Mitsubishi Materials : Financial Section 2022 (A4-sized single-sided for printing)

Financial Section

2022

P2 Management's Discussion and Analysis

P5 Basis of Presenting ConsolidatedFinancial Statements

P6 Consolidated Balance Sheets

P8 Consolidated Statements of Profit or loss

P8 Consolidated Statementsof Comprehensive Income

P9 Consolidated Statements of Changes in Net Assets

P11 Consolidated Statementsof Cash Flows

P12 Notes to Consolidated Financial Statements

P50 Consolidated Supplemental Schedules

P51 Other

P52Independent Auditor's Report on the Consolidated

Financial Statements and Internal Control Over

Financial Reporting

P58 Major Consolidated Subsidiaries and Affiliates

Management's Discussion and Analysis

Overview

Economic and Business Environment

For the fiscal year ended March 31, 2022 (hereinafter referred to as "FY2022"), the global economy continued to recover gradually in China and the U.S. from the economic downturn caused by the global spread of COVID-19, and showed signs of picking up in Europe, Thailand, and Indonesia.

The Japanese economy during the same period, continued to pick up in exports and industrial production, despite the lingering impact of COVID-19.

Total net assets increased ¥41.3 billion, or 6.7% from the end of previous period and to ¥655.7 billion mainly due to an increase in retained earnings.

As a result, the consolidated shareholder's equity ratio increased from 26.8% at the end of previous period to 27.5%, and net assets per share based on the total number of shares outstanding as at March 31, 2022 increased from ¥4,173.14 at the end of previous period to ¥4,476.52.

Cash Flows

In the business environment surrounding the Mitsubishi Materials Group (hereinafter referred to as the "Group"), in addition to the steady growth of metal prices, demand for semiconductors and automotive-related products also remained strong. On the other hand, domestic demand for cement declined.

Business Performance Summary

Under such circumstances, the Group has implemented various measures to enhance corporate value, based on Mission and the Group's medium- to long-term goals from FY2031 to FY2051, as well as the Medium-term Management Strategy for FY2021 to FY2023.

Consequently, consolidated net sales for the fiscal year ended March 31, 2022 totaled ¥1,811.7 billion, up by 22.0% year-on- year. Consolidated operating profit increased by 98.4% year-on- year to ¥52.7 billion, and consolidated ordinary profit increased by 70.9% year-on-year to ¥76.0 billion. Also, the Group recorded the extraordinary loss of ¥25.1 billion as losses on business restructuring and the extraordinary income of ¥34.6 billion as gain on sales of investment securities, respectively. As a result, profit attributable to owners of parent totaled ¥45.0 billion (up 84.4% year-on-year).

Financial Position and Liquidity

As of March 31, 2022, total assets increased ¥89.4 billion, or 4.4% from the end of previous period to ¥2,125.0 billion. Total current assets increased ¥199.0 billion, or 19.1% from the end of previous period to ¥1,238.9 billion mainly due to an increase in leased gold bullion. Total non-current assets decreased ¥109.5 billion, or 11.0% from the end of previous period to ¥886.0 billion mainly due to a decrease in investment securities.

Total liabilities increased ¥48.1 billion, or 3.4% from the end of previous period to ¥1,469.2 billion. Total current liabilities increased ¥67.8 billion, or 7.9% from the end of pervious period to ¥926.6 billion mainly due to an increase in deposited gold bullion. Total non-current liabilities decreased ¥19.7 billion, or 3.5% from the end of previous period to ¥542.5 billion mainly due to a decrease in long-term borrowings. The balance of interest-bearing debts, which adds bonds payable and commercial papers to borrowings decreased ¥20.7 billion or 3.3% from the end of previous period to ¥608.7 billion.

The cash flows during the consolidated fiscal year ended March 31, 2022 and their causes are as follows:

(Cash flows from operating activities)

Net cash provided by operating activities totaled ¥6.8 billion (decreased by ¥71.5 billion from the previous fiscal year) mainly due to an increase in notes and accounts payable-trade and an increase in inventories, despite strong business performance.

(Cash flows from investing activities)

Net cash used in investing activities totaled ¥3.2 billion (decreased by ¥98.5 billion from the previous fiscal year) mainly due to spending on capital expenditure and sales of investment securities, etc.

(Cash flows from financing activities)

Net cash used by financing activities totaled ¥5.0 billion (net cash provided by financing activities for the previous fiscal year was ¥41.5 billion) mainly due to dividend payments.

After factoring in the impact of exchange rate fluctuation, cash and cash equivalents at the end of the current consolidated fiscal year amounted to ¥153.6 billion (increased by ¥6.1 billion from the previous fiscal year end).

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Forecast for Fiscal Year 2023

As for the global economy going forward, while the economy is expected to continue picking up as the impact of COVID-19 eases, it also faces the risk of the economic downturn due to influence from the situation in Ukraine, price hikes in raw materials, fluctuations in financial and capital markets, and the re-expansion of COVID-19, among other factors.

Looking ahead, while the Japanese economy is also expected to continue picking up due to economic and social activities move toward normalization, a downturn in the economy is also a concern for the same reasons as in the global economy.

With regard to the business environment surrounding the Group in the future, although solid demand is expected to continue in the automobile and semiconductor industries, the Group expects that rising costs due to energy price hikes and other factors, as well as fluctuations in foreign exchange and metal prices, will affect each business of the Group.

Under these circumstances, for the fiscal year ending March 31, 2023, Consolidated operating performance forecasts predict net sales of ¥1,590.0 billion, operating profit of ¥36.0 billion, ordinary profit of ¥36.0 billion, and profit attributable to owners of parent of ¥20.0 billion on the assumption of average exchange rates of ¥120/USD and ¥135/EUR and a copper price of 448¢/lb.

Overview by Segment

Billions of yen

Millions of U.S. dollars

For the year ended March 31, 2022 and 2021		2022		2021
Advanced Products
Net sales	¥	485.9	¥	357.1
Operating profit		14.7		2.8
Operating margin		3.0%		0.8%
Metalworking Solutions Business
Net sales	¥	132.6	¥	119.3
Operating profit		14.1		(1.1)
Operating margin		10.6%		(1.0%)
Metals Business
Net sales	¥	997.1	¥	728.2
Operating profit		25.2		18.8
Operating margin		2.5%		2.6%
Cement Business
Net sales	¥	209.8	¥	215.8
Operating profit		3.2		6.6
Operating margin		1.6%		3.1%
Environment & Energy Business
Net sales	¥	17.8	¥	26.2
Operating profit		2.2		1.7
Operating margin		12.5%		6.8%
Other Businesses
Net sales	¥	253.6	¥	266.7
Operating profit		7.3		8.8
Operating margin		2.9%		3.3%
Total
Net sales	¥	1,811.7	¥	1,485.1
Operating profit		52.7		26.5
Operating margin		2.9%		1.8%

2022

$ 3,970.4

120.4

$ 1,083.5

115.3

$ 8,147.5

206.4

$ 1,714.4

26.6

$ 146.0

18.3

$ 2,072.4

60.1

$ 14,803.1

430.7

Note:

U.S. dollar amounts are translated from Japanese yen using the prevailing exchange rate at March 31, 2022, which was ¥122.39 to U.S.$1.

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Capital Expenditures

The Group determines capital expenditure allocations by carefully selecting projects in areas where future earnings and growth are expected while striving to reduce interest-bearing debt.

The total capital expenditure for FY2022 was ¥81.4 billion, as a result of maintenance and repair work on existing facilities in each business, as well as the expansion and rationalization of production facilities. Capital expenditures for each business segment for FY2022 are as follows:

Advanced Products

In addition to maintenance and repair work on existing facilities in this business as a whole, the Group carried out work, etc. to strengthen the production facilities mainly in the Copper alloy products business. Capital expenditures in this business segment amounted to ¥20.6 billion.

Metalworking Solutions Business

The Group carried out facility expansion and rationalization work to respond to the increased production in this business as a whole, as well as maintenance and repair work at existing facilities. Capital expenditures in this business segment amounted to ¥9.1 billion.

Metals Business

The Group carried out maintenance and repair work in this business as a whole. Capital expenditures in this business segment amounted to ¥15.3 billion.

Cement Business

At the Kyushu Plant (Kanda area), the Company installed bag filters for kiln exhaust gas treatment facilities and recycled oil receiving and feeding facilities. In addition, at the Kyushu Plant (Kurosaki area), the Company installed a CO2 separation and recovery test facility and a methanation test facility for demonstration research on CO2 reduction. Additionally, the Group carried out maintenance and repair work at existing facilities mainly in Japan and the U.S. Capital expenditures in this business segment amounted to ¥18.5 billion.

Environment & Energy Business

In the Environment & Energy Business, in addition to the construction of a new Komatagawa Hydroelectric Power Plant, the Company conducted maintenance and repair work on existing facilities. Capital expenditures in this business segment amounted to ¥3.7 billion.

Other Businesses

The Group carried out maintenance and repair work at existing facilities. Capital expenditures in the Other Businesses segment amounted to ¥13.9 billion.

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Basis of Presenting Consolidated Financial Statements

• This is an English translation of "consolidated financial statements and notes" among "Part 5. Financial Information in Annual Securities Report for the consolidated financial year ended March 31, 2022".
• Appended to the back of this document is English translations of the Independent Auditor's Report on the Consolidated Financial Statements and Internal Control Over Financial Reporting that were attached to the Annual Securities Report.
• Mitsubishi Materials Corporation (hereinafter referred to as the "Company") is a corporation domiciled in Japan. The accompanying consolidated financial statements are composed of the Company and its consolidated subsidiaries (hereinafter referred to as the "Group"). The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"). Japanese GAAP are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards ("IFRS").

• The translations of the Japanese yen amount into U.S. dollars are included solely for the convenience of readers outside of Japan, using the prevailing exchange rate on March 31, 2022, which was ¥122.39 to U.S.$1. The convenience translation should not be construed as representation that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange. Fractions less than one million yen (one tenth yen in respect to per share amount) are omitted. As a result, the total amounts in Japanese yen and translated U.S. dollars shown in the consolidated financial statements and notes to the consolidated financial statements do not necessarily agree with the sum of the individual amounts.
• The number of each note is added for the visibility.

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