Investor Meeting
Mitsubishi Materials Corporation

May 13, 2016
Aki Takeuchi,Akira
T khi President
P id tContents
1 Performance Summary (p 3–5)
1.
3 5)
2 Progress on the Medium-Term
2.
Medium Term
Management Plan (p 6–9)
3. Initiatives by Segment (p 10–16)
4. Recap (p 17)

2

1. Performance Summary (FY2016 Consolidated Results)
YoY
comparison

N t sales:
Netl
Operating profit:

Ordinary income:Net income:Nett sales
Nl were ddown, particularly
ti l l iin ththe MMetals
t l bbusiness,iddue tto ffactorstsuchh as a ffalling
lli copper
price and equipment trouble.
Operating profit decreased as a result of such factors as lower profit in the Aluminum business,affected by raw materials prices, despite higher profit from the Cement business stemming fromexpanded operations in North America.
Ordinary income declined,
declined partly because of further worsening in copper mine
mine-related
related profits
Net income rose, mainly owing to a gain on sales of investment securities.

(Billions of yen, except whereotherwise indicated)

Difference(b)-(a)

FY2015 Result (a)FY2016 Result (b)1,517.2

1,417.8- 99.3Operating profit

71 871.8

70 4
70.4

- 1.4
14

Ordinary income

81.0

72.4

- 8.6

Net income

56.1

61.3+5.1

Net income per share (yen)

42.85

46.80

+3.95

8

10+2

Di idend ratio (%)
Dividend

18 7
18.7

21 4
21.4+2 7+2.7

Exchange rate (JPY/USD)

110

120+10297¢/lb

237¢/lb- 60¢/lb

Net sales

Dividend per share (yen)Copper price (LME)3

1. Performance Summary (FY2016 Consolidated Results)
Comparison withpreviousforecast

Net sales:
Generally in line with forecast.
Operating profit: Forecast was not achieved due to factors including a decline in cement export prices and lower sales
volume on cemented carbide products.
Ordinary income: Ordinary income fell slightly below forecast levels, although the increase in copper mine dividends
partially offset a decline in operating profit
profit.
Net income:Achieved forecast levels, due to improvements in extraordinary income / loss, among other factors.
Dividend:
Our dividend forecast of ¥10 per share (up ¥2 per share year on year) remains unchanged.

(Billions of yen,yen except whereotherwise indicated)

Net sales

FY2016 Forecast (a)(AnnouncedFebruary 9, 2016)

FY2016 Result (b)Difference(b)-(a)1,410.0

1,417.8+ 7.8

Operating profit

72.0

70.4

- 1.5

Ordinary income

73.0

72.4

- 0.5

Net income

54.0

61.3

+ 7.3

Net income per share (yen)

41.22

46.80

+5.58

Dividend per share (yen)1010－

Dividend ratio (%)

24.3

21.4

- 2.9

Exchangeg rate ((JPY/USD))

121

120

-1234¢/lb237¢/lb+3¢/lbCopper price (LME)4

1. Performance Summary (Consolidated Forecast for FY2017)
YoYComparisonp

Net sales are expected to fall, mainly due to factors including lower copper prices and yen appreciation.
We forecast a decrease in operating profit, due to impact of the lower copper price and yen appreciation on theMetals business, although we anticipate increases from the Cement, Advanced Materials & Tools and Aluminumbusinesses.
Ordinary income: Ordinary income is forecast to decrease as a result of factors including lower dividends from copper mines andhigher costs related to abandoned mines
mines.
Net income:We expect net income to decline due to the record of provision for environmental measures and absence of a gainon sales of investment securities, which was present in FY2016.
Dividend:
In line with lower net income, we expect the dividend to be ¥6 per share per year, down ¥4 per share.

Net sales:
Operating profit:(Billions of yen, except whereotherwise indicated)

Difference(b)-(a)

FY2016 R
Resultlt ((a))

FY2017 F
Forecastt (b)1,417.8

1,360.0- 57.8Operating profit

70 4
70.4

68 0
68.0

- 2.4
24

Ordinary income

72.4

68.0

- 4.4

Net income

61.3

25.0

- 36.3

Net income per share (yen)

46.80

19.08

- 27.72

Dividend per share (yen)106-4

Dividend ratio (%)

21.4

31.4

+ 10.0Exchange rate (JPY/USD)

120

110

- 10237¢/lb

230¢/lb- 7¢/lb

Net sales

Copper price (LME)52. Progress on the Medium-Term Management Plan
(Outlook for Final Fiscal Year)
1,600

1,700

(Billions of yen)
110

1,500

1,360

110
100

1,300

90

50

Ordinary income

Operrating profit

70

68

68

30
FY2017(medium-term
management plan)

1. Differences in Major Assumptions for FY2017

FY2017(Forecast)

Major Assumptions
Copper price (LME)*1

FY2017(Medium-Term
Management Plan)

FY2017((Forecast))

Difference300¢/lb

230¢/lb- 70¢/lb

Exchange rate (JPY/USD)*2

100

110+10Total demand for cement inJapan (millions of tons per year)

48.0

43.0

- 5.0

Total demand for cement in the
U.S. (millions of tons per year)

104.2

92.92

- 11.3

Dividends from copper mine((billions of yen)y )

14.0

4.9

- 9.1

*1 Copper price sensitivity (ordinary income): ¥1.9 billion/10¢ (up: gain profit)*2 Exchange rate sensitivity (operating profit): ¥0.6 billion/US$ (yen depreciation:gain profit)

2. Differences in Ordinary Income by Segment (Billions of Yen)
Segment

Ordinary Income

Difference

Main Reasons for Differences

Cement35.0 → 21.1

- 13.9Delayed recovery in Japanese and U.S. demand, worsening businessenvironment in China

Metals40.0 → 25.1

- 14.9Downturn in sales of processed copper products, lower dividends from coppermine due to lower copper prices

23.0 → 16.1

- 6.9

Downturn in demand for cemented carbide products and delayed sales
expansion

6.0 → 4.0

- 2.0

Sluggish growth in sales of advanced materials and products for smartphones
and other products

7.0 → 6.1

- 0.9

Downturn in sales of extruded heat exchanger materials for automobiles inoverseas

AdvancedMaterials &Tools
ElectronicMaterials &Components
Aluminum62. Progress on Medium-Term Management Plan
(Group-wide(Groupwide Growth Strategy)

Fortifying the Foundation for GrowthA
Acceleratel t BBusinessiS
Selectionl ti andd Focus
F
Key Strategic and Major Investments in Period ofCurrent Medium-Term Management PlanCCementt• ExpandedEd d limestonelitcrushed
h d sandd production
d ti capabilities
biliti ini Kyushu
Kh plant
l t [August[At 2015]• Expanded powder of waste gypsum board recycle processing capabilities in Kyushu plant[December 2015]• Expanded E-Scrap receiving and processing capabilities in Naoshima Smelter and Refinery’sMetals[April 2016]•Acquired
51% stocks in Hitachi Tool Engineering Ltd, converted company to consolidated
Advanced
Materials & Tools
subsidiary [April 2015]• Increasing cemented carbide end mill production capacity and commence production ofAdvanced
Materials & Tools
cemented carbide drill in Indonesia [Slated for completion in October 2016]
CementKey Business Restructuring, Sales of Shares and Other Activities in Period ofCurrent Medium-Term Management Plan
Cement• Spun off Mitsubishi Materials Kenzai Corp. and transferred business [October 2015]

Cement• Conducted share exchange of all shares in Tokyo Hoso Kogyo Co., Ltd. and transferred business[April 2016]

Metals• Expanded scope of joint venture in cable business of Mitsubishi Cable Industries, Ltd [April 2016]

AdAdvancedd• Sold partial shares of MMC Superalloy [June 2014]
Materials & Tools
ElectronicMaterials &• Sold partial shares of common stock in SUMCO [April 2015]
Components

72. Progress on Medium-Term Management Plan((Group-widepGrowth Strategy)gy)

Strengthening Global CompetitivenessOverseas Business Expansion in Markets Expected to Grow
Key Initiatives Related to Overseas Business Expansion in Period of Current
Medium-Term Management PlanCement• Commence operation of new aggregate mine (Hubs aggregate mine) in South California[November 2014]

Cement• Acquisition of factory site for new ready-mixed concrete plant in Northwestern of Los Angels[December 2015]

Metals• Established E-Scrap recycling business division in the United States [July 2014]

Advanced• Expanded cemented carbide sales bases (one in Turkey, four in China, one in Vietnam, and one
Materials & Tools in India))
Advanced• Expanding cemented carbide production bases (planned increases in production capacity atMaterials & Tools bases in the United States and Spain)
Advanced• Commenced manufacture of sintering parts in Indonesia [April 2014]
Materials & Tools
Electronic
Materials &• Began production of thermistor sensors in Laos [June 2015]
Components• Started production of extruded aluminum heat exchanger materials (multi-port tubes) in India
Aluminum[March 2016]
Common• Converted supervisory offices to local subsidiaries in South and Southeast Asia, and expanded
their functions and networks [April 2015]8

2. Progress on Medium-Term Management Plan
(Group-wide Growth Strategy)
Progress on Improving Our Financial Position(Billions of yen)

BSCF

FY2015Results

FY2016
Results

FY2017
ForecastFY2017
Plan

Interest-bearing debt

630.8

526.3

580.0

650.0

N t D/E ratio
Netti (times)
(ti)

101.0

080.8090.9

1 0 or lless
1.0

Operating cash flow

108.0

118.6

75.0－－－

301.7

361.0

(42.3)(29.9)(115.0)－－－(187.3)(318.0)

65.7

88.7

(40.0)

－－－

114.4

43.0

Three-year
ycumulative
Investing cash flow
Three-year cumulative
Free cash flow
Three-year cumulative

Future Financial Strategy Directions
We will consider policies for the next medium
medium-term
term management plan bytaking into account a balance among investment in growth, financial structureand shareholder returns.

9

3. Initiatives by Segment (Cement)
Performance (Cement)(Billions of yen)2520

20.1 19.7

21.0 21.1

17 3 16.7
17.3
16 7151050
FY15

FY16

FY17 Forecast

Operating profit

Ordinary incomeJapan◆Outlook for demand in Japan
Assumed to rise slightly year on year, to 43 million tons
◆Export environment
Prices in Asia are assumed to fall, although plan toi
increasevolume,lnotablyt bl iin OOceaniai◆High-value-added promotion for waste disposal
processing
Increased processing prices and greater acceptance ofdifficult item to dispose

Demand trends (domestic / export)
7060(Millions of tons)

Domestic demand (left axis)
Exports (right axis)

1412501040830620410200(Millions of yen)

250

Waste Processing Effect and Forecast
Environmental sales
Alternative effect200150100500
FY11(Source: Japan Cement Association)

FY12FY13FY14FY15FY16FT17103. Initiatives by Segment (Cement)
Long Beach terminal

North America◆Expansion of cement supply system
Preparing to expand import terminal in anticipation of cement
supply shortage from 2017

RRM ready-mixed
concrete plant◆Further increase in ready
ready-mixed
mixed concrete operations
Newly construct or acquire ready-mixed concrete plants,
further ensure aggregate resources(Thousands of metric tons)

Demand for cement in Southern California

12,000

Domestic products

Export productsLine of local cement supply shortage (MMC estimate)

10,000

8,000

6,000

4,000

2,000

Prices of cement and ready-mixed
concrete also continuing to recover

095 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20(Source: PCA)

11

3. Initiatives by Segment (Metals)
Performance (Metals)(Billions of yen)

Mining32.8

35302524 8
24.8

27.0
24 2
24.2

25.1
21.4

2015
1050
FY15

FY16

FY17 ForecastOperating profit

Ordinary income◆FY2016 copper pricei outlooktl kFY2016 assumption is an average of 230¢/lb(1H: 225 ¢/lb; 2H: 235¢/lb)◆New mine development
Ongoing promotion of Zafranel project in Peru
(currently in pre-F/S stage)
Copper Price and Dividends
from Copper Mines

Zafranel mine ((Peru))

5045403530
2520
151050Dividends from copper mine (billions of yenyen, left axis)
Copper price (¢/lb, right axis)

500
450
400
350
300
250200150
100500123. Initiatives by Segment (Metals)(Thousands oftons)

Smelting

160◆Smelting margin in FY2016
Expected to be generally the same as in thepreceding fiscal year

140

◆Expansion of the recycling business
Becoming a world leader in E-Scrap receiving
and processing capacity

60

Completed expansion of annual receiving andprocessing capacity at the Naoshima Smelter andRefinery from 80,000 tons to 110,000 tons (totalcapacitypy of 140,000,tons,, includingg OnahamaSmelting & Refining., Ltd)

E-Scrap Processing Volume(Naoshima and Onahama)

120
100
80

4020

FY09

FY10

FY11

FY12

FY13FY14FY15FY16FY17ForecastCopper Processing◆Business environment

Expect to finish inventory adjustment ofprocessed copper products and recovery ofenvironment for automotive andsemiconductor
id t sectort◆Increasing sales and strengthen ofcost competitivenessE-Scrap

ExpandEd sales
l ffor automotivetti andd smartt
meter sector and focus to cost reduction
such as improvement of yield rate13

3. Initiatives by Segment (Advanced Materials & Tools)(Billions of yen)

Performance (Advanced Materials & Tools)

Cemented Carbide Products

20.0

16.7 16.5
15.0

16.0 14.9

17.3

16.1

Strengthen and maintain product supply andsolution proposal capabilities, and build abusiness structure that will engenderpartners
customers’ trust in us as p

10.0
5.00.0FY15FY16FY17 Forecast

Operating profit

Ordinary income◆ Expand global production and sales bases

Established seven overseas sales bases in FY2015 and FY2016◆ Strengthen sales capabilities with industry-specific teams
Select three focus sectors: automobiles, aircraft and medical equipment◆ Enhance expansion technical bases (currently five) andcooperation
New Chubu Technical Center ((Gifu Prefecture)) scheduled to openpEliciting Synergies with Mitsubishi
Hitachi Tool Engineeringgg

Step 1: Held networking events in individual departments from April 2015 (completed)
Step 2: Identify and quantify areas of potential synergy (ongoing)

Areas of potential synergy ⇒⇒・ExpandExpand product lineup (mutual product supply
supply, accelerated new product development)
・Upgrade product functionality (joint development)
・Improve delivery times (flexible manufacturing system, share the MMC’s IT
infrastructure)14

3. Initiatives by Segment (Electronic Materials & Components)
Performance (ElectronicMaterials & Components)(Billions of yen)
8

Electronic Materials & Components

7.2

7

6.3

◆Advanced materials

654

4.4

4.0
3.1

3

2.7

210
FY15

FY16FY17 Forecast

Operating profit

Ordinary income

・Expand business in sputtering target for the CIGS
solar cell, organic electroluminescence and touch
panel markets
・Rally the business with new products (high-speedplating chemicals) in the area of fine materials for
assembly—packaging materials—for smartphones
・Expand sales through new applications (electricrailway, industrial equipment, etc.) of insulation
substrate DBA products for hybrid vehicles

Fine materials for assembly(advanced materials)

DBA substrate(advanced materials)◆Electronic◆Elti devices
d iCentering on thermistor sensors, promote configurationof optimal production and sales system, and expand
sales to air conditioner, refrigerator
gand other markets◆Silicon
Although the business environment remains difficult due
to oversupply, achieve world-leading quality inpolycrystalline silicon, and boost customer satisfaction
to augment sales

MME Laos (electronic devices)15

3. Initiatives by Segment (Aluminum)
87.0

765Aluminum

Performance (Aluminum)(Billions of yen)61
6.1

5.6 5.1
4.3

4◆Rolled and extruded products(Mitsubishi Aluminum Company, Ltd.)

Expanded overseas production base for heat exchangermaterials→ Commenced production at new company in India(March 2016)

3.6

3
2
10
FY15

FY16

FY17 Forecast

Operating profit

Ordinary income◆Can production (Universal Can Corporation)

Increasing sales of bottle cans, for which demand
expanding→ Boost production capacity and increase sales throughmeasures such as accelerating existing production lines

Japanese Demand for Aluminum Bottle Cans
(Billions of cans)

3.53.0

3.00

2.5
2.0

2.26

2 56
2.56
+17％

1.5
+13％

1.0
0.5
0.0

+11％
2014 Actual

2015 Estimate

2016 Forecast(Source: Japan Aluminum Can Recycling Association)

Can products(Left: bottle can;right: regular can)Rolled and extruded
products (extruded heatexchanger materials forautomobiles)

16

4. Recap◆Execution of medium
medium-term
term management plan
growth strategy
Continue financial constitutional improvement alongwith steady strategic investment for sustained growth,and strengthen the basis for growth

M t i l Premium
Materials
Pi2016Challenge
g to Become the World’s
Leading Business Group17For further information, please contact:
Mitsubishi Materials Corporation
Keidanren Kaikan, 1-3-2, Otemachi, Chiyoda-ku, Tokyo 100-8117, Japan
E-mail: ml-mmcir@mmc.co.jp
URL: http://www.mmc.co.jp/corporate/en/index.html

These projected performance figures are based on information
available
il bl tto theth Company’s
C’ managementt as off theth dday ffor releasingli
this material. There are many uncertain or risk factors inherent inprojections, and there might be cases in which actual resultsmateriallyt i ll diffdiffer ffrom projections
j ti
off thithis material.
t i l