Consolidated Earning Reportfor the Third Quarter of the Fiscal YearEnding December 31, 2015 (Unaudited)

November 11, 2015
Kuraray Co., Ltd.

November 11, 2015
Kuraray Co., Ltd.
Consolidated Earnings Report for the Third Quarter of the Fiscal Year Ending December 31, 2015
Name of listed company:

Kuraray Co., Ltd.

Stock code:

3405

Stock exchange listing:Tokyo, first section

URL:

http://www.kuraray.co.jp/en

Representative:
Title:

Representative Director and President

Name:

Masaaki Ito

Contact:
Title:

Manager, Corporate Management Planning Office,Corporate Communications Department

Name:

Akiko Ide

Tel:

+81-3-6701-1070(Millions of yen rounded down unless otherwise stated)
Preparation of supplementary documentation for the quarterly earnings report: No
Holding of quarterly earnings results briefing: No

1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending
December 31, 2015 (January 1, 2015 to September 30, 2015)(1) Consolidated Operating Results(Percentages displayed for net sales, operating income, ordinary income and net income are comparisons withthe corresponding period of the previous fiscal year.)(Millions of yen)
Net Sales

Operating Income(Change)

Fiscal 2015 3Q

391,905―

Fiscal 2014 3Q――

Note: Comprehensive income:Ordinary Income(Change)
49,308―Net Income(Change)――

48,686―(Change)――

31,858――For the fiscal 2015 third quarter:¥26,870 million―

For the fiscal 2014 third quarter:―

Net Income per Share

Fully Diluted Net Income per(Yen)

Share (Yen)

Fiscal 2015 3Q

90.77

90.52

Fiscal 2014 3Q

―

―

―

The Company changed its fiscal year end from March 31 to December 31 from the fiscal year ended
December 31, 2014. Consequently, because consolidated financial statements were not prepared for the thirdquarter of the fiscal year ended December 31, 2014, the consolidated operating results and percentage are notgiven.
[Reference]
The below percent figures (or adjusted changes) represent comparisons of results for the third quarter offiscal 2015 (January 1, 2015 to September 30, 2015) and results from the corresponding period of theprevious calendar year (January 1, 2014 to September 30, 2014).
(Millions of yen)
Net Sales
391,905

Operating Income
11.2%

49,30823.9%

Ordinary Income
48,686

21.9%

Net Income
31,85829.9%

(2) Consolidated Financial Position(Millions of yen)
Total Assets

Net Assets

Shareholders’ Equity Ratio (%)

As of September 30, 2015

686,867

499,707

71.7%

As of December 31, 2014

691,538

481,826

68.7%(Reference)
Shareholders’ equity:

As of September 30, 2015:¥492,333 million

As of December 31, 2014:¥474,760 million

2. Dividends(Yen)
Cash Dividends per Share
Record Date

Mar. 31

Jun. 30

Sep. 30

Dec. 31AnnualFiscal 2014

―

―

18.00

9.00

27.00

Fiscal 2015

―

18.00

―
22.00

40.00

Fiscal 2015
(Forecast)

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

3. Forecasts of Consolidated Financial Results for the Fiscal Year Ending
December 31, 2015 (January 1, 2015 to December 31, 2015)(Percentages displayed for net sales, operating income, ordinary income and net income are comparisons withthe corresponding period of the previous fiscal year)(Millions of yen)
Net Sales
Full Fiscal Year

540,000

Operating Income―

66,000―Ordinary Income
66,000―Net Income
40,000Net Income per Share―

113.93

Note: Revisions to forecasts of consolidated financial results during this period: NoFrom fiscal 2014, the Company has changed its fiscal year-end from March 31 to December 31. Because thereporting period for fiscal 2015 is the twelve-month period from January 1, 2015 to December 31, 2015 andthe reporting period for fiscal 2014 was the nine-month period from April 1, 2014 to December 31, 2014 for
the Company and those subsidiaries that previously maintained a fiscal year-end of March 31, year-on-yearcomparisons are not presented herein.

[Reference]
The below percent figures (or adjusted changes) represent comparisons of forecast results for fiscal 2015
(January 1, 2015 to December 31, 2015) and results from the previous calendar year (January 1, 2014 toDecember 31, 2014).
(Millions of yen)
Net Sales
Full Fiscal Year

540,000

Operating Income

Ordinary Income

66,00066,000

11.3%

28.4%

29.5%

Net Income
40,00045.7%

4. Other(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 FinancialStatements
No(3) Changes in Accounting Principles, Procedures and Presentation Methods in Connection with thePreparation of Quarterly Consolidated Financial Statements
1. Changes following revision of accounting standards: No
2. Changes besides 1. above: No
3. Changes of 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:2.

3.

As of September 30, 2015

354,863,603 shares

As of December 31, 2014

382,863,603 shares

Number of treasury stock as of the period-end:
As of September 30, 2015

3,735,906 shares

As of December 31, 2014

32,283,465 shares

Average number of shares for the period (cumulative):Fiscal 2015 3Q

350,961,019 sharesFiscal 2014 3Q―On June 30, 2015, the Company retired of 28,000,000 shares of treasury stock (common stock).
The Company changed its fiscal year end from March 31 to December 31 from the fiscal year ended
December 31, 2014. Consequently, because consolidated financial statements were not prepared for the third
quarter of the fiscal year ended December 31, 2014, the previous year’s average number of shares for theperiod (cumulative) is not presented herein.
Indication of quarterly review procedure implementation status
This quarterly earnings report is exempt from the quarterly review procedure based upon the Financial
Instruments and Exchange Act. Nevertheless, this report was undergoing the review procedure process at thetime of this release.
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 from forecasts.
Please refer to “Basis for the Revision in Forecasts, Including Consolidated Operating Results Forecasts” onpage 4 of the Attachment for the assumptions used.

Index of the Attachment
1. Qualitative Information and Financial Statements.............................................................................

2(1) Qualitative Information and Overview of Consolidated Business Results....................................

2(2) Basis for the Revision in Forecasts, Including Consolidated Operating Results Forecasts.........

4

2. Quarterly Consolidated Financial Statements.....................................................................................

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........................................................

10Notes regarding Going Concern Assumptions..................................................................................

10Material Changes in Shareholders’ Equity...........................................................................................

10Segment and Other Information...........................................................................................................

10

1.

Qualitative Information and Financial Statements(1) Qualitative Information and Overview of Consolidated Business Results
In the third quarter of fiscal 2015 (January 1, 2015–September 30, 2015), the Japanese economy saw acontinued gradual recovery despite some signs of weakness, including the slowing pace of recovery inconsumer spending. Overseas, while employment and consumer spending remained stable and healthy in theUnited States, recovery appeared weak in Europe amid uncertainty about the future. The slowing pace ofgrowth in China’s economy became apparent in the third quarter, and conditions were patchy in otheremerging economies. The price of crude oil has continued to decline since the end of fiscal 2014, which haslowered raw material and fuel costs. This has forced adjustments in some product prices and, in turn,
positively impacted the Company's results.
Under these circumstances, the Kuraray Group has been steadily implementing the business strategies
outlined in GS-STEP, the medium-term management plan launched in the current fiscal year, as it aims tobecome a high profit specialty chemical company with a global presence.
Consequently, consolidated operating results for the third quarter of fiscal 2015 are as follows: net sales rose¥39,352 million, or 11.2%, compared with the corresponding period of the previous fiscal year to ¥391,905
million; operating income grew ¥9,525 million, or 23.9%, to ¥49,308 million; ordinary income increased¥8,733 million, or 21.9%, to ¥48,686 million; and net income rose ¥7,329 million, or 29.9%, to ¥31,858
million.
In addition, comparisons with the third quarter of the previous fiscal year use figures that have been adjusted
to the same period (January 1, 2014–September 30, 2014) as the fiscal year ended December 31, 2015
(January 1, 2015–September 30, 2015).
(Billions of yen, rounded to the nearest hundred million)
Fiscal 2014 3Q

Fiscal 2015 3Q

ChangeAmount(Adjusted)

Percent

Net Sales

352.6

391.9

39.4

11.2%

Operating Income

39.8

49.3

9.5

23.9%

Ordinary Income

40.0

48.7

8.7

21.9%

Net Income

24.5

31.9

7.3

29.9%

Note: Figures for Fiscal 2014 3Q (Adjusted) are unaudited.

2

Results by Business Segment(Billions of yen, rounded to the nearest hundred million)
Net Sales
Fiscal 2014 3Q

Operating Income

Fiscal 2015 3Q

Change Fiscal 2014 3Q(Adjusted)

Fiscal 2015 3Q

Change(Adjusted)

Vinyl Acetate

168.5

207.8

39.3

36.2

41.4

5.2

Isoprene

41.4

41.6

0.2

4.7

5.5

0.8

Functional Materials

39.5

42.2

2.7

1.0

4.2

3.2

Fibers and Textiles

35.8

34.3

(1.5)

2.5

3.0

0.5

Trading

88.1

88.8

0.7

2.9

2.8

(0.1)

Other Business

51.5

51.8

0.3

2.0

1.7

(0.3)

Elimination & Corporate(72.2)(74.7)

(2.5)

(9.4)

(9.2)

0.2

Total

352.6

391.9

39.4

39.8

49.3

9.5

Note: Figures for Fiscal 2014 3Q (Adjusted) are unaudited.
Results by Business Segment
Vinyl Acetate
Sales in this segment grew 23.4% year on year to ¥207,831 million, and segment income grew 14.4% year onyear to ¥41,375 million.
(1) The sales volume of optical-use poval film has increased due to growth in the number of LCD panels
sold and the trend toward larger panels. The Company has decided to establish a new production line at
the Saijo plant to meet the needs arising from the growing LCD market and the trend toward thinnerpolarizing films. The new line is slated to begin operation in early 2017. Sales of PVA resin were firmoverall. Although exports of PVB film to China stalled, sales in other regions made up for the shortfall.
Sales of water soluble PVA film grew favorably on the back of brisk demand.
(2) Sales of EVAL ethylene vinyl alcohol copolymer (EVOH resin) were favorable for automotive gas tanksand food packaging applications.
Isoprene
Sales in this segment grew 0.5% year on year to ¥41,644 million, and segment income rose 17.8% year onyear to ¥5,480 million.
(1) In isoprene chemicals, sales of fine chemicals, SEPTON thermoplastic elastomer and liquid rubber
remained firm.
(2) Sales of GENESTAR heat-resistant polyamide resin expanded favorably for automotive applications.
Sales of LED reflector and connector, however, were hit hard in the third quarter by the slower
economic growth in China.

3

Functional Materials
Sales in this segment grew 6.9% year on year to ¥42,223 million, and segment income increased 328.5% year
on year to ¥4,214 million.
(1) Methacrylic resin business, remained favorable thanks mainly to a shift toward highly functional products
despite a fall in demand in China for certain applications.
(2) In the medical business, sales of dental materials were brisk, boosted in part by the launch of newproducts.
(3) CLARINO man-made leather saw profit growth due to the continued expansion in sales of products
made using new processes.
Fibers and Textiles
Performance in this segment was favorable due to a shift toward high value-added products. As a result, sales
in this segment declined 4.2% year on year to ¥34,299 million while segment income grew 22.2% year onyear to ¥2,996 million.
Trading
Sales were firm in chemical-related businesses, but overseas processing expenses for the fiber-related businesssoared due to the weak yen. As a result, segment sales increased 0.8% year on year to ¥88,796 million, andsegment income fell 4.7% to ¥2,756 million.
OthersIn other businesses, while sales remained firm overall, some businesses were impacted by the slowing growthin China and rising raw material prices due to the weaker yen. As a result, segment sales grew 0.5% year onyear to ¥51,768 million, and segment income declined 13.9% to ¥1,731 million.
(2)Basis for the Revision in Forecasts, Including Consolidated Operating Results Forecasts
No changes have been made after a review of the full-year consolidated operating results
forecast announced on August 6, 2015.

4

2. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Millions of yen)

December 31, 2014

September 30, 2015

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
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent Assets
Tangible fixed assets

33,93930,090104,988

100,430

2,504
74,201
13,78814,90577,843
12,575

19,107

21,731

4,694

6,554

16,54613,130

(571)

(582)

269,200

276,679

Buildings and structures, net
Machinery, equipment and vehicles, net
LandConstruction in progress
Other, net
Total tangible fixed assets
Intangible fixed assets

52,729120,298

53,395129,099

21,99922,26062,59054,254

4,770

4,871

262,388263,880

GoodwillCustomer relation assets
Other
Total intangible fixed assets
Investments and other assets

31,21730,20834,74532,66822,877

22,914

88,84085,791

54,342302
816

46,133
241
1,060

8,701

6,906

6,993

6,226

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

(48)

(52)

71,108422,338

60,515691,5385

410,188686,867(Millions of yen)
December 31, 2014

September 30, 2015

LIABILITIESCurrent Liabilities
Notes and accounts payable–trade

43,02736,193

Short-term loans payable

12,087

7,184

Commercial papers

10,000－Accrued expenses

7,957

10,181

Income taxes payable

2,575

11,733

Provision for bonuses

4,957

7,658

19

9

29,311

16,074

109,936

89,034bonds payable

10,00010,000Long-term loans payable

42,32642,265

Deferred tax liabilities

20,526

19,811

175

180

Other provision
Other
Total current liabilities
Long-term liabilities

Provision for directors’ retirement benefits
Provision for environmental measuresNet defined benefit liabilities

852

798

10,053

9,636

Asset retirement obligations

3,500

4,092

Other

12,341

11,34099,77598,124

209,712

187,159

88,95588,955

Total noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Capital stock
Capital surplus

87,18187,147Retained earnings

285,561

274,996

Treasury stock(38,110)(4,410)423,588446,689

9,276

10,29265(5)46,89940,052(5,069)(4,694)

51,17245,643

977

852

6,087

6,522

481,826

499,707

691,538

686,867

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gain or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeSubscription rights to shares
Minority interests
Total net assets
Total liabilities and net assets

6

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated
Statements of Comprehensive Income
Quarterly Consolidated Statements of Income(Millions of yen)
Fiscal 2015 3Q(January 1, 2015 –September 30, 2015)

Net sales

391,905

Cost of sales

267,280

Gross profit

124,624

Selling, general and administrative expenses
Selling expenses

20,168General and administrative expenses

55,147

Total selling, general and administrative expenses

75,316

Operating income

49,308Non-operating income
Interest income

179

Dividends income

2,392

Equity in earnings of affiliates

2

Other, net

837

Total non-operating income

3,411

Non-operating expenses
Interest expenses

545

Other expenses

3,487

Total non-operating expenses

4,033

Ordinary income

48,686Extraordinary income
Gain on sales of tangible fixed assets

278

Total extraordinary income

278

Extraordinary loss
Loss on disposal of tangible fixed assets

267

Loss on valuation of investment securities

195

Total extraordinary loss463

7

(Millions of yen)
Fiscal 2015 3Q(January 1, 2015 –September 30, 2015)

Income before income taxes and minority interests in net
income of consolidated subsidiaries

48,501

Income taxes－current

16,987

Income taxes－deferred(884)

Total income taxes

16,102

Income before minority interests in net income of consolidatedsubsidiaries

32,398

Minority interests in income

540

Net income

31,8588Quarterly Consolidated Statements of Comprehensive Income(Millions of yen)
Fiscal 2015 3Q(January 1, 2015 –September 30, 2015)

Income before minority interests in net income ofconsolidated subsidiaries

32,398Other comprehensive income
Valuation difference on available-for-sale securities

1,015

Deferred gain or losses on hedges(71)

Foreign currency translation adjustments
Pension liability adjustments(6,847)374

Total other comprehensive income(5,528)

Quarterly comprehensive income

26,870Comprehensive income attributable to:
Owners of the parent

26,329Minority interests541

9

(3) Notes Regarding Quarterly Consolidated Financial Statements
Notes Regarding Going Concern Assumptions
None
Material Changes in Shareholders’ Equity
At the Board of Directors' Meeting held on June 24, 2015, Kuraray resolved to retire treasury stock and, on
June 30, 2015, retired 28,000,000 shares of treasury stock. As a result, capital surplus declined ¥106 million,retained earnings declined ¥32,948 million and treasury stock declined ¥33,054 million during the thirdquarter of the consolidated fiscal year ending December 31, 2015.
Segment and Other Information
Segment Information
Third Quarter of Fiscal 2015 (January 1, 2015 to September 30, 2015)
Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
Vinyl

Isoprene

AcetateOthersFunctional Fibers and Trading
Materials

1

Total

Total

TextilesElimination onConsolidated

Consolidation

Statements

2of Incomeand Corporate

3

Net Sales
Outside customers

184,356

24,11928,85826,13987,165 350,639

41,266 391,905－

391,905

Inter-segment sales

23,474

17,525

13,365

8,159

1,631

10,50274,657(74,657)－Total

207,831

41,64442,22334,29988,796 414,794

51,768 466,562(74,657)

391,905

Segment Income

41,375

5,480

4,214

2,996

2,756

1,731

(9,247)49,30864,155and transfers

56,82358,555

Notes:
1.

The “Other Business” category incorporates operations not included in business segments reported,
including activated carbon, environmental business and engineering.

2.

Elimination on Consolidation and Corporate is as follows: Included within negative segment income of¥9,247 million is the elimination of intersegment transactions of ¥1,298 million and corporate expensesof ¥10,545 million. Corporate expenses mainly comprise headquarters’ general and administrative
expenses and the submitting company’s basic research expenses not usually attributed to segments.

3.

Segment income is adjusted to agree with operating income in the consolidated statements of income.

10