Mitsui & Co., Ltd. (PNK:MITSY) Q2 2024 Earnings Call Transcript
Mitsui & Co., Ltd. (PNK:MITSY) Q2 2024 Earnings Call Transcript November 6, 2023
Kenichi Hori: Good morning, I'm Kenichi Hori, CEO. Thank you for joining us today. I will begin with an overview of the First Half Operating Results and the Full-Year Forecast. And I will then hand over to Masao Kurihara, General Manager of the Global Controller Division, who will speak on this in more detail. During the first half, the overall global economy continued to slow. Even in such an environment, Mitsui has been able to generate earnings exceeding the figures laid out in our business plan, that we announced in May, through our global business portfolio that spans across a wide range of industries. I will now summarize our operating results for the first half of this fiscal year. Core operating cash flow COCF decreased by JPY136.4 billion year-on-year to JPY475.1 billion, and profit decreased by JPY82.8 billion to JPY456.3 billion, however both made solid progress against the business plan.
In light of this progress, we revised up the full-year forecast. Compared to the business plan, we have increased our forecast for COCF by JPY90 billion to JPY960 billion and profit by JPY60 billion to JPY940 billion. Furthermore, as we were able to reconfirm the robustness in our cash flow which was enhanced through the previous Medium-term Management Plan MTMP, we have raised the full-year dividend by JPY20 per share to JPY170, which will be the new minimum level during the current MTMP, ending in fiscal year March 2026. In addition, as we made progress with several asset sales, including a large-scale one, we have decided to implement additional share repurchases of up to JPY50 billion. I will now explain our progress against the business plan.
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In the Machinery & Infrastructure segment, there was a gain on sale of the electric locomotive leasing business in Europe and good performance in the automotive business. In the Lifestyle segment a revaluation gain on previously held equity in Aim Services was recorded. These and other factors have led to these segments maintaining a high rate of progress against the business plan. In the Chemicals and Iron & Steel Products segments, the rate of progress was low due to the decrease in demand associated with the slowing of the global economy and the impact of the fall in prices. In the Energy segment, profit contribution from LNG trading and dividends will be weighted towards the second half and on a full-year basis we expect earnings to be above those set out in the business plan.
As I mentioned at the start of my presentation, we have revised up our full-year COCF forecast to JPY960 billion. Mineral & Metal Resources segment was revised up by JPY30 billion mainly due to an increase in dividends from associated companies. The Energy, Machinery & Infrastructure, and Lifestyle segments were each revised up by JPY10 billion. COCF for the company as a whole is now forecasted to be JPY90 billion higher compared to JPY870 billion in the business plan. We have also revised up our full-year profit forecast to JPY940 billion. Based on the progress in the first half, the revised forecast for Iron & Steel Products segment is lower than the business plan, whereas it is higher for the Machinery & Infrastructure, Energy, and Lifestyle segments.
COCF for the company as a whole was revised up by JPY60 billion compared to JPY880 billion in the business plan. In this section, I will discuss cash flow allocation for the first half. In the first half, we steadily made growth investments in line with the key strategic initiatives set out in the MTMP, and also had major asset sales. Cash-in for the period was JPY758 billion, comprising COCF of JPY475 billion and asset recycling of JPY283 billion. Out of the asset recycling carried out in the first half, in particular, we view the electric locomotive leasing business in Europe, MRCE, as a well-timed large-scale asset sale that will also contribute to ROIC improvement. Cash-out will be JPY771 billion, comprising investments and loans of JPY572 billion and shareholder returns of JPY199 billion.
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