Mitsubishi Corp Ord

I am Yuzo Nauchi, CFO of Mitsubishi Corporation. Thank you very much for taking time out of your busy schedule to attend our financial results investors briefing. First, I will explain the progress of the Midterm Corporate Strategy 2024, including a summary of financial results for the first three months of FY2023. Next, General Manager Shimazu of the Corporate Accounting Department will explain the details of the financial results. Please refer to the third page of the financial results presentation materials on the bottom right. First, I will explain the main points of the financial results for Q1 of FY2023. Consolidated net income for Q1 was 317.7 billion yen. Many of our businesses performed well as resource prices and foreign exchange rates remained firm, and we steadily accumulated profits in all segments, including non-resource fields. In addition, the food industry and urban development recorded capital gains from asset replacement, and we are making progress in our efforts to implement a value-added cyclical growth model. The progress rate toward the full-year forecast of 920 billion yen is 35%, which is a smooth start towards the achievement of the full-year forecast. In the second quarter and beyond, we will continue to accelerate our growth strategies and initiatives for the value-added cyclical growth model as stated in the Mid-Term Corporate Strategy 2024 with the aim of further enhancing corporate value. In addition, we will continue to consider the allocation of capital for new investments and additional shareholder returns, taking into account future cash flow trends and other factors. Next, on page 4, on the bottom right, I will explain the year-over-year changes. For the first quarter of FY2023, Each of our businesses steadily accumulated earnings, resulting in the second-highest quarterly profit in our history, following the 534 billion yen recorded in the same period last year. Compared to the same period last year, profit decreased by 216.3 billion yen, mainly due to the absence of the sharp rise in market prices, especially for resources. In the non-resource sector, in addition to the absence of capital gains recorded in the previous year, the tightened supply and demand has begun to normalize. However, we continue to maintain a high level of profit, and we expect this favorable trend to sustain going forward.

Please turn to page 5. I would like to go over our progress as of the first quarter of FY2023 vis-à-vis the cash flow allocation plan set forth in the Midterm Corporate Strategy 2024. Cash inflow for the period was 635.1 billion yen, consisting of 344 billion yen in underlying operating cash flow and 291.1 billion yen in cash flow from divestments. 227.7 billion yen of investments was a cash outflow, and as a result, adjusted free cash flow marked positive 407.4 billion yen. As the cumulative results under mid-term corporate strategy 2024, underlying operating cash flow was 1.6 trillion yen and cash flow from the investments marked 1 trillion yen, making steady progress against the outlook. Investment totaled 1.1 trillion yen on a cumulative basis, and we are steadily building up the balance of new investments, mainly in EX. We will continue to consider investments at the most appropriate timing while keeping a close eye on the market environment. The progress of numerical targets of Midterm Corporate Strategy 2024 is summarized on page 6, so please refer to the information at your convenient time. Although the global economy remains uncertain with concerns over recession stemming from high interest rates and inflation, good progress was made in building a robust portfolio by generating cash flow from competitive existing businesses and replacing assets, and we were able to present a strong financial result as in the previous fiscal year. We started the year with a good Q1. We will continue to improve asset efficiency by implementing the value-added cyclical growth model while steadily executing a growth strategy to further enhance our corporate value over the medium to long term. This concludes my explanation. Next, I'll hand over to Mr. Shimazu, General Manager of Corporate Accounting Department, to go through the details of the FY23 Q1 result.

This is Shimazu from Corporate Accounting Department. I would like to provide you with some additional information on the detailed results of the first three months of FY2023. Please refer to page 8 on the bottom right of the document. I will explain the segments with large increases and decreases compared to the same period of the previous year. First, natural gas, the first segment from the top on the left side of the slide, recorded a profit increase of 31.4 billion yen to 49.5 billion yen, mainly due to the absence of trading losses in the LNG sales business in the previous year. On the other hand, mineral resources, the fourth item from the top, reported a 157.7 billion yen earnings decrease year-near to 97.1 billion yen, mainly due to the impact of lower Australian metallurgical coal prices.

Next, moving on to the right-hand side of the slide, the second business segment from the top, food industry, recorded 49 billion yen, up by 26.6 billion yen year-on-year, mainly due to gain on sales of an affiliated company, among others. Last but not least, urban development, the item shown at the very bottom, marked a net income decline of 88.4 billion yen to 16.2 billion yen, mainly due to the absence of the sales gain of a real estate management company recorded in the same period last year. Page 9 illustrates reference information which summarizes assumptions for market conditions. Please have a look later at your convenient time. This concludes my presentation. Thank you for your attention.