Mitsui Mining and Smelting : Record of Telephone Conference Concerning FY2022 Q3 Results

Record of Telephone Conference Concerning FY2022 Q3 Results

Reference: FY2022 Q3 Results & FY2022 Forecast

https://www.mitsui- kinzoku.com/LinkClick.aspx?fileticket=TY9%2bl2oq2%2b4%3d&tabid=204&mid=824& TabModule903=0

Note:

PKG = Package substrate

HDI = High density interconnect

real profit = ordinary income excluding the inventory factors and the PGM price difference in Catalysts

■ Explanation

Please refer to page 2 about Sales and Earnings.

Net sales, operating income, ordinary income, and net income attributable to owners of parent for the cumulative Q3 were ¥498.3 billion, ¥18.6 billion, ¥24.4 billion, and ¥17.2 billion, respectively.

For the fiscal year ending March 31, 2023, we forecast consolidated net sales of ¥655.0 billion, operating income of ¥17.0 billion, ordinary income of ¥22.0 billion, and net income of ¥13.0 billion.

For the period of January to March, we assume an LME Zinc price of $3,200 per ton, an LME Lead price of $2,200 per ton, an LME Copper price of ￠ 380 per pound, and an exchange rate

of ¥130/$.

The dividend will be ¥140 per share, unchanged from the previously announced dividend forecast.

I will continue with an explanation of our full-year forecast, comparing them to the forecast announced on November 9. Please see page 4.

The ordinary income forecast announced on November 9 was ¥45.0 billion, but this has been revised downward by ¥23.0 billion, totaling to ¥22.0 billion. Of the ¥23.0 billion decrease in income, the portion shown in blue is due to the impact of the stronger yen, which accounted for approximately ¥12.2 billion.

Breaking it down by segment, inventory factors deteriorated by ¥5.1 billion, and the impact of the decline in PGM price difference on catalysts located to the right of that was a negative ¥0.9 billion. Excluding these factors, the downward revision was ¥6.9 billion in the Engineered Materials segment. The downward revision of ¥5.4 billion in the copper foil business is due to a significant decrease in the sales volume of MicroThin™, especially for package applications, which is about half of the previous forecast due to the significant impact of the prolonged inventory adjustment. The PVD materials and engineered powders businesses are also expected to see lower earnings due to sluggish demand and inventory adjustments.

The Metals segment is expected to report a decrease of ¥1.6 billion. Of this amount, approximately ¥1.3 billion is attributable to the impact of yen appreciation. The Mobility segment is also expected to see a ¥1.8 billion decrease in profit. We expect a ¥1.1 billion decrease in profit at Mitsui Kinzoku ACT due to the impact of the struggling Japanese car manufacturers in China and other factors. The catalysts business is expected to see a ¥0.4 billion decrease in

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profit due to the lower-than-expected sales volume of motorcycles in India and a less-than- expected recovery in the automobile market for four-wheeled vehicles.

Non-operating income is expected to decrease by ¥6.0 billion, of which ¥6.5 billion is due to the stronger yen. Due to these factors, we expect a significant decrease in profit from the previous forecast.

I will continue with an explanation of the results for the first nine months of the fiscal year and the outlook for the full year. Please see page 5.

In the Q3 cumulative period, net sales increased by ¥34.6 billion, or 7.5%, totaling to ¥498.3 billion, compared to the same period last year, mainly due to higher zinc prices and the weaker yen. Operating income dropped by ¥24.2 billion, or 56.6%, totaling to ¥18.6 billion due to lower sales volume of electro-deposited copper foil and MicroThin™ and higher energy costs. Ordinary income deteriorated by ¥21.4 billion, or 46.8%, totaling to ¥24.4 billion. Net income deteriorated by ¥19.6 billion totaling to ¥17.2 billion.

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We will explain the situation in each segment.

First, Engineered Materials segment. Please see page 11.

Ordinary income for the Q3 cumulative period was ¥12.1 billion, down ¥11.1 billion from the same period last year.

This was mainly due to a decrease in sales of electro-deposited copper foil and MicroThin™, which led to a ¥7.1 billion decrease in profit in the copper foil business. Also, in the PVD materials business, the impact of inventory factors decreased by ¥1.7 billion, and a decrease in sales volume led to a total decrease of ¥2.4 billion. In addition, the engineered powders business also saw a significant decrease in profit due to factors such as a decline in the sales volume of copper powder and other major products, which resulted in a ¥2.0 billion decrease in profit.

The forecast for ordinary income is ¥12.5 billion, a decrease of ¥7.5 billion from the November 9 forecast. The breakdown is shown on page 4, but the copper foil business had the largest impact, with a ¥5.4 billion decrease in profit.

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Metal segment. Please refer to page 12.

Ordinary income for the Q3 cumulative period was ¥9.5 billion, down ¥15.5 billion from the same period last year. Although there was a positive impact of ¥7.1 billion due to favorable nonferrous metal market prices and foreign exchange rates, the inventory factor was a negative factor of ¥0.7 billion, down from the positive ¥7.8 billion in the previous year, resulting in a decrease of ¥8.5 billion, on top higher energy costs, including cokes, resulted in a decrease of ¥9.7 billion.

The forecast for ordinary income is ¥9.0 billion, a decrease of ¥7.0 billion from the November 9 forecast. This was due mainly to a ¥4.4 billion deterioration in the impact of inventory factors and the impact of the stronger yen.

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