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

August 9, 2023
Kuraray Co., Ltd.

August 9, 2023
Kuraray Co., Ltd.

Consolidated Earnings Report for the Second 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 Second Quarter of the Fiscal Year Ending
December 31, 2023 (January 1, 2023 to June 30, 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 2Q
Fiscal 2022 2Q

(%)
6.4%
―

380,998
358,040

Note: Comprehensive income:Net Income per
Share (Yen)
Fiscal 2023 2Q
Fiscal 2022 2Q

Operating Income

65.26
71.32

Ordinary Income(%)
40,97038,0897.6%―

For the fiscal 2023 second quarter:
For the fiscal 2022 second quarter:

38,53837,896(%)
1.7%―

Net Income
Attributable to Ownersof the Parent(%)(9.8%)
21,842―
24,207¥73,371 million (−23.2%)¥95,477 million (―)

Fully Diluted Net
Income per Share
(Yen)
65.21
71.26

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 thesecond quarter of fiscal 2021, which predates the adoption of the standard, are not presented.

(2) Consolidated Financial Position(Millions of yen)
As of June 30, 2023
As of December 31, 2022

Total Assets
1,257,258
1,221,533

Net Assets
733,765
668,534

Equity Ratio (%)
56.6
52.9

[Reference] Equity attributable to owners of the parent:
As of June 30, 2023:¥711,617 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
―
25.00
―

Annual
44.00

25.00

50.00

Note: Revisions to cash dividend forecast during this period: Yes

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 Sales

Full Fiscal Year

810,000

Operating
Income(%)
7.1 84,000

Ordinary
Income(%)(3.6) 79,000

Net Income
Attributable to Ownersof the Parent
(%)
(%)
(6.0)
47,000(13.5)Net Income
per Share(Yen)
140.43

Note: Revisions to forecasts of consolidated financial results during this period: No[Reference](1) Changes in Important Subsidiaries during the Period (Changes in Special
Subsidiaries Involving Changes in the Scope of Consolidation)
No(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 June 30, 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 June 30, 2023
20,105,485 shares
As of December 31, 2022
20,171,061 shares

3.

Average number of shares for the period (cumulative):
As of June 30, 2023
334,725,385 shares
As of June 30, 2022
339,408,563 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 .................................................................................

6(3) Basis for the Revision in Forecasts, Including Consolidated Operating Results
Forecasts ...................................................................................................................

6(4) Basic Policies Related to Profit Distribution and Dividends in Fiscal 2023 ..............

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) Quarterly Consolidated Statements of Cash Flows ..................................................

11(4) Notes regarding Quarterly Consolidated Financial Statements ...............................

13

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

13

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

13

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

13

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

131

1. Qualitative Information regarding Business Results(1) Overview of Consolidated Business Results
In the second quarter of fiscal 2023 (January 1, 2023–June 30, 2023), except insome regions, the world economy gradually recovered, reflecting the resolutionof supply chain disruptions and the easing of supply limitations that had beencaused by a semiconductor shortage. However, the outlook remained unclear
due in part to continued financial tightening in various countries to control
inflation, a lack of vitality in the Chinese economy despite an anticipated
recovery, and the Russia-Ukraine situation, for which there seems to be no
offramp.
Amid these circumstances, consolidated operating results for the second
quarter of fiscal 2023 are as follows: net sales increased ¥22,957 million (6.4%)
year on year to ¥380,998 million; operating income increased ¥2,880 million(7.6%) year on year to ¥40,970 million; ordinary income increased ¥642 million(1.7%) year on year to ¥38,538 million; and net income attributable to owners of
the parent decreased ¥2,364 million (9.8%) year on year to ¥21,842 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 for which a motion to dismiss was expected to be granted.
Accordingly, in the second quarter, we recorded an extraordinary loss of ¥7,520
million as loss on litigation related to the lawsuits, etc. The motion to dismiss theindividual’s lawsuit was granted in July 2023. The lawsuits have therefore been
resolved.
(Millions of yen)
FY2022 2Q

FY2023 2Q

Consolidated Period

Consolidated Period

Net sales

Operating

Net sales

incomeOperatingincomeChangeNet sales

OperatingincomeVinyl Acetate

185,440

33,617

198,919

40,247

13,4796,630

Isoprene

31,9052,477

31,795(2,703)(110)(5,181)

Functional Materials

77,791

3,311

93,371

5,749

15,5802,437

Fibers and Textiles

31,795

3,795

30,163665(1,632)(3,130)

Trading

29,7052,776

28,970

2,302

(734)

(474)

Others23,668

1,221

22,864

575

(803)

(646)

(22,266)(9,110)(25,087)(5,865)(2,820)3,244

358,040

38,089380,998

40,97022,9572,880

Elimination &Corporate
Total

2

Results by Business Segment
Vinyl Acetate
Sales in this segment were ¥198,919 million (up 7.3% year on year), andsegment income was ¥40,247 million (up 19.7%).

(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 a delay in recovery for
demand for large LCD displays despite inventory adjustments for LCD
panels returning to normal. As for Advanced Interlayer Solutions, sales of
PVB film remained steady for construction applications in addition to arecovery in demand for automotive applications. 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, and demand for automotive
applications showed signs of recovery.
Isoprene
Sales in this segment were ¥31,795 million (down 0.3% year on year), andsegment loss was ¥2,703 million (operating income in the same period ofprevious fiscal year was ¥2,477 million). In addition, a new plant in Thailand
began operations in stages from February.

3(1) Results for isoprene chemicals and elastomer were affected bydeteriorating market conditions in addition to a decrease in sales volume
due to the ongoing effects of lower demand, which began in the latter half ofthe previous year.
(2) The sales volume of GENESTAR™ heat-resistant polyamide resin
decreased due to inventory adjustments for electric and electronic devices
despite signs of recovery in demand for automobile applications.
Functional Materials
Sales in this segment were ¥93,371 million (up 20.0% year on year), andsegment income was ¥5,749 million (up 73.6%).

(1) In the methacrylate business, results were affected by higher raw material
and fuel prices in addition to a decrease in sales volume due in part toinventory adjustments for electric and electronic devices.
(2) In the medical business, sales of cosmetic dental materials remained
favorable in Japan and overseas.
(3) In the environmental solutions business, demand increased for drinking
water applications in North America, and sales of activated carbon
remained steady.
Fibers and Textiles
Sales in this segment were ¥30,163 million (down 5.1% year on year), andsegment income was ¥665 million (down 82.5%).

4

(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, sales of VECTRAN™ remained stable.
Sales of KURALON™ was weak for construction applications in Europe
despite signs of a recovery in automotive applications.
(3) In consumer goods and materials, demand for KURAFLEX™ in therestaurant industry was weak.
Trading
Sales in this segment were ¥28,970 million (down 2.5% year on year), andsegment income was ¥2,302 million (down 17.1%).

(1) In fiber-related businesses, sales of sportswear remained firm, but thematerials business struggled.
(2) Sales of resins and chemicals were weak in Asian markets.
OthersSales in this segment were ¥22,864 million (down 3.4% year on year), andsegment income was ¥575 million (down 52.9%).

5

(2) Overview of Financial Position
Total assets increased ¥35,725 million from the end of the previous fiscal year to¥1,257,258 million despite a ¥18,105 million decrease in cash and deposits,
which were offset by a ¥25,305 million increase in property, plant and equipment
and a ¥15,402 million increase in inventories. Total liabilities decreased ¥29,505
million to ¥523,492 million due to factors that included a ¥38,510 million decrease
in interest-bearing debt and a ¥10,863 decrease in notes and accounts payabletrade, which together outweighed a ¥18,286 million increase in other current
liabilities reflecting an increase in accounts payable-other.
Net assets rose ¥65,231 million to ¥733,765 million due in part to an increase inforeign currency translation adjustment. Equity attributable to owners of theparent amounted to ¥711,617 million, for an equity ratio of 56.6%.
(3) Basis for the Revision in Forecasts, Including Consolidated Operating
Results Forecasts
Although operating results outperformed forecasts in the second quarter, arecovery in demand has been delayed for some businesses. Given thissituation, the full- year forecasts of consolidated operating results for fiscal 2023
(January 1, 2023 to December 31, 2023), which were announced on May 12,2023, were left unchanged. However, we revised the average exchange rates
used as assumptions for the forecasts as follows: ¥138 per USD, ¥148 per
euro, and ¥66,000 per kl of domestic naphtha.
Moreover, on July 12, 2023, we concluded a share transfer agreement totransfer all of the shares of Kuraray’s consolidated subsidiary Iruma Country
Club to RESOL Co., Ltd., which is a group company of RESOL HOLDINGS Co.,
Ltd. The transfer of shares is slated for August 31, 2023. The impact of thistransfer on the Company’s consolidated results is expected to be minor.
Note: The above forecasts are based on the best information currently
available. Actual operating results may vary significantly due to various factors.
(4) Basic Policies Related to Profit Distribution and Dividends in Fiscal
2023
The Company positions the distribution of profits to all shareholders as a priority
management issue. During the period of the medium-term management plan
“PASSION 2026”, our basic policy is to ensure a total return ratio of at least
35% as a proportion of net income attributable to owners of the parent, and anannual dividend of at least ¥40 per share. We strive to enhance shareholder
returns through the expansion of profit.
For fiscal 2023, based on the aforementioned shareholder return policy andcurrent business performance, we decided to increase the interim dividend andyear-end dividend forecast ¥1 each to ¥25. As a result, the annual dividend
forecast is ¥50, up ¥2 from the previous forecast and up ¥6 from the previous
fiscal year.
6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

June 30, 2023

123,724

105,618

157,016

163,223

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

5,686
154,366
18,56467,505
21,560(606)
535,920

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

112,065
286,117
24,002
71,88143,801
537,867

56,05830,432
34,993
121,484

58,946
31,511
37,618128,076

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

23,954107
2,270
17,265
11,811(17)
55,393
721,337
1,257,258

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
Total current liabilities
Non-current Liabilities
Bonds payable
Long-term borrowings
Deferred tax liabilities
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)
June 30, 2023

52,71734,48010,00010,00030,434
21,075
11,3709,132
42,119221,330

41,85336,515――29,33017,0509,583
7,319
60,406
202,059

60,000179,491
17,27925,626
5,303
43,968331,668
552,998

60,000160,049
18,25927,8685,887
49,368321,433
523,492

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

88,95587,146
414,055(25,652)
564,505

5,769

6,421

611
90,555(468)

227
140,737(274)

96,467

147,112341
21,443
668,534
1,221,533

341
21,806
733,765
1,257,258

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated
Statements of Comprehensive Income
Quarterly Consolidated Statements of Income(Millions of yen)
Fiscal 2022 2Q
Fiscal 2023 2Q(January 1, 2022 – (January 1, 2023 –June 30, 2022)
June 30, 2023)
Net sales
358,040
380,998
Cost of sales
247,326
261,167
Gross profit
110,713
119,830
Selling, general and administrative expenses
Selling expenses
22,146
20,742
General and administrative expenses
50,477
58,117
Total selling, general and administrative
72,62378,860expenses
Operating income
38,08940,970Non-operating income
Interest income
115644
Dividend income
320
360
Share of profit of entities accounted for using
142
96
equity method
Other
1,962
703
Total non-operating income
2,540
1,805
Non-operating expenses
Interest expenses
722
1,380
Foreign exchange loss
―
1,026
Other
2,011
1,830
Total non-operating expenses
2,734
4,237
Ordinary income
37,89638,538Extraordinary income
676
Gain on sale of investment securities
2,260―
Insurance claim income
1,089
Total extraordinary income
3,349
676
Extraordinary losses
Loss on litigation
1,549
7,520
Loss on abandonment of non-current assets
135
351
Costs related to the suspension of operations
4,915―
Total extraordinary losses
6,600
7,872
Income before income taxes and noncontrolling
34,64531,342interests
Income taxes—current
10,322
10,099
Income taxes—deferred
(588)
(798)
Total income taxes
9,733
9,301
Net income
24,911
22,041
704
198
Net income attributable to noncontrolling interests
24,207
21,842
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 2Q
Fiscal 2023 2Q(January 1, 2022 – (January 1, 2023 –June 30, 2022)
June 30, 2023)
24,911
22,041(1,448)652

1,317
70,094(351)
50,835602

194

70,56595,47751,33073,371

93,3952,081

72,487884

(3) Quarterly Consolidated Statements of Cash Flows(Millions of yen)
Fiscal 2022 2Q
Fiscal 2023 2Q(January 1, 2022 – (January 1, 2023 –June 30, 2022)
June 30, 2023)
Net cash provided by (used in) operating
Income before income taxes andactivities
noncontrolling interests
Depreciation and amortization
Loss (gain) on sale of investment securities
Loss on litigation
Loss on disposal of tangible fixed assets
Decrease (increase) in notes and accounts
receivable – trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable – trade
Other, net
Subtotal
Income taxes (paid) refund
Other, net
Net cash provided by (used in) operating
Netactivities
cash provided by (used in) investing
activities
Net decrease (increase) in time deposits
Purchase of tangible fixed assets andintangible fixed assets
Proceeds from sale and redemption of
investment securities
Other, net
Net cash provided by (used in) investing
Netactivities
cash provided by (used in) financing
activities
Net increase (decrease) in short-term loansNet(decrease) increase in commercial paper
payableProceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury shares
Cash dividends paid
Proceeds from stock issuance tononcontrolling interests
Other, net
Net cash provided by (used in) financing
Effectof Exchange Rate Changes on Cash andactivities
Cash Equivalents
Net Increase (Decrease) in Cash and Cash
Equivalents
11

34,64531,342

31,201(2,260)1,549
135

36,731
(676)
7,520
351

(4,708)2,269(28,455)(1,947)

9,611(12,498)(9,101)
32,617(10,670)(583)
21,362

6,600
69,693(11,043)(1,033)57,6163,420―(31,842)(30,151)

2,749

1,254

(1,668)(27,340)(1,287)(30,184)

100
20,00011,828(55,007)
10,000―(10,001)(6,880)

1,894(10,000)―(22,938)―(10,000)(1)(7,697)502―(1,725)(31,183)(1,750)(50,494)

6,750

5,790

(30,411)(17,271)Cash and Cash Equivalents, Beginning of the
PeriodIncrease in Cash and Cash Equivalents from
Newly Consolidated Subsidiaries
Cash and Cash Equivalents, End of the Period

12151,487

127,616136―

121,212110,345(4) Notes regarding Quarterly Consolidated Financial Statements
Notes regarding Going Concern Assumptions
None
Material Changes in Shareholders’ Equity
None
Additional Information
Regarding the civil lawsuits related to the fire that occurred at a U.S. subsidiary in May
2018, we reached settlements with the remaining plaintiffs in April 2023, except for one forwhich a motion to dismiss was expected to be granted. Accordingly, in the second quarter,
we recorded an extraordinary loss of ¥7,520 million as loss on litigation related to thelawsuits, etc. The motion to dismiss the individual’s lawsuit was granted in July 2023. The
lawsuits have therefore been resolved.
Segment Information, etc.
● Segment Information
I. Second Quarter of Fiscal 2022 (January 1, 2022 to June 30, 2022)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
Vinyl Isoprene Functional
AcetateMaterials

Net sales
Outside177,920
customers
Intersegment
sales and
7,519
transfers
Total
185,440
Segment income 33,617(loss)

FibersandTextiles

Other
Business1
Trading

Total

Adjustment2 Consolidated
Statements
3of Income

Total

25,37076,13230,063 28,907 338,394

19,646 358,040—

358,040

6,535

1,658

1,732

797 18,244

4,022 22,266(22,266)—

31,90577,791

31,795 29,705 356,638

23,668 380,307(22,266)

358,040

2,477

3,311

3,795

1,221 47,199(9,110)38,0892,776 45,978

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 ¥9,110 million is theelimination of intersegment transactions of ¥1,208 million and corporate expenses of¥7,901 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.

13

II. Second Quarter of Fiscal 2023 (January 1, 2023 to June 30, 2023)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
Vinyl Isoprene Functional
AcetateMaterials

Net sales
Outside190,694
customers
Intersegment
sales and
8,225
transfers
Total
198,919
Segment income 40,247(loss)

FibersandTextiles

Other
Business1
Trading

Total

Adjustment2 Consolidated
Statements
3of IncomeTotal

25,54591,422

28,326 28,190 364,179

16,819 380,998—

380,998

6,249

1,948

1,836

780 19,041

6,045 25,087(25,087)—

31,79593,37130,163 28,970 383,220

22,864 406,085(25,087)

380,998(2,703)

5,749

575 46,836(5,865)40,970665

2,302 46,260

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 ¥5,865 million is theelimination of positive intersegment transactions of ¥2,002 million and corporate
expenses of ¥7,868 million. Corporate expenses mainly comprise the submitting
company’s basic research expenses.
3. Segment income or loss is adjusted to agree with operating income in the
consolidated statements of income.

14