October 7, 2011

DIC Announces Full-Scale Entry into European PPS Engineered Compounds Market with Construction of New Plant and Acquisition of Business

—Part of approximately ¥10 billion project to expand global production capacity for PPS polymer and compounds—

Tokyo, Japan—DIC Corporation has announced today its intent to build a new plant for polyphenylene sulfide (PPS) compounds in Vienna, Austria – representing an investment of €14 million, or about ¥1.5 billion. The new plant is scheduled for completion in 2012, after which it will undergo production trials before commencing commercial production. On September 30, 2011, DIC and the Solvay Group, a leading European chemicals manufacturer, reached an agreement whereby DIC will acquire Solvay’s PPS compounds business. This acquisition will give DIC a strong foothold in the European market.

PPS compounds are made by reinforcing PPS resin, a high temperature resistant polymer, with glass fibers or inorganic fillers. In addition to outstanding heat resistance and mechanical strength, PPS compounds also boast excellent dimensional stability. Thanks to such properties, demand for PPS compounds as an alternative to metal is growing, particularly for use in automobiles, electrical and electronics equipment, and the housing/construction materials market.

From production facilities in Japan and Malaysia, the DIC Group currently supplies PPS neat polymer and compounded products to many global customers. As the world’s leading producer of PPS compounds, the Group has traditionally focused efforts to capture business in Japan and other Asian regions, including the People’s Republic of China (PRC). However, in recent years it has also stepped up market development efforts in Europe. Annual demand for PPS compounds in Europe is currently estimated at approximately 15,000 metric tons - which is second to Japan’s 30,000 metric tons, and is expected to continue growing by 6-8%, particularly for use in automotive electronics. Full-scale entry into the European market—made possible by the new plant and business acquisition, which have given it local production capabilities—will enable the DIC Group to better accommodate customer needs and shorten delivery times.  This strategic decision will successfully position our business to further increase European sales and help establish a solid manufacturing platform for future growth.

The new plant will have an annual production capacity of 6,000 metric tons, with the future option to expand production lines to facilitate a slated capacity of 10,000 metric tons. In addition to already increasing its share of the European PPS compounds market to more than 20%, the DIC Group will strive to further expand the necessary manufacturing infrastructure to ensure continued growth with our global customers.

The DIC Group has earmarked approximately ¥10 billion for a project to expand its global production capacity for PPS polymer and compounds. In July 2011, the Group invested about ¥500 million to increase the annual production capacity of subsidiary DIC Compounds (Malaysia) Sdn. Bhd. from 1,500 to 4,500 metric tons. The approximately ¥1.5 billion investment in Austria represents the Group’s second major initiative designed to expand its production capacity for PPS compounds. The Group will also invest about ¥8.0 billion to build a new PPS polymer production line (completion scheduled for 2013) at subsidiary DIC EP Corp.’s Kashima Plant in Japan.

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