Consolidated Financial Results for the Nine Months Ended December 31, 2019
(Japanese Accounting Standards)
February 12, 2020
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 Affairs Dept.,
Human Resources & General Affairs Div.
Tel: +81-3-5252-5206
Scheduled filing date of Quarterly Report:
February 12, 2020
Scheduled date of start of dividends payment:–
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 nine months ended December 31, 2019 (From April 1, 2019 to December 31, 2019)(1) Consolidated Results of Operations (cumulative)(Figures in percentages denote the year-on-year change.)
Net sales

The nine months ended December 31,
2019
The nine months ended December 31,
2018(Note) Comprehensive income:Operating profit

Net income
attributable toowners of parent

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen%

1,124,608-11.6

23,937-30.1

39,426-6.3

10,058-21.6

1,272,555

10.9

34,248-37.7

42,067-38.7

12,831-70.7

The nine months ended December 31, 2019: 15,326 million yen (–%)
The nine months ended December 31, 2018: -17,631 million yen (–%)

Net income
per share

Diluted net income
per shareYen

The nine months ended December 31,
2019
The nine months ended December 31,
2018

Yen

76.81

–

97.98

–

(2) Consolidated Financial Position
Total assets
As of December 31, 2019
As of March 31, 2019
(Reference) Shareholders’ Equity:

Shareholders’equity ratio

Net assets

Million yen

Million yen%

1,991,434
1,938,270

718,039
723,337

31.9
32.7

As of December 31, 2019: 634,974 million yen

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

2. Dividends Payments
Dividends per share(Record date)

First quarter

Second quarter

Yen

Third quarter

Yen

Year-end

Yen

Year ended March 31, 2019

–

40.00

–

Year ending March 31, 2020

–

40.00

–

Year ending March 31, 2020 (Forecast)

Annual
Yen

Yen

40.00

80.00

40.00

80.00

(Note) Revision of dividends 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

1,520,000-8.6

27,000-26.8

40,000-21.1-57,000–-435.29(Note) Revision to forecast published most recently: Yes

* Notes(1) Significant changes of subsidiaries during the term (changes in specific subsidiaries accompanied by a change in thescope of consolidation):
None(2) Application of specific accounting treatment:

Yes(Note) For details, please see “(3) Notes on 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 10.

(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):
Nine months ended December 31, 2019:131,489,535 sharesYear ended March 31, 2019:
131,489,535 shares(ii)
Numbers of treasury shares at end of terms:
Nine months ended December 31, 2019:547,384 sharesYear ended March 31, 2019:538,493 shares(iii) Average number of shares issued during terms (quarterly cumulative period):
Nine months ended December 31, 2019:130,947,062 shares
Nine months ended December 31, 2018: 130,957,722 shares* This quarterly financial summary 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 Nine Months Ended December 31, 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 Wednesday,
February 12, 2020. 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 Nine Months Ended December 31, 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 ..................................................................................... 5(1) Consolidated balance sheet .................................................................................................................... 5(2) Consolidated statement of income and consolidated statements of comprehensive income ................. 7
Consolidated statement of income .......................................................................................................... 7
Consolidated statements of comprehensive income ............................................................................... 8(3) Notes on consolidated quarterly financial statements ............................................................................ 9
Notes on going concern assumption ....................................................................................................... 9
Segment information............................................................................................................................... 9
Notes on significant changes in the amount of shareholders’ equity, if any ......................................... 10
Application of special accounting treatment in the preparation of the quarterly consolidated financial
statements.............................................................................................................................................. 10
Changes in accounting policies ............................................................................................................. 10
Additional information.......................................................................................................................... 10
Contingent liabilities ............................................................................................................................. 11
Important subsequent events ................................................................................................................. 13–1–

1. Qualitative Information on Financial Results for the Nine Months Ended December 31, 2019(1) Details of operating results1) Overview of operating results
During the nine months of the consolidated fiscal year, in the Asia region, economic slowdown continued in
China and a deceleration in economic growth was also seen in Thailand and 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 automotive and semiconductor-related sectors, falling copper prices, and weakerdomestic demand for cement had a negative impact.
Under these circumstances, consolidated net sales for the nine months of the year totaled ¥1,124,608 million,
down 11.6% year on year. Operating profit decreased 30.1% year on year, to ¥23,937 million, and ordinary
income fell 6.3%, to ¥39,426 million. As a result, net income attributable to owners of parent fell 21.6%, to¥10,058 million. Meanwhile, in the second quarter, Universal Can Corporation, a consolidated subsidiary of
the Company, recorded an extraordinary loss of 10,423 million yen as a loss on the Antimonopoly Act.
2) Overview by segment
From the first quarter of the fiscal year, the reporting segments have been changed. The details are set forthin “2. (3) Notes on consolidated quarterly financial statements (segment information).” In this regard, thefinancial data for the same quarter of the previous year in comparison charts shown below have been
reclassified accordingly.
(Advanced Products)

Net sales
Operating profit
Ordinary income

FY 2019 Q1-Q3
435.3
10.8
10.6

FY 2020 Q1-Q3
389.6
1.0
1.8

(Billion yen)
Increase / Decrease (%)-45.7(-10.5%)-9.7(-90.3%)-8.8(-82.9%)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 adecline 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, net sales and operating profit for the entire Advanced Products Business decreased year on year.
Ordinary income declined due to the decrease in operating profit.

–2–

(Metalworking Solutions Business)

Net sales
Operating profit
Ordinary income

FY 2019 Q1-Q3
130.0
13.7
12.7

FY 2020 Q1-Q3
115.0
7.2
6.2

(Billion yen)
Increase / Decrease (%)-14.9(-11.5%)-6.5(-47.3%)-6.4(-50.6%)In the cemented carbide products business, both net sales and operating profit decreased as a result of adecline in sales mainly 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, net sales and operating profit for the entire Metalworking Solutions Business decreased year
on year. Ordinary income declined due to the decrease in operating profit.
(Metals Business)(Billion yen)
Increase / Decrease (%)-83.1(-14.7%)

Net sales

FY 2019 Q1-Q3
564.6

FY 2020 Q1-Q3
481.4

Operating profit(loss)

-1.2

9.4

10.6

(–%)

Ordinary income

3.9

20.7

16.8

(427.0%)In the copper business, net sales fell but operating profit rose, mainly thanks to the reduced cost of smelting
despite falling copper prices.
In the gold and other valuable metals business, net sales declined due to the decreased production volume ofgold and other valuable metals that resulted from a fall in the amount contained in raw materials, but operating
income rose thanks to an increase in the price of palladium.
As a result, overall the Metals Business posted a year-on-year increase in operating profit despite a decline in
net sales. Ordinary income increased due to higher operating profit and dividends income.
(Cement Business)

Net sales
Operating profit
Ordinary income

FY 2019 Q1-Q3
192.6
14.0
15.7

FY 2020 Q1-Q3
180.6
9.5
12.2

(Billion yen)
Increase / Decrease (%)-11.9(-6.2%)-4.4(-32.1%)-3.4(-22.1%)

In Japan, both net sales and operating profit decreased, reflecting lower sales volumes mainly due to the decline
in demand for construction work of facilities related to the Tokyo Olympic and Paralympic Games in the Tokyo
metropolitan area, road construction work related to Shin-Meishin Expressway in the Tokai area, and various
construction works related to the recovery from the Great East Japan Earthquake in the Tohoku area
respectively. Overseas, the cost of raw materials and operation expenses such as personnel expenses increased
despite a rise in the volume of ready-mixed concrete sold in the United States. In Australia, coal sales prices
fell. As a result, operating profit decreased while net sales increased.
Consequently, both net sales and operating profit for the entire Cement Business decreased year on year.
Ordinary income declined mainly due to the decrease in operating profit.

–3–

(Other Businesses)

Net sales
Operating profit
Ordinary income

FY 2019 Q1-Q3
136.4
5.2
5.6

FY 2020 Q1-Q3
131.5
4.4
5.6

(Billion yen)
Increase / Decrease (%)-4.9(-3.7%)-0.8(-16.8%)0(0.3%)In the energy-related business, net sales and operating profit increased, reflecting higher sales in nuclearenergy-related business.
In the environmental and recycling-related business, net sales increased but operating profit decreased,reflecting higher operational costs in addition to a decline in the unit sales price of valuables, which offset
increased sales due to higher volumes of "E-waste" (used electronics and electrical products) and incineration
ash processing. In other businesses, excluding the energy-related business and the environmental recycling
business, net sales and operating profit decreased.
In Other Businesses overall, both net sales and operating profit decreased year on year. Ordinary income rose,reflecting an increase in the share of profit of entities accounted for using equity method.

(2) Details of financial position
Total assets at the end of the third quarter of the consolidated fiscal year stood at ¥1,991.4 billion, up ¥53.1
billion from the end of the previous consolidated fiscal year. This was mainly due to an increase in inventories.
Total liabilities were ¥1,273.3 billion, an increase of ¥58.4 billion from the end of the previous consolidated
fiscal year. This was mainly due to an increase in commercial papers.

(3) Information on the consolidated earnings forecasts and other future forecasts
Consolidated earnings forecast for the fiscal year ending March 31, 2020, announced on November 7, 2019 isrevised as below.
In the Advanced Products business, demand is decreasing for copper & copper alloy products for automobile
and semiconductor as well as aluminum products for automobile, and in the Cement Business, ready-mixed
concrete business in the U.S. is expected to fall below plan mainly due to unsettled weather. As a result, net
sales, operating profit, and ordinary income are lowered from the previous forecast.
Net income attributable to owners of parent is expected to decrease from the previous forecast. It is mainly
due to lower ordinary income and extraordinary losses, including impairment loss, in the Advanced Products
business and the Metalworking Solutions business, which are expected to arise from business structure
improvement expenses and so on.
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
1,530.0
31.0
42.0

Current forecast
1,520.0
27.0
40.0

10.0

-57.0

(Billion yen)
Increase / Decrease (%)-0.7%-12.9%-4.8%―%(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.

–4–

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–5–(Million yen)
As of December 31, 2019108,648248,220
92,452
108,293
134,825
220,108(2,900)73,538238,525
120,094
126,841
128,525
263,683(2,596)909,647

948,612229,123
235,664
222,627

233,996234,236
234,380

687,415702,61340,816
17,924,36,593
15,92058,74052,514

236,572
49,983(4,088)

243,318
48,572(4,196)

282,467

287,694

1,028,622

1,042,822

1,938,270

1,991,434

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
OthersTotal current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Provision for environmental measures
Other provisions
Net defined benefit liability
Others(Million yen)
As of December 31, 2019

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

121,130
194,300
60,0006,823
8,534
286,960
120,620

728,011

798,370

50,000259,667
40,4273,468
50,003
83,35360,000235,429
35,4183,088
49,21391,874

486,921475,024

1,214,933

1,273,394

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

119,457
92,393352,724(2,150)562,659

562,425

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)55,600(440)
32,966(8,635)(6,943)

Total accumulated other comprehensive income

70,922

72,54889,754

83,065

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–6–723,337

718,039

1,938,270

1,991,434

(2) Consolidated statement of income and consolidated statements of comprehensive income
Consolidated statement of income(Million yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating profit
Interest income
Dividends income
Share of profit of entities accounted for using equity
methodRent income on non-current assets
OthersTotal non-operating profit
Non-operating expenses
Interest expenses
Settlement expenses of remaining business in mines
OthersTotal non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on transfer of businesses
Gain on sales of non-current assets
Gain on liquidation of subsidiaries and associates
OthersTotal extraordinary income
Extraordinary losses
Loss on the Antimonopoly Act
Impairment loss
Loss on valuation of investment securities
Provision for environmental measures
OthersTotal extraordinary losses
Income before income taxes
Income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

Nine Months Ended
December 31, 2018
(Apr. 1, 2018–Dec. 31, 2018)
1,272,555
1,121,653
150,901
116,653
34,248–7–

Nine Months Ended
December 31, 2019
(Apr. 1, 2019–Dec. 31, 2019)
1,124,608
986,362
138,246
114,308
23,937820
13,169915
17,841

1,525

3,383

3,746
1,913
21,175

3,795
2,047
27,983

3,579
2,132
7,644
13,35642,067

3,699
2,964
5,830
12,49539,426

269
–
462
506
170
1,409

2,054
705
217
0
3
2,980

–
3,868
2,779
6,530
220
13,39830,077
12,785
17,291
4,460
12,831

10,423
1,741
1,388
–
339
13,89228,514
14,434
14,080
4,021
10,058

Consolidated statements of comprehensive income(Million yen)
Nine Months Ended
December 31, 2018
(Apr. 1, 2018–Dec. 31, 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–8–

Nine Months Ended
December 31, 2019
(Apr. 1, 2019–Dec. 31, 2019)17,291

14,080(44,444)
1,224
7,625
1,188

4,268
(180)
(3,590)
633

(518)

115

(34,923)

1,245(17,631)

15,326(24,223)

12,166

6,592

3,209

(3) Notes on consolidated quarterly financial statements
Notes on going concern assumption
N/A

Segment information[Segment Information]
I. For the nine months ended on December 31, 2018 (from April 1, 2018 to December 31, 2018)
Information on sales and income by reporting segment(Million yen)Amountindicated intheAdjustment
consolidated
amountquarterlystatements ofincomeAdvanced
Products

Metalworking
Solutions
Business

MetalsBusiness

CementBusiness

Other
Businesses

Total(1) Outside customers

424,925

120,900

432,163

189,589

104,975

1,272,555–(2) Within consolidated group

10,471

9,105

132,490

3,020

31,513

186,600(186,600)

–

Total

435,397130,005

564,653

192,610

136,488

1,459,155(186,600)

1,272,555

10,691

12,751

3,936

15,723

5,636

48,739(6,672)

42,067

Net sales

Segment income

1,272,555

Notes: 1. “Other Businesses” include nuclear-energy-related services, environmental and recycling-related business, realestate business, and engineering-related services.
2.“Adjustment amount” of segment income of -¥6,672 million includes the elimination of intersegment transactionsof -¥89 million and corporate expenses of -¥6,583 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 revenues and expenses.
3. Segment income has been adjusted with ordinary income in the consolidated quarterly statements of income.

II. For the nine months ended on December 31, 2019 (from April 1, 2019 to December 31, 2019)
1. Information on sales and income by reporting segment(Million yen)

Advanced
Products

Metalworking
Solutions
Business

MetalsBusiness

CementBusiness

Other
Businesses

Total

Amountindicated intheAdjustment
consolidated
amountquarterlystatements ofincomeNet sales
380,436

106,008

360,829

178,124

99,209

1,124,608–(2) Within consolidated group

9,247

9,074

120,633

2,490

32,292

173,739(173,739)

–

Total

389,684

115,083

481,463

180,614

131,502

1,298,348(173,739)

1,124,608

1,825

6,298

20,746

12,245

5,654

46,768(7,342)

39,426(1) Outside customers

Segment income

1,124608

Notes: 1.“Other Businesses” includes nuclear-energy-related services, environmental and recycling-related business, andengineering-related services.
2.“Adjustment amount” of segment income of -¥7,342 million includes the elimination of intersegment transactionsof -¥46 million and corporate expenses of -¥7,296 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 revenues and expenses.
3. Segment income has been adjusted with ordinary income in the consolidated quarterly statements of income.

–9–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 the business division. This change became effective on April 1, 2019.
The coal-related business in the “Other businesses” was transferred 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 nine months of the previous consolidated fiscal year that is
disclosed herein is based on the new 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 third quarter, andmultiplying income before income taxes for the nine months by the estimated effective tax rate.

Changes in accounting policies(Application of IFRS 16 “Leases”)
Foreign subsidiaries that adopt IFRS standard started to apply IFRS 16 “Leases” from the first quarter of theconsolidated fiscal year. The impact of the application of this accounting standard on the consolidated financial
statements for the nine months of the fiscal year 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.

– 10 –

2. Overview of accounting procedures to implement
The Company plans to treat the merger as a transaction under common control in accordance with 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 on 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 on 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 on 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 on December 31, 2010, the fiscal year ended on
December 31, 2011, the fiscal year ended on December 31, 2013 and the fiscal year ended on December 31,
2015, is US$101 million (¥11,309 million).
Third quarter of the consolidated fiscal year (As of December 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 (¥5,244 million based on the exchange– 11 –

rate at the end of the third quarter of the consolidated fiscal year) from the Indonesian National Tax Authority,
regarding the sales transaction pricing of the PTS for the year ended on December 31, 2009. On January 28,
2015, the PTS made a provisional deposit of US$14 million (¥1,533 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. The PTS filed a complaint to the Tax Court in Indonesia on June 6, 2016 topresent the fairness of the view of the Company and the PTS, however it was dismissed by ruling on January 30,
2020. Therefore, the PTS plans to appeal to the Supreme Court to further maintain the fairness of the view of theCompany and the PTS.
On November 29, 2017, the PTS also received a notice of reassessment in an amount of US$22 million (¥2,501
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended on December 31, 2012. On December 27, 2017, the PTS made a provisional
deposit of US$6 million (¥689 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 (¥1,666
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended on December 31, 2014. On December 27, 2018, the PTS made a provisional
deposit of US$5 million (¥643 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.
On January 20, 2020, the PTS received a notice from the Indonesian National Tax Authority regarding thewritten objection submitted by the PTS on February 27, 2019, and the written objection of the PTS was acceptedfor US$9 million (¥1,027 million). For US$5 million (¥639 million), for which the written objection was
dismissed, the PTS has decided to file a complaint to the Tax Court in Indonesia.
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 on December 31, 2011, the fiscal year ended on
December 31 2013, the fiscal year ended on December 31, 2015 and the fiscal year ended on December 31, 2016is US$89 million (¥9,844 million). Surcharge may be partially imposed depending on the outcome of complaint
filing and Tax Court ruling.
(Matters concerning Non-Conforming Products)
Previous consolidated fiscal year (As of March 31, 2019)
The Company discovered that its 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 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– 12 –

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 compensation of customers and other losses. However, such amounts which are currently
difficult to estimate are not reflected in the consolidated financial statements.
Third quarter of the consolidated fiscal year (As of December 31, 2019)
The Company discovered that its 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 compensation of customers and other losses. However, such amounts which are currently
difficult to estimate are not reflected in the quarterly consolidated financial statements.

Important subsequent events(Signing of the definitive agreements for acquisition of a minority stake in the Mantoverde coppermine)
The Company has reached an agreement to acquire a 30% stake in the Mantoverde copper mine located in
the Atacama region in northern Chile from Mantos Copper Holding SpA (hereinafter “Mantos Copper”) andparticipate in the Mantoverde Development Project (“MVDP”), thereby resolving to sign the definitive
agreements including share subscription agreement and shareholders agreement on February 7, 2020. The
share subscription agreement was signed on the same day.
1. Transaction Overview(1) The Company will acquire a 30% stake in the Mantoverde copper mine by undertaking newly issued
shares of Mantoverde S.A.(“MV”). In consideration for the 30% stake, the Company will contribute
US$263 million at closing, comprising a US$184 million earn-in contribution and a US$79 million
matching capital contribution. The investment by the Company will be used to partially fund MVDP.
Additionally, as there are potentially vast amounts of copper resources beyond the current development
scope of MVDP, an additional cash payment of US$20 million will be made in the event that MV receives
all permits necessary to expand the capacity of tailings storage facility significantly beyond the currently
permitted capacity.
(2) The Company will receive offtake rights for 30% of copper produced, proportionate to its ownershipstake, and will receive the produced materials in the form of copper concentrate.
(3) The closing of the transaction, which is currently expected by the end of October 2020, is subject toobtaining necessary approvals and the satisfaction of other customary conditions, as well as the successful
execution of a complete financing package for MVDP. The signing of the definitive agreements is expected
after the closing.
2. Project Overview
Total Copper Production: 1,700 kt over mine life
Project CAPEX:
US$731 million
Start-up of MVDP:
2023
3. Overview of Mantos Copper Holdings SpA– 13 –

Shareholders: Orion Mine Finance, Audley Mining Advisors Limited
Business Overview: Operation of Mantoverde copper mine and Mantos Blancos copper mine in Chile
Headquarters: Santiago, Chile
Executive Chairman: John MacKenzie(Signing of letter of intent for integration of Cement business)
The Company and Ube Industries, based on a resolution of the companies’ respective Board of
Directors meetings held today, have signed a letter of intent to start specific discussions and study on
the integration of their respective cement businesses and related businesses. The details of theintegration, which is to be implemented around April 2022, are given below.

Moving forward, the Company and Ube Industries will engage in specific discussions and study on the
integration, and they plan to sign a definitive agreement for the integration in or around late September
2020.
1 Purpose of the integration
In 1998, the Company and Ube Industries established Ube-Mitsubishi Cement Corporation as anequally-owned joint venture. Under the joint venture, the companies integrated their respective
standalone cement sales and logistics functions, realizing a certain degree of benefit including
reductions in logistics costs as well as back office expenses.
While the business situations surrounding the cement business in Japan are currently undergoingsignificant changes, including slowing demand and increased costs due to higher energy prices, it isnecessary for the Company and Ube Industries to establish a new framework for their cementbusinesses that builds upon the existing relationship including the joint venture, in order to realize thefuture growth of their cement businesses.
In response, the Company and Ube Industries have decided to start specific discussions and study on
the integration of the overall cement business and their respective related businesses. Under the
integration, the Company and Ube Industries will direct cash flows generated from the cementbusiness in Japan toward concentrated investment in businesses that are anticipated to generate growth
in and outside of Japan. Through these efforts, the Company and Ube Industries will endeavor to
realize sustainable growth as corporations that are contributing to the development of social
infrastructure and advancement of a recycling-oriented society, and to establish an optimal operationalframework for both companies.

2. Overview of the Integration
The scope of the integration is expected to encompass the cement and ready-mixed concretebusinesses, limestone resources businesses, energy and environmental-related businesses, construction
material businesses, and other related businesses of the Company and Ube Industries, both in andoutside of Japan.
The Company and Ube Industries plan to implement the integration (1) by establishing a new equallyowned joint venture (2) that will assume the respective businesses (including shares of subsidiaries
engaged in the businesses) by a company split method, and (3) via an absorption-type merger, with the
new joint venture being the surviving company, and Ube-Mitsubishi Cement being absorbed.
The Company and Ube Industries will engage in discussions and conduct study about investment ratioof the new integrated joint venture under the basic premise that each company will own a 50% stake inthe new joint venture after adjusting for the value of the businesses to be assumed by the new joint– 14 –

venture.
The Company and Ube Industries will mutually discuss and decide on the terms of the integration
including the aforementioned matters, by the time of signing the definitive agreement.
3. Schedule of Integration
February 12, 2020
Signing of letter of intent
September 2020 (may be subject to change) Signing of definitive agreement
June 2021 (may be subject to change)
Obtaining approval for integration at the ordinary generalshareholders’ meetings of Mitsubishi Materials and Ube
Industries
April 2022 (may be subject to change)
Effective date of integration
Note: Implementation of the integration is subject to completing the necessary filings for integration with relevant agencies inand outside of Japan including the Japan Fair Trade Commission, and being granted approval. Furthermore, it is subject toapproval at the general shareholders’ meetings of both companies (except where the integration clearly satisfies therequirements for a simplified absorption-type company split as stipulated in Article 784, paragraph (2) of the Companies Act
of Japan), and subject to circumstances or events not arising or coming to light that make it difficult to implement the
integration. The integration schedule is provisional at this time and subject to change based on discussions between thecompanies, because of approvals and other related procedures or other reasons having to do with fulfilling necessary
procedures.

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