Mitsubishi Materials Corporation

Management Strategy

Overview of the Medium-term Management Strategy (FY2023 Strategy)

* Updated in accordance with "Notice Regarding Partial Revision to Medium-Term Management Strategy" dated May 14, 2021.

Value creation process

The Mitsubishi Materials Corporation Group ("the Group") will utilize its strengths that include "an advanced recycling technology and business platform," "value chain from raw materials to products with a stable supply," "unique material development and manufacturing technology," and "a team that can unite to resolve issues," etc., to solve social issues, promote key group initiatives, and strengthen its core businesses, and thereby further both social and economic values.

Value creation process Click for enlarge

Mission of MMC

Based on its corporate philosophy of "For People, Society and the Earth", the Group's vision is "We will become the leading business group committed to creating a sustainable society through materials innovation, with use of our unique and distinctive technologies, for People, Society and the Earth". Based on the corporate philosophy and vision, MMC formulated the FY2023 Strategy that sets out MMC's mission and medium- and long-term goals from FY 2031 to FY2051 from the perspective of creating both social and economic values.

Mission of MMC Click for enlarge

Financial plan

1.Financial indicators and targets

The FY2023 Strategy emphasizes medium- to long-term profitability and growth potential for each business, and profitability and growth potential primarily by ROIC and EBITDA growth rate, respectively. In the process-type business, ROA is used as a complement, and ROIC, ROE, and ROA are used together as corporate financial indicators. After the revision, the company's financial targets for FY2023 are: ROIC 4.0%, ROA 2.0%, ROE 6.0%, a consolidated operating profit of ¥29 billion, a consolidated ordinary income of ¥38 billion, and a net D/E ratio of 1.0 times or less.

(Unit: billion yen)
  FY2020
Result
FY2021
Result
FY2023
Target
(*1)
Change rate
from FY2020
Remarks
ROIC (%) 3.8 3.8 4.0 +0.2points  
ROA (Ordinary income to total assets) (%) 2.6 2.3 2.0 -0.6points  
ROE (%) -12.8 4.6 6.0    
P/L Net sales 1,516.1 1,485.1 1,410.0 -7%

【Ordinary income fluctuation factors】
Market conditions 5.5
Metal prices 3.0
Exchange rate 2.0
Dividend from mine -5.5

Impact of the change in accounting treatment of cement business becoming a minority share holding -10.0

Others -6.6
Total -11.6

Net sales
(excluding metal)
857.3 795.1 600.0 -30%
Operating profit 37.9 26.5 29.0 -23%
Ordinary income 49.6 44.5 38.0 -23%
B/S Total assets 1,904.0 2,035.5 1,820.0 -4%
Net interest-bearing debt 413.1 476.3 360.0 -13%
Shareholders' Equity 506.7 545.2 560.0 +11%
Net D/E ratio (times) 0.8 0.9 1.0 or less  
Assumptions Exchange rate (yen/$) 109 106 110   【Sensitivity】
◆1 yen increase in USD/JPY
exchange rate: +0.8 billion yen

◆10¢/lb increase in copper price (LME)
: +1.6 billion yen (Ordinary income)
Exchange rate (yen/€) 121 124 130  
Copper price (¢/lb) 266 312 330  

*1 Assuming transition to equity method in cement business

2.Investment policy

For the period of the FY2023 Strategy, total investment is estimated to be \355 billion, with a growth strategy investment of \195 billion and maintenance and upgrading investment of \160 billion. Financial resources for investment will be generated by using cash flow from operations and proceeds from business restructuring and asset sales. While cash flow from operations is expected to decrease due to the impact of the COVID-19, the Company will restrain growth investment during the FY2023 Strategy period in businesses where demand expansion will be slower than expected, and aggressively invest in mines and M&A that are expected to generate high profits due to copper price hike. In addition, the Company will ensure to invest in upgradings to minimize opportunity cost due to problems with aging facilities, thereby securing the foundation of profitability and leading to future growth.

Investment policy Click for enlarge

3.Shareholder return policy

The Company recognizes that the return of profits to its shareholders is one of the most important management issues. It is the Company's basic policy to provide a stable and continuous return to its shareholders while making decisions about shareholder return based on a comprehensive assessment of factors across its management, which include earnings for the period, internal reserves, and financial standing. The amounts of dividends will be determined by taking into consideration the funds required for investments, which includes "optimization of business portfolio", "relentless pursuit of enhancing competitiveness", and "creation of new products and businesses" as stated in the Group-wide Policy, as well as future business outlook, financial standing, etc. Regarding share buybacks, the Company will implement them expeditiously as additional shareholder returns, and improve capital efficiency.
The Company planned to pay out an annual dividend of \80 per share during the period of FY2023 Strategy. However, due to the impact of the COVID-19, cash flows from operations during the same period are expected to be much lower than the initial forecast. Under these circumstances, the Company while placing an emphasis on stability and continuity with regard to dividends, will set the minimum amount of dividends per share during the period of FY2023 Strategy at \50 based on the level of cash flows from operations that the Company has assumed can be generated on a stable basis. By accelerating the sale of assets, among others, and making expeditious allotments of funds, including share buybacks and additional dividends , the Company aims to return profits to its shareholders at the same level as the total amount of dividends initially planned during the period of FY2023 Strategy.

4.Optimization of business portfolio (See the attachment)

The Electronic materials & components business consists of multiple businesses with different profitability and growth potential. Therefore, the business portfolio was positioned as "medium" in terms of both profitability and growth potential as of March 25, 2020 when the FY2023 Strategy was released. In line with this revision, the Company has subdivided the Electronic materials & components business and clarified its positioning in the business portfolio by indicating the profitability and growth potential of each business. Going forward, the Company will manage each business depending on such positioning.

Optimization of business portfolio Click for enlarge

5.DX strategy (MMDX: Mitsubishi Material Digital Business Transformation)

As part of the DX strategy, the Company established the Digital Transformation Management Office in April 2020. In order to further specify the measures set forth in the FY2023 Strategy, in FY2021, the Company selected DX themes and studied the details for implementing the measures. As a result, 21 DX themes were selected including "Review the entire business process with a focus on 'get closer to customers'", "Create a foundation for catching up to competitors' efforts and winning on a global scale" and "Strengthen the management foundation by upgrading manufacturing excellence such as safety and security, enhancing business management and data utilization, and promoting business efficiency". The Company also developed a MMDX action plan for 6 years from FY2021 to FY2026.

MMDX Theme Click for enlarge
MMDX Click for enlarge

Business strategy of each segment

<Advanced Products Business>

Long-term
business goals
Global First Supplier
Long-term strategy
  • Create new businesses and products through the sophistication and integration of our core competencies (e.g. production and development of oxygen-free copper, oxygen-free copper base alloys, and functional materials as well as technical capabilities such as bonding different metals, etc.)
  • Accelerate of marketing activities to replicate successful practice
Specific measures of the FY2023 Strategy
  • Assign key account managers acting cross-sectionally
  • Enhance information analysis by digital marketing such as the employment of AI or IoT
  • Share product roadmaps with customers (co-creation capabilities)
  • Develop new products through collaboration with Central Research Institute
  • Fortify production capabilities such as establishing a mass production system and improving productivity
  • Pursue opportunities to execute M&A or business alliances

<Metalworking Solutions Business>

Long-term
business goals
Top 3 supplier in strategic markets
Long-term strategy
  • Promote clean manufacturing
  • Provide high-efficiency products with advanced technology
  • Expand advanced metal powder business in electronic devices
Specific measures of the FY2023 Strategy
  • Increase recycling rate in our tool recovery system and utilize renewable energy
  • Provide high efficiency tools and digital solutions
  • Transition to smart factory and optimization of logistics and supply chain
  • Expand advanced metal powder business to rechargeable battery market

<Metals Business>

Long-term
business goals
Leader in environmentally-friendly mining & smelting business
Long-term strategy

Stable supply and recycling of nonferrous metal materials, predominantly copper

  • Creation of a sustainable raw material portfolio consisting of clean copper concentrate and E-Scrap
  • Promotion of recycling
  • Response to climate change
Specific measures of the FY2023 Strategy
  • Secure clean copper concentrate by investing in new mines
  • Develop impurity removal technology in copper concentrate
  • Optimize valuable metal material flow
  • Reduce fossil fuels

<Cement Business>

Long-term
business goals
Leader in the domestic and international cement industry with advanced environmental technologies
Long-term strategy
  • Stable supply of basic building materials for social infrastructure and disaster prevention infrastructure
  • Sophistication of waste disposal
  • Response to climate change by reducing CO2
  • Construction of a resilient domestic business foundation through business restructuring and business growth in overseas markets
Specific measures of the FY2023 Strategy
  • Improve and optimize production system through domestic business restructuring
  • Expand capabilities in waste plastic processing and installation of chlorine dust cleaning equipment
  • Introduce low-temperature burning technology and develop CO₂ reduction, capture, and recycling technologies
  • Expand US business and develop new overseas bases

<Environment & Energy Business>

Long-term
business goals
(Environmental recycling) Driving force of resource-recycling systems
(Renewable energy) Leading company in geothermal development
Long-term strategy
  • Provision of a safe recycling system with thorough traceability, etc.
  • Decarbonization by expanding renewable energy business
Specific measures of the FY2023 Strategy
  • Expand home appliance recycling business, advancement of automation, and improvement of added value of recovered products
  • Demonstrate LiB recycling technology and solar panel recycling technology
  • Secure stable plant operations in fly ash recycling business and biogasification business
  • Complete Komatagawa new hydroelectric power plant, construction of Appi geothermal power plant, and survey of new geothermal sites, survey of new small hydropower​

Corporate planning strategy

The following are the key corporate planning strategies for supporting each business segment in the FY2023 Strategy.

R&D and marketing strategy By focusing on changes in the external environment such as megatrends, etc., MMC will create high value-added products and services mainly in IoT and AI, next-generation vehicles, urban mines, and clean energy and decarbonization areas to meet customer needs based on its integrated functions, material composite, infrastructure and mass production, and recycling technologies.
Manufacturing excellence strategy By formulating and realizing the factory vision based on the business strategy, as well as enhancing the production process, and proactively utilizing external knowledge, MMC will raise its manufacturing capability to the next level.
Quality management strategy By optimizing its product/process design and equipment maintenance plan, MMC will implement proactive quality management to ensure that non-conforming products are not produced.
Digital Transformation strategy MMC will use DX to strengthen our three key pillars: "Business added-value", "Business operations competitiveness", and "Management speed". from fiscal 2020 to fiscal 2025, MMC will invest approximately 40 billion and allocate 100 digital professionals.

Governance

The following are the main measures for MMC's governance in the FY2023 Strategy.

Strengthening corporate governance In June 2019, MMC transitioned to a company with a nomination committee, etc., and is working on the following measures.
  • Continuous improvement of the functions of the Board of Directors
  • Formulation of basic corporate governance policy (effective April 1, 2020)
  • CEO appointment and dismissal, planning and execution of successor development plan
  • Review of executive remuneration system
  • Enhancement of governance of subsidiaries
Strengthening group governance MMC will implement the following measures to establish a governance system in which communications can be carried out smoothly and autonomously between the parent and its subsidiaries, the head office and its respective bases, and among respective bases and the Group companies.
  • Evaluation of effectiveness and improvement of the board of directors of the Group companies
  • The Group companies' officer training
  • Enhancement of governance audits
  • Prompt decision making by delegating authority and strengthening supervisory functions
  • Promotion of business operations with an awareness of differing managements within R&D, manufacturing, and human resources exchange
  • Accelerated strategy execution by Digital Transformation Management Office
HR strategy MMC will work on the following measures with the aim of securing and fostering adaptive human resources and forging a healthy organizational culture.
  • (Talent) Secure and develop human resources
  • (Organizational culture) Enhance motivation and management capabilities of the Group companies
  • (Improvement of social value) Engage in the employment of diverse talents and health & productivity management
Change of organizations (Business Divisions)
  • Promotion of Environmental and Energy Business Division to in-house Company
  • Separation of Aluminum Division from Advanced Products Company
(Corporate Division)
  • Establishment of Marketing Department
  • Establishment of Corporate Communications Department
(Group-wide organization)
  • Establishment of Digital Transformation Management Office
  • Establishment of Sustainable Management Office

Previous plans

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