Consolidated Financial Results for the Six Months Ended September 30, 2019
(JPGAAP)
November 8, 2019
Stock Exchange: Tokyo
Name of listed company: Nissan Chemical Corporation
URL: http://www.nissanchem.co.jp/
Code Number: 4021
Representative: Kojiro Kinoshita, President
Inquiry to: Nobuhiro Arita, Associate Executive Officer and Deputy Head of Finance and Accounting Department Tel. +81 3 4463 8404
Scheduled submission date of quarterly report: November 14, 2019
Scheduled dividend payment date: December 2, 2019
Supplemental information: Yes
Financial results meeting : Yes (For institutional investors and financial analysts)(Amounts rounded down to the nearest million yen)

1. Consolidated Financial Results for the Six Months Ended September 30, 2019 (From April 1, 2019 to September 30, 2019)(1) Consolidated Operating Results(% indicates the rate of increase/decrease against the same period of the previous year)

OperatingincomeNet sales

Six months ended September 30, 2019
Six months ended September 30, 2018
(Note) Comprehensive income:Ordinary
incomeNet income attributableto owners of parent

Million yen%

Million yen%

Million yen%

Million yen%

96,466(1.6)

18,026(7.1)

18,646(9.5)

14,523(5.8)

98,038

7.7

19,39912.4

20,613

15.6

15,40916.9

Six months ended September 30, 2019

: 11,051 million yen , (33.7%)

Six months ended September 30, 2018

: 16,669 million yen , (0.2%)

Basic earnings
per share

Diluted net income
per share

Yen

Yen

Six months ended September 30, 2019

98.75

㸫

Six months ended September 30, 2018

103.53

㸫(2) Consolidated Financial Position
Net assets

Total assets

Equity ratio

Million yen

Million yen%

As of September 30, 2019

223,511

180,007

79.8

As of March 31, 2019

246,990

182,074

73.0(Reference) Shareholders' equity:

As of September 30, 2019

: 178,424 million yen

As of March 31, 2019: 180,345 million yen

2. Cash Dividends
Cash dividends per shareFirst
quarter

SecondquarterYen

Thirdquarter

Yen

Year ended March 31, 2019

䠉

40.00

Year ending March 31, 2020

䠉

42.00

Year ending March 31, 2020
(Outlook)Year-end

Yen

Annual

Yen

Yen

㸫

42.00

82.00

㸫

46.00

88.00

(Note) Revision of the latest released dividend outlook: None

3. Outlook of Consolidated Financial Results for the Fiscal Year Ending March 31, 2020 (From April 1, 2019 to March 31, 2020)(% indicates the rate of increase/decrease against the same period of the previous year)

OperatingincomeNet salesYear ending March 31, 2020

Ordinary
incomeNet income attributableto owners of parent

Basic earnings
per share

Million yen%

Million yen%

Million yen%

Million yen%

Yen

209,000

2.0

38,6004.1

39,7001.5

30,6004.2

208.92(Note) Revision of the latest released outlook of financial results: Yes
Please refer to " Revision of Financial Results Outlook " for details.

4. Notes(1) Changes in significant consolidated subsidiaries(Changes in specified subsidiaries involving changes in scope of consolidation)(2) Application of special accounting treatment to preparation of quarterly financial statements: None: None(3) Changes of accounting policies and accounting estimates, and restatement
1. Changes of accounting policies due to revisions of accounting standards: None2. Changes of accounting policies other than the above: None3. Changes in accounting estimates: None4. Restatements: None(4) Number of shares outstanding (common shares)
1. Number of shares outstanding (including treasury shares)
As of September 30, 2019 : 147,000,000 shares
As of March 31, 2019

: 149,000,000 shares

2. Number of treasury shares
As of September 30, 2019 :As of March 31, 2019653,844 shares: 1,217,872 shares

3. Average number of shares outstanding
As of September 30, 2019 : 147,069,733 shares
As of September 30, 2018 : 148,836,896 shares(Note) The Company has introduced a “Board Benefit Trust (BBT)” from the second quarter of the current
consolidated fiscal year, and repurchased its own shares based on the trust agreement. As a result,treasury shares increased by 799 million yen.
Also, the shares held by the Trust (included in treasury shares) are deducted in calculating the number oftreasury shares at the end of the period and the average number of shares during the period.
The number of shares held by the Trust (included in treasury shares) at the end of second quarter of thecurrent consolidated fiscal year was 166,200 shares.
In addition, the average number of shares held by the Trust during the second quarter of the current
consolidated cumulative period was 41,550 shares. This is not included in the average number of shares
outstanding.
* Presentation regarding implementation status of quarterly review procedures
The financial release is not subject to quarterly review.
* Explanations regarding appropriate use of business forecasts and other special notes
The business forecast contained in this report is based on information available at the time of disclosure.
Actual operating results may differ materially from the forecast due to various factors.
For supplemental information, please refer to our website.
Financial results audio webcast will be released on our website as well.

Table of Contents for Attached Materials

1. Qualitative Information on Quarterly Results(1) Business Performance(2) Financial Position........................................................................................................ 2.............................................................................................................................. 2..................................................................................................................................... 4(3) Outlook of Consolidated Financial Results and Other Forward-looking Information .................................................... 5(4) Basic Policy on Distribution of Earnings
2. Consolidated Financial Statements......................................................................................................... 5................................................................................................................... 6(1) Consolidated Balance Sheets ...................................................................................................................... 6(2) Consolidated Statements of Income and Statements of Comprehensive Income(3) Consolidated Statements of Cash Flows...................................................... 8.......................................................................................................10(4) Notes to Consolidated Financial Statements..................................................................................................11(Notes on Assumption of Going Concern).................................................................................................11(Notes on Significant Changes in Shareholders' Equity)(Segment Information)................................................................................11.........................................................................................................................11(Significant Subsequent Events).............................................................................................................121

1. Qualitative Information on Quarterly Results(1) Business Performance
During the first half of the current fiscal year (April 1, 2019 to September 30, 2019), domestic demand for
consumer spending and capital expenditures remained strong, while exports to Asia and other regions remainedsluggish, and corporate production continued to be stagnant. Under these circumstances, the Chemicals Segment
sales increased in Fine Chemicals, while decreased in Basic Chemicals. Sales in the Performance Materials
Segment decreased in Semiconductor Materials and Inorganic Materials, while increased in Display Materials.
Sales of the Agricultural Chemicals Segment declined, mainly in oversea markets. In the Pharmaceuticals Segment,
in-house drug discovery sales decreased, while sales of "Custom Chemicals" (custom manufacturing and process
researching services for pharmaceutical companies) were almost the same as previous year.
As a result, business performance during the first half of the current fiscal year was as follows. Sales and each
income were below the same period of previous fiscal year, however operating income, ordinary income and net
income attributable to owners of parent exceeded the outlook announced in May.
(Amounts rounded down to the nearest million yen)
Consolidated
cumulative period
for the second
quarter of FY2018(Results)

Consolidated
cumulative period
for the second
quarter of FY2019(Results)

Net sales

98,03896,466(1,572)99,000Operating income

19,39918,026(1,373)17,800Ordinary income

20,61318,646(1,967)

18,400Net income
attributable to ownersof parent

15,40914,523(886)

13,700ChangeConsolidated
cumulative period
for the second
quarter of FY2019(Outlooks)

Explanations by segments are as below.
The Chemicals Segment
In Basic Chemicals, sales of melamine (adhesives agent for particle board) were almost the same as previous
year, while sales of high purity sulfuric acid (agent used for cleaning semiconductor) declined. In Fine Chemicals,
sales of "TEPIC" for electrical materials (solder resist, LED sealants) decreased, while sales for general use (powder
coating agent for paint) increased.
As a result, sales of this segment were 16,842 million yen (a decrease of 138 million yen) and operating income
were 343 million yen (a decrease of 801 million yen). Compared to outlook (Note), net sales were below 2.1 billion
yen and operating income were below 1.0 billion yen.
(Note) Outlooks are described on page 17 and 18 of the FY2018 Presentation Materials (announced on May 15,
2019)

2

The Performance Materials Segment
In Display Materials, sales of "SUNEVER" (LCD alignment coating) for both small-and medium-sized products
such as smartphones and large-scale products such as TVs performed well. In Semiconductor Materials, sales ofantireflective coatings for semiconductors (ARC®*) were affected by a decrease in utilization by some customers. In
Inorganic Materials, sales of "SNOWTEX" for polishing electronic materials declined. Sales of Organo / Monomer sol(various kinds of coating materials, resin additive) and Oilfield materials (for enhancing oil recovery) also declined.
As a result, sales of this segment were 31,387 million yen (a decrease of 579 million yen) and operating income
were 8,234 million yen (an increase of 113 million yen). Compared to outlook (Note), net sales were below 0.3 billion
yen and operating income were above 0.8 billion yen.
(Note) Outlooks are described on page 17 and 18 of the FY2018 Presentation Materials (announced on May 15,
2019)* ARC® is registered trade mark of Brewer Science, Inc.
The Agricultural Chemicals Segment
Sales of Fluralaner (active ingredients for veterinary pharmaceuticals) declined due to inventory adjustments,
however it was above the initial outlook. Sales of domestic agrochemicals were strong due to sales of "GRACIA"(insecticide) launched in May in Japan. Sales of ROUNDUP increased from the previous year, which was affectedby natural disasters and other factors. Sales of overseas agrochemicals decreased due to lower sales of "TARGA"(herbicide) and "PERMIT" (herbicide).
As a result, sales of this segment were 27,871 million yen (a decrease of 808 million yen) and operating income
were 9,430 million yen (a decrease of 416 million yen). Compared to outlook (Note), net sales were below 0.4 billion
yen and operating income were above 0.2 billion yen.
(Note) Outlooks are described on page 17 and 18 of the FY2018 Presentation Materials (announced on May 15,
2019)
The Pharmaceuticals Segment
Sales of "LIVALO" (anti-cholesterol drug) declined due to lower sales prices in generic products both in Japan andoverseas. Sales of "Custom Chemicals" were almost the same as the previous year.
As a result, sales of this segment were 3,431 million yen (a decrease of 284 million yen) and operating income
were 530 million yen (a decrease of 75 million yen). Compared to the outlook (Note), both net sales and operating
income were as expected.
(Note) Outlooks are described on page 17 and 18 of the FY2018 Presentation Materials (announced on May 15,
2019)
Trading
As a result, sales of this segment were 33,316 million yen (a decrease of 127 million yen) and operating income
were 1,017 million yen (a decrease of 83 million yen). Compared to outlook (Note), net sales were below 0.7 billion
yen and operating income were as expected.
(Note) Outlooks are described on page 17 and 18 of the FY2018 Presentation Materials (announced on May 15,
2019)
Others
Net sales for this segment were 9,831 million yen (a decrease of 670 million yen) and operating income were 129
million yen (a decrease of 105 million yen).

3(2) Financial Position(Position of Assets, Liabilities and Net Assets)
Total assets as of September 30, 2019 was 223,511 million yen (a decrease of 23,479 million yen from March 31,2019). It is mainly due to the decrease of notes and accounts receivable - trade.
Also, total liabilities as of September 30, 2019 was 43,503 million yen (a decrease of 21,413 million yen). It ismainly due to the decrease of loans payable.
Net assets as of September 30, 2019 was 180,007 million yen (a decrease of 2,066 million yen).
As a result of these factors, equity ratio was 79.8% (an increase of 6.8% from March 31, 2019).
(Position of Cash Flow)
Deducting income taxes paid from income before income taxes and non-controlling interests, depreciation andgain and loss on working capital, net cash provided by operating activities for the six months ended September 30,
2019 was 31,936 million yen (29,145 million yen for the same period of the previous year).
Due to the investment on plant and equipment, net cash used in investing activities for the six months ended
September 30, 2019 was 2,423 million yen (5,966 million yen).
Due to the decrease in loans payable, payment for dividends and share repurchase, net cash used in financing
activities for the six months ended September 30, 2019 was 33,449 million yen (31,478 million yen).
As a result of these factors, cash and cash equivalents at the end of this period was 31,870 million yen (29,493
million yen), reflecting exchange of 376 million yen. It decreased by 4,312 million yen from March 31, 2019.

4

(3) Outlook of Consolidated Financial Results and Other Forward-looking Information
Outlook for the year ending March 31, 2020 was revised as follows based on the cumulative second quarter anddemand outlook.
Revision of consolidated financial results’ outlook for the year ending March 31, 2020
(April 1, 2019 to March 31, 2020)(Amounts rounded to the nearest billion yen)Previous
outlook(A)Revisedoutlook (B)Increaseordecrease(B-A)

Rate ofchange(%)(Reference)
Results for theprevious fiscal
year

Net sales

210.5

209.0

(1.5)

(0.7)%

204.9

Operating income

38.7

38.6

(0.1)

(0.3)%

37.1

Ordinary income

40.2

39.7

(0.5)

(1.2)%

39.1

Net income attributable toowners of parent

30.2

30.6

+0.4

+1.3%

29.4

Basic earnings per share

205.83 yen

208.92 yen㸫㸫

197.67 yen

Revision of consolidated net sales and operating income outlook for the year ending March 31, 2020
(Amounts rounded to the nearest billion yen)
Net sales
Operating income
Chemicals
Performance Materials
Agricultural Chemicals
Pharmaceuticals
Trading
OthersAdjustment
Total

Previous
39.0
64.3
64.2
7.0
67.8
23.3
(55.1)
210.5

Revised
37.3
63.5
64.3
7.0
67.1
22.4
(52.6)
209.0

Previous
4.0
15.0
19.0
1.0
2.0
0.6
(2.9)
38.7

Revised
3.4
15.1
19.6
1.1
2.1
0.6
(3.3)
38.6

(4) Basic Policy on Distribution of Earnings
The Company’s basic policy of profit allocation is returning to shareholders by improving company value throughincreasing revenue in the medium and long terms.
In medium-term business plan “Vista2021” Stage II launched from April 2019, the Company aims to realize
dividend payout ratio to be 42.5% in FY2019 and to be 45% after FY2020. In addition, total payout ratio is aimed to
be 72.5% in FY2019 and to be 75% in FY2020.

5

2. Consolidated Financial Statements(1) Consolidated Balance Sheets(Million yen)
As of
September 30, 2019

As ofMarch 31, 2019
AssetsCurrent assets
Cash and deposits

36,18331,870Notes and accounts receivable - trade69,193

51,823Merchandise and finished goods

32,21532,19741705

Raw materials and supplies

9,742

11,622

Other

5,146

5,400

(32)

(26)

152,490

133,593

Buildings and structures, net

25,251

24,693

Other, net

27,477

27,461

Total property, plant and equipment

52,72952,154

Software

721

631

Other

796

795

1,517

1,427

Investment securities

35,22930,365

Other

5,117

6,062

Work in process

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

Intangible assets

Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(92)

(92)

Total investments and other assets

40,25336,334

94,50089,917

246,990

223,511

Total non-current assets
Total assets

6

(Million yen)
As ofMarch 31, 2019

As of
September 30, 2019

Liabilities
Current liabilities
Notes and accounts payable - trade

17,80915,786

Short-term loans payable

25,465

5,319

Income taxes payable

4,330

5,117

Provision for bonuses

2,137

2,070

25

12

Other

10,43011,503

Total current liabilities

60,19839,808

1,116

856

Provision for business structure improvement

370

310

Provision for loss on business of subsidiaries and affiliates

309

309

Net defined benefit liability

152

181

2,768

2,037

Provision for directors' bonuses

Non-current liabilities
Long-term loans payable

Other
Total non-current liabilities
Total liabilities

4,717

3,694

64,91643,503

Net assets
Shareholders' equity
Capital stock

18,942

18,942

Capital surplus

13,613

13,613Retained earnings

143,200

141,584

Treasury shares(6,291)(3,159)Total shareholders' equity

169,464

170,980

10,6348,066

Foreign currency translation adjustment

(11)

(863)

Remeasurements of defined benefit plans

258

241

10,8807,443

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

7

1,728

1,583

182,074

180,007

246,990

223,511(2) Consolidated Statements of Income / Consolidated Statements of Comprehensive Income- Consolidated Statements of Income(Million yen)
Six Months Ended
September 30, 2018

Six Months Ended
September 30, 2019

Net sales

98,03896,466

Cost of sales

54,961

56,267Gross profit

43,07740,198Selling, general and administrative expenses

23,677

22,171

Operating income

19,39918,026

Non-operating income
Interest income

1212Dividend income

332

359

Equity in earnings of affiliates

408

395

Other

1,023

595

Total non-operating income

1,777

1,362

Interest expenses

59

70

Loss on disposal of non-current assets

315

200

Plant stop losses

134

218

-

222

Non-operating expenses

Foreign exchange losses
Other

52

29

Total non- operating expenses

563

742

20,61318,646

Ordinary income
Extraordinary income
Gain on sales of investment securities

-

1,694

Total extraordinary income

-

1,694

Extraordinary losses
Licensing arrangement fee-

834

Total extraordinary losses-

834

Income before income taxes and non-controlling interests

20,613

19,506

Income taxes - current

5,397

5,034

Income taxes - deferred

(276)

(100)

Total income taxes

5,121

4,934

Net income

15,492

14,57282

49

15,40914,523

Net income attributable to non-controlling interests
Net income attributable to owners of parent8

- Consolidated Statements of Comprehensive Income(Million yen)
Six Months Ended
September 30, 2018

Six Months Ended
September 30, 201915,942

14,572850(2,567)

Foreign currency translation adjustment

352

(935)

Remeasurements of defined benefit plans, net of tax

(26)

(17)

0

(0)

Net income
Other comprehensive income
Valuation difference on available-for-sale securities

Share of other comprehensive income of entities accounted forusing equity method
Total other comprehensive income
Comprehensive income

1,176(3,521)

16,66911,051

16,564

11,085

104(34)(Comprehensive income attributable to)
Owners of parent
Non-controlling interests9(3) Consolidated Statements of Cash Flows(Million yen)
Six Months Ended
September 30, 2018

Six Months Ended
September 30, 2019

Income before income taxes and non-controlling interests

20,613

19,506

Depreciation and amortization

5,049

4,698

Interest and dividend income

(345)

(372)

Loss (gain) on sales of investment securities(268)(1,694)

Interest expenses

59

70

Loss (gain) on disposal of non-current assets

315

200

Cash flows from operating activities

Decrease (increase) in notes and accounts receivable - trade

12,093

17,051

Decrease (increase) in inventories(3,739)(2,980)

Increase (decrease) in notes and accounts payable - trade(2,054)(1,824)

Other

1,875

689

Subtotal

33,60035,346

Interest and dividend income received

789

945

Interest expenses paid

(60)

(70)

Income taxes paid

(5,183)(4,285)

Net cash provided by (used in) operating activities

29,14531,936

Cash flows from investing activities
Purchase of investment securities

(905)

(6)

Proceeds from sales of investment securities

398

2,909

(5,168)(4,175)

Payments for retirement of property, plant and equipment

(268)

(176)

Purchase of intangible assets

Purchase of property, plant and equipment

(116)

(128)

Net decrease (increase) in short-term loans receivable

91

(618)

Purchase of long-term prepaid expenses

(13)

(420)

Other

17

193

(5,966)(2,423)(19,650)(19,400)

Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Repayments of long-term loans payable(1,277)(930)

Cash dividends paid

(5,380)(6,206)

(167)

(111)

(5,002)(6,799)Dividends paid to non-controlling interests
Share repurchase
Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents(0)-(31,478)(33,449)

90

(376)

Net increase (decrease) in cash and cash equivalents(8,209)(4,312)

Cash and cash equivalents at beginning of period

37,702

36,183

Cash and cash equivalents at end of period

29,49331,87010

(4) Notes to Consolidated Financial Statements(Notes on Assumption of Going Concern)
Not applicable.
(Notes on Significant Changes in Shareholders' Equity)
The Company canceled 1,000,000 treasury shares on May 10, 2019 based on the resolution of Board of Directors' meeting held on April 23, 2019.
In addition, the Company canceled 1,000,000 treasury shares on August 30, 2019 based on the resolution of Board of Directors' meeting held on
August 20, 2019. As a result, retained earnings and treasury shares decreased by 9,932 million yen during the second quarter ofcurrent consolidated fiscal year.
Also, the Company repurchased 1,269,600 treasury shares based on the resolution of Board of Directors' meeting held on May 15, 2019.
As a result, treasury shares increased by 5,999 million yen during the second quarter of current consolidated fiscal year. In addition, the Company
repurchased 166,200 treasury shares based on the trust agreement of the Board Benefit Trust (BBT) resolved by the Board of Director's
meeting on July 30, 2019. As a result, treasury shares increased by 799 million yen during the second quarter of current consolidated fiscal year.
(Segment Information)
1. Information Regarding Sales, Income (Loss) of Reportable Segments
1) For the Six Months Ended September 30, 2018 (From April 1, 2018 to September 30, 2018)
Chemicals

Performance
Materials

Agricultural
Chemicals

Pharmaceuticals

Trading(Million yen)
Others

Total

Adjustment(1)

Consolidated
Total

Sales
Sales to outside customers

12,29928,403

26,732

3,716

23,115

3,771

98,038䠉

98,038Intersegment Sales

4,681

3,563

1,947

㸫

10,327

6,731

27,252(27,252)

㻙Total Sales

16,981

31,967

28,6803,716

33,443

10,502

125,291(27,252)

98,038Segment Income or Loss
(Operating Income or Loss)

1,145

8,120

9,846

605

1,100

235

21,054(1,655)

19,399Notes: (1) The (1,655) million yen adjustment in segment income includes (205) million yen in intersegment eliminations and (1,450) million yen
corporate expenses not attr butable to any reportable segment. The corporate expenses are mainly group administrative expenses
which do not belong to any segment.
2) For the Six Months Ended September 30, 2019 (From April 1, 2019 to September 30, 2019)
Chemicals

Performance
Materials

Agricultural
Chemicals

Pharmaceuticals

Trading(Million yen)
Others

Total

Adjustment(1)

Consolidated
Total

Sales
Sales to outside customers

12,184

27,77526,2853,420

22,8093,984

96,4596

Intersegment Sales

4,658

3,612

1,586

11

10,507

5,847

26,222(26,222)㻙

16,842

31,387

27,871

3,431

33,316

9,831

122,682(26,216)

96,466

343

8,234

9,430

530

1,017

129

19,686(1,660)18,026

Total Sales
Segment Income or Loss
(Operating Income or Loss)

96,466

Notes: (1) The (1,660) million yen adjustment in segment income includes (164) million yen in intersegment eliminations, 6 million yen sales
not attributable to any reporting segment, and (1,501) million yen corporate expenses not attributable to any reportable segment.
The corporate expenses are mainly group administrative expenses which do not belong to any segment.

11

(Significant Subsequent Events)
The Company, at the board of Director's meeting held on November 8, 2019, has decided to repurchase its shares in the market
under Article 156 of the Japanese Corporation Act, as applied pursuant to Article 165, Paragraph 3 of the same Act.
1. Purpose of repurchaseTo facilitate flexible implementation of capital policy in response to changes in the business environment.
2. Details of repurchase(1) Class of shares: Common shares of the company(2) Total number of shares : Up to 1,300,000 shares(0.89% of total shares outstanding, excluding treasury shares)(3) Total amount: Up to 4,000,000,000 yen(4) Period of repurchase: From November 11, 2019 to April 30, 2020(For reference) Number of treasury shares as of September 30, 2019
Total number of shares issued (excluding treasury shares): 146,512,356 shares

Number of treasury shares:

487,644 shares* Not including 166,200 shares of treasury shares which the Board Benefit Trust (BBT) has hold.

12