Sumitomo Chemical Reports Consolidated Financial Results for the Three Months Ended June 30, 2008

JCN Newswires, July 31, 2008

Tokyo, July 31, 2008 - (JCN Newswire) - Sumitomo Chemical has reported consolidated financial results for the three months ended June 30, 2008. The Group posted sales of JPY 496.3 billion for the first quarter, an increase of JPY 57.1 billion over the same period the previous year. Operating income was JPY 24.7 billion and ordinary income was JPY 25.3 billion, both of which represent a decrease compared with the previous year. Net income was JPY 15.1 billion, about the same level as last year.

The Company's first-quarter financial performance by segment is as follows.

In the Basic Chemicals segment, sales of aluminum declined mainly because of lower selling prices due to a stronger yen, although overseas market prices were higher.

While market prices rose with an increase in feedstock prices, sales of caprolactam and other raw materials for synthetic fibers remained at the same level as the corresponding period the previous year because of the impact of the stronger yen. As a result, sales decreased by JPY 1.6 billion compared with the previous year to JPY 75.7 billion. Operating income decreased by JPY 2.7 billion to JPY 1.6 billion, affected by higher feedstock prices.

In the Petrochemicals & Plastics segment, sales of synthetic resins and petrochemical products such as propylene oxide increased because of the Company's selling price increases in Japan that reflected the rising prices for naphtha and other feedstocks, as well as higher market prices in Asia. As a result, sales increased by JPY 21.0 billion over the same period last year to JPY 164.8 billion. However, operating income decreased by JPY 3.0 billion to post a loss of JPY 0.7 billion because the impact of rising feedstock prices exceeded the effects of rising market prices for products.

In the Fine Chemicals segment, moderate growth in shipments of pharmaceutical intermediates and adhesives raw materials helped increase sales by JPY 1.2 billion over the same period last year to JPY 24.3 billion, while operating income declined by JPY 2.1 billion to JPY 1.3 billion because of the strong yen and rising feedstock prices.

In the IT-related Chemicals segment, sales of LCD display materials such as polarizing film and color filters increased substantially, supported by production capacity increases and productivity enhancements that were undertaken to meet the booming demand. As a result, sales rose by JPY 16.5 billion over the same period last year to JPY 77.8 billion. Operating income increased by JPY 11.3 billion to JPY 7.2 billion.

In the Agricultural Chemicals segment, sales of agricultural chemicals grew thanks to solid demand primarily in overseas markets. Sales of feed additives increased because of rising selling prices spurred by expanding global demand. Sales of Olyset Nets posted solid growth. As a result, sales increased by JPY 7.1 billion over the same period the previous year to JPY 54.2 billion. Operating income increased by JPY 0.4 billion to JPY 5.8 billion.

In the Pharmaceuticals segment, despite the Japanese government's revision of reimbursement prices for pharmaceuticals this year, sales of the segment's four main products, Amlodin (thereapeutic agent for hypertension and angina pectoris), Gasmotin (gastroprokinetic), Meropen (carbapenem antibiotic), and Prorenal (vasodilator) increased, driven by marketing efforts. Also, supported by sales of new products Lonasen (agent for the treatment of schizophrenia) and Avapro (agent for the treatment of hypertension), sales grew by JPY 4.5 billion over the same period last year to JPY 62.9 billion. Operating income decreased by JPY 2.9 billion to JPY 11.0 billion, primarily because of increased research and development expenses.

In the Others segment, the Company supplies electrical power and steam as well as providing services for chemical plant design, engineering and construction management, transport and warehousing, and materials and environmental analysis.

The Company also conducts development and sales activities in new business fields such as polymer organic light emitting diodes. Revenues from design, engineering and construction management services increased with progress on the Rabigh Project, the Company's joint project with Saudi Aramco for the establishment of an integrated refining and petrochemical complex in Rabigh, Saudi Arabia. As a result, sales rose by JPY 8.4 billion over the same period last year to JPY 36.6 billion. However, operating income declined by JPY 1.9 billion to post a loss of JPY 1.5 billion because of increased research and development expenses associated with new business development.

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                                 Q1 ended June 30, 2008 June 30, 2007
                               Millions Yen   US$ 1,000  Millions Yen
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Results of Operations
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Net Sales                          496,349    4,664,058       439,222
Operating Income                    24,656      231,686        25,634
Ordinary Income                     25,337      238,085        34,438
Income Before Income Taxes and
 Minority Interests                 26,858      252,377        34,685
Net Income                          15,077      141,674        14,776
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Net income per 1,000 shares     JPY  9,132      US$  86    JPY  8,947
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                                         As of 6/30/2008    6/30/2007
                                      Yen      US$ 1,000          Yen
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Financial Position
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Total Assets                     2,311,494   21,720,485     2,358,929
Total Net Asset                    968,607    9,101,738     1,006,046
Book Value per 1,000 shares    JPY 443,568    US$ 4,168   JPY 465,213
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                                 Q1 ended June 30, 2008 June 30, 2007
                               Millions Yen   US$ 1,000  Millions Yen
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Cash Flows
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Cash flows from
  operating activities              6,325        59,434        19,073
  investing activities            (38,030)     (357,358)      (62,526)
  financing activities             23,886       224,450        14,784
Cash and cash equivalents
 at end of period                  98,434       924,958        97,811
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Results of Operations by Business Segment
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Net Sales
  Basic Chemicals                    75,670     711,051        77,248
  Petrochemicals & Plastics         164,820   1,548,769       143,862
  Fine Chemicals                     24,338     228,698        23,105
  IT-related Chemicals               77,827     731,319        61,299
  Agricultural Chemicals             54,233     509,613        47,166
  Pharmaceuticals                    62,902     591,073        58,398
  Others                             36,559     343,535        28,144
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                                    496,349   4,664,058       439,222
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Operating Income
  Basic Chemicals                     1,589      14,931         4,291
  Petrochemicals & Plastics            (711)     (6,681)        2,317
  Fine Chemicals                      1,253      11,774         3,354
  IT-related Chemicals                7,245      68,079        (4,069)
  Agricultural Chemicals              5,794      54,445         5,405
  Pharmaceuticals                    11,019     103,543        13,940
  Others                             (1,487)    (13,973)          419
  Elimination                           (46)       (432)          (23)
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                                     24,656     231,686        25,634
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(Note)
U.S. dollar amounts are translated from yen, for convenience only,
at the rate of JPY 106.42 = US$1 prevailing on June 30, 2008.