TOKYO OHKA KOGYO CO., LTD.
Business Results― The 1st Half of Fiscal Year ending Dec. 2018―Aug. 9, 2018TOKYO OHKA KOGYO CO., LTD.

© 2018 TOKYO OHKA KOGYO CO., LTD.

Contents

1. Consolidated Business Results forthe 1st Half of FY2018 (2018.1-2018.6)

p.2

2. Consolidated Performance Forecasts for
FY2018 (2018.1-2018.12)

p.13

3. Future Priority Activities

p.22© 2018 TOKYO OHKA KOGYO CO., LTD.

Consolidated Business Results
for the 1st Half of FY2018© 2018 TOKYO OHKA KOGYO CO., LTD.

Explanation about earnings of FY2018/1203

 Following a change in fiscal year-end, the results of FY2017/12
were reclassified to conform to the new fiscal period for theexplanation about earnings of FY2018/12 (results/forecast).
* Approved by the 87th Ordinary General Meeting of Shareholders (held on June 28, 2017)(March 31 ⇒ December 31)

Domestics
Overseas

3Q

2017/3
3Q
10-12
3Q

4Q
1-3
4Q

1Q
4-6

3Q

1Q
1-3
1Q

2018/12
3Q
2Q
7-9
4-6
2Q
3Q

1Q

2Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

2017/12 Simulation result
1Q
2Q
3Q
4Q
1-3
4-6
7-9
10-12

1Q
1-3

2018/12
2Q
3Q
4-6
7-9

3Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

3Q
10-12
Domestics
Overseas

3Q

2017/12
2Q
3Q
7-9
10-12

2017/6 Simulation result

3Q

4Q
10-12
4Q
4Q

4Q
10-12

2018/6© 2018 TOKYO OHKA KOGYO CO., LTD.

Summary04(Millions of yen ）FY2017/12
1H

FY2018/12

1H

Change%+2,684+5.6

Net sales

48,063 50,748

Operating income

4,506

4,674+167+3.7

Ordinary income

4,893

4,675(217)(4.4)

Profit attributable toowners of parent

3,378

3,210(168)(5.0)

Note : Following a change in fiscal year-end, comparisons are made with the adjusted results for the 1st
half of the fiscal year ended December, 2017 (January to June). Please refer to slide 3 for details.
■Average exchange rate (US$)︓ ¥111.1／$（FY2017/12 1H）⇒¥107.6／$（FY2018/12 1H)■Net sales︓Increased 5.6% due to a year-on-year sales increase both in the Material Business and theEquipment Business.
■Operating income︓Increased 3.7% year on year partly due to a reduced loss in the Equipment Businessdespite the impact of rising raw materials costs.
■Profit attributable to owners of parent︓Decreased 5.0% year on year due to special factors related to tax
effect accounting, although operating income increased and extraordinary income or loss improved.
© 2018 TOKYO OHKA KOGYO CO., LTD.

Non-operating Expenses or Income/Extraordinary Losses or Income

05（Millions of yen）

FY2017/12
1H

FY2018/12
1H

386

1（385)

Interest and dividend income+185+193+8(Foreign exchange related losses/gains)

(113)
+207
(320)

(121)
(514)
+392

（7)
(721)
+713

－

(63)

(63)

(776)

(64)

+712

Impairment loss(664)－+664Loss on sales and retirement ofnoncurrent assets

(99)

(68)

+31

Non-operating Expenses or income

Foreign exchange (loss) gain
Loss(gain) on valuation of derivatives

Operating preparation expenses
Extraordinary losses or Income

YoY

Note : Following a change in fiscal year-end, comparisons are made with the adjusted results for the 1st
half of the fiscal year ended December, 2017 (January to June). Please refer to slide 3 for details.

© 2018 TOKYO OHKA KOGYO CO., LTD.

06

Results by Business Segment
FY2017/12
1H

FY2018/12（Millions of yen）

1H

Change%48,06350,748+2,684+5.6

47,38549,686+2,301+4.9

Electronic
functional materials

27,66927,814+144+0.5

High purity
chemicals

19,62921,818+2,189+11.2

86

53

(33)

(38.6)

677

1,061+383+56.5

4,506

4,674+167+3.7

Material business

7,067

6,802（265)(3.8)

Equipment business

(662)

(321)

+341－

(1,898)(1,806)+91－

Net sales
Material business

Other
Equipment business
Operating income

Eliminations andcorporate

Note : Following a change in fiscal year-end, comparisons are made with the adjusted results for the 1st
half of the fiscal year ended December, 2017 (January to June). Please refer to slide 3 for details.
© 2018 TOKYO OHKA KOGYO CO., LTD.

Breakdown of the Charge in Operating Income(Material Business)07

1st Half of FY2017/12 result v.s. 1st Half of FY2018/12 result
Impact of exchange rate changes
andDiscounted selling prices(¥1.0billions)Improvement inproduct mix＋¥1.6billions

Expenses increase(¥0.9billions)¥6.8¥7.1billions

1st Half ofFY2017/12
Result

1st Half ofFY2018/12Resultbillions(¥0.3billions)

Note : Following a change in fiscal year-end, comparisons are made with the adjusted results for the 1st
half of the fiscal year ended December, 2017 (January to June). Please refer to slide 3 for details.
© 2018 TOKYO OHKA KOGYO CO., LTD.

Sales Breakdown of Material Business
Net Sales（Millions of yen）

25,00023,02835

20,0009,584

24,35751
10,04425,32725,534(4)

52

10,614

10,922

23,396
1708
25,29035

10,669

11,14915,00010,0005,000
013,40814,261

14,71814,55913,70914,1052017/12 Q1

2017/12 Q2

2017/12 Q3

2017/12 Q4

2018/12 Q1

2018/12 Q2

Electronic functional materials

High purity chemicals

Other

Note : Following a change in fiscal year-end, comparisons are made with the adjusted results for thequarter of the fiscal year ended December, 2017. Please refer to slide 3 for details.
© 2018 TOKYO OHKA KOGYO CO., LTD.

09

Electronic Functional Materials Division
Sales Composition of Semiconductor
Photoresist by Region

Sales Composition of Electric
Function Materials by Type
Other
High-density
integration*

9%

g+i

16%

Semiconductor
Photoresist

KrF

LCD

23%

11%

ArF

Semiconductor
Photoresist

Other

24%

8%

High-density
integration* 16%* EUV is included others.

LCD

10%

* High-density integration︓
Resist for Packaging,
MEMS Materials

23%

Asia

17% FY2017/12
1st Half
resultJapanArF

24%

FY2017/12
58% 1st Half
North America
result14%

5%g+i16%FY2018/12
1st Half
resultKrF

26%*Sales composition ofsemiconductor
photoresist by region
includes EUV.

Asia

EuropeJapan23%

FY2018/12
North
1st Half
14% America
58%
result5%EuropeNote : Following a change in fiscal year-end, comparisons are made with the adjusted results for the 1sthalf of the fiscal year ended December, 2017 (January to June). Please refer to slide 3 for details.
© 2018 TOKYO OHKA KOGYO CO., LTD.

Equipment BusinessNet sales/Order backlog（millions of yen）

Net sales

10

Order backlog

1,976

2,000

1,496

1,500
1,000

677

879

1,061

1,0615000

2017/12 1H(Millions of yen）
Year-end order backlog

2017/12 2H

2018/12 1H

2017/12 1H

2017/12 2H

2018/12 1H

1,423

1,190

2,291

Note : Following a change in fiscal year-end, uses are made with the adjusted results for the 1st
half and the 2nd half of the fiscal year ended December, 2017. Please refer to slide 3 for details.
© 2018 TOKYO OHKA KOGYO CO., LTD.

Capital Investments/Depreciation/R&D

11(Millions of yen)
FY2018/12 (2018.1-6)

FY2017/12 1H
Simulation result

Change%Capital Investments

3,436

2,045(1,390)(40.5)

Depreciation

3,446

3,532

+86

+2.5

R&D

4,459

4,098(360)(8.1)

Note : Following a change in fiscal year-end, comparisons are made with the adjusted results for the 1st
half of the fiscal year ended December, 2017 (January to June). Please refer to slide 3 for details.

© 2018 TOKYO OHKA KOGYO CO., LTD.

Balance Sheets12As ofJune 30,2018

Current Assets（Million of yen）

v.s. December
31, 2017

94,876+7,157

Cash and deposits

52,791+8,609

Notes and accounts
receivable

21,293(1,260)Inventories

15,967+73

49,023(2,680)511+21Investments and other assets

37,892(875)Current Liabilities

18,952(2,790)

9,922

(522)

Long-Term Liabilities

12,894+9,473

Total net asset

150,456(3,060)Total asset

182,304+3,622

Property, plant and equipment
Intangible assets

Notes and accounts payable

Buildings and structures
Machinery
Furniture and fixtures
LandConstruction in progress

Long-term debt

(37)
(864)
(326)
(131)
(1,337)+10,000

Retained earnings+1,826
Treasury stock(2,109)Unrealized gain on available-for-sale securities(1,036)
Foreign currencytranslation adjustments(1,354)© 2018 TOKYO OHKA KOGYO CO., LTD.

Cash Flows

13（Millions of yen）
FY2018/12
1H

Cash flows from operating activities+7,693

Income before income taxes andminority interests+4,611

Depreciation+3,532

Decrease (increase) in trade notes andaccounts receivable+829

Decrease (increase) in inventories(496)

Decrease (increase) in trade notes andaccounts payable(321)

Increase (decrease) in advances
received
Income taxes paid

+95
(1,039)Cash flows from investing activities(4,225)

Cash flows from financing activities+5,807

Translation adjustments
Net increase (decrease) in cash and cash
equivalents(686)+8,587

Major breakdown
Purchases of property,
plant and equipment(3,835)Major breakdown
Proceeds from long-term debt
+10,000
Purchases of treasury stock(2,212)
Dividends paid
(1,929)(incl. minority shareholders)© 2018 TOKYO OHKA KOGYO CO., LTD.

Consolidated Performance
Forecasts for FY2018(2018.1-2018.12)© 2018 TOKYO OHKA KOGYO CO., LTD.

Earnings Forecasts (Full-year)

15（Millions of yen）

FY2017/12
Simulation result

FY2018/12 Forecasts
Change%100,422106,200+5,777+5.8

Operating income

9,878

11,000+1,121+11.4

Ordinary income

10,534

11,400+865+8.2

6,885

7,600+714+10.4

Net sales

Profit attributable toowners of parent

Note : Following a change in fiscal year-end, comparisons are made with the adjusted results for the fiscalyear ended December, 2017. Please refer to slide 3 for details.
■Exchange rate assumptions（US$）︓ ¥111.1／$（2017/12）⇒¥108.0／$（2018/12）■Net sales : Increased 5.8% due to a year-on-year sales increase both in the Material Business and theEquipment Business.
■Operating in come : Forecast to increase 11.4% year on year due to an improvement in the Equipment
Business while the Material Business is forecasted to show only a slight increase.
■Profit attributable to owners of parent : Will increase in conjunction with increasing operating income,rising 10.4% year on year.

© 2018 TOKYO OHKA KOGYO CO., LTD.

16Performance Forecasts by Business Segment（Millions of yen)
FY2017/12
Simulation
resultNet sales

FY2018 Forecasts
Change%100,422106,200+5,700+5.8

98,247

102,600+4,352+4.4

Electronic functional
materials

56,94758,300+1,352+2.4

High purity chemicals

41,16544,200+3,034+7.4

2,174

3,600

+1,425

+65.6

9,878

11,000+1,121+11.4

Material business

14,868

15,100+231+1.6

Equipment business(1,073)

(400)

+673

－

Eliminations and corporate(3,917)(3,700)+217－

Material business

Equipment business
Operating income

Note : Net sales of the Equipment Business are the figures after elimination of inter-segment sales.
Note : Following a change in fiscal year-end, comparisons are made with the adjusted results for the fiscal year
ended December, 2017. Please refer to slide 3 for details.

© 2018 TOKYO OHKA KOGYO CO., LTD.

Capital Investments/Depreciation/R&D

17(Millions of yen)
FY2017/12(2017.1-12)
Simulation result

FY2018/12 Forecast
Change%Capital Investments

7,633

6,900(733)(9.6)

Depreciation

6,917

7,200+282+4.1

R&D

8,888

8,500(388)(4.4)

Note : Following a change in fiscal year-end, comparisons are made with the adjusted results for the fiscalyear ended December, 2017. Please refer to slide 3 for details.

© 2018 TOKYO OHKA KOGYO CO., LTD.

Breakdown of the Charge in Operating Income(Material Business)

18

FY2017/12 Simulation Result v.s. FY2017/12 Forecast

Eliminate of costs
associated with change
in fiscal year-end+¥0.8billions

Impact of Exchange rate changes
and discounted selling prices(¥2.1billions)
Expenses increase(¥2.6billions)

Impact ofsales increases, etc＋¥3.6billions¥14.9¥15.1billions

FY2017/12
Simulation resultbillions+¥0.2 billions

FY2018/12Forecast

Note : Following a change in fiscal year-end, comparisons are made with the adjusted results for the fiscalyear ended December, 2017. Please refer to slide 3 for details.
© 2018 TOKYO OHKA KOGYO CO., LTD.

Sales Breakdown of Material Business (Forecast) 19
Sales（Millions of yen）

50,00040,00047,38586

50,86247

49,68653

21,536

21,81827,66929,277

27,814

17/12 1H

17/12 2H

18/12 1H

19,62952,91346
22,381

30,00020,00010,000030,485

18/12 2H

Simulation

ElectronicSimulation
Functional MaterialsHigh purity chemicals

Other

Note : Following a change in fiscal year-end, uses are made with the adjusted results for the 1sthalf and the 2nd half of the fiscal year ended December, 2017. Please refer to slide 3 for details.
© 2018 TOKYO OHKA KOGYO CO., LTD.

Electronic Functional Materials Division
Sales Composition of Semiconductor
Photoresist by Region

Sales Composition of Electric
Functional Materials by Type
Semiconductor
Photoresist

OtherHigh-density
integration*

17%

8%

g+iJapanAsia

KrF

58%

Simulation 24%
LCD
11% result
ArF
24%

Semiconductor
Photoresist

FY2017/12
SimulationresultUSA14%

5%

EuropeOther

High-density
integration*g+i
9% g+i15%

16% FY2018/12* EUV is included others.

LCD
10%

* High-density integration︓
Resist for Packaging,
MEMS Materials*Sales composition ofsemiconductor photoresist
by region includes EUV.

23%

16%

FY2017/12

20

Forecast
ArF
24%

Japan

24%

KrF

Asia FY2018/12

26%

57%

Forecast

USA

14%
5%

EuropeNote : Following a change in fiscal year-end, comparisons are made with the adjusted results for the fiscal
year ended December, 2017. Please refer to slide 3 for details.

© 2018 TOKYO OHKA KOGYO CO., LTD.

Future Priority Activities© 2018 TOKYO OHKA KOGYO CO., LTD.

Trend by Product (Initial/Current Outlook)

22Business/Products

Initial Outlook（2018/2）

ArF

 Sales increase due to operationof next-generation production
line (Asia, USA)

 Asia︓Demand increase is expected due toexpansion of mass production
 USA : Full-scale shipment is expected in 2019

 Continued adoption for nextgeneration 3D-NAND (Japan,Asia) Japan︓Currently responding to materials
selection for next-generation 3D-NAND.
Strong demand is expected to continue Asia : Respond to materials selection for nextgeneration

KrFHigh-density
integrationmaterials

High purity
chemicals Expand production lines that use
Bump (Asia)

 Adoption of and increased
demand for Clean Solution on
next-generation production line(Asia, USA)

Equipment  Develop TSV equipment into a nextgeneration memory production (Asia)
businessEUV

 Start of operation of nextgeneration production line willcontribute to sales (Asia, USA)

Current situation and Outlook Asia︓Demands for bump fabrication in major
customers is expected to increase (packagematerials)
 Expected to start picking up from 2H (MEMSmaterials)
 Asia︓Shipments are favorable. Strong
demand is increasing
 USA︓Shipment started but full-scale
shipment is expected to start in 2019
 Obtain orders from customers (TSVequipment)

 Sales are expected to increase from the end ofFY2018/12© 2018 TOKYO OHKA KOGYO CO., LTD.

Future Priority Activities ①︓ArF/KrF【ArF】
Sales（15/3＝100）

Around120
100

Forecast

Around 50

11/3 12/3 13/3 14/3 15/3 16/3 17/3 17/12 18/12

Simulation【KrF】
Sales（15/3＝100）

100

Around140
Forecast

23

ArF︓Direction of activities□ Recovery of sales growth potential
 DRAM ︓ Continue the activities to regainour market share among major customers
in Asia and USA
 Logic : Expand our market share in a majorcustomer in USA

KrF︓Direction of activities□ Maintain the recent sales growth andstrengthen it further
 Proactive actions to meet growing demands
for 3D-NAND
・Japan︓Secure our market share withAround 80

closely related R&D with customers
・Asia︓Expand our market share bystrengthening capability to meet customersʼ

11/3 12/3 13/3 14/3 15/3 16/3 17/3 17/12 18/12

Simulation

process（Note）TOK renewed record high earnings in the FY2015/3.
© 2018 TOKYO OHKA KOGYO CO., LTD.

Future Priority Activities ②︓24

High-density integration materials

Packaging Materials︓Direction of activities【Packaging Materials】
Sales（15/3＝100）

Around 200
Forecast100□ Maintain growth amid increasingly fiercecompetition
 Strengthen price competitiveness amid
growing technical requirements
・Maintain our market share among major

Around 50

customers and acquire new customer needs

11/3 12/3 13/3 14/3 15/3 16/3 17/3 17/12 18/12

・Respond proactively to OSAT in Asia

Simulation【MEMS Materials】
Sales（15/3＝100）

Around 210
Forecast

MEMS Materials︓Direction of activities□ Enhance stable sales growth Further develop customer base・Win adoptions by major electronic

100

component manufacturers in USA, Japan,and Asia

Less than30

・Penetrate into and acquire new customers in
11/3 12/3 13/3 14/3 15/3 16/3 17/3 17/12 18/12

Simulation

the Chinese market（Note）TOK renewed record high earnings in the FY2015/3.
© 2018 TOKYO OHKA KOGYO CO., LTD.

Capital Policy

25

TOK pursues a new best balance of investment,
cash reserves, shareholder returns
１.Enhancing Shareholder Returns
Cash dividends applicable to the year（yen)Dividend payout ratio (Consolidated)

64

64
43.8%

64※72（Forecast）

 Clear dividend policy and its operation

Considering the current level of dividends,
continuously distribute dividends with aconsolidated dividend payout ratio of over40%.
（Current dividend policy was implemented fromFY2017/3）

46.3%
40.0%

36.1%

 Purchase of treasury stock（From Nov. 8, 2017 through Feb. 9, 2018）

16/3

17/3

17/12

18/12

＊:Including 4 yen of commemorative
dividend for 75th anniversary in FY2016

2.Close attention to capital cost・Total purchase cost︓Approx. 10billion yen(Number of stocks to be purchased︓Approx. 2.04million shares）
 Use of long-term debt finance・Funding through long-term debt
(Balance at the end of June 2018:10billionyen）© 2018 TOKYO OHKA KOGYO CO., LTD.

https://www.tok.co.jp/eng(Note)
This presentation material contains forward-looking statements that
describe future prospects of TOKYO OHKA KOGYO CO., LTD. (theCompany) in terms of business planning, earnings and management
strategies. Such statements are based on managementʼs judgement,
derived from information available to it at the time such information
was prepared. Readers are cautioned not to rely solely on theseforward-looking statements, as actual results and strategies may
differ substantially according to changes in the Companyʼs businessenvironment.