Ube Industries : (Delayed) Financial Results for the 1st Quarter FY2020 Explanatory material

Financial Results

for the 1st Quarter FY2020

Explanatory material

July 31, 2020

1st Quarter: April - June

FY2020 1st Quarter Consolidated Result

2

1st Quarter of the FY2020

Scope of Consolidation

Item	End of FY2019	End of FY2020	Difference	Notes
	1Q
	(A)	(B)	（B) - （A)
Number of	69	70	1	＋Premium Composite
consolidated
Technology North America
subsidiaries
Number of	26	26	0
equity method
affiliates
Total	95	96	1

3

1st Quarter of the FY2020

Environmental Factors

Price Material

Item

Exchange Rate

Naphtha	CIF
Domestic
	Benzene
	(ACP)
	Australian
	Coal
	(CIF)

	FY2019 1Q	FY2020 1Q	Difference
	(A)	(B)	(B) - (A)
Yen/$	109.9	107.6	(2.3)
$/ｔ	567	311	(256)
Yen/KL	45,500	25,300	(20,200)
$/ｔ	618	358	(260)
$/ｔ	106.3	76.0	(30.3)
Yen/t	11,677	8,179	(3,498)

4

1st Quarter of the FY2020

Major P/L Items

(Billions of yen)

Item	FY2019 1Q	FY2020 1Q	Difference
(A)	(B)	(B) - (A)
Net sales	165.0	136.1	(28.9)
Operating profit (loss)	7.3	(0.6)	(7.9)
Ordinary profit (loss)	7.7	(1.2)	(9.0)
Profit (loss) attributable to	4.5	(1.3)	(5.8)
owners of parent

Percentage

change

(17.5)%

－%

－%

－%

5

1st Quarter of the FY2020

Net Sales and Operating Profit by Segment

					(Billions of yen)
		Segment	FY2019 1Q	FY2020 1Q		Difference
		(A)	(B)		(B) - (A)
Net		Chemicals	74.5	52.5		(21.9)
	Construction Materials	75.4	69.1		(6.2)
sales
	Machinery	18.8	16.7		(2.1)
		Others	1.1	0.7		(0.4)
		Adjustment	(4.9)	(3.1)		1.8
	y	Total	165.0	136.1		(28.9)
Operating		Chemicals	4.6	(2.7)		(7.4)
	Construction Materials	2.3	1.9		(0.3)
profit		Machinery	0.4	0.2		(0.2)
	Others	0.1	0.0		(0.0)
(loss)		Adjustment	(0.2)	(0.1)		0.1
	Total	7.3	(0.6)		(7.9)

6

1st Quarter of the FY2020

Analysis - Total

(Billions of yen)

Net Sales

Difference of operating profit

200.0	165.0	(28.9)	Chemicals	(21.9)	Price ※1	(4.4)
			136.1	Construction Materials	(6.2)	合成ゴム	69.0
100.0				Machinery	(2.1)	Volume	(4.9)
			Others	(0.4)
				カプロラクタム	(6 0)
				Adjustment	1.8
0.0						Fixed Cost	1.3
	FY2019 1Q	FY2020 1Q	(17.5)% Decreased		and Others ※2

Operating profit (loss)

10.0	7.3	(7.9)									Total	(7.9)
					Chemicals	(7.4)
5.0										Construction Materials	(0.3)
									Machinery	(0.2)
0.0										Others	(0.0)
								*1: Including both selling and
									Adjustment	0.1
											purchase change
					(0.6)
										*2: Including inventory valuation
(5.0)
												changes and lowest cost accounting
FY2019 1Q	FY2020 1Q		－

7

1st Quarter of the FY2020

Analysis - Chemicals

(Billions of yen)

Net Sales

(21.9)

Operating profit (loss)

(7.4)

Engineering Plastics & Fine Chemicals	(12.2)
Synthetic rubber		(5.3)
Specialty Products		(2.7)
Pharmaceutical		(1.2)
		etc
(29.4)%	Decreased

Engineering Plastics & Fine Chemicals	(6.2)
Synthetic rubber	(0.8)
Specialty Products	(0.2)
Pharmaceutical	(0.5)
	etc

Difference of operating profit

Price ※1	(5.5)
合成ゴム	69.0
Volume	(3.3)
Fixed Cost	1.3
and Others ※2
Total	(7.4)

*1: Including both selling and purchase change

ー

*2: Including inventory valuation changes and lowest cost accounting

8

1st Quarter of the FY2020

Analysis - Construction Materials

(Billions of yen)

Net Sales

(6.2)

Cement and Ready-mixed concrete	(0.6)
Construction materials and	(3.0)
Limestone related products
Coal	(2.8)
Power	(0.3)
	etc

Difference of operating profit

Price ※1	1.3
		69.0
Volume	(1.6)
Fixed Cost

(8.3)% Decreased

and Others

(0.1)

Operating profit (loss)

(0.3)

Cement and Ready-mixed concrete	(0.2)
Construction materials and	(0.9)
Limestone related products
Coal	(0.1)
Power	0.8
	etc

Total

(0.3)

*1: Including both selling and purchase change

(15.8)% Decreased

9

1st Quarter of the FY2020

Analysis - Machinery

Net Sales

(2.1)

(11.5)% Decreased

Operating profit (loss)

(0.2)

(44.6)% Decreased

(Billions of yen)

Difference of operating profit

Price ※1	(0.2)
		69.0
Volume	(0.0)
Fixed Cost	0.0
and Others ※2
Total	(0.2)

*1: Including both selling and purchase change

*2: Including marginal profit on machinery product (0.4)

10

1st Quarter of the FY2020

Operating Profit - Profit attributable to owners of parent

				(Billions of yen)
	Item	FY2019 1Q	FY2020 1Q	Difference
	(A)	(B)	(B) - (A)
Operating profit (loss)	7.3	(0.6)	(7.9)
Non-operating income (expenses)	0.4	(0.6)	(1.0)
	Net interests expenses	0.4	0.2	(0.2)
	Share of profit of entities accounted for using equtiy method	0.6	0.0	(0.6)
	Foreign exchange gains	(0.3)	(0.2)	0.1
	Others	(0.3)	(0.7)	(0.3)
Ordinary profit (loss)	7.7	(1.2)	(9.0)
Extraordinary income (expenses)	(0.4)	0.4	0.9
Profit (loss) before income taxes	7.2	(0.7)	(8.0)
Income taxes and profit (loss) attributable to non-controlling interests	(2.7)	(0.5)	2.1
Profit (loss) attributable to owners of parent	4.5	(1.3)	(5.8)
Net income per share	44.94 yen	(13.16) yen	(58.10) yen

11

1st Quarter of the FY2020

Consolidated Balance Sheet

				(Billions of yen)
	Item	End of FY2019	End of FY2020 1Q	Difference
	(A)	(B)	(B) - (A)
	Current assets	303.9	296.9	(6.9)
	Fixed assets	423.1	427.8	4.7
	Total assets	727.2	725.0	(2.2)
	Interest-bearing debt	190.7	202.1	11.4
	Other liabilities	182.1	171.5	(10.5)
	Total liabilities	372.8	373.7	0.8
	Shareholdersʼ equity *1	332.3	329.1	(3.2)
	Non-controlling interests and others	22.0	22.1	0.0
	Total net assets	354.4	351.3	(3.1)
	Total liabilities and net assets	727.2	725.0	(2.2)

*1: Shareholdersʼ equity = Net assets - Share acquisition rights - Non-controlling interests

12

1st Quarter of the FY2020

Consolidated Statements of Cash Flows

			(Billions of yen)
Item	FY2019 1Q		FY2020 1Q
A.Cash flows from operating activities	15.5	18.1	Loss before income taxes (0.7)
Depreciation and amortization 9.0
			Increase in working capital 10.1 etc.
B.Cash flows from investing activities	(10.2)	(9.6)	Acquisition of PP&E (7.9) etc.
Free cash flows (A+B)	5.3	8.5
C.Cash flows from financing activities	(4.9)	3.5	Increase in interest-bearing debt 8.3
Dividends paid (4.7) etc.
D.Net increase/decrease in cash and	0.3	12.9
cash equivalents
E.Cash and cash equivalents at end of	32.6	53.5
the quarter

13

Reference

14

Reference: 1st Quarter of the FY2020

Analysis of Operating Profit by Segment

（Billions of yen）

				Operating profit (loss)
Segment
FY2019 1Q	FY2020 1Q	Difference	Price		Volume	Fixed cost
		and others
	(A)		(B)	(B) - (A)
		*1				*2
Chemicals	4.6		(2.7)	(7.4)	(5.5)		(3.3)		1.3
Construction Materials	2.3		1.9	(0.3)	1.3		(1.6)		(0.1)
Machinery	0.4		0.2	(0.2)	(0.2)		(0.0)	*3	0.0
Others	0.1		0.0	(0.0)	0.0		0.0		(0.1)
Adjustment	(0.2)		(0.1)	0.1	-		-		0.1
Total	7.3		(0.6)	(7.9)	(4.4)		(4.9)		1.3
*1:Including both selling and purchase change	*2:Including inventory valuation changes and lowest cost accounting
*3:Including marginal profit on machinery product (0.4)

15

Reference: 1st Quarter of the FY2020

Progress of Major P/L Items

(Billions of yen)

	FY2019 (A)	FY2020 (B)	Difference (B) - (A)
Item		1Q		1Q		1Q
		Progress		Progress

Net sales	667.8	165.0	614.0	136.1	(53.8)	(28.9)
		24.7%		22.2%
Operating profit (loss)	34.0	7.3	26.0	(0.6)	(8.0)	(7.9)
		21.5%		ー%
Ordinary profit (loss)	35.7	7.7	23.5	(1.2)	(12.2)	(9.0)
		21.7%		ー%
Profit (loss) attributable	22.9	4.5	14.0	(1.3)	(8.9)	(5.8)
to owners of parent
	19.8%		ー%

16

Reference: 1st Quarter of the FY2020

Net Sales

Segment			FY2020
				Total
	1Q	2Q	3Q	4Q
Chemicals	52.5	ー	ー	ー	52.5
Construction Materials	69.1	ー	ー	ー	69.1
Machinery	16.7	ー	ー	ー	16.7
Others	0.7	ー	ー	ー	0.7
Adjustment	(3.1)	ー	ー	ー	(3.1)
Total	136.1	ー	ー	ー	136.1

(Billions of yen)

Full-yearProgress (Forecast)

1. 20.2%

1. 23.9%

1. 21.2%

1. 23.9%

(18.0) －%

1. 22.2%

17

Reference: 1st Quarter of the FY2020

Operating Profit

Segment			FY2020
					Total
	1Q	2Q	3Q	4Q
Chemicals	(2.7)	ー	ー	ー	(2.7)
Construction Materials	1.9	ー	ー	ー	1.9
Machinery	0.2	ー	ー	ー	0.2
Others	0.0	ー	ー	ー	0.0
Adjustment	(0.1)	ー	ー	ー	(0.1)
Total	(0.6)	ー	ー	ー	(0.6)

(Billions of yen)

Full-yearProgress (Forecast)

1. －%

1. 14.4%

1. 7.1%

1. 8.6%

(1.0) －%

1. －%

18

Reference: 1st Quarter of the FY2020

1Q on 4Q - Net Sales

（Billions of yen）

Segment	FY2019	FY2020	Difference	Major factors
4Q	1Q
	(A)	(B)	(B) - (A)
				Engineering Plastics & Fine Chemicals	(11.3)
Chemicals	71.1	52.5	(18.5)	Synthetic rubber	(4.0)
Specialty Products	(2.0)
				Pharmaceutical	(1.0)	etc.
				Cement and Ready-mixed concrete	(1.9)
Construction	75.3	69.1	(6.1)	Construction materials and
Limestone related products	(2.1)
Materials
			Coal	(2.0)
				Power	0.2	etc.
Machinery	26.0	16.7	(9.3)
Others	1.0	0.7	(0.2)
Adjustment	(3.5)	(3.1)	0.3
Total	170.0	136.1	(33.9)

19

Reference: 1st Quarter of the FY2020

1Q on 4Q - Operating profit

（Billions of yen）

Segment	FY2019	FY2020	Difference	Major factors
4Q	1Q
	(A)	(B)	(B) - (A)
				Engineering Plastics & Fine Chemicals	(4.2)
Chemicals	3.4	(2.7)	(6.1)	Synthetic rubber	(0.7)
Specialty Products	(0.3)
				Pharmaceutical	(0.3)	etc.
				Cement and Ready-mixed concrete	(0.4)
Construction	3.2	1.9	(1.2)	Construction materials and
Limestone related products	(0.6)
Materials
			Coal	0.1
				Power	(0.2)	etc.
Machinery	2.0	0.2	(1.7)
Others	0.1	0.0	(0.0)
Adjustment	(0.1)	(0.1)	0.0
Total	8.6	(0.6)	(9.2)

20

Reference: 1st Quarter of the FY2020

Consolidated Key Indicators

(Billions of yen)

Item	FY2019 1Q	FY2020 1Q	FY2020 full-year	FY2019
(forecast)	full-year
Capital investment	5.6	10.8	47.0	47.6
Depreciation and amortization	9.0	9.0	37.0	36.8
Research and development expenses	3.2	2.7	14.0	12.8
Adjusted operating profit	8.6	(0.1)	29.0	37.8
Interest-bearing debt	192.3	202.1	190.0	190.7
Shareholdersʼ equity	324.8	329.1	337.0	332.3
Total assets	730.0	725.0	720.0	727.2
D/E ratio (times)	0.59	0.61	0.56	0.57
Shareholdersʼ equity ratio (%)	44.5	45.4	46.8	45.7
Return on sales - ROS (%)	4.4	(0.5)	4.2	5.1
Return on assets - ROA (%)	-	-	4.0	5.2
Return on equity - ROE (%)	-	-	4.2	6.9
Number of employees	11,213	11,120	11,000	10,890

21

Reference: 1st Quarter of the FY2020

Consolidated Major Subsidiaries

(Billions of yen)

		Net Sales	Difference of
Subsidiaries and affiliates	Business	operating
	profit from
		FY2020 1Q
		FY2019 1Q
UBE Corporation Europe, S.A. Unipersonal	Manufacture and sales of nylon, caprolactam, ammonium sulfate and fine	7.0	↓
chemical products
UBE Chemicals (Asia) Public Company Limited	Manufacture and sales of nylon, caprolactam and ammonium sulfate	6.3	↓
THAI SYNTHETIC RUBBERS COMPANY LIMITED	Manufacture and sales of polybutadiene rubber	1.9	→
UBE Ammonia Industry, Ltd.	Manufacture and sales of ammonia and industrial gases	2.2	↓
UBE Film, Ltd.	Manufacture and sales of plastic film products	2.4	→
UBE EXSYMO CO., LTD.	Manufacture and sales of polypropylene molded products, fibers, fiber-	3.0	↑
reinforced plastics and electronic and information materials
UBE Material Industries, Ltd.	Manufacture and sales of magnesia clinker, quicklime, slaked lime, etc.	9.4	↓
UBE Shipping & Logistics, Ltd.	Coastal shipping, port transport, containers, collection and transport of	4.4	↓
industrial waste, trading and engineering business
UBE Construction Materials Sales Co., Ltd.	Sales of cement, ready-mixed concrete, building materials, etc.	14.8	→
SANSHIN TSUSHO Co., Ltd.	Sales of cement, ready-mixed concrete, building materials, etc.	5.1	→
Consolidated subsidiaries dealing	Manufacture and sales of ready-mixed concrete	9.1	→
ready-mixed concrete
Ube Construction materials Co., Ltd.	Manufacture, sales and construction of various building materials	2.4	→
UBE Machinery Corporation, Ltd.	Manufacture, sales, and service of molding machines, industrial	7.4	↓
machinery and bridge, etc.
UBE Steel Co., Ltd	Manufacture and sales of cast iron and steel products and rolled steel billets	4.1	↓

Note: ↑↓Represent an increase or decrease of over 0.1 billion JPY .

22

Reference: IR Calendar

Announcement of 1st half Business Results

• Announcement of 1st half Business Results
• • October 30, 15:30
• Telephone Conference for 1st half Business Results
• • October 30, 18:15

(Note) This schedule is subject to change without notice due to circumstances.

23

This presentation material contains forward-looking statements concerning UBEʼs future plans, strategies, and performance. These forward-looking statements are not historical facts; rather, they represent assumptions and beliefs based on economic, financial, and competitive conditions currently observable. Forward-looking statements include information preceded by, followed by, or including the words "project", "predicts", "expects", "forecasts", "could", "may", or similar expressions.

Furthermore, they are subject to a number of risks and uncertainties which include, but are not limited to, economic conditions in key markets, supply and demand of products, the prices of raw material and fuel, interest rates, and exchange rates. Readers of this presentation material are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from expectations. Copyright 2018 Ube Industries, Ltd. All Rights Reserved