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

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: -)

(2) Application of specific account processing in preparation of the quarterly consolidated financial statements: None

• 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

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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 third quarter of the consolidated fiscal year under review (April 2022 through December 2022), production volumes in the automotive industry recovered, even as the industry continued to be affected by the Shanghai COVID-19 lockdowns and lingering shortages of semiconductors and other components. The construction machinery industry continued to exhibit strong demand. Despite signs suggesting corrections from last year's trends of rapid yen depreciation and soaring prices for iron ore and coking coal, procurement costs remained up year-on-year. High energy prices also continued.

Under these circumstances, thanks to efforts to reflect the rising cost of raw materials in selling prices, the Group posted consolidated net sales of 126,447 million yen in the cumulative period through the third quarter of the fiscal year under review, an increase of 22,115 million yen (21.2%) year-on-year. Consolidated operating income was 2,873 million yen, down

1,778 million yen (38.2%) year-on-year, due to widening losses at the North American Springs subsidiary and other factors. Net income attributable to owners of parent was 1,234 million yen, down 2,188 million yen (63.9%) year-on-year.

Results by business segment are reviewed below.

Net sales in the Special Steel Bars Business were 75,990 million yen-up 13,477 million yen (21.6%) year-on-year-due to efforts to adjust selling prices to reflect the devalued yen and the rising cost of raw materials and energy. Progress in reflecting rising costs in selling prices helped generate growth in operating income for the domestic business. Overseas, profits at the Indonesian business rose due to increased production and efforts to adjust selling prices to reflect rising scrap prices. Overall, the Special Steel Bars Business posted operating income of 4,738 million yen, up 340 million yen (7.7%) year-on-year.

In the Springs Business, thanks to recovering demand, automotive production increased, primarily in North America. This was despite the impact of the Shanghai COVID-19 lockdowns and the tight supply of semiconductors and other components. These and other contributing factors, including steady demand for construction machinery, the translation effects of the weaker yen, and efforts to adjust selling prices to reflect higher raw material prices, contributed to year-on-year growth of 8,866 million yen in net sales (26.0%) in the Springs Business to 42,917 million yen. Operating losses for the Springs Business as a whole grew by 1,787 million yen year-on-year to 2,817 million yen (vs. operating losses of 1,029 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, emergency shipping and other additional costs, and losses magnified by yen depreciation at the North American subsidiary.

Restructuring efforts are currently underway to address production disruptions at the North American subsidiary. These measures include efforts to normalize production costs by securing stable inventories and efforts to discontinue or raise prices for unprofitable products.

Despite orders for new special alloy powder products, sales volumes in the Formed & Fabricated Products Business fell due to customer inventory adjustments on parts for automotive internal combustion engines and discontinued production of Esco cast steel products. At the same time, adjustments in selling prices to reflect rising raw material costs helped drive net sales, which increased 197 million yen (2.6%) year-on-year, to 7,939 million yen. Operating income declined 220 million yen (30.0%) year- on-year to 513 million yen due to lower sales volumes and the failure of price increases to keep pace with various rising costs, including the rising cost of raw materials.

Net sales in the Machinery Business were 6,523 million yen, up 108 million yen (1.7%) year-on-year. Stronger sales of machinery for offshore wind power and other products helped offset the decline associated with the major order for forging machinery recorded in the same period of last year. Operating income fell by 154 million yen (31.3%) year-on-year to

339 million yen as the impact of lower sales of forging machinery outweighed the effects of profitability improvement efforts.

Other businesses, including the distribution and service businesses, posted net sales of 2,692 million yen, down 165 million yen (5.8%) year-on-year, and operating income of 88 million yen, up 13 million yen (17.7%) year-on-year.

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(2) Description of Financial Position

Total assets at the end of the third quarter of the consolidated fiscal year under review were 148,753 million yen, up

5,790 million yen from the end of the previous consolidated fiscal year. These figures were attributable to increased production and expanded inventories and despite decreases in accounts receivable-trade and in investment securities due to the sale of cross- shareholdings.

Total liabilities at the end of the third quarter of the consolidated fiscal year under review were 99,615 million yen, up

5,300 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, and reversal of the provision for fire-related losses.

Net assets at the end of the third quarter of the consolidated fiscal year under review were 49,137 million yen, up 490 million yen from the end of the previous consolidated fiscal year. Higher retained earnings played a key role in this gain.

(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 November 8, 2022).

For more information, see "Notice of 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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