Mitsubishi Corp Ord

This is Nochi, CFO of Mitsubishi Corporation. Thank you very much for taking time out of your busy schedule to participate in our financial results investors briefing for the first quarter of FI 2022. First, I will give the overview of the results, after which Shimazu, General Manager of Corporate Accounting Department, will give you a detailed explanation. I will now explain the results for the three months ended June 2022, as indicated on the cover page of the material. Please refer to page 1 on the lower right. First, let me explain the summary of year-over-year fluctuation. Please see the box on the lower left. Consolidated net income for the first quarter of FY 2022 was 534 billion yen, a record high on a quarterly basis. We view this as a robust result while addressing the rapidly changing business environment with an increase of 346.4 billion yen year-on-year. In addition to high resource prices, many of our businesses performed well, including automotive, the European integrated energy business, and the North American real estate development business. In addition, in urban development, we recorded a capital gain of 84.1 billion yen from the sale of a real estate management company. This is a good example of implementing the value-added cyclical gross model set forth in the midterm corporate strategy 2024 after comprehensively taking into account the perspective of asset replacement and enhancement. Next, we will discuss progress against financial outlook. Please continue to look at the box at the bottom right of the slide. As of the first quarter, 63% of the full-year forecast of 850 billion yen has been achieved, a fairly high progress ratio.

The plan expected profits to be skewed towards Q1 due to recognition of capital gains related to asset replacement and high commodity prices at the beginning of the year. but the progress rate was boosted as commodity prices trended higher than expected, and performance was favorable due to tailwinds in the industrial materials, petroleum and chemical solutions, and automotive and mobility segments. However, as commodity prices have settled down now from Q2 and beyond, we are anticipating a severe business environment with the situation in Russia and Ukraine, the resurgence of COVID-19, and monetary tightening in light of inflation around the world. Regarding the full-year guidance, we will account for the uncertain circumstances as mentioned earlier and plan to scrutinize and determine the level of the upward revision during Q2. Additional shareholder return will also be considered together with the full-year guidance during Q2. Although Q1 was a fast-changing business environment, our view is that we are off to a good start as we were able to capture earnings opportunities firmly and recorded strong profit growth, resulting in a high progress rate against the full-year guidance. On the other hand, from Q2 onwards, the business environment is expected to worsen because of a slowdown in the global economy We will not let our guard down with this year's performance, but will continue to promote the value-added cyclical growth model and aim for sustainable profit growth that we raise in the Mid-Term Corporate Strategy 2024 so as to increase corporate value. That is all from me. Next, Mr. Shimazu, the General Manager of Corporate Accounting, will speak mainly about performance by segment.

This is Shimazu, General Manager of the Corporate Accounting Department. I would now like to make a few additional points. Please refer to the second page of the results for Q1, Year-over-Year Segment Income. In Q1, eight out of the ten segments reported year-over-year gains. Now, I will specifically make supplementary comments regarding the segments with large increases and decreases. First, industrial materials. The second item from the top on the left side of the slide increased year-in-year by 10.1 billion yen to 19.2 billion yen from 9.1 billion yen, mainly due to an increase in equity in earnings of the plastic building materials in North America. Petroleum chemical solution also increased year-on-year by 12.5 billion yen to 22.4 billion yen from 9.9 billion, mainly due to the reversal of deferred tax liabilities in the chemical manufacturing business and increased trading profits in the petroleum business. Mineral resources rose year-on-year by 188.9 billion yen to 254.8 billion yen from 65.9 billion yen, mainly due to higher market prices in the Australian metallurgical coal business. Then we'd like to move on to the right-hand side of the slide. The automotives and mobility segment recorded 46.5 billion yen, an increase of 19.2 billion yen from 27.3 billion yen in the same period, mainly due to increased equity in earnings of Mitsubishi Motors Corporation and the ASEAN automobile business. Three items below that, power solutions posted a profit of 14.4 billion yen, up 17.7 billion yen from a loss of 3.3 billion yen in the same period of the previous year, mainly due to increased equity in earnings of European integrated energy businesses and overseas power projects. Finally, urban development, which included gains on the sale of a real estate management company, increased by 82.9 billion yen to 104.6 billion yen from 21.7 billion yen. Please move on to page 3.

Next, I will talk about cash flow on this page. please refer to the right-hand side of the bar graph where fiscal year 22 Q1 cash flow results are shown. In green is underlying operating cash flow at plus 462 billion yen, and investing cash flow is in blue, which was 78.3 billion yen positive. As a result, adjusted free cash flow was plus 540.3 billion yen. Please look at the blue box at the bottom right for main items of investing cash flow. New and sustaining investments were 195.8 billion yen due to investments in loans related to the copper and Australian metallurgical coal business. as well as the European Integrated Energy business. Sales and collection was 274.1 billion yen, which came from the sales of investment in the real estate management company, as well as the North American shale gas business and aluminum smelting business. This resulted in a positive 78.3 billion yen net investment cash flow. Please also note that for each of the items, we have color-coded them from this time around by yellow, Maintain Expand Earning Space, green, EX-Related, and blue, DX, Growth-Related, which represents the areas in the investment plans under Corporate Midterm Strategy 2024. Page 4 shows reference regarding market assumptions. Please refer to them later. That is all from me.