Mitsui Sugar : Summary of Consolidated Financial Results For the Three Months of the Year Ending March 31, 2021

Summary of Consolidated Financial Results

For the Three Months of the Year Ending March 31, 2021 (Based on Japanese GAAP)

			July 31,	2020
Company name:	Mitsui Sugar Co., Ltd.	Stock exchange listings: Tokyo
Stock code:	2109		https://www.mitsui-sugar.co.jp/
Company representative:	Daisuke Saiga, President and Chief Executive Officer
Contact person in charge:	Hideaki Batori	Executive Managing Officer,
		General Manager, Group Strategy Division
			TEL. [phone]
Planned date for submission of quarterly report:		August 6, 2020
Planned date to start dividend payment:		－
Preparation of supplementary material for quarterly financial statements:	None
Briefing session for quarterly financial statements:		None
		(Amounts are	rounded down to the nearest 1 million	yen.)

1. Consolidated Financial Results for the Three Months of the Year Ending March 31, 2021 (from April 1, 2020 to June 30, 2020)

(1) Consolidated Results of Operations				(Percentages are year-over-year changes.)
	Net sales		Operating income	Ordinary income	Profit attributable to
		owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%
First three months of FY2020	26,528	(7.9)	1,088	(22.2)	991	(49.0)	405	(68.3)
First three months of FY2019	28,795	7.9	1,398	23.3	1,945	(35.4)	1,276	(33.8)

(Note) Comprehensive income:

Three months ended June 30, 2020:

172 million yen

(-88.6%)

Three months ended June 30, 2019:

1,504 million yen

(-25.6%)

Earnings per share

Diluted earnings per share

Yen

Yen

First three months of FY2020

15.77

－

First three months of FY2019

48.10

－

(2) Consolidated Financial Position

Total assets

Net assets

Capital adequacy ratio

Net assets per share

Million yen

Million yen

%

Yen

As of June 30, 2020

137,016

91,811

60.0

3,199.60

As of March 31, 2020

141,705

92,395

58.4

3,218.77

(Reference) Equity capital:

As of June 30, 2020:

82,234 million yen

As of March 31, 2020:

82,727 million yen

2. Cash Dividends

Annual dividend

End of 1Q

End of 2Q

End of 3Q

Year end

Total

Yen

Yen

Yen

Yen

Yen

Year ended March 31, 2020

-

25.00

-

25.00

50.00

Year ending March 31, 2021

-

Year ending March 31, 2021

25.00

-

25.00

50.00

(forecast)

(Note) Revision of the dividend forecast

announced most recently: None

3. Consolidated Business Forecasts for the Year Ending March 31, 2021 (from April 1, 2020 to March 31, 2021)

(Percentages are year-over-year changes.)

Operating

Profit attributable

Earnings per

Net sales

Ordinary income

to owners of

income

share

parent

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

Full year

115,000

1.0

4,800

(1.0)

4,800

(3.7)

2,400

(0.9)

93.38

(Note) Revision of the business forecasts

announced

most

recently:

None

• Notes
• 1. Significant changes in subsidiaries during the period
     (Changes in specified subsidiaries resulting in changes of scope of consolidation): None

New:	－ companies (company name):	－
Excluded: － companies (company name):	－

1. Application of accounting method unique to preparation of quarterly consolidated financial statements: None
2. Changes in accounting policy and accounting estimates and restatement

(i)	Changes in accounting policy due to any revision of accounting standards:	Yes
(ii)	Changes in accounting policy other than i) above:	None
(iii)	Changes in accounting estimates:	None
(iv)	Restatement:	None

Note: For more details, please refer to "2. Quarterly Consolidated Financial Statements and Important Notes, (3) Notes on quarterly consolidated financial statements (Changes in accounting policies)" on page 8 of the Appendix.

(4) Number of outstanding shares (common shares)

1. Number of outstanding shares at period end (including treasury shares)
2. Number of treasury shares at period end
3. Average number of shares during period (from the beginning of fiscal year to period end)

As of June 30, 2020	28,333,480 shares	As of March 31,	28,333,480 shares
2020
As of June 30, 2020	2,631,954 shares	As of March 31,	2,631,827 shares
2020
Three months ended	25,701,616 shares	Three months ended	26,536,870 shares
June 30, 2020	June 30, 2019

• The quarterly kessan tanshin document is outside the scope of audit procedures conducted by certified public accountants and the independent auditor.
• Explanation on appropriate use of business forecasts, and other special notes
  Business forecasts and other forward-looking statements contained in this report and supplementary materials are based on information currently available to the Company and on certain assumptions deemed as rational. They do not constitute a guarantee that the Company will achieve its forecasts or other forward-looking statements. Actual results may differ significantly from forecasts due to various factors. For assumptions and other criteria used to formulate business forecasts, please refer to "1. Qualitative Information Regarding the Results for the First Three Months of the Year Ending March 31, 2021, (3) Description of consolidated business forecasts and other information about future forecasts" on page 3 of the Appendix.

Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Three Months Ended June 30, 2020

• Appendix

1.	Qualitative Information Regarding the Results for the First Three Months of the Year Ending March 31, 2021........................	2
(1)	Description of consolidated operating results..............................................................................................................................	2
(2)	Description of consolidated financial position.............................................................................................................................	3
(3)	Description of consolidated business forecasts and other information about future forecasts .....................................................	3
2.	Quarterly Consolidated Financial Statements and Important Notes ............................................................................................	4
(1)	Quarterly consolidated balance sheets .........................................................................................................................................	4
(2)	Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income........................	6
	(Quarterly consolidated statements of income) ...........................................................................................................................	6
	(Quarterly consolidated statements of comprehensive income)...................................................................................................	7
(3)	Notes on quarterly consolidated financial statements ..................................................................................................................	8
	(Note on assumptions of a going concern) ..................................................................................................................................	8
	(Notes when the amount of the shareholders' equity significantly fluctuates).............................................................................	8
	(Changes in accounting policies) ................................................................................................................................................	8
	(Segment information, etc.).........................................................................................................................................................	8

- 1 -

Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Three Months Ended June 30, 2020

1. Qualitative Information Regarding the Results for the First Three Months of the Year Ending March 31, 2021

(1) Description of consolidated operating results

In the first three months of fiscal 2020 (April - June 2020), Mitsui Sugar continued to work closely with Group companies to strengthen existing businesses and expand businesses in growth fields. However, the slowdown in the global economy caused by the COVID-19 outbreak impacted sales at Group companies. Some companies were also affected by one-off factors, with the cost ratio increasing at consolidated subsidiary Hokkaido Sugar Co., Ltd. after an accident in the previous fiscal year, and profitability deteriorating at equity-method affiliates in Thailand due to a drought that led to a poor sugar cane harvest. As a result, the Group's sales and profits both declined year on year.

(Sugar Business)

In the overseas crude sugar market, the sugar price started the fiscal year in the low-10 cents per pound level, before entering a clear downward trend amid a drop in demand caused by the COVID-19 outbreak. In late April, the price fell sharply to the 9- cent level, the lowest point in roughly 13 years, but then rebounded strongly to the 10-cent level. From mid-May, the price started to rise gradually, buoyed by speculative funds flowing into commodities markets on hopes that the global economy was heading for recovery. The sugar price ended the first quarter at the high-11 cents per pound level.

In sales activities, sales volume was sharply lower year on year, reflecting a steep drop in demand for commercial-use products from food service companies and makers of souvenir food products amid calls to remain at home during the COVID-19 outbreak. After the state of emergency was lifted for all regions in Japan at the end of May, there was a gradual rise in sales volume, but no full-fledged recovery. On the cost front, production adjustments were implemented in response to the contraction in sales volume, and there was an increase in depreciation and amortization related to investment in equipment and facility upgrades to ensure stable operations. As a result, sales and profits declined year on year.

In consolidated subsidiaries, sales and profits increased at Showa Sugar Co., Ltd. on higher production volume, supported by favorable sugar cane cultivation. However, sales and profits from consolidated subsidiaries declined overall due to weak earnings at Hokkaido Sugar Co., Ltd. and the impact of the COVID-19 outbreak on SIS' 88 Pte Ltd.

As a result of the above, the Sugar Business reported overall net sales of 21,105 million yen and operating income of 575 million yen.

Sugar market status during period

Domestic market price (listed in Nippon Keizai Shimbun, per kilogram of a large bag of superfine sugar, Tokyo) Three months ended June 30, 2020: 187-188 yen

Overseas raw sugar price (NY sugar current delivery, per pound)

Opening price: 10.39 cents, highest price: 12.27 cents, lowest price: 9.05 cents, closing price: 11.84 cents

(Food Science Business)

In the Food Science Business, sales and profits both increased compared with the same period a year earlier. Despite an impact on domestic operations from the COVID-19 outbreak, sales volume for palatinose picked up overseas and there was an increase in the use of sugar cane extract for disinfection applications.

In consolidated subsidiaries, sales and profits increased at TAISHO TECHNOS CO., LTD., supported by higher sales volumes for lactic acid bacterium, food colorings and other food ingredients, and an improvement in the cost ratio following the startup of a new plant. Nutri Co., Ltd. reported lower sales, as it was forced to scale back seminars, new product sampling events and other active marketing initiatives amid the COVID-19 outbreak. However, profits increased year on year, partly due to lower operating costs.

As a result, net sales in the Food Science Business totaled 4,926 million yen and operating income was 281 million yen.

(Real Estate Business)

The Real Estate Business reported net sales of 496 million yen and operating income of 231 million yen. Sales were steady year on year, but profits declined, mainly reflecting the implementation of maintenance work for aging facilities.

As a result, in the first three months of the fiscal year, net sales decreased 7.9% year on year to 26,528 million yen and operating income dropped 22.2% to 1,088 million yen.

In non-operating income and expenses, the Group booked royalty income of 164 million yen based on a development and marketing rights agreement for fingolimod (FTY720). However, due to an ongoing arbitration process between Novartis Pharma AG and Mitsubishi Tanabe Pharma Corporation, which is the joint holder of the fingolimod patent with the Company, the Group continues to exclude the recognition of profits related to the portion of royalty income subject to the arbitration process by Novartis Pharma AG, which is challenging the enforceability of certain provisions under the agreement. In addition, the Group

- 2 -

Mitsui Sugar Co., Ltd. (2109) Summary of Consolidated Financial Results for the First Three Months Ended June 30, 2020 recorded share of loss of entities accounted for using equity method. As a result, ordinary income declined 49.0% year on year to

991 million yen and profit attributable to owners of parent fell 68.3% to 405 million yen.

As disclosed on March 25, 2020, the Company has started discussions with Dai-Nippon Meiji Sugar Co., Ltd. regarding a possible business integration, and with Nippon Beet Sugar Manufacturing Co., Ltd. regarding a possible capital and business alliance. Talks between the three parties are ongoing.

1. Description of consolidated financial position Changes in consolidated financial position

As of June 30, 2020, total assets stood at 137,016 million yen, down 4,688 million yen from the end of the previous fiscal year. Significant changes in the main items on the consolidated balance sheet were as follows:

1. Current assets
   Current assets totaled 53,033 million yen, down 4,123 million yen from the end of the previous fiscal year. This mainly reflected a decline of 530 million yen for cash and deposits and a decline of 3,686 million yen for merchandise and finished goods.
2. Non-currentassets
   Non-current assets totaled 83,983 million yen, down 565 million yen from the end of the previous fiscal year. This primarily reflected increases of 472 million yen for lease assets and 262 million yen for construction in progress, outweighed by decreases of 703 million yen for machinery, equipment and vehicles and 514 million yen for investment securities.
3. Liabilities

Liabilities totaled 45,204 million yen, down 4,104 million yen from the end of the previous fiscal year. This mainly reflected a decrease of 2,310 million yen for loans payable and a decline of 1,560 million yen for income taxes payable.

(iv) Net assets

Net assets totaled 91,811 million yen, down 584 million yen from the end of the previous fiscal year. This was mainly due to profit attributable to owners of parent of 405 million yen and dividends of surplus of 642 million yen.

(3) Description of consolidated business forecasts and other information about future forecasts

At this stage, the Company has not revised its fiscal 2020 consolidated business forecasts, which are based on the assumption that consumption will remain weak in Japan and overseas until the end of the second quarter. However, the Group's earnings could be impacted further if the COVID-19 outbreak becomes prolonged and more serious. The Company will make timely disclosures in the event of earnings trends or other developments that require revisions to business forecasts.

- 3 -

Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Three Months Ended June 30, 2020

2. Quarterly Consolidated Financial Statements and Important Notes

(1) Quarterly consolidated balance sheets

				(Million yen)
			FY2019	First three months of FY2020
			(As of March 31, 2020)	(As of June 30, 2020)
	Assets
	Current assets
	Cash and deposits		15,520	14,989
	Notes and accounts receivable - trade	9,280	9,615
	Merchandise and finished goods		22,634	18,947
	Work in process	1,342	1,265
	Raw materials and supplies		4,947	4,572
	Other	3,437	3,648
	Allowance for doubtful accounts		(5)	(5)
	Total current assets		57,156	53,033
	Non-current assets
	Property, plant and equipment
	Buildings and structures		40,418	39,976
	Accumulated depreciation	(25,170)	(24,905)
	Buildings and structures, net		15,248	15,070
	Machinery, equipment and vehicles		85,801	85,762
	Accumulated depreciation		(66,973)	(67,638)
	Machinery, equipment and vehicles, net		18,827	18,123
	Tools, furniture and fixtures		2,711	2,711
	Accumulated depreciation	(2,189)	(2,207)
	Tools, furniture and fixtures, net		521	503
	Land		18,148	18,148
	Lease assets		915	1,468
	Accumulated depreciation	(587)	(668)
	Lease assets, net		327	800
	Construction in progress		788	1,051
	Total property, plant and equipment		53,862	53,698
	Intangible assets
	Goodwill	4,639	4,428
	Other		3,017	2,980
	Total intangible assets	7,657	7,409
	Investments and other assets
	Investment securities		11,413	10,899
	Investments in capital of subsidiaries and associates	2,191	2,362
	Long-term loans receivable		20	22
	Net defined benefit asset	210	210
	Deferred tax assets		1,881	2,119
	Other	7,365	7,314
	Allowance for doubtful accounts		(53)	(53)
	Total investments and other assets		23,028	22,875
	Total non-current assets		84,548	83,983
	Total assets		141,705	137,016

- 4 -

Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Three Months Ended June 30, 2020

(Million yen)

		FY2019	First three months of FY2020
		(As of March 31, 2020)	(As of June 30, 2020)
Liabilities
Current liabilities
Notes and accounts payable - trade	8,044	6,972
Short-term loans payable	6,103	4,335
Current portion of long-term loans payable		2,120	2,070
Lease obligations	99	320
Accrued expenses	4,035	3,272
Income taxes payable	2,424	863
Provision for directors' bonuses	36	11
Asset retirement obligations	28	28
Other		3,618	3,675
Total current liabilities		26,510	21,550
Non-current liabilities
Long-term loans payable	11,330	10,837
Lease obligations	253	497
Deferred tax liabilities	471	428
Provision for directors' retirement benefits		223	104
Net defined benefit liability	2,893	2,817
Asset retirement obligations	282	282
Other		7,343	8,686
Total non-current liabilities		22,799	23,654
Total liabilities		49,309	45,204
Net assets
Shareholders' equity
Capital stock		7,083	7,083
Capital surplus	1,291	1,291
Retained earnings	79,469	79,231
Treasury shares		(5,215)	(5,215)
Total shareholders' equity		82,628	82,390
Accumulated other comprehensive income
Valuation difference on available-for-sale securities		483	548
Deferred gains or losses on hedges	(197)	(133)
Foreign currency translation adjustment	(63)	(448)
Remeasurements of defined benefit plans		(123)	(122)
Total accumulated other comprehensive income		99	(156)
Non-controlling interests		9,668	9,577
Total net assets		92,395	91,811
Total liabilities and net assets		141,705	137,016

- 5 -

Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Three Months Ended June 30, 2020

1. Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income (Quarterly consolidated statements of income)

				(Million yen)
			First three months of FY2019	First three months of FY2020
			(From April 1, 2019 to June	(From April 1, 2020 to June 30,
		30, 2019)	2020)
	Net sales		28,795	26,528
	Cost of sales	22,114	20,492
	Gross profit		6,680	6,035
	Selling, general and administrative expenses
	Distribution expenses		1,269	1,201
	Salaries and bonuses	1,072	1,086
	Provision for directors' bonuses		10	10
	Retirement benefit expenses	40	52
	Other		2,889	2,597
	Total selling, general and administrative expenses		5,282	4,947
	Operating income		1,398	1,088
	Non-operating income
	Interest income		3	0
	Dividend income	61	42
	Royalty income		668	165
	Miscellaneous income	56	34
	Total non-operating income		789	242
	Non-operating expenses
	Interest expenses		23	23
	Loss on retirement of non-current assets	9	2
	Facilities removal expenses		63	9
	Share of loss of entities accounted for using equity method	87	288
	Miscellaneous loss		58	16
	Total non-operating expenses		243	339
	Ordinary income		1,945	991
	Extraordinary income
	Gain on disposal of non-current assets		－	18
	Gain on sales of investment securities	68	－
	Subsidy income		33	－
	Insurance claim income	238	－
	Total extraordinary income		341	18
	Extraordinary losses
	Loss on retirement of non-current assets		－	49
	Total extraordinary losses		－	49
	Profit before income taxes		2,286	960
	Income taxes－current		1,067	741
	Income taxes－deferred		(283)	(276)
	Total income taxes		783	465
	Profit		1,503	495
	Profit attributable to non-controlling interests		226	90
	Profit attributable to owners of parent		1,276	405

- 6 -

Mitsui Sugar Co., Ltd. (2109) Summary of Consolidated Financial Results for the First Three Months Ended June 30, 2020

(Quarterly consolidated statements of comprehensive income)

							(Million yen)
				First three months of FY2019	First three months of FY2020
				(From April 1, 2019 to June	(From April 1, 2020 to June 30,
				30, 2019)	2020)
	Profit		1,503		495
	Other comprehensive income
	Valuation difference on available-for-sale securities				(94)		64
	Deferred gains or losses on hedges	65	(176)
	Foreign currency translation adjustment		(0)		(58)
	Remeasurements of defined benefit plans	(11)	(1)
	Share of other comprehensive income of entities				43		(150)
	accounted for using equity method
	Total other comprehensive income		1	(323)
	Comprehensive income			1,504		172
	Comprehensive income attributable to:
	Owners of parent		1,261		149
	Non-controlling interests	243	22

- 7 -

Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Three Months Ended June 30, 2020

1. Notes on quarterly consolidated financial statements (Note on assumptions of a going concern)
   None.
   (Notes when the amount of the shareholders' equity significantly fluctuates) None.

(Changes in accounting policies) (Application of IFRS 16 "Leases")

Effective from the first quarter of the fiscal year ending March 31, 2021 (fiscal 2020), consolidated subsidiaries that use IFRS accounting standards have adopted IFRS 16 "Leases" (IFRS 16 "Leases," January 13, 2016).

As a result, in principle, all borrower leases are recognized as assets or liabilities. In accordance with transitional treatment for the adoption of IFRS 16 "Leases," the Company has recognized the cumulative impact of the new standard as of the date of application.

The effect of the new accounting standard on the consolidated financial statements for the first quarter is immaterial.

(Segment information, etc.) Segment information

1. First three months of FY2019 (From April 1, 2019 to June 30, 2019) Information on net sales and income/loss by each reportable segment

						(Million yen)
		Reportable segment			Amount recorded
		Food			Adjustments	in quarterly
	Sugar	Real Estate	Total	consolidated
	Business	Science	Business		statements of
		Business				income
Net sales
Net sales to third-party	23,168	5,132	494	28,795	－	28,795
customers
Intersegment net sales	10	41	16	68	(68)	－
and transfer
Total	23,178	5,173	511	28,863	(68)	28,795
Segment profit	992	165	240	1,398	－	1,398

(Note) Some adjustments were made between segment profit and operating income recorded in the quarterly consolidated statements of income.

1. First three months of FY2020 (From April 1, 2020 to June 30, 2020) Information on net sales and income/loss by each reportable segment

						(Million yen)
		Reportable segment			Amount recorded
		Food			Adjustments	in quarterly
	Sugar	Real Estate	Total	consolidated
	Business	Science	Business		statements of
		Business				income
Net sales
Net sales to third-party	21,105	4,926	496	26,528	－	26,528
customers
Intersegment net sales	11	31	18	61	(61)	－
and transfer
Total	21,117	4,958	514	26,590	(61)	26,528
Segment profit	575	281	231	1,088	－	1,088

(Note) Some adjustments were made between segment profit and operating income recorded in the quarterly consolidated statements of income.

- 8 -