Mitsui Sugar : Summary of Consolidated Financial Results For the Three Months of the Year Ending March 31, 2018

Summary of Consolidated Financial Results

For the Three Months of the Year Ending March 31, 2018 (Based on Japanese GAAP)

July 31, 2017

Company name: Mitsui Sugar Co., Ltd. Stock exchange listings: Tokyo

Stock code: 2109 http://www.mitsui-sugar.co.jp/ Company representative: Daisuke Saiga, President and Chief Executive Officer

Contact person in charge: Hideaki Batori, Executive Officer, General Manager, Corporate Planning Division

TEL. 81-3-3663-3111

Planned date for submission of quarterly report: August 8, 2017

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 Three Months of the Year Ending March 31, 2018 (from April 1, 2017 to June 30, 2017)

2. Consolidated Results of Operations (Percentages are year-over-year changes.)

   Net sales		Operating income		Ordinary income		Profit attributable to owners of parent
   First three months of FY2017	Million yen	%	Million yen	%	Million yen	%	Million yen	%
   	26,709	3.3	2,111	37.6	4,450	33.9	2,917	40.7
   First three months of FY2016	25,860	4.4	1,534	18.4	3,323	7.2	2,073	8.5

   (Note) Comprehensive income: Three months ended June 30, 2017: 3,263 million yen (58.6%)

   Three months ended June 30, 2016: 2,057 million yen (-8.7%)

   Earnings per share	Diluted earnings per share
   First three months of FY2017 First three months of FY2016	Yen 109.27 77.66	Yen － －

   *The Company conducted a 1-for-5 reverse stock split of common shares with an effective date of October 1, 2016. Earnings per share has been calculated assuming the reverse stock split was conducted at the start of the previous fiscal year.

3. Consolidated Financial Position

   Total assets	Net assets	Capital adequacy ratio	Net assets per share
   As of June 30, 2017	Million yen	Million yen	%	Yen
   	120,549	85,209	64.7	2,920.31
   As of March 31, 2017	121,549	83,682	63.1	2,872.96

   (Reference) Equity capital: As of June 30, 2017: 77,981 million yen As of March 31, 2017: 76,717 million yen

4. Cash Dividends

   Annual dividend
   End of 1Q	End of 2Q	End of 3Q	Year end	Total
   Year ended March 31, 2017 Year ending March 31, 2018	Yen - -	Yen 7.00	Yen -	Yen 65.00	Yen -
   Year ending March 31, 2018 (forecast)	50.00	-	50.00	100.00

   (Note) Revision of the dividend forecast announced most recently: None

   * The Company conducted a 1-for-5 reverse stock split of common shares with an effective date of October 1, 2016. The amount shown for dividend per share for end-2Q in the fiscal year ended March 31, 2017 is the dividend before the reverse stock split, while the annual dividend for the fiscal year ended March 31, 2017 has been left blank. Based on the number of shares after the reverse stock split, the annual dividend for the fiscal year ended March 31, 2017 is ¥100.00 per share.

5. Consolidated Business Forecasts for the Year Ending March 31, 2018 (from April 1, 2017 to March 31, 2018)

   (Percentages are year-over-year changes.)

   Net sales		Operating income		Ordinary income		Profit attributable to owners of parent		Earnings per share
   First six months Full year	Million yen 51,000 108,000	% (0.5) 4.7	Million yen 2,800 5,200	% 25.5 (0.3)	Million yen 6,600 12,500	% 13.8 0.0	Million yen 4,300 8,000	% 18.3 6.9	Yen 161.03 299.59

   (Note) Revision of the business forecasts announced most recently: None

   * Notes

6. 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): －

7. Application of accounting method unique to preparation of quarterly consolidated financial statements: None

8. Changes in accounting policy and accounting estimates and restatement

9. Changes in accounting policy due to any revision of accounting standards: None

10. Changes in accounting policy other than i) above: None

11. Changes in accounting estimates: None

12. Restatement: None

13. Number of outstanding shares (common shares)

    As of June 30, 2017	28,333,480 shares	As of March 31, 2017	28,333,480 shares
    As of June 30, 2017	1,630,341 shares	As of March 31, 2017	1,630,251 shares
    Three months ended June 30, 2017	26,703,181 shares	Three months ended June 30, 2016	26,704,995 shares

14. Number of outstanding shares at period end (including treasury shares)

15. Number of treasury shares at period end

16. Average number of shares during period (from the beginning of fiscal year to period end)

17. *The Company conducted a 1-for-5 reverse stock split of common shares with an effective date of October 1, 2016. Number of outstanding shares at period end, number of treasury shares at period end and average number of shares during period have been calculated assuming the reverse stock split was conducted at the start of the previous fiscal year.

    • The quarterly kessan tanshin document is outside the scope of audit procedures.

    • 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 Three Months of the Year Ending March 31, 2018, (3) Description of consolidated business forecasts and other information about future forecasts" on page 3 of the Appendix.

    • Appendix

    Mitsui Sugar Co., Ltd. (2109) Summary of Consolidated Financial Results for the First Three Months Ended June 30, 2017

18. Qualitative Information Regarding the Results for the First Three Months of the Year Ending March 31, 2018 2

19. Description of consolidated operating results 2

20. Description of consolidated financial position 3

21. Description of consolidated business forecasts and other information about future forecasts 3

22. Quarterly Consolidated Financial Statements and Important Notes 4

23. Quarterly consolidated balance sheets 4

24. 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

25. Notes on quarterly consolidated financial statements 8

26. (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 Three Months Ended June 30, 2017

    1. Qualitative Information Regarding the Results for the First Three Months of the Year Ending March 31, 2018

    (1) Description of consolidated operating results

    In the first three months of fiscal 2017 (April - June 2017), the Japanese economy recovered at a moderate pace, supported by an upturn in employment and income conditions as well as in corporate earnings. Despite lacking momentum, consumer spending also improved to some extent. Overseas economies also picked up amid a more promising outlook, including firm conditions in the US and signs that the slowdown in China had bottomed. However, the situation overseas still requires caution amid developments such as policy trends in the US and the UK's decision to leave the European Union (EU).

    Against this backdrop, the Mitsui Sugar Group actively implemented various initiatives to achieve the objectives of its sixth medium-term management plan, "Mitsui Sugar Revolution Phase 3 - The Road to 2022" (April 2016 to March 2018).

    An overview of the business activities and performance in each business segment for the first three months of the fiscal year is as follows:

    (Sugar Business)

    In the overseas crude sugar market, prices started the first quarter at the high-16 cents per pound level before falling to the low-15 cents level at one point amid strong milling output in Brazil. In late May, forecasts for looser supply-demand conditions triggered a steep drop in prices. The crude sugar price continued to fall thereafter, tracking broader weakness in crude oil markets and other international commodities, ending the first quarter at the mid-13 cents per pound level. Against this backdrop, the Company worked to procure crude sugar at appropriate times and prices.

    In production activities, variable manufacturing costs increased slightly year on year due to higher fuel costs, but the Company worked to ensure stable operations by appropriately controlling manufacturing processes to match the quality of crude sugar procured from different producing regions.

    In sales activities, sales to beverage makers and other larger users were strong amid favorable weather, but demand for home- use products was weak due to rising retail prices and a sharp drop in overseas crude sugar prices, which raised prospects of lower retail prices going forward. As a result, sales volume overall declined year on year. Also, at the end of June, the Company announced reductions to its shipment prices to pass on lower raw material procurement costs.

    At consolidated subsidiaries, Hokkaido Sugar Co., Ltd. reported lower profits year on year due to a drop in sales volume, but earnings at Showa Sugar Co., Ltd. were firm.

    As a result of the above, the Sugar Business reported overall net sales of 21,315 million yen and operating income of 1,580 million yen.

    Sugar market status during period

    Domestic market price (listed in Nippon Keizai Shimbun, per kilogram of a large bag of superfine sugar, Tokyo) Three months ended June 30, 2017: 195-196 yen

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

    Opening price: 16.93 cents, highest price: 17.18 cents, lowest price: 12.53 cents, closing price: 13.68 cents

    (Food Science Business)

    In the palatinose and palatinit category, sales volume was largely steady year on year, but operating income increased due to a drop in selling, general and administrative expenses.

    Consolidated subsidiaries reported higher sales and profits year on year, supported by firm sales at Taisho Technos Co., Ltd. and expansion at NUTRI Co., Ltd., which acquired a business at the start of the fiscal year. As a result, net sales in the Food Science Business totaled 4,913 million yen and operating income was 310 million yen.

    At a meeting on July 31, 2017, the Board of Directors approved a resolution to integrate the production of food additives at a new manufacturing facility to be operated by consolidated subsidiary Taisho Technos Co., Ltd. The decision was made to further strengthen the operating base and improve operational efficiency in the food additives business and to optimize the Mitsui Sugar Group's operations. As a result of this decision, production activities at the Company's Nagata plant will end on February 28, 2019. For more details, please refer to the press release, "Production of Food Additives to be Integrated at Consolidated Subsidiary," issued July 31, 2017 (Japanese only).

    (Real Estate Business)

    The Real Estate Business reported net sales of 480 million yen and operating income of 219 million yen, supported by rental income from a new logistics center in Okayama completed in the previous fiscal year and stable power generation at a large- scale solar facility.

    As a result, in the first three months of the fiscal year, net sales increased 3.3% year on year to 26,709 million yen and operating income rose 37.6% to 2,111 million yen.

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