Sumitomo Chemical Reports Consolidated Financial Results For the Half-Year Ended September 30, 2021

For Immediate Release

October 27, 2021

Sumitomo Chemical Reports

Consolidated Financial Results

For the Half-Year Ended September 30, 2021

For the half-year ended on September 30, 2021, the Sumitomo Chemical Group reported consolidated sales revenue of ¥1,325.2 billion, an increase of ¥278.4 billion year on year, core operating income* of ¥148.9 billion, operating income of ¥144.3 billion, and net income attributable to owners of the parent of ¥88.9 billion, all higher than the results from the same period of the previous year.

Sumitomo Chemical decided to pay an interim dividend of ¥10 per share.

*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 half-year are as follows:

Petrochemicals & Plastics

Market prices of petrochemical products, synthetic resins and synthetic fibers increased due to recovery of demand and an increase in raw material prices. Margins also improved. Therefore, sales revenue increased by ¥155.9 billion, to ¥399.5 billion, and core operating income recovered by ¥73.3 billion, to ¥42.0 billion, compared with the same period of the previous year, when the shipment volumes decreased due to the periodic shutdown maintenance for Rabigh Refining and Petrochemical Company, our equity method investee, and due to the impact of the COVID-19 pandemic, mainly on demand for automotive use.

Energy & Functional Materials

Shipments of separators for lithium-ion secondary batteries performed well. Market prices for aluminum and for the metal raw materials for cathode materials increased, resulting in higher selling prices. For the same period of the previous year, shipments were lower, mainly for automotive use, due to the COVID-19 pandemic. As a result, sales revenue increased by ¥43.2 billion from the same period of the previous year, to ¥148.5 billion. Core operating income increased by ¥7.8 billion from the same period of the previous year, to ¥12.6 billion.

IT-related Chemicals

Shipments of processing materials for semiconductors (including high purity chemicals and photoresists) increased, driven by growing demand for these items. Shipments of materials for display applications increased in the face of stay-at-home demand, and telework demand continued from the previous year. As a result, sales revenue increased by ¥14.4 billion from the same period of the previous year, to ¥227.7 billion, and core operating income increased by ¥7.4 billion from the same period of the previous year, to ¥29.5 billion.

Health & Crop Sciences

Shipments of crop protection products in North America, South America and India stayed firm. Market prices of methionine (feed additives) increased from the same period of the previous year. As a result, sales revenue increased by ¥23.4 billion from the same period of the previous year, to ¥209.4 billion. Core operating income increased by ¥9.1 billion from the same period of the previous year, to ¥18.5 billion.

Pharmaceuticals

In North America, Orgovyx™ (therapeutic agent for advanced prostate cancer), which was launched in the previous fiscal year, and Gemtesa® (therapeutic agent for overactive bladder) and Myfembree® (therapeutic agent for uterine fibroids), both of which commenced sales in the last quarter, as well as the recording of a lump-sum upfront payment for a development and commercial collaboration and license agreement, contributed to sales revenue. These more than offset negative impacts, such as declines in sales of Latuda® (atypical antipsychotic agent) and Brovana® (therapeutic agent for chronic obstructive pulmonary disease), the latter of which saw its exclusive marketing period expire. On the other hand, in Japan, sales revenues were adversely affected by the National Health Insurance (NHI) drug price revisions. As a result, sales revenue increased by ¥33.4 billion from the same period of the previous year, to ¥309.6 billion. Core operating income increased by ¥0.9 billion from the previous year, to ¥50.0 billion, because of the increase of sales revenue, though selling, general and administrative expenses increased due to the start of full-scale marketing activities by subsidiaries of Sumitovant Biopharma Limited.

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 ¥8.1 billion from the same period of the previous year, to ¥30.6 billion, and core operating income increased by ¥1.1 billion from the same period of the previous year, to ¥6.8 billion.

Summary of Consolidated Results

(1) Results of Operations:		6 Months ended		6 Months ended
		September 30, 2021		September 30, 2020*2
Sales revenue		Yen (Millions)		USD (Thousands)*1				Yen (Millions)
	1,325,210			11,840,690				1,046,771
Core operating income		148,897			1,330,388				53,477
(Share of profit of investments	(	27,239 )	(	243,379 )	(	(22,973) )
accounted for using the equity method)
Operating income		144,272			1,289,064				50,188
Income before taxes		146,781			1,311,481				38,252
Net income		107,810			963,277				14,270
Net income attributable to
non-controlling interests		18,926			169,103				16,514
Net income attributable to
owners of the parent		88,884			794,174				(2,244)
Net income per 1,000 shares		Yen		USD*1		Yen
	54,364			486				(1,372)
Comprehensive income		Yen (Millions)		USD (Thousands)*1		Yen (Millions)
	82,317			735,499				(10,502)
䚷
(2) Financial Position:		As of September 30, 2021	As of March 31, 2021
Total assets		Yen (Millions)		USD (Thousands)*1			Yen (Millions)
	4,082,799			36,479,619				3,990,254
Total equity		1,547,759			13,829,155				1,482,119
(3) Cash Flows:		6 Months ended		6 Months ended
		September 30, 2021		September 30, 2020*2
Cash flows from operating activities		Yen (Millions)		USD (Thousands)*1			Yen (Millions)
	77,198			689,761				156,585
Cash flows from investing activities		(65,150)			(582,112)				(62,963)
Cash flows from financing activities		(27,148)			(242,566)				97,937
Cash and cash equivalents at end of period		346,805			3,098,687				381,802
(4) Results of Operations by		6 Months ended		6 Months ended
䚷䚷䚷Business Segment:		September 30, 2021		September 30, 2020*2
Sales revenue		Yen (Millions)		USD (Thousands)*1			Yen (Millions)
	399,485			3,569,380				243,630
Petrochemicals & Plastics
Energy & Functional Materials		148,477			1,326,635				105,229
IT-related Chemicals		227,656			2,034,096				213,259
Health & Crop Sciences		209,427			1,871,221				186,050
Pharmaceuticals		309,580			2,766,083				276,141
Others		30,585			273,275				22,462
Core operating income		1,325,210			11,840,690				1,046,771
	42,043			375,652				(31,283)
Petrochemicals & Plastics
Energy & Functional Materials		12,573			112,339				4,769
IT-related Chemicals		29,524			263,796				22,139
Health & Crop Sciences		18,456			164,904				9,325
Pharmaceuticals		49,963			446,417				49,054
Others		6,781			60,588				5,668
Adjustments		(10,443)			(93,308)				(6,195)
		148,897			1,330,388				53,477

(Note)

• *1䚷U.S. dollar amounts are translated from yen, for convenience only, at the rate of
• • ¥111.92 = $1 prevailing on September 30, 2021.

䚷*2䚷Previous half-year results were adjusted retrospectively because the temporary accounting treatment related to business combinations was finalized.