Mitsubishi Corp Ord

Thank you all for taking time out of your busy schedule today to participate in our fiscal year 2023 financial results briefing for Mitsubishi Corporation. I am Okamoto from the Corporate Communications Department of Mitsubishi Corporation, and I will be your moderator today. We are pleased to welcome journalists, investors, and analysts to this briefing, which is held both in person and online. At 1 p.m. today, we have announced our financial results for fiscal year 2023 on our website. At the beginning of the presentation, Katsuya Nakanishi, President and CEO, and Yuzo Nouchi, CFO, will give an explanation. After that, we will have a Q&A session with the press until 2 p.m. Tokyo time. A Q&A session with investors and analysts is scheduled from around quarter after 2 to 3 o'clock. Thank you very much for your cooperation. Let me begin by introducing our presenters. The second person from your right is Katsuya Nakanishi, Representative Director, President and CEO. To Nakanishi's left is Yuzo Nouchi, Representative Director, Executive Vice President and CFO. To the right of Nakanishi is Kenji Kobayashi, Executive Officer, CSCO. The leftmost is Yoshihiro Shimazu, Executive Officer, General Manager of Accounting Department. So there will be four presenters. As a reminder, if you wish to take pictures, please do so from the camera stand in the back of the room. or from the left and right sides of the room. If you wish to take photos at the front of the venue, please keep your photos within the line above your feet. Thank you for your cooperation. So, President Nakanishi, please start. Hello, I am Mitsubishi Corporation CEO Katsuya Nakanishi. Thank you for joining us for our company's FY2023 earnings briefing. I will start by reviewing our FY2023 earnings results, followed by the outlook for FY2024, and then the highlights of our returns to shareholders. Please refer to page 3 on the presentation materials. Consolidated net income for FY 2023 was 964 billion yen. This represents an increase in earning power, even when excluding special factors such as rising commodity prices and post-pandemic demand rebound, which we took advantage of. This is our second highest ever net income result after the record high we achieved in FY 2022. In FY 2024, we expect consolidated net income to be 950 billion yen. I will explain in more detail later. Both the meteorological coal operation and the DeLawson business are expected to generate sizable profits in the coming fiscal year. At the same time, the special factors I previously mentioned is expected to taper off, and as a result, we expect FY2024 profits to remain at the same level as in FY2023. To achieve our company's next stage of growth, we will focus on the following. Reinforcing our current business, enhancing investments underway, and accelerating our growth by developing new investment opportunities. I would like to talk about shareholder returns. During the current fiscal year, we have taken into consideration the growth and earning power, the increased predictability of cash flows, and continued dialogue with stakeholders. The dividend for FY2024 will be 100 yen per share, an increase of 30 yen from FY2023, while maintaining the progressive dividend policy. Next, please refer to page 4 in the materials. Mitsubishi Corporation's earning power has steadily increased over the past few years, even when excluding the special factors such as rising commodity prices and post-pandemic demand rebound. As shown on this chart, our profit level has increased compared to the previous mid-term strategy period. Beyond FY2024, we will reinforce our current operations, enhance investments underway, and accelerate our growth by developing new investment opportunities in order to achieve profit levels exceeding 1 trillion yen through our value-added cyclical growth model. In addition, I'd like to comment on the metallurgical coal operation, which is part of our reinforced portfolio. The operation has been challenged by labour shortages since the pandemic and record-breaking rainfall. Since FY 2023, we have been taking measures to stabilise the operation on a medium to long-term basis. For this reason, FY2024 production volume is anticipated to be approximately the same level as FY2023, excluding the two coal mines we sold this year. As a result of these divestments, which were completed in April this year, Our metallurgical coal mines have been consolidated into the world's highest-grade assets. These high-grade metallurgical coal mines are expected to contribute to productivity improvement and the reduction of GHG emissions in the blast furnace steelmaking process. These high-grade coal resources are highly scarce and are expected to increase in profitability, with growing demand for decarbonization of blast furnaces and with further economic growth in India. For FY 2024, we will focus on implementing measures to stabilize our operations on a medium-to-long-term basis as part of REINFORCE.

Next, please refer to page five in the materials. I will highlight some projects which will under rain force and house and accelerate with regards to rain force. In addition to our metallurgical coal business, which I already mentioned, our automobile, salmon and trout and incumbent LNG business contribute a large portion over profit. We aim to maximize the value of these businesses and all other existing projects and will work to strengthen our core businesses. With regards to enhance. Here, we include the startup of LNG Canada as well as the collaboration with KDDI to enhance Lausanne's corporate value. We will steadily ramp up these projects to ensure we maximize profitability. With regards to accelerate, here we include investments in mineral resources for electrification, other initiatives related to our EX strategy, urban development and management, as well as strategic investments that lead to the creation of MC shared value. We are targeting businesses that are expected to drive growth. With careful consideration of macro and microeconomic factors, as well as a time horizon for returns, we'll pursue new investment opportunities for our company, maintaining our investment principles. Next, please refer to page six. As part of our strategic rebalancing of our business portfolio, in FY2024, we consolidated our highest-grade metallurgical coal operations with the divestment of two mines, as I mentioned earlier. As for the asset replacement plan, the cumulative effect up to FY2023 was approximately 60 billion yen against the baseline of FY2021. In addition, as in the case of Lawson and Nexemp, the U.S. power generation business, we implemented flexible capital structures and invited optimal strategic partners to accelerate growth. Next, please refer to page 7. As I explained earlier, we revisited the balance between dividend payouts versus share buybacks in light of increasing earning power and cash flow predictability, as well as through continued dialogue with our stakeholders. As a result, while maintaining the progressive dividend, the dividend amount will be raised to 100 yen per share. The planned dividend amount is relatively high considering our focus on reinforcing, enhancing, and accelerating our businesses beyond FY2024. However, we believe it is reasonable to pursue new investments and maintain the financial soundness of the company while sustaining this dividend level. With this, I conclude my commentary and will pass on to CFO Nauchi for his comments.

I am Yuzo Nochi, Mitsubishi Corporation CFO. I would like to give some supplementary commentary regarding the financial results. Please look at page 9. In FY2023, we achieved the highest ever net income result in our natural gas, industrial materials, industrial infrastructure, automobile, and mobility and power solution segments. Also, as announced in Q3 FY 2023, total shareholder returns reached a record high of approximately 890 billion yen after we made additional returns of 500 billion yen. As for the outlook of FY2024, while we expect sizable gains from asset sales and revaluation respectively, we expect a slowdown in the natural resource business. And therefore, we anticipate forecasted consolidated net income will be 950 billion yen, the same level as FY2023. As for shareholder returns, as explained by our CEO, Nakanishi, the dividend per share will be 100 yen. For details by segment, please refer to pages 14 and 15.