Fiscal 2012 Summary
During fiscal 2012, ended March 31, 2012, economic conditions remained unstable due to such domestic factors as the impact of the Great East Japan Earthquake (which occurred on March 11, 2011) as well as overseas factors that included concerns over downside risks in the global economy, mainly reflecting the debt crisis in Europe, and the prolonged appreciation of the yen. Despite high prices for major metals, the business environment in which the Mitsubishi Materials Group operates remained unpredictable due to the impact of the earthquake, the floods in Thailand (which began in October 2011) and weakening demand in the semiconductor-related market.
In this environment, the Group strove to establish a system enabling it to maintain production activities at pre-disaster levels by working on a quick recovery from the earthquake and the floods in Thailand. In addition, we announced in August 2011 the medium-term management plan (fiscal 2012-2014), entitled “Materials Premium 2013—Aiming for New Creation”, which was established to enable the Group to reach the next growth phase. The initiatives of the plan we have implemented are listed below.
Consolidated results recorded by the Group in fiscal 2012 were as follow. Net sales amounted to ¥1,440.8 billion, up 8.0% from the previous fiscal year. Turning to earnings, operating profit declined year-on-year 8.7% to ¥52.2 billion, and net income declined 33.0% to ¥9.5 billion due to losses on disaster resulting from the earthquake and the floods in Thailand, as well as equity in losses of affiliates in relation to the business reorganization of SUMCO CORPORATION, an equity-method affiliate of the Company.
An Overview of the Medium-Term Management Plan
The basic concept of the Materials Premium 2013 medium-term management plan is: “Simultaneously implementing growth strategies and financial improvements.” We must implement the Plan carefully in order to maintain a balance between new growth strategies and financial improvements, which can potentially counter each other. Specifically, we will further promote the selection and concentration of investment in promising projects that are directly linked to the growth strategies outlined in the medium-term management plan. In this process, our growth strategies are underpinned by the initiatives: “business advancement in overseas markets, especially newly emerging nations” and the “realization of materials premium.”
Regarding the first growth strategy pillar, “business advancement in overseas markets, especially newly emerging nations,” we will focus on advancement into overseas markets, especially fast-growing Asian emerging markets and toward the overseas sales (excluding gold exports) target of ¥510 billion in fiscal 2014. To achieve this target, we plan to implement the key initiatives of undertaking regional strategies and marketing across business segments; establishing a common regional sales company by utilizing existing business bases; and expanding businesses that focus on non-Japanese customers.
In terms of the “realization of materials premium,” we are further strengthening collaboration among our businesses to expand and enhance our existing integrated areas and to create new business areas. Through these and other actions, we are working to generate distinctive synergies as an integrated business entity that engages in a wide range of businesses, including nonferrous metals, cement, and other processed materials.
As a part of this strategy, Mitsubishi Materials established the Mineral Resources & Recycling Business Unit in April 2011 to integrate the management of the resources and environmental recycling businesses in order to further enhance these operations.
The Groupwide quantitative management objectives in the medium-term management plan for fiscal 2014 are consolidated ordinary income of ¥110 billion, ROA (based on ordinary income) of 6.0% and a net debt/equity ratio of 1.5 times or below.
Outlook for Fiscal 2013
The performance of the Group was caused a major impact by the aforementioned natural disasters and equity in losses of affiliates in relation to the SUMCO CORPORATION during fiscal 2012, the first year of the medium-term management plan. However, the Tsukuba Plant and the Onahama Smelter & Refinery returned to regular operations in May 2011 and early September 2011, respectively. Both of these facilities had been damaged during the earthquake. In addition, MMC Tools (Thailand) Co., Ltd. is currently operating at full capacity due to early repairs to its facilities, which had been affected by the floods in Thailand.
The SUMCO CORPORATION has implemented a Business Reorganization Plan, which is intended to establish a corporate structure able to sustain stable profits even under the severe market conditions currently being experienced. In order to support their Business Reorganization Plan, we subscribed ¥15.0 billion of preferred shares issued by them.
Turning to growth strategies, we will accelerate overseas businesses expansion mainly by bolstering cement operations in the United States and increasing sales of cemented carbide products, processed copper products, electronic materials and aluminum products in emerging markets. At the same time, we will further promote aggressive Groupwide cost reductions. As part of our measures to support these growth strategies, the Group will promote development and use of staff across its businesses and companies in order to retain and develop diverse human resources including global staff. Moreover, we are committed to making an even greater contribution to the sustainable development of society by deepening our CSR activities.
The economic outlook both in Japan and overseas as well as such factors as foreign currency exchange rate and metal price trends remains unpredictable. In spite of these uncertainties, the Mitsubishi Materials Group will work in unison to successfully implement its medium-term management plan.
To Our Shareholders and Investors
We regard the distribution of profits to all shareholders as one of our most important priorities. Accordingly, our policy is to make decisions on profit appropriation based on comprehensive consideration of various factors related to overall management, such as income over the relevant period, retained earnings, and financial position. Based on this policy, we decided to pay an annual dividend for fiscal 2012 of ¥2.00 per share (¥0.00 interim dividend plus ¥2.00 year-end dividend). Dividend payments for fiscal 2013 are expected to increase to ¥4.00 per share (¥0.00 interim dividend plus ¥4.00 year-end dividend).
The Mitsubishi Materials Group will strive to achieve even further growth by successfully implementing the medium-term management plan, and share the profits generated by such growth with our shareholders.
We look forward to the unwavering support and understanding of the Company’s shareholders and investors.
June 28, 2012
Hiroshi Yao, President