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, 2019 [IFRS]

Mitsui & Co., Ltd. announced its consolidated financial results for the three-month period ended June 30, 2019, 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 : Masaya Inamuro, Investor Relations Division TEL 81-3-3285-1111

1. Consolidated financial results
(1) Consolidated operating results information for the three-month period ended June 30, 2019
(from April 1, 2019 to June 30, 2019)

 

Three-month period ended June 30,

2019

 

2018

 

%

%

Revenue

Millions of yen

1,633,120

4.9

1,556,199

31.7

Profit before income taxes

Millions of yen

172,403

3.2

167,026

8.5

Profit for the period

Millions of yen

134,884

7.0

126,015

8.1

Profit for the period attributable to owners of the parent

Millions of yen

125,036

5.6

118,414

6.9

Comprehensive income for the period

Millions of yen

31,479

△80.3

160,060

30.4

Earnings per share attributable to owners of the parent, basic

Yen

71.94

 

68.14

 

Earnings per share attributable to owners of the parent, diluted

Yen

71.88

 

68.08

 

Note:
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, 2019

March 31, 2019

Total assets

Millions of yen

12,209,440

11,945,779

Total equity

Millions of yen

4,499,000

4,530,308

Total equity attributable to owners of the parent

Millions of yen

4,233,942

4,263,166

Equity attributable to owners of the parent ratio

%

34.7

35.7

2. Dividend information

 

Year ended March 31,

 

Year ending March

31, 2020 (Forecast)

2020

2019

 

Interim dividend per share

Yen

 

40

 

40

Year-end dividend per share

Yen

 

40

 

40

Annual dividend per share

Yen

 

80

 

80

Note :
Change from the latest released dividend forecast: None

3. Forecast of consolidated operating results for the year ending March 31, 2020 (from April 1, 2019 to March 31, 2020)

 

Year ending

March 31, 2020

Profit attributable to owners of the parent

Millions of yen

450,000

Earnings per share attributable to owners of the parent, basic

Yen

258.91

Note :
Change from the latest released earnings forecast: None

4. Others
(1) Increase/decrease of important subsidiaries during the period : None

(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, 2019

March 31, 2019

Number of shares of common stock issued, including treasury stock

1,742,345,627

1,742,345,627

Number of shares of treasury stock

4,273,322

4,271,539

 

Three-month period ended

June 30, 2019

Three-month period ended

June 30, 2018

Average number of shares of common stock outstanding

1,738,073,023

1,737,884,041

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 July 31, 2019.

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, 2020……………………………..

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

(8)

The Fire Incident of Intercontinental Terminals Company LLC.....................................................................

18

 

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, 2019, weakening growth continued in the global economy, reflecting a now-moderate pace of expansion of the U.S. economy and further slowdown in China as well.

In the U.S., although consumer spending continues to be resilient on account of a favorable environment for employment and employee income, the pace of economic expansion is projected to slow due to the prediction that the stimulus effect from lowered taxation will dwindle. In Europe, although exports are recovering, uncertainties hang over the region, particularly with respect to Brexit, and it is assumed that growth will continue to weaken. In Japan, a weakening trend in exports is continuing and there is concern that the economic growth will stall. Among the emerging economies, China’s economy is still expected to continue slowing partly due to the impact of trade friction with the U.S., although policy by its government is providing certain underlying support. In Brazil and Russia, meanwhile, consumer spending and capital investment are now hitting a ceiling and weakening growth is expected.

Overall, one can see growing signs of stagnation throughout the global economy, and careful attention should be given to future developments of such issues as the direction of the U.S.-China trade negotiations and the policy trends of major countries.

(2) Results of Operations
1) Analysis of Consolidated Income Statements

(Billions of Yen)

Current Period

Previous Period

Change

Revenue

1,633.1

1,556.2

+76.9

Gross profit

209.2

218.4

(9.2)

Selling, general and administrative expenses

(141.2)

(137.7)

(3.5)

Other Income (Expenses)

Gain (Loss) on Securities and Other Investments—Net

6.3

1.3

+5.0

Impairment Reversal (Loss) of Fixed Assets—Net

(1.7)

(1.0)

(0.7)

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

1.4

6.9

(5.5)

Other Income (Expense)—Net

7.8

(2.8)

+10.6

Reversal of Provision Related to Multigrain Business

-

11.1

(11.1)

Finance Income (Costs)

Interest Income

11.2

10.2

+1.0

Dividend Income

24.8

21.1

+3.7

Interest Expense

(23.8)

(19.0)

(4.8)

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

78.5

58.4

+20.1

Income Taxes

(37.5)

(41.0)

+3.5

Profit for the Period

134.9

126.0

+8.9

Profit for the Period Attributable to Owners of the Parent

125.0

118.4

+6.6

* 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, 2019 (“current period”) was ¥1,633.1 billion, an increase of ¥76.9 billion from the corresponding three-month period of the previous year (“previous period”).

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

Other Income (Expenses)
Gain (Loss) on Disposal or Sales of Fixed Assets—Net
For the previous period, a gain on disposal of fixed assets was recorded in the Iron & Steel Products Segment.

Other Income (Expense)—Net
For the current period, the Innovation & Corporate Development Segment recorded a valuation profit on a derivative in relation to a put option of an investment.

Reversal of Provision Related to Multigrain Business
For the previous period, the Lifestyle Segment recorded a gain on the reversal of the provision for the withdrawal from business.

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 Energy Segment recorded an increase.

Income Taxes
Income taxes for the current period were ¥37.5 billion, a decline of ¥3.5 billion from ¥41.0 billion for the previous period. The effective tax rate for the current period was 21.8%, a decline of 2.8% from 24.6% for the previous period. The major factor for the decline was a decrease in the ratio of income tax effect against share of profit of investments accounted for using the equity method.

Profit for the Period Attributable to Owners of the Parent
Profit for the period attributable to owners of the parent was ¥125.0 billion, an increase of ¥6.6 billion from the previous period.

2) Operating Results by Operating Segment
Real estate business and materials business, which were part of the Lifestyle Segment, were transferred to the Innovation & Corporate Development Segment and Chemicals Segment, respectively, effective April 1, 2019. In accordance with the aforementioned changes, the operating segment information for the previous period has been restated to conform to the current period presentation.

Iron & Steel Products Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

1.5

6.8

(5.3)

 

Gross profit

6.4

6.8

(0.4)

 

Profit (loss) of equity method investments

2.9

7.2

(4.3)

 

Dividend income

1.0

1.0

0

 

Selling, general and administrative expenses

(6.7)

(7.2)

+0.5

 

Others

(2.1)

(1.0)

(1.1)

・ Others include the following factor:
- For the previous 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

49.0

39.7

+9.3

 

Gross profit

61.8

45.8

+16.0

 

Profit (loss) of equity method investments

16.3

14.0

+2.3

 

Dividend income

2.2

0.6

+1.6

 

Selling, general and administrative expenses

(8.1)

(8.4)

+0.3

 

Others

(23.2)

(12.3)

(10.9)

・ Gross profit increased mainly due to the following factor:
- Iron ore mining operations in Australia reported an increase of ¥17.2 billion mainly due to higher iron ore sales prices.
・ In addition to the above, the following factor also affected result:
- For the current period, iron ore mining operations in Australia reported a decrease of profit amounting to ¥10.1 billion mainly due to the increase of income tax caused by gross profit increase.

Machinery & Infrastructure Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

16.8

15.4

+1.4

 

Gross profit

30.0

31.8

(1.8)

 

Profit (loss) of equity method investments

25.7

18.7

+7.0

 

Dividend income

1.7

2.0

(0.3)

 

Selling, general and administrative expenses

(31.9)

(30.9)

(1.0)

 

Others

(8.7)

(6.2)

(2.5)

 

Chemicals Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

4.1

9.9

(5.8)

 

Gross profit

31.8

37.4

(5.6)

 

Profit (loss) of equity method investments

3.5

4.3

(0.8)

 

Dividend income

1.4

1.1

+0.3

 

Selling, general and administrative expenses

(25.8)

(26.3)

+0.5

 

Others

(6.8)

(6.6)

(0.2)

Energy Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

40.9

17.1

+23.8

 

Gross profit

34.4

35.3

(0.9)

 

Profit (loss) of equity method investments

22.3

7.1

+15.2

 

Dividend income

12.9

11.1

+1.8

 

Selling, general and administrative expenses

(10.7)

(11.7)

+1.0

 

Others

(18.0)

(24.7)

+6.7

・ Gross profit declined mainly due to the following factors:
- Mitsui E&P Australia Pty. Ltd. reported a decrease of ¥5.4 billion mainly due to decrease in oil production.
- Mitsui & Co. Energy Trading Singapore Pte. Ltd. reported an increase of ¥5.0 billion mainly due to good performance in the LNG and oil trading business.
・ Profit of equity method investment increased mainly due to the following factor:
- Mitsui E&P Mozambique Area 1 Limited reported an increase of ¥12.0 billion due to the recognition of deferred tax assets in accordance with the Final Investment Decision for the project.
・ Dividends from six LNG projects (Sakhalin II, Qatargas 1, Abu Dhabi, Oman, Qatargas 3 and Equatorial Guinea) were ¥12.4 billion in total, an increase of ¥1.7 billion from the previous period.

Lifestyle Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

7.6

17.7

(10.1)

 

Gross profit

36.6

35.2

+1.4

 

Profit (loss) of equity method investments

4.5

5.8

(1.3)

 

Dividend income

2.3

1.9

+0.4

 

Selling, general and administrative expenses

(36.4)

(32.7)

(3.7)

 

Others

0.6

7.5

(6.9)

・ Others include the following factor:
- For the previous period, Multigrain Trading AG recorded a gain of ¥11.6 billion on reversal of the provision for the withdrawal from business.

Innovation & Corporate Development Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

2.1

10.5

(8.4)

 

Gross profit

8.4

25.9

(17.5)

 

Profit (loss) of equity method investments

3.5

1.8

+1.7

 

Dividend income

2.5

2.6

(0.1)

 

Selling, general and administrative expenses

(16.5)

(15.9)

(0.6)

 

Others

4.2

(3.9)

+8.1

・ Gross profit declined mainly due to the following factors:
- For the previous period, a ¥2.2 billion gain was recorded due to the valuation of fair value on shares in Hutchison China MediTech Ltd., while for the current period a ¥4.6 billion loss was recorded due to the valuation of fair value on shares.
- A decline of ¥6.7 billion was recorded mainly due to the gain on the valuation and sales of the shares in Mercari, Inc., for the previous period.
・ In addition to the above, the following factor also affected results:
- For the current period, a valuation profit on the derivative of ¥3.9 billion was recorded in relation to a put option of an investment

(3) Financial Condition and Cash Flows
1) Financial Condition

(Billions of yen)

June 30, 2019

March 31, 2019

Change

Total Assets

12,209.4

11,945.8

+263.6

 

Current Assets

4,023.8

3,996.3

+27.5

 

Non-current Assets

8,185.6

7,949.5

+236.1

Current Liabilities

2,789.1

2,740.3

+48.8

Non-current Liabilities

4,921.4

4,675.2

+246.2

Net Interest-bearing Debt(*)

3,620.8

3,592.0

+28.8

Total Equity Attributable to Owners of the Parent

4,233.9

4,263.2

(29.3)

Net Debt-to-Equity Ratio (times)

0.86

0.84

+0.02

(*) Since current priod,Interest-bearing debt is calculated by excluding lease liability from short-term debt and long-term debt. As a result of this change, the Net Interest-bearing Debt at March 31, 2019 has been restated.

Assets
Current Assets:
・ Cash and cash equivalents increased by ¥31.6 billion.
・ Trade and other receivables declined by ¥66.5 billion, mainly due to a decline in trading volume in the Energy Segment and lower prices in the Chemical Segment.
・ Inventories increased by ¥36.5 billion, mainly due to increases in trading volume in the Innovation & Corporate Development Segment and Machinery & Infrastructure Segment.

Non-current Assets:
・ Investments accounted for using the equity method declined by ¥15.4 billion, mainly due to the following factors:
- A decline of ¥71.8 billion resulting from foreign currency exchange fluctuations;
- An increase of ¥36.5 billion due to correction of Mitsui E&P Mozambique Area 1 Limited’s company category to investments accounted for using the equity method;
- An increase of ¥16.9 billion due to an investment in Minh Phu Seafood Joint Stock Company, a shrimp producer and processor in Vietnam; and
- An increase of ¥78.5 billion corresponding to the profit of equity method investments for the current period, despite a decline of ¥66.5 billion due to dividends received from equity accounted investees.
・ Other investments declined by ¥1.2 billion, mainly due to the following factors:
- A decline of ¥14.2 billion resulting from foreign currency exchange fluctuations; and
- Fair value on financial assets measured at FVTOCI increased by ¥23.0 billion.
・ Property, plant and equipment increased by ¥184.6 billion, mainly due to the following factors:
- An increase of ¥257.6 billion corresponding to adoption of IFRS 16 “Leases”; and
- A decline of ¥38.5 billion due to correction of Mitsui E&P Mozambique Area 1 Limited’s company category to investments accounted for using the equity method.
・ Intangible assets increased by ¥69.4 billion, mainly due to an increase of ¥72.6 billion for the Brazilian rail business restructuring.

Liabilities
Current Liabilities:
・ Short-term debt increased by ¥127.1 billion. Meanwhile, the current portion of long-term debt declined by ¥49.1 billion, mainly due to repayment of debt, despite reclassification to current maturities.
・ Trade and other payables declined by ¥61.3 billion, corresponding to the decline in trade and other receivables.

Non-current Liabilities:
・ Long-term debt, less the current portion, increased by ¥249.1 billion, mainly due to adoption of IFRS 16 “Leases”.

Total Equity Attributable to Owners of the Parent
・ Retained earnings increased by ¥51.0 billion.
・ Other components of equity declined by ¥95.8 billion, mainly due to the following factors:
- Financial assets measured at FVTOCI increased by ¥16.4 billion; and
- Foreign currency translation adjustments declined by ¥95.7 billion, mainly reflecting the appreciation of the Japanese yen against the U.S. dollar and Australian dollar.

2) Cash Flows

(Billions of yen)

Current Period

Previous Period

Change

Cash flows from operating activities

127.9

134.6

(6.7)

Cash flows from investing activities

(110.5)

(100.6)

(9.9)

Free cash flow

17.4

34.0

(16.6)

Cash flows from financing activities

22.1

(105.0)

+127.1

Effect of exchange rate changes on cash and cash equivalents etc.

(7.9)

5.0

(12.9)

Change in cash and cash equivalents

31.6

(66.1)

+97.7

Cash Flows from Operating Activities

(Billions of Yen)

Current Period

Previous Period

Change

Cash flows from operating activities

a

127.9

134.6

(6.7)

Cash flows from change in working capital

b

(28.0)

(19.9)

(8.1)

Core operating cash flow

a-b

155.9

154.5

+1.4

・ Net cash from an increase or a decrease in working capital, or changes in operating assets and liabilities for the current period was ¥28.0 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 ¥155.9 billion.
- Net cash inflow from dividend income, including dividends received from equity accounted investees, for the current period totaled ¥75.7 billion, an increase of ¥0.6 billion from ¥75.1 billion for the previous period.
- Depreciation and amortization for the current period was ¥60.5 billion, an increase of ¥16.9 billion from ¥43.6 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

0.3

0.6

(0.3)

Mineral & Metal Resources

57.9

48.3

+9.6

Machinery & Infrastructure

20.1

21.2

(1.1)

Chemicals

7.2

15.9

(8.7)

Energy

61.8

52.9

+8.9

Lifestyle

11.6

8.5

+3.1

Innovation & Corporate Development

(1.1)

13.2

(14.3)

All Other and Adjustments and Eliminations

(1.9)

(6.1)

+4.2

Consolidated Total

155.9

154.5

+1.4

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 ¥23.4 billion, mainly due to an investment in Minh Phu Seafood Joint Stock Company, a shrimp producer and processor in Vietnam, for ¥16.9 billion.
・ Net cash outflows that corresponded to other investments (net of sales and maturities of other investments) were ¥6.3 billion.
・ Net cash outflows that corresponded to increase in loan receivables (net of collections of loan receivables) were ¥10.4 billion, mainly due to the execution of loans to the IPP project in Middle East for ¥14.3 billion.
・ Net cash outflows that corresponded to purchases of property, plant, and equipment (net of sales of those assets) were ¥60.8 billion, mainly due to an expenditure for the oil and gas projects other than the U.S. shale gas and oil projects for a total of ¥18.5 billion.

Cash Flows from Financing Activities
・ Net cash inflows from net change in short-term debt were ¥131.5 billion and net cash outflows from net change in long-term debt were ¥45.2 billion.
・ The cash outflow from payments of cash dividends was ¥69.5 billion.

(4) Information Concerning Profit Forecast for the Year Ending March 31, 2020
We maintain our profit forecast attributable to owners of the parent of ¥450.0 billion and core operating cash flow forecast of ¥640.0 billion for the year ending March 31, 2020, as announced together with the results of the year ended March 31, 2019. 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)risks of changes in global macroeconomic factors, (2)market of risks of 1)commodity market risk, 2)foreign currency risk, 3)interest rate risk, 4)stock price risk, 5)risks regarding pension cost and defined benefit obligations, (3)credit risks, (4)risks regarding impairment loss on fixed assets, (5)risks regarding fund procurement, (6)risks regarding deferred tax assets, (7)concentrated risk exposures, (8)business investment risk, (9)risks regarding exploration, development and production of mineral resources and oil and gas, (10)risks due to competition, (11)risk regarding limitation of resources on business, (12)environmental risks, (13)risks associated with laws and regulations, (14)risks regarding employee's compliance with laws, regulations, and internal policies, (15)risks regarding internal control, (16)risks regarding climate changes and natural disasters, (17)risks regarding information systems and information securities, (18)risks relating to terrorists and violent groups. 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,

2019

March 31,

2019

Current Assets:

 

 

 

 

Cash and cash equivalents

¥

987,662

¥

956,107

Trade and other receivables

 

1,737,657

 

1,804,227

Other financial assets

 

300,542

 

254,507

Inventories

 

644,211

 

607,675

Advance payments to suppliers

 

208,181

 

219,849

Other current assets

 

145,555

 

153,957

Total current assets

 

4,023,808

 

3,996,322

Non-current Assets:

 

 

 

 

Investments accounted for using the equity method

 

2,960,328

 

2,975,674

Other investments

 

1,946,395

 

1,947,565

Trade and other receivables

 

453,468

 

458,809

Other financial assets

 

156,479

 

154,886

Property, plant and equipment

 

2,129,976

 

1,945,381

Investment property

 

206,040

 

203,102

Intangible assets

 

243,463

 

174,085

Deferred tax assets

 

34,584

 

40,763

Other non-current assets

 

54,899

 

49,192

Total non-current assets

 

8,185,632

 

7,949,457

Total

¥

12,209,440

¥

11,945,779

 

(Millions of Yen)

Liabilities and Equity

 

June 30,

2019

March 31,

2019

Current Liabilities:

 

 

 

 

Short-term debt

¥

464,078

¥

337,028

Current portion of long-term debt

 

430,329

 

479,390

Trade and other payables

 

1,261,035

 

1,322,274

Other financial liabilities

 

300,560

 

278,472

Income tax payables

 

51,803

 

47,197

Advances from customers

 

202,400

 

201,444

Provisions

 

30,032

 

34,458

Other current liabilities

 

48,842

 

40,012

Total current liabilities

 

2,789,079

 

2,740,275

Non-current Liabilities:

 

 

 

 

Long-term debt, less current portion

 

4,058,196

 

3,809,057

Other financial liabilities

 

69,979

 

72,095

Retirement benefit liabilities

 

56,621

 

57,203

Provisions

 

210,017

 

212,396

Deferred tax liabilities

 

496,433

 

499,756

Other non-current liabilities

 

30,115

 

24,689

Total non-current liabilities

 

4,921,361

 

4,675,196

Total liabilities

 

7,710,440

 

7,415,471

Equity:

 

 

 

 

Common stock

 

341,482

 

341,482

Capital surplus

 

402,834

 

387,335

Retained earnings

 

3,129,705

 

3,078,655

Other components of equity

 

367,500

 

463,270

Treasury stock

 

(7,579)

 

(7,576)

Total equity attributable to owners of the parent

 

4,233,942

 

4,263,166

Non-controlling interests

 

265,058

 

267,142

Total equity

 

4,499,000

 

4,530,308

Total

¥

12,209,440

¥

11,945,779

 

(2) Condensed Consolidated Statements of Income and Comprehensive Income
Condensed Consolidated Statements of Income

(Millions of Yen)

 

Three-month

period ended

June 30, 2019

Three-month

period ended

June 30, 2018

Revenue

1,633,120

1,556,199

Cost

 

(1,423,889)

 

(1,337,750)

Gross Profit

 

209,231

 

218,449

Other Income (Expenses):

 

 

 

 

Selling, general and administrative expenses

 

(141,243)

 

(137,749)

Gain (loss) on securities and other investments-net

 

6,310

 

1,345

Impairment reversal (loss) of fixed assets-net

 

(1,695)

 

(984)

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

 

1,366

 

6,862

Reversal of provision related to Multigrain business

 

-

 

11,083

Other income (expense) -net

 

7,772

 

(2,777)

Total other income (expenses)

 

(127,490)

 

(122,220)

Finance Income (Costs):

 

 

 

 

Interest income

 

11,183

 

10,233

Dividend income

 

24,766

 

21,098

Interest expense

 

(23,760)

 

(18,960)

Total finance income (costs)

 

12,189

 

12,371

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

 

78,473

 

58,426

Profit before Income Taxes

 

172,403

 

167,026

Income Taxes

 

(37,519)

 

(41,011)

Profit for the Period

¥

134,884

¥

126,015

Profit for the Period Attributable to:

 

 

 

 

Owners of the parent

¥

125,036

¥

118,414

Non-controlling interests

 

9,848

 

7,601

 

Condensed Consolidated Statements of Comprehensive Income

(Millions of Yen)

 

Three-month

period ended

June 30, 2019

Three-month

period ended

June 30, 2018

Profit for the Period

¥

134,884

¥

126,015

Other Comprehensive Income:

 

 

 

 

Items that will not be reclassified to profit or loss:

 

 

 

 

Financial assets measured at FVTOCI

 

21,468

 

50,933

Remeasurements of defined benefit plans

 

(131)

 

709

Share of other comprehensive income of investments accounted for using the equity method

 

(503)

 

(47)

Income tax relating to items not reclassified

 

(4,393)

 

(13,846)

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

Foreign currency translation adjustments

 

(33,923)

 

(23,911)

Cash flow hedges

 

(7,103)

 

186

Share of other comprehensive income of investments accounted for using the equity method

 

(80,370)

 

18,384

Income tax relating to items that may be reclassified

 

1,550

 

1,637

Total other comprehensive income

 

(103,405)

 

34,045

Comprehensive Income for the Period

¥

31,479

¥

160,060

Comprehensive Income for the Period Attributable to:

 

 

 

 

Owners of the parent

¥

30,648

¥

154,421

Non-controlling interests

 

831

 

5,639

 

(3) Condensed Consolidated Statements of Changes in Equity

(Millions of Yen)

 

Attributable to owners of the parent

Non-

controlling Interests

Total

Equity

 

Common

Stock

Capital

Surplus

Retained

Earnings

Other Components of

Equity

Treasury

Stock

Total

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

 

 

 

 

 

118,414

 

36,007

 

 

 

154,421

 

5,639

 

160,060

Transaction with owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid to the owners of the parent

 

 

 

 

 

(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

(Millions of Yen)

 

Attributable to owners of the parent

Non-

controlling

Interests

Total

Equity

 

Common

Stock

Capital

Surplus

Retained

Earnings

Other

Components of

Equity

Treasury

Stock

Total

Balance as at April 1, 2019

¥

341,482

¥

387,335

¥

3,078,655

¥

463,270

¥

(7,576)

¥

4,263,166

¥

267,142

¥

4,530,308

Cumulative effect of changes in accounting policies

 

 

 

 

 

(5,306)

 

 

 

 

 

(5,306)

 

 

 

(5,306)

Balance as at April 1, 2019 after changes in accounting policies

 

341,482

 

387,335

 

3,073,349

 

463,270

 

(7,576)

 

4,257,860

 

267,142

 

4,525,002

Profit for the period

 

 

 

 

 

125,036

 

 

 

 

 

125,036

 

9,848

 

134,884

Other comprehensive income for the period

 

 

 

 

 

 

 

(94,388)

 

 

 

(94,388)

 

(9,017)

 

(103,405)

Comprehensive income for the period

 

 

 

 

 

125,036

 

(94,388)

 

 

 

30,648

 

831

 

31,479

Transaction with owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid to the owners of the parent

 

 

 

 

 

(69,524)

 

 

 

 

 

(69,524)

 

 

 

(69,524)

Dividends paid to non-controlling interest

shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,482)

 

(4,482)

Acquisition of treasury stock

 

 

 

 

 

 

 

 

 

(3)

 

(3)

 

 

 

(3)

Equity transactions with non-controlling

interest shareholders

 

 

 

15,499

 

 

 

(538)

 

 

 

14,961

 

1,567

 

16,528

Transfer to retained earnings

 

 

 

 

 

844

 

(844)

 

 

 

 

 

 

Balance as at June 30, 2019

¥

341,482

¥

402,834

¥

3,129,705

¥

367,500

¥

(7,579)

¥

4,233,942

¥

265,058

¥

4,499,000

 

(4) Condensed Consolidated Statements of Cash Flows

(Millions of Yen)

 

Three-month period ended

June 30, 2019

Three-month period ended

June 30, 2018

Operating Activities:

 

 

 

 

Profit for the period

¥

134,884

¥

126,015

Adjustments to reconcile profit for the period to cash flows

from operating activities:

 

 

 

 

Depreciation and amortization

 

60,537

 

43,573

Change in retirement benefit liabilities

 

367

 

637

Loss allowance

 

3,625

 

2,604

Reversal of provision related to Multigrain business

 

-

 

(11,083)

(Gain) loss on securities and other investments—net

 

(6,310)

 

(1,345)

Impairment (reversal) loss of fixed assets—net

 

1,695

 

984

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

 

(1,366)

 

(6,862)

Finance (income) costs

 

(10,860)

 

(11,098)

Income taxes

 

37,519

 

41,011

Share of (profit) loss of investments accounted for using the equity method

 

(78,473)

 

(58,426)

Valuation gain (loss) related to contingent considerations and others

 

(2,809)

 

4,135

Changes in operating assets and liabilities:

 

 

 

 

Change in trade and other receivables

 

50,966

 

(27,098)

Change in inventories

 

(49,495)

 

(8,570)

Change in trade and other payables

 

(76,767)

 

32,698

Other—net

 

47,279

 

(16,880)

Interest received

 

11,064

 

8,834

Interest paid

 

(25,385)

 

(19,045)

Dividends received

 

75,747

 

75,071

Income taxes paid

 

(44,339)

 

(40,540)

Cash flows from operating activities

 

127,879

 

134,615

Investing Activities:

 

 

 

 

Net change in time deposits

 

(5,701)

 

(5,873)

Net change in investments in equity accounted investees

 

(23,353)

 

(75,499)

Net change in other investments

 

(6,282)

 

17,893

Net change in loan receivables

 

(10,446)

 

5,009

Net change in property, plant and equipment

 

(60,826)

 

(31,764)

Net change in investment property

 

(3,895)

 

(10,359)

Cash flows from investing activities

 

(110,503)

 

(100,593)

Financing Activities:

 

 

 

 

Net change in short-term debt

 

131,543

 

10,590

Net change in long-term debt

 

(45,167)

 

(47,708)

Purchases and sales of treasury stock

 

(3)

 

(3)

Dividends paid

 

(69,524)

 

(69,516)

Transactions with non-controlling interest shareholders

 

5,262

 

1,608

Cash flows from financing activities

 

22,111

 

(105,029)

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

(7,932)

 

4,950

Change in Cash and Cash Equivalents

 

31,555

 

(66,057)

Cash and Cash Equivalents at Beginning of Period

 

956,107

 

1,131,380

Cash and Cash Equivalents at End of Period

¥

987,662

¥

1,065,323

 

(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, 2019 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 Condensed Consolidated Financial Statements from April 1, 2019.

IFRS

Title

Summaries

IFRS 16

Leases

Fundamental amendment of accounting for lease transactions

In adopting IFRS 16, the companies recognized lease liabilities in relation to leases as a lessee, which had previously been classified as operating leases under the principles of IAS 17 “Leases”. These liabilities are measured at the present value discounted using the group’s incremental borrowing rate as of April 1, 2019, and are presented as “long-term debt” (including current portion). The associated rights-of-use assets are measured either at the carrying amount as if the Standard had been applied since the commencement date or at the amount equal to the lease liability, and are presented as “Property, plant and equipment”.

In transitioning to IFRS 16, the practical expedient was chosen, the companies have adopted this standard to contracts that were previously identified as leases under the principles of IAS 17 and IFRIC 4 “Determining whether an Arrangement Contains a Lease” (hereinafter referred to as “IFRIC 4”) without reassessing whether a contract is, or contains, a lease at the date of initial application. The companies have not adopted this standard to contracts that were not previously identified as containing a lease under the principles of IAS 17 and IFRIC 4.

After the date of initial application, if a contract is, or contains, a lease, leases are recognized as a lease liability and a corresponding right-of-use asset at the date at which the asset is available for use by the companies. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to interest expense over the lease term at a constant rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. Lease term includes periods of an option to extend the lease if the lessee is reasonably certain to exercise that option and an option to terminate the lease if the lessee is reasonably certain not to exercise that option. Note that short-term leases and leases for which the underlying asset is of low value apply exemption rules of the standards, and recognize the lease payments associated with those leases as an expense mainly on straight-line basis over the lease term.

The cumulative effects due to the application of this standard were recognized on the commencement date of adoption in accordance with the transitional arrangements, the retrospective restatement of prior periods have not been applied.

“Long-term debt” (including current portion) and “Property, plant and equipment” newly recognized at the date of initial application in the Condensed Consolidated Statement of financial position were JPY 272,321 million and JPY 257,624 million, respectively.

In applying IFRS 16 for the first time, the companies have used the following practical expedients permitted by the standard:

・ the use of a single discount rate to a portfolio of leases with reasonably similar characteristics
・ the reliance on assessment of whether leases are onerous applying IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” immediately before the date of initial application as an alternative to performing an impairment review
・ the accounting for operating leases with a remaining lease term of less than 12 months as at April 1, 2019 as short-term leases, and
・ the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

2) Changes in Accounting Estimates

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

(Recoverability of Deferred Tax Assets in the joint venture)

The Company, together with its business partners, has made a final investment decision on the Mozambique LNG project through Mitsui E&P Mozambique Area 1 Limited, its joint venture in the Energy Segment which owns an interest in the LNG project.

Due to this final investment decision, the joint venture recognized deferred tax assets mainly for the exploration expenses occurred in prior years, and gain of ¥13,158 million have been recognized in “Share of Profit (Loss) of Investments Accounted for Using the Equity Method”.

(7) Segment Information
Three-month period ended June 30, 2019 (from April 1, 2019 to June 30, 2019)

(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

58,099

277,919

173,856

403,695

177,799

504,802

36,636

1,632,806

314

1,633,120

Gross Profit

6,413

61,792

29,976

31,834

34,413

36,602

8,400

209,430

△199

209,231

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

2,927

16,279

25,704

3,497

22,262

4,487

3,461

78,617

△144

78,473

Profit for the Period Attributable to Owners of the parent

1,531

48,990

16,847

4,086

40,860

7,572

2,108

121,994

3,042

125,036

Core Operating Cash Flow

272

57,891

20,055

7,170

61,764

11,570

△1,095

157,627

△1,731

155,896

Total Assets at June 30, 2019

594,920

2,216,336

2,538,599

1,286,468

2,460,497

2,057,204

1,025,895

12,179,919

29,521

12,209,440

Three-month period ended June 30, 2018 (from April 1, 2018 to June 30, 2018) (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

48,550

246,738

193,206

396,225

172,131

442,120

56,100

1,555,070

1,129

1,556,199

Gross Profit

6,805

45,761

31,778

37,421

35,349

35,166

25,884

218,164

285

218,449

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

7,168

13,980

18,655

4,314

7,139

5,772

1,821

58,849

△423

58,426

Profit for the Period Attributable to Owners of the parent

6,779

39,722

15,449

9,931

17,058

17,692

10,500

117,131

1,283

118,414

Core Operating Cash Flow

606

48,325

21,182

15,895

52,928

8,538

13,167

160,641

△6,176

154,465

Total Assets at March 31, 2019

606,557

2,222,894

2,450,551

1,337,737

2,425,363

2,006,139

971,833

12,021,074

△75,295

11,945,779

Notes:1. “Others / Adjustments and Eliminations” includes of the Corporate Staff Unit which provides financing services and operations services to the companies and affiliated companies. Total assets of “Others / Adjustments and Eliminations” at March 31, 2019 and June 30, 2019 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 ¥ 7,044,713 million and ¥ 6,868,658 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, 2019 and June 30, 2019 includes elimination of receivables and payables between segments amounting to ¥ 7,120,008 million and ¥ 6,839,137 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. Due to the organizational restructuring with the aim of further strengthening of business, materials business and real estate business which were formerly included in "Lifestyle" segment are included in "Chemicals" segment and "Innovation & Corporate Development" segment respectively, from the three-month period ended June 30, 2019. In accordance with these changes, the segment information for the three-month period ended June 30, 2018 has been restated to conform to the current period presentation.

(8) The Fire Incident of Intercontinental Terminals Company LLC

On March 17, 2019 (US time) a fire began at the Deer Park tank terminal, of Intercontinental Terminals Company LLC (“ITC”), a wholly owned U.S. subsidiary of Mitsui & Co., Ltd. The Deer Park tank terminal is located in the outskirts of Houston, Texas. The fire completely destroyed, or partially damaged, 15 out of 242 tanks and its surrounding facilities and was completely extinguished by March 22, 2019 (US time). ITC has resumed its operation after discussions with related authorities. The cause of this fire is still under investigation.

The outstanding balance of provision related to this incident is ¥14,924 million for the year ended March 31, 2019. Most of the related costs have been paid out in the three-month period ended June 30, 2019, and the outstanding balance of provision as of June 30, 2019 is immaterial. ITC has also recognized the insurance benefits as profit for some of the losses related to this incident in the three-month period ended June 30, 2019, however the amount is immaterial.

There are multiple lawsuits that have been brought against ITC in relation to this incident. These lawsuits are at the early stages and the ultimate outcome of these lawsuits is not expected to have significant impact on our consolidated financial position, operating results and cash flow.

Short Name: Mitsui & Co., Ltd.
Category Code: QRF
Sequence Number: 673053
Time of Receipt (offset from UTC): 20190731T072055+0100

Contacts

Mitsui & Co Ltd

Contacts

Mitsui & Co Ltd