Mitsubishi Steel Mfg : Summary of Financial Statements for the First Half of the Fiscal Year Ending March 31, 2023 (Consolidated)

Summary of Financial Statements for the First Half of the Fiscal Year

Ending March 31, 2023

[Japanese GAAP] (Consolidated)

		November 8, 2022
		Shares listed on: Tokyo Stock Exchange
Name of listed company:	MITSUBISHI STEEL MFG. CO., LTD.
Code No.:	5632	URL: https://www.mitsubishisteel.co.jp/
Representative:	Jun Yamaguchi, Representative Director and President/Executive Officer
Contact:	Koichi Yaginuma, Executive Officer/Manager, Accounting Department Tel.: [phone]

Scheduled date for filing quarterly report:	November 11, 2022
Scheduled start date of dividend payments:	December 9, 2022
Supplementary briefing materials on quarterly results available: Yes
Briefing on quarterly results held:	Yes (For securities analysts and institutional investors)

(All figures are rounded down to the nearest million yen.)

1. Financial results for the first half of the fiscal year ending March 31, 2023 (April 1, 2022- September 30, 2022)

(1) Consolidated operating results				(Percentages represent year-on-year changes.)
	Net sales		Operating income	Ordinary income	Net income attributable
		to owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
First half of the fiscal year	82,333		24.9	1,700	(37.9)	1,713	(27.0)	1,356	(41.1)
ending March 31, 2023
First half of the fiscal year	65,922		56.1	2,736	-	2,348	-	2,302	-
ended March 31, 2022

Note: Comprehensive income: First half of the fiscal year ending March 31, 2023: 561 million yen (157.1%); First half of the fiscal year

ended March 31, 2022: 218 million yen (--%)
	Net income	Diluted net income
	per share	per share
	Yen	Yen
First half of the fiscal year	88.34	-
ending March 31, 2023
First half of the fiscal year	149.71	-
ended March 31, 2022

(2) Consolidated financial position

			Total assets		Net assets	Shareholders'
				equity ratio
			Millions of yen		Millions of yen	%
	First half of the fiscal year ending March 31, 2023	148,601	48,296		28.9
	Fiscal year ended March 31, 2022		142,962		48,647		29.8

Reference: Shareholders' equity: First half of the fiscal year ending March 31, 2023: 42,916 million yen; Fiscal year ended March 31, 2022: 42,600 million yen

2. Dividends

		Annual dividends per share
	End Q1	End Q2	End Q3		Year-end		Total
	Yen	Yen	Yen		Yen		Yen
Fiscal year ended March 31, 2022	-	10.00	-	40.00	50.00
Fiscal year ending March 31, 2023	-	10.00
Fiscal year ending March 31, 2023 (forecast)			-		40.00		50.00

Note: Revisions of projected dividends announced most recently: None

3. Forecast of consolidated financial results for fiscal year ending March 31, 2023 (April 1, 2022 - March 31, 2023)

(Percentages represent year-on-year changes.)

								Net income	Net income per
	Net sales		Operating income	Ordinary income	attributable to
		share
								owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	180,000		23.0	5,500	(12.3)	4,500	(22.2)	2,700	(33.6)	175.83

Note: Revisions of forecasts of consolidated financial results announced most recently: Yes

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Notes
(1) Changes in significant subsidiaries during the cumulative period through the period under review:	None
(Changes in specific subsidiaries accompanied by changes in the scope of consolidation)
Newly added: - companies (name: -)
Removed:	- companies (name: -)

1. Application of specific account processing in preparation of the quarterly consolidated financial statements: None
2. Changes in accounting policies, changes in accounting estimates, and retrospective restatements

 Changes in accounting policies due to the revisions of accounting standards, etc.:	None
 Any changes in accounting policies other than those under  above:	None
 Changes in accounting estimates:	None
 Retrospective restatements:	None

1. Number of shares outstanding (common shares)
2. • Number of shares outstanding at the end of the period (including treasury stock)

• Number of treasury shares at the end of the period

• Average number of shares during the period (cumulative through the period under review)

1H of fiscal year ending	15,709,968 shares	Fiscal year ended	15,709,968 shares
March 31, 2023	March 31, 2022
1H of fiscal year ending	353,923 shares	Fiscal year ended	353,774 shares
March 31, 2023	March 31, 2022
1H of fiscal year ending	15,356,095 shares	1H of fiscal year ended	15,377,809 shares
March 31, 2023		March 31, 2022

• Quarterly summaries of financial results are not subject to quarterly review by a certified public accountant or audit firm.
• Explanation of the proper use of financial results forecast and other notes
  The forecasts of financial results were prepared based on information available at this time. Actual results may differ from forecasts depending on various future factors.
  For detailed information on financial forecasts, refer to "1. Qualitative Information on Quarterly Financial Results: (3) Explanation of Forward-looking Statements Including Forecasts of Consolidated Financial Results" on page 5 of the Attached Materials.

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• Table of Contents for Attached Materials

1.	Qualitative Information on Quarterly Financial Results...................................................................................................................	4
	(1)	Description of Operating Results............................................................................................................................................	4
	(2)	Description of Financial Position ...........................................................................................................................................	5
	(3)	Explanation of Forward-looking Statements Including Forecasts of Consolidated Financial Results....................................	5
2.	Consolidated Financial Statements and Major Notes........................................................................................................................	6
	(1)	Consolidated Balance Sheet....................................................................................................................................................	6
	(2)	Consolidated Statement of Income and Consolidated Statement of Comprehensive Income .................................................	8
	(3)	Consolidated Statement of Cash Flows ................................................................................................................................	10
	(4)	Notes on First Half Consolidated Financial Statements........................................................................................................	12
		(Notes on the Going Concern Assumption)..........................................................................................................................	12
		(Notes on marked changes in amounts of shareholders' equity)...........................................................................................	12
		(Segment Information, etc.)..................................................................................................................................................	12
		(Revenue Recognition) .........................................................................................................................................................	13
3.	Appendix (Consolidated)................................................................................................................................................................	14

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1. Qualitative Information on Quarterly Financial Results

1. Description of Operating Results

With respect to the Group's operating environment in the cumulative period through the second quarter of the consolidated fiscal year under review (from April 2022 through September 2022), the Shanghai COVID-19 lockdowns and shortages of semiconductors and other components continued to affect the automotive industry despite continuing recovery in automobile production. The construction machinery industry shows continuing strong demand. However, rapid yen depreciation and soaring raw material and energy costs led to higher procurement costs although prices for iron ore and coking coal have recently plateaued. Reflecting these additional factors in selling prices has posed a major challenge.

Under these circumstances, thanks to efforts to reflect the rising cost of raw materials in selling prices, the Group posted consolidated net sales of 82,333 million yen in the cumulative period through the second quarter of the fiscal year under review, an increase of 16,410 million yen (24.9%) year-on-year. Consolidated operating income was 1,700 million yen, down 1,036 million yen (37.9%) year-on-year, due to widening losses at the North American Springs subsidiary and other factors.

Net income attributable to owners of parent was 1,356 million yen, down 945 million yen (41.1%) year-on-year. Results by business segment are reviewed below.

Net sales in the Special Steel Bars Business were 48,529 million yen, up 8,708 million yen (21.9%) year-on-year, due to progress in efforts to reflect the price hike of raw materials in selling prices and steady demand from industries associated with construction machinery. Operating income for the domestic business grew thanks to the use of raw material inventories from before price hikes and other factors; this was despite the lag in reflecting rising costs in selling prices and the impact of energy price hikes and progressive depreciation of the yen. Overseas, profits at the Indonesian business declined due to the delayed effects of efforts to reflect rising scrap prices in selling prices. Overall, the Special Steel Bars Business posted operating income of 3,011 million yen, up 125 million yen (4.4%) year-on-year.

Despite Shanghai COVID-19 lockdowns, net sales in the Springs Business were 28,309 million yen, up 6,540 million yen (30.0%) year-on-year, due to increased automotive production (mainly in North America) after semiconductor shortages had significantly reduced production in the previous year. Other contributing factors included steady demand for construction machinery and the translation effects of the weaker yen. Operating loss for the Springs Business as a whole grew by 1,139 million yen year-on-year to 2,032 million yen (vs. an operating loss of 893 million yen in the same period of the previous fiscal year). Contributing factors included production disruptions that persisted from the second half of the previous fiscal year and cut productivity and the continuing need for emergency shipping, as well as expanded losses at the North American subsidiary due to yen depreciation.

Restructuring efforts are currently underway to address production disruptions at the North American subsidiary. These measures include efforts to secure stable inventories, discontinue handling of unprofitable products, and reflect rising production costs in selling prices.

Despite lower sales volumes due to customer inventory adjustments, net sales in the Formed & Fabricated Products Business were 5,519 million yen, up 562 million yen (11.3%) year-on-year. Contributing factors included the receipt of orders for new special alloy powder products and improvements in selling prices due to rising raw material prices. Operating income was down 140 million yen (25.4%) year-on-year to 412 million yen due to lower sales volumes and other factors.

Net sales in the Machinery Business were 4,529 million yen, up 915 million yen (25.3%) year-on-year due to stronger sales of machinery related to offshore wind power and other products. Higher net sales and efforts to improve profitability boosted operating income by 79 million yen (51.5%) year-on-year to 232 million yen.

Other businesses, including the distribution and service businesses, posted net sales of 1,787 million yen, down 201 million yen (10.1%) year-on-year, and operating income of 58 million yen, down 5 million yen (9.0%) year-on-year.

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(2) Description of Financial Position

Total assets at the end of the second quarter of the consolidated fiscal year under review were 148,601 million yen, up 5,639 million yen from the end of the previous consolidated fiscal year. This was due to increased production and expanded inventories and despite a decrease in cash due to payments, including payments for accounts payable-trade, income taxes, and consumption taxes.

Total liabilities at the end of the second quarter of the consolidated fiscal year under review were 100,305 million yen, up 5,989 million yen from the end of the previous consolidated fiscal year. This increase was due to an increase in loans payable and despite decreases in liabilities related to payments, including payments for income taxes and consumption taxes.

Net assets at the end of the second quarter of the consolidated fiscal year under review were 48,296 million yen, down 350 million yen from the end of the previous consolidated fiscal year. Key contributing factors included a decline in foreign currency translation adjustments resulting from exchange rate fluctuations and an increase in net income for the quarter.

During the second quarter of the consolidated fiscal year under review, net cash used in operating activities was 8,053 million yen; net cash used in investing activities was 1,239 million yen; and net cash from financing activities was 5,636 million yen.

Cash and cash equivalents decreased by 3,340 million yen during the second quarter to 16,610 million yen at quarter's end.

(3) Explanation of Forward-looking Statements Including Forecasts of Consolidated Financial Results

Forecasts of consolidated financial results for the fiscal year ending March 2023 have been revised from the forecasts announced previously (on May 13, 2022). For more information, see "Notice of differences between forecasts and actual results for the first half of the consolidated fiscal year and revised full-year forecasts of consolidated financial results," released today. Forecasts of consolidated financial results are prepared based on information available as of the date they are released. Actual results may differ from the forecasts due to the future effects of various factors.

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