Interim report
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Consolidated Financial Results for the Six Months Ended June 30 , 2026 ( Unaudited ) August 7 , 2026 KURARAY CO . , LTD .
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Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. August 7, 2026 Consolidated Financial Results for the Six Months Ended June 30, 2026 (Under Japanese GAAP) Company name: KURARAY CO., LTD. Listing: Tokyo Stock Exchange Stock code: 3405 URL: https://www.kuraray.com Representative: Hitoshi Kawahara, Representative Director and President Inquiries: Shinichi Takizawa, Senior Manager, Corporate Communications Department, Corporate Management Planning Office Telephone: +81-3-6701-1070 Scheduled date to commence dividend payments: September 10, 2026 Preparation of supplementary material on financial results: Yes Holding of financial results briefing: Yes (for securities analysts and institutional investors) (Yen amounts are rounded down to millions, unless otherwise noted.) 1. Consolidated financial results for the six months ended June 30, 2026 (from January 1, 2026 to June 30, 2026) (1) Consolidated operating results (cumulative) (Percentages indicate year-on-year changes.) Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of the Parent Six months ended Millions of yen % Millions of yen % Millions of yen % Millions of yen % June 30, 2026 431,035 7.8 28,839 9.8 25,984 22.1 14,230 1.4 June 30, 2025 399,958 (2.7) 26,261 (42.2) 21,284 (51.7) 14,039 (53.9) Note: Comprehensive income For the six months ended June 30, 2026: ¥31,970 million [−%] For the six months ended June 30, 2025: (¥17,652 million) [−%] Net Income per Share Fully Diluted Net Income per Share Six months ended Yen Yen June 30, 2026 46.98 46.95 June 30, 2025 43.50 43.47
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(2) Consolidated financial position Total Assets Net Assets Equity Ratio As of Millions of yen Millions of yen % June 30, 2026 1,350,823 768,403 55.9 December 31, 2025 1,303,511 755,175 57.0 Reference: Equity attributable to owners of the parent As of June 30, 2026: ¥755,491 million As of December 31, 2025: ¥742,620 million 2. Cash Dividends Annual Dividends per Share First quarter-end Second quarter-end Third quarter-end Fiscal year-end Total Yen Yen Yen Yen Yen Fiscal year ended December 31, 2025 ― 27.00 ― 27.00 54.00 Fiscal year ending December 31, 2026 ― 32.00 Fiscal year ending December 31, 2026 (Forecast) ― 32.00 64.00 Note: Revisions to the forecast of cash dividends most recently announced: None FY2026 annual dividends per share (forecast): ¥54.00 normal dividend and ¥10.00 commemorative dividend 3. Forecasts of Consolidated Financial Results for the Fiscal Year Ending December 31, 2026 (January 1, 2026 to December 31, 2026) (Percentages indicate year-on-year changes.) (Millions of yen) Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of the Parent Net Income per Share (Yen) % % % % Full Fiscal Year 880,000 8.9 70,000 18.9 64,000 24.2 40,000 435.6 132.76 Note: Revisions to forecasts of consolidated financial results during this period: Yes
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[Notes] (1) Significant changes in the scope of consolidation during the period: Yes Excluded: 3 companies (Kuraray Methacrylate (Zhang Jia Gang) Co., Ltd.; WATERLINK (UK) HOLDINGS LIMITED; and one other) (2) Adoption of accounting treatment specific to the preparation of interim consolidated financial statements: None (3) Changes in accounting policies, changes in accounting estimates, and restatement (i) Changes in accounting policies due to revisions to accounting standards and other regulations: None (ii) Changes in accounting policies due to other reasons: None (iii) Changes in accounting estimates: None (iv) Restatement: None (4) Number of issued shares (common shares) (i) Total number of issued shares at the end of the period (including treasury stock) As of June 30, 2026 302,133,603 shares As of December 31, 2025 307,963,603 shares (ii) Number of treasury stock at the end of the period As of June 30, 2026 836,743 shares As of December 31, 2025 924,408 shares (iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year) As of June 30, 2026 302,905,289 shares As of June 30, 2025 322,756,736 shares Note: It is not required that this type of earnings report be audited. Cautionary Statement with Respect to Forecasts of Consolidated Business Results (Cautionary note regarding forward-looking statements) The results forecasts presented in this document are based upon currently available information and assumptions deemed rational. A variety of factors could cause actual results to differ materially from forecasts. Please refer to “1. Qualitative Information regarding Business Results (3) Basis for Forecasts, Including Consolidated Financial Results Forecasts” on page 8 of the Attachment for the assumptions used.
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1 Index of the Attachment 1. Qualitative Information regarding Business Results ................................................... 2 (1) Overview of Consolidated Business Results ............................................................ 2 (2) Overview of Financial Position .................................................................................. 8 (3) Basis for Forecasts, Including Consolidated Financial Results Forecasts ............... 8 2. Interim Consolidated Financial Statements and Notes ............................................... 9 (1) Interim Consolidated Balance Sheets ....................................................................... 9 (2) Interim Consolidated Statements of Income and Comprehensive Income .............. 11 (3) Interim Consolidated Statement of Cash Flows........................................................ 13 (4) Notes regarding Interim Consolidated Financial Statements ................................... 14 Notes regarding Going Concern Assumptions ......................................................... 14 Notes regarding Material Changes in Shareholders’ Equity ..................................... 14 Notes regarding Segment Information, etc. .............................................................. 15
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2 1. Qualitative Information regarding Business Results (1) Overview of Consolidated Business Results In the interim period of fiscal 2026 (January 1, 2026–June 30, 2026), the world economy held firm due mainly to AI-related investment, but the outlook remained uncertain as conditions in the Middle East deteriorated. Although the Japanese economy continued to gradually recover on the back of robust capital investment, concerns grew about stagnant demand due to rising prices for raw materials and fuels. The US economy remained firm, underpinned by AI-related investment and steady domestic demand, but the pace of growth was gradual due to uncertainty surrounding inflation and government policy trends. In Europe, economic growth remained sluggish amid persistently high prices and the outlook stayed uncertain. Meanwhile, in China, economic growth remained low as domestic demand was underwhelming and the real estate market continued to stall. Amid these circumstances, consolidated operating results for the interim period of fiscal 2026 are as follows: net sales increased ¥31,077 million (7.8%) year on year to ¥431,035 million; operating income increased ¥2,578 million (9.8%) year on year to ¥28,839 million; ordinary income increased ¥4,699 million (22.1%) year on year to ¥25,984 million; and net income attributable to owners of the parent increased ¥191 million (1.4%) year on year to ¥14,230 million. We undertook an organizational reform on January 1, 2026, changing the segment category of the businesses in the Electronics Materials Promotion Division from “Others” to “Functional Materials.” The interim period comparison and analysis are based on figures reflecting this change. (Millions of yen) FY2025 1H FY2026 1H Change Net sales Operating income Net sales Operating income Net sales Operating income Vinyl Acetate 202,885 29,871 217,138 25,381 14,253 (4,490) Isoprene 39,944 (1,311) 45,883 1,788 5,938 3,100 Functional Materials 98,554 1,714 110,345 4,884 11,790 3,170 Fibers and Textiles 29,751 (57) 31,889 4,196 2,138 4,254 Trading 33,908 3,042 37,346 3,671 3,438 629 Others 21,680 1,911 15,755 787 (5,925) (1,124) Elimination & Corporate (26,766) (8,909) (27,323) (11,871) (557) (2,961) Total 399,958 26,261 431,035 28,839 31,077 2,578
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3 Results by Business Segment Vinyl Acetate Net sales in this segment were ¥217,138 million (up 7.0% year on year), while operating income was ¥25,381 million (down 15.0%), due to lower capacity utilization reflecting declining sales volumes in some businesses despite making price revisions because of the rising prices of raw materials and fuels. PVOH resin: Having captured demand by leveraging our global supply system amid disruptions in the Middle East, sales volume increased. Optical-use poval film: Sales volume increased as a result of an accumulation of inventories across the supply chain due to concerns around component procurement against the backdrop of a semiconductor memory shortage and the Middle East situation in addition to demand for buying new televisions for international sporting events. Advanced Interlayer Solutions: The competitive environment for PVB film remained intense, particularly in Europe and Asia. As a result, sales volume decreased for both construction and automotive applications. Sales of SentryGlas™ specialty ionoplast interlayers also declined due in part to the effects of project delays as customers responded to deteriorating conditions in the Middle East. Water-soluble PVOH film: Sales volume decreased due to weak demand for soluble unit- dose detergent. EVAL™ EVOH resin: Sales volume increased as sales for food packaging and automotive applications remained favorable, and we were able to capture some demand with our global supply system.
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4 Isoprene Net sales in this segment were ¥45,883 million (up 14.9% year on year), and operating income was ¥1,788 million (compared with operating loss of ¥1,311 million in the same period of the previous year) due to a decrease in depreciation and amortization expenses attributable to impairment losses recorded in the previous year and the positive impact of some inventory valuation differences. Isoprene chemicals and elastomer: As a result of a pull-forward in demand in the previous year caused by U.S. tariff policies in addition to stagnant demand for construction applications in China, sales volume of isoprene chemicals decreased. Particularly in the United States market, sales volumes of elastomers increased but were impacted by intensified competition with Asian competitors in the European market and other regions. GENESTAR™ heat-resistant polyamide resin: Sales volume increased due to sales expansion in both electric and electronic applications and automotive applications.
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5 Functional Materials Net sales in this segment were ¥110,345 million (up 12.0% year on year), and operating income was ¥4,884 million (up 184.9%) due to solid sales. Methacrylate: Although sales volume fell due to a reduction in production capacity for methyl methacrylate and some downstream products from July 2025, there were positive effects on profit. Medical: Sales of cosmetic dental materials, mainly in Europe and the United States, remained firm. In addition, to meet growing demand, we began operations of expanded facilities at the Miyoshi Plant in the second quarter. Environmental Solutions: Demand for activated carbon remained stable, and sales volume increased. In addition, price revisions were implemented. To prepare for future growth in demand for reactivated carbon, we decided to expand production facilities for reactivated carbon in the United States (announced on February 27, 2026 and slated to begin operating in the first quarter of 2028).
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6 Fibers and Textiles Net sales in this segment were ¥31,889 million (up 7.2% year on year), and operating income was ¥4,196 million (compared with an operating loss of ¥57 million in the same period of the previous fiscal year). CLARINO™ man-made leather: Sales volume increased amid a recovery in demand, including for footwear applications. Fibers and industrial materials: Although sales volume of KURALON™ PVA fiber remained sluggish due to weak demand for construction material applications, price revisions were implemented. In addition, sales of VECTRAN™ liquid crystal polymer fiber remained brisk.
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7 Trading Net sales in this segment were ¥37,346 million (up 10.1% year on year), and operating income was ¥3,671 million (up 20.7%). Fiber-related businesses: Sales for sportswear and outdoor wear applications remained favorable. Resins and chemicals: Sales expanded in Asian markets, especially in China. Others Net sales in this segment were ¥15,755 million (down 27.3% year on year), and operating income was ¥787 million (down 58.8%).
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8 (2) Overview of Financial Position Total assets increased ¥47,311 million from the end of the previous fiscal year to ¥1,350,823 million due to factors that include a ¥22,504 million increase in property, plant and equipment and a ¥17,957 million increase in cash and deposits. Total liabilities increased ¥34,084 million to ¥582,420 million due to factors that include a ¥ 33,781 million increase in interest-bearing debt despite a ¥5,202 million decrease in notes and accounts payable-trade. Net assets increased ¥13,227 million to ¥768,403 million due in part to an ¥18,340 million increase in foreign currency translation adjustment and a ¥5,940 million increase in retained earnings despite a ¥10,042 million decrease in capital surplus. Equity attributable to owners of the parent amounted to ¥755,491 million, for an equity ratio of 55.9%. (3) Basis for Forecasts, Including Consolidated Financial Results Forecasts Based on the interim business results and current business trends, we revised the full-year forecast for fiscal 2026 (January 1, 2026 to December 31, 2026), which was announced on February 10, 2026. The revised consolidated operating results forecast for the fiscal year ending December 31, 2026 is as follows. (Millions of yen) (Yen) Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of the Parent Net Income Per Share Original Forecast (A) 850,000 70,000 64,000 40,000 132.80 Revised Forecast (B) 880,000 70,000 64,000 40,000 132.76 Amount Adjusted (B − A) 30,000 ― ― ― Percent Adjusted 3.5% ― ― ― (Ref.) FY2025 Results 808,447 58,882 51,515 7,468 23.62 The forecast is based on the following assumptions: ¥159/USD, ¥182/EUR, domestic naphtha at ¥92,000/kl, US natural gas at $3.2/MMBtu , and European natural gas at €52/MWh. Note: The above forecasts are based on the best information currently available. Actual financial results may vary due to various factors.
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9 2. Interim Consolidated Financial Statements and Notes (1) Interim Consolidated Balance Sheets (Millions of yen) As of December 31, 2025 As of June 30, 2026 Assets Current assets Cash and deposits 104,102 122,060 Notes and accounts receivable - trade, and contract assets 178,330 181,714 Securities 4,215 5,262 Merchandise and finished goods 178,020 177,422 Work in process 20,230 21,329 Raw materials and supplies 70,184 73,541 Other 24,209 25,539 Allowance for doubtful accounts (889) (626) Total current assets 578,403 606,244 Non-current assets Property, plant and equipment Buildings and structures, net 116,992 119,208 Machinery, equipment and vehicles, net 262,474 263,235 Land 18,154 18,318 Construction in progress 96,662 116,870 Other, net 54,828 53,984 Total property, plant and equipment 549,112 571,616 Intangible assets Goodwill 52,212 51,065 Customer-related assets 23,868 22,877 Other 34,549 34,868 Total intangible assets 110,630 108,810 Investments and other assets Investment securities 23,523 23,088 Retirement benefit asset 5,942 5,378 Deferred tax assets 20,291 18,915 Other 15,920 17,016 Allowance for doubtful accounts (311) (247) Total investments and other assets 65,366 64,151 Total non-current assets 725,108 744,578 Total assets 1,303,511 1,350,823
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10 (Millions of yen) As of December 31, 2025 As of June 30, 2026 Liabilities Current liabilities Notes and accounts payable - trade 58,490 53,288 Short-term borrowings 45,120 55,090 Commercial papers 11,000 9,000 Current portion of bonds payable - 10,000 Current portion of long-term borrowings 32,612 17,478 Accrued expenses 23,557 22,661 Income taxes payable 3,410 5,440 Provision for bonuses 9,495 8,091 Other 44,543 49,623 Total current liabilities 228,229 230,675 Non-current liabilities Bonds payable 50,000 50,000 Long-term borrowings 146,187 177,133 Deferred tax liabilities 23,243 23,906 Retirement benefit liability 32,146 32,722 Other 68,529 67,983 Total non-current liabilities 320,106 351,744 Total liabilities 548,335 582,420 Net assets Shareholders' equity Share capital 88,955 88,955 Capital surplus 55,949 45,907 Retained earnings 386,853 392,793 Treasury stock (1,623) (1,440) Total shareholders' equity 530,135 526,216 Accumulated other comprehensive income Valuation difference on available-for- sale securities 6,458 6,091 Deferred gains or losses on hedges (78) (75) Foreign currency translation adjustment 203,014 221,354 Remeasurements of defined benefit plans 3,091 1,905 Total accumulated other comprehensive income 212,485 229,275 Share acquisition rights 229 229 Non-controlling interests 12,325 12,681 Total net assets 755,175 768,403 Total liabilities and net assets 1,303,511 1,350,823
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11 (2) Interim Consolidated Statements of Income and Comprehensive Income Interim Consolidated Statement of Income (Millions of yen) For the six months ended June 30, 2025 For the six months ended June 30, 2026 Net sales 399,958 431,035 Cost of sales 282,194 302,048 Gross profit 117,764 128,987 Selling, general and administrative expenses Selling expenses 23,596 25,809 General and administrative expenses 67,906 74,337 Total selling, general and administrative expenses 91,502 100,147 Operating income 26,261 28,839 Non-operating income Interest income 1,054 1,036 Dividend income 436 417 Share of profit of entities accounted for using equity method 148 185 Gain on investments in investment partnerships - 755 Other 520 1,033 Total non-operating income 2,160 3,429 Non-operating expenses Interest expenses 1,307 1,873 Other 5,830 4,411 Total non-operating expenses 7,137 6,285 Ordinary income 21,284 25,984 Extraordinary income Gain on revision of retirement benefit plan - 1,769 Gain on sale of investment securities 1,590 1,176 Total extraordinary income 1,590 2,945 Extraordinary losses Loss on disaster - 2,281 Costs related to the suspension of operations - 1,249 Loss on disposal of tangible non-current assets 684 880 Loss on sale of tangible non-current assets 980 - Total extraordinary losses 1,665 4,411 Income before income taxes and non- controlling interests 21,210 24,518 Income taxes - current 5,980 7,072 Income taxes - deferred 1,196 2,280 Total income taxes 7,177 9,353 Net income 14,032 15,165 Net income (loss) attributable to non- controlling interests (6) 935 Net income attributable to owners of the parent 14,039 14,230
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12 Interim Consolidated Statement of Comprehensive Income (Millions of yen) For the six months ended June 30, 2025 For the six months ended June 30, 2026 Net income 14,032 15,165 Other comprehensive income Valuation difference on available-for-sale securities (1,235) (366) Deferred gains or losses on hedges (288) 17 Foreign currency translation adjustment (30,028) 18,044 Remeasurements of defined benefit plans, net of tax 143 (1,185) Share of other comprehensive income of entities accounted for using equity method (275) 294 Total other comprehensive income (31,685) 16,805 Comprehensive income (17,652) 31,970 Comprehensive income attributable to Comprehensive income attributable to owners of parent (17,277) 31,020 Comprehensive income attributable to non-controlling interests (375) 949
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13 (3) Interim Consolidated Statement of Cash Flows (Millions of yen) For the six months ended June 30, 2025 For the six months ended June 30, 2026 Net cash provided by (used in) operating activities Income before income taxes and non- controlling interests 21,210 24,518 Depreciation and amortization 41,442 42,179 Gain on revision of retirement benefit plan - (1,769) Loss (gain) on sale of investment securities (1,590) (1,176) Loss on disposal of tangible fixed assets 684 880 Loss (gain) on sale of tangible non-current assets 980 - Decrease (increase) in trade receivables 483 (162) Decrease (increase) in inventories (6,861) 755 Increase (decrease) in trade payables (6,626) (5,926) Other, net 1,556 5,424 Subtotal 51,279 64,723 Income taxes refund (paid) (10,662) (5,510) Other, net 1,545 (180) Net cash provided by (used in) operating activities 42,162 59,031 Net cash provided by (used in) investing activities Purchase of tangible fixed assets and intangible fixed assets (45,151) (54,696) Proceeds from sale and redemption of investment securities 2,541 3,058 Other, net (6,539) (4,391) Net cash provided by (used in) investing activities (49,149) (56,028) Net cash provided by (used in) financing activities Net increase (decrease) in short-term borrowings 20,020 9,970 Net increase (decrease) in commercial papers 27,000 (2,000) Proceeds from long-term borrowings - 45,000 Repayments of long-term borrowings (14,439) (28,782) Proceeds from issuance of bonds - 10,000 Redemption of bonds (10,000) - Purchase of treasury stock (8,290) (10,001) Dividends paid (8,744) (8,290) Other, net (2,239) (2,084) Net cash provided by (used in) financing activities 3,305 13,811 Effect of exchange rate change on cash and cash equivalents (4,076) 2,190 Net increase (decrease) in cash and cash equivalents (7,758) 19,005 Cash and cash equivalents, beginning of the period 121,692 108,314 Cash and cash equivalents, end of the period 113,934 127,319
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14 (4) Notes regarding Interim Consolidated Financial Statements Notes regarding Going Concern Assumptions None Notes regarding Material Changes in Shareholders’ Equity At the Board of Directors meeting held on February 10, 2026, the Company resolved to conduct a share buyback and, accordingly, acquired 5,829 thousand shares of treasury stock totaling ¥9,999 million by March 23, 2026. At the Board of Directors meeting held on May 13, 2026, the Company resolved to cancel treasury stock and, accordingly, canceled 5,830 thousand shares of treasury stock totaling ¥10,033 million on May 29, 2026. As a result of the above transactions and other factors, capital surplus decreased by ¥10,042 million while treasury stock decreased by ¥183 million during the interim period. Thus, capital surplus totaled ¥45,907 million and treasury stock stood at ¥1,440 million as of June 30, 2026.
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15 Notes regarding Segment Information, etc. ● Segment Information I. Interim period of fiscal 2025 (January 1, 2025 to June 30, 2025) 1. Net sales, income and loss by reporting segment (Millions of yen) Reporting Segment Others1 Total Adjustment2 Consolidated Statements of Income3 Vinyl Acetate Isoprene Functional Materials Fibers and Textiles Trading Total Net sales Outside customers 193,809 30,494 96,353 27,607 33,255 381,520 18,437 399,958 — 399,958 Intersegment sales and transfers 9,076 9,449 2,201 2,143 653 23,523 3,242 26,766 (26,766) — Total 202,885 39,944 98,554 29,751 33,908 405,044 21,680 426,724 (26,766) 399,958 Segment income (loss) 29,871 (1,311) 1,714 (57) 3,042 33,259 1,911 35,171 (8,909) 26,261 Notes: 1. The “Others” category incorporates operations not included in the reporting segments, including engineering-related business. 2. The adjustment of ¥(8,909) million to segment income (loss) includes the elimination of intersegment transactions of ¥1,102 million and unallocated corporate expenses of ¥10,012 million. Corporate expenses mainly comprise the Company’s basic research expenses. 3. Segment income (loss) is reconciled to operating income in the interim consolidated statement of income. II. Interim period of fiscal 2026 (January 1, 2026 to June 30, 2026) 1. Net sales, income and loss by reporting segment (Millions of yen) Reporting Segment Others1 Total Adjustment2 Consolidated Statements of Income3 Vinyl Acetate Isoprene Functional Materials Fibers and Textiles Trading Total Net sales Outside customers 207,939 37,940 108,411 29,239 36,601 420,131 10,904 431,035 — 431,035 Intersegment sales and transfers 9,199 7,943 1,934 2,650 745 22,472 4,850 27,323 (27,323) — Total 217,138 45,883 110,345 31,889 37,346 442,603 15,755 458,359 (27,323) 431,035 Segment income 25,381 1,788 4,884 4,196 3,671 39,923 787 40,711 (11,871) 28,839 Notes: 1. The “Others” category incorporates operations not included in the reporting segments, including engineering-related business. 2. The adjustment of ¥(11,871) million to segment income includes the elimination of intersegment transactions of ¥(1,166) million and unallocated corporate expenses of ¥10,704 million. Corporate expenses mainly comprise the Company’s basic research expenses. 3. Segment income is reconciled to operating income in the interim consolidated statement of income.
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16 2. Notes regarding Changes in Reporting Segments (Changes in Reporting Segments) In line with an organizational reform, from the interim period of fiscal 2026, the segment category of the businesses in the Electronics Materials Promotion Division was changed from “Others” to “Functional Materials.” For the purposes of comparison, segment information for the interim period of fiscal 2025 has been retroactively adjusted based on this recategorization.