MITSUI SOKO : Consolidated Financial Results for the Six Months Ended September 30, 2023

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

November 7, 2023

Consolidated Financial Results

for the Six Months Ended September 30, 2023

(Under Japanese GAAP)

Company name:	MITSUI-SOKO HOLDINGS Co., Ltd.
Listing:	Tokyo Stock Exchange
Securities code:	9302
URL:	https://www.mitsui-soko.com/en/
Representative:	Hirobumi Koga, Representative Director, President & CEO
Inquiries:	Takeshi Matsuki, General Manager of Finance and Accounting Division
Telephone:	[phone]

Scheduled date to file quarterly securities report:	November 8, 2023
Scheduled date to commence dividend payments:	December 4, 2023
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:	Yes (for securities analysts and
	institutional investors)

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the six months ended September 30, 2023 (from April 1, 2023 to September 30, 2023)

(1) Consolidated operating results (cumulative)		(Percentages indicate year-on-year changes.)
	Operating revenue	Operating profit	Ordinary profit	Profit attributable to
	owners of parent
Six months ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
September 30, 2023	131,862	(16.1)	11,843	(13.4)		12,206	(15.5)	7,182	(21.7)
September 30, 2022	157,252	12.3	13,673	17.5		14,446	23.2	9,169	36.1
Note: Comprehensive income	For the six months ended September 30, 2023:	¥13,231 million	[(6.7)%]
		For the six months ended September 30, 2022:	¥14,179 million	[72.5%]
	Basic earnings per	Diluted earnings per
		share		share
Six months ended			Yen		Yen
September 30, 2023		288.54		-
September 30, 2022		368.90		-

(2) Consolidated financial position

		Total assets	Net assets
As of		Millions of yen	Millions of yen
September 30, 2023		264,799	111,947
March 31, 2023		258,679	104,078
Reference: Equity capital
As of September 30, 2023:	¥101,919 million
As of March 31, 2023:	¥93,285 million

Equity ratio

%

38.5

36.1

2. Cash dividends

		Annual dividends per share
	First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end	Total
	Yen	Yen	Yen	Yen	Yen
Fiscal year ended	-	72.00	-	117.00	189.00
March 31, 2023
Fiscal year ending	-	67.00
March 31, 2024
Fiscal year ending			-	75.00	142.00
March 31, 2024
(Forecast)

Note: Revisions to the forecast of cash dividends most recently announced: None

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2024 (April 1, 2023 to March 31, 2024)

(Percentages indicate year-on-year changes.)

	Operating revenue	Operating profit	Ordinary profit	Profit attributable to	Basic
	earnings per
	owners of parent
							share
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Fiscal year ending	273,000	(9.3)	21,500	(17.2)	20,700	(22.0)	11,800	(24.4)	473.86
March 31, 2024
Note: Revisions to the earnings forecasts most recently announced: None

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
   Newly included: -
   Excluded: -
2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates, and restatement
4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None
5. Number of issued shares (common shares)
6. 1. Total number of issued shares at the end of the period (including treasury shares)

As of September 30, 2023

As of March 31, 2023

24,957,602 shares

24,921,802 shares

(ii) Number of treasury shares at the end of the period

As of September 30, 2023

As of March 31, 2023

46,932 shares

46,808 shares

1. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

Six months ended September 30, 2023

Six months ended September 30, 2022

24,892,859 shares

24,855,718 shares

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters
  Figures for the forecasts, outlooks, and targets described in this report that are not historical facts are calculated based on the currently available information and uncertain factors that may have an effect on future performance. The actual results may differ from the forecasts. Regarding earnings forecasts, please refer to "(3) Explanation of earnings forecasts and other forward-looking statements," under "1. Qualitative information on quarterly financial results," on page 4 of the attached materials.

	MITSUI-SOKO HOLDINGS Co., Ltd. (9302)
Attached Materials
	Index
1. Qualitative information on quarterly financial results	2
(1)	Explanation of operating results	2
(2)	Explanation of financial position	3
(3)	Explanation of earnings forecasts and other forward-looking statements	4
2. Quarterly consolidated financial statements and significant notes thereto	5
(1)	Quarterly consolidated balance sheet	5
(2)	Quarterly consolidated statement of income and quarterly consolidated statement of
	comprehensive income	7
	Quarterly consolidated statement of income
	[For the first six months]	7
	Quarterly consolidated statement of comprehensive income
	[For the first six months]	8
(3)	Quarterly consolidated statement of cash flows	9
(4)	Notes to quarterly consolidated financial statements	10
	Notes on premise of going concern	10
	Notes when there are significant changes in amounts of shareholders' equity	10
	Segment information, etc	10
3. Supplemental information	11

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MITSUI-SOKO HOLDINGS Co., Ltd. (9302)

1. Qualitative information on quarterly financial results

1. Explanation of operating results
   The overview of the financial results for the six months ended September 30, 2023 is as follows.

				(Millions of yen)
Consolidated total amount	Six months ended	Six months ended	Year-on-year	Changes
September 30,	September 30,
comparison
	2022	2023
Operating revenue	157,252	131,862	(25,390)	(16.1)%
Operating profit	13,673	11,843	(1,830)	(13.4)%
Ordinary profit	14,446	12,206	(2,239)	(15.5)%
Profit attributable to owners of parent	9,169	7,182	(1,986)	(21.7)%

• Revenues and earnings declined year on year, mainly due to the impact of lower unit prices for ocean and air freight.
• As personnel expenses and other costs rose, MITSUI-SOKO HOLDINGS Co., Ltd. (the "Company") worked to streamline operations related to transportation and cargo handling.

Operating results by segment are as follows.

(a)	Logistics Business
					(Millions of yen)
	Logistics Business	Six months ended	Six months ended	Year-on-year	Changes
	September 30,	September 30,
	comparison
		2022	2023
Operating revenue	152,996	127,616	(25,379)	(16.6)%
Operating profit	12,502	11,224	(1,277)	(10.2)%

Business environment: The business environment surrounding the Company is as follows.

• As an inventory adjustment phase by companies persisted into the second quarter of this fiscal year, international transportation cargo movements remained sluggish.
• The disruption in the shipping market and supply constraints on cargo space due to reduced air passenger flights have been resolved, and as a result unit prices for ocean and air freight declined compared to the previous fiscal year. Currently, the unit price level for freight has remained unchanged.

Operating situation: The situation regarding the operating activities of the Company is as follows.

• Revenues and earnings in the forwarding business declined due to the effects of lower unit prices for ocean and air freight.
• In the home appliance-related logistics, the transportation, delivery and installation of large-sized home appliances performed well, with an increase in the number of items handled.
• The Company worked to improve truck loading efficiency in the domestic transportation and delivery of home appliances and daily necessities, as well as to streamline operations at logistics centers, to reduce costs while responding to rising personnel and fuel expenses.

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MITSUI-SOKO HOLDINGS Co., Ltd. (9302)

1. Real Estate Business

				(Millions of yen)
	Six months ended	Six months ended	Year-on-year
Real Estate Business	September 30,	September 30,	Changes
comparison
	2022	2023
Operating revenue	4,658	4,655	(2)	(0.1)%
Operating profit	2,832	2,820	(11)	(0.4)%

Business environment: The business environment surrounding the Company is as follows.

• The average vacancy rates for existing office properties in the Tokyo business district remained mostly unchanged, while average rents declined slightly.

Operating situation: The situation regarding the operating activities of the Company is as follows.

1. • There were no significant changes in the vacancy rate and rent levels for office properties owned by the Company, and both operating revenue and operating profit were nearly unchanged.
2. Explanation of financial position
3. 1. Status of changes in financial position

				(Millions of yen)
Consolidated total amount	As of March 31,	As of September	Comparison from	Changes
2023	30, 2023	March 31, 2023
Equity capital	93,285	101,919	8,633	9.3%
Total assets	258,679	264,799	6,119	2.4%
Equity ratio	36.1%	38.5%	+2.4 pt	6.7%
Interest-bearing debt	92,621	89,392	(3,228)	(3.5)%
D/E ratio	0.99	0.88	(0.12)	(11.7)%

• The increase in equity capital was due to the recording of profit attributable to owners of parent and an increase in foreign currency translation adjustment due to the weak yen.
• The increase in total assets was due mainly to an increase in cash and deposits.
• The decrease in interest-bearing debt was due to the repayments of borrowings.
• The Company will continue its operations policy that aims for a D/E ratio of approximately 1.0.

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MITSUI-SOKO HOLDINGS Co., Ltd. (9302)

(ii) Status of cash flows

Consolidated total amount	Six months ended	Six months ended
September 30, 2022	September 30, 2023
Cash and cash equivalents at beginning	22,822	33,417
of period
Net cash provided by (used in) operating	19,180	15,579
activities
Net cash provided by (used in) investing	(2,310)	(3,816)
activities
Net cash provided by (used in)	(9,145)	(9,020)
financing activities
Cash and cash equivalents at end of	31,615	37,622
period

(Millions of yen)

Year-on-year

comparison

-

(3,600)

(1,505)

124

-

• The main items in cash flows from operating activities are profit before income taxes, cash reserves due to recording of depreciation, and a decrease in trade receivables.
• The main items in cash flows from investing activities are software investment based on DX strategy, investment to maintain and update existing logistics facilities, and investments in partner companies working to commercialize trunk route transportation services using autonomous trucks.
• The main items in cash flows from financing activities are repayments of borrowings and payments of dividends.

1. Changes in cash flow-related indicators

	Fiscal year ended	Six months ended	Fiscal year ended	Six months ended
	March 31, 2022	September 30, 2022	March 31, 2023	September 30, 2023
Equity ratio (%)	30.8	33.8	36.1	38.5
Equity ratio based on market value (%)	24.1	29.0	37.7	40.5
Interest-bearing debt to cash flow ratio	4.3	2.5	2.9	2.9
Interest coverage ratio	27.1	42.6	37.1	37.1

Notes: Equity ratio: Equity capital/Total assets

Equity ratio based on market value: Market capitalization/Total assets

Interest-bearing debt to cash flow ratio: Interest-bearing debt/Cash flow

Interest coverage ratio: Cash flow/Interest payments

1. 1. Each of the above indicators is calculated based on consolidated financial figures.
   2. Market capitalization is calculated as follows: Final stock price at the end of the period x Total number of issued shares at the end of the period (excluding treasury shares).
   3. The figure used for cash flow is "Net cash provided by (used in) operating activities" on the consolidated statement of cash flows. Interest-bearing debt includes all liabilities recorded on the consolidated balance sheet on which interest is paid. Furthermore, regarding the interest payments, the figure for "Interest paid" on the consolidated statement of cash flows is used.
   4. Interest-bearingdebt to cash flow ratio is calculated at 2 times for the period under review, since cash flow is converted to an annual amount.
2. Explanation of earnings forecasts and other forward-looking statements
   The consolidated earnings for the six months ended September 30, 2023 have mostly been in line with the forecast figures announced on August 2, 2023. Therefore, the full-year consolidated earnings forecasts have been left unchanged.

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MITSUI-SOKO HOLDINGS Co., Ltd. (9302)

2. Quarterly consolidated financial statements and significant notes thereto

(1) Quarterly consolidated balance sheet

			(Millions of yen)
		As of March 31, 2023	As of September 30, 2023
Assets
Current assets
Cash and deposits	34,480	38,506
Notes and operation accounts receivable trade, and	32,291	30,706
contract assets
Inventories	1,999	1,465
Other	7,796	9,682
Allowance for doubtful accounts	(52)	(29)
Total current assets	76,515	80,330
Non-current assets
Property, plant and equipment
Buildings and structures, net	71,462	69,976
Land	56,724	57,356
Other, net	10,544	10,541
Total property, plant and equipment	138,730	137,874
Intangible assets
Goodwill	1,670	1,651
Other	8,851	10,013
Total intangible assets	10,521	11,665
Investments and other assets
Investment securities	11,068	13,508
Other	22,451	22,039
Allowance for doubtful accounts	(609)	(619)
Total investments and other assets	32,911	34,928
Total non-current assets	182,163	184,468
Total assets		258,679	264,799

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MITSUI-SOKO HOLDINGS Co., Ltd. (9302)

			(Millions of yen)
		As of March 31, 2023	As of September 30, 2023
Liabilities
Current liabilities
Trade notes and accounts payable	16,893	16,423
Short-term borrowings	706	716
Current portion of long-term borrowings	8,461	8,443
Income taxes payable	2,696	2,791
Provision for bonuses	3,884	3,964
Other	21,585	22,713
Total current liabilities	54,227	55,052
Non-current liabilities
Bonds payable	25,000	25,000
Long-term borrowings	50,900	48,318
Retirement benefit liability	6,467	6,485
Other	18,005	17,995
Total non-current liabilities	100,373	97,799
Total liabilities	154,601	152,852
Net assets
Shareholders' equity
Share capital	11,156	11,219
Capital surplus	5,603	5,666
Retained earnings	64,244	68,516
Treasury shares	(103)	(104)
Total shareholders' equity	80,900	85,298
Accumulated other comprehensive income
Valuation difference on available-for-sale securities	4,295	5,610
Deferred gains or losses on hedges	(0)	0
Foreign currency translation adjustment	6,560	9,560
Remeasurements of defined benefit plans	1,528	1,449
Total accumulated other comprehensive income	12,385	16,620
Non-controlling interests	10,792	10,027
Total net assets	104,078	111,947
Total liabilities and net assets		258,679	264,799

- 6 -

MITSUI-SOKO HOLDINGS Co., Ltd. (9302)

1. Quarterly consolidated statement of income and quarterly consolidated statement of comprehensive income
   Quarterly consolidated statement of income [For the first six months]

			(Millions of yen)
		Six months ended	Six months ended
		September 30, 2022	September 30, 2023
Operating revenue
Warehousing fee income	18,806	19,149
Stevedoring income	16,943	16,375
Port terminal fee income	8,996	8,572
Transportation income	84,567	61,781
Real estate income	4,256	4,245
Other	23,681	21,737
Total operating revenue	157,252	131,862
Operating costs
Direct operation expenses	81,097	57,614
Rent expenses	10,053	10,506
Depreciation	3,949	3,945
Salaries and allowances	18,977	19,239
Other	20,448	19,083
Total operating costs	134,526	110,388
Operating gross profit	22,726	21,473
Selling, general and administrative expenses
Depreciation	697	846
Remuneration, salaries and allowances	4,227	4,370
Amortization of goodwill	223	75
Other	3,904	4,337
Total selling, general and administrative expenses	9,052	9,630
Operating profit	13,673	11,843
Non-operating income
Interest income	113	258
Dividend income	205	214
Foreign exchange gains	496	265
Share of profit of entities accounted for using equity	280	82
method
Other	333	278
Total non-operating income	1,429	1,100
Non-operating expenses
Interest expenses	449	407
Commission expenses	36	46
Loss on retirement of non-current assets	26	64
Other	144	216
Total non-operating expenses	656	736
Ordinary profit	14,446	12,206
Extraordinary income
Gain on return of assets from retirement benefits trust	496	-
Gain on reversal of asset retirement obligations	-	139
Total extraordinary income	496	139
Profit before income taxes	14,942	12,346
Income taxes	4,122	3,739
Profit	10,820	8,606
Profit attributable to non-controlling interests	1,650	1,424
Profit attributable to owners of parent		9,169	7,182

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