Mitsubishi Materials Corporation
Investor Conference Material

May 16, 2019
Naoki Ono, President
Mitsubishi Materials Corporation

1｜2019.5.16

Contents

1. Performance Summary (P.4 - 6)
2. Progress on the Medium-Term Management Strategy (P.8 - 14)
3. Initiatives by Segment (P.16 - 36)
4. Issues and Enhancement of Group Governance (P.38 - 45)

2｜2019.5.16

Contents

1. Performance Summary (P.4 - 6)
2. Progress on the Medium-Term Management Strategy (P.8 - 14)
3. Initiatives by Segment (P.16 - 36)
4. Issues and Enhancement of Group Governance (P.38 - 45)

3｜2019.5.16

FY2019 Result (Comparison with the Previous Year Result)Comparison
with thePreviousYear
ResultNet sales: Increased in all businesses, and the overall growth was achieved.
Operating profit : Decreased in all businesses, and the overall operating profit also decreased.
Ordinary income : Decreased mainly due to a fall in operating profit despite an increase in equity inearnings of affiliates and other items.
Net income*: Decreased mainly due to an increase in income taxes – deferred, in addition to a fallin ordinary income.
Dividend: Annual dividend per share unchanged at 80 yen from the previous fiscal year basedon the capital policy in the Medium-term Management Strategy.

(¥ billions)

Net sales

FY2018Result (a)FY2019Result (b)Difference(b)-(a)1,599.5

1,662.9+63.4

Operating profit

72.8

36.8

-35.9

Ordinary income

79.6

50.6

-28.9

Net income*

34.5

1.2

-33.2

264.159.92-254.23

Dividend per share (yen)

80

80

－

Exchange rate USD (yen / $)

111

111

0

Copper price (LME) (¢ / lb)

292

288

-4

Net income per share (yen)

4｜2019.5.16* Net income attributable to owners of parent

FY2019 Result (Comparison with the Previous Forecast)Comparison
with thePrevious
Forecast

Net sales: Increased overall thanks to sales increase in the Metals Business.
Operating profit : Decreased overall as a result of a decline in Metals and other businesses despite
an increase in Others Business.
Ordinary income : Decreased mainly due to a fall in operating profit despite an increase in equity inearnings of affiliates and other items.
Net income*: Decreased mainly due to an increase in income taxes – deferred, in addition to a fallin ordinary income.
Dividend: Previous forecast remains unchanged.

(¥ billions)

FY2019Forecast (a)(Announced on Feb. 12)

Net sales

FY2019Result (b)Difference(b)-(a)1,650.0

1,662.9+12.9

Operating profit

42.0

36.8

-5.1

Ordinary income

52.0

50.6

-1.3

Net income*

10.0

1.2

-8.7

Net income per share (yen)

76.36

9.92

-66.44

Dividend per share (yen)

80

80

－

Exchange rate USD (yen / $)

111

111

0

Copper price (LME) (¢ / lb)

285

288

+3

5｜2019.5.16* Net income attributable to owners of parent

FY2020 Full Year Forecast
Comparison
with thePrevousYear
ResultNet sales: Expected to increase in Metals and other businesses, and overall growth is expected.
Operating profit : The same as net sales, expected to increase in Metals and other businesses, andoverall growth is expected.
Ordinary income : Increase due to a rise in operating profit despite a decrease expected individend income.
Net income*: Increase thanks to an improvement expected in income taxes – deferred, in addition
to growth in ordinary income.
Dividend: Annual dividend per share remains unchanged at 80 yen from the previous fiscal
year based on the capital policy in the Medium-term Management Strategy.

(¥ billions)

Net sales

FY2019Result (a)FY2020
Forecast (b)Difference(b)-(a)1,662.9

1,700.0+37.1

Operating profit

36.8

51.0

+14.2

Ordinary income

50.6

62.0

+11.4

Net income*

1.2

30.0

+28.8

Net income per share (yen)9.92

229.08+219.16

Dividend per share (yen)

80

80

－

Exchange rate USD (yen / $)

111

110

-1

Copper price (LME) (¢ / lb)

288

290

+2

6｜2019.5.16* Net income attributable to owners of parent

Contents

1. Performance Summary (P.4 - 6)
2. Progress on the Medium-Term Management Strategy (P.8 - 14)
3. Initiatives by Segment (P.16 - 36)
4. Issues and Enhancement of Group Governance (P.38 - 45)

7｜2019.5.16

Group-wide PolicyLong-term Management Policy

Corporate Philosophy
ValuesCode of Conduct

VisionMedium- to 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 growthrateGroup-wide Policy
Resources andRecycling◆Optimization of business portfolio◆Comprehensive efforts to increase businesscompetitiveness◆Creation of new products and businesses

Sustainable
Development
Medium-term Management Strategy
Processed
Goods

8｜2019.5.16

Materials

Global Strategy

Technology andDevelopment Strategy

Marketing Strategy

HR Strategy

Key Strategies in FY2020 Strategy◆Achieve growth through innovation◆Create value by building a recycling-oriented
society◆Increase the company’s market presence throughinvestment for growth◆Increase efficiency through continuous
improvement

Progress on the Medium-Term Management Strategy◆Medium-Term Management
Strategy
Review the growth strategy and investment
plan for upcoming three years once a year

［Unit: ¥ billions］

Free Cash Flow

ROA

Operating CF

Investing CF

Financing CF

200.0

4.5 - 5.0%
4.1%

140.1

150.0
108.0

118.6

115.5

100.0

100.0

3.5%

50.7

3.2%

50.0

2.6%

2.0
0.0

◆Rolling Review of the MediumTerm Management Strategy(FY2020 Strategy)-50.0

FY2017
Result

FY2018Result

FY2019ResultFY2020
Forecast

ROE

7.0 - 8.0%

(October, 2018)
New establishment of the “Advanced
Products Company”⇒ Strengthening and growth of productmanufacturing business

FY2020Medium-termManagement
Strategy-150.0
(FCF)

4.8%

-83.9

(65.7)
15/3(88.7)
16/3(88.9)
17/3(-33.2)
18/3

600.0

-110.0(53.9)
19/3

Shareholder’s equity, Net Interest-Bearing Debt
and Net D/E Ratio
Shareholders’ equity
Net D/E Ratio (times)(-10.0)20/3
Forecast［Unit: ¥ billions］

Net Interest-Bearing Debt

682.4
633.5

621.2

4.6%

-86.2

651.2

550.7
537.7 555.2
466.1⇒ Creation of new products andbusinesses in product manufacturingbusiness

386.9

400.0

428.0

386.1

412.0

0.2%
200.0
FY2017
Result9｜2019.5.16-47.6-120.4

800.0

5.3%

-11.0

-15.7

-100.0Growth strategies: No major changes
Investment plan: No major changes◆Optimization of business portfolio

-26.5

-42.3
-29.9
-42.2

FY2018Result

FY2019ResultFY2020
Forecast

FY2020Medium-termManagement
Strategy

1.0

0.8
0.6

0.6

0.6

0.6

FY2017FY2018FY2019FY2020
Forecast

0.0
FY2015FY2016

Optimization of Business Portfolio◆ To integrate three product manufacturing businesses and establish the Advanced Products Company
in October, 2018
◆ Newly set a EBITDA growth rate as the most important indicator of the Advanced Products Company
Direction

Product manufacturing

Growthpromotionbusiness

Advanced Products(Copper & Copper Alloy
Products)
Metalworking Solutions *(Indicator to watch)◆Promote growth by matching customer andmarket needs and the Company’s strength◆Business development in adjacent fields andglobal markets

EBITDA growth rate

Profitability
restructuringbusiness

Process
manufacturing

Stablegrowthbusiness

Advanced Products(Electronic Materials &Components)◆Work promptly to solve issues and define thefuture direction of growth.

Advanced Products(Aluminum)

・Make investments in competitive advantages
and support technological development
・Ensure thorough selection and concentration

Metals (smelting)
CementRecycling
Renewable energy◆Aim to strengthen the business foundation byincreasing and maintaining cost competitivenessusing recycling revenues, etc. and seek
carefully selected opportunities for large
investments* As of October 1, 2018, “Advanced Materials & Tools Company” has changed its name to “Metalworking Solutions Business Company.”

10｜2019.5.16

ROA

Key Measures to Strengthen and Restructure the Business Since April 2017
Key Business Strengthening and Acquisition of Shares• “Luvata Special Products Division” became a consolidated subsidiary through completion of the acquisition of shares• Development of Flake-type thermistors for high-precision temperature control (the world’s smallest and with long-term reliability) oflaser diodes for optical communication

Advanced Products• To begin collaboration with Denka Company Limited for full-fledged mass-production of ceramic insulated circuit substrates with high thermal
conductivity for eco-friendly vehicles• Joint development with Mitsubishi Shindoh Co., Ltd. regarding corrosion protective plating technology for the terminal connectors of aluminum
wire harnesses which is expected to contribute for reducing the weight of automobiles• Development of two types of copper sintering bonding materials for next-generation power modules capable of solving problems that arise inconventional solder• Development of uniformity electrodeposition coating technology for highly heat-resistant and highly insulating resin for next-generation vehicles• "Central Japan Technical Center" was established

Metalworking
Solutions Business• “TianJin LingYun tool Design Co.,LTD.” was relocated, and improved and expanded• Tungsten recycling capacity at Japan New Metals Co., Ltd. was increased 1.5 times*Black: FY2018*Red: FY2019• “Machining Technology and Education Center in North America” was relocated, and improved and expanded

Metals Business• “MM Metal Recycling B.V.”, an E-Scrap sampling facility established in the Netherlands, went into operation

Cement Business• Capacity of waste plastic processing at Kyushu Plant increased 1.7 times• “KitaKyushu Ash Recycle Systems Co., Ltd.”, which is engaged in the treatment of incineration fly ash, went into operation

Others Business• To begin the joint development of recycling technology of cobalt, nickel and other metals with Nippon Magnetic Dressing Co., LTD.
• “New Energy Fujimino Co., Ltd.” was established for operating a business of producing biogas from food waste• Investment to “Incubation Alliance, Inc.”, which is involved in the development and manufacture of new carbonaceous material “graphene”

Common• “New Business Development & Promotion Division” and “EV Material Development & Recycling Business Promotion Dept.” were established• Establishment of "MMC Innovation Investment Limited Partnership", which will invest in venture companies that have material technologies

Key Business Restructuring and Sales of Shares
Metalworking
Solutions Business•All shares in “Hitachi Metals MMC Superalloy, Ltd.” were soldCommon•All shares in “Mitsubishi Materials Real Estate Corporation” were sold11｜2019.5.16

Creation of New Products and Businesses
From battery pack, materials for interior and exterior to recycling
The Company provides unique products and recycle technology with the keywords "Manufacturing", "Use" and "Revival"
that are indispensable for electric vehicles.

Battery pack top cover Flameretardant resins【Advanced Products(Copper & Copper Alloy Products) 】

Battery module

Electronic components
Copper materials for electrical connectors【Advanced Products【Advanced Products(Electronic Materials & Components) 】 (Copper & Copper Alloy
Products)】

Spring and Contact for
Bus bar【Advanced Products
Power Relay【 Advanced Products(Copper & Copper Alloy(Copper & Copper Alloy Products) 】 Products) 】

Battery pack floor case
【Advanced Products (Aluminum) 】

xEV Lithium-ion battery pack

12｜2019.5.16

Tab lead【Advanced Products(Copper & Copper Alloy
Products) 】

Creation of New Products and Businesses
Battery module
Negative active
materials coating on
copper foil for current
collector<Recycling>
Recycling technology for Lithium-ion
battery for xEV by solvent extraction
process

1st resistance welding(electrode sheets +collector terminal)
Press winding to rolls
Welding Electrode(Copper material)

Positive active
materials coating on
aluminum foil for
current collector

Welding Electrode(Tungsten material)
Electrode Sheet

Collector terminal(Copper material)

Slot die(Metalworking Solutions /Aluminum foil products(Advanced Products / Aluminum) Cemented Carbide Products)

2nd resistance welding(output terminal + collector
terminal)

Cell cap
Output terminal

Solvent extraction separator
Tungsten tri-oxide; WO3 powder
Ionic liquids(Metalworking Solutions /(Advanced Products /Electronic Materials & Components) Cemented Carbide Products)

Collector terminal

Stack insertion to box

LiOH
Bus bar welding(external connect)13｜2019.5.16

Cell cap welding(seal) / Fill hole

CoSO4

Shareholder Return
Unit: yen

History of Dividend per Share (after consolidation of shares base)& Consolidated Dividend Payout Ratio

・

100
80

Dividend
Payout Ratio(Right Axis)
806.6%

Unit: %
120.0
1,000.0

90.0
Dividend per share(Left Axis)
80 yen
60.0

60
40
20
0

12/3

13/3

Dividend

14/3

15/3

16/3

17/3

Dividend per share
30.0(Left Axis)
Dividend
80 yen Payout Ratio(Right Axis)
0.0
34.9%
18/3
19/3
20/3
(Forecast)

17/3 (Results)

18/3 - 20/3

60 yen/share *80 yen/share◆While the Company’s performance is changed, its policy is to maintain stabledividends, and annual dividends during the FY2018-2020 period will be 80 yen
per share (same as dividend in FY2018).
◆If the consolidated dividend payout ratio is lower than 25%, however, theCompany will temporarily increase the dividend or purchase treasury stock.
* A consolidation of shares of the Company's common stock at a 10:1 ratio was executed, with an effective date ofOctober 1, 2016. According to this, dividend per share for FY2012 to FY2017 are calculated on the assumption thatthe consolidation of its shares was conducted at the beginning of the FY2012.

14｜2019.5.16

Contents

1. Performance Summary (P.4 - 6)
2. Progress on the Medium-Term Management Strategy (P.8 - 14)
3. Initiatives by Segment (P.16 - 36)
4. Issues and Enhancement of Group Governance (P.38 - 45)

15｜2019.5.16

Advanced Products

16｜2019.5.16

Advanced Products
History of Consolidate Earnings
800.0
18.4 18.4
600.0
536.0
400.0

570.9

11.9

13.2

Ordinary 20.0
Operating income
profit
15.7
14.5
15.0
Net Sales
587.9

200.0

Net sales &Ordinary income
ratio by Segment *22%
Net sales(Outer)34%
Ordinary income(Inner)
22%

10.0
5.0

0.0

0.0
18/3

¥billion

19/3

20/3
Forecast*FY2019 Result
Net sales is for outside customers

FY2020◆ Copper & Copper Alloy Products
Mitsubishi Shindoh Co.,Ltd. is expected to maintain solid sales of terminal materials for automobiles at the same level as the previous
year and increase sales of electronic materials for semiconductors, MSP alloys, etc.
Luvata Group is expected to increase sales of welding-related products to North American, European, and Japanese automobile
manufacturers and superconducting wires for MRI in China and other areas of Asia.

◆ Electronic Materials & Components
Sales of products such as insulated substrates with high thermal conductivity and solar heat-ray shielding for next-generation vehicles
and electronic components for in-vehicle equipment and optical communication-related equipment are expected.

◆ Aluminum
Mitsubishi Aluminum Co., Ltd. is expected to increase sales of products such as heat exchanger sheet materials for automobiles
through the stabilization of sheet production and foil products for lithium-ion battery cases.
Universal Can Corporation plans to launch upsized aluminum bottle cans and expects a recovery in demand for aluminum bottle cans.
17｜2019.5.16

34%

Advanced Products
Medium-term Management Strategy - Progress of Key Strategies◆ Automotive Market
Rapid shift of automobiles to EVs, automatic driving technology, and progress ofconnected technology【Key Results in FY2019】
Key Strategies

Measures

Progress

C&CAP

Sell products meeting customer needs /Increase sales of terminal materials andnew alloys

Increase sales of terminal materials to major Some customers decided to use MSP5 andcustomers in the industry with a focus on
MSP8, ,mass production commenced, andthe MSP series
progress is generally steady

EM&C

New products and sales expansion in the 1. Strengthen insulated substrates with
next-generation vehicle market
high thermal conductivity business2. Increase sales of solar heat-ray
shielding

1. Expanded production capacity for heatsink-integrated substrates
2. Achieved sales exceeded the previous
year result

Aluminum

Promote of selection and concentration /shift to heat exchanger materials

Under construction, aiming for operation
in FY2021

Increase facilities【Key Plans for FY2020】
Key Strategies

Measures & Plans

C&CAP

Fortify the manufacturing system ofrolling business

EM&C

New products and sales expansion in the 1. Strengthen insulated substrates with high thermal
next-generation vehicle market
conductivity business2. Increase sales of solar heat-ray shielding
3. Increase sales of thermistors and surge absorbers

Aluminum

Promote of selection and concentration /shift to heat exchanger materials

18｜2019.5.16

Increase production capacity of terminal materials forautomobiles by introducing continuous annealing furnaces

Although consideration for a joint venture with Gränges wascanceled, we continue to hold discussions on future business
opportunities* C&CAP: Copper & Copper Alloy Products EM&C: Electronic Materials & Components

Heat exchanger
for automobiles(End products)

Advanced Products
Medium-term Management Strategy - Progress of Key Strategies◆ Electronics Market
Utilizing Big Data, expansion of IoT, AI, 5G, etc.
◆ Semiconductor Market
Growth in demand for semiconductor manufacturing equipment and related materials that
support demand for automobiles and electronics【Key Results in FY2019】
Key Strategies

Measures

Progress

EM&C(Electronics)
New products and sales expansion
in the IoT- related market

Increase market shares in the
Implementing to expand sales in the
U.S. and Chinese markets
optical communication equipment
market based on high reliability andcompact-sizing as its strengths

C&CAP(Semiconductor)
Expand sealing materials business

Increase sales to global customers

Increased the facilities at Minoshima
Works as planned【Key Plans for FY2020】
Key Strategies

Measures & Plans

EM&C(Electronics)
New products and sales expansion
in the IoT- related market

Enhance facilities to prepare for an
increase in orders receiving

C&CAP(Semiconductor)
Expand sealing materials business

Complete the facility expansion at
Minoshima Works
Commence an increase in production andsales expansion in FY2021* C&CAP: Copper & Copper Alloy Products EM&C: Electronic Materials & Components

19｜2019.5.16

Sealing materials

Advanced Products◆ Development of corrosion protective plating technology for connectors in aluminum wire harnesses(Announced on December 3rd, 2018)
New
technology

Corrosion protective plating technology for connectors
in aluminum wire harnesses

What is ?

A corrosion protective plating technology that limits the progress of galvanic corrosion*by adding an anti-corrosion layer that includes zinc (Zn) to tin-plating that is widely used
for surface treatment of copper alloy terminals

Properties &Functions

In addition to preventing galvanic corrosion*, this technology has an advantage in terms
of production cost compared with conventional technologies

In the future

Demand is expected to expand due to the replacement to aluminum wire harnesses
according to the weight reduction for automobiles that is demanded for the purpose of
reducing CO2 by improving fuel efficiency.

Corrosion protective plated
connectors connected toaluminum wires* Galvanic corrosion: A phenomenon in which a metal corrodes when it is in electrical contact with another (different) metal in the presence of anelectrolytic solution. It is caused by the flow of galvanic current between the two metals, with the difference in corrosion potential acting as the driving force.

◆ Development of Two Types of Sintering Bonding Materials for Next-generation Power Modules(Announced on March 6th, 2019)
New product

Sintering copper bonding material

Core-shell bonding material

What is ?

Bonding material using low-temperature sinteringsubmicron copper particles

Bonding material using core-shell particles including
copper coated with tin

Properties &FunctionsUsable for bonding at low temperatures and in an inert
atmosphere

Implements bonding in a short amount of time

In the future

It is expected that the use of the new products will expand as sintering bonding material for next-generation power
modules for which high heat resistance and high reliability are desired.

20｜2019.5.16

Metalworking Solutions
Business ** As of October 1, 2018, “Advanced Materials & Tools Company” has changed its name to “Metalworking Solutions Business Company.”
21｜2019.5.16

Metalworking Solutions BusinessNet sales &Ordinary income
ratio by Segment *History of Consolidate Earnings
200.0

18.5
16.8

150.0

171.5
16.7

161.1

15.6

Net Sales 20.0
179.2
Operating
15.0
profit Ordinary
income
16.7
16.2

100.0

10.0

50.0

5.0

0.0

0.0

¥billion

18/3

19/3

20/3
Forecast

Net sales(Outer)10%
Ordinary income(Inner)
25%
25%

10%
*FY2019 Result
Net sales is for outside customers

FY2020◆ Cemented Carbide Products
Increase of sales according to reinforce and accelerate the key account strategy, expand sales to key industries Automotive, Aerospace, Medical, and Mold & Die, and expenditures for sales expansion for the future are expectedto the plan.

22｜2019.5.16

Metalworking Solutions BusinessMedium-term Management Strategy - Progress of Key Strategies◆ Cemented Carbide Products Business
Become a global player capable of providing high value-added products and service
solutions
Cemented carbide tools【Key Results in FY2019】
Key Strategies

Measures

Progress

Cemented
CarbideProducts

Enhance the power of solution Expanding sales for Automotive,
Aerospace, Medical, & Mold & Die(mainly expanding into key accounts)

Increase sales above 3% against target

Cemented
CarbideProducts

Expand technical center
networks

Machining Technology and Education
Center in North America was relocated,
and improved and expanded (Oct. 2018)

To establish and expand overseas
locations and technical center【Key Plans for FY2020】
Key Strategies

Measures & Plans

Cemented
CarbideProducts

Expand technical center
networks

Plan to establish new technical centersin Germany and India

Cemented
CarbideProducts

Promote tungsten recycling

Increase scrap collected from overseas
and the recycle ratio in raw materials

23｜2019.5.16

InsertMetalworking Solutions Business◆ Expand technical center networks

East Japan
Technical Center

MTEC North Carolina(North Carolina, United States)
Relocated, improved and expanded
in 2018(Saitama, Japan)
Established in 2010

Central Japan
Technical Center(Gifu, Japan)
Established in 2017

MTEC Valencia(Valencia, Spain)
Established in 2008

Sharing
information
Utilizing mutual
facilities
ExperimentsupportMTEC Tianjin
TianJin LingYun tool
Design Co.,LTD(TianJin, China)
Relocated, improvedand expanded in 2017

MTEC Bangkok(Bangkok, Thai)
Established in 201524｜2019.5.16

MTEC Germany

MTEC India(Stuttgart, Germany)*Plan to establish(Pune, India)*Plan to establish

Metals Business

25｜2019.5.16

Metals BusinessHistory of Consolidate Earnings
800.0

715.3

720.0

25.4

600.0
400.0

12.7
2.3

Net Sales 30.0
748.1
Ordinary
income
16.6
Operatingprofit8.2

200.0

Net sales &Ordinary income
ratio by Segment *20.0

Net sales(Outer)33%
Ordinary income(Inner)
4%

10.0
0.0

-7.1

0.0
18/3
¥billion

19/3

33%

-10.0
20/3
Forecast

4%*FY2019 Result
Net sales is for outside customers

FY2020◆ Mining
Expecting dividend income from copper mines of 12.0 billion yen, down 0.8 billion yen year on year.
◆ Smelting
Increase profit by improving the recovery rate of valuable metals, in addition to full production at Naoshima Smelter
and Refinery and PT. Smelting (no periodic furnace repairs).

26｜2019.5.16

Metals BusinessMedium-term Management Strategy - Progress of Key Strategies
Medium- to Long-term Goals◆ Increase synergy between new copper mine development and smelting◆ Expand the recycling business and increase its profitability
MM Metal Recycling B.V.
(Netherlands)【Key Results in FY2019】
Key Strategies

Measures

Progress

Mining

Improve of existing projects andstrengthen the system

Stable operation at Copper Mountain Mine
(Canada)Achieved a record high volume of ore dressing byimproving facilities for the crashing and grinding
process

MiningDevelop new projects

Implementation of feasibility study at
Zafranal area (Peru)

Implemented economic efficiency assessment
based on geological information, mining plans,
mining water, ore dressing-related data, etc.

Smelting

Increase E-Scrap recycling

Establishing E-Scrap sampling facility

MM Metal Recycling B.V. completed in May 2018,
and increased operation line capacity gradually【Key Plans for FY2020】
Key Strategies

Measures & Plans

MiningDevelop new projects

For the Zafranal area, focus on the task of acquiring
environment licenses and permits after examining thefeasibility study
Meanwhile, start making an approach to new projects

Smelting

Optimize the smelting business

Build a new processing and collection flow across the
production locations
Establish a system for increasing capacity of processing
copper ore at PT. Smelting in Indonesia

27｜2019.5.16

Zafranal area (Peru)

Metals Business◆ Development foundation for increasing E-Scrap recycling
An increase in E-Scrap recycling resulted in growth in the load of impurities, which has begun to cause troubles.
The Company positions the FY2020 as a “willful slowdown” and will actively undertake the sorting and recycling of impurities
contained in E-Scrap and smelting metals from them utilizing the strength of smelter network in the Group.
Through this measures, troubles will be reduced. Furthermore, E-Scrap recycling will be also stabilized by acquiring a newincome source, and we will expand processing amount in the future.
Naoshima Smelter& Refinery
Concentrate lead raw
materials generated at two
copper smelters, Naoshima
and Onahama (increase
the recovery of copper inlead raw materials)

Commence theconcentration of leadraw materials
generated at copper
smelters.

Introduce the pressure
Developing businessleaching process atplan
Naoshima Smelter &Refinery(increase in amount ofnickel recovered from slime,
production of bismuth raw
materials)

Increase the amountof lead recoveredfrom lead raw
materials generated
at copper smelters
Plan to start
construction(Plan to be completed
in FY2021)

Plan to start andcomplete construction(operation will bestarted in FY2021)

Increasing capacity ofprocessing palladium at
Onahama establishment ofMaterials Eco-Refining Co.,Ltd.

Establish a system forincreasing capacity ofprocessing

Increase production
line
Plan to complete
construction

CopperCopper smelting
process
Recovery of iron,stainless steel,and aluminum
Lead Raw Materials

Physical sorting
process

Copper smelting
process

Hosokura Metal
Mining Company

Lead
Ikuno Plant

Lead Raw Materials
Lead smelting
process

Copper electrorefining process

Tin Raw Materials

NickelPrecious metal
process

Tin smelting
process

Lead Raw Materials

Slime pressureleaching

Recover tin raw materials
Conducting pilot testfrom intermediate products Developing businessgenerated at Hosokura
plan
Metal Mining Company andproduce tin at Ikuno Plant

Lead

Onahama Smelting
and Refining Co.,Ltd.

BismuthLead by-productproduction process

Bismuth Raw Materials

Tin

Recoverby-product tin

Water leaching scrap
Palladium
PGM process*Materials Eco-Refining Co., Ltd.
Onahama establishment* PGM: platinum-group metals

28｜2019.5.16

Cement Business

29｜2019.5.16

Cement BusinessHistory of Consolidate Earnings *1
Net Sales 24.0
253.6

280.0

21.0
19.4
210.0
192.3

198.2
13.4

15.4

140.0

Ordinary
income18.2
Operatingprofit
15.9

70.0

18.0

Net sales &Ordinary income
ratio by Segment *2
12%

12.0
6.0

0.0

Net sales(Outer)12%
Ordinary income(Inner)
25%

25%

0.0
18/3

¥billion

19/3

20/3
Forecast*1 As of April 1, 2019, the coal-related business in the “Others business”
changed to the “Cement business.”*2 FY2019 Result
Net sales is for outside customers

FY2020◆ JapanWhile an increase in construction investment is expected due to growth in public investment, total domestic demand for cement is
expected to be 42.5 million tons, taking into account factors such as labor shortages in construction work and transportationcompanies.
As in FY2019, the Company will persistently explain the necessity for sales price optimizations of cement and continue negotiations.
Moreover, we will contribute further processing of industrial waste and by-products and work on thorough cost reductions.

◆ California, USA
The Company plans to increase sales prices, in addition to sales growth, under steady demand for both cement andready-mixed concrete is expected to continue.
30｜2019.5.16

Cement BusinessMedium-term Management Strategy - Progress of Key Strategies◆ Become a leading company in terms of efficiency in the cement industry◆ Become a local-area champion in overseas【Key Results in FY2019】
Key Strategies

Cushenbury Plant (U.S.)

Measures
Increase global competitiveness at Kyushu
Plant

ProgressJapan

Fortifying the domestic foundation
for competitivenessJapan

Expand the environmental business Capacity of waste plastic processing increased Completed in May 2018, and capacity
increased 1.7 times

Japan

Fortifying the foundation for readymixed concrete business

Overseas

Expanding business to Northern California Opened new ready-mixed concrete plants in
Expand the US business (Expand
the ready-mixed concrete business)
Stockton area since Nov. 2018 (currently, 2plants are in operation)

Strengthen acquisition of high value-added
projects at middle of the city

Continuing the measures to reduce theproduction cost, despite some delay due to therevision of the plan

Relocated the concrete technology center tothe Tokyo metropolitan area (bay area) anddeveloped ready-mixed concrete plants【Key Plans for FY2020】
Key Strategies

Measures & Plans

Japan

Establish a stable operation system Improving production total efficiency(increase the efficiency of combustion burners
and clinker coolers)

Overseas

Expand the US business (Expand
Plan to start operation at Simi Valley plant
the ready-mixed concrete business) (FY2020/1Q)

Overseas

Expand the US business (Expand
Considering further development of facilities in
the ready-mixed concrete business) the Northern California

31｜2019.5.16

Ready-mixed concrete plant ofRobertson's Ready Mix, Ltd. (U.S.)

Cement Business◆ Capacity of waste plastic processing expanded
Locations

Capital Expenditure◆ Demand History (Domestic / Export) **Source: Japan Cement Association

History

Kyushu Plant

Establish processing facility

2002

Kyushu Plant

Increase processing facility (1st term)

2007

Yokoze Plant

Increase processing facility

Domestic trend (left axis)

Exports (right axis)
12

2008

45

9

Kyushu Plant

Increase processing facility (2nd term)
Introduce high chlorine removal
2008
system30

6Iwate Plant

Increase processing facility

15

3

Yokoze Plant

Increase high chlorine removal system 2010

Kyushu Plant

Increase processing facility (3rd term)
May, 2018
Increase high chlorine removal system

0

0

2
0
1
9
.
5
.
1
6

60

2009

800

History for amount of waste plastic processing

million 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3 20/3 million
Forecast tons
tons

◆ Demand history for cement in Southern California *thousand tons

12,000600

Domestic Products*Source: PCA
Import Products

9,000

400

6,000
200

3,000
0

2003 2008 2009 2010 2011 2018 2019 2020 FY
Forecast*FY2003 Result = 100, amount is including wood waste and shredder dust

32｜2019.5.16

095 97 99 01 03 05 07 09 11 13 15 17 19 21
ForecastOthers Business

33｜2019.5.16

Others BusinessHistory of Consolidate Earnings *1
280.0

249.5

210.0

13.1

255.7
13.1

14.6

8.3

140.0

18/3

19/3

¥billion

20/3
Forecast

12%24%

Net Sales 12.0
182.8
Ordinary
income
7.8
Operatingprofit
6.9

70.0

0.0

16.0

Net sales &Ordinary income
ratio by Segment *2

Net sales(Outer)12%
Ordinary income(Inner)
24%

8.0
4.0

0.0

*1 As of April 1, 2019, the coal-related business in the “Others business”
changed to the “Cement business.”*2 FY2019 Result
Net sales is for outside customers

FY2020◆ Environmental Recycling
Further increase processing capacity at "KitaKyushu Ash Recycle Systems Co., Ltd." engaging in the treatment of incineration fly ash.
Ensure the steady construction of the head office plant of "New Energy Fujimino Co., Ltd." operating a business of producing biogas
from food waste.
Carry out verification tests of the post-demolition recovery materials automatic sorting technology in the home appliance recycling
business.

◆ Renewable Energy

Put the operation of the Wasabizawa Geothermal Power Plant on track and steadily carry out the construction work of Appi
Geothermal Power Plant and the New Komatagawa Hydroelectric Power Plant according to the plan.
Conduct research on geothermal resources in new regions and consider the feasibility of commercialization.
34｜2019.5.16

Others BusinessMedium-term Management Strategy - Progress of Key Strategies◆ Environmental Recycling
Establish and expand recycling businesses trusted by stakeholders◆ Renewable Energy
Aim to become a leading company in Japan with overall strengths in geothermal
power generation【Key Results in FY2019】
Key Strategies

Measures

New Energy Fujimino Co., Ltd.
conceptual drawing

Progress

Environmental
Recycling

Expansion to new recycling items suchas solar panels and lithium ion batteries"KitaKyushu Ash Recycle Systems Co.,Ltd.", which is engaged in the treatment of
incineration fly ash, went into operation

Began operations in April, 2018

Environmental
Recycling

Start the biomass recycling business"New Energy Fujimino Co., Ltd." wasestablished for operating a business of
producing biogas from food waste

Established in May, 2018
Plan to commence operation in 2020

Environmental
Recycling

Become recovery materials to high added "Chubu Eco Technology Co., Ltd." achieved Started supplying raw material pellets invalue in home appliance recycling
seamless processing from resin mixtures to April 2019
manufacture of PP raw material pellets【Key Plans for FY2020】
Key Strategies

Measures & Plans

Environmental
Recycling

Promote automated demolition in home
appliance recycling"Chubu Eco Technology Co., Ltd." introduce
an automatic sorting robot and commence
verification tests

Renewable
EnergyExpand new geothermal power
generation business

Plan to begin operations at Wasabizawa
Geothermal Power Plant in May, 2019

Renewable
EnergyExpand new geothermal power
generation business

Plan to start construction of Appi
Geothermal Power Plant
Plan to commence operation in 2024

35｜2019.5.16

Appi Geothermal Power Plant
conceptual drawing

Others Business◆“Komatagawa New Power Plant” - a new hydroelectric power plant in Akita Prefecture will
start construction in May 2019 for the first time in 66 years. (Announced on December 25th, 2018)
Komatagawa New Power Plant
Features ofhydroelectric power
generation

Eco-friendly method of power
generation that does not emit CO2

PurposeAchieve the efficient use of water
resources by providing a long-term, stablesupply of renewable energy using thehydropower of the Komatagawa water
system while preserving the riverenvironment

Location

Aomori City
Lake Towada
Kitaakita City
Kazuno City
Mt. Moriyoshi
Hachimantai
Yakeyama
Lake Tazawa

Lake Towada

Mt. Komagatake
Morioka City

Akita City

Komatagawa river system, Kitaakita
City, Akita Prefecture

Oyu RiverOyu Hydroelectric Plant

Kazuno City
Yoneshiro RiverPower generation
capacity

Yoneshiro River

10,326kW

MMC Tohoku Power Service Station

Kitaakita City

Annual amount of
power generation

Approx. 48,500 MWh

Plan to start

May, 2019 Noshiro City

Ani RiverMoriyoshizan-Dam(Lake Shikimi)

Komatagawa No.4
Hydroelectric Plant
Komatagawa No.1
Hydroelectric Plant

Ikari Hydroelectric Plant
Nagata Hydroelectric Plant
Kumazawa RiverMoriyoshizan-Dam(Lake Taihei)

Komatagawa No.2 Hydroelectric Plant

Komatagawa New
Hydroelectric Plant
Lake Tazawa

Plan to complete

December, 2022

Annual CO2
reduction amountthrough theoperation of the
new power plant

Approx. 9,800 tons

36｜2019.5.16(Equivalent to the amount of CO2
absorbed by approx. 1,100 ha of 40-yearold planted cedar forests)

Contents

1. Performance Summary (P.4 - 6)
2. Progress on the Medium-Term Management Strategy (P.8 - 14)
3. Initiatives by Segment (P.16 - 36)
4. Issues and Enhancement of Group Governance (P.38 - 45)

37｜2019.5.16

RecapEnhancement of the Governance
Framework for Quality Control
Thorough Enhancement and Promotionof Group GovernanceFurther Improvement of GovernanceFunction
Implementation of More Timely andEffective Management

To Ensure Implementation of each
Measures in Final Fiscal Year of theMedium-Term Management Strategy

38｜2019.5.16

Recognition of Issues and Initiatives
Recognition ofissues

Initiatives to enhance
governanceCommunication(■)■ Visiting locations by executive officers
and head office executives, and holding
dialogue meetings and workshops

1) Organization with good and healthy
communication where employee canbe unrestricted communication■ Establishment of Governance Division /■ Formulate, implement and follow-up theplan for the conduct of governance(Governance Deliberation Council)

2) Organization capable of autonomously
solving issues

The amount and quality ofcommunication is inadequate at
all levels in the Group.

Awareness and system ofcompliance (■)
Sense of fulfilling responsibility islacking.
The abilities to voluntarily
discover inappropriate events,
make efforts to improve it andpromptly report it are lacking.

Resource allocation (■)
Resource allocation was
inappropriate as a result ofprioritizing operating
performance and to postpone
required investments.
39｜2019.5.16■■ Increasing the frequency of audits■■ Advocating and promoting SCQDE** The priorities when making decisions forthe performance of operations(1) Safety & Health(2) Compliance & Environment(3) Quality (4) Delivery (5) Earnings■ From the automation of quality
inspections to the enhancement of theprocess■ Selection the group-wide risks (2019)- Gaps between workload and human resources- Obsolescence and degradation of production
facilities

Becoming an organization that supports theenhancement of corporate value3) Organization that adequately shares theunderstanding of its business
4) Organization that makes prompt andresolute decisions
5) Organization that manages businesswith awareness of the differences
between the product manufacturingbusiness and the process
manufacturing business
6) Organization that aims for thoroughdigitization

Change of the Governance System
Shift to the Company with the Three Statutory Committees
Based on the assumption of approval at the 94th Ordinary General Meeting of Shareholders to be held on June 21, 2019,
the Company plans to shift from the company with audit & supervisory board to the company with the three statutory
committees. (Announced on March. 28, 2019)< Purpose of the shift >Further improvement of the corporate governance system and an enhancement of the corporate value
 Strengthen the management supervision function of the board of directors and increase the transparency andimpartiality of the management by shifting to the company with the three statutory committees that has threecommittees: the nomination, audit, and compensation committees that majority constitute by external directors
 Accelerate decision-making in the performance of duties by transferring authority to the Executive Officers.

< Composition of the board of directors >Make the majority of directors external directors to strengthen the management supervision function of the board of
directors.

Board of Directors

External
Directors

Internal
Directors

6 people5 people< Composition of nomination, compensation, and audit committee >In addition to the majority of the members of each committee being external directors, make the chairman external directors.

Nomination
Committee
External Directors
Internal Directors
40｜2019.5.16

Compensation
Committee

Audit
Committee

3 people3 people3 people(including chairman) (including chairman) (including chairman)
2 people2 people2 people

Group Governance Framework Enhancement Measures
1

Enhancement offramework for discussion,and reporting ofgovernance-related
matters◆ We will implement a framework for reducing risks and preventing problem occurrences⇒ We have been deliberating and sharing policies, plans, etc. on governance-related mattersthrough the “Governance Deliberative Council”

2
Improvement of functionsof management divisions
and their collaboration
with operating divisions
3◆ We have established the Governance Division to improve administrative division’s control andsupport functions for governance-related matters

Improvement of humanresources training andencouragement of active
interaction◆ We expand educations regarding governance-related matters◆ In addition to promoting human resources interactions in the Group, and endeavoring todeepen communication, we have been providing human resources training throughout theGroup by developing the knowledge and experience in various divisions

Internal audit
strengthening◆ The frequency and content of audits has been enhanced through cooperation with eachdepartment within the Governance Division.

Studies with a business
optimization focus◆ Effectiveness of the governance is one of the important decision-making criteria when
considering business portfolio◆ We are seeking to achieve an appropriate balance so that the Group’s governancecapabilities match the business domains

4

5

41｜2019.5.16

Group Governance Framework Enhancement Measures: Summary of FY2019 and Initiatives in FY2020
FY2019FY2020Introduced measures to enhance governance

Establish, further develop, and increase efficiency

Governance Enhancement
Measures(1)(2)

Summary of FY2019

Enhancement of framework for 
deliberation and reporting ofgovernance-related mattersImprovement of functions ofmanagement divisions andtheir collaboration with
operating divisions


Initiatives in FY2020

Development of group governance reporting
system, etc. (establish rules)
Holding of Governance Deliberation Council (April, October, and February)
Operate plan for the conduct of governance andprogress reports

Introduction of new risk management system(3) Improvement of humanresources training andencouragement of active
interaction






(4) Internal audit strengthening






(5) Studies with a business
optimization focus
42｜2019.5.16

Continuous holding of Governance Deliberation
CouncilReport on performance of operations, and review
the flow of the plan for the conduct of governanceand progress reports
Select the locations for priority support and build a
support system
Enhance overseas regional managementcompanies
Operation of the new risk management system

Hold governance training for executives of theGroup (290 people)
Implement measures to improve communication at 
all levels
Compliance awareness surveys(May and December)Encouragement of active interaction(8 employees from the Company to the Group
companies, and 7 employees from the Group
companies to the Company)

Continue governance training for new executivesof the Group
Promote to improve communication
Continue the compliance awareness surveys(twice)Continue the encouragement of active interaction(approx. 20 employees)

Change the cycle from once every 5 - 6 years to 2 yearsIntroduce governance audits (120 locations)
Implement quality audits (76 locations)
Increase the number of auditors

2nd year in one cycle
Continue the governance audits (120 locations)and quality audits (80 locations)
Further increase the number of auditors

Start segmentation of the Group companies fromthe perspective of governanceStart reorganization of some companies

Preventive measures of the Matters of Non-Conforming Products
Main causes of the shipment of non-conforming products

Preventive measures(Restructuring Measures of the Governance Framework
for Quality Control in the Group)◆Inadequate framework for exerting influence on productdevelopment and order receiving processes at order
receiving stage◆Attitude excessively prioritizing "order receiving" and"delivery date“◆Order received and mass production that the specifications
exceeding manufacturing capability◆Insufficient framework of quality assurance system◆Pressure on quality assurance departments from otherdepartments◆Low awareness of compliance with specifications◆Arrogance in thinking that quality control is being achieved◆Low sensitivity to risk in relation to quality issues

1) Implementation of a front loading system fororder receiving

2) Enhancement of the framework and authority ofthe quality control department

3) Expansion of quality training

4) Promoting automated inspection equipment◆Insufficient business resources(insufficient inspectors, inspection equipment, etc.)

5) Enhancement of quality audits◆Audit procedures that has become a mere facade6) Utilization of outside consultants

43｜2019.5.16

Preventive measures of the Matters of Non-Conforming Products: Summary of FY2019 and Initiatives in FY2020
Sharing quality issues in the entire Group and implement to promote measures
Preventive measures

Summary of FY2019(1) Implementation ofa front loading
system (FLS)(2) Enhancement of theframework andauthority of thequality control
department

(3) Expansion of quality
training

Initiatives in FY2020

Apply the improvement for the order receiving systemto the Group
Improve the order receiving system focus on 6 affected
locations (utilize quality guidance meetings led byoutside consultants)
Reorganize at each company and define rules⇒ Confirmation of statusDefinition and dissemination of the basic quality rules
Provide quality leader training (17 times, 260
employees)
Holding meetings for person in charge of quality
assurance (3 times)(4) Promoting automated 
inspection equipment (5) Enhancement ofquality audits

44｜2019.5.16

Accelerate improvement of the order receiving
system in locations other than the 6 affected
locations (utilize quality guidance meetings led byoutside consultants)
Confirm the effectiveness and provide support forreorganization and rule definition in the quality audits
Confirm the independence of the quality control
division in small locations
Dissemination of the basic quality rules again and tocontinue the training
Provide support for quality improvement at overseas
locations (including Asia, Europe and the U.S. andthe methods of utilizing automation data)
Holding meetings for person in charge of quality
assurance utilizing case studies (3 times)

Formulate a three-year plan at each company
Promote automation

Periodically check and promote the automation plan
Sharing information of the automation of inspection
equipment

Commence audits once every 2 years (76 locations)
Increase the number of auditors



Quality audits in 80 locations (40 locations each inJapan and overseas)
In the second year of the once every 2 year cycle,
increase the number of quality auditors to acceleratequality audits(6) Utilization of outside
consultantsContinue to "improve quality control"

Hold quality guidance meetings (30 times) focus on
preventive measures at the 6 affected locations

Begin to provide support for the improvement ofquality control in locations other than the 6 affected
locations (twice a month, a total of 24 times)

Promoting Automated Inspection Equipment
Initially, promoting automated inspection equipment at overseas locations had planned to implement after
the three-year inspection equipment automation plan.
However, we will also proceed with automation at overseas locations as much as possible and aim toreach the target early, by the end of FY2021.
Unit (set)Trends in the Number of Devices for Automated Inspection (Plan)

Final automation total number (6,303 set)

6,000

5,403

4,000

3,484

2,000

1,372
655

0
End of Dec. 2018
(Result)

End of FY2019(Result)

End of FY2020(Plan)End of FY2021(Plan)

Examples of measures for automation and addition of data transfer functions related to cement products
45｜2019.5.16

For further information, please contact at:

Mitsubishi Materials Corporation
IR Dept., Finance & Accounting Dept.,
Corporate Strategy Div.
3-2-3, Marunouchi, Chiyoda-ku, Tokyo 100-8117 Japan
E-mail: ml-mmcir@mmc.co.jp
URL: http://www.mmc.co.jp/corporate/ja/index.html

These projected performance figures are based on information available to the Company’s
management as of the day for releasing this material.
There are many uncertain or risk factors inherent in projections, and there might be cases inwhich actual results materially differ from projections of this material.
Mitsubishi Materials Corporation prohibits unauthorized reproduction of the text, photos,
maps, or other materials on this website.
The Company holds the exclusive copyright to the information appearing on this website.
46｜2019.5.16

Note

47｜2019.5.16