Summary of Consolidated Financial Results for Third Quarter of FY2018
Feb. 6, 2019
Mitsubishi Gas Chemical Company, Inc (TSE 4182)
1.Summary of Income Statement (April 1- Dec 31, 2018)
Apr. 1 -Dec. 31,
2017471,110Net Sales

Millions of yen, rounded down
Apr. 1 -Dec. 31,
Change (%)
2018499,625
6.1

Operating income

48,95238,398(21.6)

Ordinary income

64,261

62,672(2.5)

Net income attributable to owners of the parent

43,91950,16014.2

Comprehensive income

56,52849,271(12.8)Net income per share (Yen)

203.71

234.81

2. Financial Position
Millions of yen, rounded down
As of Dec. 31, 2018

As of Mar. 31, 2018
Total Assets

785,687

803,583

Net Assets

519,144551,799

59.5

62.2

Equity Ratio(%)
3. Dividends
FY2017FY2018Interim dividend per share (Yen)

24.00

35.00

Year-end dividend per share (Yen)

35.00

35.00(Forecast)

Annual Dividend per share (Yen)

59.00

70.00(Forecast)(Note) Revision of cash dividend forecast during this period: None
4. Consolidated Business Forecasts for FY2018 (April 1, 2018 - March 31, 2019)
Millions of yen, rounded down
Full YearNet Sales

650,000

Operating income

45,000Ordinary income

76,000Net income attributable to owners of the parent

61,000Net income per share (Yen)

285.54(Note) Revision of consolidated business forecasts during this period: Yes
Please refer to ”Revision of Business Performance”for details.
5. Number of Shares Outstanding (Common Stock)
Mar31,2018

Dec31,2018

Number of shares outstanding at term end (including treasury stock)

231,739,199

231,739,199

Number of shares of treasury stock at term-end

18,135,027

18,098,910

Apr. 1 -Dec. 31,
2017

Apr. 1 -Dec. 31,
2018215,597,970

213,626,854

Average shares outstanding during period

1. These quarterly financial results are not subject to quarterly review procedures. At this time of disclosure ofthese financial results, the quarterly financial statement review procedures based on the Financial Instrument andExchange Law have not been completed.
2. Forecasts, etc., recorded in this document contain forward-looking statements that are based on management’s
estimates, assumptions and projections at the time of publication. A number of factors could cause actual results
to differ materially from expectations.

Consolidated Financial Statements
1. Consolidated Balance Sheets(Millions of yen, rounded down)
As of Mar. 31, 2018 As of Dec. 31, 2018ASSETS
Current assets
Cash and deposits
Trade notes and accounts receivable
Short-term investments securities
Merchandise and finished goods
Work in progress
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

1

101,090
165,606
121
57,958
11,04434,75014,847(1,170)384,249

84,553
164,546
81
70,29912,41536,313
18,220(1,020)385,40980,82381,35958,535
220,71779,75378,24568,241
226,240

3,911
4,499
8,411

3,934
4,839
8,774

161,391
11,471(555)
172,308
401,437
785,687

172,146
11,567(554)
183,159
418,173803,583

Consolidated Balance Sheets (continued)(Millions of yen, rounded down)
As of Mar. 31, 2018 As of Dec. 31, 2018
LIABILITIESCurrent liabilities
Trade notes and accounts payable
Short-term loans payable
Income taxes payable
Provision
Asset retirement obligations
Other
Total current liabilities
Noncurrent liabilities
Bonds payable
Long –term loans payable
Provision
Projected benefit obligations
Asset retirement obligations
Other
Total noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive incomeValuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
Non controlling interest
Total net assets
Total liabilities and net assets

288,72071,155
4,133
5,643
1,522
35,660206,835

90,711
61,495
2,510
3,138
1,550
39,188
198,594

10,00025,328
3,549
4,592
2,420
13,81559,707
266,543

10,00017,016
4,160
4,605
2,447
14,95953,189251,783

41,97034,578399,033(19,966)
455,616

41,97034,652434,240(19,929)
490,934

17,261(0)
222(7,614)
1,878
11,74751,780519,144785,687

12,276(1)
222(5,236)
1,373
8,635
52,230551,799803,583

2. Consolidated Statements of Income(Millions of yen, rounded down)
Apr. 1 -Dec. 31, Apr. 1 -Dec. 31,
2017
2018
471,110499,625
353,474
390,064
117,635
109,560
68,682
71,161
48,95238,398Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in earnings of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expense
Personnel expenses for seconded employees
Rent expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Provision for loss on guarantees
Loss on valuation of investment securities
Loss on disposal of non-current assets
Loss on liquidation of subsidiaries and affiliates
Amortization of goodwill
Loss on withdrawal from businessTotal extraordinary losses
Income before income taxes, etc.
Income taxes, etc.
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent

3

323
2,007
14,0003,304
19,636435
2,089
24,494
2,707
29,726

784
1,151
835
1,556
4,328
64,261

791
1,248
1,187
2,225
5,452
62,672

1,105
1,105

989
714
1,704

1,007
8,320
154
162
102
100
9,847
55,5207,230
48,2894,369
43,919711
669
1201,501
62,875
9,757
53,117
2,957
50,160(Consolidated Statements of Comprehensive Income)(Millions of yen, rounded down)
Apr. 1 -Dec. 31, Apr. 1 -Dec. 31,
2017
2018
Net income
Other comprehensive Income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency statements translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of associates accounted for using equity method
Total other comprehensive Income
Comprehensive income
Comprehensive income attributable to owners of the parentComprehensive income attributable to non-controlling interests

448,28953,117

4,171
(3)
2,878
(217)
1,410
8,238
56,52851,206
5,321(5,010)(1)(1,041)(458)
2,665(3,846)49,27147,0482,2223.Segment Information(Billions of yen, rounded down）
FY 2017

FY 2018

1-3Q

1-3Q

FY2017
ChangeFY 2018

Full Year Full Year
ResultNet sales

Forecast

471.1

499.6

28.5

635.9

650.0

Natural Gas Chemicals

124.1

144.3

20.2

174.7

186.3

Aromatic Chemicals

161.6

162.7

1.1

213.1

213.0

Specialty Chemicals

152.3

158.7

6.3

205.0210.4

Information and Advanced Materials

39.9

40.8

0.9

52.7

51.1

Other and Adjustment
Operating income (loss)

(6.9)

(7.1)

(0.1)

(9.8)

(10.9)

48.9

38.3(10.5)

62.7

45.0

Natural Gas Chemicals

3.2

3.1

(0.1)

5.4

3.2

Aromatic Chemicals

21.6

15.5

(6.1)

25.6

17.6

Specialty Chemicals

22.2

17.8

(4.4)

29.6

23.3

Information and Advanced Materials

3.5

3.7

0.2

4.2

3.4

Other and Adjustment
Non-operating profit

(1.8)

(1.8)

(0.0)

(2.2)

(2.7)

15.3

24.2

8.9

17.9

31.0

Ordinary income

64.2

62.6

(1.5)

80.7

76.0

Natural Gas Chemicals

10.9

20.7

9.7

14.2

27.0

Aromatic Chemicals

20.9

15.0(5.9)

24.5

16.6

Specialty Chemicals

27.9

23.0

(4.9)

37.9

29.2

Information and Advanced Materials

4.7

4.3

(0.3)

5.5

4.3

(0.3)

(0.4)

(0.1)

(1.6)

(1.3)

Other and Adjustment

4.Other Information 1
FY2014FY2015FY2016FY2017FY2018
Forecast

Investments(Billions of yen)

Full year

22.2

30.5

35.0

30.9

44.0

1-3Q

14.7

22.6

24.1

23.2

28.7

Depreciation & amortization(Billions of yen)Full year

23.7

26.7

25.6

27.0

27.0

1-3Q

17.8

19.8

18.8

20.0

20.3

R&D expenditures(Billions of yen)

Full year

16.8

18.9

19.2

18.9

20.0

1-3Q

12.3

13.7

14.2

14.2

13.8

Number of Staff

Year-end

8,254

8,176

8,034

8,009

8,152

ROA (Ordinary income)

5.8%

5.9%

8.4%

10.6%

9.4%

ROA

ROE (Net income)

12.6%

9.0%

12.0%

13.6%

12.4%

R

5.Other Information 2
FY2014FY2015FY2016FY2017

ResultResultResultResult1-3Q

FY20184Q

ResultForecast

1-3Q

4Q

First half

Second halfFirst half

Second halfFirst half

Second half

Exchange Rate
(JPY/USD, Average)

103

117

122

118

105

112

112

108

111

110

Exchange Rate
(JPY/EUR, Average)

139

139

135

130

118

119

129

133

129

125

crude oil (Dubai)(USD/BBL)

104

63

56

36

43

51

53

64

71

55

Methanol (USD/MT, Asian
average spot price)

432

358

301

230

230

327

319

395

394

310

Mixed Xylene(USD/MT)

1,100

730

740

630

660

680

660

765

825

650

Bisphenol A(USD/MT)*

1,600

1,200

950

850

1,000

1,000

1,100

1,600

1,200

1,200

～2,000～1,900～1,500～1,100～1,200～1,400～1,700～1,700～1,900～1,500

Polycarbonate(USD/MT)*

2,500

2,300

2,100

2,000

2,200

2,400

2,500

3,600

2,100

2,100～2,700～2,700～2,650～2,400～2,500～2,800～3,600～3,900～3,800～2,500*Describe the minimum and maximum values during the period

Note: Methanol price forecasts are expressed for the following periods.
FY2014:
1H:January-June
2H:July-December
FY2015-FY2016:
1H:April-September
2H:October-March

5

Qualitative Information
Consolidated Business Results for This Period
Overview of Results(Billions of yen)
Apr.1-Dec.31,

Apr.1-Dec.31,

2017

2018

Net sales

471.1

499.6

28.5

Operating income

48.9

38.3

(10.5)

Ordinary income

64.2

62.6

(1.5)

43.9

50.1

6.2

Net income attributable to owners ofthe parent

ChangeOver the first nine months of the fiscal year ending March 2019 (April 1– December 31, 2018),
the world economy continued to show signs of a slow recovery. However, concerns about trade
friction, the deceleration of China’s economic growth and the volatility of financial and capital
markets reinforced existing economic uncertainty. The Japanese economy also manifested signsof a slow recovery. Despite increased costs for production and logistics due to a labor shortage,
employment and private income continued to improve.
The management environment surrounding the MGC Group saw such changes as increases in
raw material and fuel prices. However, the market prices of polycarbonates and purified
isophthalic acid saw the end of a prolonged high and began to decline.
Against this backdrop, the MGC Group adhered to the Group Vision of “Creating values to sharewith society” in a bid to improve its corporate value. In the first fiscal year of the MGC Advance2020 Medium-term Management Plan, the Group moved ahead with the plan’s basic policies:“strengthening the earnings power of existing businesses with a focus on core businesses,”“creating and developing new businesses” and “implementing investment strategies to form anoptimal business portfolio.”
The MGC Group achieved growth in net sales compared with the same period of the previous
fiscal year, primarily because of the market prices of methanol, which, despite a downward trend
from last November onward, remained higher than the levels recorded in the same period of theprevious fiscal year. Also contributing were strong overall sales volumes.
Operating income fell compared with results for the same nine-month period of the previous fiscalyear. While sales volumes of specialty polycarbonates increased, the profitability of foamed
plastics has deteriorated due to hikes in raw material and fuel prices. Furthermore, the lower
market prices of purified isophthalic acid and polycarbonates also led to the decrease in earnings.

-6-Although the Group’s overseas methanol producing companies served as key contributors to anincrease in equity in earnings of affiliates, ordinary income decreased year on year due to thedecline in operating income.
However, net income attributable to owners of the parent grew year on year. This was mainly
thanks to a decrease in extraordinary losses from the same period of the previous fiscal year inwhich the Group posted a loss on valuation of investment securities in connection with a shale
gas and LNG project in Canada.
MGC issued a news release on December 4, 2018 entitled, “Notice about the Methanol Joint
Venture in Saudi Arabia of JSMC, a MGC’s Equity Method Affiliate.” As stated in that release,
MGC’s equity method affiliate JSMC and Saudi Basic Industries Corp. (SABIC) agreed to thefollowing two terms regarding the Saudi Methanol Company (AR-RAZI), whose joint ventureagreement was set to expire on November 29, 2018. First, JSMC will sell 50% of its shares in ARRAZI (this represents 25% of all AR-RAZI shares) to SABIC for US$150 million to reduce its
shareholding ratio to 25:75. And, second, JSMC will make a final decision by March 31, 2019 onwhether to exercise its option to sell its remaining stake, which would end the joint venture statusof AR-RAZI.
As for the expected impact on MGC’s consolidated financial performance, although the transferof shares is expected to generate a total loss of around ¥5.0 billion, MGC already recorded theoriginally projected ¥1.7 billion in tax-related expenses as equity in earnings (losses) of affiliatedcompanies in the third quarter of the current fiscal year. The decrease in JSMC’s shareholding for
AR-RAZI will also likely affect MGC’s equity in earnings (losses) of affiliated companies. However,
MGC has not yet determined when its consolidated performance will be impacted because thetransfer of shares must first be approved by each country's governmental authorities. In the third
quarter of the fiscal year, MGC therefore calculated equity in earnings (losses) of affiliatedcompanies related to JSMC at the pre-sale 50:50 shareholding ratio for the period after November
29, 2018, when the joint venture agreement was set to expire.

-7-Results by Business Segment
Natural Gas Chemicals(Billions of yen)
Apr.1-Dec.31,

Apr.1-Dec.31,

Change

2017

2018

Sales

118.1

138.0

19.9

Operating income

3.2

3.1(0.1)

Ordinary income

10.9

20.7

9.7

The methanol business grew in both revenue and earnings due to an increase in methanol market
prices compared with the same period of the previous year.
Methanol and ammonia-based chemicals had higher revenue due to an overall increase in sales
volumes and an increase in the market prices of MMA-based products. Earnings from thesechemicals, however, decreased year on year, due to higher raw material prices.
Crude oil and other energy sources achieved prior-year-level earnings. Despite a crude oil priceincrease, crude oil sales volume dropped.
Aromatic Chemicals(Billions of yen)
Apr.1-Dec.31,

Apr.1-Dec.31,

Change

2017

2018

Sales

160.9

162.3

1.3

Operating income

21.6

15.5

(6.1)

Ordinary income

20.9

15.0

(5.9)

Specialty aromatic chemical products posted growth in both revenue and earnings compared withthe same period of the previous fiscal year. The negative impact of higher raw material and fuelprices was more than offset by solid sales of meta-xylenediamine and aromatic aldehydes.
General-purpose aromatic chemical products suffered lower earnings. Negative influences
included an increase in raw material and fuel prices and reduced profitability due to lower market
prices of purified isophthalic acid.
Foamed plastics saw a decline in earnings primarily due to higher raw material and fuel prices.

-8-

Specialty Chemicals(Billions of yen)
Apr.1-Dec.31,

Apr.1-Dec.31,

Change

2017

2018

Sales

151.6

157.8

6.2

Operating income

22.2

17.8(4.4)

Ordinary income

27.9

23.0(4.9)

Although higher sales volumes helped drive up sales of inorganic chemicals, lower earnings wereposted due to increasing competition in liquid chemicals used for semiconductor and LCD displays.
The engineering plastics business saw a sales volume increase for specialty polycarbonates usedin smartphone camera lenses. However, earnings decreased due to the deteriorating profitabilityof polycarbonates and polyacetal as well as a lower sales volume for films used in flat panel
displays.

Information & Advanced Materials(Billions of yen)
Apr.1-Dec.31,

Apr.1-Dec.31,

Change20172018

Sales39.940.8

0.9Operating income

3.5

3.7

0.2

Ordinary income

4.7

4.3

(0.3)

Electronic materials achieved growth in both revenue and earnings. This was thanks to a yearon-year increase in the sales volume of mainstay BT materials for semiconductor packaging thatcountered unfavorable factors emerging in the third quarter due to declining demand for materials
for smartphones and an excess supply of those used in memory devices.
Oxygen absorbers such as AGELESS® saw a drop in earnings, primarily due to increasing
competition in the domestic food market.

-9-