1H of FY2014 (Apr. to Sep.)
Earnings Presentation(Overview)

1Overview of 1H FY2014 Results [1](Billion yen)
Net Sales
250

200222.6223

Operating Income
3024.725199.3
19926.927

Ordinary Income
3024.92527.027

Net Income
2015.81617.017152020150
10100
101055000

2013年度
上期

2014年度

1H
1H
上期
FY2013 FY2014

00

2014年度
1H
1H
上期
FY2013 FY2014
2013年度
上期

2014年度
1H
1H
上期
FY2013 FY2014
2013年度
上期

2014年度
1H
1H
上期
FY2013 FY2014
2013年度上期

2Overview of 1H FY2014 Results [2](Billion yen)

Net SalesOperating Income
Ordinary Income
Net Income

1H FY2014
Forecast
Announced
Apr. 25, 2014

1HFY2014

1H
FY2013Difference

222.6
26.9
27.0
17.0

199.3+23.3 (+11.7%)

24.7+2.3 (+9.3%)

220.0
26.0

24.9

+2.2 (+8.7%)

26.0

15.8

+1.3 (+8.1%)

16.0

Average exchange rate for the period
JPY/USD

103

99

105

JPY/EUR

139

130

140

Domestic
naphtha/kl¥71,000¥65,000¥72,0003Forecast for FY2014(Billion yen)

Current
Forecast

InitialForecast(April-December 2014)(April-December 2014)

Net Sales
OperatingIncome
OrdinaryIncome

415.0

385.030.0

44.0

44.0-

43.0

43.0-

Net Income

26.0

26.0-

Difference

4Net Sales/Operating Income Trend(Billion yen)
Net Sales(Billion yen)
Operating Income5Outcomes of Main FY2014 Initiatives
Expansion of Mainstay Core Businesses Completed acquisition of glass laminating solutions/vinyls business of DuPontof the U.S.
→ Reached agreement to sell German PVB production facility and R&D center Decided to build a new plant for water-soluble PVA film in the U.S.
→ Start of operation scheduled for January 2016
 Started operation of 32 million m2 expansion of production facilities for
optical-use PVA film (Saijo Plant)

Creation/Expansion of New Businesses
 Started operation of 600 thousand m2 expansion of production facilities for

VECSTAR

Technological Innovation
 Decided to build new pilot facility for new KURALON manufacturing process6【Ref.】 Completion of Acquisition of DuPont’s Glass Laminating Solutions/Vinyls Business

1. Post-Acquisition Vinyl Acetate Product Lineup
Global No. 1

Ionomer sheeting
Global No. 2

PVB film

Global No. 1

Opticaluse PVA film
Global No. 1
Global No. 1

PVB

Watersoluble
PVA film

EVAL

Global No. 1PVA fiber

Global No.1

PVAVAM (Vinyl Acetate Monomer)77【Ref.】 Completion of Acquisition of DuPont’s Glass Laminating Solutions/Vinyls Business

2. Objectives of the Acquisition•Strengthening of global businessplatform and expansion of vinyl acetaterelated business Increase of in-house manufacturing of rawmaterials
 Expansion of products and markets
Synergy effect• Optimization of manufacturing site
• Sales and technical service• Technical know-how• Manufacturing and development• Procurement of raw materials
8【Ref.】 Completion of Acquisition of DuPont’s Glass Laminating Solutions/Vinyls Business

3. Vinyl Acetate Business Production Bases●VAM ●PVA ●Optical-use PVA film ●Water-soluble PVA film ●PVB ●PVB film ●EVAL●Ionomer sheets

MonoSol (U.K.)● Water-soluble PVA film

Kuraray Europe(Germany)
● PVA
● PVB
● PVB film

MonoSol (Indiana, U.S.A.)● Water-soluble PVA film

OOO Trosifol(Russia)

New base (WestVirginia, U.S.A.)● PVB● PVB film

New base(S. Korea)● PVB film
New base(Czech Republic)● PVB film

Kuraray● VAM● PVA● EVAL● Optical-use PVA filmEval Europe (Belgium)● EVAL

Kuraray America(Texas, U.S.A.)● EVAL

Kuraray Asia Pacific(Singapore)● PVA

New base(Texas, U.S.A.)
● VAM
● PVA

New base (NorthCarolina, U.S.A.)● PVB● PVB film
● Ionomer sheeting9【Ref.】 Completion of Acquisition of DuPont’s Glass Laminating Solutions/Vinyls Business4. Ionomer Sheet•What is ionomer sheet?
A laminated glass interlayer encapsulant developed by DuPont•Application: Laminated glass for construction ofinnovative architectural designs requiring higher safetystandards•Features:Architectural glassinterlayer market

・ Resilience: 100 times stiffer andHigh-end
applications:
5 times stronger than PVB
Ionomer sheet
・ Safety: Even if the glass breaks,shards do not scatter・ Transparency: Ultra high transparency thatGeneralapplications:does not interfere with visibility
PVB film
・ Durability: Remains clear even afteryears of exposure

10

FY2014 Dividends
9-month period due to change in fiscal year end in FY2014¥２７ per share scheduled（Interim: ¥18, Year-end: ¥9）Cash dividends per share (Yen) and Payout ratio Trend
InterimYear-end

Full-year

Payout ratioFY2014（9 months）¥18¥9¥2736.4%

FY2013¥18¥18¥3642.9%

FY2012¥18¥18¥3643.6%‣Target of profit distribution for FY2012-2014： At least 35％ of payout ratio
11See following pages for details.

1H FY2014 Results (Details)

13

Sales and Operating Income by Segment(Billion yen)

1H FY2014

1H FY2013

Difference

Net Sales

Operating
IncomeNet Sales

Operating
IncomeNet Sales

Operating
IncomeVinyl Acetate

105.1

24.8

90.1

24.5

15.0

0.3

Isoprene

27.0

2.8

25.4

2.1

1.6

0.7

Functional
Materials

26.00.4

23.1

0.5

2.9(0.1)

Fibers & Textiles

22.0

1.7

21.3

1.3

0.7

0.4

Trading

58.7

1.8

53.0

1.7

5.7

0.1

Others

32.3

1.3

30.5

1.4

1.8

(0.1)

Eliminations andcorporate expenses(48.5)(5.8)(44.1)

(6.9)

(4.4)

1.1

Total

222.6

26.9

199.3

24.7

23.3

2.3
14

Overview of Main Businesses in 1H FY2014
PVA Resin

Sales were firm due to the penetration of price increases.

PVA film

Sales volume of optical-use PVA film increased due to larger-scale LCDTVs. Sales of water-soluble PVA film expanded favorably, backed bybrisk demand, and Kuraray decided to build a new plant in the U.S. inresponse (start of operation scheduled for January 2016).

EVAL

Favorable growth, mainly in the U.S. and Asia.

Isoprene

Favorable performance by fine chemicals. Demand for liquid isoprenerubber recovered. Sales of SEPTON thermoplastic elastomer were firm.

GENESTAR

Sales were favorable for applications in LED reflectors, connectors andautomobiles.

Methacrylic resin

Conditions were tough due to a market downturn.

MedicalSales of dental materials were favorable.

CLARINOThe transfer of general-purpose product manufacturing to China as partof business restructuring and other measures showed an effect. Thebusiness was profitable in the second quarter (July-September) and aims
to be profitable for the fiscal year.

KURALON

Sales were strong for applications in automotive brake hoses and as anasbestos substitute in fiber reinforced cement (FRC).

15

Factors Affecting the Change in Operating Income
1H FY2014¥２６.９ billion

Sales volume

4.0
2.5
1.0
0.5

Utilization
Selling price, product mix
Foreign exchange
Raw material and fuel costs¥２.３ billion(1.5)(excl. effect of foreign exchange）

Depreciation and amortization

(2.5)
(1.7)

Expenses and others

1H FY2013
Raw Materials‘
and FuelCosts and Domestic naphtha/kl
Foreign
USD（average)
Exchange

EUR （average）¥２４.７ billion
1H FY2013

1H FY2014¥65,000¥71,000

¥99

¥103

¥130

¥13916

1H FY2014 Results (Cash Flow, etc.)(Billion yen)

1H FY2014

1H FY2013

Difference

Operating CF

29.0

23.3

5.7

Investing CF*(28.0)(25.9)(2.1)

Free CF*

(2.6)

3.6

M&A

1.0
(66.8)-(66.8)EPS¥48.62¥45.04¥3.58

Depreciation&Amortization

18.9

16.4

2.5

R&D Expenses

8.7

8.4

0.3

*Cash flows from investment activities and free cash flow exclude net
cash used in fund management and M&A.

(7.9%)

17

Summary of Consolidated Assets(Billion yen)Mar. 31,2014

Sep. 30,
2014
Current
AssetsNoncurrent
Assets
Total
AssetsDifference

255.0

302.4

(47.4)

389.2

331.8

57.3

644.2

634.3

10.0

Reference: Year-end exchange rates

Japan

Overseas subsidiaries

Sep. 30, 2014

Mar. 31, 2014

Jun. 30, 2014

Dec. 31, 2013

JPY/USD

109

103

101

105

JPY/EUR139142138145
18

Summary of Consolidated Liabilities and Net Assets(Billion yen)Sep. 30,
2014

Mar. 31,2014

Difference

Current Liabilities

98.9

89.1

9.8

Noncurrent Liabilities

90.9

92.6

(1.7)

Total Liabilities

189.9

181.8

8.1

Net Assets

454.3

452.5

1.9

Total Liabilities and Net
Assets

644.2

634.3

10.0

Reference: Year-end exchange rates

Japan

Overseas subsidiaries

Sep. 30, 2014

Mar. 31, 2014

Jun. 30, 2014

Dec. 31, 2013

JPY/USD

109

103

101

105

JPY/EUR

139

142

138

145
19

【Ref.】

Balance of Net Cash
(Billion yen)Sep. 30,
2014

Mar. 31,2014Difference

Operating capital

53.3

121.3

(68.0)

Interest-bearing debt

(70.2)(65.3)(4.9)

Net cash(16.9)

56.0(72.9)

20

Forecast for FY2014

Nine-month period from April toDecember in Japan, twelve-month
period from January to December
overseas for both FY2013 andFY2014

FY2013Full-Year Results(Adjusted)

FY2014Full-Year
Forecast(Billion yen)

Difference

Net Sales

415.0

339.9

75.1

Operating Income

44.0

38.3

5.7

Ordinary Income

43.0

38.4

4.6

Net Income

26.0

23.1

2.9

¥74.19¥66.05¥8.14

Dividends per Share¥27ーーCAPEX (decision basis）

45.0

ーーCAPEX（acceptance basis)

44.0

51.9

(7.9)

Depreciation andAmortization

33.0 *

28.6

4.4

R&D Expenses

14.0

13.2

0.8

EPS

* Including ¥1.3 billion of tentative goodwill amortization for the business acquired from DuPont.

21

FY2014 Forecast by Segment
Net Sales
FY2014FY2013(Adjusted)(Billion yen)

Operating Income
Difference

FY2014FY2013(Adjusted)

Difference

Vinyl Acetate

219.0

160.7

58.3

39.5

36.2

3.3

Isoprene

47.0

42.0

5.0

5.0

3.9

1.1

Functional Materials

45.5

38.8

6.71.01.1(0.1)

Fibers & Textiles

36.0

34.7

1.3

2.3

2.1

0.2

Trading

88.0

80.9

7.1

2.7

2.5

0.2

Others

51.5

50.2

1.3

2.0

1.7

0.3

Eliminations &corporate expenses(72.0)(67.3)

(4.7)

(8.5)

(9.3)

0.8

Total

415.0

339.9

75.1

44.0

38.3

5.7
22

【Ref.】 FY2014 Forecast
1H(Billion yen)

Net Sales
Full Year
2H

Operating Income
Full Year
1H
2H

Vinyl Acetate

105.1

113.9

219.0

24.8

14.7

39.5

Isoprene

27.0

20.0

47.0

2.8

2.2

5.0

Functional Materials

26.019.5

45.5

0.4

0.6

1.0

Fibers & Textiles

22.0

14.0

36.0

1.7

0.6

2.3

Trading

58.7

29.3

88.0

1.8

0.9

2.7

Others

32.3

19.2

51.5

1.3

0.7

2.0

Eliminations &corporate expenses(48.5)(23.5)(72.0)

(5.8)

(2.7)

(8.5)

Total

222.6

192.4

415.0

26.9

17.1

44.0
23This presentation contains various forward-looking statements which are based on the current expectations andassumptions of future events. All figures and statements with respect to the future performance, projections, andbusiness plans of Kuraray and its group companies constitute forward-looking statements. Although Kuraray believes
that its expectations and assumptions are reasonable, actual results and trends of Kuraray’s performance could differ
materially from those expressed or implied by such figures or statements due to risks and uncertainties in the futurebusiness circumstances. The factors which may cause such difference include, without limitation: (1) general market
and economic conditions in Asia including Japan, the U.S., Europe and other regions; (2) fluctuations of currency
exchange rates, especially between the Japanese yen and the U.S. dollar and other foreign currencies; (3) changes inraw material and fuel costs; (4) industrial competition and price fluctuations in Japan and international markets; (5)advance or delay in the construction of new plants and production lines; (6) successful development of new products
and technologies; and (7) changes in laws and regulations (including tax and environmental) and legal proceedings.
24