Mitsui Sugar : Summary of Consolidated Financial Results For the Nine Months of the Year Ending March 31, 2020

Summary of Consolidated Financial Results

For the Nine Months of the Year Ending March 31, 2020 (Based on Japanese GAAP)

		January 31, 2020
Company name:	Mitsui Sugar Co., Ltd.	Stock exchange listings: Tokyo
Stock code:	2109	https://www.mitsui-sugar.co.jp/
Company representative:	Daisuke Saiga, President and Chief Executive Officer
Contact person in charge:	Kouji Suzuki, General Manager, Corporate Planning Division
		TEL. [phone]
Planned date for submission of quarterly report:	February 12, 2020
Planned date to start dividend payment:	－
Preparation of supplementary material for quarterly financial statements:	None
Briefing session for quarterly financial statements:	None
	(Amounts	are rounded down to the nearest 1 million yen.)

1. Consolidated Financial Results for the Nine Months of the Year Ending March 31, 2020 (from April 1, 2019 to December 31, 2019)

(1) Consolidated Results of Operations				(Percentages are year-over-year changes.)
	Net sales		Operating income	Ordinary income	Profit attributable to
		owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%
First nine months of FY2019	86,961	10.7	4,966	63.9	4,800	(41.1)	2,759	(45.2)
First nine months of FY2018	78,550	(2.7)	3,030	(47.8)	8,146	(28.3)	5,031	(30.3)

(Note) Comprehensive income:

Nine months ended December 31, 2019: 2,708 million yen (-47.9%)

Nine months ended December 31, 2018: 5,198 million yen (-34.9%)

Earnings per share

Diluted earnings per share

Yen

Yen

First nine months of FY2019

105.86

－

First nine months of FY2018

188.44

－

(2) Consolidated Financial Position

Total assets

Net assets

Capital adequacy ratio

Net assets per share

Million yen

Million yen

%

Yen

As of December 31, 2019

141,381

93,274

59.0

3,244.55

As of March 31, 2019

139,867

95,063

61.1

3,201.11

(Reference) Equity capital:

As of December 31,

2019: 83,390 million yen

As of March 31, 2019: 85,475 million yen

2. Cash Dividends

Annual dividend

End of 1Q

End of 2Q

End of 3Q

Year end

Total

Yen

Yen

Yen

Yen

Yen

Year ended March 31, 2019

-

55.00

-

55.00

110.00

Year ending March 31, 2020

-

25.00

-

Year ending March 31, 2020

25.00

50.00

(forecast)

(Note) Revision of the dividend forecast

announced most recently: None

3. Consolidated Business Forecasts for the Year Ending March 31, 2020 (from April 1, 2019 to March 31, 2020)

(Percentages are year-over-year changes.)

Operating

Profit attributable

Earnings per

Net sales

Ordinary income

to owners of

income

share

parent

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

Full year

113,000

7.3

5,100

36.3

5,100

(50.6)

2,600

(62.1)

99.76

(Note) Revision of the business forecasts

announced

most

recently:

None

• Notes
• 1. Significant changes in subsidiaries during the period
     (Changes in specified subsidiaries resulting in changes of scope of consolidation): None

New:	－ companies (company name):	－
Excluded: － companies (company name):	－

1. Application of accounting method unique to preparation of quarterly consolidated financial statements: None
2. Changes in accounting policy and accounting estimates and restatement

(i)	Changes in accounting policy due to any revision of accounting standards:	None
(ii)	Changes in accounting policy other than i) above:	None
(iii)	Changes in accounting estimates:	None
(iv)	Restatement:	None

(4) Number of outstanding shares (common shares)

1. Number of outstanding shares at period end (including treasury shares)
2. Number of treasury shares at period end
3. Average number of shares during period (from the beginning of fiscal year to period end)

As of December 31,	28,333,480 shares	As of March 31,	28,333,480 shares
2019	2019
As of December 31,	2,631,677 shares	As of March 31,	1,631,540 shares
2019	2019
Nine months ended	26,063,460 shares	Nine months ended	26,702,340 shares
December 31, 2019	December 31, 2018

• The quarterly kessan tanshin document is outside the scope of audit procedures conducted by certified public accountants and the independent auditor.
• Explanation on appropriate use of business forecasts, and other special notes
  Business forecasts and other forward-looking statements contained in this report and supplementary materials are based on information currently available to the Company and on certain assumptions deemed as rational. They do not constitute a guarantee that the Company will achieve its forecasts or other forward-looking statements. Actual results may differ significantly from forecasts due to various factors. For assumptions and other criteria used to formulate business forecasts, please refer to "1. Qualitative Information Regarding the Results for the First Nine Months of the Year Ending March 31, 2020, (3) Description of consolidated business forecasts and other information about future forecasts" on page 3 of the Appendix.

Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Nine Months Ended December 31, 2019

• Appendix

1.	Qualitative Information Regarding the Results for the First Nine Months of the Year Ending March 31, 2020 .........................	2
(1)	Description of consolidated operating results..............................................................................................................................	2
(2)	Description of consolidated financial position.............................................................................................................................	3
(3)	Description of consolidated business forecasts and other information about future forecasts .....................................................	3
2.	Quarterly Consolidated Financial Statements and Important Notes ............................................................................................	4
(1)	Quarterly consolidated balance sheets .........................................................................................................................................	4
(2)	Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income........................	6
	(Quarterly consolidated statements of income) ...........................................................................................................................	6
	(Quarterly consolidated statements of comprehensive income)...................................................................................................	7
(3)	Notes on quarterly consolidated financial statements ..................................................................................................................	8
	(Note on assumptions of a going concern) ..................................................................................................................................	8
	(Notes when the amount of the shareholders' equity significantly fluctuates).............................................................................	8
	(Segment information, etc.).........................................................................................................................................................	8

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Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Nine Months Ended December 31, 2019

1. Qualitative Information Regarding the Results for the First Nine Months of the Year Ending March 31, 2020

(1) Description of consolidated operating results

In the first nine months of fiscal 2019 (April - December 2019), the Group's operating income increased sharply year on year, despite the amortization of goodwill related to overseas investments since last year, supported by the strong performance of the domestic Sugar Business. Accordingly, EBITDA, which is an indicator of underlying business performance, was 9,566 million yen, illustrating the Group's continued ability to generate stable cash flow.

(Sugar Business)

In the overseas crude sugar market, sugar prices started the fiscal year at around 12 cents per pound and continued to fail to rise owing to high inventories before falling to around 10 cents in mid-September for the first time in around a year. The market then turned upward following a string of prospects for reduced production next fiscal year from major sugar-producing countries, ending the third quarter at around 13 cents.

In sales activities, shipments of crude sugar for commercial use were strong, but shipments for home use declined year on year, reflecting a reduction in the volume of sales to volume sellers toward the end of the year, which was the peak of the demand. On the cost front, the Group faced rising logistics and fuel costs due to a worker shortage, as well as an increase in depreciation costs related to investment in new equipment and facilities to ensure stable operations. However, efforts to procure crude sugar at appropriate prices led to an improvement in raw material costs, leading to an increase in operating income compared with the same period a year earlier.

In consolidated subsidiaries, production volume declined at Showa Sugar Co., Ltd. amid poor weather, and sales prices and sales volume fell at Hokkaido Sugar Co., Ltd. However, SIS' 88 Pte Ltd, which was consolidated as a Group subsidiary at the end of the third quarter in the previous fiscal year, contributed to the profits throughout the term.

As a result of the above, the Sugar Business reported overall net sales of 70,219 million yen and an operating income of 3,619 million yen.

By establishing HANY SUGAR, a joint venture with Yingkou New Northern Sweet, in China in December 2019, and through other efforts, the Sugar Business has been continuing to strengthen its new business foundation.

Sugar market status during period

Domestic market price (listed in Nippon Keizai Shimbun, per kilogram of a large bag of superfine sugar, Tokyo) Nine months ended December 31, 2019: 187-188 yen

Overseas raw sugar price (NY sugar current delivery, per pound)

Opening price: 12.53 cents, highest price: 13.67 cents, lowest price: 10.68 cents, closing price: 13.42 cents

(Food Science Business)

In the Food Science Business, palatinose was adopted for new products by major users as an energy supplement during exercise. As a result, operating income increased compared with the same period a year earlier.

In consolidated subsidiaries, sales and profits from TAISHO TECHNOS CO., LTD. increased, due to strong sales and an improved cost ratio following the start of the operations of a new plant. Nutri Co., Ltd. also reported increased sales and profits due to increased sales from a liquid food business acquired at the start of the first quarter and other businesses.

As a result, net sales in the Food Science Business totaled 15,280 million yen and operating income was 649 million yen.

(Real Estate Business)

The Real Estate Business reported net sales of 1,461 million yen and operating income of 697 million yen, both higher year on year, mainly reflecting the start of leasing activities for a new logistics center in Okayama City from November 2018.

As a result of the above, in the first nine months of the fiscal year, net sales increased 10.7% year on year to 86,961 million yen and operating income rose 63.9% to 4,966 million yen.

Meantime, while COFCO Sugar Liaoning Co., Ltd, in which the Company made investments in the fourth quarter in the previous fiscal year, was performing well, earnings deteriorated at the Group's affiliates in Thailand due to the softening of crude sugar prices overseas and postponing of the recognition of some profits from royalty income for fingolimod (FTY720) due to the ongoing arbitration procedure. As a result, ordinary income declined 41.1% year on year to 4,800 million yen and profit attributable to owners of parent fell 45.2% to 2,759 million yen.

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Mitsui Sugar Co., Ltd. (2109) Summary of Consolidated Financial Results for the First Nine Months Ended December 31, 2019

(2) Description of consolidated financial position Changes in consolidated financial position

As of December 31, 2019, total assets stood at 141,381 million yen, up 1,514 million yen from the end of the previous fiscal year. Significant changes in the main items on the consolidated balance sheet were as follows:

1. Current assets
   Current assets totaled 57,325 million yen, up 3,465 million yen from the end of the previous fiscal year. This mainly reflected an increase of 4,988 million yen for raw materials and supplies, versus a decrease of 2,688 million yen for merchandise and finished goods.
2. Non-currentassets
   Non-current assets totaled 84,056 million yen, down 1,951 million yen from the end of the previous fiscal year. This mainly reflected decreases of 616 million yen for goodwill and 901 million yen for investment securities.
3. Liabilities

Liabilities totaled 48,106 million yen, up 3,302 million yen from the end of the previous fiscal year. This mainly reflected increases of 8,080 million yen for loans payable and 4,820 million yen for other current liabilities, versus a decrease of 10,000 million yen for current portion of bonds.

(iv) Net assets

Net assets totaled 93,274 million yen, down 1,788 million yen from the end of the previous fiscal year. This was mainly due to profit attributable to owners of parent of 2,759 million yen, dividends of surplus of 2,111 million yen and purchase of treasury shares of 2,304 million yen.

1. Description of consolidated business forecasts and other information about future forecasts Consolidated business forecasts for fiscal 2019, announced on May 14, 2019, are unchanged.

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Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Nine Months Ended December 31, 2019

2. Quarterly Consolidated Financial Statements and Important Notes

(1) Quarterly consolidated balance sheets

				(Million yen)
			FY2018	First nine months of FY2019
			(As of March 31, 2019)	(As of December 31, 2019)
	Assets
	Current assets
	Cash and deposits		15,232	14,063
	Notes and accounts receivable - trade	9,861	11,034
	Merchandise and finished goods		19,473	16,785
	Work in process	1,835	1,502
	Raw materials and supplies		4,454	9,443
	Other	3,007	4,502
	Allowance for doubtful accounts		(5)	(5)
	Total current assets		53,859	57,325
	Non-current assets
	Property, plant and equipment
	Buildings and structures		40,579	39,930
	Accumulated depreciation	(25,199)	(24,947)
	Buildings and structures, net		15,380	14,983
	Machinery, equipment and vehicles		83,270	84,838
	Accumulated depreciation		(65,215)	(66,446)
	Machinery, equipment and vehicles, net		18,054	18,391
	Tools, furniture and fixtures		2,601	2,681
	Accumulated depreciation	(2,088)	(2,160)
	Tools, furniture and fixtures, net		513	521
	Land		18,436	18,148
	Lease assets		912	915
	Accumulated depreciation	(492)	(563)
	Lease assets, net		420	351
	Construction in progress		459	823
	Total property, plant and equipment		53,265	53,218
	Intangible assets
	Goodwill	5,388	4,771
	Other		3,282	3,021
	Total intangible assets	8,670	7,793
	Investments and other assets
	Investment securities		12,786	11,884
	Investments in capital of subsidiaries and associates	2,128	2,158
	Long-term loans receivable		23	20
	Net defined benefit asset	501	639
	Deferred tax assets		1,008	1,011
	Other	7,681	7,381
	Allowance for doubtful accounts		(58)	(51)
	Total investments and other assets		24,071	23,044
	Total non-current assets		86,008	84,056
	Total assets		139,867	141,381

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Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Nine Months Ended December 31, 2019

(Million yen)

					FY2018	First nine months of FY2019
				(As of March 31, 2019)	(As of December 31, 2019)
	Liabilities
	Current liabilities
	Notes and accounts payable - trade		9,408		11,552
	Short-term loans payable	4,850	9,170
	Current portion of bonds				10,000		－
	Current portion of long-term loans payable		1,120		1,830
	Lease obligations		97		98
	Accrued expenses	3,799	3,121
	Income taxes payable		1,411		1,659
	Provision for directors' bonuses	52	30
	Asset retirement obligations		108		70
	Other		4,588	9,409
	Total current liabilities			35,437		36,944
	Non-current liabilities
	Long-term loans payable		2,550		5,600
	Lease obligations	351	276
	Deferred tax liabilities				1,589		471
	Provision for directors' retirement benefits		268		213
	Net defined benefit liability		2,812		2,873
	Asset retirement obligations	305	306
	Other			1,489		1,420
	Total non-current liabilities		9,366	11,162
	Total liabilities				44,804		48,106
	Net assets
	Shareholders' equity
	Capital stock	7,083	7,083
	Capital surplus		1,291		1,291
	Retained earnings	79,157	79,805
	Treasury shares			(2,910)		(5,215)
	Total shareholders' equity		84,622	82,965
	Accumulated other comprehensive income
	Valuation difference on available-for-sale securities		735		529
	Deferred gains or losses on hedges		36		(203)
	Foreign currency translation adjustment	(99)	(51)
	Remeasurements of defined benefit plans			180		151
	Total accumulated other comprehensive income		853	425
	Non-controlling interests			9,587		9,884
	Total net assets		95,063	93,274
	Total liabilities and net assets			139,867		141,381

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Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Nine Months Ended December 31, 2019

1. Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income (Quarterly consolidated statements of income)

				(Million yen)
			First nine months of FY2018	First nine months of FY2019
			(From April 1, 2018 to	(From April 1, 2019 to
			December 31, 2018)	December 31, 2019)
	Net sales		78,550	86,961
	Cost of sales	60,407	66,222
	Gross profit		18,143	20,738
	Selling, general and administrative expenses
	Distribution expenses		3,900	3,838
	Salaries and bonuses	2,837	3,191
	Provision for directors' bonuses		45	30
	Retirement benefit expenses	137	129
	Other		8,192	8,583
	Total selling, general and administrative expenses		15,113	15,771
	Operating income		3,030	4,966
	Non-operating income
	Interest income		1	0
	Dividend income	59	97
	Royalty income		6,053	1,130
	Miscellaneous income	185	156
	Total non-operating income		6,300	1,385
	Non-operating expenses
	Interest expenses		48	63
	Loss on retirement of non-current assets	37	52
	Facilities removal expenses		118	259
	Share of loss of entities accounted for using equity method	823	1,038
	Miscellaneous loss		156	137
	Total non-operating expenses		1,184	1,551
	Ordinary income		8,146	4,800
	Extraordinary income
	Gain on sales of investment securities		1	209
	Gain on disposal of non-current assets		－	14
	Insurance claim income		11	261
	Gain on change in equity	88	－
	Subsidy income		－	362
	Total extraordinary income		100	847
	Extraordinary losses
	Loss on reduction of non-current assets	9	328
	Loss on disaster		77	－
	Environmental expenses		－	97
	Total extraordinary losses		86	425
	Profit before income taxes		8,160	5,222
	Income taxes－current		2,600	3,087
	Income taxes－deferred	244	(1,027)
	Total income taxes		2,844	2,060
	Profit		5,315	3,162
	Profit attributable to non-controlling interests		283	403
	Profit attributable to owners of parent		5,031	2,759

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Mitsui Sugar Co., Ltd. (2109) Summary of Consolidated Financial Results for the First Nine Months Ended December 31, 2019

(Quarterly consolidated statements of comprehensive income)

		(Million yen)
	First nine months of FY2018	First nine months of FY2019
	(From April 1, 2018 to	(From April 1, 2019 to
	December 31, 2018)	December 31, 2019)
Profit	5,315	3,162
Other comprehensive income

Valuation difference on available-for-sale securities

Deferred gains or losses on hedges

Foreign currency translation adjustment

Remeasurements of defined benefit plans

Share of other comprehensive income of entities accounted for using equity method

				(170)				(202)
				(17)	85
				－		(258)
				(14)	(35)
				85				(40)

Total other comprehensive income		(116)	(453)
Comprehensive income		5,198	2,708
Comprehensive income attributable to:
Owners of parent	4,936	2,331
Non-controlling interests	261	377

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Mitsui Sugar Co., Ltd. (2109)

Summary of Consolidated Financial Results for the First Nine Months Ended December 31, 2019

1. Notes on quarterly consolidated financial statements (Note on assumptions of a going concern)
   None.

(Notes when the amount of the shareholders' equity significantly fluctuates)

The Company completed a share buyback on September 25, 2019 in accordance with a resolution approved by the Board of Directors on May 14, 2019. The number of shares repurchased (1,000,000) and the value of the shares (2,304 million yen) have been included in the quarterly consolidated financial statements. As a result of the repurchase, during the third quarter the Company's treasury shares increased by 2,304 million yen, resulting in a balance of 5,215 million yen at the end of the period.

(Segment information, etc.) Segment information

1. First nine months of FY2018 (From April 1, 2018 to December 31, 2018) Information on net sales and income/loss by each reportable segment

						(Million yen)
		Reportable segment			Amount recorded
		Food			Adjustments	in quarterly
	Sugar	Real Estate	Total	consolidated
	Business	Science	Business		statements of
		Business				income
Net sales
Net sales to third-party	62,155	14,992	1,402	78,550	－	78,550
customers
Intersegment net sales	43	99	32	174	(174)	－
and transfer
Total	62,199	15,091	1,434	78,725	(174)	78,550
Segment profit	1,801	563	664	3,030	－	3,030

(Note) Some adjustments were made between segment profit and operating income recorded in the quarterly consolidated statements of income.

1. First nine months of FY2019 (From April 1, 2019 to December 31, 2019) Information on net sales and income/loss by each reportable segment

						(Million yen)
		Reportable segment			Amount recorded
		Food			Adjustments	in quarterly
	Sugar	Real Estate	Total	consolidated
	Business	Science	Business		statements of
		Business				income
Net sales
Net sales to third-party	70,219	15,280	1,461	86,961	－	86,961
customers
Intersegment net sales	31	109	49	190	(190)	－
and transfer
Total	70,250	15,389	1,511	87,151	(190)	86,961
Segment profit	3,619	649	697	4,966	－	4,966

(Note) Some adjustments were made between segment profit and operating income recorded in the quarterly consolidated statements of income.

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