Mitsubishi Materials : IR Management Briefing Materials

Mitsubishi Materials Corporation

IR management briefing materials

November 15, 2022

Naoki Ono Director, President and Chief Executive Officer

Mitsubishi Materials Corporation

Contents of explanation

1. Financial Results and Full-Year Forecast for the First Half of the Fiscal Year Ending March 31, 2023
2. Progress of the Medium-Term Management Strategy (the FY2023 Strategy )

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Contents of explanation

1. Financial Results and Full-Year Forecast for the First Half of the Fiscal Year Ending March 31, 2023
2. Progress of the Medium-Term Management Strategy (the FY2023 Strategy)

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1. Financial Results for the First Half of the Fiscal Year Ending March 31, 2023 and Full-Year Forecast

Business Environment for the First Half of the Fiscal Year Ending March 31, 2023

• The global economy is experiencing a wide-ranging sense of stagnation, with price rises and monetary tightening in response to Russia's invasion of the Ukraine, the European energy crisis, and the collapse of the Chinese real estate market.
• By industry, uncertainty remained in automobile-related demand due mainly to the effect of the shortage of semiconductors, and demand for semiconductors seemed to be pausing. Nevertheless, there was virtually no negative impact on our first-half results, and all of them remained steady.
• By region, in China, economic activities were restrained by urban blocking as a measure to combat infectious diseases, but in other regions, the economy remained on a recovery trend.
• Other factors included soaring energy prices, higher commodity prices, instability in metal prices, and the depreciation of the yen due to rising interest rates, particularly in developed countries. These factors had a significant impact on our results of operations. These economic trends, which have a significant impact on our operations, will also continue to warrant close monitoring in the future.

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1. Financial Results for the First Half of the Fiscal Year Ending March 31, 2023 and Full-Year Forecast

Financial Results for the First Half of the Fiscal Year Ending March 31, 2023

FY2023

1H

FY2023

Full-year

Forecast

From the

next fiscal

year onward

Outlook

Approach to

ROIC

Management

• Operating income increased by ¥0.5 billion year-on-year due to higher sales in the Copper & copper alloy business and the Metal business, and the impact of the weaker yen.
• Ordinary income decreased by ¥15.1 billion year-on-year due to a decrease in dividends received from the Los Perambres Mine and an extraordinary loss due to a restructuring of the manufacturing structure of Mitsubishi UBE Cement Corporation(MUCC).
• Upward revision of sales due to the impact of yen depreciation, etc.
• Slight downward revision of operating income.
• • Earnings in the Copper & copper alloy business, the Metalworking Solution business, and the Environment & Energy business are expected to exceed the previous forecast.
  • In the Electronic materials & components business, sales for semiconductors and automobiles are robust, but growth is not as high as the previous forecast in light of the current situation.
  • The Metal business is implementing various cost measures, but it is lower than the previous forecast due to an increase in energy costs and sluggish sulfuric acid prices.
• Ordinary income has been significantly downwardly revised due to extraordinary losses in MUCC recorded as equity in earnings of affiliates.
• Net income has been downwardly revised significantly due to extraordinary losses in the Polycrystalline silicon business and other factors.
• The Company expects a large amount of one-time losses in this fiscal year, including equity-method losses and restructuring losses. However, it expects MUCC to become profitable from next fiscal year onward due to a restructuring of production and the effect of price hikes.
• As part of the FY2023 Strategy, the Company is focusing on optimizing its business portfolio, and with the transfer of its polycrystalline silicon business, it largely completed the reorganization of its problem businesses (selection of businesses). The Medium-Term Management Plan from the Next Fiscal Year will be presenting growth strategies.
• ROIC target of 4.0% in the FY2023 Strategy has been downwardly revised from the initial target (6.0%). Full-year forecast ROIC for the current fiscal year is 2.1%, which is significantly below the target (Excluding cement business:5.7%)
• Currently, in order to improve ROIC, the Company has established drivers to improve ROIC, such as expanding sales of products and reducing the cost of sales ratio and is making improvements.

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