Mitsubishi Materials : Consolidated Financial Results for the Six Months Ended September 30, 2022 (Japanese Accounting Standards)

Note: This document is a translation of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results for the Six Months Ended September 30, 2022

(Japanese Accounting Standards)

Name of Listed Company: Mitsubishi Materials Corporation				November 10, 2022
Listing: Tokyo Stock Exchange
Stock Code: 5711			URL: https://www.mmc.co.jp/
Representative: Naoki Ono, Chief Executive Officer					Tel: [phone]
Contact: Chiaki Kubota, General Manager, Corporate Communications Dept.,
Management Strategy Div., Strategic Headquarters
Scheduled filing date of Quarterly Report: November 10, 2022
Scheduled date of start of dividend payment: December 9, 2022
Supplementary materials for the quarterly financial results: Yes
Investor conference for the quarterly financial results: Yes (For Institutional Investors)
				(Amounts of less than one million yen are omitted.)
1. Results of the Six Months Ended September 30, 2022 (From April 1, 2022 to September 30, 2022)
(1) Consolidated Results of Operations (cumulative)			(Figures in percentages denote the year-on-year change.)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%
The six months ended September 30, 2022	831,981	-3.3	29,560	1.8	23,025	-39.8	23,624	-38.1
The six months ended September 30, 2021	860,026	18.5	29,038	321.4	38,220	132.2	38,181	－

(Note) Comprehensive income:	The six months ended September 30, 2022: 60,608 million yen (+76.3%)
	The six months ended September 30, 2021, 34,368 million yen (－%)
		Profit	Diluted profit per
		per share	share
		Yen	Yen
The six months ended September 30, 2022		180.80	-
The six months ended September 30, 2021		292.24	-

(2) Consolidated Financial Position

		Total assets	Total net assets	Shareholders'
		equity ratio
		Million yen	Million yen	%
As of September 30, 2022		1,991,610	658,100	30.9
As of March 31, 2022		2,125,032	655,752	27.5
(Reference) Shareholders' Equity:	As of September 30, 2022: 615,971 million yen As of March 31, 2022: 584,817 million yen

2. Dividend Payments

						Dividend per share
(Record date)	First quarter			Second quarter		Third quarter	Year-end	Annual
	Yen			Yen		Yen	Yen	Yen
Year ended March 31, 2022	-	40.00		-	50.00		90.00
Year ending March 31, 2023	-	25.00
Year ending March 31, 2023 (Forecast)							-	25.00		50.00

(Note1) Revision of dividend forecast published most recently: None

(Note2) The interim dividend per share for the year ended March 31, 2022 consists of 25.00 yen ordinary dividend and 15.00 yen special dividend. The year-end dividend per share for the year ended March 31, 2022 consists of 35.00 yen ordinary dividend and 15.00 yen special dividend.

3. Consolidated Earnings Forecast (From April 1, 2022 to March 31, 2023)

(Figures in percentages denote the year-on-year change.)

	Net sales			Operating profit	Ordinary profit	Profit attributable to	Profit per
			owners of parent	share
Year ending March 31,	Million yen		%		Million yen	%	Million yen	%	Million yen	%	Yen
1,649,000		-6.7		44,000	-16.5	18,000	-76.3	3,000	-93.3	22.96
2023
(Note) Revision to forecast published most recently: Yes

* Notes

1. Significant changes of subsidiaries during the term (changes in specified subsidiaries accompanied by a change in the scope of consolidation): Yes
   New: -, Exempt: 1 (MCC Development Corporation)
   (Note) For details, please see "(4) Key notes on consolidated quarterly financial statements, Changes of significant subsidiaries during the six months ended September 30, 2022" under "2. Consolidated Financial Statements and Key Notes" on page 15.
2. Application of special accounting treatment in the preparation of the quarterly consolidated financial statements: Yes (Note) For details, please see "(4) Key notes on consolidated quarterly financial statements, Application of special accounting treatment in the preparation of quarterly consolidated financial statements" under "2. Consolidated Financial Statements and Key Notes" on page 15.
3. Changes in accounting policies, changes of accounting estimates and restatement

(i)	Changes in accounting policies due to amendments to accounting standards:	None
(ii)	Other changes in accounting policies:	None
(iii)	Changes in accounting estimates:	None
(iv)	Restatements:	None

(4) Numbers of outstanding shares (common stock)

1. Numbers of outstanding shares at end of period (including treasury shares):

Six months ended September 30, 2022:	131,489,535 shares
Year ended March 31, 2022:	131,489,535 shares

1. Numbers of treasury shares at end of period:

Six months ended September 30, 2022:	813,714 shares
Year ended March 31, 2022:	848,433 shares

1. Average number of outstanding shares during period (quarterly cumulative period):

Six months ended September 30, 2022:	130,661,264 shares
Six months ended September 30, 2021:	130,649,525 shares

• This quarterly financial summary is not subject to a quarterly review by certified public accountants or audit firms.
• Explanation about the proper use of financial forecast and other special notes

(Notes concerning forward-looking statements, etc.)

The operating results forecast and other forward-looking statements contained in this report are based on information currently available to the Company, as well as certain assumptions that the Company has judged to be reasonable. As such, they do not constitute an assurance that the Company promises to achieve these projected results. Therefore, readers are advised to note that the actual results may vary materially from the forecast due to a variety of factors.

Please see "(3) Information on the consolidated earnings forecast and other future forecast" under "1. Qualitative Information on Financial Results for the Six Months Ended September 30, 2022" on page 7 or the assumptions about consolidated earnings forecast.

(Procedure for obtaining supplementary information on quarterly financial results and quarterly financial briefing) Mitsubishi Materials Corporation plans to hold a quarterly financial briefing for institutional investors on Thursday, November 10, 2022. The materials used at this briefing are disclosed on the TDnet and the Company's web page at the time that the quarterly financial results are announced.

2

Contents
1. Qualitative Information on Financial Results for the Six Months Ended September 30, 2022 ........................................	4
(1)	Details of operating results .........................................................................................................................................	4
(2)	Details of financial position ........................................................................................................................................	6
(3)	Information on the consolidated earnings forecast and other future forecast..............................................................	7
2. Consolidated Financial Statements and Key Notes ..........................................................................................................	8
(1)	Consolidated balance sheet .........................................................................................................................................	8
(2)	Consolidated statement of profit or loss and consolidated statement of comprehensive income..............................	10
Consolidated statement of profit or loss .....................................................................................................................	10
Consolidated statement of comprehensive income.....................................................................................................	11
(3)	Consolidated statement of cash flows.......................................................................................................................	12
(4)	Key notes on consolidated quarterly financial statements ........................................................................................	14
Notes on going concern assumption ...........................................................................................................................	14
Segment Information, etc. ..........................................................................................................................................	14
Notes on significant changes in the amount of shareholders' equity, if any ...............................................................	15
Changes of significant subsidiaries during the six months ended September 30, 2022..............................................	15
Application of special accounting treatment in the preparation of quarterly consolidated financial statements ........	15
Additional information ...............................................................................................................................................	15
Contingent liabilities ..................................................................................................................................................	17
Important subsequent events ......................................................................................................................................	17

3

1. Qualitative Information on Financial Results for the Six Months Ended September 30, 2022

1. Details of operating results

1) Overview of operating results

During the first half of the current fiscal year ended September 30, 2022, the global economy saw a surge in price of goods, services and energy, and instability in metal prices resulting from the situation in Ukraine, along with a weakening of the yen due to a rise in interest rates mainly in developed countries. Against this backdrop, although economic activities in China were affected by the prolonged city lockdowns as a countermeasure against COVID-19, the economy in other regions showed signs of recovery.

The Japanese economy remained on a recovery track as economic and social activities moved toward normalization. The business environment surrounding the Mitsubishi Materials' Group (hereinafter referred to as the "Group") saw the automobile-related demand remained uncertain due to the impact of semiconductor shortages, and semiconductor-related demand seemed to be slowing down, but both remained steady. In addition, there was an impact of a depreciation trend of the yen, as well as a decline in palladium prices and a rise in energy prices.

Under these circumstances, for the first half of the current fiscal year, sales and operating profit of Advanced Products Business, Metalworking Solutions Business, Metals Business and Environment & Energy Business all increased compared with the same period of the previous fiscal year.

As a result, consolidated net sales and operating profit for the first half of the current fiscal year were approximately the same year-on-year, despite the impact of Cement Business and Aluminum Business being removed from the scope of consolidation. Net sales were ¥831,981 million (down 3.3% year-on-year), operating profit was ¥29,560 million (up 1.8% year-on-year). Ordinary profit was ¥23,025 million (down 39.8% year-on-year), due to recorded non-operating expenses of ¥9,793 million as share of loss of entities accounted for using equity method and a decrease in dividend income. In addition, the Company recorded an extraordinary income of ¥11,007 million as gain on change in equity. Consequently, quarterly profit attributable to owners of parent was ¥23,624 million (down 38.1% year-on-year).

2) Overview by segments

Effective from the first quarter of the current fiscal year, the Company has changed its reporting segments, etc. For details, please refer to (4) Key notes on consolidated quarterly financial statements (Segment Information, etc.)" under "2. Consolidated Financial Statements and Key Notes". The following year-on-year comparisons are calculated based on the figures for the same period of the previous year, restated according to the new classification.

(Advanced Products Business)

				(Billion yen)
	FY2022	FY2023	Increase / Decrease (%)
	Q1-Q2	Q1-Q2
Net sales	230.5	260.3	29.7	（12.9%）
Operating profit	5.8	6.1	2	（5.0%）
Ordinary profit	7.2	6.1	-1.1	（-15.9%）

In the Copper & copper alloy products business, both net sales and operating profit increased year-on-year mainly due to the impact of the yen's depreciation and an increase in sales, mainly in the U.S. and Europe, despite higher energy costs, etc.

In the Electronic materials & components business, net sales increased year-on-year mainly due to the impact of the yen's depreciation on polycrystalline silicon products. However, operating profit decreased year-on-year, mainly due to a decrease in sales of semiconductor-related products and an increase in energy costs, etc.

As a result, net sales and operating profit for the entire Advanced Products Business increased year-on-year. Ordinary profit decreased mainly due to a decrease in gain on valuation of derivatives, despite an increase in operating profit.

4

(Metalworking Solutions Business)

				(Billion yen)
	FY2022	FY2023	Increase / Decrease (%)
	Q1-Q2	Q1-Q2
Net sales	65.4	71.8	6.4	（9.8%）
Operating profit	5.8	7.8	2.0	（35.0%）
Ordinary profit	5.7	8.8	3.0	（52.0%）

For cemented carbide products, a major product category, both net sales and operating profit increased year-on-year mainly due to increase in sales in Japan and North America, despite decrease in sales in China caused by the prolonged city lockdowns.

As a result, net sales and operating profit for the entire Metalworking Solutions Business increased year-on-year. Ordinary profit increased mainly due to an increase in foreign exchange gains, in addition to an increase in operating profit.

(Metals Business)

				(Billion yen)
	FY2022	FY2023	Increase / Decrease (%)
	Q1-Q2	Q1-Q2
Net sales	469.4	565.5	96.0	（20.5%）
Operating profit	14.8	15.9	1.1	（7.5%）
Ordinary profit	24.9	20.1	-4.8	（-19.3%）

In the Copper business, both net sales and operating profit increased year-on-year mainly due to an increase in production volume compared with the same period of the previous fiscal year, despite an increase in energy costs and other factors. In the Gold and other valuable metals business, net sales increased but operating profit decreased year-on-year mainly due to decline in the price of palladium, despite an increase in gold sales volume year-on-year.

As a result, net sales and operating profit for the entire Metals Business increased year-on-year. Ordinary profit decreased mainly due to a decrease in dividend income.

(Environment & Energy Business)

				(Billion yen)
	FY2022	FY2023	Increase / Decrease (%)
	Q1-Q2	Q1-Q2
Net sales	9.1	10.2	1.0	（11.1%）
Operating profit	0.7	1.5	0.8	（124.0%）
Ordinary profit	1.4	2.5	1.1	（77.1%）

In the Energy-related business, both net sales and operating profit increased year-on-year mainly due to higher sales in nuclear-energy-related services.

In the Environmental recycling business, despite higher unit prices for the sale of valuable materials, net sales increased but operating profit decreased year-on-year mainly due to a decrease in the volume of recycled home appliances and an increase in selling, general and administrative expenses.

As a result, net sales and operating profit for the entire Environment & Energy Business increased year-on-year. Ordinary profit increased due to the increase in operating profit and an increase in share of profit of entities accounted for using equity method.

5