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For the 79th terms from April 1, 2002 through to March 31, 2003

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During the report term, the Japanese economy has been under a continuous difficult business environment affected by the controlled investment in public sector and in private capital, and further hovering of stock prices by such as the unrest on the financial system, in the continuous price plunge, although the production has increased by the restoration of export and the trend has been changed for the better.

The chemical industry has gained increasing severity by a further price jump in petrochemical raw material of naphtha due to the worsened Middle East situation.

Under these circumstances, Chisso Corporation has made efforts to expand the business of the performance products for such as electronics field, and made a concentrated effort to strengthen its competitiveness of the profitable basic business including the petrochemicals and the consumer oriented goods. And it has made efforts to improve profits by implementation of the innovative activities in services such as the reorganization of the Indirect Division.

As the result, the present term closed with a sales figure of slightly over 117,710 million yen at a level a little below that of the previous term, due partly to an effect of the change in the form of transaction in the Performance Products Division, however, with ordinary profits of over 5,420 million yen exceeded that of the previous term.

The special profits and losses accounts showed a loss due to the Minamata Disease Compensation Liabilities of a little over 7,120 million yen. As a result, the report term closed regrettably with a loss of a little over 1,070 million yen.

Petrochemicals Division

The Division has not gained sufficient results, in spite of the price correction coping with the jump in the raw material naphtha price.

The domestic shipment of polypropylene has been favorable. Especially, the performance polymers series of long-fiber glass reinforced plastic resins (trade name: "FUNCSTER") were appreciated for its strength properties so high they have been employed for large automotive structural members and the like substituting for metal materials, and the sales has drastically increased.

Organic chemicals have steadily increased in the sales of ester family solvents including ethyl acetate and oxo alcohols, however, the profitability has turned to be severe due to the jump in the raw material price and the sluggish in the products price.

Consumer-Oriented Goods Division

In the bi-component fibers area, the demand in the sanitary materials has been favorable, however, the market has been weakened by the competition with cheap imported non-woven products and other materials.

In the agrichemical products, under a severe environment surrounding the agriculture seen in the increase of imported agricultural products and in the decrease in the rice acreage, the domestic shipment of the coated urea fertilizers (trade name:"MEISTER") have been favorable, however, the compound fertilizers and the agricultural materials showed a sluggish growth in shipment. As for agricultural materials, the company has agreed with C.I. KASEI Co., Ltd. to discuss for the purpose of realization of comprehensive business cooperation in relation to the business of agricultural film. After this, the both companies will combine to carry out full examination, and aim at the further rationalization and improvement in the business.

Making the best use of the quality characteristics of the synthetic paper (trade name"CARRE"), the sales of the applications in commercial posters, adhesive labels, printing paper and others has been expanding.

Performance Products Division

Liquid crystals marked favorable shipments, favored with placing on the large-scale market of liquid crystal monitor display (LCD) TV and getting larger in size of LCD of all kinds. As to the other liquid crystal materials, aligned films marked greatly favorable shipments, and transparent materials such as color filter protective films placed on market last year has been highly valued and the preparation of commercial production has started. Organic EL materials for a new display material having a prospective future, are appreciated the unique characteristics of the company and the shipment has started.

As the results of expansion of the market of LCD and finding new customers, the orders for electronic components have been increased and production has been gradually recovered. The lead free soldered bump based on new technologies has been increased steadily in the order received, due to the high demands on the environment-conscious electronic materials.

The shipment of the silane coupling agents (trade name: "Sila-Ace") in silicon products has increased, though the prices has decreased under a severe competition with imported materials. The market for optical fibers has continued to be in severe situation due to the drop of both domestic and foreign demands.

The sorbates in the fine chemical products suffered from severe business environment with sluggish sales and price affected by the cheap imported materials. Regarding polylysine, measures to develop application other than food has been conducted actively.

The present term closed with a sales figure of 7% over that of the previous term after the deduction of the effect of the change in the form of transaction regarding the electronic components.