Mitsubishi Materials : Summary of Explanation and Q&A on Conference Call（Financial Results Briefing for the Nine Months Ended December 31, 2021）

Financial results briefing for the Nine Months Ended December 31, 2021

Higher metal prices and increased demand for semiconductor and automobile related products contributed to Mitsubishi Materials Corporation's ordinary profit for the first nine months of the fiscal year.

Nobuhiro Takayanagi (hereinafter referred to as "Takayanagi"):

I am Takayanagi, Managing Executive Officer. Thank you very much for participating in our financial results briefing today. I would like to provide an overview of Mitsubishi Materials Corporation (hereinafter referred to as "the Company") consolidated financial results for the nine months ended December 31, 2021.

Please refer to the Performance Overview (Quarterly) on page 3 of the Supplementary Explanation of Consolidated Financial Results. The results for the third quarter are shown in the bar graph on the very right side of the bottom row of the slide. Operating profit declined from the previous quarter due to the decline in price of palladium and furnace repairs at the Onahama Smelting and Refining Co.,Ltd.

On the other hand, net income reached 23.2 billion yen, mainly due to the recording of dividend income from copper mines in ordinary profit for the third quarter and the recording of gain on sales of investment securities, as a result of the continued reduction in the number of strategic shareholdings.

On page 4, I will explain the Comparison with the Previous Year Results.

Net sales increased mainly in the Advanced Products, Metalworking Solutions Business, and Metals Business driven by a rise in copper prices, and firm demand for semiconductor related and automobile related products.

On the other hand, in the Cement Business, domestic demand remained sluggish, and in the U.S. business, driver shortages continued due to tight supply and demand in the labor market, resulting in lower sales volume of ready-mix concrete and cement.

As a result, net sales increased by 234.1 billion yen to 1,314.0 billion yen year-on-year. As for ordinary profit, I will explain it later in the waterfall graph on page 6.

Net income reached at 61.4 billion yen led by the gain on sales of investment securities, etc., as I mentioned earlier.

< Comparison with the Previous Year Results (Statistics)>

Please refer to page 5 for Statistics.

Sales volume of copper & copper alloy products increased, mainly for automobile-related products.

The sales volume of copper cathodes (in-house product) was affected in the first quarter by the production cutback after completion of furnace repairs at the Naoshima Smelter & Refinery in February and March of the previous fiscal year, as well as the production cutback at the Onahama Smelting and Refining Co.,Ltd. due to equipment failure at a company providing oxygen in January last year, although this has already been resolved. These production cuts in the first half of the fiscal year had an impact.

As for PT. Smelting, the company conducted regular furnace repairs in the third quarter of the previous fiscal year. As a result, sales volume increased year-on-year.

Dividends from copper mines were increased mainly due to dividends from the Los Pelambres copper mine.

The total demand for cement in Japan decreased year-on-year. In addition to the results in the first half of the fiscal year, the pace of shipments was generally sluggish in the third quarter.

Regarding the ready-mix concrete sales volumes in the U.S., as I mentioned earlier, the driver shortage at Robertson's Ready Mix, Ltd. and the labor shortage at the construction sites

continued to affect sales. The impact of unfavorable weather conditions at the end of the year was also a factor in the decline in sales.

As a result of the decline in sales of ready-mix concrete, sales volume of cement in the U.S. also declined.

Sales volume of aluminum sheet products and aluminum extruded products increased, mainly for automobile-related products.

The waterfall graph on the slide shows the increase and decrease in ordinary profit. Ordinary profit for the first nine months of the fiscal year ending March 31, 2022 (hereinafter referred to as "FY2022"), shown on the rightmost of this side, is 61.2 billion yen, up 29.1 billion yen from 32.0 billion yen year-on-year.

I would like to explain the main details of each segment, business by business, on the next page, page 7.

For Copper & copper alloy in the Advanced Products Business, sales of products for the automotive industry increased, and the segment returned to profitability from an operating loss of the same period in the previous fiscal year. In Electronic materials & components, sales of semiconductors continued to be strong, resulting in a profit growth.

In the Metalworking Solutions Business, profit increased driven by a recovery in demand from major automobile manufacturers in Japan and major overseas countries. As for others, operating profit has improved as a result of the transfer of the Sintered parts business in December 2020, which had been posting an operating loss.

On the other hand, the rapid improvement in profit margins also led to a distribution of higher book value inventories, whose higher book value is because of lower operating rate in the previous year. It raised costs and contributed negatively on profit.

In the Metals Business, higher metal prices and improved sulfuric acid prices contributed to the profit growth, as did increased dividends received from copper mines and an increase of profit of investments accounted for using equity method of copper mines.

In the Cement Business, as I have already mentioned, both operating profit and ordinary profit decreased. In addition to the weaker demand, the increase in the cost of thermal energy is also driving up the cost in the domestic market. The business in the U.S. is as I mentioned earlier.