Kureha Corporation Reports Interim Results
April – September 2016
This report has been prepared in accordance with the International Financial ReportingStandards (IFRS), which Kureha adopted in FY2016.
Tokyo, Japan, December 2016 – Kureha Corporation (“Kureha”), a leading global
supplier of specialty chemicals and plastics, has reported earnings for the first half ofthe year ending March 2017 (FY2016). On a consolidated basis, sales decreased
10.1% to 60.2 billion yen year-on-year while operating income fell 9.9% to 4.5 billion
yen. Income before income tax decreased by 25.8% to 3.6 billion yen. This resulted in
an 11.6% decrease in net income attributable to the owners of Kureha to 3.1 billion yen.
Earnings were affected by a challenging operating environment. In the global economy,
uncertainties persisted about the downside risks of the Chinese economy as well as
instability in the EU, which was magnified by the Brexit decision. In Japan, personal
consumption and capital investment continued to be lackluster, while the appreciating
yen impacted negatively on the sales of companies operating overseas.
The situation was compounded by a bottoming-out of the crude oil price early in theyear, which affected the hydraulic fracking industry in North America and, in turn,demand for Kureha’s polyglycolic acid (PGA). This was a key reason behind thedeclines in sales and operating income seen in the first half.
However, the Advanced Materials segment also saw positive developments, including
effective operational streamlining and continued strong demand for polyvinylidene
fluoride (PVDF), a key binder material for lithium-ion batteries. Kureha, already leading
the global PVDF market with a share of 50%, is now looking to expand capacity. In
addition, the Specialty Plastics segment continued to see strong growth for Kureha’s
popular home-use wrap film, New Krewrap.
Yutaka Kobayashi, President and Chief Executive Officer, said, “Operating conditionsin the first half were very challenging, particularly in the core Advanced Materials
segment. It is vital that we now assess each of our business areas to maximize
performance. However, it is important to note that, in the PGA business, the long
downward trend in the number of drilling units reversed in June, and that PGA demandcan be expected to grow going forward. To benefit from this trend, Kureha has taken
steps to gain direct access to customers in the North America market as a developerand supplier of leading-edge frac plug solutions. In addition, PVDF demand is so strongthat we are looking to expand capacity at our Iwaki Plant in Japan.”
Mr. Kobayashi added, “Our group-wide efforts to reduce costs and enhance efficiency
continue to bear fruit. In several segments that saw lower sales in the first half, we also
saw rises in operating income, notably in the Specialty Plastics business. We willcontinue to innovate and add value to our product offering at every level of ouroperations, while continuing our successful drive to reduce costs across the group.”
Consolidated interim results(Billions of yen, except where stated)
Sales
Operating income
Income before income tax
Net income attributableto owners of Kureha
Dividend per share (yen)Sept. 2016

Sept. 2015

Change (%)

60.2
4.5
3.6
3.1

67.0
5.0
4.8
3.5

-10.1
-9.9
-25.8
-11.6

5.5.

5.5

-

Page 1 of 7

Consolidated interim results by segment(Billions of yen)Segment
Advanced materials
Specialty chemicals
Specialty plastics
Construction related
Other operations

Sept. 2016

Sept. 2015

Change (%)

Sales
Operating income
Sales
Operating income
Sales
Operating income
Sales
Operating income
Sales
Operating income

14.7
0.6
11.2
0.8
21.0
2.3
5.9
0.4
7.5
0.4
2

17.8
0.6
14.8
2.4
20.7
1.4
6.3
0.3
7.5
0.3
1

-17.5
3.8
-24.2
-67.8
1.6
64
-6.9
13.9
0.2
36.5

Sales
Operating income

60.2
4.5

67.0
5.0

-10.1
-9.9

Adjustments
Total

Performance by Segment
Advanced Materials
Major product areas: advanced plastics (PPS, PVDF, PGA), carbon materials
In the first-half period, sales in the Advanced Materials segment decreased by 17.5%
to 14.7 billion yen from 17.8 billion yen. Operating income continued on a slight positive
trajectory, rising by 3.8% to 0.6 billion yen. These results were primarily driven by lower
demand for PGA in the advanced plastics business.
Advanced plastics: Slowing PGA demand but continued PVDF growth
Sales of advanced plastics fell 22% to 9.0 billion yen. A key contributing factor was thefall in demand for PGA in the shale oil and gas industry, which was affected by low
crude oil prices.
PVDF for use in binders for lithium-ion batteries (LiBs) continued to see firm sales,
primarily for automotive LiBs loaded in electric and plug-in hybrid electric vehicles,
although this growth could not offset the slower performance in the PGA business.
Carbon products: Effective streamlining improves operating income
In carbon products, sales decreased by 28% to 2.2 billion yen. This was due to factors
including falling demand for heat-insulating materials used in the manufacturing of solar
power equipment. However, Kureha’s ongoing group-wide effort to reduce costs andraise operating efficiency contributed to an improvement in operating income.
Outlook: Segment sales for the full fiscal year are projected to be 33.0 billion yen,down 3% from 33.9 billion yen in the previous period. Operating income is expected tofall 20% to 1.1 billion yen. The main factors behind these results will be continued
slowing performance in the PGA business throughout the year, as well as intensifying
competition in the PPS business.
However, it should be noted that the number of fracking wells is once again on the rise
since June, and we foresee PGA demand to grow going forward. Importantly, in April
2016 Kureha renegotiated the sales contract with Magnum Oil Tools International Ltd.,
which previously had exclusive sales rights for PGA in North America, and revised it toinclude non-exclusivity terms. This revision gave Kureha direct access to the market
and thereby drastically improved our ability to develop and deliver differentiatedPage 2 of 7

solutions to meet customer needs. Going forward, we will be able to directly showcase
our technological know-how to customers through a new joint venture between Kureha
and JGC Corporation, called Kureha Energy Solutions LLC. Based in Houston, Texas,
this new company, which became operational in October 2016, will focus specificallyon marketing and selling Kureha’s original PGA downhole tools for use in gas and oilfields in the Americas. We are confident this new market position will contribute towarda growth recovery for the PGA business, although the strategic change will have an
impact on results initially.
In the PVDF business, the tightening of environmental regulations and positive outlook
for electric and plug-in hybrid electric vehicles around the world points toward
continued strong demand. We expect LiB binder demand, particularly for use withcathode materials, to become increasingly diversified and expand for both general andspecialty grades. Kureha is therefore moving to expand production capacity by 2,000
tons / year at the Iwaki Plant in Fukushima, Japan.
For heat-insulating materials used in the manufacturing of solar power equipment,
Kureha foresees continued improvement in operating income due to price adjustments
and efforts to raise operating efficiency.

Specialty Chemicals
Major product areas – industrial chemicals, agrochemicals, pharmaceuticals
In the first-half period, the Specialty Chemicals segment recorded sales of 11.2 billion
yen, a decrease of 24.2%, and operating income of 0.8 billion yen, down 67.8%. This
result was primarily driven by slower performance for agrochemicals andpharmaceuticals.
Agrochemicals: Slow agriculture sector affects demand
The agricultural sector continued to face difficult conditions characterized byoversupply and lower export demand. This negatively affected demand for agriculturalchemicals, including the fungicide Metconazole.
Pharmaceuticals: Negative impact of price revisions and generics
Drug price revisions and government promotion of generic drugs in the Japanesemarket weighed on this business, and Kureha recorded a decrease in the sales volume
of Kremezin, a therapeutic agent for chronic kidney disease.
Industrial chemicals: Low raw material prices impact on sales and income
In the industrial chemicals business, lower raw material prices resulted in lower market
prices, in turn adversely affecting sales and income. Kureha’s ongoing cost reduction
efforts, however, offset these declines to some extent.
Outlook: Segment sales for the full fiscal year are projected to decrease by 18% from30.4 billion yen to 25.0 billion yen, while operating income will decrease by 47% to 2.5
billion yen, mainly due to the negative effects of drug price revisions and generic drugs
on pharmaceuticals, which will affect sales and income for Kremezin. The slow sales ofagrochemicals in the US will also force Kureha to make inventory adjustments.

Page 3 of 7

Specialty Plastics
Major product areas – food packaging materials, household products
In the first-half period, sales increased 1.6% to 21.0 billion yen from 20.7 billion yen
while operating income was up 64% from 1.4 billion yen to 2.3 billion yen. These
results were mainly due to firm growth in the consumer goods business and effective
cost reductions in the packaging materials business.
Consumer goods: Increases in sales and income
In consumer goods, sales of New Krewrap household-use wrapping continued on asolid upward trajectory, leading to increases in both sales and operating income.
Packaging materials: Lower sales of heat-shrink film, but improved income
In commercial-use food packaging materials, Kureha saw decreased sales of heatshrink barrier film. However, effective measures to cut costs and improve efficiency
reduced the operating loss.
Outlook: Sales declines in packaging materials will be more than offset by firm growthin the consumer goods business, particularly in the sales of New Krewrap. Segment
sales for the full fiscal year are expected to decrease marginally from 42.7 billion yen to
42.0 billion yen, while operating income is projected to rise strongly by 21% to 4.0
billion yen.

Construction-related / Other Operations
Major product areas – construction and engineering, environmental engineering,logistics, trading related businesses
Construction-related businesses: Income rises due to cost reductions
In the first-half period, there were fewer public reconstruction projects connected to theGreat East Japan Earthquake of March 2011, offsetting a rise in private construction
projects. However, while these circumstances impacted on sales, effective cost
reductions contributed positively to operating income. As a result, sales in constructionrelated businesses as a whole fell 6.9% to 5.9 billion yen, while operating income rose
13.9% to 0.4 billion yen from 0.3 billion yen.
Other operations: Increases in both sales and income
In the environmental business, sales and income remained on par with the previous
year due to continued incinerator renewal work. In the transportation business, whilesales were slower, operating income rose due to effective cost reductions. As a result,in other operations, sales rose slightly by 0.2% to 7.5 billion yen, while operating
income rose 36.5% to 0.4 billion yen from 0.3 billion yen.
Outlook: In construction-related businesses, Kureha foresees a continued reduction in
post-quake construction projects, as well as rising wage and material costs that will
impact on profitability. Sales are projected to decrease 14% to 14.0 billion yen while
operating income will fall 54% to 0.7 billion yen.
In other operations, Kureha forecasts growth of the micro-level PCB waste treatment
business. However, intensifying competition and increased R&D costs in theenvironmental engineering business will negatively affect sales and income. Sales areprojected to decrease 9% to 16.0 billion yen, while operating income will fall 10% to 1.4
billion yen.

Page 4 of 7

Capex, Depreciation, R&D and Debt
(Billions of yen)Sept. 2016

Sept. 2015

4.8
5.1
2.2
77.8

5.3
4.8
2.3
87.7

Capital expenditure
Depreciation
R&D
Interest-bearing debt

March 2017
(forecasts)
14.5
10.2
5.4
80.8

Capital expenditure during the first-half period decreased from 5.3 billion yen to 4.8
billion yen. For the full fiscal year, Kureha expects to spend 14.5 billion yen, up from
12.1 billion yen in FY2015, primarily to upgrade aging equipment at the Iwaki Factory
and to boost production of PPS to meet firm demand.
R&D expenditure remained nearly unchanged at 2.2 billion yen in the first half, but for
the full year the allocation is projected to be 5.4 billion yen, up from 4.9 billion yen in
the previous year. Kureha will continue to focus its R&D efforts on enhancing existingproducts and processes as well as developing next-generation products.
Interest-bearing debt decreased from 87.7 billion yen to 77.8 billion yen and is
projected to reach 80.8 billion yen for the full fiscal year.

Outlook for the Full Fiscal Year
(Billions of yen, except where stated)

Sales
Operating income
Income before income tax
Net income attributableto owners of Kureha
Dividend per share (yen)*March 2017
(Forecasts)
130.0
9.0
8.5
6.5

March 2016

Change (%)

140.8
7.4
6.6
4.9

-8
22
29
33

55.0

5.5

*Post-consolidation common share basis effective October 1, 2016.
(Billions of yen)
Division
Advanced materials
Specialty chemicals
Specialty plastics
Construction related
Other operations
Adjustments
Total

Sales
Operating income
Sales
Operating income
Sales
Operating income
Sales
Operating income
Sales
Operating income
Sales
Operating income

March 2017
(Forecasts)
33.0
1.1
25.0
2.5
42.0
4.0
14.0
0.7
16.0
1.4
-7
130. 09.0

March 2016
33.9
1.4
30.4
4.7
42.7
3.3
16.2
1.5
17.6
1.6
-50
140.8
7.4

Change
(%)
-3
-20
-18
-47
-2
21
-14
-54
-9
-10
-8
22

Kureha expects the challenging market conditions to continue in the second half of the
fiscal year. Sales will be slow in all segments, with foreign exchange fluctuations
continuing to affect results negatively.

Page 5 of 7

In the Advanced Materials segment, competition in the PPS resin business will intensify.
Also, there will be financial costs from our strategic shift to a direct Kureha market
presence in North America in the PGA business as well as our investment into
additional PVDF production capacity.
However, the PVDF business will continue to show firm growth. Likewise, in theSpecialty Plastics segment, we expect continued solid sales and income performancedue to the popularity of our New Krewrap household food wrap, which will more thanoffset declines in Specialty Chemicals and Construction. Kureha will also continue with
its program of group-wide cost reductions to further boost operating income.
Overall sales for FY2016 are forecast to fall by 8% to 130.0 billion yen, while operating
income is expected to rise 22% to 9.0 billion yen. Income before income tax is
expected to rise 29% to 8.5 billion yen. Net income attributable to owners of Kureha isprojected to increase 33% to 6.5 billion yen for the full fiscal year.
*****

For further information, please contact:
KUREHA CORPORATION
Public Relations and IR Department
Tel. 03-3249-4651

Page 6 of 7

Condensed interim balance sheets
As of 30 September 2016 and 2015
(Millions of yen)
AssetsCurrent assets
Cash and cash equivalents
Noncurrent 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. 2016

Sept. 2015

67,6996,118
162,832
121,364
1,526
39,942
230,53170,812
5,657
179,431130,848
1,810
46,773
250,244

66,93935,57845,472
26,862
14,550112,41165,862
31,03963,03032,00014,323
128,892

116,851
1,268
118,120

104,422855
121,351

230,531250,244

Sept. 2016
60,22843,472
13,163
4,512
3,564
469
3,052

Sept. 2015
66,98749,22913,867
5,008
4,807
1,418
3,453

Condensed interim income statement
As of 30 September 2016 and 2015
(Millions of yen)
Sales
Cost of goods soldSelling, general and administrative expenses
Operating income
Income before income taxes
Taxes and minority interest adjustments
Net income attributable to Kureha

Page 7 of 7

Fiscal 2016 Interim Results(Period April 1 – September 30,2016)

November 14, 2016

Contents
1. FY2016 Half-Year Results• FY2016 1H Highlights• Segment Performance• Balance Sheets• Cash Flow
2. FY2016 Full-Year Forecasts• FY2016 Full-Year Outlook• Segment Outlook• Key Indicators• Cash Flow
3. Consolidated Companies

1
2-4
5-8
9
10
11
12-15
16-19
20
21
22

NoticeKureha has adopted the International Financial Reporting Standards (IFRS) from the fiscal year ending
March 31, 2017 (FY2016). In this report, data of the previous year (FY2015) are also provided inaccordance with IFRS for comparison purposes.

1

1. FY2016 Half-Year Results(April 1 – September 30, 2016)

2

FY2016 1H Highlights(in 100 million yen except where stated)

FY2016 1H

FY2015 1H %Change

Net sales

602

670

-10.1%

Operating income

45

50

-9.9%

Income before income tax
Net income attributable toowners of Kureha

36

48-25.8%

31

35-11.6%

EPS*¥177.61¥200.99

Equity attributable toowners of Kureha per share*¥6,799¥7,011

Ratio of equity attributable toowners of Kureha to total assets

50.7%

49.3%

¥5.5

¥5.5

Dividend per share

Sept 30 2016 Mar 31 2016

Total assets

2,305

2,398

Total equity attributable toowners of Kureha

1,169

1,182

- Net sales down due to weak
volumes in Advanced Materials
and Specialty Chemicals- Lower operating income driven
primarily by declined Specialty
Chemicals- Increased financial expenses- Lower tax expenses* Per-share values are provided on a postconsolidation common share basis, in which
every ten pre-consolidation common shareswere consolidated to one post-consolidationcommon share, effective October 1, 2016.

3

FY2016 1H Highlights
FY2016 1H
Net sales

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Construction

Other
Operations

Segment
Total

147

112

210

59

75

602

Adjustment

602

Elimination

0

Other income

2

Other expenses

1

Operating income

6

8

23

4

4

44

2

Financial income

3

Financial expenses

12

Net sales

31
Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Construction

Other
Operations

Segment
Total

178

148

207

63

75

670

Adjustment

1

Other income

4

Other expenses

4

6

24

14

3

3

49

1

Financial income

4

Financial expenses

6

Income before income tax
Net income
attributable to Kureha

Total

670

Elimination

Operating income

45

36

Income before income tax
Net income
attributable to Kureha

FY2015 1H

Total

50

48
35

4

FY2016 1H Highlights
Net sales

Operating income
FY2016 1H

250
200
150

147

FY2015 1H

210 207

178

148

23

14

15

59 63

50

FY2015 1H

20

112

100

24

25

FY2016 1H

75 75

0

10
5

6 6

8
4 3

4

3

0

Advanced
Materials

Specialty Specialty Construction
Other
Chemicals Plastics
Operations

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Construction

Other
Operations

Factors affecting segment operating income[Advanced Materials] Improved PVDF and carbon products offsetting a decline in PGA[Specialty Chemicals] Lower volumes in pharmaceuticals and agrochemicals, negative effect of drug price revision[Specialty Plastics] Steady growth of home products[Construction] Cost reduction[Other Operations] Cost reduction

5

Segment Performance
Advanced Materials(in 100 million yen)

FY20161H

FY2015
1H %Change

Sales
Advanced plastics

90

115

-22%

Carbon products

22

30

-28%

Other

1

1

-18%

Non-consolidated sales total

112

146

-23%

Subsidiaries sales total

122

152

-20%

Adjustment

-88

-120

--

Kureha Group sales

147

178

-17%

6

6

4%

Kureha Group operating income

Advanced plastics
Declined on lower PGA volumes(extruded products used for oil
and gas exploration) more thanoffsetting the growth of PVDF forlithium-ion battery applications
Carbon products
Improved operating loss bystreamlining domestic and global
operations despite lower volume
sales

6

Segment Performance
Specialty Chemicals(in 100 million yen)

FY20161H

FY2015
1H %Change

Sales
Agrochemicals
Pharmaceuticals
Industrial chemicals

19
32
42

36
42
48

-48%
-24%
-13%

Non-consolidated sales total

93

127

-27%

Subsidiaries sales total

32

38

-14%

Adjustment

-13

-17

--

Kureha Group sales

112

148

-24%

8

24

-68%

Kureha Group operating income

Agrochemicals
Weak demand for fungicides
Pharmaceuticals
Lower volume and lower price of
Kremezin (therapeutic medicine
for chronic kidney failure) affectedby the impact of the national drug
price revision
Industrial chemicals
Lower volumes in both organicand inorganic chemicals

7

Segment Performance
Specialty Plastics(in 100 million yen)

Sales
Home products
Packaging materials

FY20161H

FY2015
1H %Change

101
36

89
39

14%
-9%

Non-consolidated sales total
Packaging materials
overseas
Fiber products
Other

137

128

7%

53

63

-16%

18
34

19
35

-3%
-3%

Subsidiaries sales total

104

116

-10%

Adjustment

-31

-37

--

Kureha Group sales

210

207

2%

Kureha Group operating income

23

14

64%

Home productsContinued strong growth of homeuse wrap film ‘NEW Krewrap’
Packaging materials
Decreased sales on lower heatshrink film volumes but narrowed
operating loss on improved
efficiency

8

Segment Performance(in 100 million yen)

FY20161H

FY2015
1H %Change

Construction
Sales
Construction
Adjustment

96
-37

98
-35

-2%
--

Kureha Group sales

59

63

-7%

Kureha Group operating income

4

3

14%

Logistics
Hospital operations
Other
Subsidiaries sales total

43
42
18
9
113

43
45
18
9
115

0%
-6%
3%
1%
-2%

Adjustment

-38

-40

--

Kureha Group sales

75

75

0%

Kureha Group operating income

4

3

37%

Construction
Sales slightly down due to weak
demand for post-quake publicreconstruction, but operating
income upped on lower costs

Other Operations
Sales
Environmental engineering

Other operations- Environmental engineeringleveled off- Logistics operating profit
improved through cost
reduction- Hospital operations turned
profitable on improved sales

9Balance Sheet(in 100 million yen)

AssetsSept. 30 Mar. 30%Change2016
2016

Cash and cash equivalents

61

67

-6

Accounts and notes
receivable-trade

259

309

-51

Inventories
Other current assets
Current assets total

327
30
677

331
22
729

-4
8
-52

Property, plant andequipment

1,214

1,250

-36

Intangible assets

15

17

-1

Investments and otherassets

399

403

-3

Noncurrent assets total

1,628

1,669

-41

Assets total

2,305

2,398

-93

Liabilities andNet Assets

Sept. 30 Mar. 30%Change2016
2016

Accounts and notes
payable-trade

188

198

-10

Interest-bearing debt

778

812

-34

Reserves
Other liabilities
Liabilities total

55
104
1,124

58
135
1,204

-4
-32
-80

Capital stock
Capital surplus
Treasury stock
Retained earnings
Other equities
Minority interests
Net assets total

125
94
-45
977
17
13
1,181

125
94
-45
957
50
13
1,194

0
0
0
20
-33
0
-13

Liabilities andNet assets total

2,305

2,398

-93

10

Cash Flow(in 100 million yen)

FY20161H

FY2015
1H

ChangePre-depreciation profit
Increase/decrease n assets and liabilities
Payments of corporation tax
Other-net
Cash flow from operating activities total

86
46
-14
-38
80

98
11
-25
-28
55

-12
35
10
-9
25

Cash flow from investing activities total

-56

-58

1

Cash flow from financing activities total

-31

-21

-10

Effect of exchange rate changes on cash and cash
equivalents

2

0

1

Increase/decrease in cash and cash equivalents

-6

-23

17

Cash and cash equivalents at beginning of year

67

79

-12

Cash and cash equivalents at end of year

61

57

5

11

2. FY2016 Full-Year Forecasts(April 1, 2016 – March 31, 2017)

12

FY2016 Full-Year Outlook
YoY

Changes from
FY2016 projection
as of May 2016

FY2016e

FY2015

Change

1,300

1,408

-108 (-8%)-120 (-9%)

Operating income

9074

16 (22%)-15 (-14%)

Income before income tax

8566

19 (29%)-20 (-19%)

Net income attributable toowners of Kureha

6549

16 (33%)-15 (-19%)

Dividend per share (yen)InterimEnd-year¥5.5¥55.0 *

¥5.5
¥5.5

(in 100 million yen)

Net sales* According to a post-consolidation commonshare basis effective October 1, 2016

YoY changes
Factors for changes from May 2016 projection- Sales decline in all segments, with a sharp drop in- Sales down across all segments, primarily in Advanced
Specialty Chemicals
Materials, partly affected by negative currency- Increased operating income on strong growth of Specialty - Increased operating income in Specialty Plastics and
Plastics and due to lack of last year’s reconstruction cost,
Construction, owing partly to reduced cost, more thanmore than offsetting declines in Specialty Chemicals andoffset by negative currency effects and decline inConstruction
Advanced Materials- Increased financial expenses

13

FY2016 Full-Year Outlook
FY2016e(in ¥100M yen)

Net sales
Elimination
Other income
Other expenses
Operating income
Financial income
Financial expenses
Income before income tax
Net income
attributable to Kureha

FY2015(in ¥100M yen)

Net sales
Elimination
Other income
Other expenses
Operating income
Financial income
Financial expenses
Income before income tax
Net income
attributable to Kureha

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Construction

Other
Operations

Segment
Total

330

250

420

140

160

1,300

*Incl. ¥7.8B subsidy income*Incl. ¥6.9B loss on reduction and ¥1.5B loss on retirement of noncurrent assets

11

25

40

7

14

97

Adjustment

Total

1,300
0
80
87
-7
6
11

90

85
65
Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Construction

Other
Operations

Segment
Total

339

304

427

162

176

1,408

*Incl. ¥4.5B restructuring cost

14

47

33

15

16

124

Adjustment

Total

1,408
-1
9
59
-50
8
16

74

66
49

14

FY2016 Full-Year Outlook
Present FY2016 Outlook vs. FY2015 Performance
Net sales

Operating income
FY2016e500
400

FY2015420 427
330 339300

250

FY2016e

160176100

20
10Specialty
Chemicals

Specialty
Other
Construction
Plastics
Operations

0

FY2015

40
33

30

162
140

Advanced
Materials

47

50
40

304

200

0

(in 100 million yen )

25
11 14

Advanced Specialty Specialty
Materials Chemicals Plastics

15

14 16

7

Construction

Other
Operations

YoY changes for segment operating income[Advanced Materials] Decline due to delayed PGA business development resulting from strategic changes and intensifiedcompetition for PPS, despite improvements in PVDF and Carbon Products[Specialty Chemicals] Decline due to negative effects of drug price revision and generic drugs on pharmaceuticals andinventory adjustments for agrochemicals[Specialty Plastics] Improve on steady growth of Home Products more than offsetting a decline in Packaging Materials[Construction] Decline due to low demand for post-quake reconstruction and increased labor/raw materials cost
[Other Operations] Decline due to increased competition and R&D cost for Environmental Engineering

15

FY2016 Full-Year Outlook
Present FY2016 Outlook vs. Previous FY2016 Projection (in May 2016)
Present FY2016 Projection
Prior FY2016 Projection

Net sales
500
400

330

420 440400

300

250 265200

14014050160175

10Advanced
Materials

Specialty
Chemicals

Specialty
Other
Construction
Plastics
Operations

30

30
20

0

Present FY2016 Projection
Prior FY2016 Projection

40

40

100
0

Operating income(in 100 million yen )

36

2525
14 14

11

Advanced Specialty Specialty
Materials Chemicals Plastics

7 5
Construction

Other
Operations[FY2016 Operating Income Outlook]
Previous projection: ¥11,000 mil  Present (Revised) projection: ¥9,700 mil*Factors include negative currency effect (¥500mil), reduced sales (¥2000mil), increased cost (1200mil)

Factors for changes in segment operating income projection[Advanced Materials] Delayed PGA business growth due to strategic changes, intensified competition for PPS[Specialty Chemicals] Benefits of cost reduction offsetting negative currency effect[Specialty Plastics] Growth in Home Products more than offsetting delayed sales expansion and negative currency
effect for Packaging Materials[Construction] Lower operating income on projected sales[Other Operations] Benefits of cost reduction offsetting ales decline in Environmental Engineering

16

Segment Outlook
Advanced Materials(in 100 million yen)

FY2016FY2015 %Change

Sales
Advanced plastics

211

213

-1%

Carbon products

40

52

-23%

Other

4

4

2%

Non-consolidated sales total

255

270

-5%

Subsidiaries sales total

290

311

-7%

Adjustment

-215

-242

--

Kureha Group sales

330

339

-3%

Kureha Group operating income

11

14

-20%

Advanced plastics
PGA and PPS decline to more thanoffset the growth of PVDF
Carbon products
Operating loss decreases onhigher price and restructuring
efforts

17

Segment Outlook
Specialty Chemicals(in 100 million yen)

FY2016FY2015 %Change

Sales
Agrochemicals
Pharmaceuticals
Industrial chemicals

75
55
85

95
74
94

-21%
-26%
-10%

Non-consolidated sales total

215

263

-18%

Subsidiaries sales total

65

70

-7%

Adjustment

-30

-30

--

Kureha Group sales

250

304

-18%

Kureha Group operating income

25

47

-47%

Agrochemicals
Declines on continued slow
demand and inventory adjustment
Pharmaceuticals
Declines on lower volumes andlower prices affected by the
impact of generic drugs and drug
price revision
Industrial chemicals
Negatively affected by lower
market prices reflecting lower raw
materials prices

18

Segment Outlook
Specialty Plastics(in 100 million yen)

Sales
Home products
Packaging materials

FY2016FY2015 %Change

194
71

186
79

4%
-10%

Non-consolidated sales total
Packaging materials(overseas)
Fiber products
Other

265

265

0%

114

125

-9%

36
67

36
74

1%
-10%

Subsidiaries sales total

217

235

-8%

Adjustment

-62

-73

--

Kureha Group sales

420

427

-2%

Kureha Group operating income

40

33

21%

Home productsContinued growth of home-use
wrap film ‘NEW Krewrap’
Packaging materials
Flat heat-shrink film sales, decline
in operating income due tonegative currency effect19

Segment Outlook(in 100 million yen)

FY2016FY2015 %Change

Construction
Sales
Construction
Adjustment

210
-70

246
-84

-15%
--

Kureha Group sales

140

162

-14%

7

15

-54%

Kureha Group operating income

Other Operations
Sales
Logistics
Hospital operations
Other
Subsidiaries sales total

102
84
37
17
240

99
89
36
17
241

3%
-6%
4%
-1%
0%

Adjustment

-80

-65

--

Kureha Group sales

160

176

-9%

Kureha Group operating income

14

16

-10%

Environmental engineering

Construction
Operating income decrease on
weak volumes in post-quake
reconstruction and with higher
labor and raw materials costs

Other operations
Segment sales and operating
income negatively affected
intensified competition andtechnology development costs inthe environmental engineeringbusiness, despite growth in lowconcentration PCB treatment
sector

20

Key Indicators
FY20161H

FY2016 FY2016
2H
Full year

FY20151H

FY2015 FY2015 FY15-16
2H
Full year %Change

Capital expenditure

48

97

145

53

68

121

35%

Depreciation

51

51

102

48

51

99

6%

R&D expenses

22

32

54

23

26

49

19%

Interest-bearing debt

778

808

808

877

812

812

-0%

Exchange JP¥/US$
rates

Average

105.2

105.0

105.1

121.9

118.4

120.1

Term end

101.1

105.0

105.0

120.0

112.7

112.7

JP¥/EUR€

Average

118.0
113.4

115.0
115.0

116.5
115.0

135.1
135.0

130.1
127.7

132.6
127.7

15.9
15.1

15.5
15.5

15.7
15.5

19.5
19.0

18.3
17.4

18.9
17.4

Term end

JP¥/CH¥

Average
Term end

21

Cash Flow(in 100 million yen)

FY2016FY2015

ChangePre-depreciation profit
Increase/decrease n assets and liabilities
Payments of corporation tax
Other-net
Cash flow from operating activities total

187
-47
-20
69
189

169
-22
-43
41
146

18
-25
23
28
43

Cash flow from investing activities total

-166

-60

-106

Cash flow from financing activities total

-22

-99

77

Effect of exchange rate changes on cash and cash
equivalents

0

2

-2

Increase/decrease in cash and cash equivalents

1

-12

13

Cash and cash equivalents at beginning of year

67

79

-12

Cash and cash equivalents at end of year

68

67

1

22

3. Consolidated Companies

23

Subsidiaries Sales and Assets
FY2016 1H
Kureha Corporation
Kureha Trading Group (2)Kureha Corporation
Kureha Trading Group (2)Kureha Extron Co.
Kureha Extech Co.

Kureha Battery Materials Japan Co. (2)Advanced Kureha GmbH
Materials Kureha America Group (4)Kureha (Shanghai) Carbon Fiber
Mateials Co.
Kureha China Group (3)Consolidation adjustments
Total
Kureha Corporation
Specialty Kureha Trading Co.
Chemicals Consolidation adjustments
Total
Kureha Corporation
Kureha Trading Co.
Kureha Gohsen Co.
Kureha China Group (3)Specialty
Kureha America Group (4)Plastics
Kureha Europe Group (5)Kureha Vietnam Co.
Consolidated adjustments
Total

FY2015 1H

ChangeNet sales
286
77
112
41
8
12
7
29

Total assets
1,883
122
19
17
2
10
244

Net sales
310
76
146
35
12
13
33
8
17

Total assets
1,963
118
25
30
38
11
286

Net sales
-24
1
-33
6
-4
-1
-33
0
11

Total assets
-80
4
-6
-12
-36
-1
-41

7

20

8

37

-2

-17

19
-88
147
93
32
-13
112
137
23
18
2
9
39
14
-31
210

126
34
7
56
36
-

25
-120
178
127
38
-17
148
128
21
19
3
11
45
18
-37
207

154
36
10
68
47
-

-7
32
-31
-34
-5
3
-36
9
2
-1
-1
-2
-6
-4
6
3

-28
-1
-2
-12
-11
-

24

Subsidiaries Sales and Assets
FY26016 1H
Net sales

Total
assets-38
97
26
83
5
62
9
38
7
-

FY2015 1H
Net sales

Total assets

Net sales

Total assets

80
18
-35
63
38
6
45
0
3
18
6
-41
75

95
28
74
6
61
9
42
6
-

-3
1
-2
-4
0
-1
-3
0
0
1
0
3
0

1
-2
8
-1
1
1
-5
0
-

Kureha Nishiki Group (4)Kureha Engineering Co.
Consolidation adjustments
Total
Kureha Ecology Management Co.
Kureha Special Laboratory Co.
Kureha Unyu Group (7)Kureha Trading Co.
Other
Kureha Service Co.
Operations
Kureha-kai Medical Co.
Kureha Staff Service Co.
Consolidation adjustments
Total

78
19
-37
59
38
6
42
0
3
18
6
-38
75

Consolidation Total

602

670

[Total Number of Consolidated Subsidiaries]

[41]

[40]

Construction

Change-68

Disclaimer

1. These materials are supplied to provide a deeper understanding of ourcompany, and are not intended to as a solicitation for investment or otheractions
2. These materials were prepared by our company based on the information
available at this point in time, however actual performance may produce
results that differ from the plan, due to a variety of factors
3. Please utilize these materials using you own judgment and responsibility