Consolidated Financial Statements for the First Quarter of the Fiscal Year Ending March 31, 2018
<Under Japanese GAAP>
August 3, 2017
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): August 8, 2017
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 First Quarter of the Fiscal Year Ending March 31, 2018
(April 1, 2017 to June 30, 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 first quarter ended
Millions of yen% Millions of yen% Millions of yen% Millions of yen
June 30, 2017
187,136
7.9
5,604
59.0
6,370
63.2
3,482
June 30, 2016
173,394(6.3)
3,525 (28.9)
3,904 (26.7)
2,236(Notes) Comprehensive income
First quarter ended June 30, 2017: ¥7,758 million (―%)%

55.7
(34.2)First quarter ended June 30, 2016: (¥5,342) million (―%)
Earnings per share
For the first quarter ended
June 30, 2017
June 30, 2016

Yen
27.62
17.61

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

June 30, 2017
March 31, 2017
(Reference) Equity capital

Shareholders’equity ratio

Net assets
Millions of yen

540,690
300,450
530,775
295,198
As of June 30, 2017: ¥295,607 million
As of March 31, 2017: ¥ 290,217 million

Net assets per share
%

Yen

54.7
54.7

2,343.85
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−
March 2018 (estimate)
17.00(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

732,000

Operating income% Millions of yen

1.3

19,100

Profit attributable toowners of the parent

Ordinary income% Millions of yen

27.1

20,900% Millions of yen

27.7

12,500Earnings per
share

%

Yen

21.0

99.11

(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)
New: 1 (Company name: INKRON LIMITED) Excluded: ― (Company name:(Note)
Please refer to “2. Quarterly Consolidated Financial Statements (3) Notes related to Quarterly
Consolidated Financial Statements (Changes in Significant Subsidiaries during the Period）.” on page
9 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)June 30, 2017
127,408,285 shares March 31,2017
127,408,285 shares
ii.

iii.

Number of treasury stock as of the fiscal period end
June 30, 2017
1,287,672 shares

March 31, 2017

1,287,366 shares

Average number of shares during the period
June 30, 2017
126,120,721 shares

June 30, 2016

127,030,962 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 3 of thisdocument.

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

Attachments
1. Qualitative Information

2(1) Business Performance2(2) Financial Position

3(3) Qualitative Information related to Earnings Forecasts

3

2. Quarterly Consolidated Financial Statements and Notes

4(1) Quarterly Consolidated Balance Sheets

4(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income

6

Quarterly Consolidated Statements of Income

6

Quarterly Consolidated Statements of Comprehensive Income

7(3) Notes related to Quarterly Consolidated Financial Statements

8(Assumption for Going Concern)

8(Segment Information, etc.)8(Significant Fluctuations in Shareholders’ Equity)9(Changes in Significant Subsidiaries during the Period)

9

3. Supplementary Information

9(1) Overseas Sales

9-1-

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

1. Qualitative Information(1) Business Performancea. General Summary of Results
The Japanese economy maintained a gradual recovery during the consolidated first quarter as corporate earnings and payrolls
improved. While the global economy grew likewise overall, improvement slowed in China and other emerging economies,
while uncertainty remains as to the future direction of U.S. and European political and economic policies. Accordingly, theexact future of the global economy is not easy to predict.
In this environment, the Company recorded consolidated first quarter domestic sales of ¥94.94 billion, which was a 6.8%
increase year on year. Overseas sales amounted to ¥92.18 billion (+9.1%), resulting in total sales of ¥187.13 billion, or an
increase of 7.9% year on year.
The Company recorded gross profit of ¥24.07 billion, an increase of 6.7%, in conjunction with higher sales. Operating income
amounted to ¥5.6 billion (+59.0%). This increase was mainly due to a decrease in retirement benefit expenses in connection
with lower amortization of actuarial differences. Ordinary income rose 63.2% year on year to ¥6.37 billion, mainly due toimproved earnings in equity-method affiliates. Profit attributable to owners of the parent amounted to ¥3.48 billion, an increaseof 55.7%.

b. Segment Summary
Functional Materials
The Functional Materials segment recorded higher year on year sales in both domestic and overseas markets.
The Performance Chemicals business recorded higher sales due to growth in coating raw materials and urethane materials,
spurred by strong automotive production in Japan and overseas.
The Speciality Chemicals business recorded higher sales overall. Sales of fluorochemicals, electronics chemicals, and plastic
materials and additives were higher for the semiconductor and other electronics industry. At the same time, sales were higher
for plastic additives in overseas markets.
As a result, the Functional Materials segment recorded sales of ¥40.32 billion for the consolidated first quarter, a ¥3.23 billion(+8.7%) increase year on year. Operating income for the segment was ¥1.17 billion, representing a ¥310 million (+35.8%)
increase.

Advanced Materials & Processing
The Advanced Materials & Processing segment recorded higher year on year 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.
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, the Advanced Materials & Processing segment recorded sales of ¥64.59 billion for the consolidated first quarter, a¥5.9 billion (+10.1%) increase year on year. Segment operating income grew ¥450 million (+38.2%), reaching ¥1.66 billion forthe consolidated first quarter.

Electronics
The Electronics segment recorded slightly higher sales in Japan and overseas year on year.
The Electronic Chemicals business recorded higher sales due to growth in photolithography material sales and strong
performance of formulated epoxy resins for the heavy electrical and semiconductor industries.
-2-

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

The Electronic Materials business recorded lower sales, mainly due to lower performance in smartphone case materials, despite
higher sales of display-related products.
As a result, net sales for the segment amounted to ¥30.53 billion, which was a ¥650 million (+2.2%) increase. Segment
operating income grew ¥240 million (+16.5%), reaching ¥1.72 billion for the consolidated first quarter.

Automotive & Energy
The Automotive Solutions business recorded higher sales, driven by strong performance in our domestic resins business andhigher sales of car electronics-related products.
As a result, sales for the segment amounted to ¥30.73 billion, which was a ¥4.51 billion (+17.2%) increase. Operating income
for the segment was ¥670 million, representing a ¥400 million (+150.0%) increase.

Life & Healthcare
The Life & Healthcare segment recorded slightly lower sales compared to the same period in the prior fiscal year. This result
was mainly due to lower sales in Japan, despite growth in the European market.
In the Life & Healthcare Products business, sales of TREHA™ and other products to food ingredient makers were level year
on year in Japan and overseas. Although the business recorded higher sales of AA2G™ to major customers in the Japanese skincare and toiletries field, sales to major customers overseas were lower. In the medical and pharmaceutical field, sales of raw
materials and intermediates and medical materials were lower. As a result, the business recorded sales slightly lower comparedto the prior year.
The Beauty Care Products business, which includes sales of cosmetics and health foods, recorded slightly lower sales, mainly
due to weakness in existing products.
As a result, net sales for the segment amounted to ¥20.79 billion, representing a ¥530 million (-2.5%) decrease. Operating
income decreased ¥30 million (-2.8%) year on year, down to ¥1.21 billion.

Other
No special matters to disclose.

(2) Financial Position
As of the end of the consolidated first quarter, current assets amounted to ¥326.64 billion. This represents an increase of ¥5.42
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 ¥214.04 billion, up ¥4.48 billion. This increase was mainly due toincreases in fair values of shares retained. As a result of these various factors, total assets increased ¥9.91 billion to ¥540.69
billion as of the end of the consolidated first quarter.
Liabilities amounted to ¥240.24 billion, a ¥4.66 billion increase compared to the end of the prior consolidated fiscal year. This
increase was mainly due to increases in long-term loans and the issuance of commercial paper, despite the redemption of bonds.
Net assets amounted to ¥300.45 billion, up ¥5.25 billion. This increase was mainly due to ¥3.48 billion in profit attributable toowners of the parent and an increase in net unrealized holding gains in securities.
As a result, the Company recorded a shareholders’ equity ratio of 54.7%, level with the end of the prior consolidated fiscal year.

(3) Qualitative Information related to Consolidated Earnings Forecasts
The Company has made no changes its full-year consolidated earnings forecasts as originally published on May 2, 2017.

-3-

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

2. Quarterly Consolidated Financial Statements(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-4-(Millions of yen)First Quarter, Current
Consolidated Fiscal Year
(June 30, 2017)39,830206,846
58,162
1,309
3,648
2,375
9,681
(638)
321,215

38,095
210,487
61,663
1,283
3,820
2,163
9,764
(633)
326,644

67,61967,43823,034
13,791
3,916
40,742

23,501
13,397
3,668
40,567

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

99,628
457
1,401
4,841
(289)
106,039
214,045
540,690

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the First 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 (loss) gain 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-5-(Millions of yen)First Quarter, Current
Consolidated Fiscal Year
(June 30, 2017)

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

103,269
28,866
3,270
5,000
1,440
38
2,291
59
17,928
162,164

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

20,00026,793
15,72814,709843
78,075240,240

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

9,699
11,353221,052(1,338)240,768

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

51,434
3
3,621
(219)
54,8394,842
300,450
540,690

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the First 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)Three-month periods ended June 30, 2017 and 2016
(Millions of yen)Three-month period ended
June 30, 2016
(April 1, 2016 - June 30, 2016)

Three-month period ended
June 30, 2017
(April 1, 2017 - June 30, 2017)

173,394
150,829
22,564
19,0393,525

187,136
163,064
24,072
18,467
5,604

51
729
78
129
988

43
684
68
204
16
83
1,100

228
85
192
102
609
3,904

236
97
334
6,370

15
60
75

0
0

10
49
10
24
151
257
57
560
3,418
690
450
1,141
2,277
41
2,236

19
13
225
230
294
782
5,588
1,170
935
2,106
3,482
(0)
3,482

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
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 (loss) attributable to non-controlling interests
Profit attributable to owners of the parent-6-

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

(Quarterly Consolidated Statements of Comprehensive Income)Three-month periods ended June 30, 2017 and 2016
(Millions of yen)Three-month period ended
June 30, 2016
(April 1, 2016 - June 30, 2016)

Three-month period ended
June 30, 2017
(April 1, 2017 - June 30, 2017)

2,277

3,482

(2,301)
26(5,448)
537

3,747
(1)
493
54

(435)

(18)

(7,620)(5,342)

4,276
7,758

(4,843)
(499)

7,718
39

Profit for the period
Other comprehensive income
Net unrealized holding (loss) 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-7-

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the First 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 Three-month period ended June 30, 2016 (consolidated)
1. Information related to net sales and income (loss) by reportable segment(Millions of yen)
To Quarterly
Consolidated

Reportable Segments
Advanced
Functional
Automotive
Life &
Materials & Electronics
Materials& Energy Healthcare
Processing

Total

Other
(Note) 1.

Total

Corporate Adjustments
Statements of(Note) 2. (Note) 3.
Income(Note) 4.

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

37,09058,691

29,887

26,226

21,328173,224169

173,394--

173,394

433

590

411

603

130

2,170

1,446

3,616

-

(3,616)-37,52459,28230,29826,83021,458

175,394

1,615

177,010-(3,616)173,394

868

1,201

1,481

271

1,252

5,075

73

5,148

(1,759)

136

3,525

(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 Three-month period ended June 30, 2017 (consolidated)
1. Information related to net sales and income (loss) by reportable segment(Millions of yen)
To Quarterly
Consolidated

Reportable Segments
Advanced
Functional
Automotive
Life &
Materials & Electronics
Materials& Energy Healthcare
Processing

Total

Other
(Note) 1.

Total

Corporate Adjustments
Statements of(Note) 2. (Note) 3.
Income(Note) 4.

Net sales
Sales to40,32364,59230,53930,73920,793

186,989

146

187,136--

187,136

Intersegment
sales/transfers

600

569

522

671

122

2,486

1,087

3,573

-

(3,573)-

Total

40,924

65,161

31,062

31,411

20,916

189,476

1,234

190,710-(3,573)

187,136

1,178

1,660

1,726

679

1,217

6,462

61

6,524

(1,018)98

5,604

customers

Segment income(loss)(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.

-8-

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the First 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 includes 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 Three-month period ended June 30, 2016 (consolidated)
GreaterChina
I Overseas sales

46,188Millions of yen)

ASEAN

Americas24,781

7,037

Europe

Other

2,928

Total

3,548

II Consolidated sales

84,484

173,394

Millions of yen)
III Ratio of overseas sales to

26.6

consolidated sales (%)

14.3

4.1

1.7

2.0

48.7

II Three-month period ended June 30, 2017 (consolidated)
GreaterChina
I Overseas sales
Millions of yen)

50,254ASEAN

Americas26,1287,685

Europe

Other

3,474

Total

4,643

II Consolidated sales
Millions of yen)
III Ratio of overseas sales toconsolidated sales (%)

92,186

187,136
26.8

14.0

4.1

1.9

2.5

(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-9-49.3