Business Results for theFirst Quarter of the Fiscal Year Ending
December 31, 2020 (Unaudited)

May 14, 2020
Kuraray Co., Ltd.

May 14, 2020
Kuraray Co., Ltd.

Consolidated Earnings Report for the First Quarter of the Fiscal Year Ending December 31, 2020
Name of listed company:
Stock code:
Stock exchange listing:
URL:

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

Representative:
Title:
Name:

Representative Director and President
Masaaki Ito

Contact:
Title:

Senior Manager, Corporate Communications Department, Corporate Management
Planning Office
Fumio Uegaki+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,
2020 (January 1, 2020 to March 31, 2020)(1) Consolidated Operating Results(Percentage changes displayed for net sales, operating income, ordinary income and net income attributable to owners of theparent are comparisons with the corresponding period of the previous fiscal year.)(Millions of yen)
Net Sales

Fiscal 2020 1Q
Fiscal 2019 1Q

(%)
(3.3)
(5.0)

136,927
141,646

Note: Comprehensive income:

11,971
14,632(%)(18.2)(34.5)For the fiscal 2020 first quarter:
For the fiscal 2019 first quarter:

Net Income per
Share (Yen)
Fiscal 2020 1Q
Fiscal 2019 1Q

Operating Income

19.50
17.48

Ordinary Income
11,306
12,794(%)(11.6)(41.6)(¥2,205 million) (―%)
¥4,543 million (―%)

Fully Diluted Net
Income per Share
(Yen)
19.48
17.45

(2) Consolidated Financial Position(Millions of yen)
Total Assets
993,099
991,149

Net Assets
529,802538,545

Equity Ratio (%)
51.9
As of March 31, 2020
53.0
As of December 31, 2019
[Reference] Equity attributable to owners of the parent: As of March 31, 2020:¥515,406 million
As of December 31, 2019: ¥525,151 million

Net Income Attributableto Owners of the Parent
6,705
6,085

(%)
10.2
(59.7)

2. Dividends(Yen)
Record Date
Fiscal 2019
Fiscal 2020
Fiscal 2020
(Forecast)Mar. 31――

Cash Dividends per ShareJun. 30
Sep. 30
Dec. 31
20.00
22.00
―

21.00

―

Annual
42.00

21.00

42.00

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

3. Forecasts of Consolidated Financial Results for the Fiscal Year Ending December 31, 2020
(January 1, 2020 to December 31, 2020)(Percentage changes displayed for net sales, operating income, ordinary income and net income attributable to owners of theparent are comparisons with the corresponding period of the previous fiscal year.)(Millions of yen)
Net SalesInterim Period
Full Fiscal Year

260,000―

Operating Income Ordinary Income

(%)
(9.5)
―

15,000―(%)(46.3)―

13,000―Net Income
Net Income per
Attributable to
Share (Yen)
Owners of the Parent(%)(%)(47.3)
7,000(47.2)
20.36
―
―
―
―

Note: Revisions to forecasts of consolidated financial results during this period: Yes
Regarding the full-year forecasts of consolidated financial results, due to the difficulty of reasonably
calculating the impact of COVID-19 pandemic on the Group’s results from the third quarter onward, we
have temporarily withdrawn the forecasts released on February 13, 2020 and it is to be determined. We
will swiftly release a forecast once calculations become possible.

[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, 2020
354,863,603 shares
As of December 31, 2019354,863,603 shares

2.

Number of treasury shares as of the period-end:
As of March 31, 2020
11,005,846 shares
As of December 31, 201911,130,834 shares

3.

Average number of shares for the period (cumulative):
As of March 31, 2020
343,781,244 shares
As of March 31, 2019
348,198,564 shares

Note: It is not required that this type of earnings report be audited.
Cautionary Statement with Respect to Forecasts of Consolidated Business Results(Cautionary note regarding forward-looking statements)
The results forecasts presented in this document are based upon currently available information andassumptions deemed rational. A variety of factors could cause actual results to differ materially fromforecasts. Please refer to “1. Qualitative Information regarding Business Results (3) Basis for the
Revision in Forecasts, Including Consolidated Operating Results Forecasts” on page 4 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 ..............................................................................................................

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

4

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

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

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

7(3) Notes regarding Quarterly Consolidated Financial Statements ........................................................

10

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

10

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

10

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

101

1. Qualitative Information regarding Business Results(1) Overview of Consolidated Business Results
In the first quarter of fiscal 2020 (January 1, 2020–March 31, 2020), the world economy
dramatically decelerated due to the serious impacts on consumption and production of therestrictions on economic activity to counter the global spread of COVID-19. Consequently,
consolidated operating results for the first quarter of fiscal 2020 are as follows: net sales fell
¥4,719 million, or 3.3%, compared with the previous fiscal year to ¥136,927 million;
operating income decreased ¥2,660 million, or 18.2%, to ¥11,971 million; ordinary income
decreased ¥1,488 million, or 11.6%, to ¥11,306 million; and net income attributable toowners of the parent increased ¥619 million, or 10.2%, to ¥6,705 million.
The global spread of COVID-19 remains a serious issue with no end in sight regarding
containment. In addition, it is expected to take a long time for economic activity to return
to normal.
Even amid this kind of environment, we will continue to supply needed products aroundthe world. We realize the importance of the role that has been given to us, and we will
maintain our business activities while thoroughly ensuring safety and working to prevent
infection. The Group’s long-term vision, Kuraray Vision 2026, is to become a “Specialty
Chemical Company, growing sustainably by incorporating new foundational platforms into
its own technologies.” As we continue working to realize this vision, we will steadily takespecific measures in line with the key management strategies underlined in themedium-term management plan “PROUD 2020” from a medium- to long-term
perspective. Through these efforts, we will also continue working to establish a new
business portfolio.
Results by Business Segment
Vinyl Acetate
Sales in this segment decreased 3.6% year on year to ¥63,866 million, and segment income
fell 22.4% year on year to ¥8,387 million.
(1) The volume of PVA resin declined due to stagnant global demand. Due to the effectof an LCD panel inventory adjustment continuing from the second half of theprevious fiscal year, shipments of optical-use poval film stayed level with the previous
year. In addition, sales of PVB film remained weak, mainly for automotive applications.
However, sales of water-soluble PVA film steadily expanded for use in unit dose
detergent packets.
(2) The sales volume of EVAL™ ethylene vinyl alcohol copolymer (EVOH resin)increased for food packaging applications but sales for gas tank applications were weak
due to a decline in the number of vehicles produced.
Isoprene
Sales in this segment decreased 3.4% year on year to ¥13,162 million, and segment income
fell 16.0% year on year to ¥3,140 million.
(1) Shipments of isoprene chemicals declined, especially those to China. Sales of
SEPTON™ thermoplastic elastomer struggled in Asia, but U.S. demand remained
firm.
2

(2) The sales volume of GENESTAR™ heat-resistant polyamide resin increased due toanticipatory demand in China for electric and electronic device applications. Demandfor connectors for automotive devices remained favorable.
Functional Materials
Sales in this segment increased 1.0% year on year to ¥30,766 million, and segment income
grew 12.5% year on year to ¥1,268 million.
(1) Although the sales volume of methacrylic resins and sheets increased, the methacrylatebusiness was affected by worsening market conditions.
(2) In the medical business, sales were steady in the first quarter due to anticipatory
demand for dental materials, especially exports, but there are concerns about
decelerating demand as many dental clinics have closed, mainly across the UnitedStates and Europe.
(3) As for Calgon Carbon, demand remained steady in North America, especially for
drinking water applications while demand was sluggish in Europe. In the Carbon
Materials business, sales of high value-added products increased.
Fibers and Textiles
Sales in this segment fell 12.5% year on year to ¥14,467 million while segment income
decreased 18.1% year on year to ¥916 million.
(1) The sales volume of CLARINO™ man-made leather decreased due to stagnant
demand in Asia and Europe.
(2) In fibers and industrial materials, the performance of KURALON™ for cement
reinforcement use remained weak. Sales of products used in reinforcing rubber were
negatively affected by a decline in vehicle production. However, sales results for
VECTRAN™ were firm.
(3) In consumer goods and materials, sales of KURAFLEX™ were weak as demand forcosmetic and automotive applications fell despite an increase in sales for mask-related
applications.
Trading
In fiber-related businesses, sales of sportswear-use products remained steady, but sales ofresins and chemicals targeting Japanese and Chinese markets struggled. As a result, segment
sales decreased 5.1% year on year to ¥29,771 million, and segment income rose 9.9% to¥961 million.
OthersIn other business, due to weak sales of domestic affiliates, segment sales declined 18.0%
year on year to ¥11,661 million, and segment income fell 67.2% to ¥43 million.
(2) Overview of Financial Position
Total assets increased ¥1,950 million from the end of the previous fiscal year to ¥993,099
million mainly because of a ¥4,757 million increase in cash and cash deposits and a ¥4,515
million increase in inventory assets that offset a ¥3,716 million decrease in intangible fixed
assets and a ¥4,204 million decrease in investment securities. Total liabilities increased¥10,693 million to ¥463,297 million due to factors that included the issuance ofcommercial paper totaling ¥26,000 million and a ¥23,364 million increase in long-termloans payable, despite a ¥29,392 million decrease in accrued expenses.
3

Net assets fell ¥8,742 million to ¥529,802 million. Equity attributable to owners of theparent amounted to ¥515,406 million, for an equity ratio of 51.9%.
(3) Basis for the Revision in Forecasts, Including Consolidated Operating Results
Forecasts
Due to economic restrictions to combat the global spread of COVID-19, first quarter
results for all segments were weak as demand for automobiles, electronic devices, displays
and other mainstay Kuraray applications stagnated. Further deterioration in demand fromthe second quarter is unavoidable, and we need to respond accordingly with production
adjustments and other measures. We expect this to have a large impact on our operating
results. Based on these circumstances, the forecast of consolidated operating results for thesecond quarter of fiscal 2020 (January 1, 2020 to June 30, 2020) is as shown below.
Furthermore, regarding the full-year forecasts of the consolidated financial results, due tothe difficulty of reasonably calculating the impact of COVID-19 pandemic on the Group’s
results from the third quarter onward, we have temporarily withdrawn the forecasts
released on February 13, 2020 and it is to be determined. We will swiftly release a forecast
once calculations become possible.
In addition, although we recorded an extraordinary loss in fiscal 2019 related to thelitigation over the fire at the U.S. subsidiary in May 2018, if it is determined that we need torevise our results forecasts in the course of future negotiations, we will make a swift
announcement.
The revised cumulative consolidated operating results forecast for the second quarter ofthe fiscal year ending December 31, 2020 (January 1, 2020 to June 30, 2020) is as follows.

Original Forecast (A)(Announced February 13, 2020)
Revised Forecast (B)Amount Adjusted (B − A)
Percent Adjusted(Millions of yen)
Net Income
Operating Ordinary
Net Sales
Attributable to
Income Income
Owners of the Parent
290,000
28,000 26,000
16,000260,000(30,000)(10.3)

15,000 13,000(13,000) (13,000)(46.4)(50.0)

7,000(9,000)(56.3)(Yen)

Net Income
Per Share
46.54
20.36

The revised consolidated operating results forecast for the fiscal year ending December 31,
2020 (January 1, 2020 to December 31, 2020) is as follows.

Original Forecast (A)(Announced February 13, 2020)
Revised Forecast (B)Amount Adjusted (B − A)
Percent Adjusted(Millions of yen)
Net Income
Operating Ordinary
Net Sales
Attributable to
Income Income
Owners of the Parent
590,000
60,000 56,000
35,000
―
―
―

―
―
―

―
―
―

―
―
―

Note: The above forecasts are based on the best information currently available.
Actual operating results may vary significantly due to various factors.
4

(Yen)

Net Income
Per Share
101.82―

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheets(Millions of yen)
ASSETS
Current Assets
Cash and cash deposits
Notes and accounts receivable–trade
Short-term investment securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent Assets
Tangible fixed assets
Buildings and structures, net
Machinery, equipment and vehicles, net
LandConstruction in progress
Other, net
Total tangible fixed assets
Intangible fixed assets
Goodwill
Customer-related assets
Other
Total intangible fixed assets
Investments and other assets
Investment securities
Long-term loans receivable
Net defined benefit assets
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total Assets

5

December 31, 2019

March 31, 2020

72,014
121,166
33,341
101,628
15,67934,696
16,661(455)
394,732

76,772
118,370
34,421106,042
16,80833,66916,432(371)
402,145

79,629205,974
22,062
82,071
25,055
414,793

82,383
208,249
22,09477,50024,689414,918

61,35733,06235,514
129,934

59,84532,161
34,210126,217

28,770189
1,977
13,5067,272(28)
51,688596,416
991,149

24,565179
2,021
15,9947,085(28)
49,818590,954
993,099

(Millions of yen)
LIABILITIESCurrent Liabilities
Notes and accounts payable–trade
Short-term loans payable
Commercial paper
Accrued expenses
Income taxes payable
Provision for bonuses
Other provision
Other
Total current liabilities
Noncurrent Liabilities
Bonds payable
Long-term loans payable
Deferred tax liabilities
Provision for directors’ retirement benefits
Provision for environmental measures
Net defined benefit liabilities
Asset retirement obligations
Other
Total noncurrent liabilities
Total Liabilities
NET ASSETS
Shareholders’ Equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated Other Comprehensive Income
Valuation difference on available-for-sale securities
Deferred gain or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription Rights to Shares
Noncontrolling Interests
Total Net Assets
Total Liabilities and Net Assets

6

December 31, 2019

March 31, 2020

39,88334,86424,00050,491
4,307
6,578
226
41,317
201,670

38,51535,23150,00021,099
4,988
8,700
238
31,873
190,647

50,000128,001
13,743347
3,692
22,203
4,671
28,273250,933
452,604

50,000151,366
13,241337
3,608
22,456
4,525
27,114
272,650
463,297

88,95587,197348,289(16,286)
508,156

88,95587,187
347,407(16,103)507,448

7,922
(263)
14,575(5,238)16,995663
12,729538,545
991,149

5,060
115
7,686
(4,903)
7,958
604
13,790529,802
993,099

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements ofComprehensive Income
Quarterly Consolidated Statements of Income(Millions of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in earnings of affiliates
Gain on extinguishment of debts
Insurance income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange loss
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Insurance income
Gain on sale of investment securities
Total extraordinary income
Extraordinary loss
Costs related to the suspension of operations
Loss on disposal of tangible fixed assets
Loss on litigation
Impairment loss
Total extraordinary loss
Income before income taxes and noncontrolling interests
Income taxes—current
Income taxes—deferred
Total income taxes
Net income
7

Fiscal 2019 1Q(January 1, 2019 –March 31, 2019)

Fiscal 2020 1Q(January 1, 2020 –March 31, 2020)

141,646
96,06145,585

136,927
94,22942,697

8,191
22,76030,952
14,632

7,824
22,90130,725
11,971

70
45
59
―
174
335
686

71
73
42
163
―
311
661

382
557
1,583
2,523
12,794

315
―
1,012
1,327
11,306

―
1,568
1,568

334
―
334

―
606
―
3,392
3,999
10,363
4,999(1,047)
3,952
6,411

489
438
145
―
1,073
10,5675,610(2,062)
3,547
7,019

Net income attributable to noncontrolling interests
Net income attributable to owners of the parent

8

Fiscal 2019 1Q(January 1, 2019 –March 31, 2019)

Fiscal 2020 1Q(January 1, 2020 –March 31, 2020)

326
6,085

314
6,705

Quarterly Consolidated Statements of Comprehensive Income(Millions of yen)

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

9

Fiscal 2019 1Q(January 1, 2019 –March 31, 2019)
6,411

Fiscal 2020 1Q(January 1, 2020 –March 31, 2020)
7,019

(503)
26
(1,281)(109)(1,868)4,543(2,863)464(7,160)335(9,224)(2,205)4,164379(2,331)126

(3) Notes regarding Quarterly Consolidated Financial Statements
Notes regarding Going Concern Assumptions
None
Material Changes in Shareholders’ Equity
None
Segment Information, etc.
● Segment Information
I. First Quarter of Fiscal 2019 (January 1, 2019 to March 31, 2019)
1. Net sales, income and loss by reporting segment(Millions of yen)

Net sales(1) Outside
customers(2) Intersegment
sales andtransfers
Total
Segment income(loss)

Reporting Segment
Vinyl Isoprene Functional Fibers and Trading
AcetateMaterials Textiles
55,444

7,731

25,47913,098

10,780

5,887

4,977

3,438

66,224

13,61830,456

16,537

10,809

3,739

1,127

1,118

Total

30,740 132,494
640

25,724

31,380 158,218
874

17,669Other
Business1

Total

9,152 141,646

Adjustment2 Consolidated
Statements3of Income—141,646

30,791(30,791)—

14,219 172,438(30,791)

141,646(3,168)

14,6325,067
131

17,800Notes:
1. The “Other Business” category incorporates operations not included in business segment
reporting, including the environmental business and engineering business.
2. Adjustment is as follows: Included within segment loss of ¥3,168 million is the elimination ofintersegment transactions of ¥463 million and corporate expenses of ¥3,631million. 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 ofincome.
2. Information related to goodwill or impairment loss of fixed assets for each reportable segment
Important impairment losses related to fixed assets
In the vinyl acetate segment, Kuraray recorded an impairment loss. Furthermore, the amount recorded
for said impairment loss was ¥3,392 million in the first quarter of the fiscal year.

10II. First Quarter of Fiscal 2020 (January 1, 2020 to March 31, 2020)
1. Net sales, income and loss by reporting segment(Millions of yen)

Net sales(1) Outside
customers(2) Intersegment
sales andtransfers
Total
Segment income(loss)

Reporting Segment
Vinyl Isoprene Functional Fibers and Trading
AcetateMaterials Textiles
54,212

7,293

26,141

11,177

9,653

5,869

4,624

3,290

63,866

13,16230,766

14,467

8,387

3,140

1,268

916

Total

Other
Total
Business1

29,084 127,910

9,017 136,927

687

24,12429,771 152,034
961

14,673Adjustment2 Consolidated
Statements3of Income—

136,927

26,769(26,769)—

11,661 163,696(26,769)

136,927(2,745)

11,9712,644
43

14,717

Notes:
1. The “Other Business” category incorporates operations not included in business segment
reporting, including the environmental business and engineering business.
2. Adjustment is as follows: Included within segment loss of ¥2,745 million is the elimination ofintersegment transactions of ¥574 million and corporate expenses of ¥3,319 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 ofincome.

11