Mitsubishi Materials : Explanation on Conference Call (FY ended March 2024)

I am Managing Executive Officer Takayanagi.

Thank you very much for joining financial results briefing today.

Now, I would like to explain the summary of the financial results for the fiscal year ended March 2024 and the full-year earnings outlook for the fiscal year ending March 2025.

First, please refer to the executive summary on page 4 of the supplementary material for the financial results.

First, let me explain the business environment.

The automobile market was on a recovery trend until the third quarter, but demand fluctuated due to the stagnation of automobile production and other factors in the fourth quarter. On the other hand, in the semiconductor market, the demand in the fourth quarter was low, but we are now seeing a recovery in demand.

The yen has continued to weaken. In terms of metal prices, copper prices rose significantly in March, and palladium prices have continued to decline. Electricity prices have remained high and raw material costs have continued to rise.

For the fiscal year ended March 2024, net sales decreased, operating profit decreased, and ordinary profit and profit attributable to owners of parent increased.

Net sales decreased due to a decline in sales of automotive and semiconductor products owing to deteriorating market conditions, a change in the PTS scheme to contract smelting, and the impact of the transfer of polycrystalline silicon business.

Operating profit decreased due to a decline in sales of automotive and semiconductor products and the impact of a hike in raw materials, despite the impact of efforts to raise prices and the yen's depreciation. Ordinary profit increased due to an improvement in equity-method investment profit from Mitsubishi UBE Cement Corporation and an increase in dividend income from the Los Pelambres Copper Mine.

Profit attributable to owners of parent increased owing to an improvement of ordinary profit.

In the full-year forecast for the fiscal year ending March 2025, we expect an increase in sales and profit from the previous fiscal year.

As you can see, the status of each business is as follows:

In the Metals business, dividend income from Los Pelambres Copper Mine is expected to be on the downside, but we expect production to increase due to the elimination of production troubles at the smelter and an improvement of equity-method investment profit in the Resources business.

In the Copper & Copper Alloy business, we expect sales to increase due to the recovery in demand in both the automotive and semiconductor markets.

In the Electronic Materials & Components business, we expect a full-scale recovery in demand from the second half due to the recovery in demand in the semiconductor market.

In the Metalworking Solutions business, we expect an increase in sales due to price revisions and demand recovery for products for overseas markets.

The dividend forecast is ¥100, an increase of ¥6 (interim: ¥50, year-end: ¥50). Next, please refer to the quarterly performance on page 5.

This is the quarterly profit and loss trend.

Net sales are shown as a line graph, and operating profit and ordinary profit are shown as bar graphs for each quarter.

In the Metals business, operating profit fluctuates every quarter due to the recording of profits caused by semi-annual metal recoveries, and ordinary profit fluctuates due to the recording of dividends from mines. Therefore, the Metals business and Other businesses are shown separately for operating profit and ordinary profit.

Looking at the changes in operating profit of Other businesses, you can see that it has gradually recovered since the bottom of the first quarter of the fiscal year ending March 2024.

Next, I will explain page 6.

This table shows the results for the fiscal year ended March 2024.

Details will be explained on the next page, so please see the waterfall chart on page 7.

This is an analysis of changes in ordinary profit in the fiscal year ended March 2024 compared with the fiscal year ended March 2023 results.

From this time forward, we are showing the price difference separately for price hike, energy costs and raw materials.

Operating profit decreased by ¥26.7 billion from the previous year due to a sharp decline in palladium prices, deterioration in sulfuric acid trading conditions, and a decrease in sales of automotive products and semiconductor-related products, despite the impact of price revisions and the yen's depreciation.

Non-operating profit increased ¥55.5 billion year-on-year mainly owing to an increase in equity- method investment profit of Mitsubishi UBE Cement Corporation and an increase in dividend income from Los Pelambres Copper Mine.

As a result, ordinary profit increased ¥28.7 billion year-on-year to ¥54.1 billion.

Please refer to page 8.

This is an analysis of changes in ordinary profit for the fiscal year ended March 2024 compared with the previous forecast.

Operating profit was significantly down in "Others," mainly due to a decline in the metal recoveries. In contrast, non-operating profit was boosted by equity-method investment profit due to an upward swing in Mitsubishi UBE Cement. As a result, ordinary profit was 54.1 billion yen, 1.8 billion yen lower than the previous forecast.

Profit attributable to owners of parent decreased by ¥8.2 billion to ¥29.7 billion in the fourth quarter due to the recording of extraordinary losses, including impairment losses at the Ceramics Plant in the Electronic Materials & Components business and Kitakyushu Ash Recycling Systems.

Please refer to page 9.

This is the consolidated balance sheet as of the end of March 2024.

The balance was ¥2,167.6 billion, an increase of ¥275.8 billion from the end of March 2023.

Inventories had decreased at the end of March 2023 due to the impact of Naoshima Smelter & Refinery's furnace maintenance in the fourth quarter of the previous fiscal year, however, current assets increased due to the elimination of the impact.

There was also an increase in fixed assets due to the expansion of the PTS and an increase in the loan of operating funds to Mantoverde Copper Mine, an equity-method affiliate.