Kuraray : Earnings Reports (Jbzy)

May 13, 2026

Company name: KURARAY CO., LTD.

Listing: Tokyo Stock Exchange

Stock code: 3405

URL: https://www.kuraray.com

Representative: Hitoshi Kawahara, Representative Director and President Inquiries: Shinichi Takizawa, Senior Manager, Corporate Communications

Department, Corporate Management Planning Office

Telephone: +81-3-6701-1070

Scheduled date to commence dividend payments: -

Preparation of supplementary material on financial results: Yes

Holding of financial results briefing: Yes (for securities analysts and institutional investors)

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the three months ended March 31, 2026 (from January 1, 2026 to March 31, 2026)
   1. Consolidated operating results (cumulative) (Percentages indicate year-on-year changes.)

      	Net Sales		Operating Income		Ordinary Income		Net Income Attributable to Owners of the Parent
      Three months ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
      March 31, 2026	200,913	3.1	14,870	(20.3)	13,745	(22.9)	7,802	(35.0)
      March 31, 2025	194,804	1.4	18,650	(35.2)	17,826	(36.0)	12,007	(44.4)

      Note: Comprehensive income For the three months ended March 31, 2026: ¥16,612 million [-%]

      For the three months ended March 31, 2025: −¥15,412 million [-%]

      	Net Income per Share	Fully Diluted Net Income per Share
      Three months ended	Yen	Yen
      March 31, 2026	25.62	25.61
      March 31, 2025	37.07	37.05

   2. Consolidated financial position

   	Total Assets	Net Assets	Equity Ratio
   As of	Millions of yen	Millions of yen	%
   March 31, 2026	1,316,053	752,904	56.2
   December 31, 2025	1,303,511	755,175	57.0

   Reference: Equity attributable to owners of the parent

   As of March 31, 2026: ¥740,202 million

   As of December 31, 2025: ¥742,620 million

2. Cash Dividends

   	Annual Dividends per Share
   	First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end	Total
   Fiscal year ended December 31, 2025 Fiscal year ending December 31, 2026	Yen	Yen	Yen	Yen	Yen
   	- -	27.00	-	27.00	54.00
   Fiscal year ending December 31, 2026 (Forecast)		32.00	-	32.00	64.00

   Note: Revisions to the forecast of cash dividends most recently announced: None

   FY2026 annual dividends per share (forecast): ¥54.00 normal dividend and ¥10.00 commemorative dividend

3. Forecasts of Consolidated Financial Results for the Fiscal Year Ending December 31, 2026 (January 1, 2026 to December 31, 2026)

(Percentage changes displayed for net sales, operating income, ordinary income and net income attributable

to owners of the parent are comparisons with the corresponding period of the previous fiscal year.)

(Millions of yen)

Note: Revisions to forecasts of consolidated financial results during this period: None

Because it is difficult to create a reasonable forecast due to the deteriorating Middle East situation, at this juncture, we have not revised the consolidated forecast released on February 10, 2026. When it becomes possible to create a reasonable forecast, we will swiftly disclose any revisions that may be necessary. For details, please see page 7 of the consolidated financial results (the attachment), (3) Basis for Forecasts, Including Consolidated Financial Results Forecasts.

The Company concluded the share buybacks on March 23, 2026, resolved at the meeting of the Board of Directors held on February 10, 2026. The consolidated forecast for net income per share takes these effects into consideration.

1. Significant changes in the scope of consolidation during the period: Yes Excluded: 3 companies (Kuraray Methacrylate (Zhang Jia Gang) Co., Ltd.; WATERLINK (UK) HOLDINGS LIMITED; and one other)

2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None

3. Changes in accounting policies, changes in accounting estimates, and restatement

   1. Changes in accounting policies due to revisions to accounting standards and other regulations: None

   2. Changes in accounting policies due to other reasons: None

   3. Changes in accounting estimates: None

   4. Restatement: None

4. Number of issued shares (common shares)

   1. Total number of issued shares at the end of the period (including treasury stock)

      As of March 31, 2026	307,963,603 shares
      As of December 31, 2025	307,963,603 shares

   2. Number of treasury stock at the end of the period

      As of March 31, 2026	6,753,844 shares
      As of December 31, 2025	924,408 shares

   3. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

Note: Review of the Japanese-language originals of the attached consolidated quarterly financial statements by certified public accountants or an audit firm:

None

Index of the Attachment

1. Qualitative Information regarding Business Results 2

   1. Overview of Consolidated Business Results 2

   2. Overview of Financial Position 7

   3. Basis for Forecasts, Including Consolidated Financial Results Forecasts 7

   4. Basic Policies Related to Profit Distribution and Dividends in Fiscal 2026 7

2. Quarterly Consolidated Financial Statements and Primary Notes 8

   1. Quarterly Consolidated Balance Sheet 8

   2. Quarterly Consolidated Statements of Income and Comprehensive Income 10

   3. Notes regarding Quarterly Consolidated Financial Statements 12

Notes regarding Going Concern Assumptions 12

Notes regarding Material Changes in Shareholders' Equity 12

Notes regarding Cash Flow Statements 12

Notes regarding Segment Information, etc 13

1. Qualitative Information regarding Business Results
   1. Overview of Consolidated Business Results

      In the first quarter of fiscal 2026 (January 1, 2026-March 31, 2026), the world economy made a solid start, but uncertainty grew as conditions in the Middle East deteriorated.

      Although the Japanese economy gradually recovered on the back of stable domestic demand, the outlook became more uncertain due to rising prices and concerns about the procurement of some raw materials. The US economy remained firm, driven by the robust AI-related field, but downward pressure intensified due to anticipated inflation effects.

      Recovery in the European economy stalled due to rising inflation and uncertainty. Meanwhile, in China, economic growth remained low due in part to prolonged poor conditions in the real estate market and a rebound from the government-led economic stimulus measures.

      Amid these circumstances, consolidated operating results for the first quarter of fiscal 2026 are as follows: net sales increased ¥6,108 million (3.1%) year on year to ¥200,913 million; operating income decreased ¥3,779 million (20.3%) year on year to ¥14,870 million; ordinary income decreased ¥4,080 million (22.9%) year on year to ¥13,745 million; and net income attributable to owners of the parent decreased ¥4,204 million (35.0%) year on year to ¥7,802 million.

      We undertook an organizational reform on January 1, 2026, changing the segment category of the businesses in the Electronics Materials Promotion Division from "Others" to "Functional Materials." The first quarter comparison and analysis are based on figures reflecting this change.

      (Millions of yen)

      	FY2025 1Q Consolidated Period		FY2026 1Q Consolidated Period		Change
      	Net sales	Operating income	Net sales	Operating income	Net sales	Operating income
      Vinyl Acetate	100,434	15,917	101,930	11,031	1,496	(4,885)
      Isoprene	19,686	2,822	21,527	2,889	1,840	67
      Functional Materials	47,799	1,359	52,820	3,375	5,021	2,015
      Fibers and Textiles	13,409	(598)	13,950	1,143	541	1,742
      Trading	16,659	1,377	17,789	1,564	1,130	186
      Others	10,916	781	7,167	397	(3,748)	(384)
      Elimination & Corporate	(14,101)	(3,009)	(14,272)	(5,530)	(171)	(2,520)
      Total	194,804	18,650	200,913	14,870	6,108	(3,779)

      Results by Business Segment Vinyl Acetate

      Net sales in this segment were ¥101,930 million (up 1.5% year on year), and operating income was ¥11,031 million (down 30.7%), due to lower capacity utilization in some businesses and the impact of price adjustments.

      
      
      

      PVOH resin: Despite capturing demand by leveraging its global supply system amid disruptions in the Middle East, sales volume declined due to overall demand stagnation.

      Optical-use poval film: Sales volume increased as a result of an accumulation of inventories across the supply chain due to concerns around component procurement and product deliveries against the backdrop of a semiconductor memory shortage and the Middle East situation in addition to demand for buying new televisions for international sporting events.

      Advanced Interlayer Solutions: The competitive environment for PVB film remained intense, particularly in Europe and Asia. As a result, sales volume decreased for both construction and automotive applications. Sales of SentryGlas™ specialty ionoplast interlayers also declined due in part to the effects of project delays.

      Water-soluble PVOH film: The sales volume decreased due to weak demand for soluble-unit-dose detergent.

      EVAL™ EVOH resin: The sales volume increased overall as sales for food packaging and automotive applications remained favorable, and we were able to capture some demand with our global supply system.

      Isoprene

      Net sales in this segment were ¥21,527 million (up 9.3% year on year), and operating income was ¥2,889 million (up 2.4%). Although depreciation and amortization expenses decreased due to impairment losses recorded in the previous year, some inventory valuation differences had a negative impact.

      
      
      

      Isoprene chemicals and elastomer: As a result of a pull-forward in demand in the previous year caused by U.S. tariff policies in addition to stagnant demand for construction applications in China, sales volume of isoprene chemicals decreased. Sales volumes of elastomers increased, but were impacted by intensified competition with Asian competitors in the European market and other regions.

      GENESTAR™ heat-resistant polyamide resin: Sales volume increased due to sales expansion in both electric and electronic applications and automotive applications.

      Functional Materials

      Net sales in this segment were ¥52,820 million (up 10.5% year on year), and operating income was ¥3,375 million (up 148.2%) due in part to the profit boosting effects of currency exchange rates in addition to solid sales.

      
      
      

      Methacrylate: Sales volume fell due to a reduction in production capacity for methyl methacrylate and some downstream products from July 2025.

      Medical: Sales remained firm overall.

      Environmental Solutions: Demand for activated carbon remained stable, and sales volume increased. In addition, price revisions progressed.

      Fibers and Textiles

      Net sales in this segment were ¥13,950 million (up 4.0% year on year), and operating income was ¥1,143 million (compared with operating loss of ¥598 million in the same period of the previous fiscal year).

      
      
      

      CLARINO™ man-made leather: The sales volume increased amid a recovery in demand, including for footwear applications.

      Fibers and industrial materials: The sales volume increased as demand recovered, mainly for liquid crystal polymer fibers VECTRAN™. Meanwhile, sales remained flat due to the withdrawal from dry-laid nonwoven fabrics business.

      Trading

      Net sales in this segment were ¥17,789 million (up 6.8% year on year), and operating income was ¥1,564 million (up 13.5%).

      
      
      

      Fiber-related businesses: Sales of sportswear applications remained favorable. Resins and chemicals: Sales expanded in Asian markets, especially in China.

      Others

      Net sales in this segment were ¥7,167 million (down 34.3% year on year), and operating income was ¥397 million (down 49.2%).

      
      
      
   2. Overview of Financial Position

      Total assets increased ¥12,541 million from the end of the previous fiscal year to ¥1,316,053 million due to factors that include an ¥11,941 million increase in inventories and a ¥9,624 million increase in property, plant and equipment despite a ¥9,783 million decrease in notes and accounts receivable-trade, and contract assets. Total liabilities increased ¥14,813 million to ¥563,148 million due to factors that include a ¥14,514 million increase in interest-bearing debt despite a ¥7,505 million decrease in notes and accounts payable-trade.

      Net assets fell ¥2,271 million to ¥752,904 million due in part to a ¥10,000 million increase in treasury stock despite an ¥8,373 million increase in foreign currency translation adjustment. Equity attributable to owners of the parent amounted to ¥740,202 million, for an equity ratio of 56.2%.

   3. Basis for Forecasts, Including Consolidated Financial Results Forecasts

      The deteriorating Middle East situation is affecting the supply chain of the chemical industry, such as rising raw material and fuel prices and disruptions in the logistics network. The Company has also experienced supply restrictions and sharp rises in procurement prices for some of its procured materials. It is currently unclear how these developments will impact our businesses or for how long. Because it is difficult to create a reasonable forecast under these circumstances, at this juncture, we have not revised the consolidated forecast released on February 10, 2026. When it becomes possible to create a reasonable forecast, we will swiftly disclose any revisions that may be necessary.

   4. Basic Policies Related to Profit Distribution and Dividends in Fiscal 2026

   The Company positions the distribution of profits to all shareholders as a priority management issue. Our shareholder return policy is to ensure a total return ratio of at least 50% as a proportion of net income attributable to owners of the parent, hold steady or increase dividends per share, and aim for continually conducting share buybacks. Based on this policy, in fiscal 2026, we plan to add a ¥5 100th anniversary commemorative dividend to each of the

   ¥27 normal dividends per share for the interim dividend and year-end dividend, meaning the two dividends will each be ¥32 per share. Thus, the annual dividend is planned to be ¥64 per share, including ¥10 to commemorate our 100th anniversary added to the normal dividend of

   ¥54.

   In addition, as announced on March 25, 2026, the Company completed the acquisition of 5,829 thousand shares of treasury stock totaling ¥9,999 million by March 23, 2026, based on a resolution of the Board of Directors meeting held on February 10, 2026.

   At the Board of Directors meeting held on May 13, 2026, the Company decided to cancel 5,830 thousand shares of treasury stock (common shares, 1.89% of total issued shares before cancelation). The cancellation is set for May 29, 2026.

2. Quarterly Consolidated Financial Statements and Primary Notes

1. Quarterly Consolidated Balance Sheet

   (Millions of yen)

   As of December 31, 2025 As of March 31, 2026

   Assets

   Current assets

   Cash and deposits 104,102 102,891

   Notes and accounts receivable - trade, and contract assets	178,330	168,546
   Securities	4,215	4,158
   Merchandise and finished goods	178,020	185,870
   Work in process	20,230	22,389
   Raw materials and supplies	70,184	72,117
   Other	24,209	25,936
   Allowance for doubtful accounts	(889)	(605)
   Total current assets	578,403	581,303

   Non-current assets

   Property, plant and equipment

   Buildings and structures, net 116,992 116,750

   Machinery, equipment and vehicles, net	262,474	260,280
   Land	18,154	18,184
   Construction in progress	96,662	109,345
   Other, net	54,828	54,175
   Total property, plant and equipment	549,112	558,737
   Intangible assets
   Goodwill	52,212	51,730
   Customer-related assets	23,868	23,441
   Other	34,549	34,798
   Total intangible assets	110,630	109,971
   Investments and other assets Investment securities	23,523	22,165
   Retirement benefit asset	5,942	5,925
   Deferred tax assets	20,291	21,952
   Other	15,920	16,250
   Allowance for doubtful accounts	(311)	(254)
   Total investments and other assets	65,366	66,041
   Total non-current assets	725,108	734,749
   Total assets	1,303,511	1,316,053

   (Millions of yen)

   As of December 31, 2025 As of March 31, 2026

   Liabilities

   Current liabilities

   Notes and accounts payable - trade	58,490	50,985
   Short-term borrowings	45,120	45,090
   Commercial papers	11,000	21,000
   Current portion of long-term borrowings	32,612	27,487
   Accrued expenses	23,557	25,299
   Income taxes payable	3,410	5,785
   Provision for bonuses	9,495	12,094
   Other	44,543	45,566
   Total current liabilities	228,229	233,310
   Non-current liabilities Bonds payable	50,000	50,000
   Long-term borrowings	146,187	155,857
   Deferred tax liabilities	23,243	23,723
   Retirement benefit liability	32,146	32,617
   Other	68,529	67,640
   Total non-current liabilities	320,106	329,838
   Total liabilities	548,335	563,148
   Net assets
   Shareholders' equity Share capital	88,955	88,955
   Capital surplus	55,949	55,949
   Retained earnings	386,853	386,366
   Treasury stock	(1,623)	(11,623)
   Total shareholders' equity	530,135	519,647

   Accumulated other comprehensive income Valuation difference on available-for-sale securities

   6,458 6,118

   Deferred gains or losses on hedges (78) (29)

   Foreign currency translation adjustment 203,014 211,387

   Remeasurements of defined benefit plans

   Total accumulated other comprehensive income

   3,091 3,078

   212,485 220,554

   Share acquisition rights	229	229
   Non-controlling interests	12,325	12,472
   Total net assets	755,175	752,904
   Total liabilities and net assets	1,303,511	1,316,053

2. Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated Statement of Income For the Three-Month Period

   		(Millions of yen)
   	For the three months ended March 31, 2025	For the three months ended March 31, 2026
   Net sales	194,804	200,913
   Cost of sales	131,218	137,482
   Gross profit	63,586	63,430
   Selling, general and administrative expenses
   Selling expenses	11,761	11,566
   General and administrative expenses	33,174	36,993
   Total selling, general and administrative expenses	44,935	48,560
   Operating income	18,650	14,870
   Non-operating income
   Interest income	599	508
   Dividend income	125	90
   Share of profit of entities accounted for using equity method	69	92
   Gain on investments in investment partnerships	-	378
   Other	338	354
   Total non-operating income	1,132	1,424
   Non-operating expenses
   Interest expenses	661	858
   Other	1,296	1,691
   Total non-operating expenses	1,957	2,550
   Ordinary income	17,826	13,745
   Extraordinary income
   Gain on sale of investment securities	-	1,176
   Total extraordinary income	-	1,176

   Extraordinary losses

   Loss on disaster 691 1,814

   Costs related to the suspension of operations

   Loss on disposal of tangible non-current assets

   - 865

   153 490

   Loss on liquidation of business 555 -

   Total extraordinary losses 1,401 3,170

   Income before income taxes and non-controlling interests	16,424	11,751
   Income taxes - current	4,308	4,513
   Income taxes - deferred	(394)	(1,297)
   Total income taxes	3,914	3,216
   Net income	12,510	8,534

   Net income attributable to non-controlling interests

   503 731

   Net income attributable to owners of the parent 12,007 7,802

   Quarterly Consolidated Statement of Comprehensive Income For the Three-Month Period

   For the three months ended March 31, 2025

   (Millions of yen)

   For the three months ended March 31, 2026

   Net income 12,510 8,534

   Other comprehensive income

   Valuation difference on available-for-sale securities

   (454) (340)

   Deferred gains or losses on hedges 10 61

   Foreign currency translation adjustment (27,321) 8,228

   Remeasurements of defined benefit plans, net of tax

   43 (12)

   Share of other comprehensive income of entities accounted for using equity method Total other comprehensive income	(201) (27,923)	142 8,078
   Comprehensive income	(15,412)	16,612
   Comprehensive income attributable to Owners of the parent	(15,523)	15,872
   Non-controlling interests	110	740

3. Notes regarding Quarterly Consolidated Financial Statements

None

At the Board of Directors meeting held on February 10, 2026, the Company resolved to conduct a share buyback and, accordingly, acquired 5,829 thousand shares of treasury stock totaling ¥9,999 million by March 23, 2026. Due in part to this acquisition, in the first quarter of fiscal 2026, treasury stock increased ¥10,000 million, and as of March 31, 2026, treasury stock totaled ¥11,623 million.

The Company has not prepared quarterly consolidated statements of cash flows for the first quarter. The following table details depreciation and amortization (including the amortization of intangible fixed assets other than goodwill) and the amortization of goodwill in the first quarter.

(Millions of yen)

For the three months ended March 31, 2025

For the three months ended March 31, 2026

• Segment Information

1. First Quarter of Fiscal 2025 (January 1, 2025 to March 31, 2025)

   1. Net sales, income and loss by reporting segment

      (Millions of yen)

      	Reporting Segment						Others1	Total	Adjustment2	Consolidated Statements of Income3
      	Vinyl Acetate	Isoprene	Functional Materials	Fibers and Textiles	Trading	Total
      Net sales Outside customers Intersegment sales and transfers	95,333 5,101	14,926 4,760	46,502 1,297	12,370 1,038	16,335 324	185,467 12,521	9,336 1,579	194,804 14,101	- (14,101)	194,804 -
      Total	100,434	19,686	47,799	13,409	16,659	197,989	10,916	208,906	(14,101)	194,804
      Segment income (loss)	15,917	2,822	1,359	(598)	1,377	20,878	781	21,660	(3,009)	18,650

      Notes:

      1. The "Others" category incorporates operations not included in business segment reporting, including engineering business.

      2. Adjustment is as follows: Included within segment loss of ¥3,009 million is the elimination of intersegment transactions of ¥1,149 million and corporate expenses of

         ¥4,159 million. Corporate expenses mainly comprise the submitting company's basic research expenses.

      3. Segment income (loss) is adjusted to agree with operating income in the consolidated statements of income.

2. First Quarter of Fiscal 2026 (January 1, 2026 to March 31, 2026)

   1. Net sales, income and loss by reporting segment

      (Millions of yen)

      	Reporting Segment						Others1	Total	Adjustment2	Consolidated Statements of Income3
      	Vinyl Acetate	Isoprene	Functional Materials	Fibers and Textiles	Trading	Total
      Net sales Outside customers Intersegment sales and transfers	96,205 5,724	17,735 3,792	51,825 994	12,796 1,154	17,391 397	195,955 12,063	4,958 2,209	200,913 14,272	- (14,272)	200,913 -
      Total	101,930	21,527	52,820	13,950	17,789	208,018	7,167	215,186	(14,272)	200,913
      Segment income	11,031	2,889	3,375	1,143	1,564	20,003	397	20,401	(5,530)	14,870

      Notes:

      1. The "Others" category incorporates operations not included in business segment reporting, including engineering business.

      2. Adjustment is as follows: Included within segment loss of ¥5,530 million is the elimination of intersegment transactions of ¥(823) million and corporate expenses of

         ¥4,707 million. Corporate expenses mainly comprise the submitting company's basic research expenses.

      3. Segment income is adjusted to agree with operating income in the consolidated statements of income.

   2. Notes regarding Changes in Reporting Segments (Changes in Reporting Segments)

In line with an organizational reform, from the first quarter of fiscal 2026, the segment category of the businesses in the Electronics Materials Promotion Division was changed from "Others" to "Functional Materials." For the purposes of comparison, segment information for the first quarter of fiscal 2025 has been retroactively adjusted based on this recategorization.