Mitsui & Co Ltd Ord

Good afternoon. I am Tetsuya Shigeta, CFO. Thank you for joining us today. I will begin by giving a summary of the operating results for the first nine months and the full-year forecast. I will then hand over to Masao Kurihara, General Manager of the Global Controller Division, who will speak on the details of our operating results. Although the global economy saw a gradual pickup during the third quarter, uncertainties remain due to factors such as developments surrounding tariff policies in the U.S. and geopolitical risks. Even under such conditions, we continue to strengthen our earning space by thoroughly executing integrated risk management and improving the quality of our globally diversified business portfolio that spans a wide range of industries. Let me begin with a summary of operating results for the first nine months. Core operating cash flow of COCF was 748.8 billion yen and profit was 611.9 billion yen. There was solid progress in COCF at a pace exceeding the forecast that was revised upward in the second quarter. Reflecting this strong progress, we are revising up our full-year forecast for COCF once again by 50 billion yen to 950 billion yen. Despite recording a one-time loss in relation to J.A. Mitsui Leasing, profit has progressed steadily across the board against a forecast that was revised upward in the second quarter and we are maintaining this full-year forecast of 820 billion yen. I will now move on to the forecast for COCF. The mineral and metal resources, energy, machinery and infrastructure, and iron and steel product segments all had progress of above 80% against the previous forecast. Based on this, we have revised up the full-year forecast by ¥50 billion to ¥950 billion. Regarding profit, progress was steady overall, with strong results in the mineral and metal resources, energy, machinery and infrastructure, and iron and steel product segments, and we have made no change to the previous forecast of 820 billion yen. In innovation and corporate development, we recorded a one-time loss at JA Mitsui Leasing. However, we expect gains from asset sales before the end of the fiscal year. Let me provide some details regarding JA Mitsui leasing. As JA Mitsui leasing announced today at 12 o'clock, in connection with the recoverability of risk of receivables from a counterparty of one of its group companies, Kazumi Global, Mitsui recorded a ¥34.1 billion loss in the third quarter. This amount includes the approximately ¥3 billion impact that we explained in the full-year forecast at the second quarter financial results announcement. This matter concerns the counterparty's account receivables, for which there are emerging indications of possible inflated and fabricated billing or multiple assignments. Based on this, JA Mitsui Leasing has recorded a provision for doubtful accounts. We will continue to closely monitor developments and, while JA Mitsui Leasing will make every effort to recover the receivables, we will also take appropriate actions as a shareholder. For details, please refer to today's press release from both JA Mitsui Leasing and Mitsui. Next, I will discuss cash flow allocation for the first nine months. Cash inflows totaled ¥950 billion, consisting of ¥749 billion in COCS and ¥201 billion from asset recycling. Cash outflows totaled ¥1,442,000,000. This includes ¥1,206,000,000 in investments and loans, as in the third quarter, we completed acquisition of our interest in the Rose Ridge Iron Ore Project and ¥236,000,000 in shareholder returns. I will now speak on the progress made in the current period related to investment for growth executed during the current Medium-Term Management Plan or MTMP. Investments for growth aimed at the long-term enhancement of our earnings base are progressing steadily. For the rose-rich iron ore project, we completed the acquisition of our interest, and based on favorable results from the pre-feasibility study, we have decided to move on to a comprehensive feasibility study toward development of the own deposits. This study is a key milestone toward making a final investment decision and will assess development of an initial production stage of 40 to 50 million tons per year with completion of the study in 2029 and first ore by 2030. The Mozambique LNG project lifted the declaration of force majeure in November 2025 and announced a restart of all activities including construction on January 29th, following improvements in security conditions around the project site. We continue to target commencing production by 2029. Regarding the US low-carbon ammonia project Blue Point, We acquired certification for Japan's price gap support system from the Ministry of Economy, Trade and Industry. Based on the business plan for which we have certification, we will work towards developing a low-carbon ammonia supply chain for Japan. By executing carefully selected investments for growth aligned with our key strategic initiatives, we continue to solidify and further enhance our earnings base heading into the next MTMP. We will persist in our efforts to substantially enhance our cash generation capability. Regarding shareholder returns, there is no change from the policy announced at the time of the fiscal year March 2026 second quarter financial results. The 200 billion yen share repurchase announced in the second quarter is progressing steadily and we plan to complete the acquisition and cancellation by the end of March 2026. We will continue to consider enhancing shareholder returns, maintaining a good balance with investments for growth. This concludes my part of the explanation. I will now hand over to General Manager of the Global Controller Division, Masao Kurihara, for details of our financials.

I am Masao Kurihara, General Manager of Global Controller Division. I will now provide details of our operating results for the first nine months. First, I will explain the main year-on-year changes in COCF by segment. COCF for the first nine months decreased by 44.7 billion yen year-on-year to 748.8 billion yen. In the mineral and metal resources segment, there was a decrease of 40 billion yen to 244.8 billion yen. mainly due to lower metallurgical coal and iron ore prices and lower dividends from equity method investees. In the energy segment, despite higher US gas prices, there was a decrease of 62.3 billion yen to 215.5 billion yen mainly due to the swingback of large LNG dividends received in the previous year. These dividends were from FY March 2024, but the payments were delayed into FY March 2025. In the machinery and infrastructure segment, there was an increase of 20.6 billion yen to 136.1 billion yen, mainly due to an increase in dividends from equity method investees and the absence of taxes paid in the previous period due to asset sales. In the chemical segment, there was an increase of 4.5 billion yen to 74.7 billion yen, mainly due to the gain on the reversal of provisions related to business outside Japan. In iron and steel products segment, there was an increase of 13.3 billion yen to 17.7 billion yen, mainly due to trading and increase in dividends from equity method investees. In the lifestyle segment, there was a decrease of 18.8 billion yen to 10 billion yen, mainly due to an intra-segment transaction with others, adjustments and eliminations, and coffee trading. In innovation and corporate development segment, there was an increase of 11.9 billion yen to 30.5 billion yen, mainly due to the absence of taxes paid in the previous period due to asset sales. Others, adjustment and eliminations recorded an increase of 26.1 billion yen to 19.5 billion yen, mainly due to an intra-segment transaction with the lifestyle segment. Next, I will explain the main year-on-year changes in profit by segment. Profit for the first nine months decreased by 40.3 billion yen year-on-year to 611.9 billion yen. In the mineral and metal resources segment, there was a decrease of 29.5 billion yen to 199.7 billion yen, mainly due to lower prices of metallurgical coal and iron ore and higher costs and lower volumes for copper, despite higher dividends from Vale. In the energy segment, there was an increase of 14.6 billion yen to 138.5 billion yen, driven by higher U.S. gas prices and absence of impairment losses, despite lower crude oil prices. In the machinery and infrastructure segment, there was a decrease of 23.9 billion yen to 162.1 billion yen, mainly due to the absence of asset sales, despite valuation gains related to FETPL from the Firefly IPO and higher profit from automotives. In the chemical segment, there was an increase of 15.2 billion yen to 55.5 billion yen, mainly due to a valuation gain on ITC Antwerp and the absence of an impairment loss. The iron and steel products segment, there was an increase of 7.6 billion yen to 16.5 billion yen, mainly due to trading. In the lifestyle segment, there was an increase of 0.8 billion yen to 33.1 billion yen, mainly due to asset sales despite lower profit from coffee trading. In the innovation and corporate development segment, there was a decrease of 62.9 billion yen to 4.2 billion yen, mainly due to the absence of asset sales and a one-time loss of JA Mitsui leasing. Others, adjustments and eliminations recorded an increase of 37.8 billion yen to 2.3 billion yen, mainly due to the absence of an amendment to the retirement benefit system. This page provides a summary of the year-on-year factor comparison for profit. Base profit increased by 56 billion yen, mainly due to increases in valet dividends, LNG-related businesses, iron and steel products, automotives, IPP, protein, and chemicals, despite decreases in tankers, coffee trading, and oil trading. Resources cost volume decreased by 23 billion yen mainly due to higher costs and lower volumes in copper and lower volumes in energy. Commodity prices saw a net decrease of 11 billion yen due to lower metallurgical coal and iron ore prices despite higher US gas prices. Forex decreased by 9 billion yen due to a stronger yen. As a result, commodity prices and forex decreased by 20 billion yen. Asset recycling decreased by 77 billion yen, mainly due to the absence of gains recorded in the previous period. Valuation gains, losses, and one-time factors increased by 24 billion yen, mainly due to the absence of losses in the previous period, and valuation gain at ITC Antwerp, despite one-time losses at JA Mitsui Resing and Mainstream. This page provides a summary of the latest full-year profit forecast against the previous forecast. Base profit is expected to be 21 billion yen lower, mainly due to chemicals trading, coffee trading and other factors, despite higher value dividends and FBTPL than previously expected. Resources cost volume is expected to be 1 billion yen lower. Commodity prices in forex is expected to be 28 billion yen higher, mainly due to higher prices for iron ore, copper, and U.S. gas and the weaker yen. Asset recycling is expected to be 30 billion yen higher due to several asset... sales we have planned for Q4. Valuation gains and losses and one-time factors is expected to be 36 billion yen lower, mainly due to a one-time loss related to JA Mitsui Resin. Finally, I will speak on the balance sheet as of the end of the third quarter. Net interest-bearing debt increased by 1.1 trillion yen from the end of March 2025 to 4.4 trillion yen, mainly due to borrowings associated with the acquisition of our interest in the Rose Ridge iron ore project. shareholder equity increased by 0.9 trillion yen to 8.4 trillion yen, affecting an increase of foreign exchange translation adjustments driven by the weaker yen and increase in FPT-OCI financial assets due to rising stock prices of listed holdings. As a result, the net DE ratio was 0.52 times.