Mid-term Management Plan

ZEON CORPORATION
Kimiaki TanakaPresident

2018年4月27日
October 31, 2019

Current Status

Contents

1. Overall Progress of Phase III
2. Business Topics

2©ZEON CORPORATION. All rights reserved.

Sphere of New Mid-term Management Plan

Corporate Philosophy
Zeon CSR Policy
Enterprise Blueprint for 2020

Zeon makes the Future Today through the Power of Chemistry.

VisionZeon will continue to contribute to the realization of customer dreams
and a prosperous society through employees’ individual growth.

Key Sense of Value
Speed

SZ-20(2011–13)

DialogueSocialcontribution

Phase II(2014–16)

Treasured Zeon
Characteristics
Mutual trust and Confidence
among Zeon Members

Phase III(2017–20)
3©ZEON CORPORATION. All rights reserved.

Corporate Philosophy and CSR Policy

Corporate Philosophy
Zeon is contributing to the preservation of the Earthand the prosperity of the human race.
Zeon, with its name from the words signifying the Earth (geo) and eternity (eon), iscommitted to responsible stewardship of the global environment as the foundation forhuman prosperity through the development and application of unique, world-leading
technologies.

Zeon CSR Policy• We will ensure compliance and meet society’s needs for safety andsecurity• We will contribute to sustainably developing society and protecting theglobal environment through our corporate activities• We will ensure that each and every Zeon person is aware of CSR andacts accordingly
4©ZEON CORPORATION. All rights reserved.

SZ-20 Phase III

Enterprise Blueprint for 2020
Zeon makes the Future Today
through the Power of Chemistry.
Zeon will continue to contribute to the realization of customer dreams
and a prosperous society through employees’ individual growth.

Targeting consolidated net sales ofover 500 billion yen in FY2020

5©ZEON CORPORATION. All rights reserved.

SZ-20 Phase III
SZ-20 Phase III: Groupwide Strategy

Growth

1. Reinforce the combined strengths of the Zeon Group.
Explore ways of going beyond boundaries andcollaborating with external players to provide
solutions globally as a contribution to society
2. Accelerate the pace of new business creation andproduct development in key development areas:
global environment, smart devices, and health and living.

Culture3. Cultivate a corporate culture that places value on
taking proactive action by harnessing diverse ideasand trying them.

6©ZEON CORPORATION. All rights reserved.

Zeon Group Financial Results
Due to the global economic slowdown, sales was flat and operating income (OI) was lowering in 2Q.
• Elastomers: Decline in sales and OI due to slowdown in automotive and industrial use• Specialty Materials: Record sales and OI due to robust sales in COP, optical film, and battery materials(Billions of yen)
Net sales

Second Quarter Results

500

Net sales

OI50

OIResults by Fiscal Year50050

Net sales
400

40400

40

Other andEliminations
SpecialtyMaterials

300

30300

30200

2020020Elastomers

Operating income

1001010010consolidated
basis
Specialty
Materials
Elastomers

0002016
Results

Phase II
JPY/USD

107.7

SZ-20 Phase III
111.2

109.5

109.2

2017
Results

108.9

2019
2020 PlanForecast(announced)

SZ-20 Phase III

Phase II
JPY/USD

2018
Results

111.2©ZEON CORPORATION. All rights reserved.

110.7

105.00ROE
No more impairment losses at the Singapore subsidiary. Expect ROE torecover to 8% or higher in FY2019. Aiming to recover to SZ-20 Phase II levels.

Forecast

SZ-20 Phase II

SZ-20 Phase III
8©ZEON CORPORATION. All rights reserved.

Shareholder Returns
Offering stable and consistent dividend payments to shareholders;
dividends increase for tenth consecutive fiscal year(Yen/Share)

Dividend per Share

予想Forecast

SZ-20

SZ-20 Phase II

SZ-20 Phase III
9©ZEON CORPORATION. All rights reserved.

Contents

1. Overall Progress of Phase III
2. Business Topics① Elastomer Business Investments
 Topics: Specialty rubbers, S-SBR② Specialty Materials Business Investments
 Topics: COP, energy materials, electronicmaterials, Medical devices③ Others
 CSR

10©ZEON CORPORATION. All rights reserved.

Phase III: Strategy by Business Segment

Strategy by Business Segment

Elastomer Business• Reinforce competitive businesses by responding globally togrowth markets and raising cost effectiveness.
• Explore new opportunities and achieve growth based on theZeon’s reputation in the market and relationships with customers

Specialty Materials Business• Expand business in step with the speed of market growth andtechnological progress through focused investment of resources
and stronger collaboration with outside players.

11©ZEON CORPORATION. All rights reserved.

Business Topics: Elastomer Business Investments

 Specialty rubbers(HNBR, acrylic rubber) Topics

 Specialty rubbers
 S-SBR
Strategy of Elastomer Business• Reinforce competitive businesses by responding globallyto growth markets and raising cost effectiveness.
• Explore new opportunities and achieve growth based on
the Zeon’s reputation in the market and relationships
with customers
12©ZEON CORPORATION. All rights reserved.

Investments
Drying facility for Zetpol® specialty
cross-linked type at Kawasaki plant(Apr. 2018 press released)

CapacityCompletionx1.5 ofdry products

Sept. 2019

5,000t/Y

Spring 2020

Acrylic rubber (ACM) manufacturing
plant in Thailand(Aug. 2018 press released)t/Y

ACM Production Capacity

25,00020,00015,00010,0005,000
0Construction of ACM plant in Thailand

12,50017,000before 2013 2014～2019
Kawasaki+US+Tohpe

22,0002020+Thailand
13©ZEON CORPORATION. All rights reserved.

Topics: Specialty Rubbers
Unit sales of internal combustion engine vehicles to remain constantin the near future⇒ We support the industry with a stable supply of specialty rubberZetpol®

Light Vehicle Sales Forecast

M. units120

 Steady growth in specialty crosslinked type100Acrylic Rubber80

 Currently producing 17,000 tons/year
at 3 bases in Japan and the US Spring 2020: a new plant in Thailand(5,000 tons/year) to be completed60
40

Fuel cell

ElectricHybrid (with IC)

'30

'29

'28

'27

'26

'25

'24

'23

'22

'21

'20

'19'18(started in 2017)
 Actively engaged in customer supportand related sales of Zeon’s rubbers'170'16

Asia Technical Support Lab.
'15

20

IC Only(IC=Internal combustion engine)“Source：LMC Automotive’s quarterly Global Hybrid and EV Forecast (published in December 2018)14©ZEON CORPORATION. All rights reserved.

Topics: S-SBR
Leveraging synergistic effects in technology and production tobecome the global leader
By combining the polymer modification and production technologies of Zeon andSumitomo Chemical, we will enhance the fuel efficiency and abrasion resistance oftires.

S-SBR Sales

Synergy Polymer
Good

Under development for launch in 2021

Sales volume index
FY2017 as 100

Abrasion resistancePrototype 2
Prototype 1
Reference
product 1

Reference product 2

Fuel efficiency

Good15©ZEON CORPORATION. All rights reserved.

Business Topics: Specialty Materials BusinessInvestments
Specialty plastics (COP, Optical films）

Topics
Specialty plastics
Energy materials
Electronic materials
Medical devices
Strategy of Specialty Materials Biz.
•

Expand business in step with the speed of market
growth and technological progress through focusedinvestment of resources and stronger collaboration withoutside players.
16©ZEON CORPORATION. All rights reserved.

Investments
Capacity
Expand production capacity for extruded
film in Takaoka(Oct.2018 press released)

New manufacturing line of retardation
films for large-screen TVs in Tsuruga(Oct.2018 press released)

Expand COP production capacity in(Sep.2019 press released)
Mizushima
Production capacity ofCOP and Film-Completion
Spring 2020 (plan)

operation starts

50 million
m2/Y

Apr. 2020 (plan)

4,600t/Y

Jul. 2021

operation starts

41,600t/Y

17©ZEON CORPORATION. All rights reserved.

Strengths of Zeon’s Optical Film Business
Raw Materials
 Dicyclopentadiene produced byZeon’s own GPI Process

Polymer itself
 Resistant to heat and moisture Easy to process

Processing Technology
 Melt extrusion and film stretching

Integrated Production
 Integrated production of polymer design,
film manufacturing and processing
 Market needs are reflected in polymer
design18©ZEON CORPORATION. All rights reserved.

Topics: Specialty Plastics Business
1. T62R selected for use in automotive sensing cameras
Forwardmonitoring
Back monitor
Side monitor

Front monitor

Image sensing
Interior
monitoring T62R is a new grade featuring
low deformation and color change underhigh temperatures Selected for use in automotive sensing
camerasSecure field of view
ZEONEX® has a proven track record

2. Presented the advantages of using the COP for medical andpharmaceutical applications (pre-filled syringes)
 Presented the characteristic of COP as plastic for pre-filled syringes tothe U.S. FDA (May 2019)
 Delivered a presentation at PDA (an academic conference on prefilled syringes) (Sweden, October 2019)
 Transparency, high purity, low water absorption, and chemical stability
equivalent to glass
 Higher mechanical strength and extremely low protein adsorption andaggregation compared to glass©ZEON CORPORATION. All rights reserved.

Pre-filled syringe19Topics: Battery Materials
Continues to grow beyond the market growth
Sales Forecast for Battery Materials
800

Plan計画700

Result
実績600Market of lithium-ion battery
リチウムイオン電池市場規模

Characteristics of Zeon Products
Anode binder

Cathode water-based binder

Reducing electrode swelling
during charge/discharge cycle.
 Durability and safety

Preventing side reaction inside
batteries by covering active
materials
 Durability

Functional layer binder

500

The demand is growing esp. in
EV market since the launch in2015.
 Safety

Phase III Plan

400
300

Sealant
Preventing electrolyte leaks
 Durability

Functional layer (heat-resistance separator)
GasketCathode active
material

Sealant200

Conductive
additive

Binder / slurry
for functional layer
Active materials

Separator

Anode activematerial

Active materials

100
0'13'14

'15

'16

'17

'18

'19

Aluminum
foil'20Copper
foil

Index: FY2013 = 100
AnodeSource of market data: B3, Inc. report

Cathode binder©ZEON CORPORATION. All rights reserved.

CathodeAnode binder

20Topics: Electronic Materials
Launched a positive electron beam photoresist for next-generationelectronic components
Characteristics of ZEP530A
 Suitable for compound semiconductors (high-frequency,high-voltage applications) Main chain scission-type positive photoresist
 Ultra-fine resolution (hp 17 nm L/S) Superior dry etch resistance and wide processing margin

Sales of E-Beam Resists

Sales (relative value)

2.5

Top-view scanning electron microscopic image

CAGR: 11%
(FY2015 to FY2019)

2.0
1.5
1.0
0.5
0.0
2015

2016

2017

2018

2019
2020
(Forecast) (Plan)

2025(Plan)

Applications in compound semiconductorprocessing• 5G semiconductors (high-frequencyapplication)• Power semiconductors (high-voltageapplication)*Value relative to FY2015 sales
21©ZEON CORPORATION. All rights reserved.

Topics: Medical devices
Expanding business by new products launch Cardiovascular Business: FFR devices with
optical fiber sensors (launched in 2016) Endoscopic Business:• Balloon catheter for extracting biliary stones,
Biliary stents (launched in 2018)• Hemostatic forceps, Clips (plan to launch 4Q-2019)
250
200
150

Sales Forecast for medical devices
消化器CardiovascularEndoscopic
循環器

Balloon catheterfor extracting
biliary stones
Biliary stents

100
50
0

Hemostaticforceps'17'18'19'20 Index: Sales (actual) for FY2017 = 100.
©ZEON CORPORATION. All rights reserved.

Clips
22

CSR
Signing the UN Global Compact
Zeon supports the 10 Principlesof the UN Global Compact andrespects global standards inpromoting corporate activities
to realize a sustainable society.

Continuing voluntary activities in the Tohoku region
In the seven years since October
2012, Zeon has organized 66
activities in which a total of 520
employees have participated.
The focus has recently turned tosupporting agriculture andfisheries.

Mizushima Plant dormitory in Okayama
constructed with the CLT method
The equivalent of 4.9
million m2 of thinned
wood from Okayama
Prefecture was used.

LNES card-type solar lamp• Used crowdfunding• Held an event to coincidewith the Winter Illumination,
held from November 1 to14 at Tokyo Tower

23©ZEON CORPORATION. All rights reserved.

SpeedDialogue
SocialContribution
Mutual trust and confidence among Zeon members
24

Zeon’s plans, forecasts, and other data appearing in this presentation were calculated
based on information which was currently available and therefore includes risks anduncertainties. Actual results may differ depending on various factors.
This document is a translation of the original Japanese-language and is provided for convenience only.
In all cases, the original Japanese version shall take precedence.
25