Half-yearly Report

LONDON--()--

This announcement is for our U.S.$5,000,000,000 Euro Medium Term Note Programme.

Consolidated Financial Results for the Six-Month Period Ended September 30, 2013
[Based on accounting principles generally accepted in the United States of America ("U.S. GAAP")]
Tokyo, November 5, 2013 - Mitsui & Co., Ltd. announced its consolidated financial results for the six-month period ended September 30, 2013.
                     
Mitsui & Co., Ltd. and subsidiaries

(Web Site : http://www.mitsui.com/jp/en/)

 
President and Chief Executive Officer : Masami Iijima
Investor Relations Contacts : Michihiro Nose, General Manager, Investor Relations Division TEL 81-3-3285-7533
 
1. Consolidated financial results (Unreviewed)
(1) Consolidated operating results information for the six-month period ended September 30, 2013
(from April 1, 2013 to September 30, 2013)
 
                                                               
Six-month period ended

September 30,

                         
2013       2012    
                                              %             %  
Revenues                       Millions of yen   2,872,305       21.4     2,365,898       △ 10.0  
Income before Income Taxes and Equity in Earnings   Millions of yen   202,408       26.3     160,302       △ 30.8  
Net income attributable to Mitsui & Co., Ltd.   Millions of yen   197,201       17.1     168,337       △ 25.9  
Net income attributable to Mitsui & Co., Ltd. per share, basic Yen     108.05       92.24      
Net income attributable to Mitsui & Co., Ltd. per share, diluted   Yen       108.05             -          
Notes:
1.Percentage figures for Revenues, Income before Income Taxes and Equity in Earnings, and Net income attributable to

  Mitsui & Co., Ltd. represent changes from the previous year.

2.Comprehensive Income for the six-month periods ended September 30, 2013 and 2012 were ¥209,908 million (1,383.6 %) and

¥14,149 million ( - %) , respectively.

3.Diluted net income attributable to Mitsui & Co., Ltd. per share for the period ended September 30, 2012 is

not disclosed as there are no dilutive potential shares.

 
(2) Consolidated financial position information
                                                           
September 30, 2013 March 31, 2013
                                                           
Total assets     Millions of yen   10,441,926   10,324,581
Total equity (net worth)     Millions of yen   3,604,353   3,440,104
Mitsui & Co., Ltd. shareholders' equity           Millions of yen   3,351,099   3,181,819
Mitsui & Co., Ltd. shareholders' equity ratio         %         32.1   30.8
Mitsui & Co., Ltd. shareholders' equity per share       Yen   1,836.06   1,743.34
 
2. Dividend information
                                                             
Year ended March 31,         Year ending March 31, 2014 (Forecast)
                                      2014     2013        
Interim dividend per share       Yen   25     22        
Year-end dividend per share       Yen         21       26
Annual dividend per share       Yen         43       51
 
3. Forecast of consolidated operating results for the year ending March 31, 2014 (from April 1, 2013 to March 31, 2014)
                                                   
                                    Year ending

March 31, 2014

                                                   
Net income attributable to Mitsui & Co., Ltd.     Millions of yen   370,000
Net income attributable to Mitsui & Co., Ltd. per share, basic     Yen   202.74
 
Note :
We maintain our forecast net income attributable to Mitsui & Co., Ltd. for the year ending March 31, 2014 of ¥370.0 billion announced together with the results of fiscal year ended March 2013. No updates have been made to this forecast.
 
4. Others
(1) Increase/decrease of important subsidiaries during the period : None
 
(2) Number of shares :
                                                   
                                    September 30, 2013   March 31, 2013
                                                   
Number of shares of common stock issued, including treasury stock   1,829,153,527   1,829,153,527
Number of shares of treasury stock               3,991,092   4,027,206
                                                   
                                    Six-month period ended September 30, 2013   Six-month period ended September 30, 2012
                                                   
Average number of shares of common stock outstanding     1,825,144,542   1,824,947,980
 
 
Disclosure Regarding Quarterly Review Procedures:
As of the date of disclosure of this quarterly earnings report, a review of the quarterly financial statements is being carried out in accordance with the Financial Instruments and Exchange Act.
 
A Cautionary Note on Forward-Looking Statements:

This report contains forward-looking statements including those concerning future performance of Mitsui & Co., Ltd. ("Mitsui"), and those statements are based on Mitsui's current assumptions, expectations and beliefs in light of the information currently possessed by it. Various factors may cause Mitsui's actual results to be materially different from any future performance expressed or implied by these forward-looking statements.

Therefore, these statements do not constitute a guarantee by Mitsui that such future performance will be realized.

For key assumptions on which the statements concerning future performance are based, please refer to (2) "Forecasts for the Year Ending March 31, 2014" on p.17. For cautionary notes with respect to forward-looking statements, please refer to the "Notice" section on p.20.
 
 
Supplementary materials and IR meeting on financial results:
Supplementary materials on financial results can be found on our web site.
We will hold an IR meeting on financial results for analysts and institutional investors on November 6, 2013.
Contents of the meeting (English and Japanese) will be posted on our web site immediately after the meeting.

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Table of Contents

1. Qualitative Information      
(1) Operating Environment 2
(2) Results of Operations 2
(3) Financial Condition and Cash Flows 12
 
2. Management Policies
(1) Result and Forecast for Investment and Loan Plan 16
(2) Forecasts for the Year Ending March 31, 2014 17
(3) Shareholder Return Policy 19
 
3. Other Information 20
 
4. Consolidated Financial Statements
(1) Consolidated Balance Sheets 21
(2) Statements of Consolidated Income and Comprehensive Income (Loss) 23
(3) Statements of Consolidated Cash Flows 24
(4) Assumption for Going Concern 24
(5) Significant Changes in Shareholder’s Equity 24
(6) Operating Segment Information 25
 

1. Qualitative Information

As of the date of disclosure of this quarterly earnings report, a review of the quarterly financial statements is being carried out in accordance with the Financial Instruments and Exchange Act.

(1) Operating Environment

During the six-month period ended September 30, 2013, the global economy continued to recover at a moderate pace, supported mainly by firm growth in Japan, the U.S. and China. However, concerns about an economic downturn persisted.

The U.S. economy is currently driving growth in the global economy. The number of people in employment in the U.S. rose steadily and consumer spending, capital investment and housing investment continued to improve gradually, despite issues surrounding the government debt ceiling and concerns that the U.S. Quantitative Easing (QE3) will be gradually scaled back. In Japan, consumer spending increased and exports expanded, supported by the weak yen. The impact of fiscal stimulus measures is also starting to emerge. Japan is expected to achieve the highest rate of GDP growth among the major advanced economies in 2013. Europe registered its first quarter of positive growth in three quarters. However, employment and personal income conditions are not improving and consumer spending and capital investment are weak, indicating that full economic recovery is still some way off. In Brazil, India, Indonesia and some other emerging countries, indications that QE3 will be scaled back have led to fears that funds could flow out of those countries. This is fueling concerns that their economies could also lose steam, with a weakening in local currencies leading to increased inflationary pressures, forcing governments to increase interest rates in order to control inflation and protect their currencies.

With respect to China, which appears to be shifting its policy focus from the pace of growth to the sustainability of growth, some had voiced concerns the economy could be heading for a hard landing. However, the impact of additional infrastructure spending announced by the government since July is now feeding through and there is a growing consensus that China will be able to maintain growth at around 7.5%. Market concerns about the pace of growth have also been partly assuaged by government policy that downplays the importance of growth, with the spot reference price for iron ore (Iron Ore (Fine) CFR North China (Fe 62%)) traded in a range of around US$120-140 per ton and the Dubai Crude spot price stable at around US$100-110 per barrel during the six-month period ended September 30, 2013.

Although there is uncertainty about future U.S. policy responses and the outlook for the Chinese economy, coupled with geopolitical risks, our view that the global economy as a whole will continue to expand at a moderate pace is unchanged.

(2) Results of Operations

1) Analysis of Consolidated Income Statements

Revenues

Mitsui & Co., Ltd. (“Mitsui”) and its subsidiaries (collectively “we”) recorded total revenues of ¥2,872.3 billion for the six-month period ended September 30, 2013, an increase of ¥506.4 billion from ¥2,365.9 billion for the corresponding six-month period of the previous year.

Revenues from sales of products for the six-month period ended September 30, 2013 were ¥2,617.2 billion, an increase of ¥499.5 billion from ¥2,117.7 billion for the corresponding six-month period of the previous year, as a result of the following:

  • The Energy Segment reported an increase of ¥121.0 billion. Petroleum trading operations recorded an increase of ¥97.4 billion due to the increase in trading volume, while oil and gas producing operations recorded an increase of ¥21.8 billion reflecting the depreciation of the Japanese yen.
  • The Chemicals Segment reported an increase of ¥113.0 billion mainly attributable to a recovery of trading activities of petrochemical materials.
  • The Mineral & Metal Resources Segment reported an increase of ¥83.0 billion. Iron ore mining operations in Australia reported an increase of ¥41.9 billion due to the depreciation of the Japanese yen and an increase in sales volume owing to increased capacity.
  • The Lifestyle Segment reported an increase of ¥73.1 billion due to an increase in trading volume of grain.
  • The Americas Segment reported an increase of ¥69.7 billion, attributable to the depreciation of the Japanese yen; an increase in trading volume of grain; and new contributions from Cinco Pipe And Supply, LLC (United States.)

Revenues from sales of services for the six-month period ended September 30, 2013 were ¥202.0 billion, an increase of ¥16.6 billion from ¥185.4 billion for the corresponding six-month period of the previous year.

Revenues from other sales for the six-month period ended September 30, 2013 were ¥53.2 billion, a decline of ¥9.6 billion from ¥62.8 billion for the corresponding six-month period of the previous year. The commodity derivatives trading business at Mitsui recorded a decline in revenues from other sales corresponding to an improvement of ¥12.7 billion in the foreign exchange gains and losses posted in other expenses-net.

Gross Profit

Gross profit for the six-month period ended September 30, 2013 was ¥430.0 billion, an increase of ¥37.0 billion from ¥393.0 billion for the corresponding six-month period of the previous year as a result of the following:

  • The Mineral & Metal Resources Segment reported an increase of ¥24.4 billion. Iron ore mining operations in Australia reported an increase of ¥22.3 billion due to the depreciation of the Japanese yen and an increase in sales volume owing to increased capacity.
  • The Iron & Steel Products Segment reported an increase of ¥8.4 billion, attributable to the positive impact of the depreciation of the Japanese yen, solid sales of tubular products and increased export volume from Japan.
  • The Machinery & Infrastructure Segment reported an increase of ¥6.6 billion. Automotive-related and mining and construction machinery-related businesses in South America achieved a solid performance.
  • The Chemicals Segment reported an increase of ¥6.2 billion, due to the depreciation of the Japanese yen; recovery of trading activities of petrochemical materials; and strong sales of agricultural chemicals.
  • The Innovation & Corporate Development Segment reported a decline of ¥15.0 billion. The commodity derivatives trading business at Mitsui recorded a decline in gross profit corresponding to an improvement of ¥12.7 billion in the foreign exchange gains and losses posted in other expenses-net.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six-month period ended September 30, 2013 were ¥278.6 billion, an increase of ¥27.1 billion from ¥251.5 billion for the corresponding six-month period of the previous year. The depreciation of the Japanese yen increased selling, general and administrative expenses of overseas subsidiaries.

The table below provides a breakdown of selling, general and administrative expenses used for our internal review.

[Table Omitted]

The table below provides selling, general and administrative expenses broken down by operating segments.

[Table Omitted]

Provision for Doubtful Receivables

Provision for doubtful receivables for the six-month period ended September 30, 2013 was ¥5.4 billion, a decline of ¥1.8 billion from ¥7.2 billion for the corresponding six-month period of the previous year. The provisions for both periods represented aggregated reserves for individually small receivables.

Interest Expense (Income)—Net

Interest expense, net of interest income, for the six-month period ended September 30, 2013 was ¥7.2 billion, an increase of ¥0.9 billion from ¥6.3 billion of expense for the corresponding six-month period of the previous year. The following table provides the month-end average of three-month Tibor for the Japanese yen and three-month Libor for the U.S. dollar for the six-month periods ended September 30, 2013 and 2012.

Month-end average of three-month rate (%p.a.)
      Six-month period ended September 30,
  2012     2013
Japanese yen 0.33 0.23
U.S. dollar 0.44 0.27
 

Dividend Income

Dividend income for the six-month period ended September 30, 2013 was ¥64.5 billion, an increase of ¥18.1 billion from ¥46.4 billion for the corresponding six-month period of the previous year. Dividends from six LNG projects (Abu Dhabi, Oman, Qatargas 1 and 3, Equatorial Guinea, and Sakhalin II) were ¥52.9 billion in total, an increase of ¥15.7 billion from ¥37.2 billion for the corresponding six-month period of the previous year, mainly due to an increase in dividends received from the Sakhalin II project.

Gain on Sales of Securities—Net

Gain on sales of securities for the six-month period ended September 30, 2013 was ¥17.0 billion, an increase of ¥1.3 billion from ¥15.7 billion for the corresponding six-month period of the previous year.

  • For the six-month period ended September 30, 2013, a gain on the sale of shares in Daicel Corporation for ¥3.3 billion; a gain on the exchange of shares in Mikuni Coca-Cola Bottling Co., Ltd. for ¥3.2 billion; and a gain on the sale of overseas listed shares for ¥3.2 billion were recorded.
  • For the corresponding six-month period of the previous year, a ¥5.5 billion gain related to equity dilution in IHH Healthcare Bhd. (Malaysia) and a ¥4.8 billion gain on the sale of shares in Nihon Unisys, Ltd. were recorded.

Loss on Write-Downs of Securities

Loss on write-downs of securities for the six-month period ended September 30, 2013 was ¥10.6 billion, an improvement of ¥7.8 billion from ¥18.4 billion for the corresponding six-month period of the previous year.

  • For the six-month period ended September 30, 2013, an impairment loss of ¥4.9 billion on preferred shares of Valepar S.A. was recorded reflecting an other-than-temporary decline related to a foreign exchange translation loss in the investment value of the current portion of preferred shares. Furthermore, an impairment loss of ¥3.3 billion on investment in an LNG project was recorded reflecting an other-than-temporary decline in the investment value.
  • For the corresponding six-month period of the previous year, impairment losses on listed shares of ¥4.9 billion in an iron & steel company and ¥3.0 billion in Mitsui Chemicals Inc. were recorded reflecting the decline in share prices. Meanwhile, an impairment loss of ¥2.6 billion on preferred shares of Valepar S.A. was recorded in the same manner as the six-month period ended September 30, 2013.

Gain (Loss) on Disposal or Sales of Property and Equipment—Net

Gain on disposal or sales of property and equipment for the six-month period ended September 30, 2013 was ¥1.8 billion, an increase of ¥0.3 billion from ¥1.5 billion for the corresponding six-month period of the previous year. There were miscellaneous small transactions in both periods.

Impairment Loss of Long-Lived Assets

Impairment loss of long-lived assets for the six-month period ended September 30, 2013 was ¥0.4 billion, an increase of ¥0.2 billion from ¥0.2 billion for the corresponding six-month period of the previous year.

Other Expenses (Income)—Net

Other expense for the six-month period ended September 30, 2013 was ¥8.7 billion, an improvement of ¥4.0 billion from ¥12.7 billion for the corresponding six-month period of the previous year.

  • For the six-month period ended September 30, 2013, Mitsui recorded a foreign exchange gain of ¥7.5 billion in the commodity derivatives trading business in the Innovation & Corporate Development Segment, which corresponded to related revenues and gross profit in the segment. Meanwhile, exploration expenses totaled ¥11.5 billion, including those recorded at oil and gas producing businesses.
  • For the corresponding six-month period of the previous year, exploration expenses totaled ¥14.0 billion, including those recorded at oil and gas producing businesses. Furthermore, the Innovation & Corporate Development Segment recorded a foreign exchange loss of ¥5.2 billion in the commodity derivatives trading business at Mitsui, which corresponded to related revenues and gross profit in the segment.

Income Taxes

Income taxes for the six-month period ended September 30, 2013 were ¥89.3 billion, an increase of ¥11.7 billion from ¥77.6 billion for the corresponding six-month period of the previous year.

  • “Income before income taxes and equity in earnings” for the six-month period ended September 30, 2013 was ¥202.4 billion, an increase of ¥42.1 billion from ¥160.3 billion for the corresponding six-month period of the previous year. In response, applicable income taxes also increased.
  • Reversal of deferred tax liabilities related to dividends received from the undistributed retained earnings of associated companies was approximately ¥11.5 billion for the six-month period ended September 30, 2013, a decline of approximately ¥3.5 billion from the corresponding six-month period of the previous year.

The effective tax rate on “Income before income taxes and equity in earnings” for the six-month period ended September 30, 2013 was 44.1%, a decline of 4.3% from 48.4% for the corresponding six-month period of the previous year. The major factors for the decline were a decrease in the ratio of resource related taxes with higher tax rates and the ratio of income tax effect recorded for equity in earnings against “Income before income taxes and equity in earnings,” while the factors for the increase include a decline in the ratio of the aforementioned reversal of deferred tax liabilities.

Equity in Earnings of Associated Companies—Net

Equity in earnings of associated companies for the six-month period ended September 30, 2013 was ¥93.3 billion, a decline of ¥4.0 billion from ¥97.3 billion for the corresponding six-month period of the previous year as a result of the following:

  • Reflecting an other-than-temporary decline in the investment value, a ¥14.1 billion impairment loss was recorded on the investment in SCM Minera Lumina Copper Chile (Chile), a project company for the Caserones copper and molybdenum project.
  • Valepar S.A. reported a decline of ¥6.1 billion, mainly due to the absence of the reversal of deferred tax liabilities recorded for the corresponding previous year and a decline in iron ore prices, despite a positive impact of exchange rate fluctuations including the depreciation of the Japanese yen.
  • The Lifestyle Segment recorded an impairment loss reflecting an other-than-temporary decline in the investment value recorded for an associated company.
  • Robe River Mining Co. Pty. Ltd. (Australia) reported an increase of ¥6.8 billion, reflecting the depreciation of the Japanese yen.
  • IPP businesses reported an increase of ¥6.0 billion in earnings due to an improvement of ¥3.0 billion in mark-to-market valuation gains and losses, such as those on power derivative contracts and fuel purchase contracts. Hezhou and Paiton 3, which commenced commercial operation, also contributed to the increase.
  • Japan Australia LNG (MIMI) Pty. Ltd. (Australia) reported an increase reflecting an increase in production as well as the depreciation of the Japanese yen.

Net Income attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests for the six-month period ended September 30, 2013 was ¥9.2 billion, a decline of ¥2.5 billion from ¥11.7 billion for the corresponding six-month period of the previous year.

Net Income attributable to Mitsui & Co., Ltd.

As a result, net income attributable to Mitsui & Co., Ltd. for the six-month period ended September 30, 2013 was ¥197.2 billion, an increase of ¥28.9 billion from ¥168.3 billion for the corresponding six-month period of the previous year.

2) Operating Results by Operating Segment

Effective April 1, 2013, the Innovation & Cross Function Segment changed its name to the Innovation & Corporate Development Segment. Logistics infrastructure businesses, including development and management of ports and airport terminal, advanced materials related businesses such as liquid crystal and electronic devices, and media-related businesses such as TV shopping and broadcasting, all included in the Innovation & Cross Function Segment until March 31, 2013, were transferred to the Machinery & Infrastructure Segment, Chemicals Segment, and Lifestyle Segment, respectively, at the beginning of the six-month period ended September 30, 2013. Meanwhile, steel scrap related businesses of Mitsui Bussan Metals Co., Ltd. in the Mineral & Metal Resources Segment were transferred to Mitsui & Co. Steel Ltd. in the Iron & Steel Products Segment at the beginning of the six-month period ended September 30, 2013. The operating segment information for the corresponding six-month period of the previous year has been restated to conform to the current period presentation.

Iron & Steel Products Segment

Gross profit for the six-month period ended September 30, 2013 was ¥26.8 billion, an increase of ¥8.4 billion from ¥18.4 billion for the corresponding six-month period of the previous year. Major factors included the positive impact of the depreciation of the Japanese yen, solid sales of tubular products including line pipe and increased export volume from Japan.

Operating income for the six-month period ended September 30, 2013 was ¥8.0 billion, an increase of ¥8.7 billion from ¥0.7 billion of operating loss for the corresponding six-month period of the previous year.

Equity in earnings of associated companies for the six-month period ended September 30, 2013 was ¥3.1 billion, an increase of ¥2.0 billion from ¥1.1 billion for the corresponding six-month period of the previous year.

Net income attributable to Mitsui & Co., Ltd. for the six-month period ended September 30, 2013 was ¥6.7 billion, an increase of ¥8.0 billion from a net loss of ¥1.3 billion for the corresponding six-month period of the previous year. In addition to the above, an impairment loss of ¥4.3 billion on listed shares in an iron & steel company reflecting the decline in share price was recorded for the corresponding six-month period of the previous year.

Mineral & Metal Resources Segment

[Graph Omitted]

Gross profit for the six-month period ended September 30, 2013 was ¥99.6 billion, an increase of ¥24.4 billion from ¥75.2 billion for the corresponding six-month period of the previous year. The main factor behind the increase was a positive impact from the depreciation of the Japanese yen on iron ore mining operations in Australia.

As for iron ore pricing, the majority of contract prices applied to products sold during the six-month period

ended September 30, 2013 were based on pricing that more closely reflects current spot reference prices, the same pricing as applied in the corresponding six-month period of the previous year, such as a daily average of spot reference prices for the current quarter of shipment and a daily average of spot reference prices for the shipment month.

Mitsui Iron Ore Development Pty. Ltd. (Australia) and Mitsui-Itochu Iron Pty. Ltd. (Australia) reported increases of ¥14.7 billion and ¥7.6 billion in gross profit, respectively, reflecting the depreciation of the Japanese yen and an increase in iron ore sales volume owing to increased capacity.

Operating income for the six-month period ended September 30, 2013 was ¥80.5 billion, an increase of ¥21.9 billion from ¥58.6 billion for the corresponding six-month period of the previous year. Despite the increase in gross profit, selling, general and administrative expenses increased.

Equity in earnings of associated companies for the six-month period ended September 30, 2013 was ¥23.2 billion, a decrease of ¥12.1 billion from ¥35.3 billion for the corresponding six-month period of the previous year.

  • Reflecting an other-than-temporary decline in the investment value, a ¥14.1 billion impairment loss was recorded on the investment in SCM Minera Lumina Copper Chile, a project company for the Caserones copper and molybdenum project.
  • Valepar S.A. posted earnings of ¥11.8 billion, a decline of ¥6.1 billion from ¥17.9 billion for the corresponding six-month period of the previous year. The major factors for the decline were the absence of a reversal of deferred tax liabilities recorded for the corresponding six-month period of the previous year and a decline in iron ore prices, despite a positive impact of exchange rate fluctuations including the depreciation of the Japanese yen.
  • The scrap metal recycling business in which Mitsui Raw Materials Development Pty. Limited (Australia) invests, reported a decline of ¥3.3 billion, reflecting impairment losses on inventories and long-lived assets.
  • Earnings at Robe River Mining Co. Pty. Ltd., an iron ore mining company in Australia, were ¥22.9 billion, an increase of ¥6.8 billion from ¥16.1 billion for the corresponding six-month period of the previous year, reflecting the depreciation of the Japanese yen.
  • Equity in earnings of SUMIC Nickel Netherlands B.V. (Netherlands) improved from the corresponding six-month period of the previous year, due to the discontinuation of applying the equity method on investment in Vale Nouvelle-Calédonie S.A.S, owing to the dilution of ownership interest.

Net income attributable to Mitsui & Co., Ltd. for the six-month period ended September 30, 2013 was ¥44.7 billion, a decrease of ¥5.5 billion from ¥50.2 billion for the corresponding six-month period of the previous year.

Machinery & Infrastructure Segment

Gross profit for the six-month period ended September 30, 2013 was ¥54.3 billion, an increase of ¥6.6 billion from ¥47.7 billion for the corresponding six-month period of the previous year.

  • The Infrastructure Projects Business Unit reported an increase of ¥0.5 billion.
  • The Integrated Transportation Systems Business Unit reported an increase of ¥6.2 billion. Automotive-related and mining and construction machinery-related businesses in South America achieved a solid performance.

Operating loss for the six-month period ended September 30, 2013 was ¥6.8 billion, an improvement of ¥2.8 billion from ¥9.6 billion for the corresponding six-month period of the previous year. Despite the increase in gross profit, selling, general and administrative expenses increased.

Equity in earnings of associated companies for the six-month period ended September 30, 2013 was ¥15.4 billion, an increase of ¥1.4 billion from ¥14.0 billion for the corresponding six-month period of the previous year.

  • The Infrastructure Projects Business Unit reported an increase of ¥9.0 billion. IPP businesses reported equity in earnings of ¥7.8 billion in total, an increase of ¥6.0 billion from ¥1.8 billion for the corresponding six-month period of the previous year. Mark-to-market valuation gains and losses, such as those on long-term power derivative contracts and long-term fuel purchase contracts, improved by ¥3.0 billion to a loss of ¥1.5 billion from a loss of ¥4.5 billion for the corresponding six-month period of the previous year. In addition, coal-fired plants, Hezhou in China and Paiton 3 in Indonesia, which commenced commercial operation, were new contributors.
  • The Integrated Transportation Systems Business Unit reported a decline of ¥7.6 billion. The main causes of the decrease included a decline in automotive-related business in North America and the research and development cost incurred for the development of a new aircraft engine with General Electric Company.

Net income attributable to Mitsui & Co., Ltd. for the six-month period ended September 30, 2013 was ¥9.0 billion, an increase of ¥1.5 billion from ¥7.5 billion for the corresponding six-month period of the previous year.

Chemicals Segment

Gross profit for the six-month period ended September 30, 2013 was ¥40.1 billion, an increase of ¥6.2 billion from ¥33.9 billion for the corresponding six-month period of the previous year.

  • The Basic Chemicals Business Unit reported an increase of ¥2.6 billion due to the recovery of underperforming trading activities of petrochemical materials for the corresponding six-month period of the previous year.
  • The Performance Chemicals Business Unit reported an increase of ¥3.6 billion. The major factors included the positive effect of the depreciation of the Japanese yen and strong sales of agricultural chemicals at Mitsui AgriScience International SA/NV (Belgium.)

Operating income for the six-month period ended September 30, 2013 was ¥6.5 billion, an increase of ¥3.4 billion from ¥3.1 billion for the corresponding six-month period of the previous year, reflecting an increase in gross profit.

Equity in earnings of associated companies for the six-month period ended September 30, 2013 was ¥3.2 billion, a decline of ¥0.8 billion from ¥4.0 billion for the corresponding six-month period of the previous year.

Net income attributable to Mitsui & Co., Ltd. for the six-month period ended September 30, 2013 was ¥9.5 billion, an increase of ¥10.5 billion from a net loss of ¥1.0 billion for the corresponding six-month period of the previous year. In addition to the above-mentioned factors, the following factors also affected results:

  • For the six-month period ended September 30, 2013, this segment recorded a gain of ¥3.3 billion on the sale of shares in Daicel Corporation.
  • For the corresponding six-month period of the previous year, this segment recorded an impairment loss of ¥3.0 billion on listed shares in Mitsui Chemicals Inc. reflecting the decline in share price.

Energy Segment

[Graph Omitted]

The weighted average crude oil prices applied to our operating results for the six-month period ended September 30, 2013 and 2012 were estimated to be US$111 and US$117 per barrel, respectively.

Gross profit for the six-month period ended September 30, 2013 was ¥96.5 billion, a decline of ¥1.0 billion from ¥97.5 billion for the corresponding six-month period of the previous year, primarily due to the following factors:

  • Mitsui E&P Middle East B.V. (Netherlands) reported an increase of ¥11.7 billion due to an increase in oil

production volume as well as the depreciation of the Japanese yen.

  • Mitsui Oil Exploration Co., Ltd. reported an increase of ¥5.9 billion due to the depreciation of the Japanese yen.
  • Mitsui E&P USA LLC (United States) reported an increase of ¥3.3 billion due to a reduction in unit depreciation costs associated with an increase in proved reserves of shale gas as well as higher gas prices.
  • Mitsui E&P Australia Pty Limited (Australia) reported a decline of ¥16.2 billion due to a decline in production volume associated with overhauling of its oil production facility.
  • Mitsui Coal Holdings Pty. Ltd. (Australia) reported a decline of ¥12.2 billion due to lower coal prices.

Operating income for the six-month period ended September 30, 2013 was ¥64.7 billion, a decline of ¥5.6 billion from ¥70.3 billion for the corresponding six-month period of the previous year. In addition to a decline in gross profit, selling, general and administrative expenses increased.

Equity in earnings of associated companies for the six-month period ended September 30, 2013 was ¥30.3 billion, an increase of ¥7.5 billion from ¥22.8 billion for the corresponding six-month period of the previous year. Japan Australia LNG (MIMI) Pty. Ltd. reported an increase reflecting an increase in production volume as well as the depreciation of the Japanese yen.

Net income attributable to Mitsui & Co., Ltd. for the six-month period ended September 30, 2013 was ¥94.0 billion, an increase of ¥15.1 billion from ¥78.9 billion for the corresponding six-month period of the previous year. In addition to the above, the following factors also affected results:

  • Dividends from six LNG projects (Abu Dhabi, Oman, Qatargas 1 and 3, Equatorial Guinea, and Sakhalin II) were ¥52.9 billion in total, an increase of ¥15.7 billion from ¥37.2 billion for the corresponding six-month period of the previous year, due mainly to an increase in dividends received from the Sakhalin II project.
  • For the six-month period ended September 30, 2013, a ¥3.3 billion impairment loss on investment in an LNG project was recorded reflecting an other-than-temporary decline in the investment value.
  • Reversal of deferred tax liabilities on undistributed retained earnings of associated companies at the time of profit distribution declined by approximately ¥3.0 billion from the corresponding six-month period of the previous year.
  • For the six-month period ended September 30, 2013, exploration expenses of ¥10.7 billion in total were recorded, including those recorded by Mitsui E&P Australia Pty Limited. For the corresponding six-month period of the previous year, exploration expenses totaled ¥13.6 billion, including those recorded by Mitsui E&P Mozambique Area 1 Limited (United Kingdom).

Lifestyle Segment

Gross profit for the six-month period ended September 30, 2013 was ¥56.1 billion, a decline of ¥0.2 billion from ¥56.3 billion for the corresponding six-month period of the previous year.

  • The Food Resources Business Unit reported a decline of ¥0.8 billion.
  • The Food Products & Services Business Unit recorded a decline of ¥1.3 billion reflecting the downturn in domestic businesses.
  • The Consumer Service Business Unit reported an increase of ¥2.0 billion, mainly attributable to the new contribution from Paul Stuart, Inc. (United States), which was acquired during the three-month period ended December 31, 2012.

Operating loss for the six-month period ended September 30, 2013 was ¥7.9 billion, a deterioration of ¥5.3 billion from an operating loss of ¥2.6 billion for the corresponding six-month period of the previous year, reflecting the increase in selling, general and administrative expenses.

Equity in earnings of associated companies for the six-month period ended September 30, 2013 was ¥6.6 billion, a decline of ¥1.1 billion from ¥7.7 billion for the corresponding six-month period of the previous year.

  • The Food Resources Business Unit reported an increase of ¥3.3 billion. For the corresponding six-month period of the previous year, this business unit recorded a ¥2.9 billion impairment loss on listed shares in Mitsui Sugar Co., Ltd. due to the decline in share prices.
  • The Food Products & Services Business Unit recorded a decline of ¥0.4 billion.
  • The Consumer Service Business Unit reported a decline of ¥4.1 billion. An impairment loss reflecting an other-than-temporary decline in the investment value was recorded for an associated company.

Net income attributable to Mitsui & Co., Ltd. for the six-month period ended September 30, 2013 was ¥8.0 billion, an increase of ¥2.4 billion from ¥5.6 billion for the corresponding six-month period of the previous year. In addition to the above-mentioned factors, there are the following factors.

  • For the six-month period ended September 30, 2013, this segment recorded a gain on sale of securities of ¥10.4 billion in total, including a ¥3.2 billion gain on the exchange of shares in Mikuni Coca-Cola Bottling Co., Ltd. for Coca-Cola East Japan Co., Ltd.
  • For the corresponding six-month period of the previous year, MBK Healthcare Partners Limited (United Kingdom) recorded a ¥5.5 billion gain related to equity dilution in IHH Healthcare Bhd.

Innovation & Corporate Development Segment

Gross profit for the six-month period ended September 30, 2013 was ¥9.0 billion, a deterioration of ¥15.0 billion from ¥24.0 billion for the corresponding six-month period of the previous year. Gross profit corresponding to foreign exchange gains of ¥7.5 billion and losses of ¥5.2 billion related to the commodity derivatives trading business at Mitsui posted in other expenses-net were included in gross profit for the six-month period ended September 30, 2013 and for the corresponding six-month period of the previous year, respectively; there was a decline in gross profit corresponding to the ¥12.7 billion improvement of foreign exchange gains and losses.

Operating loss for the six-month period ended September 30, 2013 was ¥21.6 billion, a deterioration of ¥15.9 billion from ¥5.7 billion for the corresponding six-month period of the previous year.

Equity in earnings of associated companies for the six-month period ended September 30, 2013 was ¥6.3 billion, a decline of ¥0.8 billion from ¥7.1 billion for the corresponding six-month period of the previous year.

Net loss attributable to Mitsui & Co., Ltd. for the six-month period ended September 30, 2013 was ¥3.7 billion, a decline of ¥10.3 billion from a net income of ¥6.6 billion for the corresponding six-month period of the previous year. In addition to the above-mentioned factors, the following factors also affected the results:

  • For the six-month period ended September 30, 2013 and for the corresponding six-month period of the previous year, foreign exchange gains of ¥7.5 billion and losses of ¥5.2 billion, respectively, were posted in other expense-net in relation to the commodity derivatives trading business at Mitsui.
  • For the corresponding six-month period of the previous year, this segment recorded a gain of ¥4.8 billion on the partial sale of shares in Nihon Unisys, Ltd.

Americas Segment

Gross profit for the six-month period ended September 30, 2013 was ¥36.6 billion, an increase of ¥2.7 billion from ¥33.9 billion for the corresponding six-month period of the previous year. Cinco Pipe And Supply, LLC, which was newly acquired during the three-month period ended December 31, 2012, contributed to the increase.

Operating income for the six-month period ended September 30, 2013 was ¥5.3 billion, a decline of ¥2.8 billion from ¥8.1 billion for the corresponding six-month period of the previous year. Despite the increase in gross profit, selling, general and administrative expenses increased reflecting the depreciation of the Japanese yen.

Equity in earnings of associated companies for the six-month period ended September 30, 2013 was ¥3.1 billion, an increase of ¥1.1 billion from ¥2.0 billion for the corresponding six-month period of the previous year.

Net income attributable to Mitsui & Co., Ltd. for the six-month period ended September 30, 2013 was ¥5.2 billion, a decline of ¥3.6 billion from ¥8.8 billion for the corresponding six-month period of the previous year.

Europe, the Middle East and Africa Segment

Gross profit for the six-month period ended September 30, 2013 was ¥12.1 billion, an increase of ¥4.8 billion from ¥7.3 billion for the corresponding six-month period of the previous year. MBK Real Estate Europe Limited (United Kingdom) reported an increase of ¥3.6 billion due to the sale of an office building.

Operating profit for the six-month period ended September 30, 2013 was ¥2.0 billion, an increase of ¥3.9 billion from a loss of ¥1.9 billion for the corresponding six-month period of the previous year.

Equity in earnings of associated companies for the six-month period ended September 30, 2013 was ¥0.4 billion, an increase of ¥0.2 billion from ¥0.2 billion for the corresponding six-month period of the previous year.

Net income attributable to Mitsui & Co., Ltd. for the six-month period ended September 30, 2013 was ¥4.6 billion, an increase of ¥5.1 billion from ¥0.5 billion of net loss for the corresponding six-month period of the previous year.

Asia Pacific Segment

Gross profit for the six-month period ended September 30, 2013 was ¥6.4 billion, an increase of ¥1.2 billion from ¥5.2 billion for the corresponding six-month period of the previous year.

Operating loss for the six-month period ended September 30, 2013 was ¥2.5 billion, a decline of ¥0.1 billion from ¥2.4 billion for the corresponding six-month period of the previous year.

Equity in earnings of associated companies for the six-month period ended September 30, 2013 was ¥2.1 billion, a decline of ¥1.0 billion from ¥3.1 billion for the corresponding six-month period of the previous year.

Net income attributable to Mitsui & Co., Ltd. for the six-month period ended September 30, 2013 was ¥18.4 billion, an increase of ¥1.6 billion from ¥16.8 billion for the corresponding six-month period of the previous year. In addition to the above, this segment recorded earnings from the segment’s minority interest in Mitsui Iron Ore Development Pty. Ltd., Mitsui-Itochu Iron Pty. Ltd., and Mitsui Coal Holdings Pty. Ltd.

(3) Financial Condition and Cash Flows

1) Financial Condition

Total assets as of September 30, 2013 were ¥10,441.9 billion, an increase of ¥117.3 billion from ¥10,324.6 billion as of March 31, 2013.

Total current assets as of September 30, 2013 were ¥4,358.5 billion, a decline of ¥273.0 billion from ¥4,631.5 billion as of March 31, 2013. Trade receivables, cash and cash equivalents, and inventories declined by ¥178.7 billion, ¥108.7 billion and ¥20.5 billion, respectively. Trade receivables declined, mainly due to a decline in volume, at the Machinery & Infrastructure Segment, oil and gas producing operations and petroleum trading operations in the Energy Segment, and the precious metal lease business in the Innovation & Corporate Development Segment.

Total current liabilities as of September 30, 2013 were ¥2,995.4 billion, a decline of ¥49.9 billion from ¥3,045.3 billion as of March 31, 2013. Trade payables and short-term debt declined by ¥129.6 billion and ¥16.7 billion, respectively, while current maturities of long-term debt increased by ¥106.8 billion. Trade payables declined at the Machinery & Infrastructure Segment, the Energy Segment and the precious metal lease business in the Innovation & Corporate Development Segment.

As a result, working capital, or current assets less current liabilities, as of September 30, 2013 totaled ¥1,363.1 billion, a decline of ¥223.1 billion from ¥1,586.2 billion as of March 31, 2013.

[Graphic Omitted]

The sum of “total investments and non-current receivables,” “net property and equipment,” “intangible assets, less accumulated amortization,” “deferred tax assets-non-current,” and “other assets” as of September 30, 2013 totaled ¥6,083.4 billion, an increase of ¥390.3 billion from ¥5,693.1 billion as of March 31, 2013, mainly due to the following factors:

Within this category, the total of investments and non-current receivables as of September 30, 2013 was ¥4,211.1 billion, an increase of ¥252.3 billion from ¥3,958.8 billion as of March 31, 2013.

  • Investments in and advances to associated companies as of September 30, 2013 was ¥2,443.6 billion, an increase of ¥118.3 billion from ¥2,325.3 billion as of March 31, 2013. Major factors were as follows:

- An increase of ¥39.3 billion due to an investment in the North and South American operations of an automotive components supplier, Gestamp Automoción, S.L.;

- An increase of ¥26.1 billion due to an investment in the Caserones copper and molybdenum project in Chile;

- An increase of ¥12.7 billion due to an acquisition of a 49% stake in Czech water business companies, Aqualia Czech, S.L. and Aqualia Infraestructuras Inženýring, s.r.o.;

- An increase due to an acquisition of a 19.99% stake in Medini Iskandar Malaysia Sdn. Bhd., which is engaged in the urban development of a smart city in Malaysia; and

- Factors that do not involve cash flow included an increase of ¥5.9 billion resulting from a foreign exchange translation adjustment on foreign investments due to the depreciation of the Japanese yen, despite net declines in equity earnings of ¥2.4 billion (net of ¥95.7 billion in dividends received from associated companies).

  • Other investments as of September 30, 2013 were ¥932.9 billion, an increase of ¥116.6 billion from ¥816.3 billion as of March 31, 2013. Major factors included a ¥61.3 billion increase by an acquisition of a 7% share in BHP Iron Ore (Jimblebar) Pty. Ltd. which is developing the Jimblebar iron ore mine in Australia, as well as a ¥55.8 billion net increase in unrealized holding gains on available-for-sale securities.
  • Net property and equipment as of September 30, 2013 totaled ¥1,706.2 billion, an increase of ¥135.9 billion from ¥1,570.3 billion as of March 31, 2013, mainly due to the following factors:

- An increase of ¥93.3 billion due to an acquisition of a 25% interest in the Tempa Rossa onshore oil field in the Gorgoglione concession in Italy;

- An increase of ¥23.7 billion (including a foreign exchange translation gain of ¥10.1 billion) at the Marcellus and Eagle Ford shale gas and oil producing operations in the United States;

- An increase of ¥16.0 billion (including a foreign exchange translation gain of ¥4.8 billion) at oil & gas producing operations other than U.S. shale gas and oil and the Tempa Rossa onshore oil field;

- An increase of ¥10.6 billion (including a foreign exchange translation loss of ¥25.5 billion) at iron ore mining operations in Australia; and

- A decline of ¥13.3 billion (including a foreign exchange translation loss of ¥13.6 billion) at coal mining operations in Australia.

Long-term debt less current maturities as of September 30, 2013 was ¥3,200.8 billion, an increase of ¥15.8 billion from ¥3,185.0 billion as of March 31, 2013, mainly due to an increase in long-term borrowings at financial subsidiaries, despite a decline in long-term debt due to a reclassification to current maturities at Mitsui.

Total Mitsui & Co., Ltd. shareholders’ equity as of September 30, 2013 was ¥3,351.1 billion, an increase of ¥169.3 billion from ¥3,181.8 billion as of March 31, 2013. The major component of the increase was an increase in retained earnings of ¥156.5 billion and unrealized holding gains on available-for-sale securities of ¥37.0 billion reflecting higher stock prices. Meanwhile, there was a net decline of ¥29.5 billion in foreign currency translation adjustments mainly due to the depreciation of the Australian dollar and Brazilian real against the Japanese yen.

As a result, the equity-to-asset ratio as of September 30, 2013, was 32.1%, 1.3% higher compared to 30.8% as of March 31, 2013. Net interest-bearing debt, or interest-bearing debt less cash and cash equivalents and time deposits as of September 30, 2013 was ¥3,050.0 billion, an increase of ¥210.6 billion from ¥2,839.4 billion as of March 31, 2013. The net debt-to-equity ratio (DER) as of September 30, 2013 was 0.91 times, 0.02 points higher compared to 0.89 times as of March 31, 2013.

[Table Omitted]

2) Cash Flows

Cash Flows from Operating Activities

Net cash provided by operating activities for the six-month period ended September 30, 2013 was ¥276.6 billion, an increase of ¥49.5 billion from ¥227.1 billion for the corresponding six-month period of the previous year. Major components of net cash provided by operating activities were our operating income of ¥146.0 billion, dividend income of ¥150.9 billion, including dividends received from associated companies, while net cash outflow of ¥35.6 billion from an increase in working capital, or changes in operating assets and liabilities.

Compared with the corresponding six-month period of the previous year, dividend income increased by ¥64.7 billion and operating income increased by ¥11.7 billion, while net cash flow from changes in working capital deteriorated by ¥42.4 billion.

Cash Flows from Investing Activities

Net cash used in investing activities for the six-month period ended September 30, 2013 was ¥449.4 billion, a decline of ¥73.3 billion from ¥522.7 billion for the corresponding six-month period of the previous year. Net cash used in investing activities consisted of:

  • Net outflows of cash that corresponded to investments in and advances to associated companies (net of sales of investments in and collection of advances to associated companies) were ¥76.1 billion. The major cash outflows were attributable to an acquisition of a 30% stake in Gestamp Automoción, S.L.’s North and South American operations for ¥39.3 billion, an investment in the Caserones copper and molybdenum project in Chile for ¥26.1 billion, an acquisition of a 49% stake in Aqualia Czech, S.L. and Aqualia Infraestructuras Inženýring, s.r.o. for ¥12.7 billion, and an acquisition of a 19.99% stake in Medini Iskandar Malaysia Sdn. Bhd. The major cash inflows included collection of a loan for ¥24.5 billion from FPSO leasing business for oil and gas production in Brazil.
  • Net outflows of cash that corresponded to other investments and business (net of sales and redemption of other investments) were ¥152.9 billion. Major cash expenditures included an acquisition of a 25% interest in an onshore oil field in Italy for ¥98.3 billion and an acquisition of a 7% share in BHP Iron Ore (Jimblebar) Pty. Ltd. for ¥61.3 billion.
  • Net outflows of cash that corresponded to long-term loan receivables (net of collection) were ¥23.5 billion. Increases in long-term loans mainly consisted of the loan to BHP Iron Ore (Jimblebar) Pty. Ltd.
  • Net outflows of cash relating to purchases of property leased to others and property and equipment (net of sales of those assets) were ¥192.1 billion. Major expenditures included:

- Iron ore mining operations in Australia for ¥48.7 billion;

- Oil and gas producing operations other than U.S. shale gas and oil for a total of ¥47.3 billion;

- Marcellus and Eagle Ford shale gas and oil producing operations in the United States for ¥47.1 billion; and

- Rolling stock for leasing for ¥12.1 billion.

Free cash flow, or the sum of net cash provided by operating activities and net cash used in investing activities, for the six-month period ended September 30, 2013 was a net outflow of ¥172.8 billion.

Cash Flows from Financing Activities

For the six-month period ended September 30, 2013, net cash provided by financing activities was ¥67.6 billion, a decline of ¥111.8 billion from ¥179.4 billion for the corresponding six-month period of the previous year. The net cash inflow from the borrowing of long-term debt and short-term debt were ¥85.0 billion and ¥21.6 billion, respectively, while the cash outflow from payments of cash dividends was ¥38.3 billion.

In addition to the changes discussed above, there was a decline in cash and cash equivalents of ¥3.5 billion due to foreign exchange translation; as a result, cash and cash equivalents as of September 30, 2013 totaled ¥1,316.5 billion, a decline of ¥108.7 billion from ¥1,425.2 billion as of March 31, 2013.

2. Management Policy

(1) Result and Forecast for Investment and Loan Plan

Our progress with the investments and loans plan in each of the six business areas for the six-month period ended September 30, 2013 was as follows:

[Graphic Omitted]

During the six-month period ended September 30, 2013, we implemented new investments and loans of approximately ¥550 billion, which was originally planned at ¥1,000 billion for the fiscal year ending March 31, 2014. Investments and loans in each of the six business areas, mainly to high-quality upstream assets and infrastructure projects in emerging countries, are executed in line with our original plan. During the six-month period ended September 30, 2013, we collected approximately ¥110 billion for divestiture, which was originally planned at ¥170 billion for the fiscal year ending March 31, 2014. Adding to the collection for loans and sales of real estate, we proactively sold our holding shares. We maintain our projection of the investments and loans plan for the fiscal year ending March 31, 2014.

Due to the many investment opportunities to strengthen our earnings base, free cash flow is forecasted to be negative for the fiscal year ending March 31, 2014. We plan to continue our efforts to improve our portfolio by further reinforcing our investment discipline and enhancing strategic divestitures, keeping in mind the necessity to recover from negative free cash flow.

(2) Forecasts for the Year Ending March 31, 2014

1) Revised forecasts for the year ending March 31, 2014

[Table Omitted]

We assume foreign exchange rates for the six-month period ending March 31, 2014 (2nd half) will be ¥95/US$, ¥90/AU$ and ¥40/BRL, while average foreign exchange rates for the six-month period ended September 30, 2013 (1st half) were ¥98.65/US$, ¥92.94/AU$ and ¥44.94/BRL. Also, we assume the annual average crude oil price applicable to our financial results for the year ending March 31, 2013 will be US$108/barrel, up US$2 from the original forecast, based on the assumption that the crude oil price (JCC) will be maintained at US$103/barrel throughout the six-month period ending March 31, 2014.

Gross profit for the year ending March 31, 2014 is expected to be ¥850.0 billion, a decline of ¥50.0 billion from the original forecast, due to a decline in coal prices and underperforming commodity derivatives trading. Equity in earnings of associated companies is expected to be ¥180.0 billion, a decline of ¥20.0 billion. Major factors included impairment losses on equity investments including SCM Minera Lumina Copper Chile recoded in the six-month period ended September 30, 2013 and equity loss from scrap metal recycling business. Meanwhile, we expect increases in divided income and gain on sale of securities.

As a result, net income attributable to Mitsui & Co., Ltd. for the year ending March 31, 2014 is expected to be ¥370.0 billion, the same level as the original forecast.

The forecast for annual operating results by operating segment compared to the original forecast is described as follows:

(Billions of yen)   Year ending

March 31, 2014

Revised Forecast

  Year ending

March 31, 2014

Original Forecast*

  Change
Iron & Steel Products   13.0   13.0   0.0
Mineral & Metal Resources   89.0   112.0   (23.0)
Machinery & Infrastructure   19.0   22.0   (3.0)
Chemicals   14.0   12.0   2.0
Energy   172.0   155.0   17.0
Lifestyle   22.0   16.0   6.0
Innovation & Corporate Development   1.0   (3.0)   4.0
Americas   14.0   17.0   (3.0)
Europe, the Middle East and Africa   3.0   3.0   0.0
Asia Pacific   33.0   33.0   0.0
All Other/Adjustments and Eliminations   (10.0)   (10.0)   0.0
Consolidated total   370.0   370.0   0.0

* Effective October 1, 2013, the coal related businesses, except for trading of thermal coal for power utilities, were transferred from the Energy Segment to the Mineral & Metal Resources Segment. In accordance with this change, the operating segment information of the original forecast for the year ending March 31, 2014 has been restated to conform to the operating segment as of October 1, 2013.

  • Projected net income attributable to Mitsui & Co., Ltd. from the Iron & Steel Products Segment for the year ending March 31, 2013 is ¥13.0 billion, the same level as the original forecast, taking into consideration its progress, which is in line with the original forecast.
  • Projected net income attributable to Mitsui & Co., Ltd. from the Mineral & Metal Resources Segment is ¥89.0 billion, a decline of ¥23.0 billion from the original forecast. The primary reasons for the decline are the impairment loss on investment in SCM Minera Lumina Copper Chile recoded in the six-month period ended September 30, 2013; a deterioration in earnings of Mitsui Raw Materials Development Pty. Limited which invests in the scrap metal recycling business; and a decline in coal prices. Meanwhile, we count the positive impact attributable to iron ore prices and sales volume.
  • Projected net income attributable to Mitsui & Co., Ltd. from the Machinery & Infrastructure Segment is ¥19.0 billion, a decline of ¥3.0 billion from the original forecast. Gas distribution business in Brazil and construction machinery-related businesses are expected to post declines in profits, due to the fluctuations in exchange rates and weaker demand.
  • Projected net income attributable to Mitsui & Co., Ltd. from the Chemicals Segment is ¥14.0 billion, an increase of ¥2.0 billion from the original forecast, reflecting the gain on sale of securities recorded in the six-month period ended September 30, 2013.
  • Projected net income attributable to Mitsui & Co., Ltd. from the Energy Segment is ¥172.0 billion, an increase of ¥17.0 billion from the original forecast. The main causes of the increase are a decline in cost at oil and gas producing operations; the positive effect from depreciation of the Japanese yen; and an increase in oil prices. Meanwhile, we took into consideration certain decline in production volume at oil and gas producing operations.
  • Projected net income attributable to Mitsui & Co., Ltd. from the Lifestyle Segment is ¥22.0 billion, an increase of ¥6.0 billion from the original forecast. Expected positive factors include an increase in gains on sales of consumer service -related securities compared with the original forecast.
  • Projected net income attributable to Mitsui & Co., Ltd. from the Innovation & Corporate Development Segment is ¥1.0 billion, an increase of ¥4.0 billion from the original forecast. We expect an increase in gains on sales of information industry-related securities, despite a profit decline in the commodity derivatives trading at Mitsui & Co. Commodity Risk Management Ltd. and the venture capital business.
  • Projected net income attributable to Mitsui & Co., Ltd. from the Americas Segment is ¥14.0 billion, a decline of ¥3.0 billion from the original forecast, reflecting the loss on sale of SunWize Technologies, Inc., a photovoltaic distributor, recorded in the six-month period ended September 30, 2013. Projected net income attributable to Mitsui & Co., Ltd. from the Europe, the Middle East and Africa Segment and the Asia Pacific Segment are ¥3.0 billion and ¥33.0 billion, respectively, the same level as the original forecast.
  • Projected net loss attributable to Mitsui & Co., Ltd. from All Other/Adjustments and Eliminations Segment is ¥10.0 billion, the same level as the original forecast. Adjustments and Eliminations include income and expense items that are not allocated to specific segments.

2) Key commodity prices and other parameters for the year ending March 31, 2014

The table below shows assumptions for key commodity prices and other parameters for the projected net income attributable to Mitsui & Co., Ltd. for the year ending March 31, 2014. Effects of price movements for each commodity on annual net income attributable to Mitsui & Co., Ltd. are included in the table.

Impact on Net Income attributable to Mitsui & Co., Ltd.

for the Year ending March 31, 2014

(Announced in May 2013)

  March 2014

(Revised Forecast)

(Announced in November 2013)

    March 2014   March 2013

(Original Forecast)

(Announced in May 2013)

1st Half

(Result)

  2nd Half

(Assumption)

 
Commodity   Crude Oil/JCC   ¥1.9 bn (US$1/bbl) 105 108   103   103
Consolidated Oil Price(*1)     108 111   105   106
Iron Ore   ¥2.2 bn (US$1/ton)   (*2) 124.8(*3)   (*2)   (*2)
  Copper   ¥0.6 bn (US$100/ton)   7,413 7,537(*4)   7,500(*5)   7,500
Forex (*6) USD   ¥1.9 bn (¥1/USD)   96.83 98.65   95   95
AUD   ¥1.9 bn (¥1/AUD)   91.47 92.94   90   95
  BRL   ¥0.4 bn (¥1/BRL)   42.47 44.94   40   45
 

(*1) The oil price trend is reflected in net income with a 0-6 month time lag. We assume the annual average price applicable to our financial results as the Consolidated Oil Price based on the estimation: 4-6 month time lag, 34%; 1-3 month time lag, 47%; no time lag, 19%.

(*2) We refrain from disclosing the iron ore price assumptions.

(*3) Daily average of representative reference prices (Fine, Fe 62% CFR North China) during April 2013 to September 2013

(*4) Average of LME cash settlement price during January 2013 to June 2013

(*5) Price assumption for January 2014 to March 2014

(*6) Impact of currency fluctuation on net income of overseas subsidiaries and associated companies (denomination in functional currency) against the Japanese yen

Impact of currency fluctuation between their functional currencies against revenue currencies and exchange rate hedging are not included.

(3) Shareholder Return Policy

In order to increase corporate value and maximize shareholder value, we have sought to maintain an optimal balance between (a) meeting investment demand in areas that are our core strengths and growth largely through re-investments of our retained earnings, and (b) directly providing returns to shareholders by paying out cash dividends based on a target dividend payout ratio of consolidated net income.

For the two-year period of the Medium-term Management Plan to March 2014, while we principally aim for a steady increase in dividends through improvements in corporate performance, we will also consider more flexible compensation to the shareholders, provided that sufficient retained earnings for future business development is secured. Considering the strengthening of our financial standing that has been accomplished through the execution of our previous Medium-term Management Plan, we have set our minimum target dividend payout ratio at 25%.

For the six-month period ended September 30, 2013, we have decided to pay an interim dividend of ¥25 per share, a ¥3 per share increase from the corresponding six-month period of the previous year. Pursuant to our policy, for the year ending March 31, 2014, we currently envisage an annual dividend of ¥51 per share (including the interim dividend of ¥25 per share), an ¥8 increase from the year ended March 31, 2013, on the assumption that our annual consolidated net income attributable to Mitsui & Co., Ltd. will be ¥370 billion, as mentioned in our net income forecast for the year ending March 31, 2014.

We will continue to review the shareholder return policy taking into consideration the business environment, future investing activity trends, free cash flow and interest-bearing debt levels, and return on equity.

3. Other Information

Notice:

This flash report contains forward-looking statements about Mitsui and its consolidated subsidiaries. These forward-looking statements are based on Mitsui’s current assumptions, expectations and beliefs in light of the information currently possessed by it and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Mitsui’s actual consolidated financial position, consolidated operating results or consolidated cash flows to be materially different from any future consolidated financial position, consolidated operating results or consolidated cash flows expressed or implied by these forward-looking statements.

These risks, uncertainties and other factors include, among others, (1) economic downturns worldwide or at specific regions, (2) fluctuations in commodity prices, (3) fluctuations in exchange rates, (4) credit risks from clients with which Mitsui and its consolidated subsidiaries have business transactions or financial dealings and/or from various projects, (5) declines in the values of assets for which Mitsui and its consolidated subsidiaries act as lessors, (6) changes in the financing environment, (7) declines in market value of equity and/or debt securities, (8) changes in evaluation in connection to the establishment of valuation allowances for deferred tax assets, (9) inability to successfully restructure or eliminate subsidiaries or associated companies as planned, (10) unsuccessful joint ventures and strategic investments, (11) risks of resource related businesses not developing in line with assumed costs and schedules and uncertainty in reserves and performance of third party operators, (12) loss of opportunities to enter new business areas due to limitations on business resources, (13) environmental laws and regulations, (14) changes in laws and regulations or unilateral changes in contractual terms by governmental entities, (15) employee misconduct, (16) failure to maintain adequate internal control over financial reporting, and (17) climate change and natural disaster. For further information on the above, please refer to Mitsui’s Annual Securities Report.

Forward-looking statements may be included in Mitsui’s Annual Securities Report and Quarterly Securities Reports or in its other disclosure documents, press releases or website disclosures. Mitsui undertakes no obligation to publicly update or revise any forward-looking statements.

                   
4. Consolidated Financial Statements
(1) Consolidated Balance Sheets
(Millions of Yen)
Assets
                       

 

March 31,

2013

  September 30,

2013

 
Current Assets:
Cash and cash equivalents ¥ 1,425,174 ¥ 1,316,481
Time deposits 4,740 8,725
Marketable securities 367 370
Trade receivables:
Notes and loans, less unearned interest 291,052 258,854
Accounts 1,608,915 1,501,213
Associated companies 138,588 97,165
Allowance for doubtful receivables -16,463 -13,806
Inventories 746,584 726,144
Advance payments to suppliers 135,120 127,484
Deferred tax assets―current 15,644 14,534
Derivative assets 61,081 87,137
Other current assets 220,729 234,179
Total current assets 4,631,531 4,358,480
Investments and Non-current Receivables:
Investments in and advances to associated

companies

2,325,255 2,443,637
Other investments 816,343 932,877
Non-current receivables, less unearned interest 523,904 531,170
Allowance for doubtful receivables -37,362 -37,881
Property leased to others―at cost, less accumulated

depreciation

330,627 341,275
Total investments and non-current receivables 3,958,767 4,211,078
Property and Equipment―at Cost:
Land, land improvements and timberlands 218,801 220,859
Buildings, including leasehold improvements 442,255 461,610
Equipment and fixtures 1,668,246 1,791,095
Mineral rights 203,142 277,718
Vessels 42,478 41,274
Projects in progress 235,084 238,445
Total 2,810,006 3,031,001
Accumulated depreciation -1,239,736 -1,324,785
Net property and equipment 1,570,270 1,706,216
Intangible Assets, less Accumulated Amortization 118,448 123,311
Deferred Tax Assets―Non-current 31,538 28,699
Other Assets 14,027 14,142
                                 
      Total                 ¥ 10,324,581     ¥ 10,441,926
 
                 
 
 

(Millions of Yen)

Liabilities and Equity
                        March 31,

2013

    September 30,

2013

 
 
Current Liabilities:
 
Short-term debt ¥ 663,129 ¥ 646,417
Current maturities of long-term debt 421,211 528,018
Trade payables:
Notes and acceptances 46,057 37,537
Accounts 1,438,287 1,297,402
Associated companies 71,272 91,100
Accrued expenses:
Income taxes 54,091 54,464
Interest 16,985 15,887
Other 80,971 80,515
Advances from customers 98,470 100,474
Derivative liabilities 83,940 75,053
Other current liabilities 70,917 68,560
Total current liabilities 3,045,330 2,995,427
Long-term Debt, less Current Maturities 3,184,957 3,200,804
Accrued Pension Costs and Liability for Severance

Indemnities

68,312 66,518
Deferred Tax Liabilities―Non-current 266,544 288,127
Other Long-Term Liabilities 319,334 286,697
Equity:
Common stock 341,482 341,482
Capital surplus 429,828 427,255
Retained earnings:
Appropriated for legal reserve 69,653 72,067
Unappropriated 2,405,008 2,561,468
Accumulated other comprehensive income (loss):
Unrealized holding gains on available-for-sale securities 135,832 172,770
Foreign currency translation adjustments -94,912 -124,427
最小年金債務調整額(当期)

 

キャッシュフローヘッジ損益(期末)

 

外換算調整勘定(期末)
繰延ヘッジ損失(流動資産)
繰延ヘッジ損失(固定資産)
繰延ヘッジ利益(流動負債)
繰延ヘッジ利益(固定負債)
Foreign currency translation adjustments
Defined benefit pension plans -74,124 -70,998
Defined benefit pension plans
Net unrealized losses on derivatives -24,974 -22,585
Total accumulated other comprehensive loss -58,178 -45,240
Treasury stock, at cost -5,974 -5,933
Total Mitsui & Co., Ltd. shareholders' equity 3,181,819 3,351,099
 
Noncontrolling interests 258,285 253,254
Total equity 3,440,104 3,604,353
                                   
      Total   ¥ 10,324,581       ¥ 10,441,926
 
(2) Statements of Consolidated Income and Comprehensive Income
         
Statements of Consolidated Income

(Millions of Yen)

Six-month period ended

September

30, 2012

 

Six-month period ended

September

30, 2013

 
                   
Revenues :
Sales of products ¥ 2,117,701 ¥ 2,617,151
Sales of services 185,434 201,981
Other sales 62,763 53,173
Total revenues 2,365,898 2,872,305
 
Total Trading Transactions :
Six-month period ended September 30, 2012, ¥ 4,992,679 million
Six-month period ended September 30, 2013, ¥ 5,531,382 million
 
Cost of Revenues :
Cost of products sold -1,866,548 -2,332,370
Cost of services sold -76,850 -80,331
Cost of other sales -29,526 -29,628
Total cost of revenues -1,972,924 -2,442,329
Gross Profit 392,974 429,976
Other Expenses (Income) :
Selling, general and administrative 251,480 278,565
Provision for doubtful receivables 7,219 5,444
Interest expense - net 6,263 7,213
Dividend income -46,386 -64,523
Gain on sales of securities - net -15,664 -16,987
Loss on write-down of securities 18,361 10,600
Gain on disposal or sales of property and equipment - net -1,516 -1,838
Impairment loss of long-lived assets 224 414
Other expenses - net 12,691 8,680
Total other expenses (income) 232,672 227,568
Income before Income Taxes and Equity in Earnings 160,302 202,408
Income Taxes 77,625 89,288
Income before Equity in Earnings 82,677 113,120
Equity in Earnings of Associated Companies - Net 97,338 93,301
 
Net Income before Attribution of Noncontrolling Interests 180,015 206,421
  Net Income Attributable to Noncontrolling Interests   -11,678     -9,220
  Net Income Attributable to Mitsui & Co., Ltd.   ¥ 168,337     ¥ 197,201
 
 
Statements of Consolidated Comprehensive Income
 

(Millions of Yen)

Six-month

period ended September

30, 2012

 

Six-month

period ended September

30, 2013

 
                   
Net Income before Attribution of Noncontrolling Interests ¥ 180,015 ¥ 206,421
Other Comprehensive Income (Loss) (after income tax effect):
Unrealized holding (losses) gains on available-for-sale securities -41,079 35,569
Foreign currency translation adjustments -120,210 -28,885
Defined benefit pension plans 1,680 3,143
Net unrealized (losses) gains on derivatives -3,885 2,308
Total Other Comprehensive (Loss) Income (after income tax effect) -163,494 12,135
Comprehensive Income before Attribution of Noncontrolling Interests 16,521 218,556
  Comprehensive Income Attributable to Noncontrolling Interests   -2,372     -8,648
  Comprehensive Income Attributable to Mitsui & Co., Ltd.   ¥ 14,149     ¥ 209,908
 
(3) Statements of Consolidated Cash Flows
     
 
  (Millions of Yen)
         

Six-month period ended September 30, 2012

Six-month period ended September 30, 2013

Operating Activities:
Net income before attribution of noncontrolling interests ¥ 180,015 ¥ 206,421
Adjustments to reconcile net income before attribution of noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization 88,203 105,478
Pension and severance costs, less payments 5,417 3,421
Provision for doubtful receivables 7,219 5,444
Gain on sales of securities - net (15,664) (16,987)
Loss on write-down of securities 18,361 10,600
Gain on disposal or sales of property and equipment - net (1,516) (1,838)
Impairment loss of long-lived assets 224 414
Deferred income taxes (4,486) 6,188
Equity in earnings of associated companies, less dividends received (57,494) (6,905)
Changes in operating assets and liabilities:
Decrease in trade receivables 167,662 183,819
(Increase) decrease in inventories (66,237) 28,023
Decrease in trade payables (72,800) (140,121)
      Other - net   (21,816)   (107,339)
      Net cash provided by operating activities   227,088   276,618
Investing Activities:
Net increase in time deposits

 

(2,070) (4,699)
Net increase in investments in and advances to associated companies

 

(193,659) (76,112)
Net decrease (increase) in other investments

 

10,959 (152,946)
Net increase in long-term loan receivables

 

(136,398) (23,545)
  Net increase in property leased to others and property and equipment

 

  (201,524)   (192,125)
      Net cash used in investing activities   (522,692)   (449,427)
Financing Activities:
Net increase in short-term debt

 

152,665 21,593
Net increase in long-term debt

 

78,714 85,016

Transactions with noncontrolling interest shareholders

(820) (681)
Purchases of treasury stock - net

 

(2) (9)
  Payments of cash dividends   (51,111)   (38,334)
      Net cash provided by financing activities   179,446   67,585
Effect of Exchange Rate Changes on Cash and Cash Equivalents   (20,380)   (3,469)
Net Decrease in Cash and Cash Equivalents (136,538) (108,693)
Cash and Cash Equivalents at Beginning of Period   1,431,112   1,425,174
Cash and Cash Equivalents at End of Period   ¥ 1,294,574   ¥ 1,316,481
 
 
(4) Assumption for Going Concern: None
 
(5) Significant Changes in Shareholders' Equity: None
 
(6) Operating Segment Information
                 
Six-month period ended September 30, 2012 (from April 1, 2012 to September 30, 2012) (As restated)
                                  (Millions of Yen)
          Iron & Steel Products   Mineral & Metal Resources   Machinery & Infrastructure   Chemicals   Energy   Lifestyle   Innovation & Corporate Development
 
Revenues 103,646 236,761 170,582 338,309 701,010 396,473 68,736
Gross Profit 18,448 75,164 47,651 33,871 97,505 56,265 23,967
Operating Income (Loss) -691 58,616 -9,571 3,056 70,259 -2,604 -5,667
Equity in Earnings of Associated Companies -Net 1,094 35,281 14,024 4,008 22,767 7,710 7,101
Net Income (Loss) Attributable to Mitsui & Co., Ltd.   -1,340   50,232   7,533   -953   78,863   5,612   6,635
Total Assets at September 30, 2012   524,757   1,241,711   1,290,607   655,475   1,675,961   1,273,199   465,339
                                   
          Americas   Europe,

the Middle East and Africa

  Asia Pacific   Total   All Other   Adjustments

and Eliminations

  Consolidated Total
 
Revenues 271,941 48,226 29,255 2,364,939 959 - 2,365,898
Gross Profit 33,872 7,265 5,204 399,212 462 -6,700 392,974
Operating Income (Loss) 8,069 -1,930 -2,354 117,183 -2,222 19,314 134,275
Equity in Earnings of Associated Companies -Net 2,020 191 3,071 97,267 - 71 97,338
Net Income (Loss) Attributable to Mitsui & Co., Ltd.   8,806   -501   16,805   171,692   864   -4,219   168,337
Total Assets at September 30, 2012   415,271   88,895   252,459   7,883,674   4,722,241   -3,686,672   8,919,243
 
 
Six-month period ended September 30, 2013 (from April 1, 2013 to September 30, 2013)
                                  (Millions of Yen)
          Iron & Steel Products   Mineral & Metal Resources   Machinery & Infrastructure   Chemicals   Energy   Lifestyle   Innovation & Corporate Development
 
Revenues 117,484 320,176 185,713 452,426 822,301 474,553 45,152
Gross Profit 26,798 99,613 54,323 40,063 96,507 56,103 9,016
Operating Income (Loss) 7,996 80,491 -6,837 6,514 64,729 -7,939 -21,565
Equity in Earnings of Associated Companies -Net 3,114 23,243 15,424 3,234 30,258 6,561 6,328
Net Income (Loss) Attributable to Mitsui & Co., Ltd.   6,681   44,664   8,977   9,546   93,987   7,961   -3,691
Total Assets at September 30, 2013   547,980   1,678,929   1,612,743   695,460   2,091,827   1,455,942   562,276
                                   
          Americas   Europe,

the Middle East and Africa

  Asia Pacific   Total   All Other   Adjustments

and Eliminations

  Consolidated Total
 
Revenues 341,522 60,537 51,505 2,871,369 933 3 2,872,305
Gross Profit 36,556 12,103 6,435 437,517 492 -8,033 429,976
Operating Income (Loss) 5,308 1,984 -2,507 128,174 -5,477 23,270 145,967
Equity in Earnings of Associated Companies -Net 3,058 416 2,053 93,689 10 -398 93,301
Net Income (Loss) Attributable to Mitsui & Co., Ltd.   5,241   4,568   18,442   196,376   5,384   -4,559   197,201
Total Assets at September 30, 2013   497,896   117,647   313,621   9,574,321   4,865,669   -3,998,064   10,441,926
 

Notes:

1. “All Other” principally consisted of the Corporate Staff Unit which provides financing services and operations services to external customers and/or to the companies and associated companies. Total assets of “All Other” at September 30, 2012 and 2013 consisted primarily of cash and cash equivalents and time deposits related to financing activities, and assets of the Corporate Staff Unit and certain subsidiaries related to the above services.

During the six-month period ended September 30, 2013, a part of the Corporate Staff Unit which was formerly included in “Adjustments and Eliminations” is included in “All Other”.

This change has been made to the operating segment information for the six-month period ended September 30, 2012, to conform to the current period presentation.

2. Transfers between operating segments are made at cost plus a markup.

3. Net Income (Loss) Attributable to Mitsui & Co., Ltd. of “Adjustments and Eliminations” includes income and expense items that are not allocated to specific reportable operating segments, and eliminations of intersegment transactions.

4. During the three-month period ended June 30, 2013, Logistics infrastructure businesses including development and management of ports and airport terminal, advanced materials related businesses such as liquid crystal and electronic devices, and media related businesses such as TV shopping and broadcasting, all included in “Innovation & Corporate Development” segment, were transferred to “Machinery & Infrastructure” segment, “Chemicals” segment, and “Lifestyle” segment, respectively.

In accordance with these changes, the operating segment information for the six-month period ended September 30, 2012, has been restated to conform to the current period presentation.

5. During the three-month period ended June 30, 2013, the steel scrap related businesses of Mitsui Bussan Metals Co., Ltd. in “Mineral & Metal Resources” segment were transferred to Mitsui & Co. Steel Ltd. in “Iron & Steel Products” segment.

In accordance with this change, the operating segment information for the six-month period ended September 30, 2012, has been restated to conform to the current period presentation.

6. During the three-month period ended June 30, 2013, “Innovation & Cross Function” changed its name to “Innovation & Corporate Development”.

7. Operating Income (Loss) reflects the companies' a) Gross Profit, b) Selling, general and administrative expenses, and c) Provision for doubtful receivables as presented in the Statements of Consolidated Income.

For diagrams omitted, please see our home page. (http://www.mitsui.com/jp/en/ir/library/meeting/__icsFiles/afieldfile/2013/11/05/en_143_2q_ta.pdf)

Short Name: Mitsui & Co., Ltd.
Category Code: IR
Sequence Number: 396665
Time of Receipt (offset from UTC): 20131105T074756+0000

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Mitsui & Co Ltd

Contacts

Mitsui & Co Ltd