Kureha Corporation Reports Interim Results
Q2 FY2011 (April - Sept. 2010)
Tokyo, Japan – November 2010 – Leading specialty chemicals and plastic products
company, Kureha Corporation (“Kureha”), has reported earnings for the half-year
period ended September 30, 2010. On a consolidated basis, both operating income
and recurring income increased significantly year-on-year (YoY), rising 474.9% to¥3,008 million and 528.1% to ¥2,547 million, respectively. Overall sales also grew 8.2%YoY to ¥64,642 million, while net income was ¥1,253 million. Results exceeded theimproved earnings forecast announced by Kureha in September and can be largely
attributed to a strong recovery in the Advanced Materials and Specialty Chemicalsdivisions.

Change in earnings estimates (April-Sept. 2010)
ActualSales
Operating income
Recurring income
Net income
Earnings per share (EPS) (¥)

64,642
3,008
2,547
1,253
7.08

(¥ million, except where stated)
New Forecast
Old Forecast(Sept. 2, 2010) (May. 13, 2010)
64,00062,000
2,400
1,300
2,000
1,000
1,000
600
5.58
3.35

Commenting on the results Kureha President and Chief Executive Officer, Takao
Iwasaki, said, “Thanks to the stronger than anticipated demand recovery for major
products in the advanced materials division including PPS, PVDF and negativeelectrode materials for lithium batteries, along with the steady expansion of specialty
chemical products such as fungicide and Kremezin, both operating and recurring profits
recorded a significant increase, albeit from a comparatively lower base. Kureha
expects its efforts to develop the business and market for PGA (polyglycolic acid) toalso begin contributing to results in the years to come, with commercial operations due
to commence next spring following the construction of a new U.S. production facility. I
believe that our focus on developing strategic products globally, such as PGA, isgradually demonstrating results.”

Summary of consolidated half year results

Sales
Operating income
Recurring income
Net income
Earnings per share (EPS) (¥)

Sept. 2010
64,642
3,008
2,547
1,2537.08(¥ million, except where stated)
Sept. 2009
Change (%)
59,717
8.2
523
474.9
405
528.1
110.06-Page 1 of 6

Consolidated interim performance
Division
Advanced materials
Specialty chemicals
Specialty plastics
Other operations
TotalSales
Operating income
Sales
Operating income
Sales
Operating income
Sales
Operating income
Sales
Operating profit(¥ million, except where stated)
Sept. 20010 Sept. 2009
Change(%)
17,02613,99821
109-911
15,892
14,248
12
2,412
1,141
110
20,813
20,978
-1
1,147
829
38
10,91010,4914-502-289
64,642
59,717
8.2
3,167
523
474.9

Performance by division
Advanced Materials Division
Major product areas: advanced plastics (PPS, PVDF), carbon fiber, PGA
For the half-year period, the performance of the Advanced Materials Division exceeded
the latest company forecast. Divisional sales increased by 21% YoY to ¥17.0 billion,
with the division recording operating profit of ¥109 million.
Carbon products business recovering
Sales of carbon products increased from ¥3.1 billion to ¥3.3 billion, due to demand
recovery for carbon fibers for heat insulation materials used in the manufacturing ofsolar power equipment and semiconductors. In addition, Kureha’s hard carbon for
negative electrode material of lithium ion secondary batteries, Carbotron, whichdisplays high durability, has seen growing demand from the automotive sector andstrong interest in the product has also been seen in Japan, Korea and China.
Sharp increase in demand for PPS and PVDF
Sales of advanced plastics jumped from ¥5.7 billion to ¥7.5 billion. Demand for PPS
resin used in the electrical, electronics and automotive industries, particularly hybrid
electronic vehicles (HEVs), steadily improved and provided strong profitability.
Earnings from the U.S.-based joint venture, Fortron Industries, have also demonstrated
signs of recovery. Demand for PVDF resin, which is used in electrode binders forlithium-ion batteries for EVs, HEVs and consumer electronic appliances, has alsoexperienced strengthening. As a result, production capacity will be increased to 4,000
tons per year by next summer, in particular reflecting stronger demand from theautomotive sector.
Outlook: Divisional sales for the full-year are projected to be ¥35.0 billion, up from¥28.4 billion, with operating losses expected to shrink from ¥3.6 billion in the previous
fiscal year to ¥0.4 billion. It is anticipated that major products across the division willrecord an increase in both sales and profits. PVDF is expected to enjoy strong demand
growth, although PPS demand for use in automotive applications is set to decline dueto the expiration of a government incentive program aimed to green vehicles. InPage 2 of 6

addition, PGA is starting to contribute to sales figures, although further progress will berequired to offset heavy development costs.

Outlook for PGA business:
Following significant research and analysis, Kureha firmly believes in the potential of
PGA to grow into a core strategic product of the future. Kureha is currently targeting
two application areas: packaging materials and well stimulation. A global beverage
producer has already begun testing of Kureha’s PGA bottles in Africa, where thesevere environment provides the sternest test of the material’s stability. In the oilexploration area, PGA’s characteristics means one application is expected to be in
crude oil drilling to improve the recovery ratio of residuals.
Currently, mechanical work is expected to be completed by the end of November, withtrial production to be launched shortly thereafter and commercial production to begin in
March/April 2011. The plant is expected to run at full capacity within four to five years
time.

Specialty Chemicals Division
Major product areas – industrial chemicals, agrochemicals, pharmaceuticals
Specialty Chemicals Division sales were up 12% YoY to ¥15.9 billion, with divisional
operating income more than doubled at ¥2.4 billion.
Improved performance of industrial chemicals
Sales of industrial chemicals increased 8% YoY to ¥5.2 billion. Inorganic chemicals
suffered from unit price decline, although the price of chlorobenzene improved.
However, the significant volume growth of both organic and inorganic chemicals wasenough to offset weaker pricing, and ensured an increase in sales and profits.
Agrochemicals exports strengthen
Sales of agrochemicals improved to ¥2.9 billion, up from ¥2.2 billion in the previousyear. Strong export sales of Metconazole, a fungicide for oilseed rape and wheat, morethan offset the impact of the weakened Euro. Strengthening of one yen against theEuro is estimated to lower Kureha’s top-line by approximately ¥45 million.
Pharmaceuticals business stable
Sales of Kremezin, a therapeutic agent for chronic kidney disease, registered strong
volume growth despite a drug price cut, while overall sales of pharmaceuticals grewsteadily from ¥4.4 billion to ¥4.6 billion. Sales of Krestin, a cancer immunotherapy
treatment, however, were weaker during the interim period.

Outlook: Divisional sales are projected to be ¥33.0 billion for the full fiscal year, downfrom ¥35.8 billion in previous year. The anticipated weakening of performance is due tocombination of factors, including a one-off payment for domestic marketing rights for
Kremezin, an official drug price cut and the weakening Euro.

Specialty Plastics Division
Major product areas –food packaging materials, household products, fishing lines

Page 3 of 6

Specialty Plastics Division operating income improved by 38% YoY to ¥1.1 billion,
while sales declined marginally by 1% YoY to ¥20.8 billion.
Sales of commercial-use packaging materials increased
Sales of commercial-use packaging materials including multi-layer shrinkable film,vinylidene chloride film and Besela, a high gas barrier film for lamination, increased
during the period, up by 9% YoY to ¥5.7 billion, also benefitting from an increase inPVDC compound exports to China. The interim period also saw a reduction in pension
related costs at affiliated companies in Europe, but costs associated with a shift inproduction to Vietnam as well as the weak Euro exerted pressure on profitability.
Household-use packaging materials weaken
Sales of household products declined to ¥9.6 billion from ¥10.8 billion, down 11% YoY.
Despite efforts to optimize pricing and customer value for the renewed NEW Krewrap,
sales declined due to increasingly severe competition. However, a reduction in fixedcosts as a result of the expansion in production of raw material vinylidene chloride
compound, meant that operating profits for household products improved from theprevious year.
Outlook: For the full fiscal year, divisional sales are forecast to increase to ¥45.0 billion,from ¥42.4 billion during the previous fiscal year. Operating income is expected toincrease from ¥1.9 billion to ¥2.8 billion thanks to the anticipated contribution from anincrease in PVDC compound exports to China, a reduction in pension related costs ataffiliated companies in Europe and the removal of PGA-related costs. Increased
competition in the household packaging materials sector is set to continue.

Other Operations Division
Major product areas – construction, environment, logistics, trading related businesses
Other Operations Division sales were down 4% YoY to ¥10.9 billion, while the division
recorded an operating loss of ¥500 million.
Continued challenges for construction related businesses
Sales at construction related businesses declined by 18% YoY to ¥8.6 billion due to thedrop in both public works and private sector construction works. The absence of large
plant projects also placed pressure on overall performance.
Environmental engineering sales increase
Sales at environmental engineering businesses increased 35% YoY to ¥2.9 billion on
the back of increased orders for industrial waste processing work and the contributionof a new office acquired in Kanagawa prefecture.
Logistics and warehousing activity stable
Sales for logistics and warehousing businesses were ¥5.5 billion, up from ¥5.2 billion in
the previous year due to the increase in traffic volume. Profits also increased.

Outlook: Overall divisional sales are projected to be ¥27.0 billion for the full fiscal year,
down from ¥27.9 billion in the previous year. With the continued weak outlook forconstruction related businesses, the division is expected reach approximately
breakeven point.

Page 4 of 6

Consolidated capital expenditure, depreciation and R&D

Capital expenditure
Depreciation
R&D
Interest-bearing debt

Sept. 2010

Sept. 2009

4.8
5.0
2.6
51.6

6.6
5.3
2.8
47.8

(¥ billion)
March 2011
(forecast)
15.7
10.5
6.0
55.4

Capital expenditure declined from ¥6.6 billion to ¥4.8 billion during the half-year period,in part because capacity expansion efforts across all divisions have gradually reachedcompletion. For the full-year, capital expenditure is projected to be ¥15.7, down 7%
YoY. Depreciation for the period declined slightly from ¥5.3 billion to ¥5.0 billion; atrend that is expected to continue for the full-year results. R&D expenditure was downslightly from ¥2.8 billion to ¥2.6 billion during the half-year period and is projected to beapproximately ¥6.0 billion for the full fiscal year. Interest-bearing debt has been
increasing, rising from ¥47.8 billion to ¥51.6 billion during the half-year period and isprojected to reach ¥55.4 billion for the full fiscal year, although this trend is in line with
Kureha’s expectations.

Outlook for the full year

Sales
Operating income
Recurring income
Net income
Earnings per share (EPS) (¥)

March 2011
(Forecasts)
140,000
6,000
5,000
2,400
13.98

(¥ million, except where stated)
March 2010
Change (%)
134,606
5,706
5,499
1,571
8.77

4.0
5.1
-9.1
52.7
59.4

The forecast for overall sales for the fiscal year ending March 2011 remains unchangedat ¥140.0 billion, although divisional forecasts have been adjusted to reflect the better
than expected improvement of the Advanced Materials Division and the deterioration in
performance of the Other Operations Division. Projections for operating income andrecurring income remain unchanged from May 2010. Net income is projected to expand
significantly to ¥2.4 billion.
*****
For further information, please contact:
KUREHA CORPORATION
Public Relations and IR Department
Tel. 03-3249-4651

Page 5 of 6

Condensed interim balance sheets
As of 30 September 2010 and 2009

AssetsCurrent assets
Cash and cash equivalents
Fixed assets
Property, plant and equipment
Intangible assets
Investments and other assets
Total Assets
Liabilities and Net Assets
Current liabilities
Short-term borrowings
Fixed liabilities
Corporate bonds
Long-term borrowings
Total Liabilities
Net Assets
Shareholders’ equity
Minority interest
Total Net Assets
Total Liabilities and Net Assets

Sept. 2010

¥ million
Sept. 2009

62,7208,138
114,815
81,124989
32,701
177,536

65,261
7,480
116,643
77,645
882
38,115
181,904

41,172
12,30644,81620,00019,26085,98846,924
17,35837,39515,00015,43984,32090,730204
91,547
177,536

93,119406
97,584
181,904

Sept. 2010
64,64247,976
13,657
3,008
651
1,113
2,547
280
4082,418
1,165
1,253

¥ million
Sept. 2009
59,71744,957
14,235
523
792
910
405
349
413
341
330
11

Condensed interim income statement
For the fiscal years ended 30 September 2010 and 2009

Sales
Cost of goods soldSelling, general and administrative expenses
Operating income
Non-operating income
Non-operating expenses
Recurring income
Extraordinary gains
Extraordinary losses
Income before income taxes
Taxes and minority interest adjustments
Net income

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