Mitsubishi Materials Corporation
Investor Conference Material

November 12, 2019
Naoki Ono, Chief Executive Officer
Mitsubishi Materials Corporation

1｜2019.11.12

Contents

1. Performance Summary (P.4 - 6)
2. Progress on the Medium-Term Management Strategy (P.8 - 13)
3. Initiatives by Segment (P.15 - 35)
4. Issues and Enhancement of Group Governance (P.37 - 43)

2｜2019.11.12

Contents

1. Performance Summary (P.4 - 6)
2. Progress on the Medium-Term Management Strategy (P.8 - 13)
3. Initiatives by Segment (P.15 - 35)
4. Issues and Enhancement of Group Governance (P.37 - 43)

3｜2019.11.12

FY2020 1st Half Result (Comparison with the Previous Year Result)Comparison
with thePreviousYear
ResultNet sales: Decreased overall due to a decline in all the businesses.
Operating profit : Decreased overall as a result of a decline in all the businesses other than
Metal business.
Ordinary income : Decreased due to a fall in operating profit despite an increase in dividend income
and so on.
Net income*: Decreased due to an increase in extraordinary loss, in addition to a fallin ordinary income.
Dividend: Previous forecast remains unchanged.

(¥ billions)

FY2019
1st Half Result（a）

FY2020
1st Half Result（b）

Difference（b）-（a）

Net sales

855.2

748.4

-106.8Operating profit

27.5

16.9

-10.6

Ordinary income

33.0

27.2

-5.8

Net income*

14.8

4.5

-10.3

113.3934.46-78.93

Dividend per share (yen)

40

40

-

Exchange rate USD(yen/$)

110

109

-2

294¢/lb270¢/lb-24¢/lb

Net income per share (yen)Copper price(LME)
4｜2019.11.12* Net income attributable to owners of parent

FY2020 1st Half Result (Comparison with the Previous 1st Half Forecast)Comparison
with thePrevious
1st Half
Forecast

Net sales: Decreased overall due to a decline in all the businesses.
Operating profit : Decreased overall as a result of a decline in all the businesses other than
Metal business.
Ordinary income : Increased due to an increase in dividend income and other items despite a fall in
operating profit.
Net income*: Decreased mainly due to an increase in income taxes despite an increase in ordinary
income.
Dividend: Previous forecast remains unchanged.

(¥ billions)

Previous 1st Half
Forecast (a)(Announced on Aug. 7)

FY2020
1st Half
Result (b)Difference(b)-(a)Net sales

830.0

748.4

-81.6

Operating profit

23.0

16.9

-6.1

Ordinary income

24.0

27.2

3.2

Net income*

5.0

4.5

-5.0

38.18

34.46

-3.72

40

40

－

110

109

-1

290¢/lb270¢/lb-20¢/lb

Net income per share (yen)Dividend per share (yen)Exchange rate USD (yen / $)Copper price (LME)
5｜2019.11.12* Net income attributable to owners of parent

FY2020 Full Year Forecast
Comparison
with thePreviousYear
ResultNet sales: Decrease overall due to a decline expected in all the businesses.
Operating profit : Decrease overall as a result of a decline in all the businesses other than
Metal business.
Ordinary income : Decrease because a fall in operating profit are expected.
Net income*: Decrease because a fall in ordinary income are expected.

Dividend: Previous forecast remains unchanged.

(¥ billions)

FY2020Previous Forecast(a)(Announced on May 13)

Net sales

FY2020
Forecast (b)Difference(b)-(a)1700.01530.0-170.0Operating profit

51.0

31.0

-20.0

Ordinary income

62.0

42.0

-20.0

Net income*

30.0

10.0

-20.0

229.0876.37-152.71

80

80

－

110

108

-2

290¢/lb

268¢/lb-22¢/lb

Net income per share (yen)Dividend per share (yen)Exchange rate USD (yen / $)Copper price (LME)
6｜2019.11.12* Net income attributable to owners of parent

Contents

1. Performance Summary (P.4 - 6)
2. Progress on the Medium-Term Management Strategy (P.8 - 13)
3. Initiatives by Segment (P.15 - 35)
4. Issues and Enhancement of Group Governance (P.37 - 43)

7｜2019.11.12

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｜2019.11.12

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 andinvestment plan for upcoming three years
once a year

Operating CF

Investing CF

Financing CF

200.0

4.5～5.0%

140.1

150.0

118.6

108.0

90.0
50.7

3.5%

50.0

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

0.0

2.2%

-50.0
-100.0FY2018Result

FY2019ResultFY2020
Forecast

FY2020Medium-termManagement
Stragtegy

(FCF)

-11.0

-15.7

-26.5

-29.9
-42.3
-42.2

-7.0
-47.6

-83.9

-86.2

-100.0-120.4-150.0FY2017
Result

115.5

100.0

4.1%

2.6%

Growth strategies: No major changes
Investment plan: No major changes［Unit: ¥ billions］

Free Cash Flow

ROA

(65.7)(88.7)(88.9)(-33.2)(53.9)(-10.0)

15/3

16/3

17/3

18/3

19/3

20/3
Forecast◆ Optimization of business portfolio- New establishment of the “Advanced
Products Company” (2018)- Absorption-type Merger of theconsolidated subsidiary Mitsubishi
Shindoh Co., Ltd. (2019)- Sales of all shares in Kobelco & Materials
Copper Tube Co., Ltd. (2019)

ROE

7.0～8.0%9｜2019.11.12

Shareholder's equity
Net D/E Ratio(times)

800.0

4.8%

600.0

0.2%

FY2018Result682.4

FY2019Result550.7
537.7 555.2
466.1

633.5

617.8

3.5
3

386.9

400.0

1.6%

428.0

386.1

412.0 2.5
2
1.5

200.0
FY2017
ResultNet Interest-Bearing Debt4

621.2

5.3%

◆ Next Medium-term Management
Strategy
Currently being prepared(scheduled for announcement at the endof the FY2020)

Shareholder’s equity, Net Interest-Bearing Debt
and Net D/E Ratio

FY2020
Forecast

FY2020Medium-termManagement
Stragtegy

1.0

1

0.8
0.6

0.6

0.6

0.7

17/3

18/3

19/3

20/3
Forecast

0.0

0.5
0

15/3

16/3

Enhancement Business CompetitivenessEstablishment of the Smart Factory Promotion Center
On September 1, 2019, the Smart Factory Promotion Center was established in Omiya-ku, Saitama.
(Press release issued on September 2, 2019)
Item

Contents

PurposeTo promote further digitization and automation of
production sites

Business
Environment

Diversification of customer needs
Labor shortages in Japan
AI-based fault prediction for critical equipment
Development of inspection equipment for
products with complex shapes using robots andimage processing technologies

Initiatives toIssuesBuilding of data collection infrastructure
concerning information on objects and peopleusing RFID
Improving safety through AI-based analysis of inplant camera images
Automation of exterior inspections by applying AI
to image analysis
AI-based plant operating support
Active exchanges with universities and otheroutside organizations

10｜2019.11.12

Roll out acrossthe organization

Support for turning production sites into smart factories- Automation of inspection and sorting through robots and image
processing- Line automation through collaborative robots- Improving operating procedures through visualization and analysis
of human behavior- AI-based equipment fault prediction and plant operating support, etc.

AI

Smart Factory Promotion Center- Development of AI-focused humanresources and improving AI literacy- Enhancing technological capabilities in AI
and mechatronics- Demonstration testing and development of
in-house technologies- Strengthening coordination with universities
and other outside organizations

Key Measures to Strengthen and Restructure the Business(from April 2017)Black: FY2018 and FY2019
Red: FY2020

Segment

Results

Advanced
Products

・“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
・To begin collaboration with Denka Company Limited for full-fledged mass-production of ceramic insulated circuit substrates withhigh thermal conductivity for eco-friendly vehicles
・Joint development with Mitsubishi Shindoh Co., Ltd. regarding corrosion protective plating technology for the terminal connectors ofaluminum 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 in conventional solder
・Development of uniformity electrodeposition coating technology for highly heat-resistant and highly insulating resin fornext-generation vehicles
・Developed compact high-performance multiband antennas for IoT devices that use cellular communications (LTE / 3G)・Aiming to become the leading global company in the industry of copper & copper alloy products through the absorption merger ofconsolidated subsidiary Mitsubishi Shindoh Co., Ltd.
・Sold all shares in Kobelco & Materials Copper Tube Co., Ltd.

Metalworking
Solutions
Business・"Central Japan Technical Center" was established・All shares in “Hitachi Metals MMC Superalloy, Ltd.” were sold・"TianJin LingYun tool Design Co., LTD. (China)" was relocated, and improved and expanded・Tungsten recycling capacity at Japan New Metals Co., Ltd. was increased 1.5 times
・"Machining Technology and Education Center in North America (United States)” was relocated, and improved and expanded・"Stuttgart Technical Center (Germany)" was established・"Queretaro Technical Center (Mexico)" was established

MetalsBusiness・"MM Metal Recycling B.V.", an E-Scrap sampling facility established in the Netherlands, went into operation

CementBusiness・Capacity of waste plastic processing at Kyushu Plant increased 1.7 times

11｜2019.11.12

Key Measures to Strengthen and Restructure the Business(from April 2017)
Profitable: FY2018 and FY2019
Unprofitable: FY2020

Segment

Results

Others Business(Environment &Energy Business)

・"KitaKyushu Ash Recycle Systems Co., Ltd.", which is engaged in the treatment of incineration fly ash, went into operation
・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
・Began operations of Wasabizawa Geothermal Power Plant
・Started construction of Appi Geothermal Power Plant
・Started demonstration testing of technology to diagnose deterioration of in-vehicle lithium-ion batteries
・Strengthened structure of business to produce biogas from food waste

Common・All shares in “Mitsubishi Materials Real Estate Corporation“ were sold・Investment in “Incubation Alliance, Inc.,” which is involved in the development and manufacture of the new carbonaceous
material, graphene
・"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
・Established Smart Factory Promotion Center to further advance the digitization and automation of production sites

12｜2019.11.12

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

Unit: yen・

Dividend
Rayout Ratio(Right Axis)

100
80
60

Dividend per share 1,000.0
150.0(Left Axis)
80 yen120.0

Dividend
Rayout Ratio(Right Axis)
Dividend per share
104.8％(Left Axis)
80 yen

40
20
0
12/3

13/3

14/3

15/3

16/3

17/3

18/3

19/3

20/3
（Forecast）

Dividend

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.

13｜2019.11.12

90.0
60.0
30.0
0.0

Contents

1. Performance Summary (P.4 - 6)
2. Progress on the Medium-Term Management Strategy (P.8 - 13)
3. Initiatives by Segment (P.15 - 35)
4. Issues and Enhancement of Group Governance (P.37 - 43)

14｜2019.11.12

Advanced Products

15｜2019.11.12

Advanced Products
History of Consolidate Earnings
800.0

20.0

18.4 18.4
570.9

600.0
536.0

400.0

Net Sales
519.0

200.0

Unit : ¥billion

18/3

15.0

19/3

22% 34%
Net sales（Outer）
34％
Ordinary income（Inner）
22％

11.9 13.2
Ordinary
incomeOperating 4.7
profit3.4

0.0

Net sales &Ordinary income
ratio by Segment *

10.0
5.0
0.0

20/3 Unit : ¥billion
Forecast*FY2019 Result
Net sales is for outside customers

FY2020◆ Copper ＆ Copper Alloy Products
Mitsubishi Shindoh Co., Ltd. experiences a decline in sales of terminal materials for automobiles due to production adjustments by automotive component
manufacturers.
The Luvata Group experiences a decline in sales of welding-related products for automotive manufacturers in China and elsewhere, and declining in sales ofconductive components for automotive and other sectors in Europe and Asia.

◆ Electronic Materials ＆ Components

Sales of products for semi-conductors and electronics decline due to decelerating growth of the smartphone market and worsening of semiconductor market
conditions.
Additionally, sales of electronic device products also decline due to worsening market conditions in China attributable to trade friction between China and theUnited States.

◆ Aluminum

Mitsubishi Aluminum Co., Ltd. experiences declining sales of heat exchanger sheet materials for automobiles and extrusion products for trucks and automobiles
due to harsh market conditions and other factors.
Universal Can Corporation expands sales with the market launch of upsized aluminum bottle cans, but due to the ongoing impact from PET bottles for coffee
beverages, sales of aluminum bottle cans decline. Similarly for regular cans, it will be necessary to limit supply quantities for multi-product supply, and lower
sales are expected.

16｜2019.11.12

Advanced Products
Medium-term Management Strategy - Progress on Key Strategies◆ Automotive Sector
Rapid shift of automobiles to EVs, automatic driving technology, and progress ofconnected technology[Major Progress in FY 2020]

Key Strategies

Measures and Plans

Progress

Copper ＆Copper Alloy
Products

Fortify the manufacturing system ofrolling business

Increase production capacity of terminalmaterials for automobiles by introducing
continuous annealing furnaces

Construction work proceeding on schedule
Construction expected to be completed
within FY2020

Electronic
Materials ＆Components

New products and sales expansion in
the next-generation vehicle market(1) Strengthen insulated substrates withhigh thermal conductivity business(2) Increase sales of solar heat-ray
shielding(3) Increase sales of thermistors andsurge absorbers(1) The expansion of facility capacity isproceeding on schedule
Focus on reducing production costs(2) Planned sales have been achieved(3) Adoption for next-generation vehicles
has expanded

Aluminum

Promotion of selection andconcentration / shift to heat exchangematerials

Although consideration for a joint venturewith Gränges was canceled, we continue
to hold discussions on future business
opportunities

Engaged in consideration in search of new
business opportunities

Terminals connectors* Customer product17｜2019.11.12

DBA substrates

Heat exchanger for
automobiles(End products)

Advanced Products
Medium-term Management Strategy - Progress on Key Strategies◆ Electronics Sector
Utilizing Big Data, expansion of IoT, AI, 5G, etc.
◆ Semiconductor Sector
Growth in demand for semiconductor manufacturing equipment and related materials
that support demand for automobiles and electronics[Major Progress in FY 2020]

Key Strategies

Measures and Plans

Progress

Electronic
Materials ＆Components[Electronics]
New products and sales expansion in
the IoT- related market

Enhance facilities to prepare for an
increase in orders receiving

Building increased production capacity in
Thailand

Copper ＆Copper Alloy
Products[Semiconductor]
Expand sealing materials business

Complete the facility expansion at
Minoshima Works
Commence an increase in production andsales expansion in FY2021

Construction work proceeding on schedule
Scheduled to begin operating within
FY2020Sensors

18｜2019.11.12

Sealing Parts

Advanced Products
Absorption-type Merger of
Mitsubishi Shindoh Co., Ltd.

◆Market Needs

July, 2019 Announcement of Mitsubishi Shindoh merger
April, 2020 Scheduled date of the merger

Higher current &Higher voltage

Computerized
control◆Positions of Copper & Copper Alloy

Product Type

Direction

Growthpromotionbusiness

Advanced
Products(Copper &Copper Alloy
Products)
Processing◆Promote growth by matchingcustomer and market needs
and the Company’s strength◆Business development inadjacent fields and global
markets

Rate of
EBITDA
growth◆Purpose of the Absorption-type Merger
To integrate Mitsubishi Shindoh into theCompany and cooperatively operate ourmanagement resources.
We will aim to become the global leading
company in the industry of copper &Manufaccopper alloy products by improving
turingour presence globally and capturing
new demand.

IoT, AI(Indicator to watch)

R＆D

CASE*

Reduction of theenvironmental impact◆Strategic Investment
Planning capex of approx. ¥30.0 billion in total from FY2021 to 2027.
To increase our production capacity by about 30% from the current
level, mainly for automobile-related products in which strong demandis expected.
Expansion of rolling business
Promoting the integration of extrusion business

Integration

Sales

Enhance supply capacity of raw materials in Sakai Plant andsales expansion of the Group companies
Strengthening and promoting the development of ourbusiness in overseas markets and downstream market

Capex

Improvement of the capability for marketing and R&D* CASE: Connected, Autonomous, Shared & Services, Electric19｜2019.11.12

Metalworking Solutions
Business

20｜2019.11.12

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

18.5

150.0

16.8

161.1

171.5
16.7

20.0
Net Sales
151.2
15.0

15.6

100.0

10.0
OperatingprofitOrdinary
6.9
income 5.0
5.9

50.0
0.0

18/3

¥billion

19/3

20/3
Forecast

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

0.0
¥billion10%*FY2019 Result
Net sales is for outside customers

FY2020◆ Cemented Carbide Products
Market environment in each region has worsened. Market environments are particularly severe in China andSoutheast Asia.
On a per-industry basis, performance is strong for aircraft and medical, but the automobile and mold & die
sectors have suffered a slowdown.
21｜2019.11.12

Metalworking Solutions BusinessMedium-term Management Strategy - Progress on Key Strategies◆ Cemented Carbide Products BusinessA global player capable of providing high value-added products and service solutions
Cemented carbide tools[Major Progress in FY 2020]

Key Strategies

Measures and Plans

Progress

Cemented
CarbideProducts

Expand technical center
networks

Plan to establish new technical centersin Germany and India

Establishment of Stuttgart Technical Center(Germany: June 2019)
Establishment of Queretaro Technical Center(Mexico: September 2019)
Now planning establishment of India (Pune)
Technical Center (during FY2020)

Cemented
carbideproducts

Promote tungsten recycling

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

Taking action to increase collection of scrap inmanufacturing plants and sales bases
Slightly over 20％(FY2019) ⇒ Nearly 30％(FY2020)

Insert22｜2019.11.12

Technical Center

Digital processing simulation(technical center)Cemented Carbide Products
Sales Trend by Industry
Aerospace

Automotive

2019

ResultProvision ofMarketing andSolutions by the
Aerospace Dept.

YoY
+1%

YoY
▲11%

YoY
▲13%

2020

FY2017

Forecast

2018

2019

Result2020

Forecast

FY201720182019

Result2020

FY20192020

Forecast

Development of industry-specific products

Relocation and expansion of Machining Technology and Education Center in the
US (from Chicago to North Carolina)
Research into demand for EVs

Establishment of a
specialized team in the US

Enhancement of capacity of tools for processing components

FY2020Establishment of technical centers (Germany, Mexico)

23｜2019.11.12

Result2019

Selection of key accounts and launch of full-scale expansion activities

Establishment of the
Chubu Japan Technical Center

Development ofa system for
improving
responsiveness

2018

Creation of synergies between Mitsubishi Hitachi Tool Engineering and Mitsubishi Materials

Establishment and promotion of
new brand, MOLDINO

M&A research

FY2018FY2017

Forecast

Establishment and promotion of new brand, DIAEDGE

M&A research

Key Activities

Basic
Activities

+8％

+8％

YoY
+6%

2018

Mold

+37％

+55％

FY 2017

MedicalEstablishment of Shizuoka Sales
OfficeRegional expansion of solutionsdelivery methods
Establishment of Global Solution
Center

Metals Business

24｜2019.11.12

Metals BusinessNet sales &Ordinary income
ratio by Segment *History of Consolidate Earnings
800.0

715.3

720.0

25.4

600.0

Net Sales
678.5

30.0

Ordinary 20.0
incomeOperating 17.3
profit
10.0
8.8

12.7
400.0
2.3
200.0

0.0
-7.1

0.0
18/3
¥billion

19/3

-10.0
20/3
Forecast¥billion

Net Sales(Outer)33%
Ordinary Income(Inner)
4%

33%

4%

*FY2019 Result
Net sales is for outside customers

FY2020◆ Mining
Expecting dividend income from copper mines of 11.7 billion yen, in line with plans at the beginning of the year

◆ Smelting
The repairs of valuable metals is improving as planned.
Seek stable operation of Naoshima Smelter and Refinery, PT. Smelting in Indonesia and Onahama Smelting and Refining,
none of which are scheduled for periodic furnace repairs this period.

25｜2019.11.12

Metals BusinessMedium-term Management Strategy - Progress on 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)[Major Progress in FY 2020]

Key Strategies

Measures and Plans

Progress

Mine

Develop new projects

For the Zafranal area, focus on the task ofacquiring environment licenses andpermits after examining the feasibility
study.
Meanwhile, start making an approach to
new projects.

The feasibility study for the Zafranal mine is generally
complete, and is currently under review. We plan to begin
procedures to apply for an environment licenses andpermits within the year.
Other new projects are also being developed to expand the
project pipeline for business continuity.

Smelting

Optimize the smelting
business

Build a new processing and collection flow
across the production locations.
Establishing a system for increasing
capacity for processing copper ore at PT.
Smelting (PTS) in Indonesia

Improvements to new processing and collection flow acrossproduction sites such as slime processing at the Naoshima
Smelter & Refinery and the recovery of tin materials at
Hosokura Metal Mining are being promoted.
Launch of increased processing at PT. Smelting iscompleted

Copperconcentrate

Mitsubishi processGold and silver scraps(E-scrap)

26｜2019.11.12

Zafranal mine (Pelu)

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 issues. 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 themutilizing 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 new income source, and wewill expand processing amount in the future.
Item

FY2020 Plan

FY2020 Progress

Naoshima Smelter &RefineryOnahama Smelting
and Refining Co., Ltd.
Iron

Concentrate lead raw Increase the amount Transportation of leadmaterials generated at of lead recovered
sediment from thetwo copper smelters,from lead raw
Naoshima Smelter &Naoshima andmaterials generated at Refinery to Onahama
Onahama (increase the copper smelters
Smelting and Refining
recovery of copper in
implemented.
lead raw materials)
Operations
concentrated at
Onahama Smelting
and Refining.
Improvements to theslime processing
process at the
Naoshima Smelter &RefineryPlan to start
construction(Plan to be completed
in FY2021)

Recover tin atPlan to start andHosokura Metal Mining complete construction
Company(operation will bestarted in FY2021)

Installation work
underway ahead of
implementation fromautumn 2020.
Installation work
underway ahead of
implementation during
FY2020

Increase palladium
Establish a system for The new line has
processing capacity at increasing capacity of been installed and is
Onahama site ofprocessing
operating according toMaterials Eco-Refining
plan
Co., Ltd.

27｜2019.11.12

Physical sorting
process

Aluminum

Copper smelting
process

Recovery of iron,stainless steel
and aluminum

Lead raw materials
Copper smelting
process

Hosokura Metal
Mining Company

Lead

Ikuno Plant

Lead raw materials
Lead smelting
process

Copper electrorefining process
Slime
processing

Lead raw materials

Tin smelting
process

Tin raw materials
NickelLead by-productproduction
process

Precious metal
process* PGM:
Platinum-group metals

BismuthPGM process *Palladium
Onahama establishment ofMaterials Eco-Refining Co., Ltd.

Tin recovery

TinCement Business

28｜2019.11.12

Cement BusinessHistory of Consolidate Earnings *1
280.0

Net Sales
235.1

21.0
19.4

24.0

198.2

140.0

Ordinary 18.0
incomeOperating
15.4
17.8
profit
15.6
12.0

70.0

6.0

210.0
192.3

Net sales &Ordinary income
ratio by Segment *2

13.4

12%

Net Sales(Outer)12%
Ordinary Income(Inner)
25%

25%
0.0

0.0
18/3
¥billion

19/3

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

FY2020◆ JapanDomestic demand for cement is as the forecast at the beginning of the year (42,500 thounsand tons, in line with FY2019)
The Company will persistently explain the necessity for sales price optimizations of cement and continue negotiations.
◆ California, USA
Aim to increase sales in the cement business under the environment of stable demand.
While competition in the ready-mixed concrete business continues to be intense, sales are expected to increase thanks tostable demand.

29｜2019.11.12

Cement BusinessMedium-term Management Strategy - Progress on Key Strategies

Kyushu Plant◆ Become a leading company in terms of efficiency in the cement industry◆ Become a local area champion overseas[Major Progress in FY2020]

Key Strategies

Measures and Plans

ProgressJapan

Establish a stable
operation system

Improving production total efficiency(Plan to increase the efficiency of
combustion burners and clinker
coolers)[Kyushu Plant]
Increased efficiency of No. 5 kiln and combustion burnercomplete (July, 2019)
Planned completion of increased efficiency of No. 3 kiln andclinker cooler (December, 2019)

Overseas

Expand the US business(Expand the ready-mixed
concrete business)

Plan to start operation at Simi Valley
plant (FY2020/1Q)

Construction of ready-mixed concrete plant was completed
and shipments commenced in August 2019

Overseas

Expand the US business(Expand the ready-mixed
concrete business)

Considering further development offacilities in the Northern California

New ready-mixed concrete plant began operation in July
2019 (two plants are currently operating)Cushenbury Plant (U. S.)

30｜2019.11.12

Robertson's Ready Mix, Ltd Readymixed Concrete Plant (U. S.)

Cement Business◆ Robertson's Ready Mix Business Expansion◆ Demand History (Domestic / Export)*[Ready-mixed Concrete Business]
Regionmillion tons

* Source: Cement Association
Domestic Demand (left axis)
million tons
Exports (right axis)
12◆Southern California

Description

TimingAcquisition of Temescal Valley Plant

2018

Northern California

Lathrop Plant Installation (removal in
2019)

2018

45

9

Northern California

French Camp Plant Installation

2019

30

6

Northern California

Acquisition of Vernalis Plant

2019

15

3

Southern California

Completion of Simi Valley Plant

2019

60

[Aggregate Business]

0

RegionDescription

TimingSouthern California

Acquisition of land adjoining Cabazon
mine

2017

Southern California

Acquisition of permit for expansion planfor Redlands Mine

2019

thousand cy

10,000

History of sales amount of Ready-mixed concrete

0
11/3

13/3

15/3

17/3

19/3

◆ Change in Cement Demand in the Southern
California Region** Source: PCA
thousand tons

12,000

Domestic Products

Import Products

9,000

7,500

6,000

5,000

3,000

2,500

0
95 97 99 01 03 05 07 09 11 13 15 17 19 21 23

0
13/3

31｜2019.11.12

15/3

17/3

19/3

20/3
Forecast

ForecastOthers Business

32｜2019.11.12

Others BusinessHistory of Consolidate Earnings *1
280.0

249.5
13.1

210.0

255.7
13.1

8.3

16.0
14.6

Net
Sales
182.0

12.0

70.0

Ordinary
8.0
Operating income
8.5
profit
7.2
4.0

0.0

0.0

140.0

18/3
¥billion

19/3

20/3
Forecast

Net sales &Ordinary income
ratio by Segment *2

12%

24%
Net Sales(Outer)12%
Ordinary Income(Inner)24%

Unit: ¥ billions*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- In the incineration fly ash treatment business, KitaKyushu Ash Recycle Systems Co., Ltd is currently engaged inconstruction work to increase processing capacity.
- In the business of producing biogas from food waste, New Energy Fujimino Co., Ltd. began plant construction from July.
Additionally, Ichikawa Kankyo Engineering Co., Ltd. , the Co-op Deli Consumers' Co-operative Union and Co-op Mirai,
became newly shareholders of New Energy Fujimino Co., Ltd. to strengthen its business structure.
◆Renewable Energy
The Wasabizawa Geothermal Power Plant has been operating steadily since May 2019. Additionally, construction wasstarted on the Appi Geothermal Power Plant in August.
33｜2019.11.12

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

New Energy Fujimino Co., Ltd.
Conceptual drawing[Major Progress in FY2020]

Key Strategies

Measures and Plans

Progress

Environmental
Recycling

Promote automateddemolition in home appliancerecycling"Chubu Eco Technology Co., Ltd." introduce anautomatic sorting robot and commence
verification tests

Introduced automatic picking robots on
washing machine and air conditioning
dismantlement line. Demonstration testing
currently underway.

Renewable
EnergyExpand new geothermal
power generation business

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

Commenced operations on schedule in
May 2019

Renewable
EnergyExpand new geothermal
power generation businessStart construction of Appi Geothermal Power
Plant
Scheduled to commence operation in 2024

Construction work started in August 2019

ニューエナジーふじみ野社
家電リサイクル
完成予想図
Rendering of completed Appi
Home Appliance Recycling 自動ピッキングロボット
Geothermal Power Plant
Automated picking robots
Wasabizawa Geothermal Power Plant
34｜2019.11.12

Others Business◆Strengthening the Structure of the Business to Produce Biogas from Food Waste(Press release issued October 29, 2019)

To strengthen biogas business foundations, capital increase was implemented in New Energy Fujimino Co., Ltd. ("NEFC,"
hereafter) (before increased investment: 100% wholly owned subsidiary), namely Ichikawa Kankyo Engineering Co., Ltd. ("IKE"),
which has a track record collecting and transporting food waste, and the food companies Co-op Deli Consumers‘ Co-operative
Union ("Co-op Deli") and Co-op Mirai Consumers' Co-operative Union ("Co-op Mirai") were newly shareholders.
Future Plans and Developments
Smooth pick-up of food waste shipments throughcollaboration with IKE
Receiving food waste through coordination with
Strengthening Co-op Deli and Co-op Mirai, use of electric power
generated through biogas plants by stores andother locations, and development of a foodrecycling loop
Increased
investment

50 million yen  250 million yen

ControllingsharesMitsubishi Materials: 100%
Mitsubishi Materials: 75%
IKE
: 20%
Co-op Deli : 2.5%
Co-op Mirai : 2.5%

Start ofoperations
Plannedthroughput

35｜2019.11.12

Business Model

Electric Power
Companies

Co-op Deli / Co-op Mirai(distribution centers, stores)

Food waste isconverted into
electricity and recycled

Recycling with Zero
Final Disposal

FIT Electric Power

CementRecycling
SystemFood Waste

2
4

Residue

Food Companies(Food Waste Producers)

Collection andTransportation
Companies

NEFC Biogas Plant

September 2020 (planned)(Initial plan: April 2020)
Ichikawa Kankyo Engineering

40 tons of food waste / day

Shipment Collection andCollection Management

Cement Plant

Contents

1. Performance Summary (P.4 - 6)
2. Progress on the Medium-Term Management Strategy (P.8 - 13)
3. Initiatives by Segment (P.15 - 35)
4. Issues and Enhancement of Group Governance (P.37 - 43)

36｜2019.11.12

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

37｜2019.11.12

Towards Sustainable Growth in Corporate Value
Major group
governance issues

Initiatives to resolve
issuesStrengthen corporate
governance and build astructure for prompt
management

Developing an organizationthat supports sustainablegrowth to corporate value

1

Inadequate
amount and qualityof communication

1

Events for dialogue with
top management andemployees, and holdingof workshops

Shift to the company
with a Nomination
Committee

1

Organization with good andhealthy communication where
employee has unrestrictedcommunication

2

Weakness and low
level of awarenessand system ofcompliance2

Establishment of“Governance
Deliberative Council”

1

2

Organization capable ofautonomously solving issues

3

Organization that adequately
shares the understanding of
its business4

Improve thetransparency andfairness ofmanagement

Organization that makes
prompt and resolutedecisions

5

Continue to implement anddeepen measures toenhance our governancestructure, along withmeasures to rebuild ourgovernance structure
related to quality control

Organization that manages
business with awareness ofthe differences between the
product manufacturingbusiness and the process
manufacturing business

6

Organization that aims forthorough digitization

3

3

Inadequate
resource allocation
4

5

Increasing the frequency
of audits andstrengthening theadministrative division
Selection the risks(2019)- Obsolescence anddegradation of
production facilities- Gap between workload
and human resources
Establishment of"SCQDE" ** Priority of decisions in the execution of business(1) Safety & Health (2) Compliance & Environment(3) Quality (4) Delivery (5) Earnings

38｜2019.11.12

2

3

Ensure faster, higherquality decision-making
and business execution
Strengthen the function
for supervisingbusiness execution

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

39｜2019.11.12

Initiative for Group Governance Framework Enhancement Measures
Further development, and increase efficiency of Governance Enhancement Measures arebeing implemented as planned
Governance Framework
Enhancement Measures

FY2020 Plan Ongoing operations of the Governance Deliberative(1) Improvements to
Councilgovernance-related
 Report on performance of operations, and review thereview and reporting
flow of the plan for the conduct of governance andsystems
progress reports(2) Improvement of Select the locations for priority support and build afunctions ofsupport systemmanagement
 Enhance overseas regional management companies
divisions and theircollaboration with
operating divisions
 Operation of the new risk management system Continue governance training for new executives of the(3) Improvement ofGrouphuman resources Promote to improve communication
training and Continue the compliance awareness surveys (twice)encouragement of Continue human resources exchanges
active interaction(4) Internal audit
strengthening(5) Studies with abusiness
optimization focus

40｜2019.11.12

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

 Start reorganization of some companies

1st Half Result of FY2020
 Holding of Governance Deliberative Council meeting(September) Conducting a review of the reporting flow and switching
to operations that emphasis dialogue with companies
and sites Per-function assessments of each organization are
underway to select locations for priority support
 Coordinating with overseas regional managementcompanies and providing support to overseas Group
companies Conducting risk management training Conducting governance training for new executives of
the Group Conducting communication workshops
 Conducting compliance awareness survey (June) Conducting human resources exchanges between
Group companies Implementation of governance audits at 37 locations
 Implementation of quality audits at a total of 41
locations in Japan and overseas
 Increasing the number of auditors and strengthening theframework In light of growth strategies, business portfolio
optimization and incidental governance perspectives,
decisions were made to implement the absorption-typemerger of Mitsubishi Shindoh Co., Ltd. and transfer
shares in Kobelco & Materials Copper Tube Co., Ltd.

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

41｜2019.11.12

Initiative for Preventive measures of the Matters of
Non-Conforming Products
Each Preventive measures of matters of non-confirming products
is being implemented as planned
Recurrence Prevention
FY2020 Plan
1st Half Result of FY2020
Measures(1) Implementation of a  Accelerate improvement of the order receiving system in FLS guidelines were revised to be easier tofront loading system
locations other than the six affected locations (utilize quality
understand and then disseminated(FLS)
guidance meetings led by outside consultants)(2) Enhancement of the Confirm the effectiveness and provide support forframework andreorganization and rule definition in the quality audits Enhancing the details of and disseminating the basic
authority of the Confirm the independence of the quality control division inquality rules and quality control guidelines
quality control
small locations
department
 Dissemination of the basic quality rules again and to Disseminating and conducting training on revised
continue the training
version of the quality control guidelines
 Providing support for quality improvements at overseas(3) Expansion of quality
 Progress on support to improve quality at 8
locations (in Asia, Europe and the U.S., including methods
training
overseas sites
for utilization automation data) First meetings for quality personnel (June 2020, Holding meetings for quality personnel utilizing case studies
attended by 130 people)(3 times) Conducting periodic checks on the progress of(4) Promotion of Periodically check and promote the automation plan
automation
automated Sharing information of the automation of inspection
 Selecting inspection automation personnel andinspection equipment
equipment
sharing information
 Quality audits in 80 locations (40 locations each in Japan(5) Enhancement ofand overseas) Conducted quality audits at a total of 41 locations inquality audits
 In the second year of the once every 2 year cycle, increase
Japan and overseas
the number of quality auditors to accelerate quality audits Begin to provide support for the improvement of quality(6) Utilization of outside
 Consultant guidance provided at 14 locations othercontrol in locations other than the six affected locations
consultants
than the six affected locations(twice a month, a total of 24 times)
42｜2019.11.12

Promoting automated inspection equipment

Equipment Compatible with
Automation (sets)■Status of Inspection Automation
On schedule, implementing to install automated inspection equipment In domestic andoverseas locations.
Progress on Inspection Automation

7,000

Final automation total number (6,021 sets)

6,000

5,090

5,000
4,000
3,000

3,226
2,351

2,109

2,000

2,014

1,372

1,000
0
PlannedActualEnd of FY2019

PlannedActualEnd of Sep. 2019

PlannedActualEnd of FY2020

Example of automation measures for hardness measurement
Before:Manual measurement

43｜2019.11.12

After:
Automated measurement+ Automated recording

PlannedActualEnd of FY2021

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.
44｜2019.11.12