Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2018
<Under Japanese GAAP>
February 5, 2018
These financial statements have been prepared for reference only in accordance with accounting principles and practices generally accepted in Japan.

NAGASE & CO., LTD.
Stock exchange listing: Tokyo (First Section)
Code number:8012
URL (https: //www.nagase.co.jp/english/)Representative:
Kenji Asakura, Representative Director and President
Contact:
Akira Takami, General Manager, Accounting Division
TEL: +81-3-3665-3103
Filing of quarterly report (scheduled): February 8, 2018
Start of distribution of dividends (scheduled): Supplementary documents of quarterly financial results: Yes
Quarterly investors' meeting: No(Note: Amounts have been rounded down to the nearest million yen.)

1. Consolidated Results for the Third Quarter of the Fiscal Year Ending March 31, 2018
(April 1, 2017 to December 31, 2017)(1) Consolidated Operating Results(Percentages represent changes compared with same period of the previous fiscal year.)Net sales

Operating income

Profit attributable toowners of the parent

Ordinary income

For the third quarter ended
Millions of yen% Millions of yen% Millions of yen% Millions of yen
December 31, 2017593,564
10.5
20,31974.2
22,11973.6
14,637
December 31, 2016
537,090(5.2)
11,661 (21.3)
12,738 (17.2)
8,853(Notes) Comprehensive income
Third quarter ended December 31, 2017: ¥27,104 million (39.5%)

%

65.3
(7.5)

Third quarter ended December 31, 2016: ¥19,426 million (131.6%)
Earnings per share
For the third quarter ended
December 31, 2017
December 31, 2016

Yen
116.06
69.90

Earnings per share (diluted)
Yen−−(2) Consolidated Financial Position
Total assets
Millions of yen

December 31, 2017
March 31, 2017
(Reference) Equity capital

Net assets

Shareholders’equity ratio

Millions of yen

594,568
317,093
530,775
295,198
As of December 31, 2017: ¥311,914 million
As of March 31, 2017: ¥ 290,217 million

Net assets per share
%

Yen

52.5
54.7

2,473.31
2,301.10

2. Dividends
Annual Dividends per Share
3Q
Fiscal year end

1Q
2Q
For the year ended (or ending)
Yen
YenMarch 2017
16.00−
March 2018
17.00−
March 2018 (estimate)(Note) Revisions to the latest projected dividends: No

Annual

Yen

Yen

Yen

−
−

17.00

33.00

18.00

35.00

3. Projected Consolidated Results for the Fiscal Year Ending March 31, 2018
(April 1, 2017 to March 31, 2018)(Percentages represent changes compared with the corresponding periods of the previous fiscal year.)Net sales
Millions of yen

Full fiscal year

771,000

Operating income% Millions of yen

6.7

23,500

Profit attributable toowners of the parent

Ordinary income% Millions of yen

56.3

25,500% Millions of yen

55.8

16,000Earnings per
share

%

Yen

54.9

126.87(Note) Revisions to the latest projected consolidated results: No* Notes(1) Changes in major subsidiaries during the period (changes in specified subsidiaries accompanying changes in thescope of consolidation): Yes
Excluded: ― (Company name:)
New: 1 (Company name: INKRON LIMITED)(Note)
Please refer to “2. Quarterly Consolidated Financial Statements and Notes (3) Notes related to
Quarterly Consolidated Financial Statements (Changes in Significant Subsidiaries during the Period）.”
on page 10 of this document.
(2) Application of special accounting methods to the preparation of quarterly financial statements: No(3) Changes of accounting principles, changes in accounting estimates, and restatement of prior period financial
statements after error correctionsi.
Changes in accordance with revisions to accounting and other standards: No
ii. Changes in items other than (i) above: Noiii. Changes in accounting estimates: No
iv. Restatement of prior period financial statements after error corrections: No(4) Number of shares issued and outstanding (common stock)i.
Number of shares issued and outstanding as of the fiscal period end (including treasury stock)
December 31, 2017
127,408,285 shares March 31,2017
127,408,285 shares
ii.

iii.

Number of treasury stock as of the fiscal period end
December 31, 2017
1,295,818 shares

March 31, 2017

Average number of shares during the period
December 31, 2017
126,116,626 shares

December 31, 2016

1,287,366 shares

126,667,603 shares* Quarterly financial statements are not subject to quarterly review.
* Cautionary Statement with Respect to Forecasts of Consolidated Business Results
The earnings forecasts presented in this document are based upon currently available information and assumptions
deemed rational. A variety of factors could cause actual results to differ materially from forecasts.
Please refer to “1. Qualitative Information (3) Qualitative Information related to Earnings Forecasts” on page 4 of thisdocument.

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2018
Attachments
1. Qualitative Information

2(1) Business Performance2(2) Financial Position

4(3) Qualitative Information related to Earnings 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 of Comprehensive Income

7

Quarterly Consolidated Statements of Income
Nine-month periods ended December 31, 2017 and 20167

Quarterly Consolidated Statements of Comprehensive Income
Nine-month periods ended December 31, 2017 and 2016(3) Notes related to Quarterly Consolidated Financial Statements

9(Assumption for Going Concern)

9(Segment Information, etc.)9(Significant Fluctuations in Shareholders’ Equity)

10(Changes in Significant Subsidiaries during the Period)

10

3. Supplementary Information
(1)

8

10

Overseas Sales

10

－

1 －

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2018

1. Qualitative Information(1) Business Performancea. General Summary of Results
The Japanese economy continued to recover during the cumulative consolidated third quarter as corporate earnings rallied,
while improving employment and payrolls supported a modest recovery of personal consumption. The global economy
maintained a gradual recovery, with strong performance in the economies of China and the emerging economies, a moderate
expansion in business conditions in the United States, and other positive factors.
In this environment, the Company recorded domestic sales of ¥297.06 billion (+8.1% year on year) for the cumulative
consolidated third quarter. Overseas sales, impacted positively by the relatively weak yen compared to the year-ago period,rose to ¥296.5 billion (+13.0%). In total, the Company recorded ¥593.56 billion in net sales, an all-time record and a 10.5%
improvement over the first nine months in the prior fiscal year.
The Company recorded gross profit of ¥77.9 billion, an increase of 14.2%, in conjunction with higher sales. Operating income
amounted to ¥20.31 billion, an increase of 74.2% year on year. This increase was mainly due to a decrease in retirement benefit
expense in connection with the amortization of actuarial differences. Ordinary income amounted to ¥22.11 billion (+73.6%),
while profit attributable to owners of the parent amounted to ¥14.63 billion (+65.3%). All profit indicators marked record highs
for any cumulative consolidated third quarter in the history of the Company.

b. Segment Summary
Functional Materials
The Functional Materials segment recorded higher sales in both domestic and overseas markets.
The Performance Chemicals business recorded significantly higher sales due to improved sales of coating raw materials andurethane materials, spurred by strong automotive production in Japan and overseas. Another contributing factor was a jump insales associated with the Company’s acquisition of a distributor in the United States.
The Speciality Chemicals business recorded higher sales overall. Sales of fluorochemicals, electronics chemicals, and raw
materials for industrial oil solutions were higher for the semiconductor and other electronics industry in Japan. Overseas, sales
were higher for electronics chemicals and other products.
As a result, sales for the segment amounted to ¥130.21 billion, which was a ¥16.55 billion (+14.6%) increase year on year.
Segment operating income grew ¥980 million (+33.3%), reaching ¥3.95 billion for the consolidated third quarter.

Advanced Materials & Processing
The Advanced Materials & Processing segment recorded higher sales in both domestic and overseas markets.
The Colors & Advanced Processing business recorded higher sales as a whole, driven by growth in plastic resins for industrial
and packaging applications, dyes/additives, and digital print processing materials in Japan. Overseas, strong sales of printrelated business products contributed to higher overall performance.
The Polymer Global Account business mainly sells plastics to the office equipment, appliance, and video game device markets.
The sales of those business were higher overall, driven by growth in Japan, Greater China, and ASEAN.
As a result, sales for the segment amounted to ¥201.21 billion, which was a ¥19.86 billion (+11.0%) increase compared to the
cumulative consolidated third quarter of the prior fiscal year. Segment operating income grew ¥1.55 billion (+38.7%), reaching¥5.58 billion for the cumulative consolidated third quarter.

－2 －NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2018

Electronics
The Electronics segment recorded higher sales in Japan and overseas.
The Electronic Chemicals business recorded significantly higher sales due to growth in photolithography material andequipment-related sales, as well as strong performance of formulated epoxy resins for the electric and electronics industries.
The Electronic Materials business recorded lower sales compared to the same period in the prior fiscal year due to lower
performance in processed materials caused by smartphone model changeovers.
As a result, sales for the segment amounted to ¥100.73 billion, which was a ¥4.46 billion (+4.6%) increase. Segment operating
income grew ¥2.61 billion (+55.9%) year on year, reaching ¥7.28 billion for the cumulative consolidated third quarter.

Automotive & Energy
The Automotive Solutions business recorded higher sales, driven by strong performance in our resins business in Japan,
Greater China, and ASEAN.
As a result, sales for the segment amounted to ¥96.47 billion, which was a ¥13.93 billion (+16.9%) increase compared to the
cumulative consolidated third quarter of the prior fiscal year. Segment operating income grew ¥1.16 billiion (+121.1%),
reaching ¥2.12 billion for the cumulative consolidated third quarter.

Life & Healthcare
The Life & Healthcare segment recorded net sales slightly higher compared to the same period in the prior fiscal year. While
sales were level domestically, sales increased overseas.
Sales of TREHA™ and other products to food ingredient makers in our Life & Healthcare Products business were level, whilesales in Europe and other regions overseas grew. Although the business recorded lower sales of AA2G™ to major customers inthe skin care and toiletries field overseas, sales to major customers in Japan were higher. In the medical and pharmaceuticalfield, sales of pharmaceutical raw materials and intermediates and medical materials were level with the year-ago period, whilesales of pharmaceutical business products were lower. As a result, the business recorded higher sales compared to the prior year.
The Beauty Care Products business, which includes sales of cosmetics and health foods, recorded lower sales, driven down due
to weak performance across all product categories.
As a result, sales for the segment amounted to ¥64.48 billion, which was a ¥1.68 billion (+2.7%) increase compared to the
cumulative consolidated third quarter of the prior fiscal year. Segment operating income grew ¥720 million (+25.4%), reaching¥3.56 billion for the cumulative consolidated third quarter.

Other
No special matters to disclose.

－

3 －NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2018

(2) Financial Position
As of the end of the consolidated third quarter, current assets amounted to ¥367.72 billion. This represents an increase of ¥46.5
billion compared to the end of the prior consolidated fiscal year. This increase was mainly due to increases in accounts
receivable and inventories. Non-current assets amounted to ¥226.84 billion, up ¥17.28 billion. This increase was mainly due toincreases in fair values of shares retained and goodwill recorded by the Company during the period. As a result of these various
factors, total assets increased ¥63.79 billion to ¥594.56 billion as of the end of the consolidated third quarter.
Liabilities amounted to ¥277.47 billion, a ¥41.89 billion increase compared to the end of the prior consolidated fiscal year. This
increase was mainly due to increases in accounts payable and loans, which exceeded redemptions of bonds.
Net assets amounted to ¥317.09 billion, up ¥21.89 billion. This increase was mainly due to ¥14.63 billion in profit attributableto owners of the parent and an increase in net unrealized holding gains on securities.
As a result, the Company recorded a shareholders’ equity ratio of 52.5%, down 2.2 points compared to the end of the priorconsolidated fiscal year.

(3) Qualitative Information related to Earnings Forecasts
The Company has made no changes to its full-year consolidated earnings forecasts announced on November 2, 2017.

－

4 －NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2018

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheets

Prior Consolidated Fiscal Year
(March 31, 2017)
ASSETS
Current assets
Cash and time deposits
Notes and accounts receivable
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Less allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Intangible fixed assets
Goodwill
Technology-based assets
Other
Total intangible fixed assets
Investments and other assets
Investments in securities
Long-term loans receivable
Deferred tax assets
Other
Less allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets－

5 －(Millions of yen)
Third Quarter, Current
Consolidated Fiscal Year
(December 31, 2017)39,830206,846
58,162
1,309
3,648
2,375
9,681
(638)
321,215

45,771
238,277
66,733
2,040
4,364
2,271
8,939
(679)
367,72167,61969,52523,034
13,791
3,916
40,742

26,535
12,6093,392
42,537

94,548
482
1,524
4,931
(289)
101,197
209,559
530,775

108,427
133
1,389
5,084
(250)
114,784
226,847
594,568NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2018

Prior Consolidated Fiscal Year
(March 31, 2017)
LIABILITIESCurrent liabilities
Notes and accounts payable
Short-term loans
Current portion of long-term loans
Commercial paper
Current portion of bonds
Accrued income taxes
Deferred tax liabilities
Accrued bonuses for employees
Accrued bonuses for directors
Other
Total current liabilities
Long-term liabilities
Bonds
Long-term loans
Deferred tax liabilities
Net defined benefit liability
Other
Total long-term liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income (loss)
Net unrealized holding gain on securities
Deferred gain (loss) on hedges
Translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets－

6 －(Millions of yen)
Third Quarter, Current
Consolidated Fiscal Year
(December 31, 2017)

102,076
28,162
3,522
10,000
1,849
37
4,512
171
16,161
166,494

123,650
36,098774
10,000
1,839
42
3,114
171
18,775
194,466

20,00020,07813,503
14,625874
69,082
235,576

20,00028,60018,92914,606872
83,008277,475

9,699
11,590219,721(1,337)
239,674

9,699
11,174230,063(1,353)
249,583

47,683
4
3,129
(274)
50,542
4,981
295,198
530,775

57,025
(3)
5,420
(111)
62,331
5,178
317,093594,568NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2018

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive
Income(Quarterly Consolidated Statements of Income)Nine-month periods ended December 31, 2017 and 2016
(Millions of yen)
Nine-month period ended
December 31, 2016

Nine-month period ended
December 31, 2017

(April 1, 2016 -December 31, 2016)(April 1, 2017 - December 31, 2017)

537,090
468,869
68,22056,55911,661

593,564
515,654
77,90957,59020,319

142
1,442
228
458
2,272

152
1,479
203
690
114
311
2,951

767
27
44
355
1,195
12,738

900
250
1,151
22,119

226
495
76
798

28
8
229
267

40
169
52
25
92
291
60
731
12,804
3,168
551
3,720
9,084
230
8,853

24
66
259
3
0
457
294
1,105
21,280
4,748
1,588
6,336
14,944307
14,637

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Rent income
Equity in earnings of affiliates
Foreign exchange gain
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary gains
Gain on sale of non-current assets
Gain on sale of investment securities
Gain on negative goodwill
Other
Total extraordinary gains
Extraordinary losses
Loss on sale of non-current assets
Loss on disposal of non-current assets
Impairment losses
Loss on sale of investments securities
Loss on valuation of investments securities
Loss on sales of shares of subsidiaries and affiliates
Loss on business withdrawal
Loss on step acquisitions
Other
Total extraordinary losses
Income before income taxes and non-controlling interests
Income taxes - current
Income taxes - deferred
Total income taxes
Profit for the period
Profit attributable to non-controlling interests
Profit attributable to owners of the parent－

7 －NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2018

(Quarterly Consolidated Statements of Comprehensive Income)Nine-month periods ended December 31, 2017 and 2016
(Millions of yen)
Nine-month period ended
December 31, 2016

Nine-month period ended
December 31, 2017

(April 1, 2016 -December 31, 2016)(April 1, 2017 - December 31, 2017)

9,084

14,944

8,865
15
(12)
1,613

9,333
(8)
2,494
162

(140)

177

10,342
19,426

12,16027,104

19,279146

26,531
572

Profit for the period
Other comprehensive income
Net unrealized holding gain on securities
Deferred gain (loss) on hedges
Translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates
accounted for by the equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Shareholders of the parent
Non-controlling interests－

8 －NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2018

(3) Notes related to Quarterly Consolidated Financial Statements(Assumption for Going Concern)
No matters to report.

(Segment Information, etc.)
Segment Information
I Nine-month period ended December 31, 2016 (consolidated)
1. Information related to net sales and income (loss) by reportable segment(Millions of yen)
Reportable Segments
Advanced
Functional
Automotive
Life &
Materials & Electronics
Materials& Energy Healthcare
Processing

Total

Other
(Note) 1.

Total

Corporate Adjustments(Note) 2.
(Note) 3.

To Quarterly
Consolidated
Financial
Statements(Note) 4.

Net sales
Sales to113,665

181,345

96,27182,542

62,793536,619471

537,090--537,090

1,379

1,793

1,314

1,965

364

6,817

4,157

10,974-(10,974)-

Total

115,045

183,138

97,586

84,50863,158543,437

4,628

548,065-(10,974)

537,090

Segment income(loss)

2,965

4,029

4,672

960

2,843

15,470138

15,608(4,341)

395

11,661

customers
Intersegment
sales/transfers(Note) 1. Other is a business segment consisting of businesses not included in reportable segments, and includes logistics services,
information processing services, and professional services.
2. Corporate segment income (loss) represents expenses not allocated to reportable segments or Other.
3. Adjustments are eliminations of intersegment transactions.
4. The sum of Segment income (loss), Corporate, and Adjustments is equivalent to operating profit as presented in the
consolidated statements of income.
II Nine-month period ended December 31, 2017 (consolidated)
1. Information related to net sales and income (loss) by reportable segment(Millions of yen)
Reportable Segments
Advanced
Functional
Automotive
Life &
Materials & Electronics
Materials& Energy Healthcare
Processing

Total

Other
(Note) 1.

Total

To Quarterly
Consolidated
Corporate Adjustments
Financial(Note) 2.
(Note) 3.
Statements(Note) 4.

Net sales
Sales tocustomers
Intersegment
sales/transfers
Total
Segment income(loss)

130,217201,210

100,732

96,47964,481

593,121442

593,564--593,564

1,819

1,698

1,557

2,094

360

7,530

3,512

11,043-(11,043)-

132,037

202,909102,289

98,57364,842600,652

3,954

604,607-(11,043)593,564

3,951

5,587

7,283

2,122

3,566

22,510255

22,766(2,775)328

20,319(Note) 1. Other is a business segment consisting of businesses not included in reportable segments, and includes logistics services,
information processing services, and professional services.
2. Corporate segment income (loss) represents expenses not allocated to reportable segments or Other.
3. Adjustments are eliminations of intersegment transactions.
4. The sum of Segment income (loss), Corporate, and Adjustments is equivalent to operating profit as presented in the
consolidated statements of income.

－9 －NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2018

(Significant Fluctuations in Shareholders’ Equity)
No matters to report.

(Changes in Significant Subsidiaries during the Period)
During the consolidated first quarter, the Company acquired shares of INKRON LIMITED (specified subsidiary). Accordingly,
the Company included INKRON LIMITED and two INKRON LIMITED subsidiaries (Inkron Oy and Inkron Technologies
GmbH) in the scope of consolidation.

3. Supplementary Information(1) Overseas Sales
I Nine-month period ended December 31, 2016 (consolidated)
GreaterChina
I Overseas sales(Millions of yen)

146,130

ASEAN

Americas74,886

21,584

Europe

Other

8,385

Total

11,416

II Consolidated sales

537,090(Millions of yen)
III Ratio of overseas sales toconsolidated sales (%)

262,403

27.2

14.0

4.0

1.6

2.1

48.9

II Nine-month period ended December 31, 2017 (consolidated)
GreaterChina
I Overseas sales(Millions of yen)

160,727

ASEAN

Americas81,901

26,820EuropeOther

10,967

Total

16,086

II Consolidated sales

593,564(Millions of yen)
III Ratio of overseas sales toconsolidated sales (%)

296,503

27.2

13.8

4.5

1.8

2.7

(Note)
1. Overseas sales consist of net sales of the Company and consolidated subsidiaries in other countries or regions.
2. Countries/regions are determined by geographical proximity.
3. Major countries in each region(1) Greater China......China, Hong Kong, Taiwan(2) ASEAN...............Thailand, Singapore(3) Americas.............U.S., Mexico(4) Europe................Germany(5) Other...................Korea

－

10 －

50.0