Business Results for theFirst Quarter of the Fiscal Year Ending
December 31, 2023 (Unaudited)

May 12, 2023
Kuraray Co., Ltd.

May 12, 2023
Kuraray Co., Ltd.

Consolidated Earnings Report for the First Quarter of the Fiscal Year Ending
December 31, 2023
Name of listed company:
Stock code:
Stock exchange listing:
URL:

Kuraray Co., Ltd.
3405
Tokyo Stock Exchange, Prime Market
https://www.kuraray.com/

Representative:
Title:
Name:

Representative Director and President
Hitoshi Kawahara

Contact:
Title:

Senior Manager, Corporate Communications Department, Corporate
Management Planning Office
Shinichi Takizawa+81-3-6701-1070

Name:
Tel:

Preparation of supplementary documentation for the quarterly earnings report: Yes
Holding of quarterly earnings results briefing: Yes (for securities analysts and institutional investors)(Millions of yen rounded down unless otherwise stated)

1. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending
December 31, 2023 (January 1, 2023 to March 31, 2023)(1) Consolidated Operating Results(Percentage changes displayed for net sales, operating income, ordinary income and net income attributableto owners of the parent are comparisons with the corresponding period of the previous fiscal year.)(Millions of yen)
Net Sales

Fiscal 2023 1Q
Fiscal 2022 1Q

184,965
167,558

(%)
10.4%
―

Note: Comprehensive income:Net Income per
Share (Yen)
Fiscal 2023 1Q
Fiscal 2022 1Q

Operating Income

24.36
37.11

21,324
22,145(%)(3.7%)―For the fiscal 2023 first quarter:
For the fiscal 2022 first quarter:

Ordinary Income

20,38922,295(%)(8.5%)―Net Income
Attributable to Ownersof the Parent(%)(35.8%)
8,152―
12,701¥16,094 million (−59.7%)¥39,957 million ―Fully Diluted Net
Income per Share
(Yen)
24.34
37.08

Note: The Company adopted the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29;
March 31, 2020) from January 1, 2022. Therefore, year-on-year percent changes from the figures for the firstquarter of fiscal 2021, which predates the adoption of the standard, are not presented.

(2) Consolidated Financial Position(Millions of yen)
Total Assets
1,217,079
1,221,533

As of March 31, 2023
As of December 31, 2022

Net Assets
676,416
668,534

Equity Ratio (%)
53.8
52.9

[Reference] Equity attributable to owners of the parent:
As of March 31, 2023:¥654,642 million
As of December 31, 2022: ¥646,750 million

2. Dividends(Yen)
Record Date
Fiscal 2022
Fiscal 2023
Fiscal 2023
(Forecast)Mar. 31――

Cash Dividends per ShareJun. 30
Sep. 30
Dec. 31
21.00
23.00
―

24.00

―

Annual
44.00

24.00

48.00

Note: Revisions to cash dividend forecast during this period: No

3. Forecasts of Consolidated Financial Results for the Fiscal Year Ending December
31, 2023 (January 1, 2023 to December 31, 2023)(Percentage changes displayed for net sales, operating income, ordinary income and net income attributableto owners of the parent are comparisons with the corresponding period of the previous fiscal year.)(Millions of yen)
Net SalesInterim Period
Full Fiscal Year

380,000
810,000

Operating
Income(%)
6.1 36,000
7.1 84,000

Ordinary
IncomeNet Income
Attributable to Ownersof the Parent
(%)
(%)
(%)
(5.5) 33,000 (12.9)
17,000(29.8)(3.6) 79,000 (6.0)
47,000(13.5)Net Income
per Share
(Yen)
50.79
140.43

Note: Revisions to forecasts of consolidated financial results during this period: Yes[Reference](1) Changes in Important Subsidiaries during the Period (Changes in Special
Subsidiaries Involving Changes in the Scope of Consolidation)
Added: No companies

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

Number of shares issued and outstanding (including treasury stock) as of the period-end:
As of March 31, 2023
354,863,603 shares
As of December 31, 2022
354,863,603 shares

2.

Number of treasury shares as of the period-end:
As of March 31, 2023
20,171,629 shares
As of December 31, 2022
20,171,061 shares

3.

Average number of shares for the period (cumulative):
As of March 31, 2023
334,692,204 shares
As of March 31, 2022
342,261,353 shares

Note: It is not required that this type of earnings report be audited.

Cautionary Statement with Respect to Forecasts of Consolidated BusinessResults(Cautionary note regarding forward-looking statements)
The results forecasts presented in this document are based upon currently available
information and assumptions deemed rational. A variety of factors could cause actual
results to differ materially from forecasts. Please refer to “1. Qualitative Information
regarding Business Results (3) Basis for the Revision in Forecasts, Including Consolidated
Operating Results Forecasts” on page 6 of the Attachment for the assumptions used.

Index of the Attachment
1. Qualitative Information regarding Business Results ...................................................

2(1) Overview of Consolidated Business Results ............................................................

2(2) Overview of Financial Position .................................................................................

5(3) Basis for the Revision in Forecasts, Including Consolidated Operating Results
Forecasts ..................................................................................................................

6

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

7(1) Quarterly Consolidated Balance Sheets ...................................................................

7(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated
Statements of Comprehensive Income ....................................................................

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

11

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

11

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

11

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

11

Segment Information, etc..........................................................................................

111

1. Qualitative Information regarding Business Results(1) Overview of Consolidated Business Results
In the first quarter of fiscal 2023 (January 1, 2023–March 31, 2023), the world
economy showed some signs of improvement due to the Chinese economy
returning to normal after the reversal of its zero-COVID policy and other factors.
However, the outlook remained unclear and a sense of economic deceleration
grew due in part to continued financial tightening in various countries to control
inflation and the effects of the Russia-Ukraine situation.
Amid these circumstances, consolidated operating results for the first quarter offiscal 2023 are as follows: net sales increased ¥17,407 million (10.4%) year on
year to ¥184,965 million; operating income decreased ¥820 million (3.7%) year
on year to ¥21,324 million; ordinary income decreased ¥1,905 million (8.5%)
year on year to ¥20,389 million; and net income attributable to owners of theparent decreased ¥4,548 million (35.8%) year on year to ¥8,152 million.
Regarding the civil lawsuits related to the fire that occurred at a U.S. subsidiaryin May 2018, we reached settlements with the remaining plaintiffs in April 2023,
except for one whose motion to dismiss is expected to be granted soon. The
lawsuits have therefore been effectively resolved. Accordingly, in the firstquarter, we recorded an extraordinary loss related to the lawsuits of ¥7,151
million as loss on litigation.
(Millions of yen)
FY2022 1Q

FY2023 1Q

Consolidated Period

Consolidated Period

Net sales

Operating

Net sales

incomeOperatingincomeChangeNet sales

OperatingincomeVinyl Acetate

86,154

17,243

97,815

17,82011,661577

Isoprene

15,3582,672

15,780190

422(2,481)

Functional Materials

38,0262,201

45,378

3,495

7,351

1,293

Fibers and Textiles

14,425

1,627

13,533248(892)(1,379)Trading

13,953

1,316

13,810

1,142

(142)

(173)

Others

10,681381

11,347

63

666

(318)

(11,041)(3,297)(12,700)(1,635)(1,658)

1,661

167,558

22,145

184,965

21,324

17,407(820)

Elimination &Corporate
Total

2

Results by Business Segment
Vinyl Acetate
Sales in this segment were ¥97,815 million (up 13.5% year on year), andsegment income was ¥17,820 million (up 3.3%).

(1) The sales volume of PVOH resin decreased due to receding global
demand, but we further promoted a shift to high value-added products.
Shipments of optical-use poval film decreased due to effects of inventory
adjustments for LCD panels ongoing from the latter half of last year. As for
Advanced Interlayer Solutions, sales of PVB film remained steady in North
America, Asia, and elsewhere. Shipments of water-soluble PVOH film
decreased mainly for use in unit dose detergent packets in Europe due to
inflation-driven belt tightening and other effects.
(2) As for EVAL™ ethylene vinyl alcohol copolymer (EVOH resin), sales forfood packaging applications remained firm.
Isoprene
Sales in this segment were ¥15,780 million (up 2.8% year on year), andsegment income was ¥190 million (down 92.9%).

(1) The sales volume of isoprene chemicals and elastomer decreased due tothe ongoing effects of lower demand, which began in the latter half of theprevious year.
(2) The sales volume of GENESTAR™ heat-resistant polyamide resin
decreased due to inventory adjustments for electric and electronic devices
3despite signs of recovery in demand for automobile applications.
Functional Materials
Sales in this segment were ¥45,378 million (up 19.3% year on year), andsegment income was ¥3,495 million (up 58.8%).

(1) In the methacrylate business, the sales volume decreased due to the effects
of inventory adjustments for electric and electronic devices.
(2) In the medical business, sales of cosmetic dental materials remained
favorable, especially in Europe.
(3) In the environmental solutions business, demand increased for drinking
water applications, and sales of activated carbon remained steady.
Fibers and Textiles
Sales in this segment were ¥13,533 million (down 6.2% year on year), andsegment income was ¥248 million (down 84.7%).

(1) Shipments of CLARINO™ man-made leather decreased due to the effects oflower demand for sports and other applications.
(2) In fibers and industrial materials, KURALON™ was affected by economic
deceleration and a delayed recovery in the production of automobiles, whilesales of VECTRAN™ remained stable.
(3) In consumer goods and materials, demand for KURAFLEX™ in therestaurant industry was weak.
4

Trading
Sales in this segment were ¥13,810 million (down 1.0% year on year), andsegment income was ¥1,142 million (down 13.2%).

(1) In fiber-related businesses, sales expanded, especially for sports wear,
including wearable gear.
(2) Sales of resins and chemicals were affected by economic deceleration.
OthersSales in this segment were ¥11,347 million (up 6.2% year on year), andsegment income was ¥63 million (down 83.4%).

(2) Overview of Financial Position
Total assets decreased ¥4,453 million from the end of the previous fiscal year to¥1,217,079 million mainly because of a ¥55,951 million decrease in constructionin progress and a ¥15,055 million decrease in cash and deposits, which together
outweighed a ¥44,797 million increase in machinery, equipment and vehicles, net,an ¥11,851 million increase in buildings and structures, net, and an ¥11,417
million increase in inventories. Total liabilities decreased ¥12,335 million to¥540,663 million due to factors that included a ¥13,891 million decrease in longterm borrowings and a ¥5,733 million decrease in income taxes payable, which
together outweighed a ¥8,536 million increase in other current liabilities thatmainly reflected an increase in accounts payable-other.
Net assets rose ¥7,881 million to ¥676,416 million. Equity attributable to ownersof the parent amounted to ¥654,642 million, for an equity ratio of 53.8%.
5

(3) Basis for the Revision in Forecasts, Including Consolidated Operating
Results Forecasts
Because of a growing sense of economic deceleration due in part to financial
tightening, especially in the Europe and the United States, the performance ofsome of the Group’s products have been impacted. Nevertheless, we expect
demand for high value-added products, mainly vinyl acetate, to remain firm inthe second quarter. Based on these circumstances and the recording of a loss
on litigation in the first quarter of fiscal 2023, the forecasts of consolidated
operating results for the second quarter of fiscal 2023 (January 1, 2023 to June30, 2023) and the full fiscal 2023 (January 1, 2023 to December 31, 2023) wererevised.
The revised cumulative consolidated operating results forecast for the second
quarter of the fiscal year ending December 31, 2023 (January 1, 2023 to June30, 2023) is as follows.
(Millions of yen)
Net Income
Net Operating Ordinary
Attributable toSales Income Income
Owners of the Parent
Original Forecast (A)400,000
36,00033,00021,000
Revised Forecast (B)380,000
36,00033,00017,000
Amount Adjusted (B − A) (20,000)――(4,000)Percent Adjusted(5.0%)――(19.0%)(Ref.)
358,040
38,08937,89624,207
FY2022 2Q Results(Yen)

Net Income
Per Share
62.74
50.79

71.32

The revised operating results forecast for the fiscal year ending December 31,
2023 (January 1, 2023 to December 31, 2023) is as follows.
(Millions of yen)
Net Income
Net Operating Ordinary
Attributable toSales Income Income
Owners of the Parent
Original Forecast (A)830,000
84,00079,00051,000
Revised Forecast (B)810,000
84,00079,00047,000
Amount Adjusted (B − A) (20,000)――(4,000)Percent Adjusted(2.4%)――(7.8%)(Ref.)
756,376
87,13984,06054,307
FY2022 Results(Yen)

Net Income
Per Share

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

6

152.38140.43161.13

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

ASSETS
Current Assets
Cash and deposits
Notes and accounts receivable–trade, andcontract assets
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current Assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
LandConstruction in progress
Other, net
Total property, plant, and equipment
Intangible assets
Goodwill
Customer-related assets
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Retirement benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total Assets

7(Millions of yen)

December 31, 2022

March 31, 2023

123,724

108,669

157,016

157,114

4,852
145,851
19,07860,104
23,815(510)
533,933

4,698
153,740
21,87860,832
21,496(624)
527,805

94,745219,200
23,264137,424
37,926
512,562

106,597
263,998
23,363
81,47338,055
513,487

56,05830,432
34,993
121,484

55,43029,82335,298120,552

23,19497
2,104
16,71811,458(20)
53,553
687,600
1,221,533

24,35697
2,162
17,367
11,266(17)55,233
689,273
1,217,079

December 31, 2022
LIABILITIESCurrent Liabilities
Notes and accounts payable–trade
Short-term borrowings
Commercial papers
Current portion of bonds payable
Current portion of long-term borrowings
Accrued expenses
Income taxes payable
Accrued bonuses
Other provisions
Other
Total current liabilities
Non-current Liabilities
Bonds payable
Long-term borrowings
Deferred tax liabilities
Provision for retirement benefits for directors(and other officers)
Provision for environmental measures
Retirement benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total Liabilities
NET ASSETS
Shareholders’ Equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated Other Comprehensive Income
Valuation difference on available-for-salesecurities
Deferred gain or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeShare Acquisition Rights
Non-controlling Interests
Total Net Assets
Total Liabilities and Net Assets
8(Millions of yen)March 31, 2023

52,71734,48010,00010,00030,434
21,075
11,3709,132
111
42,008221,330

52,45534,48010,00010,00029,071
17,034
5,636
11,279118
50,545
220,62260,000179,491
17,27960,000166,962
17,457

294

305

397
25,626
5,303
43,275
331,668
552,998397
26,4095,428
43,080320,040
540,663

88,95587,152399,910(25,735)
550,282

88,95587,152400,371(25,736)
550,743

5,769

6,522

611
90,555(468)

213
97,551(387)

96,467

103,899341
21,443
668,534
1,221,533

341
21,432
676,416
1,217,079

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated
Statements of Comprehensive Income
Quarterly Consolidated Statements of Income(Millions of yen)
Fiscal 2022 1Q
Fiscal 2023 1Q(January 1, 2022 – (January 1, 2023 –March 31, 2022)
March 31, 2023)
Net sales
167,558
184,965
Cost of sales
110,821
124,992
Gross profit
56,73759,973
Selling, general and administrative expenses
Selling expenses
10,06910,450General and administrative expenses
24,522
28,197
Total selling, general and administrative
34,592
38,648expenses
Operating income
22,14521,324Non-operating income
Interest income
53265
Dividend income
96
59
Share of profit of entities accounted for using
61
47
equity method
Other
932
381
Total non-operating income
1,143
753
Non-operating expenses
Interest expenses
361
577
Other
632
1,111
Total non-operating expenses
993
1,688
Ordinary income
22,295
20,389Extraordinary income―
Insurance claim income
663―
Subsidy income
188―
Total extraordinary income
851
Extraordinary losses
Loss on litigation
974
7,151
Loss on abandonment of non-current assets
45
102
Costs related to the suspension of operations
2,805―
Loss on tax purpose reduction entry of non169―
current assets
Total extraordinary losses
3,995
7,253
Income before income taxes and noncontrolling
19,151
13,135interests
Income taxes—current
7,114
5,436
Income taxes—deferred(1,142)(711)
Total income taxes
5,972
4,724
Net income
13,179
8,410
478
257
Net income attributable to noncontrolling interests
12,7018,152
Net income attributable to owners of the parent
9

Quarterly Consolidated Statements of Comprehensive Income(Millions of yen)

Net income
Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Total other comprehensive income
Quarterly comprehensive income
Comprehensive income attributable to:
Owners of the parent
Noncontrolling interests

10

Fiscal 2022 1Q
Fiscal 2023 1Q(January 1, 2022 – (January 1, 2023 –March 31, 2022)
March 31, 2023)
13,179
8,410
135

753

556
26,018

(420)
7,269

66

81

26,77839,957

7,684
16,09438,788
1,169

15,584510

(3) Notes regarding Quarterly Consolidated Financial Statements
Notes regarding Going Concern Assumptions
None
Material Changes in Shareholders’ Equity
None
Additional Information
Resolution of Lawsuits Related to a Fire at a U.S. Subsidiary
Regarding the civil lawsuits related to the fire that occurred at a U.S. subsidiary in May
2018, we have reached settlements with the remaining plaintiffs in April 2023, except for
one whose motion to dismiss is expected to be granted soon.
The lawsuits have therefore been effectively resolved. Accordingly, in the first quarter, werecorded an extraordinary loss related to the lawsuits of ¥7,151 million as loss on litigation.
Segment Information, etc.
● Segment Information
I. First Quarter of Fiscal 2022 (January 1, 2022 to March 31, 2022)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
Vinyl Isoprene Functional
AcetateMaterials

Net sales
Outsidecustomers
Intersegment
sales andtransfers
Total
Segment income(loss)

FibersandTextiles

Other
Business1
Trading

Total

Adjustment2 Consolidated
Statements
3of Income

Total

8,681 167,558—

167,558

9,041

2,000 11,041(11,041)—

38,026

14,425 13,953 167,918

10,681 178,599(11,041)

167,558

2,201

1,627

381 25,442(3,297)

22,14582,42012,17637,074

3,733

3,181

952

86,154

15,35817,243

2,672

13,612 13,592 158,876
813

360

1,316 25,061

Notes:
1. The “Other Business” category incorporates operations not included in businesssegment reporting, including engineering business.
2. Adjustment is as follows: Included within segment loss of ¥3,297 million is theelimination of intersegment transactions of ¥665 million and corporate expenses of¥3,963 million. Corporate expenses mainly comprise the submitting company’s basic
research expenses.
3. Segment income is adjusted to agree with operating income in the consolidated
statements of income.

11II. First Quarter of Fiscal 2023 (January 1, 2023 to March 31, 2023)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
Vinyl Isoprene Functional
AcetateMaterials

Net sales
Outsidecustomers
Intersegment
sales andtransfers
Total
Segment income(loss)

93,737

12,382

44,252

4,077

3,398

1,126

97,815

15,78045,37817,820190

3,495FibersandTextiles

Other
Business1
Trading

Total

Adjustment2 Consolidated
Statements
3of Income

Total

8,463 184,965—

184,9659,816

2,884 12,700(12,700)—

13,533 13,810 186,318

11,347 197,666(12,700)

184,965

63 22,960(1,635)21,324

12,720 13,408 176,502
812

248

401

1,142 22,897

Notes:
1. The “Other Business” category incorporates operations not included in businesssegment reporting, including engineering business.
2. Adjustment is as follows: Included within segment loss of ¥1,635 million is theelimination of intersegment transactions of ¥1,830 million and corporate expenses of¥3,466 million. Corporate expenses mainly comprise the submitting company’s basic
research expenses.
3. Segment income is adjusted to agree with operating income in the consolidated
statements of income.

12