asahi kasei mid-term management plan

1

“For Tomorrow 2015”

New Mid-term Management Initiative (FY2011–2015)

May 2011

2

Contents

1. Review of “Growth Action – 2010” 4–7

2. Basic concepts of “For Tomorrow 2015” 9–12

3. Business strategy(1) Expansion of world-leading businesses(2) Creation of new value for society

14 15–24

4. Reformation of corporate systems 26–28

5. Plans by business sector 30–31

Disclaimer:

The forecasts and estimates shown in this document are dependent on a variety of assumptions and economic conditions. Plans and figures depicting the future do not imply a guarantee of actual outcomes.

3

1. Review of “Growth Action – 2010”

4

Ishin2000FY 1999–2002

Ishin-05FY 2003–2005

Shifting to growth

戦略投資の実行

Expanding global businesses

Enhancing domestic businesses

FY 2005 results

FY 2010 initial target

Net sales 1,498.6 1,800

Operating income 108.7 150

Net income 59.7 80

ROE 11.8% ≥10%

FY 2006–2010Growth Action – 2010

Strategic investment

Business portfolio realignment for expansion

and growth

Selectivity and focus

Disposal of negative legacies

Selective diversificationCreation of cash flowManagement speed

and autonomy

(¥ billion)

Growth Action – 2010

5

Implementation of strategy for further growth in line with economic changesExpanding global businesses

– World competitive petrochemicals business• Construction of new acrylonitrile (AN) and MMA plants in Thailand, capacity

expansion for AN in Korea, study on AN project in Saudi Arabia• Construction of new solution SBR plant in Singapore

– Electronics• Capacity expansion for Hipore™ Li-ion battery (LIB) separator• Electronic compass business, semiconductors for cell phones and smartphones

(acquisition of Toko, Inc.’s semiconductor business, etc.)– Health Care

• Polysulfone hollow-fiber membrane artificial kidneys business (incl. tie-ups with Kawasumi Laboratories, Inc. and NxStage Medical)

• Market entry in bioprocess equipment and advanced medical devices businessesEnhancing domestic businesses

– Reinforcing pharmaceuticals business• Market launch of Recomodulin™ recombinant thrombomodulin and Famvir™

anti-herpes agent, application for approval to manufacture and sell Teribone™ (teriparatide acetate) as an osteoporosis drug

– Strengthening homes business (three-story houses for urban life, peripheral businesses, etc.)

Restructuring • Unified management of naphtha crackers in Mizushima, Japan; closure of

polyester filament plant, etc.

Review of Growth Action – 2010

5

6

0

20

40

60

80

100

120

140

160

2005 2006 2007 2008 2009 2010

State of financial performance

0.3

0.35

0.4

0.45

0.5

0.55

0.6

0.65

04/3 06/3 08/3 08/9 09/3 09/9 10/3 10/9 11/3

Operating income D/E ratio

FY 2010 results

FY 2010 original target

Net sales 1,598.4 1,800.0

Operating income 122.9 150.0

Net income 60.3 80.0

ROE 9% ≥10%

Baseline for Grow

th Action –2010

target

Grow

th Action –2010

target

Grow

th Action –2010

target

Grow

th Action –2010

target

108.7

127.8 127.7

35.0

57.6

122.9

(¥ billion)

Utilizing strong financial constitution for proactive

investment in growth fields

(¥ billion)

Return to growth

Grow

th Action –2010

target

Results

Improvement

7

Framework of For Tomorrow 2015Go “back to basics” and determine the proper course of action in order to continue to offer value to the world

Consider economic climate and trendsFind the appropriate way for Asahi KaseiPursue growth in our own way

Overview of Growth Action – 2010Drastic changes in the economic climate resulted in partial underachievement of plans. • Initial targets not met• Strategy for further growth not completed

Improvement in financial constitution providing sufficient strength for large investments in growth fields.

New mid-term initiative

For Tomorrow 2015FY 2011–2015

FY 2006–2010Growth Action – 2010

Strategic investment

Business portfolio realignment for

expansion and growth

Ishin2000FY 1999–2002

Selectivity and focus

Disposal of negative legacies

Ishin-05FY 2003–2005

Selective diversification

Creation of cash flow

Management speed and autonomy

Toward the new mid-term initiative

8

2. Basic concepts of “For Tomorrow 2015”

9

Megatrend Threat Opportunity1. Growth of developing

countries• Increasingly intense global competition

• Accelerated speed of change

• Growing demand in emerging markets

2. Maturing of the Japanese economy

• Asahi Kasei Group’s domestic sales account for 3/4 of overall sales

• Unprecedented natural disaster

• Proposal and contribution of new value for social systems

3. Limitations of the Earth1) Shortage of natural resources • Sharp rise in feedstock costs

• Greater advantage in resource-rich countries

• Creation of resources • Effective utilization of resources

2) Global warming • More stringent environmental regulations in advanced countries

• New markets (for electric vehicles, batteries, insulation)

3) Environmental deterioration4. Aging population • Change in household structure

and consumer behavior• Government efforts to cut medical costs

• Emerging demand and social needs in healthcare, living, nursing care, etc.

Based on megatrends, capturing new opportunities in anticipation of emerging social needs.

Management climate

10

Group Mission

Contributing to life and living for people around the world

Group Values

Sinceri

ty, Challe

nge,

Creativ

ity

Group Vision

Living in health and comfort

Harmony with the natural environment

Human

Res

ource

Princip

les

of the

Asahi

Kasei

Group Visions of

core operating companies

Mid-term management

initiatives of the Asahi Kasei Group

Princip

les of

core

opera

ting c

ompa

nies

Group Slogan Creating for Tomorrow

Basis for action

Group Mission

Group Values

Group Vision

The Asahi Kasei Group’s unchanging reason for being

Shared values that must be held by the people who work in the Asahi Kasei Group

The direction in which Asahi Kasei Group business activities advance

11

0

50

100

150

200

250

300

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Operating incomeNet income

Offering new value based on living in health and comfort and harmony with the natural environment in anticipation of changing social needs. Continuously enhancing the corporate value of the Asahi Kasei Group.(¥ billion)

Net income ¥110 billion

Net incomeover ¥140 billion

Operating income¥200 billion

Operating incomeover ¥250 billion

(2011–2015)Long-term investment¥1 trillion

Net sales¥2 trillion

Net sales¥2.5–3 trillion

Aiming at continuous dividends increase, with basic standard for payout ratio of 30%

ROE 9% ≥10%ROIC 7% ≥7%Overseas sales ratio(excl. Homes & Const. Mat.)

28%(39%)

32%(45%)

Vision for the Asahi Kasei Group

12

Megatrends Group Mission and Values

Creating for Tomorrow – the Asahi Kasei Group is creating new things for the future based on the perspectives of “living in health and comfort” and “harmony with the natural environment.”

1. Business Strategy 2. Reformation of corporate systems

Promotion of “one AK” management

1. Global business expansion

2. Creation of new businesses

3. Propagation of our mission, values, and vision

4. Human resource policies

5. Management control, resource allocation

Pursuit of growth1. Expansion of world-leading

businesses2. Creation of new value for society

Promotion of businesses based on living in health and comfort and harmony with the natural environment

1) Environment/energy-related2) Residential living-related3) Health care-related

Basic Strategy

Basic strategy

13

3. Business Strategy

14

0

20

40

60

80

100

120

2010 2015

Development based on world leadership(1) Expansion of world-leading businesses

Acrylonitrile (AN)• Thailand – Plant start-up in 2011• Korea – Capacity expansion scheduled in

2013 at Tong Suh Petrochemical• Saudi Arabia – Joint venture to study AN project → Expansion focused on growing Asian market to gain

No. 1 position in the global AN marketProduction capacityFY 2010: 750 thousand tons/year → FY 2015: 1.4 million tons/yearMarket share in Asia: 25% in FY 2010 →

40% in FY 2015

solution SBR (S-SBR)• Plant start-up in Singapore (Phase I) in 2013 • Plant start-up in Singapore (Phase II) in 2015→ Meeting rapidly increasing demand for fuel-efficient tires

Estimated share of capacityFY 2010: 18% → FY 2015: 26%

Expand businesses to serve global demand growth

Other world-leading businesses include Hipore™ Li-ion battery separator, LSIs, dry film photoresist, artificial kidneys, Planova™ virus removal filters, Roica™ elastic polyurethane filament, photomask pellicles, etc.

Proactive expansion of global No. 1 & No. 2 businesses to serve global demand growth in emerging markets

Profit*

Overseas sales ratio

(¥ billion)

Net sales ¥620 billion


* Operating income of each business plus equity in earnings of AN affiliates.

62% →

69%

15

Creation of new social value

Environment & Energy

Residential Living Health Care

Chemicals & Fibers

Electronics

Homes & Construction

Materials

Health Care

Combined-unit projects

Environment & Energy for Tomorrow

Residential Living for Tomorrow

Health Care for Tomorrow

Roica™ elastic polyurethane filament (spandex), Eltas™ spunbond, Lamous™ artificial suede, Bemberg™ cupro cellulosic fiber, Leona™ nylon 66 filament, Organic and inorganic industrial chemicals, synthetic resin, synthetic rubber, coating materials, latex, pharmaceutical and food additives, explosives, separation and ion-exchange membranes, systems, and equipment Saran Wrap™, cling film, Ziploc™ storage bags, plastic film, sheet, and foam.Hall elements, Hall effect ICs, mixed-signal LSIs, Hipore™ Li-ion battery separator, photomask pellicles, plastic optical fiber, light-diffusion plates, APR™ photosensitive resin and printing plate making systems, epoxy resin, Pimel™ photosensitive polyimide precursor, Sunfort™ dry film photoresist (DF), glass fabric for printed wiring boards.

Hebel Haus™ unit homes, Hebel Maison™ apartment buildings, condominiums, residential land development, remodeling, real estate, home financing, Hebel™ autoclaved aerated concrete (AAC) panels, Eazet and other piles and foundation systems, Neoma™ foam insulation panels, BasePack™ steel-frame structural components.Pharmaceuticals including Recomodulin™, Elcitonin™, and Flivas™, diagnostic enzymes and reagents, APS™ polysulfone-membrane artificial kidneys (dialyzers), Cellsorba™ leukocyte adsorption columns, Planova™ virus removal filters, Sepacell™ leukocyte reduction filters.

Fields of focus

Production process technology, Production process technology, materials/processing technologymaterials/processing technology

EnergyEnergy-- conserving conserving

devices, battery devices, battery materialsmaterials

Sensors, Sensors, energyenergy--

conserving conserving devices, battery devices, battery

materialsmaterials

Medical Medical equipment equipment

applicationsapplications

Insulation,Insulation, highly durable highly durable construction construction

materialsmaterials

Unit homes, multiUnit homes, multi-- dwelling homes, dwelling homes,

peripheral peripheral businessesbusinesses

Rental homes for Rental homes for the elderlythe elderly

Pharmaceuticals, Pharmaceuticals, medicalmedical--related related

devices & systemsdevices & systems

Bas

is o

f est

ablis

hed

busi

ness

es

Combining businesses across different business units, responding to new social needs.

(2) Creation of new value for society

16

0

10

20

30

40

50

60

70

2010 2015

Expansion of environment/energy-related businesses

Hipore™ LIB separatorIn addition to No. 1 position in LIBs for electronics, establishing firm lead in technology & market for automotive LIBs.

Sensors, power-saving LSIsExpansion of application fields and geographic markets. Broad provision of new value with unique technology.

Insulation materialsContributing to energy-saving society with world-leading level insulation performance (wall, roof, and floor applications)

Water treatment/membrane businessDevelopment of markets in China, etc.

Creation of new businesses through combined-unit projects

Pushing diverse technology to tackle environmental challenges

Operating income(¥ billion)



Currently: From now:Centered on

consumer electronics ⇒Greater focus on

infrastructure, automotiveCentered on Japan ⇒ Accelerated globalization


New combined- unit projects

Established business

17

Houses, apartments• Superior structural technology and

lifestyle innovation to anticipate emerging needs in three-story and two-generation urban homes.

• Development of unique apartment buildings for the elderly, single women, pet owners, etc.

• Increased market share through marketing meticulously aligned with each area.

Real estate (condominium development, brokerage, subleasing)• Maximum utilization of land value

through consensus-building among diverse interested parties.

Remodeling• Providing greater satisfaction to Hebel

Haus™ owners through renovation aligned to lifestyle changes.

Providing comfortable living to more customers, more quickly

Fulfillment in living in a mature urban setting

Living environment

for health and comfort

Interpersonal bonds

Energy and resource

conservationMaximum

utilization of land value

Expansion of residential living-related businesses


0

10

20

30

40

50

60

2010 2015







18

0

5

10

15

20

25

30

35

40

2010 2015

Pharmaceuticals• Expansion of Recomodulin™, launch & expansion of

Teribone™• Reinforcing pipeline by in-licensing new drugs• Strengthening clinical development capability in US

⇒ Step 1: sales expanding to ¥100 billion scale⇒ Step 2: global reach with new drugs, emergence

as a global specialty pharma player

Blood purification (hemodialysis, apheresis)• Full coverage of Europe, North America, and emerging

markets• Enhanced cost competitiveness (overseas manufacturing

alliances)• Higher product performance (launch of innovative products)

Bioprocess-related business• Lineup of distinctive membrane modules• Expanded sales together with bioprocess equipment

⇒ World-leading process equipment and media for biologics

Unique products & technologies for healthy & lively longevity

(2) Creation of new value for societyExpansion of health care-related businesses







19

Creation of new value through “For Tomorrow” projects

In anticipation of emerging social needs, Asahi Kasei will offer distinctive solutions that make the most of its diversity in business and technology.

(i) Environment & Energy for Tomorrow

(ii) Residential Living for Tomorrow

Battery materials, energy-saving devices Emergency and

critical care

Cell culturing

Medical IT

Living in health and comfortHarmony with the natural environment

Environmental friendlinessHuman interactionAdjacency to hospitalsLiving support

Group configuration for combined-unit projects

Physical and emotional health & comfortCreation of social bonds in urban areas

Seamless advanced medical treatment from acute/emergency to chronic level

Innovative materials, devices, and systems for generation, storage, and consumption of energy


(iii) Health Care for Tomorrow

Home diagnosis

LICs, Sensors

20

•Transmission efficiency

• Transmission d istance (distribution)

•Transmission efficiency

•Transmission distance (distribution)

•Energy conservation (insulation)

• Regenerative braking*

•Energy conservation (insulation)

•Regenerative braking*

•Battery performance (storage, discharge, durability)

• Battery cost

•Battery performance (storage, discharge, durability)

•Battery cost

•Generation efficiency

• E nvironmental compatibility

•Generation efficiency

•Environmental compatibility

Necessary perspectives:

Living

HouseholdsHouseholds* Converting heat energy generated from braking into electrical energy, and storing it as power.† Modules combining LICs and control circuits, for use in backup power supplies, electric vehicles (EVs), hybrid electric vehicles (HEVs), etc.

(2) Creation of new value for society: Combined-unit projects

(i) Environment & Energy for Tomorrow

Power generation

Power transmission

Power storage

Power consumption

• Advanced solar cell materials (encapsulant, anti-fouling coating, etc.)

• Next-generation solar cells, etc.

• Next-generation storage battery materials (electrodes, electrolyte, functional separators, etc.)

• Systems using LIC modules†

and LICs

• Next-generation energy-saving devices(UV LED, next-generation power management semiconductors)

• LED materials (encapsulant, etc.)

21


Harmony with the natural environment

Necessary perspectives:

Individuals and families

Communities and

surroundings

Global environment

Others• Support services

(from construction until after moving in)• Interior, exterior, gardening• Second-hand home brokerage/agency• Overseas housing business

Fresh perspectives for fixtures• Geothermal heating, sheet-type solar

power generation• Cabinet-sized “vegetable factory”• Energy conservation monitoring,

health monitoring systems(utilizing sensor technology)

Fresh perspectives for remodeling• Interactive living

(cohousing*, etc.)• At-home medical care• New home fixtures

Fresh perspectives for urban development• Interactive condominiums, purpose-

specific condominiums• Coordinated medical/residential

development, revitalization of small/mid-size healthcare facilities

• Communities for “sustainable living”• Emotional and

physical aspects of living

• Safety and security• Comfortable living• Preserving asset

value

• Sense of community• Sense of security• Tasteful aesthetics

• Utilizing the blessings of nature

• Energy conservation• Environmental

friendliness• Waste reduction• Addressing new needs

(EV charging, etc.)

* A type of collaborative housing combining private living space with shared facilities.

(ii) Residential Living for Tomorrow(2) Creation of new value for society: Combined-unit projects

22

Connection with community Connection with family

Challenge 2:Utilizing medical IT to support

healthy life ・Biosync sensors, monitoring equipment・

Health information data management・

At-home care support services

Acute care

Safer, more effective therapeutic systems

for critical care

Emergency ward

Intensive care unit

Disaster medicine

Chronic care

New technology to more effectively

contribute to better QOL

Cancer, intractable diseasesPersonalized medicineCell therapy/cell-based drugs

Challenge 1:Heightening emergency and critical care• Ease of use,

miniaturization, portability

• Services coordinated with prehospital care

Challenge 3:Applying cell therapy, regenerative medicine ・Cell processing(culturing, isolation, purification, storage)

• Cell therapy support services

Living w/family

Living alone

At-home treatment/ nursing care

Hospital-coordinated facilities

Lifestyle of the elderly

Tackling three challenges for a healthy society of longevity

Community Quality of Life

SeamlessEmergency

(iii) Health Care for Tomorrow(2) Creation of new value for society: Combined-unit projects

23

0

50

100

150

200

250

2010 20150

500

1,000

1,500

2,000

2,500

2010 2015

Reweighting the composition of businesses

Net sales Operating income


Residential Living

Health Care

(¥ billion)

2,000

1,598.4

122.9

200


(¥ billion)

Half or more

2/3

Health Care

Residential Living


24

Quantitative indexes to confirm the progress of our contribution

Harmony with the natural environment

Quantitative indexes are used as a guide to confirm that the Asahi Kasei Group makes steady improvement in enabling living in health and comfort and harmony with the natural environment.

By measuring improvements using quantitative indexes, the Asahi Kasei Group confirms progress to ensure that we are constantly

contributing to life and living for people around the world in accordance with our Group Mission.

Example targetsReduction of CO2 emissions: 5% (FY 2020 vs. FY 2005)Ratio of reduced CO2 emissions based on LCA* vs. Asahi Kasei Group CO2 emissions: Increase from current 3.2 to 8.0 in FY 2020* Life cycle assessment of CO2 emissions reduction enabled by Asahi Kasei Group products and technologies compared to the conventional products and technologies they replace.


Number of patients benefiting from Asahi Kasei products Number of residents in Hebel Haus™

2010 2015 2010 2015

30% increase 20% increase


25

4. Reformation of corporate systems

26

Previously (since Oct. 2003)Autonomy of each core

operating company “one AK” managementFor Tomorrow 2015

Objectives:• Autonomy• Optimization to match each industry

• Emphasis on cash flow management

• Accelerated transformation of business portfolio

• Speed

Results:• Improved cash flow• Speedy management• Investment in growing fields

Room for improvement:• Group strategy• Longer-term emphasis• Efficiency

Significant change in economic climateIncreasingly intense competition

Emergence of global issues

Significant change in economic climateIncreasingly intense competition

Emergence of global issues

Implementing dynamic strategy for growth by bringing together the power of the Asahi Kasei Group

• Expansion of world-leading businesses

• Creation of new value for society

Basic concepts

Promotion of “one AK” management

27

Expansion of world-leading businesses

Creation of new value for society

Promoting global business expansion• Strengthening regional support and business

development as group functions

Human resource policies• Utilization, interchange, and concentration of

human resources (support for global business expansion and for development of new businesses)

• Fostering human resources from long-term perspective

Business management, resource allocation• Funding focused on key businesses• Setting targets based on quantitative

contribution index

Propagation of our mission, values, and vision

Creation of new businesses• Implementation of “For Tomorrow” projects

(across business units within the Asahi Kasei Group)• Identification of next strategic pillars (advanced

research laboratories to be established)

Business strategy

Acceleration of business strategy

28

New business development strategyCore operating companies: Market-focused R&D related to each businessHolding company: R&D other than the above

Previous

Configuration for key projects extending across different business units

Future/ uncertainty

Near-term/certainty

Degree of certainty of market growth

Core operating company R&D

Advanced

research laboratories

Peripheral to established

business

New fields

Focus, optimization on key group projects• Project leaders with responsibility across business units

• Creating new value anticipating changes

• Advancement with group perspective• Focused investment of resources• Alliances and utilization of external resources

Identification of future core businesses of the group• Long-term perspective in

technology development, market research, and planning

• New research projects• Fostering “seed” technology

(separation, bio, precise surface processing, etc.)

Group optimization (shift from project-centric to group-centric focus)

これからPJこれからPJ

CVC

“For Tomorrow”

projects

Coordination with production technology from business development phase

Corporate venture capital

29

5. Plans by business sector

30

(¥ billion)

FY 2010FY2011forecast FY 2015 vs.

FY 2010 FY 2010FY2011forecast FY 2015 vs.

FY 2010

Chemicals & Fibers 851.0 913.0 880.0 +29.0 68.6 58.5 75.0 +6.4 56% 38%

Homes &Const. Mat. 456.6 499.0 570.0 +113.4 38.6 45.5 50.0 +11.4 31% 25%

Electronics 158.3 169.0 250.0 +91.7 14.3 15.5 40.0 +25.7 12% 20%

Health Care 116.4 124.0 180.0 +63.6 7.0 8.0 25.0 +18.0 6% 13%

Others 16.0 19.0 20.0 +4.0 -5.5 -7.5 -5.0 +0.5 -4% -3%

Subtotal 1598.4 1724.0 1900.0 +301.6 122.9 120.0 185.0 +62.1

100.0 +100.0 15.0 +15.0 8%

Total 1598.4 1724.0 2000.0 +401.6 122.9 120.0 200.0 +77.1

"For Tomorrow"projects

Proportion ofoperating income


(FY 2020)approx. 300

(FY 2020)approx. 50

'10 '15

Performance plan by business sector

31

Chemicals& Fibers

Homes &Const. Mat.

Electronics

Health Care

Intermittentexpansion ofestablishedbusinesses,establishment ofnew businesses,M&A

Long-term investment planLong-term investment of some ¥1 trillion over 5-year period

Major investments: AN, S-SBR

Major investments: LSIs, sensors,Hipore™Major investments:

Artificial kidneys, Planova™, development and in- licensing of new drugsOperating

income (FY 2010)

Operating income

(FY 2015)

56%

31%

12%

38%

6%

25%

20%

13%

8%

Chemicals & Fibers

Homes & Const. Mat.

Electronics

Health Care

“For Tomorrow” projects

¥122.9 billion

¥200 billion

-4% -3% Others

32

Creating for Tomorrow

The commitment of the Asahi Kasei Group:

To do all that we can in every era to help the people of the world

make the most of life and attain fulfillment in living.

Since our founding, we have always been deeply committed to contributing to the development of society,

boldly anticipating the emergence of new needs.

This is what we mean by “Creating for Tomorrow.”

32

33

Reference

34

Chemicals

Health Care

Homes

Fibers

Electronics

Others*

Construction Materials

Sales: 1,598.4 Operating Income: 122.9

14.3

2.1

4.2

36.5

64.4

7.0

1.7

409.2

116.4

47.4

16.0

158.3

108.8

742.2

FY10 results, ¥ billion

Sales and operating income by segment

Chemicals & Fibers 53%

Homes & Const. Mat.

29%

Electronics 10%

Health Care Pharmaceuticals &

medical devices 7%

Share of sales by business sector

* Others category replaces the former Services, Engineering and Others segment. Operating expenses of one consolidated subsidiary previously included in Services, Engineering and Others are now included in corporate expenses and eliminations (no impact on sales, immaterial impact on operating income).

35

2010

1950 19801965

History of business portfolio transformation, change in sales composition

1995

Bemberg™ regenerated cellulose

Rayon fiber Acrylic fiberNylon fiber Chemicals

Housing & Const. Mat.

Health CareElectronics

Expansion into synthetic fiber businesses

• Construction of petrochemical complex

• Start of housing business

• Start of LSI and dry film photoresist businesses

• Formation of pharmaceuticals business unit and consolidation with Toyo Jozo Co., Ltd.

• Development of housing business

• Business portfolio restructuring

• Expansion of global businesses

Business portfolio transformation

aligned with new currents

Fibers

Housing & Const. Mat.

Chemicals

36

0

500

1,000

1,500

2,000

2005 2006 2007 2008 2009 2010 20110

50

100

150Sales (left scale)Operating income (right scale)

0

500

1,000

1,500

2,000

2005 2006 2007 2008 2009 2010 20110

50

100

150Sales (left scale)Operating income (right scale)

Sales and operating income in yen and in US$

Sales & operating income in yen Sales & operating income in US$

2005 2006 2007 2008 2009 2010 2011 forecast

Sales 1,489.6 1,623.8 1,696.8 1,553.1 1,433.6 1,598.4 1,724

Operating income

108.7 127.8 127.7 35.0 57.6 122.9 120

2005 2006 2007 2008 2009 2010 2011 forecast

Sales 1,326.2 1,387.9 1,488.4 1,537.7 1,541.5 1,858.6 2,155

Operating income

96.2 109.2 112.0 34.7 61.9 142.9 150

¥/US$ exchange rate 113 117 114 101 93 86 80

(¥ billion)

(¥ billion)

forecast(US$ million)

forecast

(US$ million)

37

Business strategy: Chemicals & Fibers

851.0 880.0

75.068.6

0

200

400

600

800

2010 20150

20

40

60

80

Operating climate• Growth of emerging markets, particularly in Asia

• Increasingly intense competition with China, the Middle East, etc. (especially in commodity products)

• Global environmental challenges, such as resource limitations.

Basic strategy(1) Aiming for global No.1 position in globally competitive businesses

(acrylonitrile and S-SBR)

(2) Business expansion in growing emerging countries, particularly of Asia

(3) Creation of new businesses and business fields as next strategic pillars


(¥ billion)

Specific strategies(1) • Acrylonitrile: Serving global demand growth with the construction of cost-competitive plants

→ Aiming for No.1 position in the world• S-SBR: Proactive capacity expansion, aiming for No. 1 position in Asia in the growing fuel-efficient tire market

(2) • Performance polymers: Enhancing established position in target markets in Asia• Water treatment/membrane businesses: Further reinforcing membrane business, expanding operations in

China• Duranate™ HDI-based polyisocyanate: Expanding operations, securing leading position in China• Bemberg™ regenerated cellulose: Advancing into new markets including emerging countries, accelerating

business development• Roica™ elastic polyurethane: Developing differentiated, high-function yarns through polymer modification,

expanding in Asia• Spunbond: Expanding Precise™ spunbond nonwovens and differentiated PP-spunbond in Asia

(3) • Expansion in healthcare areas: Developing Ceolus™ microcrystalline cellulose in emerging markets, accelerating development of pharmaceutical intermediates

• Creation of new businesses in optimum collaboration within the Asahi Kasei Group

FY FY

38

Business strategy: Homes & Construction Materials

Operating climate • Declining population, decreasing number of households and decreasing

number of people per household, urban concentration• Need for energy conservation, need for high-durability homes• Market polarization: Young low-income customers focused on price –

affluent older customers focused on customization to taste

Specific strategies(1) Unit homes and multi-dwelling homes:

• Provision of superior products and services • Increasing market share at each branch

(2) Real estate operations: • Reinforcing condominium businesses based on obtaining accord in exchange of equivalent value • Maximizing utilization of land value through brokerage-related operations

(3) Expansion of housing-related operations: • Expansion of remodeling and renovation work in addition to mainstay maintenance work

(4) Autoclaved aerated concrete panels: • Reinforcing cost competitiveness, improving stable profitability

(5) Neoma™ phenolic foam insulation panels: • Expansion with standardization of next-generation energy conservation performance

456.6570.0

50.038.6

0

200

400

600

800

2010 20150

20

40

60

80

Basic strategy

• Unit homes: Pursuing high quality at lower price, increasing market share

• Contributing to satisfaction in urban living

• Construction materials: Greater cost competitiveness, higher added-value

Sales Operating income(¥ billion)

Improving sales force, both individuals and in teams

FY FY

39

Business strategy: Electronics

250.0

158.340.0

14.30

200

400

2010 20150

20

40

60

80

Operating climate• Increased market share from medium/long-term perspective

(production of electronics centered on emerging countries)• Expansion of energy-saving and battery-related products• Dynamic market changes, alliances and collaboration with other

companiesBasic strategyElectronic devices:• Well-balanced expansion in infrastructure, automotive, industrial-

equipment, and mobile applications; providing new functions required in each application

Electronic materials:• Shifting management resources to energy-related businesses

Specific strategies

Electronic devices:

• Reinforcing local capability for design and development

• Reinforcing customer service in each market

Electronic materials:

Focused investment of resources on LIB separator

- Proactive expansion of production capacity in line with market growth

- Strengthening development of new types of membrane

• Market launch of new products, such as infrared sensors and next-generation LSIs for communication

• Improved earnings and expansion of power management semiconductors

• Strengthening development in Greater China

• Maintaining leading market position in mobile applications

• Developing automotive applications


FY FY

40

Business strategy: Health CareOperating climate• Advanced countries: 70% of the world market, standing of Japanese

market declining with aging population• Emerging countries: Market growth with rising income, improving medical

standards, and increasing population• Curtailment of medical expenditure• Unmet needs for new medicines and medical devices

Basic strategy• Expanding sales and profit with new drugs: Recomodulin™ recombinant

thrombomodulin for disseminated intravascular coagulation and Teribone™ teriparatide acetate for osteoporosis

• Global expansion of medical devices, including dissemination of therapeutic apheresis

116.4

180.0

7.0 25.0

0

200

400

FY2010 FY20150

20

40

60

80

Specific strategies

Recomodulin™ - Nationwide sale in 2011 ⇒ Expansion of facilities and hospital departments covered, expansion of indications - Simultaneous advancement of overseas clinical development (entering Phase III)

Teribone™ - Approval and market launch in 2011 (planned)

Famvir™ antiviral - Application for approval for herpes simplex in 2012 and approval in 2013 (planned)

Hemodialysis - Capacity expansion (incl. alliances w/other companies), cost reduction ⇒ Expansion in emerging markets - Provision of next-generation membranes, devices, and services for hemodialysis

Bioprocess - Accelerated growth in Asia, expansion in plasma derivatives, technical service centers in Europe and US - Development of next-generation virus removal membranes


41

Acrylonitrile

4

5

6

09 10 11 12 13 14 15

Global demand forecast (Asahi Kasei estimate)

Basic strategyBusiness expansion in growing Asian market as the No.1 supplier

Major growth in Asia

Market share in Asia 25% 40%

Expanding toward global No.1 supply position

Currently FY 2011 FY 2013 FY 2015

750 kt

200 kt in Thailand

250 kt in Korea

200 kt in Mid-east

Capacity expansion

Current status Future outlook

Technological strength

No.1- World’s highest production yield

- Production process

Reinforcement of catalyst technology

Cost- competitiveness

Top level- Plant in Thailand, using low- cost propane as feedstock

- Tong Suh in Korea (earnings from by-product)

• Plant start-up in Thailand• More plants in locations with

superior cost-competitiveness

Supply capacity No.1 in Asia Mostly in the Far East

• Strengthened position in the Far East

• Supply expansion ASEAN, India, and the Middle East.Customer service No.1 in the Far East

(million tons)

Annual growth rate 3%, mainly in ABS resins

950 kt total

1,200 kt total

1,400 kt total

FY

Plant at Tong Suh Petrochemical, AN subsidiary in Korea

Chemicals & Fibers

42

Solution-polymerized SBR (S-SBR)

0.0

0.5

1.0

1.5

FY 2010 FY 2015 FY 2020

Basic strategy

• Proactive capacity expansion in rapidly growing Asian market for fuel-efficient tires

• Further improvement in fuel efficiency and grip performance

(million tons)Global demand forecast for S-SBR

(Asahi Kasei estimate)

In-house production by tire manufacturers

Open market

Background of demand increase

S-SBR for silica compound tires is the most optimal material to achieve high grip performance, high fuel efficiency, and high abrasion resistance.

Features of our products

High fuel efficiency without losing excellent grip performance and abrasion resistance

Less fabrication cost for customers

0

50

100

150

200

250

300

2010 2013 2015 2020

(thousand tons)

Production capacity of Asahi Kasei

Domestic capacity

Domestic capacity expansion

Phase 1 Singapore plant

Phase 2 Singapore plant

Additional capacity (overseas)

Labeling requirement for performance

Legal minimum standard for performance

Europe Since Nov. 2012- Fuel efficiency, grip performance, noise

Since 2016/2017 (2 phases)- Fuel efficiency, grip performance, noise

Japan Since 2010, voluntary standard in the tire industry- Fuel efficiency, grip performance

Not adopted

US From 2011 (planned)- Fuel efficiency, grip performance, abrasion resistance

Not adopted

Fiscal year

Chemicals & Fibers

43

Top-tier world share: 22%

Rapid demand growth in municipal water & sewage treatment, wastewater recovery• More stringent drinking water regulation in

US from 2011: requirement to remove 99.9997% of Cryptosporidium parvum

• Increasing water pollution/shortages in China

Accelerated development of wastewater recycling business• Operation start-up at first and second projects in China

2 production sites, Japan and China• 30,000 module/y plant in Fuji, Japan

• 30,000 module/y assembly plant in China

Microza™ hollow-fiber membrane for filtration

Chemicals & Fibers

44

Basic chemicals Caustic soda PE Membranes

Chlorine ABS, SAN

Ammonia PMMA pellet & sheet

Nitric acid Synthetic rubber & elastomer

Monomers Acrylonitrile Tenac™ POM

Styrene Xyron™ mPPE

MMA Leona™ nylon 66

Cyclohexanol

Adipic acid Explosives Defense explosives

Metal cladding

Saran Wrap™ cling film

Packaging products

Share of sales* Share of sales* 25%

* Based on results for FY 2010.

Home-use/Consumables

75%

Chemicals & derivative products Polymer productsVolume products

Specialty products

General-purposepolymers

Ceolus™ microcrystallinecellulose

Functionaladditives

Microza™ MF/UFmembranes

Ion-exchange membranes& systems

Duranate™ HDI-basedpolyisocyanate

Aluminum paste

SB latex

Performancechemicals

Performancepolymers

Business portfolio of ChemicalsChemicals & Fibers

45

Main products of chemicals & derivative products in Chemicals

Asahi Kasei Chemicals Main competitors

Main applications Asahi Kasei’s position/strengthsCapacity

(kt/y)Share

(%) CompanyCapacity

(kt/y)Share

(%)

Acrylonitrile 750 13 Ineos 1,324 23 Acrylic fiber, ABS resin; captive use for ABS, adiponitrile

2nd largest producer in the world

Styrene 710 2 ShellIneosDow

2,0702,0521,969

776

EPS, ABS, SB latex, unsaturated polyester, SBR; captive use for PS, ABS, SB latex, SBR

Largest production capacity in Japan

Methyl methacrylate

100 3 Mitsubishi Rayon

1,356 36 MS, MBS, coating materials; captive use for PMMA

Proprietary, cost- competitive C4 process

Adipic acid 170 6 InvistaRhodia

640455

2216

Polyurethane; captive use for nylon 66

Top-tier producer in Asia

* Share of production capacity, Asahi Kasei estimate.† Asahi Kasei estimate.

As of Nov. 1, 2010

* † *

Chemicals & Fibers

46

Business field Product Position

Membranes Microza™ UF and MF membranes and systems

Top-tier world share: 22%

Aciplex™ ion-exchange membranes No. 1 world share: 45%

Electrolysis plants No. 1 world share: 30%

Performance chemicals

Duranate™ HDI-based polyisocyanate

No. 1 domestic share

Aluminum paste No. 2 domestic share

Polydurex™ silicone-modified acrylic latex, PVDC latex

PVDC latex, No. 2 world share: 20%

Functional additives Ceolus™ microcrystalline cellulose No. 3 world share

Specialty products in ChemicalsChemicals & Fibers

47

Roica™ high-function spandex•Acquisition of spandex plants in Germany and US from Lanxess of Germany in Nov. 05, application of Roica™ technology at the plants•World’s No. 3 share; global development of high- function and high-quality brand; production plants in Japan, Taiwan, China, Thailand, Germany, and US

Bemberg™ regenerated cellulose fiber•Only producer in the world•Shift from domestic lining market to global markets and non-lining applications

Full product lineup of nonwovens•Sales expansion with focus on Precisé™ multifunctional nonwoven

Leona™ nylon 66 filament with superior strength and thermal resistance

•Sales expansion in automotive airbag application in addition to tire cord application

Main products in Fibers

Dormagen Plant for spandex, in Germany

Chemicals & Fibers

48

Financial performance and actions in Homes

0

100

200

300

400

500

600

2005 2010 2011forecast

2015forecast

Unit-homes & multi-dwelling homes• Extension of superiority in three-story homes and

two-generation homes• Establishment of No.1 position in innovative

lifestyle proposals • Community-specific proposals• Greater product variation• Distinctive products suited to urban needs

Real estate-related operations

(¥ billion)

Remodeling and other operations• Enhanced product proposal

capability; i.e. remodeling for energy conservation

• RenovationMaximum utilization of land value with operations focused on obtaining accord, etc.

Operating income

¥28.2 billion

Sales growth trendIncreased operating income

through cost reductions in home construction businesses and expansion of housing-related

operations

Operating income

¥36.5 billion

Operating income

¥45 billionOperating

income ¥42 billion

Remodeling, etc.

Real estate-related

Unit homes and multi-dwelling homes

FY

Homes & Construction Materials

49

“Long Life Home” strategy for Hebel Haus™

Hebel Haus™ high-end urban homes Exceptional resistance to earthquake and fire60-year inspection systemPioneer of urban three-story homes and two-generation homes • Launch of Hebel Haus™ Frex “G3” three-story homes

featuring next-generation energy conservation performance• Launch of Hebel Haus™ “i_co_i” as the latest

two-generation homes Strategic marketing • Development of urban markets from Kanto westward• Focus on rebuilding demand

More than 7 million houses in 3 largest areas are non-compliantwith current earthquake resistance standards

• Promotion with Hebel Haus™ “street-corner showrooms”Services for the ≈300,000 units sold to date• Steady increase in orders at remodeling business• Increased units under rent guarantee at real-estate business

Hebel Haus™ Frex “G3”

Homes & Construction Materials

http://www.asahi-kasei.co.jp/j-koho/press/smart.ZIP

50

Electronic materials (1) Hipore™ lithium-ion battery separator

0

1

2

3

4

5

'10 '11 '12 '13 '14 '15

Basic strategy

Proactive expansion in line with market growth

• Maintaining market share of 50% or more in mobile applications

• Full-fledged marketing in automotive applications, expanding sales with rapid demand growth

Provision of membranes suited to various needs

AsahiKasei

Market share in 2010

Mobile applications

Maintaining market lead with share of 50% or more

Automotive applications

Gaining top position in rapid-growing automotive applications, utilizing technical strength* and customer service capability established in mobile applications

Technological development• Timely development of high-function membranes suited to

customer needs• Achieving lower cost through high productivity

ProductionHyuga: capacity expansion as high-volume production siteMoriyama: production of high-function membranes, mother plant for production technology innovationOther: establishment of overseas production capability

Marketing1. Mobile applications• Complete customization mainly for Japanese and Korean

customers• Reinforcement of local sales functions2. Automotive applications• Development of membranes suited to needs of automotive

applications• Establishment of supply to major producers of LIBs for

automotive applications * Phase separation, membrane forming, polymer composition, etc.

(million m2)Global demand forecast for LIB separator

(Asahi Kasei estimate)

10% growth per year in mobile applications

Growing market in

automotive applications

Fiscal year

Mobile applicationsAutomotive applications

Electronics

51

Sunfort™ dry film photoresist (DF) for printed wiring boards• World top-3 share: 30% • The world’s largest DF plant in China – capacity expanded

of 100 million m2/y in Jun. 08 to 280 million m2/y• Total capacity 370 million m2/y, combined with

Fuji plant of 90 million m2/y capacityExpansion of ultra-thin glass fabricPimel™ semiconductor buffer coats• World’s No. 1 share • Expansion of alkaline type• New plant in Feb. 08Photomask pellicles for LSIs and LCDs• World top-3 share, and world’s No.1 supplier

for large LCDs• New production line for pellicles for 10G LCD

panels in Nov. 08

Electronic materials (2)

Pellicles

Dry film photoresist

Electronics

52

Electronic devices

2005 2010 2015

Sales expansion for tablets

and smartphones

Expansion in LED, motor driver,

and automotive applications

Market launch of new

electric-current sensorInfrared sensor

Ultra-compact and high-speed response

Applications- Non-contact

temperature measurement

- Detection of human body

- Gas sensors

JapanGreater China

Europe & US

Mobile electronics

Projected path of sales

Accelerating overseas developmentEnhancing design functionPursuing high quality

High profitability and established presence in specific areas, though small scale in semiconductor industry

Electric-current sensor

Geographic breakdown

Breakdown by application

Infrared sensors, LSIs for sensor control, LSIs for next-generation

communication, etc.

Strengths of our LSI business Weaknesses Opportunities• Analog signal processing • Strong record in magnetic

sensors• Compound semiconductor

technology

• Mainly limited to mobile electronics

• Inadequate development of overseas business

Large undeveloped

market

Japan

Europe & US

Greater China

Portable/ stationary

electronics

Industrial

Automotive

Magnetic sensors

LSIs

Power management

LSIs

Electronic compass

(among LSIs)

Creation and addition of new businesses

Creation of new businesses

FY FY FY

Electronics

53

Business field Product PositionElectronic devices

Mixed-signal LSIsWorld’s No. 1 share in TCXOs*, electronic compasses, and audio devices

Hall elements (magnetic sensors) World’s No. 1 share: 70%Electronic materials Hipore™ Li-ion rechargeable

battery separator World’s No. 1 share: 50%

Dry film photoresist World top-3 share: 30%

Glass fabric World’s No. 1 share in ultra-thin glass fabric

Pimel™ semiconductor buffer coats

World’s No. 1 share in photosensitive products

Photomask pellicles World top-3 share, and world’s No. 1 share for LCD panels

APR™ photosensitive resin, AFP™ photosensitive plates, printing plate making systems

World’s No. 2 share in photosensitive resin

Electronic products

* Temperature compensated crystal oscillators.

Electronics

54

Pharmaceuticals (1)

FY 2011 2015 2020

2011

2015

2020

Recomodulin™Nationwide expansion

in 2011

Teribone™Approval/market launch

in 2011 (planned)

Recomodulin™Approval/market launch in Europe, US, and Asia

Approval and market launch of pentosan for osteoarthritis,zoledronic acid for osteoporosis, and AK106 for rheumatoid arthritis

Flivas™ & Recomodulin™: reinforcement of sales infrastructure in China and Korea

Recomodulin™ & AK106: development in Europe and US

Sales of¥60 billion

Sales of some ¥100 billion

Sales of over ¥150 billion

Global supply of new drugs

Completion of all-case

survey

Teribone™: addition of new dosage form

Recomodulin™: expansion of indication

Famvir™: approval for herpes simplex

Over ¥30 billion in sales of 2 new drugs in FY 2015

Osteoporosis drug for weekly administration to inhibit vertebral fracture with increased bone density (approval expected in 2011)Potential patients: over 10 million people estimated to have osteoporosis in Japan, including those not receiving treatment

World’s first recombinant thrombomodulin formulationUsed to treat disseminated intravascular coagulation (DIC) accompanying cancer, infection, etc.

Potential patients: over 70 thousand people in Japan

Health Care

55

Pharmaceuticals (2)

Generic name Mechanism/substance class

Indication Formulation FY09 sales

(¥ billion)

FY10 sales

(¥ billion)

Flivas™ Naftopidil Selective α-1 blocker Benign prostatic hypertrophy Tablet 13.7 13.9

Elcitonin™ Elcatonin Eel calcitonin derivative

Osteoporosis pain Injection 14.0 13.4

Bredinin™ Mizoribine Immunosuppressant Rheumatoid arthritis, kidney transplantation, nephrosis syndrome, lupus nephritis

Tablet 6.5 6.5

Recomodulin™ Recombinant thrombomodulin alpha

Blood coagulation Disseminated intravascular coagulation

Injection 1.2 4.2

Toledomin™ Milnacipran hydrochloride

SNRI Depression Tablet 5.0 3.5

Eril™ Fasudil Rho-kinase inhibitor Cerebral vasospasm after subarachnoid hemorrhage surgery

Injection 1.4 1.5

Famvir™Distributed by Maruho

Famciclovir Antiviral Shingles (zoster) Tablet －－

Main products

Health Care

56

Pharmaceuticals (3)Product pipeline

Development stage

Code name, form, generic name Classifications Indication Remarks

Pending approval

MN-10-T, injection, teriparatide acetate

Synthetic human parathyroid hormone (PTH)

Osteoporosis New chemical entity

Phase III AK-120, oral, famciclovir Antiviral Herpes simplex Additional indication

Phase II AT-877, oral, fasudil hydrochloride hydrate

Rho-kinase inhibitor

Pulmonary arterial hypertension

Additional indication, new dosage form

AK150, injection, pentosan polysulfate sodium

Anti-osteoarthritic Osteoarthritis New chemical entity

Phase II (overseas)

ART-123, injection, recombinant thrombomodulin alpha

Recombinant human thrombomodulin

Sepsis with disseminated intravascular coagulation

New biologic

AK106 Anti-inflammatory Rheumatoid arthritis

New chemical entity

Health Care

57

Medical devices (1) Artificial kidneys

0

5

10

15

20

25

30

35

40

45

2010 2015

Stable growth of sales volume

Overseas sales volumeIntensive expansion in growth markets, mainly in emerging countries

Expansion of overseas assembly capacity

Licensing-in assembly technology from NxStage Medical

Establishment of overseas sales subsidiaries

Development of package products

Alliance with NxStage Medical, Inc.

Alliance with Kawasumi Laboratories, Inc.

Establishment of sales subsidiaries in China,

Korea, Taiwan, and Turkey

Expansion of assembly plant in China

Development of dry-pack products

Actions performed Measures toward 2015 Aiming for global top position in dialysis systems

Key actions• Reinforcement of quality and performance• Improvement of cost competitiveness and

tolerance to exchange rate• Reinforcement of sales functions

(Uni

t: m

illion

mod

ules

)

Domestic sales volume

FY FY

Health Care

58

0

20

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

20% growth per year 10% or m

ore growth per year

Medical devices (2) Planova™ virus removal filters

Sales(¥ billion)

Results

Plan

Inventory adjustment Renewed growth from 2011 after completion of

inventory adjustment; record-high monthly sales in April 2011 with adoption in process for drugs entering large-scale manufacture

Market of biopharmaceuticals and plasma derivatives

•Growing by more than 10% per year over medium term• Expanding global demand for bioprocess products in biopharmaceuticals and plasma derivative applications

Reinforced development of Chinese and Asian markets in addition to main markets of Europe and US

• China: expansion in plasma derivatives field• Korea and India: expansion in biosimilars field

• Tightening regulations for virus removal, proliferation of biosimilar products

• Growth in emerging markets (China, India, South America)

Newly launched BioEX

Fiscal year

Health Care

59

Chromatography (protein A)

Virus removalCentrifugation MicrofiltrationDepth filtration

Chromatography (anion exchange)

Chromatography (cation exchange)

Ultrafiltration

Medical devices (3) Bioprocess business & therapeutic apheresis business

1. Development of bio-process business

Example of manufacturing process for biopharmaceuticals

Provision of high-yield manufacturing process for biopharmaceuticals

• Asahi Kasei Bioprocess, Inc. (US)• Technical centers in US (Chicago) and

Germany (Cologne)• Membrane technology of Asahi Kasei Group• Integration of outside resources by M&A

•Full product line to meet various market needs•Reinforcement of overseas technical service personnel•Alliances and M&A

2. Expansion of therapeutic apheresis business

Some medical needs cannot be met with drugs

Apheresis (“take away”) therapy

Metabolic waste removal

Virus removal

Leukocyte removal

Blood viscosity reduction

Ascites

Hepatitis C

Ulcerative colitis

Arteriosclerosis

Example indications

Packaging

Development of applications, dissemination of apheresis therapy

Expansion in China and Europe

Biopharma- ceuticals

Health Care