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0:00:00.0 SHIFT 2019 ?Fusion? SEKISUI CHEMICAL CO., LTD. Presentation of Financial Results and Progress under Management Plan for the Fiscal Year 2017, which ended March 31, 2018 Teiji Koge President 26 April, 2018 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:00:06.5 Results for FY2017 FY2016 Forex Rate FY2017 2H 1H \112/US$ \123/? \111/US$ \126/? 2H \112/US$ \132/? \111/US$ \133/? 1H \111/US$ \125/? \105/US$ \118/? Assumption Results (Avg. rate for each term) \109/US$ \113/? \111/US$ \119/? Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 1 0:00:13.0 FY2017 Results ?Reported a substantial increase in net sales and record highs at each level of profit (record high operating income and bottom line profit for a fifth consecutive fiscal year) ?Each level of profit fell short of plans ?Increased the period-end dividend \2 per share compared with forecasts FY2016 (Billions of yen) FY2017 Difference FY2017 Plan (Jan. 2018) Difference Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of the Parent 1,065.8 96.5 91.5 60.9 35* 1,107.4 99.2 93.9 63.5 40* +41.7 +2.8 +2.4 +2.6 +5 1,114.0 102.0 101.0 67.0 38* -6.6 -2.8 -7.1 -3.5 +2 Dividend per Share (Yen) *Including 70th anniversary commemorative dividend of 1 yen per share Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 2 0:00:47.9 FY2017 Results: Net Sales and Operating Income by Divisional Company ? Despite achieving an increase in profit at all three divisional companies (record high profit at the HPP and UIEP companies), fell short of operating income plans ? ? ? ? HPP: Fell short of operating income plans due to a slowdown in demand in the electronics field Housing: Offset a weak renovation business performance by implementing various measures including the control of fixed costs in the new housing business; results essentially in line with operating income plans UIEP: Fell short of operating income plans due to delays in aircraft sheet recovery Others, Eliminations or Unallocatable Accounts: Actively invested in research and development FY2016 (Billions of yen) Net Sales Operating Income FY2017 Net Sales Operating Income Difference Net Sales Operating Income FY2017 Plan (Jan. 2018) Net Sales Operating Income Difference Net Sales Operating Income HPP* Housing* UIEP* Others Eliminations or Unallocatable Accounts 357.5 485.0 240.3 2.7 -19.8 1,065.8 54.5 37.5 12.8 -7.6 -0.8 386.2 497.8 239.2 5.9 -21.6 57.8 37.9 14.8 -9.8 -1.6 99.2 +28.6 +12.8 -1.1 +3.1 -1.8 +41.7 +3.3 +0.4 +2.0 -2.1 -0.7 +2.8 388.0 497.5 241.0 6.0 -18.5 1,114.0 59.0 38.0 15.0 -9.0 -1.0 102.0 -1.8 +0.3 -1.8 -0.1 -3.1 -6.6 -1.2 -0.1 -0.2 -0.8 -0.6 -2.8 Total *HPP: 96.5 1,107.4 High Performance Plastics Company, Housing: Housing Company, UIEP: Urban Infrastructure & Environmental Products Company Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 3 0:02:12.2 FY2017 Results (1H & 2H): Net Sales and Operating Income by Divisional Company ? Profit held to a narrow increase in the 2H of FY2017 due to the impact of such factors as the upswing in raw material costs, which hovered at a high level, and a deterioration in the business environment ? ? ? ? HPP: Despite a sharp slowdown in demand in the electronics field, profit grew in the 2H due to an increase in sales volume, improvements in the product mix, and reductions in costs Housing: While the new housing business offset the slump in sales in the renovation business, profit decreased in the 2H UIEP: Despite the continued slump in aircraft sheets, secured an increase in profit in the 2H due to the increase in sales volume and improvements in the product mix in Japan Others, Eliminations or Unallocatable Accounts: Increased investments to expand film-type lithium-ion battery production capacity; accelerated the pace of biorefinery (BR) development 1H FY2016 Operating 1H FY2017 Operating Difference Operating 2H FY2016 2H FY2017 Difference (Billions of yen) Net Sales Income Net Sales Income Net Sales Income Operating Operating Operating Net Sales Income Net Sales Income Net Sales Income HPP Housing UIEP Others Eliminations or Unallocatable Accounts 176.7 237.7 112.0 1.3 -9.9 517.9 27.5 185.5 17.2 244.4 3.2 112.1 -3.9 2.7 28.8 17.8 4.8 -4.8 -0.6 +8.8 +6.7 0 +1.4 -0.7 +1.3 +0.6 +1.7 -1.0 -0.3 +2.3 180.8 247.3 128.3 1.4 -9.9 547.9 27.0 200.6 20.4 253.4 9.6 127.2 -3.8 -0.5 3.1 -11.0 29.0 +19.8 20.1 9.9 -4.9 -0.9 +6.1 -1.1 +1.7 -1.1 +2.0 -0.2 +0.3 -1.2 -0.5 +0.4 4 -0.4 -10.6 43.7 534.1 Total 46.0 +16.3 52.8 573.3 53.2 +25.4 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:02:44.4 FY2017 Results: Analysis of Net Sales and Operating Income ? Achieved a substantial increase in net sales ? Despite a substantial increase in sales volumes and significant improvement in the product mix mainly in the HPP company, fell short of plans ? Minimized the impact of high raw material costs by adjusting product prices (Breakdown of main differences) and reducing costs; undertook steps to control fixed costs Electronics Field: -1.1 excluding growth investments Net Sales Impact of business structural reform (YoY): -8.4 bil. yen, newly consolidated (YoY): +17.7 bil. yen Analysis of Operating Income Sales Change Quantity of & consolidated Foreign Compocompany Exchange sition Renovation Business: -0.7 Sheet Business: -0.5 Depreciation cost Cost Raw Reduction Labor Selling Price Materials and etc. cost Others +41.7 bil. yen 1,065.8 bil. yen 1,114.0 bil. yen 1,107.4 bil. yen Plan +0.7 (Jan, 2018) +1.5 +14.9 +1.0 -8.2 +4.4 -3.9 -0.4 -4.6 102.0 Full Year +0.1 +1.0 +11.7 +1.2 -8.2 +3.9 -3.9 -0.5 -2.7 Fixed Costs: -7.1 bil. yen 96.5 bil. yen FY2016 FY2016 FY2017 Plan (Jan. 2018) FY2017 Sales Change Quantity of & consolidated Foreign Compocompany Exchange sition +2.8 bil. yen 99.2 bil. yen FY2017 Cost Raw Reduction Materials and etc. Depreciation cost Selling Price Labor cost Others 合計 Total ? Increased by 32.4 billion yen on the actual basis excluding the impact of business structural reform and newly consolidated 1H 2H +0.3 -0.2 +0.4 +0.6 +7.2 +4.5 +0.3 +0.9 -3.8 -4.5 +2.2 +1.8 -1.8 -2.1 -0.2 -0.3 -2.4 -0.3 +2.3 +0.4 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 5 0:03:43.7 Plan for FY2018 FY2017 Forex Rate FY2018 2H 1H \108/US$ \134/? ‐ 2H \108/US$ \134/? ‐ 1H \112/US$ \123/? \111/US$ \126/? Assumption Results (Avg. rate for each term) \112/US$ \132/? \111/US$ \133/? Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 6 0:03:58.5 FY2018 Plan ?Work to secure a substantial increase in net sales; planning record highs at each level of profit (record high operating income and bottom line profit for a sixth consecutive fiscal year) ?Plans to increase dividends for a ninth consecutive fiscal year FY2017 (Billions of yen) FY2018 (Plan) Difference Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of Parent Dividend per Share (Yen) 1,107.4 99.2 93.9 63.5 40* 1,168.0 102.0 100.0 67.0 42 +60.6 +2.8 +6.1 +3.5 +2 *Including 70th anniversary commemorative dividend of 1 yen per share. Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 7 0:04:32.2 FY2018 Plan: Net Sales and Operating Income by Divisional Company ? Plans to respond appropriately to a harsh business environment; net sales and profits forecast to increase at all three divisional companies ? Continue to actively undertake Group-wide R&D investments FY2017 (Billions of yen) Net Sales Operating Income FY2018 (Plan) Net Sales Operating Income Difference Net Sales Operating Income HPP Housing UIEP Others Eliminations or Unallocatable Accounts 386.2 497.8 239.2 5.9 -21.6 1,107.4 57.8 37.9 14.8 -9.8 -1.6 99.2 418.0 516.0 247.0 7.5 -20.5 1,168.0 59.5 39.5 16.5 -11.3 -2.2 102.0 +31.8 +18.2 +7.8 +1.6 +1.1 +60.6 +1.7 +1.6 +1.7 -1.5 -0.6 +2.8 Total Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 8 0:04:48.7 FY2018 Plan: Outlook for Market Conditions ? Overall improvement in the business environment leading up to the 2H; raw material costs projected to remain high Production volume of LCD panels for smartphone use *Benchmarked 1Q FY2017 Number of owned home and detached house (built for sale) starts *Benchmarked 1H FY2017 Estimate (at the time of the Company’s 3Q earnings announcement) ? After bottoming out in the 4Q of FY2017, gradual recovery anticipated 17 1Q 17 2Q 17 3Q 17 4Q 18 1Q 18 2Q 18 3Q 18 4Q ? Rush in demand prior to the consumption tax rate hike projected to gradually emerge Number of automobiles manufactured *Benchmarked 1Q FY2017 ? Slight increase in the number of automobiles manufactured (Up 2% in FY2018, YoY worldwide) 17 1H 17 2H 18 1H 18 2H 17 1Q 17 2Q 17 3Q 17 4Q 18 1Q 18 2Q 18 3Q 18 4Q Non-residential construction starts floor area *Benchmarked 1H FY2016 Domestic naphtha price *Benchmarked 1Q FY2017 ? Upward trend in nonresidential construction starts mainly in the Tokyo metropolitan area Note: Demand for each of the UIEP company’s products expected to emerge from around one year after the start of nonresidential construction ? Increase in naphtha prices to plateau in FY2018 17 1Q 17 2Q 17 3Q 17 4Q 18 1Q 18 2Q 18 3Q 18 4Q 16 1H 16 2H 17 1H 17 2H Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 9 0:05:42.4 FY2018 Plan (1H & 2H): Net Sales and Operating Income by Divisional Company ? Anticipating a difficult business environment (from each of the raw material, foreign currency exchange rate, and market condition perspective) and an increase in fixed costs; aim to secure 1H results on par with the previous year at all three divisional companies ? Plans for an increase in profit in the 2H of FY2018 on the back of improvements in the business environment, strategic investments and the positive effects of structural reforms ? Looking to undertake R&D in line with plans 1H FY2017 (Billions of yen) 1H FY2018 (Plan) Difference 2H FY2017 2H FY2018 (Plan) Difference Operating Operating Operating Net Sales Income Net Sales Income Net Sales Income Operating Operating Operating Net Sales Income Net Sales Income Net Sales Income HPP Housing UIEP Others Eliminations or Unallocatable Accounts 185.5 244.4 112.1 2.7 -10.6 534.1 28.8 205.0 17.8 253.0 4.8 114.5 -4.8 3.5 28.5 +19.5 17.8 4.9 -5.7 -1.0 +8.6 +2.4 +0.8 +0.6 -0.3 0 +0.1 -0.9 -0.4 -1.5 200.6 253.4 127.2 3.1 -11.0 573.3 29.0 213.0 20.1 263.0 9.9 132.5 -4.9 4.0 31.0 +12.4 21.7 11.6 -5.6 -1.2 +9.6 +5.3 +0.9 +0.5 +2.0 +1.6 +1.7 -0.7 -0.3 +4.3 -0.6 -10.0 46.0 566.0 -0.9 -10.5 53.2 602.0 Total 44.5 +31.9 57.5 +28.7 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 10 0:06:42.5 FY2018 Plan: Analysis of Net Sales and Operating Income ? Plans of a substantial increase in net sales on a Group-wide basis ? Plans for a substantial increase in sales volumes and significant improvement in the product mix at all three divisional companies (HPP: Focus mainly on the four strategic fields; Housing: Increase of 360 in the number of houses sold; UIEP: Increase sales of prioritized products; overseas recovery) ? Accelerate the pace of investments aimed at continuous growth; reduce to some extent the impact of high raw material costs through the reduction of costs Net Sales Impact of Newly consolidated (YoY): +17.1 bil. yen Analysis of Operating Income Sales Change Quantity of Cost & consolidated Foreign Compo- Selling Raw Reduction Labor company Exchange sition cost Price Materials and etc. Depreciation cost Others +60.6 bil. yen 1,107.4 bil. yen Full Year 0 -1.5 +19.4 -0.2 -5.2 +2.5 -8.0 -3.2 -1.2 1,168.0 bil. yen Fixed Costs: -12.2 bil. yen +2.8 bil. yen 99.2 bil. yen FY2017 Sales Change Quantity of & Foreign consolidated Exchange Compocompany sition Selling Price Raw Materials Cost Reduction Labor and etc. cost Depreciation cost 102.0 bil. yen FY2018 (Plan) Others FY2017 FY2018 (Plan) 1H 2H Total ? Increased by 43.5 billion yen on the actual basis excluding the impact of newly consolidated 0 0 -0.4 -1.0 +7.3 +12.1 -0.5 +0.4 -3.0 -2.3 +1.2 +1.4 -4.3 -3.7 -1.2 -2.0 -0.6 -0.6 -1.5 +4.3 11 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:07:19.5 Returns to Shareholders ? Again, ensure the stable increase in dividends and implement measures designed to enhance capital efficiency in a bid to achieve ROE of 12%, a target under the Medium-term Management Plan in FY2018 Returns to Shareholders Track Record Acquisition of treasury stock Total dividend payment Net income attributable to owners of parent FY2018 Plan 53.0 56.7 60.9 63.5 Cash dividends per share (Yen) Acquisition of treasury stock 42 \ 16.0 billion Maximize 8 million shares 8 million shares 41.2 (Billions of yen) 23.6 11.6 0 5.3 FY2009 28.1 30.2 10.0 11.8 FY2013 15.0 13.6 FY2014 16.8 14.7 FY2015 16.4 16.8 FY2016 16.0 19.0 FY2017 Treasury stock retired 2.2 6.8 FY2010 4.5 7.8 FY2011 0 9.3 FY2012 Fiscal Year Net income attributable to owners of parent per share (yen) Cash dividends per share (yen) Dividends payout ratio Acquisition of treasury stock (billions of yen) 2009 22.1 10 45.2% 0 45.2% 1.6% 2010 44.9 13 28.9% 2.2 38.2% 2.0% 2011 54.0 15 27.8% 4.5 43.7% 2.3% 2012 58.5 18 30.8% 0 30.8% 2.4% 7,000 2013 80.1 23 28.7% 10.0 52.9% 2.7% 2014 104.7 27 25.8% 15.0 54.0% 2.8% 12,000 2015 115.1 30 26.1% 16.8 55.5% 2.8% 10,000 2016 126.1 35 27.7% 16.4 54.5% 3.1% 2017 133.8 40 29.9% 16.0 55.1% 3.3% 10,000 12 *Total return ratio = (Amount of treasury stock acquired + Total Dividends) / Net income attributable to owners of parent **DOE=Total dividend payment / Average shareholders’ equity Total return ratio* DOE** Treasury stock retired (thousand of shares) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:08:00.2 Progress under Medium-term Management Plan Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 13 0:08:06.2 Progress under Medium-term Management Plan, SHIFT 2019 -Fusion? Achieve a continuous upswing in net sales, an increase in operating income for a 10th consecutive fiscal year, and record high profit for a sixth consecutive fiscal year in FY2018; position the year as a step toward achieving the FY2019 Medium-term Management Plan Operating Income Performance 12000 2200 FY2009-FY2013 GS21-SHINKA! 1,110.9 915.5 965.1 8.1% 1,032.4 FY2014-FY2016 SHINKA!-Advance 2016 1,112.7 1,096.3 10.9% 1,065.8 11.3% FY2017-FY2019 SHIFT 2019 -Fusion1,107.4 1,168.0 11.2% 9.0% 1,200.0 12.0% 10.0% 120.0 (Billions of yen) 10000 1700 858.5 10.9% 9.4% 7.8% 7.4% 7.7% 85.8 46.0 11.2% 8.7% 102.0 65.0 59.5 Net Sales 8000 6.9% 4.2% 5.4% 3.5% ROE Operating Income Ratio 8.2% 89.8 53.4 9.1% 96.5 54.5 1200 6000 99.2 57.8 5.7% 54.6 20.6 31.1 3.0 FY2011 5.8% 59.6 23.2 36.3 1.8 FY2012 82.5 36.1 4000 700 HPP Housing UIEP 0 2000 200 36.0 19.2 19.4 49.3 24.4 24.4 1.5 FY2010 03/2011 41.1 6.5 FY2013 41.3 1.3 FY2014 2015 36.4 3.6 FY2015 2015 Drop in resource prices 37.5 12.8 FY2016 01/2016 Sharp yen appreciation 37.9 14.8 FY2017 01/2017 Inauguration of a new administration in the U.S. 39.5 16.5 FY2018 (Plan) 03/2018 Emerging concerns toward global trade friction 50.0 18.0 FY2019 -2.4 Other -300 FY2009 10/2008 Lehman shock (Medium-term Plan) 10/2019 Consumption tax raises from 8% to 10% External Environment Forex Rate* (Avg. rate for each term) 09/2011 04/2014 Increasing Great East European financial Consumption tax raises concern of Japan Earthquake crisis worsens from 5% to 8% China economic slowdown FY2008 \103/US$ FY2009 \94/US$ FY2010 \87/US$ FY2011 \80/US$ FY2012 \83/US$ FY2013 FY2014 FY2015 FY2016 FY2017 FY2018* FY2019* *FY2018 and FY2019 \100/US$ \110/US$ \120/US$ \108/US$ \111/US$ \108/US$ \100/US$ Assumptions Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 14 0:08:23.1 Progress under Medium-term Management Plan, SHIFT 2019 -Fusion? Steady progress in growth investments and structural reforms; implement “fusion” and M&As in order to accelerate growth Main Initiatives and Maturation Period ? HPP ■ Housing ■ UIEP ■Corporate Headquarters :Begin realizing benefits :Realize benefits in earnest Main Initiatives ? Increased production of high-performance interlayer films in Mexico ? Expanded the Life Science Business (integrated EIDIA; establish a new diagnostic reagent company in China) Maturation Period (Image) FY2017 FY2018 FY2019~ Strategic Investments ? Increase production of high-performance interlayer films and PVB resin in Europe ? Establish a new foam plant in China (Automobiles and Transportation Filed) ? Establish second foam plant in Thailand (Building and Infrastructure Field) ? Increase sheet for aircraft and FFU for railway production ? Develop and introduce new products (luminous PVB films, products for OLEDs, other) Forwardlooking Investment New Products ? Introduced new 70th anniversary commemorative products (SPS GR, GRAND TO YOU V, and others) ? Develop and introduce new products (FY2017: 27 items, FY2018: 30 items) ? Increase film-type lithium-ion battery production for housing application Constant Structural Reform ? Consolidate foam business plants (Europe, US) ? Improved efficiency of housing production plants (unified operations of production companies in the three major metropolitan areas, other) ■ ■ Reorganize the structure of production in Japan ? Established Sekisui Polymatech Co., Ltd. ? Established Sekisui SoflanWiz Co., Ltd. Fusion and M&A ? Acquired all of the shares in Veredus Laboratories Pte. Ltd. ? Acquired shares of PeptiStar Inc. ? Took up an equity interest in TP Group, major pipe manufacturer group in Vietnam Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 15 0:08:45.5 Progress under Medium Term Management Plan, SHIFT 2019 -Fusion? Steady progress in “Fusion” measures; expecting a FY2017-FY2018 cumulative increase of 33.0 billion yen Details of Incremental Increases in Sales (Image) M&A (potential incremental increase) Increase attributable to fusion Incremental increase in existing businesses *Compared with FY2016 Aircraft sheets (HPP and UIEP) 1,200.0 bil. yen 50.0 bil. yen 84.0 bil. yen Status of progress and major themes FY2019 Urban development project Cultivating the Vietnam market (UIEP and TP Group) FY2018 14.0 bil. yen FY2017 19.0 bil. yen Cultivating the car electronics field Strengthening kitchen, bathroom, laundry renovations (Housing and UIEP) Acquired Polymatech Japan Co., Ltd. Film-type lithium-ion battery (Sekisui Chemical and External electronic manufacturer) Chlorinated polyvinyl chloride (CPVC) (HPP and UIEP) 1,065.8 bil. yen FY2016 FY2019 Increase attributable to "Fusion" ?Steady progress overall in Development & Creation themes; also announce details of new themes Typical Examples of Development Themes ? Film-type lithium-ion battery (Housing, Corporate R&D, and External electronic manufacturer) ? Urban development project (Housing, UIEP, HPP, and Corporate R&D) ? Next-generation solar cell (Corporate R&D and advanced User Candidates) ? Carbon fiber reinforced thermal plastic (UIEP and Corporate R&D) New Theme Partial commercialization for indoor use Partial comercialization in the civil engineering field FY2016 Launch products for stationary use FY2017 FY2018 FY2019 FY2020 and after Launch products for automobile use Stationary use: Increase investments to expand production capacity and variation for housing (Automotive use: Commence sample work with users) Design completion; commence preparation of land Commence built-for-sale Push forward urban development proposals that seamlessly combine the collective strengths of our housing activities Group’s technologies and products nationwide Indoor: Improve performance and production technologies; conduct user verification tests ⇒ Expand applications Outdoor: Promote progress in weather resistance development activities Consider application in other areas including vehicles and vessels ? Technologies (BR) that convert waste into ethanol (Corporate R&D) Develop technologies Consider business models; identify partners Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 16 0:09:16.8 Progress under Medium-term Management Plan, SHIFT 2019 -Fusion? Steady progress in strategic capital investments, ordinary investments, and environmental contribution investments FY2017-FY2019 Medium-term Management Plan Acquired cash Operating Cash Flows 300 bil. yen Strategic capital investments Energy saving investments 12.0 bil. yen Application M&As 130.0 bil. yen 70.0 bil. yen Strategic investments 200.0 bil. yen Total investments 300.0 bil. yen 88.0 bil. yen Ordinary investments FY2017-FY2018 Forecast 営業CF Energy saving investments 22.0 M&As and Capital participation 79.0 Strategic capital investments 62.0 Ordinary investments 5.0 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 17 0:09:48.9 Tatsuya Nishida Results for FY2017 Executive Officer Head of Corporate Finance & Accounting Department Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 18 0:10:01.5 Consolidated Companies Number of Consolidated Companies Mar. 31, 2017 Consolidated Subsidiaries Affiliates (Equity Method) Mar. 31, 2018 Difference Increased: 17 Subsidiaries*1 Decreased: 9 Subsidiaries*2 Increased: 0 Subsidiaries Decreased: 0 Subsidies 143 8 151 8 *1: ENAX,INC., Sekisui Polymatech Co., Ltd., Sekisui SoflanWiz Co., Ltd., and etc. *2: Includes the integration of three Sekisui Heim Real Estate companies into a single company and four Sekisui Heim Industry companies into a separate single company. Influence of Change in the Number of Consolidated Companies FY2017 Net Sales Operating Income *3: Removed from consolidation from 2Q FY2016 *?: Removed from consolidation from 4Q FY2016 *?: Newly Consolidated from 2Q FY2017 *?: Newly Consolidated from 3Q FY2017 Difference ? Sekisui Film*3 ? Nippon No-Dig Technology*? ? Sekisui Polymatech Co., Ltd.*5 ? Sekisui SoflanWiz Co., Ltd.*6 and etc. +9.1 bil. yen +0.9 bil. yen Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 19 0:10:10.5 Summary of Profit and Loss FY2016 FY2017 Difference (Billions of yen) Net Sales Gross Profit Gross Profit Rate Selling, Gen. and Admin. Expenses 1,065.8 353.5 33.2% 257.0 96.5 2.5 -7.4 91.5 6.9 15.6 82.9 21.0 1.1 60.9 108 119 1,107.4 362.1 32.7% 262.9 99.2 2.5 -7.8 93.9 2.5 2.1 94.3 27.6 3.3 63.5 111 130 +41.7 +8.6 -0.5% +5.8 +2.8 0 -0.4 +2.4 -4.5 -13.5 +11.5 +6.7 +2.2 +2.6 Loss on devaluation of investments in securities and impact of business structural reform (FY2016) Gain on sales of investments in securities (FY2016) Operating Income Equity in Earnings of Affiliates Other Non-operating Income and Expenses Ordinary Income Extraordinary Income Extraordinary Loss Income before Income Taxes Corporate Income Tax, etc. Net Income Attributable to Non-controlling Interests Net Income Attributable to Owners of the Parent Foreign Exchange (Avg. rate) 1US$ 1? Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 20 0:11:00.4 Balance Sheets (Assets) (Billions of yen) Mar. 31, 2017 Mar. 31, 2018 Difference Cash and Deposits Account Receivable on Sales Inventories Other Current Assets Tangible Non-Current Assets Intangible Non-Current Assets Investments in Securities Investments & Other Assets Total Assets 109.9 164.1 153.6 38.6 261.8 39.6 156.9 19.3 943.6 78.0 183.3 170.5 41.6 279.7 51.1 177.7 17.3 999.1 -31.9 +19.2 +16.9 +3.0 +18.0 +11.5 +20.8 -2.0 +55.5 Increase of land for sale, and etc. Capital investment, M&A, and etc. Purchases and investment in securities, at fair value, and etc. Influence of Change of Consolidated Companies +27.4 bil. yen Foreign exchange +2.8 bil. yen Actual basis; +25.3 bil. yen Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 21 0:11:49.0 Balance Sheets (Liabilities & Net Assets) Net income (Billions of yen) Mar. 31, 2017 Mar. 31, 2018 Difference 63.5 bil. yen Dividends paid -18.1 bil. yen Retirement of treasury stock -12.9 bil. yen Non-Interest-Bearing Liabilities Interest-Bearing Liabilities Total Liabilities Capital Stock etc. Retained Earning Treasury Stock Unrealized Holding Gain on Securities Non-controlling Interests Other Net Assets Total Net Assets Total Liabilities, Net Assets 329.4 43.7 373.1 209.2 341.0 -41.0 39.5 20.8 1.1 570.5 943.6 340.0 46.3 386.4 209.0 374.1 -42.5 46.3 24.7 1.0 612.8 999.1 +10.7 +2.6 +13.3 -0.2 +33.1 -1.5 +6.9 +3.9 0 +42.2 +55.5 Purchases of treasury stock -16.0 bil. yen Retirement of treasury stock 12.9 bil. yen Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 22 0:12:09.9 Consolidated Cash Flows (Billions of yen) FY2016 FY2017 Working Capital and Increase in corporate tax payment, and etc. Operating Cash Flows Investing Cash Flows Financing Cash Flows Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents at the End of Term Free Cash Flow =Operating Cash Flows + Investing Cash Flows Dividends Paid 108.2 -44.1 -39.6 22.8 89.9 48.1 82.3 -60.9 -36.0 -13.8 76.7 2.3 Capital investment, M&A, and etc. Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 23 0:12:55.2 Depreciation and Capital Expenditures Depreciation FY2016 FY2017 Difference FY2016 Capital Expenditures FY2017 Difference (Billions of yen) Housing UIEP HPP Others Eliminations or Unallocatable Accounts 8.9 6.4 17.7 0.8 1.0 34.8 9.3 6.4 18.0 1.3 1.0 36.0 +0.4 0 +0.3 +0.4 +0.1 +1.2 13.5 6.7 20.8 2.1 1.0 43.9 14.4 9.8 25.7 2.5 1.1 53.5 +0.9 +3.1 +4.9 +0.5 +0.1 +9.6 Total Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 24 0:13:05.7 Depreciation, Capital Expenditures, Research and Development Expenditure (Billions of yen) FY2017 FY2018 (Plan) Difference Depreciation 36.0 53.5 37.0 40.0 75.0 40.0 +4.0 +21.5 +3.0 Capital Expenditures Research and Development Expenditure Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 25 0:13:27.2 FY2018 Plan FY2017 (Billions of yen) FY2018 (Plan) Difference Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of Parent Dividend per Share (Yen) 1,107.4 99.2 93.9 63.5 40* 1,168.0 102.0 100.0 67.0 42 +60.6 +2.8 +6.1 +3.5 +2 *Including 70th anniversary commemorative dividend of 1 yen per share Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 26 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 27 0:13:37.0 High Performance Plastics Company Keita Kato Company President Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 28 0:13:44.5 Performance Trends ? Overcame the effects of high raw material costs and reported record high company profits for a fifth consecutive fiscal year in FY2017 ? Respond flexibly and swiftly to changes in the global economic environment and target a sixth consecutive fiscal year of record high profit in FY2018 Performance Trends FY2009-FY2013 GS21-SHINKA! HPP Company Investment and Return FY2014-FY2016 SHINKA!-Advance 2016 FY2017-FY2019 SHIFT 2019 -Fusion- Ordinary Investment Strategic capital investments M&As (Billions of yen) Operating Income Ratio Net Sales Operating Income 8.7% 281.6 10.2% 7.0% 353.8 332.0 296.9 23.2 6.9% 12.3% 15.3% 15.0% 14.2% 14.1% 16.7% Operating income after tax Depreciation and amortization 7.8% 372.3 378.6 357.5 386.2 418.0 59.5 390.0 65.0 (Billions of yen) 78.0 59.0 33.0+ α 63.0 247.7 36.1 19.2 24.4 20.6 46.0 53.4 54.5 57.8 (Fiscal Year) 2009 Foreign Exchange Rate *Avg. rate for each fiscal year 2010 FY2010 2011 FY2011 2012 FY2012 2013 FY2013 2014 FY2014 2015 FY2015 2016 FY2016 2017 FY2017 2018 (Plan) 2019 (Medium-term Plan) *FY2018 and FY2019 Assumptions FY2009 FY2018* FY2019* \94/US$ \87/US$ \80/US$ \83/US$ \100/US$ \110/US$ \120/US$ \108/US$ \113/US$ \108/US$ \100/US$ \115/? 07/2008 \111/? \107/? 02/2011 Sekisui Diagnostics \134/? \139/? \133/? 11/2015 \119/? \121/? \134/? 12/2017 SoflanWiz 12/2017 \113/? 500 FY2017 FY2018 (Plan) 07/2009 PVA Business of Celanese 09/2017 Polymatech Japan 03/2018 Veredus Laboratories 2H 2019 Main M&As and Strategic Investments XenoTech EIDIA 06/2015 Started operations at the Thai CPVC factory Started operations Plans to start operations at a new interlayer film at a new interlayer production line (Mexico) production line (Europe) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 29 0:16:06.6 FY2017 Results: Analysis of Net Sales and Operating Income HPP Company ? Despite continued progress through substantial increases in sales volumes and significant improvements in the product mix mainly in the automobiles and transportation field, fell short of operating income plans due to a slowdown in demand in the electronics field ? Minimized the impact of high raw material costs through cost reduction endeavors; controlled fixed costs excluding growth investments Electronics: -0.1 Net Sales Impact of business structural reform (YoY): -3.3 bil. yen, newly consolidated (YoY): +15.1 bil. yen 構造改革 (対前年) +28.6 bil. yen -33億円 Analysis of Operating Income Selling Quantity Consolid& ated Foreign Compo-basis Change Exchange sition Automobiles and Transportation: +2.8 Building and Infrastructure: -0.1 Life Science: +2.3 Cost Raw Selling Reduction Fixed Price Materials and etc. Cost 388.0 bil. yen 357.5 bil. yen 386.2 bil. yen Plan (Jan, 2018) 0 +1.7 +6.8 -0.5 -4.9 +3.9 -2.5 59.0 Full Year 0 +1.2 +5.0 -0.3 -4.9 +3.7 -1.4 57.8 bil. yen 54.5 bil. yen FY2016 FY2016 FY2017 Plan (Jan. 2018) FY2017 +3.3 bil. yen Marginal Profit: +3.5 bil. yen FY2017 Total 1H ? Increased by 16.9 billion yen on the actual basis excluding the impact of business structural reform and newly consolidated -0.2 +0.1 +0.6 +0.6 +3.0 +2.0 -0.2 -0.2 -2.3 -2.7 +1.7 +2.1 -1.4 0 +1.3 +2.0 30 2H Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:17:43.8 FY2018 Plan: Analysis of Net Sales and Operating Income HPP Company ? Plans to secure a substantial increase in sales volumes and significant improvements in the product mix by realizing the effects of strategic investments (increase in production capacity, M&A synergies) mainly in the four strategic fields ? Respond flexibly and swiftly to changes in market conditions (deterioration and recovery); offset any increase in raw material expenses through an increase in selling prices and reductions in costs as and when required and secure an appropriate spread while at the same time implementing cost control measures Electronics: +2.0 Net Sales Newly consolidated (YoY): +17.1 bil. yen Analysis of Operating Income Selling Quantity Consolid& ated Foreign Compo-basis sition Change Exchange Automobiles and Transportation: +4.5 Building and Infrastructure: +2.0 Life Science: +2.5 Selling Price Cost Reduction Raw Materials and etc. Fixed Cost +31.8 bil. yen 386.2 bil. yen Full Year 0 418.0 bil. yen -1.4 +11.4 -1.4 -2.9 +1.0 -5.0 59.5 bil. yen 57.8 bil. yen FY2017 +1.7 bil. yen FY2018 (Plan) Total Marginal Profit: +8.1 bil. yen 0 0 -0.4 -1.0 +4.1 +7.3 -0.8 -0.6 -1.9 -1.0 +0.7 +0.4 -2.0 -3.1 FY2017 FY2018 (Plan) 1H 2H -0.3 +2.0 31 ? Increased by 14.7 billion yen on the actual basis excluding the impact of newly consolidated Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:19:43.1 Four Strategic Fields HPP Company ? Secure increases in net sales and profit mainly in the automobiles and transportation as well as life science fields; substantial recovery in electronics market conditions not expected ? Hasten the effects of strategic investments (increase in production capacity, M&A synergies) in each of the four strategic fields Net Sales in the Four Strategic Fields and Key Measures in FY2018 Electronics ? Hasten the shift to non-liquid fields *The increase owing to M&A is marked in red Automobiles and Transportation ? Maximize the effects of investments to expand production capacity ? No prospect of a substantial recovery in FPD market conditions in FY2018 ? Focus on increasing market share in mainstay products and expanding the customer base ? Consider investments to expand production capacity of semiconductor- and OLED-related products ? Despite stable growth in global market conditions, uncertainty from region to region ? Increase global sales of high-performance products; work toward full capacity interlayer film production line in Mexico ? Accelerate the pace of product rollout (and especially heat dissipation products) in the car electronics field (Billions of yen) 24.5 25.6 32.3 30.2 32.4 28.0 5.7 6.3 1.3 6.3 26.7 26.6 26.1 23.9 (Billions of yen) 51.0 0.6 49.2 50.4 60.6 58.4 58.6 4.3 4.3 4.2 54.2 56.3 46.5 54.3 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) Building and Infrastructure ? Work to increase market share in mainstay products and expand in peripheral fields Life Science ? Expand the frontier business field ? CPVC: Middle East experiencing a recovery trend despite increased competition in India; target expansion mainly in the Americas ? Fire-resistant materials: Aim to quickly realize synergies with SoflanWiz Co., Ltd. (Billions of yen) 28.4 28.4 36.0 30.2 35.3 5.2 5.6 2.6 0 30.8 29.7 28.3 27.6 28.3 ? Firm diagnostics demand in developed countries; work to expand demand in emerging countries ? Acquire a diagnostics business company in Singapore; promote expansion of the diagnostics domain and commence steps to develop business in the ASEAN region ? Entry into the child health field and special peptide pharmaceutical ingredients business (Billions of yen) 35.4 35.9 35.8 38.2 37.2 40.7 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 32 0:22:57.5 Growth Enhancement Areas and other Areas HPP Company ? Steady increase in sales in growth enhancement areas; advances in growth strategy mechanisms in cooperation enhancement areas Enhancement Area Electronics ・Packaging and semiconductor materials New products* and New businesses Building and Infrastructure ・Overseas Infrastructure materials ・High-performance PVA ・Thermal insulation+ noncombustible materials Automobiles and Transportation ・Interlayer films with new functions ・Automobile interior materials Life Science ・Diagnostic reagents designed for overseas markets ・Assistance for overseas drug development ・Development of new active pharmaceutical ingredients Growth Enhancement (Billions of yen) ・OLED-related materials ? New products: Anticipating a bottoming out; pick up the pace of development and market release ? New businesses: Work to expand sales of implementation/semiconductorrelated materials New products Sales *Definition of new product: up to 5 years after being placed on the market 7.4 7.4 8.7 2.4 3.5 5.4 14.5 15.5 17.9 15.5 17.2 18.7 (Billions of yen) FY2016 FY2017 FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) Car electronics materials Realize synergies with Polymatech Japan Co., Ltd. ? Strengthen efforts to rollout heat dissipation products ? Work to expand global sales channels High-value-added materials Push forward efforts to realize synergies with SoflanWiz Co., Ltd. ?Strengthen urethane business development, production, and sales Healthcare Undertake additional equity interest in PeptiStar Inc. ?Establish volume production technologies relating to special peptide pharmaceutical ingredients 33.7 FY2016 28.2 FY2017 31.3 FY2018 (Plan) Cooperation Enhancement *Main Measures New businesses Sales (Billions of yen) Materials for transport aircrafts and vehicles Promote collaboration with the UIEP Company ?Especially in the aviation field 1.6 FY2016 2.1 FY2017 2.3 FY2018 (Plan) 33 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:25:33.0 Housing Company Shunichi Sekiguchi Company President Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 34 0:25:38.9 Performance Trends ? Secured an increase in both sales and profit for a second consecutive fiscal year in FY2017 ? Cultivated a new customer base through the new products “GRAND TO YOU V” that are capable of capturing a share of the volume zone; increase in housing orders (unit base) for a second consecutive fiscal year (FY2016 and FY2017) ? YoY decrease in renovation orders and sales; work to transform the business model in FY2018 ? Secured an increase both sales and profit in the domestic and overseas frontier business Performance Trends FY2009-FY2010 GS21-SHINKA! (1st Stage) Housing Company FY2011-FY2013 GS21-SHINKA! (2nd Stage) FY2014-FY2016 SHINKA!-Advance 2016 FY2017-FY2019 SHIFT 2019 -Fusion- Net Sales (Billions of yen) Operating Income Ratio Operating Income 6.9% 7.7% 8.3% 8.4% 9.1% 7.7% 7.7% 7.6% 7.7% 516.0 550.0 4.9% 398.2 5.8% 418.7 449.4 469.0 496.8 41.1 494.1 41.3 473.4 485.0 497.8 37.9 19.4 24.4 31.1 36.3 36.4 37.5 39.5 50.0 FY2009 External Environment 09/2008 Lehman shock FY2010 FY2011 FY2012 12/2012 FY2013 04/2014 FY2014 FY2015 FY2016 02/2016 FY2017 04/2016 FY2018 (Plan) FY2019 (Medium-term Plan) 03/2011 Great East Japan Earthquake 09/2014 10/2019 Consumption tax raised from 8% to 10% New government Consumption tax FIT problem administration raised from 5% to 8% Kumamoto Introduction of a negative Earthquake interest rate policy Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 35 0:26:43.0 FY2017 Results: Analysis of Net Sales and Operating Income Housing Company ? Secured an increase in both sales and profit in FY2017; results came roughly in line with operating income plans ? Housing: Despite the impact of high component costs, achieved an increase in sales and profit on the back of an upswing in the number of houses sold; orders also up 1%* YoY (unit base) ? Renovation: Decrease in sales and profit due to the slump in orders; fell substantially below operating income plans Net Sales by Business (Billions of yen) Analysis of Operating Income (Billions of yen) Frontier (Domestic and Overseas) Renovation Housing Marginal Sales Profit Fixed Marginal Fixed Marginal Fixed Marginal Fixed Factors Factors Costs Profit Costs Profit Costs Profit Costs ( )=YoY Plan (Jan, 2018) +12.8 bil. yen 485.0 57.4 96.9 +2.8 -1.5 -0.8 Housing: +0.4 4 住宅+ 0 -0.4 -0.4 +0.6 -0.4 +0.1 +0.1 38.0 F(Domestic): 497.5 60.8 96.0 497.8 (+3%) Renovation: +0.2 F(Overseas): +0.2 60.8 (+6%) 95.1 (-2%) Full Year +2.6 -2.2 +0.4 -0.7 -0.4 +0.7 -0.5 +0.2 +0.3 Sales: +220 units Of which, housing materials: -1.6 37.9 bil. yen +0.4 bil. yen 37.5 bil. yen 330.7 340.7 341.9 (+3%) FY2016 Housing: Renovation: Frontier (Domestic): Frontier (Overseas): FY2017 +0.8 bil. yen FY2016 FY2017 Plan (Jan. 2018) FY2017 1H 2H -1.1 bil. yen +0.3 bil. yen +0.5 bil. yen Total +1.4 -0.4 -0.2 -0.2 -0.3 +0.3 -0.2 +0.1 +0.1 +0.6 +1.2 -1.7 +0.5 -0.5 -0.1 +0.4 -0.3 +0.1 +0.2 -0.2 36 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:28:19.8 FY2018 Plan: Analysis of Net Sales and Operating Income Housing Company ? Forecast third consecutive fiscal year of sales and profit growth; work to secure an order balance commensurate with a substantial upswing in profit in FY2019 ? Housing: Increase in the number of houses sold; strengthen marketing resources (sales personnel and model houses) in a bid to increase market share ? Renovation: Promote the return to an upward trend in profit by transforming the business model and increasing the efficiency of indirect functions thereby reducing fixed costs Net Sales by Business (Billions of yen) Analysis of Operating Income (Billions of yen) Frontier (Domestic and Overseas) Renovation Housing Marginal Sales Profit Fixed Marginal Fixed Marginal Fixed Marginal Fixed Factors Factors Costs Profit Costs Profit Costs Profit Costs ( )=YoY +18.2 bil. yen 497.8 60.8 95.1 67.6 93.8 Full Year +4.2 -0.8 -2.9 -0.3 +0.7 +1.4 -0.7 Sales: +360 units Of which, housing materials: -0.9 0 0 516.0 (+4%) (+11%) (-1%) 39.5 bil. yen +1.6 bil. yen 37.9 bil. yen FY2017 341.9 354.6 (+4%) Housing: Renovation: Frontier (Domestic): Frontier (Overseas): +0.5 bil. yen 29.7→ +0.4 bil. yen +0.7 bil. yen 6.1→ 2.4→ even -0.4→ FY2018 (Plan) 30.3 bil. yen 1H 6.5 bil.yen 3.1 bil.yen -0.4 bil.yen Total +2.1 -0.7 -1.4 -0.4 +0.2 +0.6 -0.4 +2.1 0 -1.5 +0.1 +0.5 +0.8 -0.3 0 0 0 0 0 +1.6 37 FY2017 FY2018 (Plan) 2H Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:31:57.9 New Housing Orders ? Further strengthen products, the land and subdivision housing business, and sales force; work to capture the rush in demand FY2018 Market Environment Outlook and Housing Order Plans ? ? ? Market projected to exhibit modest vitality in the lead up to the consumption tax rate hike Rush in demand in FY2018 not expected to reach the levels experienced prior to the previous tax rate hike Successfully secured an increase in the number of visitors in the 2H of FY2017 (Up 6%, YoY) on the back of various measures including the renewal of model home galleries and efforts to diversify promotion tools to attract customers Reference: At the time of the consumption tax rate hike from 5% in April 2014 to 8% Housing Company FY2018 Plan FY2017 FY2018 (Plan) Full year: +4% (Units) +9% 2H FY2012 1H FY2012 +14% 1H FY2013 (Units) +1% +3% FY2018 +1% +6% From 2H FY2011 To 2H FY2012 2H FY2011 FY2017 From 1H FY2012 To 1H FY2013 1H 2H FY2018 Initiatives Aimed at Securing Orders FY2017 ? Significantly expanded the lineup through the launch of new products FY2018 ? Maximize new product orders released in FY2017 ? Work to strengthen steel-frame flat roof-related products April: launched Smart Power Station FR Product Strategies High DESIO Urban Grand To You V Desio series: +13%(2H FY2017, YoY) SPS series: +4%(2H FY2017, YoY) Wooden Frame series: +46% (2H FY2017, YoY) Price zone SPS GR Strengthen zero energy house (ZEH) compliance 1H FY2018: Prepare for the rush in demand; strengthen activities in the high-price range in response to rebuilding demand Land and Subdivision Housing Strategies ? Substantially strengthened Company-owned land and subdivision housing: orders Up 14%(YoY) ?Further strengthen the procurement of subdivision housing land Through to the 1H of FY2019 Beginning of FY2018 land for sales: Up 12% (YoY) ?Promote the nationwide rollout of large-scale subdivision, Smart Heim City ? Increased model home galleries and open houses mainly in Tokyo, Nagoya, and Osaka ? Increase sales personnel: Up 5% (beginning of the FY2018, YoY) ? Further increase model home galleries and open houses Sales Force Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 38 0:34:15.9 Renovation and Frontier (Domestic), and Overseas Business Renovation ? Concentrate on expanding sales of high-valueadded strategic products Products ?Rollout attractive new housing products into the renovations business ?Strengthen energy self-sufficiency proposals with an eye toward the period following the end of the FIT system (strengthen storage battery variations and other) Housing Company Frontier (Domestic) Net Sales by Business Segment Rental Management Indicator Operating Income per unit (yen) Residential Services Real Estate (Billions of yen) ?Promote repeat orders 55.5 9.2 46.3 FY2016 58.8 9.8 49.0 FY2017 65.2 10.9 54.3 38K 42K 46K No. of dwelling units under management Sales Force Cost Control ? Complete the separation of responsibilities between sales and after care services ? Work to increase the efficiency of indirect functions 42K 45K 47K FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) Orders by Products (Billions of yen) 98.3 29.2 11.1 58.0 FY2015 95.4 29.4 6.9 59.1 FY2016 94.1 30.3 2.8 61.1 FY2017 95.4 30.5 1.3 63.6 Strategic Products* Solar power generation systems Maintenance, other (coatings, etc.) ? Maximize the integration effects of Tokyo, Nagoya, and Osaka real estate companies ?Horizontally deploy the Tokyo area high profitability model ?Bring in Heim properties that are not currently managed (increase the coverage ratio) Overseas ? Strengthen the sales structure ? Work to expand the subdivision housing business No. of housing units sold through a joint venture in Thailand FY2018 (Plan) 134 148 180 *Strategic products: for exterior areas, new external walls, bathrooms and kitchens, extensions, and etc. FY2016 FY2017 FY2018 (Plan) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 39 0:36:27.9 Urban Infrastructure and Environmental Products Company Hajime Kubo Company President Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 40 0:36:36.5 Performance Trends UIEP Company ? In FY2017, reported record high profit at the company level for a second consecutive fiscal year; also achieved further improvement in the profit margin ? In FY2018, work to accelerate the pace of growth and pursue continuous improvement in the profit foundation; target a third consecutive fiscal year of record high profit Performance trends FY2009-FY2013 GS21-SHINKA! (Billions of yen) FY2014-FY2016 SHINKA!-Advance 2016 FY2017-FY2019 SHIFT 2019 ?Fusion- Net Sales Operating Income 5.3% 0.8% 214.5 2.7% 239.9 0.6% 227.7 1.6% 226.3 240.3 12.8 6.2% 6.7% 7.2% Operating Income Ratio -1.2% 194.6 0.8% 195.6 1.5% 200.0 239.2 14.8 247.0 16.5 251.5 18.0 -2.4 FY2009 External Environment 2007 09/2008 1.5 FY2010 3.0 FY2011 6.5 1.8 FY2012 12/2012 1.3 FY2013 FY2014 3.6 FY2015 FY2016 FY2017 FY2018 (Plan) FY2019 (Medium-term Plan) 10/2019 07-08/2020 03/2011 04/2014 Stricter Lehman shock Great East Building Japan Earthquake Standards Law New government Consumption tax administration raised from 5% to 8% Consumption tax Tokyo Olympic raised from 8% to 10% Games 41 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 41 0:37:02.4 FY2017 Results: Analysis of Net Sales and Operating Income UIEP Company ? Despite achieving plans in Japan, fell short of overseas plans owing to delays in aircraft sheet recovery ? Steadily expanded sales of prioritized products*; substantial increase in sales volume; significant improvement in the product mix in Japan ? Secured a general improvement in spreads through ongoing profitability improvement measures; * Prioritized products: High-valueprogress in improving low-profit businesses added products with the potential for ? Delays in overseas aircraft sheet recovery; progress in alliance strategies (TP Group in Vietnam; market growth and substitutability overseas pipeline renewal business) and investments to expand production capacity (sheets, FFU) Net Sales Impact of business structural reform (YoY): -5.1 bil. yen Analysis of Operating Income Selling Cost Quantity Reduction Fixed Marginal Selling Raw & Profit Composition Price Materials and etc. Costs Fixed Costs Foreign Exchange -1.1 bil. yen 240.3 bil. yen 241.0 bil. yen 239.2 bil. yen Plan (Jan, 2018) +2.4 +1.5 -1.8 +0.8 Domestic: +2.5 bil. yen -0.4 +0.3 -0.4 Overseas: -0.3 bil. yen -0.2 15.0 Full Year +2.2 +1.5 -1.7 +0.7 -0.1 -0.2 -0.3 -0.2 14.8 bil. yen 12.8 bil. yen FY2016 FY2016 FY2017 Plan (Jan. 2018) FY2017 1H 2H +2.0 bil. yen Domestic: +2.7 bil. yen Overseas: -0.7 bil. yen FY2017 Total ? Increased by 4.0 billion yen on the actual basis excluding the impact of business structural reform and newly consolidated +1.6 +0.5 +0.6 +1.0 -0.7 -1.0 +0.7 0 0 -0.1 -0.2 0 -0.1 -0.2 -0.2 0 +1.6 +0.3 42 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:38:57.9 FY2018 Plan: Analysis of Net Sales and Operating Income UIEP Company ? Plan for a third consecutive fiscal year of record high profit on the back of continuous increases in sales volume and improvement in the product mix in Japan and an increase in marginal profit attributable to the recovery in overseas conditions ? Accelerate the pace of growth (Japan): Increase sales of prioritized products; work to accelerate the pace of new product launch ? Accelerate the pace of growth (overseas): Accelerate the pace of product strategy implementation by area; work to realize the effects of strategic investments ? Continue to improve the profit foundation: Promote efforts to optimize production capacity taking into account the drop in demand following the consumption tax rate hike Net Sales 構造改革 -55億円 Analysis of Operating Income Selling Cost Quantity Selling Raw Reduction Fixed & Composition Price Materials and etc. Costs Marginal Fixed Costs Profit Foreign Exchange +7.8 bil. yen 239.2 bil. yen Full Year +2.5 +1.3 -1.4 +0.8 -2.5 +2.1 -1.0 -0.1 Labor cost: -0.4 Depreciation cost: -0.2 247.0 bil. yen Labor cost: -1.4 Depreciation cost: -0.8 16.5 bil. yen 14.8 bil. yen FY2017 FY2017 FY2018 (Plan) +1.7 bil. yen Domestic: +0.7 bil. yen Overseas: +1.0 bil. yen FY2018 (Plan) Total 1H 2H +0.7 +1.8 +0.3 +1.0 -0.7 -0.7 +0.2 +0.6 -1.0 -1.5 +1.0 +1.0 -0.5 -0.4 0 0 +0.1 +1.7 43 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:40:44.3 Three Strategic Fields ? Accelerate the pace of growth in each of the three business fields Net Sales in the Three Strategic Fields and Key Measures in FY2018 Piping and Infrastructure ? Japan: Capture expanding building and infrastructure demand mainly in the Tokyo metropolitan area ? Overseas: Accelerate the pace of industrial materials, fittings, and catch basin rollout; strengthen efforts to rollout the pipeline renewal business overseas Business structural reform (YoY) 1H: -3.4 2H: -1.7 UIEP Company Advanced Materials ? Capitalize on aircraft sheet recovery; work to cultivate other fields (railway, medical equipment, other) ? In FFU products, accelerate the pace of railway sleeper rollout overseas and capture domestic infrastructure demand ? Expand the blow-molded container business field (regenerative medicine, electronic material fields) (Billions of yen) 60.6 31.9 28.7 FY2016 63.1 66.7 32.2 30.9 FY2017 35.1 2H (Billions of yen) 104.3 104.0 56.3 47.7 FY2017 107.8 58.1 49.7 FY2018 (Plan) 31.6 FY2018 (Plan) 1H 56.6 47.7 FY2016 2H 1H (Reference: Strategic Portfolio under Medium-term Management Plan “SHIFT 2019 -Fusion-”) Market Category Piping and Infrastructure Asia Building and Living Environment Interior decorative sheets Advanced Materials Aviation and Railroad Australia Europa New Field/ New Material High Grade Plastic Sheet Building and Living Environment ? Work to increase sales of new products (new rain gutters, new modular bathroom) ? Strengthen the lineup of prioritized products Overseas Industrial Piping Piping for Building (Metal substitute) Australia・Europe・US (SPR) Asia (Catch Basin/Fittings) Growth (Billions of yen) 55.9 29.0 26.9 FY2016 55.1 28.5 26.6 FY2017 55.1 28.4 26.6 FY2018 (Plan) Core Piping for Building Piping High grade Rain Gutter Pipeline Renewal Rain Gutter for Building RCP MIGUSA (Resin Tatami) Soundproof Material CFRTP To Domestic FFU (SEW etc.) Blow mold Container Plastic Plate Care Equipment Rain Gutter for Housing Exterior PE pipe for Civil Eng. FFU Rail Sleeper 2H 1H Reform FFU (Water treatment) Food Tray Engineering Panel Tank Modular Bathroom Agriculture Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 44 0:42:27.0 Growth Strategies, Overseas Strategies, and Platform Efficiency Prioritized Products Sales ? Steady expansion; accelerate the pace of new product launch in FY2018 (FY2016: 18 products → FY2017: 27 products → FY 2018: 30 products) (Billions of yen) 213.2 UIEP Company *Including the export of domestic products Americas 〇 Sales by Overseas Area* ? Accelerate the pace of area-specific product strategy implementation Products Pipeline Renovation Strategies Return to profit in FY2017; promote business with Australia as a production hub Promote synergies with TP Group in the ASEAN region Expand the aviation and three priority fields Expand applications by area and upgrade production bases Europe 〇 Asia 〇 ◎ 〇 ◎ ◎ 〇 〇 〇 AUS ◎ 212.2 215.3 Domestic Sales of which, Prioritized products sales Piping and Infrastructure Sheet FFU 13.6% 29.1 FY2016 15.1% 32.3 FY2017 17.4% 37.4 FY2018 (Plan) Prioritized Product Sales /Domestic Sales (Billions of yen) 26.8 8.3 4.9 13.6 27.1 9.6 4.2 13.4 FY2017 :Begin realizing benefits 31.8 11.7 4.9 15.3 FY2018 (Plan) :Realize benefits in earnest Asia & AUS Europe Americas FY2016 ? Implement measures aimed at strengthening strategic investments and platform efficiency in order to accelerate the pace of growth and improve profitability Strengthen Strategic Investments and Platform Efficiency Main Initiatives ? Promote synergies with TP Group (industrial materials and piping materials) Maturation Period (Image) FY2017 FY2018 FY2019 FY2020 and after Strategic Investments ? Increase aircraft sheet production (15% increase in production capacity*) ? Increase FFU production in Japan (40% increase in production capacity*); consider overseas bases ? Construct R&D facilities ? Reorganized production in Japan (strengthened expertise, optimized production costs) ? Improved profit at low-profit businesses *Compared with current production capacity Platform Efficiency Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 45 0:44:45.9 Examples of Prioritized and New Products ? Cultivate new fields and domains through conventional material (metals, wood, glass) substitutes using plastic products Field Product UIEP Company Piping and Infrastructure Polyvinyl chloride pipes, construction piping materials, industrial piping materials, pipeline renewal, etc. ? Metal substitute: Lightweight, easy installation, corrosion-resistant Building and Living Environment Designer rain gutters, interior decorative sheets, nursing care equipment, etc. Advanced Materials Sheets, FFU, blow-molded containers, CFRTP etc. ? Sheets: Increase production targeting the aviation field 3 expansion fields (railroad, medicine, construction) ? Glass substitutes (low elution sterilization container for medical use) Roll out ? Area: Japan; Expand application domains Overseas; Focus on Southeast Asia ? Metal substitutes: Helping to reduce the weight and enhancing the easy installation of non-residential rain gutters ? Wood substitutes: Enhancing design through interior decorative sheets Examples of new products in FY2017 ESLO HYPER AWHP SPR-SE UVS-VP Examples of Prioritized Products Fire-resistant VP Functional flooring Sheets for aviation High Flowrate Drainage system CHOUSHIN LEVOL Infrastructure GUARD Industrial piping FFU Railway Sleepers Low elution sterilization container for medical use Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 46 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 47 0:44:57.5 This slide presentation may contain forward-looking statements. Such forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements due to changes in global economic, business, competitive market and regulatory factors. Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 48 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 49 Housing Company Results and Plan 1. Main data in Housing business FY2017 1H Net Sales (Billions of yen) FY2016 Annual 497.8 341.9 95.1 58.8 49.0 9.8 1.9 10,820 9,880 8,270 1,610 940 31.1 835 122.9 419 2,367 29% 33% 1H 237.7 161.4 48.3 27.2 22.7 4.4 0.8 5,220 4,740 3,790 950 480 30.4 818 122.7 412 2,522 30% 37% 2H 247.3 169.3 48.6 28.3 23.6 4.7 1.0 5,380 4,820 3,980 840 560 30.8 826 123.0 30% 34% Annual 485.0 330.7 96.9 55.5 46.3 9.2 1.9 10,600 9,560 7,770 1,790 1,040 30.6 822 122.9 414 2,370 30% 35% 2H 253.4 174.6 47.7 30.2 25.1 5.1 0.9 5,460 4,940 4,070 870 520 31.1 836 122.8 28% 33% 244.4 167.3 47.4 28.7 * Rebuilding ratio and Referral sales ratio are based on time of orders-received. CONSOLIDATED OTHERS Housing Renovation Frontier (Domestic) Real estate Residential Services 23.9 4.7 1.0 5,360 4,940 4,200 740 420 31.0 832 123.0 416 2,495 28% 32% Overseas 1. Number of houses sold (Housing units) Detached houses Heim Two-U Apartments (housing complex) 2. Main data Prices <Sales subsidiaries: Detached houses>/ Unit (Millions of yen) Prices <Sales subsidiaries: Detached houses>/ Tsubo (3.3 Square meter)(Thousands of yen) Floor space (Square meter) Exhibition places (Units) Sales staff (Number of person) Rebuilding ratio (%)* Referral sales ratio (%)* Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 50 Housing Company Results and Plan 2. Housing orders (Millions of yen) Year-start Backlog Growth Rate New Orders Growth Rate Sales of Housing/Renovation Growth Rate Balance at the end Growth Rate FY2018 (Plan) FY2017 FY2016 1H 206,900 ±0% 207,840 +2% 206,040 +2% 208,700 ±0% 2H 208,700 ±0% 216,000 +4% 212,700 +2% 212,000 +3% Annual 423,840 +3% 418,740 +2% FY2017 1H 206,000 ±0% 202,957 ±0% 201,157 ±0% 207,800 ±0% 2H 207,800 ±0% 207,061 ±0% 207,961 ±0% 206,900 ±0% Annual 410,018 ±0% 409,118 ±0% - 1H 205,500 +1% 202,457 +1% 200,457 +1% 207,500 +1% 2H 207,500 +1% 207,529 +2% 209,029 +2% 206,000 ±0% Annual 409,987 +1% 409,487 +2% FY2015 3. Housing starts (Units) Housing starts* Privately-owned houses* (included in above) =A Detached house sales by our company=B (Unit base) Our share in Detached houses=B/A FY2016 Annual 1H 2H Annual 1H 2H Annual 496,840 148,266 4,940 3.3% 453,160 141,734 4,940 3.5% 950,000 290,000 9,880 3.4% 500,151 152,836 4,740 3.1% 473,986 138,947 4,820 3.5% 974,137 291,783 9,560 3.3% 920,537 284,441 9,410 3.3% *“The housing starts” and “Privately-owned houses” after 2H of FY2017 are based on forecasts. 4.The ratio of the houses equipped with the high-performance specifications FY2017 1H 2H Annual 1H FY2016 2H Annual FY2015 Annual Solar power generation systems installed Tiled exterior walls (Heim type JX) Storage battery installed Comfortable Air System 75% 71% 21% 75% 73% 71% 21% 78% 74% 71% 21% 76% 77% 67% 21% 73% 78% 68% 27% 77% 78% 67% 24% 75% 79% 66% 25% 70% 51 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. Teiji Koge," , "Tatsuya Nishida, " , "Keita Kato," , "Shunichi Sekiguchi," , "Hajime Kubo, President" , "Executive Officer, Head of Corporate Finance & Accounting Dept." , "Company President" , "Company President" , "Company President 0:00:00.0 SHIFT 2019 ?Fusion? SEKISUI CHEMICAL CO., LTD. Presentation of Financial Results and Progress under Management Plan for the Fiscal Year 2017, which ended March 31, 2018 Teiji Koge President 26 April, 2018 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:00:06.5 Results for FY2017 FY2016 Forex Rate FY2017 2H 1H \112/US$ \123/? \111/US$ \126/? 2H \112/US$ \132/? \111/US$ \133/? 1H \111/US$ \125/? \105/US$ \118/? Assumption Results (Avg. rate for each term) \109/US$ \113/? \111/US$ \119/? Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 1 0:00:13.0 FY2017 Results ?Reported a substantial increase in net sales and record highs at each level of profit (record high operating income and bottom line profit for a fifth consecutive fiscal year) ?Each level of profit fell short of plans ?Increased the period-end dividend \2 per share compared with forecasts FY2016 (Billions of yen) FY2017 Difference FY2017 Plan (Jan. 2018) Difference Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of the Parent 1,065.8 96.5 91.5 60.9 35* 1,107.4 99.2 93.9 63.5 40* +41.7 +2.8 +2.4 +2.6 +5 1,114.0 102.0 101.0 67.0 38* -6.6 -2.8 -7.1 -3.5 +2 Dividend per Share (Yen) *Including 70th anniversary commemorative dividend of 1 yen per share Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 2 0:00:47.9 FY2017 Results: Net Sales and Operating Income by Divisional Company ? Despite achieving an increase in profit at all three divisional companies (record high profit at the HPP and UIEP companies), fell short of operating income plans ? ? ? ? HPP: Fell short of operating income plans due to a slowdown in demand in the electronics field Housing: Offset a weak renovation business performance by implementing various measures including the control of fixed costs in the new housing business; results essentially in line with operating income plans UIEP: Fell short of operating income plans due to delays in aircraft sheet recovery Others, Eliminations or Unallocatable Accounts: Actively invested in research and development FY2016 (Billions of yen) Net Sales Operating Income FY2017 Net Sales Operating Income Difference Net Sales Operating Income FY2017 Plan (Jan. 2018) Net Sales Operating Income Difference Net Sales Operating Income HPP* Housing* UIEP* Others Eliminations or Unallocatable Accounts 357.5 485.0 240.3 2.7 -19.8 1,065.8 54.5 37.5 12.8 -7.6 -0.8 386.2 497.8 239.2 5.9 -21.6 57.8 37.9 14.8 -9.8 -1.6 99.2 +28.6 +12.8 -1.1 +3.1 -1.8 +41.7 +3.3 +0.4 +2.0 -2.1 -0.7 +2.8 388.0 497.5 241.0 6.0 -18.5 1,114.0 59.0 38.0 15.0 -9.0 -1.0 102.0 -1.8 +0.3 -1.8 -0.1 -3.1 -6.6 -1.2 -0.1 -0.2 -0.8 -0.6 -2.8 Total *HPP: 96.5 1,107.4 High Performance Plastics Company, Housing: Housing Company, UIEP: Urban Infrastructure & Environmental Products Company Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 3 0:02:12.2 FY2017 Results (1H & 2H): Net Sales and Operating Income by Divisional Company ? Profit held to a narrow increase in the 2H of FY2017 due to the impact of such factors as the upswing in raw material costs, which hovered at a high level, and a deterioration in the business environment ? ? ? ? HPP: Despite a sharp slowdown in demand in the electronics field, profit grew in the 2H due to an increase in sales volume, improvements in the product mix, and reductions in costs Housing: While the new housing business offset the slump in sales in the renovation business, profit decreased in the 2H UIEP: Despite the continued slump in aircraft sheets, secured an increase in profit in the 2H due to the increase in sales volume and improvements in the product mix in Japan Others, Eliminations or Unallocatable Accounts: Increased investments to expand film-type lithium-ion battery production capacity; accelerated the pace of biorefinery (BR) development 1H FY2016 Operating 1H FY2017 Operating Difference Operating 2H FY2016 2H FY2017 Difference (Billions of yen) Net Sales Income Net Sales Income Net Sales Income Operating Operating Operating Net Sales Income Net Sales Income Net Sales Income HPP Housing UIEP Others Eliminations or Unallocatable Accounts 176.7 237.7 112.0 1.3 -9.9 517.9 27.5 185.5 17.2 244.4 3.2 112.1 -3.9 2.7 28.8 17.8 4.8 -4.8 -0.6 +8.8 +6.7 0 +1.4 -0.7 +1.3 +0.6 +1.7 -1.0 -0.3 +2.3 180.8 247.3 128.3 1.4 -9.9 547.9 27.0 200.6 20.4 253.4 9.6 127.2 -3.8 -0.5 3.1 -11.0 29.0 +19.8 20.1 9.9 -4.9 -0.9 +6.1 -1.1 +1.7 -1.1 +2.0 -0.2 +0.3 -1.2 -0.5 +0.4 4 -0.4 -10.6 43.7 534.1 Total 46.0 +16.3 52.8 573.3 53.2 +25.4 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:02:44.4 FY2017 Results: Analysis of Net Sales and Operating Income ? Achieved a substantial increase in net sales ? Despite a substantial increase in sales volumes and significant improvement in the product mix mainly in the HPP company, fell short of plans ? Minimized the impact of high raw material costs by adjusting product prices (Breakdown of main differences) and reducing costs; undertook steps to control fixed costs Electronics Field: -1.1 excluding growth investments Net Sales Impact of business structural reform (YoY): -8.4 bil. yen, newly consolidated (YoY): +17.7 bil. yen Analysis of Operating Income Sales Change Quantity of & consolidated Foreign Compocompany Exchange sition Renovation Business: -0.7 Sheet Business: -0.5 Depreciation cost Cost Raw Reduction Labor Selling Price Materials and etc. cost Others +41.7 bil. yen 1,065.8 bil. yen 1,114.0 bil. yen 1,107.4 bil. yen Plan +0.7 (Jan, 2018) +1.5 +14.9 +1.0 -8.2 +4.4 -3.9 -0.4 -4.6 102.0 Full Year +0.1 +1.0 +11.7 +1.2 -8.2 +3.9 -3.9 -0.5 -2.7 Fixed Costs: -7.1 bil. yen 96.5 bil. yen FY2016 FY2016 FY2017 Plan (Jan. 2018) FY2017 Sales Change Quantity of & consolidated Foreign Compocompany Exchange sition +2.8 bil. yen 99.2 bil. yen FY2017 Cost Raw Reduction Materials and etc. Depreciation cost Selling Price Labor cost Others 合計 Total ? Increased by 32.4 billion yen on the actual basis excluding the impact of business structural reform and newly consolidated 1H 2H +0.3 -0.2 +0.4 +0.6 +7.2 +4.5 +0.3 +0.9 -3.8 -4.5 +2.2 +1.8 -1.8 -2.1 -0.2 -0.3 -2.4 -0.3 +2.3 +0.4 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 5 0:03:43.7 Plan for FY2018 FY2017 Forex Rate FY2018 2H 1H \108/US$ \134/? ‐ 2H \108/US$ \134/? ‐ 1H \112/US$ \123/? \111/US$ \126/? Assumption Results (Avg. rate for each term) \112/US$ \132/? \111/US$ \133/? Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 6 0:03:58.5 FY2018 Plan ?Work to secure a substantial increase in net sales; planning record highs at each level of profit (record high operating income and bottom line profit for a sixth consecutive fiscal year) ?Plans to increase dividends for a ninth consecutive fiscal year FY2017 (Billions of yen) FY2018 (Plan) Difference Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of Parent Dividend per Share (Yen) 1,107.4 99.2 93.9 63.5 40* 1,168.0 102.0 100.0 67.0 42 +60.6 +2.8 +6.1 +3.5 +2 *Including 70th anniversary commemorative dividend of 1 yen per share. Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 7 0:04:32.2 FY2018 Plan: Net Sales and Operating Income by Divisional Company ? Plans to respond appropriately to a harsh business environment; net sales and profits forecast to increase at all three divisional companies ? Continue to actively undertake Group-wide R&D investments FY2017 (Billions of yen) Net Sales Operating Income FY2018 (Plan) Net Sales Operating Income Difference Net Sales Operating Income HPP Housing UIEP Others Eliminations or Unallocatable Accounts 386.2 497.8 239.2 5.9 -21.6 1,107.4 57.8 37.9 14.8 -9.8 -1.6 99.2 418.0 516.0 247.0 7.5 -20.5 1,168.0 59.5 39.5 16.5 -11.3 -2.2 102.0 +31.8 +18.2 +7.8 +1.6 +1.1 +60.6 +1.7 +1.6 +1.7 -1.5 -0.6 +2.8 Total Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 8 0:04:48.7 FY2018 Plan: Outlook for Market Conditions ? Overall improvement in the business environment leading up to the 2H; raw material costs projected to remain high Production volume of LCD panels for smartphone use *Benchmarked 1Q FY2017 Number of owned home and detached house (built for sale) starts *Benchmarked 1H FY2017 Estimate (at the time of the Company’s 3Q earnings announcement) ? After bottoming out in the 4Q of FY2017, gradual recovery anticipated 17 1Q 17 2Q 17 3Q 17 4Q 18 1Q 18 2Q 18 3Q 18 4Q ? Rush in demand prior to the consumption tax rate hike projected to gradually emerge Number of automobiles manufactured *Benchmarked 1Q FY2017 ? Slight increase in the number of automobiles manufactured (Up 2% in FY2018, YoY worldwide) 17 1H 17 2H 18 1H 18 2H 17 1Q 17 2Q 17 3Q 17 4Q 18 1Q 18 2Q 18 3Q 18 4Q Non-residential construction starts floor area *Benchmarked 1H FY2016 Domestic naphtha price *Benchmarked 1Q FY2017 ? Upward trend in nonresidential construction starts mainly in the Tokyo metropolitan area Note: Demand for each of the UIEP company’s products expected to emerge from around one year after the start of nonresidential construction ? Increase in naphtha prices to plateau in FY2018 17 1Q 17 2Q 17 3Q 17 4Q 18 1Q 18 2Q 18 3Q 18 4Q 16 1H 16 2H 17 1H 17 2H Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 9 0:05:42.4 FY2018 Plan (1H & 2H): Net Sales and Operating Income by Divisional Company ? Anticipating a difficult business environment (from each of the raw material, foreign currency exchange rate, and market condition perspective) and an increase in fixed costs; aim to secure 1H results on par with the previous year at all three divisional companies ? Plans for an increase in profit in the 2H of FY2018 on the back of improvements in the business environment, strategic investments and the positive effects of structural reforms ? Looking to undertake R&D in line with plans 1H FY2017 (Billions of yen) 1H FY2018 (Plan) Difference 2H FY2017 2H FY2018 (Plan) Difference Operating Operating Operating Net Sales Income Net Sales Income Net Sales Income Operating Operating Operating Net Sales Income Net Sales Income Net Sales Income HPP Housing UIEP Others Eliminations or Unallocatable Accounts 185.5 244.4 112.1 2.7 -10.6 534.1 28.8 205.0 17.8 253.0 4.8 114.5 -4.8 3.5 28.5 +19.5 17.8 4.9 -5.7 -1.0 +8.6 +2.4 +0.8 +0.6 -0.3 0 +0.1 -0.9 -0.4 -1.5 200.6 253.4 127.2 3.1 -11.0 573.3 29.0 213.0 20.1 263.0 9.9 132.5 -4.9 4.0 31.0 +12.4 21.7 11.6 -5.6 -1.2 +9.6 +5.3 +0.9 +0.5 +2.0 +1.6 +1.7 -0.7 -0.3 +4.3 -0.6 -10.0 46.0 566.0 -0.9 -10.5 53.2 602.0 Total 44.5 +31.9 57.5 +28.7 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 10 0:06:42.5 FY2018 Plan: Analysis of Net Sales and Operating Income ? Plans of a substantial increase in net sales on a Group-wide basis ? Plans for a substantial increase in sales volumes and significant improvement in the product mix at all three divisional companies (HPP: Focus mainly on the four strategic fields; Housing: Increase of 360 in the number of houses sold; UIEP: Increase sales of prioritized products; overseas recovery) ? Accelerate the pace of investments aimed at continuous growth; reduce to some extent the impact of high raw material costs through the reduction of costs Net Sales Impact of Newly consolidated (YoY): +17.1 bil. yen Analysis of Operating Income Sales Change Quantity of Cost & consolidated Foreign Compo- Selling Raw Reduction Labor company Exchange sition cost Price Materials and etc. Depreciation cost Others +60.6 bil. yen 1,107.4 bil. yen Full Year 0 -1.5 +19.4 -0.2 -5.2 +2.5 -8.0 -3.2 -1.2 1,168.0 bil. yen Fixed Costs: -12.2 bil. yen +2.8 bil. yen 99.2 bil. yen FY2017 Sales Change Quantity of & Foreign consolidated Exchange Compocompany sition Selling Price Raw Materials Cost Reduction Labor and etc. cost Depreciation cost 102.0 bil. yen FY2018 (Plan) Others FY2017 FY2018 (Plan) 1H 2H Total ? Increased by 43.5 billion yen on the actual basis excluding the impact of newly consolidated 0 0 -0.4 -1.0 +7.3 +12.1 -0.5 +0.4 -3.0 -2.3 +1.2 +1.4 -4.3 -3.7 -1.2 -2.0 -0.6 -0.6 -1.5 +4.3 11 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:07:19.5 Returns to Shareholders ? Again, ensure the stable increase in dividends and implement measures designed to enhance capital efficiency in a bid to achieve ROE of 12%, a target under the Medium-term Management Plan in FY2018 Returns to Shareholders Track Record Acquisition of treasury stock Total dividend payment Net income attributable to owners of parent FY2018 Plan 53.0 56.7 60.9 63.5 Cash dividends per share (Yen) Acquisition of treasury stock 42 \ 16.0 billion Maximize 8 million shares 8 million shares 41.2 (Billions of yen) 23.6 11.6 0 5.3 FY2009 28.1 30.2 10.0 11.8 FY2013 15.0 13.6 FY2014 16.8 14.7 FY2015 16.4 16.8 FY2016 16.0 19.0 FY2017 Treasury stock retired 2.2 6.8 FY2010 4.5 7.8 FY2011 0 9.3 FY2012 Fiscal Year Net income attributable to owners of parent per share (yen) Cash dividends per share (yen) Dividends payout ratio Acquisition of treasury stock (billions of yen) 2009 22.1 10 45.2% 0 45.2% 1.6% 2010 44.9 13 28.9% 2.2 38.2% 2.0% 2011 54.0 15 27.8% 4.5 43.7% 2.3% 2012 58.5 18 30.8% 0 30.8% 2.4% 7,000 2013 80.1 23 28.7% 10.0 52.9% 2.7% 2014 104.7 27 25.8% 15.0 54.0% 2.8% 12,000 2015 115.1 30 26.1% 16.8 55.5% 2.8% 10,000 2016 126.1 35 27.7% 16.4 54.5% 3.1% 2017 133.8 40 29.9% 16.0 55.1% 3.3% 10,000 12 *Total return ratio = (Amount of treasury stock acquired + Total Dividends) / Net income attributable to owners of parent **DOE=Total dividend payment / Average shareholders’ equity Total return ratio* DOE** Treasury stock retired (thousand of shares) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:08:00.2 Progress under Medium-term Management Plan Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 13 0:08:06.2 Progress under Medium-term Management Plan, SHIFT 2019 -Fusion? Achieve a continuous upswing in net sales, an increase in operating income for a 10th consecutive fiscal year, and record high profit for a sixth consecutive fiscal year in FY2018; position the year as a step toward achieving the FY2019 Medium-term Management Plan Operating Income Performance 12000 2200 FY2009-FY2013 GS21-SHINKA! 1,110.9 915.5 965.1 8.1% 1,032.4 FY2014-FY2016 SHINKA!-Advance 2016 1,112.7 1,096.3 10.9% 1,065.8 11.3% FY2017-FY2019 SHIFT 2019 -Fusion1,107.4 1,168.0 11.2% 9.0% 1,200.0 12.0% 10.0% 120.0 (Billions of yen) 10000 1700 858.5 10.9% 9.4% 7.8% 7.4% 7.7% 85.8 46.0 11.2% 8.7% 102.0 65.0 59.5 Net Sales 8000 6.9% 4.2% 5.4% 3.5% ROE Operating Income Ratio 8.2% 89.8 53.4 9.1% 96.5 54.5 1200 6000 99.2 57.8 5.7% 54.6 20.6 31.1 3.0 FY2011 5.8% 59.6 23.2 36.3 1.8 FY2012 82.5 36.1 4000 700 HPP Housing UIEP 0 2000 200 36.0 19.2 19.4 49.3 24.4 24.4 1.5 FY2010 03/2011 41.1 6.5 FY2013 41.3 1.3 FY2014 2015 36.4 3.6 FY2015 2015 Drop in resource prices 37.5 12.8 FY2016 01/2016 Sharp yen appreciation 37.9 14.8 FY2017 01/2017 Inauguration of a new administration in the U.S. 39.5 16.5 FY2018 (Plan) 03/2018 Emerging concerns toward global trade friction 50.0 18.0 FY2019 -2.4 Other -300 FY2009 10/2008 Lehman shock (Medium-term Plan) 10/2019 Consumption tax raises from 8% to 10% External Environment Forex Rate* (Avg. rate for each term) 09/2011 04/2014 Increasing Great East European financial Consumption tax raises concern of Japan Earthquake crisis worsens from 5% to 8% China economic slowdown FY2008 \103/US$ FY2009 \94/US$ FY2010 \87/US$ FY2011 \80/US$ FY2012 \83/US$ FY2013 FY2014 FY2015 FY2016 FY2017 FY2018* FY2019* *FY2018 and FY2019 \100/US$ \110/US$ \120/US$ \108/US$ \111/US$ \108/US$ \100/US$ Assumptions Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 14 0:08:23.1 Progress under Medium-term Management Plan, SHIFT 2019 -Fusion? Steady progress in growth investments and structural reforms; implement “fusion” and M&As in order to accelerate growth Main Initiatives and Maturation Period ? HPP ■ Housing ■ UIEP ■Corporate Headquarters :Begin realizing benefits :Realize benefits in earnest Main Initiatives ? Increased production of high-performance interlayer films in Mexico ? Expanded the Life Science Business (integrated EIDIA; establish a new diagnostic reagent company in China) Maturation Period (Image) FY2017 FY2018 FY2019~ Strategic Investments ? Increase production of high-performance interlayer films and PVB resin in Europe ? Establish a new foam plant in China (Automobiles and Transportation Filed) ? Establish second foam plant in Thailand (Building and Infrastructure Field) ? Increase sheet for aircraft and FFU for railway production ? Develop and introduce new products (luminous PVB films, products for OLEDs, other) Forwardlooking Investment New Products ? Introduced new 70th anniversary commemorative products (SPS GR, GRAND TO YOU V, and others) ? Develop and introduce new products (FY2017: 27 items, FY2018: 30 items) ? Increase film-type lithium-ion battery production for housing application Constant Structural Reform ? Consolidate foam business plants (Europe, US) ? Improved efficiency of housing production plants (unified operations of production companies in the three major metropolitan areas, other) ■ ■ Reorganize the structure of production in Japan ? Established Sekisui Polymatech Co., Ltd. ? Established Sekisui SoflanWiz Co., Ltd. Fusion and M&A ? Acquired all of the shares in Veredus Laboratories Pte. Ltd. ? Acquired shares of PeptiStar Inc. ? Took up an equity interest in TP Group, major pipe manufacturer group in Vietnam Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 15 0:08:45.5 Progress under Medium Term Management Plan, SHIFT 2019 -Fusion? Steady progress in “Fusion” measures; expecting a FY2017-FY2018 cumulative increase of 33.0 billion yen Details of Incremental Increases in Sales (Image) M&A (potential incremental increase) Increase attributable to fusion Incremental increase in existing businesses *Compared with FY2016 Aircraft sheets (HPP and UIEP) 1,200.0 bil. yen 50.0 bil. yen 84.0 bil. yen Status of progress and major themes FY2019 Urban development project Cultivating the Vietnam market (UIEP and TP Group) FY2018 14.0 bil. yen FY2017 19.0 bil. yen Cultivating the car electronics field Strengthening kitchen, bathroom, laundry renovations (Housing and UIEP) Acquired Polymatech Japan Co., Ltd. Film-type lithium-ion battery (Sekisui Chemical and External electronic manufacturer) Chlorinated polyvinyl chloride (CPVC) (HPP and UIEP) 1,065.8 bil. yen FY2016 FY2019 Increase attributable to "Fusion" ?Steady progress overall in Development & Creation themes; also announce details of new themes Typical Examples of Development Themes ? Film-type lithium-ion battery (Housing, Corporate R&D, and External electronic manufacturer) ? Urban development project (Housing, UIEP, HPP, and Corporate R&D) ? Next-generation solar cell (Corporate R&D and advanced User Candidates) ? Carbon fiber reinforced thermal plastic (UIEP and Corporate R&D) New Theme Partial commercialization for indoor use Partial comercialization in the civil engineering field FY2016 Launch products for stationary use FY2017 FY2018 FY2019 FY2020 and after Launch products for automobile use Stationary use: Increase investments to expand production capacity and variation for housing (Automotive use: Commence sample work with users) Design completion; commence preparation of land Commence built-for-sale Push forward urban development proposals that seamlessly combine the collective strengths of our housing activities Group’s technologies and products nationwide Indoor: Improve performance and production technologies; conduct user verification tests ⇒ Expand applications Outdoor: Promote progress in weather resistance development activities Consider application in other areas including vehicles and vessels ? Technologies (BR) that convert waste into ethanol (Corporate R&D) Develop technologies Consider business models; identify partners Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 16 0:09:16.8 Progress under Medium-term Management Plan, SHIFT 2019 -Fusion? Steady progress in strategic capital investments, ordinary investments, and environmental contribution investments FY2017-FY2019 Medium-term Management Plan Acquired cash Operating Cash Flows 300 bil. yen Strategic capital investments Energy saving investments 12.0 bil. yen Application M&As 130.0 bil. yen 70.0 bil. yen Strategic investments 200.0 bil. yen Total investments 300.0 bil. yen 88.0 bil. yen Ordinary investments FY2017-FY2018 Forecast 営業CF Energy saving investments 22.0 M&As and Capital participation 79.0 Strategic capital investments 62.0 Ordinary investments 5.0 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 17 0:09:48.9 Tatsuya Nishida Results for FY2017 Executive Officer Head of Corporate Finance & Accounting Department Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 18 0:10:01.5 Consolidated Companies Number of Consolidated Companies Mar. 31, 2017 Consolidated Subsidiaries Affiliates (Equity Method) Mar. 31, 2018 Difference Increased: 17 Subsidiaries*1 Decreased: 9 Subsidiaries*2 Increased: 0 Subsidiaries Decreased: 0 Subsidies 143 8 151 8 *1: ENAX,INC., Sekisui Polymatech Co., Ltd., Sekisui SoflanWiz Co., Ltd., and etc. *2: Includes the integration of three Sekisui Heim Real Estate companies into a single company and four Sekisui Heim Industry companies into a separate single company. Influence of Change in the Number of Consolidated Companies FY2017 Net Sales Operating Income *3: Removed from consolidation from 2Q FY2016 *?: Removed from consolidation from 4Q FY2016 *?: Newly Consolidated from 2Q FY2017 *?: Newly Consolidated from 3Q FY2017 Difference ? Sekisui Film*3 ? Nippon No-Dig Technology*? ? Sekisui Polymatech Co., Ltd.*5 ? Sekisui SoflanWiz Co., Ltd.*6 and etc. +9.1 bil. yen +0.9 bil. yen Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 19 0:10:10.5 Summary of Profit and Loss FY2016 FY2017 Difference (Billions of yen) Net Sales Gross Profit Gross Profit Rate Selling, Gen. and Admin. Expenses 1,065.8 353.5 33.2% 257.0 96.5 2.5 -7.4 91.5 6.9 15.6 82.9 21.0 1.1 60.9 108 119 1,107.4 362.1 32.7% 262.9 99.2 2.5 -7.8 93.9 2.5 2.1 94.3 27.6 3.3 63.5 111 130 +41.7 +8.6 -0.5% +5.8 +2.8 0 -0.4 +2.4 -4.5 -13.5 +11.5 +6.7 +2.2 +2.6 Loss on devaluation of investments in securities and impact of business structural reform (FY2016) Gain on sales of investments in securities (FY2016) Operating Income Equity in Earnings of Affiliates Other Non-operating Income and Expenses Ordinary Income Extraordinary Income Extraordinary Loss Income before Income Taxes Corporate Income Tax, etc. Net Income Attributable to Non-controlling Interests Net Income Attributable to Owners of the Parent Foreign Exchange (Avg. rate) 1US$ 1? Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 20 0:11:00.4 Balance Sheets (Assets) (Billions of yen) Mar. 31, 2017 Mar. 31, 2018 Difference Cash and Deposits Account Receivable on Sales Inventories Other Current Assets Tangible Non-Current Assets Intangible Non-Current Assets Investments in Securities Investments & Other Assets Total Assets 109.9 164.1 153.6 38.6 261.8 39.6 156.9 19.3 943.6 78.0 183.3 170.5 41.6 279.7 51.1 177.7 17.3 999.1 -31.9 +19.2 +16.9 +3.0 +18.0 +11.5 +20.8 -2.0 +55.5 Increase of land for sale, and etc. Capital investment, M&A, and etc. Purchases and investment in securities, at fair value, and etc. Influence of Change of Consolidated Companies +27.4 bil. yen Foreign exchange +2.8 bil. yen Actual basis; +25.3 bil. yen Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 21 0:11:49.0 Balance Sheets (Liabilities & Net Assets) Net income (Billions of yen) Mar. 31, 2017 Mar. 31, 2018 Difference 63.5 bil. yen Dividends paid -18.1 bil. yen Retirement of treasury stock -12.9 bil. yen Non-Interest-Bearing Liabilities Interest-Bearing Liabilities Total Liabilities Capital Stock etc. Retained Earning Treasury Stock Unrealized Holding Gain on Securities Non-controlling Interests Other Net Assets Total Net Assets Total Liabilities, Net Assets 329.4 43.7 373.1 209.2 341.0 -41.0 39.5 20.8 1.1 570.5 943.6 340.0 46.3 386.4 209.0 374.1 -42.5 46.3 24.7 1.0 612.8 999.1 +10.7 +2.6 +13.3 -0.2 +33.1 -1.5 +6.9 +3.9 0 +42.2 +55.5 Purchases of treasury stock -16.0 bil. yen Retirement of treasury stock 12.9 bil. yen Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 22 0:12:09.9 Consolidated Cash Flows (Billions of yen) FY2016 FY2017 Working Capital and Increase in corporate tax payment, and etc. Operating Cash Flows Investing Cash Flows Financing Cash Flows Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents at the End of Term Free Cash Flow =Operating Cash Flows + Investing Cash Flows Dividends Paid 108.2 -44.1 -39.6 22.8 89.9 48.1 82.3 -60.9 -36.0 -13.8 76.7 2.3 Capital investment, M&A, and etc. Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 23 0:12:55.2 Depreciation and Capital Expenditures Depreciation FY2016 FY2017 Difference FY2016 Capital Expenditures FY2017 Difference (Billions of yen) Housing UIEP HPP Others Eliminations or Unallocatable Accounts 8.9 6.4 17.7 0.8 1.0 34.8 9.3 6.4 18.0 1.3 1.0 36.0 +0.4 0 +0.3 +0.4 +0.1 +1.2 13.5 6.7 20.8 2.1 1.0 43.9 14.4 9.8 25.7 2.5 1.1 53.5 +0.9 +3.1 +4.9 +0.5 +0.1 +9.6 Total Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 24 0:13:05.7 Depreciation, Capital Expenditures, Research and Development Expenditure (Billions of yen) FY2017 FY2018 (Plan) Difference Depreciation 36.0 53.5 37.0 40.0 75.0 40.0 +4.0 +21.5 +3.0 Capital Expenditures Research and Development Expenditure Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 25 0:13:27.2 FY2018 Plan FY2017 (Billions of yen) FY2018 (Plan) Difference Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of Parent Dividend per Share (Yen) 1,107.4 99.2 93.9 63.5 40* 1,168.0 102.0 100.0 67.0 42 +60.6 +2.8 +6.1 +3.5 +2 *Including 70th anniversary commemorative dividend of 1 yen per share Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 26 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 27 0:13:37.0 High Performance Plastics Company Keita Kato Company President Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 28 0:13:44.5 Performance Trends ? Overcame the effects of high raw material costs and reported record high company profits for a fifth consecutive fiscal year in FY2017 ? Respond flexibly and swiftly to changes in the global economic environment and target a sixth consecutive fiscal year of record high profit in FY2018 Performance Trends FY2009-FY2013 GS21-SHINKA! HPP Company Investment and Return FY2014-FY2016 SHINKA!-Advance 2016 FY2017-FY2019 SHIFT 2019 -Fusion- Ordinary Investment Strategic capital investments M&As (Billions of yen) Operating Income Ratio Net Sales Operating Income 8.7% 281.6 10.2% 7.0% 353.8 332.0 296.9 23.2 6.9% 12.3% 15.3% 15.0% 14.2% 14.1% 16.7% Operating income after tax Depreciation and amortization 7.8% 372.3 378.6 357.5 386.2 418.0 59.5 390.0 65.0 (Billions of yen) 78.0 59.0 33.0+ α 63.0 247.7 36.1 19.2 24.4 20.6 46.0 53.4 54.5 57.8 (Fiscal Year) 2009 Foreign Exchange Rate *Avg. rate for each fiscal year 2010 FY2010 2011 FY2011 2012 FY2012 2013 FY2013 2014 FY2014 2015 FY2015 2016 FY2016 2017 FY2017 2018 (Plan) 2019 (Medium-term Plan) *FY2018 and FY2019 Assumptions FY2009 FY2018* FY2019* \94/US$ \87/US$ \80/US$ \83/US$ \100/US$ \110/US$ \120/US$ \108/US$ \113/US$ \108/US$ \100/US$ \115/? 07/2008 \111/? \107/? 02/2011 Sekisui Diagnostics \134/? \139/? \133/? 11/2015 \119/? \121/? \134/? 12/2017 SoflanWiz 12/2017 \113/? 500 FY2017 FY2018 (Plan) 07/2009 PVA Business of Celanese 09/2017 Polymatech Japan 03/2018 Veredus Laboratories 2H 2019 Main M&As and Strategic Investments XenoTech EIDIA 06/2015 Started operations at the Thai CPVC factory Started operations Plans to start operations at a new interlayer film at a new interlayer production line (Mexico) production line (Europe) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 29 0:16:06.6 FY2017 Results: Analysis of Net Sales and Operating Income HPP Company ? Despite continued progress through substantial increases in sales volumes and significant improvements in the product mix mainly in the automobiles and transportation field, fell short of operating income plans due to a slowdown in demand in the electronics field ? Minimized the impact of high raw material costs through cost reduction endeavors; controlled fixed costs excluding growth investments Electronics: -0.1 Net Sales Impact of business structural reform (YoY): -3.3 bil. yen, newly consolidated (YoY): +15.1 bil. yen 構造改革 (対前年) +28.6 bil. yen -33億円 Analysis of Operating Income Selling Quantity Consolid& ated Foreign Compo-basis Change Exchange sition Automobiles and Transportation: +2.8 Building and Infrastructure: -0.1 Life Science: +2.3 Cost Raw Selling Reduction Fixed Price Materials and etc. Cost 388.0 bil. yen 357.5 bil. yen 386.2 bil. yen Plan (Jan, 2018) 0 +1.7 +6.8 -0.5 -4.9 +3.9 -2.5 59.0 Full Year 0 +1.2 +5.0 -0.3 -4.9 +3.7 -1.4 57.8 bil. yen 54.5 bil. yen FY2016 FY2016 FY2017 Plan (Jan. 2018) FY2017 +3.3 bil. yen Marginal Profit: +3.5 bil. yen FY2017 Total 1H ? Increased by 16.9 billion yen on the actual basis excluding the impact of business structural reform and newly consolidated -0.2 +0.1 +0.6 +0.6 +3.0 +2.0 -0.2 -0.2 -2.3 -2.7 +1.7 +2.1 -1.4 0 +1.3 +2.0 30 2H Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:17:43.8 FY2018 Plan: Analysis of Net Sales and Operating Income HPP Company ? Plans to secure a substantial increase in sales volumes and significant improvements in the product mix by realizing the effects of strategic investments (increase in production capacity, M&A synergies) mainly in the four strategic fields ? Respond flexibly and swiftly to changes in market conditions (deterioration and recovery); offset any increase in raw material expenses through an increase in selling prices and reductions in costs as and when required and secure an appropriate spread while at the same time implementing cost control measures Electronics: +2.0 Net Sales Newly consolidated (YoY): +17.1 bil. yen Analysis of Operating Income Selling Quantity Consolid& ated Foreign Compo-basis sition Change Exchange Automobiles and Transportation: +4.5 Building and Infrastructure: +2.0 Life Science: +2.5 Selling Price Cost Reduction Raw Materials and etc. Fixed Cost +31.8 bil. yen 386.2 bil. yen Full Year 0 418.0 bil. yen -1.4 +11.4 -1.4 -2.9 +1.0 -5.0 59.5 bil. yen 57.8 bil. yen FY2017 +1.7 bil. yen FY2018 (Plan) Total Marginal Profit: +8.1 bil. yen 0 0 -0.4 -1.0 +4.1 +7.3 -0.8 -0.6 -1.9 -1.0 +0.7 +0.4 -2.0 -3.1 FY2017 FY2018 (Plan) 1H 2H -0.3 +2.0 31 ? Increased by 14.7 billion yen on the actual basis excluding the impact of newly consolidated Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:19:43.1 Four Strategic Fields HPP Company ? Secure increases in net sales and profit mainly in the automobiles and transportation as well as life science fields; substantial recovery in electronics market conditions not expected ? Hasten the effects of strategic investments (increase in production capacity, M&A synergies) in each of the four strategic fields Net Sales in the Four Strategic Fields and Key Measures in FY2018 Electronics ? Hasten the shift to non-liquid fields *The increase owing to M&A is marked in red Automobiles and Transportation ? Maximize the effects of investments to expand production capacity ? No prospect of a substantial recovery in FPD market conditions in FY2018 ? Focus on increasing market share in mainstay products and expanding the customer base ? Consider investments to expand production capacity of semiconductor- and OLED-related products ? Despite stable growth in global market conditions, uncertainty from region to region ? Increase global sales of high-performance products; work toward full capacity interlayer film production line in Mexico ? Accelerate the pace of product rollout (and especially heat dissipation products) in the car electronics field (Billions of yen) 24.5 25.6 32.3 30.2 32.4 28.0 5.7 6.3 1.3 6.3 26.7 26.6 26.1 23.9 (Billions of yen) 51.0 0.6 49.2 50.4 60.6 58.4 58.6 4.3 4.3 4.2 54.2 56.3 46.5 54.3 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) Building and Infrastructure ? Work to increase market share in mainstay products and expand in peripheral fields Life Science ? Expand the frontier business field ? CPVC: Middle East experiencing a recovery trend despite increased competition in India; target expansion mainly in the Americas ? Fire-resistant materials: Aim to quickly realize synergies with SoflanWiz Co., Ltd. (Billions of yen) 28.4 28.4 36.0 30.2 35.3 5.2 5.6 2.6 0 30.8 29.7 28.3 27.6 28.3 ? Firm diagnostics demand in developed countries; work to expand demand in emerging countries ? Acquire a diagnostics business company in Singapore; promote expansion of the diagnostics domain and commence steps to develop business in the ASEAN region ? Entry into the child health field and special peptide pharmaceutical ingredients business (Billions of yen) 35.4 35.9 35.8 38.2 37.2 40.7 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 32 0:22:57.5 Growth Enhancement Areas and other Areas HPP Company ? Steady increase in sales in growth enhancement areas; advances in growth strategy mechanisms in cooperation enhancement areas Enhancement Area Electronics ・Packaging and semiconductor materials New products* and New businesses Building and Infrastructure ・Overseas Infrastructure materials ・High-performance PVA ・Thermal insulation+ noncombustible materials Automobiles and Transportation ・Interlayer films with new functions ・Automobile interior materials Life Science ・Diagnostic reagents designed for overseas markets ・Assistance for overseas drug development ・Development of new active pharmaceutical ingredients Growth Enhancement (Billions of yen) ・OLED-related materials ? New products: Anticipating a bottoming out; pick up the pace of development and market release ? New businesses: Work to expand sales of implementation/semiconductorrelated materials New products Sales *Definition of new product: up to 5 years after being placed on the market 7.4 7.4 8.7 2.4 3.5 5.4 14.5 15.5 17.9 15.5 17.2 18.7 (Billions of yen) FY2016 FY2017 FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) Car electronics materials Realize synergies with Polymatech Japan Co., Ltd. ? Strengthen efforts to rollout heat dissipation products ? Work to expand global sales channels High-value-added materials Push forward efforts to realize synergies with SoflanWiz Co., Ltd. ?Strengthen urethane business development, production, and sales Healthcare Undertake additional equity interest in PeptiStar Inc. ?Establish volume production technologies relating to special peptide pharmaceutical ingredients 33.7 FY2016 28.2 FY2017 31.3 FY2018 (Plan) Cooperation Enhancement *Main Measures New businesses Sales (Billions of yen) Materials for transport aircrafts and vehicles Promote collaboration with the UIEP Company ?Especially in the aviation field 1.6 FY2016 2.1 FY2017 2.3 FY2018 (Plan) 33 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:25:33.0 Housing Company Shunichi Sekiguchi Company President Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 34 0:25:38.9 Performance Trends ? Secured an increase in both sales and profit for a second consecutive fiscal year in FY2017 ? Cultivated a new customer base through the new products “GRAND TO YOU V” that are capable of capturing a share of the volume zone; increase in housing orders (unit base) for a second consecutive fiscal year (FY2016 and FY2017) ? YoY decrease in renovation orders and sales; work to transform the business model in FY2018 ? Secured an increase both sales and profit in the domestic and overseas frontier business Performance Trends FY2009-FY2010 GS21-SHINKA! (1st Stage) Housing Company FY2011-FY2013 GS21-SHINKA! (2nd Stage) FY2014-FY2016 SHINKA!-Advance 2016 FY2017-FY2019 SHIFT 2019 -Fusion- Net Sales (Billions of yen) Operating Income Ratio Operating Income 6.9% 7.7% 8.3% 8.4% 9.1% 7.7% 7.7% 7.6% 7.7% 516.0 550.0 4.9% 398.2 5.8% 418.7 449.4 469.0 496.8 41.1 494.1 41.3 473.4 485.0 497.8 37.9 19.4 24.4 31.1 36.3 36.4 37.5 39.5 50.0 FY2009 External Environment 09/2008 Lehman shock FY2010 FY2011 FY2012 12/2012 FY2013 04/2014 FY2014 FY2015 FY2016 02/2016 FY2017 04/2016 FY2018 (Plan) FY2019 (Medium-term Plan) 03/2011 Great East Japan Earthquake 09/2014 10/2019 Consumption tax raised from 8% to 10% New government Consumption tax FIT problem administration raised from 5% to 8% Kumamoto Introduction of a negative Earthquake interest rate policy Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 35 0:26:43.0 FY2017 Results: Analysis of Net Sales and Operating Income Housing Company ? Secured an increase in both sales and profit in FY2017; results came roughly in line with operating income plans ? Housing: Despite the impact of high component costs, achieved an increase in sales and profit on the back of an upswing in the number of houses sold; orders also up 1%* YoY (unit base) ? Renovation: Decrease in sales and profit due to the slump in orders; fell substantially below operating income plans Net Sales by Business (Billions of yen) Analysis of Operating Income (Billions of yen) Frontier (Domestic and Overseas) Renovation Housing Marginal Sales Profit Fixed Marginal Fixed Marginal Fixed Marginal Fixed Factors Factors Costs Profit Costs Profit Costs Profit Costs ( )=YoY Plan (Jan, 2018) +12.8 bil. yen 485.0 57.4 96.9 +2.8 -1.5 -0.8 Housing: +0.4 4 住宅+ 0 -0.4 -0.4 +0.6 -0.4 +0.1 +0.1 38.0 F(Domestic): 497.5 60.8 96.0 497.8 (+3%) Renovation: +0.2 F(Overseas): +0.2 60.8 (+6%) 95.1 (-2%) Full Year +2.6 -2.2 +0.4 -0.7 -0.4 +0.7 -0.5 +0.2 +0.3 Sales: +220 units Of which, housing materials: -1.6 37.9 bil. yen +0.4 bil. yen 37.5 bil. yen 330.7 340.7 341.9 (+3%) FY2016 Housing: Renovation: Frontier (Domestic): Frontier (Overseas): FY2017 +0.8 bil. yen FY2016 FY2017 Plan (Jan. 2018) FY2017 1H 2H -1.1 bil. yen +0.3 bil. yen +0.5 bil. yen Total +1.4 -0.4 -0.2 -0.2 -0.3 +0.3 -0.2 +0.1 +0.1 +0.6 +1.2 -1.7 +0.5 -0.5 -0.1 +0.4 -0.3 +0.1 +0.2 -0.2 36 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:28:19.8 FY2018 Plan: Analysis of Net Sales and Operating Income Housing Company ? Forecast third consecutive fiscal year of sales and profit growth; work to secure an order balance commensurate with a substantial upswing in profit in FY2019 ? Housing: Increase in the number of houses sold; strengthen marketing resources (sales personnel and model houses) in a bid to increase market share ? Renovation: Promote the return to an upward trend in profit by transforming the business model and increasing the efficiency of indirect functions thereby reducing fixed costs Net Sales by Business (Billions of yen) Analysis of Operating Income (Billions of yen) Frontier (Domestic and Overseas) Renovation Housing Marginal Sales Profit Fixed Marginal Fixed Marginal Fixed Marginal Fixed Factors Factors Costs Profit Costs Profit Costs Profit Costs ( )=YoY +18.2 bil. yen 497.8 60.8 95.1 67.6 93.8 Full Year +4.2 -0.8 -2.9 -0.3 +0.7 +1.4 -0.7 Sales: +360 units Of which, housing materials: -0.9 0 0 516.0 (+4%) (+11%) (-1%) 39.5 bil. yen +1.6 bil. yen 37.9 bil. yen FY2017 341.9 354.6 (+4%) Housing: Renovation: Frontier (Domestic): Frontier (Overseas): +0.5 bil. yen 29.7→ +0.4 bil. yen +0.7 bil. yen 6.1→ 2.4→ even -0.4→ FY2018 (Plan) 30.3 bil. yen 1H 6.5 bil.yen 3.1 bil.yen -0.4 bil.yen Total +2.1 -0.7 -1.4 -0.4 +0.2 +0.6 -0.4 +2.1 0 -1.5 +0.1 +0.5 +0.8 -0.3 0 0 0 0 0 +1.6 37 FY2017 FY2018 (Plan) 2H Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:31:57.9 New Housing Orders ? Further strengthen products, the land and subdivision housing business, and sales force; work to capture the rush in demand FY2018 Market Environment Outlook and Housing Order Plans ? ? ? Market projected to exhibit modest vitality in the lead up to the consumption tax rate hike Rush in demand in FY2018 not expected to reach the levels experienced prior to the previous tax rate hike Successfully secured an increase in the number of visitors in the 2H of FY2017 (Up 6%, YoY) on the back of various measures including the renewal of model home galleries and efforts to diversify promotion tools to attract customers Reference: At the time of the consumption tax rate hike from 5% in April 2014 to 8% Housing Company FY2018 Plan FY2017 FY2018 (Plan) Full year: +4% (Units) +9% 2H FY2012 1H FY2012 +14% 1H FY2013 (Units) +1% +3% FY2018 +1% +6% From 2H FY2011 To 2H FY2012 2H FY2011 FY2017 From 1H FY2012 To 1H FY2013 1H 2H FY2018 Initiatives Aimed at Securing Orders FY2017 ? Significantly expanded the lineup through the launch of new products FY2018 ? Maximize new product orders released in FY2017 ? Work to strengthen steel-frame flat roof-related products April: launched Smart Power Station FR Product Strategies High DESIO Urban Grand To You V Desio series: +13%(2H FY2017, YoY) SPS series: +4%(2H FY2017, YoY) Wooden Frame series: +46% (2H FY2017, YoY) Price zone SPS GR Strengthen zero energy house (ZEH) compliance 1H FY2018: Prepare for the rush in demand; strengthen activities in the high-price range in response to rebuilding demand Land and Subdivision Housing Strategies ? Substantially strengthened Company-owned land and subdivision housing: orders Up 14%(YoY) ?Further strengthen the procurement of subdivision housing land Through to the 1H of FY2019 Beginning of FY2018 land for sales: Up 12% (YoY) ?Promote the nationwide rollout of large-scale subdivision, Smart Heim City ? Increased model home galleries and open houses mainly in Tokyo, Nagoya, and Osaka ? Increase sales personnel: Up 5% (beginning of the FY2018, YoY) ? Further increase model home galleries and open houses Sales Force Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 38 0:34:15.9 Renovation and Frontier (Domestic), and Overseas Business Renovation ? Concentrate on expanding sales of high-valueadded strategic products Products ?Rollout attractive new housing products into the renovations business ?Strengthen energy self-sufficiency proposals with an eye toward the period following the end of the FIT system (strengthen storage battery variations and other) Housing Company Frontier (Domestic) Net Sales by Business Segment Rental Management Indicator Operating Income per unit (yen) Residential Services Real Estate (Billions of yen) ?Promote repeat orders 55.5 9.2 46.3 FY2016 58.8 9.8 49.0 FY2017 65.2 10.9 54.3 38K 42K 46K No. of dwelling units under management Sales Force Cost Control ? Complete the separation of responsibilities between sales and after care services ? Work to increase the efficiency of indirect functions 42K 45K 47K FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) Orders by Products (Billions of yen) 98.3 29.2 11.1 58.0 FY2015 95.4 29.4 6.9 59.1 FY2016 94.1 30.3 2.8 61.1 FY2017 95.4 30.5 1.3 63.6 Strategic Products* Solar power generation systems Maintenance, other (coatings, etc.) ? Maximize the integration effects of Tokyo, Nagoya, and Osaka real estate companies ?Horizontally deploy the Tokyo area high profitability model ?Bring in Heim properties that are not currently managed (increase the coverage ratio) Overseas ? Strengthen the sales structure ? Work to expand the subdivision housing business No. of housing units sold through a joint venture in Thailand FY2018 (Plan) 134 148 180 *Strategic products: for exterior areas, new external walls, bathrooms and kitchens, extensions, and etc. FY2016 FY2017 FY2018 (Plan) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 39 0:36:27.9 Urban Infrastructure and Environmental Products Company Hajime Kubo Company President Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 40 0:36:36.5 Performance Trends UIEP Company ? In FY2017, reported record high profit at the company level for a second consecutive fiscal year; also achieved further improvement in the profit margin ? In FY2018, work to accelerate the pace of growth and pursue continuous improvement in the profit foundation; target a third consecutive fiscal year of record high profit Performance trends FY2009-FY2013 GS21-SHINKA! (Billions of yen) FY2014-FY2016 SHINKA!-Advance 2016 FY2017-FY2019 SHIFT 2019 ?Fusion- Net Sales Operating Income 5.3% 0.8% 214.5 2.7% 239.9 0.6% 227.7 1.6% 226.3 240.3 12.8 6.2% 6.7% 7.2% Operating Income Ratio -1.2% 194.6 0.8% 195.6 1.5% 200.0 239.2 14.8 247.0 16.5 251.5 18.0 -2.4 FY2009 External Environment 2007 09/2008 1.5 FY2010 3.0 FY2011 6.5 1.8 FY2012 12/2012 1.3 FY2013 FY2014 3.6 FY2015 FY2016 FY2017 FY2018 (Plan) FY2019 (Medium-term Plan) 10/2019 07-08/2020 03/2011 04/2014 Stricter Lehman shock Great East Building Japan Earthquake Standards Law New government Consumption tax administration raised from 5% to 8% Consumption tax Tokyo Olympic raised from 8% to 10% Games 41 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 41 0:37:02.4 FY2017 Results: Analysis of Net Sales and Operating Income UIEP Company ? Despite achieving plans in Japan, fell short of overseas plans owing to delays in aircraft sheet recovery ? Steadily expanded sales of prioritized products*; substantial increase in sales volume; significant improvement in the product mix in Japan ? Secured a general improvement in spreads through ongoing profitability improvement measures; * Prioritized products: High-valueprogress in improving low-profit businesses added products with the potential for ? Delays in overseas aircraft sheet recovery; progress in alliance strategies (TP Group in Vietnam; market growth and substitutability overseas pipeline renewal business) and investments to expand production capacity (sheets, FFU) Net Sales Impact of business structural reform (YoY): -5.1 bil. yen Analysis of Operating Income Selling Cost Quantity Reduction Fixed Marginal Selling Raw & Profit Composition Price Materials and etc. Costs Fixed Costs Foreign Exchange -1.1 bil. yen 240.3 bil. yen 241.0 bil. yen 239.2 bil. yen Plan (Jan, 2018) +2.4 +1.5 -1.8 +0.8 Domestic: +2.5 bil. yen -0.4 +0.3 -0.4 Overseas: -0.3 bil. yen -0.2 15.0 Full Year +2.2 +1.5 -1.7 +0.7 -0.1 -0.2 -0.3 -0.2 14.8 bil. yen 12.8 bil. yen FY2016 FY2016 FY2017 Plan (Jan. 2018) FY2017 1H 2H +2.0 bil. yen Domestic: +2.7 bil. yen Overseas: -0.7 bil. yen FY2017 Total ? Increased by 4.0 billion yen on the actual basis excluding the impact of business structural reform and newly consolidated +1.6 +0.5 +0.6 +1.0 -0.7 -1.0 +0.7 0 0 -0.1 -0.2 0 -0.1 -0.2 -0.2 0 +1.6 +0.3 42 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:38:57.9 FY2018 Plan: Analysis of Net Sales and Operating Income UIEP Company ? Plan for a third consecutive fiscal year of record high profit on the back of continuous increases in sales volume and improvement in the product mix in Japan and an increase in marginal profit attributable to the recovery in overseas conditions ? Accelerate the pace of growth (Japan): Increase sales of prioritized products; work to accelerate the pace of new product launch ? Accelerate the pace of growth (overseas): Accelerate the pace of product strategy implementation by area; work to realize the effects of strategic investments ? Continue to improve the profit foundation: Promote efforts to optimize production capacity taking into account the drop in demand following the consumption tax rate hike Net Sales 構造改革 -55億円 Analysis of Operating Income Selling Cost Quantity Selling Raw Reduction Fixed & Composition Price Materials and etc. Costs Marginal Fixed Costs Profit Foreign Exchange +7.8 bil. yen 239.2 bil. yen Full Year +2.5 +1.3 -1.4 +0.8 -2.5 +2.1 -1.0 -0.1 Labor cost: -0.4 Depreciation cost: -0.2 247.0 bil. yen Labor cost: -1.4 Depreciation cost: -0.8 16.5 bil. yen 14.8 bil. yen FY2017 FY2017 FY2018 (Plan) +1.7 bil. yen Domestic: +0.7 bil. yen Overseas: +1.0 bil. yen FY2018 (Plan) Total 1H 2H +0.7 +1.8 +0.3 +1.0 -0.7 -0.7 +0.2 +0.6 -1.0 -1.5 +1.0 +1.0 -0.5 -0.4 0 0 +0.1 +1.7 43 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:40:44.3 Three Strategic Fields ? Accelerate the pace of growth in each of the three business fields Net Sales in the Three Strategic Fields and Key Measures in FY2018 Piping and Infrastructure ? Japan: Capture expanding building and infrastructure demand mainly in the Tokyo metropolitan area ? Overseas: Accelerate the pace of industrial materials, fittings, and catch basin rollout; strengthen efforts to rollout the pipeline renewal business overseas Business structural reform (YoY) 1H: -3.4 2H: -1.7 UIEP Company Advanced Materials ? Capitalize on aircraft sheet recovery; work to cultivate other fields (railway, medical equipment, other) ? In FFU products, accelerate the pace of railway sleeper rollout overseas and capture domestic infrastructure demand ? Expand the blow-molded container business field (regenerative medicine, electronic material fields) (Billions of yen) 60.6 31.9 28.7 FY2016 63.1 66.7 32.2 30.9 FY2017 35.1 2H (Billions of yen) 104.3 104.0 56.3 47.7 FY2017 107.8 58.1 49.7 FY2018 (Plan) 31.6 FY2018 (Plan) 1H 56.6 47.7 FY2016 2H 1H (Reference: Strategic Portfolio under Medium-term Management Plan “SHIFT 2019 -Fusion-”) Market Category Piping and Infrastructure Asia Building and Living Environment Interior decorative sheets Advanced Materials Aviation and Railroad Australia Europa New Field/ New Material High Grade Plastic Sheet Building and Living Environment ? Work to increase sales of new products (new rain gutters, new modular bathroom) ? Strengthen the lineup of prioritized products Overseas Industrial Piping Piping for Building (Metal substitute) Australia・Europe・US (SPR) Asia (Catch Basin/Fittings) Growth (Billions of yen) 55.9 29.0 26.9 FY2016 55.1 28.5 26.6 FY2017 55.1 28.4 26.6 FY2018 (Plan) Core Piping for Building Piping High grade Rain Gutter Pipeline Renewal Rain Gutter for Building RCP MIGUSA (Resin Tatami) Soundproof Material CFRTP To Domestic FFU (SEW etc.) Blow mold Container Plastic Plate Care Equipment Rain Gutter for Housing Exterior PE pipe for Civil Eng. FFU Rail Sleeper 2H 1H Reform FFU (Water treatment) Food Tray Engineering Panel Tank Modular Bathroom Agriculture Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 44 0:42:27.0 Growth Strategies, Overseas Strategies, and Platform Efficiency Prioritized Products Sales ? Steady expansion; accelerate the pace of new product launch in FY2018 (FY2016: 18 products → FY2017: 27 products → FY 2018: 30 products) (Billions of yen) 213.2 UIEP Company *Including the export of domestic products Americas 〇 Sales by Overseas Area* ? Accelerate the pace of area-specific product strategy implementation Products Pipeline Renovation Strategies Return to profit in FY2017; promote business with Australia as a production hub Promote synergies with TP Group in the ASEAN region Expand the aviation and three priority fields Expand applications by area and upgrade production bases Europe 〇 Asia 〇 ◎ 〇 ◎ ◎ 〇 〇 〇 AUS ◎ 212.2 215.3 Domestic Sales of which, Prioritized products sales Piping and Infrastructure Sheet FFU 13.6% 29.1 FY2016 15.1% 32.3 FY2017 17.4% 37.4 FY2018 (Plan) Prioritized Product Sales /Domestic Sales (Billions of yen) 26.8 8.3 4.9 13.6 27.1 9.6 4.2 13.4 FY2017 :Begin realizing benefits 31.8 11.7 4.9 15.3 FY2018 (Plan) :Realize benefits in earnest Asia & AUS Europe Americas FY2016 ? Implement measures aimed at strengthening strategic investments and platform efficiency in order to accelerate the pace of growth and improve profitability Strengthen Strategic Investments and Platform Efficiency Main Initiatives ? Promote synergies with TP Group (industrial materials and piping materials) Maturation Period (Image) FY2017 FY2018 FY2019 FY2020 and after Strategic Investments ? Increase aircraft sheet production (15% increase in production capacity*) ? Increase FFU production in Japan (40% increase in production capacity*); consider overseas bases ? Construct R&D facilities ? Reorganized production in Japan (strengthened expertise, optimized production costs) ? Improved profit at low-profit businesses *Compared with current production capacity Platform Efficiency Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 45 0:44:45.9 Examples of Prioritized and New Products ? Cultivate new fields and domains through conventional material (metals, wood, glass) substitutes using plastic products Field Product UIEP Company Piping and Infrastructure Polyvinyl chloride pipes, construction piping materials, industrial piping materials, pipeline renewal, etc. ? Metal substitute: Lightweight, easy installation, corrosion-resistant Building and Living Environment Designer rain gutters, interior decorative sheets, nursing care equipment, etc. Advanced Materials Sheets, FFU, blow-molded containers, CFRTP etc. ? Sheets: Increase production targeting the aviation field 3 expansion fields (railroad, medicine, construction) ? Glass substitutes (low elution sterilization container for medical use) Roll out ? Area: Japan; Expand application domains Overseas; Focus on Southeast Asia ? Metal substitutes: Helping to reduce the weight and enhancing the easy installation of non-residential rain gutters ? Wood substitutes: Enhancing design through interior decorative sheets Examples of new products in FY2017 ESLO HYPER AWHP SPR-SE UVS-VP Examples of Prioritized Products Fire-resistant VP Functional flooring Sheets for aviation High Flowrate Drainage system CHOUSHIN LEVOL Infrastructure GUARD Industrial piping FFU Railway Sleepers Low elution sterilization container for medical use Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 46 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 47 0:44:57.5 This slide presentation may contain forward-looking statements. Such forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements due to changes in global economic, business, competitive market and regulatory factors. Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 48 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 49 Housing Company Results and Plan 1. Main data in Housing business FY2017 1H Net Sales (Billions of yen) FY2016 Annual 497.8 341.9 95.1 58.8 49.0 9.8 1.9 10,820 9,880 8,270 1,610 940 31.1 835 122.9 419 2,367 29% 33% 1H 237.7 161.4 48.3 27.2 22.7 4.4 0.8 5,220 4,740 3,790 950 480 30.4 818 122.7 412 2,522 30% 37% 2H 247.3 169.3 48.6 28.3 23.6 4.7 1.0 5,380 4,820 3,980 840 560 30.8 826 123.0 30% 34% Annual 485.0 330.7 96.9 55.5 46.3 9.2 1.9 10,600 9,560 7,770 1,790 1,040 30.6 822 122.9 414 2,370 30% 35% 2H 253.4 174.6 47.7 30.2 25.1 5.1 0.9 5,460 4,940 4,070 870 520 31.1 836 122.8 28% 33% 244.4 167.3 47.4 28.7 * Rebuilding ratio and Referral sales ratio are based on time of orders-received. CONSOLIDATED OTHERS Housing Renovation Frontier (Domestic) Real estate Residential Services 23.9 4.7 1.0 5,360 4,940 4,200 740 420 31.0 832 123.0 416 2,495 28% 32% Overseas 1. Number of houses sold (Housing units) Detached houses Heim Two-U Apartments (housing complex) 2. Main data Prices <Sales subsidiaries: Detached houses>/ Unit (Millions of yen) Prices <Sales subsidiaries: Detached houses>/ Tsubo (3.3 Square meter)(Thousands of yen) Floor space (Square meter) Exhibition places (Units) Sales staff (Number of person) Rebuilding ratio (%)* Referral sales ratio (%)* Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 50 Housing Company Results and Plan 2. Housing orders (Millions of yen) Year-start Backlog Growth Rate New Orders Growth Rate Sales of Housing/Renovation Growth Rate Balance at the end Growth Rate FY2018 (Plan) FY2017 FY2016 1H 206,900 ±0% 207,840 +2% 206,040 +2% 208,700 ±0% 2H 208,700 ±0% 216,000 +4% 212,700 +2% 212,000 +3% Annual 423,840 +3% 418,740 +2% FY2017 1H 206,000 ±0% 202,957 ±0% 201,157 ±0% 207,800 ±0% 2H 207,800 ±0% 207,061 ±0% 207,961 ±0% 206,900 ±0% Annual 410,018 ±0% 409,118 ±0% - 1H 205,500 +1% 202,457 +1% 200,457 +1% 207,500 +1% 2H 207,500 +1% 207,529 +2% 209,029 +2% 206,000 ±0% Annual 409,987 +1% 409,487 +2% FY2015 3. Housing starts (Units) Housing starts* Privately-owned houses* (included in above) =A Detached house sales by our company=B (Unit base) Our share in Detached houses=B/A FY2016 Annual 1H 2H Annual 1H 2H Annual 496,840 148,266 4,940 3.3% 453,160 141,734 4,940 3.5% 950,000 290,000 9,880 3.4% 500,151 152,836 4,740 3.1% 473,986 138,947 4,820 3.5% 974,137 291,783 9,560 3.3% 920,537 284,441 9,410 3.3% *“The housing starts” and “Privately-owned houses” after 2H of FY2017 are based on forecasts. 4.The ratio of the houses equipped with the high-performance specifications FY2017 1H 2H Annual 1H FY2016 2H Annual FY2015 Annual Solar power generation systems installed Tiled exterior walls (Heim type JX) Storage battery installed Comfortable Air System 75% 71% 21% 75% 73% 71% 21% 78% 74% 71% 21% 76% 77% 67% 21% 73% 78% 68% 27% 77% 78% 67% 24% 75% 79% 66% 25% 70% 51 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. Teiji Koge," , "Tatsuya Nishida, " , "Keita Kato," , "Shunichi Sekiguchi," , "Hajime Kubo, President" , "Executive Officer, Head of Corporate Finance & Accounting Dept." , "Company President" , "Company President" , "Company President 0:00:00.0 SHIFT 2019 ?Fusion? SEKISUI CHEMICAL CO., LTD. Presentation of Financial Results and Progress under Management Plan for the Fiscal Year 2017, which ended March 31, 2018 Teiji Koge President 26 April, 2018 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:00:06.5 Results for FY2017 FY2016 Forex Rate FY2017 2H 1H \112/US$ \123/? \111/US$ \126/? 2H \112/US$ \132/? \111/US$ \133/? 1H \111/US$ \125/? \105/US$ \118/? Assumption Results (Avg. rate for each term) \109/US$ \113/? \111/US$ \119/? Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 1 0:00:13.0 FY2017 Results ?Reported a substantial increase in net sales and record highs at each level of profit (record high operating income and bottom line profit for a fifth consecutive fiscal year) ?Each level of profit fell short of plans ?Increased the period-end dividend \2 per share compared with forecasts FY2016 (Billions of yen) FY2017 Difference FY2017 Plan (Jan. 2018) Difference Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of the Parent 1,065.8 96.5 91.5 60.9 35* 1,107.4 99.2 93.9 63.5 40* +41.7 +2.8 +2.4 +2.6 +5 1,114.0 102.0 101.0 67.0 38* -6.6 -2.8 -7.1 -3.5 +2 Dividend per Share (Yen) *Including 70th anniversary commemorative dividend of 1 yen per share Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 2 0:00:47.9 FY2017 Results: Net Sales and Operating Income by Divisional Company ? Despite achieving an increase in profit at all three divisional companies (record high profit at the HPP and UIEP companies), fell short of operating income plans ? ? ? ? HPP: Fell short of operating income plans due to a slowdown in demand in the electronics field Housing: Offset a weak renovation business performance by implementing various measures including the control of fixed costs in the new housing business; results essentially in line with operating income plans UIEP: Fell short of operating income plans due to delays in aircraft sheet recovery Others, Eliminations or Unallocatable Accounts: Actively invested in research and development FY2016 (Billions of yen) Net Sales Operating Income FY2017 Net Sales Operating Income Difference Net Sales Operating Income FY2017 Plan (Jan. 2018) Net Sales Operating Income Difference Net Sales Operating Income HPP* Housing* UIEP* Others Eliminations or Unallocatable Accounts 357.5 485.0 240.3 2.7 -19.8 1,065.8 54.5 37.5 12.8 -7.6 -0.8 386.2 497.8 239.2 5.9 -21.6 57.8 37.9 14.8 -9.8 -1.6 99.2 +28.6 +12.8 -1.1 +3.1 -1.8 +41.7 +3.3 +0.4 +2.0 -2.1 -0.7 +2.8 388.0 497.5 241.0 6.0 -18.5 1,114.0 59.0 38.0 15.0 -9.0 -1.0 102.0 -1.8 +0.3 -1.8 -0.1 -3.1 -6.6 -1.2 -0.1 -0.2 -0.8 -0.6 -2.8 Total *HPP: 96.5 1,107.4 High Performance Plastics Company, Housing: Housing Company, UIEP: Urban Infrastructure & Environmental Products Company Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 3 0:02:12.2 FY2017 Results (1H & 2H): Net Sales and Operating Income by Divisional Company ? Profit held to a narrow increase in the 2H of FY2017 due to the impact of such factors as the upswing in raw material costs, which hovered at a high level, and a deterioration in the business environment ? ? ? ? HPP: Despite a sharp slowdown in demand in the electronics field, profit grew in the 2H due to an increase in sales volume, improvements in the product mix, and reductions in costs Housing: While the new housing business offset the slump in sales in the renovation business, profit decreased in the 2H UIEP: Despite the continued slump in aircraft sheets, secured an increase in profit in the 2H due to the increase in sales volume and improvements in the product mix in Japan Others, Eliminations or Unallocatable Accounts: Increased investments to expand film-type lithium-ion battery production capacity; accelerated the pace of biorefinery (BR) development 1H FY2016 Operating 1H FY2017 Operating Difference Operating 2H FY2016 2H FY2017 Difference (Billions of yen) Net Sales Income Net Sales Income Net Sales Income Operating Operating Operating Net Sales Income Net Sales Income Net Sales Income HPP Housing UIEP Others Eliminations or Unallocatable Accounts 176.7 237.7 112.0 1.3 -9.9 517.9 27.5 185.5 17.2 244.4 3.2 112.1 -3.9 2.7 28.8 17.8 4.8 -4.8 -0.6 +8.8 +6.7 0 +1.4 -0.7 +1.3 +0.6 +1.7 -1.0 -0.3 +2.3 180.8 247.3 128.3 1.4 -9.9 547.9 27.0 200.6 20.4 253.4 9.6 127.2 -3.8 -0.5 3.1 -11.0 29.0 +19.8 20.1 9.9 -4.9 -0.9 +6.1 -1.1 +1.7 -1.1 +2.0 -0.2 +0.3 -1.2 -0.5 +0.4 4 -0.4 -10.6 43.7 534.1 Total 46.0 +16.3 52.8 573.3 53.2 +25.4 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:02:44.4 FY2017 Results: Analysis of Net Sales and Operating Income ? Achieved a substantial increase in net sales ? Despite a substantial increase in sales volumes and significant improvement in the product mix mainly in the HPP company, fell short of plans ? Minimized the impact of high raw material costs by adjusting product prices (Breakdown of main differences) and reducing costs; undertook steps to control fixed costs Electronics Field: -1.1 excluding growth investments Net Sales Impact of business structural reform (YoY): -8.4 bil. yen, newly consolidated (YoY): +17.7 bil. yen Analysis of Operating Income Sales Change Quantity of & consolidated Foreign Compocompany Exchange sition Renovation Business: -0.7 Sheet Business: -0.5 Depreciation cost Cost Raw Reduction Labor Selling Price Materials and etc. cost Others +41.7 bil. yen 1,065.8 bil. yen 1,114.0 bil. yen 1,107.4 bil. yen Plan +0.7 (Jan, 2018) +1.5 +14.9 +1.0 -8.2 +4.4 -3.9 -0.4 -4.6 102.0 Full Year +0.1 +1.0 +11.7 +1.2 -8.2 +3.9 -3.9 -0.5 -2.7 Fixed Costs: -7.1 bil. yen 96.5 bil. yen FY2016 FY2016 FY2017 Plan (Jan. 2018) FY2017 Sales Change Quantity of & consolidated Foreign Compocompany Exchange sition +2.8 bil. yen 99.2 bil. yen FY2017 Cost Raw Reduction Materials and etc. Depreciation cost Selling Price Labor cost Others 合計 Total ? Increased by 32.4 billion yen on the actual basis excluding the impact of business structural reform and newly consolidated 1H 2H +0.3 -0.2 +0.4 +0.6 +7.2 +4.5 +0.3 +0.9 -3.8 -4.5 +2.2 +1.8 -1.8 -2.1 -0.2 -0.3 -2.4 -0.3 +2.3 +0.4 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 5 0:03:43.7 Plan for FY2018 FY2017 Forex Rate FY2018 2H 1H \108/US$ \134/? ‐ 2H \108/US$ \134/? ‐ 1H \112/US$ \123/? \111/US$ \126/? Assumption Results (Avg. rate for each term) \112/US$ \132/? \111/US$ \133/? Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 6 0:03:58.5 FY2018 Plan ?Work to secure a substantial increase in net sales; planning record highs at each level of profit (record high operating income and bottom line profit for a sixth consecutive fiscal year) ?Plans to increase dividends for a ninth consecutive fiscal year FY2017 (Billions of yen) FY2018 (Plan) Difference Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of Parent Dividend per Share (Yen) 1,107.4 99.2 93.9 63.5 40* 1,168.0 102.0 100.0 67.0 42 +60.6 +2.8 +6.1 +3.5 +2 *Including 70th anniversary commemorative dividend of 1 yen per share. Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 7 0:04:32.2 FY2018 Plan: Net Sales and Operating Income by Divisional Company ? Plans to respond appropriately to a harsh business environment; net sales and profits forecast to increase at all three divisional companies ? Continue to actively undertake Group-wide R&D investments FY2017 (Billions of yen) Net Sales Operating Income FY2018 (Plan) Net Sales Operating Income Difference Net Sales Operating Income HPP Housing UIEP Others Eliminations or Unallocatable Accounts 386.2 497.8 239.2 5.9 -21.6 1,107.4 57.8 37.9 14.8 -9.8 -1.6 99.2 418.0 516.0 247.0 7.5 -20.5 1,168.0 59.5 39.5 16.5 -11.3 -2.2 102.0 +31.8 +18.2 +7.8 +1.6 +1.1 +60.6 +1.7 +1.6 +1.7 -1.5 -0.6 +2.8 Total Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 8 0:04:48.7 FY2018 Plan: Outlook for Market Conditions ? Overall improvement in the business environment leading up to the 2H; raw material costs projected to remain high Production volume of LCD panels for smartphone use *Benchmarked 1Q FY2017 Number of owned home and detached house (built for sale) starts *Benchmarked 1H FY2017 Estimate (at the time of the Company’s 3Q earnings announcement) ? After bottoming out in the 4Q of FY2017, gradual recovery anticipated 17 1Q 17 2Q 17 3Q 17 4Q 18 1Q 18 2Q 18 3Q 18 4Q ? Rush in demand prior to the consumption tax rate hike projected to gradually emerge Number of automobiles manufactured *Benchmarked 1Q FY2017 ? Slight increase in the number of automobiles manufactured (Up 2% in FY2018, YoY worldwide) 17 1H 17 2H 18 1H 18 2H 17 1Q 17 2Q 17 3Q 17 4Q 18 1Q 18 2Q 18 3Q 18 4Q Non-residential construction starts floor area *Benchmarked 1H FY2016 Domestic naphtha price *Benchmarked 1Q FY2017 ? Upward trend in nonresidential construction starts mainly in the Tokyo metropolitan area Note: Demand for each of the UIEP company’s products expected to emerge from around one year after the start of nonresidential construction ? Increase in naphtha prices to plateau in FY2018 17 1Q 17 2Q 17 3Q 17 4Q 18 1Q 18 2Q 18 3Q 18 4Q 16 1H 16 2H 17 1H 17 2H Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 9 0:05:42.4 FY2018 Plan (1H & 2H): Net Sales and Operating Income by Divisional Company ? Anticipating a difficult business environment (from each of the raw material, foreign currency exchange rate, and market condition perspective) and an increase in fixed costs; aim to secure 1H results on par with the previous year at all three divisional companies ? Plans for an increase in profit in the 2H of FY2018 on the back of improvements in the business environment, strategic investments and the positive effects of structural reforms ? Looking to undertake R&D in line with plans 1H FY2017 (Billions of yen) 1H FY2018 (Plan) Difference 2H FY2017 2H FY2018 (Plan) Difference Operating Operating Operating Net Sales Income Net Sales Income Net Sales Income Operating Operating Operating Net Sales Income Net Sales Income Net Sales Income HPP Housing UIEP Others Eliminations or Unallocatable Accounts 185.5 244.4 112.1 2.7 -10.6 534.1 28.8 205.0 17.8 253.0 4.8 114.5 -4.8 3.5 28.5 +19.5 17.8 4.9 -5.7 -1.0 +8.6 +2.4 +0.8 +0.6 -0.3 0 +0.1 -0.9 -0.4 -1.5 200.6 253.4 127.2 3.1 -11.0 573.3 29.0 213.0 20.1 263.0 9.9 132.5 -4.9 4.0 31.0 +12.4 21.7 11.6 -5.6 -1.2 +9.6 +5.3 +0.9 +0.5 +2.0 +1.6 +1.7 -0.7 -0.3 +4.3 -0.6 -10.0 46.0 566.0 -0.9 -10.5 53.2 602.0 Total 44.5 +31.9 57.5 +28.7 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 10 0:06:42.5 FY2018 Plan: Analysis of Net Sales and Operating Income ? Plans of a substantial increase in net sales on a Group-wide basis ? Plans for a substantial increase in sales volumes and significant improvement in the product mix at all three divisional companies (HPP: Focus mainly on the four strategic fields; Housing: Increase of 360 in the number of houses sold; UIEP: Increase sales of prioritized products; overseas recovery) ? Accelerate the pace of investments aimed at continuous growth; reduce to some extent the impact of high raw material costs through the reduction of costs Net Sales Impact of Newly consolidated (YoY): +17.1 bil. yen Analysis of Operating Income Sales Change Quantity of Cost & consolidated Foreign Compo- Selling Raw Reduction Labor company Exchange sition cost Price Materials and etc. Depreciation cost Others +60.6 bil. yen 1,107.4 bil. yen Full Year 0 -1.5 +19.4 -0.2 -5.2 +2.5 -8.0 -3.2 -1.2 1,168.0 bil. yen Fixed Costs: -12.2 bil. yen +2.8 bil. yen 99.2 bil. yen FY2017 Sales Change Quantity of & Foreign consolidated Exchange Compocompany sition Selling Price Raw Materials Cost Reduction Labor and etc. cost Depreciation cost 102.0 bil. yen FY2018 (Plan) Others FY2017 FY2018 (Plan) 1H 2H Total ? Increased by 43.5 billion yen on the actual basis excluding the impact of newly consolidated 0 0 -0.4 -1.0 +7.3 +12.1 -0.5 +0.4 -3.0 -2.3 +1.2 +1.4 -4.3 -3.7 -1.2 -2.0 -0.6 -0.6 -1.5 +4.3 11 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:07:19.5 Returns to Shareholders ? Again, ensure the stable increase in dividends and implement measures designed to enhance capital efficiency in a bid to achieve ROE of 12%, a target under the Medium-term Management Plan in FY2018 Returns to Shareholders Track Record Acquisition of treasury stock Total dividend payment Net income attributable to owners of parent FY2018 Plan 53.0 56.7 60.9 63.5 Cash dividends per share (Yen) Acquisition of treasury stock 42 \ 16.0 billion Maximize 8 million shares 8 million shares 41.2 (Billions of yen) 23.6 11.6 0 5.3 FY2009 28.1 30.2 10.0 11.8 FY2013 15.0 13.6 FY2014 16.8 14.7 FY2015 16.4 16.8 FY2016 16.0 19.0 FY2017 Treasury stock retired 2.2 6.8 FY2010 4.5 7.8 FY2011 0 9.3 FY2012 Fiscal Year Net income attributable to owners of parent per share (yen) Cash dividends per share (yen) Dividends payout ratio Acquisition of treasury stock (billions of yen) 2009 22.1 10 45.2% 0 45.2% 1.6% 2010 44.9 13 28.9% 2.2 38.2% 2.0% 2011 54.0 15 27.8% 4.5 43.7% 2.3% 2012 58.5 18 30.8% 0 30.8% 2.4% 7,000 2013 80.1 23 28.7% 10.0 52.9% 2.7% 2014 104.7 27 25.8% 15.0 54.0% 2.8% 12,000 2015 115.1 30 26.1% 16.8 55.5% 2.8% 10,000 2016 126.1 35 27.7% 16.4 54.5% 3.1% 2017 133.8 40 29.9% 16.0 55.1% 3.3% 10,000 12 *Total return ratio = (Amount of treasury stock acquired + Total Dividends) / Net income attributable to owners of parent **DOE=Total dividend payment / Average shareholders’ equity Total return ratio* DOE** Treasury stock retired (thousand of shares) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:08:00.2 Progress under Medium-term Management Plan Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 13 0:08:06.2 Progress under Medium-term Management Plan, SHIFT 2019 -Fusion? Achieve a continuous upswing in net sales, an increase in operating income for a 10th consecutive fiscal year, and record high profit for a sixth consecutive fiscal year in FY2018; position the year as a step toward achieving the FY2019 Medium-term Management Plan Operating Income Performance 12000 2200 FY2009-FY2013 GS21-SHINKA! 1,110.9 915.5 965.1 8.1% 1,032.4 FY2014-FY2016 SHINKA!-Advance 2016 1,112.7 1,096.3 10.9% 1,065.8 11.3% FY2017-FY2019 SHIFT 2019 -Fusion1,107.4 1,168.0 11.2% 9.0% 1,200.0 12.0% 10.0% 120.0 (Billions of yen) 10000 1700 858.5 10.9% 9.4% 7.8% 7.4% 7.7% 85.8 46.0 11.2% 8.7% 102.0 65.0 59.5 Net Sales 8000 6.9% 4.2% 5.4% 3.5% ROE Operating Income Ratio 8.2% 89.8 53.4 9.1% 96.5 54.5 1200 6000 99.2 57.8 5.7% 54.6 20.6 31.1 3.0 FY2011 5.8% 59.6 23.2 36.3 1.8 FY2012 82.5 36.1 4000 700 HPP Housing UIEP 0 2000 200 36.0 19.2 19.4 49.3 24.4 24.4 1.5 FY2010 03/2011 41.1 6.5 FY2013 41.3 1.3 FY2014 2015 36.4 3.6 FY2015 2015 Drop in resource prices 37.5 12.8 FY2016 01/2016 Sharp yen appreciation 37.9 14.8 FY2017 01/2017 Inauguration of a new administration in the U.S. 39.5 16.5 FY2018 (Plan) 03/2018 Emerging concerns toward global trade friction 50.0 18.0 FY2019 -2.4 Other -300 FY2009 10/2008 Lehman shock (Medium-term Plan) 10/2019 Consumption tax raises from 8% to 10% External Environment Forex Rate* (Avg. rate for each term) 09/2011 04/2014 Increasing Great East European financial Consumption tax raises concern of Japan Earthquake crisis worsens from 5% to 8% China economic slowdown FY2008 \103/US$ FY2009 \94/US$ FY2010 \87/US$ FY2011 \80/US$ FY2012 \83/US$ FY2013 FY2014 FY2015 FY2016 FY2017 FY2018* FY2019* *FY2018 and FY2019 \100/US$ \110/US$ \120/US$ \108/US$ \111/US$ \108/US$ \100/US$ Assumptions Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 14 0:08:23.1 Progress under Medium-term Management Plan, SHIFT 2019 -Fusion? Steady progress in growth investments and structural reforms; implement “fusion” and M&As in order to accelerate growth Main Initiatives and Maturation Period ? HPP ■ Housing ■ UIEP ■Corporate Headquarters :Begin realizing benefits :Realize benefits in earnest Main Initiatives ? Increased production of high-performance interlayer films in Mexico ? Expanded the Life Science Business (integrated EIDIA; establish a new diagnostic reagent company in China) Maturation Period (Image) FY2017 FY2018 FY2019~ Strategic Investments ? Increase production of high-performance interlayer films and PVB resin in Europe ? Establish a new foam plant in China (Automobiles and Transportation Filed) ? Establish second foam plant in Thailand (Building and Infrastructure Field) ? Increase sheet for aircraft and FFU for railway production ? Develop and introduce new products (luminous PVB films, products for OLEDs, other) Forwardlooking Investment New Products ? Introduced new 70th anniversary commemorative products (SPS GR, GRAND TO YOU V, and others) ? Develop and introduce new products (FY2017: 27 items, FY2018: 30 items) ? Increase film-type lithium-ion battery production for housing application Constant Structural Reform ? Consolidate foam business plants (Europe, US) ? Improved efficiency of housing production plants (unified operations of production companies in the three major metropolitan areas, other) ■ ■ Reorganize the structure of production in Japan ? Established Sekisui Polymatech Co., Ltd. ? Established Sekisui SoflanWiz Co., Ltd. Fusion and M&A ? Acquired all of the shares in Veredus Laboratories Pte. Ltd. ? Acquired shares of PeptiStar Inc. ? Took up an equity interest in TP Group, major pipe manufacturer group in Vietnam Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 15 0:08:45.5 Progress under Medium Term Management Plan, SHIFT 2019 -Fusion? Steady progress in “Fusion” measures; expecting a FY2017-FY2018 cumulative increase of 33.0 billion yen Details of Incremental Increases in Sales (Image) M&A (potential incremental increase) Increase attributable to fusion Incremental increase in existing businesses *Compared with FY2016 Aircraft sheets (HPP and UIEP) 1,200.0 bil. yen 50.0 bil. yen 84.0 bil. yen Status of progress and major themes FY2019 Urban development project Cultivating the Vietnam market (UIEP and TP Group) FY2018 14.0 bil. yen FY2017 19.0 bil. yen Cultivating the car electronics field Strengthening kitchen, bathroom, laundry renovations (Housing and UIEP) Acquired Polymatech Japan Co., Ltd. Film-type lithium-ion battery (Sekisui Chemical and External electronic manufacturer) Chlorinated polyvinyl chloride (CPVC) (HPP and UIEP) 1,065.8 bil. yen FY2016 FY2019 Increase attributable to "Fusion" ?Steady progress overall in Development & Creation themes; also announce details of new themes Typical Examples of Development Themes ? Film-type lithium-ion battery (Housing, Corporate R&D, and External electronic manufacturer) ? Urban development project (Housing, UIEP, HPP, and Corporate R&D) ? Next-generation solar cell (Corporate R&D and advanced User Candidates) ? Carbon fiber reinforced thermal plastic (UIEP and Corporate R&D) New Theme Partial commercialization for indoor use Partial comercialization in the civil engineering field FY2016 Launch products for stationary use FY2017 FY2018 FY2019 FY2020 and after Launch products for automobile use Stationary use: Increase investments to expand production capacity and variation for housing (Automotive use: Commence sample work with users) Design completion; commence preparation of land Commence built-for-sale Push forward urban development proposals that seamlessly combine the collective strengths of our housing activities Group’s technologies and products nationwide Indoor: Improve performance and production technologies; conduct user verification tests ⇒ Expand applications Outdoor: Promote progress in weather resistance development activities Consider application in other areas including vehicles and vessels ? Technologies (BR) that convert waste into ethanol (Corporate R&D) Develop technologies Consider business models; identify partners Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 16 0:09:16.8 Progress under Medium-term Management Plan, SHIFT 2019 -Fusion? Steady progress in strategic capital investments, ordinary investments, and environmental contribution investments FY2017-FY2019 Medium-term Management Plan Acquired cash Operating Cash Flows 300 bil. yen Strategic capital investments Energy saving investments 12.0 bil. yen Application M&As 130.0 bil. yen 70.0 bil. yen Strategic investments 200.0 bil. yen Total investments 300.0 bil. yen 88.0 bil. yen Ordinary investments FY2017-FY2018 Forecast 営業CF Energy saving investments 22.0 M&As and Capital participation 79.0 Strategic capital investments 62.0 Ordinary investments 5.0 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 17 0:09:48.9 Tatsuya Nishida Results for FY2017 Executive Officer Head of Corporate Finance & Accounting Department Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 18 0:10:01.5 Consolidated Companies Number of Consolidated Companies Mar. 31, 2017 Consolidated Subsidiaries Affiliates (Equity Method) Mar. 31, 2018 Difference Increased: 17 Subsidiaries*1 Decreased: 9 Subsidiaries*2 Increased: 0 Subsidiaries Decreased: 0 Subsidies 143 8 151 8 *1: ENAX,INC., Sekisui Polymatech Co., Ltd., Sekisui SoflanWiz Co., Ltd., and etc. *2: Includes the integration of three Sekisui Heim Real Estate companies into a single company and four Sekisui Heim Industry companies into a separate single company. Influence of Change in the Number of Consolidated Companies FY2017 Net Sales Operating Income *3: Removed from consolidation from 2Q FY2016 *?: Removed from consolidation from 4Q FY2016 *?: Newly Consolidated from 2Q FY2017 *?: Newly Consolidated from 3Q FY2017 Difference ? Sekisui Film*3 ? Nippon No-Dig Technology*? ? Sekisui Polymatech Co., Ltd.*5 ? Sekisui SoflanWiz Co., Ltd.*6 and etc. +9.1 bil. yen +0.9 bil. yen Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 19 0:10:10.5 Summary of Profit and Loss FY2016 FY2017 Difference (Billions of yen) Net Sales Gross Profit Gross Profit Rate Selling, Gen. and Admin. Expenses 1,065.8 353.5 33.2% 257.0 96.5 2.5 -7.4 91.5 6.9 15.6 82.9 21.0 1.1 60.9 108 119 1,107.4 362.1 32.7% 262.9 99.2 2.5 -7.8 93.9 2.5 2.1 94.3 27.6 3.3 63.5 111 130 +41.7 +8.6 -0.5% +5.8 +2.8 0 -0.4 +2.4 -4.5 -13.5 +11.5 +6.7 +2.2 +2.6 Loss on devaluation of investments in securities and impact of business structural reform (FY2016) Gain on sales of investments in securities (FY2016) Operating Income Equity in Earnings of Affiliates Other Non-operating Income and Expenses Ordinary Income Extraordinary Income Extraordinary Loss Income before Income Taxes Corporate Income Tax, etc. Net Income Attributable to Non-controlling Interests Net Income Attributable to Owners of the Parent Foreign Exchange (Avg. rate) 1US$ 1? Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 20 0:11:00.4 Balance Sheets (Assets) (Billions of yen) Mar. 31, 2017 Mar. 31, 2018 Difference Cash and Deposits Account Receivable on Sales Inventories Other Current Assets Tangible Non-Current Assets Intangible Non-Current Assets Investments in Securities Investments & Other Assets Total Assets 109.9 164.1 153.6 38.6 261.8 39.6 156.9 19.3 943.6 78.0 183.3 170.5 41.6 279.7 51.1 177.7 17.3 999.1 -31.9 +19.2 +16.9 +3.0 +18.0 +11.5 +20.8 -2.0 +55.5 Increase of land for sale, and etc. Capital investment, M&A, and etc. Purchases and investment in securities, at fair value, and etc. Influence of Change of Consolidated Companies +27.4 bil. yen Foreign exchange +2.8 bil. yen Actual basis; +25.3 bil. yen Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 21 0:11:49.0 Balance Sheets (Liabilities & Net Assets) Net income (Billions of yen) Mar. 31, 2017 Mar. 31, 2018 Difference 63.5 bil. yen Dividends paid -18.1 bil. yen Retirement of treasury stock -12.9 bil. yen Non-Interest-Bearing Liabilities Interest-Bearing Liabilities Total Liabilities Capital Stock etc. Retained Earning Treasury Stock Unrealized Holding Gain on Securities Non-controlling Interests Other Net Assets Total Net Assets Total Liabilities, Net Assets 329.4 43.7 373.1 209.2 341.0 -41.0 39.5 20.8 1.1 570.5 943.6 340.0 46.3 386.4 209.0 374.1 -42.5 46.3 24.7 1.0 612.8 999.1 +10.7 +2.6 +13.3 -0.2 +33.1 -1.5 +6.9 +3.9 0 +42.2 +55.5 Purchases of treasury stock -16.0 bil. yen Retirement of treasury stock 12.9 bil. yen Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 22 0:12:09.9 Consolidated Cash Flows (Billions of yen) FY2016 FY2017 Working Capital and Increase in corporate tax payment, and etc. Operating Cash Flows Investing Cash Flows Financing Cash Flows Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents at the End of Term Free Cash Flow =Operating Cash Flows + Investing Cash Flows Dividends Paid 108.2 -44.1 -39.6 22.8 89.9 48.1 82.3 -60.9 -36.0 -13.8 76.7 2.3 Capital investment, M&A, and etc. Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 23 0:12:55.2 Depreciation and Capital Expenditures Depreciation FY2016 FY2017 Difference FY2016 Capital Expenditures FY2017 Difference (Billions of yen) Housing UIEP HPP Others Eliminations or Unallocatable Accounts 8.9 6.4 17.7 0.8 1.0 34.8 9.3 6.4 18.0 1.3 1.0 36.0 +0.4 0 +0.3 +0.4 +0.1 +1.2 13.5 6.7 20.8 2.1 1.0 43.9 14.4 9.8 25.7 2.5 1.1 53.5 +0.9 +3.1 +4.9 +0.5 +0.1 +9.6 Total Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 24 0:13:05.7 Depreciation, Capital Expenditures, Research and Development Expenditure (Billions of yen) FY2017 FY2018 (Plan) Difference Depreciation 36.0 53.5 37.0 40.0 75.0 40.0 +4.0 +21.5 +3.0 Capital Expenditures Research and Development Expenditure Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 25 0:13:27.2 FY2018 Plan FY2017 (Billions of yen) FY2018 (Plan) Difference Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of Parent Dividend per Share (Yen) 1,107.4 99.2 93.9 63.5 40* 1,168.0 102.0 100.0 67.0 42 +60.6 +2.8 +6.1 +3.5 +2 *Including 70th anniversary commemorative dividend of 1 yen per share Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 26 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 27 0:13:37.0 High Performance Plastics Company Keita Kato Company President Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 28 0:13:44.5 Performance Trends ? Overcame the effects of high raw material costs and reported record high company profits for a fifth consecutive fiscal year in FY2017 ? Respond flexibly and swiftly to changes in the global economic environment and target a sixth consecutive fiscal year of record high profit in FY2018 Performance Trends FY2009-FY2013 GS21-SHINKA! HPP Company Investment and Return FY2014-FY2016 SHINKA!-Advance 2016 FY2017-FY2019 SHIFT 2019 -Fusion- Ordinary Investment Strategic capital investments M&As (Billions of yen) Operating Income Ratio Net Sales Operating Income 8.7% 281.6 10.2% 7.0% 353.8 332.0 296.9 23.2 6.9% 12.3% 15.3% 15.0% 14.2% 14.1% 16.7% Operating income after tax Depreciation and amortization 7.8% 372.3 378.6 357.5 386.2 418.0 59.5 390.0 65.0 (Billions of yen) 78.0 59.0 33.0+ α 63.0 247.7 36.1 19.2 24.4 20.6 46.0 53.4 54.5 57.8 (Fiscal Year) 2009 Foreign Exchange Rate *Avg. rate for each fiscal year 2010 FY2010 2011 FY2011 2012 FY2012 2013 FY2013 2014 FY2014 2015 FY2015 2016 FY2016 2017 FY2017 2018 (Plan) 2019 (Medium-term Plan) *FY2018 and FY2019 Assumptions FY2009 FY2018* FY2019* \94/US$ \87/US$ \80/US$ \83/US$ \100/US$ \110/US$ \120/US$ \108/US$ \113/US$ \108/US$ \100/US$ \115/? 07/2008 \111/? \107/? 02/2011 Sekisui Diagnostics \134/? \139/? \133/? 11/2015 \119/? \121/? \134/? 12/2017 SoflanWiz 12/2017 \113/? 500 FY2017 FY2018 (Plan) 07/2009 PVA Business of Celanese 09/2017 Polymatech Japan 03/2018 Veredus Laboratories 2H 2019 Main M&As and Strategic Investments XenoTech EIDIA 06/2015 Started operations at the Thai CPVC factory Started operations Plans to start operations at a new interlayer film at a new interlayer production line (Mexico) production line (Europe) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 29 0:16:06.6 FY2017 Results: Analysis of Net Sales and Operating Income HPP Company ? Despite continued progress through substantial increases in sales volumes and significant improvements in the product mix mainly in the automobiles and transportation field, fell short of operating income plans due to a slowdown in demand in the electronics field ? Minimized the impact of high raw material costs through cost reduction endeavors; controlled fixed costs excluding growth investments Electronics: -0.1 Net Sales Impact of business structural reform (YoY): -3.3 bil. yen, newly consolidated (YoY): +15.1 bil. yen 構造改革 (対前年) +28.6 bil. yen -33億円 Analysis of Operating Income Selling Quantity Consolid& ated Foreign Compo-basis Change Exchange sition Automobiles and Transportation: +2.8 Building and Infrastructure: -0.1 Life Science: +2.3 Cost Raw Selling Reduction Fixed Price Materials and etc. Cost 388.0 bil. yen 357.5 bil. yen 386.2 bil. yen Plan (Jan, 2018) 0 +1.7 +6.8 -0.5 -4.9 +3.9 -2.5 59.0 Full Year 0 +1.2 +5.0 -0.3 -4.9 +3.7 -1.4 57.8 bil. yen 54.5 bil. yen FY2016 FY2016 FY2017 Plan (Jan. 2018) FY2017 +3.3 bil. yen Marginal Profit: +3.5 bil. yen FY2017 Total 1H ? Increased by 16.9 billion yen on the actual basis excluding the impact of business structural reform and newly consolidated -0.2 +0.1 +0.6 +0.6 +3.0 +2.0 -0.2 -0.2 -2.3 -2.7 +1.7 +2.1 -1.4 0 +1.3 +2.0 30 2H Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:17:43.8 FY2018 Plan: Analysis of Net Sales and Operating Income HPP Company ? Plans to secure a substantial increase in sales volumes and significant improvements in the product mix by realizing the effects of strategic investments (increase in production capacity, M&A synergies) mainly in the four strategic fields ? Respond flexibly and swiftly to changes in market conditions (deterioration and recovery); offset any increase in raw material expenses through an increase in selling prices and reductions in costs as and when required and secure an appropriate spread while at the same time implementing cost control measures Electronics: +2.0 Net Sales Newly consolidated (YoY): +17.1 bil. yen Analysis of Operating Income Selling Quantity Consolid& ated Foreign Compo-basis sition Change Exchange Automobiles and Transportation: +4.5 Building and Infrastructure: +2.0 Life Science: +2.5 Selling Price Cost Reduction Raw Materials and etc. Fixed Cost +31.8 bil. yen 386.2 bil. yen Full Year 0 418.0 bil. yen -1.4 +11.4 -1.4 -2.9 +1.0 -5.0 59.5 bil. yen 57.8 bil. yen FY2017 +1.7 bil. yen FY2018 (Plan) Total Marginal Profit: +8.1 bil. yen 0 0 -0.4 -1.0 +4.1 +7.3 -0.8 -0.6 -1.9 -1.0 +0.7 +0.4 -2.0 -3.1 FY2017 FY2018 (Plan) 1H 2H -0.3 +2.0 31 ? Increased by 14.7 billion yen on the actual basis excluding the impact of newly consolidated Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:19:43.1 Four Strategic Fields HPP Company ? Secure increases in net sales and profit mainly in the automobiles and transportation as well as life science fields; substantial recovery in electronics market conditions not expected ? Hasten the effects of strategic investments (increase in production capacity, M&A synergies) in each of the four strategic fields Net Sales in the Four Strategic Fields and Key Measures in FY2018 Electronics ? Hasten the shift to non-liquid fields *The increase owing to M&A is marked in red Automobiles and Transportation ? Maximize the effects of investments to expand production capacity ? No prospect of a substantial recovery in FPD market conditions in FY2018 ? Focus on increasing market share in mainstay products and expanding the customer base ? Consider investments to expand production capacity of semiconductor- and OLED-related products ? Despite stable growth in global market conditions, uncertainty from region to region ? Increase global sales of high-performance products; work toward full capacity interlayer film production line in Mexico ? Accelerate the pace of product rollout (and especially heat dissipation products) in the car electronics field (Billions of yen) 24.5 25.6 32.3 30.2 32.4 28.0 5.7 6.3 1.3 6.3 26.7 26.6 26.1 23.9 (Billions of yen) 51.0 0.6 49.2 50.4 60.6 58.4 58.6 4.3 4.3 4.2 54.2 56.3 46.5 54.3 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) Building and Infrastructure ? Work to increase market share in mainstay products and expand in peripheral fields Life Science ? Expand the frontier business field ? CPVC: Middle East experiencing a recovery trend despite increased competition in India; target expansion mainly in the Americas ? Fire-resistant materials: Aim to quickly realize synergies with SoflanWiz Co., Ltd. (Billions of yen) 28.4 28.4 36.0 30.2 35.3 5.2 5.6 2.6 0 30.8 29.7 28.3 27.6 28.3 ? Firm diagnostics demand in developed countries; work to expand demand in emerging countries ? Acquire a diagnostics business company in Singapore; promote expansion of the diagnostics domain and commence steps to develop business in the ASEAN region ? Entry into the child health field and special peptide pharmaceutical ingredients business (Billions of yen) 35.4 35.9 35.8 38.2 37.2 40.7 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 2H FY2018 (Plan) (Plan) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 32 0:22:57.5 Growth Enhancement Areas and other Areas HPP Company ? Steady increase in sales in growth enhancement areas; advances in growth strategy mechanisms in cooperation enhancement areas Enhancement Area Electronics ・Packaging and semiconductor materials New products* and New businesses Building and Infrastructure ・Overseas Infrastructure materials ・High-performance PVA ・Thermal insulation+ noncombustible materials Automobiles and Transportation ・Interlayer films with new functions ・Automobile interior materials Life Science ・Diagnostic reagents designed for overseas markets ・Assistance for overseas drug development ・Development of new active pharmaceutical ingredients Growth Enhancement (Billions of yen) ・OLED-related materials ? New products: Anticipating a bottoming out; pick up the pace of development and market release ? New businesses: Work to expand sales of implementation/semiconductorrelated materials New products Sales *Definition of new product: up to 5 years after being placed on the market 7.4 7.4 8.7 2.4 3.5 5.4 14.5 15.5 17.9 15.5 17.2 18.7 (Billions of yen) FY2016 FY2017 FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) Car electronics materials Realize synergies with Polymatech Japan Co., Ltd. ? Strengthen efforts to rollout heat dissipation products ? Work to expand global sales channels High-value-added materials Push forward efforts to realize synergies with SoflanWiz Co., Ltd. ?Strengthen urethane business development, production, and sales Healthcare Undertake additional equity interest in PeptiStar Inc. ?Establish volume production technologies relating to special peptide pharmaceutical ingredients 33.7 FY2016 28.2 FY2017 31.3 FY2018 (Plan) Cooperation Enhancement *Main Measures New businesses Sales (Billions of yen) Materials for transport aircrafts and vehicles Promote collaboration with the UIEP Company ?Especially in the aviation field 1.6 FY2016 2.1 FY2017 2.3 FY2018 (Plan) 33 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:25:33.0 Housing Company Shunichi Sekiguchi Company President Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 34 0:25:38.9 Performance Trends ? Secured an increase in both sales and profit for a second consecutive fiscal year in FY2017 ? Cultivated a new customer base through the new products “GRAND TO YOU V” that are capable of capturing a share of the volume zone; increase in housing orders (unit base) for a second consecutive fiscal year (FY2016 and FY2017) ? YoY decrease in renovation orders and sales; work to transform the business model in FY2018 ? Secured an increase both sales and profit in the domestic and overseas frontier business Performance Trends FY2009-FY2010 GS21-SHINKA! (1st Stage) Housing Company FY2011-FY2013 GS21-SHINKA! (2nd Stage) FY2014-FY2016 SHINKA!-Advance 2016 FY2017-FY2019 SHIFT 2019 -Fusion- Net Sales (Billions of yen) Operating Income Ratio Operating Income 6.9% 7.7% 8.3% 8.4% 9.1% 7.7% 7.7% 7.6% 7.7% 516.0 550.0 4.9% 398.2 5.8% 418.7 449.4 469.0 496.8 41.1 494.1 41.3 473.4 485.0 497.8 37.9 19.4 24.4 31.1 36.3 36.4 37.5 39.5 50.0 FY2009 External Environment 09/2008 Lehman shock FY2010 FY2011 FY2012 12/2012 FY2013 04/2014 FY2014 FY2015 FY2016 02/2016 FY2017 04/2016 FY2018 (Plan) FY2019 (Medium-term Plan) 03/2011 Great East Japan Earthquake 09/2014 10/2019 Consumption tax raised from 8% to 10% New government Consumption tax FIT problem administration raised from 5% to 8% Kumamoto Introduction of a negative Earthquake interest rate policy Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 35 0:26:43.0 FY2017 Results: Analysis of Net Sales and Operating Income Housing Company ? Secured an increase in both sales and profit in FY2017; results came roughly in line with operating income plans ? Housing: Despite the impact of high component costs, achieved an increase in sales and profit on the back of an upswing in the number of houses sold; orders also up 1%* YoY (unit base) ? Renovation: Decrease in sales and profit due to the slump in orders; fell substantially below operating income plans Net Sales by Business (Billions of yen) Analysis of Operating Income (Billions of yen) Frontier (Domestic and Overseas) Renovation Housing Marginal Sales Profit Fixed Marginal Fixed Marginal Fixed Marginal Fixed Factors Factors Costs Profit Costs Profit Costs Profit Costs ( )=YoY Plan (Jan, 2018) +12.8 bil. yen 485.0 57.4 96.9 +2.8 -1.5 -0.8 Housing: +0.4 4 住宅+ 0 -0.4 -0.4 +0.6 -0.4 +0.1 +0.1 38.0 F(Domestic): 497.5 60.8 96.0 497.8 (+3%) Renovation: +0.2 F(Overseas): +0.2 60.8 (+6%) 95.1 (-2%) Full Year +2.6 -2.2 +0.4 -0.7 -0.4 +0.7 -0.5 +0.2 +0.3 Sales: +220 units Of which, housing materials: -1.6 37.9 bil. yen +0.4 bil. yen 37.5 bil. yen 330.7 340.7 341.9 (+3%) FY2016 Housing: Renovation: Frontier (Domestic): Frontier (Overseas): FY2017 +0.8 bil. yen FY2016 FY2017 Plan (Jan. 2018) FY2017 1H 2H -1.1 bil. yen +0.3 bil. yen +0.5 bil. yen Total +1.4 -0.4 -0.2 -0.2 -0.3 +0.3 -0.2 +0.1 +0.1 +0.6 +1.2 -1.7 +0.5 -0.5 -0.1 +0.4 -0.3 +0.1 +0.2 -0.2 36 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:28:19.8 FY2018 Plan: Analysis of Net Sales and Operating Income Housing Company ? Forecast third consecutive fiscal year of sales and profit growth; work to secure an order balance commensurate with a substantial upswing in profit in FY2019 ? Housing: Increase in the number of houses sold; strengthen marketing resources (sales personnel and model houses) in a bid to increase market share ? Renovation: Promote the return to an upward trend in profit by transforming the business model and increasing the efficiency of indirect functions thereby reducing fixed costs Net Sales by Business (Billions of yen) Analysis of Operating Income (Billions of yen) Frontier (Domestic and Overseas) Renovation Housing Marginal Sales Profit Fixed Marginal Fixed Marginal Fixed Marginal Fixed Factors Factors Costs Profit Costs Profit Costs Profit Costs ( )=YoY +18.2 bil. yen 497.8 60.8 95.1 67.6 93.8 Full Year +4.2 -0.8 -2.9 -0.3 +0.7 +1.4 -0.7 Sales: +360 units Of which, housing materials: -0.9 0 0 516.0 (+4%) (+11%) (-1%) 39.5 bil. yen +1.6 bil. yen 37.9 bil. yen FY2017 341.9 354.6 (+4%) Housing: Renovation: Frontier (Domestic): Frontier (Overseas): +0.5 bil. yen 29.7→ +0.4 bil. yen +0.7 bil. yen 6.1→ 2.4→ even -0.4→ FY2018 (Plan) 30.3 bil. yen 1H 6.5 bil.yen 3.1 bil.yen -0.4 bil.yen Total +2.1 -0.7 -1.4 -0.4 +0.2 +0.6 -0.4 +2.1 0 -1.5 +0.1 +0.5 +0.8 -0.3 0 0 0 0 0 +1.6 37 FY2017 FY2018 (Plan) 2H Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:31:57.9 New Housing Orders ? Further strengthen products, the land and subdivision housing business, and sales force; work to capture the rush in demand FY2018 Market Environment Outlook and Housing Order Plans ? ? ? Market projected to exhibit modest vitality in the lead up to the consumption tax rate hike Rush in demand in FY2018 not expected to reach the levels experienced prior to the previous tax rate hike Successfully secured an increase in the number of visitors in the 2H of FY2017 (Up 6%, YoY) on the back of various measures including the renewal of model home galleries and efforts to diversify promotion tools to attract customers Reference: At the time of the consumption tax rate hike from 5% in April 2014 to 8% Housing Company FY2018 Plan FY2017 FY2018 (Plan) Full year: +4% (Units) +9% 2H FY2012 1H FY2012 +14% 1H FY2013 (Units) +1% +3% FY2018 +1% +6% From 2H FY2011 To 2H FY2012 2H FY2011 FY2017 From 1H FY2012 To 1H FY2013 1H 2H FY2018 Initiatives Aimed at Securing Orders FY2017 ? Significantly expanded the lineup through the launch of new products FY2018 ? Maximize new product orders released in FY2017 ? Work to strengthen steel-frame flat roof-related products April: launched Smart Power Station FR Product Strategies High DESIO Urban Grand To You V Desio series: +13%(2H FY2017, YoY) SPS series: +4%(2H FY2017, YoY) Wooden Frame series: +46% (2H FY2017, YoY) Price zone SPS GR Strengthen zero energy house (ZEH) compliance 1H FY2018: Prepare for the rush in demand; strengthen activities in the high-price range in response to rebuilding demand Land and Subdivision Housing Strategies ? Substantially strengthened Company-owned land and subdivision housing: orders Up 14%(YoY) ?Further strengthen the procurement of subdivision housing land Through to the 1H of FY2019 Beginning of FY2018 land for sales: Up 12% (YoY) ?Promote the nationwide rollout of large-scale subdivision, Smart Heim City ? Increased model home galleries and open houses mainly in Tokyo, Nagoya, and Osaka ? Increase sales personnel: Up 5% (beginning of the FY2018, YoY) ? Further increase model home galleries and open houses Sales Force Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 38 0:34:15.9 Renovation and Frontier (Domestic), and Overseas Business Renovation ? Concentrate on expanding sales of high-valueadded strategic products Products ?Rollout attractive new housing products into the renovations business ?Strengthen energy self-sufficiency proposals with an eye toward the period following the end of the FIT system (strengthen storage battery variations and other) Housing Company Frontier (Domestic) Net Sales by Business Segment Rental Management Indicator Operating Income per unit (yen) Residential Services Real Estate (Billions of yen) ?Promote repeat orders 55.5 9.2 46.3 FY2016 58.8 9.8 49.0 FY2017 65.2 10.9 54.3 38K 42K 46K No. of dwelling units under management Sales Force Cost Control ? Complete the separation of responsibilities between sales and after care services ? Work to increase the efficiency of indirect functions 42K 45K 47K FY2018 (Plan) FY2016 FY2017 FY2018 (Plan) Orders by Products (Billions of yen) 98.3 29.2 11.1 58.0 FY2015 95.4 29.4 6.9 59.1 FY2016 94.1 30.3 2.8 61.1 FY2017 95.4 30.5 1.3 63.6 Strategic Products* Solar power generation systems Maintenance, other (coatings, etc.) ? Maximize the integration effects of Tokyo, Nagoya, and Osaka real estate companies ?Horizontally deploy the Tokyo area high profitability model ?Bring in Heim properties that are not currently managed (increase the coverage ratio) Overseas ? Strengthen the sales structure ? Work to expand the subdivision housing business No. of housing units sold through a joint venture in Thailand FY2018 (Plan) 134 148 180 *Strategic products: for exterior areas, new external walls, bathrooms and kitchens, extensions, and etc. FY2016 FY2017 FY2018 (Plan) Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 39 0:36:27.9 Urban Infrastructure and Environmental Products Company Hajime Kubo Company President Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 40 0:36:36.5 Performance Trends UIEP Company ? In FY2017, reported record high profit at the company level for a second consecutive fiscal year; also achieved further improvement in the profit margin ? In FY2018, work to accelerate the pace of growth and pursue continuous improvement in the profit foundation; target a third consecutive fiscal year of record high profit Performance trends FY2009-FY2013 GS21-SHINKA! (Billions of yen) FY2014-FY2016 SHINKA!-Advance 2016 FY2017-FY2019 SHIFT 2019 ?Fusion- Net Sales Operating Income 5.3% 0.8% 214.5 2.7% 239.9 0.6% 227.7 1.6% 226.3 240.3 12.8 6.2% 6.7% 7.2% Operating Income Ratio -1.2% 194.6 0.8% 195.6 1.5% 200.0 239.2 14.8 247.0 16.5 251.5 18.0 -2.4 FY2009 External Environment 2007 09/2008 1.5 FY2010 3.0 FY2011 6.5 1.8 FY2012 12/2012 1.3 FY2013 FY2014 3.6 FY2015 FY2016 FY2017 FY2018 (Plan) FY2019 (Medium-term Plan) 10/2019 07-08/2020 03/2011 04/2014 Stricter Lehman shock Great East Building Japan Earthquake Standards Law New government Consumption tax administration raised from 5% to 8% Consumption tax Tokyo Olympic raised from 8% to 10% Games 41 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 41 0:37:02.4 FY2017 Results: Analysis of Net Sales and Operating Income UIEP Company ? Despite achieving plans in Japan, fell short of overseas plans owing to delays in aircraft sheet recovery ? Steadily expanded sales of prioritized products*; substantial increase in sales volume; significant improvement in the product mix in Japan ? Secured a general improvement in spreads through ongoing profitability improvement measures; * Prioritized products: High-valueprogress in improving low-profit businesses added products with the potential for ? Delays in overseas aircraft sheet recovery; progress in alliance strategies (TP Group in Vietnam; market growth and substitutability overseas pipeline renewal business) and investments to expand production capacity (sheets, FFU) Net Sales Impact of business structural reform (YoY): -5.1 bil. yen Analysis of Operating Income Selling Cost Quantity Reduction Fixed Marginal Selling Raw & Profit Composition Price Materials and etc. Costs Fixed Costs Foreign Exchange -1.1 bil. yen 240.3 bil. yen 241.0 bil. yen 239.2 bil. yen Plan (Jan, 2018) +2.4 +1.5 -1.8 +0.8 Domestic: +2.5 bil. yen -0.4 +0.3 -0.4 Overseas: -0.3 bil. yen -0.2 15.0 Full Year +2.2 +1.5 -1.7 +0.7 -0.1 -0.2 -0.3 -0.2 14.8 bil. yen 12.8 bil. yen FY2016 FY2016 FY2017 Plan (Jan. 2018) FY2017 1H 2H +2.0 bil. yen Domestic: +2.7 bil. yen Overseas: -0.7 bil. yen FY2017 Total ? Increased by 4.0 billion yen on the actual basis excluding the impact of business structural reform and newly consolidated +1.6 +0.5 +0.6 +1.0 -0.7 -1.0 +0.7 0 0 -0.1 -0.2 0 -0.1 -0.2 -0.2 0 +1.6 +0.3 42 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:38:57.9 FY2018 Plan: Analysis of Net Sales and Operating Income UIEP Company ? Plan for a third consecutive fiscal year of record high profit on the back of continuous increases in sales volume and improvement in the product mix in Japan and an increase in marginal profit attributable to the recovery in overseas conditions ? Accelerate the pace of growth (Japan): Increase sales of prioritized products; work to accelerate the pace of new product launch ? Accelerate the pace of growth (overseas): Accelerate the pace of product strategy implementation by area; work to realize the effects of strategic investments ? Continue to improve the profit foundation: Promote efforts to optimize production capacity taking into account the drop in demand following the consumption tax rate hike Net Sales 構造改革 -55億円 Analysis of Operating Income Selling Cost Quantity Selling Raw Reduction Fixed & Composition Price Materials and etc. Costs Marginal Fixed Costs Profit Foreign Exchange +7.8 bil. yen 239.2 bil. yen Full Year +2.5 +1.3 -1.4 +0.8 -2.5 +2.1 -1.0 -0.1 Labor cost: -0.4 Depreciation cost: -0.2 247.0 bil. yen Labor cost: -1.4 Depreciation cost: -0.8 16.5 bil. yen 14.8 bil. yen FY2017 FY2017 FY2018 (Plan) +1.7 bil. yen Domestic: +0.7 bil. yen Overseas: +1.0 bil. yen FY2018 (Plan) Total 1H 2H +0.7 +1.8 +0.3 +1.0 -0.7 -0.7 +0.2 +0.6 -1.0 -1.5 +1.0 +1.0 -0.5 -0.4 0 0 +0.1 +1.7 43 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 0:40:44.3 Three Strategic Fields ? Accelerate the pace of growth in each of the three business fields Net Sales in the Three Strategic Fields and Key Measures in FY2018 Piping and Infrastructure ? Japan: Capture expanding building and infrastructure demand mainly in the Tokyo metropolitan area ? Overseas: Accelerate the pace of industrial materials, fittings, and catch basin rollout; strengthen efforts to rollout the pipeline renewal business overseas Business structural reform (YoY) 1H: -3.4 2H: -1.7 UIEP Company Advanced Materials ? Capitalize on aircraft sheet recovery; work to cultivate other fields (railway, medical equipment, other) ? In FFU products, accelerate the pace of railway sleeper rollout overseas and capture domestic infrastructure demand ? Expand the blow-molded container business field (regenerative medicine, electronic material fields) (Billions of yen) 60.6 31.9 28.7 FY2016 63.1 66.7 32.2 30.9 FY2017 35.1 2H (Billions of yen) 104.3 104.0 56.3 47.7 FY2017 107.8 58.1 49.7 FY2018 (Plan) 31.6 FY2018 (Plan) 1H 56.6 47.7 FY2016 2H 1H (Reference: Strategic Portfolio under Medium-term Management Plan “SHIFT 2019 -Fusion-”) Market Category Piping and Infrastructure Asia Building and Living Environment Interior decorative sheets Advanced Materials Aviation and Railroad Australia Europa New Field/ New Material High Grade Plastic Sheet Building and Living Environment ? Work to increase sales of new products (new rain gutters, new modular bathroom) ? Strengthen the lineup of prioritized products Overseas Industrial Piping Piping for Building (Metal substitute) Australia・Europe・US (SPR) Asia (Catch Basin/Fittings) Growth (Billions of yen) 55.9 29.0 26.9 FY2016 55.1 28.5 26.6 FY2017 55.1 28.4 26.6 FY2018 (Plan) Core Piping for Building Piping High grade Rain Gutter Pipeline Renewal Rain Gutter for Building RCP MIGUSA (Resin Tatami) Soundproof Material CFRTP To Domestic FFU (SEW etc.) Blow mold Container Plastic Plate Care Equipment Rain Gutter for Housing Exterior PE pipe for Civil Eng. FFU Rail Sleeper 2H 1H Reform FFU (Water treatment) Food Tray Engineering Panel Tank Modular Bathroom Agriculture Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 44 0:42:27.0 Growth Strategies, Overseas Strategies, and Platform Efficiency Prioritized Products Sales ? Steady expansion; accelerate the pace of new product launch in FY2018 (FY2016: 18 products → FY2017: 27 products → FY 2018: 30 products) (Billions of yen) 213.2 UIEP Company *Including the export of domestic products Americas 〇 Sales by Overseas Area* ? Accelerate the pace of area-specific product strategy implementation Products Pipeline Renovation Strategies Return to profit in FY2017; promote business with Australia as a production hub Promote synergies with TP Group in the ASEAN region Expand the aviation and three priority fields Expand applications by area and upgrade production bases Europe 〇 Asia 〇 ◎ 〇 ◎ ◎ 〇 〇 〇 AUS ◎ 212.2 215.3 Domestic Sales of which, Prioritized products sales Piping and Infrastructure Sheet FFU 13.6% 29.1 FY2016 15.1% 32.3 FY2017 17.4% 37.4 FY2018 (Plan) Prioritized Product Sales /Domestic Sales (Billions of yen) 26.8 8.3 4.9 13.6 27.1 9.6 4.2 13.4 FY2017 :Begin realizing benefits 31.8 11.7 4.9 15.3 FY2018 (Plan) :Realize benefits in earnest Asia & AUS Europe Americas FY2016 ? Implement measures aimed at strengthening strategic investments and platform efficiency in order to accelerate the pace of growth and improve profitability Strengthen Strategic Investments and Platform Efficiency Main Initiatives ? Promote synergies with TP Group (industrial materials and piping materials) Maturation Period (Image) FY2017 FY2018 FY2019 FY2020 and after Strategic Investments ? Increase aircraft sheet production (15% increase in production capacity*) ? Increase FFU production in Japan (40% increase in production capacity*); consider overseas bases ? Construct R&D facilities ? Reorganized production in Japan (strengthened expertise, optimized production costs) ? Improved profit at low-profit businesses *Compared with current production capacity Platform Efficiency Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 45 0:44:45.9 Examples of Prioritized and New Products ? Cultivate new fields and domains through conventional material (metals, wood, glass) substitutes using plastic products Field Product UIEP Company Piping and Infrastructure Polyvinyl chloride pipes, construction piping materials, industrial piping materials, pipeline renewal, etc. ? Metal substitute: Lightweight, easy installation, corrosion-resistant Building and Living Environment Designer rain gutters, interior decorative sheets, nursing care equipment, etc. Advanced Materials Sheets, FFU, blow-molded containers, CFRTP etc. ? Sheets: Increase production targeting the aviation field 3 expansion fields (railroad, medicine, construction) ? Glass substitutes (low elution sterilization container for medical use) Roll out ? Area: Japan; Expand application domains Overseas; Focus on Southeast Asia ? Metal substitutes: Helping to reduce the weight and enhancing the easy installation of non-residential rain gutters ? Wood substitutes: Enhancing design through interior decorative sheets Examples of new products in FY2017 ESLO HYPER AWHP SPR-SE UVS-VP Examples of Prioritized Products Fire-resistant VP Functional flooring Sheets for aviation High Flowrate Drainage system CHOUSHIN LEVOL Infrastructure GUARD Industrial piping FFU Railway Sleepers Low elution sterilization container for medical use Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 46 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 47 0:44:57.5 This slide presentation may contain forward-looking statements. Such forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements due to changes in global economic, business, competitive market and regulatory factors. Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 48 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 49 Housing Company Results and Plan 1. Main data in Housing business FY2017 1H Net Sales (Billions of yen) FY2016 Annual 497.8 341.9 95.1 58.8 49.0 9.8 1.9 10,820 9,880 8,270 1,610 940 31.1 835 122.9 419 2,367 29% 33% 1H 237.7 161.4 48.3 27.2 22.7 4.4 0.8 5,220 4,740 3,790 950 480 30.4 818 122.7 412 2,522 30% 37% 2H 247.3 169.3 48.6 28.3 23.6 4.7 1.0 5,380 4,820 3,980 840 560 30.8 826 123.0 30% 34% Annual 485.0 330.7 96.9 55.5 46.3 9.2 1.9 10,600 9,560 7,770 1,790 1,040 30.6 822 122.9 414 2,370 30% 35% 2H 253.4 174.6 47.7 30.2 25.1 5.1 0.9 5,460 4,940 4,070 870 520 31.1 836 122.8 28% 33% 244.4 167.3 47.4 28.7 * Rebuilding ratio and Referral sales ratio are based on time of orders-received. CONSOLIDATED OTHERS Housing Renovation Frontier (Domestic) Real estate Residential Services 23.9 4.7 1.0 5,360 4,940 4,200 740 420 31.0 832 123.0 416 2,495 28% 32% Overseas 1. Number of houses sold (Housing units) Detached houses Heim Two-U Apartments (housing complex) 2. Main data Prices <Sales subsidiaries: Detached houses>/ Unit (Millions of yen) Prices <Sales subsidiaries: Detached houses>/ Tsubo (3.3 Square meter)(Thousands of yen) Floor space (Square meter) Exhibition places (Units) Sales staff (Number of person) Rebuilding ratio (%)* Referral sales ratio (%)* Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. 50 Housing Company Results and Plan 2. Housing orders (Millions of yen) Year-start Backlog Growth Rate New Orders Growth Rate Sales of Housing/Renovation Growth Rate Balance at the end Growth Rate FY2018 (Plan) FY2017 FY2016 1H 206,900 ±0% 207,840 +2% 206,040 +2% 208,700 ±0% 2H 208,700 ±0% 216,000 +4% 212,700 +2% 212,000 +3% Annual 423,840 +3% 418,740 +2% FY2017 1H 206,000 ±0% 202,957 ±0% 201,157 ±0% 207,800 ±0% 2H 207,800 ±0% 207,061 ±0% 207,961 ±0% 206,900 ±0% Annual 410,018 ±0% 409,118 ±0% - 1H 205,500 +1% 202,457 +1% 200,457 +1% 207,500 +1% 2H 207,500 +1% 207,529 +2% 209,029 +2% 206,000 ±0% Annual 409,987 +1% 409,487 +2% FY2015 3. Housing starts (Units) Housing starts* Privately-owned houses* (included in above) =A Detached house sales by our company=B (Unit base) Our share in Detached houses=B/A FY2016 Annual 1H 2H Annual 1H 2H Annual 496,840 148,266 4,940 3.3% 453,160 141,734 4,940 3.5% 950,000 290,000 9,880 3.4% 500,151 152,836 4,740 3.1% 473,986 138,947 4,820 3.5% 974,137 291,783 9,560 3.3% 920,537 284,441 9,410 3.3% *“The housing starts” and “Privately-owned houses” after 2H of FY2017 are based on forecasts. 4.The ratio of the houses equipped with the high-performance specifications FY2017 1H 2H Annual 1H FY2016 2H Annual FY2015 Annual Solar power generation systems installed Tiled exterior walls (Heim type JX) Storage battery installed Comfortable Air System 75% 71% 21% 75% 73% 71% 21% 78% 74% 71% 21% 76% 77% 67% 21% 73% 78% 68% 27% 77% 78% 67% 24% 75% 79% 66% 25% 70% 51 Copyrightc SEKISUI CHEMICAL CO., LTD. All Rights Reserved. Teiji Koge," , "Tatsuya Nishida, " , "Keita Kato," , "Shunichi Sekiguchi," , "Hajime Kubo, President" , "Executive Officer, Head of Corporate Finance & Accounting Dept." , "Company President" , "Company President" , "Company President