Sumitomo Chemical : Reports Consolidated Financial Results For the Three Months Ended June 30, 2022

For Immediate Release

August 1, 2022

Sumitomo Chemical Reports

Consolidated Financial Results

For the Three Months Ended June 30, 2022

For the first quarter ended on June 30, 2022, the Sumitomo Chemical Group reported consolidated sales revenue of ¥774.1 billion, an increase of ¥135.2 billion year on year, core operating income* of ¥64.1 billion, operating income of ¥66.3 billion, and net income attributable to owners of the parent of ¥70.0 billion, all higher than the results from the same period in the previous year.

*Core operating income is a gain and loss concept, reflecting recurring earning capacity, and deducts gains and losses incurred by non-recurring factors from operating income. It includes the share of profit from investments accounted for using the equity method.

The financial results by business segment for the first quarter are as follows:

Essential Chemicals & Plastics

Selling prices for synthetic resins, methyl methacrylate and various industrial chemicals improved due to an increase in raw material prices. The weak yen also benefited sales revenues of subsidiaries outside of Japan when converted into yen. On the other hand, shipments declined, primarily because of weak demand for products in automotive applications. As a result, sales revenue increased by ¥39.0 billion from the same period in the previous year, to ¥238.6 billion. Core operating income was ¥10.0 billion, declined by ¥13.8 billion from the same period in the previous year, because of a deterioration in margins caused by higher raw material prices and the impact of lower shipment volumes, despite an improvement in the performance of Rabigh Refining and Petrochemical Company, our equity method investee.

Energy & Functional Materials

Selling prices for aluminum and cathode materials increased in good market conditions. Shipments of separators for lithium-ion secondary batteries stayed firm. The weak yen also had a positive effect. As a result, sales revenue increased by ¥12.0 billion, to ¥86.4 billion from the same period in the previous year. Core operating income was ¥6.6 billion, relatively flat with the same period in the previous year, led by higher income from exports due to the weak yen and by a decline in margins resulted from the rise in raw material prices.

IT-related Chemicals

Sales revenue benefited from the weak yen's effect on the sales of subsidiaries outside of Japan in yen terms. In addition, demand growth for processing materials for semiconductors such as high purity chemicals and photoresists brought about increase of shipments. On the other hand, shipments of display-related materials declined because stay-at-home demand had run its course, and consumer sentiment was deteriorated in the face of inflation concerns. As a result, sales revenue increased by ¥5.4 billion from the same period in the previous year, to ¥114.7 billion. Core operating income was ¥15.8 billion, increased by ¥2.3 billion from the same period in the previous year, attributable to higher income from exports due to the weak yen and higher shipments of processing materials for semiconductors.

Health & Crop Sciences

Sales of crop protection products in South America increased significantly, and shipments in such markets as India performed well. Moreover, market prices of methionine (feed additives) increased from the same period in the previous year. The weak yen also had a positive effect on sales from subsidiaries outside of Japan when converted into yen. As a result, sales revenue increased by ¥49.5 billion from the same period in the previous year, to ¥152.6 billion. Core operating income was ¥21.9 billion, increased by ¥11.6 billion from the same period in the previous year, driven by the increase in sales and higher income from exports as a result of the weak yen, despite higher prices for raw materials.

Pharmaceuticals

In North America, sales growth of Latuda® (atypical antipsychotic agent), Orgovyx® (therapeutic agent for advanced prostate cancer) and Gemtesa® (therapeutic agent for overactive bladder), as well as the recognition as revenue of an upfront payment received in consideration of the exclusive license agreement to commercialize Orgovyx® (generic name: relugolix) in Europe, contributed to the sales revenue. The weak yen also benefited sales revenues of subsidiaries outside of Japan when converted into yen. On the other hand, in Japan, sales revenues were affected by the National Health Insurance (NHI) drug price revisions. As a result, sales revenue increased by ¥28.6 billion from the same period in the previous year, to ¥167.7 billion. Core operating income was ¥14.1 billion, increased by ¥4.4 billion from the same period in the previous year, as the growth of sales revenue more than offset increases in selling, general and administrative expenses and R&D expenses primarily due to the effects of forex situation.

Others

In addition to the above five segments, the Sumitomo Chemical Group supplies electric power and steam, designs chemical plants and supervises the construction of those facilities, provides transportation and warehousing, and conducts physical property analysis and environmental analysis. Sales revenue of these businesses increased by ¥0.6 billion from the same period in the previous year, to ¥14.2 billion, and core operating income increased by ¥0.5 billion from the same period in the previous year, to ¥3.3 billion.

Consolidated Statement of Financial Position

In millions of yen

As of June 30, 2022

As of March 31, 2022

Assets

• Current assets:

䚷䚷䚷 Cash and cash equivalents	498,600	365,429
䚷䚷䚷 Trade and other receivables	778,623	720,422
䚷䚷䚷	Other financial assets	34,793	23,991
䚷䚷䚷	Inventories	742,030	651,358
䚷䚷䚷	Other current assets	80,762	51,442
䚷䚷 Total current assets	2,134,808	1,812,642
䚷䚷Non-current assets:
䚷䚷		䚷Property, plant and equipment	843,883	823,022
䚷䚷		䚷Goodwill	269,057	244,517
䚷	䚷䚷Intangible assets	510,678	471,109
䚷	䚷䚷Investments accounted for using the equity method	318,316	289,968
䚷	䚷䚷Other financial assets	397,253	474,899
䚷	䚷䚷Retirement benefit assets	90,522	89,538
䚷	䚷䚷Deferred tax assets	49,567	49,121
䚷	䚷䚷Other non-current assets	55,803	53,335
䚷䚷Total non-current assets	2,535,079	2,495,509
Total Assets	4,669,887	4,308,151
Liabilities and Equity
Liabilities
䚷䚷Current liabilities:
䚷䚷		䚷Bonds and borrowings	325,803	261,280
䚷	䚷䚷Trade and other payables	675,828	551,583
䚷	䚷䚷Other financial liabilities	77,228	84,137
䚷	䚷䚷Income taxes payable	33,719	24,515
䚷	䚷䚷Provisions	153,440	129,709
䚷䚷䚷Other current liabilities	101,075	122,267
䚷䚷Total current liabilities	1,367,093	1,173,491
䚷䚷Non-current liabilities:
䚷䚷䚷Bonds and borrowings	1,091,623	1,089,190
䚷䚷䚷Other financial liabilities	97,397	101,718
䚷	䚷䚷Retirement benefit liabilities	33,278	33,091
䚷䚷䚷Provisions	37,839	36,502
䚷䚷䚷Deferred tax liabilities	110,494	101,299
䚷䚷䚷Other non-current liabilities	68,928	70,883
䚷䚷Total non-current liabilities	1,439,559	1,432,683
䚷Total liabilities	2,806,652	2,606,174
䚷Equity
䚷	䚷Share capital	89,699	89,699
䚷䚷Capital surplus	27,275	27,089
䚷	䚷Retained earnings	1,026,071	974,382
䚷䚷Treasury shares	(8,344)	(8,343)
䚷䚷Other components of equity	208,555	135,274
䚷	䚷Equity attributable to owners of the parent	1,343,256	1,218,101
䚷	䚷Non-controlling interests	519,979	483,876
䚷Total equity	1,863,235	1,701,977
Total Liabilities and Equity	4,669,887	4,308,151

Consolidated Statement of Profit or Loss

	Three Months ended June 30,
In millions of yen	2022	2021
Sales revenue	774,134	638,979
Cost of sales	(528,345)	(428,875)
Gross profit	245,789	210,104
Selling, general and administrative expenses	(195,980)	(165,551)
Other operating income	8,181	2,127
Other operating expenses	(4,379)	(3,078)
Share of profit of investments accounted for	12,671	14,742
using the equity method
Operating income	66,282	58,344
Finance income	61,908	3,092
Finance expenses	(14,534)	(4,743)
Income before taxes	113,656	56,693
Income tax expenses	(28,548)	(17,809)
Net income	85,108	38,884
Net income attributable to:
Owners of the parent	69,992	35,659
Non-controlling interests	15,116	3,225	䚷
Net income	85,108	38,884
	Three Months ended June 30,
In yen
2022	2021
Earnings per share:
Basic earnings per share	42.81	21.81
Diluted earnings per share