Sojitz Corp Unsp/Adr

Good afternoon. This is Yoshiki Manabe speaking. Thank you very much for joining us for the Sawdust Corporation's earnings briefing for Q3 FY 2022. I'll be referring to two documents. The one that's titled highlights of consolidated financial results for the third quarter ended December 31st, 2022. And another that also says supplementary material. Both have been made available on the web. Let me begin now. Let me begin with the consolidated statements of profit or loss. Revenue or top line. Metals, mineral resources and recycling benefited from continued higher coal prices. The segment revenue was up 106.2 billion yen to 519 billion yen. Chemicals was also up by 83.4 billion yen to 481.1 billion yen, thanks to strengths in plastic resin, rare earth and C5 businesses. Retail and consumer service segment was up 81 billion yen to 232.9 billion yen thanks to an acquisition of an aquaculture food product manufacturing company. The total revenue came to 1,925.3 billion yen, up 376.7 billion yen year on year. Gross profit increased to 263.4 billion yen, up 72.7 billion yen year on year. Metals, mineral resources, and recycling made a great contribution, was up 35.2 billion yen. Retail and consumer service was up 10.3 billion yen. Chemicals was up 9.4 billion yen. Total SG&A expenses came to 162.0 billion yen. That was an increase by 31.9 billion yen. There was a consolidation of newly acquired subsidiary and the weaker yen pushed up the yen translated amount of expenses at overseas subsidiaries. There was also increased bonus payments tied to stronger business performance. down to other income and expenses. In the first half, we booked gain on partial sale and revaluation concerning an overseas telecommunication tower operations company. In Q3, we booked gain on sale of JREIT management company, and we're also booking losses related to copper mine interest. The total other income and expenses came to a net income of 7.2 billion yen. For financial income and costs, we booked net interest expenses of 3.6 billion yen. Dividends received also came down. The financial income and costs came to a net financial cost of 200 million yen. That's a worsening of 1.8 billion yen year on year. With regard to share of profit or loss of investments accounted for using the equity method, the figure came to 37.1 billion yen, that's up 11.7 billion yen, thanks to steel trading company and LNG-related operations, as well as wind power operations in Europe, all increasing profits. Profit before tax increased 60.5 billion yen year on year to 145.5 billion yen. After income tax expenses, profit attributable to owners of the company, which is the line shaded in pale blue, came to 108.7 billion yen. That's up 46.7 billion yen year on year. The figure is 99% of the 110 billion yen forecast that we produced in November. This time, we are not... revising the full year forecast for profit. And I'll come back to this later. Moving to the right, consolidated statements of financial position. Total assets at the end of December came to 2,855,000,000,000 yen. That is up 193.9 billion yen from the end of March, 2022. This includes ¥70 billion due to weaker yen pushing up the yen-based value of foreign currency-denominated assets. The real increase is ¥120 billion, which comes from new investments, and the increase in trade and other receivables due to the timing of transactions related to coal and fertilizers. Total liabilities came to ¥1,964.9 billion, that's up ¥67.1 billion from the end of March 2022. As was the case with assets, there's ¥50 billion due to weaker yen. down to equity the total equity attributable to owners of the company which is the underlined line item came to 849.2 billion yen that's up 121.2 billion yen from the end of march 2022. Retained earnings increased by 92.6 billion yen thanks to profit for the period. Other components of equity increased by 28.5 billion yen. This comes from the impact of 37.5 billion yen of currency translation differences related to foreign operations resulting from the weaker yen. Further down, we're showing six KPIs. The third from the top is the net debt to equity ratio. This figure came to 0.88. That's down 0.18 from the end of March 2022. Down to the bottom center, and let's look at cash flows. Cash flows from operating activities was a net inflow of 128 billion yen. This mostly comes from the core operating cash flow. Cash flows from investing activities was a net outflow of 46.3 billion yen. This is due to new investments. The resulting free cash flow was a net inflow of 81.7 billion yen. From the core operating cash flow, adding the asset replacement impact of 60 billion yen, less new investments of 67 billion yen, and shareholder return of 29 billion yen results in a core cash flow, which came to a net cash inflow of 79.5 billion yen. Let's move to the second sheet where it says supplementary material. I'd like to focus on the middle part where it says segment performance profit for the period. The top performer segment was metals, mineral resources, and recycling segment, which enjoyed continued higher prices of coal. All segments were up year on year. Given the latest results, we have again revised the forecast for each segment. after that revision earlier in November. Let us now look at segment by segment. For automotive segment, the impact of semiconductor shortage was still there, but operations in the Americas were strong, and there was an impact of the weaker yen that benefited overseas automobile businesses. Q3 profit came to 6.9 billion yen. That's larger than the full year forecast. Given that progress, we have upward revised the full year figure to 8 billion yen. Aerospace and transportation project. Q3 results came to 4.4 billion yen thanks to earnings from aircraft related businesses and vessels. In November, we had upward revised the full-year forecast by 500 million yen to 5 billion yen, and this Q3 figure is in line with that, so we are maintaining that. Infrastructure and healthcare. In November, we upward revised the full-year forecast from 9 billion yen to 12 billion yen, giving strong first-half results. And the... impact of the partial sale of telecommunications tower operating business. In Q3, we also had earnings from domestic and overseas power generation and LNG businesses. And in Q4, we are expecting more from those lines of businesses, and that's why we have upward revised the full year figure to 17 billion yen. for metals, minerals, resources, and recycling. In November, we upward revised the full year forecast from 51 billion yen to 65 billion yen given the strong first half results. However, we actually downward revised this figure this time to 60 billion yen despite strong coal market to account for impacts of acid replacement and of lower production volumes in Australia stemming from heavy rains. For chemicals, we upward revised the full year figure in November from 12.5 billion yen to 17 billion yen. In Q3, the profit came to 15.1 billion yen, thanks to higher prices of various chemical products and improved profitability, and we are maintaining that. For consumer industry and agriculture business, We upward revised the four-year figure in November from 3 billion yen to 6 billion yen. Q3 results came to 7.4 billion yen. That's above that forecast. And with that, we are upward revising the four-year figure to 7.5 billion yen. For retail and consumer service, we upward revised the figure from 5 billion yen to 7 billion yen in November in anticipation of a one-time gain in the second half. And the Q3 results came to 7.5 billion yen. That's higher than the figure. And we have therefore upward revised the full year figure to 7.5 billion yen. With all that, for the seven segments, we are expecting a profit in Q4 of about 20 billion yen. But then if you look at the others line, in Q3, the profit figure came to 6.9 billion yen. However, rising inflation and interest rates Revised plans for ongoing projects and the impact of COVID including delays and associated costs have all been reassessed to be around 20 billion yen worth and we are now factoring that in so the new revised forecast is a loss of 12 billion yen. So while Q3 profit came to 108.7 billion yen, which is 99% of the 110 billion yen full year forecast, we are maintaining this figure and not changing it. Now to the upper left, where we're showing operating results, we have also reviewed our revised forecast for each line item. For gross profit, the figure has been upward revised by 5 billion yen from 340 billion yen to 345 billion yen. SD&A was 230 billion yen. That's increased or improved by 5 billion yen to 225 billion yen. Financial income and costs, we are expecting net cost of 5 billion yen. That's been upward revised by 4 billion yen to a cost of 1 billion yen. The share of profit or loss of investment accounted for using the equity method was 43 billion yen. We have upward revised that by 6 billion yen to 49 billion yen. On the other hand, other income and expenses, we were expecting a net income of 2 billion yen. That has been downward revised by 20 billion yen to a net expense of 18 billion yen. Down, and we're showing financial positions. We are revising the figures, reflecting new investments, asset replacement, and the assumed exchange rate of 130 yen to the dollar. And those are the new figures reflecting all that. This concludes my presentation. Thank you very much for your kind attention.