Slide 1: Kureha Corporation Reports Fiscal 2018 Results (IFRS)
Kureha Corporation Reports Fiscal 2018 Results (IFRS) Tokyo, Japan – June 2019 – Kureha Corporation (“Kureha”), a leading global supplier of specialty chemicals and plastics, has reported its results for the fiscal year ended March 31, 2019 (FY2018), the final year of the FY2016-2018 mid-term manage
Slide 2: Summary of Consolidated Full-year Results
be our pillars for long-term growth. Other key focus areas include further differentiating existing businesses from competitors. Here, development of new downstream applications for various markets and fields will be important. We will also be more aggressive in seeking new business opportunities ar
Slide 3: Performance by Segment
Performance by Segment Consolidated Performance by Segment (Billions of yen) Segment FY2017 FY2018 Revenue 41.6 45.7 Advanced Materials Operating profit (loss) 1.7 4.6 Revenue 26.2 27.3 Specialty Chemicals Operating profit (loss) 3.4 3.3 Revenue 45.4 45.1 Specialty Plastics Operating profit (loss) 6
Slide 4: Advanced Materials segment continued
continued high demand led operating profit in the PVDF business to increase 166.7% to 2.4 billion yen year-on-year. The polyphenylene sulfide (PPS) business continued to see demand growth for automotive applications, since its combination of light weight and heat stability makes it an excellent repl
Slide 5: Specialty Chemicals Segment
Specialty Chemicals Segment Major product areas: industrial chemicals, agrochemicals, pharmaceuticals Specialty Chemicals revenue grew by 4% to 27.3 billion yen while operating profit decreased by 4% to 3.3 billion yen. Agrochemicals: Lower sales volumes of fungicide In the agrochemicals business, i
Slide 6: Specialty Plastics Segment
Specialty Plastics Segment Major product areas: household packaging products, food packaging materials, auto-packaging machinery Specialty Plastics segment revenue fell to 45.1 billion yen from 45.4 billion yen. Operating profit also decreased slightly to 6.7 billion yen. Home products: Higher costs
Slide 7: Construction and Other Operations
Construction and Other Operations Major product areas: construction, environmental engineering, transport/warehousing, and trading-related businesses Construction: Earnings affected by lower demand for private sector projects In FY2018, lower demand for private sector construction projects affected
Slide 8: Capex, Depreciation, R&D and Debt
In FY2019, Kureha expects revenue growth to be driven mainly by the Advanced Materials segment. Alongside the fast-growing PVDF business, the PGA business is projected to pick up further momentum and achieve profitability. The PPS business will also fully recover from the hurricane damage to make a
Slide 9: R&D spending and contact information
R&D spending, which rose from 5.0 billion yen to 5.3 billion yen year-on-year, will be strengthened to 6.4 billion yen in FY2019. The main purposes of this investment will be to accelerate the development of new products and promising research themes, and to improve process technologies and develop
Slide 10: Condensed Consolidated Balance Sheets and Statement of Income
Condensed Consolidated Balance Sheets As of March 31, 2018 and 2019 (Millions of yen) March 2018 March 2019 Assets Current assets 76,963 78,777 Cash and cash equivalents 6,475 5,989 Noncurrent assets 165,318 168,574 Property, plant and equipment 114,236 117,553 Intangible assets 1,336 1,094 Investme
Slide 11: FY2018 Financial Results
FY2018 Financial Results (Period April 1, 2018 – March 31, 2019) May 14, 2019
Slide 12: Contents
1 Contents 1. FY2018 Results • FY2018 Highlights 3-6 • Expansion of PGA Business 26-27 • Segment Performance 7-10 • Expansion of PVDF Business 28 • FY2018 Results vs. Initial Projection 11 • Returning to Shareholders 29 • Key Indicators 12 • Financial Position 13 3. FY2018 Outlook • Cash Flow 14 • F
Slide 13: 1. FY2018 Results
2 1. FY2018 Results (April 1, 2018 – March 31, 2019)
Slide 14: FY2018 Highlights
3 FY2018 Highlights (in billions of yen, except where stated otherwise) Change Mid-term FY2017 FY2018 YOY(%) Plan Targets 0.9 FY2018 vs. FY2017 Revenue 147.3 148.3 160 (0.6%) • Revenue growth driven by 4.2 Operating profit 13.0 17.2 14 Advanced Materials more than (32.4%) offsetting a sharp decline
Slide 15: FY2018 Highlights: Segment Performance
4 FY2018 Highlights Segment Performance: FY2018 vs. FY2017 (billions of yen) Revenue Operating 6.9 6.7 45.7 45.4 45.1 …FY2017 Profit …FY2017 41.6 …FY2018 …FY2018 4.6 26.2 27.3 3.4 3.3 17.4 16.8 17.6 1.8 2.1 12.4 1.7 1.0 0.7 Advanced Specialty Specialty Other Advanced Specialty Specialty Other Constr
Slide 16: FY2018 Highlights: Segment Detail
5 FY2018 Highlights (billions of yen) Advanced Specialty Specialty Con- Other Segment FY2017 Materials Chemicals Plastics struction Operations Total Adjustment Total Revenue 41.6 26.2 45.4 17.4 16.8 147.3 ------ 147.3 Elimination 0.2 ------ Other income *Subsidy income: ¥0.3bn 0.5 ------ Other expen
Slide 17: Other Income and Expenses
6 FY2018 Highlights Other Income and Expenses FY2017 FY2018 Other income ¥0.5 billion Other income ¥0.6 billion ¥0.2b Subsidy income: ¥0.3bn Subsidy income: ¥0.3bn *Includes government’s subsidies for post- *Includes government’s subsidies for post- quake restoration initiatives quake restoration in
Slide 18: Segment Performance: Advanced Materials
7 Segment Performance: Advanced Materials (billions of yen) FY2017 FY2018 Change FY2018 vs. FY2017 % Advanced Materials Revenue Operating Profit Advanced plastics 24.4 27.3 12% Advanced plastics Carbon products 4.9 5.1 4% Revenue up; Ope. profit up: Revenue: Kureha Co. 29.4 32.5 10% - Higher PVDF (L
Slide 19: Segment Performance: Specialty Chemicals
8 Segment Performance: Specialty Chemicals (billions of yen) FY2017 FY2018 Change FY2018 vs. FY2017 % Specialty Chemicals Revenue Operating Profit Agrochemicals 9.2 8.3 -9% Agrochemicals Pharmaceuticals 3.8 5.1 32% Revenue down, Ope. profit down: Industrial chemicals 9.4 10.1 7% - Lower fungicides v
Slide 20: Segment Performance: Specialty Plastics
9 Segment Performance: Specialty Plastics (billions of yen) FY2017 FY2018 Change FY2018 vs. FY2017 % Specialty Plastics Revenue Operating Profit Home products 20.7 20.8 0% Packaging materials 6.3 6.2 -1% Home products Revenue up, Ope. profit down: Revenue: Kureha Co. 27.0 27.1 0% - Volumes growth fo
Slide 21: Segment Performance: Construction & Other Operations
10 Segment Performance: Construction & Other Operations (billions of yen) FY2017 FY2018 Change FY2018 vs. FY2017 % Construction Revenue Operating Profit Construction 23.9 20.3 -15% Construction Elimination -6.6 -7.9 -- - Fewer construction projects in private Kureha-G Revenue 17.4 12.4 -28% sector m
Slide 22: FY2018 Results vs. Projection
11 FY2018 Results vs. Projection (billions of yen) FY2018 Results vs. Projection (May 2018) Revenue Projection: ¥150bn Results: ¥148.3bn Operating profit Projection: ¥14bn Results: ¥17.2bn 45.5 45.7 46.0 45.1 …FY2018 Projection 6.7 …FY2018 Projection …FY2018 Results 5.9 …FY2018 Results 27.5 27.3 4.6
Slide 23: Key Indicators
12 Key Indicators (billions of yen) FY2017 FY2018 Change 1H 2H Full year 1H 2H Full year YOY Capital expenditure 4.0 5.8 9.8 5.8 7.4 13.2 35% Depreciation 4.9 5.0 9.9 5.0 5.3 10.3 4% R&D expenses 2.3 2.7 5.0 2.5 2.8 5.3 6% Interest-bearing debt 56.0 48.1 48.1 45.9 39.0 39.0 -19% (Currency exchange r
Slide 24: Financial Position
13 Financial Position (billions of yen) Assets Liabilities and Equity Mar. 31 Mar. 31 Mar. 31 Mar. 31 Change Change 2018 2019 2018 2019 Cash and cash equivalents 6.5 6.0 -0.5 Trade and other payables 21.5 24.0 2.5 Trade and other receivables 32.7 30.7 -1.9 Interest-bearing debt 48.1 39.0 -9.1 Invent
Slide 25: Cash Flow
14 Cash Flow (billions of yen) FY2017 FY2018 Change Profit before income tax 12.7 17.4 4.8 Depreciation 9.9 10.3 0.4 Other -2.4 -4.4 -2.0 Cash flow from operating activities 20.2 23.4 3.2 Cash flow from investing activities -9.7 -8.4 1.3 Cash flow from financing activities -10.4 -15.5 -5.1 Effect of
Slide 26: 2. Review and Extension of the Mid-Term Management Plan
15 2. Review and Extension of the Mid-Term Management Plan
Slide 27: Kureha's Challenge 2018 Review
16 Kureha’s Challenge 2018 Review “Kureha's Challenge 2018” (FY2016-2018 Mid-term Management Plan) ~ Product Differentiation & New Business Creation ~ Strategic Direction Management Goals ‘As a company built on technology, Kureha will Business strategies: develop differentiated - Enhance competitiv
Slide 28: FY2018 Results vs. FY2015 Results
17 FY2018 Results vs. FY2015 Results FY2018 Results vs. FY2015 Results (Final year of FY2012-2015 Mid-term Management) Plan) Operating profit Revenue (billions of yen) FY2015: ¥140.8bn FY2018: ¥148.3bn FY2015: ¥7.4bn FY2018: ¥17.2bn …FY2015 results …FY2015 results 45.7 42.3 45.1 …FY2018 results 6.7
Slide 29: FY2018 Results vs. KC2018 Targets
18 FY2018 Results vs. KC2018 Targets FY2018 Results vs. KC2018 Initial Targets (FY2016-2018 Mid-term Management Plan) Revenue Operating profit (billions of yen) KC2018 Targets: ¥160bn FY2018 Results: ¥148.3bn KC2018 Targets: ¥14bn FY2018 Results: ¥17.2bn 50 …KC2018 targets …KC2018 targets 45.7 47 45
Slide 30: From Kureha's Challenge 2018 to Kureha's Challenge 2020
From ‘Kureha’s Challenge 2018’ 19 To ‘Kureha’s Challenge 2020’ Kureha’s Challenge 2018 (KC2018) Kureha’s Challenge 2020 (KC2020) Kureha exceeded its quantitative target (achieved ¥17.2bn in operating profit) Complete the strategic measures but was unable to complete the remaining from KC2018 follow
Slide 31: Kureha's Challenge 2020 Overview
20 Kureha’s Challenge 2020 Overview “Kureha's Challenge 2020” ~ Product Differentiation & New Business Generation ~ Strategic Direction Management Goals ‘As a company built on technology, Kureha will Expand the PGA business and generate earnings develop differentiated Strengthen the PVDF business
Slide 32: KC2020: Quantitative Plan
21 KC2020: Qualitative Plan (in billions of yen, except where stated otherwise) FY2018 FY2020 FY2018 FY2020 Change Results Targets Results Targets ROE 9.0% 8.0% Revenue 148.3 157.0 Same level (% revenue overseas) 8.7 ROA 7.1% (30%) (33%) as FY2018 Operating profit 17.2 18.0 (% operating margin) 0.8
Slide 33: KC2020: Quantitative Plan by Segment
22 KC2020: Qualitative Plan (billions of yen) FY2018 FY2020 Change Results Targets 2020 vs. 2018 Revenue Ope. Revenue Ope. Ope. FY2020 vs. FY2018 Revenue profit profit profit Operating profit in Advanced key businesses: Materials 45.7 4.6 55 7.6 9.3 3.0 (AD) Specialty PGA ↑ Chemicals 27.3 3.3 26 2.1
Slide 34: KC2020: Capital Expenditure, R&D
23 KC2020: Capital Expenditure, R&D Kureha actively invests for its future expansion utilizing both operating cash flow and cash gained through effective use of assets FY2019-20 Capital expenditure: ¥38bn FY2019-20 Research &Development: ¥13bn • PPS 5000t capacity increase (FY18-20): • Accelerate th
Slide 35: KC2020: Action Plans
24 KC2020: Action Plans Developments in FY2016-2018 (KC2018) Actions in FY2019-2020 (KC2020) Expanding & Generating Profit in PGA Business Established U.S. Kureha Energy Solutions to boost Achieve profitability; accelerate sales expansion for local sales & marketing functions; Launched low-temp ultr
Slide 36: KC2020: Action Plans
25 KC2020: Action Plans Developments in FY2016-2018 (KC2018) Actions for FY2019-2020 (KC2020) Exploring New Business Themes Exploring & Cultivating New Businesses Globally Identified and developed new business themes Explore new business themes in Japan and overseas derived from market needs while c
Slide 37: Expansion of PGA Business (PGA Frac Plugs)
26 Expansion of PGA Business (PGA Frac Plugs for Shale Oil & Gas Drilling) By expanding sales of Kureha original degradable frac plugs (KDPs), we aim to: - Achieve profitability in FY2019 - Generate ¥1bn operating profit in FY2020 (¥ billion) 100 8.8 20 80 6.4 10 60 4.4 1.0 0 40 2.8 0.2 (10) 20 -1.0
Slide 38: Expansion of PGA Business: KDP Quarterly Sales
27 Expansion of PGA Business (PGA Frac Plugs for Shale Oil & Gas Drilling) Kureha Energy Solutions: KDP Quarterly Sales FY2018-2019 (billions of yen) 1.5 1.0 0.5 0.0 １Ｑ ２Ｑ ３Ｑ ４Ｑ １Ｑ ２Ｑ ３Ｑ ４Ｑ FY2018 Sales: ¥1.5 billion FY2019 Sales Outlook: ¥3.5 billion
Slide 39: Expansion of PVDF Business
28 Expansion of PVDF Business Demand for lithium-ion battery is growing rapidly due to vehicle electrification Kureha is a leading supplier of PVDF binder for LiBs with over 40% market share, selling primarily to large LiB makers in China and South Korea Our challenge is to secure suppliabilit
Slide 40: Returning to Shareholders
29 Returning to Shareholders Kureha’s basic policy for the distribution of earnings is to strengthen the company overall to realize longer-term growth, prepare for future business expansion, enhance retained earnings, and provide a stable and continued dividend. Kureha will consider the acquisit
Slide 41: 3. FY2019 Outlook
30 3. FY2019 Outlook (April 1, 2019 – March 31, 2020)
Slide 42: FY2019 Forecast
31 FY2019 Forecast (billions of yen, except where stated otherwise) FY2019e Change FY2018 1H | 2H YOY (%) FY2019e vs. FY2018 Revenue 148.3 152 3.7 (2.5%) 75 | 77 • Revenue growth driven by Advanced Materials Operating profit 17.2 26 8.8 (51.4%) • Operating profit to increase on 8.0 | 18.0 earnings g
Slide 43: FY2019 Forecast: Segment Performance
32 FY2019 Forecast Segment Performance: FY2019e vs. FY2018 (billions of yen) Revenue Operating …FY2018 Profit …FY2018 50.5 …FY2019e 6.7 …FY2019e 45.7 45.1 45.0 6.0 6.1 4.6 27.3 27.0 3.3 17.6 17.0 2.7 2.1 12.4 12.5 1.8 0.7 0.4 Advanced Specialty Specialty Other Advanced Specialty Specialty Other Cons
Slide 44: FY2019 Forecast: Segment Detail
33 FY2019 Forecast (billions of yen) FY2018 Advanced Specialty Specialty Con- Other Segment Adjustment Total Materials Chemicals Plastics struction Operations Total Revenue 45.7 27.3 45.1 12.4 17.6 148.3 ------ 148.3 Elimination 0.1 ------ Other income *Subsidy income: ¥0.3bn 0.6 ------ Other expens
Slide 45: Segment Outlook: Advanced Materials
34 Segment Outlook: Advanced Materials (billions of yen) FY2018 FY2019e Change FY2019e vs. FY2018 % Advanced Materials Revenue Operating Profit Advanced plastics 27.3 29.8 9% Advanced plastics Carbon products 5.1 4.7 -8% Revenue up, Ope. profit up: Revenue: Kureha Co. 32.5 34.5 6% - PGA volume growt
Slide 46: Segment Outlook: Specialty Chemicals
35 Segment Outlook: Specialty Chemicals (billions of yen) FY2018 FY2019e Change FY2019e vs. FY2018 % Specialty Chemicals Revenue Operating Profit Agrochemicals 8.3 6.7 -20% Agrochemicals Pharmaceuticals 5.1 5.3 5% Revenue down, Ope. profit down: Industrial chemicals 10.1 9.8 -3% - Lower sales volume
Slide 47: Segment Outlook: Specialty Plastics
36 Segment Outlook: Specialty Plastics (billions of yen) FY2018 FY2019e Change FY2018e vs. FY2017 % Specialty Plastics Revenue Operating Profit Home products 20.8 21.4 3% Home products Packaging materials 6.2 4.8 -23% Revenue up, Ope. profit down: Revenue: Kureha Co. 27.1 26.2 -3% - Volumes growth f
Slide 48: Segment Outlook: Construction & Other Operations
37 Segment Outlook: Construction & Other Operations (billions of yen) FY2019e vs. FY2018 FY2018 FY2019e Change % Revenue Operating Profit Construction Construction 20.3 19.5 -4% Construction Elimination -7.9 -7.0 -- Operating profit expected to fall on flat revenue growth due to higher labor and Kur
Slide 49: Key Indicators
38 Key Indicators (billions of yen) Change FY2018 FY2019e YOY(%) Capital expenditure 13.2 17.0 3.8 (29%) Depreciation 10.3 11.5 1.2 (12%) R&D expenses 5.3 6.4 1.1 (21%) Interest-bearing debt 39.0 39.5 0.5 (1%) (Currency exchange rates) 1USD: Term average ¥110.9 ¥110.0 Term end ¥111.0 ¥110.0 1EUR: Te
Slide 50: Cash Flow
39 Cash Flow (billions of yen) Change FY2018 FY2019e YOY Profit before income tax 17.4 26.0 8.6 Depreciation 10.3 11.6 1.3 Other -4.4 -19.7 -15.3 Cash flow from operating activities 23.4 17.9 -5.5 Cash flow from investing activities -8.4 -5.3 3.0 Cash flow from financing activities -15.5 -13.2 2.3 E
Slide 51: 4. Consolidated Companies
40 4. Consolidated Companies
Slide 52: Revenues & Assets
41 Revenues & Assets (billions of yen) FY2017 FY2018 Change Revenue Total assets Revenue Total assets Revenue Total assets Kureha Corporation 78.9 192.7 83.0 198.2 4.2 5.5 Kureha Trading Group (2) 22.5 14.1 22.7 13.2 0.2 -1.0 Kureha Corporation 29.4 -- 32.5 -- 3.1 -- Kureha Trading Group (2) 10.7 --
Slide 53: Revenues & Assets
42 Revenues & Assets (billions of yen) FY2017 FY2018 Change Revenue Total assets Revenue Total assets Revenue Total assets Kureha Nishiki Group (4) 21.9 11.3 17.9 12.0 -4.0 0.7 Construc- Kureha Engineering 2.0 2.1 2.4 1.8 0.4 -0.3 tion Consolidation adjustments -6.6 -- -7.9 -- -- -- Total 17.4 -- 12
Slide 54: Disclaimer
43 Disclaimer • These materials are supplied to provide a deeper understanding of our company, and are not intended to as a solicitation for investment or other actions. • These materials have been prepared by our company based on the information available at this point in time. However, actual perf