#1THE KAITEKI COMPANY Sustainability Health APTSIS 15 Step 2 (FY2013 - FY2015) Presentation to Investors March 11, 2015 Yoshimitsu Kobayashi Comfort President & Chief Executive Officer Mitsubishi Chemical Holdings Corporation#2THE KAITEKI COMPANY The forward-looking statements are based largely on information available as of the date hereof, and are subject to risks and uncertainties which may be beyond Company control. Actual results could differ largely, due to numerous factors, including but not limited to the following: Group companies execute businesses in many different fields, such as information and electronics, performance products, polymers and processed products, pharmaceuticals, carbon and inorganic products, and petrochemicals, and these business. results are subjected to influences of world demands, exchange rates, price and procurement volume of crude oil and naphtha, trends in market prices, speed in technology innovation, National Health Insurance price revision, product liabilities, lawsuits, laws, and regulations. Mitsubishi Chemical Holdings 2#3List of Abbreviations THE KAITEKI COMPANY MCHC: Mitsubishi Chemical Holdings Corporation MCC: Mitsubishi Chemical Corporation MTPC: Mitsubishi Tanabe Pharma Corporation MPI: Mitsubishi Plastics, Inc. MRC: Mitsubishi Rayon Co., Ltd. LSII: Life Science Institute, Inc. TNSC: Taiyo Nippon Sanso Corporation APIC: API Corporation BARDA: Biomedical Advanced Research and Development Authority CRK: Chuo Rika Kogyo Corporation HLC: Healthy Life Compass Corporation LSIM: LSI Medience Corporation NEDO: New Energy and Industrial Technology Development Organization NIMS: National Institute for Materials Science NSCI: The Nippon Synthetic Chemical Industry Co., Ltd. QKK: Qualicaps Co., Ltd. ALS: Amyotrophic lateral sclerosis BPA: Bisphenol-A CAE: Computer aided engineering CD: Crohn's disease CIDP: Chronic inflammatory demyelinating polyradicaloneuropathy DPC: Diphenyl carbonate EO: Ethylene oxide EV: Electric vehicle EVOH: Ethylene vinyl alcohol FPD: Flat panel display GaN: Gallium nitride HEV: Electric vehicle Hib: Haemophilus influenza type b ICT: Information and communication technology LiB: Lithium-ion battery MMA: Methyl methacrylate MOCVD: Metal organic chemical vapor deposition MOS: Management of Sustainability MOT: Management of Technology MS: Multiple sclerosis OLED: Organic light emitting diode OPV: Organic photovoltaic PC: Polycarbonate PE: Polyethylene PCM: Prepreg compression molding PHEV: Plug-in hybrid electric vehicle PHL: Phenol PMMA: Polymethyl methacrylate PP: Polypropylene PS: Psoriasis PTA: Terephthalic acid PVC: Polyvinyl chloride PVOH: Polyvinyl alcohol RTM: Resin transfer molding SAP: Super absorbent polymer SBU: Strategic business unit SM: Styrene monomer SMC: Sheet molding compound UTT: Utility VLP: Virus-like particles ZEB: Zero energy building Note: FY2011: April 1, 2011 - March 31, 2012 FY2012: April 1, 2012 - March 31, 2013 FY2013: April 1, 2013 - March 31, 2014 FY2014: April 1, 2014 - March 31, 2015 FY2015: April 1, 2015 - March 31, 2016 Product names, brand names, service names, and technology names used in this presentation material are denoted in italics and are trademarks or registered trademarks of the MCHC Group in Japan and/or overseas. Other product names, brand names, and service names may also be protected. Mitsubishi Chemical Holdings 3#4Today's Agenda THE KAITEKI COMPANY 1. Group Overview and Performance Review 2. Progress in Principal Businesses (Comparison with Step 2) 2-1. Performance Products 2-2. Health Care 2-3. Industrial Materials 2-4. Summary 3. Challenges of Formulating the Next Medium-term Management Plan 4#5Performance Products Health Care Industrial Materials *Listed company 1-1. Group Overview MCHC* **Net sales, employees (as of March 31, 2014) Net sales (consolidated): Approx. ¥4 trillion Overseas sales ratio: Approx. 40% Employees (consolidated): Approx. 70,000 Overseas employees: Approx. 23,000 (Figures for fiscal 2014 were calculated as the simple summation of TNSC results with those of the Group.) Oct. 2005- THE KAITEKI COMPANY Net sales (consolidated): ¥3,498.8 billion** Employees (consolidated): 56,031** The KAITEKI Institute, Inc. Mitsubishi Chemical Holdings America, Inc. Mitsubishi Chemical Holdings (Beijing) Co., Ltd. Apr. 2009- Nov. 2010- Nov. 2011- 100% Mitsubishi Chemical Holdings Europe GmbH Mitsubishi Chemical Holdings Corporate Staff, Inc. MCHC R&D Synergy Center, Inc. Nov. 2012 - Apr. 2013- Apr. 2014- Oct. 2013: Strengthening capital and business alliance (ownership ratio: 27%) Sep. 30, 2014: Commenced TOB Nov. 12, 2014: Completed payment Thereafter, TNSC became a consolidated subsidiary (with 50.6% MCHC ownership) 100% 56.3% 100% 100% MCC MTPC* MPI Oct. 2007- Apr. 2008- Oct. 2005- Net sales (consolidated) ¥2,159.7 billion** Business lines Performance products, Industrial materials, etc. Net sales (consolidated) ¥412.7 billion** Business lines Pharmaceuticals, etc. Net sales (consolidated) ¥442.7 billion** Business lines Plastic products, etc. MRC E 100% 50.6% LSII TNSC* Apr. 2010- Net sales (consolidated) ¥606.2 billion** Business lines Chemical products, resins, fibers, carbon fiber and composite materials, membrane bioreactors, etc. Apr. 2014- Net sales (consolidated) [¥118.7 billion]** Business lines Healthcare and medical ICT, support for pharmaceutical development and advanced medication, etc. Nov. 2014- Net sales (consolidated) ¥522.7 billion** Business lines Industrial gases, electronics, medical, etc. Mitsubishi Chemical Holdings 5#61-2. Business Domains Information and electronics THE KAITEKI COMPANY -related products Recording media Pharmaceuticals Imaging supplies Food ingredients Battery materials Fine chemicals Polymer processing products Performance Products Composite materials Electronics Applications Designed Materials Inorganic chemicals Chemical fibers Industrial gases Health Care Health Care Diagnostic reagents and instruments Clinical testing Pharmaceutical formulation materials Industrial Materials Synthetic resins Chemicals Polymers Basic petrochemicals Carbon products Chemical derivatives Synthetic fiber materials Mitsubishi Chemical Holdings 9#7THE KAITEKI COMPANY 1-3. Financial Results and Fiscal 2014 Outlook ■Consolidated TNSC in 3Q fiscal 2014 through TOB Forecasting major increase in income in fiscal 2014 (+145% Y-o-Y) because of this and other factors Net sales 5,000 Net sales Operating income 4,000 (\ billion) Operating income 500 400 3,680.0 3,498.8 TNSC 3,166.8 3,208.2 3,088.6 2,909.0 3,000 2,515.1 226.5 2,000 1.000 66.3 8.2 0 FY2008 FY2009 Notes: Mitsubishi Chemical Holdings 300 200 160.0 130.6 110.5 90.2 100 0 FY2010 FY2011 FY2012 FY2013 FY2014 Forecasts (Figures announced Nov. 27, 2014) Includes effects of adopting uniform date for account closings in fiscal 2013: Net sales: ¥151.9 billion; Operating income: ¥3.9 billion Includes effects of consolidating TNSC in fiscal 2014: Net sales: ¥275.0 billion; Operating income: \17.5 billion 7#81-4. Operating Income by Segment!HE KAITEKI COMPANY Fiscal 2013 Actual Results vs. Fiscal 2014 Forecasts ■Designed Materials: Conditions firm ■Health Care: Conditions firm for pharmaceuticals and healthcare solutions Polymers: Outlook for major increase in income in MMA/PMMA FY2013 Domains Segments actual results FY2014 forecasts* Change Accumulated through 3Q** Target attainment ratio Electronics Applications (5.5) (2.0) +3.5 (2.3) • Performance Products Designed Materials • 46.5 55.5 +9.0 41.7 75.1% Health Care Health Care 68.3 70.0 +1.7 70.7 101% Operating income (\ billion) Comments Consolidation of TNSC (Chemicals) [3Q fiscal 2014] Outlook for inventory valuation loss* for naphtha and paraxylene in Chemicals and marginal gain* for polyolefin in Polymers [3Q and 4Q fiscal 2014] • Outlook for increase in income in Designed Materials, Health Care, and Polymers Chemicals 0.7 17.5 +16.8 2.2 12.6% Industrial Materials *Overall impact: (Approx. ¥18.0 billion) Polymers 2.3 20.5 +18.2 13.7 66.8% Notes: Others 5.7 6.5 + 0.8 3.3 50.8% Corporate (7.5) (8.0) (0.5) (5.0) Total 110.5 160.0 + 49.5 124.3 77.7% Includes effects of adopting uniform date for account closings in fiscal 2013: Net sales: ¥151.9 billion; Operating income: ¥3.9 billion) Includes effects of consolidating TNSC in fiscal 2014: Net sales: ¥275.0 billion; Operating income: ¥17.5 billion *Figures announced Nov. 27, 2014 **Figures announced Feb. 4, 2015 8#9Performance Products THE KAITEKI COMPANY 2-1. Performance Products: Progress ■Increase income by accelerating development of growth fields Operating income (\ billion) 100 80 60 60 40 40 53.5* 20 20 41.0 (Accumulated through 3Q: 39.4)** 17.4 0 FY2012 Actual FY2013 Actual FY2014 Forecasts Mitsubishi Chemical Holdings *Figure announced Nov. 27, 2014 **Figure announced Feb. 4, 2015 85.0 FY2015 Growth fields ⚫ Lithium-ion battery materials • Organic synthesis (NSCI) • Polyester film • Engineering plastics •⚫ Carbon fiber and composite materials, etc. Step 2 Plan 6#10Performance Products THE KAITEKI COMPANY 2-1-1. Electronics Applications: Principal Businesses ■ Organic photovoltaics (OPVS) . Developed film-type OPV. Currently undergoing verification tests at the Sendai City Science Museum. (From Jun. 2014) Developed external wall units with Taisei Construction for use in ZEB. Verification tests for practical use are under way. (From May 2014) Customers are evaluating OPV modules. (Market launch scheduled for the first half of fiscal 2015) →Verification tests are being implemented as “Guidance and Technical Development Project for the Practical Application of Organic Photovoltaics" supported by NEDO. ■ Organic photo-semiconductors (OLEDs) • Realizing improvements in color rendering properties and useful lifetimes Based on their excellence in reproducing skin colors and their thinness, were adopted, combined with mirrors, for use in makeup washstands. ■ Gallium nitride (GaN) substrates • In the market for LED lamps using GaN substrates, expansion is taking place mainly in units for use in automobiles and units to replace halogen lamps. Sendai City Science Museum (Film-type OPVs) • To help customers increase production efficiency, currently moving forward with large substrate sizes (from 2 inches to 4 inches) • Research is currently under way under tie-up with Nobel laureate Prof. Shuji Nakamura in automobiles of the University of California, Santa Barbara. (Since 2001) *SORAA, Inc.: Venture business established by Prof. Nakamura and other co-founders LED lighting installed LED lighting developed to replace halogen lamps (SORAA, Inc.*) LED materials ⚫In South Korea, took measures against infringement of the legitimacy of our patent (co-owned with NIMS) for red phosphor, and the legitimacy of our patent was confirmed. In addition, a similar patent infringement litigation is also in progress in China. ⚫Concluded a cross-licensing agreement for red phosphor with Nichia Corporation Mitsubishi Chemical Holdings 10#11Performance Products THE KAITEKI COMPANY 2-1-2. Lithium-ion Battery Materials Business expansion to the field that requires high quality, especially in automotive applications Although the start-up of usage in automobiles has been slower than expected, annual growth of 50% on a volume basis is expected for lithium-ion battery materials. Trends in volume of LiBs sold to the world automobile industry (GWh/y) MCC's lithium-ion battery materials provide a good balance of the special features required in automobile applications, and adoption is expanding in major EV and PHEV models. 16 14.9 HEVS 14 Along with the expansion in demand, sales in volume terms are increasing. PHEVS As a result of this and cost reductions, we are expecting operating losses to decline substantially, and reaching breakeven is expected at an early date. 12 EVs 10.5 10 Electrolytes: Have secured strong position through additive technology. Will maintain a high market share in applications for automobiles 8 6.8 Anode materials: Beginning to be adopted by major automobile models, because of the strengths of natural graphite. Sales in volume terms are expanding gradually. 6 3.6 4 Separators: Have completed the development stage of heat-resistant separators for automobile use, and will launch sales in fiscal 2015 20 Mitsubishi Chemical Holdings FY2012 FY2013 FY2014 FY2015 Estimates by MCC 11#12Performance Products THE KAITEKI COMPANY 2-1-3. Organic Synthesis (NSCI) Aggressive expansion in core businesses. Continuing initiatives to accelerate development of third major business OPL film, Optical PVOH film • A new production line for wide films (line No. 6) at the Kumamoto Plant went into commercial operation. (Nov. 2014) Soarnol, EVOH copolymer • A new production line under construction at Noltex, LLC in U.S.A. (Scheduled operation in 1Q fiscal 2015) Hi-Selon, Water soluble PVOH film . Expecting higher demand for individual packaging of liquid detergents, transfer printing, and other applications. Will build a new production facility at the Kumamoto Plant (Scheduled operation in 4Q fiscal 2015) Pressure sensitive adhesive and functional coating resin • COPONYL (acrylic copolymer): Expecting increases in demand for electronic and optical materials. Will add a new facility at the Ogaki Plant (Scheduled operation in 1Q fiscal 2016) • Integrated emulsion manufacturing division into CRK. Relaunched as a new company, Japan Coating Resin Co., Ltd. (Oct. 2014) Mitsubishi Chemical Holdings 12#13Performance Products THE KAITEKI COMPANY 2-1-4. Polyester Film Asia: Making sure to capture FPD demand in the Chinese market. The volume of films for touch panels decreased due to development of thinner films in fiscal 2014. Will expand sales in fiscal 2015 ■North America: Conditions firm in industrial uses; Europe: Focusing on high-value-added medical applications Mitsubishi Polyester Film GmbH (Germany) Trends in FPD-related sales and ratio of sales to China in total sales 140 <Volume*> 120 100 80 60 40 20 0 FY2011 FY2012 FY2013 FY2014 Forecasts Mitsubishi Polyester Film, Inc. (North America) MPI (Shiga, Japan) Mitsubishi Polyester Film Suzhou Co., Ltd. Mitsubishi Plastics Converting Film Wuxi Co., Ltd. PT. MC PET FILM (Indonesia) Trends in touch panel related sales 300 <Volume*> 250 50% 200 150 30% 100 50 10% 0 FY2011 FY2012 FY2013 -10% FY2015 Plan *Relative figures with FY2011 as the base of 100 FY2014 Forecasts FY2015 Plan Touch panel APTSIS 15 13 Total APTSIS 15 --Ratio of sales to China in total sales Mitsubishi Chemical Holdings#14Performance Products THE KAITEKI COMPANY 2-1-5. Engineering Plastics (Quadrant Group) ■Sales for transportation equipment and in the life science fields are favorable. ■Going forward, aggressive development in Americas, Europe, and the rest of Asia Europe 15 sites, 10 countries Mitsubishi Chemical Holdings Americas Areas Asia/Africa 10 sites, Transportation 15 sites, 4 countries 6 countries Trends in sales* 200 150 100 50 0 FY2012 FY2013 FY2014 FY2015 Plan *Relative figures with FY2012 as the base of 100 Product types Applications Life science Sheet material for lining Glass mat reinforced thermoplastic Casting nylon Ultrahigh molecular weight polyethylene Advanced engineering plastic Others Advanced engineering plastic = Lining for pallets Underbody covers Gears, rollers Artificial joints Components for medical equipment Retainer rings 14#15Performance Products THE KAITEKI COMPANY 2-1-6. Carbon Fiber and Composite Materials Integration of the carbon fiber businesses in MPI and MRC: Targeting a ¥100 billion business in fiscal 2020 Using our hybrid PAN-based and pitch-based carbon fibers together with our molding technologies (SMC, PCM, RTM, etc.), we are aiming to improve performance characteristics and lower weight. Will establish competitively superior position for industrial uses (automobiles, etc.) Business integration into MRC MRC ⚫ Precursors . (Apr. 1, 2015) • PAN-based carbon fibers • Molding technology for automotive components (prepreg, SMC, PCM, RTM, etc.) • Intermediates MPI • Pitch-based carbon fibers . Carbon fiber composite materials • Molding technology for machine components (Sheet, winding) MCC • Polyolefins • ⚫ Epoxy resins, modified resins • Non-destructive diagnostic technology ⚫Fundamental technology (CAE, recycling) Automobiles Wind power generation Pressure vessels Mitsubishi Chemical Holdings Sales (¥billion) 100 50 60 0 FY2014 FY2017 FY2020 ■Intermediates and composites for automobiles (hybrid) ■PAN- and pitch-based carbon fibers 15#16Health Care 2-2. Health Care: Progress THE KAITEKI COMPANY ■Inroads of generics into our long-term listed pharmaceuticals for healthcare usage have been more than expected. Will secure earnings expanding royalties from out-licensing of technology and implementation of structural reforms ■In healthcare solutions, we will focus on creating new growth businesses. Operating income (¥ billion) 120 100 80 60 60 40 40 20 20 70.0* 110.0 HHH 74.9 68.3 0 FY2012 Actual FY2013 Actual (Accumulated through 3Q: 70.7)** FY2014 Forecast FY2015 Step 2 Plan Mitsubishi Chemical Holdings *Figure announced Nov. 27, 2014 **Figure announced Feb. 4, 2015 Businesses in Health Care • MTPC . LSII Group -QKK (Capsules, pharmaceutical formulation materials, etc.) -APIC (Active pharmaceutical intermediates) -LSIM (Clinical testing, support for pharmaceutical development, etc.) -HLC (Health self-check services, etc.) 16#17Health Care 2-2-1. Pharmaceuticals Trends in net sales Net sales (\billion) 500 and operating income Operating income (\ billion) (\billion) 200 409.5 400 419.2 407.2 (2.4) (9.6) (22.7) 412.7 406.0 410.0 160 (37.6) (53.6) 300 120 THE KAITEKI COMPANY Trends in royalties for pharmaceutical technologies 40 40 37.6 76.6 200 69.0 69.0 80 22.7 65.0 59.1 60.0 20 20 100 40 9.6 53.6 0 0 0 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 Forecasts Plan FY2011 FY2012 FY2013 FY2014 Forecasts FY2015 Plan Long-listed products, etc. Remicade Gilenya Others New products (Japan) Operating income Royalties for pharmaceutical technologies *Simponi, Telavic, Tenelia, Canaglu, Lexapro, Imusera, Tetrabik Mitsubishi Chemical Holdings Invokana (Including from FY2013) 17#18Health Care THE KAITEKI COMPANY 2-2-1. Pharmaceuticals ■Steady advances in development and marketing of pharmaceuticals in priority disease domains • • Scheduled product launches during APTSIS 15 and pipeline products (Phase 2-) Domains Phase 2 Phase 3 Auto-immune disease MT-1303 (MS, PS, CD) FTY720 (CIDP) Filed Remicade (Behcet's disease with special lesions) As of February 2, 2015 Launched Simponi (Rheumatoid arthritis) Imusera (Multiple sclerosis) CNS disease MP-214 (Schizophrenia) MT-4666 (Dementia of Alzheimer's type) Radicut (ALS) Lexapro (Depression) MT-2412 (Combination drug In-house Diabetes and kidney disease MT-3995 for Tenelia and Canaglu) (Diabetic nephropathy) TA-7284 License-in (Diabetic nephropathy) Plant-based VLP vaccine (Influenza) Vaccine* MT-2301 (Hib vaccine**) MT-4580 Others (Secondary hyperparathyroidism) *Medicago Inc., a subsidiary of MTPC, signed an agreement with the U.S. government organization (BARDA) related to development of an alternative method for producing antibodies to treat Ebola virus infections (Feb. 2015). Medicago is a biopharmaceutical company that uses MCC's fully artificial light-type plant growing systems, etc., and specializes in R&D related to developing new vaccines with VLP technology. **Hib vaccine: Haemophilus influenza type b (Prevents meningitis due to Hib infection in infants) Mitsubishi Chemical Holdings Tenelia (Type 2 diabetes mellitus) Canaglu (Type 2 diabetes mellitus) BindRen (Hyperphosphatemia) Tetrabik (Combined vaccine for preventing four diseases: diphtheria, pertussis, Tetanus, and polio) Telavic (Chronic hepatitis C) 18#19Health Care 2-2-2. Healthcare Solutions THE KAITEKI COMPANY ■Aiming for net sales of ¥300 billion and operating income of ¥30 billion in fiscal 2020, strengthen existing businesses, work in concert with other Group companies, and develop/promote new growth businesses through alliances and innovation (Sales forecast for fiscal 2014: Approx. ¥130 billion) ■Strengthen existing businesses QKK • Expand capsule business, new production lines under construction APIC • Strengthen manufacturing of API for use in generics LSIM • Expand sales of new testing kits, restructure systems for developing PATHFAST diagnostic equipment in U.S.A. HLC • • Expand number of drugstores providing services for the self-health check service Jibun Karada Club by eliminating the grey zone (Looking to reach 1,000 drugstores in fiscal 2015) Promote initiatives to make use of ICT for next-generation healthcare services* *Effective disease prevention, health maintenance, life support services related to diseases, etc., and diverse forms of evidence-based healthcare services ■Work in concert with other Group companies, conclude alliances, and innovate • • • Realize synergies with the MCHC Group (development of new capsule materials, develop diagnostic reagents, etc.) Form alliances with academia (with Kyushu University and Tsinghua University (Beijing) in the clinical testing field) Form alliances with other companies (operating agreement with Nikon Corporation in the testing and diagnostic equipment fields) • Promote alliances in the regenerative medicine field Mitsubishi Chemical Holdings 19#20Industrial Materials THE KAITEKI COMPANY 2-3. Industrial Materials: Progress ■Consolidated TNSC in 3Q fiscal 2014 ■Will promote structural reforms in petrochemical businesses and aim to reach targets Operating income (loss) (¥ billion) 80 60 40 20 20 38.0* 60.0*** (0.1) 3.0 0 (Accumulated through 3Q: 15.9)** FY2012 FY2013 FY2014 Forecasts -20 FY2015 Step 2 Plan Fiscal 2015 Outlook • Performance of MMA, carbon, . and performance polymers to remain firm TNSC will be fully consolidated and contribute to income (Fiscal 2015 plan in "Ortus Stage 1": operating income of ¥38 billion) • Expecting to eliminate inventory valuation loss in the naphtha and paraxylene businesses in fiscal 2014 *Figure announced Nov. 27, 2014. Includes effects of adopting uniform date for account closings in fiscal 2013: Net sales: ¥151.9 billion; Operating income: ¥3.9 billion. **Figure announced Feb. 4, 2015. Includes effects of consolidating TNSC in fiscal 2014: Net sales: ¥275.0 billion; Operating income: \17.5 billion. ***Including Leaping ahead (M&A) Mitsubishi Chemical Holdings 20 20#21Industrial Materials THE KAITEKI COMPANY 2-3-1. PHL/PC Chain ■ Promote thorough-going cost-cutting and implement reforms aimed at creating a stable earnings structure ■Return to profitability at the operating income level in fiscal 2015 Business Environment ➤ Improve supply/demand balance for PHL, BPA, and PC Priority Measures Kashima Achieve improvements in plant safety and cost reductions (in fiscal 2014) through introducing technology from ILLA International*. Further cost cuts by lowering UTT and fixed costs, etc. Kurosaki Continuing pursuit of thoroughgoing cost reductions (energy conservation, UTT, etc.). Raise profitability by accelerating sales of high-performance PC making use of specialized bisphenol China** Implement cost reductions similar to those at the Kurosaki Plant. Improve profitability through strengthening sales at MCC initiative and introducing high-value-added grades. Considering production of non-phosgene DPC in house *ILLA International Ltd. (Russia): Licensing company for phenol technology **Sinopec Mitsubishi Chemical Polycarbonate (Beijing) Co., Ltd.: A 50-50 joint venture between MCC and Sinopec in China Characteristics of high-performance PC Surface hardness High-performance RC Formability Impact strength Mitsubishi Chemical Holdings Ordinary PC Flame Appearance retardance 21 24#22Industrial Materials 2-3-2. Terephthalic Acid THE KAITEKI COMPANY ■Expected to show an operating profit in fiscal 2017 as a result of revisions in the price schedule at bases, improvement in the terms of trade for paraxylene, and implementation of cost reductions ■Implemented policies to reduce inventory valuation risk when prices of raw materials decline Business environment < Market conditions continuing to stagnate because of large excess supply capacity in China Priority measures ➤ India Scheduled to reduce costs through electric power purchases from the grid (Mar. 2015) and converting to coal fuel (heavy oil →> coal: end of 2015) Aiming to return to profitability through changes in the domestic price schedules (including antidumping tax) ➤ Indonesia Changes in domestic price schedules (maintaining PTA flooring) South Korea Reduce losses substantially through optimizing production operations (including downsizing) Increase domestic share as Korean competitor withdraws from the business Linking domestic and overseas prices to paraxylene China Structural reform with a view also to inviting new partners Alliances in the energy field with corporations in the vicinity, considering changing fuel to be used Continue to link domestic prices to paraxylene Mitsubishi Chemical Holdings 22 222#23Industrial Materials THE KAITEKI COMPANY . 2-3-3. Sustainable Resources: DURABIO Making use of the special features of DURABIO and expanding number of automobile manufacturers adopting the material • Together with Mazda Motor Corporation, MCC developed a new grade of DURABIO that can be used in automotive components without a coating step. • Decision made to adopt for usage in an interior component for new model MX-5 Scheduled to be used in exterior components for other Mazda production models (DURABIO: Bioengineering plastic, made principally from plant-derived isosorbide) Balancing the range of properties necessary for automotive components at a high level Collision resistance New model MX-5 (Photo by Mazda Motor Corporation) Good appearance DURABIO Heat resistance High surface hardness (resistance to scratches) Weather resistance (durable colors) Mitsubishi Chemical Holdings HUSTLER (Photo by Suzuki Motor Corporation) 23#24Industrial Materials THE KAITEKI COMPANY 2-3-4. MMA-PMMA ■ Establishing global operations and optimizing production taking account of raw materials and supply/demand ■Expansion strategy, increasing income ratios, and implementing rationalization Expansion strategy Thailand: New plant began MAA production (Feb. 2014) U.S.A.: Began production at the Beaumont MAA plant (Jul. 2014) MMA Monomer: Supply/demand balance Middle East Alpha project: Scheduled for operation (250 kt/y) Looking for a site for Alpha-3 plant in U.S.A. LICC (Shanghai): Scheduled for operation (82 kt/y) China: Increased capacity and rationalized Shanghai MMA plant: 82,000 t/y (kty) (Jan. 2015) 5,000 Improving income ratios and rationalization Singapore: Improvements in energy efficiency 15% 4,000 3,000 (Scheduled for 4Q 2015) Introduction of new catalyst (Beginning in 2015) 2,000 1,000 MMA Project in the Middle East 0 . Production capacity: MMA (250kty), PMMA (40kty) 2013 2014 2015 2016 2017 2018 2019 2020 . Create the world's largest MA production capacity using a new ethylene production technology (Alpha technology) using gas-based raw materials MMA/PMMA: Production sites that offer an overwhelming cost advantage • Create a strategic base for supplying growing emerging country markets in Eastern Europe, India, the Middle East, Africa, etc. • Completion: Scheduled for Apr. 2017 • Commercial operation: Scheduled for Jul. 2017 Note: Planning to make public announcement on U.S.A. project as soon as decisions are made Mitsubishi Chemical Holdings Under construction Under review Supply Demand (5%) Demand (3%) Sites Europe Asia U.S.A. MMA monomer 1 8 3 MMA polymer 6 11 3 R&D 3 2 1 24 24#25Industrial Materials THE KAITEKI COMPANY 2-3-5. TNSC (1) Long-term vision to reach net sales of ¥1 trillion, operating income ratio of 10%, ROCE of 10% or more, and a ratio of overseas sales of 50% by fiscal 2022 ■Going forward, will implement "Ortus Stage 1," looking to preparation of APTSIS 20 Measures Structural reforms Innovation Global development Ortus Stage 1: Progress • • Optimization of personnel and organizations ⇒Implementation of early retirement program at TNSC (Apr. 2014) • Hydrogen refueling stations, Water-180 (stable isotope), etc.*next page •⚫ On-site project initiatives abroad →Received major on-site project order from South African company Sasol, in Louisiana, U.S.A. (Jan. 2015) Will supply gas via piping to ethane cracker project and to the surrounding region (Start-up: 2018) • Global development of subsidiaries ⇒ Established company to manufacture thermos bottles in the Philippines (Sep. 2015) • Acquired European thermos bottle manufacturer (Nov. 2014) Acquired gas distributor in southern California (Feb. 2015) M&A • Acquired gas business in Hawaii (Feb. 2015) Synergies with the MCHC Group ⇒ (Deployment of business sites in 43 states out of the 50 states) • Industrial gases . = Acting in concert to supply UTT Electronics Joint activities in MOCVD devices and GaN substrates Healthcare Promote mutual use of the business network (artificial spa generators, medical-use gases, home medical care, etc.) • Concerted focus on R&D within the MCHC Group Mitsubishi Chemical Holdings 25 25#26Industrial Materials THE KAITEKI COMPANY 2-3-5. TNSC (2) ■ Hydrogen refueling station business • As the hydrogen-based society comes closer to being a reality, TNSC strengthened its sales activities for Hydro Shuttle, which is a package-type hydrogen refueling station, originally launched in Aug. 2013. • As of Feb. 2015, orders for eight stations for commercial use have been placed. (fixed type: three; Hydro Shuttle: five) Number of units Plans for installation of hydrogen stations in Japan (Accumulated) 1,000 900 800 700 600 L 500 Of the 100 accumulated number of stations scheduled through fiscal 2015, TNSC's target is a 30% market share. 1,000 圧ガス 400 300 200 100 100 18 42 0 FY2013 FY2014 FY2015 FY2025 Hydro Shuttle, package-type hydrogen refueling station ■Water-180 (stable isotope) business • Material for PET cancer diagnosis drug (5% to 10% annual growth); Expect applications to expand to brain and heart disease diagnosis Build No. 3 plant in Shunan district, Yamaguchi (First shipments: Fall 2015) Mitsubishi Chemical Holdings 26#272-4-1. Summary: APTSIS 15 THE KAITEKI COMPANY Transforming the business structure base on the four-quadrant model Withdrawal Impact on sales (¥310 billion) Fertilizer (Dec. 2009) Nylon chain (May 2010) Domestic terephthalic acid (Dec. 2010) PVC chain (Mar. 2011) SM chain (Mar. 2011) Piping materials (Mar. 2013) SAP (Mar. 2013) Restructuring Optimized polyolefin production (Apr. 2014) Shifted to one cracker unit operations at the Kashima Plant (Jul. 2015) Next-generation growth businesses Organic photovoltaic modules and materials Organic photo-semiconductors Sustainable resources Agribusiness solutions Healthcare solutions and others Businesses to be restructured ◆ Basic petrochemicals ◆ Terephthalic acid PHL/BPA/PC ◆PE, PP and others Naphtha cracker integration (Shifting to one cracker unit operations at the Mizushima Plant in 2016 Polyolefins Terephthalic acid Growth businesses ◆ GaN ♦ White LED lighting and materials ◆ LiB battery materials ◆ Organic synthesis ◆ Specialty chemicals ◆ Performance polymers ◆ Polyester film ◆ Alumina fiber ◆ Engineering plastic products ◆ Pharmaceuticals ◆ MMA/PMMA ◆ Carbon fiber and composite materials Water treatment systems and services and others Cash-generating businesses Coke Diagnostics and support for new pharmaceutical development Food ingredients Electronic and industrial films Fibers and others Leaping ahead Impact on sales +¥1,350 billion MRC (Mar. 2010: Management integration) NSCI (Dec. 2012: Acquisition of majority shareholding) QKK (Mar. 2013: Acquisition) Quadrant AG (May 2013: Made into a wholly owned subsidiary) TNSC (Nov. 2014: Made into a consolidated subsidiary) Mitsubishi Chemical Holdings 27#28THE KAITEKI COMPANY 2-4-2. Summary: APTSIS 15 Step 2 ■ Implementing a portfolio transformation 1. TNSC became consolidated subsidiary (Closing: Nov. 12, 2014; Contribution in 3Q through 4Q fiscal 2014) 2. Establishment of LSII (Apr. 2014) 3. Delays in commercialization of next-generation growth businesses ■ Promoting petrochemical structural reforms 1. Realign/restructure petrochemical-related businesses ⇒ Transition to single cracker operation at full capacity (Kashima) and full-capacity operation (Mizushima) →Shift to high-performance products and optimize production in derivatives (strengthen EO and PE, optimize PE and PP production) Kashima complex alliances (Optimize power plant operations) 2. Implement drastic measures in the terephthalic acid, PHL/PC chain businesses ■ Strengthening Profitability of Growth Businesses 1. Strengthening and expanding profit base of MMA business ⇒Implementation of Middle East project and U.S. project 2. Accelerate development of performance products businesses ⇒ Integration of emulsion business, etc. ⇒ Various high-performance films, alumina fiber, etc. 3. Generating synergies Integrating the carbon fiber businesses of MRC and MPI (April 2015), etc. Mitsubishi Chemical Holdings 28#292-4-3. Summary: THE KAITEKI COMPANY Toward Fiscal 2015, Final Year of APTSIS 15 Conditions firm for Performance Products. Hurdle to clear in Health Care under APTSIS 15 Step 2 is high. Industrial Materials is on a recovery trend. ■Steadily implementing measures to address major management issues and exerting utmost efforts to attain targets for fiscal 2015 Operating income (\ billion) Notes: 300 250 200 150 100 50 APTSIS 10 APTSIS 15 Step 1 APTSIS 15 Step 2 Fiscal 2006 - Fiscal 2010 Fiscal 2011- Fiscal 2012 Fiscal 2013 - Fiscal 2015 226.5 130.6 110.5 90.2 160.0* 280.0 (Accumulated through 3Q: 124.3)** 66.3 0 8.2 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 Forecasts FY2015 Step 2 Plan Includes effects of adopting uniform date for account closings in fiscal 2013: Net sales: ¥151.9 billion; Operating income: ¥3.9 billion Includes effects of consolidating TNSC in fiscal 2014: Net sales: ¥275.0 billion; Operating income: ¥17.5 billion Financial results forecasts for fiscal 2015 to be announced on May 13, 2015 *Figure announced Nov. 27, 2014 **Figure announced Feb. 4, 2015 Mitsubishi Chemical Holdings 29#30THE KAITEKI COMPANY 3. Next Medium-term Management Plan MCHC Group vision Realizing KAITEKI What we aspire to be in 2020 By increasing profitability, pursuing innovation, and contributing to sustainability, MCHC will establish the base to be a global excellent company. Next medium-term management plan: APTSIS 20 Period: Fiscal 2016 – Fiscal 2020 Announcement: Dec. 2015 (scheduled) Mitsubishi Chemical Holdings 30 30#31THE KAITEKI COMPANY 3. Basic Approach to Preparing APTSIS 20 ◉ Emphasis on increasing profitability and management speed ROE: Considering assumption of 10% target Expansion in growth businesses: Aggressive allocation of resources to Performance Products and Health Care • Strategy formulation for growth businesses from perspective of concerted efforts transcending existing SBUS Strategic reformation in the Group R&D • Innovating productivity in growth businesses Accelerate commercialization of businesses through reassessment of next-generation growth businesses and reviews of business strategies Further evolving holding company operating systems • Transitioning to a Company with Committees with the aim of substantially strengthening corporate governance (Transition scheduled to follow approval by the general meeting of shareholders in late Jun. 2015) • Strengthening global operating systems and infrastructures More use of MOS Indexes Mitsubishi Chemical Holdings 31 31#32THE KAITEKI COMPANY 3. KAITEKI Management ■Increase KAITEKI value and work to expand shareholder value through putting MOE, MOT, and MOS into practice Management of Sustainability (MOS) Management which aims to improve sustainability Contributing to the resolution of a variety of environmental and social issues through corporate activities that consider the future of people, society, and the Earth MOS Axis Century The value created from MOS Management of Economics (MOE) Management which focuses on capital efficiency MOE Axis The value created from MOE Pursuing profits by efficiently using various forms of capital, including human resources, assets and funds Quarter Mitsubishi Chemical Holdings Corporate Value KAITEKI Value Time -Taking into consideration signs of the times MOT Axis The value created from MOT Decade Management of Technology (MOT) Management which strives to create innovations for society Creating innovative products and services through the differentiation of technology that we possess 32