Mitsubishi Aktie

Hello. I am Nakanishi, President and CEO. Thank you very much for attending our FY 2025 Earnings briefing today despite your busy schedules. First, I would like to go over the highlights of our financial results. Please refer in terms of the financial results. The underlying operating cash flow was JPY 1.0481 trillion, and consolidated net income was JPY 800.5 billion. Through our initiatives to Enhance and Reshape across each business, we have steadily accumulated profits, coupled with the impact of a market upswing toward the end of the fiscal year. Those figures significantly exceeded our full year forecast.

Moving on to the FY 2026 Forecast. As explained recently, driven by the growth of our normalized profit, including the start of earnings contribution from our U.S. shale gas business as well as sizable asset and business recycling-related gains, we forecast an underlying operating cash flow of JPY 1.25 trillion and a consolidated net income of JPY 1.1 trillion. Given the increasing predictability of our higher profit levels, we will maintain our progressive dividend policy and increase the dividend by JPY 15 compared to FY 2025, bringing it to JPY 125 per share. Next, regarding the progress of our Corporate Strategy 2027. Against our total profit growth plan of JPY 400 billion or higher, driven by initiatives to Enhance, Reshape and Create, we consider our progress to be generally well on track.

For Enhance and Reshape initiatives of JPY 300 billion or more, please refer to the slide. As for initiatives to Create, that is JPY 100 billion or more in the U.S. shale gas business, we anticipate a profit increase of JPY 60 billion predicated on a 25% stake sale to the founding family to enhance operational stability. We are also exploring a gas value chain concept originating from this business to drive further profit growth. Although the uncertain environment continues, we will keep driving our value creation mechanism powered by our integrated strengths. We will thoroughly strengthen the earnings base of existing businesses and aggressively pursue growth investments in new businesses, leveraging our broad industrial footprint, aiming to achieve the quantitative targets of our Corporate Strategy 2027. This concludes my initial explanation.

Next, CFO, Shimazu, will provide a summary of the financial results.

My name is Shimazu, CFO. I would like to provide a brief overview of our financial results and an update on the progress of Corporate Strategy 2027. Please turn to Page 5. In FY 2025, although we experienced a negative rebound from the capital recycling recorded in the previous fiscal year, each business steadily accumulated earnings. As a result, both operating cash flow and consolidated net profit exceeded our expectations. For FY 2026, we expect profit growth driven by initiatives under our Enhance, Reshape and Create strategy.

Including our entry into the U.S. shale gas business and the full year operation of LNG Canada. In addition, we expect gains from large-scale sales and evaluations across several projects. As a result, we project an increase of approximately JPY 200 billion in operating cash flow and JPY 300 billion in consolidated net profit. Next, I would like to add 2 comments on the progress of Corporate Strategy 2027. Please go to Page 6. First, let me explain the latest outlook for our capital allocation plan under Corporate Strategy 2027. Given the solid trend of operating cash flow and the faster recovery of investments as well as the ongoing investment pipeline and dividend expansion, we have raised both cash in and cash out by JPY 0.7 trillion, respectively. We will continue to strengthen cash in and utilize leverage.

Additional allocation capacity will be flexibly directed to growth investments and shareholder returns as we pursue both growth and efficiency. Please turn to Page 14. For the profit growth plan under Enhance and Reshape through FY 2027, we made partial revisions in reinforcing the earnings base based on the latest business environment.

At the same time, reflecting strong progress in asset turnover type businesses under executed projects, we continue to plan for JPY 300 billion profit growth. Plans and progress under executed projects, rebound of core businesses and reinforcing the earnings base are shown on Page 15 and 16 with key initiatives of major categories. We will steadily execute these initiatives to achieve our JPY 300 billion profit growth target. Cash flow results and the segment performance are shown on Pages 7 through 12 for your reference.

This concludes my explanation. Thank you very much.

I'm Nouchi, the CFO. Thank you very much for taking the time out of your busy schedules to attend our fiscal '25 third quarter earnings briefing today. First, I'll walk you through an overview of our fiscal '25 third quarter results as well as key updates under Corporate Strategy 2027.

Please turn to Page 3 of the earnings presentation. First, let me begin with our financial results. In fiscal '25 Q3, underlying operating cash flow was 763.3 billion, and consolidated net income was JPY 607.9 billion. Supported by improved market conditions, enhanced profitability and revenue growth across multiple businesses, performance remained stronger than we had initially anticipated.

Regarding the full year forecast, we have reflected changes in the business environment since the second quarter earnings announcement as well as updated segment level risk assessments. Accordingly, we have revised our forecast for underlying operating cash flow upward by JPY 20 billion to JPY 920 billion, while maintaining consolidated net income at JPY 700 billion. Progress against the revised forecast are at high levels with 83% for underlying operating cash flow and 87% for consolidated net income. While there is a possibility that full year results may exceed the revised forecast, given the continued uncertainty in parts of the business environment toward fiscal year-end, we will carefully monitor conditions across each business and work steadily toward realizing potential upside.

Next, I will discuss progress under Corporate Strategy 2027. With respect to our value creation framework of Enhance, Reshape, and Create, we have announced several new initiatives since our previous earnings release. By way of example, in the Create initiative, as announced at our recent briefing, we decided to participate in the U.S. shale gas business, representing the largest investment in our history. In addition, under the Enhance initiative, we have reached an agreement to acquire upstream gas assets in Brunei. Through these initiatives, we expect to generate profit contributions of meaningful scale. Details of each project are provided on Page 14 of the presentation materials for your reference later.

Beyond these examples, initiatives under Enhance, Reshape, and Create are all making steady progress. Under Enhance, expected profit contributions from projects already executed alone account for roughly half of the planned target. Under Reshape, in addition to the completed full consolidation of Mitsubishi Shokuhin, several other projects are currently under consideration. And as for Create, the U.S. shale gas project alone that I mentioned earlier accounts for approximately 80% of the planned progress. Taking other projects into account, we believe that even in the first year, we are already well on track to achieve the plan by a certain degree. An overall view of progress across all initiatives as well as the breakdown of Enhance, which represents the largest profit contribution, is provided on Pages 11 and 12 of the presentation materials.

Next, please turn to Page 4. Underlying operating cash flow for fiscal ' 25 Q3 was essentially flat year-on-year despite variations among segments. Consolidated net income was also at a similar level when excluding the absence of large capital recycling gains and losses as well as onetime items. Even amid a challenging business environment, each business performed more solidly than expected. With signs that performance has bottomed out and steady progress being made across various initiatives, we are gaining increasing confidence in achieving the quantitative targets set forth under Corporate Strategy 2027. We will continue to push forward strongly with our Enhance, Reshape, and Create initiatives.

In addition, our share buyback program of up to JPY 1 trillion announced on April 3, continues to progress steadily. As of the end of December, the total repurchase amount reached JPY 794.3 billion.

Please turn to Page 5. I will now explain progress against the cash flow allocation plan under Corporate Strategy 2027, as well as our financial leverage position. Cash inflows consisted of JPY 763.3 billion in underlying operating cash flow and JPY 334.8 billion in cash inflows from divestitures. Major capital recovery items this period included loan repayments from the Quellaveco copper project and collection of deferred payment related to the divestiture of 2 Australian steelmaking coal mines in the previous fiscal year. On the other hand, we executed investments totaling JPY 913.9 billion as cash outflows.

During the period, we completed acquisitions, including the salmon farming business at Cermaq. As shown in the investment progress section, sustaining CapEx as well as Enhance, Reshape, and Create initiatives are all progressing smoothly against plan. Also, as of the end of fiscal '25 Q3, our net debt-to-equity ratio, net DER, which we use as an indicator of financial soundness, stood at 0.46x. Due to the recently approved investment in the U.S. shale gas business, net DER is expected to temporarily exceed 0.6x. However, we will manage leverage, so that it returns to an appropriate level with 0.6x as an upper guideline by the end of fiscal 2027, thereby maintaining financial soundness.

Furthermore, as we continue to have sufficient leverage capacity during the Corporate Strategy 2027 period, we plan to flexibly and proactively allocate additional capital to growth investments and shareholder returns, taking into account attractive investment opportunities and market expectations.

That concludes my remarks. Next, Mr. Shimazu, GM of Corporate Accounting, will provide a detailed explanation by segment.

My name is Shimazu, the GM of Corporate Accounting. I'll provide additional details on fiscal '25 Q3 results. Please turn to Page 6 of the presentation. First, I'll explain the year-on-year changes in underlying operating cash flow, focusing on segments with larger fluctuations. The segment at the top, Environmental Energy, recorded JPY 124.1 billion, a decrease of JPY 32.3 billion year-on-year. While there was a reduction in tax burden due to differences in the timing of payments in the Asia Pacific LNG business, this was more than offset by factors such as upfront costs associated with the start of production at LNG Canada and the North American LNG business.

Next, the third segment from the top, Mineral Resources posted JPY 118.8 billion, a decrease of JPY 45.3 billion year-on-year, mainly due to declining market conditions in the Australian steelmaking coal business and lower dividend income from the iron ore business. By contrast, the Urban Development & Infrastructure segment, beneath, recorded JPY 96.9 billion, an increase of JPY 40 billion year-on-year, primarily driven by improved profitability at Chiyoda Corporation following contract amendments for the U.S. Golden Pass LNG project.

Next, please turn to Page 7 for consolidated net income. In addition to the factors explained for underlying operating cash flow, due to the absence of major capital recycling and onetime gains recorded in fiscal '24, such as gains on the sale of coal mines in the Australian steelmaking coal business within Mineral Resources and revaluation gains related to Lawson within SLC, the decline in consolidated net income is larger than that of underlying operating cash flow.

From this period onward, we have disclosed the factor analysis of year-on-year changes in consolidated net income separating capital recycling and onetime items from adjusted consolidated net income. This analysis is summarized on Page 8 for your reference later.

Next, I'll explain the full year forecast by segment. Please turn to Page 9. As our CFO, Mr. Nouchi, explained earlier, we have revised our full year forecast for underlying operating cash flow upward by JPY 20 billion to JPY 920 billion. We have revised forecast for all segments. The fourth segment from the top, Urban Development & Infrastructure, is expected to reach JPY 104 billion, reflecting a JPY 20 billion upward revision from the November forecast, mainly due to improved profitability at Chiyoda Corporation, as explained in the year-on-year comparison. The bottom segment, Power Solution, is projected to reach JPY 114 billion, reflecting a JPY 10 billion upward revision from the November forecast, driven by increased trading profits in the European Integrated Energy business and the North American Power business.

Finally, please turn to Page 10 for consolidated net income. We are maintaining the full year consolidated net income forecast at JPY 700 billion, while revising the outlook for several segments. The segment at the top, Environmental Energy, is expected to reach JPY 143 billion, reflecting a JPY 15 billion downward revision from the November forecast, mainly due to reduced volumes associated with the extended time line to reach full production at LNG Canada.

The third segment from the top, Mineral Resources, in the Australian steelmaking coal business, while a decline in profits is expected due to factors such as operational issues at underground coal mines and volume decreases resulting from rainfall impacts, taking into account higher copper prices and the strong performance of the Mineral Resources trading business, is expected to reach JPY 110 billion, reflecting an upward revision of JPY 15 billion from the November forecast.

Underneath, regarding the Urban Development & Infrastructure segment, it's expected to reach JPY 76 billion, reflecting the JPY 16 billion upward revision from the November forecast, driven mainly by improved profitability at Chiyoda Corporation, consistent with the underlying operating cash flow outlook. Additional details by segment and assumptions regarding market conditions are provided on Page 17 onward. That concludes my explanation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Hello, everyone. I am Nakanishi, President and CEO. Thank you very much for taking the time to attend Mitsubishi Corporation's Fiscal '25 Q2 Earnings Presentation. First, I will explain the highlights of our fiscal '25 second quarter results and the main progress under Corporate Strategy 2027.

Please refer to Page 3 at the bottom right of the presentation materials. First, regarding our results, underlying operating cash flow for fiscal '25 Q2 was JPY 446.3 billion, and consolidated net income was JPY 355.8 billion. Both are progressing at around 50% toward our full year forecast. While there are differences across segments, overall performance is largely in line with plan.

Taking into account macroeconomic trends and the external environment, we are revising the forecast by each segment, whilst we maintain our overall full year forecast of JPY 900 billion in underlying operating cash flow and JPY 700 billion in consolidated net income set at the beginning of the fiscal year.

Next, regarding progress under Corporate Strategy 2027. We have continued to advance initiatives under our value creation framework, Enhance, Reshape and Create and have announced several new projects since the previous quarter. For example, in our copper business, as a Reshape initiative, we reached a definitive agreement for a joint mine plan with the adjacent copper mines in Chile.

Under Create, we agreed to acquire shares in a copper mining project in North America with which we conducted a press release the other day. Through these initiatives, our equity copper production is expected to increase by 42,000 metric tons on average from around fiscal year 2030.

In addition to these announced initiatives, under Enhance, we are steadily promoting efforts to strengthen the earnings base across all 244 businesses. For example, LNG Canada is progressing smoothly, aiming to begin production at Train 2 in November following May this year. Other initiatives announced through the second quarter as well as the main actions and progress of each business under Enhance are detailed on Pages 10 and 11 in the materials.

We will continue to advance our value creation mechanism, powered by our comprehensive strengths, pursuing both enhancement and expansion of existing businesses and new investments. Under Corporate Strategy 2027, we aim to achieve an average underlying operating cash flow growth rate of over 10% and ROE of over 12% by fiscal year 2027. That concludes my remarks. Next, our CFO, Mr. Nouchi, will explain the financial overview.

I'm Nouchi, CFO of the company. I'll provide several additional comments on our financial results. Please turn to Page 4. Underlying operating cash flow for the second quarter was JPY 446.3 billion, down JPY 81 billion year-on-year. And consolidated net income was JPY 355.8 billion, down JPY 262.3 billion year-on-year. The decline in underlying operating cash flow was mainly due to worsening market conditions in the Australian steelmaking coal business and the reclassification of Lawson as an equity method affiliate.

Consolidated net income decreased year-on-year, reflecting the absence of the previous fiscal year's major capital recycling gains, such as the gain on sale of steelmaking coal mines in Australia and the revaluation gain associated with Lawson's reclassification to an equity method affiliate.

Regarding the full year forecast, as President Nakanishi mentioned earlier, after reviewing each segment, we will maintain our full year forecast of JPY 900 billion in underlying operating cash flow and JPY 700 billion in consolidated net income. Despite changes in the market and business environment, both indicators are progressing smoothly with about 50% achievement against the full year forecast. Our share buyback program announced on April 3 with an upper limit of JPY 1 trillion is also progressing steadily with total purchases amounting to JPY 578.2 billion as of the end of September.

Please now turn to Page 5. I will now explain progress in cash flow allocation and leverage as of the second quarter under Corporate Strategy 2027. Compared to our cash flow allocation plan, cash-ins consisted of JPY 446.3 billion in underlying operating cash flow and JPY 251.3 billion through divestitures. On the cash-out side, in addition to payment for reentry into the Malaysia LNG Dua project in Q1, in Q2, we executed a tender offer for Mitsubishi Shokuhin as a Reshape initiative and acquired a stake in GCash, a digital financial business in the Philippines as a Create initiative with total cash outflows reaching JPY 593.6 billion, including the ongoing share buyback with an upper limit of JPY 1 trillion, total shareholder returns for fiscal 2025 are expected to reach JPY 1.5 trillion.

As of the end of fiscal '25 Q2, our net DER, an indicator of financial soundness, stood at 0.39x, well below our upper target of 0.6x, indicating sufficient capacity for additional funding. Overall, progress in cash flow allocation remains on track. Leveraging our strong financial position, we will continue to allocate resources proactively to enhance, reshape and create, advancing our value creation framework.

Next, please refer to Page 6 and beyond for segment details. First, I'll explain the segments with large year-on-year changes regarding underlying cash flow, underlying operating cash flow on a year-over-year basis. In Environmental Energy at the top, although initial costs were incurred ahead of production start at LNG Canada, as dividends in the LNG Asia Pacific business were recognized in the first half, profits increased. The third from the top, in Mineral Resources, profits declined mainly due to worsening market conditions and lower dividends from the iron ore business. Underneath, in Urban Development & Infrastructure, the decline in profit was due to lower dividends from North American real estate development and reduced equity income from the commercial vessels-related business.

Please turn to Page 7 for consolidated net income. Compared with underlying operating cash flow, the decline in the consolidated net income was greater, reflecting the absence of one-off gains recorded in fiscal '24, such as the coal mine sales in Mineral Resources and the loss and revaluation gain in the SLC segment.

Next, please refer to Page 8 for forecast by segment. Like explained earlier, we have maintained our full year forecast of JPY 900 billion in underlying operating cash flow, but made several segment level revisions. First, at the very top, for Environmental Energy, we revised our forecast upward by JPY 14 billion to JPY 167 billion, reflecting the impact of upstream reorganization in the North American LNG business.

For Materials Solution, we revised our forecast downward by JPY 12 billion to JPY 79 billion due to sluggish steel products transactions and weaker marketing conditions in the basic chemicals business. At the very bottom, for Power Solution, we revised our forecast upward by JPY 11 billion to JPY 104 billion, driven by favorable ForEx impact in the European integrated energy business and stronger trading income in the U.S. power business.

Finally, please turn to Page 9 for the consolidated net income forecast. We have maintained our full year consolidated net income forecast of JPY 700 billion with segment level revisions. In light of changes in the business environment, like underlying cash flow -- operating cash flow, Materials Solution, Mineral Resources and Mobility were revised downward, while Urban Development & Infrastructure, SLC and Power Solution were revised upward. The market assumptions used for these forecasts are detailed on Page 46 of the materials. Please refer to it later. That concludes my presentation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

I'm Nouchi, CFO of Mitsubishi Corporation. Thank you very much for joining our FY 2025 Q1 earnings presentation despite a very busy schedule. First, I will provide an overview of FY 2025 Q1 earnings. Please find Page #3 at the bottom right corner of the earnings presentation material.

Underlying operating cash flow for FY '25 Q1 was JPY 250.4 billion, and consolidated net income was JPY 203.1 billion. Underlying operating cash flow progressed 28% against the full year guidance. While there are variations across segments due to the timing of dividend income, progress was largely in line with full year guidance. Consolidated net income showed 29% progress against the full year guidance. Slightly higher progress was driven by capital recycling gains and onetime items across multiple business units. However, similar to the underlying operating cash flow, progress was largely in line with full year guidance of JPY 700 billion.

Next, I would like to explain the key progress made in Enhance, Reshape and Create, which is a value creation mechanism we outlined in our Corporate Strategy 2027. First, regarding our efforts to Enhance, the LNG Canada project successfully shipped the first cargo as scheduled. Additionally, our wholly owned subsidiary, Cermaq has reached an agreement to acquire the salmon farming business from Grieg Seafood. By expanding production in our core Norwegian operations and our Canadian operations, we aim to achieve further growth for Cermaq.

Regarding our Reshape initiative, a tender offer for the full acquisition of Mitsubishi Shokuhin was completed in July.

Regarding our Create initiative, we announced today our plan to make Thai Union Group, a major global seafood processing company, primarily using tuna and bonito as raw materials, our equity-method affiliate. By leveraging the company's business foundation and pursuing synergies with our own operations, we aim to create a new pillar of revenue in the seafood business following our salmon farming business.

Together with ENEOS, we have participated in the renewable fuel manufacturing and sales business by Par Pacific in the state of Hawaii, the United States. By combining the expertise and capabilities of our Environment Energy Group and the Food Industry Group, we aim to enhance business value and contribute to the realization of decarbonized society. Details of each project are outlined from Page 8 for your reference. We will continue to advance initiatives that leverage our comprehensive capabilities to create value in line with the Corporate Strategy 2027, aiming at an average growth of underlying operating cash flow of 10% or more and an ROE of 12% or higher by FY 2027.

Please find Page 4, indicated on the bottom right of the page. For Q1 FY 2025, both underlying operating cash flow and the consolidated net income were down year-on-year. However, as mentioned in the outset, both underlying operating cash flow and consolidated net income are progressing largely in line with the full year guidance for FY 2025. Additionally, the share buyback program announced on the 3rd of April with maximum limit of JPY 1 trillion progressed smoothly with a total purchase at the end of June amounting to JPY 347.3 billion.

Please turn to Page 5. The page number is shown on the bottom right. I will now explain the progress against the cash flow allocation plan outlined in the Corporate Strategy 2027 as well as the current status of financial leverage. Cash inflows include underlying operating cash flow of JPY 250.4 billion and JPY 179.7 billion from divestitures. Cash outflows include JPY 280.2 billion for the reinvestment in the Malaysia LNG Dua project and investments in the U.S. power business.

As for the shareholder returns, including the share buybacks up to JPY 1 trillion announced on April 3, we expect a total of JPY 1.5 trillion in FY 2025.

As we said in the capital allocation strategy of Corporate Strategy 2027, when the investments are executed steadily and if the additional capital is necessary, we will consider the use of leverage as we maintain the financial soundness. At the end of Q1 FY '25, the financial soundness indicator, net debt/equity ratio was 0.38x. So compared to the ceiling of 0.6x, we have the debt financing buffer.

Based on the active capital allocation strategy, utilizing strong financial strength, we will steadily execute the initiatives of Enhance, Reshape and Create to promote value creation mechanism. That concludes my part of presentation. I would hand over to Mr. Shimazu, General Manager of Corporate Accounting Department.

This is Shimazu speaking. I'd like to make some additional explanation on the details of the Q1 financial results.

Please turn to Page 6. Let me first explain the major year-on-year differences of underlying operating cash flow by segment. In Environmental Energy, the tax expenses declined due to the reduced capital in European business. Dividend from Asia Pacific LNG business decreased. Costs associated with the start-up of LNG Canada in North American business increased. Underlying operating cash flow was JPY 35.9 billion, down JPY 24.4 billion year-on-year.

Next, the third from the top, Mineral Resources. Market prices declined in Australian steelmaking coal business. Dividend from iron ore and copper businesses decreased. Underlying operating cash flow was JPY 37.6 billion, down JPY 28.6 billion year-on-year.

Urban Development & Infrastructure. In North American real estate development business, dividend declined while tax expenses increased. Also, dividend income from energy infrastructure business decreased. Underlying operating cash flow was JPY 10.6 billion, down JPY 12.8 billion year-on-year.

Please turn to Page 7. Let me explain the major year-on-year differences of consolidated net income by segment. The top, the Environmental Energy due to the lower dividend income and absence of previous fiscal year revision of depreciation method in Asia Pacific LNG gas, consolidated net income declined JPY 19.9 billion year-on-year to JPY 40.9 billion.

Next is Mineral Resources. With the absence of previous fiscal year sales gain of coal mines and lower market prices in Australian steelmaking coal business, the consolidated net income decreased JPY 140.7 billion year-on-year to JPY 25 billion.

In Urban Development & Infrastructure, with the absence of previous fiscal year provisions for the Chiyoda Corporation's U.S. Golden Pass LNG project and gain on construction completion in the energy infrastructure business and gain on sale of Japanese real estate development business, consolidated net income increased JPY 42.9 billion year-on-year to JPY 35.8 billion.

Supplementary information, including details by segment and assumptions are shown on the Pages 12 and onwards for your reference. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]