Consolidated Financial Results for the Six Months Ended September 30, 2017
(Japanese Accounting Standards)
November 8, 2017
Name of Listed Company: Mitsubishi Materials Corporation
Listing:
Tokyo Stock Exchange
Stock Code:
5711
URL:
http://www.mmc.co.jp/
Representative: Akira Takeuchi, President
Contact:
Nobuyuki Suzuki, General Manager, Corporate Communications Dept., General Affiars Dept.,
General Administration Div.
Tel: +81-3-5252-5206
Scheduled filing date of Quarterly Report:
November 8, 2017
Scheduled date of start of dividend payment:
December 4, 2017
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, 2017 (From April 1, 2017 to September 30, 2017)(1) Consolidated Results of Operations (cumulative)(Figures in percentages denote the year-on-year change.)
Net salesFirst six months ended September 30, 2017
First six months ended September 30, 2016
(Note) Comprehensive income:Operating profit

Net income
attributable toowners of parent

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen%

725,450
603,137

20.3
-15.0

36,47927,32033.5-24.5

39,53026,02651.9-33.2

20,14829,555

-31.8
-35.4

The first six months ended September 30, 2017: 30,532 million yen (–%)
The first six months ended September 30, 2016: -1,715 million yen (–%)

Net income
per share

Diluted net income
per share
YenFirst six months ended September 30, 2017
First six months ended September 30, 2016

Yen

–
–

153.83225.62* The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective date of October 1, 2016. Accordingly, net income per share is calculated on
the assumption that the consolidation of its shares was conducted at the beginning of the previous consolidated fiscal year.

(2) Consolidated Financial Position
Total assets
As of September 30, 2017
As of March 31, 2017
(Reference) Shareholders’ Equity:

Shareholders’equity ratio

Net assets

Million yen

Million yen%

2,007,078
1,896,939

727,221710,195

31.8
32.8

As of September 30, 2017: 638,456 million yen

As of March 31, 2017: 621,281 million yen

2. Dividend Payments
Dividends per share(Record date)

First quarter

Second quarter

Third quarter

Yen

Yen

Yen

Year ended March 31, 2017

–

2.00

Year ending March 31, 2018

–

30.00

Year ending March 31, 2018 (Forecast)Year-end

Annual
Yen

–

40.00

–

50.00

Yen

–
80.00

(Note) Revision of dividend forecast published most recently: No* The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective date of October 1, 2016. For the amount of dividends at the end of the second
quarter of the fiscal year ended March 31, 2017, the amount prior to the consolidation of shares is stated because the dividends were paid based on the number of shares
before the consolidation of shares.
For the year-end dividend per share in the fiscal year ended March 31, 2017, the amount after the consolidation of shares is stated and a hyphen is written for the annual
dividend because it cannot be simply combined.

3. Consolidated earnings forecast (From April 1, 2017 to March 31, 2018)(Figures in percentages denote the year-on-year change.)

Net salesYear ending March 31, 2018

Operating profit

Ordinary income

Net income
attributable toowners of parent

Net income
per share

Million yen%

Million yen%

Million yen%

Million yen%

Yen

1,600,000

22.7

75,00025.5

80,00025.1

35,00023.4

267.22(Note) Revision to forecast published most recently: Yes

* Notes(1) Significant changes of subsidiaries during the term under review (changes in specific subsidiaries accompanied bya change 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 Keynotes” 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:

None
Yes
None
None

(Note) For details, please see “(4) Notes to consolidated quarterly financial statements (Changes in accounting policies)” under“2. Consolidated Financial Statements and Keynotes” on page 13.

(4) Numbers of issued shares (common stock)(i)
Numbers of issued shares at end of terms (including treasury shares):Six months ended September 30, 2017: 131,489,535 sharesYear ended March 31, 2017:
131,489,535 shares(ii)
Numbers of treasury shares at end of terms:
Six months ended September 30, 2017:
515,895 sharesYear ended March 31, 2017:
507,863 shares(iii) Average number of shares issued during terms (quarterly cumulative period):
Six months ended September 30, 2017: 130,977,833 shares
Six months ended September 30, 2016: 130,998,123 shares* The Company consolidated its shares at a rate of one share for every 10 shares of its common stock, with October 1, 2016 as
the effective date. Subsequently, the average number of shares issued during terms are calculated based on the assumption thatthe consolidation of shares was conducted at the beginning of the previous consolidated fiscal year.

* This quarterly financial summaries is not subject to a quarterly review.
* 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, 2017” on page 5 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 Wednesday,
November 8, 2017. 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, 2017........................... 2(1) Details of operating results .............................................................................................................................2(2) Details of financial position ...........................................................................................................................5(3) Information on the consolidated earnings forecasts and other future forecasts ..............................................5
2. Consolidated Financial Statements and Keynotes ............................................................................................... 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 .................................................................................................................................... 13–1–

1. Qualitative Information on Financial Results for the First Six Months Ended September 30,
2017(1) Details of operating results1) Overview of operating results
During the first half of the consolidated fiscal year under review, signs of recovery were seen in the Asian
economies of China, Thailand and Indonesia. In the United States, the economy remained on a moderate
recovery track.
In Japan, corporate earnings and employment and income conditions were on the road to recovery, andconsumer spending and capital expenditure showed signs of improvement.
Regarding the business environment for the Mitsubishi Materials Group, the energy prices rose but thecopper prices increased, the yen remained weak, and demand for products used in the automotive andelectronics industry remained strong.
Under these circumstances, consolidated net sales for the first half of the year under review totaled ¥725,450
million, up 20.3% year on year. Operating profit increased 33.5% year on year, to ¥36,479 million, andordinary income rose 51.9%, to ¥39,530 million. Net income attributable to owners of parent was ¥20,148
million, down 31.8% year on year. ** The decrease in net income attributable to owners of parent in the first six months of the fiscal year under review was caused by adecline in gain on sales of non-current assets.

2) Overview by segments(Cement)

Net sales
Operating profit
Ordinary income

FY 2017 Q1-Q2
83.8
8.1
7.5

FY 2018 Q1-Q2
95.6
10.6
11.0

(Billion yen)
Increase / Decrease (%)
11.8(14.1%)
2.5(31.8%)
3.4(45.5%)

Sales volumes rose in Japan due to the firm performance of construction work of facilities related to theTokyo Olympic and Paralympic Games in the Tokyo metropolitan area, as well as disaster restoration workand road-related work in Kyushu, which also remained solid. However, mainly rising energy costs resulted ina decline in operating profit, even as net sales increased.
In the United States, the sales volumes of ready-mixed concrete increased thanks to strong private-sector
demand related to housing and commercial facilities in Southern California. In addition, both the sales
volumes and selling price of cement grew year on year. As a result, both net sales and operating profit
increased.
As a result, net sales and operating profit increased year on year for the entire Cement business. Ordinary
income also rose with the increase in operating profit.

–2–

(Metals)

Net sales
Operating profit
Ordinary income

FY 2017 Q1-Q2
278.8
7.9
9.3

FY 2018 Q1-Q2
374.5
10.8
14.2

(Billion yen)
Increase / Decrease (%)
95.6(34.3%)
2.8(35.4%)
4.8(51.5%)In the copper business, both net sales and operating profit rose, reflecting increase in the copper prices and arise in the amount contracted by Onahama Smelting and Refining Co., Ltd. despite periodic furnace repairs
conducted at Noshima Smelter & Refinery.
In the gold and other valuable metals business, net sales and operating profit increased mainly due to a rise inpalladium prices.
In the copper and copper alloy products business, net sales and operating profit were up chiefly due to anincrease in sales of products for automobiles and other use.
As a result, the overall Metals business posted a year-on-year increase in net sales and operating profit.
Ordinary income increased due to a rise in operating profit and dividend income.
The business results of MMC Copper Products have been added to the consolidated statement of income of
the Mitsubishi Materials Group since the second quarter of the fiscal year under review.
(Advanced Materials & Tools)

Net sales
Operating profit
Ordinary income

FY 2017 Q1-Q2
71.1
6.5
4.9

FY 2018 Q1-Q2
78.3
8.6
8.1

(Billion yen)
Increase / Decrease (%)
7.1(10.1%)
2.1(32.2%)
3.2(65.0%)In the cemented carbide products business, net sales and operating profit increased as a result of aggressive
efforts for sales promotion, in addition to higher demand in Japan, Europe, United States, and Southeast Asia.
In the high-performance alloy products business, sales of our mainstay sintering parts increased in Japan,
Europe, and the United States following the launch of new products in addition to growth in demand, but
operating profit declined due to a rise in selling and administrative expenses, although net sales increased.
As a result, the overall Advanced Materials & Tools business recorded year-on-year increases in net sales
and operating profit. Ordinary income also rose due to foreign exchange gains, in addition to higher operating
profit.
(Electronic Materials & Components)

Net sales
Operating profit
Ordinary income

FY 2017 Q1-Q2
29.8
0.9
0.9

FY 2018 Q1-Q2
34.0
1.8
2.3

(Billion yen)
Increase / Decrease (%)
4.1(14.1%)
0.9(105.5%)1.4(156.4%)In the advanced materials and chemical products business, net sales and operating profit increased, reflecting
a rise in sales of products related to semiconductor manufacturing equipment and other products.
In the electronic components business, both net sales and operating profit also increased thanks to a higher–3–

volume of sales of products for home appliances and optical communication related equipment.
The polycrystalline silicon business recorded an increase in net sales and a decrease in operating profit,
chiefly due to a fall in selling prices, despite an increase in sales volume based primarily on higher demand
backed by the strong semiconductor market.
As a result, the entire Electronics Materials & Components business registered year-on-year increases in net
sales and operating profit. Ordinary income rose as a result of higher operating profit and dividend income.
(Aluminum)

Net sales
Operating profit
Ordinary income

FY 2017 Q1-Q2
80.6
5.0
5.1

FY 2018 Q1-Q2
77.5
3.9
3.7

(Billion yen)
Increase / Decrease (%)-3.0(-3.8%)-1.1(-22.0%)-1.4(-27.2%)In the aluminum can business, net sales and operating profit declined due to a fall in sales of both regularcans and bottle cans and rising energy costs.
In the rolled aluminum and processed aluminum products business, net sales and operating profit fell as aresult of lower sales of plate products for Litho sheets, etc. and a rise in energy costs.
As a result, the entire Aluminum business posted a year-on-year decrease in net sales and operating profit.
Ordinary income also declined due to a fall in operating profit.
(Others)

Net sales
Operating profit
Ordinary income

FY 2017 Q1-Q2
95.6
2.7
2.5

FY 2018 Q1-Q2
106.4
3.9
4.4

(Billion yen)
Increase / Decrease (%)
10.7(11.3%)
1.1(43.2%)
1.8(75.4%)In the energy-related business, net sales and operating profit increased due to a rise in sales prices of coalthanks to an improvement in the coal market condition.
In the “E-waste” (used electronics and electrical products) recycling business, both net sales and operating
profit increased with a rise in the recycling unit cost of valuables, in addition to continued firmness inrecycling volumes.
Total net sales and operating profit in the overall Others business excluding the energy-related business andthe “E-waste” (used electronics and electrical products) recycling business increased.
In the overall Others business, net sales and operating profit increased from a year earlier. Ordinary income
rose due to the rise in operating profit, in addition to an increase in dividend income.

–4–

(2) Details of financial position
Total assets at the end of the second quarter of the consolidated fiscal year under review stood at ¥2,007.0 billion,up ¥110.1 billion from the end of the previous consolidated fiscal year. This result was mainly due to an increase
in inventories.
Total liabilities were ¥1,279.8 billion, an increase of ¥93.1 billion from the end of the previous consolidated
fiscal year. This increase was chiefly attributable to a rise in notes and accounts payable-trade.
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 ¥4.3 billion (a decrease of ¥38.5 billion from the first half of theprevious fiscal year) mainly due to an increase in inventories, despite strong earnings.
(Cash Flow from Investing Activities)
Net cash used in investing activities totaled ¥78.1 billion (an increase of ¥63.2 billion from the first half of theprevious fiscal year) chiefly attributable to the purchase of shares of subsidiaries resulting in change in scope of
consolidation.
(Cash Flow from Financing Activities)
Net cash provided by financing activities totaled ¥19.7 billion (net cash used of ¥20.8 billion in the first half ofthe previous fiscal year) mainly as a result of raising the ¥73.7 billion cash used by operating activities andinvesting activities through commercial paper.
As a result of adding a net increase (decrease) in cash and cash equivalents mainly due to the effect of theexchange rate changes to the above, cash and cash equivalents at the end of the second quarter under review
stood at ¥81.0 billion (down ¥51.5 billion from the end of the previous fiscal year).

(3) Information on the consolidated earnings forecasts and other future forecasts
In our consolidated earnings forecasts for the full year of the fiscal year ending March 31, 2018, we have revised
the previous forecasts (announced on August 8, 2017) as shown below mainly due to an increase in demand of
the cemented carbide products in the Advanced Materials & Tools business.
Revisions to Consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2018(from April 1, 2017 to March 31, 2018)

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

Previous forecast
1,540.070.0
75.0

Current forecast
1,600.0
75.0
80.0

31.0

35.0

(Billion yen)
Increase / Decrease (%)
3.9%
7.1%
6.7%
12.9%

(Note) The above forecast has been prepared on assumed economic conditions, market trends, and other factors foreseeable as of the date ofthis announcement, and the results may differ from the forecasts due to various factors arising in the future.

–5–

2. Consolidated Financial Statements and Keynotes(1) Consolidated balance sheet
As of March 31, 2017
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, 2017

141,264
213,343
85,878
101,643
100,757
227,119(2,537)89,532
250,209
95,936150,236
130,166
230,756(2,697)

867,469

944,141

199,758
260,805
205,661

203,377
259,101
214,378

666,226

676,857

43,43615,13848,672
21,47758,57470,150252,067
58,151(5,549)258,073
63,429(5,574)

304,669

315,928

1,029,470

1,062,936

1,896,939

2,007,078

As of March 31, 2017
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Current portion of bonds 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 provision
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity(Million yen)
As of September 30, 2017

114,502203,819
15,000–16,154
13,518241,406
102,262

163,904
202,640
25,00020,00011,516
12,556
252,057
107,042706,665794,718

55,000254,41132,5685,502
56,03776,56050,000263,836
31,5102,475
57,06980,244

480,079

485,137

1,186,744

1,279,856

119,457
92,422
333,526(2,017)

119,457
92,422349,206(2,045)543,390559,042

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

55,226888
34,930(1,418)(11,735)

58,504(1,296)34,924(2,359)(10,359)

Total accumulated other comprehensive income

77,891

79,413

88,91388,765

Non-controlling interests
Total net assets
Total liabilities and net assets–7–710,195

727,221

1,896,939

2,007,078

(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
Equity in earnings of affiliates
Rent 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
Other
Total extraordinary income
Extraordinary losses
Loss on sales of investment securities
Loss on sales of non-current assets
Loss on valuation of investment securities
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, 2016
(Apr. 1, 2016–Sep. 30, 2016)
603,137
505,708
97,42870,10827,320–8–

Six Months Ended
September 30, 2017
(Apr. 1, 2017–Sep. 30, 2017)
725,450
616,750
108,700
72,22036,479

255
2,966
1,213
2,499
1,117
8,051

362
6,729
1,694
2,406
2,204
13,396

2,655
1,721
4,968
9,345
26,026

2,532
2,348
5,465
10,34539,530602
16,026459
17,088

165
33
6
204

–
35
589
253
878
42,236
10,191
32,0452,490
29,555

490
280
–
164
934
38,80013,807
24,993
4,844
20,148

Consolidated statements of comprehensive income
Consolidated first six months(Million yen)
Six Months Ended
September 30, 2016
(Apr. 1, 2016–Sep. 30, 2016)

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
Equity in earnings of affiliates
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners ofparentComprehensive income attributable tonon-controlling interests–9–

Six Months Ended
September 30, 2017
(Apr. 1, 2017–Sep. 30, 2017)

32,04524,993332
505(32,921)
2,012(3,690)3,202(2,122)
2,746
1,412
300

(33,760)

5,539(1,715)30,532

3,899

25,054(5,614)

5,477

(3) Consolidated statement of cash flows(Million yen)
Six Months Ended
September 30, 2016
(Apr. 1, 2016–Sep. 30, 2016)
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 (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories
Proceeds from sales of gold bullion
Purchase of gold bullion
Increase (decrease) in notes and accounts
payable-trade
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid) refund
Net cash provided by 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 purchase of shares of subsidiaries
resulting in change in scope of consolidation
Purchase of shares of subsidiaries resulting in change
in scope of consolidation
Proceeds from sales of shares of subsidiaries
resulting in change in scope of consolidation
Payments for sales of shares of subsidiaries resulting
in change in scope of consolidation
Payments of loans receivableCollection of loans receivable
Proceeds from transfer of business
Payments for transfer of business
Other
Net cash provided by investing activities– 10 –Six Months Ended
September 30, 2017
(Apr. 1, 2017–Sep. 30, 2017)

42,236
27,77638,80027,776(2,686)(1,057)(1,953)318(3,222)
2,655(1,069)891(7,091)
2,532(1,213)(1,694)(16,038)
(602)
589

297
324
–

30,397(24,903)(29,957)
61,551(61,277)(71,558)
72,398(52,123)

8,366

35,883(7,748)49,192
3,975(2,694)(7,543)42,929(3,244)
16,1638,443(2,531)(17,696)
4,379(37,232)
22,991(401)
264(34,541)
144(1,251)
209

–

273

–

(38,496)

2,035

185

–

(901)

(1,182)44
2,176–(3,567)(14,871)(2,999)4,363–(1,475)(3,679)(78,170)

Six Months Ended
September 30, 2016
(Apr. 1, 2016–Sep. 30, 2016)
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 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
Increase (decrease) in cash and cash equivalents
resulting from change of accounting period of
consolidated subsidiary
Cash and cash equivalents at the end of period– 11 –Six Months Ended
September 30, 2017
(Apr. 1, 2017–Sep. 30, 2017)

6,676

2,810

23,302(40,115)–(15,100)
16,000(16)(6,550)(2,905)(2,157)(20,866)

33,206(32,498)
20,000(15,000)
20,000(28)(5,239)(2,247)(1,217)
19,785(4,931)

484

2,260

(53,520)

58,482

132,616

896

714

–

1,228

61,63981,039(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, 2016 (from April 1, 2016 to September 30, 2016)
Sales and income of reporting segments(Million yen)

AdvancedElectronic
Materials & Materials & Aluminum
Tools
Components

CementMetals(1) Outside customers

82,424

275,367

63,324

27,113(2) Withinconsolidated group

1,425

3,530

7,822

2,697

Total

83,850278,897

71,146

7,588

9,378

4,932

Amountindicated intheAdjustment
consolidated
amountquarterlystatements
of income

OthersTotal

79,57575,331

603,137–

603,137

1,094

20,32136,891(36,891)–

29,81080,66995,653640,028(36,891)

603,137

901

5,163

2,508

30,473(4,447)26,026

Net sales

Segment income

Notes: 1. “Others” includes nuclear energy-related services, environmental and recycling-related business, real estatebusiness, and engineering-related services.
2. “Adjustment amount” of segment income of -¥4,447 million includes the elimination of intersegment transactionsof -¥85 million and corporate expenses of -¥4,361 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, 2017 (from April 1, 2017 to September 30, 2017)
1. Sales and income of reporting segments(Million yen)

AdvancedElectronic
Materials & Materials & Aluminum
Tools
Components

CementMetals(1) Outside customers

94,003

370,151

72,52329,592(2) Withinconsolidated group

1,681

4,370

5,787

Total

95,685374,522

11,042

14,211

Amountindicated intheAdjustment
consolidated
amountquarterlystatements
of income

OthersTotal

77,15382,025725,450–

725,450

4,416

427

24,392

41,076(41,076)–

78,31034,00977,580106,418

766,527(41,076)

725,450

8,139

2,311

3,758

4,401

43,863(4,332)39,530Net sales

Segment income

Notes: 1. “Others” includes nuclear energy-related services, environmental and recycling-related business, real estatebusiness, and engineering-related services.
2. “Adjustment amount” of segment income of -¥4,332 million includes the elimination of intersegment transactionsof -¥7 million and corporate expenses of -¥4,324 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 relating to the change in the reporting segments, etc.
(Changes in the depreciation method of property, plant and equipment)
As stated in “Changes in accounting policies”, as the deprecation method applied to production facilities forelectronic materials and components of the Company and its consolidated subsidiaries in Japan, thedeclining-balance method was mainly used, but the method has been changed to the straight-line method fromthe first quarter of the current consolidated fiscal year.
As a result of changing the depreciation method, segment income has increased ¥134 million in the first half ofthe current consolidated fiscal year, compared with the case in which the past method is used.

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(Changes in the depreciation method of property, plant and equipment)
As the deprecation method applied to production facilities for electronic materials and components of theCompany and its consolidated subsidiaries in Japan, the declining-balance method was mainly used, but themethod has been changed to the straight-line method from the first quarter of the current consolidated fiscal year.
This change has been made based on our judgment that the straight-line method is more reasonable, given that
production facilities are expected to operate stably over a long period of time and that the investment effect is
expected to emerge evenly, as a result of examining the depreciation method in the wake of the formulation of
the Medium-Term Management Strategy (FY2018 to FY2020).
As a result of changing the depreciation method, operating profit, ordinary income and income before income
taxes have increased ¥134 million, respectively, in the first half of the current consolidated fiscal year, comparedwith the case in which the past method is used.

Additional information(Provision for environmental measures)
In regards to expenses for specific countermeasure work to prevent mining-induced pollution and expenses forcountermeasure work to stabilize collection sites in abandoned mines managed by the Group, we have recorded a
provision for expenses whose estimated amount has been fixed because the details of the construction work havebeen determined. However, there are some forms of countermeasure work for which the amount cannot becalculated reasonably because the details of construction work are undecided due to the fact that the mostappropriate construction method for the landscape and existing equipment have yet to be selected, even thoughspecific countermeasure work is necessary.

Contingent liabilities
Previous consolidated fiscal year (As of March 31, 2017)
On December 30, 2014, PT. Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafter the“Consolidated Subsidiary”) received a notice of reassessment in an amount of US$47 million (¥5,370 million
based on the exchange rate at the end of the previous consolidated fiscal year) from the Indonesian National Tax– 13 –

Authority regarding the sales transaction pricing of the Consolidated Subsidiary for the year ended December
2009. On January 28, 2015, the Consolidated Subsidiary made a provisional deposit of US$14 million (¥1,570
million) as a part of the additional collection.
However, the Consolidated Subsidiary 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 theConsolidated Subsidiary based on a comparison of the profit margin ratio with other companies selected by theIndonesian National Tax Authority, was highly unreasonable and found to be unacceptable by the Company andthe Consolidated Subsidiary.
The written objection submitted by the Consolidated Subsidiary on March 25, 2015 was dismissed by theIndonesian National Tax Authority on March 16, 2016. Therefore, the Consolidated Subsidiary filed a complaint
to the Tax Court in Indonesia on June 6, 2016 to present the fairness of the view of the Company and theConsolidated Subsidiary.
On December 22, 2016, the Consolidated Subsidiary received a notice of reassessment in an amount of US$34
million (¥3,841 million) from the Indonesian National Tax Authority, regarding its posting of raw material costs
for the fiscal year ended December 31, 2011.
However, the Consolidated Subsidiary submitted a written objection to the Indonesian National Tax Authority
on March 20, 2017, because this assessment was a view that unilaterally negated the basis for recording raw
materials costs, etc. of the Consolidated Subsidiary and found to be unacceptable by the Company and theConsolidated Subsidiary.
Second quarter of the consolidated fiscal year under review (As of September 30, 2017)
On December 30, 2014, PT. Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafter the“Consolidated Subsidiary”) received a notice of reassessment in an amount of US$47 million (¥5,396 million
based on the exchange rate at the end of the second quarter of the consolidated fiscal year under review) from theIndonesian National Tax Authority, regarding the sales transaction pricing of the Consolidated Subsidiary for theyear ended December 2009. On January 28, 2015, the Consolidated Subsidiary made a provisional deposit of
US$14 million (¥1,578 million) as a part of the additional collection.
However, the Consolidated Subsidiary 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 theConsolidated Subsidiary based on a comparison of the profit margin ratio with other companies selected by theIndonesian National Tax Authority, was highly unreasonable and found to be unacceptable by the Company andthe Consolidated Subsidiary.
The written objection submitted by the Consolidated Subsidiary on March 25, 2015 was dismissed by theIndonesian National Tax Authority on March 16, 2016. Therefore, the Consolidated Subsidiary filed a complaint
to the Tax Court in Indonesia on June 6, 2016 to present the fairness of the view of the Company and theConsolidated Subsidiary.
On December 22, 2016, the Consolidated Subsidiary received a notice of reassessment in an amount of US$34
million (¥3,859 million) from the Indonesian National Tax Authority, regarding its posting of raw material costs
for the fiscal year ended December 31, 2011.
However, the Consolidated Subsidiary submitted a written objection to the Indonesian National Tax Authority
on March 20, 2017, because this assessment was a view that unilaterally negated the basis for recording raw
materials costs, etc. of the Consolidated Subsidiary and found to be unacceptable by the Company and theConsolidated Subsidiary.

– 14 –