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Edited Transcript of 8058.T earnings conference call or presentation 8-Nov-19 5:30am GMT

Q2 2020 Mitsubishi Corp Earnings Presentation

Tokyo Nov 27, 2019 (Thomson StreetEvents) -- Edited Transcript of Mitsubishi Corp earnings conference call or presentation Friday, November 8, 2019 at 5:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Kazuyuki Masu

Mitsubishi Corporation - Executive VP, Corporate Functional Officer, CFO & Director

* Takehiko Kakiuchi

Mitsubishi Corporation - CEO, President & Representative Director

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Presentation

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Kazuyuki Masu, Mitsubishi Corporation - Executive VP, Corporate Functional Officer, CFO & Director [1]

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Hello. I am Masu, CFO. Based off the presentation that has been handed out, I would like you to refer to Page 1 in the presentation materials. There are 3 main points I'd like to highlight today: first, consolidated net income for the first 2 quarters declined by JPY 66.9 billion year-over-year to JPY 242.4 billion; second, we have revised the full year consolidated net income forecast of JPY 600 billion, announced in May, downwards to JPY 520 billion; lastly, we have revised the full year dividends per share forecast of JPY 125, announced in May, upwards by JPY 7 to JPY 132.

First, I'll explain the financial results of the fiscal 2019 first half. Please look at year-over-year fluctuation on the lower left of the page and the graph below it.

In the business-related sector, net income fell by JPY 23.6 billion. Despite rebound from one-off losses recorded in the previous year, this was mainly due to lower underlying operating income in the automotive-related business, petrochemicals business, LNG-related business and salmon farming business as well as losses on crude oil trading derivatives, recorded by a consolidated subsidiary in Singapore, as detailed in the press release.

In the market-related sector, net income fell by JPY 34.6 billion, and this was mainly due to increased production costs and declining market conditions in the Australian metallurgical coal business as well as lower business revenue due to the disposal of the thermal coal business.

As a result, consolidated net income for the first 2 quarters declined by JPY 66.9 billion year-over-year to JPY 242.4 billion.

Next, I will explain the revisions to the full year financial guidance. Please look at the revision on the forecast of the year on a lower part of the page and also the dividend information.

After considering one-off losses recorded this year as well as lower demand due to global economic slowdown and declining resource prices, we have revised the initial forecast of JPY 600 billion downward by JPY 80 billion to JPY 520 billion.

Next, we have increased the full year dividend forecast by JPY 7 to JPY 132 per share. Dividends per share will increase due to less denominator as we are planning to keep total dividend amount for the fiscal year 2018 unchanged for this fiscal year. Though, the number of shares will fall by about 6% by year-end due to share buybacks.

In summary, due to -- in part to the worsening business environment and a sluggish market, financial results for the first half were challenging with decreased net income in both business-related and market-related sector. While the business environment remains challenging during the second half, all of us will work together to advance initiatives, including replacement of existing businesses in accordance with the midterm business plan. That's all.

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Takehiko Kakiuchi, Mitsubishi Corporation - CEO, President & Representative Director [2]

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Ladies and gentlemen, thank you very much for attending our financial results briefing today.

I'd like to briefly elaborate on a few points brought up by Mr. Masu, our CFO, during his explanation of the financial results, and I would like to talk about 3 points in relationship to that.

First of all, we take it very seriously that we revised down the full year outlook. We will manage the company so as to strengthen and stabilize our existing businesses to ensure that the revised forecasts are achieved. So I'd like to briefly talk about 3 points.

One is about the one-off factors related to our consolidated subsidiary in Singapore. Due to crude oil trading derivatives, a significant loss was acknowledged and recorded. MC has paid considerable attention and have made efforts from before on establishing internal control-related discipline and systems. However, we take it very seriously that we were unable to prevent this operational problem beforehand.

After the incident has occurred within the group, we checked to see other departments that are under similar operations to check and see whether similar issues are -- have occurred or not, but we have confirmed that no similar problems exist in other businesses at all. Whatever the case may be, we will ensure that we will reinforce this as basics, and we will also ensure that we can prevent recurrences.

So my second point is related to investments. As midterm plan of the diverse L-shaped area was set forth related to digital transformation and also B2B2C was what I talked about, meaning through digital transformation, I talked about investments in these related areas. Compared to the time when we made the midterm plan announcement, we now have been looking at multiple number of candidate projects.

So we do have a long list of potential products -- projects. However, the external environment continues to be uncertain, and we believe this to continue. And in the past, we have repeatedly booked impairment losses. So we would like to ensure that we are -- don't pay too much of a premium and execute the projects at the right timing in a careful manner.

So lastly, with regards to dividends. At the time when I took my position as President, from the first midterm plan that I assumed, I talked about employing a progressive dividends policy so that for long-term shareholders, in particular, we can offer a program that is rewarding. And that is why we decided to pursue a progressive dividend policy, and we have been engaging in it steadily. We will continue to have this policy for our shareholders, and we hope to respond to your expectations by continuing on with the progressive dividend program.

That concludes my remarks with regards to the highlights of our results. Thank you.

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