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, 2020 [IFRS]

Mitsui & Co., Ltd. announced its consolidated financial results for the three-month period ended June 30, 2020, based on International Financial Reporting Standards ("IFRS").

Mitsui & Co., Ltd. and subsidiaries
(Web Site : https://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, 2020
(from April 1, 2020 to June 30, 2020)

 

Three-month period ended June 30,

2020

 

2019

 

%

%

Revenue

Millions of yen

1,521,768

△6.8

1,633,120

4.9

Profit before income taxes

Millions of yen

101,990

△40.8

172,403

3.2

Profit for the period

Millions of yen

66,663

△50.6

134,884

7.0

Profit for the period attributable to owners of the parent

Millions of yen

62,557

△50.0

125,036

5.6

Comprehensive income for the period

Millions of yen

172,237

447.1

31,479

△80.3

Earnings per share attributable to owners of the parent, basic

Yen

36.92

 

71.94

 

Earnings per share attributable to owners of the parent, diluted

Yen

36.90

 

71.88

 

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, 2020

March 31, 2020

Total assets

Millions of yen

11,486,047

11,806,292

Total equity

Millions of yen

4,124,189

4,060,932

Total equity attributable to owners of the parent

Millions of yen

3,870,727

3,817,677

Equity attributable to owners of the parent ratio

%

33.7

32.3

2. Dividend information

 

Year ended March 31,

 

Year ending March

31, 2021 (Forecast)

2021

2020

 

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, 2021 (from April 1, 2020 to March 31, 2021)

 

Year ending

March 31, 2021

Profit attributable to owners of the parent

Millions of yen

180,000

Earnings per share attributable to owners of the parent, basic

Yen

106.74

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

None

Note :
For further details please refer to page 17 "3. Condensed Consolidated Financial Statements (6) Changes in Accounting Policies".

(3) Number of shares :

 

June 30, 2020

March 31, 2020

Number of shares of common stock issued, including treasury stock

1,716,720,206

1,742,684,906

Number of shares of treasury stock

33,975,077

35,184,567

 

Three-month period ended

June 30, 2020

Three-month period ended

June 30, 2019

Average number of shares of common stock outstanding

1,694,434,804

1,738,073,023

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 11.

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, 2020.

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………………………………………………………………………………………

3

(3)

Financial Condition and Cash Flows………………………………………………………………………

8

(4)

Information Concerning Profit Forecast for the Year Ending March 31, 2021……………………………

11

 

 

 

2. Other Information…………………………………………………………………………………………….

11

 

 

 

3. Condensed Consolidated Financial Statements

 

(1)

Condensed Consolidated Statements of Financial Position........................................................…..............

12

(2)

Condensed Consolidated Statements of Income and Comprehensive Income...............................…..........

14

(3)

Condensed Consolidated Statements of Changes in Equity...............................................................…......

15

(4)

Condensed Consolidated Statements of Cash Flows..............................................................................…..

16

(5)

Assumption for Going Concern....................................................................................................................

17

(6)

Changes in Accounting Policies...................................................................................................................

17

(7)

Changes in Presentation................................................................................................................................

17

(8)

Segment Information.................................................................................................…...............................

18

(9)

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

19

(10)

Taxation on Capital Gain in India.................................................................................................................

19

 

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, 2020, despite signs of improvement in China, the global economy experienced a rapid drop in internal and external demand and the growth rate decreased significantly due to the spread of infections of COVID-19 in major developed countries, such as the U.S., and emerging and developing countries excluding China. However, the global economy appears to have made it out of its worst period and be moving toward recovery as the economy has bottomed out with the resumption of economic activities.

In the U.S., consumer spending, which took a major hit due to the lockdown at the start of the period, showed signs of bottoming out due to the subsequent resumption of economic activities, economic measures, etc., and employment is gradually improving. On the other hand, there appears to be a second wave of infections and there are concerns over its impact. In Europe, although economic activities have resumed due to the easing of restrictions against going outside and the effects of economic measures are gradually appearing, the situation seems to be improving at a sluggish pace. In Japan, consumer spending has bottomed out due to the lifting of the state of emergency and economic measures and the economy is expected to improve in the future. However, the pace of improvement is likely to be gradual. In emerging countries, manufacturing activities in China continue to resume, and the economy is recovering with signs of a pickup in consumption and investments. On the other hand, there are concerns regarding the economic outlook of Russia and Brazil as they are suffering from a fall in the price of crude oil, and Brazil in particular is experiencing a serious outbreak of infections.

Considering that COVID-19 continues to spread depending on the country and region, careful attention should be given to the possibility that the global economy may deteriorate again.

(2) Results of Operations

1) Analysis of Consolidated Income Statements

(Billions of Yen)

Current Period

Previous Period

Change

Revenue

1,521.8

1,633.1

(111.3)

Gross profit

189.7

209.2

(19.5)

Selling, general and administrative expenses

(134.7)

(141.2)

+6.5

Other Income (Expenses)

Gain (Loss) on Securities and Other Investments—Net

8.4

6.3

+2.1

Impairment Reversal (Loss) of Fixed Assets—Net

(0.3)

(1.7)

+1.4

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

(0.1)

1.4

(1.5)

Other Income (Expense)—Net

0.3

7.8

(7.5)

Finance Income (Costs)

Interest Income

6.2

11.2

(5.0)

Dividend Income

13.9

24.8

(10.9)

Interest Expense

(15.4)

(23.8)

+8.4

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

34.0

78.5

(44.5)

Income Taxes

(35.3)

(37.5)

+2.2

Profit for the Period

66.7

134.9

(68.2)

Profit for the Period Attributable to Owners of the Parent

62.6

125.0

(62.4)

* 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, 2020 (“current period”) was ¥1,521.8 billion, a decline of ¥111.3 billion from the corresponding three-month period of the previous year (“previous period”).

Gross Profit

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

Selling, general and administrative expenses

The Mineral & Metal Resources Segment recorded an increase while overall, selling, general and administrative expenses decreased ¥6.5 billion from previous period.

Other Income (Expenses)

Gain (Loss) on Securities and Other Investments—Net
For the current period, a gain on sale of securities was recorded in the Machinery & Infrastructure Segment.

Other Income (Expense)—Net

For the current period, the Energy segment recorded derivative related profits and foreign exchange related profits. Also, the Chemicals Segment recorded insurance proceeds in the business in North America. For the previous period, the Innovation & Corporate Development Segment recorded a valuation profit on a derivative in relation to a put option of an investment.

Finance Income (Costs)
Dividend Income
Mainly the Energy Segment recorded a decrease.

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

Mainly the Energy Segment, the Machinery & Infrastructure Segment, the Lifestyle Segment and the Iron and Steel Products Segment recorded a decline.

Income Taxes

Income taxes for the current period were ¥35.3 billion, a decline of ¥2.2 billion from ¥37.5 billion for the previous period. The effective tax rate for the current period was 34.6%, an increase of 12.8 points from 21.8% for the previous period. The major factors for the increase were an increase of a valuation allowance against a deferred tax asset and an increase in the tax burden due to resource-related high rate taxes in the Energy segment.

Profit for the Period Attributable to Owners of the Parent

Impacts caused by a decrease in demand and a fluctuation in commodity price due to the spread of COVID-19 were included. As a result, profit for the period attributable to owners of the parent was ¥62.6 billion, a decline of ¥62.4 billion from the previous period.

2) Operating Results by Operating Segment

The business of the infrastructure of next-generation electric power, which was a part of the Machinery & Infrastructure Segment was transferred to the Energy Segment, effective April 1, 2020. 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

(1.3)

1.5

(2.8)

 

Gross profit

5.4

6.4

(1.0)

 

Profit (loss) of equity method investments

(1.9)

2.9

(4.8)

 

Dividend income

0.7

1.0

(0.3)

 

Selling, general and administrative expenses

(5.6)

(6.7)

+1.1

 

Others

0.1

(2.1)

+2.2

・ Profit (loss) of equity method investments decreased mainly due to the following factor:

- For the current period, associated companies, which process and sell automotive steel products, reported a decrease of profit mainly due to the lower operating time and slow sales caused by a decline in demand for steel product,and the impact of foreign exchange fluctuations.

Mineral & Metal Resources Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

32.2

49.0

(16.8)

 

Gross profit

50.3

61.8

(11.5)

 

Profit (loss) of equity method investments

13.4

16.3

(2.9)

 

Dividend income

2.5

2.2

+0.3

 

Selling, general and administrative expenses

(10.4)

(8.1)

(2.3)

 

Others

(23.6)

(23.2)

(0.4)

・ Gross profit declined mainly due to the following factor:

- Coal mining operations in Australia reported a decline of ¥13.9 billion mainly due to lower coal sales prices.

・ Selling, general and administrative expenses increased mainly due to the following factor:

- For the current period, an impairment loss of ¥4.1 billion for doubtful debt was posted, reflecting the revisions to our various assumptions regarding the Moatize mine business in Mozambique.

Energy Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

3.5

40.4

(36.9)

 

Gross profit

25.6

34.3

(8.7)

 

Profit (loss) of equity method investments

5.7

22.1

(16.4)

 

Dividend income

2.1

12.9

(10.8)

 

Selling, general and administrative expenses

(11.1)

(11.0)

(0.1)

 

Others

(18.8)

(17.9)

(0.9)

・ Gross profit declined mainly due to the following factors:

- Mitsui Oil Exploration Co., Ltd. reported a decrease of ¥16.0 billion mainly due to lower oil and gas prices and decrease in production.

- Mitsui E&P USA LLC reported a decrease of ¥3.4 billion mainly due to lower gas prices.

- Business division at the Headquarters reported an increase due to good performance in the LNG trading business.

・ Profit (loss) of equity method investment declined mainly due to the following factors:

- Mitsui E&P Mozambique Area 1 Limited reported a decrease of ¥11.9 billion due to the recognition of deferred tax assets, in accordance with the Final Investment Decision for the project for the

previous period.

- Japan Australia LNG (MIMI) Pty. Ltd. reported a decrease mainly due to lower oil and gas prices.

・ Dividends from six LNG projects (Qatargas 1, Oman, Qatargas 3, Sakhalin II, Abu Dhabi and Equatorial Guinea) were ¥2.1 billion in total, a decrease of ¥10.3 billion from the previous period.

・ In addition to the above, the following factor also affected results:

- Mitsui Oil Exploration Co., Ltd. reported an increase of ¥5.1 billion due to derivative related profits at its overseas subsidiary and foreign exchange related profits.

Machinery & Infrastructure Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

18.5

17.3

+1.2

 

Gross profit

26.7

30.1

(3.4)

 

Profit (loss) of equity method investments

17.3

25.8

(8.5)

 

Dividend income

1.6

1.7

(0.1)

 

Selling, general and administrative expenses

(29.2)

(31.7)

+2.5

 

Others

2.1

(8.6)

+10.7

・ Profit (loss) of equity method investments declined mainly due to the following factor:

- For the previous period, investments in gas distribution companies in Brazil recorded a profit reflecting the refund of service tax payments through arbitrations.

・ In addition to the above, the following factor also affected results:

- For the current period, a gain on sale of IPP business in North America was recorded.

Chemicals Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

6.3

4.1

+2.2

 

Gross profit

29.9

31.8

(1.9)

 

Profit (loss) of equity method investments

0.9

3.5

(2.6)

 

Dividend income

1.1

1.4

(0.3)

 

Selling, general and administrative expenses

(23.4)

(25.8)

+2.4

 

Others

(2.2)

(6.8)

+4.6

・ Others include the following factor:

- For the current period, insurance proceeds were recorded in the business in North America.

Lifestyle Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

(5.6)

7.6

(13.2)

 

Gross profit

27.8

36.6

(8.8)

 

Profit (loss) of equity method investments

(3.8)

4.5

(8.3)

 

Dividend income

2.2

2.3

(0.1)

 

Selling, general and administrative expenses

(31.7)

(36.4)

+4.7

 

Others

(0.1)

0.6

(0.7)

・Gross profit declined mainly due to the following factor:

- For the current period, subsidiaries, whose businesses are fashion, food and distribution, reported a decrease of profit due to the closure of stores and decrease in demand for commercial ingredients for the food service industry caused by the state of emergency and curfew.

・ Profit (loss) of equity method investment declined mainly due to the following factor:

- For the current period, associated companies, whose businesses are food, fashion and services, reported a decrease of profit due to curfew and self-restraint.

Innovation & Corporate Development Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

10.5

2.1

+8.4

 

Gross profit

23.2

8.4

+14.8

 

Profit (loss) of equity method investments

2.3

3.5

(1.2)

 

Dividend income

3.1

2.5

+0.6

 

Selling, general and administrative expenses

(16.1)

(16.5)

+0.4

 

Others

(2.0)

4.2

(6.2)

・ Gross profit increased mainly due to the following factors:

- For the previous period, ¥4.6 billion loss was recorded due to the valuation of fair value on shares in Hutchison China MediTech Ltd., while for the current period ¥4.1 billion gain was recorded due to the valuation of fair value on shares.

- For the current period, an increase of ¥4.3 billion was recorded mainly due to good results of energy trading in Mitsui Bussan Commodities Ltd.

・ In addition to the above, the following factor also affected results:

- For the previous 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, 2020

March 31, 2020

Change

Total Assets

11,486.0

11,806.3

(320.3)

 

Current Assets

3,768.1

4,124.4

(356.3)

 

Non-current Assets

7,717.9

7,681.9

+36.0

Current Liabilities

2,342.5

2,701.1

(358.6)

Non-current Liabilities

5,019.4

5,044.3

(24.9)

Net Interest-bearing Debt

3,534.9

3,486.7

+48.2

Total Equity Attributable to Owners of the Parent

3,870.7

3,817.7

+53.0

Net Debt-to-Equity Ratio (times)

0.91

0.91

0.00

Assets

Current Assets:

・ Cash and cash equivalents declined by ¥17.3 billion.

・ Trade and other receivables declined by ¥162.4 billion, mainly due to lower market prices and decreases in trading volume in the Energy Segment and the Chemicals Segment.

・ Other financial assets declined by ¥137.7 billion, mainly due to market volatility and decreases in trading volume of derivative trading in the Energy Segment and the Innovation & Corporate Development Segment.

Non-current Assets:

・ Investments accounted for using the equity method declined by ¥54.6 billion, mainly due to the following factors:

- An increase of ¥34.0 billion corresponding to the profit of equity method investments for the current period, despite a decline of ¥59.0 billion due to dividends received from equity accounted investees; and

- A decline due to a fair value valuation of shares in Arctic LNG 2 Project in Russia through Japan Arctic LNG.

・ Other investments increased by ¥92.4 billion, mainly due to the following factor:

- Mainly as a result of higher share prices, fair value on financial assets measured at FVTOCI increased by ¥97.1 billion.

・ Property, plant and equipment increased by ¥30.7 billion, mainly due to the following factors:

- An increase of ¥40.5 billion (including foreign exchange translation profit of ¥32.3 billion) at iron ore mining operations in Australia; and

- A decline of ¥14.7 billion (including foreign exchange translation loss of ¥1.7 billion) at the oil and gas projects other than the U.S. shale gas and oil projects

Liabilities

Current Liabilities:

・ Current portion of long-term debt increased by ¥36.2 billion, mainly due to a reclassification to current maturities.

・ Trade and other payables declined by ¥111.4 billion, corresponding to the decline in trade and other receivables.

・ Other financial liabilities declined by ¥277.4 billion, mainly due to corresponding decline in other financial assets, payments on account payable-other at the integrated development project in the 2, Otemachi 1-Chome District and decreases in the precious metal lease business in the Innovation & Corporate Development Segment.

Non-current Liabilities:

・ Long-term debt, less the current portion, declined by ¥27.6 billion.

Total Equity Attributable to Owners of the Parent

・ Retained earnings decreased by ¥51.8 billion.

・ Other components of equity increased by ¥97.0 billion, mainly due to the following factors:

- Financial assets measured at FVTOCI increased by ¥70.0 billion; and

- Foreign currency translation adjustments increased by ¥58.9 billion, mainly reflecting the appreciation of the Australian dollar against the Japanese Yen, despite the depreciation of the U.S. dollar and the Brazilian real.

・ Treasury stock which is a subtraction item in shareholders' equity decreased by ¥7.7 billion, mainly due to the cancellation of the stock for ¥46.7 billion, despite share buy-back for ¥39.1 billion.

2) Cash Flows

(Billions of yen)

Current Period

Previous Period

Change

Cash flows from operating activities

164.0

127.9

+36.1

Cash flows from investing activities

(108.5)

(110.5)

+2.0

Free cash flow

55.5

17.4

+38.1

Cash flows from financing activities

(88.2)

22.1

(110.3)

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

15.4

(7.9)

+23.3

Change in cash and cash equivalents

(17.3)

31.6

(48.9)

Cash Flows from Operating Activities

(Billions of Yen)

Current Period

Previous Period

Change

Cash flows from operating activities

a

164.0

127.9

+36.1

Cash flows from change in working capital

b

37.4

(28.0)

+65.4

Repayments of lease liabilities

c

(15.8)

(13.5)

(2.3)

Core operating cash flow

a-b+c

110.8

142.4

(31.6)

・ Net cash from an increase or a decrease in working capital, or changes in operating assets and liabilities for the current period was ¥37.4 billion of net cash inflow. Repayments of lease liabilities for the current period was ¥15.8 billion of cash outflow. Core operating cash flow, cash flows from operating activities without both net cash from an increase or a decrease in working capital and repayments of lease liabilities, for the current period amounted to ¥110.8 billion. From current period, in order to reflect a regular cash generation output from operating activities more appropriately, repayments of lease liabilities have been deducted. In conformity with this change, Core operating cash flow for the previous period has been restated.

- Net cash inflow from dividend income, including dividends received from equity accounted investees, for the current period totaled ¥49.3 billion, a decline of ¥26.4 billion from ¥75.7 billion for the previous period.

- Depreciation and amortization for the current period was ¥63.0 billion, an increase of ¥2.5 billion from ¥60.5 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

1.6

0.2

+1.4

Mineral & Metal Resources

41.9

57.7

(15.8)

Energy

36.4

58.7

(22.3)

Machinery & Infrastructure

12.9

18.2

(5.3)

Chemicals

15.7

6.5

+9.2

Lifestyle

3.6

7.4

(3.8)

Innovation & Corporate Development

12.7

(2.1)

+14.8

All Other and Adjustments and Eliminations

(14.0)

(4.2)

(9.8)

Consolidated Total

110.8

142.4

(31.6)

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 ¥2.2 billion, though there was a sale of IPP business in North America as a main cash inflow factor.

・ Net cash outflows that corresponded to purchases of property, plant, and equipment (net of sales of those assets) were ¥78.8 billion, mainly due to the following factors:

- An expenditure for the integrated development project in the 2, Otemachi 1-Chome District for ¥36.6 billion; and

- An expenditure for iron ore mining operations in Australia for ¥11.1 billion.

・ Net cash outflows that corresponded to purchases of investment property (net of sales of those assets) were ¥34.6 billion, mainly due to an expenditure for the integrated development project in the 2, Otemachi 1-Chome District for ¥30.6 billion.

Cash Flows from Financing Activities

・ Net cash inflows from net change in short-term debt were ¥2.6 billion, net cash inflows from net change in long-term debt were ¥32.6 billion, and cash outflow from repayments of lease liabilities were ¥15.8 billion.

・ The cash outflow from the purchases of treasury stock was ¥39.1 billion.

・ The cash outflow from payments of cash dividends was ¥68.3 billion.

(4) Information Concerning Profit Forecast for the Year Ending March 31, 2021

We maintain our profit forecast attributable to owners of the parent of ¥180.0 billion and core operating cash flow forecast of ¥400.0 billion for the year ending March 31, 2021, as announced together with the results of the year ended March 31, 2020. 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 important risks, uncertainties and other factors include, among others, (1)risk of COVID-19, (2)business investment risks, (3)country risks, (4)risks regarding climate changes, (5)commodity market risks, (6)foreign currency risks, (7)stock price risks of listed stock Mitsui and its subsidiaries hold, (8)credit risks, (9)risks regarding fund procurement, (10)operational risks, (11)risks regarding employee’s compliance with laws, regulations, and internal policies, (12)risks regarding information systems and information securities, (13)risks relating to natural disasters, 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,

2020

March 31,

2020

Current Assets:

 

 

 

 

Cash and cash equivalents

¥

1,041,388

¥

1,058,733

Trade and other receivables

 

1,460,096

 

1,622,501

Other financial assets

 

425,171

 

562,899

Inventories

 

533,957

 

553,861

Advance payments to suppliers

 

156,385

 

167,250

Other current assets

 

151,129

 

159,175

Total current assets

 

3,768,126

 

4,124,419

Non-current Assets:

 

 

 

 

Investments accounted for using the equity method

 

2,826,363

 

2,880,958

Other investments

 

1,576,752

 

1,484,422

Trade and other receivables

 

411,076

 

422,423

Other financial assets

 

169,255

 

186,010

Property, plant and equipment

 

2,152,059

 

2,121,371

Investment property

 

259,849

 

251,838

Intangible assets

 

192,732

 

195,289

Deferred tax assets

 

51,538

 

58,908

Other non-current assets

 

78,297

 

80,654

Total non-current assets

 

7,717,921

 

7,681,873

Total

¥

11,486,047

¥

11,806,292

 

 

 

(Millions of Yen)

Liabilities and Equity

 

June 30,

2020

March 31,

2020

Current Liabilities:

 

 

 

 

Short-term debt

¥

303,173

¥

297,458

Current portion of long-term debt

 

436,097

 

399,904

Trade and other payables

 

1,025,096

 

1,136,504

Other financial liabilities

 

349,604

 

626,963

Income tax payables

 

48,760

 

46,206

Advances from customers

 

109,435

 

133,247

Provisions

 

26,420

 

25,844

Other current liabilities

 

43,909

 

34,984

Total current liabilities

 

2,342,494

 

2,701,110

Non-current Liabilities:

 

 

 

 

Long-term debt, less current portion

 

4,201,551

 

4,229,218

Other financial liabilities

 

96,995

 

105,279

Retirement benefit liabilities

 

41,186

 

39,956

Provisions

 

230,189

 

228,173

Deferred tax liabilities

 

421,113

 

412,971

Other non-current liabilities

 

28,330

 

28,653

Total non-current liabilities

 

5,019,364

 

5,044,250

Total liabilities

 

7,361,858

 

7,745,360

Equity:

 

 

 

 

Common stock

 

341,776

 

341,776

Capital surplus

 

402,742

 

402,652

Retained earnings

 

3,310,530

 

3,362,297

Other components of equity

 

(126,877)

 

(223,910)

Treasury stock

 

(57,444)

 

(65,138)

Total equity attributable to owners of the parent

 

3,870,727

 

3,817,677

Non-controlling interests

 

253,462

 

243,255

Total equity

 

4,124,189

 

4,060,932

Total

¥

11,486,047

¥

11,806,292

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

 

 

 

(Millions of Yen)

 

Three-month

period ended

June 30, 2020

Three-month

period ended

June 30, 2019

Revenue

¥

1,521,768

¥

1,633,120

Cost

 

(1,332,061)

 

(1,423,889)

Gross Profit

 

189,707

 

209,231

Other Income (Expenses):

 

 

 

 

Selling, general and administrative expenses

 

(134,708)

 

(141,243)

Gain (loss) on securities and other investments-net

 

8,427

 

6,310

Impairment reversal (loss) of fixed assets-net

 

(305)

 

(1,695)

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

 

(97)

 

1,366

Other income (expense) -net

 

282

 

7,772

Total other income (expenses)

 

(126,401)

 

(127,490)

Finance Income (Costs):

 

 

 

 

Interest income

 

6,218

 

11,183

Dividend income

 

13,896

 

24,766

Interest expense

 

(15,433)

 

(23,760)

Total finance income (costs)

 

4,681

 

12,189

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

 

34,003

 

78,473

Profit before Income Taxes

 

101,990

 

172,403

Income Taxes

 

(35,327)

 

(37,519)

Profit for the Period

¥

66,663

¥

134,884

Profit for the Period Attributable to:

 

 

 

 

Owners of the parent

¥

62,557

¥

125,036

Non-controlling interests

 

4,106

 

9,848

Condensed Consolidated Statements of Comprehensive Income

 

 

 

(Millions of Yen)

 

Three-month

period ended

June 30, 2020

Three-month

period ended

June 30, 2019

Profit for the Period

¥

66,663

¥

134,884

Other Comprehensive Income:

 

 

 

 

Items that will not be reclassified to profit or loss:

 

 

 

 

Financial assets measured at FVTOCI

 

97,758

 

21,468

Remeasurements of defined benefit plans

 

(1,374)

 

(131)

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

 

(16,031)

 

(503)

Income tax relating to items not reclassified

 

(9,247)

 

(4,393)

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

Foreign currency translation adjustments

 

72,176

 

(33,923)

Cash flow hedges

 

3,275

 

(7,103)

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

 

(40,096)

 

(80,370)

Income tax relating to items that may be reclassified

 

(887)

 

1,550

Total other comprehensive income

 

105,574

 

(103,405)

Comprehensive Income for the Period

¥

172,237

¥

31,479

Comprehensive Income for the Period Attributable to:

 

 

 

 

Owners of the parent

¥

160,312

¥

30,648

Non-controlling interests

 

11,925

 

831

(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, 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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, 2020

¥

341,776

¥

402,652

¥

3,362,297

¥

(223,910)

¥

(65,138)

¥

3,817,677

¥

243,255

¥

4,060,932

Profit for the period

 

 

 

 

 

62,557

 

 

 

 

 

62,557

 

4,106

 

66,663

Other comprehensive income for the period

 

 

 

 

 

 

 

97,755

 

 

 

97,755

 

7,819

 

105,574

Comprehensive income for the period

 

 

 

 

 

62,557

 

97,755

 

 

 

160,312

 

11,925

 

172,237

Transaction with owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid to the owners of the parent

 

 

 

 

 

(68,301)

 

 

 

 

 

(68,301)

 

 

 

(68,301)

Dividends paid to non-controlling interest

shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,129)

 

(1,129)

Acquisition of treasury stock

 

 

 

 

 

 

 

 

 

(39,067)

 

(39,067)

 

 

 

(39,067)

Sales of treasury stock

 

 

 

(16)

 

(23)

 

 

 

39

 

0

 

 

 

0

Cancellation of treasury stock

 

 

 

 

 

(46,722)

 

 

 

46,722

 

-

 

 

 

-

Equity transactions with non-controlling

interest shareholders

 

 

 

106

 

 

 

0

 

 

 

106

 

(589)

 

(483)

Transfer to retained earnings

 

 

 

 

 

722

 

(722)

 

 

 

-

 

 

 

-

Balance as at June 30, 2020

¥

341,776

¥

402,742

¥

3,310,530

¥

(126,877)

¥

(57,444)

¥

3,870,727

¥

253,462

¥

4,124,189

(4) Condensed Consolidated Statements of Cash Flows

 

 

 

 

(Millions of Yen)

 

Three-month period ended

June 30, 2020

Three-month period ended

June 30, 2019

Operating Activities:

 

 

 

 

Profit for the period

¥

66,663

¥

134,884

Adjustments to reconcile profit for the period to cash flows

from operating activities:

 

 

 

 

Depreciation and amortization

 

63,018

 

60,537

Change in retirement benefit liabilities

 

(398)

 

367

Loss allowance

 

7,953

 

3,625

(Gain) loss on securities and other investments—net

 

(8,427)

 

(6,310)

Impairment (reversal) loss of fixed assets—net

 

305

 

1,695

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

 

97

 

(1,366)

Interest Income, dividend income and interest expense

 

(12,835)

 

(10,860)

Income taxes

 

35,327

 

37,519

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

 

(34,003)

 

(78,473)

Valuation (gain) loss related to contingent considerations and others

 

(3,656)

 

(2,809)

Changes in operating assets and liabilities:

 

 

 

 

Change in trade and other receivables

 

225,662

 

50,966

Change in inventories

 

24,209

 

(49,495)

Change in trade and other payables

 

(123,169)

 

(76,767)

Other—net

 

(89,302)

 

47,279

Interest received

 

14,923

 

11,064

Interest paid

 

(17,451)

 

(25,385)

Dividends received

 

49,339

 

75,747

Income taxes paid

 

(34,215)

 

(44,339)

Cash flows from operating activities

 

164,040

 

127,879

Investing Activities:

 

 

 

 

Net change in time deposits

 

(677)

 

(5,701)

Net change in investments in equity accounted investees

 

(2,211)

 

(23,353)

Net change in other investments

 

(148)

 

(6,282)

Net change in loan receivables

 

7,966

 

(10,446)

Net change in property, plant and equipment

 

(78,831)

 

(60,826)

Net change in investment property

 

(34,637)

 

(3,895)

Cash flows from investing activities

 

(108,538)

 

(110,503)

Financing Activities:

 

 

 

 

Net change in short-term debt

 

2,601

 

131,543

Net change in long-term debt

 

32,572

 

(31,626)

Repayments of lease liabilities

 

(15,796)

 

(13,541)

Purchases and sales of treasury stock

 

(39,067)

 

(3)

Dividends paid

 

(68,301)

 

(69,524)

Transactions with non-controlling interest shareholders

 

(250)

 

5,262

Cash flows from financing activities

 

(88,241)

 

22,111

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

15,394

 

(7,932)

Change in Cash and Cash Equivalents

 

(17,345)

 

31,555

Cash and Cash Equivalents at Beginning of Period

 

1,058,733

 

956,107

Cash and Cash Equivalents at End of Period

¥

1,041,388

¥

987,662

“Interest income, dividend income and interest expense”, “Interest received”, “Interest paid” and “Dividends received” of Condensed Consolidated Statements of Cash Flows include not only interest income, dividend income and interest expense that are included in “Finance Income (Costs)” of Condensed Consolidated Statements of Income, but also interest income, dividend income, interest expense that are included in Revenue and Cost respectively and cash flows related with them.

(5) Assumption for Going Concern: None

(6) Changes in Accounting Policies

Significant accounting policies applied in the Condensed Consolidated Financial Statements for the period ended June 30, 2020 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, 2020.

IFRS

Title

Summaries

IFRS 3

Business Combinations (amended in October 2018)

Amendment of definition of a business

Impacts from the application of IFRS 3 "Business Combinations" amended in October 2018 on the Condensed Consolidated Financial Statements are immaterial.

(7) Changes in Presentation

(Condensed Consolidated Statements of Cash Flows)

“Repayments of lease liabilities”, which was included in “Net change in long-term debt” for the three-month period ended June 2019 is separately presented from the three-month period ended June 2020 in order to indicate the calculation of Core Operating Cash Flow whose formula has been altered from April 1,2020. Condensed Consolidated Statements of Cash Flows for the three-month period ended June 2019 is reclassified to conform to this change in presentation.

As a result, the amount of ¥(45,167) million for the three-month period ended June 2019, which was presented in “Net change in long-term debt” within “Cash Flows from Financing Activities” in the Condensed Consolidated Statements of Cash Flows for the three-month period ended June 2019 has been reclassified and presented as ¥(31,626) million for “Net change in long-term debt” and as ¥(13,541) million for “Repayments of lease liabilities”.

(8) Segment Information

Three-month period ended June 30, 2020 (from April 1, 2020 to June 30, 2020)

 

 

 

 

 

 

 

 

 

(Millions of Yen)

 

Iron & Steel
Products

Mineral &
Metal
Resources

Energy

Machinery &
Infrastructure

Chemicals

Lifestyle

Innovation &
Corporate
Development

Total

Others /
Adjustments
and
Eliminations

Consolidated
Total

Revenue

57,530

281,624

174,350

242,473

273,958

442,305

47,771

1,520,011

1,757

1,521,768

Gross Profit

5,447

50,266

25,647

26,736

29,933

27,797

23,203

189,029

678

189,707

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

△1,874

13,395

5,682

17,316

914

△3,769

2,321

33,985

18

34,003

Profit (Loss)for the Period
Attributable to Owners of the parent

△1,263

32,182

3,451

18,510

6,329

△5,599

10,536

64,146

△1,589

62,557

Core Operating Cash Flow

1,589

41,860

36,426

12,926

15,673

3,589

12,732

124,795

△13,951

110,844

Total Assets at June 30, 2020

525,889

2,033,460

2,331,259

2,218,646

1,193,164

1,903,788

1,130,794

11,337,000

149,047

11,486,047

Three-month period ended June 30, 2019 (from April 1, 2019 to June 30, 2019) (As restated)

 

 

 

 

 

 

 

 

 

(Millions of Yen)

 

Iron & Steel Products

Mineral &
Metal
Resources

Energy

Machinery &
Infrastructure

Chemicals

Lifestyle

Innovation &
Corporate
Development

Total

Others /
Adjustments
and
Eliminations

Consolidated
Total

Revenue

58,099

277,919

178,500

173,156

403,695

504,802

36,636

1,632,807

313

1,633,120

Gross Profit

6,413

61,792

34,280

30,109

31,834

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

22,146

25,820

3,497

4,487

3,461

78,617

△144

78,473

Profit for the Period Attributable to
Owners of the parent

1,531

48,990

40,393

17,315

4,086

7,572

2,108

121,995

3,041

125,036

Core Operating Cash Flow

171

57,679

58,719

18,243

6,501

7,401

△2,105

146,609

△4,254

142,355

Total Assets at March 31, 2020

539,599

1,921,883

2,566,282

2,360,321

1,217,737

1,907,621

1,198,286

11,711,729

94,563

11,806,292

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, 2020 and June 30, 2020 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 ¥ 7,142,647 million and ¥ 6,987,545 million, respectively.

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

3. Profit (Loss) 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, 2020 and June 30, 2020 includes elimination of receivables and payables between segments amounting to ¥ 7,048,084 million and ¥ 6,838,498 million, respectively.

5. Formerly, Core Operating Cash Flow was 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. From the three-month period ended June 30, 2020, it is calculated by additionally deducting the “Repayments of lease liabilities” as presented in the “Cash Flows from Financing Activities”. In accordance with this change, Core Operating Cash Flow for the three-month period ended June 30, 2019 has been restated.

6. In order to accelerate our multifaceted, flexible initiatives that combine various kinds of knowledge from different business domains, the business of next-generation electric power was transferred from the “Machinery & Infrastructure” segment to the “Energy” segment, in conjunction with the creation of the Energy Solutions Business Unit in “Energy” segment, from the three-month period ended June 30, 2020. In accordance with this change, the segment information for the three-month period ended June 30, 2019 has been restated to conform to the current period presentation.

(9) 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 partially damaged tanks owned by ITC. ITC has resumed its operation after discussions with related authorities. Harris County Fire Marshal's Office released its final report with respect to the fire incident on December 6, 2019 (US time) and the report classified the fire as accidental, while not specifying the cause of the fire. The cause of the fire is still under investigation by other relevant authorities.

The profit and loss related to this incident recognized in the three-month period ended June 30, 2020 and 2019, and the outstanding balance of related provision as of June 30, 2020 are 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.

(10) Taxation on Capital Gain in India

Earlyguard Limited (“EG”), a UK subsidiary of Mitsui & Co., Ltd., received a tax payment notice dated January 21, 2020 which requested payment of 24 billion Indian Rupees (¥37 billion) from Indian tax authority.

The taxable income of this notice is the capital gain on sales of Finsider International Company Limited (a UK company that owned 51% of Sesa Goa, an Indian iron ore company) shares held by EG in April 2007. Although EG treated the capital gain properly according to the tax laws at that time, the tax payment notice has been issued.

The company does not expect a significant impact on our consolidated financial position, operating results and cash flow at this stage.

Short Name: Mitsui & Co., Ltd.
Category Code: QRF
Sequence Number: 705364
Time of Receipt (offset from UTC): 20200731T055609+0100

Contacts

Mitsui & Co Ltd

Contacts

Mitsui & Co Ltd