Mitsui E&S : 3rd Quarter Consolidated Financial Results for FY 2019

February 10, 2020

Mitsui E&S Holdings Co., Ltd. and its Consolidated Subsidiaries

3rd Quarter CONSOLIDATED FINANCIAL RESULTS FOR FY2019

From April 1, 2019 to December 31, 2019

Code number:	7003	URL:	https://www.mes.co.jp/
Shares Listed:	Tokyo Stock Exchange
Representative:	Ryoichi Oka, President, Representative Director, and CEO
Inquiries:	Kazunori Miyake, General Manager of Finance & Accounting Dept.
Tel: [phone]
Scheduled date to file Quarterly securities report:	February 12, 2020
Scheduled date to commence dividend payments:	－
Supplementary explanatory materials prepared:	Yes
Explanatory meeting:			Yes (for analysts)

(Amounts less than one million yen are truncated)

1. Consolidated Financial Results for 3rd Quarter FY2019 (April 1, 2019 to December 31, 2019)

			(Millions of yen)
	From Apr. 1, 2018	From Apr. 1, 2019	Change (%)
	to Dec. 31, 2018	to Dec. 31, 2019
New Orders Received	374,347	571,949	52.8
Net Sales	479,396	547,698	14.2
Operating Loss	(27,081)	(72,352)	－
Ordinary Loss	(22,000)	(69,693)	－
Loss attributable to owners of parent	(47,338)	(70,040)	－
Earnings per Share (Yen)	(585.67)	(866.45)	－

Figures in parentheses represent negative.

Total Assets

Net Assets

Shareholders' Equity to Total Assets

	(Millions of yen)
As of Mar. 31, 2019	As of Dec. 31, 2019
999,100	1,033,324
280,239	193,537
16.0%	7.7%

Note: This consolidated financial results has been prepared in accordance with Japanese accounting standards and Japanese law.

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2. Dividends

(Yen)

FY2018

FY2019

FY2019

(forecast)

Annual dividends per share

First quarter

－

－

Second quarter

0.00

0.00

Third quarter

－

－

Year-end

0.00

0.00

Total

0.00

0.00

Note: Revision of the most recent dividends forecast: None

3. Forecast of Financial Results for FY2019

(Millions of yen)

Net Sales

Operating Income

Ordinary Income

Profit attributable to

Earnings per Share

owners of parent

(Yen)

Year ending

790,000

(71,000)

(67,000)

(95,000)

(1,175.21)

March 31, 2020

Note: Revision of the most recent financial forecast: Yes

Reference: Estimate is based on exchange rate of USD1.00 = JPY110.0

4. Notes

(1) Changes in significant subsidiaries during the period

(changes in specified subsidiaries resulting in the change in scope of consolidation):

None

(2) Application of specific accounting for preparing the quarterly consolidated financial statements:

Yes

(3) Changes in accounting policies, accounting estimates or restatements

i )

Changes due to amendment of accounting standards:

None

ii )

Changes due to other reasons:

None

iii )

Changes in accounting estimates:

None

iv )

Restatements:

None

(4) Number of shares outstanding (common stock)

FY2018 /

FY2019 3Q

FY2018 3Q

shares

shares

Number of shares outstanding at the end of period (including treasury stock)

83,098,717

83,098,717

Number of treasury stock at the end of period

2,271,423

2,260,255

Average number of shares during the period (cumulative quarterly consolidated period)

80,827,686

80,836,663

NOTICE REGARDING QUARTERLY REVIEW PROCEDURES FOR THE QUARTERLY FINANCIAL RESULTS

This quarterly financial results statement is exempt from the quarterly review procedures based upon the Financial Instruments and Exchange Act. At the time of disclosure of this quarterly financial results statement, the quarterly review procedure based upon the Financial Instruments and Exchange Act has not been completed.

FORWARD LOOKING STATEMENTS AND OTHER SPECIAL ITEMS

The forecasts for financial results are based on information available at the time this report was released. These forecasts and other forward-looking statements are not guarantees of future performance. Actual operating results may differ from the above forecasts due to known and unknown risks, uncertainties, and other factors.

HOW TO GET THE SUPPLEMENTARY EXPLANATORY MATERIALS

Supplementary explanatory material is planned to be posted on our web site.

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Overview of Reportable Segment

Reportable Segment is classified into 4 segments: Ship, Ocean Development, Machinery and Engineering. Main products and servicesof each Reportable Segment are as follows.

Reportable Segment	Main Products and Services
Ship	Commercial ships, naval ships, high speed passenger/vehicle ferries, offshore structures, underwater TV
vehicles, steel structures
Ocean Development	FPSOs (floating production storage offloading vessels)
	Marine and stationary diesel engines, marine equipment, gas engines, steam turbines, blowers, process
Machinery	compressors, gas turbines, cogeneration system, regulating system, container cranes, industrial cranes,
container terminal management systems, HWM manipulators, equipment of radar sensing for underground
	and construction, bridges, port structures, induction heaters
Engineering	Renewable energy power generation plants, power generation business, overseas civil works, chemical plants,
waste treatment plants, water treatment plants, resources recycling plants, PCB disposal plants

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New Orders by Segment			(Millions of yen)
	From Apr. 1, 2018	From Apr. 1, 2019	Difference
	to Dec. 31, 2018	to Dec. 31, 2019
Ship	83,244	38,624	(44,619)
			(53.6%)
Ocean Development	65,992	342,286	276,294
			418.7%
Machinery	122,575	117,539	(5,036)
			(4.1%)
Engineering	49,713	32,310	(17,402)
			(35.0%)
Others	52,822	41,187	(11,634)
			(22.0%)
Total	374,347	571,949	197,601
			52.8%
Net Sales by Segment			(Millions of yen)
	From Apr. 1, 2018	From Apr. 1, 2019	Difference
	to Dec. 31, 2018	to Dec. 31, 2019
Ship	69,486	85,565	16,079
			23.1%
Ocean Development	167,124	219,606	52,481
			31.4%
Machinery	135,819	143,959	8,139
			6.0%
Engineering	49,828	44,743	(5,084)
			(10.2%)
Others	57,137	53,823	(3,313)
			(5.8%)
Total	479,396	547,698	68,301
			14.2%
Operating Income (Loss) by Segment			(Millions of yen)
	From Apr. 1, 2018	From Apr. 1, 2019	Difference
	to Dec. 31, 2018	to Dec. 31, 2019
Ship	(6,597)	(1,898)	4,698
Ocean Development	11,868	(8,938)	(20,807)
Machinery	7,515	8,967	1,452
Engineering	(40,848)	(73,317)	(32,469)
Others	979	2,834	1,854
Total	(27,081)	(72,352)	(45,270)
Figures in parentheses represent negative.

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Consolidated Balance Sheets

			(Millions of yen)
		As of March 31, 2019	As of December 31, 2019
Assets
Current assets
Cash and time deposits	100,857	132,850
Trade receivables	225,765	263,418
Merchandise and finished goods	4,967	5,414
Work in progress	42,294	58,434
Raw materials and supplies	8,439	10,115
Short-term loans	41,038	5,604
Others	46,050	39,642
Allowance for doubtful accounts	(1,452)	(1,208)
Total current assets	467,959	514,272
Non-current assets
Property, plant and equipment
Land	245,736	245,691
Others, net	96,303	98,040
Total property, plant and equipment	342,040	343,731
Intangible assets
Goodwill	11,616	10,522
Others	17,874	17,574
Total intangible assets	29,490	28,097
Investments and other assets
Others	160,268	147,925
Allowance for doubtful accounts	(658)	(702)
Total investments and other assets	159,609	147,223
Total non-current assets	531,140	519,051
Total assets		999,100	1,033,324

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					(Millions of yen)
			As of March 31, 2019	As of December 31, 2019
Liabilities
Current liabilities
Trade payables	190,955		219,836
Short-term borrowings	3,535		84,696
Current portion of long-term borrowings	39,062		44,138
Current portion of bonds	10,000		5,000
Accrued income taxes	11,846		6,803
Advances from customers	92,603		91,198
Provision for construction warranties	10,781		10,805
Provision for losses on construction contracts	60,972		109,710
Other provisions	7,104		6,646
Asset retirement obligations	2		3
Others	37,875		37,084
Total current liabilities	464,740		615,922
Long-term liabilities
Bonds	40,000		35,000
Long-term borrowings	112,020		77,801
Liability for severance and retirement benefits		463		543
for directors and corporate auditors
Other provisions	2,167		2,058
Net defined benefit liabilities	13,104		15,205
Asset retirement obligations	1,878		1,801
Others	84,487		91,453
Total long-term liabilities	254,121		223,864
Total liabilities	718,861		839,786
Net assets
Shareholders' equity
Common stock	44,384		44,384
Capital surplus	18,747		18,744
Retained earnings	67,812		(2,035)
Treasury stock	(4,759)		(4,730)
Total shareholders' equity	126,185		56,363
Accumulated other comprehensive income
Net unrealized holding gains (losses) on		3,365		2,515
securities
Unrealized gains (losses) on hedging derivatives	(6,065)		(10,909)
Revaluation reserve for land	37,807		37,803
Foreign currency translation adjustments	740		(3,993)
Remeasurements of defined benefit plans	(2,488)		(2,278)
Total accumulated other comprehensive income	33,359		23,136
Subscription rights to shares	205		180
Non-controlling interests	120,488		113,857
Total net assets	280,239		193,537
Total liabilities and net assets		999,100		1,033,324

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Consolidated Statements of Operations

					(Millions of yen)
			April 1, 2018 to	April 1, 2019 to
			December 31, 2018	December 31, 2019
Net sales	479,396		547,698
Cost of sales	467,419		582,711
Gross profit (loss)	11,976		ሺ35,013)
Selling, general and administrative expenses	39,058		37,339
Operating loss		ሺ27,081)	ሺ72,352)
Non-operating income
Interest income	5,105		4,692
Dividend income	1,141		745
Equity in earnings of unconsolidated subsidiaries		2,839		1,685
and affiliates accounted for using equity method
Others	965		901
Total non-operating income	10,051		8,024
Non-operating expenses
Interest expenses	2,163		2,056
Commitment fee	342		1,888
Foreign currency exchange losses	1,036		15
Loss on valuation of derivatives	90		265
Others	1,337		1,139
Total non-operating expenses	4,970		5,366
Ordinary loss		ሺ22,000	ሺ69,693)
Extraordinary income
Gain on disposal of non-current assets	99		410
Gain on sales of investment securities	816		1,132
Gain on sales of subsidiaries and affiliates' stocks	101		-
Total extraordinary income	1,016		1,543
Extraordinary losses
Loss on disposal of non-current assets	514		238
Loss on impairment of non-current assets	559		216
Loss on sales of investment securities	-		121
Loss on sales of shares of subsidiaries and affiliates	-		877
Loss on valuation of investment securities	356		244
Loss on valuation of shares of subsidiaries and		-		43
affiliates
Loss on litigation	167		-
Provision for loss on compensation for damage	150		-
Total extraordinary losses	1,748		1,742
Loss before income taxes		ሺ22,732)	ሺ69,892)
Income taxes	19,882		2,601
Loss		ሺ42,615)	ሺ72,494)
Profit (loss) attributable to non-controlling interests	4,723		ሺ2,453)
Loss attributable to owners of parent			ሺ47,338)	(70,040)

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Consolidated Statements of Comprehensive Income

				(Millions of yen)
		April 1, 2018 to	April 1, 2019 to
		December 31, 2018	December 31, 2019
Loss	ሺ42,615)		(72,494)
Other comprehensive income
Net unrealized holding losses on securities	(3,596)		(1,436)
Unrealized losses on hedging derivatives	ሺ1,061)		(46)
Foreign currency translation adjustments	(2,618)		ሺ4,494)
Remeasurements of defined benefit plans	1,436		158
Share of other comprehensive income of affiliates	4,224		(6,802)
accounted for using equity method

Total

Comprehensive income Comprehensive income attributable to

ሺ1,615)ሺ12,620)

(44,230)(85,115)

Owners of parent	(47,727)	ሺ80,259)
Non-controlling interests	3,496	(4,855)

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