December 24, 2014
Kuraray Co., Ltd.
～ Realization of a high-profit specialty chemical company with a global presence ～New Medium-Term Management Plan GS-STEP

Kuraray Co., Ltd. (“Kuraray”) has established its new medium-term management plan GS-STEP(Growth Strategy with Synergy, Technology, Eco-friendliness and Profitability) for implementation
over the three years from fiscal 2015 to fiscal 2017 to make the Kuraray Group a “high-profit
specialty chemical company with a global presence.”

1. Achievements of GS-III, the previous medium-term management plan

Based on GS-III, the medium-term management plan it created in 2012, Kuraray has been working
for “Geographic expansion of coe businesses” and “Creation and expansion of new business” as its
primary objectives from fiscal 2012 to fiscal 2014. Although expectations for global economic
growth were high in economic projections at the time GS-III was formulated, the extent ofsubsequent real economic growth was not as initially assumed due to factors including weak growthin the economies of Europe and emerging countries including China.

Under these conditions, Kuraray will have difficulty achieving its operating income target for fiscal2014, the final year of the plan. However, Kuraray expects to come close to its net sales target as aresult of the steady execution of measures including acquisition of DuPont’s glass laminating
solutions/vinyls business (GLS business) and MonoSol, LLC, and investment in production capacity
expansion for optical-use PVA film and EVAL. Other measures that will lead to future growth
included construction of a new plant for PVA resin in North America, investment in production
capacity expansion of VECSTAR liquid crystalline polymer film for high-speed printed circuit boardsand construction of a new plant for BIOCARBOTRON anode material for lithium-ion batteries.
Kuraray believes that it has now established a foundation to aim for further business expansion andhigher profit through these measures.

Performance Trend
FY2011FY2012(Actual)(Actual)
Net sales
369.0
369.4
Operating income
54.7
49.2
* Adjusted basis for April 2014-March 2015

1FY2013(Actual)
413.5
49.5

FY2014*(Forecast)
515.0
54.0

(Billions of yen)
FY2014(GS-III)
550.0
85.0

2. Overview of the new medium-term management plan GS-STEP

In the current economic environment, solid expansion is continuing in the United States, but in
Europe the financial crisis and emergence of geopolitical risk are factors depressing businessconditions, and a full-scale rally is expected to require time. In emerging countries, the Chinese
economy continues to trend toward a slowdown, with patchy conditions in other regions. Given
these factors, the outlook for the overall global economy is considered unclear. As for energy
resources, there is a high likelihood that the shale revolution will lead to substantial changes in theglobal state of affairs as it exerts a significant impact on worldwide conditions for raw materials andfuel, including natural gas and crude oil. In Japan, trends in cutbacks in ethylene crackers andwithdrawal from some businesses require close attention.

In this environment, the Kuraray Group will achieve high profit by bringing the measures
implemented during the period of GS-III to fruition and by steadily building a business foundation
for further business expansion, and will steadily execute various strategies for further growth.

1) Main management strategies

Kuraray has a unique corporate culture of “contributing to the world and individual well-being
through actions that others are unable to produce.” To steadfastly maintain this corporate culture andbecome “a high-profit specialty chemical company with a global presence,” Kuraray will promote
the following five main management strategies under the new medium-term management planGS-STEP.

(1) Deepening of core businesses
Increase competitive advantages by producing results from the effects of investments including
business acquisitions and production capacity expansion for a more solid foundation inbusinesses where Kuraray products are number one in market share or the only ones of their kind.
In addition, lay the groundwork for further growth.

(2) Technological innovation
Create new business by using highly distinctive, original Kuraray technologies and accelerating
their rollout to new domains and technologies. In addition, establish new and improved processes
to achieve overwhelming superiority in product quality and cost.

2(3) Next-generation growth modelWork to expand into new business domains by making more effective use of external resources,
including M&A and alliances. In addition, take on the challenge of establishing an innovative
business model for corporate activities including research and development, technical services,manufacturing and sales, and indirect operations.

(4) Optimum allocation of management resources
Raise the quality of global management through the optimal allocation and proactive use ofmanagement resources such as the expanded bases and human resources resulting from theintegration of GLS business and other initiatives.

(5) Contribution to the environment
Expand provision of products that contribute to the global environment. In addition, use
production processes that reduce environmental load.

Performance Targets(Billions of yen)
FY2014*(Forecast)
515.0
54.010.5%Net sales
Operating incomeOP margin[For reference]
Exchange rate:¥108/$* Adjusted basis for April 2014-March 2015
3FY2017 Plan(GS-STEP)
650.0
90.0
13.8%
¥120/$

2) Main business strategies(1) Vinyl Acetate Segment
Generate synergy from business integration at an early stage to establish a firmer global businessfoundation as the world’s number-one supplier and accelerate expansion of sales ofhigh-value-added products, opening of markets in emerging countries and development of new
products and applications.

(2) Isoprene Segment
Expand the scale of business globally while working to raise profitability by shifting tohigh-value-added products. After promoting further production process innovation, give serious
consideration to new plants for stable procurement of raw materials and steady supply ofproducts that are the only ones of their kind.

(3) Functional Materials Segment
As competition intensifies, work to establish a business foundation that is less affected by market
conditions by thoroughly reducing costs, expanding sales of highly functional products, anddeveloping new fields and new applications using original materials and technologies.

(4) Fibers and Textiles Segment
Improve profitability by pioneering new applications that utilize Kuraray’s strengths and by
reducing costs through the development of innovative production processes.

(5) New Business and Others
Work to accelerate new business development through methods including strategic partnerships,
and deepen research and development by allocating resources to basic technologies.

4Sales and Operating Income by Business Segment
FY2014 Forecast
Business segment

Adjusted April 2014March 2015 period

Net Sales
Vinyl Acetate
Isoprene
Functional Materials
Fibers and Textiles
Trading
Other BusinessCorporate andEliminations
Total(Billions of yen)
FY2017 Plan(GS-STEP)Net Sales

265.0
61.0
58.0
48.0
113.0
65.0

Operating
Income
49.5
6.5
2.0
3.0
3.5
3.0(95.0)
515.0(13.5)
54.0(96.0)
650.0

330.0
73.0
65.0
56.0
130.0
92.0

Increase/Decrease

Operating Net Sales Operating
IncomeIncome
76.5
+65.0
+27.0
10.0
+12.0
+3.5
6.5
+7.0
+4.5
4.0
+8.0
+1.0
5.0
+17.0
+1.5
4.5
+27.0
+1.5
(16.5)
90.0(1.0)+135.0

(3.0)
+36.0

Breakdown of Net Sales by Geographic Region

The ratio of overseas sales to net sales will increase from 55% to 68%. Net sales will increase in all
geographic regions, with a more balanced ratio due particularly to growth in North America, wheresales so far have been comparatively small.

FY2013 Net Sales

FY2017 Net Sales

FY2013 → FY2017 Geographical413.5 billion yen

650.0 billion yen

breakdown of net sales increase(+236.5 billion yen)

3) Resource allocation(1) Capital expenditures
To carry out the abovementioned strategies, the plan calls for approximately 200 billion yen incapital expenditures (decision basis) over the three-year period, or an average of approximately
70 billion yen per year. About 60% is planned for expansion of production capacity.
5Main capital expenditures
Vinyl acetate monomer: Production capacity expansion in North America
Optical-use PVA film: Expand facilities at Saijo Plant
PVB film: Expand facilities in North America, Europe and Asia
Water-soluble PVA film: Expand facilities
EVAL: Production capacity expansion in North America and Europe
Isoprene chemicals: Construction of new plant
SEPTON: Expand facilities in North America
Original methacrylic resin: Production capacity expansion at Niigata Plant
VECSTAR: Expand facilities at Saijo Plant
Expand facilities for BIOCARBOTRON anode material for lithium-ion batteries
Note: The above investments have not been officially decided at present and are matters for further deliberation.

(2) Financial strategy
・ Kuraray expects to secure 220 billion yen in cash flow over the three-year period, and hasscheduled capital expenditures of 170 billion yen on a payment basis.
・ For large-scale strategic investments such as new projects and M&A, Kuraray will consider
obtaining funds through loans or other means as necessary.
・ Kuraray views shareholder returns as a priority management issue. The company has set abasic policy of steady, continuous dividends in line with the growth of its businessperformance, with a total payout ratio of 35% or higher and dividends per share of 36 yen orhigher. In addition, Kuraray will retire 20 million or more shares of treasury stock during
fiscal 2015.

(3) Environmental measures
Kuraray has adopted eco-efficiency (net sales/environmental load) as an environmental indicatorand has formulated a Medium-Term Environmental Plan with targets set for fiscal 2020. However,due in part to factors including the integration of GLS business and environmental changes,
Kuraray will revise the figures and implement them during the period covered by GS-STEP.

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