Explanation of Financial Summary for Third Quarter of FY2016

Explanation of business overview and factors affecting sales and operating income by segment

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Consolidated Financial Highlights

(Billions of Yen)

( ) Denotes a minus

Items FY2015
1 - 3Q
FY2016
1 - 3Q
Increase
(Decrease)
%
Sales 1,031.8 870.1 (161.7) (16%)
Operating income 56.4 71.6 15.2 27%
Non-operating income (expenses) (3.7) (2.1) 1.6 -
Ordinary income 57.2 69.5 16.8 32%
Extraordinary gains / losses (0.8) (1.2) (0.4) -
Net income (loss) before income
taxes and minority interests
51.9 68.3 16.4 32%
Profit (loss) attributable to owners of parent 33.6 50.0 16.4 49%
Exchange Rate (Yen / US$) 122 107 (15)  
Domestic Standard Naphtha Price (Yen / KL) 45,600 32,300 (13,300)  

Overview

Mobility

Overseas, healthy demand for elastomers, functional compounds and polypropylene compounds continued for automotive applications.
Healthy demand continued in functional polymers especially for information and communication technology applications.

Healthcare

Sales were stable in vision care materials.
In nonwoven fabrics, consumption of premium paper diapers remained firm, but demand was continually impacted by the digestion of distribution inventories.
Sales in dental materials were stable mainly in Europe and North America.

Food & Packaging

Sales for coating & engineering materials and functional films & sheets were stable.
Sales in agrochemicals were dropped from the corresponding period in FY2015.

Basic Materials

Healthy domestic demand continued and operating rates remained at high levels for naphtha crackers and other production facilities.
The overseas market for petrochemical and other such products remained strong due mainly to disruptions at major suppliers.
Business restructuring and cost cutting also progressed as scheduled in bulk & commodity products.

Overview of increase/decrease by segment (sales and operating income, year-on-year)

Description of Increase / Decrease in Mobility

Increase / Decrease of Net Sales (Third Quarter of FY2016 vs. Third Quarter of FY2015)

216.1 billion yen ( (24.6) billion yen year on year )

Volume +10.4 billion yen
- Prompt response to healthy global automotive use demand.
- Prompt response to healthy demand for information and communication technology applications.
Price (35.0) billion yen
- Decrease from sales price revision in line with downward swing in raw material prices.
- Decrease from strong yen, etc.

Increase / Decrease of Operating Income (Third Quarter of FY2016 vs. Third Quarter of FY2015)

31.1 billion yen ( (3.8) billion yen year on year )

Volume +3.9 billion yen
- Prompt response to healthy global automotive use demand.
- Prompt response to healthy demand for information and communication technology applications.
Terms of trade (7.5) billion yen
- Decrease from unfavorable terms of trade due to strong yen, etc.
Costs (0.2) billion yen

Description of Increase / Decrease in Healthcare

Increase / Decrease of Net Sales (Third Quarter of FY2016 vs. Third Quarter of FY2015)

100.0 billion yen ( (25.2) billion yen year on year )

Volume (12.0) billion yen
include effects of fiscal period adjustment in FY2015 : (11.4)
- Stable sales of vision care materials and dental materials.
- Inventory adjustment in nonwoven fabrics.
Price (13.2) billion yen
- Decrease from sales price revision in line with downward swing in raw material prices.
- Decrease from strong yen, etc.

Increase / Decrease of Operating Income (Third Quarter of FY2016 vs. Third Quarter of FY2015)

7.9 billion yen ( (0.5) billion yen year on year )

Volume (0.6) billion yen
- Stable sales of vision care materials and dental materials.
- Inventory adjustment in nonwoven fabrics.
Terms of trade (0.4) billion yen

Costs +0.5 billion yen
- Decrease in fixed costs from depreciation of goodwill etc.

Description of Increase / Decrease in Food & Packaging

Increase / Decrease of Net Sales (Third Quarter of FY2016 vs. Third Quarter of FY2015)

132.0 billion yen ( (12.3) billion yen year on year )

Volume (0.8) billion yen
- Stable sales of coating & engineering materials, and functional films & sheets.
- Decrease in agrochemicals.
Price (11.5) billion yen
- Decrease from sales price revision in line with downward swing in raw material prices.
- Decrease from strong yen, etc.

Increase / Decrease of Operating Income (Third Quarter of FY2016 vs. Third Quarter of FY2015)

14.9 billion yen ( (0.8) billion yen year on year )

Volume +0.8 billion yen
- Stable sales of coating & engineering materials, and functional films & sheets.
- Decrease in agrochemicals.
Terms of trade (1.0) billion yen

Costs (0.6) billion yen

Description of Increase / Decrease in Basic Materials

Increase / Decrease of Net Sales (Third Quarter of FY2016 vs. Third Quarter of FY2015)

395.4 billion yen ( (98.2) billion yen year on year )

Volume (26.5) billion yen
- Decrease from company split-up of polyurethane materials.
- Decrease from production rationalization, etc.
Price (71.1) billion yen
- Decrease from sales price revision in line with downward swing in raw material prices.
- Decrease from strong yen, etc.

Increase / Decrease of Operating Income (Third Quarter of FY2016 vs. Third Quarter of FY2015)

23.9 billion yen ( +21.5 billion yen year on year )

Volume (0.5) billion yen
- Decrease from company split-up of polyurethane materials.
- Decrease from production rationalization, etc.
Terms of trade +17.0 billion yen
- Market price.
- Improvement from high operating rates, etc.
Costs +5.0 billion yen
- Improvement from production suspension of polyurethane materials, etc.