Sumitomo Chemical : Reports Consolidated Financial Results For the Half-Year Ended September 30, 2016

For Immediate Release October 28, 2016

The Sumitomo Chemical Group's sales for the half-year ended September 30, 2016 totaled ¥900.5 billion, a decrease of ¥175.4 billion compared with the same period of the previous fiscal year. The Group posted operating income of ¥47.3 billion, ordinary income of ¥50.6 billion and net income attributable to owners of the parent of ¥19.2 billion, all representing year-on-year decreases.

Sumitomo Chemical decided to pay an interim dividend of ¥7 per share.

The Sumitomo Chemical Group's financial results by business segment for the half-year were as follows.

Market prices of petrochemical products and synthetic resins declined because of lower feedstock prices. Shipments of petrochemical products decreased due to the restructuring of the petrochemical business at the Chiba Works. The stronger yen had a negative effect on sales from overseas subsidiaries in yen terms. As a result, the segment's sales decreased by ¥96.4 billion compared with the same period of the previous fiscal year, to ¥265.7 billion. Operating income declined by ¥6.7 billion, to ¥6.7 billion.

Market prices of aluminum declined. Shipments of resorcinol, a raw material for adhesives, and engineering plastics increased due to a rise in demand. As a result, the segment's sales decreased by ¥10.7 billion compared with the same period of the previous fiscal year, to ¥94.4 billion. Operating income came to ¥2.2 billion, almost unchanged from the same period of the previous fiscal year.

Selling prices of polarizing film dropped. Selling prices of touchscreen panels also declined, but shipments increased due to growth in demand. The stronger yen had a negative effect on sales from overseas subsidiaries in yen terms. As a result, the segment's sales decreased by ¥33.4 billion compared with the same period of the previous fiscal year, to ¥174.7 billion. Operating income declined by ¥13.6 billion, to ¥2.5 billion.

Sales of the feed additive methionine dropped due to lower market prices. Shipments overseas of crop protection chemicals declined. The stronger yen also had a negative effect on sales. As a result, the segment's sales decreased by ¥31.4 billion compared with the same period of the previous fiscal year, to ¥125.8 billion. Operating income declined by ¥14.2 billion, to ¥12.9 billion.

In Japan, although sales of Aimix® (anti-hypertension drug), Trerief® (therapeutic agent for Parkinson's disease) and other drugs increased, overall sales declined due largely to the impacts of Japanese National Health Insurance drug price revisions and a decrease in shipments of patent-expired originator drugs. In North America, sales of Latuda® (atypical antipsychotic) and other drugs increased steadily. The stronger yen had a negative effect on sales from overseas subsidiaries in yen terms. As a result, the segment's sales declined by ¥0.7 billion compared with the same period of the previous fiscal year, to ¥214.3 billion. Operating income rose by ¥8.5 billion, to ¥27.9 billion, due to the expansion of sales in North America.

In addition to the above five segments, the Sumitomo Chemical Group engages in supplying electrical power and steam, providing services for the design, engineering, and construction management of chemical plants, providing transport and warehousing, and conducting materials and environmental analysis. The segment's sales decreased by ¥2.7 billion compared with the same period of the previous fiscal year, to ¥25.6 billion. Operating income declined by ¥1.8 billion, to ¥2.4 billion.

Equity in earnings of affiliates decreased by ¥9.7 billion compared with the same period of the previous fiscal year, to ¥18.8 billion. Earnings of Petrochemical Corporation of Singapore remained strong, while earnings of Rabigh Refining and Petrochemical Company (Petro Rabigh) deteriorated due chiefly to lower profit margins caused by a decline in selling prices of petrochemical products.

Sumitomo Chemical has revised its consolidated financial forecast for the full-year ending March 31, 2017, previously announced on May 11, 2016, as follows.

(Millions of yen)

Sales are anticipated to fall below previous expectations due to the effects of the stronger yen and lower prices of naphtha and other feedstocks. Operating income is also expected to fall below previous projections due to the effects of the stronger yen, lower selling prices of products in the IT-related Chemicals Sector, and a decrease in shipments of products in the Health & Crop Sciences Sector.

Ordinary income and net income attributable to owners of the parent are also anticipated to fall below previous expectations.

The new forecast is based on the assumptions of a foreign exchange rate of

¥105/US$ and a naphtha price of ¥34,000/kl for the second half of the current fiscal year.

Cautionary Statement

Summary of Consolidated Results

1. Results of Operations:

   6 Months ended

   September 30, 2016

   6 Months ended

   September 30, 2015

   Yen (Millions)	USD (Thousands)*1	Yen (Millions)
   Net sales	900,512	8,905,380	1,075,863
   Operating income	47,254	467,306	74,244
   Ordinary income Income before income taxes and non-controlling interests	50,608 42,682	500,475 422,093	100,395 105,028
   Net income Net income attributable to non-controlling interests	31,881 12,647	315,279 125,069	77,933 17,037
   Net income attributable to owners of the parent	19,234	190,210	60,896
   Net income per 1,000 shares	Yen 11,769	USD*1 116	Yen 37,261
   Dividends per 1,000 shares:
   Interim dividends 7,000		69	8,000
   Yen (Millions)		USD (Thousands)*1	Yen (Millions)

   Comprehensive income (66,253) (655,192) 47,017

2. Financial Position:

   As of September 30, 2016 As of March 31, 2016 Yen (Millions) USD (Thousands)*1 Yen (Millions)

   Total assets 2,541,731 25,135,789 2,662,150

   Total net assets 1,007,176 9,960,206 1,090,776

3. Cash Flows:

   6 Months ended 6 Months ended

   September 30, 2016

   September 30, 2015

   Yen (Millions)	USD (Thousands)*1	Yen (Millions)
   Cash flows from operating activities	82,282	813,706	132,906
   Cash flows from investing activities	(58,655)	(580,053)	(7,772)
   Cash flows from financing activities	21,808	215,665	(50,550)
   Cash and cash equivalents at end of period	240,245	2,375,841	271,106

4. Results of Operations by

6 Months ended

6 Months ended

Business Segment:

Net sales

September 30, 2016 September 30, 2015 Yen (Millions) USD (Thousands)*1 Yen (Millions)*2

(Note)

*1:U.S. dollar amounts are translated from yen, for convenience only, at the rate of

¥101.12 = $1 prevailing on September 30, 2016.

*2:New business segmentation is applied to consolidated results of previous year.