March 25, 2020
To All Concerned Parties
Company name
Representative

Contact forinquiries

Mitsubishi Materials Corporation
Naoki Ono, Chief Executive Officer(Securities code: 5711, First Section, Tokyo Stock
Exchange)
Nobuyuki Suzuki, General Manager,
Corporate Communications Dept.,
General Affairs Dept.,
Human Resources & General Affairs Div.
(Tel: +81-3-5252-5206)

Announcement of Medium-term Management Strategy
Mitsubishi Materials Corporation (hereinafter referred to as “MMC”) has developed a new medium-term management strategy(“FY2023 Strategy”) covering the period from FY2021 to FY2023.
1. Overview of the current medium-term management strategy (FY2018 to FY2020)
Based on the key strategies of "achieve growth through innovation," "create value by building a recycling-oriented
society," "increase the company's market presence through investment for growth," and "increase efficiency throughcontinuous improvement," the Mitsubishi Materials Corporation Group (hereinafter referred to as “MMC Group”) has
implemented various measures in the current medium-term management strategy, including new product development,
M&A inside and outside of Japan, the expansion of overseas production and sales bases, and the enhancement of recyclingrelated facilities.
Meanwhile, consolidated operating profit, consolidated ordinary income, ROA (Ratio of Ordinary Income to Total
Assets), and net D/E ratio are expected to diverge from the estimates for FY2020 in the current medium-term plan.

Financial indicators

Estimate for FY2020
in the current
medium-term plan

FY2018Result

FY2019ResultFY2020
Forecast

Consolidated operating profit

86 to 95 billion yen

72.8 billion yen

36.8 billion yen

27 billion yen

Consolidated ordinary income

82 to 100 billion yen

79.6 billion yen

50.6 billion yen

40 billion yen

ROA

4.5〜5.0％

4.1%

2.6％

2.1％

Net D / E ratio

0.7 times

0.6 times

0.6 times

0.8 times

The shortfalls in meeting our FY2020 objectives are attributed to the external factors of a slowing Chinese economy, asluggish economic growth in the Thailand and Indonesia area, a shrinking demand for automobiles and semiconductors,
and a demand decline for cement in Japan, as well as the internal factor of a delayed implementation of key strategic
measures caused by “insufficient marketing activities”, “insufficient gathering of customer information”, and “insufficientability to solve manufacturing problems on site”, and other reasons. In the new medium-term management plan, MMC
Group will address these problems by setting "strengthening marketing", "promoting digitalization", and "fortifying
manufacturing excellence" as the key strategies to strengthen its management base.

- 1 -2. Overview of the Medium-term Management Strategy (FY2023 Strategy)1) Value creation process
MMC Group will utilize its strengths that include "an advanced recycling technology and business platform," "value
chain from raw materials to products with a stable supply," "unique material development and manufacturing technology,"and "a team that can unite to resolve issues," etc., to solve social issues, promote key group initiatives, and strengthen its
core businesses, and thereby further both social and economic values.
2) Mission
Based on its corporate philosophy of “For People, Society and the Earth”, MMC Group’s vision is “We will become theleading business group committed to creating a sustainable society through materials innovation, with use of our uniqueand distinctive technologies, for People, Society and the Earth". Based on the corporate philosophy and vision, MMC
Group formulated the FY2023 Strategy that sets out MMC Group’s mission and medium- and long-term goals from FY
2031 to FY2051 from the perspective of creating both social and economic values.
<Mission>(1)

Contribute to build a prosperous society
We aim to contribute to build a prosperous society by providing nonferrous metal materials, predominantly copper,and high value-added functional materials and products.

(2)

Contribute to build a recycling-oriented society
We aim to contribute to build a recycling-oriented society by providing recyclable products and advanced
technology-based waste recycling.
Contribute to build a decarbonized society
We aim to contribute to build a decarbonized society by developing and promoting the use of renewable energies
such as geothermal energy, and ensuring to consider the reduction of environmental impact in manufacturing.

(3)

MMC Group will promote the group-wide policy in the FY2023 Strategy as follows.
<Group-wide Policy>(1) Optimization of business portfolio
In regards to businesses that MMC Group should take ownership of, it will focus on businesses that are consistent
with its vision and mission, are governable by MMC Group, capable of earning a leadership role in a specificregion or the world, and that can deliver stable returns over capital costs on a medium- to long-term basis. MMC
Group will also determine the direction of the businesses based on profitability and growth potential, in order tobuild a business portfolio.
(2) Comprehensive efforts to increase business competitivenessTo provide to the market, MMC Group will sophisticate its core technologies and knowledge with the support ofits corporate division’s strategies (manufacturing excellence strategy, quality management strategy, and digitaltransformation strategy). Meanwhile, MMC Group will acquire lacking or complementary businesses throughM&A and business alliances to relentlessly enhance business competitiveness.
(3) Creation of new products and businesses
With the support of MMC Group’s corporate division’s strategy (R&D and marketing strategy), MMC Group will
create new products and businesses that meet customer needs and wants.
3) Financial plan
(1) Financial indicators and targets
The FY2023 Strategy emphasizes medium- to long-term profitability and growth potential for each business, andprofitability and growth potential primarily by ROIC and EBITDA growth rate, respectively. In the process-typebusiness, ROA is used as a complement, and ROIC, ROE, and ROA are used together as corporate financial
indicators. The company's financial targets for FY2023 are: ROIC 6.0%, ROA 4.0%, ROE 7.0%, a consolidated
operating profit of ¥58 billion, a consolidated ordinary income of ¥75 billion, and a net D / E ratio of 1.0 times or
less.

- 2 -

(2)

(3)

(4)

Investment policy
For the period of the FY2023 Strategy, total investment is estimated to be ¥360 billion, with a growth strategy
investment of ¥190 billion and a maintenance and upgrading investment of ¥170 billion. Financial resources forinvestment will be generated by using cash flows from operations and proceeds from business restructuring andasset sales. If attractive large-scale investment projects for growth emerge, investments will be made proactively
as long as there is a net D/E ratio within the range of 1.0 times or less.
Shareholder return policy
In order to return profits to shareholders, MMC will determine its profit allocation based on a comprehensive
assessment of concerned factors, which include earnings for the period, internal reserves, and financial standing.
With regard to profit allocation during the FY2023 Strategy period, MMC will focus on providing stable dividends
despite fluctuating consolidated business results, and will pay out an annual dividend of ¥80 per share from FY2021
to FY2023. In cases that the consolidated payout ratio is less than 25%, MMC will temporarily increase thedividend or conduct share buybacks.
Strategic holdings
Unless required for strategic objectives, MMC will not acquire or hold shares other than purely for investment
purposes.

4) Business strategy of each segment＜Advanced Products Business＞
Long-termbusiness goals

Global First SupplierLong-term
strategy Create new businesses and products through the sophistication and integration of our corecompetencies (e.g. production and development of oxygen-free copper, oxygen-free copper
base alloys, and functional materials as well as technical capabilities such as bonding different
metals, etc.)
 Accelerate of marketing activities to replicate successful practiceSpecificmeasures of
the FY2023
Strategy Assign key account managers acting cross-sectionally Enhance information analysis by digital marketing such as the employment of AI or IoT
 Share product roadmaps with customers (co-creation capabilities)
 Develop new products through collaboration with Central Research Institute Fortify production capabilities such as establishing a mass production system and improving
productivity
 Pursue opportunities to execute M&A or business alliances<Metalworking Solutions Business>
Long-termbusiness goals

Top 3 supplier in strategic markets

Long-term
strategy Promote clean manufacturing
 Provide high-efficiency products with advanced technology
 Expand advanced metal powder business in electronic devices

Specificmeasures of
the FY2023
Strategy

 Increase recycling rate in our tool recovery system and utilize renewable energy
 Provide high efficiency tools and digital solutions
 Transition to smart factory and optimization of logistics and supply chain
 Expand advanced metal powder business to rechargeable battery market- 3 -<Metals Business>
Long-termbusiness goals

Leader in environmentally-friendly mining & smelting businessLong-term
strategy

Stable supply and recycling of nonferrous metal materials, predominantly copper Creation of a sustainable raw material portfolio consisting of clean copper concentrate and EScrap
 Promotion of recycling Response to climate change

Specificmeasures of
the FY2023
Strategy Secure clean copper concentrate by investing in new mines Develop impurity removal technology in copper concentrate
 Optimize valuable metal material flow Reduce fossil fuels<Cement Business>
Long-termbusiness goals

Leader in the domestic and international cement industry with advanced environmental
technologies

Long-term
strategy

 Stable supply of basic building materials for social infrastructure and disaster prevention
infrastructure
 Sophistication of waste disposal
 Response to climate change by reducing CO2
 Construction of a resilient domestic business foundation through business restructuring andbusiness growth in overseas markets

Specificmeasures of
the FY2023
Strategy

 Improve and optimize production system through domestic business restructuring
 Expand capabilities in waste plastic processing and installation of chlorine dust cleaning
equipment
 Introduce low-temperature burning technology and develop CO₂ reduction, capture, andrecycling technologies
 Expand US business and develop new overseas bases<Environment & Energy Business>
Long-termbusiness goals(Environmental recycling) Driving force of resource-recycling systems(Renewable energy) Leading company in geothermal development

Long-term
strategySpecificmeasures of
the FY2023
Strategy Expand home appliance recycling business, advancement of automation, and improvement ofadded value of recovered products Demonstrate LiB recycling technology and solar panel recycling technology
 Secure stable plant operations in fly ash recycling business and biogasification business Complete Komatagawa new hydroelectric power plant, construction of Appi geothermal power
plant, and survey of new geothermal sites

Provision of a safe recycling system with thorough traceability, etc.
Decarbonization by expanding renewable energy business5) Corporate division’s strategy
The following are the key corporate division’s strategies for supporting each business segment in the FY2023 Strategy.

R&D and marketingstrategy

By focusing on changes in the external environment such as megatrends, etc., MMC Group will
create high value-added products and services mainly in IoT and AI, next-generation vehicles,
urban mines, and clean energy and decarbonization areas to meet customer needs based on its
integrated functions, material composite, infrastructure and mass production, and recycling
technologies.

- 4 -Manufacturing
excellence strategy

By formulating and realizing the factory vision based on the business strategy, as well as
enhancing the production process, and proactively utilizing external knowledge, MMC Groupwill raise its manufacturing capability to the next level.

Quality management
strategy

By optimizing its product/process design and equipment maintenance plan, MMC Group will
implement proactive quality management to ensure that non-conforming products are notproduced.

DigitalTransformation
strategy

MMC Group will use Digital Transformation to strengthen our three key pillars: “Business addedvalue”, “Business operations competitiveness”, and “Management speed”. In the next five years,
MMC will invest approximately ¥30 billion and allocate 100 digital professionals.

6) Governance
The following are the main measures for MMC Group’s governance in the FY2023 Strategy.

Strengthening corporate
governance

In June 2019, MMC transitioned to a company with a nomination committee, etc., and is
working on the following measures.
 Continuous improvement of the functions of the Board of Directors
 Formulation of basic corporate governance policy (effective April 1, 2020) CEO appointment and dismissal, planning and execution of successor developmentplan Review of executive remuneration system Enhancement of governance of subsidiaries

Strengthening group
governance

MMC Group will implement the following measures to establish a governance system inwhich communications can be carried out smoothly and autonomously between the parent
and its subsidiaries, the head office and its respective bases, and among respective bases andthe Group companies.
 Evaluation of effectiveness and improvement of the board of directors of the Group
companies The Group companies’ officer training Enhancement of governance audits
 Prompt decision making by delegating authority and strengthening supervisory
functions Promotion of business operations with an awareness of differing managements
within R&D, manufacturing, and human resources exchange Accelerated strategy execution by Digital Transformation Management Office

HR strategy

MMC Group will work on the following measures with the aim of securing and fostering
adaptive human resources and forging a healthy organizational culture.
 (Talent) Secure and develop human resources (Organizational culture) Enhance motivation and management capabilities of theGroup companies (Improvement of social value) Engage in the employment of diverse talents andhealth & productivity management

Change of organizations(Business Divisions) Promotion of Environmental and Energy Business Division to in-house Company
 Separation of Aluminum Division from Advanced Products Company(Corporate Division)
 Establishment of Marketing Department
 Establishment of Corporate Communications Department(Group-wide organization)
 Establishment of Digital Transformation Management Office Establishment of Sustainable Management Office- 5 -<Reference>
1. Value creation process and company vision- 6 -2. Financial target and investment amountThe estimated financial targets and investment amounts for the implementation of all measures included in the FY2023
Strategy are as follows.
1) Financial figures (consolidated)(Unit: billion yen)
FY2020 Forecast

ROIC

-

6.0%

2.1％

4.0％

-

7.0％

Consolidated net sales

1,520

1,530

Consolidated net sales(excluding metal)

830

650

Consolidated ordinary income

4075

Total assets

1,990

2,040

Net interest-bearing debt

450

510

Shareholders’ Equity

560

630

0.8 times

1.0 times or less

109 yen / US dollar

110 yen / US dollar

121 yen / Euro125 yen / Euro

268￠/1b290￠/1b

ROA (ordinary income to total assets)
ROE

PL

BS

FY2023 Target

Net D / E ratio
Exchange rate
Assumptions
Copper price2) Investment amount(Unit: billion yen)

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