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

August 12, 2020
Kuraray Co., Ltd.

August 12, 2020
Kuraray Co., Ltd.

Consolidated Earnings Report for the Second 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 Second Quarter of the Fiscal Year Ending December
31, 2020 (January 1, 2020 to June 30, 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 2Q
Fiscal 2019 2Q

Operating Income
(%)
(8.8)
(4.6)

262,006
287,419

Note: Comprehensive income:(%)(29.8)(23.0)

17,63824,685For the fiscal 2020 second quarter: (¥504 million)
For the fiscal 2019 second quarter: ¥1,256 million

Net Income per
Share (Yen)
Fiscal 2020 2Q
Fiscal 2019 2Q

19,611
27,921

Ordinary Income

26.64
38.16

(%)
(28.5)(28.6)(―%)(87.1%)

Fully Diluted Net
Income per Share
(Yen)
26.62
38.10

(2) Consolidated Financial Position(Millions of yen)
Total Assets
1,083,789
991,149

Net Assets
532,282
538,545

Equity Ratio (%)
As of June 30, 2020
47.7
As of December 31, 2019
53.0
[Reference] Equity attributable to owners of the parent: As of June 30, 2020:¥517,189 million
As of December 31, 2019: ¥525,151 million

Net Income Attributableto Owners of the Parent
9,160
13,254(%)(30.9)(41.3)

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

Cash Dividends per ShareJun. 30
Sep. 30
Dec. 31
20.00
―
22.00
21.00
―

Annual
42.00

19.00

40.00

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

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 Sales

Full Fiscal Year(%)
510,000 (11.4)

Operating Income

33,000(%)(39.1)

Ordinary Income

29,000Net Income Attributable Net Income per
to Owners of the Parent
Share (Yen)(%)(%)(39.9)
13,000―37.80

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 June 30, 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 June 30, 2020
10,939,263 shares
As of December 31, 201911,130,834 shares

3.

Average number of shares for the period (cumulative):
As of June 30, 2020
343,835,380 shares
As of June 30, 2019347,356,017 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 “(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) Quarterly Consolidated Statements of Cash Flows .............................................................................

10(4) Notes regarding Quarterly Consolidated Financial Statements ........................................................

12

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

12

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

12

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

121

1. Qualitative Information regarding Business Results(1) Overview of Consolidated Business Results
In the second quarter of fiscal 2020 (January 1, 2020–June 30, 2020), the world economy
saw a much clearer retraction as efforts to contain the spread of COVID-19 have failed togain traction. Even amid this kind of environment, our Group maintained its businessactivities while thoroughly ensuring safety and working to prevent infection with the aim ofsupporting industrial supply chains. Consequently, consolidated operating results for thesecond quarter of fiscal 2020 are as follows: net sales fell ¥25,412 million, or 8.8%,
compared with the previous fiscal year to ¥262,006 million; operating income decreased¥8,310 million, or 29.8%, to ¥19,611 million; ordinary income decreased ¥7,047 million,or 28.5%, to ¥17,638 million; and net income attributable to owners of the parent fell
¥4,093 million, or 30.9%, to ¥9,160 million.
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 take specificmeasures in line with the key management strategies underlined in the medium-term
management plan “PROUD 2020” from a medium- to long-term perspective. Throughthese efforts, we will also continue working to establish a new business portfolio.
Results by Business Segment
Vinyl Acetate
Sales in this segment decreased 9.6% year on year to ¥121,809 million, and segment
income fell 26.7% year on year to ¥16,924 million.
(1) The volume of PVA resin declined due to stagnant global demand. Although LCD
panel manufacturers reduced inventory adjustments, shipments of optical-use poval
film stayed level with the previous year due to effects from COVID-19 crisis. The salesof PVB film were weak for construction and automotive applications. However, salesof water-soluble PVA film continued to expand 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 wereheavily impacted by a decline in the number of vehicles produced.
Isoprene
Sales in this segment decreased 9.9% year on year to ¥24,720 million, and segment income
fell 38.6% year on year to ¥2,116 million.
(1) Sales of isoprene chemicals and SEPTON™ thermoplastic elastomer were affected byslowing demand, mainly in China and the rest of Asia.
(2) Although sales of GENESTAR™ heat-resistant polyamide resin remained steady forelectric and electronic device applications, sales for automotive applications wereaffected by the decline in vehicle production.
Functional Materials
Sales in this segment decreased 5.5% year on year to ¥59,143 million, and segment income
fell 52.4% year on year to ¥1,054 million.
(1) The overall methacrylate business was affected by worsening market conditions despite2

an increase in demand for spatter-blocking barrier panels.
(2) In the medical business, the dental materials business struggled, especially in the
United States and Europe, as a result of an increase in dental clinic closures in
response to spreading infections.
(3) As for Calgon Carbon, sales were steady even during COVID-19 crisis, this business’s
products underpin people’s daily lives. In addition, in the Carbon Materials business,sales of high value-added products increased. Moreover, with expanding demand forhigh-performance activated carbon, we decided in this second quarter to expand thefacilities at the U.S. plant of Calgon Carbon Corporation.
Fibers and Textiles
Sales in this segment fell 14.7% year on year to ¥28,224 million while segment income
decreased 44.1% year on year to ¥1,656 million.
(1) The sales volume of CLARINO™ man-made leather decreased due to receding
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 the number of vehicles produced.
(3) In consumer goods and materials, sales of KURAFLEX™ were weak as demand forcosmetic and automotive applications stagnated despite an increase in the sales formask-related applications.
Trading
In fiber-related businesses, sales of sewn products remained steady. However, sales ofresins and chemicals were affected by lower demand in Japan and Asia. As a result,segment sales decreased 7.3% year on year to ¥60,037 million, and segment income rose
1.2% to ¥2,078 million.
OthersIn other business, due to weak sales of domestic affiliates, segment sales declined 14.9%
year on year to ¥22,155 million, and segment income fell 44.0% to ¥206 million.
(2) Overview of Financial Position
Total assets increased ¥92,640 million from the end of the previous fiscal year to¥1,083,789 million mainly because of a ¥117,450 million increase in cash and cash deposits(due to an increase in liquidity undertaken in response to COVID-19 pandemic), a ¥10,686
million decrease in notes and accounts receivable—trade, and a ¥15,413 million decrease in
short-term investment securities. Total liabilities increased ¥98,903 million to ¥551,507
million due to factors that included the issuance of bonds payable totaling ¥30,000 million,a ¥36,000 million increase in commercial paper, and a ¥79,099 million increase inlong-term loans payable, despite a ¥30,157 million decrease in accrued expenses.
Net assets fell ¥6,262 million to ¥532,282 million. Equity attributable to owners of theparent amounted to ¥517,189 million, for an equity ratio of 47.7%.

3

(3) Basis for the Revision in Forecasts, Including Consolidated Operating Results
Forecasts
The economy has receded significantly due to COVID-19 pandemic, and we assume thatthe effects will last into 2021 and beyond. We expect that demand will continue to stagnate
for our operations in the third quarter onward accompanied by production adjustments.
The forecast of consolidated operating results for the fiscal year ending December
31, 2020 (January 1, 2020 to December 31, 2020) is as shown below.
Revised Consolidated Operating Results Forecast for Fiscal 2020
Net
Sales
Original Forecast (A)―Revised Forecast (B)510,000
Amount Adjusted (B − A)―
Percent Adjusted―
Ref: FY2019 Results
575,807(Millions of yen)
Operating Ordinary Net Income Attributable to
IncomeIncomeOwners of the Parent(Yen)

Net Income
Per Share

―

―

―

―

33,00029,00013,000

37.80

―
―

―
―

―
―

―
―

54,17348,271(1,956)(5.66)

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

4

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

June 30, 2020

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

189,464
110,479
17,927
99,63914,83335,52820,261(371)
487,762

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

82,502
204,108
22,11489,531
24,760423,016

61,35733,06235,514
129,934

58,414
31,20833,829123,452

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

25,609165
2,090
14,551
7,168(28)
49,557596,026
1,083,789

(Millions of yen)
LIABILITIESCurrent Liabilities
Notes and accounts payable–trade
Short-term loans payable
Commercial paper
Current portion of bonds payable
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

June 30, 2020

39,88334,86424,000―50,491
4,307
6,578
226
41,317
201,670

31,70135,19760,00010,00020,334
5,695
5,300
232
33,707202,170

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

70,000207,101
13,365354
3,526
23,075
4,524
27,389349,336
551,507

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

88,95587,178349,863(16,005)
509,991

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

5,908
(380)
6,578
(4,909)7,197
328
14,765532,282
1,083,789

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements ofComprehensive Income
Quarterly Consolidated Statements of Income(Millions of yen)
Fiscal 2019 2Q
Fiscal 2020 2Q(January 1, 2019 –(January 1, 2020 –June 30, 2019)
June 30, 2020)
Net sales
287,419
262,006
Cost of sales
195,784
182,449
Gross profit
91,63479,557
Selling, general and administrative expenses
Selling expenses
16,824
15,457
General and administrative expenses
46,88844,488
Total selling, general and administrative expenses
63,71359,946
Operating income
27,921
19,611Non-operating income
Interest income
166
156
Dividend income
331
325
Equity in earnings of affiliates
128
58
Other
424
598
Total non-operating income
1,050
1,138
Non-operating expenses
Interest expenses
726
651
Foreign exchange loss
1,362
194
Other
2,197
2,265
Total non-operating expenses
4,286
3,111
Ordinary income
24,685
17,638Extraordinary income
Insurance income
337
393
Gain on reversal of share acquisition rights―
285
Gain on sale of investment securities
1,568―
Total extraordinary income
1,906
679
Extraordinary loss
Loss on litigation
706
2,422
Costs related to the suspension of operations
516
2,122
Loss on disposal of tangible fixed assets
1,016
508
Impairment loss
3,387―
Disaster loss
624―
Total extraordinary loss
6,252
5,053
Income before income taxes and noncontrolling interests
20,33913,264
Income taxes—current
7,731
5,478
Income taxes—deferred(1,190)(1,796)
Total income taxes
6,541
3,681
Net income
13,797
9,582
7

Fiscal 2019 2Q(January 1, 2019 –June 30, 2019)543
13,254

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

8

Fiscal 2020 2Q(January 1, 2020 –June 30, 2020)
422
9,160

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 2Q(January 1, 2019 –June 30, 2019)13,797

Fiscal 2020 2Q(January 1, 2020 –June 30, 2020)
9,582(1,402)
63(11,125)(76)(12,540)
1,256(2,014)(275)(8,127)329(10,087)
(504)

653
603

(637)
132

(3) Quarterly Consolidated Statements of Cash FlowsNet cash provided by (used in) operating activities
Income before income taxes and noncontrollinginterests
Depreciation and amortization
Foreign exchange losses (gains)
Loss (gain) on redemption of investment securities
Loss on litigation
Impairment loss
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
Loss on litigation paid
Other, net
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net decrease (increase) in time deposits
Net decrease (increase) in short-term investment
securities
Purchase of tangible fixed assets and intangible fixed
assetsPurchase of investment securities
Proceeds from sale and redemption of investment
securities
Other, net
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Net (decrease) increase in commercial paper
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Cash dividends paid
Proceeds from stock issuance to noncontrollinginterests
Other, net
Net cash provided by (used in) financing activities
Effect of Exchange Rate Changes on Cash and Cash
Equivalents
10

Fiscal 2019 2Q(January 1, 2019 –June 30, 2019)(Millions of yen)
Fiscal 2020 2Q(January 1, 2020 –June 30, 2020)

20,33913,26428,440537(1,568)
706
3,387
1,016

31,026
275
―
2,422
―
508

3,946

9,712

(6,190)378(7,449)(7,911)

2,327
45,495(7,434)(706)
86
37,440(2,263)47,414(4,269)(31,303)252
12,093(907)(2,360)(7,728)

3,625(40,793)(46,937)

(361)

(85)

2,208

156

(1,880)(49,463)(1,372)(46,973)567
24,0002,094(11,033)―(7,671)

340
36,00079,261(16)
30,000(7,562)―

2,211(4,481)
3,474(1,153)139,081(702)(1,150)Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of the Period
Increase in Cash and Cash Equivalents from Newly
Consolidated Subsidiaries
Cash and Cash Equivalents, End of the Period

11

Fiscal 2019 2Q(January 1, 2019 –June 30, 2019)(9,250)71,345(Millions of yen)
Fiscal 2020 2Q(January 1, 2020 –June 30, 2020)
103,050
75,9671

228

62,095

179,246(4) Notes regarding Quarterly Consolidated Financial Statements
Notes regarding Going Concern Assumptions
None
Material Changes in Shareholders’ Equity
None
Segment Information, etc.
● Segment Information
I. Second Quarter of Fiscal 2019 (January 1, 2019 to June 30, 2019)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
Vinyl Isoprene Functional Fibers and Trading
AcetateMaterials Textiles

Net sales(1) Outside
113,522
customers(2) Intersegment
sales and
21,225transfers
Total
134,747
Segment income
23,087(loss)

Total

Other
Business1

Total

15,14653,06825,18963,438 270,365

17,054 287,419

12,287

9,489

7,881

1,326

8,986

27,43362,55833,07164,765 322,575

3,449

2,213

2,963

2,053

52,21033,767

Adjustment2 Consolidated
Statements3of Income—

287,419

61,196(61,196)—

26,040 348,615(61,196)

287,419(6,214)27,921

369

34,136

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 ¥6,214 million is the elimination ofintersegment transactions of ¥776 million and corporate expenses of ¥6,991million. 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 ¥3,387 million in the second quarter of the fiscal year.

12II. Second Quarter of Fiscal 2020 (January 1, 2020 to June 30, 2020)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
Vinyl Isoprene Functional Fibers and Trading
AcetateMaterials Textiles

Net sales(1) Outside
102,466
customers(2) Intersegment
sales and
19,343transfers
Total
121,809
Segment income
16,924(loss)

Total

Other
Total
Business1

13,38750,466

21,29958,593 246,212

15,793 262,006

11,333

8,677

6,925

1,444

6,362

24,72059,14328,22460,037 293,936

2,116

1,054

1,656

2,078

47,72323,829Adjustment2 Consolidated
Statements3of Income—

262,006

54,085(54,085)—

22,155 316,091(54,085)

262,006(4,425)

19,611

206

24,036

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 ¥4,425 million is the elimination ofintersegment transactions of ¥1,044 million and corporate expenses of ¥5,470 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.

13