Hitachi Chemical Co., Ltd. Business Report FY ended Mar. 2019

Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2019	FY ended Mar. 31, 2018	Rate of Change (%)	Factors
Revenue	681,025	669,234	1.8	-Revenue increased, thanks to increased demand for polishing materials for smoothing semiconductor circuits and carbon negative-electrode carbon for lithium-ion batteries; as well as the benefit from an M&A transaction.
Income	36,353	46,219	(21.3)	-Income decreased because of increased fixed-costs resulting from an M&A transaction, even though revenue increased due to higher volumes of negative-electrode carbon for lithium-ion batteries mounted on eco-cars.
Income before income taxes	40,500	48,941	(17.2)	-
Net income	29,451	37,121	(20.7)	-
Net income attributable to owners of the parent	28,723	36,324	(20.9)	-

Joint Venture

-Japan's New Energy and Industrial Technology Development Organization (NEDO), Hitachi Chemical Co., Ltd. (Hitachi Chemical), Hitachi Power Solutions Co., Ltd. (Hitachi Power Solutions), and NGK Insulators, Ltd. (NGK Insulators) announced that they have completed a large-scale hybrid power storage system and will start operational demonstrations in the City of Varel, Niedersachsen, Germany. The system consists 2 types of storage batteries, Hitachi Chemical’s lithium-ion batteries that feature a high power charge and discharge output, and NGK Insulators’ long-duration capacity sodium-sulfur batteries, as well as Hitachi Power Solutions’ power grid information and battery control system. The system economically maintains the electric power supply and demand balance, and stabilize the electric systems that are increasingly being introducing for renewable energy sources. Testing will be conducted to verify the effectiveness of the large-scale hybrid power storage system for power stabilization. The demonstration operations will be carried out until February 2020. (From an article in the Nikkan Jidosha Shimbun on November 7, 2018)

-On June 4 Hitachi Chemical Co., Ltd. (Hitachi Chemical) announced that it has entered into a licensing agreement with Silatronix, Inc., a U.S.-based chemical startup company, (Silatronix) concerning the manufacturing, sales, and use of Silatronix's patented organosilicon compounds as electrolyte materials of lithium-ion batteries. The battery life will be longer and the battery storage stability better at high temperatures when the compounds are added to electrolytes. Hitachi Chemical aims to win the first order for the electrolyte material within the next three years from electrolyte makers working to improve the performance of electric vehicles. (From an article in the Nikkan Jidosha Shimbun on June 5, 2018)

Acquisition

-Thai Storage Battery (BAT-3K), subsidiary of Hitachi Chemical, submitted a letter to the Stock Exchange of Thailand to inform that the company's board meeting approved acquiring the entire business of its subsidiaries, Power Plas (PP) and 3K Products (3KP). PP is a producer and distributor of plastic granules while 3KP is a distributor of vehicle batteries. BAT-3K will purchase the entire business of both firms, paying THB 100 million for PP and THB 600 million for 3KP. Transactions transferring the entirety of both businesses should be completed by April 1, 2019. (From an article of Bangkok Post on October 03, 2018)

R&D Expenditure

(in million JPY)

	FY ended Mar. 31, 2019	FY ended Mar. 31, 2018	FY ended Mar. 31, 2017
Overall	32,600	30,800	28,200
-Functional Materials	21,800	21,300	20,100
-Advanced Components and Systems	10,800	9,500	8,100

Technology Licensing-out Agreement

(As of Mar. 31, 2019)

Company	Other company	Contract Details	Period
The Company	Hung-A Forming Co., Ltd. (Korea)	Approval to use technology that involves rear door modules (except for the inner panels)	Mar. 11, 2013 - Sep. 30, 2029 (The contract is scheduled to automatically renew every year after the initial period ends.)

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2019	FY ended Mar. 31, 2018	FY ended Mar. 31, 2017
Overall	52,500	42,600	39,900
-Functional Materials	20,500	16,800	22,100
-Advanced Components and Systems	32,000	25,800	17,800