reference materials our “prominence”due to changes in global economic, business, competitive...

Reference Materials

Our “Prominence”Reference MaterialsReference Materials

Our Our ““ProminenceProminence””

Disclaimer: These materials may contain forward-looking statements. Such forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements due to changes in global economic, business, competitive market and regulatory factors.

Sekisui Chemical Co., Ltd.Sekisui Chemical Co., Ltd.Sekisui Chemical Co., Ltd.

SEKISUI CHEMICAL GROUP 1

218.3

245.5

280.5

197.7

14.8

17.5

20.7

24.5

0

50

100

150

200

250

300

FY2004 FY2005 FY2006 FY20070

5

10

15

20

25

30

Sales Operating income

• Differentiating technology that provides high value-added• Global operation that meets market needs• Information gathering ability and product development technology born

from top market share• Business expansion limited to markets where high growth is expected

High Performance Plastics Company (HPP)High Performance Plastics Company (HPP)High Performance Plastics Company (HPP)

Primary Business Areas Sales & Operating Income

HPPHPP

AT (Automotive materials)AT (Automotive materials)

IT (IT-related materials)IT (IT-related materials)

MD (Medical products)MD (Medical products)

Functional materials and othersFunctional materials and others

Interlayer films for laminated glass, Polyolefin foam, Automotive resin products, Double-sided tape

LCD fine particles, Photosensitive materials, Semiconductor materials, Optical adhesive tape and film

Diagnostic drugs, Blood sampling plastic tubes, Transdermal drugs, Drug discovery support business

Adhesives, Marking film, Fire resistant tapes and sheets, Packaging tape, Packaging and agricultural tape, Plastic containers

(bn.yen) (bn.yen)

High Performance Plastics Company

The Prominence of the High Performance Plastics Company

February 2009 Update

45.0 50.5 57.667.8

18.523.5

27.029.7

11.011.5

24.4

37.1

134.5

109.0

85.574.5

0

20

40

60

80

100

120

140

160

FY2004 FY2005 FY2006 FY2007

AT IT MD

(bn.yen)

Sales in Strategic Business Fields


5) Interlayer windshield film that extends onto the roof

Interlayer film is used to laminate glass plates to make safety glass for automobiles and buildings and is made of transparent polyvinyl butyral resin with strong adhesiveness to glass.

HPPHPP-- 11 Expanding Interlayer Film Business (1)Expanding Interlayer Film Business (1)

1. What is interlayer film?1. What is interlayer film?

2. High performance interlayer films2. High performance interlayer films

Differentiating technology that provides high value-addedOur core product of interlayer films are transparent polyvinyl butyral resin films with superior adhesiveness for use in glass for automobiles and construction. Our films combine three of our technologies: 1) multi-layer technology enabling simultaneous shaping of multiple layers, 2) fine-particle dispersion technology enabling the uniform incorporation of fine particles and other elements into the films, and 3) adhesion technology with superior moisture resistance capable of withstanding high humidity levels.

Differentiating technology that provides high value-addedOur core product of interlayer films are transparent polyvinyl butyral resin films with superior adhesiveness for use in glass for automobiles and construction. Our films combine three of our technologies: 1) multi-layer technology enabling simultaneous shaping of multiple layers, 2) fine-particle dispersion technology enabling the uniform incorporation of fine particles and other elements into the films, and 3) adhesion technology with superior moisture resistance capable of withstanding high humidity levels.


1) Sound acoustic film

MultiMulti--layer Extrusion Technologylayer Extrusion Technology

1. Normal Film Layer1. Normal Film Layer

2. Colored Layer



Cross Section of Laminated GlassCross Section of Laminated GlassNano-dispersed Heat Shielding Particles

4. Sound Insulation Layer

5-layer Structure (world’s first)5-layer Structure (world’s first)

Thickness: 0.76mmGlassGlass

Interlayer Interlayer FilmFilm

GlassGlass

3. Expanding applications3. Expanding applications

Smash & Grab Prevention

Impact Absorption

Blocks Over 99% of UV Rays

Shatter Prevention

WindshieldWindshield

Door Window (partial)Door Window (partial)

SunroofSunroof


4) Wedge-shaped high-performance interlayer film for head-up display

2) Solar control film3) SA and SC film


Interlayer Film Plant

HPPHPP-- 22 Expanding Interlayer Film Business (2)Expanding Interlayer Film Business (2)

Global Operations to Meet Market DemandWe have moved ahead of competitors to establish a global production network with six film plants and two resin plants in each region of high demand. Our interlayer film plants are strategically situated near automobile plants to provide local production and meet specific local demand.

Global Operations to Meet Market DemandWe have moved ahead of competitors to establish a global production network with six film plants and two resin plants in each region of high demand. Our interlayer film plants are strategically situated near automobile plants to provide local production and meet specific local demand.


Asia Demand:

Approx. 30-kiloton

Sekisui Share:Approx. 50% (No.1)

North & South AmericaDemand: Approx. 70-kiloton

Sekisui Share：Approx. 20% (No.3) Japan

Demand:Approx. 20-kilotonSekisui Share：

Approx. 80% (No.1)

Start operation of U.S. interlayer film plant(October 2007)

Start operation of U.S. interlayer film plant(October 2007)

Accelerating the Further Development of Global OperationsAccelerating the Further Development of Global Operations

Expanding Sales of High-performance FilmsDeveloping and Introducing New Types of High-performance Films

Expanding Sales of High-performance FilmsDeveloping and Introducing New Types of High-performance Films

up

up

Bases established in each demand regionahead of competitors

Bases established in each demand regionahead of competitors

We applied our unique technologicalabilities to the business

We applied our unique technologicalabilities to the business

Production system : 6 interlayer film plants, 2 raw materials plants

Raw materials plant


Note: Demand figures are based on Company FY2006 estimates and include construction-use interlayer films.

2006 2010

Growth of global market (estimate) 200- kiloton 240-kiloton

Sekisui share (automotive applications) 40% 45%

Composition ratio of interlayer film in HPP 15% 22%

EuropeDemand: Approx. 80-kiloton

Sekisui Share:Approx. 40% (No.1)

up

Start expanded production line at the Netherlands Raw Materials Processing Plant (July 2010)

Start expanded production line at the Netherlands Raw Materials Processing Plant (July 2010)

Start expanded interlayer film production line at the China plant (October 2009)

Start expanded interlayer film production line at the China plant (October 2009)

Start expanded high-performance interlayer film production line

(October 2009)Start expanded sound insulation

resin production line(October 2009)

Start expanded high-performance interlayer film production line

(October 2009)Start expanded sound insulation

resin production line(October 2009)


HPPHPP-- 33 Expanding Foam Division Business (1)Expanding Foam Division Business (1)

Moldability

Heat Insulation

Chemical Resistance

Design Properties

Cushion Elasticity

Lightweight

Door Trim

InstrumentPanel

Sekisui’s Softlon provides a unique combination of design sophistication

and cushioning properties

Sekisui’s Softlon provides a unique combination of design sophistication

and cushioning properties

Tight Contact with Plastic Parts without GapsTight Contact with Plastic Parts without Gaps

Differentiating technology that provides high value-added The key product in our foams business is Softlon®, a polyolefin foam pioneered by Sekisui in 1965. With high strength and heat resistance, Softlon is used for a variety of automotive applications, such as auto interiors, and IT applications, including mobile phones, that demand uniform thickness and high moldability. Softlon can be adhered seamlessly to plastic components, enhancing both designabilty and cushion properties. In lightweight sound dampening materials for automobiles, Softlon is 50% lighter than other existing products and enables both sound insulation (vibration dampening) and weight reduction. Softlon meets automakers’ strong needs for foam with moldability into complex shapes.

Differentiating technology that provides high value-added The key product in our foams business is Softlon®, a polyolefin foam pioneered by Sekisui in 1965. With high strength and heat resistance, Softlon is used for a variety of automotive applications, such as auto interiors, and IT applications, including mobile phones, that demand uniform thickness and high moldability. Softlon can be adhered seamlessly to plastic components, enhancing both designabilty and cushion properties. In lightweight sound dampening materials for automobiles, Softlon is 50% lighter than other existing products and enables both sound insulation (vibration dampening) and weight reduction. Softlon meets automakers’ strong needs for foam with moldability into complex shapes.

May 2008 Update

Sekisui pioneered the development of cross-linked polyolefin foam with the release of Softlon ® in 1965. Softlon material is used for car interiors and other automotive materials requiring high levels of strength and heat-resistance. Softlon is also widely used in the IT field, where its high functionality, consistent thickness and moldability make it ideal for use in mobile phones and other devices.

1. What is foam?1. What is foam?

2. Lightweight Vibration Reduction Materials2. Lightweight Vibration Reduction Materials

Weight reduced by 50% from existing productsBoth lightweight and vibration reduction (good sound insulation) achieved simultaneouslyFormable into complex shapes

Weight reduced by 50% from existing productsBoth lightweight and vibration reduction (good sound insulation) achieved simultaneouslyFormable into complex shapes

Applied to Roof PanelApplied to Roof PanelPP Laminate Film

PP Foam

Special Elastomer Foam

Vibrating Parts Adhesion



HPPHPP-- 44 Expanding Foam Division Business (2)Expanding Foam Division Business (2)

Global operation that meets market needsOur foam business operating bases (development, production, sales) and nine plants are strategically located in each global region of high demand. Establishing this global network early has enabled us to capture top-level market share and positions us to quickly ascertain customer needs and open new markets.

Global operation that meets market needsOur foam business operating bases (development, production, sales) and nine plants are strategically located in each global region of high demand. Establishing this global network early has enabled us to capture top-level market share and positions us to quickly ascertain customer needs and open new markets.

May 2008 Update

Reinforcing the Global Network• Promoting further optimization by securing development, production

and sales bases in each demand region worldwide• Utilizing our leading position in the industry (No.1 share) captured

through early establishment of a global network

Reinforcing the Global NetworkReinforcing the Global Network• Promoting further optimization by securing development, production

and sales bases in each demand region worldwide• Utilizing our leading position in the industry (No.1 share) captured

through early establishment of a global network

Applying our Technological Capabilities to Generate New Demand• The world’s first cross-linked polyolefin foam (1965)• Applying our technology and strong customer relations to generate new

demand

Applying our Technological Capabilities to Generate New Demand• The world’s first cross-linked polyolefin foam (1965)• Applying our technology and strong customer relations to generate new

demand

Foam can be processed into various shapes, making it ideal for car interior applicationsFoam can be processed into various shapes, making it ideal for car interior applications

■ Lightweight Vibration Reduction Material

Introducing New Environmental Products• Introduced new products responding to weight-savings and vibration-

deadening needs• Aggressively expanding applications for new automotive parts

Introducing New Environmental Products• Introduced new products responding to weight-savings and vibration-

deadening needs• Aggressively expanding applications for new automotive parts

Aiming to Further Expand Share Focused on the Frontiers of Growth Markets (including possible M&A）Aiming to Further Expand Share Focused Aiming to Further Expand Share Focused on the Frontiers of Growth Markets on the Frontiers of Growth Markets (including possible M&A）

Foaming Polyolefin Plant Exclusively for Automobiles Constructed in China (November 2006)

Foaming Polyolefin Plant Exclusively for Automobiles Constructed in China (November 2006)

Increase Share by Offering Comfort-enhancing and Environmentally Friendly ProductsIncrease Share by Offering Comfort-enhancing and Environmentally Friendly Products

Putting New Products on the Market

Putting New Putting New Products on Products on the Marketthe Market

Expanding Sales of Existing Products

Expanding Sales Expanding Sales of Existing of Existing ProductsProducts

Enabling the development of each interior section

Enabling the development of each interior section

Weight-saving and sophisticated appearance

Weight-saving and sophisticated appearance

Cultivating the Existing

Market

Cultivating Cultivating the Existing the Existing

MarketMarket

Capturing New Markets

Capturing Capturing New MarketsNew Markets

PP Laminated Film

Special Foam(elastomer foam)

Vibrating Base

Adhesion

Production Bases

Nine Plant Global NetworkNine Plant Global Network



The heat- and moisture-resistance properties of this double-faced tape provide stable adhesiveness while its ultra-thinness (5 micron) enables high transparency.

Liquid Crystal Display Materials


LCD SpacerLCD Spacer Conductive Fine ParticlesConductive Fine Particles

High Transparency High Transparency DoubleDouble--faced Tapefaced Tape

UV AdhesiveUV AdhesiveUV adhesives made of high-performance, high-purity resins with exceptional ultraviolet-curing properties. These products’ minimal elution to liquid crystals is contributing to new advances in LCD production processes.

Phase Difference FilmPhase Difference Film

Liquid Crystal Display

Pearl-like plastic spheres of several-micron diameter maintain a constant thickness of the liquid crystal layer.Sekisui global share: 70% in the LCD of 17-inch and under LCDs

Fine particles with electrical conductivity on gold-plated plastic spheres. Display images are produced by electric voltage flowing through the fine particles.This system can also be applied to the large-sized LCDs.

Differentiating Technology Providing High Added ValueSpacers are spherical fine particle products produced using our proprietary fine particle technology. Spacers ensure uniform spacing between glass substrates in the display area of an LCD panel, and thereby prevent discoloration. Sekisui spacers command major market share in the LCD industry, which demands high quality performance, such as high color vividness. We are also aiming for top share in related fields, such as in conductive fine particles segment, to which we supply gold-plated spherical plastic fine particles.

Differentiating Technology Providing High Added ValueSpacers are spherical fine particle products produced using our proprietary fine particle technology. Spacers ensure uniform spacing between glass substrates in the display area of an LCD panel, and thereby prevent discoloration. Sekisui spacers command major market share in the LCD industry, which demands high quality performance, such as high color vividness. We are also aiming for top share in related fields, such as in conductive fine particles segment, to which we supply gold-plated spherical plastic fine particles.

HPP- 5 Expanding the LCD Related Products Business


Phase difference film is used as a polarizing film to enable a wide viewing angle for high-contrast liquid-crystal display. The thin, high-precision film compensates for a change in phase depending on the viewing angle.


HPPHPP-- 66 The Outline of the Medical Products BusinessThe Outline of the Medical Products Business——Business Business Integration with Daiichi Pure ChemicalsIntegration with Daiichi Pure Chemicals

Business Expansion Focused on Expected High Growth MarketsSekisui Chemical acquired Daiichi Pure Chemicals as a downstream operation to support our growth projections for core polymer technologies. We merged the company with Sekisui operations and formed Sekisui Medical Co., Ltd., with the objective of increasing profits through the merger effects throughout the value chain. Sekisui Chemical operates four businesses under two divisions. The testing division specializes in testing agents and testing implements, and the medical division in drug agents and dynamic testing of drug compounds for other companies. Narrowing down the target business segments allows us to concentrate management resources. We have global No. 1 market share for HDL and LDL cholesterol testing agents, and global No. 2 share in diabetes testing columns. With these differentiating technologies, we are aiming to attain top domestic market share in the blood clotting, diabetes, and infection fields.

Business Expansion Focused on Expected High Growth MarketsSekisui Chemical acquired Daiichi Pure Chemicals as a downstream operation to support our growth projections for core polymer technologies. We merged the company with Sekisui operations and formed Sekisui Medical Co., Ltd., with the objective of increasing profits through the merger effects throughout the value chain. Sekisui Chemical operates four businesses under two divisions. The testing division specializes in testing agents and testing implements, and the medical division in drug agents and dynamic testing of drug compounds for other companies. Narrowing down the target business segments allows us to concentrate management resources. We have global No. 1 market share for HDL and LDL cholesterol testing agents, and global No. 2 share in diabetes testing columns. With these differentiating technologies, we are aiming to attain top domestic market share in the blood clotting, diabetes, and infection fields.


Sales

Sekisui ChemicalPolymer Technology

Development Planning

& Product Development

Production Technology

& ProductizationDaiichi Pure Chemicals

<Sales Power>+

Sekisui ChemicalOverseas Operating

Bases

M&A Business Integration with Daiichi Pure ChemicalsM&A Business Integration with Daiichi Pure Chemicals

Daiichi Pure Chemicals

Establishing a Value-chain from Raw Material to SalesEstablishing a ValueEstablishing a Value--chain from Raw Material to Saleschain from Raw Material to Sales

Vertical IntegrationVertical Integration

Materials & Basic

Technology

Pursuing Synergy, Product ExamplesPursuing Synergy, Product Examples

POC TestingJapan: ¥80 billion

Overseas: ¥300 billionSekisui

ChemicalSekisui

ChemicalDaiichi Pure Chemicals

Daiichi Pure Chemicals

Non-centrifugal Blood Collection TubeLaunched World’s First in August 2006

Test Column for DiabetesShare: No.1 in Japan, No.2 globally

Reagent for Influenza TestShare in Japan 15%

Lifestyle-relatedDisease TestingJapan: ¥35 billion

Overseas: ¥350 billion Reagents for HDL (Good), LDL (Bad) Cholesterol TestShare: No.1 in Japan, No.1 globally

Note: Share percentages include our estimates

Medical business integration on April 2008.Name changed to “Sekisui

Medical Co., Ltd.”


Medical Products Business FieldsMedical Products Business Fields

DiagnosticsDiagnosticsFieldsFields62%62%

PharmaceuticalsPharmaceuticalsFieldsFields31%31%

Pharmaceuticals BusinessADME & Tox. Research

BusinessAcquired XenoTech, L.L.C.

in U.S.

Pharmaceuticals BusinessADME & Tox. Research

BusinessAcquired XenoTech, L.L.C.

in U.S.

Selection and Concentration of Business

Selection and Concentration of Business

Management TargetManagement Target

FY2007 FY2011

Net Sales 33bn.yen 50bn.yenOperating Income

Ratio11% 18%

Percentage of New Products Sales

12% 20%

Percentage of Overseas Sales

17% 30%

Note: Figures do not include Daiichi Pure Chemicals goodwill amortization.

WithdrawalWithdrawal7%7%

Diagnostics Reagent BusinessMedical Devices BusinessDiagnostics Reagent BusinessMedical Devices Business

FY2007Net Sales33 bn yen

Medical Materials BusinessRegents for Research

Business

Medical Materials BusinessRegents for Research

Business


214.1226.5

233.8

204.8

8.910.4

11.3

6.1

0

50

100

150

200

250

FY2004 FY2005 FY2006 FY20070

5

10

15

20

25

Sales Operating income

• Domestic maker brand power• Business development prowess that allows new businesses (ex. pipe

restoration) to grow out of our core businesses• Overall strength (differentiating technology, capital strength, human

resources needed for global expansion, etc.) in our water infrastructure business, where opportunities for global expansion are great

Urban Infrastructure & Environment Products Company (UIEP)Urban Infrastructure & Environment Products Company (UIEP)Urban Infrastructure & Environment Products Company (UIEP)


UIEPUIEP

Pipe materials (water supply & drainage, construction equipment, sewage pipes, electricity pipes, gas pipes, and others)

Pipe materials (water supply & drainage, construction equipment, sewage pipes, electricity pipes, gas pipes, and others)

Environmental civil engineeringEnvironmental civil engineering

Plant materialsPlant materials

Composite materials for infrastructureComposite materials for infrastructure

PVC pipes, Polyethylene pipe, Lining steel pipe, Plastic mass, etc.

Materials, Equipment and installation methods for pipe restoration

Pipe materials for factory production equipment (valves, pipes, joints, etc.), Sheets for aircraft interiors, Sheets for vehicle interiors/exteriors

Reinforced plastic composite pipe, Plastic foam reinforced by long glass fibers [FFU]

Building materials and housing equipmentBuilding materials and housing equipmentConstruction materials (rain gutters, materials for roofs, materials for decks), Bathroom units

Urban Infrastructure & Environment Products Company

(bn yen)

The Prominence of the Urban Infrastructure & Environmental Products Company

2.35.4 6.9

13.4

0.2

0.91.2

1.2

5.9

6.6

10.1

14.8

29.4

18.2

12.9

8.4

0

5

10

15

20

25

30

35

FY2004 FY2005 FY2006 FY2007Functional MaterialsPipe RestorationWater Infrastructure

(bn yen) (bn yen)

Overseas Sales



Prioritizing of growth businesses and growth product linesAccelerating development and launch of large-scale new products

Exploring and establishing new businesses

Top-ranked brand power in Japan, ‘Eslon ® pipe’Reorganization of the industryWe are allied with Mitsubishi Plastics Kubota and C.E. Kasei are launching the new company, Kubota C.I.

Structural reform progressResponding to high material costs

We raised product prices in March 2004, October 2004, October 2005, July 2006, *July 2007, April 2008, September 2008

*Note: We were unable to raise prices in FY2007, primarily because of the slowdown in construction starts after the enactment of the revised Construction Standard Law.

UIEPUIEP-- 1 1 Revitalizing Domestic DemandRevitalizing Domestic Demand--led Core Businesses led Core Businesses and Accelerating the Shift to Growth Fieldsand Accelerating the Shift to Growth Fields

Industry Split

Fire-resistant pipe

PFI Business

Expanding the “Frontiers of Growth” in Japan

Fortifying the Domestic Revenue Structure Business RestructuringBusiness RestructuringBusiness Restructuring

Phenovaboard

Stock Business

Rain gutter reinforced by super stretched sheet

Rainwater treatment business

Domestic Brand Power

Sekisui maintains a strong brand power and is a global leader in the PVC piping market. We are restructuring the PVC piping business by establishing new foundations for growth and revenue in “growth frontiers” to raise our overall strength and to enhance the profit structure of our domestic operation.

Domestic Brand Power

Sekisui maintains a strong brand power and is a global leader in the PVC piping market. We are restructuring the PVC piping business by establishing new foundations for growth and revenue in “growth frontiers” to raise our overall strength and to enhance the profit structure of our domestic operation.

Using Our Comprehensive Technical Strength to Create Demand

Using Our Comprehensive Technical Using Our Comprehensive Technical Strength to Create DemandStrength to Create Demand



Expanding the “Frontiers of Growth” in Japan Using Our Comprehensive Technical Strength to Create Demand

Using Our Comprehensive Technical Using Our Comprehensive Technical Strength to Create DemandStrength to Create Demand


Our combined strengths (differentiating technology, capital, human resources needed for global expansion, etc.) in our water infrastructure business position us to advance where opportunities for global expansion are great.We are globalizing the water environment infrastructure business and are currently preparing business development strategies focused on China. Water environment demand has been rapidly growing worldwide in recent years along with expanding needs for plastic piping with superior corrosion resistance and durability.

Our combined strengths (differentiating technology, capital, human resources needed for global expansion, etc.) in our water infrastructure business position us to advance where opportunities for global expansion are great.We are globalizing the water environment infrastructure business and are currently preparing business development strategies focused on China. Water environment demand has been rapidly growing worldwide in recent years along with expanding needs for plastic piping with superior corrosion resistance and durability.

Globalization of the Water Environment Infrastructure Business Rapid Worldwide Growth in Water-related Demand

Rapid Worldwide Growth in Rapid Worldwide Growth in WaterWater--related Demandrelated Demand

Yongchang Sekisui Composites Co., Ltd. (China, management rights acquired April 2005) [Reinforced plastics pipes, FFU]

7 Production bases (Miquan and Yili in Xinjiang, Guangzhou, Shanghai, Kanjiang,Changsha, Fengyang)Shanghai Plant transfer and expansion, start of FFU production (April 2007) Sekisui Qingdao Plastic Co., Ltd.

(China) [High-performance plastic pipes for water supply]Wuxi SSS-Diamond Plastics Co., Ltd. (China) [PE pipe fittings]

Sekisui Nuvotec Co., Ltd. (Korea)[Water supply and drainage pipes]

Eslon B.V. (Netherlands) [Rain gutters]

LLC SUMI-LON (Russia, established July 2008)[Reinforced plastic pipes]

Domestic and agricultural water Domestic and agricultural water Shortages (distribution infrastructureShortages (distribution infrastructure))

Fiberglass

Polyester resin

Resin concrete

Sand

Polyester resin

FRP

Salt damage,Salt damage,desalinationdesalination

Reinforced Plastic Pipe

February 2009 UpdateUIEPUIEP-- 2 Expanding Overseas Business 2 Expanding Overseas Business ——Water Infrastructure BusinessWater Infrastructure Business


Long distance,Long distance,high pressure distributionhigh pressure distribution

AntiAnti--corrosivecorrosiveplastic pipeplastic pipe


Establishing a Worldwide Business Network

Outstanding Technologies

Our unique method enables pipe restoration without excavation

SPR Method

Heitkamp, Inc. Acquired Dec 2007 (U.S.)

Sales (FY2006) ): ¥3 billion

Major Production Bases Major Business Facilities

CPT GmbHAcquired July 2008 (Germany)Sales (FY2007): ¥10.8 billion

Business facilities: Germany, Australia, UAE etc.

Sekisui SPR Americas, LLC. Established Aug 2005 (U.S.)

Oveaseas

6.6 9.1 9.3 9.6 7.60.2

0.9 1.2 1.2

9.310.810.510.06.8

16.9

0

5

10

15

20

25

FY2004 FY2005 FY2006 FY2007 FY2008

(bn. yen)

Japan

Pipe Restoration Business Sales

UIEPUIEP-- 33 Expanding Overseas Business Expanding Overseas Business ——Pipe Restoration BusinessPipe Restoration Business February 2009 Update


Our prowess in business development promotes new business creation (ex. pipe restoration) from our core businessesSekisui’s pipe restoration business extends the life of existing infrastructure by covering the inside of aging water pipes with hardened PVC in a helical structure. Our SPR pipe restoration method allows the work to be completed without excavation, greatly shortening construction time while generating less waste. The pipe restoration business utilizes the technological prowess of our materials, gained in our core business, and the knowledge accumulated in our water infrastructure business over many years.

Our prowess in business development promotes new business creation (ex. pipe restoration) from our core businessesSekisui’s pipe restoration business extends the life of existing infrastructure by covering the inside of aging water pipes with hardened PVC in a helical structure. Our SPR pipe restoration method allows the work to be completed without excavation, greatly shortening construction time while generating less waste. The pipe restoration business utilizes the technological prowess of our materials, gained in our core business, and the knowledge accumulated in our water infrastructure business over many years.

Revised Plan


UIEPUIEP-- 4 Expanding Overseas Business 4 Expanding Overseas Business ——The Plant Materials BusinessThe Plant Materials Business

General strength (differentiating technology, capital strength, human resources needed for global expansion, etc.) in our water infrastructure business, where opportunities for global expansion are greatIn our overseas businesses, we are aggressively promoting expansion strategies and seeking M&A opportunities in areas where we can employ our differentiating technologies. In March 2006, we gained control of Taiwanese valve maker Sanideng. In June 2007, we renamed the company Sekisui Industrial Piping and increased capacity at a new plant. In PVC sheets for molding, in the U.S., we changed the name of Kleerdex to KYDEX and aim to enhance its competitiveness and achieve sustainable growth. In ABS sheets for molding, we acquired Allen Extruders of the U.S. in April 2007. Through these initiatives, we are aiming to increase sales to IT related sectors (semiconductors, LCD panels, etc.) and the aircraft sector.

General strength (differentiating technology, capital strength, human resources needed for global expansion, etc.) in our water infrastructure business, where opportunities for global expansion are greatIn our overseas businesses, we are aggressively promoting expansion strategies and seeking M&A opportunities in areas where we can employ our differentiating technologies. In March 2006, we gained control of Taiwanese valve maker Sanideng. In June 2007, we renamed the company Sekisui Industrial Piping and increased capacity at a new plant. In PVC sheets for molding, in the U.S., we changed the name of Kleerdex to KYDEX and aim to enhance its competitiveness and achieve sustainable growth. In ABS sheets for molding, we acquired Allen Extruders of the U.S. in April 2007. Through these initiatives, we are aiming to increase sales to IT related sectors (semiconductors, LCD panels, etc.) and the aircraft sector.


Piping Materials for Plant and Equipment(valves, pipes, fittings, etc.)

Piping materials for ultra-pure water (clean pipes, flow sensors) Plates for clean rooms

Piping Materials for Plant and Equipment(valves, pipes, fittings, etc.)

Piping materials for ultra-pure water (clean pipes, flow sensors) Plates for clean rooms

Plates for clean roomsPlates for clean rooms

Industrial Materials(plates, sheet)

Plates for aircraftSheet for automotive interior/ exterior

Industrial MaterialsIndustrial Materials(plates, sheet)

Plates for aircraftSheet for automotive interior/ exterior

Accelerated Global Expansion with High Function ProductsAccelerated Global Expansion with High Function Products

1. Acquired management rights for Sanideng, a producer of valves in Taiwan (March 2006）*We have changed the company name from “Sekisui Sanideng” to “Sekisui Industrial Piping”Expanded capacity at a new plant (June 2007)

2. Changed the name of the U.S. company Kleerdex to KYDEX (January 2009)3. Acquired Allen Extruders company, producer of “ABS sheet for forming”（April 2007）

Sales increased to the IT-related (semiconductor, LCD panel, etc.) and Aircraft IndustriesSales increased to the IT-related (semiconductor, LCD panel, etc.) and Aircraft Industries

Interior material for aircrafts

Interior material for aircrafts

Outer cover for heavy machinery

Outer cover for heavy machineryPiping materialsPiping materials

KYDEX®ALLEN®

PVC sheet for formingPVC sheet for forming(Application Example)(Application Example)

ABS sheet for formingABS sheet for forming(Application Example)(Application Example)



• Highly industrialized housing of the unit construction method–high value-added differentiating technology

• Development and production prowess in high-functionality housing–high value-added differentiating technology

• Housing renovation business made possible by a long-term customer support system responsive to tenant needs in each life stage using the tenant information gathering system enabled by industrialized housing systems

Housing CompanyHousing CompanyHousing Company


HousingHousing

HousingHousing

Living environmentLiving environment

Steel-frame unit house "Sekisui Heim", Wood-frame unit house "Sekisui Two-U, Subdivision land

Refurbishing, Interiors, exteriors, Reuse System House” built with reused unit houses

Housing Company

338.2 352.7 347.7 339.7 326.7

72.776.5 79.9 90.7 93.3

15.7 14.5 13.3 11.1

0.5 0.2 1.0 3.0

0

100

200

300

400

500

FY2003 FY2004 FY2005 FY2006 FY20070

10

20

30

40

50(Billions of yen)

Sales (Housing) Sales (Living Environment)Operating income (Housing) Operating income (Living Environment)

The Prominence of the Housing Company

May 2008 Update

410.9429.2 427.6 430.5 420.0

16.2 14.7 14.3 14.1

9.8

0.510.3

(Billions of yen)


HousingHousing-- 1 Original Unit Construction Method1 Original Unit Construction Method

Highly industrialized housing employing the unit construction method —high value-added differentiating technologyOur housing products are industrialized housing with 80% of the construction process occurring inside the factory. This system enables us to realize high quality levels in the design of fundamental housing features, such as high heat insulation and airtightness. We have shortened on-site construction work to just 50 days, reducing the need for temporary residence and making our construction method especially attractive to owners rebuilding their houses.

Highly industrialized housing employing the unit construction method —high value-added differentiating technologyOur housing products are industrialized housing with 80% of the construction process occurring inside the factory. This system enables us to realize high quality levels in the design of fundamental housing features, such as high heat insulation and airtightness. We have shortened on-site construction work to just 50 days, reducing the need for temporary residence and making our construction method especially attractive to owners rebuilding their houses.

May 2008 Update

2. Comparison of Our In-plant Production Ratiowith Other Companies Sekisui established the

UNIT HOUSING category Sekisui established the

UNIT HOUSING category

Only Sekisui can“produce” the living space

inside the factory.

Only Sekisui canOnly Sekisui can““produceproduce”” the living spacethe living space

inside the factory. inside the factory.

1. Regional industry & Local builders Traditional Construction Method (Wooden structures)

2. Prefabricated Housing Makers ≒ Industrialized Housing

1. Housing Supply in Japan

The quality is guaranteed to match the design specifications1) Assembling in a factory

High heat-insulation and airtightness2) Production line assembly Stable quality

Short construction period1) ‘Fine Up 50’ Convenient for rebuilding

80%20%Others

20%80%Sekisui

On-site construction ratioIn-plant production ratio

Shortened temporary housing periodOn-site construction period: 50 days

3. Advantages of Our Unit Construction Method

Housing Company


Steel-framed Sekisui Heim

Domani Confattic new

Parfait MasterDesign 2.0

Desio BR

Grand To You Fiora

Letoiｔ

Wooden-framed Sekisui Two-U

HousingHousing-- 2 Model Selections2 Model Selections

bj new

Grand To You Piache

Three-story house

Housing complexes

May 2008 Update

Housing Company


HousingHousing-- 3 Pursuit of 3 Pursuit of ““High Performance HousingHigh Performance Housing”” Obtainable Obtainable Only Through the Unit Construction MethodOnly Through the Unit Construction Method”” (1)(1)

Development and production prowess in high-functionality housing —high value-added differentiating technologyThe high heat insulation achievable with the unit construction method is the starting point for our “zero utility cost” housing combining solar cell power production and all-electric equipment. Our advanced housing products are models for the homes of the future. We present simulations for customers to see first-hand the merits of the differentiating technology of our products, such as our “zero utility cost” and LCC exterior siding technologies, for use in marketing our rebuilding products.

Development and production prowess in high-functionality housing —high value-added differentiating technologyThe high heat insulation achievable with the unit construction method is the starting point for our “zero utility cost” housing combining solar cell power production and all-electric equipment. Our advanced housing products are models for the homes of the future. We present simulations for customers to see first-hand the merits of the differentiating technology of our products, such as our “zero utility cost” and LCC exterior siding technologies, for use in marketing our rebuilding products.

May 2008 Update

(1) Heat insulation effectiveness achievable only by the Unit Construction Method

Amount of electricity sold in h the daytime Amount electricity purchased＞＝

The “Zero Utility Cost” House Life Cycle Cost

(2) The effects of high-performance appliances and total electrification

Individual House Diagnostic Systems

Zero Utility Cost Simulation

LCCSimulation

Quake Resistance Quake Resistance SimulationSimulation

We offer a We offer a ““more assured feeling more assured feeling ”” for for individual housesindividual houses

(3) “Energy Creation” effect realized by solar generation

Photovoltaic Generation Systemconverting sunlight into electrical

power

Eco cuteCo2 heat pump water heater

selling power

purchasing power

Electrical Power MeterTwo types of meters for “purchasing power”

and “selling power”

late-nightelectricity

Total Electrification

High Airtightness &Heat Insulation

Solar Electric Generating System

Housing Company

Tiled wall

Stainless steel roofing


HousingHousing-- 4 4 Pursuit of Pursuit of ““High High Performance HousingPerformance Housing”” Obtainable Obtainable Only Through the Unit Construction MethodOnly Through the Unit Construction Method”” (2)(2)

Development and production prowess in high-functionality housing —high value-added differentiating technologyWith housing stock sufficient for long-term needs, the Japanese housing market has reached a stage where the focus is on quality. The Basic Law for Housing Environments established the substantial responsibility of housing constructors to provide housing that is friendly to the environment and in which occupants can live for long periods with peace of mind. Sekisui is committed to developing housing that provides high functionality in not only the fundamental housing features but also in the quality our products provide for the environment, comfort, and peace of mind.

Development and production prowess in high-functionality housing —high value-added differentiating technologyWith housing stock sufficient for long-term needs, the Japanese housing market has reached a stage where the focus is on quality. The Basic Law for Housing Environments established the substantial responsibility of housing constructors to provide housing that is friendly to the environment and in which occupants can live for long periods with peace of mind. Sekisui is committed to developing housing that provides high functionality in not only the fundamental housing features but also in the quality our products provide for the environment, comfort, and peace of mind.

May 2008 Update

EnvironmentEnvironment ComfortComfort ReassuranceReassurance

Housing aiming at “the highest level of performance” can only be attainable with highly-industrialized technology

Parfait Master Design

Exceptional earthquake resistance is realized through our new testing and simulation systems encompassing “unprecedented earthquake levels”

Exceptional earthquake resistance is realized through our new testing and simulation systems encompassing “unprecedented earthquake levels”

We have mounted solar-energy generation systems on over 55,000 houses.Sekisui is the industry leader in energy-conserving heat insulation and

airtightness performance.

We have mounted solar-energy generation systems on over 55,000 houses.Sekisui is the industry leader in energy-conserving heat insulation and

airtightness performance.

The housing design provides a cool summer and warm winter environment supported by the superior heat-insulation

and airtightness.Humidification systems are also an essential element in the

healthy living environments of our housing products.

The housing design provides a cool summer and warm winter environment supported by the superior heat-insulation

and airtightness.Humidification systems are also an essential element in the

healthy living environments of our housing products.

Parfait Master Design 2.0

Housing demand is quantitatively satisfied and is entering an age focusing on qualitative satisfaction.

The Basic Law for Housing Environments requires higher performance housing.

We supply environmentally-friendly houses designed to provide peace of mind to occupants for 60 years or more

Housing Company


HousingHousing-- 5 5 ““ComfortComfort””——Evolution in the Whole House Heating System Evolution in the Whole House Heating System ““Warm AiryWarm Airy””

Development and production prowess in high-functionality housing —high value-added differentiating technologyThe high airtightness and heat insulation provided by the unit construction method increases the comfort of the living environment in our houses. Low-cost central heating can also be provided by utilizing the large under-floor space in our housing designs.

Development and production prowess in high-functionality housing —high value-added differentiating technologyThe high airtightness and heat insulation provided by the unit construction method increases the comfort of the living environment in our houses. Low-cost central heating can also be provided by utilizing the large under-floor space in our housing designs.

May 2008 Update

Fundamental Thermal Insulation

WARM Factory(Thermal Storage Heating System under the floor)

AIR Factory(Heat exchange-type first class ventilating system)

＋

＋

Realizing a Healthy and Comfortable Living Space Realizing a Healthy and Comfortable Living Space

Heim FundamentalThermal InsulationHeim FundamentalThermal Insulation

The superior airtightness and heat insulation properties achieved by our unit construction method also allow us to offer a competitively priced Whole House Heating System.

A yearA year--around warm spring indoor environmentaround warm spring indoor environment

＋

Humidification System

*Newly developed humidifier maintains a comfortable humidity level

WARM FactoryWARM Factory

AdditionalAdditional warmingwarmingusing heat stored inside using heat stored inside the duct.the duct.

HeatHeat Pump,Pump,HumidifyingHumidifying &&DehumidifyingDehumidifying Unit Unit

HeatHeat ExchangingExchanging FanFan

HighHigh FunctionFunction ChamberChamber

Room Temp. 21Room Temp. 21℃℃

FloorFloor Temp. 24Temp. 24℃℃

FloorFloor Temp. 18Temp. 18℃℃

OutsideOutsideTemp.Temp.1.81.8℃℃

Room Temp. 17Room Temp. 17℃℃

Housing Company


＋

HousingHousing-- 6 6 ““ReassuranceReassurance”” ——Evolution in Earthquake ResistanceEvolution in Earthquake Resistance

Movement from large earthquakes is suppressed by elasticity resistance-type rigid-framed box structures.

Small and medium-sized earthquake vibrations are controlled by intensity resistance-type load-bearing external walls

1. We developed “GAIASS” which absorbs seismic force with the composite structure

Meeting the maximum quake-resistance and wind-resistance levels set by the Housing Quality Assurance Law, “3-3-2 (collapse prevention, seismic damage prevention, and wind resistance)” is a standard specifications of our housing products.

The structural capability of Heim’s anti-seismic design is itself sufficient to withstand most earthquakes.

Damping Structure & Seismic Isolation Structure

Five Points for Earthquake Peace of Mind1) Large earthquakes are anticipated2) Additional seismic reinforcement is not necessary3) Flexibility is built into the structural design4) Excellent quake-resistance throughout the house5) Use of the earthquake-resistance Yure-Navi Diagnosis System

Development and production prowess in high-functionality housing —high value-added differentiating technologyJapan is a seismically active country and large earthquakes are expected. We have responded by developing the Globally Absorbed Impact Architectural System by Sekisui Heim (GAIASS). In a small or mid-sized earthquake, the withstanding strength of GAIASS in the highly seismic energy-resistant exterior controls shaking and withstands seismic energy. In a large earthquake, seismic energy is absorbed via a compound structure called the “box-ramen construction”. Our product standards meet the highest seismic resistance levels under the Housing Quality Assurance Law (3-3-2 for collapse prevention, seismic damage prevention, wind resistance), resulting in housing that occupants can live in with full confidence of earthquake protection.

Development and production prowess in high-functionality housing —high value-added differentiating technologyJapan is a seismically active country and large earthquakes are expected. We have responded by developing the Globally Absorbed Impact Architectural System by Sekisui Heim (GAIASS). In a small or mid-sized earthquake, the withstanding strength of GAIASS in the highly seismic energy-resistant exterior controls shaking and withstands seismic energy. In a large earthquake, seismic energy is absorbed via a compound structure called the “box-ramen construction”. Our product standards meet the highest seismic resistance levels under the Housing Quality Assurance Law (3-3-2 for collapse prevention, seismic damage prevention, wind resistance), resulting in housing that occupants can live in with full confidence of earthquake protection.

May 2008 Update

Housing Company


2×6 2×4

Zero Utility Cost Specification of Zero Utility Cost Specification of ““Grand To YouGrand To You”■Advanced thermal insulation and advanced airtightness of the structural frame■Mounting of a highly efficient, space-saving solar power generation system■Highly efficient “Eco Cute” (CO2 heat pump hot-water boiler) ■Total electrification

(1) Development of the 2 x 6 (external ventilation) Unit Construction Method

(2) The “Advanced Living Comfort Standards” Make Health and Living Comfort into Sciences

(3) Achievement of the “Advanced Living Comfort Standards” and “Zero Utility Cost”

6 inch 4 inch

・Improved anti-earthquake and anti-storm properties, Improved heat-insulation, Improved sound-insulation

Housing construction timber size

2×6 timber ← 2×4 (Conventional)

Room temperatures, Temperature fluctuation, Humidity, Air quality, and Sound Control of:Ventilating &

Dehumidifying System Air conditioning of all rooms

External Wall Structure

HousingHousing-- 7 7 ““Grand To YouGrand To You””

““Grand To YoGrand To You Fu Fioraiora””

May 2008 Update

Housing Company


MaintenanceMaintenanceRefurbishing Refurbishing （（PaintingPainting））

LCC Refurbishing (Environment)LCC Refurbishing (Environment)((Solar generator, Solar generator,

Tiled wall, SUS RoofingTiled wall, SUS Roofing))

Life StagesLife Stages

Refurbishing to Life StagesRefurbishing to Life Stages(ApplianceAppliance (kitchen, bath) modification(kitchen, bath) modification、、

Layout revisionLayout revision))

Large refurbishingLarge refurbishing((more than more than ¥¥10 million10 million))

Utilization of the Resident Information Management System only viable with Industrialized Housing.

Periodical Diagnostic System

to identify needs at the life stage of each occupant

5 year-

10 year-

15 year-

20 year-

25 year-

Periodical diagnosisSeparable Frame and Infill ConstructionSeparable Frame and Infill ConstructionLongLong--term 60term 60--year Supportyear Support

HousingHousing-- 8 Living Environment 8 Living Environment --RefurbishingRefurbishing

Offering a Living Environment only possible with "Sekisui Heim VOffering a Living Environment only possible with "Sekisui Heim Valuealue””supported by our distinctive Unit Construction Methodsupported by our distinctive Unit Construction Method

Housing renovation business made possible by a long-term customer support system responsive to tenant needs in each life stage using the tenant information gathering system enabled by industrialized housing systemsSekisui utilizes a design structure that completely separates the house frame from the infill (interior). This makes renovation easier as only the infill needs replacing. Using data from the time of construction on the materials used, floor plans, piping and electrical lines stored in a database, we can offer customers renovation products suitable to their individual life stages.

Housing renovation business made possible by a long-term customer support system responsive to tenant needs in each life stage using the tenant information gathering system enabled by industrialized housing systemsSekisui utilizes a design structure that completely separates the house frame from the infill (interior). This makes renovation easier as only the infill needs replacing. Using data from the time of construction on the materials used, floor plans, piping and electrical lines stored in a database, we can offer customers renovation products suitable to their individual life stages.

May 2008 Update

Housing Company


55 60

35

60

0

50

100

150

FY 2003-FY2005 FY 2006-FY2008

(billions of yen）

90

Cash Flow Management

Usage of Acquired CashInvestment Investment ¥120 billion,, including strategic investment (50%))including strategic investment (50%))

Return to stockholders (Dividend ratio 30%)Return to stockholders (Dividend ratio 30%)Cash Flow Cash Flow

from business operationfrom business operation¥200 billion

GS21-Go!FrontierBreakdown of Investment ¥120 billion120

Strengthening financial standingStrengthening financial standing

Strategic Investment

HPP¥70 bn

58%

UIEP¥30 bn

25%

Housing¥15 bn

13%

Otherｓ¥5 bn

4%

Decision-making basis

Financial Strategy (FY2006Financial Strategy (FY2006--FY2008)FY2008)-- 11

Strategic Investment・Overseas・M&A (IT, AT, MD)

* June 2007 Revised Plan: ¥100 billion

Ordinary Investment

*

May 2008 Update

Corporate Strategy


Active Strategic InvestmentActive Strategic Investment

*Decision-making basis

Strategic Strategic InvestmentInvestmentFrameworkFramework¥60 billion

StrategicStrategicInvestmentInvestmentFrameworkFramework¥100 billion

Original PlanOriginal Plan

Revised PlanRevised Plan

Strategic Investment・Water environment solution business・IT technology related materials・Automotive related materials・M&A・Reinforcing the overseas business base

Strategic Strategic Investment Investment to FY2005to FY2005

*Sold portion of our stock-holding in Sekisui House Ltd. (June 2007)

May 2008 Update

Others

Financial Resourcefrom the sale

of Sekisui House stocks

Acquisition of Allen Extruders LLC.

Acquisition of Daiichi PureChemical Co.

Acceleratinginvestments

Construction of interlayer film plant in U.S.Construction of the raw material plant for interlayer film in EuropeAcquisition of managemet right in Saindeng Co. in Taiwan

Corporate Strategy

Financial Strategy (FY2006Financial Strategy (FY2006--FY2008)FY2008)-- 22

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