Progress and Outlook of the Medium-term Management Strategy FY2031
May 21, 2024
Director, Chief Executive Officer
Naoki Ono
Management Policy for FY ending March 2025
- We have established management policy for FY ending March 2025, the second year of the Medium-term Management Strategy FY2031. In order to fullfill "Our Commitment" of "For people, society and the earth, circulating resources for a sustainable future," we will build a recycling system for metal resources based on our strengths and realize growth throughout the value chain by expanding the scope, regions and scale of our operations.
Strengthening Response to
SCQ * Issues
- Prevention of industrial accidents
- Strict adherence to compliance
- Strengthening information security
- Company-widecritical risk management activities
Optimization of Management Structure
- Deepening matrix management of business and functional axes
- Establishment of regional axes (A new company in Europe)
- Optimization of business structure
Achievement of FY 2031 Strategy Goals
- Implementation of PDCA for the FY2031 Strategy
- Improving profitability
- Responding to labor shortage
Responding to Sustainability Issues
- Promoting resource recycling
- Strengthening response to global environmental issues
- Strengthening human capital
Sustainability Issues
*SCQ: the order of priority of our business decisions. Safety & Health, Compliance, Quality
- Promotion of resource circulation
- Response to global environmental issues
- Enhance human capital management
- Activate communication
- Strengthen information security
- Strengthening response to SCQ * issues
- Strengthening sustainable SCM
- Deepenning of DX
- Pursuit of value creation
- Geopolitical and geoeconomic risk
- Financial risk
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Table of Contents
- Progress of the Medium-term Management Strategy FY2031
- Status of Major Measures in Progress of the Medium-term Management Strategy FY2031
- Expansion of resource recycling
- Enhancing the supply of high-performance materials and products
- Renewable Energy business
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1. Progress of the Medium-term Management Strategy FY2031
Copyright ©MITSUBISHI MATERIALS Corporation.All rights reserved.
1. Progress of the FY2031 Strategy
Medium-term Management Strategy FY2031 (the FY2031 Strategy)
For people, society and the earth, circulating resources for a sustainable future
Prosperous | Recycling- | Decarbonized | ||
society | oriented society | society |
Build a recycling system of metal resources based on our strengths and realize growth throughout the value chain by expanding the scope, regions, and scale of our operations
Resource | Decomposition and separation | Smelting | Material processing and product manufacturing |
procurement | |||
(1) Expansion of resource recycling | (2) Enhancing the supply of | ||
high-performance materials and products |
Metals Company
Resources Business,
Smelting & Resource Recycling Business
- E-Scrapinformation network with recyclers in more than 60 countries around the world
- Base for highly efficient collection of used products (collection sites)
- Advanced decomposition and separation technologies cultivated through home appliance recycling
- Highly efficient recycling technology using smelting systems
Advanced Products Company
Copper & Copper Alloy Business,
Electronic Materials and Components Business
-
High-performancematerials and processed products
(copper alloy, oxygen-free copper, silicon precision processed products, etc.) - Global expansion of EV connectors and superconducting wires for MRI
Metalworking Solutions Company
Carbide Tool Business, Tungsten Business,
and Solutions Business
- Ability to cope with difficult-to-cut materials and new materials
- Materials and coating technologies, and technical proposals
Sales and use
(3) Implementing GHG reduction measures to achieve carbon neutrality
Supply of renewable electricity | Renewable Energy Business | Supply of renewable electricity | ||
Geothermal, hydroelectric, solar, and wind power | ||||
generation Business | ||||
Technology based on abundant achievements and experience in the geothermal power generation business | ||||
*The Environmental & Recycling business was integrated into Metals Company in April 2023, and the Renewable Energy business was reorganized under the Strategic Headquarters. | ||||
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1. Progress of the FY2031 Strategy
Trends in the External Environment
Demand
Copper Copper
Price
TC/RC
Automobile
Industry
Semiconductor
Industry
- Growth is slowing due to a generally sluggish global economy and delayed economic recovery in China; however, in the medium- to long-term, demand for copper will remain strong due to demand for EVs and renewable energy, as well as demand for data centers as the digitalization society progresses.
- Although copper price was 379¢/lb in FY ended March 2024 (full year), lower than the previous fiscal year (388¢/lb), it has been on an upward trend since April 2024 and is currently above 450¢/lb. Steady movement is expected due to anticipated long-term growth in demand.
- Supply concerns have led to strong buying by Chinese smelting operations and traders, and spot TC/RCs are extremely low; as smelting capabilities continue to grow in Indonesia and India, there are concerns that TC/RCs will remain low.
- There was a general trend toward recovery up through Q3 of FY ended March 2024, but the recovery trend slowed down in the 4th quarter. A moderate recovery is projected in FY ending March 2025.
- Demand for our copper alloy products and cemented carbide tools is also expected to recover in FY ending March 2025.
- As Semiconductor-related demand continued to be at a bottom phase in FY ended March 2024, it appears to have bottomed out in the fourth quarter. Demand for semiconductor manufacturing equipment and materials is expected to recover in FY ending March 2025, particularly for AI-related technologies and automotive applications.
- Stronger recovery of demand for semiconductor-related materials is projected for the latter half of the fiscal year.
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1. Progress of the FY2031 Strategy
Review of FY Ended March 2024, Forecast for FY Ending March 2025
- OperatingprofitinFYendedMarch2024 fell shortof our initialplan,duetotheeffectsof weakeningautomobileand semiconductormarkets.In contrast,we madeeffortsto enhancecost competitiveness,suchas by implementingcost reductionmeasuresineach of our businesses,aheadof scheduleintheFY2031 Strategy.
- Recovereddemandis projectedfor automobileproductsbeginninginQ1 of FYendingMarch 2025, and for semiconductor-relatedproducts beginninginthelatterhalf of thefiscal year.
- We can achieveourstrategytargetsby implementingthevariousmeasuresprovidedintheFY2031 Strategyand enhancingour cost competitiveness.
FY Ended | FY Ended | FY Ended | FY Ending | FY Ending | FY Ending | ||
March 2023 | March 2024 | March 2024 | March 2025 | March 2026 | March 2031 | ||
Result | Initial Forecast | Result | Forecast | Plan | Target | ||
Net sales | Billions | 1,625.9 | 1,670.0 | 1,540.6 | 1,950.0 | 1,940.0 | 2,000.0 |
(Net sales excluding metal charges) | of yen | (608.0) | (706.0) | (548.1) | (652.0) | (690.0) | (850.0) |
Operating profit | Billions | 50.0 | 50.0 | 23.2 | 41.0 | 70.0 | 130.0 |
of yen | |||||||
Ordinary profit | Billions | 25.3 | 58.0 | 54.1 | 63.0 | 87.0 | 180.0 |
of yen | |||||||
ROIC | % | 1.4% | 4.1% | 3.8% | 4.3% | 5.5% | 9.0% |
ROE | % | 3.5% | 6.8% | 4.8% | 6.7% | 10.0% | 13.6% |
EBITDA | Billions | 75.7 | 113.0 | 105.0 | 117.4 | 150.0 | 260.0 |
of yen | |||||||
Net D/E ratio | Times | 0.7 | 0.7 | 0.7 | 0.7 | 0.7 | 0.5 or less |
Net interest-bearing debt | Times | 5.2 | 4.1 | 4.5 | 4.3 | 3.5 | 2.0 or less |
/ EBITDA ratio | |||||||
Dividend per annum | Yen | 50 | 94 | 94 | 100 | ||
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1. Progress of the FY2031 Strategy
Metals Company
- Resourcesbusiness:Dividendsfrom Los PelambresCopperMineincreasedinFYendedMarch2024. Dividendsareexpectedtobelower inFY endingMarch2025, however,CopperMountainCopperMineandMantoverdeCopperMineareexpectedto becomeprofitable.
- Smelting& ResourceRecyclingbusiness:In FY endedMarch2024, profitabilitydeteriorateddueto a declineinpalladiumpricesand one-time factors such as troubleinOnahamaSmelter& Refineryandreductionof raw materialarrivals.One-timefactors areexpectedto beresolvedinFY endingMarch2025.
FY Ended | FY Ended | FY Ending | FY2031 | Direction for achieving | ||||||||
March | March | March | ||||||||||
(billions of yen) | Strategy | FY2031 Strategy Measures | Progress | the FY2031 Strategy | ||||||||
2023 | 2024 | 2025 | ||||||||||
Plan | Plan | |||||||||||
Result | Result | Forecast | ||||||||||
Ordinary profit | 2.4 | 20.1 | 17.9 | 11.4 | • Promotion of technological | • | Mining investment is | • | Expansion of operations | |||
development to recover rare | proceeding as | at Los Pelambres Copper | ||||||||||
EBITDA | 2.5 | 19.0 | 16.6 | 11.1 | metal resources contained in | anticipated. | Mine is also going well, | |||||
copper deposits | • | Full-scale copper | and dividends are as | |||||||||
Resources | ROIC | 1.1% | 11.7% | 10.5% | 9.0% | • Acquisition of copper mining | concentrate production | planned | ||||
interests and securing copper | planned at Mantoverde | • In FY ending March 2026, | ||||||||||
Business | ROIC spread | -8.6pt | +2.0pt | +0.8pt | -0.7pt | concentrates through | copper mine in the | the ROIC is temporarily | ||||
WACC:9.7% | continuous investment in | latter half of 2024. | expected to decrease, and | |||||||||
mines | EP will be negative due to | |||||||||||
EP | 2.1 | 0.9 | • Expansion of electrolytic | the execution of | ||||||||
copper supply through SX-EW | investment in mines. | |||||||||||
operations at copper mines | ||||||||||||
Ordinary profit | 25.9 | 11.6 | 19.0 | 27.0 | • Strengthening and expanding | • | Construction has begun | • Increased profit due to | ||||
the networks to promote | on a pilot plant for LIB | review of metal prices | ||||||||||
resource recycling | recycling. | and reduction of hedging | ||||||||||
EBITDA | 42.6 | 28.8 | 33.4 | 39.6 | • Expansion of electrolytic | • | We will consider | costs in response to | ||||
copper production capacity | adjustments to | increased electricity costs | ||||||||||
Smelting | • Increasing the recycling rate by | investment allocation | • ROIC is improving due to | |||||||||
ROIC | 8.3% | 2.9% | 5.7% | 7.1% | expanding the treatment of | with respect to | increased profit | |||||
& | recycled products containing | strengthening E-scrap | • | Regarding E-Scrap, we | ||||||||
Resource | metal resources | capacity. | will strengthen the | |||||||||
Recycling | ROIC spread | +2.9pt | -2.5pt | +0.3pt | +1,7pt | • Creation of rare earths and | collection system in | |||||
Business | rare metals recycling | Europe based on the | ||||||||||
WACC:5.4% | businesses | forecast of supply and | ||||||||||
• Accelerating business | demand | |||||||||||
EP | -7.4 | 1.0 | developments in Japan and | |||||||||
overseas (E-Scrap, home | ||||||||||||
appliances, automobile | ||||||||||||
recycling) | ||||||||||||
*EBITDA= Ordinary profit + Interest expense + Depreciation | + Goodwill depreciation | 8 | ||||||||||
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1. Progress of the FY2031 Strategy
Advanced Products Company
- Copper& CopperAlloy business:Demandfor automobilesdeclinedinFYendingMarch 2024. Ordinaryprofitis expectedto improveinFYending March2025 drivenby recoveryof demandfor automobiles,revisionof roll marginsandcost reductions.
- ElectronicMaterials& Componentsbusiness:Demandfor semiconductorproductsdecreasedinFYendedMarch2024. Thesemiconductor marketremainsweak,and a full-scalerecoveryindemandisexpectedin thesecondhalf of FYendingMarch2025.
FY Ended | FY Ended | FY Ending | FY2031 | Direction for achieving | ||||||
March | March | March | ||||||||
(billions of yen) | Strategy | FY2031 Strategy Measures | Progress | the FY2031 Strategy | ||||||
2023 | 2024 | 2025 | ||||||||
Plan | Plan | |||||||||
Result | Result | Forecast | ||||||||
Ordinary profit | -0.0 | -0.5 | 7.3 | 12.4 | • Improve the recycling rate of | • | Investment to | • | Lowering the break-even | |
wrought copper products and | strengthen | point by improving yield | ||||||||
establish a scrap platform | production capacity | and productivity | ||||||||
EBITDA | 9.3 | 10.6 | 20.5 | 24.6 | base | for copper sheets and | • | Reducing raw material | ||
Copper & | • Overseas (Luvata): Rapid entry | copper strips is | costs by improving | |||||||
into growing markets (xEV, | proceeding as | recycling rates | ||||||||
Copper | ||||||||||
ROIC | 0.6% | 0.6% | 3.2% | 4.0% | healthcare, environment) | anticipated, and | • | Promoting sales expansion | ||
Alloy | ||||||||||
• Expand sales and strengthen | substantial | to domestic key accounts | ||||||||
Business | ||||||||||
ROIC spread | -2.1pt | -2.1pt | +0.5pt | +1.3pt | services to overseas customers | operations to begin in | and expanding into | |||
WACC:2.7% | by establishing a new | the latter half of FY | overseas sales channels | |||||||
overseas plant which carries out | ending March 2025 | • | Accelerating sales shift to | |||||||
EP | -4.5 | 1.1 | a downstream process, with the | high-profit products | ||||||
domestic plants as mother ones | ||||||||||
Ordinary profit | 7.7 | 2.8 | 3.8 | 8.6 | • Highly capital-efficient management | • | The business | • | Semiconductor market, | |
through continual restructuring of the | environment for | effects of increased | ||||||||
business portfolio | precision silicon | production due to recovery | ||||||||
• Strategic investment in focal | products is worsening. | in demand and growth of | ||||||||
EBITDA | 11.5 | 6.9 | 8.7 | 16.0 | products in growth areas | We will reevaluate | automobiles (mainly | |||
Electronic | • Developing and securing human | investments in | electric vehicles), | |||||||
resources for the creation of new | increased production | additional sales expansion | ||||||||
Materials | 8.7% | businesses and the | and shift toward | measures (Silicon | ||||||
& | ROIC | 3.3% | 3.8% | 7.8% | promotion of business alliances | other growth areas. | processed products, device | |||
Compone | • Enhancing manufacturing | products) | ||||||||
nts | capabilities and DX to enhance | • | Improvement of ROIC by | |||||||
Business | ROIC spread | +1.3pt | -4.1pt | -3.6pt | +0.4pt | production sophistication and | implementing a growth | |||
WACC:7.4% | profitability | investment plan based on | ||||||||
• Providing business and social value | semiconductor market | |||||||||
(SDGs) for carbon neutrality | conditions | |||||||||
EP | -2.7 | -2.7 | ||||||||
*EBITDA= Ordinary profit + Interest expense + Depreciation + Goodwill depreciation
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1. Progress of the FY2031 Strategy
Metalworking Solutions Company
- MetalworkingSolutionsbusiness:In FYendedMarch2024, demandfor cementedcarbideproductsfor Japan and Asiadeclined.In FY ending March2025, we expectrecoveryindemandfor automobiles.
FY Ended | FY Ended | FY Ending | FY2031 | Direction for achieving | ||||||
March | March | March | FY2031 Strategy | |||||||
(billions of yen) | Strategy | Progress | the FY2031 Strategy | |||||||
2023 | 2024 | 2025 | Measures | |||||||
Plan | Plan | |||||||||
Result | Result | Forecast | ||||||||
Ordinary profit | 14.5 | 12.2 | 14.0 | 25.0 | Carbide tools business | • Creation of high added- | • | Enhancement of tungsten | ||
• | Stable supply of the | value products in various | business (Recycling, | |||||||
world's top quality, high- | fields including automobile, | production and sales of | ||||||||
EBITDA | 27.4 | 24.5 | 28.8 | 39.9 | efficiency products | aerospace, and medical are | high-performance powders | |||
utilizing the strength of | as planned. | and alloys) through | ||||||||
materials and coating | acquisition of H.C. Starck, | |||||||||
technology | Germany | |||||||||
Metalworking | ROIC | 6.9% | 5.2% | 5.3% | 8.6% | Tungsten business | • | Improvement of sales | ||
• | Expansion of business | efficiency and productivity | ||||||||
Solutions | scale for rechargeable | using DX | ||||||||
Business | ROIC spread | +0.4pt | -1.3pt | -1.2pt | +2.1pt | batteries in addition to | • | Improvement of capital | ||
WACC:6.5% | carbide tools, etc. | efficiency by reducing | ||||||||
• | Strengthening | inventories | ||||||||
environmental | ||||||||||
responsiveness | ||||||||||
EP | -2.1 | -2.0 | Solution business | |||||||
• | Commercialization of | |||||||||
solution sales to | ||||||||||
manufacturing sites | ||||||||||
*EBITDA= Ordinary profit + Interest expense + Depreciation + Goodwill depreciation |
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Mitsubishi Materials Corporation published this content on 21 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 May 2024 02:44:07 UTC.