Consolidated Financial Results for the Six Months Ended September 30, 2019
(Japanese Accounting Standards)
November 7, 2019
Tokyo Stock Exchange
http://www.mmc.co.jp/

Name of Listed Company: Mitsubishi Materials Corporation
Listing:
Stock Code:
5711
URL:
Representative: Naoki Ono, Chief Executive Officer
Contact:
Nobuyuki Suzuki, General Manager, Corporate Communications Dept., General Affiars Dept.,
Human Resources & General Affairs Div.
Tel: +81-3-5252-5206
Scheduled filing date of Quarterly Report:
November 7, 2019
Scheduled date of start of dividend payment:
December 3, 2019
Supplementary materials for the quarterly financial results: Yes
Investor conference for the quarterly financial results:
Yes (For Institutional Investors)(Amounts of less than million yen are omitted.)

1. Results of the first six months ended September 30, 2019 (From April 1, 2019 to September 30, 2019)(1) Consolidated Results of Operations (cumulative)(Figures in percentages denote the year-on-year change.)
Net salesFirst six months ended September 30,
2019
First six months ended September 30,
2018(Note) Comprehensive income:Operating profit

Net income
attributable toowners of parent

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen%

748,400-12.5

16,978-38.5

27,242

-17.6

4,511

-69.6

855,268

17.9

27,594-24.4

33,067-16.4

14,849-26.3

The first six months ended September 30, 2019: -9,715 million yen (–%)
The first six months ended September 30, 2018: 6,648 million yen (-78.2%)

Net income
per share

Diluted net income
per share
YenFirst six months ended September 30,
2019
First six months ended September 30,
2018

Yen

34.46

–

113.39–(2) Consolidated Financial Position
Total assets
As of September 30, 2019
As of March 31, 2019
(Reference) Shareholders’ Equity:

Shareholders’equity ratio

Net assets

Million yen

Million yen%

1,944,479
1,938,270

699,590
723,337

31.8
32.7

As of September 30, 2019: 617,796 million yen

As of March 31, 2019: 633,582 million yen

2. Dividend Payments
Dividends per share(Record date)

First quarter

Second quarter

Yen

Third quarter

Yen

Year ended March 31, 2019

–

40.00

Year ending March 31, 2020

–

40.00

Year-end

Yen

Year ending March 31, 2020 (Forecast)

Annual
Yen

Yen

–

40.00

80.00

–

40.00

80.00

(Note) Revision of dividend forecast published most recently: No

3. Consolidated Earnings Forecast (From April 1, 2019 to March 31, 2020)(Figures in percentages denote the year-on-year change.)

Net salesYear ending March 31,
2020

Operating profit

Net income
attributable toowners of parent

Ordinary income

Net income
per share

Million yen%

Million yen%

Million yen%

Million yen%

Yen

1,530,000-8.0

31,000-15.9

42,000-17.1

10,000

669.9

76.37

(Note) Revision to forecast published most recently: Yes

* Notes(1) Significant changes of subsidiaries during the term under review (changes in specific subsidiaries accompanied by achange in the scope of consolidation):
None(2) Application of specific accounting treatment:

Yes(Note) For details, please see “(4) Notes to consolidated quarterly financial statements (Application of special accounting
treatment in the preparation of the quarterly consolidated financial statements)” under “2. Consolidated Financial
Statements and Key Notes” on page 13.

(3) Changes in accounting policies, changes of accounting estimates and restatement(i)
Changes in accounting policies due to amendments to accounting standards:(ii) Other changes in accounting policies:(iii) Changes in accounting estimates:(iv) Restatements:

Yes
None
None
None

(4) Numbers of issued shares (common stock)(i)
Numbers of issued shares at end of terms (including treasury shares):Six months ended September 30, 2019: 131,489,535 sharesYear ended March 31, 2019:
131,489,535 shares(ii)
Numbers of treasury shares at end of terms:
Six months ended September 30, 2019:543,818 sharesYear ended March 31, 2019:538,493 shares(iii) Average number of shares issued during terms (quarterly cumulative period):
Six months ended September 30, 2019: 130,948,499 shares
Six months ended September 30, 2018: 130,959,327 shares* This quarterly financial summaries is not subject to a quarterly review by certified public accountants or audit firms.
* Explanation about the proper use of financial forecasts and other special notes(Notes concerning forward-looking statements, etc.)
The operating results forecasts and other forward-looking statements contained in this report are based on information
currently available to the Company, as well as certain assumptions that the Company has judged to be reasonable. As
such, they do not constitute an assurance that the Company promises to achieve these projected results. Therefore, readers
are advised to note that the actual results may vary materially from the forecasts due to a variety of factors.
Please see “(3) Information on the consolidated earnings forecasts and other future forecasts” of “1. Qualitative
Information on Financial Results for the Six Months Ended September 30, 2019” on page 4 for the assumptions about
consolidated earnings forecasts.
(Procedure for obtaining supplementary information on quarterly financial results and quarterly financial briefing)
Mitsubishi Materials Corporation plans to hold a quarterly financial briefing for institutional investors on Thursday,
November 7, 2019. The materials used at this briefing are disclosed on the TDnet and the Company’s web page at thetime that the quarterly financial results are announced.

Contents
1. Qualitative Information on Financial Results for the Six Months Ended September 30, 2019................... 2(1) Details of operating results .................................................................................................................... 2(2) Details of financial position ................................................................................................................... 4(3) Information on the consolidated earnings forecasts and other future forecasts ..................................... 4
2. Consolidated Financial Statements and Key Notes ..................................................................................... 6(1) Consolidated balance sheet .................................................................................................................... 6(2) Consolidated statement of income and consolidated statements of comprehensive income ................. 8
Consolidated statement of income .......................................................................................................... 8
Consolidated statements of comprehensive income ............................................................................... 9(3) Consolidated statement of cash flows.................................................................................................. 10(4) Notes to consolidated quarterly financial statements .......................................................................... 12
Notes on assumptions for a going concern ........................................................................................... 12
Segment information............................................................................................................................. 12
Notes on significant changes in the amount of shareholders’ equity, if any ......................................... 13
Application of special accounting treatment in the preparation of the quarterly consolidated financial
statements.............................................................................................................................................. 13
Changes in accounting policies ............................................................................................................. 13
Additional information.......................................................................................................................... 13
Contingent liabilities ............................................................................................................................. 14–1–

1. Qualitative Information on Financial Results for the Six Months Ended September 30, 2019(1) Details of operating results1) Overview of operating results
During the first half of the consolidated fiscal year under review, in the Asia region, economic slowdown
continued in China and a tendency toward economic deceleration was also seen in Thailand. However,
economy showed signs of a modest recovery in Indonesia. In the United States, the economy continued to
improve steadily.
In Japan, employment and income conditions were on the road to recovery. However, exports and industrial
production appeared to slow down.
Regarding the business environment for the Mitsubishi Materials Group, declining demand in automobile
and semiconductor-related sectors and falling copper prices and weaker domestic demand for cement had anegative impact.
Under these circumstances, consolidated net sales for the first half of the year under review totaled ¥748,400
million, down 12.5% year on year. Operating profit decreased 38.5% year on year, to ¥16,978 million, andordinary income fell 17.6%, to ¥27,242 million. Meanwhile, Universal Can Corporation, which is a
consolidated subsidiary of the Company, recorded an extraordinary loss of ¥10,423 million as a loss on the
Antimonopoly Act. As a result, net income attributable to owners of parent fell 69.6%, to ¥4,511 million.
2) Overview by segments
From the first quarter of the fiscal year, the reporting segments have been changed. The details are set forthin “2. (4) Notes to consolidated quarterly financial statements (segment information).” In this regard, incomparison with the data of the same quarter of the previous year below, the numerical data obtained upon
the reclassification for the same quarter of the previous year under the changed segments is used.
(Advanced Products)

Net sales
Operating profit
Ordinary income

FY 2019 Q1-Q2
290.5
7.6
8.1

FY 2020 Q1-Q2
262.2
0.9
1.9

(Billion yen)
Increase / Decrease (%)-28.2(-9.7%)-6.6(-87.5%)-6.2(-76.4%)In the copper and copper alloy products business, both net sales and operating profit decreased as a result of afall in sales of automotive and semiconductor-related products.
In the electronics materials & components business, both net sales and operating profit decreased, reflecting
decline in sales of products such as advanced materials and electronic components and an increase in the
production costs of polycrystalline silicon products.
In the aluminum products business, both net sales and operating profit fell due to a decrease in sales ofregular cans and bottle cans for beverages and rolled and processed products such as extruded products forautomobiles and heat exchange sheet materials.
Consequently, both net sales and operating profit for the entire Advanced Products decreased year on year.
Ordinary income declined due to decrease in operating profit.

–2–

(Metalworking Solutions Business)

Net sales
Operating profit
Ordinary income

FY 2019 Q1-Q2
87.2
9.9
9.3

FY 2020 Q1-Q2
78.1
5.9
5.2

(Billion yen)
Increase / Decrease (%)-9.0(-10.4%)-3.9(-39.9%)-4.1(-44.5%)In the cemented carbide products business, both net sales and operating profit decreased as a result of decline
in sales in the Asia region, especially China.
In the sintering parts, etc. business, operating loss was reduced due to a decrease in shipping expenses despite
a fall in sales of mainstay sintering parts.
Consequently, both net sales and operating profit for the entire Metalworking Solutions business fell year on
year. Ordinary income declined due to decrease in operating profit.
(Metals Business)

Net sales
Operating profit
Ordinary income

FY 2019 Q1-Q2
386.9
4.1
8.1

FY 2020 Q1-Q2
316.5
5.6
13.7

(Billion yen)
Increase / Decrease (%)-70.3(-18.2%)
1.4(35.6%)
5.5(67.8%)In the copper business, net sales fell but operating profit rose, mainly thanks to reduced cost of smelting despite
decreased production volume due to a decline in copper quality in raw ores in addition to falling copper prices.
In the gold and other valuable metals business, both net sales and operating profit declined due to decreased
production volume of gold and other valuable metals as a result of a fall in the amount contained in raw
materials.
As a result, overall the Metal business posted year-on-year increase in operating profit despite a decline in net
sales. Ordinary income increased due to higher operating profit and dividend income.
(Cement Business)

Net sales
Operating profit
Ordinary income

FY 2019 Q1-Q2
123.4
8.2
9.0

FY 2020 Q1-Q2
119.4
6.5
7.9

(Billion yen)
Increase / Decrease (%)-3.9(-3.2%)-1.6(-20.5%)-1.0(-12.1%)

In Japan, both net sales and operating profit decreased, reflecting lower sales volumes mainly due to decline indemand both for construction work of facilities related to the Tokyo Olympic and Paralympic Games in theTokyo metropolitan area as well as the road construction work related to Shin-Meishin Expressway in the
Tokai area.
Overseas, the cost of raw materials and operation expenses such as personnel expenses increased despite a risein the volume of ready-mixed concrete sold in the United States. In Australia, both the volume and sales priceof coal fell. As a result, operating profit decreased while net sales increased.
Consequently, net sales and operating profit for the entire Cement business decreased year on year. Ordinary
income declined mainly due to decrease in operating profit.

–3–

(Others Business)
Net sales
Operating profit
Ordinary income

FY 2019 Q1-Q2
85.3
2.6
2.8

FY 2020 Q1-Q2
84.0
2.4
3.2

(Billion yen)
Increase / Decrease (%)-1.2(-1.5%)-0.2(-8.4%)
0.3(11.9%)In the energy-related business, net sales and operating profit increased, reflecting higher sales in nuclear
energy-related business.
In the environment recycling business, net sales increased but operating profit decreased, reflecting higher
operational costs in addition to decline in the unit sales price of valuables, which offset increased sales due tohigher volumes of "E-waste" (used electronics and electrical products) and incineration ash processing.
In the Others business, excluding the energy-related business and the environmental recycling business, net
sales and operating profit decreased.
In the Others business overall, both net sales and operating profit decreased year on year. Ordinary incomerose, reflecting an increase in share of profit entities accounted for using equity method.

(2) Details of financial position
Total assets at the end of the second quarter of the consolidated fiscal year under review stood at ¥1,944.4 billion,up ¥6.2 billion from the end of the previous consolidated fiscal year. This result was mainly due to an increase ininventories, which more than offset a decrease in cash and deposits.
Total liabilities were ¥1,244.8 billion, an increase of ¥29.9 billion from the end of the previous consolidated fiscal
year. This was mainly due to an increase in commercial papers.
The status of cash flow and factors contributing to these amounts in each category for the first six months of the
fiscal year under review are as follows:(Cash Flow from Operating Activities)
Net cash provided by operating activities totaled ¥9.6 billion (a decrease of ¥3.4 billion from the first half of theprevious fiscal year) mainly because of the posting of income before income taxes.
(Cash Flow from Investing Activities)
Net cash used in investing activities totaled ¥46.3 billion (an increase of ¥11.4 billion from the first half of theprevious fiscal year) chiefly attributable to purchase of property, plant and equipment.
(Cash Flow from Financing Activities)
Net cash provided by financing activities totaled ¥22.3 billion (an increase of ¥2.7 billion from the first half of theprevious fiscal year) mainly as a result of raising the ¥36.6 billion cash used by operating activities and investing
activities through commercial paper.
As a result of adding a net increase (decrease) in cash and cash equivalents mainly due to the effect of the exchange
rate changes to the above, cash and cash equivalents at the end of the second quarter under review stood at ¥83.1
billion (down ¥16.4 billion from the end of the previous fiscal year).

(3) Information on the consolidated earnings forecasts and other future forecasts
In the business of the Advanced Products and Metalworking Solutions businesses, demand is decreasing for thecopper & copper alloy, electronic materials & components, aluminum products, and cemented carbide products
mainly due to the slowdown in the growth of the Chinese economy caused by the U.S.-China trade friction. As a–4–

result, sales are expected to decline from the previous forecast. Therefore, the consolidated earnings forecast for
the fiscal year ending March 31, 2020, has been revised from the forecast announced on August 7, 2019 as
below.
Revisions to Consolidated Earnings Forecasts for the fiscal year ending March 31, 2020
(from April 1, 2019 to March 31, 2020)

Net sales
Operating profit
Ordinary income
Net income attributableto owners of parent

Previous forecast
1,700.0
51.0
62.0

Current forecast
1,530.0
31.0
42.0

30.0

10.0

(Billion yen)
Increase / Decrease (%)-10.0%-39.2%-32.3%-66.7%(Note) The above forecast has been prepared on assumed economic conditions, market trends, and other factors as of the date of thisannouncement, and the results may differ from the forecasts due to various factors arising in the future.

–5–

2. Consolidated Financial Statements and Key Notes(1) Consolidated balance sheet
As of March 31, 2019
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
OthersAllowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Machinery and equipment, net
Land, net
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
OthersAllowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets–6–(Million yen)
As of September 30, 2019108,648248,220
92,452
108,293
134,825
220,108(2,900)91,415
234,001
101,386
128,980
129,902
241,884(2,758)909,647

924,811229,123
235,664
222,627

232,439
233,827
232,292

687,415

698,559

40,816
17,924

37,611
16,39558,74054,006

236,572
49,983(4,088)

222,780
48,520(4,198)282,467

267,101

1,028,622

1,019,668

1,938,270

1,944,479

As of March 31, 2019
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Commercial papers
Income taxes payable
Provision
Gold payable
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Provision for environmental measures
Other provisions
Net defined benefit liability
Other(Million yen)
As of September 30, 2019

147,566
180,100
5,000
7,869
14,931
253,918
118,623

125,694
175,375
50,0007,641
13,841
280,137
111,039

728,011763,729

50,000259,667
40,4273,468
50,003
83,35360,000244,797
37,337
3,099
49,33586,588486,921481,159

1,214,933

1,244,888

119,457
92,393352,932(2,123)

119,457
92,393352,421(2,139)562,659

562,133

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans

51,220124
33,023(5,828)(7,617)42,234327
32,961(12,614)(7,246)

Total accumulated other comprehensive income

70,922

55,66289,754

81,794

Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity

Non-controlling interests
Total net assets
Total liabilities and net assets–7–723,337

699,590

1,938,270

1,944,479

(2) Consolidated statement of income and consolidated statements of comprehensive income
Consolidated statement of income
Consolidated first six months

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating profit
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodRent income on non-current assets
Other
Total non-operating profit
Non-operating expenses
Interest expenses
Settlement expenses of remaining business in mines
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on sales of non-current assets
Gain on liquidation of subsidiaries and associates
Other
Total extraordinary income
Extraordinary losses
Loss on the Antimonopoly Act
Loss on valuation of investment securities
Impairment loss
Other
Total extraordinary losses
Income before income taxes
Income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent(Million yen)
Six Months Ended
September 30, 2018
(Apr. 1, 2018–Sep. 30, 2018)855,268
750,493
104,775
77,18027,594–8–Six Months Ended
September 30, 2019
(Apr. 1, 2019–Sep. 30, 2019)
748,400
655,585
92,81475,835
16,978

514
9,660

644
12,169

757

2,163

2,536
1,480
14,9502,594
1,582
19,155

2,378
1,604
5,495
9,477
33,067

2,498
1,942
4,450
8,891
27,242

170
328
506
–
1,005

1,878
97
0
0
1,976

–
2,779
1,539
59
4,378
29,693
9,948
19,744
4,895
14,84910,423
1,405
1,067
51
12,948
16,270
9,417
6,853
2,341
4,511

Consolidated statements of comprehensive income
Consolidated first six months(Million yen)
Six Months Ended
September 30, 2018
(Apr. 1, 2018–Sep. 30, 2018)

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests–9–

Six Months Ended
September 30, 2019
(Apr. 1, 2019–Sep. 30, 2019)19,744

6,853(23,951)(2,316)
12,901875(9,019)1,021(8,388)
343

(604)

(525)

(13,096)(16,568)

6,648(9,715)(1,959)(10,275)

8,607

559

(3) Consolidated statement of cash flows(Million yen)
Six Months Ended
September 30, 2018
(Apr. 1, 2018–Sep. 30, 2018)
Cash flows from operating activities
Income before income taxes
Depreciation
Increase (decrease) in provision for environmental
measures
Increase (decrease) in provision
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Share of (profit) loss of entities accounted for using
equity method
Loss (gain) on sales of property, plant and equipment
Loss on the Antimonopoly Act
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts receivabletrade
Decrease (increase) in inventories
Proceeds from sales of gold bullion
Purchase of gold bullion
Increase (decrease) in notes and accounts payabletrade
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid) refund
Loss on non-conforming products paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from liquidation of subsidiaries andassociates
Payments of loans receivableCollection of loans receivable
Proceeds from sales of shares of subsidiaries
resulting in change in scope of consolidation
Other
Net cash provided by (used in) investing activities– 10 –Six Months Ended
September 30, 2019
(Apr. 1, 2019–Sep. 30, 2019)29,69329,531

16,27031,980(1,401)(3,090)

(259)
(766)
(10,175)
2,378(1,590)(951)(12,814)
2,498

(757)

(2,163)

(287)
–
(171)
2,779

(103)
10,423(1,857)
1,405

4,265

12,129(27,111)52,405(52,230)(27,632)
52,400(52,286)(17,520)(18,589)

7,979
18,352
11,462(2,356)(12,926)(1,430)13,101

705
6,735
14,617(2,483)(9,203)–
9,665(36,980)618(1,416)344(47,575)
435(1,576)
3,299

2,160

0

(1,339)572(2,147)
176

–

68

1,106
(34,935)966(46,352)

(Million yen)
Six Months Ended
September 30, 2018
(Apr. 1, 2018–Sep. 30, 2018)
Cash flows from financing activities
Net increase (decrease) in short-term loans
payableProceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Increase (decrease) in commercial papers
Purchase of treasury shares
Cash dividends paid
Dividends paid to non-controlling interests
Other
Net cash provided by (used in) financing
activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at the beginning of
periodIncrease (decrease) in cash and cash equivalents
resulting from change of scope of consolidation
Cash and cash equivalents at the end of period– 11 –Six Months Ended
September 30, 2019
(Apr. 1, 2019–Sep. 30, 2019)(2,591)

8,458

26,254(20,141)–(25,000)
50,000(21)(6,548)(1,259)(1,089)7,750(33,973)
10,000–45,000(15)(5,238)(8,753)(849)

19,602

22,3792,459(2,223)

228(16,530)

87,35599,672

4,624

52

92,20883,193

(4) Notes to consolidated quarterly financial statements
Notes on assumptions for a going concern
N/A

Segment information[Segment Information]
I. For the six months ended September 30, 2018 (from April 1, 2018 to September 30, 2018)
Sales and income of reporting segments(Million yen)

Advanced
Products

Metalworking
Solutions
Business

MetalsBusiness

CementBusiness

OthersBusiness

Total

Amountindicated intheAdjustment
consolidated
amountquarterlystatements ofincomeNet sales
283,386

81,199300,990

121,655

68,036855,268–(2) Within consolidated group

7,140

6,075

85,923

1,746

17,330118,216(118,216)

–

Total

290,527

87,274

386,914

123,401

85,366

973,485(118,216)

855,268

8,174

9,378

8,173

9,033

2,885

37,645(4,578)33,067(1) Outside customers

Segment income

855,268

Notes: 1. “Others business” includes nuclear energy-related services, environmental and recycling-related business, realestate business, and engineering-related services.
2. “Adjustment amount” of segment income of -¥4,578 million includes the elimination of intersegment transactionsof ¥89 million and corporate expenses of -¥4,667 million which are not distributed to the reporting segments.
Corporate expenses consist mainly of general and administrative expenses that do not belong to the reporting
segments, basic experiment and research expenses, and financial revenue and expenses.
3. Segment income has been adjusted together with ordinary income on the consolidated quarterly statements ofincome.

II. For the six months ended September 30, 2019 (from April 1, 2019 to September 30, 2019)
1. Sales and income of reporting segments(Million yen)

Advanced
Products

Metalworking
Solutions
Business

MetalsBusiness

CementBusiness

OthersBusiness

Total

Amountindicated intheAdjustment
consolidated
amountquarterlystatements ofincomeNet sales
256,701

72,276

239,560

117,915

61,947

748,400–(2) Within consolidated group

5,546

5,904

77,027

1,559

22,143112,180(112,180)

–

Total

262,247

78,180316,588

119,474

84,090860,580(112,180)

748,400

1,931

5,208

13,716

7,938

3,230

32,025(4,782)

27,242(1) Outside customers

Segment income

748,400

Notes: 1. “Others business” includes nuclear energy-related services, environmental and recycling-related business, andengineering-related services.
2. “Adjustment amount” of segment income of -¥4,782 million includes the elimination of intersegment transactionsof -¥3 million and corporate expenses of -¥4,779 million which are not distributed to the reporting segments.
Corporate expenses consist mainly of general and administrative expenses that do not belong to the reporting
segments, basic experiment and research expenses, and financial revenue and expenses.
3. Segment income has been adjusted together with ordinary income on the consolidated quarterly statements ofincome.

– 12 –

2. Matters regarding the change of the reporting segments, among other changes
At the meeting of the Board of Directors held on February 12, 2019, the Company resolved to partially change
the organization of business divisions. This change was made on April 1, 2019.
The coal-related business in the “Others business” has changed to the “Cement Business,” in which coal isused as thermal energy, to achieve more efficient business management.
In this regard, the segment information for the six months of the previous consolidated fiscal year that is
disclosed herein is made according to the changed method of segmentation.

Notes on significant changes in the amount of shareholders’ equity, if any
N/AApplication of special accounting treatment in the preparation of the quarterly consolidated
financial statements
The Company calculates tax expenses by rationally assuming an effective tax rate after applying tax effectaccounting to income before income taxes for the consolidated fiscal year, including the second quarter underreview, and multiplying income before income taxes for the first half by the estimated effective tax rate.

Changes in accounting policies(Application of IFRS 16 “Leases”)
Foreign subsidiaries that apply IFRS started applying IFRS 16 “Leases” from the first quarter of the consolidated
fiscal year under review. The impact of the application of this accounting standard on the consolidated financial
statements for the first six months of the fiscal year under review was insignificant.

Additional information(Absorption-type merger of the consolidated subsidiary)
The Company resolved at a meeting of its Board of Directors held on July 31, 2019 to conduct an absorptiontype merger of Mitsubishi Shindoh Co., Ltd., a consolidated subsidiary of the Company with April 1, 2020 as theeffective date and concluded a merger agreement on July 31, 2019.
1. Overview of transaction(1) Name and business of acquired enterprise
Name of acquired enterprise:
Mitsubishi Shindoh Co., Ltd.
Business of acquired enterprise: Rolling, extruding and casting of copper and copper alloys and theprocessing and sales thereof(2) Date of business combination
April 1, 2020 (Plan)(3) Legal form of business combination
Absorption-type merger in which the Company shall be the surviving company and Mitsubishi Shindoh Co.,
Ltd. shall be dissolved. .
(4) Name of the companies after the business combination
Mitsubishi Materials Corporation(5) Purpose of business combination
The purpose of the merger is to cooperatively operate the Group’s management resources in the Copper &Copper Alloy business in order to invest more actively and flexibly and to develop products promptly thatmeet market needs and to improve and enhance the production and sales systems in Japan as well as
overseas.

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2. Overview of accounting procedures to implement
The Company plans to account processing for the merger as a transaction under common control in accordancewith the Accounting Standard for Business Combinations (ASBJ Statement No. 21, January 16, 2019) and
Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures (ASBJ Guidance No. 10, January 16, 2019).

Contingent liabilities(Matters concerning taxation in Indonesia)
Previous consolidated fiscal year (As of March 31, 2019)
On December 30, 2014, PT. Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafter the“PTS”) received a notice of reassessment in an amount of US$47 million (¥5,312 million based on the exchange
rate at the end of the previous consolidated fiscal year) from the Indonesian National Tax Authority, regarding
the sales transaction pricing of the PTS for the year ended December 31, 2009. On January 28, 2015, the PTS
made a provisional deposit of US$14 million (¥1,553 million) as a part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on March 25, 2015,
because this assessment, which claimed there was a sales shortage on the part of the PTS based on a comparisonof the profit margin ratio with other companies selected by the Indonesian National Tax Authority, was highly
unreasonable and found to be unacceptable by the Company and the PTS.
The written objection submitted by the PTS on March 25, 2015 was dismissed by the Indonesian National Tax
Authority on March 16, 2016. Therefore, the PTS filed a complaint to the Tax Court in Indonesia on June 6,2016 to present the fairness of the view of the Company and the PTS.
On November 29, 2017, the PTS also received a notice of reassessment in an amount of US$22 million (¥2,533
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2012. On December 27, 2017, the PTS made a provisional
deposit of US$6 million (¥698 million) as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2018,
because this assessment was a view that unilaterally negated the basis for recording gains and losses on hedging,etc. of the PTS and found to be unacceptable by the Company and the PTS.
The written objection submitted by the PTS on February 27, 2018 was dismissed by the Indonesian National Tax
Authority on February 25, 2019. Therefore, the PTS filed a complaint to the Tax Court in Indonesia on May 17,
2019 to present the fairness of the view of the Company and the PTS.
On December 5, 2018, the PTS also received a notice of reassessment in an amount of US$15 million (¥1,688
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2014. On December 27, 2018, the PTS made a provisional
deposit of US$5 million (¥651 million) as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2019,because this assessment was a view that unilaterally negated the basis for recording gains and losses on hedging,etc. of the PTS and found to be unacceptable by the Company and the PTS.
The total amount for additional collection being disputed by the PTS, including amounts for the fiscal years
described above as well as amounts for the fiscal year ended December 31, 2010, the fiscal year ended
December 31 2011, the fiscal year ended December 31, 2013 and the fiscal year ended December 31, 2015 is
US$101 million (¥11,309 million).
Second quarter of the consolidated fiscal year under review (As of September 30, 2019)
On December 30, 2014, PT. Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafter the“PTS”) received a notice of reassessment in an amount of US$47 million (¥5,165 million based on the exchange– 14 –

rate at the end of the second quarter of the consolidated fiscal year under review) from the Indonesian National
Tax Authority, regarding the sales transaction pricing of the PTS for the year ended December 31, 2009. On
January 28, 2015, the PTS made a provisional deposit of US$14 million (¥1,510 million) as a part of theadditional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on March 25, 2015,
because this assessment, which claimed there was a sales shortage on the part of the PTS based on a comparisonof the profit margin ratio with other companies selected by the Indonesian National Tax Authority, was highly
unreasonable and found to be unacceptable by the Company and the PTS.
The written objection submitted by the PTS on March 25, 2015 was dismissed by the Indonesian National Tax
Authority on March 16, 2016. Therefore, the PTS filed a complaint to the Tax Court in Indonesia on June 6,2016 to present the fairness of the view of the Company and the PTS.
On November 29, 2017, the PTS also received a notice of reassessment in an amount of US$22 million (¥2,463
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2012. On December 27, 2017, the PTS made a provisional
deposit of US$6 million (¥679 million) as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2018,
because this assessment was a view that unilaterally negated the basis for recording gains and losses on hedging,etc. of the PTS and found to be unacceptable by the Company and the PTS.
The written objection submitted by the PTS on February 27, 2018 was dismissed by the Indonesian National Tax
Authority on February 25, 2019. Therefore, the PTS filed a complaint to the Tax Court in Indonesia on May 17,
2019 to present the fairness of the view of the Company and the PTS.
On December 5, 2018, the PTS also received a notice of reassessment in an amount of US$15 million (¥1,641
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2014. On December 27, 2018, the PTS made a provisional
deposit of US$5 million (¥633 million) as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2019,because this assessment was a view that unilaterally negated the basis for recording gains and losses on hedging,etc. of the PTS and found to be unacceptable by the Company and the PTS.
The total amount for additional collection being disputed by the PTS, including amounts for the fiscal years
described above as well as amounts for the fiscal year ended December 31, 2010, the fiscal year ended
December 31 2011, the fiscal year ended December 31, 2013 and the fiscal year ended December 31, 2015 is
US$101 million (¥10,996 million).
(Matters concerning Non-Conforming Products)
Previous consolidated fiscal year (As of March 31, 2019)
Mitsubishi Materials Corporation discovered that the Company’s consolidated subsidiaries had delivered
products, etc. that deviated from customer standards or internal company specifications due to misconduct,
including the rewriting of inspection records data and the insufficient testing, concerning some of the products
manufactured and sold in the past.
Based on the above fact, some of the aforementioned subsidiaries received notification of revocation of their JIS
certification and ISO certifications from the accrediting agencies.
Depending on the progress of the above mentioned issues, the Company’s consolidated business results may beaffected, due to compensate customers and other losses. However, such amounts which are currently difficult toestimate are not reflected in the consolidated financial statements.
Second quarter of the consolidated fiscal year under review (As of September 30, 2019)– 15 –

Mitsubishi Materials Corporation discovered that the Company’s consolidated subsidiaries had delivered
products, etc. that deviated from customer standards or internal company specifications due to misconduct,
including the rewriting of inspection records data and the insufficient testing, concerning some of the products
manufactured and sold in the past.
Based on the above fact, some of the aforementioned subsidiaries received notification of revocation of their JIS
certification and ISO certifications from the accrediting agencies.
Depending on the progress of the above mentioned issues, the Company’s consolidated business results may beaffected, due to compensate customers and other losses. However, such amounts which are currently difficult toestimate are not reflected in the quarterly consolidated financial statements.

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