eligible employees.
(q) Distribution of retained earnings
Under the Corporation Law of Japan, the distribution of retained earnings with respect to a given financial period is made byresolution of the shareholders at a general meeting held subsequent to the close of the financial period. The accounts for that
period do not, therefore, reflect such distributions (see Note 24).
(r) Recognition of contract revenue and cost
The Company recognizes revenue by applying the percentage-of-completion method for the construction projects for which
the outcome of the construction activity is deemed certain at the end of the reporting period. To estimate the progress of such
construction projects, the Company measures the percentage of completion by comparing costs incurred to date with the mostrecent estimate of total costs required to complete the project (cost to cost basis). For other construction projects where theoutcome cannot be reliably measured, the completed-contract method is applied.
(s) Accounting standards issued but not yet effective(1) The Company and domestic consolidated subsidiaries(Implementation Guidance on Tax Effect Accounting and Implementation Guidance on Recoverability of Deferred Tax Assets)
On February 16, 2018, Accounting Standards Board of Japan (“ASBJ”) issued “Implementation Guidance on Tax EffectAccounting” (ASBJ Guidance No. 28) and “Implementation Guidance on Recoverability of Deferred Tax Assets” (revised 2018)(ASBJ Guidance No. 26).
1) Overview
The accounting treatment for taxable temporary differences related to investments in subsidiaries when an entity
prepares non consolidated financial statements was modified. In addition, the accounting treatment related to therecoverability of deferred tax assets in entities that qualify as Category 1 was clarified.

31

32

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

2) Scheduled date of adoption
The Company expects to adopt the implementation guidance from the beginning of the fiscal year ending March 31, 2019.
3) Impact of the adoption of implementation guidance
The Company is currently evaluating the effect of the adoption of this implementation guidance on its consolidated
financial statements.
(Accounting Standard and Implementation Guidance on Revenue Recognition)
On March 30, 2018, the ASBJ issued “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29) and“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30).
1) Overview
This is a comprehensive accounting standard for revenue recognition. Specifically, the accounting standard establishes
the following five-step model that will apply to revenue from customers:
1.
2.
3.
4.
5.

Identify the contract with a customer
Identify the performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in the contract
Recognize revenue when (or as) the entity satisfies a performance obligation

2) Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal
year ending March 31, 2022.
3) Impact of the adoption of accounting standard and implementation guidance
The Company is currently evaluating the effect of the adoption of this accounting standard and implementation guidanceon its consolidated financial statements.
(2) Overseas consolidated subsidiaries
The accounting standards newly issued or amended but not yet effective as of March 31, 2018 are as follows:
The Company is currently evaluating the effect of the adoption of the following accounting standards on its consolidated
financial statements.
Accounting Standard
Overview
Schedule date of adoption

2.

IFRS 9Financial
Instruments

The accounting standard sets out new requirements forclassiﬁcation, measurement, impairment and hedge
accounting of ﬁnancial instruments.

From the beginning of the ﬁscal year
ending March 31, 2020

IFRS 15

Revenue fromContracts with
Customers

The accounting standard sets out a single comprehensivemodel to account for revenue arising from contracts withcustomers.

From the beginning of the ﬁscal year
ending March 31, 2019

IFRS 16

Leases

The accounting standard requires lessees to account for all From the beginning of the ﬁscal year
leases under a single on-balance sheet model.
ending March 31, 2020

U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter of arithmetic computation
only, at ¥106.24 = U.S. $1.00, the approximate rate of exchange in effect on March 31, 2018. This translation should not be
construed as a representation that yen have been, could have been, or could in the future be, converted into U.S. dollars at theabove or any other rate.

Consolidated
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Messages fromPresident

Special Feature

Description ofBusiness

Governance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

3.

Notes Receivable and Notes Payable
The balance sheet date for the year ended March 31, 2018 fell on a bank holiday. Consequently, notes receivable, trade of ¥81
million ($762 thousand) and notes payable, trade of ¥19 million ($179 thousand) with maturity dates of March 31, 2018 were
included in the respective balances in the consolidated balance sheet at March 31, 2018 and were settled on the next business
day.

4.

Financial Instruments(1) Current status of financial instruments
1) Policy for financial instruments
The Group manages temporary surplus funds through short-term bank deposits. The Group raises funds through bankloans. The Group uses derivatives for the purpose of reducing foreign currency exchange rate fluctuation risk or interest
rate fluctuation risk, and does not enter into derivatives for speculative or trading purposes.
2) Types of financial instruments and related risk
Notes and accounts receivable, trade are exposed to credit risk in relation to customers. Trade receivables in foreign
currencies, arising from export transactions for the global business, are exposed to foreign currency exchange rate
fluctuation risk, which are hedged by forward foreign exchange contracts.
Investments in securities are composed of the shares of common stock of other companies with which the Grouphas business or capital relationships, which are also exposed to market price volatility risk.
Substantially all notes and accounts payable, trade have payment due dates within one year, which are also hedged
by forward foreign currency exchange contracts. The loans are taken out principally for the purpose of making capital
expenditures. The loans with variable interest rates are exposed to interest rate fluctuation risk.
Regarding derivatives, the Group enters into forward foreign currency exchange transactions to avoid foreign currency
exchange rate fluctuation risk related to trade receivables and trade payables denominated in foreign currencies.
Further information regarding the method of hedge accounting, hedging instruments and hedged items, hedging
policy, and the assessment of the effectiveness of hedging activities can be found in Note 21.
3) Risk management for financial instrumentsi) Monitoring for credit risk (the risk that customers or counterparties may default)With respect to trade receivables, each related division of the Company monitors the conditions of their main
customers periodically, monitors due dates and outstanding balances of individual customers, and evaluates credit
worthiness of their main customers semiannually. The consolidated subsidiaries also monitor trade receivables in asame manner.
The Group also believes that the credit risk of derivatives is insignificant as the Group enters into derivativetransactions only with financial institutions with high credit ratings.
ii)

Monitoring of market risks (the risks arising from fluctuations in foreign exchange rates, interest rates and others)
For trade receivables and trade payables in foreign currencies, the Group enters into forward foreign currency
exchange contracts.
For investments in securities, the Group periodically reviews the fair values of such financial instruments andthe financial position of the issuers. In addition, the Group continuously evaluates whether securities other thanthose classified as held-to-maturity should be maintained taking into account their fair values and relationships with
the issuers.
For derivative transactions, the finance department of the Company enters into and manages derivativetransactions. Results of derivative transactions are reported to the director in charge monthly.

iii) Monitoring of liquidity risk (the risk that the Group may not be able to meet its obligations on the scheduled due dates)
Based on reports from each division, the Group prepares and updates its cash flow plans on a timely basis to
manage liquidity risk.

33

34

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 20184) Supplementary explanation of the estimated fair value of financial instruments
The notional amounts of derivatives in the following table are not necessarily indicative of the actual market risk involved
in derivative transactions.
(2) Fair value of financial instruments
Carrying value, fair value, and unrealized gain or loss on financial instruments at March 31, 2018 and 2017 are shown in thefollowing table. The following table does not include financial instruments for which it is extremely difficult to determine thefair value.
2018
2017
(Millions of yen)

Carrying
value

Fair
value

Unrealized
gain (loss)

55,920¥Carrying
value

Fair
value

Unrealized
loss

Assets:i) Cash and cash equivalents,
and time deposits ………………

¥ii) Notes andaccounts receivable ……………

55,920¥–¥–56,139¥56,139¥–78,03878,03839,732¥ 173,690

39,732¥ 173,690

¥

–
–

¥

36,274
156,614¥36,274
156,614

¥

–
–

¥

¥

¥

–

¥

44,615¥44,615¥–64,20164,201–iii) Investments insecurities:
Other securities ………………

Total assets …………………………
Liabilities:iv) Notes andaccounts payable ………………
v) Short-termbank loans………………………

58,06658,066

8,244

8,244

–

9,976

9,976

–

Total liabilities ………………………

4,438
35,301¥ 106,049

4,440
35,103¥ 105,853

¥

2
(198)
(196)

¥

11,583
26,37492,548¥

11,565
26,21092,366

¥

(18)
(164)
(182)

Derivatives …………………………

¥

¥

¥

–

¥

15

¥

15

¥

–

vi) Current portion of
long-term debt …………………

vii) Long-term debt ………………

84

84
2018

(Thousands of U.S. dollars)

Carrying
value

Fair
value

i) Cash and cash equivalents,
and time deposits ………………

$ 526,355$ 526,355ii) Notes andaccounts receivable ……………

734,544734,544

373,984$1,634,883

373,984$1,634,883

Unrealized
gain (loss)

Assets:$––iii) Investments insecurities:
Other securities ………………

Total assets …………………………

$––

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and Analysis ofOperation

Financial
Statements

Corporate Data

2018
(Thousands of U.S. dollars)

Carrying
value

Fair
value

Unrealized
gain (loss)iv) Notes andaccounts payable ………………

$ 546,555$ 546,555v) Short-termbank loans………………………

77,59877,598–

Total liabilities ………………………

41,773332,275$ 998,201

41,792
330,412$ 996,357$

19(1,863)(1,844)

Derivatives …………………………

$

$

$

–

Liabilities:vi) Current portion of
long-term debt …………………

vii) Long-term debt ………………

1)

791

791

$

–

Calculation methods of fair value of financial instruments, securities, and derivatives are as follows:
Assets:i) Cash and cash equivalents, time deposits, and ii) notes and accounts receivable
Since these items are settled in a short period of time, their carrying values approximate the fair value.
iii) Investments in securities
Please refer to Note 1(i).
Liabilities:iv) Notes and accounts payable, and v) short-term bank loans
Since these items are settled in a short period of time, their carrying values approximate the fair value.
vi) Current portion of long-term debt, and vii) long-term debt
The fair value of long-term debt is based on present value of the total amount including principal and interest,
discounted by the expected interest rate in the case of new borrowings under the same conditions and in the sameamount of the balance as of the end of the period.
Derivative transactions:
Please refer to Note 21.

2)

Financial instruments for which it is extremely difficult to determine the fair value:
Other securities whose market value were not determinable at March 31, 2018 and 2017 are presented as follows:
2018
2017
2018

Unlisted securities and other ……………

(Thousands of
U.S. dollars)(Millions of yen)

¥

1,728

¥

1,214

$

16,264Since there is no market price for unlisted securities and it is difficult to determine the fair value, they are not included in thepreceding table “(2) Fair value of financial instruments.”
The impairment losses on investment in unlisted securities in the amount of ¥115 million were recognized for the year
ended March 31, 2017.

35

36

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 20183)

The redemption schedule for monetary assets with maturity dates as of March 31, 2018 and 2017 is as follows:
2018
2017
2018
(Thousands of
U.S. dollars)(Millions of yen)

Cash and cash equivalents, and time
deposits ……………………………………

Due within
one year

Due within
one year

Due within
one year¥¥$

55,92078,038133,958

Notes and accounts receivable …………

¥
5.

¥

526,355
734,544$ 1,260,899

56,13964,201
120,340Investments in Securities
Marketable securities classified as other securities at March 31, 2018 and 2017 are summarized as follows:
2018
2017
(Millions of yen)

Carrying
value

Acquisition
cost

Unrealized
gain

¥

¥

Carrying
value

Acquisition
cost

Unrealized
gain (loss)

Securities whose carrying value
exceeds their acquisition cost:
Equity securities ……………………

¥Subtotal ………………………………

39,732
39,732

19,021
19,021

20,711
20,711¥

36,21436,214¥19,01919,019¥Securities whose acquisition costexceeds their carrying value:
Equity securities ……………………

Subtotal ………………………………
Total …………………………………

¥––
39,732––
19,021¥¥––
20,711¥

2018(Thousands of U.S. dollars)

Carrying
value

Acquisition
cost

Unrealized
gain$ 373,983
373,983$ 179,038
179,038$ 194,945
194,945––$ 373,983––$ 179,038––$ 194,945

Securities whose carrying value
exceeds their acquisition cost:
Equity securities ……………………

Subtotal ………………………………
Securities whose acquisition costexceeds their carrying value:
Equity securities ……………………

Subtotal ………………………………
Total …………………………………

Sales of other securities for the years ended March 31, 2018 and 2017 were as follows:
2018
2017
2018

Proceeds ……………………………
Gross realized gain …………………

(Thousands of
U.S. dollars)(Millions of yen)

¥
¥

867
580

¥
¥

1,260
1,199

$
$

8,161
5,459

60
60
36,274¥85
85
19,104¥

17,195
17,195(25)(25)
17,170Consolidated
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Highlights

6.

Messages fromPresident

Special Feature

Description ofBusiness

Inventories
Inventories at March 31, 2018 and 2017 were as follows:
2018
2017

Merchandise and ﬁnished goods ……

¥

Raw materials ………………………
Supplies ………………………………

Total …………………………………

¥

31,414
5,437
13,075
7,088
57,014¥¥

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

2018
(Thousands of
U.S. dollars)(Millions of yen)Work in process ………………………

7.

Governance
SystemCSR Based on
Responsible
Care Concept

28,162
6,315
10,595
6,037
51,109$ 295,689
51,177123,070
66,717$ 536,653

Short-Term Bank Loans, Long-Term Debt and Lease Obligations
Short-term bank loans consisted mainly of unsecured loans. The average interest rates on short-term bank loans outstanding at
March 31, 2018 and 2017 were 1.77% and 1.42%, respectively.
Long-term debt and lease obligations at March 31, 2018 and 2017 consisted of the following:
2018
2017

2018
(Thousands of
U.S. dollars)(Millions of yen)Unsecured bonds payable in Japanese yen, at rate of 0.11%,
due through 2021 ……………………………………………………

¥

10,000¥10,000$94,127

Unsecured loans from banks and insurance companies, payable inJapanese yen, at rates from 0.14% to 0.84%, due through 2023 …

13,522

17,271

127,278

Unsecured loans from banks, payable in U.S. dollars, at rates of
1.80%, due through 2020 ……………………………………………

6,639

13,32462,48919,57880
49,819(4,466)45,3537,362
108
48,065(11,608)
36,457

184,281753
468,928(42,037)
426,891

Unsecured loans from banks, payable in Euro, at rates from 0.24%
to 0.75%, due through 2024 …………………………………………

Lease obligations ……………………………………………………
Subtotal ……………………………………………………………

Less current portion …………………………………………………
Total …………………………………………………………………

¥¥

The aggregate annual maturities of long-term debt subsequent to March 31, 2018 are summarized below:
Year ending March 31,
2019 …………………………………………………………………

(Millions of yen)¥2020 …………………………………………………………………

2021 …………………………………………………………………
2022 …………………………………………………………………

2023 and thereafter …………………………………………………

¥

4,438
12,772
6,131
16,106
10,292
49,739(Thousands of
U.S. dollars)$$

41,773
120,218
57,709151,600
96,875468,175

$

37

38

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

The aggregate annual maturities of lease obligations to March 31, 2018 are summarized below:
Year ending March 31,
2019 …………………………………………………………………
2020 …………………………………………………………………

(Thousands of
U.S. dollars)(Millions of yen)¥2021 …………………………………………………………………
2022 …………………………………………………………………
2023 and thereafter …………………………………………………

¥

28
19
7
5
21
80

$

$

264
179
66
47
197
753

Assets pledged as collateral for short-term bank loans and notes and accounts payable at March 31, 2018 and 2017 were as
follows:
2018
2017
2018

Time deposits ………………………………………………………

¥

Land …………………………………………………………………

Buildings and structures ……………………………………………
Machinery and equipment …………………………………………

Other assets …………………………………………………………
Total …………………………………………………………………

8.

(Thousands of
U.S. dollars)(Millions of yen)

¥

8
550
101
193
4
856

¥

¥

8
550
105
175
5
843

$

$

75
5,177
951
1,817
37
8,057

Retirement Benefits
Outline of Retirement Benefit Plan
Employees of the Company and consolidated subsidiaries are mainly covered by funded and unfunded defined benefit plans anddefined contribution pension plans to provide for retirement benefits. In funded defined benefit corporate pension plans, lumpsum payments or pensions at retirement based on salary and length of service are paid. In unfunded lump-sum payments plan,
lump-sum payments based on salary and length of service are paid as retirement benefits. In addition, the Company has a cash
balance plan for a defined benefit corporate pension plan and a retirement lump-sum plan. Under the cash balance plan, eacheligible employee has a hypothetical account, which is equivalent to the funded amount as the basis for the pension payment. The
hypothetical accounts accumulate contribution credits based on salary level and interest credits based on market interest trends.
The Company also has the employeesʼ retirement benefit trust.
Certain consolidated subsidiaries calculate the retirement benefit obligations, retirement benefit assets and retirement
benefit expenses for their defined benefit corporate pension plans and lump-sum payments plans based on the amount which
would be payable at the year-end if all eligible employees terminated their services voluntarily (“the simplified method”).
Certain consolidated subsidiaries participate in a multi-employer pension plan. Since the portion of pension assets of theconsolidated subsidiaries held in the multi-employer pension plan could not be reasonably calculated, the required contribution
amount is recognized as retirement benefit expense.

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Corporate Data

Information on defined benefit pension plans for the years ended March 31, 2018 and 2017 is as follows:
The changes in retirement benefit obligation are outlined as follows (excluding plans to which the simplified method is applied):
2018
2017
2018

Balance at the beginning of the year ………………………………

¥

Service cost …………………………………………………………

Interest cost …………………………………………………………
Actuarial loss (gain) …………………………………………………
Beneﬁts paid …………………………………………………………
Past service cost ……………………………………………………

Other …………………………………………………………………

Balance at the end of the year ………………………………………

(Thousands of
U.S. dollars)(Millions of yen)¥

36,846
1,855
331
2,474
(1,691)1,537(10)41,342¥¥

38,9881,885
203(2,436)(1,793)–(1)
36,846$$

346,819
17,4603,116
23,287(15,917)
14,467(94)
389,138

The changes in plan assets at fair value are outlined as follows (excluding plans to which the simplified method is applied):
2018
2017
2018

Balance at the beginning of the year ………………………………

¥Expected return on plan assets ……………………………………

Actuarial gain…………………………………………………………

Contributions by the employer………………………………………

Beneﬁts paid …………………………………………………………

Balance at the end of the year ………………………………………

(Thousands of
U.S. dollars)(Millions of yen)¥

33,172
649
657
1,587
(1,075)34,990¥¥31,007
607
914
1,720
(1,076)33,172The changes in liabilities for retirement benefits calculated by the simplified method are outlined as follows:
2018
2017

Balance at the beginning of the year ………………………………

¥Beneﬁts paid …………………………………………………………
Other …………………………………………………………………

Balance at the end of the year ………………………………………

¥

1,100
99
(90)
(14)
1,095

$

312,236
6,109
6,184
14,939(10,119)
329,349

2018(Thousands of
U.S. dollars)(Millions of yen)

Retirement beneﬁt expenses ………………………………………

$

¥

¥

1,059
85
(30)
(14)
1,100

$

$

10,354
932
(847)
(132)
10,307

39

40

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

The reconciliation of the ending balance of the retirement benefit obligation and plan assets to the asset and liability for
retirement benefits recognized in the consolidated balance sheets were as follows:
2018
2017
2018

Funded retirement beneﬁt obligation ………………………………

(Thousands of
U.S. dollars)(Millions of yen)¥

Unfunded retirement beneﬁt obligation ……………………………

29,376(35,229)(5,853)
13,300Net amount of liabilities and assets recognized in consolidatedbalance sheets ………………………………………………………

7,447

4,774

70,096

13,607(6,160)12,072(7,298)128,078(57,982)

Plan assets at fair value ……………………………………………

Liability for retirement beneﬁts ……………………………………

Asset for retirement beneﬁts ………………………………………

Net amount of liabilities and assets recognized in consolidatedbalance sheets ………………………………………………………

¥

7,447

¥

26,412(33,387)(6,975)
11,749

¥

4,774

$

276,506(331,598)(55,092)
125,188$

70,096Retirement benefit calculated by the simplified method is included in the above table.
The components of retirement benefit expenses are outlined as follows:2018

Service cost …………………………………………………………

2018

2017

(Thousands of
U.S. dollars)(Millions of yen)¥Interest cost …………………………………………………………
Expected return on plan assets ……………………………………

1,855
331
(649)

¥

1,886
203
(607)

$

17,4603,116(6,109)Amortization:
Actuarial loss …………………………………………………………

Past service cost ……………………………………………………
Retirement beneﬁt expenses calculated by simpliﬁed method …
Retirement beneﬁt expenses ………………………………………

¥

508
321
99
2,465

¥

837
14
84
2,417

$

4,783
3,021
932
23,203The components of retirement benefits liability adjustments included in other comprehensive income, before the tax effect, areoutlined as follows:
2018
2017
2018
(Thousands of
U.S. dollars)(Millions of yen)

Past service cost ……………………………………………………

¥Total …………………………………………………………………

¥

Actuarial (loss) gain …………………………………………………

(1,217)(1,319)(2,536)

¥
¥

14
4,187
4,201

$
$

(11,455)(12,415)(23,870)

Consolidated
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Corporate Data

The components of retirement benefit liability adjustments included in accumulated other comprehensive income, before the tax
effect, are outlined as follows:
2018
2017
2018
(Thousands of
U.S. dollars)(Millions of yen)

Unrecognized past service cost ……………………………………

¥Total …………………………………………………………………

¥

1,224
930
2,154

Unrecognized actuarial gain (loss) …………………………………

¥

7
(389)
(382)

¥

$

11,5208,754
20,274$The breakdown of plan assets by major category is as follows:
2018
Bonds …………………………………………………………………

2017
73%
18%
4%
5%
100%

Equities ………………………………………………………………

Cash and deposits ……………………………………………………
Other …………………………………………………………………
Total …………………………………………………………………

57%
24%
10%
9%
100%

(Note) The breakdown of plan assets in the above table is determined based on the percentage of composition of the various
assets in the pension fund. Bonds include multi-asset funds and alternative investments that are approximately thesame as bonds in terms of level of risk.
(Note) 0.4% of pension assets are part of a retirement benefit trust for a corporate pension plan.
The assumptions used in accounting for the defined benefit plans for the years ended March 31, 2018 and 2017 are as follows:
2018
2017
Principally 0.7%
Principally 0.8%
Discount rates ………………………………………………………
Principally 2.0%
Principally 2.0%
Expected long-term rate of return on plan assets ………………
Principally 4.5%
Principally 5.2%
Rates of salary increase ……………………………………………
The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio allocation atpresent and in the future, and long-term expected rates of return from multiple plan assets at present and in the future.
The required contributions to defined contribution pension plans for the years ended March 31, 2018 and 2017 amounted to ¥177
million ($1,666 thousand) and ¥165 million, respectively
The following table sets forth the recent status of the multi-employer pension plan at March 31, 2017 and 2016:
2017
2016

(Thousands of
U.S. dollars)(Millions of yen)

Plan assets……………………………………………………………

¥

549,913¥531,917$ 5,176,139¥

547,8392,074¥

538,161(6,244)$

Total amounts of actuarial liability calculated under pension
ﬁnancing and minimum actuarial reserve …………………………

Difference ……………………………………………………………

2017

5,156,617
19,522The contribution ratio of the Group to the multi-employer plan was 0.5% at March 31, 2018 and 2017. This percentage is not thesame as the Groupʼs percentage of obligation.

41

42

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Additional information
The difference of ¥2,074 million ($19,522 thousand) in the above table is the remaining balance after deduction of the generalreserve of ¥28,297 million ($266,350 thousand) and the surplus of the plan of ¥2,650 million ($24,944 thousand) from the balanceof past service cost of ¥28,873 million ($271,771 thousand) calculated under pension financing at March 31, 2017. Past service
cost was amortized on a straight-line basis over 5 years as of March 31, 2017, and the Company and consolidated subsidiaries
expensed additional payments in the amount of ¥29 million ($273 thousand) for amortization of past service cost.
The difference of ¥6,244 million in the above table is the remaining balance after deduction of the general reserve of ¥49,752
million from the balance of past service cost of ¥34,541 million calculated under pension financing and the shortage of the plan of¥21,455 million at March 31, 2016. Past service cost was amortized on a straight-line basis over 6 years as of March 31, 2016, andthe Company and consolidated subsidiaries expensed additional payments in the amount of ¥29 million for amortization of past
service cost.

9.

Income Taxes
Income taxes applicable to the Company and its domestic consolidated subsidiaries consist of corporation, inhabitantsʼ
and enterprise taxes. The statutory tax rate in Japan for the years ended March 31, 2018 and 2017 was, in the aggregate,approximately 30.8%.
The effective tax rates reflected in the accompanying consolidated statements of income for the years ended March 31, 2018and 2017 differed from the above statutory tax rate for the following reasons:
2018
2017
30.8 %
30.8 %
Statutory tax rate ……………………………………………………
Effect of:Valuation allowance ………………………………………………

Different tax rate applicable to income of subsidiaries …………

Tax credit for research and development costs …………………

Equity in earnings of an unconsolidated subsidiary and afﬁliates …
Other tax credit ……………………………………………………

Other, net …………………………………………………………

Effective tax rates ……………………………………………………

(1.6)
(1.0)
(3.2)
(4.2)
(0.1)
3.8
24.5 %

(1.4)
(0.7)
(4.5)
(2.7)
(1.6)
1.0
20.9 %

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and Analysis ofOperation

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Corporate Data

Deferred income taxes reflect the net tax effect of the temporary differences between the carrying amounts of the assets andliabilities calculated for financial reporting purposes and the corresponding tax bases reported for income tax purposes. The
significant components of the deferred tax assets and liabilities of the Company and its consolidated subsidiaries at March 31,2018 and 2017 are summarized as follows:
2018
2017
2018
(Thousands of
U.S. dollars)(Millions of yen)

Deferred tax assets:
Liability for retirement beneﬁts for employees …………………

¥Depreciation and amortization (including
loss on impairment) ………………………………………………
Tax loss carryforwards ……………………………………………

Loss on impairment of land ………………………………………
Accrued bonuses to employees …………………………………

Intercompany proﬁt on inventories and property, plant andequipment …………………………………………………………

Reserve for periodic repairs ………………………………………
Loss on devaluation of investments in securities and other ……
Other ………………………………………………………………

Gross deferred tax assets …………………………………………
Less: Valuation allowance …………………………………………

Total deferred tax assets ……………………………………………
Deferred tax liabilities:
Net unrealized holding gain on securities ………………………
Depreciation and amortization (in overseas subsidiaries)………
Equity in earnings of an overseas consolidated subsidiary ……

Deferred capital gain on property …………………………………

Reserve for depreciation for tax purposes ………………………
Other ………………………………………………………………

Total deferred tax liabilities …………………………………………

Net deferred tax assets ……………………………………………

¥

2,357

¥

1,497

$

22,186

2,209
1,816
972
943

2,014
4,842
1,038
888

20,79317,093
9,149
8,876

818
748
673
1,128
11,664(2,282)
9,382

609
778
681
1,218
13,565(4,530)
9,035

7,700
7,041
6,335
10,616
109,789(21,480)
88,309(5,779)
(902)
(317)
(216)
(6)
(1,881)(9,101)281(4,775)(1,625)
(653)
(245)
(9)
(1,677)(8,984)51(54,396)(8,490)(2,984)(2,033)(56)(17,705)(85,664)
2,645

¥

$

10. Shareholdersʼ Equity
The Corporation Law of Japan (the “Law”) provides that an amount equal to 10% of the amount to be disbursed as distributions ofcapital surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capitalreserve and the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capitalstock account. Such distributions can be made at any time by resolution of the shareholders, or by the Board of Directors if
certain conditions are met.
Retained earnings include the legal reserve provided in accordance with the provisions of the Law. The legal reserve of theCompany included in retained earnings amounted to ¥3,920 million ($36,898 thousand) at March 31, 2018 and 2017.

43

44

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Common stock and treasury stock
Movements in shares of common stock in issue and treasury stock during the years ended March 31, 2018 and 2017 aresummarized as follows:
2018
Number of shares(Thousands)

Common stock …………

Treasury stock …………

April 1, 2017

Increase

Decrease

40,800
919

–
1

–
0

March 31, 201840,800920

The increase in treasury stock of 1 thousand shares was due to the acquisition of fractional shares (1 thousand shares).
The decrease in treasury stock of 0 thousand shares was due to the sale of shares less than one standard unit (0 thousand
shares).
2017
Number of shares(Thousands)

Common stock …………

Treasury stock …………

April 1, 2016

Increase

Decrease

40,800
217

–
701

–
0

March 31, 201740,800919

The increase in treasury stock of 701 thousand shares was due to the acquisition of shares based on the articles of incorporationof the Company under Article 165 (2) of the Companies Act (700 thousand shares) and the acquisition of fractional shares (1thousand shares).
The decrease in treasury stock of 0 thousand shares was due to the sale of shares less than one standard unit (0 thousand
shares).
11. Research and Development Costs
Research and development costs included in cost of sales and selling, general and administrative expenses for the years ended
March 31, 2018 and 2017 totaled ¥13,266 million ($124,868 thousand) and ¥13,283 million, respectively.
12. Gain on Sales of Property, Plant and Equipment
Gain on sale of land was included in gain on sales of property, plant and equipment for the year ended March 31, 2017.
13. Loss on Impairment of Property, Plant and Equipment
Assets are grouped by the smallest units generating largely independent cash flows based on the business units. In addition,assets not expected to be utilized in the future are grouped individually.
For the year ended March 31, 2018, as a result of a worsening demand and supply balance, the profitability of maleic
anhydride deteriorated. As related continuous losses hereafter were expected due to such deterioration in profitability, aloss on impairment in the amount of ¥420 million ($3,953 thousand) was recognized on property, plant and equipment used
to manufacture maleic anhydride at the Himeji Plant in Hyogo Prefecture. Accordingly, the Company has written down such
assets to net recoverable amounts. The net recoverable amounts were measured using the value in use and evaluated at the
memorandum value because the related cash flows were expected to remain negative.
As the related continuous losses of polyacrylates were expected due to low business demand, a loss on impairment in theamount of ¥45 million ($424 thousand) was recognized on property, plant and equipment used to manufacture polyacrylates atthe Himeji Plant in Hyogo Prefecture. Accordingly, the Company has written down such assets to net recoverable amounts. The
net recoverable amounts were measured using the value in use and evaluated at the memorandum value because the related
cash flows were expected to remain negative.

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Details of the loss on impairment of property, plant and equipment are summarized as follows:
2018
Location

Himeji Plant(Hyogo Prefecture)

Application

Equipment to manufacture maleic
anhydride(Millions of yen)Classiﬁcation

Buildings and structures
Machinery
Equipment

Sub total
Himeji Plant(Hyogo Prefecture)

Equipment to manufacturepolyacrylates

Buildings and structures
Machinery
Equipment

Sub total
Total(Thousands of
U.S. dollars )

¥ 184
234
2
420

$ 1,732
2,202
19
3,953

¥

$

3
39
3
45
¥ 465

28
368
28
424
$ 4,377

14. Loss on Closing of Research Center
For the year ended March 31, 2017, the Company recorded a loss due to the closure of the Tsukuba Research Center. The main
component was loss on impairment.
Details of the loss on impairment of property, plant and equipment are summarized as follows:
2017
Location

Tsukuba Research Center(Tsukuba, Ibaraki Prefecture)

Application

Research base

Classiﬁcation

Buildings and structures
Equipment
Land
Other

Total

(Millions of yen)

¥ 217
2
497
1
¥ 717

Assets are grouped by the smallest units generating largely independent cash flows based on the business units. In addition,assets not expected to be utilized in the future are grouped individually.
During the year ended March 31, 2017, the Tsukuba Research Center, located in Tsukuba, Ibaraki Prefecture, has been closed
and related assets were written down to their respective net recoverable amounts, and a loss on closing of research center wasrecognized. The net recoverable amounts of these impaired assets were measured at net selling value based on appraisal value
by a real estate appraiser.

45

46

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

15. Loss on Liquidation of Business
For the year ended March 31, 2017, the Company recorded a loss on liquidation of business consisting mainly of impairment loss
on manufacturing equipment. Details of the loss on liquidation of business are as follows:(Millions of yen)

Fumaric acid business in Himeji plant …………………………………………………

¥

108
51
159

Ethylene glycol monoethyl ether business in Kawasaki plant …………………………
Total ………………………………………………………………………………………

¥

16. Other
For the year ended March 31, 2017, the Company recorded expenses in the amount of ¥457 million related to emergency dredging
for the recovery of water depth around the port at the Himeji plant.
17. Other Comprehensive Income
The following table presents reclassification adjustments and tax effects of components of other comprehensive income for theyears ended March 31, 2018 and 2017:
2018
2017
2018
(Thousands of
U.S. dollars)(Millions of yen)

Net unrealized holding gain on securities:
Amount arising during the year …………………………………

¥

Reclassiﬁcation adjustments ……………………………………

Before tax effects …………………………………………………
Tax effects …………………………………………………………

Net unrealized holding gain on securities ………………………
Net unrealized deferred loss on hedges:
Amount arising during the year …………………………………

Reclassiﬁcation adjustments ……………………………………

Before tax effects …………………………………………………

Tax effects …………………………………………………………

Net unrealized deferred loss on hedges …………………………
Translation adjustments:

Amount arising during the year …………………………………

Translation adjustments …………………………………………
Retirement beneﬁts liability adjustments:

Amount arising during the year …………………………………

Reclassiﬁcation adjustments ……………………………………

Before tax effects …………………………………………………

Tax effects …………………………………………………………

Retirement beneﬁts liability adjustments ………………………

4,112
(570)
3,542
(1,004)
2,538¥

Reclassiﬁcation adjustments ……………………………………
Share of other comprehensive income (loss) of an
unconsolidated subsidiary and afﬁliates accounted for by theequity method ………………………………………………………

Total other comprehensive (loss) income …………………………

¥$

38,705(5,365)33,340(9,452)
23,888

(2)
(9)
(11)
3
(8)

(8)
–
(8)
2
(6)

(19)
(85)
(104)
29
(75)

(2,537)(2,537)(4,526)(4,526)(23,880)(23,880)(3,365)829(2,536)771(1,765)

3,350
851
4,201
(1,221)
2,980(31,674)
7,804(23,870)
7,257(16,613)

1,138
32

(933)
20

10,712
301

Share of other comprehensive income (loss) of an unconsolidated
subsidiary and afﬁliates accounted for by the equity method:Amount arising during the year …………………………………

7,872(1,069)6,803(2,162)
4,641

1,170
(602)

¥

(913)
2,176

$

11,013(5,667)

Consolidated
Financial
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Special Feature

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Governance
SystemCSR Based on
Responsible
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Management
Discussion
and Analysis ofOperation

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Corporate Data

18. Lease
The following pro forma amounts represent the acquisition cost, accumulated depreciation and net book value of property
leased to the Company and its domestic consolidated subsidiaries at March 31, 2017 which would have been reflected in theaccompanying consolidated balance sheets if finance leases, other than those which transfer the ownership of the leased assets
to the Company or its domestic consolidated subsidiaries, that started on or before March 31, 2008 (which are currently accounted
for as operating leases) had been capitalized:
2017(Millions of yen)Equipment:
Acquisition costs ……………………………………………………

¥

Net book value ……………………………………………………

¥

491
(451)
40

Accumulated depreciation …………………………………………

Lease payments of the Company and its domestic consolidated subsidiaries relating to finance leases amounted to ¥52 million
for the years ended March 31, 2017. Depreciation on these leased assets calculated by the straight-line method would haveamounted to ¥52 million for the years ended March 31, 2017, if it had been reflected in the accompanying consolidated balance
sheet.
19. Contingent Liabilities
The Company and a consolidated subsidiary were contingently liable as guarantors of indebtedness of affiliates at March 31, 2018and 2017 as follows:
2018
2017
2018

American Acryl L.P. …………………………………………………

(Thousands of
U.S. dollars)(Millions of yen)

¥

1,289
644

Re-guaranteed by Arkema Delaware Inc. …………………………

¥

1,361
681

$

12,133
6,062

20. Amounts per Share2018
Proﬁt attributable to owners of parent ……………………………
Cash dividends ………………………………………………………

Net assets ……………………………………………………………

2017
(Yen)

¥

608.84160.007,705.05

2018(U.S. dollars)¥

478.36150.007,238.33

$

5.73
1.51
72.52

Profit attributable to owners of parent per share has been computed based on the profit attributable to owners of parent available
for distribution to shareholders of common stock and the weighted-average number of shares of common stock outstanding
during the year. Diluted profit attributable to owners of parent per share has not been presented for the years ended March 31,2018 and 2017 since neither the Company nor any of the consolidated subsidiaries had any potentially dilutive shares at March 31,2018 and 2017.
Cash dividends per share represent the cash dividends declared as applicable to the respective years together with theinterim cash dividends paid.

47

48

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

The financial data used in the computation of profit attributable to owners of parent per share for the years ended March 31,2018 and 2017 is summarized as follows:
2018
2017
2018
(Thousands of
U.S. dollars)(Millions of yen)Proﬁt attributable to owners of parent ……………………………

¥

24,280–¥19,361–$

228,539–

Adjusted proﬁt attributable to owners of parent available toshareholders of common stock ……………………………………

¥

24,280¥19,361$

228,539

Deductions from proﬁt attributable to owners of parent …………

Weighted-average number of shares of common stock outstanding
during the year (thousands of shares) ……………………………

39,88040,474

21. Derivatives(1) Derivative transactions to which hedge accounting is not applied
Derivative transactions to which hedge accounting is not applied as of March 31, 2018 are summarized as follows:
2018
Contract value
Classiﬁcation

Transaction

Maturing within
one year

Maturing after
one year

Unrealized
gains

Fair value

Millions of yen

Over-the-countertransactions

Forward foreign currency
exchange contracts:

¥

Sell
Buy

8,450
28

¥

¥

–
–

76
4

¥

76
4

2018
Contract value
Classiﬁcation

Transaction

Maturing within
one year

Maturing after
one year

Fair value

Unrealized
gains

Millions of yen

Over-the-countertransactions

Forward foreign currency
exchange contracts:
Sell
Buy

$ 79,537
264

$

–
–

$

715
38

There were no derivative transactions to which hedge accounting was not applied as of March 31, 2017.

$

715
38

Consolidated
Financial
Highlights

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Special Feature

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Governance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
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and Analysis ofOperation

Financial
Statements

Corporate Data

(2) Derivative transactions to which hedge accounting is applied
The estimated fair value of the derivatives positions outstanding which qualify for deferral hedge accounting as of March 31,2018 and 2017 are summarized as follows:
Currency-related transactions
2018
Contract value
Method of hedge
accounting

Transaction

Major hedged item

Maturing within
one year

Maturing after
one year

Fair value

Millions of yen

Deferral hedge

Forward foreign currency
exchange contracts:
Buy

Accounts payable, trade

¥

23

¥

–

¥

4

2017
Contract value
Method of hedge
accounting

Transaction

Major hedged item

Maturing within
one year

Maturing after
one year

Fair value

Millions of yen

Deferral hedge

Allocation method

Forward foreign currency
exchange contracts:
Buy

Accounts payable, trade

¥

71

¥

–

¥

15

Forward foreign currency
exchange contracts:
Sell

Accounts receivable, trade

Buy

Accounts payable, trade

6,587
24

(*)
(*)

–
–

2018
Contract value
Method of hedge
accounting

Transaction

Major hedged item

Maturing within
one year

Maturing after
one year

Fair value

Thousands of U.S. dollars

Deferral hedge

Forward foreign currency
exchange contracts:
Buy

Accounts payable, trade

$

216

$

–

$

38

Fair value of forward foreign currency exchange contracts is computed using prices provided by counterparty financial institutions.
(*) Fair value of forward foreign currency exchange contracts under the allocation method is included in accounts receivable,
trade or accounts payable, trade.

49

50

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Interest-rate related transactions
2017
Contract value
Method of hedge
accounting

Transaction

Major hedged item

Notional
amountMore than one
year

Fair value(Millions of yen)

Swap rates applied tounderlying debt

Interest rate swaps:
Long-term debt,
Receive / ﬂoating and pay / ﬁxed including current portion

¥

5,000

¥

–

(*)

(*) Because interest rate swap agreements are accounted for by applying swap rates to underlying long-term debt, their fairvalue is included in that of the long-term debt disclosed in Note 4.
There were no interest-rate related transactions to which hedge accounting is applied as of March 31, 2018.
22. Segment Information(1) Outline of reporting segments
The Groupʼs reporting segments are divisions of the Group for which separate financial information is available, and whose
operating results are reviewed regularly by the Board of Directors meeting of the Company in order to allocate management
resources and assess performance of operations.
The Groupʼs main business lines are divided based on similarities of function and nature and the Company prepares thecomprehensive strategy and conducts the business activities corresponding to the products handled by each business line.
Accordingly, the Group has three reporting segments based on product family: Basic chemicals, Functional chemicals, andEnvironment and catalysts.
Basic chemicals division is engaged in manufacturing and sales of acrylic acids, acrylic ester, ethylene oxides, ethylene
glycols, ethanolamine, secondary alcohol ethoxylates and glycol ether.
Functional chemicals division is engaged in manufacturing and sales of superabsorbent polymers, pharmaceuticalintermediates, polymer for concrete admixture, electronic and information materials, iodine, maleic anhydride, resins foradhesives and paints, and process adhesive products.
Environment and catalysts division is engaged in manufacturing and sales of automotive catalysts, De-NOx catalysts, dioxin
decomposition catalysts, industrial catalysts, exhaust gas treatment equipment and fuel cell material.
(2) Calculation methods used for sales, income or loss, assets, and other items on each reporting segment.
The accounting policies of the segments are substantially the same as those described in the significant accounting policies inNote 1. Intersegment sales and transfers are recorded at the same prices used in transactions with third parties.

Consolidated
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Governance
SystemCSR Based on
Responsible
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Management
Discussion
and Analysis ofOperation

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Summary

Financial
Statements

Corporate Data

(3) Information as to sales, profit or loss, assets, and other items on each reporting segment
The segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2018 and 2017 isoutlined as follows:Year ended March 31, 2018
Basic
chemicals

Functional
chemicals

Environmentand catalysts

Total

Adjustments
andeliminations

Consolidated¥¥(Millions of yen)

Depreciation and amortization

120,025
34,849154,874
12,912
134,778
8,205

Increases in property, plant andequipment and other assets

7,103

Sales to third parties¥

Intersegment sales and transfers
Net sales
Segment proﬁt¥¥

Segment assets¥¥¥

173,965
6,182
180,147
13,935
245,729
8,742

¥
¥
¥

18,621

28,811
2,012
30,823268
32,109666¥¥¥

322,801
43,043365,844
27,115
412,616
17,613

1,115¥¥

26,839–(43,043)(43,043)(388)
57,486–¥¥

322,801–
322,801
26,727
470,102
17,613–

26,839Adjustments
andeliminations

Consolidated¥¥

Year ended March 31, 2017
Basic
chemicals

Functional
chemicals

Environmentand catalysts

Total(Millions of yen)

Depreciation and amortization

107,580
29,311
136,891
8,207
132,191
9,359

Increases in property, plant andequipment and other assets

6,905

Sales to third parties¥

Intersegment sales and transfers
Net sales
Segment proﬁt
Segment assets

¥
¥

¥
¥
¥

159,961
4,877
164,838
12,119227,037
8,572

¥
¥
¥

28,753

26,429725
27,154748
29,330
570
2,792

¥
¥
¥

293,970
34,913328,883
21,074
388,558
18,501¥¥

38,450–(34,913)(34,913)77
45,052–¥¥

293,970–
293,970
21,151
433,610
18,501–

38,450Adjustments
andeliminations

Consolidated

Year ended March 31, 2018
Basic
chemicals

Functional
chemicals

Environmentand catalysts

Total(Thousands of U.S. dollars)

Depreciation and amortization$ 1,129,753
328,022$ 1,457,775$ 121,536
1,268,618
77,231$ 1,637,472
58,189$ 1,695,661$ 131,165
2,312,961
82,285

Increases in property, plant andequipment and other assets

66,858

175,273

Sales to third parties
Intersegment sales and transfers
Net sales
Segment proﬁt
Segment assets

Notes 1.

$$$

271,188
18,938290,126
2,523
302,231
6,269$ 3,038,413
405,149$ 3,443,562$ 255,224
3,883,810
165,785

10,495

252,626$–(405,149)$ (405,149)$ (3,652)
541,096–$ 3,038,413–$ 3,038,413$ 251,572
4,424,906
165,785–

252,626

The adjustments in segment profit are related to the elimination between inter segment transactions. The
adjustments in segment assets consist of inter segment elimination and the common properties of the group. The
common properties are the investments held by the Company, mainly cash and cash equivalents, and investments
in securities.

51

52

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Note 2.

The amount of long-term prepaid expense and its amortized cost are included in depreciation and amortization,
increases in property, plant and equipment and other assets.

(4) Related information
Geographical information
1) SalesSales categorized by countries and regions based on locations of customers of the Group for the years ended March 31, 2018and 2017 are summarized as follows:
2018(Millions of yen)

Japan

¥

167,828

Asia¥

71,339EuropeAmericas¥¥41,63328,066

Other

¥

Total

13,935¥322,801

2017(Millions of yen)

Japan

¥

149,943

Asia¥

Europe62,473¥

Americas36,891¥32,331

Other

¥

Total

12,332¥

293,970

2018(Thousands of U.S. dollars)

Japan

$

1,579,706

Asia$

Europe671,489$

Americas391,877$

264,175

Other

$

Total

131,166$

3,038,413“Asia” includes east and south-east Asia. “Americas” includes U.S.A. and Canada. “Other” includes areas except for Asia,
Europe, North America and Japan.
2)

Property, plant and equipment
Property, plant and equipment categorized by countries and regions as of March 31, 2018 and 2017 is summarized as follow:
2018(Millions of yen)

Japan

¥

100,333

Indonesia

Other Asia

Belgium¥¥¥

20,4602,835

44,961

Other

¥

Total

6,652

¥

175,241

2017(Millions of yen)

Japan

¥

103,648

Indonesia

Other Asia

Belgium¥¥¥

25,1082,645

23,047

Other

¥

Total

8,712

¥

62,613$

163,160

2018(Thousands of U.S. dollars)

Japan

$

944,399

Indonesia

Other Asia

Belgium$$$

192,583

26,685423,202

Other

$

Total

1,649,482

Consolidated
Financial
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Messages fromPresident

Special Feature

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CSR Based on
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Care Concept

Governance
SystemManagement
Discussion
and Analysis ofOperation

Ten-Years
Summary

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Statements

Corporate Data

(5) Information about loss on impairment
2018(Millions of yen)

Reporting segments
Functional
chemicals

Basic chemicals
Loss onimpairment ………

¥

–

¥

Adjustments
andeliminations

Environment andcatalysts

465

¥

–

¥

Total

–

¥

465

2017
(Millions of yen)

Reporting segments
Functional
chemicals

Basic chemicals
Loss onimpairment ………

¥

19

¥

Adjustments
andeliminations

Environment andcatalysts

108

¥

–

¥

Total

717

¥

844

2018
(Thousands of U.S. dollars)

Reporting segments
Functional
chemicals

Basic chemicals
Loss onimpairment ………

$

–

$

4,377

Adjustments
andeliminations

Environment andcatalysts

$

–

$

Total

–

$

4,377

23. Related Party Transactions
Principal transactions between the Company and its related party for the years ended March 31, 2018 and 2017 are summarized
as follows:
2018
2017
2018
(Thousands of
U.S. dollars)(Millions of yen)

Umicore Shokubai Japan Co., Ltd.:Sales of ﬁnished goods ………………………………………………

¥Purchases of raw materials …………………………………………

23,493
20,553¥The balances due from and to its related party at March 31, 2018 and 2017 were as follows:
2018

18,84916,501$

221,131
193,458

2018

2017

(Thousands of
U.S. dollars)(Millions of yen)

Umicore Shokubai Japan Co., Ltd.:
Notes and accounts receivable ………………………………………

Notes and accounts payable …………………………………………

¥

8,670
5,679

¥

7,005
4,486

The prices for the above related party transactions were determined in reference to market value and cost.
Umicore Shokubai Co., Ltd. is a related company in which the Company indirectly owns 40% of the shares.

$

81,60853,45453

54

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 201824. Subsequent Events
Cash dividends
The following distribution of retained earnings of the Company, which has not been reflected in the accompanying consolidated
financial statements for the year ended March 31, 2018, was approved at a shareholdersʼ meeting held on June 20, 2018:

Cash dividends (¥85.00 = $0.800 per share) ………………………………………………

(Millions of yen)(Thousands of
U.S. dollars)

¥

$

3,390

31,909

Consolidated
Financial
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Special Feature

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Governance
SystemCSR Based on
Responsible
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Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

55

54

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Corporate Data

NIPPON SHOKUBAI CO., LTD. (As of March 31, 2018)
Established: August 21, 1941
Common Stock (Paid in Capital): 25,038 million yen
Number of Shares Issued: 40,800,000 shares
Number of Shares Authorized: 127,200,000 shares
Number of Employees: 4,219 (Consolidated)
2,253 (Non-consolidated)
Markets listed: Tokyo Stock Exchange; Securities Code:4114;
ADR (The Bank of New York Mellon Bank);
Checker Symbol: NPSHY

Fiscal Year Ends: March 31
Auditors: Ernst & Young Shin Nihon LLC
Lead Managers (Securities): Nomura Securities Co., ltd.,
Mizuho Securities Co., Ltd.
Stock Transfer Agency: Mitsubishi UFJ Trust and Banking
Corporation
Banks: Resona Bank, Limited,
Mizuho Bank, Ltd.,The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Number of shareholders: 10,254

Organization Chart (As of June 20, 2018)

DivisionInternal Audit Office
Corporate Planning
Health & Medical Business
Development Office
Malonates Business
Development Office
General Affairs & HR
Finance & Accounting
Information Technology
Management Office
Responsible Care
Production
The Board

President

Engineering

Corporate Managing
Committee

Innovation & Business Development
Ethylene Oxide BusinessAcrylic BusinessSuperabsorbents Business
Performance Chemicals Business
Catalysis & Green Energy
Materials Business
Purchasing & Logistics
Kawasaki Plant
Himeji Plant

AuditorBoard of Auditors

Auditor OfficeConsolidated
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Corporate Data

Major Shareholders (As of March 31, 2018)

Name

Number of Shares
Owned(thousand shares)

Ratio of capital
Contribution
(%)

2,727
2,129

6.84
5.33

2,028

5.08

1,534

3.84

1,383

3.46

1,373
1,267

3.44
3.17

1,243

3.11

948
904

2.37
2.26

Sumitomo Chemical Company, Limited
JXTG Holdings, Inc.
Japan Trustee Services Bank, Ltd.
(Trust Account)
JP MORGAN CHASE BANK 385632
National Mutual Insurance Federation ofAgricultural Cooperatives
Resona Bank, Limited.
Sanyo Chemical Industries, Ltd.
The Master Trust Bank of Japan, Ltd.
(Trust Account)
Mizuho Bank, Ltd.
Toyo Ink SC Holdings Co., Ltd.

Individuals, others,
11.8％

Financial
Institutions
32.3％

Stock Brokers
0.7％

Foreign
Institutions,
etc.
27.4％
Other Corporate
Shareholders
27.8％(Note 1) Other than the above, the Company holds 920 thousand shares as treasury stock.
(Note 2) Treasury stock is excluded from the calculation for “Shareholding Ratio of the Total Shares Outstanding” above.
(Note 3) Figures in “Number of Shares Owned” and “Shareholding Ratio of the Total Shares Outstanding” are truncated.

Share Price and Turnover (April 2017- March 2018)
Share Price(¥)

9,000
8,500
8,000
7,500
7,000
6,500
6,000
5,500

4

2017

5

6

7

8

9

10

11

12

1

2018

2

3

55

56

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Subsidiaries & AffiliatesJapan
NIPPOH CHEMICALS CO., LTD.

Neo Kawai Bldg.,8-15,4-Chome,Nihonbashi-Honchou, Chuo-Ku, Tokyo 103-0023, Japan
TEL +81-3-3270-5341 FAX +81-3-3270-3401
Principle Business: Manufacture and sale of iodine, intermediates for API and agro-chemicals, flame
retardants, and photo/electro chemicals

CHUGOKU KAKO CO., LTD.

1575 Mizue, Kurashiki, Okayama 710-0802, Japan
TEL +81-86-465-3555 FAX +81-86-465-7843
Principle Business: Manufacture and sale of adhesive-processed products and fine sphere particles

Nisshoku Butsuryu Co., Ltd.

6F Kogin Bldg., 4-1-1 Koraibashi, Chuo-ku, Osaka 541-0043, Japan
TEL +81-6-6202-5267 FAX +81-6-6233-2475
Principle Business: Logistics of chemicals

NIPPON NYUKAZAI CO., LTD.

Ibasen Bldg., 4-1 Nihonbashi Kobuna-cho, Chuo-ku, Tokyo 103-0024, Japan
TEL +81-3-5651-5631 FAX +81-3-5651-5639
Principle Business: Manufacture and sale of surfactant and other chemicals

TOKYO FINE CHEMICAL CO., LTD.

3F Bussan Bldg., 1-4-14 Nishi Shinbashi, Minato-ku, Tokyo 105-0003, Japan
TEL +81-3-3506-7666 FAX +81-3-3506-7671
Principle Business: Manufacture and sale of stabilizer of vinyl chloride resin, antiseptics, antifoulingagents and antifreeze
9-1 Koutani Shinmachi, Ichikawa, Chiba 272-0011, Japan

NISSHOKU TECHNO FINE CHEMICAL CO., LTD. TEL +81-47-328-1185 FAX +81-47-328-1189(formerly NIHON JYORYU KOGYO CO., LTD) Principle Business: Manufacture and sale of polycyclic aromatic hydrocarbons, (meth)acrylic acidderivatives and photo/electro chemicals

NIPPON SHOKUBAI TRADING CO., LTD.

2F Yusen Suitengumae Bldg., 1-14-8 Nihonbashi Ningyou-cho, Chuo-ku, Tokyo 103-0013, Japan
TEL +81-3-5695-4021 FAX +81-3-5695-4024
Principle Business: Sale of chemical products
2114 Okihama, Aboshi-ku, Himeji, Hyogo 671-1241, JapanNIPPON POLYMER INDUSTRIES. CO., LTD. TEL +81-79-273-4121 FAX +81-79-273-4601

Principle Business: Manufacture and sale of acrylic resins

Japan Composite Co., Ltd.

2F Advantec Nihonbashi Bldg., 3-2-13 Nihonbashi-Honcho, Chuo-ku, Tokyo 103-0023, Japan
TEL +81-3-3516-3002 FAX +81-3-3516-3090
Principle Business: Manufacture and sale of unsaturated polyester resins and plastic molded materials

Umicore Shokubai Japan Co. Ltd

1-25-19 Rinku-cho, Tokoname, Aichi 479-0882, Japan
TEL +81-569-38-7670 FAX +81-569-38-7678
Principle Business: Manufacture, R&D and sale of automotive catalysts

NS Green Co., Ltd.

992-1 Aza-Nishioki, Okihama, Aboshi-ku, Himeji, Hyogo 671-1241, Japan
TEL +81-79-273-4744 FAX +81-79-273-4744
Principle Business: Maintenance of green tract of land of plant site

NISSHOKU ENGINEERING SERVICE CO.,LTD.

992-1 Aza-Nishioki, Okihama, Aboshi-ku, Himeji, Hyogo 671-1241, Japan
TEL +81-79-272-0677 FAX +81-79-271-5188
Principle Business: Design, construction, repair and maintenance of production facilities

NIHON METHACRYL MONOMER CO. LTD.

Sumitomo Twin Bldg., 2-27-1 Shinkawa, Chuo-ku, Tokyo 104-0033, Japan
TEL +81-3-5543-5302 FAX +81-3-5543-5907
Principle Business: Manufacture and sale of MAA and MMA

CATOX Co., Ltd.

1-46 Higashi Kaigan-cho,Amagasaki, Hyogo 660-0843, Japan
TEL +81-6-6409-1301 FAX +81-6-6409-1302
Principle Business: Development and sale of plant control systems

Consolidated
Financial
Highlights

Messages fromPresident

Special Feature

Description ofBusiness

Governance
SystemCSR Based on
Responsible
Care Concept

Ten-Years
Summary

Management
Discussion
and Analysis ofOperation

Financial
Statements

Corporate Data

Overseas
Nippon Shokubai America Industries, Inc.

4631 Old Highway 146, Suite A, Pasadena, TX 77507, USA
TEL +1-832-284-4033
Principle Business: Manufacture and sale of superabsorbent polymers, polymers for concrete admixture
and water soluble polymers

SINGAPORE ACRYLIC PTE LTD

80 Robinson Road, #18-02, 068898, Singapore
TEL +65-6532-0078 FAX +65-6532-0079
Principle Business: Manufacture and sale of crude acrylic acid

PT.NIPPON SHOKUBAI INDONESIA

Kawasan Industri Panca Puri Jl. Raya Anyer Km. 122 Ciwandan, Cilegon, 42447 Banten, Indonesia
TEL +62-254-600-660 FAX +62-254-600-657
Principle Business: Manufacture and sale of superabsorbent polymers, acrylic acid and acrylic esters

NIPPON SHOKUBAI (ASIA) PTE.LTD.

80 Robinson Road, #18-02, 068898, Singapore
TEL +65-6532-0078 FAX +65-6532-0079
Principle Business: Manufacture glacial acrylic acid, Sale of chemical products

NIPPON SHOKUBAI EUROPE N.V.

Haven 1053, Nieuwe Weg1, B-2070 Zwijndrecht, Belgium
TEL +32-3-250-3705 FAX +32-3-250-3712
Principle Business: Manufacture and sale of superabsorbent polymers

NISSHOKU CHEMICAL INDUSTRY(ZHANGJIAGANG) CO., LTD.

No.19 Changjiang Road (E),Yangtze River International Chemical Industrial Park, Zhangjiagang,
Jiangsu 215635, China
TEL +86-512-5893-7910 FAX +86-512-5893-7912
Principle Business: Manufacture and sale of superabsorbent polymers, polymers for concrete admixture

SINO-JAPAN CHEMICAL CO.,LTD

14Fl, 99, Sec. 2, Jen Ai Rd., Taipei, Taiwan
TEL +886-2-2396-6223 FAX +886-2-2396-9076
Principle Business: Manufacture and sale of surfactant and other chemicals

LG MMA Corporation

23F, LG Seoulstation Building, 98, Huam-ro, Joong-gu, Seoul 04637, Korea
TEL +82-2-6930-3800 FAX +82-2-6930-3801
Principle Business: Manufacture and sale of MAA and PMMA

American Acryl NA,LLC
American Acryl L.P.

4631 Old Highway 146, Suite B, Pasadena, TX 77507, USA
Principle Business: Manufacture and sale of acrylic acid

Umicore Shokubai S.A.

L-4940, Bascharage, 5, rue Bommel, Luxembourg
Principle Business: Automotive catalyst

NISSHOKU TRADING (SHANGHAI) CO.,LTD

R/No.3604,The Center,989 Changle Road, Shanghai 200031, China
TEL +86-21-5407-5959 FAX +86-21-5407-5673
Principle Business: Sale of chemical products

Sirrus, Inc.

422 Wards Corner Road, Loveland, OH 45140, USA
TEL +1-513-448-0308 FAX +1-513-448-0310
Principle Business: Manufacture and sale of Malonates

Nippon Shokubai Korea Co., Ltd.

8F Taeyoung Bldg.,144, Mapo-daero, Mapo-gu, Seoul 04212, Korea
TEL +82-2-704-9113 FAX +82-2-704-9114
Principle Business: Marketing service of E&I materials and chemical products

57

58

NIPPON SHOKUBAI CO., ltd
ANNUAL REPORT 2018

Directory
Management
Member of the Board, President
Yujiro Goto ＊Member of the Board,
Senior Managing Executive Officer
Masao Yamamoto ＊Yojiro Takahashi
Member of the Board,
Managing Executive Officer
Koichiro Yamada
Jiro Iriguchi

Member of the Board,
Executive Officer
Yukihiro Matsumoto
Member of the Board
Kozo Arao
Shinji Hasebe
Tetsuo Setoguchi
Statutory Corporate Auditor
Taizo Maruo
Yoshihiro Arita
Yoichiro Komatsu
Satoshi Taguchi

Managing Executive Officer
Kin-ya Nagasuna
Masaya Yoshida
Teruo Kamei
Executive Officer
Kazukiyo Arakawa
Ren Hasebe
Gun Saito
Katsunori Kajii
Masahiro Watanabe
Kazuhiro Noda
Takashi Kobayashi* Representative

Company Outline
Business establishments
・Osaka Office
Kogin Bldg., 4-1-1 Koraibashi, Chuoku, Osaka 541-0043 Japan
TEL +81-6-6223-9111
FAX +81-6-6201-3716
・Tokyo Office
Hibiya Dai Bldg., 1-2-2 Uchisaiwaicho, Chiyoda-ku, Tokyo 100-0011
Japan
TEL +81-3-3506-7475
FAX +81-3-3506-7598
・Kawasaki Plant and Kawasaki
Research Center[Chidori Plant]
14-1 Chidori-cho, Kawasaki-ku,
Kawasaki, Kanagawa 210-0865
Japan
TEL +81-44-288-7366[Ukishima Plant]
10-12 Ukishima-cho, Kawasakiku, Kawasaki, Kanagawa 210-0862
Japan
TEL +81-44-288-5715

Research Centers
・Himeji Plant and Himeji ResearchCenter992-1 Aza-Nishioki, Okihama,
Aboshi-ku, Himeji, Hyogo 671-1282
Japan
TEL +81-79-273-1131 (Plant)+81-79-273-1145(Research Center)
・Suita Research Center
5-8 Nishi Otabi-cho, Suita, Osaka
564-0034 Japan
TEL +81-6-6317-2202

・Research Center (Suita, Himeji)
・Analysis Technology Center(Suita, Himeji)
・Ethylene Oxide Business Div.
Research Dept. (Suita)
・Acrylic Business Div. Research
Dept. (Himeji)
・Superabsorbents Research Dept.
(Himeji)・Performance Chemicals BusinessDiv. Research Dept. (Suita, Himeji)
・Catalysts & Green Energy
Materials Business Div.
Research Dept. (Suita, Himeji)
・Process Technology Center(Suita, Himeji)

Osaka Office
Kogin Bldg.
4-1-1 Koraibashi, Chuo-ku,
Osaka 541-0043, Japan
Telephone +81-6-6223-9111
Facsimile +81-6-6201-3716

Tokyo Office
Hibiya Dai Bldg.
1-2-2 Uchisaiwai-cho, Chiyoda-ku,
Tokyo 100-0011, Japan
Telephone +81-3-3506-7475
Facsimile +81-3-3506-7598
Securities Code 4114
URL http://www.shokubai.co.jp