Mitsubishi Materials : Supplementary Explanation of Consolidated Financial Results for the Six Months Ended September 30, 2022

MITSUBISHI MATERIALS

CORPORATION

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

November 10, 2022

Contents

１．	Executive summary	…	P.3
２．	Performance Overview (Quarterly)	…	P.4
３．	Comparison with the Previous Year Results	…	P.5
４．	Consolidated Balance Sheet	…	P.8
５．	Performance Forecast for FY2023	…	P.9
６．	Overview by Segment	…	P.12
７．	Cash Flows, Net D/E Ratio	…	P.18
８．	Reference	…	P.20

2

Executive Summary

FY2023

1H

FY2023

Forecast

From the

next fiscal

year onward

Outlook

Approach to

ROIC

Management

• Operating income increased by +500 million yen year-on-year due to higher sales in the Copper & copper alloy business and metal business and the impact of the weaker yen.
• Ordinary income decreased by 15.1 billion yen year-on-year due to a decrease in dividends received from the Los Perambres Mine and an extraordinary loss due to a review 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 as a whole.
• • Earnings in the Copper & copper alloy business, Metalworking Solutions business, and Environment & Energy business are expected to exceed the previous forecasts.
  • 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 review of production and the impact of price hikes.
• As part of the FY2023 Strategy, the company worked to optimize its business portfolio, and with the transfer of its polycrystalline business, it largely completed the reorganization of its problem businesses (selection of businesses). Presenting Growth Strategies in the Medium-Term Management Plan from the Next Fiscal Year.
• 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 impact: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.

3

Performance Overview (Quarterly)

［Unit: billion yen］

427.6		432.3	453.9	497.7
		422.6	409.3
								Operating profit			Net Sales
30								Ordinary profit
							Profit (loss) attributable to owners of parent
25.1
	22.9	23.2	24.1
				21.2
20
		16.9				13.917.0
14.8	14.1 13.0	10.2	13.314.8	15.6
10
								5.9

500

400

300

0

-10

(0.5)

-20

-30

(16.4)

FY22. 1Q

FY22. 2Q

FY22. 3Q

FY22. 4Q

FY23. 1Q

FY23. 2Q

4

Comparison with the Previous Year Results

				［Unit: billion yen］
	FY22 1H	FY23 1H	YoY change
	Results(a)		Results(b)	(b-a)
Net sales	860.0		831.9	-28.0
Operating profit	29.0		29.5	0.5
Dividend income	10.5		6.7	-3.7
Other financial income and expenses	(2.4)		(2.3)	0.0
Share of profit (loss) of entities accounted for using equity method	2.9		(9.7)	-12.7
Non-operating income (loss)	(1.8)		(1.1)	0.7
Ordinary profit	38.2		23.0	-15.1
Extraordinary income	19.7		11.6	-8.0
Income taxes	(15.2)		(8.0)	7.2
Profit (loss) attributable to non-controlling interests	(4.5)		(3.0)	1.4
Profit attributable to owners of parent	38.1		23.6	-14.5
Exchange rate（JPY / $）	110		134	24
Exchange rate （JPY / €）	131		139	8
Copper price （LME)（￠ /lb）	433		392	-41
5