Mitsubishi Materials Corporation

5711

JP3903000002

Diversified Mining

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May. 30	Mitsubishi Materials to Acquire H.C. Starck for 21 Billion Yen	MT
May. 17	Mitsubishi Materials' Fiscal-Year Profit Surges 47% on Extraordinary Income	MT

Mitsubishi Materials : Progress and Outlook of the Medium-term Management Strategy FY2031

May 20, 2024 at 10:45 pm EDT

Progress and Outlook of the Medium-term Management Strategy FY2031

May 21, 2024

Director, Chief Executive Officer

Naoki Ono

Management Policy for FY ending March 2025

We have established management policy for FY ending March 2025, the second year of the Medium-term Management Strategy FY2031. In order to fullfill "Our Commitment" of "For people, society and the earth, circulating resources for a sustainable future," we will build a recycling system for metal resources based on our strengths and realize growth throughout the value chain by expanding the scope, regions and scale of our operations.

Strengthening Response to

SCQ * Issues

Prevention of industrial accidents
Strict adherence to compliance
Strengthening information security
Company-widecritical risk management activities

Optimization of Management Structure

Deepening matrix management of business and functional axes
Establishment of regional axes (A new company in Europe)
Optimization of business structure

Achievement of FY 2031 Strategy Goals

Implementation of PDCA for the FY2031 Strategy
Improving profitability
Responding to labor shortage

Responding to Sustainability Issues

Promoting resource recycling
Strengthening response to global environmental issues
Strengthening human capital

Sustainability Issues

*SCQ: the order of priority of our business decisions. Safety & Health, Compliance, Quality

Promotion of resource circulation
Response to global environmental issues
Enhance human capital management
Activate communication
Strengthen information security
Strengthening response to SCQ * issues
Strengthening sustainable SCM

Deepenning of DX
Pursuit of value creation
Geopolitical and geoeconomic risk
Financial risk

Table of Contents

Progress of the Medium-term Management Strategy FY2031
Status of Major Measures in Progress of the Medium-term Management Strategy FY2031
1. Expansion of resource recycling
2. Enhancing the supply of high-performance materials and products
3. Renewable Energy business

1. Progress of the Medium-term Management Strategy FY2031

1. Progress of the FY2031 Strategy

Medium-term Management Strategy FY2031 (the FY2031 Strategy)

For people, society and the earth, circulating resources for a sustainable future


Prosperous	Recycling-	Decarbonized
society		oriented society	society

Build a recycling system of metal resources based on our strengths and realize growth throughout the value chain by expanding the scope, regions, and scale of our operations

Resource	Decomposition and separation	Smelting	Material processing and product manufacturing
procurement
(1) Expansion of resource recycling		(2) Enhancing the supply of

			high-performance materials and products

Metals Company

Resources Business,

Smelting & Resource Recycling Business

E-Scrapinformation network with recyclers in more than 60 countries around the world
Base for highly efficient collection of used products (collection sites)
Advanced decomposition and separation technologies cultivated through home appliance recycling
Highly efficient recycling technology using smelting systems

Advanced Products Company

Copper & Copper Alloy Business,

Electronic Materials and Components Business

High-performancematerials and processed products
(copper alloy, oxygen-free copper, silicon precision processed products, etc.)
Global expansion of EV connectors and superconducting wires for MRI

Metalworking Solutions Company

Carbide Tool Business, Tungsten Business,

and Solutions Business

Ability to cope with difficult-to-cut materials and new materials
Materials and coating technologies, and technical proposals

Sales and use

(3) Implementing GHG reduction measures to achieve carbon neutrality

	Supply of renewable electricity	Renewable Energy Business	Supply of renewable electricity
		Geothermal, hydroelectric, solar, and wind power
		generation Business
		 Technology based on abundant achievements and experience in the geothermal power generation business

	*The Environmental ＆ Recycling business was integrated into Metals Company in April 2023, and the Renewable Energy business was reorganized under the Strategic Headquarters.
Copyright ©MITSUBISHI MATERIALS Corporation.All rights reserved.		5

1. Progress of the FY2031 Strategy

Trends in the External Environment

Demand

Copper Copper

Price

TC/RC

Automobile

Industry

Semiconductor

Industry

Growth is slowing due to a generally sluggish global economy and delayed economic recovery in China; however, in the medium- to long-term, demand for copper will remain strong due to demand for EVs and renewable energy, as well as demand for data centers as the digitalization society progresses.
Although copper price was 379¢/lb in FY ended March 2024 (full year), lower than the previous fiscal year (388¢/lb), it has been on an upward trend since April 2024 and is currently above 450¢/lb. Steady movement is expected due to anticipated long-term growth in demand.
Supply concerns have led to strong buying by Chinese smelting operations and traders, and spot TC/RCs are extremely low; as smelting capabilities continue to grow in Indonesia and India, there are concerns that TC/RCs will remain low.
There was a general trend toward recovery up through Q3 of FY ended March 2024, but the recovery trend slowed down in the 4th quarter. A moderate recovery is projected in FY ending March 2025.
Demand for our copper alloy products and cemented carbide tools is also expected to recover in FY ending March 2025.
As Semiconductor-related demand continued to be at a bottom phase in FY ended March 2024, it appears to have bottomed out in the fourth quarter. Demand for semiconductor manufacturing equipment and materials is expected to recover in FY ending March 2025, particularly for AI-related technologies and automotive applications.
Stronger recovery of demand for semiconductor-related materials is projected for the latter half of the fiscal year.

1. Progress of the FY2031 Strategy

Review of FY Ended March 2024, Forecast for FY Ending March 2025

OperatingprofitinFYendedMarch2024 fell shortof our initialplan,duetotheeffectsof weakeningautomobileand semiconductormarkets.In contrast,we madeeffortsto enhancecost competitiveness,suchas by implementingcost reductionmeasuresineach of our businesses,aheadof scheduleintheFY2031 Strategy.
Recovereddemandis projectedfor automobileproductsbeginninginQ1 of FYendingMarch 2025, and for semiconductor-relatedproducts beginninginthelatterhalf of thefiscal year.
We can achieveourstrategytargetsby implementingthevariousmeasuresprovidedintheFY2031 Strategyand enhancingour cost competitiveness.

		FY Ended	FY Ended	FY Ended	FY Ending	FY Ending	FY Ending
		March 2023	March 2024	March 2024	March 2025	March 2026	March 2031
		Result	Initial Forecast	Result	Forecast	Plan	Target
Net sales	Billions	1,625.9	1,670.0	1,540.6	1,950.0	1,940.0	2,000.0
(Net sales excluding metal charges)	of yen	(608.0)	(706.0)	(548.1)	(652.0)	(690.0)	(850.0)

Operating profit	Billions	50.0	50.0	23.2	41.0	70.0	130.0
of yen

Ordinary profit	Billions	25.3	58.0	54.1	63.0	87.0	180.0
of yen

ROIC	%	1.4%	4.1%	3.8%	4.3%	5.5%	9.0%

ROE	%	3.5%	6.8%	4.8%	6.7%	10.0%	13.6%

EBITDA	Billions	75.7	113.0	105.0	117.4	150.0	260.0
of yen

Net D/E ratio	Times	0.7	0.7	0.7	0.7	0.7	0.5 or less

Net interest-bearing debt	Times	5.2	4.1	4.5	4.3	3.5	2.0 or less
/ EBITDA ratio


Dividend per annum	Yen	50	94	94	100

1. Progress of the FY2031 Strategy

Metals Company

Resourcesbusiness:Dividendsfrom Los PelambresCopperMineincreasedinFYendedMarch2024. Dividendsareexpectedtobelower inFY endingMarch2025, however,CopperMountainCopperMineandMantoverdeCopperMineareexpectedto becomeprofitable.
Smelting& ResourceRecyclingbusiness:In FY endedMarch2024, profitabilitydeteriorateddueto a declineinpalladiumpricesand one-time factors such as troubleinOnahamaSmelter& Refineryandreductionof raw materialarrivals.One-timefactors areexpectedto beresolvedinFY endingMarch2025.

FY Ended

FY Ending

FY2031

Direction for achieving

March

(billions of yen)

Strategy

FY2031 Strategy Measures

Progress

the FY2031 Strategy

2023

2024

2025

Plan

Result

Forecast

Ordinary profit

2.4

20.1

17.9

11.4

• Promotion of technological

•

Mining investment is

•

Expansion of operations

development to recover rare

proceeding as

at Los Pelambres Copper

EBITDA

2.5

19.0

16.6

11.1

metal resources contained in

anticipated.

Mine is also going well,

copper deposits

•

Full-scale copper

and dividends are as

Resources

ROIC

1.1%

11.7%

10.5%

9.0%

• Acquisition of copper mining

concentrate production

planned

interests and securing copper

planned at Mantoverde

• In FY ending March 2026,

Business

ROIC spread

-8.6pt

+2.0pt

+0.8pt

-0.7pt

concentrates through

copper mine in the

the ROIC is temporarily

WACC:9.7%

continuous investment in

latter half of 2024.

expected to decrease, and

mines

EP will be negative due to

2.1

0.9

• Expansion of electrolytic

the execution of

copper supply through SX-EW

investment in mines.

operations at copper mines

Ordinary profit

25.9

11.6

19.0

27.0

• Strengthening and expanding

•

Construction has begun

• Increased profit due to

the networks to promote

on a pilot plant for LIB

review of metal prices

resource recycling

recycling.

and reduction of hedging

EBITDA

42.6

28.8

33.4

39.6

• Expansion of electrolytic

•

We will consider

costs in response to

copper production capacity

adjustments to

increased electricity costs

Smelting

• Increasing the recycling rate by

investment allocation

• ROIC is improving due to

ROIC

8.3%

2.9%

5.7%

7.1%

expanding the treatment of

with respect to

increased profit

＆

recycled products containing

strengthening E-scrap

•

Regarding E-Scrap, we

Resource

metal resources

capacity.

will strengthen the

Recycling

ROIC spread

+2.9pt

-2.5pt

+0.3pt

+1,7pt

• Creation of rare earths and

collection system in

Business

rare metals recycling

Europe based on the

WACC:5.4%

businesses

forecast of supply and

• Accelerating business

demand

-7.4

1.0

developments in Japan and

overseas (E-Scrap, home

appliances, automobile

recycling)

*EBITDA= Ordinary profit + Interest expense + Depreciation

+ Goodwill depreciation

1. Progress of the FY2031 Strategy

Advanced Products Company

Copper& CopperAlloy business:Demandfor automobilesdeclinedinFYendingMarch 2024. Ordinaryprofitis expectedto improveinFYending March2025 drivenby recoveryof demandfor automobiles,revisionof roll marginsandcost reductions.
ElectronicMaterials& Componentsbusiness:Demandfor semiconductorproductsdecreasedinFYendedMarch2024. Thesemiconductor marketremainsweak,and a full-scalerecoveryindemandisexpectedin thesecondhalf of FYendingMarch2025.


		FY Ended	FY Ended	FY Ending	FY2031					Direction for achieving
		March	March	March
(billions of yen)	Strategy	FY2031 Strategy Measures		Progress		the FY2031 Strategy
2023	2024	2025
		Plan					Plan
		Result	Result	Forecast

	Ordinary profit	-0.0	-0.5	7.3	12.4	• Improve the recycling rate of	•	Investment to	•	Lowering the break-even
	wrought copper products and		strengthen		point by improving yield
						establish a scrap platform		production capacity		and productivity
	EBITDA	9.3	10.6	20.5	24.6	base		for copper sheets and	•	Reducing raw material
Copper &	• Overseas (Luvata): Rapid entry		copper strips is		costs by improving
					into growing markets (xEV,		proceeding as		recycling rates

Copper
ROIC	0.6%	0.6%	3.2%	4.0%	healthcare, environment)		anticipated, and	•	Promoting sales expansion
Alloy
					• Expand sales and strengthen		substantial		to domestic key accounts
Business
ROIC spread	-2.1pt	-2.1pt	+0.5pt	+1.3pt	services to overseas customers		operations to begin in		and expanding into

WACC:2.7%	by establishing a new		the latter half of FY		overseas sales channels
						overseas plant which carries out		ending March 2025	•	Accelerating sales shift to
	EP		-4.5	1.1		a downstream process, with the				high-profit products
			domestic plants as mother ones

	Ordinary profit	7.7	2.8	3.8	8.6	• Highly capital-efficient management	•	The business	•	Semiconductor market,
	through continual restructuring of the		environment for		effects of increased
						business portfolio		precision silicon		production due to recovery
						• Strategic investment in focal		products is worsening.		in demand and growth of
	EBITDA	11.5	6.9	8.7	16.0	products in growth areas		We will reevaluate		automobiles (mainly
Electronic	• Developing and securing human		investments in		electric vehicles),
					resources for the creation of new		increased production		additional sales expansion
Materials		8.7%				businesses and the		and shift toward		measures (Silicon
&	ROIC	3.3%	3.8%	7.8%	promotion of business alliances		other growth areas.		processed products, device
Compone		• Enhancing manufacturing				products)
nts						capabilities and DX to enhance			•	Improvement of ROIC by
Business	ROIC spread	+1.3pt	-4.1pt	-3.6pt	+0.4pt	production sophistication and				implementing a growth
WACC:7.4%	profitability				investment plan based on
						• Providing business and social value				semiconductor market
						(SDGs) for carbon neutrality				conditions
	EP		-2.7	-2.7

*EBITDA= Ordinary profit + Interest expense + Depreciation + Goodwill depreciation

1. Progress of the FY2031 Strategy

Metalworking Solutions Company

MetalworkingSolutionsbusiness:In FYendedMarch2024, demandfor cementedcarbideproductsfor Japan and Asiadeclined.In FY ending March2025, we expectrecoveryindemandfor automobiles.

		FY Ended	FY Ended	FY Ending	FY2031					Direction for achieving
		March	March	March		FY2031 Strategy
(billions of yen)	Strategy		Progress		the FY2031 Strategy
2023	2024	2025		Measures
		Plan				Plan
		Result	Result	Forecast

	Ordinary profit	14.5	12.2	14.0	25.0	Carbide tools business	• Creation of high added-	•	Enhancement of tungsten
	•	Stable supply of the	value products in various		business (Recycling,
							world's top quality, high-	fields including automobile,		production and sales of
	EBITDA	27.4	24.5	28.8	39.9		efficiency products	aerospace, and medical are		high-performance powders
		utilizing the strength of	as planned.		and alloys) through
							materials and coating			acquisition of H.C. Starck,
							technology			Germany
Metalworking	ROIC	6.9%	5.2%	5.3%	8.6%	Tungsten business		•	Improvement of sales
•	Expansion of business			efficiency and productivity
Solutions							scale for rechargeable			using DX

Business	ROIC spread	+0.4pt	-1.3pt	-1.2pt	+2.1pt		batteries in addition to		•	Improvement of capital
WACC:6.5%		carbide tools, etc.			efficiency by reducing

					•	Strengthening			inventories

							environmental
							responsiveness
	EP		-2.1	-2.0		Solution business
			•	Commercialization of

							solution sales to
							manufacturing sites
*EBITDA= Ordinary profit + Interest expense + Depreciation + Goodwill depreciation

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Mitsubishi Materials Corporation published this content on 21 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 May 2024 02:44:07 UTC.

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Company Profile

Mitsubishi Materials Corporation is a diversified industrial group organized around 5 sectors of activity: - production of non-ferrous metals (42.8% of net sales): ingots, copper rods and cathodes, gold, silver, zinc, etc.; - production of advanced materials (25.9%): high-performance alloy products. The group also produces electronic materials and components; - production of cement (11.5%); - production of cemented carbide (7.1%); - other (12.7%): primarily engineering services and nuclear energy production. Net sales break down geographically as follows: Japan (50.3%), Asia (35%), the United States (9.2%), Europe (4%) and other (1.5%).

Sector

Diversified Mining

Calendar

2024-08-06 - Q1 2025 Earnings Release (Projected)

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Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

3,063 JPY

Average target price

2,926 JPY

Spread / Average Target

-4.46%

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5711

JP3903000002

Diversified Mining

Mitsubishi Materials : Progress and Outlook of the Medium-term Management Strategy FY2031

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