Mitsubishi Chemical Holdings: Business Results for the Third Quarter of the Fiscal Year Ending March 31, 2007

For full report, see attachment.

3. Business Performances and Financial Position

(1) Business Performances

Consolidated Performance for the Third Quarter of the Fiscal Year Ending March 31, 2007 (From April 1, 2006 to December 31, 2006)

TOKYO, Feb. 5, 2007-Until the third quarter of the fiscal year ending March 31, 2007, the Japanese economy continued to expand gently benefiting from factors such as brisk export driven by overseas economic boom and active capital investments.

In the Group business environment, both domestic and overseas demands remained firm, while crude oil and naphtha had still kept these high level of prices, despite the descend of these peaks.

Under these circumstances, the consolidated business results until the third quarter of the fiscal year ending March 31, 2007, resulted as follows. The net sales increased by ¥182.7 billion (10.4% increase) to ¥1,936.1 billion compared to the same period of the previous fiscal year; operating income fell by ¥14.1 billion (12.5% decrease) to ¥98.9 billion compared to the same period of the previous fiscal year; ordinary income decreased by ¥15.3 billion (thousand tons, an increase by 9% compared to the same period of the previous fiscal year.

Businesses in basic petrochemicals, industrial chemicals, synthetic fiber intermediates, and synthetic resins progressed favorably by the active demands in both domestic and overseas markets. Market prices for products such as purified terephthalic acid and ethylene glycol were affected by the hiking crude oil and naphtha prices.

Major actions taken for the Petrochemicals Segment during the third quarter (from October 1, 2006 to December 31, 2006) are as follows:

• Mitsubishi Engineering-Plastics Corporation decided to establish a manufacturing company for engineering plastic compounds such as PBT and Nylon 6 in Guangdong, China. (October 2006) 
• Kashima Kita Electric Power Corporation decided to renovate a facility due to conversion from one of the major fuel, orimulsion to petroleum coke. (November 2006) 
• Mitsubishi Chemical Corporation decided to license its production technology of bisphenol-A to PTT Phenol Company Limited. (November 2006)

Performance and Functional Products

Net sales of the segment increased by ¥47.5 billion (7.4% increase) to ¥687.1 billion compared to the same period of the previous fiscal year. Operating income, decreased by ¥8.2 billion (15.6% decrease) to ¥44.2 billion compared to the same period of the previous fiscal year.

In the area of information and electronics related products, with regard to the DVDs, sales volume continued to expand, despite the price fall. With regard to printing supplies, such as organic photo conductor (OPC) drums, toner, and chemical toner, sales volume increased as domestic demands were active. In the performance products businesses, favorable results in sales continued for food ingredients business. In the carbon businesses, the price difference in inventories of raw material coal turned into a loss against the gain in the same period of the previous fiscal year and decline in the export price of coking coal, operating profit fell compared to the same period of the previous fiscal year.

In the functional products businesses, all types of films including composite films and sheets progressed favorably, especially in the protecting polyester films for liquid crystal displays. Plastic injection moldings for electronic applications such as liquid crystal television, and both construction materials including composite materials and industrial application materials such as carbon fibers and alumina fibers increased net sales at a satisfactory pace.

Major actions taken for the Performance and Functional Products Segments during the third quarter (from October 1, 2006 to December 31, 2006) are as follows:

• Mitsubishi Chemical Corporation and Mitsubishi Corporation increased in capital to Frontier Carbon Corporation in order to develop fullerenes for industrial use. (October 2006) 
• Mitsubishi Plastics, Inc. launched open type cooling tower with built-in chemical water treatment system, which enables space-saving and easy piping work. (October 2006) 
• Mitsubishi Plastics, Inc. decided to establish a new facility for engineering plastic films at the Nagahama Plant to increase the production capacity, in response to demand expansion of engineering plastic films for IT. (November 2006) 
• Mitsubishi Kagaku Media Co., Ltd. launched 2x "bare" type (cartridge-less) Blu-ray Disc (BD-R and BD-RE) for video use. (December 2006)

Health Care

Net sales of the segment decreased by ¥9.8 billion (4.0% decrease) to ¥232.3 billion compared to the same period of the previous fiscal year. Operating income increased by ¥1.8 billion (5.1% increase) to ¥36.0 billion compared to the same period of the previous fiscal year, as the result of decrease in the selling, general and administrative expenses such as sales commission.

In the pharmaceutical business, net sales fell compared to the same period of the previous fiscal year due to the National Health Insurance price revision, despite growth in sales of major products such as an ethical neuroprotective agent, RADICUT inj. and anti-platelet agent, ANPLAG. Business performances for clinical testing and testing for clinical trials were satisfactory in general.

Major actions taken for the Health Care Segment during the third quarter (from October 1, 2006 to December 31, 2006) are as follows:

• Mitsubishi Pharma Corporation and Kureha Corporation concluded a licensing agreement in respect of Kremezin, a therapeutic agent for chronic kidney disease developed by Kureha Corporation, under which Mitsubishi Pharma Corporation is granted the exclusive global development and commercialization rights including the US but excluding Japan, South Korea, China, Taiwan, the Philippines, India, and Israel. (November 2006) 
• Mitsubishi Chemical Corporation sold all the shares of IC-Vec Limited to Imuthes Limited (November 2006)

Others

Net sales increased by ¥9.4 billion (11.4% increase) to ¥91.8 billion compared to the same period of the previous fiscal year, and operating income increased by ¥0.6 billion (9.5% increase) to ¥6.9 billion compared to the same period of the previous fiscal year.

Both engineering service and logistics progressed satisfactory.

• Mitsubishi Chemical Corporation decided to transfer hotel business of Kitakyushu Prince Hotel, a subsidiary of Mitsubishi Chemical Corporation, to Hotel Management International Company Ltd. (November 2006) 
• Mitsubishi Chemical Corporation issued the 35th (bond issue: ¥10 billion; period: 10 years) and the 36th (bond issue: ¥10 billion; period: 5 years) domestic straight bonds. (December 2006) 
• The Cell Structure and Diseases Research Group of Mitsubishi Kagaku Institute of Life Sciences reported the novel mechanism which maintains the structure of intracellular organelles during interphase of cell cycle. (December 2006)

(3) Consolidated Financial Position

At the end of the third quarter of the fiscal year ending March 2007, total assets amounted to ¥2,288.3 billion, an increase by ¥161.7 billion compared to the end of the previous fiscal year. This was due to such as an increase in trade receivables affected by holidays on closing dates and growth in net sales, an increase in inventory assets according to factors such as the seasonal effect, and an increase in property, plant and equipment by the expansion of capital investment.

4. Consolidated Financial Projection for the Fiscal Year Ending March 31, 2007

The financial position has progressed on the track of the financial projection for the fiscal year ending Mach 31, 2007, as announced on November 9, 2006 until the third quarter of the fiscal year ending March 2007. This projection has not been revised.

Financial Projection for the Fiscal Year Ending Year Ending March 31, 2007

(Announced on November 9, 2006)

Unit: Billions of Yen

Forward-Looking Statements

The forward-looking statements are based largely on company expectations and information available as of the date hereof, and are subject to risks and uncertainties, which may be beyond company control. Actual results could differ materially due to numerous factors, including without limitation, market conditions and the effects of industry competition. The company expectations for the forward-looking statements are described in page [2], [6], and [7], hereof.

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