1st Quarter Results

TOKYO--()--

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

Consolidated Financial Results for the Three-Month Period Ended June 30, 2018 [IFRS]

Mitsui & Co., Ltd. announced its consolidated financial results for the three-month period ended June 30, 2018, based on International Financial Reporting Standards ("IFRS").

Mitsui & Co., Ltd. and subsidiaries
(Web Site : http://www.mitsui.com/jp/en/)

President and Chief Executive Officer : Tatsuo Yasunaga
Investor Relations Contacts : Yuji Mano, General Manager, Investor Relations Division TEL 81-3-3285-7533

1. Consolidated financial results
(1) Consolidated operating results information for the three-month period ended June 30, 2018
(from April 1, 2018 to June 30, 2018)

    Three-month period ended June 30,
 

 

     

 

   
       

2018

  %  

2017

  %
Revenue   Millions of yen   1,556,199   31.7   1,181,660   15.9
Profit before income taxes   Millions of yen   167,026   8.5   153,924   79.6
Profit for the period   Millions of yen   126,015   8.1   116,533   81.2
Profit for the period attributable to owners of the parent   Millions of yen   118,414   6.9   110,756   81.1
Comprehensive income for the period   Millions of yen   160,060   30.4   122,755   -
Earnings per share attributable to owners of the parent, basic   Yen   68.14 62.79
Earnings per share attributable to owners of the parent, diluted   Yen   68.08       62.75    

Percentage figures for Revenue, Profit before income taxes, Profit for the period, Profit for the period attributable to owners of the parent, and Comprehensive income for the period represent changes from the previous year.

(2) Consolidated financial position information

    June 30, 2018   March 31, 2018
             
Total assets   Millions of yen   11,379,486   11,306,660
Total equity   Millions of yen   4,306,789   4,218,123
Total equity attributable to owners of the parent   Millions of yen   4,056,345   3,974,715
Equity attributable to owners of the parent ratio   %   35.6   35.2
2. Dividend information        
 
Year ended March 31, Year ending March 31, 2019 (Forecast)
        2019   2018    
Interim dividend per share   Yen 0 30 35
Year-end dividend per share   Yen 40 35
Annual dividend per share   Yen       70 70

Note :
Change from the latest released dividend forecast : None

3. Forecast of consolidated operating results for the year ending March 31, 2019 (from April 1, 2018 to March 31, 2019)

    Year ending

March 31, 2019

         
Profit attributable to owners of the parent   Millions of yen   420,000
Earnings per share attributable to owners of the parent, basic   Yen   241.67

Note :
Change from the latest released earnings forecast : None

4. Others

(1) Increase/decrease of important subsidiaries during the period : Yes
Included: 1 company (AWE Limited)

(2) Changes in accounting policies and accounting estimate :

  (i) Changes in accounting policies required by IFRS   Yes
(ii) Other changes None
(iii) Changes in accounting estimates Yes

Note :
For further details please refer to page 15 "3. Condensed Consolidated Financial Statements (6) Changes in Accounting Policies and Changes in Accounting Estimates".

(3) Number of shares :

    June 30, 2018   March 31, 2018
         
Number of shares of common stock issued, including treasury stock   1,742,345,627   1,796,514,127
Number of shares of treasury stock   4,458,822   58,632,655
         
    Three-month period ended

June 30, 2018

  Three-month period ended

June 30, 2017

   
Average number of shares of common stock outstanding   1,737,884,041   1,763,954,938

This quarterly earnings report  is not subject to quarterly review.

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 cautionary notes with respect to forward-looking statements, please refer to the "Notice" section on page 9.

Supplementary materials and IR meetings 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 August 2, 2018.

Contents of the meeting (English and Japanese) will be posted on our web site immediately after the meeting.

Table of Contents  
 
1. Qualitative Information
(1) Operating Environment 2
(2) Results of Operations 2
(3) Financial Condition and Cash Flows 6
(4) Information Concerning Profit Forecast for the Year Ending March 31, 2019 9
 
2. Other Information 9
 
3. Condensed Consolidated Financial Statements
(1) Condensed Consolidated Statements of Financial Position 10
(2) Condensed Consolidated Statements of Income and Comprehensive Income 12
(3) Condensed Consolidated Statements of Changes in Equity 13
(4) Condensed Consolidated Statements of Cash Flows 14
(5) Assumption for Going Concern 14
(6) Changes in Accounting Policies and Changes in Accounting Estimates 15
(7) Segment Information 17

1. Qualitative Information

As of the date of disclosure of this quarterly earnings report, the review procedures for quarterly financial statements in accordance with the Financial Instruments and Exchange Act are in progress.

(1) Operating Environment

In the three-month period ended June 30, 2018, the global economy experienced an upturn compared to the temporary weak growth in the previous three-month period and continued to be resilient, particularly in developed countries, supported by a recovery in spending and investment.

In the U.S., consumer spending continues to be resilient supported by a favorable environment for employment and employee income, and tax reform is expected to drive capital investment. As such, economic recovery is expected to continue for the time being. In the meantime, in Europe, growth is expected to gradually weaken as corporate business confidence plateaus. In Japan, moderate economic recovery is expected to continue as a result of consumer spending supported by the improvement in the employment environment, and because of increases in both investment related to the Olympic and Paralympic Games, and in capital investment focused on labor-saving initiatives. However, there is concern regarding the impact of the disasters caused by heavy rainfall in western Japan in early July. As for emerging countries, growth is expected to weaken in China due to excess capacity and adjustments of debts in addition to the impact of the trade friction between the U.S. and China. In Brazil, the economy is expected to slow down following the impact of truck drivers going on strike and the depreciation of the Brazilian real. In Russia, limited growth is also expected to continue due in part to ongoing sanctions from the U.S. and other nations.

The global economy is expected to follow a trend of gentle recovery going forward. However, there is increased uncertainty and a careful watch is needed on a range of circumstances that include the escalation of geopolitical risk surrounding the Middle East, the future prospects for the European and U.S. economies, which have shown signs of maturity in some parts, the impact of the Federal Reserve Board’s monetary tightening on the economies of emerging countries, and the growing intensity of trade friction as a result of U.S. trade policy.

(2) Results of Operations

1) Analysis of Consolidated Income Statements

(Billions of Yen)   Current Period   Previous Period   Change
Revenue   1,556.2   1,181.7   +374.5
Gross profit   218.4   199.4   +19.0
Selling, general and administrative expenses   (137.7)   (132.1)   (5.6)
Other Income (Expenses)  

Gain (Loss) on Securities and Other Investments-Net

  1.3   3.3   (2.0)

Impairment Reversal (Loss) of Fixed Assets-Net

  (1.0)   (1.3)   +0.3

Gain (Loss) on Disposal or Sales of Fixed Assets-Net

  6.9   6.5   +0.4

Other Income (Expense)-Net

  (2.8)   4.8   (7.6)
Reversal of Provision Related to Multigrain Business   11.1   -   +11.1
Finance Income (Costs) Interest Income   10.2   9.7   +0.5
Dividend Income   21.1   17.4   +3.7
Interest Expense   (19.0)   (16.1)   (2.9)
Share of Profit (Loss) of Investments Accounted for Using the Equity Method   58.4   62.3   (3.9)
Income Taxes   (41.0)   (37.4)   (3.6)
Profit for the Period   126.0   116.5   +9.5
Profit for the Period Attributable to Owners of the Parent   118.4   110.8   +7.6

* May not match with the total of items due to rounding off. The same shall apply hereafter.

Revenue

Revenue for the three-month period ended June 30, 2018 (“current period”) was ¥1,556.2 billion, an increase of ¥374.5 billion (including ¥385.0 billion due to the adoption of the new accounting treatment) from the corresponding three-month period of the previous year (“previous period”).

Gross Profit

Mainly the Innovation & Corporate Development Segment and the Energy Segment reported an increase in gross profit, while the Mineral & Metal Resources Segment recorded a decline.

Other Income (Expenses)

Gain (Loss) on Disposal or Sales of Fixed Assets—Net

For the current period, a gain on disposal of fixed assets was recorded in the Iron & Steel Products Segment. For the previous period, a gain on disposal of fixed assets was recorded in the Innovation & Corporate Development Segment.

Reversal of Provision Related to Multigrain Business

The Lifestyle Segment recorded a gain on the reversal of the provision for the withdrawal from the business recognized in the previous year.

Finance Income (Costs)

Dividend Income

Mainly the Energy Segment recorded an increase.

Share of Profit (Loss) of Investments Accounted for Using the Equity Method

Mainly the Mineral & Metal Resources Segment recorded a decline, while the Machinery & Infrastructure Segment and the Iron & Steel Products Segment recorded an increase.

Income Taxes

Income taxes for the current period increased as profit before income taxes for the current period increased by ¥13.1 billion. The effective tax rate for the current period was 24.6%, an increase of 0.3% from 24.3% for the previous period.

Profit for the Period Attributable to Owners of the Parent

Profit for the period attributable to owners of the parent was ¥118.4 billion, an increase of ¥7.6 billion from the previous period.

2) Operating Results by Operating Segment

Iron & Steel Products Segment

(Billions of Yen)   Current Period   Previous Period   Change
Profit for the period attributable to owners of the parent   6.8   6.9   (0.1)
  Gross profit   6.8   12.7   (5.9)
Profit (loss) of equity method investments   7.2   4.1   +3.1
Dividend income   1.0   1.2   (0.2)
Selling, general and administrative expenses   (7.2)   (9.1)   +1.9
  Others   (1.0)   (2.0)   +1.0
  • Profit (loss) of equity method investments increased mainly due to the following factor:
    • For the current period, following the classification of NIPPON STEEL & SUMIKIN BUSSAN CORPORATION as an equity method investee, a profit of equity method investment of ¥3.6 billion was recorded.
  • In addition to the above, the following factor also affected results:
    • For the current period, a one-time gain of ¥5.9 billion was recorded due to the sale of land of an affiliated company.

Mineral & Metal Resources Segment

(Billions of Yen)   Current Period   Previous Period   Change
Profit for the period attributable to owners of the parent   39.7   54.4   (14.7)
  Gross profit   45.8   56.9   (11.1)
Profit (loss) of equity method investments   14.0   27.0   (13.0)
Dividend income   0.6   1.1   (0.5)
Selling, general and administrative expenses   (8.4)   (9.3)   +0.9
  Others   (12.3)   (21.3)   +9.0
  • Gross profit declined mainly due to the following factors:  
    • Iron ore mining operations in Australia reported a decline of ¥5.8 billion due to the change in the mining operation controlled by joint ventures as well as lower iron ore prices applied to the financial results.
    • Coal mining operations in Australia reported a decline of ¥4.7 billion due to higher operational costs caused by the change in mining plans.
  • Profit (loss) of equity method investments declined mainly due to the following factors:
    • Valepar S.A. declined by ¥11.6 billion due to the deconsolidation following the incorporation by Vale S.A. in the three month period ended September 30, 2017.
    • Inversiones Mineras Acrux SpA, a copper mining company in Chile, reported a decline of ¥3.9 billion mainly due to a reversal effect of impairment reversal for the previous period.

Machinery & Infrastructure Segment

(Billions of Yen)   Current Period   Previous Period   Change
Profit for the period attributable to owners of the parent   15.4   15.5   (0.1)
  Gross profit   31.8   31.2   +0.6
Profit (loss) of equity method investments   18.7   14.9   +3.8
Dividend income   2.0   1.3   +0.7
Selling, general and administrative expenses   (30.9)   (32.0)   +1.1
  Others   (6.2)   0.1   (6.3)
  • Profit (loss) of equity method investments increased mainly due to the following factor:
    • IPP businesses recorded an increase of ¥0.7 billion.
      • Mark-to-market valuation losses, such as those on long-term derivative contracts, were improved by ¥4.6 billion to ¥0.6 billion loss from a ¥5.2 billion loss for the previous period.

Chemicals Segment

(Billions of Yen)   Current Period   Previous Period   Change
Profit for the period attributable to owners of the parent   9.7   6.3   +3.4
  Gross profit   36.3   33.6   +2.7
Profit (loss) of equity method investments   4.0   2.0   +2.0
Dividend income   1.1   1.0   +0.1
Selling, general and administrative expenses   (24.9)   (24.6)   (0.3)
  Others   (6.8)   (5.7)   (1.1)

Energy Segment

(Billions of Yen)   Current Period   Previous Period   Change
Profit for the period attributable to owners of the parent   17.1   16.3   +0.8
  Gross profit   35.3   27.5   +7.8
Profit (loss) of equity method investments   7.1   5.6   +1.5
Dividend income   11.1   7.6   +3.5
Selling, general and administrative expenses   (11.7)   (11.6)   (0.1)
  Others   (24.7)   (12.8)   (11.9)
  • Gross profit increased mainly due to the following factors:
    • Mitsui Oil Exploration Co., Ltd. recorded an increase of ¥8.3 billion mainly due to an increase in the oil and gas prices and a decrease in costs.
    • Westport Petroleum LLC reported a decline of ¥3.4 billion as a mark-to-market valuation loss related to its derivative contract for the hedging transaction.
  • Dividends from six LNG projects (Sakhalin II, Qatargas 1, Abu Dhabi, Oman, Qatargas 3 and Equatorial Guinea) were ¥10.7 billion in total, an increase of ¥3.6 billion from the previous period.
  • In addition to the above, the following factor also affected results:
    • For the current period, exploration expenses of ¥0.8 billion in total were recorded, including those recorded by Mitsui E&P Australia Pty Ltd. For the previous period, exploration expenses of ¥3.1 billion in total were recorded, including those recorded by Mitsui Oil Exploration Co., Ltd.

Lifestyle Segment

(Billions of Yen)   Current Period   Previous Period   Change
Profit for the period attributable to owners of the parent   17.5   6.4   +11.1
  Gross profit   39.0   34.4   +4.6
Profit (loss) of equity method investments   6.1   6.8   (0.7)
Dividend income   2.1   2.2   (0.1)
Selling, general and administrative expenses   (36.9)   (37.6)   +0.7
  Others   7.2   0.6   +6.6
  • Others include the following factor:
    • For the current period, Multigrain Trading AG recorded a gain of ¥11.6 billion on reversal of the provision for the withdrawal from the business recognized in the previous year.

Innovation & Corporate Development Segment

(Billions of Yen)   Current Period   Previous Period   Change
Profit for the period attributable to owners of the parent   10.9   5.8   +5.1
  Gross profit   23.2   12.6   +10.6
Profit (loss) of equity method investments   1.8   2.0   (0.2)
Dividend income   2.5   2.3   +0.2
Selling, general and administrative expenses   (13.1)   (14.2)   +1.1
  Others   (3.5)   3.1   (6.6)
  • Gross profit increased mainly due to the following factor:
    • For the current period, a ¥5.6 billion gain was recorded due to the valuation and sales of shares in Mercari, Inc.
  • In addition to the above, the following factor also affected results:
    • For the previous period, a gain on the sales of warehouses in Japan was recorded.

(3) Financial Condition and Cash Flows

1) Financial Condition

(Billions of yen)   June 30, 2018   March 31, 2018   Change
Total Assets   11,379.5   11,306.7   +72.8
  Current Assets   4,037.1   4,226.2   (189.1)
Non-current Assets   7,342.4   7,080.5   +261.9
Current Liabilities   2,645.7   2,698.8   (53.1)
Non-current Liabilities   4,427.0   4,389.8   +37.2
Net Interest-bearing Debt   3,183.7   3,089.2   +94.5
Total Equity Attributable to Owners of the Parent   4,056.3   3,974.7   +81.6
Net Debt-to-Equity Ratio (times)   0.78   0.78   0.00

Assets

Current Assets:

  • Cash and cash equivalents declined by ¥66.1 billion.
  • Advance payments to suppliers declined by ¥62.3 billion, mainly due to netting against advances from customers.
  • Assets held for sale, which were expected to be transferred from Mitsui and Mitsui & Co. Steel Ltd. to NIPPON STEEL & SUMIKIN BUSSAN CORPORATION and presented as a single line item as of March 31, 2018, declined by ¥108.9 billion due to completing the transfer in this period.

Non-current Assets:

  • Investments accounted for using the equity method increased by ¥129.1 billion, mainly due to the following factors:
    • An increase of ¥38.0 billion due to an additional acquisition of shares in NIPPON STEEL & SUMIKIN BUSSAN CORPORATION and reclassification to investments accounted for using the equity method corresponding to the additional acquisition;
    • An increase of ¥21.9 billion due to an investment in ETC Group, which engages in businesses involving agricultural products, agricultural supplies, and food manufacturing and sales in East Africa;
    • An increase due to an investment in MAERSK PRODUCT TANKERS A/S, a product tanker company (vessel owning);
    • An increase due to an investment in Inversiones Mitta, the holding company for Chile’s leading automobile operating lease and rental car business;
    • An increase of ¥10.1 billion due to an additional acquisition of a stake in Axiata (Cambodia) Holdings Limited, the holding company for Smart Axiata Co., Ltd which is a telecommunication service provider in Cambodia; and
    • An increase of ¥58.4 billion corresponding to the profit of equity method investments for the current year, despite a decline of ¥60.7 billion due to dividends received from equity accounted investees.
  • Other investments increased by ¥36.9 billion, mainly due to the following factors:
    • Fair value on financial assets measured at FVTOCI increased by ¥46.5 billion mainly due to higher share prices;
    • An increase of ¥17.4 billion resulting from foreign currency exchange fluctuations; and
    • A decline of ¥29.9 billion due to reclassification to investments accounted for using the equity method corresponding to an additional acquisition of shares in NIPPON STEEL & SUMIKIN BUSSAN CORPORATION.
  • Property, plant and equipment increased by ¥92.2 billion, mainly due to the following factors:
    • An increase of ¥74.1 billion (including the consolidation of AWE Limited, oil and gas company in Australia, of ¥56.5 billion and foreign exchange translation profit of ¥9.5 billion) at oil and gas operations other than U.S. shale gas and oil producing operations.

Liabilities

Current Liabilities:

  • Advances from customers declined by ¥63.9 billion, corresponding to netting against advance payments to suppliers.
  • Liabilities directly associated with assets held for sale, which were expected to be transferred from Mitsui and Mitsui & Co. Steel Ltd. to NIPPON STEEL & SUMIKIN BUSSAN CORPORATION and presented as a single line item as of March 31, 2018, declined by ¥40.3 billion due to completing the transfer in the current period.

Non-current Liabilities:

  • Long-term debt, less the current portion, increased by ¥26.1 billion, mainly reflecting the appreciation of the U.S. dollar against the Japanese yen.
  • Provisions kept the same level as on March 31, 2018, mainly due to an increase caused by the consolidation of AWE Limited, an oil and gas company in Australia, and a decline caused by the recognition of a reversal of a provision related to the Multigrain business.
  • Deferred tax liabilities increased by ¥21.0 billion, mainly due to the increase in financial assets measured at FVTOCI corresponding to higher share prices.

Total Equity Attributable to Owners of the Parent

  • Retained earnings declined by ¥43.3 billion.
  • Other components of equity increased by ¥28.1 billion, mainly due to the following factors:
    • Financial assets measured at FVTOCI increased by ¥31.0 billion, mainly due to higher share prices; and
    • Foreign currency translation adjustments declined by ¥11.4 billion, mainly reflecting the depreciation of the Brazilian real, despite the appreciation of the U.S. dollar against the Japanese yen.
  • Treasury stock which is a subtraction item in shareholders’ equity declined by ¥96.5 billion, due to the cancellation of treasury stock.

2) Cash Flows

(Billions of yen)   Current Period   Previous Period   Change
Cash flows from operating activities   134.6   202.8   (68.2)
Cash flows from investing activities   (100.6)   (20.6)   (80.0)
Free cash flow   34.0   182.2   (148.2)
Cash flows from financing activities   (105.0)   (103.9)   (1.1)
Effect of exchange rate changes on cash and cash equivalents etc.   5.0   1.2   +3.8
Change in cash and cash equivalents   (66.1)   79.4   (145.5)

Cash Flows from Operating Activities

(Billions of Yen)   Current Period   Previous Period   Change
Cash flows from operating activities   a   134.6   202.8   (68.2)
Cash flows from change in working capital   b   (19.9)   47.4   (67.3)
Core operating cash flow   a-b   154.5   155.4   (0.9)
  • Net cash from an increase or a decrease in working capital, or changes in operating assets and liabilities for the current year was ¥19.9 billion of net cash outflow. Core operating cash flow, cash flows from operating activities without the net cash flow from an increase or a decrease in working capital, for the current period amounted to ¥154.5 billion.
    • Net cash inflow from dividend income, including dividends received from equity accounted investees, for the current period totaled ¥75.1 billion, a decline of ¥0.7 billion from ¥75.8 billion for the previous period.
    • Depreciation and amortization for the current period was ¥43.6 billion, a decline of ¥3.9 billion from ¥47.5 billion for the previous period.

The following table shows core operating cash flow by operating segment.

(Billions of Yen)   Current Period   Previous Period   Change
Iron & Steel Products   0.6   6.2   (5.6)
Mineral & Metal Resources   48.3   70.4   (22.1)
Machinery & Infrastructure   21.2   20.1   +1.1
Chemicals   15.2   11.8   +3.4
Energy   52.9   44.0   +8.9
Lifestyle   8.8   1.7   +7.1
Innovation & Corporate Development   13.6   1.0   +12.6
All Other and Adjustments and Eliminations   (6.1)   0.2   (6.3)
Consolidated Total   154.5   155.4   (0.9)

Cash Flows from Investing Activities

  • Net cash outflows that corresponded to investments in equity accounted investees (net of sales of investments in equity accounted investees) were ¥75.5 billion, mainly due to the following factors:
    • An investment in ETC Group, which engages in businesses involving agricultural products, agricultural supplies, and food manufacturing and sales in East Africa, for ¥21.9 billion;
    • An investment in MAERSK PRODUCT TANKERS A/S, a product tanker company (vessel owning);
    • An investment in Inversiones Mitta, the holding company for Chile’s leading automobile operating lease and rental car business; and
    • An additional acquisition of a stake in Axiata (Cambodia) Holdings Limited, the holding company for Smart Axiata Co., Ltd which is a telecommunication service provider in Cambodia, for ¥10.1 billion.
  • Net cash inflows that corresponded to other investments (net of sales and maturities of other investments) were ¥17.9 billion, mainly due to the following factors:
    • A transfer of the iron & steel products business to NIPPON STEEL & SUMIKIN BUSSAN CORPORATION for ¥64.4 billion; and
    • An acquisition of an oil and gas business in Australia for ¥48.2 billion.
  • Net cash outflows that corresponded to purchases of property, plant, and equipment (net of sales of those assets) were ¥31.8 billion, mainly due to the following factors:
    • An expenditure for the oil and gas projects other than the U.S. shale gas and oil projects for a total of ¥21.5 billion; and
    • Net cash inflows for the lease transactions of ¥12.6 billion.

Cash Flows from Financing Activities

  • Net cash inflows from net change in short-term debt were ¥10.6 billion and net cash outflows from net change in long-term debt were ¥47.7 billion.
  • The cash outflow from payments of cash dividends was ¥69.5 billion.

(4) Information Concerning Profit Forecast for the Year Ending March 31, 2019

We maintain our profit forecast attributable to owners of the parent of ¥420.0 billion and core operating cash flow forecast of ¥570.0 billion for the year ending March 31, 2019, as announced together with the results of the year ended March 31, 2018. No updates have been made to these forecasts.

2. 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 non-current assets, (6) changes in the financing environment, (7) declines in market value of equity and/or debt securities, (8) changes in the assessment for recoverability of 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.

     

3. Condensed Consolidated Financial Statements

(1) Condensed Consolidated Statements of Financial Position
        (Millions of Yen)
Assets
        June 30,

2018

  March 31,

2018

 
 
Current Assets:
Cash and cash equivalents ¥ 1,065,323 ¥ 1,131,380
Trade and other receivables 1,721,608 1,766,017
Other financial assets 297,317 243,915
Inventories 566,608 550,699
Advance payments to suppliers 244,999 307,339
Assets held for sale - 108,920
  Other current assets   141,200   117,886  
  Total current assets   4,037,055   4,226,156  
Non-current Assets:
Investments accounted for using the equity method 2,632,073 2,502,994
Other investments 1,861,900 1,825,026
Trade and other receivables 402,013 400,079
Other financial assets 141,676 153,149
Property, plant and equipment 1,822,062 1,729,897
Investment property 201,583 188,953
Intangible assets 170,797 173,207
Deferred tax assets 56,267 49,474
  Other non-current assets   54,060   57,725  
  Total non-current assets   7,342,431   7,080,504  
  Total   ¥ 11,379,486   ¥11,306,660  
      (Millions of Yen)
Liabilities and Equity
      June 30,

2018

  March 31,

2018

   
 
Current Liabilities:
Short-term debt ¥ 213,253 ¥ 201,556
Current portion of long-term debt 479,243 482,550
Trade and other payables 1,286,559 1,264,285
Other financial liabilities 318,549 300,284
Income tax payables 68,702 62,546
Advances from customers 223,910 287,779
Provisions 16,199 28,036
Liabilities directly associated with assets held for sale - 40,344
Other current liabilities   39,274   31,392  
  Total current liabilities   2,645,689   2,698,772  
Non-current Liabilities:
Long-term debt, less current portion 3,568,923 3,542,829
Other financial liabilities 94,530 103,162
Retirement benefit liabilities 49,627 50,872
Provisions 201,228 200,649
Deferred tax liabilities 487,991 467,003
Other non-current liabilities   24,709   25,250  
  Total non-current liabilities   4,427,008   4,389,765  
  Total liabilities   7,072,697   7,088,537  
Equity:
Common stock 341,482 341,482
Capital surplus 386,632 386,165
Retained earnings 2,860,084 2,903,432
Other components of equity 476,069 448,035
Treasury stock   (7,922)   (104,399)  
  Total equity attributable to owners of the parent   4,056,345   3,974,715  
Non-controlling interests   250,444   243,408  
  Total equity   4,306,789   4,218,123  
  Total   ¥ 11,379,486   ¥11,306,660  
   
 
(2) Condensed Consolidated Statements of Income and Comprehensive Income
 
Condensed Consolidated Statements of Income
    (Millions of Yen)
Three-month period ended

June 30,

2018

Three-month period ended

June 30,

2017

 
             
Revenue:
Sale of products

-

¥1,042,347
Rendering of services

-

103,058
Other revenue

-

36,255
Revenue 1,556,199

-

Total revenue 1,556,199 1,181,660
Cost:
Cost of products sold

-

(923,331)
Cost of services rendered

-

(43,571)
Cost of other revenue

-

(15,366)
Cost (1,337,750)

-

Total cost (1,337,750) (982,268)
Gross Profit 218,449 199,392
Other Income (Expenses):
Selling, general and administrative expenses (137,749) (132,070)

Gain (loss) on securities and other investments-net

1,345 3,295

Impairment reversal (loss) of fixed assets-net

(984) (1,282)

Gain (loss) on disposal or sales of fixed assets-net

6,862 6,461
Reversal of provision related to Multigrain business 11,083

-

Other income (expense)-net

(2,777) 4,758
Total other income (expenses) (122,220) (118,838)
Finance Income (Costs): Loss on write-down of securities
Interest income 10,233 9,682
Dividend income 21,098 17,429
Interest expense (18,960) (16,053)
Total finance income (costs) 12,371 11,058
Share of Profit (Loss) of Investments Accounted for Using the Equity Method 58,426 62,312
Profit before Income Taxes 167,026 153,924
Income Taxes (41,011) (37,391)
Profit for the Period ¥ 126,015 ¥ 116,533
 
Profit for the Period Attributable to:
Owners of the parent ¥ 118,414 ¥ 110,756
Non-controlling interests 7,601 5,777
             
 
Condensed Consolidated Statements of Comprehensive Income
(Millions of Yen)
Three-month period ended

June 30,

2018

Three-month period ended

June 30,

2017

 
             
Profit for the Period ¥ 126,015 ¥ 116,533
Other Comprehensive Income:
Items that will not be reclassified to profit or loss:
Financial assets measured at FVTOCI 50,933 31,109
Remeasurements of defined benefit plans 709 (408)
Share of other comprehensive income of investments accounted for using the equity method (47) 2,258
Income tax relating to items not reclassified (13,846) (10,679)
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation adjustments (23,911) (11,269)
Cash flow hedges 186 (1,998)
Share of other comprehensive income of investments accounted for using the equity method 18,384 (2,917)
Income tax relating to items that may be reclassified 1,637 126
Total other comprehensive income 34,045 6,222
Comprehensive Income for the Period ¥ 160,060 ¥ 122,755
 
Comprehensive Income for the Period Attributable to:
Owners of the parent ¥ 154,421 ¥ 117,397
Non-controlling interests 5,639 5,358

Notes:

1. The Statements of Consolidated Income above are not reviewed by the auditors.

2. The Statements of Consolidated Income above have been adjusted due to the adoption of ASC 810-10-65.

3. "Net Income attributable to Noncontrolling Interests" and "Comprehensive Loss (Income) attributable to Noncontrolling Interests" show the amounts deducted to calculate "Net Income attributable to Mitsui & Co., Ltd." and "Comprehensive (Loss) Income attributable to Mitsui & Co., Ltd.", respectively.

4. Tax effects on investments in associated companies which were formerly included in "Equity in Earnings of Associated Companies - Net (After Income Tax Effect)" are included in "Income Taxes" for the three-month period ended December 31, 2009. At the same time, "Equity in Earnings of Associated Companies - Net (After Income Tax Effect)" are changed to "Equity in Earnings of Associated Companies - Net." Amounts for three-month period ended December 31, 2008 have been reclassified to conform to the current period presentation.

(3) Condensed Consolidated Statements of Changes in Equity
(Millions of Yen)
  Attributable to owners of the parent  

 

 

 

    Common Stock   Capital Surplus   Retained Earnings   Other Components of Equity   Treasury Stock   Total  

Non-controlling Interests

 

Total

Equity

Balance as at April 1, 2017 ¥ 341,482   ¥ 409,528   ¥ 2,550,124   ¥ 485,447   ¥ (54,402)   ¥ 3,732,179   ¥ 257,983   ¥ 3,990,162
Profit for the period 110,756 110,756 5,777 116,533
Other comprehensive income for the period 6,641 6,641 (419) 6,222
Comprehensive income for the period 117,397 5,358 122,755
Transaction with owners:
Dividends paid to owners of the parent

(per share: ¥30)

(52,922) (52,922) (52,922)
Dividends paid to non-controlling interest shareholders (4,825) (4,825)
Acquisition of treasury stock (3) (3) (3)
Sales of treasury stock (0) 0 0 0
Equity transactions with non-controlling interest shareholders (561) (22) (583) 4,583 4,000
Transfer to retained earnings 2,823 (2,823)

-

-

Balance as at June 30, 2017   ¥ 341,482   ¥ 408,967   ¥ 2,610,781   ¥ 489,243   ¥ (54,405)   ¥ 3,796,068   ¥ 263,099   ¥ 4,059,167
 
(Millions of Yen)
Attributable to owners of the parent  

 

 

 

    Common Stock   Capital Surplus   Retained Earnings   Other Components of Equity   Treasury Stock   Total  

Non-controlling Interests

 

Total

Equity

Balance as at April 1, 2018 ¥ 341,482 ¥ 386,165 ¥ 2,903,432 ¥ 448,035 ¥ (104,399) ¥ 3,974,715 ¥ 243,408 ¥ 4,218,123
Cumulative effect of changes in accounting policies (3,535) (3,535) (3,535)
Balance as at April 1, 2018 after changes in accounting policies 341,482 386,165 2,899,897 448,035 (104,399) 3,971,180 243,408 4,214,588
Profit for the period 118,414 118,414 7,601 126,015
Other comprehensive income for the period 36,007 36,007 (1,962) 34,045
Comprehensive income for the period 154,421 5,639 160,060
Transaction with owners:
Dividends paid to owners of the parent

(per share: ¥40)

(69,516) (69,516) (69,516)
Dividends paid to non-controlling interest shareholders (5,999) (5,999)
Acquisition of treasury stock (3) (3) (3)
Sales of treasury stock (6) (7) 13 0 0
Cancellation of treasury stock (96,467) 96,467

-

-

Equity transactions with non-controlling interest shareholders 473 (210) 263 7,396 7,659
Transfer to retained earnings 7,763 (7,763)

-

-

Balance as at June 30, 2018   ¥ 341,482   ¥ 386,632   ¥ 2,860,084   ¥ 476,069   ¥ (7,922)   ¥ 4,056,345   ¥ 250,444   ¥ 4,306,789
(4) Condensed Consolidated Statements of Cash Flows
(Millions of Yen)

 

Three-month period ended
June 30, 2018
  Three-month period ended
June 30, 2017
Operating Activities:  
  Profit for the period ¥ 126,015 ¥ 116,533
Adjustments to reconcile profit for the period to cash flows from operating activities:
  Depreciation and amortization 43,573 47,462
Change in retirement benefit liabilities 637 344
Provision for doubtful receivables 2,604 2,177
Reversal of provision related to Multigrain business (11,083)
(Gain) loss on securities and other investments—net (1,345) (3,295)
Impairment (reversal) loss of fixed assets—net 984 1,282
(Gain) loss on disposal or sales of fixed assets—net (6,862) (6,461)
Finance (income) costs (11,098) (9,220)
Income taxes 41,011 37,391
Share of (profit) loss of investments accounted for using the equity method (58,426) (62,312)
Valuation gain (loss) related to contingent considerations and others 4,135
Changes in operating assets and liabilities:
Change in trade and other receivables (27,098) 52,745
Change in inventories (8,570) (2,858)
Change in trade and other payables 32,698 (32,625)
Other—net (16,880) 30,100
Interest received 8,834 7,840
Interest paid (19,045) (18,340)
Dividends received 75,071 75,797
    Income taxes paid   (40,540)   (33,798)
      Cash flows from operating activities   134,615   202,762
Investing Activities:
Net change in time deposits (5,873) (1,945)
Net change in investments in equity accounted investees (75,499) (12,616)
Net change in other investments 17,893 (7,333)
Net change in loan receivables 5,009 23,031
Net change in property, plant and equipment (31,764) (16,923)
  Net change in investment property   (10,359)   (4,796)
      Cash flows from investing activities   (100,593)   (20,582)
Financing Activities:
Net change in short-term debt 10,590 (18,764)
Net change in long-term debt (47,708) (33,879)
Purchases and sales of treasury stock (3) (3)
Dividends paid (69,516) (52,922)
  Transactions with non-controlling interest shareholders   1,608   1,624
      Cash flows from financing activities   (105,029)   (103,944)
Effect of Exchange Rate Changes on Cash and Cash Equivalents 4,950 1,179
Change in Cash and Cash Equivalents (66,057) 79,415
Cash and Cash Equivalents at Beginning of Period   1,131,380   1,503,820
Cash and Cash Equivalents at End of Period   ¥ 1,065,323   ¥ 1,583,235
 
 
(5) Assumption for Going Concern: None

(6) Changes in Accounting Policies and Changes in Accounting Estimates
1)  Changes in Accounting Policies

Significant accounting policies applied in the Condensed Consolidated Financial Statements for the period ended June 30, 2018 are the same as those applied in the Consolidated Financial Statements of the previous fiscal year except for the following.

The companies applied the following new standards for the Condensed Consolidated Financial Statements from April 1, 2018.

IFRS   Title   Summaries
IFRS9  

Financial Instruments
(amended in July 2014)

  Implementation of expected credit loss model for

the recognition of impairment losses of financial

instruments

   

 

   
IFRS15   Revenue from Contracts

with Customers

  Accounting for recognizing revenue from contracts

with customers

In adopting IFRS 9, the retrospective restatement of the comparative information has not been applied in accordance with the transitional arrangements. Impacts of the application of IFRS 9 on the Condensed Consolidated Financial Statements are immaterial.

In adopting IFRS 15, the cumulative effects due to the adoption were recognized on the commencement date of adoption in accordance with the transitional arrangements, however, impacts of the application of IFRS 15 on the Condensed Consolidated Financial Statements are immaterial except for followings.

In accordance with IFRS 15, after the consideration for recognition of revenue whether the entity is involved in providing goods or services specified by a contract as a principal or as an agent, recognition of revenue for certain transactions has been changed from the net amount to the gross amount. As a result, revenue and cost increased by ¥385,014 million in the Condensed Consolidated Financial Statement of Income for the three-month ended June 30, 2018 when compared to the figures under the former accounting standards.

"Sales of products", "Rendering of services" and "Other revenue", and "Cost of products sold", "Cost of service rendered" and "Cost of other revenue" were separately presented on prior Condensed Consolidated Financial Statement of Income. Since the three-month period ended June 30, 2018, their line of items are presented single line of items as "Revenue" and "Cost", respectively.

As a result of the adoption of IFRS 9 and IFRS 15, the balance of retained earnings as of April 1, 2018 decreased by ¥2,857 million and ¥678 million, respectively. These impacts are included under Cumulative effect of changes in accounting policies in the Condensed Consolidated Statement of Changes in Equity for the three-month ended June 30, 2018.

2) Changes in Accounting Estimates

The significant changes in accounting estimates in the Condensed Consolidated Financial Statements are as follows:

(Provision)

As for Multigrain Trading AG which is our consolidated subsidiary and engaged in origination and merchandising of agricultural products in Brazil, gains of ¥11,083 million have been recognized for the three-month period ended June 30, 2018 as reversal of provisions related to the export business due to termination of the relevant contracts.

(7) Segment Information                
   
Three-month period ended June 30, 2018 (from April 1, 2018 to June 30, 2018)
                                        (Millions of Yen)
    Iron & Steel Products   Mineral & Metal Resources   Machinery & Infrastructure   Chemicals   Energy   Lifestyle   Innovation & Corporate Development   Total   Others / Adjustments

and Eliminations

  Consolidated Total
 
Revenue 48,550 246,738 193,206 391,183 172,131 458,310 44,951 1,555,069 1,130 1,556,199
Gross Profit 6,805 45,761 31,778 36,256 35,349 38,986 23,228 218,163 286 218,449

Share of Profit (Loss) of Investments
Accounted for Using the Equity Method

 

7,168 13,980 18,655 3,980 7,139 6,108 1,820 58,850 (424) 58,426

Profit for the Period
Attributable to Owners of the parent

 

  6,779   39,722   15,449   9,735   17,058   17,501   10,886   117,130   1,284   118,414
Core Operating Cash Flow   606   48,325   21,182   15,175   52,928   8,844   13,581   160,641   (6,176)   154,465
Total Assets at June 30, 2018   608,865   2,253,346   2,273,830   1,236,640   2,237,900   2,032,722   697,690   11,340,993   38,493   11,379,486

 

 
 
Three-month period ended June 30, 2017 (from April 1, 2017 to June 30, 2017) (As restated)
(Millions of Yen)
    Iron & Steel Products   Mineral & Metal Resources   Machinery & Infrastructure   Chemicals   Energy   Lifestyle   Innovation & Corporate Development   Total   Others / Adjustments

and Eliminations

  Consolidated Total
                 
Revenue 65,338 218,482 108,024 274,189 122,560 369,753 30,191 1,188,537 (6,877) 1,181,660
Gross Profit 12,650 56,897 31,236 33,552 27,522 34,350 12,596 208,803 (9,411) 199,392
Share of Profit (Loss) of Investments

Accounted for Using the Equity Method

4,123 27,029 14,886 2,012 5,606 6,833 2,035 62,524 (212) 62,312
Profit for the Period

Attributable to Owners of the parent

  6,870   54,378   15,474   6,258   16,324   6,410   5,815   111,529   (773)   110,756
Core Operating Cash Flow   6,194   70,360   20,108   11,787   44,022   1,736   975   155,182   218   155,400
Total Assets at March 31, 2018   680,257   2,260,050   2,364,616   1,228,773   2,083,766   1,987,306   662,192   11,266,960   39,700   11,306,660
Notes:   1.   “Others / Adjustments and Eliminations” includes of the Corporate Staff Unit which provides financing services and operational services to the companies and affiliated companies.
Total assets of “Others / Adjustments and Eliminations” at March 31, 2018 and June 30, 2018 includes cash, cash equivalents and time deposits related to financing activities, and assets of the Corporate Staff Unit and certain subsidiaries related to the above services amounting to ¥ 6,506,907 million and ¥ 6,419,620 million, respectively.
2. Transfers between reportable segments are made at cost plus a markup.
3. Profit for the Period Attributable to Owners of the parent of “Others / Adjustments and Eliminations” includes income and expense items that are not allocated to specific reportable segments, and eliminations of intersegment transactions.
4. Total assets of “Others / Adjustments and Eliminations” at March 31, 2018 and June 30, 2018 includes elimination of receivables and payables between segments amounting to ¥ 6,467,207 million and ¥ 6,381,127 million, respectively.
5. Core Operating Cash Flow is calculated by eliminating the sum of the “Changes in Operating Assets and Liabilities” from “Cash Flows from Operating Activities” as presented in the Condensed Consolidated Statements of Cash Flows.
6. Since the three-month period ended June 30, 2018, "All Other" and "Adjustments and Eliminations", which were reported individually are aggregated to "Others / Adjustments and Eliminations" since they are not material except for Total Assets. The amount of Total Assets are stated in Notes 1 and Notes 4. As a result of this change, "All Other" and "Adjustments and Eliminations" for the three-month period ended June 30, 2017 has been restated to conform to the current period presentation.
7. Since the three-month period ended June 30, 2018, due to implementation of the new consolidated accounting system, the elimination of intercompany receivables and payables was refined and Total Assets at March 31, 2018 has been restated to conform to the current period presentation.

For diagrams omitted, please see our home page. (https://www.mitsui.com/jp/en/ir/library/meeting/2019/index.html)

Short Name: Mitsui & Co., Ltd.
Category Code: QRF
Sequence Number: 652676
Time of Receipt (offset from UTC): 20180802T062641+0100

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Mitsui & Co Ltd

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Mitsui & Co Ltd