Consolidated Financial Results for the Three Months Ended June 30, 2020
(Japanese Accounting Standards)
August 6, 2020
Tokyo Stock Exchange
https://www.mmc.co.jp/

Name of Listed Company: Mitsubishi Materials Corporation
Listing:
Stock Code:
5711
URL:
Representative: Naoki Ono, Chief Executive Officer
Contact:
Yuji Omura, General Manager, Corporate Communications Dept.
Scheduled filing date of Quarterly Report:
August 6, 2020
Scheduled date of start of dividend payment:–
Supplementary materials for the quarterly financial results: Yes
Investor conference for the quarterly financial results:
Yes (For Institutional Investors)

Tel: +81-3-5252-5206(Amounts of less than million yen are omitted.)

1. Results of the three months ended June 30, 2020 (From April 1, 2020 to June 30, 2020)(1) Consolidated Results of Operations (cumulative)(Figures in percentages denote the year-on-year change.)
Net sales

Operating profit

Million yen

Profit (loss)
attributable toowners of parent

Ordinary profit%

Million yen%

Million yen%

Million yen%

The three months ended June 30, 2020

344,363

-6.0

2,506

-72.1

3,118

-83.7

442

-81.7

The three months ended June 30, 2019366,256

-12.8

8,992

-46.8

19,191

6.2

2,411

-75.6

(Note) Comprehensive income:The three months ended June 30, 2020: 10,689 million yen (–%)
The three months ended June 30, 2019: -14,800 million yen (–%)

Profit (loss)
per share

Diluted net income
per share
Yen

Yen

The three months ended June 30, 2020

3.38

–

The three months ended June 30, 2019

18.41

–

(2) Consolidated Financial Position
Total assets
As of June 30, 2020
As of March 31, 2020
(Reference) Shareholders’ Equity:

Shareholders’equity ratio

Total net assets

Million yen

Million yen%

1,929,513

565,35925.8

1,904,050

586,034

26.6

As of June 30, 2020: 497,993 million yen

As of March 31, 2020: 506,781 million yen

2. Dividend Payments
Dividend per share(Record date)

First quarter

Second quarter

Yen

Year ended March 31, 2020–

Year ending March 31, 2021–

Third quarter

Yen

Year ending March 31, 2021 (Forecast)Year-end

Yen

Annual
Yen

Yen

40.00

–

40.00

80.00

0.00

–

40.00

40.00

(Note) Revision of dividend forecast published most recently: Yes

3. Consolidated Earnings Forecast (From April 1, 2020 to March 31, 2021)(Figures in percentages denote the year-on-year change.)

Net sales
Six months ending
September 30, 2020
Year ending March 31,
2021

Operating profit

Million yen%

Million yen

720,000
1,410,000

-3.8
-7.0

-2,000-5,000(Note) Revision to forecast published most recently: Yes%––

Profit (loss)
attributable toowners of parent

Ordinary income
Million yen%

Million yen

00-100.0-100.0-5,000-10,000

Profit(loss) per
share
%

–
–

Yen

-38.23-76.50* Notes(1) Significant changes of subsidiaries during the term (changes in specific subsidiaries accompanied by a change in thescope of consolidation):
Yes
New: - (Company name: - ), Exempt: 1 Company (Company name: Mitsubishi Shindoh CO., LTD)
(Note) For details, please see “(3) Notes on quarterly consolidated financial statements Changes of significant subsidiaries during
the three months ended June 30, 2020” under “2. Consolidated Financial Statements and Key Notes” on page 11.
(2)

Application of special accounting treatment in the preparation of the quarterly consolidated financial statements:
Yes(Note) For details, please see “(3) Notes on quarterly consolidated financial statements Application of special accounting
treatment in the preparation of quarterly consolidated financial statements” under “2. Consolidated Financial Statements and Key
Notes” on page 11.

(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
None
None
None

(4) Numbers of issued shares (common stock)(i)
Numbers of issued shares at end of period (including treasury shares):Three months ended June 30, 2020:
131,489,535 sharesYear ended March 31, 2020:
131,489,535 shares(ii)
Numbers of treasury shares at end of period:
Three months ended June 30, 2020:
826,001 sharesYear ended March 31, 2020:
550,160 shares(iii) Average number of shares issued during period (quarterly cumulative period):
Three months ended June 30, 2020:
130,870,276 shares
Three months ended June 30, 2019:
130,949,845 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 constitutean 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” under “1. Qualitative Information on
Financial Results for the First Three Months Ended June 30, 2020” on page 2 for the assumptions about consolidated earnings forecasts.
(Procedure for obtaining supplementary information on quarterly financial results and quarterly financial briefing)
Mitsubishi Materials Corporation plans to hold a quarterly financial briefing for institutional investors on Thursday, August 6, 2020.
The materials used at this briefing are disclosed on the TDnet and the Company’s web page at the time that the quarterly financial
results are announced.

Contents

1. Qualitative Information on Financial Results for the First Three Months Ended June 30, 2020 ........ 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 sheets .................................................................................................................. 5(2) Consolidated statements of profit or loss and consolidated statements of comprehensive income ....... 7
Consolidated statements of profit or loss .......................................................................................................................... 7
Consolidated statements of comprehensive income.......................................................................................................... 8(3) Notes on quarterly consolidated financial statements ............................................................................ 9
Notes on going concern assumption ................................................................................................................................. 9
Segment information ........................................................................................................................................................ 9
Notes on significant changes in the amount of shareholders’ equity, if any ................................................................... 11
Changes of significant subsidiaries during the three months ended June 30, 2020 ......................................................... 11
Application of special accounting treatment in the preparation of quarterly consolidated financial statements ............. 11
Additional information ................................................................................................................................................... 11
Business combinations and other relationships............................................................................................................... 12
Contingent liabilities....................................................................................................................................................... 14
Related to consolidated statement of income .................................................................................................................. 16－ 1 －1. Qualitative Information on Financial Results for the First Three Months Ended June 30, 2020
(1) Details of operating results1) Overview of operating results
During the first quarter of the consolidated fiscal year, the global economy was in considerable constraints on its
economic activities due to the global spread of COVID-19. In China, the economy appeared to be recovering, but inThailand and Indonesia, economic growth abruptly decelerated. In Europe and the United States, economic slowdown
was also intensified.
In Japan, due to COVID-19, the employment and income conditions deteriorated and exports and industrial production
showed an abrupt decline.
Regarding the business environment for the Mitsubishi Materials Group (hereinafter referred to as “the Group”), theGroup was affected by the global spread of COVID-19. Demand in semiconductor-related sectors remained favorable,
while demand in automobile-related sectors substantially declined. In addition, copper prices fell and domestic demandfor cement declined.
Under these circumstances, consolidated net sales for the first three months of the year under review totaled ¥344,363
million, down 6.0% year-on-year. Operating profit decreased 72.1% year-on-year to ¥2,506 million, and ordinary profit
fell 83.7% year-on-year to ¥3,118 million. As a result, profit (loss) attributable to owners of parent fell 81.7% year-onyear to ¥442 million.
2) Overview by segments
From the first quarter of the fiscal year, the reporting segments have been changed. The details are set forth in “2. (3)Notes on consolidated quarterly financial statements (segment information).” In this regard, the following year-on-yearcomparisons are based on the figures for the same quarter of the previous year reclassified into the new categories.
(Advanced Products)(Billion yen)
FY 2020 Q1

FY 2021 Q1

Increase / Decrease (%)

Net sales

97.6

79.9

-17.7

(-18.1%)

Operating profit (loss)

1.2

-0.1

-1.3

(-%)

Ordinary profit (loss)

1.6

-0.7

-2.3

(-%)

In the Copper & copper alloy products business, both net sales and operating profit declined due to decreased sales forautomotive products, mainly affected by the global spread of COVID-19.
In the Electronics materials & components business, while sales of automotive products declined due to the global spreadof COVID-19, among others, sales of semiconductor-related products increased. In addition, production costs ofpolycrystalline silicon also decreased. As a result, net sales decreased but operating profit increased.
Consequently, net sales and operating profit for the entire Advanced Products decreased year-on-year. Ordinary profit
declined due to the decrease in operating profit.
(Metalworking Solutions Business)(Billion yen)
FY 2020 Q1

FY 2021 Q1

Increase / Decrease (%)

Net sales

40.4

27.9

-12.4

(-30.9%)Operating profit (loss)

3.4

-1.2

-4.6

(-%)

Ordinary profit (loss)

3.0

-1.3

-4.4

(-%)

In the Cemented carbide products business, both net sales and operating profit declined, due to decreased sales mainly of
automotive products in Japan and overseas major countries, mainly affected by the global spread of COVID-19.
In the Sintered products, etc. business, losses increased due to decreased sales of sintered parts, which are major products
in Japan and major countries overseas, affected by the global spread of COVID-19, among others.
Consequently, net sales and operating profit for the entire Metalworking Solution Business decreased year-on-year.
Ordinary profit declined due to the decrease in operating profit.

－ 2 －(Metals Business)(Billion yen)
FY 2020 Q1
Net sales

FY 2021 Q1

Increase / Decrease (%)

151.9

157.8

5.9

(3.9%)

Operating profit

1.2

1.5

0.3

(28.7%)

Ordinary profit

9.7

1.6

-8.0

(-82.7%)In the Copper business, both net sales and operating profit decreased due mainly to a decline in copper prices while
production increased year-on-year.
In the Gold and other valuable metals business, both net sales and operating profit increased due mainly to a hike inpalladium prices.
Consequently, net sales and operating profit for the entire Metals Business increased year-on-year. Ordinary profit
declined due to a decrease in dividend income.
(Cement Business)(Billion yen)
FY 2020 Q1

FY 2021 Q1

Increase / Decrease (%)

Net sales

60.6

51.2

-9.3

(-15.5%)

Operating profit

4.2

1.9

-2.2

(-53.0%)Ordinary profit

5.0

2.5

-2.5

(-49.2%)

In Japan, both net sales and operating profit decreased, reflecting lower sales volumes as a result of the suspension of
construction work in the Tokyo metropolitan and other areas following the spread of COVID-19, as well as increased
repair expenses as a result of moving up the schedule of plant shut downs in anticipation of demand decline.
Overseas, in the United States, sales volume of ready-mixed concrete decreased and operating expenses, including suchas raw materials costs, also increased. In addition, in the Coal business in Australia, coal sales prices fell. As a result,both net sales and operating profit decreased.
Consequently, net sales and operating profit for the entire Cement Business decreased year-on-year. Ordinary profit
declined due to the decrease in operating profit.
(Environment & Energy Business)(Billion yen)
FY 2020 Q1

FY 2021 Q1

Increase / Decrease (%)

Net sales

4.4

4.6

0.1

(4.3%)

Operating profit (loss)

0.0

-0.0

-0.1

(-%)

Ordinary profit

0.3

0.2

-0.0

(-30.2%)In the Energy-related business, net sales and operating profit increased due to increased sales in the Nuclear-energyrelated services business, etc.
In the Environmental and recycling-related business, losses expanded, reflecting increased selling, general andadministrative expenses in addition to decreased net sales due to a decline in the unit sales prices of valuables.
Consequently, net sales for the entire Environment & Energy Business increased year-on-year, but operating profit
decreased. Ordinary profit declined due to the decrease in operating profit.

－ 3 －(Other Businesses)(Billion yen)
FY 2020 Q1

FY 2021 Q1

Increase / Decrease (%)

Net sales

66.8

61.9

-4.8

(-7.3%)

Operating profit (loss)

-0.3

0.8

1.1

(-%)

Ordinary profit (loss)

-0.2

0.7

1.0

(-%)

In the Aluminum beverage cans business, sales of regular cans increased due mainly to an increase in demand for
drinking at home following the spread of COVID-19. Raw materials costs and energy costs also declined. As a result,both net sales and operating profit increased.
In the Aluminum rolled and processed products business, losses were reduced due to decreased depreciation resulting
from the recording of impairment loss on fixed assets by Mitsubishi Aluminum Co., Ltd. in the previous fiscal year, as
well as effects of cost reduction and others, in spite of a decrease in sales for mainly automotive products, affected by the
global spread of COVID-19 principally.
In the businesses other than the Aluminum beverage cans business and the Aluminum rolled and processed products
business, both net sales and operating profit in the aggregate decreased.
Consequently, net sales for the entire Other Businesses decreased year-on-year, but operating profit increased.
Ordinary profit increased due to the increase in operating profit.

(2) Details of financial position
Total assets at the end of the first quarter of the consolidated fiscal year under review stood at ¥1,929.5 billion, up ¥25.4
billion from the end of the previous consolidated fiscal year. This was due mainly to an increase in investment securities
during the first quarter.
Total liabilities were ¥1,364.1 billion, an increase of ¥46.1 billion from the end of the previous consolidated fiscal year.
This was due mainly to an increase in borrowings during the first quarter under review.

(3) Information on the consolidated earnings forecasts and other future forecasts
With regard to the consolidated earnings forecasts and dividend forecasts for the fiscal year ending March 31, 2021,
which were undetermined, the Company has announced the consolidated earnings forecasts and dividend forecasts forfiscal year ending March 31, 2021. For further details, please refer to the “Notice Regarding the Consolidated Earnings
Forecasts, Dividend Forecasts and Non-Consolidated Earnings Forecasts” separately announced today.

－ 4 －2. Consolidated Financial Statements and Key Notes(1) Consolidated balance sheets(Million yen)
As of March 31, 2020
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance 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, net
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets－ 5 －As of June 30, 2020

134,444
217,259
111,409112,908
127,908
254,001(2,470)955,462

142,742
194,237
120,061
106,812
133,089
271,835(2,529)966,249

218,923
216,487
223,888659,298

215,619
214,578
225,689
655,886

35,586
15,90651,492

34,095
15,27249,368183,043
58,866(4,112)
237,796
948,588
1,904,050

199,437
62,679(4,108)258,009963,263
1,929,513

(Million yen)
As of March 31, 2020
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Commercial papers
Income taxes payable
Other provisions
Deposited gold bullion
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term borrowings
Provision for environmental measures
Provision for loss on business restructuring
Other provisions
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests
Total net assets
Total liabilities and net assets－ 6 －As of June 30, 2020

113,148
191,038
50,000
10,221
14,424294,312
124,746
797,892

118,200
202,860
58,0005,856
7,972
318,686
113,311824,888

60,000246,578
32,581
30,272
6,117
56,312
88,261
520,123
1,318,016

60,000269,024
30,217
28,687
4,535
54,026
92,774539,264
1, 364,153

119,457
92,393274,723(2,157)484,416

119,457
79,234
269,886(2,844)
465,734

22,806

33,694708
28,059(12,212)(16,997)(1,312)
28,059(12,990)(15,192)

22,36432,25879,252586,034
1,904,050

67,366565,359
1,929,513

(2) Consolidated statements of profit or loss and consolidated statements of comprehensive income
Consolidated statements of profit or loss
(Million yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Rental income on non-current assets
Share of profit of entities accounted for using equity
methodOther
Total non-operating income
Non-operating expenses
Interest expenses
Expense for the maintenance and management ofabandoned mines
Share of loss of entities accounted for using equity
methodOther
Total non-operating expenses
Ordinary profit
Extraordinary income
Reversal of provision for loss on businessrestructuring
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary losses
Impairment loss
Provision for loss on the Antimonopoly Act
Other
Total extraordinary losses
Profit (loss) before income taxes
Income taxes
Profit (loss)
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent

Three Months Ended
Three Months Ended June 30,
June 30, 20192020
(April 1, 2019-June 30, 2019) (April 1, 2020-June 30, 2020)
366,256
344,363319,134
306,025
47,12238,337
38,13035,830
8,992
2,506

－ 7 －

346
11,074
1,268

225
2,268
1,206

765

－

1,205
14,660

1,451
5,151

1,263

1,053

948

741

－

159

2,249
4,461
19,191

2,585
4,539
3,118

－

1,584

1,070
53
1,123

21
135
1,741

478
10,42327
10,928
9,386
5,655
3,730
1,319
2,411

286
－
7
293
4,566
3,285
1,280
838
442

Consolidated statements of comprehensive income(Million yen)

Profit (loss)
Other comprehensive income
Valuation difference on available-for-salesecurities
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(Break down)Comprehensive income attributable to
Owners of parent
Non-controlling interests

Three Months Ended June 30,
2019(April 1, 2019-June 30, 2019)
3,730

Three Months Ended June 30,
2020(April 1, 2020- June 30, 2020)
1,280(12,970)

10,8301,881(6,808)(393)(2,587)
(801)
1,787

(240)

181

(18,531)(14,800)

9,409
10,689(14,325)(474)

10,335353－ 8 －(3) Notes on quarterly consolidated financial statements
Notes on going concern assumption
N/A

Segment information[Segment Information]
I. For the three months ended June 30, 2019 (from April 1, 2019 to June 30, 2019)
1. Information on net sales and income of each reporting segment(Million yen)AmountEnvironment

Metalworking
Advanced
Products

Solutions
Business

indicated in the

MetalsCement&Other

Business

Business

EnergyBusinesses

Total

Adjustment

quarterly

amountconsolidated

Businessstatements ofprofit and loss

Net sales
95,15337,455

110,877

59,885

4,328

58,556366,256－

366,256

2,494

2,993

41,049

717

126

8,317

55,698(55,698)－

Total

97,64740,449151,926

60,602

4,455

66,873421,955(55,698)366,256

Segment income (loss)

1,630

3,066

9,767

5,085

318

(299)

19,568(376)

19,191(1) Outside customers(2) Within consolidated
group

Notes:
1.
2.

“Other Businesses” includes aluminum-related business and engineering-related services.
“Adjustment amount” of segment income (loss) of -¥376 million includes the elimination of intersegment transactions of -¥36
million and corporate expenses of -¥340 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 research3.

expenses, and financial income and expenses.
Segment income (loss) has been adjusted together with ordinary profit on the consolidated statements of profit or loss.

II. For the three months ended June 30, 2020 (from April 1, 2020 to June 30, 2020)
1. Information on net sales and income of each reporting segment(Million yen)AmountEnvironment
Advanced
Products

Metalworking
Solutionsindicated in the

MetalsCement&Other

Business

Business

EnergyBusinesses

Business

Total

Adjustment

quarterly

amountconsolidated

Businessstatements ofprofit and loss

Net sales
77,12725,864132,266

50,732

4,545

53,826344,363－344,363

2,810

2,097

25,563

473

102

8,158

39,206(39,206)－

Total

79,937

27,961

157,829

51,206

4,648

61,985383,569(39,206)

344,363

Segment income (loss)(714)(1,379)

1,686

2,584

222

756

3,157

(38)

3,118

(1) Outside customers(2) Within consolidated
group

Notes:
1.
2.

“Other Businesses” includes aluminum-related business and engineering-related services.
“Adjustment amount” of segment income (loss) of -¥38 million includes the elimination of intersegment transactions of -¥37
million and corporate expenses of -¥0 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－ 9 －expenses, and financial income and expenses.
3.

Segment income (loss) has been adjusted together with ordinary profit on the consolidated statements of profit or loss.

2. Matters regarding the change of the reporting segments, among other changes
Mitsubishi Materials Corporation (hereinafter referred to as “the Company”) has changed its reporting segments as aresult of the organizational restructuring made on April 1, 2020.
Consequently, the business related to energy and environmental and recycling-related businesses included in the “Other
Businesses” is sectionalized into the “Environment & Energy Business” and the business related to aluminum includedin the “Advanced Products” are sectionalized into the “Other Businesses”.
Further, the business related to cement sales included in the “Other Businesses” has been transferred to the “Cement
Business”.
In addition, to more properly assess and manage the performance by each reporting segment, the Company has reviewed
the method of allocating common costs of the Company and changed the method of calculating the profits or losses of
the reporting segments.
In this regard, the segment information for the first quarter of the previous consolidated fiscal year is disclosed herein
according to the changed segmentation and calculation methods of the reporting segments.

－ 10 －

Notes on significant changes in the amount of shareholders’ equity, if any
N/AChanges of significant subsidiaries during the three months ended June 30, 2020
For the first three months ended June 30, 2020, the Group excluded Mitsubishi Shindoh Co., Ltd. which was theCompany’s specified subsidiary company, from the scope of consolidation since it dissolved due to an absorption-typemerger in which the Company was the surviving company.

Application of special accounting treatment in the preparation of quarterly consolidated financial
statements
The Company calculates tax expenses by rationally assuming an effective tax rate after applying tax effect accounting to
net income before income taxes for the consolidated fiscal year, including the first quarter, and multiplying net income
before income taxes for the three months by the estimated effective tax rate.

Additional information
Stock-based compensation system
1. Overview of transaction
The Company have introduced a stock-based compensation system (hereinafter referred to as the “System”) for its
executive officers, operating officers and fellows (excluding non-domestic residents, hereinafter referred to as the“Officers”) from May 2020.
The System adopts a structure called Board Incentive Plan Trust (hereinafter referred to as the “BIP Trust”). The System
is to issue and grant to the Officers the Company’s shares and cash equal to the amount of the Company’s shares to beconverted into cash, according to the Officers’ positions or the like.
2. The Company’s shares remaining in the BIP Trust
The Company recorded the Company’s shares remaining in the BIP Trust in the net assets as the treasury shares in an
amount of their book value in the BIP Trust (excluding the amount of ancillary expenses). The book value and thenumber of the Company’s treasury shares are ¥684 million and 274 thousand shares respectively at the end of the firstquarter of the current consolidated fiscal year.
(Accounting estimates associated with the spread of COVID-19)
Due to the global spread of COVID-19, the Group’s major business locations in Japan and overseas have been affectedby decreased demand mainly for automotive products.
However, as a result of examinations based on third-party information and others available as of the end of the firstquarter of the current consolidated fiscal year, no material change has been made in the assumptions, including the
spread in the future and winding-down timing of COVID-19, described in the Annual Securities Report (Additional
information) (Accounting estimates associated with the spread of COVID-19) for the previous consolidated fiscal year.

－ 11 －

Business combinations and other relationships(Additional purchase of subsidiaries’ shares)
The Company entered into a share purchase agreement with Hitachi Metals, Ltd. On March 2, 2020 under which theCompany acquires the shares in Mitsubishi Hitachi Tool Engineering, Ltd. which is a subsidiary of MMC, and has
acquired such shares on April 1, 2020.
1. Overview of transaction(1) Name and business of acquired enterprise
Name of acquired enterprise: Mitsubishi Hitachi Tool Engineering, Ltd.
Description of business: Manufacturing and sales of cemented carbide tools.
(2) Date of business combination
April 1, 2020
(3) Legal form of business combination
Purchase of shares from non-controlling shareholders whose consideration is cash.
(4) Name of the company after the business combination
MOLDINO Tool Engineering Ltd.
(5) Other matters concerning overviews of transaction
The Company additionally acquired 49% of the voting rights of Mitsubishi Hitachi Tool Engineering, Ltd. resulting in
the Company holding 100% of the voting rights. The purpose of the additional acquisition is to cope with rapidlychanging market needs and to realize more flexible operation.
2. Overview of implemented accounting procedures
The Company has made account processing for the merger as a transaction conducted with non-controllingshareholders under common control in accordance with the Accounting Standard for Business Combinations(Accounting Standards Board of Japan (hereinafter “ASBJ”) Statement No. 21, January 16, 2019) and Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (ASBJ GuidanceNo. 10, January 16, 2019).
3. Matters to be provided upon additional purchase of subsidiaries’ share
Cost of acquisition and breakdown of considerations by kindConsideration for acquisition (million yen)
Cash and deposits
Acquisition cost (million yen)

24,92024,9204. Matters concerning changes in the Company’s interest due to transactions with non-controlling shareholders(1) Major factors affecting capital surplus
Additional purchase of subsidiaries’ shares(2) Amount of capital surplus decreased by transactions with non-controlling shareholders¥13,009 million(Absorption-type merger of consolidated subsidiary)
The Company resolved at a meeting of its Board of Directors held on July 31, 2019 to conduct an absorption-type mergerof Mitsubishi Shindoh Co., Ltd., a consolidated subsidiary of the Company and conducted such absorption-type merger
as of April 1, 2020.
1. Overview of the transaction(1) Name and business of the acquired enterprise:
Name of the acquired enterprise: Mitsubishi Shindoh Co., Ltd.
Description of business: Rolling, extruding and casting of copper and copper alloys and the processing and sales, etc.,
thereof.
(2) Date of business combination
April 1, 2020
(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 company after the business combination－ 12 －

Mitsubishi Materials Corporation(5) Other matters concerning overview of transaction
The purpose of the merger is to integrally operate the Group’s management resources in the Copper & Copper Alloy
Business in order to invest more actively and flexibly, to develop products promptly that meet market needs and to
improve and enhance the production and sales systems in Japan and overseas.
2. Overview of implemented accounting procedures
The Company has made account processing for 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 the Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (ASBJ GuidanceNo. 10, January 16, 2019).

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Contingent liabilities(Matters concerning taxation in Indonesia)
Previous consolidated fiscal year (As of March 31, 2020)
On December 30, 2014, PT. Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafterreferred to as “the PTS”) received a notice of reassessment in an amount of US$47 million (¥5,209 million basedon the exchange rate at the end of the previous consolidated fiscal year) from the Indonesian National Tax
Authority, regarding the sales transaction pricing of PTS for the year ended December 31, 2009. On January 28,
2015, PTS made a provisional deposit of US$14 million (¥1,523 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 on June 6, 2016 to present its
fairness of the view of the Company and the PTS but the complaint was dismissed on January 30, 2020. Alongwith this, the PTS paid the shorted amount of deposit of US$33 million (¥3,685 million) on March 23, 2020 and
paid the same amount of surcharge on April 24, 2020 respectively. However, the court decision ruled by the tax
court was unacceptable for the Company and the PTS, and the PTS appealed to the Supreme Court on June 8,2020 to present the fairness of the view of the Company and the PTS.
On November 29, 2017, the PTS also received a notice of reassessment in an amount of US$ 22 million (¥2,484
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2012. On December 27, 2017, the PTS made a provisional
deposit of US$6 million (¥685 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 from a point of view that unilaterally negated the basis for recording gains andlosses 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, on May 17, 2019 the PTS filed a complaint to the tax court inIndonesia 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 (¥1,655
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2014. On December 27, 2018, the PTS made a provisional
deposit of US$5 million (¥638 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 from 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 (¥1,020 million). For US$4 million (¥515 million), for which the written objection was
dismissed, the PTS has decided to file a complaint to the tax court in Indonesia.
In the previous consolidated fiscal year, the total amount for additional collection being disputed by the PTS,
including amounts for the fiscal year described above as well as amounts for the fiscal year ended December 31,
2011, the fiscal year ended December 31, 2013, the fiscal year ended December 31, 2015, the fiscal year ended
December 31, 2016 and the fiscal year ended December 31, 2018, is US$125 million (¥13,669 million). There
are some cases that a surcharge may be imposed due to the objections or the results of tax trials.

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First quarter of the consolidated fiscal year under review (As of June 30, 2020)
On December 30, 2014, PT. Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafterreferred to as “the PTS”) received a notice of reassessment in an amount of US$47 million (¥5,157 million basedon the exchange rate at the end of the first quarter of the consolidated fiscal year ) from the Indonesian National
Tax Authority, regarding the sales transaction pricing of the PTS for the year ended December 31, 2009. On
January 28, 2015, the PTS made a provisional deposit of US$14 million (¥1,508 million) as a part of theadditional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on March 25, 2015,
because this assessment , which claimed there was a sales shortage on the part of the PTS based on a comparisonof the profit margin ratio with other companies selected by the Indonesian National Tax Authority, was highly
unreasonable and found to be unacceptable by the Company and the PTS.
The written objection submitted by the PTS on March 25, 2015 was dismissed by the Indonesian National Tax
Authority on March 16, 2016. The PTS filed a complaint to the tax court on June 6, 2016 to present its fairnessof the view of the Company and the PTS, however it was dismissed on January 30, 2020. Along with this, thePTS paid the shorted amount of deposit of US$33 million (¥3,648 million) on March 23, 2020, and paid asurcharge of US$33 million (¥3,648 million) on April 24, 2020 respectively. However, the court decision ruledby the tax court was unacceptable for the Company and the PTS, and the PTS appealed to the Supreme Court on
June 8, 2020 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 (¥2,459
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2012. On December 27, 2017, the PTS made a provisional
deposit of US$6 million (¥678 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 from a point of view that unilaterally negated the basis for recording gains andlosses 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, on May 17, 2019 the PTS filed a complaint to the tax court inIndonesia 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 (¥1,639
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2014. On December 27, 2018, the PTS made a provisional
deposit of US$5 million (¥632 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 from 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 (¥1,010 million). For US$4 million (¥510 million), for which the written objection was
dismissed, the PTS filed a complaint to the tax court in Indonesia on July 7, 2020 to present the fairness of theview of the Company and the PTS.
At the end of the first quarter of the consolidated fiscal year, the total amount for additional collection being
disputed by the PTS, including amounts for the fiscal years described above as well as amounts for the fiscal
year ended December 31, 2011, the fiscal year ended December 31, 2013, the fiscal year ended December 31
2015, the fiscal year ended December 31, 2016 and the fiscal year ended December 31, 2018, is US$125 million(¥13,533 million). There are some cases that a surcharge may be imposed due to the objections or the results oftax trials.

－ 15 －

Related to consolidated statement of income* Reversal of provision for loss on business restructuring
For the three months ended June 30, 2020 (April. 1, 2020–June 30, 2020)
The Company has reported as reversal of the provision for loss on business restructuring under the item of
extraordinary income, the loss incurred from the business restructuring by the affiliated company engaging in the
Sintered parts business for the three months ended June 30, 2020 by reversing the provision for loss on businessrestructuring accounted for to prepare for any loss on business restructuring expected to be incurred by theaffiliated company engaging in the Sintered parts business.

－ 16 －