Message from the President

Dear Shareholders and Investors

In the fiscal year ended December 31, 2018, the world economy entered a downward trend. This was largely attributable to intensifying tensions due to U.S. trade policies and credit insecurity arising from the outflow of capital from emerging economies countering stable growth mainly centered in the United States and Europe. In the chemicals industry, corporate profits were held down, reflecting, in part, increases in raw material and fuel costs throughout the year. Amid this situation, although Kuraray's performance went according to plan in the cumulative consolidated third quarter, results ultimately ended up lower than the previous fiscal year by the fourth quarter.

Consequently, cumulative consolidated operating results for fiscal 2018 are as follows: net sales rose ¥84,553 million, or 16.3%, compared with the previous fiscal year to ¥602,996 million; operating income declined ¥10,557 million, or 13.8%, to ¥65,794 million; ordinary income decreased ¥13,067 million, or 17.6%, to ¥61,167 million; and net income attributable to owners of the parent fell ¥20,898 million, or 38.4%, to ¥33,560 million.

In fiscal 2019, the second year of the medium-term management plan “PROUD 2020,” we will steadily implement specific measures created for the main management strategies outlined in the plan. We will also focus on achieving tangible results from the integration of the Calgon Carbon business, which was acquired in fiscal 2018, and on successfully launching a butadiene derivative business in Thailand, for which investment has been decided. In addition, amid rising uncertainty in the global economy and financial markets, we will maintain a financial position where we can respond to unpredictable economic volatility while also continuing to invest in growth businesses with the aim of building a forward-looking, stable business portfolio.

In addition, the distribution of profits to shareholders is one of the Company’s top management issues. Kuraray will continuously and stably pay out dividends, taking into consideration business performance and financial standing while carefully securing internal reserves, which are its primary source of funds for business development.

During PROUD 2020, the medium-term management plan for fiscal 2018 through fiscal 2020, the Company will uphold a basic policy of increasing the distribution of profits through continuous improvement in business results. It has set targets of a total return ratio of 35% or more, reflecting net income attributable to owners of the parent, and annual dividends per share of ¥40 or higher.

On behalf of Kuraray, I would like to extend our gratitude for your continued understanding and generous support.

February 13, 2019
Masaaki Ito
Representative Director and President