Mitsui Chemicals : FY2023 Consolidated Financial Results Summary

Summary of Consolidated Financial Results for FY2023

1. Summary of Operating Results

	FY2022	FY2023	Incr.
	(Decr.)
Sales revenue	1,879.5	1,749.7	(129.8)
Operating income before special items	113.9	96.2	(17.7)
Operating income	129.0	74.1	(54.9)
Net income	90.1	53.8	(36.3)
Net income attributable to owners of the parent	82.9	50.0	(32.9)

May 15, 2024 Mitsui Chemicals, Inc.

Unit : Billions of Yen)

Outlook for FY2024

Interim

Full year

890.0 1,850.0

52.0 125.0

1. 113.0

1. 83.0

29.0 73.0

2. Sales Revenue and Operating Income before Special Items by Business Segment

	㺃Sales revenue										Unit : Billions of Yen)
			FY2022	FY2023			Incr.	Breakdown
				(Decr.)		Volume		Price
	Life & Healthcare Solutions		258.2	271.7			13.5		4.8		8.7
	Mobility Solutions		521.6	544.0			22.4		29.1		(6.7)
	ICT Solutions		235.7	237.5			1.8		(7.6)		9.4
	Basic & Green Materials		849.0	681.8			(167.2)		(146.7)		(20.5)
	Others		15.0		14.7			(0.3)		-		(0.3)
	Total		1,879.5	1,749.7			(129.8)		(120.4)		(9.4)
	㺃Operating income before special items							Unit : Billions of Yen)
						Incr.			Breakdown
		FY2022	FY2023					Fixed
		(Decr.)	Volume	Price
						Costs
													etc.
	Life & Healthcare Solutions	29.2		30.0		0.8	(3.7)	5.8	(1.3)
	Mobility Solutions	49.3		57.7		8.4	5.4	9.6	(6.6)
	ICT Solutions	23.8		22.4		(1.4)	(2.0)	6.9	(6.3)
	Basic & Green Materials	17.8		(10.3)	(28.1)	(12.6)	(8.9)	(6.6)
	Others	(2.8)		(1.7)		1.1	-	-	1.1
	Adjustment	(3.4)		(1.9)		1.5	-	-	1.5
	Total	113.9		96.2	(17.7)	(12.9)	13.4	(18.2)

Price includes both selling and purchasing price variances.

3. Summary of Statement of Financial Position

Assets

As of	As of	Incr.
Mar. 31,	Mar. 31,
(Decr.)
2023	2024

Current assets	1,094.3	1,150.6	56.3
Property, plant and equipment	600.9	652.1	51.2
& right-of-use assets
Goodwill and intangible assets	67.5	76.4	8.9
Other non-current assets	305.5	336.7	31.2
Total assets	2,068.2	2,215.8	147.6
䠷 Inventories	441.9	451.1	9.2

		Unit : Billions of Yen)
	Liabilities and Equity
	As of	As of		Incr.
	Mar. 31,	Mar. 31,
		(Decr.)
	2023	2024
Interest-bearing liabilities	794.7	811.5		16.8
Other liabilities	390.2	419.5		29.3
Equity attributable to owners of	786.8	862.9		76.1
the parent
Non-controlling interests	96.5	121.9		25.4
Total liabilities and equity	2,068.2	2,215.8		147.6
䠷 Net D/E Ratio	0.77	0.69		(0.08)

4. Summary of Statement of Cash Flows

	FY2022	FY2023	Incr.
	(Decr.)
Cash flows from operating activities	101.2	161.3	60.1
Cash flows from investing activities	(106.3)	(123.9)	(17.6)
Free cash flows	(5.1)	37.4	42.5
Cash flows from financing activities	2.5	(26.0)	(28.5)
Others	7.7	12.6	4.9
Net incr.(decr.) in cash and cash equivalents	5.1	24.0	18.9
Cash and cash equivalents at the end of period	186.3	210.3	24.0

Unit : Billions of Yen)

Outlook for FY2024

Interim

Full year

56.0 180.0

(70.0) (205.0)

(14.0) (25.0)

1. 30.0

1. 0.0

1. 5.0
   0.0

5. Accounting Fundamentals

		FY2022	FY2023	Incr.
		(Decr.)
R & D expenses	Billions	43.0	44.7	1.7
Depreciation & amortization	Billions	92.1	95.2	3.1
Capital expenditures	Billions	168.0	185.7	17.7
Financing incomes & expenses	Billions	(11.7)	(0.8)	10.9
Interest-bearing liabilities	Billions	794.7	811.5	16.8
Net D/E Ratio	percentage	0.77	0.69	(0.08)
Number of employees	person	18,933	19,861	928
Exchange rate	Yen / US$	135	145	10
Domestic standard naphtha price	Yen / KL	76,600	69,100	(7,500)

6. Scope of Consolidation and Equity Method

	FY2022	FY2023	Incr.
	(Decr.)
Consolidated subsidiaries	134	133	(1)
Joint operations	4	4
Non-consolidated subsidiaries and affiliates	27	26	(1)
Total	165	163	(2)

Outlook for FY2024

Interim

Full year

1. 47.0

1. 102.0

1. 175.0

(3.0) (6.0)

1. 876.0

1. 0.73

18,200 18,200

145 145

75,000 75,000

Outlook for FY2024

Interim	Full year
128	128
4	4
25	25
157	157

7. Sales Revenue and Operating Income before Special Items by Business Segment (by business segment after change)

㺃Sales revenue

	FY2023
	Interim	Full year
Life & Healthcare Solutions	119.1	271.7
Mobility Solutions	261.3	544.0
ICT Solutions	124.9	259.4
Basic & Green Materials	310.6	659.9
Others	7.8	14.7
Total	823.7	1,749.7
㺃Operating income before special items
	FY2023
	Interim	Full year
Life & Healthcare Solutions	11.2	30.0
Mobility Solutions	26.9	57.7
ICT Solutions	12.9	23.6
Basic & Green Materials	(8.7)	(11.6)
Others	(0.5)	(1.7)
Adjustment	0.2	(1.8)
Total	42.0	96.2

Unit : Billions of Yen)

Outlook for FY2024

Interim

Full year

137.0 296.0

278.0 577.0

116.0 247.0

1. 716.0

1. 14.0

890.0 1,850.0

Unit : Billions of Yen)

Outlook for FY2024

Interim

Full year

16.0 36.0

28.0 60.0

13.0 30.0

(3.0) 4.0

(0.5) (2.0)

(1.5) (3.0)

52.0 125.0

Changes in Reported Segments Classification Methods

In accordance with the organizational reform implemented on April 1, 2024, we have revised the segments to which Honshu Chemical Industry Co., Ltd. and certain other consolidated subsidiaries and equity method affiliates belong.

Additionally, the segments for the current fiscal year are disclosed based on the reportable segment classifications after the revisions.

8. Dividends

		Annual Dividends per Share (yen)
	1st Q	Interim	3rd Q	Year-end	Annual Total
	(2nd Q)	(4th Q)
FY2023 Result		70.00		70.00	140.00
FY2024 Forecast		75.00		75.00	150.00

9. Number of Shares Outstanding (common stock)

	FY2022	FY2023
Number of shares outstanding at term-end (including treasury stock)	200,763,815	200,843,815
Number of shares of treasury stock at term-end	10,697,729	10,709,181
Average number of shares	192,349,712	190,120,582

1. Operating Results

(1) Overview

In the fiscal period under review (the twelve-month period from April 1, 2023 to March 31, 2024, hereinafter the "fiscal 2023"), economic recovery continued worldwide, particularly in the service industry, which includes such businesses as restaurants and lodging. Meanwhile, the pace of recovery in manufacturing industries has slowed amid weak global demand and moves to tighten monetary policy.

In Japan as well, economic activity has continued to recover. However, the economy was showing a period of stagnation due to a rise in the cost of living and a slowdown in overseas demand.

In the domestic chemical industry, domestic naphtha cracker operating rates remained weak due to slowing demand for downstream products.

Under these circumstances, the Mitsui Chemicals Group (hereinafter "the Group") worked for business expansion and growth in three business domains-Life & Healthcare Solutions, Mobility Solutions, and ICT Solutions-while also creating and developing the next- generation business domain and further enhancing competitiveness in the area of Basic & Green Materials.

In Life & Healthcare Solutions, amid declining birthrates and aging populations in advanced countries and growing economies and increasing populations in emerging markets, people are growing ever more concerned about improving their quality of life (QOL) as well as social issues, such as food resource shortages. In vision care materials, an area in which we boast the world-leading market share, we increased the production capacity of the Omuta Works and begun operations in January 2024 in response to the expanding high refractive index lens market, which continues to grow worldwide due to increasing demand for high- performance products in Asia and demand related to switching over from polycarbonate materials in North America. We are also moving forward with our next expansion plan. In the nonwoven fabrics business, Mitsui Chemicals, Inc. (hereinafter "the Company") and Asahi Kasei Corporation (hereinafter "Asahi Kasei") established Mitsui Chemicals Asahi Life Materials Co., Ltd. through a joint incorporation-type split. By combining the technologies and know-how that the Company and Asahi Kasei have cultivated over the years, we aim to maximize synergies and become a world-leading company in the nonwoven fabrics business.

In Mobility Solutions, there has been diversified needs for lighter, more comfortable vehicles in the automotive industry in addition to a shift toward electric cars and an increased need for improved fuel economy. In polypropylene compounds, which have a high global share and contribute to the weight reduction of automobiles, our subsidiary Advanced Composites, Inc. is working to meet the growing environmental needs by creating recycled compounds that contain 30%-50%post-consumer materials, and it has been decided that such materials will be adopted by automobile manufacturers. In addition, in the solutions business, which provides new solutions that combine materials and services, we have begun providing mass- produced parts for the next-generation EV drive system "E-Axle". For the drive system, the development period, which normally takes 3 to 5 years, was shortened to 1 year by simultaneously carrying out each development process, from design, prototyping, and analysis to evaluation, within our group, an undertaking that had previously been carried out by the customer.

In ICT Solutions, in line with the advance of global digitalization such as high-speed telecommunications and the development of AI, the importance of evolution is increasing in the information, communication and technology (ICT) field regarding Beyond 5G and AI, which support safe and comfortable infrastructure and a sustainable global environment. In the semiconductor-related market, which is expected to expand over the medium to long term for continued technological innovation, we have decided to split off the ICT business of our subsidiary Mitsui Chemicals Tohcello, Inc. (hereinafter "MCTI") and newly establish Mitsui

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Chemicals ICT Materia, Inc., in order to further pursue synergies and speed up decision- making as a group. Additionally, MCTI merged its package solutions (hereinafter "PS") business with SunTox Co., Ltd., a joint venture between Rengo Co., Ltd. (hereinafter "Rengo") and Tokuyama Corporation, with MCTI as the surviving integrated company (changed its trade name to "RM TOHCELLO CO., LTD" as of April 1, 2024) handling the PS business. As a shareholder, we will continue to be involved in managing RM TOHCELLO. Furthermore, in order to further strengthen development in the ICT field, we have decided to open an ICT research building within our Nagoya Works.

In Basic & Green Materials, for the existing basic materials domain, which is centered on petrochemicals and basic chemicals, we have been restructuring our business and expanding the markets for highly functional and niche products by enhancing downstream businesses while reducing business volatility. We will continue to promote further restructuring to stabilize earnings. In October 2024, we will shut down the polyethylene terephthalate (PET) plant at our Iwakuni-Ohtake Works, which has been operating at low productivity due to increased imports of inexpensive overseas products and increased demand for recycled PET bottles. Also, as it has become difficult to secure profits due to a significant oversupply as new facilities started operation in Asia, mainly China, and a reduction in domestic demand, we have decided to shut down the phenol plant at our Ichihara Works by fiscal 2026 at the latest. Additionally in Chiba, we have reached an agreement with Idemitsu Kosan Co., Ltd. to consider production optimization by aggregating ethylene equipment. In addition, in order to achieve carbon neutrality, we have formulated "Osaka Works Carbon Neutrality Concept," which is a package of technologies that can be realized around 2030, and includes such processes as switching raw materials and fuels for naphtha crackers and utilizing and storing CO2, modeled after our Osaka Works. We will proceed with specifics in the future.

The Group reported the following operating results for fiscal 2023 as follows. The Group employs operating income before special items (excluding non-recurring items) as a management indicator.

(Billions of Yen)

					Operating Income						Net Income
										Attributable to
		Sales Revenue			before Special			Operating Income
								Owners of the
					Items
										Parent
Fiscal 2023	1,749.7	96.2	74.1	50.0
Previous fiscal year	1,879.5	113.9	129.0	82.9
Difference	(129.8)	(17.7)	(54.9)	(32.9)
Difference (%)	(6.9)	(15.5)	(42.5)	(39.7)

Sales revenue decreased 129.8 billion yen, or 6.9%, compared with the previous fiscal year to 1,749.7 billion yen. This was mainly attributable to a decrease in sales volume due to weak demand and the sale of subsidiaries.

Operating income before special items was 96.2 billion yen, a decrease of 17.7 billion yen, or 15.5%, year on year. This result was due to lower sales volume, which was reflected by weak demand, and a decrease in share of profit of investments accounted for using equity method.

Operating income was 74.1 billion yen, a decrease of 54.9 billion yen, or 42.5%, year on year. This result was due to the decrease in operating income before special items and the gain on sale of shares of subsidiaries recorded in the previous fiscal year.

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Financial income/expenses improved 10.9 billion yen year on year to loss of 0.8 billion yen.

As a result of the aforementioned factors, income before income taxes amounted to 73.3 billion yen, a decrease of 44.0 billion yen, or 37.5%, year on year.

Net income attributable to owners of the parent after accounting for income taxes and non-controllinginterests was 50.0 billion yen, a decrease of 32.9 billion yen, or 39.7%, compared with the previous fiscal year. Basic earnings per share for the period amounted to 262.99 yen.

(2) Results by Business Segment

The status of each segment during fiscal 2023 is as follows.

Life & Healthcare Solutions

Sales revenue increased 13.5 billion yen compared with the previous fiscal year to 271.7 billion yen and comprised 15% of total sales. Operating income before special items increased 0.8 billion yen to 30.0 billion yen year on year. The increase in income was mainly due to healthy overseas sales in agrochemicals despite weak sales mainly in vision care materials and nonwovens.

In vision care materials, sales remained weak for ophthalmic lens materials due to inventory adjustments by customers during the first half.

In oral care materials, sales remained same level as the previous fiscal year.

In agrochemicals, overseas sales were healthy.

In nonwovens, sales remained weak due to slowing demand.

Mobility Solutions

Sales revenue increased 22.4 billion yen year on year to 544.0 billion yen and comprised 31% of total sales. Operating income before special items increased 8.4 billion yen to 57.7 billion yen, mainly due to an increase in sales volume and improved terms of trade.

In elastomers, sales increased, and terms of trade improved due to sales price revisions and favorable foreign exchange conditions.

In polypropylene compounds, sales increased due to a recovery of production volume in the automotive industry.

In solutions business, orders for the development of prototypes increased.

ICT Solutions

Sales revenue increased 1.8 billion yen compared with the previous fiscal year to 237.5 billion yen and comprised 14% of total sales. On the other hand, operating income before special items decreased 1.4 billion yen to 22.4 billion yen year on year. This was mainly affected by delayed recovery in the semiconductor market, although terms of trade were improved by favorable foreign exchange conditions.

In semiconductor & optical materials, sales decreased due to delayed recovery in the semiconductor market.

In coatings & engineering materials and Industrial films & sheets, terms of trade improved due to sales price revisions and favorable foreign exchange conditions.

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Basic & Green Materials

Sales revenue decreased 167.2 billion yen compared with the previous fiscal year to 681.8 billion yen and accounted for 39% of total sales. Operating income before special items decreased 28.1 billion yen, resulting in a 10.3 billion yen loss. This was attributable to a decrease in sales volume due to slowing demand and a decline in inventory valuation gain.

Sales of polyolefin and phenols decreased compared with the previous fiscal year due to slowing demand. Naphtha cracker operating rates remained at a low level due to slowing demand for downstream products.

Others

Sales revenue decreased 0.3 billion yen to 14.7 billion yen and comprised 1% of total sales. On the other hand, operating loss before special items improved 1.1 billion yen compared with the previous fiscal year to a loss of 1.7 billion yen.

2. Financial Position

(1) Status of Assets, Liabilities and Net Assets

Total assets at the end of fiscal year stood at 2,215.8 billion yen, an increase of 147.6 billion yen compared with the previous fiscal year-end.

Total liabilities at the end of fiscal year increased 46.1 billion yen compared with the previous fiscal year-end to 1,231.0 billion yen. Interest-bearingdebt amounted to 811.5 billion yen, an increase of 16.8 billion yen compared with the previous fiscal year-end. As a result, the interest-bearing debt ratio was 36.6%, a decrease of 1.8 percentage point.

Total equity was 984.8 billion yen, an increase of 101.5 billion yen compared with the previous fiscal year-end. The ratio of equity attributable to owners of the parent was 38.9%, an increase of 0.9 percentage point.

Accounting for the aforementioned factors, the net debt-equityratio stood at 0.69 at the end of the fiscal year, a 0.08-percentage point decrease from the previous fiscal year-end.

(2) Cash Flow Status

Cash and cash equivalents (hereinafter "net cash") at the end of the fiscal year increased 24.0 billion yen to 210.3 billion yen compared with the previous fiscal year-end.

Cash Flows from Operating Activities

Net cash provided by operating activities increased 60.1 billion yen to 161.3 billion yen, due to a decrease in working capital, despite lower income before income taxes.

Cash Flows from Investing Activities

Net cash used in investing activities increased 17.6 billion yen to 123.9 billion yen, compared with the previous fiscal year, due primarily to an increase in cash outflows from capital expenditure.

Cash Flows from Financing Activities

Net cash used in financing activities was 26.0 billion yen, compared with 2.5 billion yen in income in the previous fiscal year, due primarily to dividend payments.

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(3) Trends in Cash Flow Indicators

		FY2019		FY2020		FY2021		FY2022		FY2023
		(As of March		(As of March		(As of March		(As of March		(As of March
		31, 2020)		31, 2021)		31, 2022)		31, 2023)		31, 2024)
	Shareholders' Equity	34.6		39.0		36.8		38.0		38.9
	Ratio (%)
	Shareholders' Equity Ratio on	25.6		44.0		30.9		31.3		37.2
	a Market Value Basis (%)
	Ratio of Interest-bearing Debt	4.2		3.2		7.7		7.8		5.0
	to Cash Flows
	Interest Coverage	25.5		37.1		23.3		17.2		21.6
	Ratio (Times)

Notes:

• Shareholders' Equity Ratio: Shareholders' equity to total assets.
• Shareholders' Equity Ratio on a Market Value Basis: Market capitalization to total assets.
• Ratio of Interest-bearing Debt to Cash Flows: Interest-bearing debt to cash flows.
• Interest Coverage Ratio: Cash flows to interest paid.
• Each of the indicators was calculated using consolidated financial figures.
• The market capitalization was calculated by multiplying the closing share price as of the end of the period with the number of shares outstanding (excluding treasury stock).
• Operating cash flow figures have been used for cash flow calculations.
• Interest-bearingdebt is the portion of total debt booked on the consolidated statement of financial position on which interest is being paid. Interest paid is the amount of interest paid as reported in the consolidated statements of cash flows.

3. Outlook for Fiscal 2024 (Year Ending March 31, 2025)

(1) Overall of Financial Outlook for Fiscal 2024

In fiscal 2024, although there are concerns that the recovery will slow down due to factors such as the stagnation of the Chinese economy, geopolitical risks and continuous adjustments in the monetary policy, the global economy is expected to continue to recover.

In Japan, although there is a risk of economic downturn due to exchange rate fluctuations, price increases and a slowdown in overseas demand, the Japanese economy will continue to recover.

In the chemical industry, although there are concerns about the effects of exchange rate fluctuations, rising prices and a slowdown in overseas demand, demand is expected to expand as the economy recovers.

Under these conditions, the Group forecasts its business performance and earnings growth for fiscal 2024 as follows.

													(Billions of Yen)
					Operating								Net Income
		Sales					Operating			Net Income		Attributable to
				Income before
		Revenue					Income				Owners of the
				Special Items
												Parent
Fiscal 2024	1,850.0	125.0	113.0	83.0	73.0
Fiscal 2023	1,749.7	96.2	74.1	53.8	50.0
Difference	100.3	28.8	38.9	29.2	23.0
Difference (%)	5.7	29.9	52.4	54.3	46.0

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The above outlook is based on the following assumptions:

1. Exchange rate for the full year is 145 yen/US$
2. Average price of domestic naphtha is 75,000 yen/kl
3. "Operating income before special items" is operating income excluding non-recurring items.

(2) Outlook by FY2024 Business Segment

Outlook by FY2024 business segment is as follows.

In accordance with the organizational reform implemented on April 1, 2024, we have revised the segments to which Honshu Chemical Industry Co., Ltd. and certain other consolidated subsidiaries and equity method affiliates belong.

Additionally, the segments for the current fiscal year are disclosed based on the reportable segment classifications after the revisions.

(Billions of Yen)

								Sales Revenue
		Life &			Mobility			ICT			Basic &
		Healthcare							Green			Others			Adjustment			Total
				Solutions			Solutions
		Solutions							Materials
Fiscal 2024	296.0		577.0		247.0		716.0		14.0		-		1,850.0
Fiscal 2023	271.7		544.0		259.4		659.9		14.7		-		1,749.7
Difference	24.3		33.0		(12.4)		56.1		(0.7)		-		100.3
Difference (%)	8.9		6.1		(4.8)		8.5		(4.8)		-		5.7

(Billions of Yen)

						Operating Income before Special Items
		Life &			Mobility			ICT			Basic &
		Healthcare							Green			Others			Adjustment			Total
				Solutions			Solutions
		Solutions							Materials
Fiscal 2024	36.0		60.0		30.0		4.0		(2.0)			(3.0)		125.0
Fiscal 2023	30.0		57.7		23.6		(11.6)		(1.7)			(1.8)		96.2
Difference	6.0		2.3		6.4		15.6		(0.3)			(1.2)		28.8
Difference (%)	20.0		4.0		27.1		-		-			-		29.9

4. Basic Policy on the Appropriation of Profits, Cash Dividends for Fiscal

2023 and 2024 (Year Ending March 31, 2024 and March 31, 2025)

1. Basic Policy on the Appropriation of Profits

The Company is committed to enhancing shareholder returns through the stable and continuous dividends and agile and flexible acquisition of the Company's own shares, while taking business performance into account.

Specifically, the Company will aim to achieve a steady 3.0% or higher for dividends on equity (DOE) (Note 1) and a total return ratio (Note 2) of 30% or more.

Note 1: Dividends on equity = dividends paid / total equity attributable to owners of the parent

Note 2: Total return ratio = (dividends paid + treasury stock acquired) / net income attributable to owners of the parent

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1. Cash Dividends for Fiscal 2023 and 2024

Considering the recent business conditions, the Company plans to pay a year-end dividend of 70 yen per share in current fiscal year.

Because a 70 yen interim dividend was already paid out on December 4, 2023, dividends for the full fiscal year will total 140 yen per share, dividends on equity will be 3.2% and total return ratio will be 53.2%.

Turning to dividends for the fiscal year ending March 31, 2025, the Company plans to pay an interim dividend of 75 yen and a year-end dividend of 75 yen, totaling 150 yen per share for the full year.

5. Concept for Selection of Accounting Standard

Based on the Group's development of global business activities, the Group voluntarily adopted IFRS from fiscal 2020 for the purposes of improving the international comparability of financial information in capital markets and enhancing its business management by unifying accounting standard across the Group.

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6. Consolidated Statements of Financial Position

	Millions of yen
	FY2022	FY2023
	As of	As of
	March 31, 2023	March 31, 2024
Assets
Current assets
Cash and cash equivalents	186,310	210,292
Trade receivables	352,181	365,896
Inventories	441,949	451,075
Other financial assets	76,409	39,218
Other current assets	37,437	37,230
Total	1,094,286	1,103,711
Assets held for sale		46,868
Total current assets	1,094,286	1,150,579
Non-current assets
Property, plant and equipment	553,332	605,789
Right-of-use assets	47,555	46,309
Goodwill	19,338	21,169
Intangible assets	48,137	55,241
Investment property	21,713	21,667
Investments accounted for using equity method	148,892	155,924
Other financial assets	58,518	61,669
Retirement benefit assets	61,036	82,777
Deferred tax assets	10,270	5,039
Other non-current assets	5,126	9,656
Total non-current assets	973,917	1,065,240
Total assets	2,068,203	2,215,819

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