May 11, 2017
To Our Shareholders

Company name Mitsubishi Materials Corporation
Representative
Akira Takeuchi, President(Securities code: 5711, First Section, Tokyo StockExchange)
Nobuyuki Suzuki,
Contact for
General Manager,inquiries
Corporate Communications Dept.,
General Affairs Div.
(Tel: +81-3-5252-5206）

Announcement of Formulation of Medium-Term Management Strategy
Mitsubishi Materials Corporation hereby announces that it has formulated its medium-term management
strategy for FY2018-2020 (hereinafter the “FY2020 Strategy”). Details are as follows:
1. Overview of previous medium-term management plan (FY2015-2017)
Under the previous medium-term management plan, the Company developed a Group-wide growthstrategy: fortifying the foundation for growth, strengthening global competitiveness, and pursuing arecycling-based business model. It implemented a range of initiatives, including M&A in Japan andoverseas, expansion in production and sales locations in overseas countries, and strengthening of recycling
facilities.
As a result, in FY2017, the Company achieved its target net debt-to-equity (D/E) ratio of 1.0 or lower.
However, the Company could not meet its targets for consolidated operating profit, ordinary income andROA (ordinary income to total assets).

Consolidated operating profit
Consolidated ordinary income
ROA (ordinary income to totalassets)
Net D/E ratio

FY2017
Targets
100 billion yen
110 billion yen
6％

FY201571.8 billion yen
81.0 billion yen
4.4％

Result
FY201670.4 billion yen
72.4 billion yen
3.9％

FY201759.7 billion yen
63.9 billion yen
3.5％

1.0 times

1.0 times

0.8 times

0.6 times

The Company’s failure to achieve its targets can be attributed to various factors: stagnation of demandin Japan and North America and the decline of export prices mainly in Asia in the Cement Business;falling copper prices and decreased sales of copper and copper alloy products in the Metals Business; anda delay in the effect of initiatives to expand sales, decreased sales largely due to the economic slowdown
in China and a delay in the reduction of fixed costs in the Advanced Materials & Tools Business. In
addition to such external factors as falling copper prices and the slowing Chinese economy, there werealso internal factors such as the non-implementation or delayed implementation of important strategies anda delay in the effect of initiatives to expand sales. Accordingly, the Company recognizes that
accommodating changes in the external environment and building a structure focusing on strategy areissues.
‐1‐2. Formulation of the FY2020 Medium-Term Management Strategy
1) Themes
In recent years, the business environment surrounding the Mitsubishi Materials Group has beenchanging intensely with increasing uncertainty. In this environment, implementation of atransformation is essential to achieve sustainable development. Accordingly, the Company formulated
the FY2020 Medium-Term Management Strategy based on the theme “Transformation for Growth.”
The Company believes that the three driving forces for transformation are sharing a sound sense ofcrisis, possessing clear targets and a passion to achieve the targets, and transforming corporate culture.
The Company holds that transformation for growth can only be achieved when all of these driving
forces are in place.
2) Changes to formulation method
To accommodate changes in the external environment and build a structure focusing on strategy, theCompany has changed its formulation method for the FY2020 Strategy as shown below.
・The Company is changing both the content and the name of the plan, switching from a “mediumterm management plan” that is primarily a financial plan to a “medium-term management strategy”
that focuses on the planning and implementation of growth strategies. To build a structure focusedon strategy, the Company will concentrate on growth strategies rather than on financial plans andwill place emphasis on executing growth strategies.
・The growth strategies and investment plan were fixed for three years under FY2017 Plan. To
respond flexibly to changes in the external environment, the Company will every year plan toreview its growth strategies and investment plans for upcoming three years under the FY2020
Strategy.
3) Review of long-term management policy
Recently, when formulating the FY2020 Strategy, the Company reviewed its long-term management
policy as a policy looking 10 years ahead.
The Mitsubishi Materials Group’s Philosophy is “For People, Society and the Earth” and its Vision is“We will become the leading business group committed to creating a sustainable world throughmaterials innovation, with the use of our unique and distinctive technologies, for People, Society andthe Earth.” The Group conducts a wide range of business activities, from upstream resources and raw
materials to downstream products. Leveraging the manufacturing technology and knowhow
accumulated in these areas, the Group has built a business model for supplying high value-added
products and a recycling-oriented business model for using waste as resources.
To realize its Vision, the Company has adopted its long-term management policy which consists ofmedium- and long-term goals (the company in the future) and a group-wide policy. Details are as
follows:< Medium- and Long-term Goals (the company in the future)>・Leading company in domestic and overseas key markets
・Achieving high profitability and efficiency
・Achieving growth that exceeds the market growth rate
< Group-Wide Policy >‐2‐

・Optimization of business portfolio・Comprehensive efforts to increase business competitiveness・Creation of new products and businesses
The Company will also consider reviewing its long-term management policy every three years, once
again looking 10 years ahead.
3. Overview of FY2020 Strategy1) Implementation of Group-wide policies
Under the FY2020 Strategy, the Company will implement group-wide policies set out in the longterm management policy, as detailed below:(i)

Optimization of business portfolio
The Company will classify its business into three categories: stable growth business, growthpromotion business and profitability restructuring business, and will promote selection andconcentration and improve capital efficiency after determining a direction geared to thecharacteristics of each business and clarifying any issues. Stable growth business consists of thecement, metals (smelting), recycling and renewable energy businesses, and in this category, theCompany will aim to strengthen its business foundations by maintaining and improving costcompetitiveness. Growth promotion business consists of the metals (copper and copper alloy)
and advanced materials & tools businesses, and here the Company will seek businessdevelopment in adjacent fields and global markets to outperform market growth. Profitability
restructuring business consists of the electronic materials & components and aluminumbusinesses. In this category, the Company will work promptly to solve issues and define thefuture direction of growth.

(ii)Comprehensive efforts to increase business competitivenessTo increase the business competitiveness of the business divisions, it is necessary to put in placea more efficient and effective structure. The Company will seek improvement and innovation inthe production technologies of the business divisions by making optimal use of its technical andmanagement resources in cross-functional projects, mainly among the departments of theTechnology Division (Production Technology Management Dept., Safety & Environment Dept.,
System Strategy Dept., Procurement & Logistics Dept., Corporate Production Engineering Dept.,
Corporate Research & Development Dept. and Mineral Resources Dept.), which was establishedon April 1, 2017. Through this initiative, the Company will pursue business competitiveness inthe production technology area by responding rapidly to an evolving world, differentiating itself
from its competitors by being a step ahead, and achieving new development such as new
products and production technologies.

(iii)

Creation of new products and businesses
For the Group to achieve sustainable development in a dramatically changing externalenvironment, it must create new business that will support profitability in the future. Under theFY2020 Strategy, important social needs the Company should meet are identified as nextgeneration vehicles, internet of things (IoT) and artificial intelligence (AI), and building a rich,sustainable society. The Company plans to create and develop new products and new businesses
that are vital for sustainable development.
‐3‐2) Key strategies
The Company will implement specific measures under Key strategies shown below:
・Achieve growth through innovation
・Create value by building a recycling-oriented society
・Increase the company’s market presence through investment for growth・Increase efficiency through continuous improvement
3) Investment Strategy
The total amount invested over the period of the FY2020 Strategy is expected to be 280 billion yen,with growth strategy investment of 110 billion yen and maintenance/upgrading investment of 170
billion yen. The Company will implement the investment by utilizing operating cash flow and revenue
from selling assets.
If there is any other favorable large investment for growth, however, the Company will positively
implement such an investment as far as keeping net debt-to-equity (D/E) ratio of 1.0 or lower.
4) Capital Policy
The Company considers the return of profits to shareholders to be one of the most importantmanagement priorities and its policy is to determine the distribution of profits based on comprehensive
consideration of a wide range of management factors, including income for the period, internal reserves
and financial position.
Regarding profit distributions during the period of the FY2020 Strategy, the Company will attach
importance to stable dividends even when its consolidated performance fluctuates and annual dividends
during the FY2018-2020 period will be 80 yen per share. If the consolidated dividend payout ratio is
below 25%, however, the Company will temporarily increase the dividend or purchase treasury stock.
5) Business Strategies of each Business Segment①Cement BusinessMedium- Become a leading company in terms of efficiency in the cement industry
and Long- Become a local-area champion in overseas
termgoals
Business
Become superior in a domestic market that is contracting as it matures
policyGrow overseas businesses with the support of stable cash income from domestic
businesses
Key< Domestic business >strategies
・Increase the global competitiveness of Kyushu Plant
・Fortify the sales foundation in the Tokyo metropolitan area, etc. for downstream
business・ Expand the environmental business by developing new business in growthsegments< US business >・Fortify the cement manufacturing and supply system
・Expand ready-mixed concrete business< New overseas business bases >・Develop new business bases through acquisitions, etc.

‐4‐

②Metals BusinessMedium- Increase synergy between new copper mine development and smelting
and long- Expand the recycling business and increase its profitability
Build high rolling-margin profitability
term
goals
Contribute to a recycling-oriented society through metals from manufacturing to recycling
Businesspolicy
Key< Mining >strategies
・Develop new projects
・Refine the system for improving and making decisions on existing projects< Smelting >・Increase e-scrap recycling
・Increase process efficiency, Optimize the smelting business< Copper & copper alloy products >・Sell products meeting customer needs (Increase sales of terminal materials andnew alloys, Develop high-performance plating)・Promote alloy recycling
・Make use of synergies with Luvata, Establish a global sales system
・Expand sealing materials business・Fortify the manufacturing system of rolling business・Strengthen cost competitiveness of extrusion business③Advanced Materials & Tools BusinessMedium- Become a global player capable of providing high value-added products and service
and long- solutions
termgoals
We aspire to become an energetic company with a “WakuWaku” feeling as well as aBusinesstrusted genuine partner of our customers through a relentless pursuit of “speed” andpolicy“innovation” from our customers’ perspective, consistently making things happen.
Key・Enhance the power of solutions by industry oriented teams
Strategies ・Create key technologies through the Company’s original development and open
innovation
・Promote local production for local consumption by reinforcing factories and usinglocal vendors
・Create synergies with MHTE
・Reinforce the Key Account strategy④Electronic Materials & Components BusinessMediumBecome a highly profitable business entity that provides materials (solutions as well asand long- products) required by growth market in timely manner by responding to changes in theterm goals business environment quicklyBusiness
Lineup of high value-added products
policyGenerate and expand profits by concentrating resources on growth businesses and products
Develop and nurture strong new businesses
Key・ New products and sales expansion in the IoT- related market (antenna modules,
Strategies
thermistor sensors, etc.)
・ New products and sales expansion in the next-generation vehicle market (insulatedsubstrates with high thermal conductivity, in-vehicle sensors, solar heat-ray shielding,etc.)‐5‐⑤Aluminum BusinessMedium(Rolling and processing) Establish a presence in the global market for automotive heatand long- exchanger materials
term goals (Can manufacturing) Gain the No. 1 share of the domestic aluminum can market andexpand business overseas
Business
Pursue business strategies that utilize the strengths of the rolling and can manufacturing
policybusinesses, respectively
Key・Implement a selection and concentration strategy in rolling and processing businesses
Strategies(shift to heat exchanger materials)
・Respond to increased production of beverage bottle-cans and develop next-generation
products‐6‐

＜For Reference＞
1. Corporate Philosophy, Long-Term Management Policy and FY2020 Strategy‐7‐

2. Provisional Financial Calculations and of Investment Amounts
FY2020 provisional financial calculations assuming implementation of the initiatives under the FY2020
Strategy and the investment amounts are as follows.
① Provisional financial calculations (consolidated)
FY2017 Results
Consolidated sales
Consolidated sales(excluding metal)
Consolidated ordinary
incomeTotal assets
BSNet debt
EquityROA (ordinary income to total assets)
ROE
Net D/E ratio
Assumptions * Exchange rate USD
Exchange rate EUR
Copper pricePL¥1,304 billion¥757 billion

FY2020(Provisional calculations)¥1,620 – 1,840 billion¥870 - 910 billion¥64 billion¥82 - 100 billion¥1,897 billion¥387 billion¥621 billion
3.5 %
4.8 %
0.6 times
108 ¥/$119 ¥/€234￠/1b¥1,950 billion¥450 billion¥640 billion
4.5 – 5.0 %7.0 – 80 %0.7 times
100 - 120 ¥/$120 ¥/€250 - 270￠/1b* median used for BS② Investment amounts (billion yen)

‐8‐