Investor Conference

November 14, 2023

Chief Executive Officer Naoki Ono

Table of Contents

  1. Outlook for FY March 2024
  2. Progress on Major Initiatives of the FY2031 Strategy
    1. Expansion of Resource Recycling
    2. Enhancing the Supply of High-performance Materials and Products
    3. Renewable Energy Business
  4. Management Focused on Capital Cost and Stock Price

2

1. Outlook for FY March 2024

Trends in the External Environment

  • Copper price fell due to oversupply with inventories at LME-designated warehouses more

Copper price than tripling in less than three months as a result of sluggish demand in China. In October,

the price fell below the milestone of $8,000 per ton, reaching a four-month low.

Foreign

Exchange

Automotive

-related

Semiconductor

-related

  • The dollar-yen rate hit a one-year low, reaching a milestone of 150 yen to the dollar in late October, as interest rate differential between the Japanese yen and the U.S. and European currencies widened.
  • The yen continued to depreciate, with the euro-yen exchange rate hitting ¥160 per euro in late October, the highest level in 15 years.
  • In the automobile market, demand from auto manufacturers and Tier1 companies continued to recover as the semiconductor shortage moved toward an end, but demand from materials manufacturers did not recover.
  • Orders in the Copper & Copper Alloy business are currently on a recovery trend, and earnings from the business are expected in the H2.
  • The semiconductor market is stagnant due to lower sales of device makers.
  • Demand remains weak, and the recovery is expected to be delayed from FY2024 H2 to FY2025 H1.

4

Financial Plan for the FY2031 Strategy

  • The earnings forecast for FY2024 is expected to show a decrease in ordinary profit compared to the previous forecast, but demand is expected to recover going forward. We consider that the FY2031 Strategy targets (FY2026 and FY2031) can be sufficiently achieved by implementing the measures set forth in the FY2031 Strategy (described on page 10 and later) and strengthening competitiveness through cost reduction (described on page 8).
  • Dividend payout ratio is targeted to be 30%, and the Company plans to pay a dividend of ¥94 per share for FY2024.

FY2023

FY 2024 Forecast

FY2026

FY2031

Result

Previous

Current

Change

Plan

Target

(May 12)

(November 9)

Net sales

Billions

1,625.9

1,670.0

1,660.0

-10.0

1,940.0

2,000.0

(Net sales excluding metal)

of yen

(608.0)

(706.0)

(604.0)

(-102.0)

(690.0)

(850.0)

Operating profit

Billions

50.0

50.0

40.0

-10.0

70.0

130.0

of yen

Ordinary profit

Billions

25.3

58.0

56.0

-2.0

87.0

180.0

of yen

ROIC

%

1.4%

4.1%

4.0%

-0.1

5.5%

9.0%

ROE

%

3.5%

6.8%

6.3%

-0.5

10.0%

13.6%

EBITDA

Billions

75.7

113.0

110.0

-3.0

150.0

260.0

of yen

Net D/E ratio

Times

0.7

0.7

0.7

-

0.7

0.5 or less

Net interest-bearing debt

Times

5.2

4.1

4.1

-

3.5

2.0 or less

/EBITDA ratio

Dividends (annual)

Yen

50

94

94

-

5

Capital Allocation

  • Cash inflows are expected to be ￥154.0 bn, almost in line with the Phase 1 (FY2024 - FY2026) plan of ￥420.0 bn.
  • Operating CF is almost in line with the plan at ￥90.0 bn, with an increase in interest-bearing debt ahead of schedule and no major increase expected from asset sales this fiscal year.
  • Cash outflows are generally progressing as planned. Going forward, we will carefully review projects and consider their compatibility with our mission and the balance between "maintenance and upgrading investment" and "growth investment."

¥420.0 billion

Sale of assets 40.0

¥420.0 billion

Increase in interest-

bearing debt

100.0

Operating CF

280.0

¥154.0 billion

Sale of assets 1.0

Increase in interest-

bearing debt

63.0

Operating CF

90.0

Dividends, etc. 60.0

Maintenance and

upgrading investment

130.0

Growth Investment

230.0

  • 154.0 billion

Dividends, etc. 20.0

Maintenance and

upgrading investment

45.0

Growth investment

89.0

Phase 1

FY2024 Forecast

(FY2024 - FY2026)

Plan IN

Phase 1

FY2024 Forecast

(FY2024 - FY2026)

Plan OUT

6

Ordinary Profit and ROIC by Business

  • The Copper & Copper Alloy and Electronic Materials & Components businesses revised downward its previous forecast for FY2024
    (Billions of yen)

FY2023

FY2024 Forecast

FY2026

FY2031

Result

Previous

Current

Change

Plan

Target

(May 12)

(Nov. 9)

Ordinary profit

2.4

13.0

11.7

-1.3

11.4

48.3

Resources Business

Metals

ROIC

1.1%

9.2%

5.7%

-3.5

9.0%

18.6%

WACC:9.7%

Company

Smelting ＆

Ordinary profit

25.9

21.1

23.5

+2.4

27.0

35.0

Resource Recycling

Business*

ROIC

8.3%

5.3%

6.1%

+0.8

7.1%

7.6%

WACC:5.4%

Copper & Copper

Ordinary profit

-0.0

6.7

1.8

-4.9

12.4

16.4

Alloy Business

Advanced

ROIC

0.6%

2.8%

1.4%

-1.4

4.0%

5.0%

WACC:2.7%

Products

Ordinary profit

7.7

6.3

2.7

-3.6

8.6

20.4

Company

Electronic Materials

& Components

Business

ROIC

8.7%

6.5%

3.1%

-3.4

7.8%

14.2%

WACC:7.4%

Metalworking

Metalworking

Ordinary profit

14.5

15.2

15.6

+0.4

25.0

52.7

Solutions

Solutions Business

ROIC

6.9%

6.5%

7.0%

+0.5

8.6%

13.1%

Company

WACC:6.5%

Ordinary profit

0.9

0.4

0.5

+0.1

2.3

4.3

Renewable Energy Business

ROIC

3.8%

2.4%

2.4%

-

3.7%

4.7%

WACC:1.6%

Ordinary profit

25.3

58.0

56.0

-2.0

87.0

180.0

Total

ROIC

1.4%

4.1%

4.0%

-0.1

5.5%

9.0%

WACC:4.1%

＊ Figures for FY March 2023 Result in the Metals Company are after segment reclassification.

7

Strengthening Cost Competitiveness

  • As part of the measures under the FY2031 Strategy, the Company will implement cost reduction plans totaling approx. ¥9.0 bn by FY2026 and approx. ¥24.0 bn by FY2031.
  • In this fiscal year, considering the harsh economic conditions, we expect to achieve a total cost reduction of ¥7.2 bn, ahead of next year's plan of ¥4.4 bn, by taking additional measures besides the initial plan.
  • However, in this fiscal year, the Advanced Products business will not achieve the expected cost reduction plan due to lower sales.

(Billions of yen)

Cost reduction plan, progress,

Total cost reduction

FY2024

FY2024

FY2024

FY2024

FY2025

FY2026

and additional measures for FY2024

Additional

Total Cost

Plan

Forecast

Plan

Plan

Measures

Reduction

Plan to reduce costs by

increasing the processing capacity of copper

Metals

concentrate in Naoshima, but the effect is

0.0

0.0

3.6

3.6

0.01

2.6

expected to start in FY2026.

Energy and slag cost reduction, etc.
Improvement of yield rates, marginal profit,

Advanced

etc.

Expected to fall short due to a

1.7

1.0

0.4

1.4

2.4

3.2

Products

decrease in lower sales

Outsourcing and labor cost reduction
Cost reduction by the development of

Metalworking

smart factories

Generally on par with the plan

0.9

0.9

1.2

2.2

1.9

3.0

Solutions

Accumulation of cost reductions for

non-consolidated and subsidiaries

Preparations are underway to

Renewable

improve operational efficiency through automated

operation

0.0

0.0

0.03

0.03

0.02

0.02

Energy

Reduction of power plant operating

expenses, etc.

Total

2.6

2.0

5.2

7.2

4.4

8.8

8

2. Progress on Major Initiatives 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

society

Recycling-

oriented society

Decarbonized

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

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

(2) Enhancing the supply of

high-performance materials and products

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.

10

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Mitsubishi Materials Corporation published this content on 14 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 November 2023 14:57:58 UTC.