Mitsui Chemicals Report Year Ended March 31, 2019 From One to Infinity Creating a brighter future through chemistry. Four Strengths of the Mitsui Chemicals Group Global 100 years of Diverse range Strong platform & technological of products & customer diverse human 1 know-how services base 2 resources H He 3 9 10 4 Li 7 8 F Be Ne 6 N O 18 11 16 12 C 17 Ar Na 14 15 S 19 Mg Cl 21 Si P 35 34 36 K 20 22 32 27 5 Sc 24 31 Br Ca 39 40 Ti 25 29 50Ge 33Se 53 Kr 37 26 Co 45 B 30 Cr 47 Ga Y Zr 23 43 Mn Cu Sn As I 38 Fe 54 Rb 46 51 Rh Zn 52 Ag 80 V 41 Tc 49 Sr 76 Xe 55 44 77 Pd Sb Te Hg 86 Nb 79 81 Os 48 In Cs 72 Ru Ir 78 82 84 56 Au Rn 42 Cd Tl Ba Hf 73 108 Pt Pb 83Po 87 89 Mo Ta Hs 111 113 Bi Fr Ac 109 28 114 85 74 Nh 88 104 Rg112 Mt Ni Fl 116 At 105 W 118 Ra Rf 75 Cn 110 Lv Db 70 13 Og 58 68 Re 69 107 Ds Yb Al 59 65 Ce Er 67 61 Tm Pr Bh Tb Pm 106 66 Ho 62 71 117 Sg 64 Dy 60 Sm Lu 115 Ts 63 Gd Nd Eu Mc 94 89 Pu 101 Ac 92 Md U 91 Pa 100 Fm 95 97 99 Am Bk 102 Es 93 96 No Np Cm 98 103 90 Cf Th Lr Contents Value creation story 02 Corporate Vision/Value Creation Process 04 Four strengths of the Mitsui Chemicals Group 08 Economy, Environment, and Society: Targets and Progress 10 Financial Highlights 11 Non-Financial Highlights 12 CEO Message 18 CFO Message Sustainability 22 Discussion on Sustainability 25 Sustainability Management 26 Key Issues (Materiality) 27 Blue Value™ and Rose Value™ — Visualizing Contributions to the Environment and Society 30 Climate Change and Problems with Plastic Growth strategies 34 At a Glance 36 Strategy by Business Segment 36 Mobility 40 Health Care 44 Food & Packaging 48 Basic Materials 51 Next Generation 54 R&D Strategy 56 Intellectual Property Strategy 57 Human Resources Strategy Foundations for growth 60 Members of the Board, Corporate Auditors 62 Board of Directors, Board of Corporate Auditors, and Executive Officers 64 Discussion between Outside Directors and CFO 68 Corporate Governance 73 Risk and Compliance Management 74 Responsible Care Financial data 77 Financial Data 78 11-Year Overview of Major Financial and Non-Financial Indicators 80 Management’s Discussion and Analysis 90 Business Risks 94 Consolidated Financial Statements 99 Notes to Consolidated Financial Statements 124 Independent Auditor’s Report Company data 126 Global Network/Domestic Sites 128 Stock Information/Corporate Information Editorial Policy Scope and Principles In compiling this Mitsui Chemicals Report 2019, we sought to present a compre- • Period: April 1, 2018 to March 31, 2019 (FY2018). Please note some data may post- hensive overview of our various strategies and performance from both the financial date April 2019. and non-financial perspectives with the ultimate goal of creating a platform for mean- • Scope: Mitsui Chemicals, Inc. and the Mitsui Chemicals Group ingful dialogue with all stakeholders. While we have drawn on the disclosure frame- (Other entities, if included, are identified in the text.) work for integrated reports issued by the International • Accounting principles: Japanese Generally Accepted Accounting Principles (JGAAP) Integrated Reporting Council (IIRC) and the Ministry of the Economy, Trade and Industry’s Guidance for Collaborative Forward-Looking Statements Value Creation, we have tried to avoid a rigid format. Our This report contains forward-looking statements about future plans and strategies as goal has been to provide a useful document that allows read- well as forecasts and expectations regarding the performance of the Mitsui Chemicals ers to gain a deeper understanding of our efforts toward the Group. Actual results may differ materially from those projected due to a variety of fac- creation of value through innovation over the medium- to tors, and the Mitsui Chemicals Group cannot guarantee that any forward-looking state- long-term. ments herein are accurate or that targets will be achieved. (Planned figures are as of May 15, 2019.) Inclusion in ESG investment indices As of September 2019 Mitsui Chemicals Report 2019 01 Value creation story Corporate Vision Value Creation Process Corporate Mission Social trends Contribute broadly to society by provid- Changes in global ing high-quality products and services to environment Climate chae a reuet customers through innovation and the occurrence of natural disasters Four strengths tricter eirometal creation of materials, while keeping in har- regulations mony with the global environment. Population increase 1 2 * * Input ssues coceri resources 100 years of Output /Outcome energy, water, and food Diverse range of technological products & services Maturation of developed know-how nations and rise of Helping build emerging countries eclii irth rate a a better Corporate Target aging population 3 4 (developed nations) Global platform Strong future society roi ee or improe & diverse human customer base Net sales Constantly pursuing innovation and (emerging countries) resources growth to become a chemical group with Injection of Advancements in technology ¥1,482.9bn resources creasil iormatioase an undisputed global presence. society (IoT, big data, AI, etc.) ustrial a social paraim Operating income Global human resources shifts Cohesive ¥93.4bn 17,743 employees society in harmony with Triple Bottom Line Management Percentage of Creating new customer value and Profit attributable overseas employees solving social challenges through to owners of parent the environment 43% ¥76.1bn our business activities Capital expenditure ROE ¥61.9bn 14.3% R&D expenses ROIC ¥35.8bn f u l % fi 6.0 l l m e Health and n t o Financial position well-being f TM e Mobility Blue Value m in an aging p sales l Consolidated total assets o society y e ¥231.1bn e s ¥1,501.1bn TM s Health Care Food & Rose Value h Net D/E ratio Five business a r e s h t sales o Packaging n l d e r m ’ s s e i v n 0.68 activities ¥194.0bn Shareholders’ equity ratio Together with society we aim to achieve 36.8% sustainable growth and development by Dividends Credit ratings Industrial deepening our triple bottom line manage- ¥ /share Japan Credit Rating Agency 100 platforms in ment approach based on the three axes of (JCR) Basic Materials Next Generation harmony Acquisition of economy, environment, and society. We Business A+ treasury stock with local also seek to engage in management from communities ¥10.0bn a long-term perspective and implement Rating and Investment Information (R&I) initiatives aimed at solving the challenges A Total return ratio faced by society. 39.0% Foundations for growth Mitsui Chemicals Group’s Future Vision https://www.mitsuichem.com/en/corporate/management/ *Actual results as of FY2018 02 Mitsui Chemicals Report 2019 Value creation story Sustainability Growth strategies Foundations for growth Financial data Company data We believe that broadly helping to solve various issues faced by society through our business activities based on our Corporate Mission is the Mitsui Chemicals Group’s reason for existence. Moreover, in recognizing the importance of find- ing the right balance between the three dimensions (i.e., economy, environment, and society) in order to realize sustainable development of society and the Group, we will continue to propel our triple bottom line management approach. With these ideas in mind and in light of social trends and our Group strengths, we aim to realize a future cohesive society in harmony Social trends with the environment, health and well-being in an aging society, and industrial platforms in harmony with local communi- ties. We will continue to create new customer value and help build a better future society through our business activities. Changes in global environment Climate chae a reuet occurrence of natural disasters Four strengths tricter eirometal regulations P4 Population increase 1 2 * * Input ssues coceri resources 100 years of Output /Outcome energy, water, and food Diverse range of technological products & services Maturation of developed know-how nations and rise of Helping build emerging countries eclii irth rate a a better aging population 3 4 (developed nations) Global platform Strong future society roi ee or improe & diverse human customer base Net sales (emerging countries) resources Injection of Advancements in technology ¥1,482.9bn resources creasil iormatioase society (IoT, big data, AI, etc.) ustrial a social paraim Operating income Global human resources shifts Cohesive ¥93.4bn 17,743 employees society in Percentage of Creating new customer value and Profit attributable harmony with overseas employees solving social challenges through to owners of parent the environment 43% ¥76.1bn our business activities Capital expenditure ROE ¥61.9bn 14.3% R&D expenses ROIC ¥35.8bn 6.0% Health and Financial position well-being Mobility Blue ValueTM in an aging sales Consolidated total assets P36 society ¥231.1bn ¥ bn 1,501.1 P27 Net D/E ratio Health Care Five business Food & Rose ValueTM Packaging sales 0.68 P40 activities P44 ¥194.0bn Shareholders’ equity ratio 36.8% Dividends Credit ratings Industrial ¥ /share Japan Credit Rating Agency 100 platforms in (JCR) Basic Materials Next Generation harmony Acquisition of Business A+ P48 treasury stock with local P51 communities ¥ bn Rating and Investment 10.0 Information (R&I) A Total return ratio 39.0% Foundations for growth P60 *Actual results as of FY2018 Mitsui Chemicals Report 2019 03 Value creation story Four strengths of the Mitsui Chemicals Group 100 years of technological know-how + Diverse range of products & services Ever since we started up our coal chemical business in 1912 in Omuta (Fukuoka), the Mitsui Chemicals Group has con- tinued to produce numerous different products.