Financial Report

The 1st Quarter of FY2019(From Apr. 1 to Jun. 30)

Jul. 31, 2019

Index

Business Environment
Summary and Topics
Statement of Income (Consolidated)• Total• Elastomer Business• Specialty Business• Others

Comparative Balance SheetForecast of Operating Performance for FY2019
1©ZEON CORPORATION. All rights reserved.

Business Environment
FY2018
1Q

AmountRate(JPY/$)
110.8(JPY/€)
123.6($/bbl)69(JPY/kl) 45,600
($/ｔ)
1,035
($/ｔ)
1,380
($/ｔ)
1,514

108.1
129.9
74
48,700
1,593
1,390
1,399

2.7-6.3-5-3,100-558-10115

2 %
-5 %
-7 %
-6 %-35 %-1 %8 %Ave. for 3 mo.

Exchange rate
Exchange rate
Crude Oil
Naphtha price
Asian Butadiene
Isoprene
Natural rubber

Increase/Decrease

FY2019
1Q

2©ZEON CORPORATION. All rights reserved.

Summary and Topics
Elastomer Business●Rubbers

Sluggish in domestic sales, export and overseas subsidiaries due to the global
economic slowdown from US-China trade disputes.
Operating Income was lower YoY due to fluctuation of raw material price.

●Latexes

Net sales and operating income were almost the same YoY, due to the steadydomestic sales of resin modifier.

●Chemicals

Net sales in domestic and export was lower YoY due to the regular plantmaintenance in Mizushima.
Operating income increased due to the cost reductions.

Specialty Materials Business●Specialty Plastics

Steady both in optical resin and film. Net sales and operating income
increased YoY.

●Specialty Chemicals

Net sales in domestic and export of Specialty Chemicals Unit was lower
YoY due to the regular plant maintenance in Mizushima.
Net sales and operating income in this business segment total increased
YoY due to the steady sales in Electronic Materials, Toner and Batteriy
Materials.
©ZEON CORPORATION. All rights reserved.

3Statement of Income (Consolidated) for 3 Months ended Mar. 31, 2020
(Unit : JPY100m)

Net Sales
Operating income
Non-operating income & expenses
Ordinary income
Profit or loss on extraordinary item
Income before income taxes
Net income

Increase/Decrease

FY20191Q

FY2018
1Q

Amount824
83
387-18561

837
851297-295
67-13-1-9-10
1-9-6Rate-1 %-2 %-72 %-10 %- %-10 %-9 %Comparative analysis
Net sales: -1.3 billion yen, Operating income: -0.1 billion yen

4©ZEON CORPORATION. All rights reserved.

Statement of Income (Consolidated) for 3 Months ended Mar. 31, 2020
(Unit : JPY100m)

Net Sales－13

Operating Income

ー1824

85

FY2018FY2019FY2018FY2019

1Q

1Q

1Q

1Q

837

＜Net Sales＞

Elastomers
Specialty Materials
Others・Eliminations-38+27- 183＜Operating income＞
Elastomers
Specialty Materials
Others-16+17- 2

 Elastomers:
Net sales: Decreased, Operating income: Decreased
 Specialty Materials: Net sales: Increased, Operating income: Increased
5©ZEON CORPORATION. All rights reserved.

Statement of Income (Consolidated) for 3 Months ended Mar. 31, 2020

Elastomer Business

Sales volume (thousand tons)
Rubbers
Latexes
Chemicals
Net sales
Rubbers
Latexes
Chemicals
Others / Eliminations
Operating income
Opeating income ratio(Unit : JPY100m)

Increase/Decrease

FY20191Q

FY2018
1Q

Amount

147
85
30
32471
328
45
92
735

159
91
31
37509
363
44
98
451

-12-6-1-5-38-36
0-63-16

7.4%

10.1%

-2.6 pt

Rate-8 %-6 %-4 %-14 %-8 %-10 %1 %-6 %78 %-32 % Rubbers: Net Sales: Decreased, Operating income: Decreased
10% decreased in net sales due to the sluggish business in automobile andgeneral industry.
 Chemicals: Net Sales: Decreased, Operating income: Increased
Sales volume decreased 6% due to the plant shut down, but the profit increased
due to the cost reduction, etc.
6©ZEON CORPORATION. All rights reserved.

Statement of Income (Consolidated) for 3 Months ended Mar. 31, 2020

Elastomer Business
売上高(Unit : JPY100m)

Net Sales

Operating Income－16471

51

FY2018FY2019FY2018FY20191Q1Q1Q

1Q

509

－38

35

 Net Sales Variance by business unit
 Rubbers: -36: Sluggish in domestic, export and oversea subsidiaries
 Latexes:+0
 Chemicals: - 6: Production adjustment by regular plant maintenance Others:+3
 Operating Income Variance YoY
 Quantity: -9: Sales volume decreases in Rubbers and Chemicals
 Price:-9: Selling prices drop by formula Exchange rate: +1: JPY 108.1/ $ ⇒ JPY 110.8/ $ Raw materials prices: -2: Impact of the high price raw material inventory from last fiscal year
 SG&A:+3: Decrease of freight and storage fee due to the sales volume decrease
7©ZEON CORPORATION. All rights reserved.

Statement of Income (Consolidated) for 3 Months ended Mar. 31, 2020
(Unit : JPY100m)

Specialty Materials Business
Increase/Decrease

FY20191Q

FY2018
1Q

AmountNet sales
Specialty Plastics
Specialty Chemicals
Medical Devices, etc.
Operating income

223
14267
1451

195
11666
14342726
1117

Opeating income ratio

22.7%

17.4%

5.3 ptRate

14 %
23 %
1 %
4 %
49 %

 Specialty Plastics: Net Sales: Increased, Operating income: Increased• 2.6 billion yen increased in sales due to the steady sales in optical resins andoptical films. Increased about 30% in net sales of optical films.
 Specialty Chemicals: Net Sales: Increased, Operating income: Increased• Specialty Chemical Unit: decreased in sales volume due to the regular plantmaintenance.
• Electronic Materials and Toner are steady.
• Sales of Energy Materials marks double-digit growth.
• Sales grows 1% in this segment total.
8©ZEON CORPORATION. All rights reserved.

Statement of Income (Consolidated) for 3 Months ended Mar. 31, 2020
(Unit : JPY100m)

Specialty Materials Business
Operating IncomeNet Sales
売上高195+2722334+1751

FY2018FY2019FY2018FY2019

1Q

1Q

1Q

1Q

 Net Sales Variance by business unit Sp. Plastics: +26: Steady in optical resins and optical films
 Sp. Chemicals: + 1: Steady in Electronic Materials, Toner and Battery Materials
 Medical etc.:+1
 Operating Income Variance YoY
 Quantity: +15: Sales volume increased in optical films and energy materials
 Price:- 5: Selling prices of optical film market is weakened Exchange rate: +1: JPY 108.1/ $ ⇒ JPY 110.8/ $ Raw materials prices: +10: Increase of the optical film production
 SG&A:-4: Increase of the freight due to the sales growth of the optical films
9©ZEON CORPORATION. All rights reserved.

Statement of Income (Consolidated) for 3 Months ended Mar. 31, 2020
(Unit : JPY100m)

Others

Net sales
Operating income
Opeating income ratio

Increase/Decrease

FY20191Q

FY2018
1Q

Amount

136
4138
6-3-3

2.9%

4.6%

-1.8 pt

Rate-2 %-39 % Others: Net Sales: Decreased, Operating income: Decreased
Sluggish in sales of Trading and RIM business.

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Comparative Balance Sheets (Consolidated)(Unit : JPY100m)

AssetsCurrent assets
Cash and bank deposits
Notes and accounts receivable- trade
Accounts receivable- other
Inventories
Other current assets
Fixed assets
Property, Plant and Equipment
Intangible assets
Investment securities
Other fixed assets
Total assets

Liabilities and Net Assets
E/Jun.
2019

E/Mar.
2019

Increase /Decrease

2,147
373
758
255
685
76
1,978
1,054
31783
110
4,126

2,272
375
784
357
711
46
1,977
1,023
32
811
1114,249-125-2-25-102-26
30
131-1-28-1-124

Capital expenditures
Depreciation & amortization
Other factors

55-40
15

Fixed assets

30

E/Jun.
2019

E/Mar.
2019

Increase /Decrease

Current liabilities
Notes and account payable- trade
Short-term interest-bearing debt
Other current liabilities
Long-term Liabilities
Long-term interest-bearing debt
Other long-term liabilities
Total net assets
Equity capital
Other net assets

1,148
707
121
320
365
120
245
2,613
2,582
31

1,300
824
121355
357
120
237
2,592
2,562
30

-152-117
0-357072120
1

Total Liabilities and net assets

4,126

4,249-124

Total interest-bearing debt
Equity ratio（％）
D/E ratio

241
62.6
0.09

241
60.3
0.09

0
2.30.00◆Cash flows
19Q1

18Q1

Cash flows from operating activities

6340

Cash flows from investing activities
Free cash flows
Cash flows from financing activities
Net increase (decrease) in cash and equivalents-50
13-20-7-38
2-127
-125

11
©ZEON CORPORATION. All rights reserved.

Forecast of Operating Performance for FY2019(Unit : JPY100m)

Net sales
Elastomer BusinessSpecialty Materials BusinessOthers
Eliminations
Operating income
Operating income ratio

Elastomer BusinessSpecialty Materials Business
OthersNon-operating income & expenses
Ordinary income
Net income
Exchange rate
Exchange rate
Naphtha price
Asian Butadiene price(JPY/$)(JPY/€)(JPY/kl)(USD/t)Increase/Decrease

FY2019FY2018

3,300
1,900
860
565
-25
300

3,375
1,981
851
567
-25
331

-75
-81
9-2-0-31

-2 %
-4 %
1 %
-0 %

144
170
-14
20
320
220

177
161
-732363185-33
9-7-12-4335-19 %5 %- %-37 %
-12 %
19 %

105.0
120.039,000
1,250

110.7
128.7
49,5001,372-5.7-8.7-10,500-122-5 %
-7 %
-21 %
-9 %

9.1%

9.8%

Amount-0.7 pt

Rate-9 %The Company is predicting no change in the forecast disclosed as of Apr. 26, 2019.
12©ZEON CORPORATION. All rights reserved.

Next Announcement of Financial Statements

The second quarterof FY2019

Oct. 31, 2019
Subject to change without notice

Any forward-looking statements in this document are based upon information available to the company on the date of this release. These forward-lookingstatements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the company's operations and business environment
which may cause the company's actual results to be materially different from any future results, expressed or implied, in these forward-looking statements.
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.
13©ZEON CORPORATION. All rights reserved.

Reference: Consolidated Statement of Income (Quarterly)
2018

2019

Q1

Q2

Q3

Q4

Q1

159

149

145

164

Rubbers91

8480

Latexes

3129

Chemicals

37(Unit : JPY100m)

Q4→Q1
AmountRate

147-17-10%99

85-14-14%30

32

30-2-6%

3534

32

32

-1-2%

837

854

855

829

824-5-1%

Elastomer Business

509

493

490

489

471

-18-4%

Rubbers

363

340

339

345

328

-17-5%

Latexes

4451

48

45

45

-0-1%

Chemicals

98

96

95

94

92-2-2%Others / Eliminations

46757239%

Specialty Materials Biz.

195

229

223

205

223

189%

Sp. Chemicals

66

68

70

72

67-5-7%

Sp. Plastics

116

148

138

117

142

2521%

Medical, etc.

14121516

14-2-10%

Others / Eliminations

132

132

143

136

131-5-4%

85

95

90

61

83

2236%

10%

11%

11%

7%

10%

Elastomer Business

514449

33

35

26%

Specialty Materials Biz.

3453

42

32

51

1960%

Ohters

-1-2-0-3-2

1-

Sales volume (thousand tons)

Net sales

Operating income
Operating income ratio

3 pt

14
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Reference: Capital Expenditures, Depreciation & Amortization
and R&D Expenses(Unit : JPY100m)

2018 Actl.
146

2018 Actl.
188

2019
Forecast
330

2019
Forecast180

2018 Actl.
165
2019
Forecast
16515©ZEON CORPORATION. All rights reserved.