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Consolidated Financial Results for the Three-Month Period Ended June 30, 2021 [IFRS]

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TOKYO, August 03, 2021--(BUSINESS WIRE)--

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

Mitsui & Co., Ltd. announced its consolidated financial results for the three-month period ended June 30, 2021, 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 : Kenichi Hori

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, 2021

(from April 1, 2021 to June 30, 2021)

Three-month period ended June 30,

2021

2020

%

%

Revenue

Millions of yen

2,658,034

44.0

1,845,373

(12.1)

Profit before income taxes

Millions of yen

256,191

151.2

101,990

(40.8)

Profit for the period

Millions of yen

200,005

200.0

66,663

(50.6)

Profit for the period attributable to owners of the parent

Millions of yen

191,264

205.7

62,557

(50.0)

Comprehensive income for the period

Millions of yen

399,150

131.7

172,237

447.1

Earnings per share attributable to owners of the parent, basic

Yen

115.74

36.92

Earnings per share attributable to owners of the parent, diluted

Yen

115.68

36.90

Note:

1. 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. As described in the Note in Condensed Consolidated Statements of Income, we have reconsidered the presentation of revenue from certain transactions, and have restated revenues for the three-month period ended June 30, 2020.

(2) Consolidated financial position information

June 30, 2021

March 31, 2021

Total assets

Millions of yen

13,105,504

12,515,845

Total equity

Millions of yen

5,065,760

4,822,887

Total equity attributable to owners of the parent

Millions of yen

4,809,796

4,570,420

Equity attributable to owners of the parent ratio

%

36.7

36.5

2. Dividend information

Year ended March 31,

Year ending March

31, 2022 (Forecast)

2022

2021

Interim dividend per share

Yen

40

45

Year-end dividend per share

Yen

45

45

Annual dividend per share

Yen

85

90

Note :

Change from the latest released dividend forecast: None

3. Forecast of consolidated operating results for the year ending March 31, 2022 (from April 1, 2021 to March 31, 2022)

Year ending

March 31, 2022

Profit attributable to owners of the parent

Millions of yen

640,000

Earnings per share attributable to owners of the parent, basic

Yen

389.73

Note :

Change from the latest released earnings forecast: Yes

4. Others

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

(2) Changes in accounting policies and accounting estimates :

(i)

Changes in accounting policies required by IFRS

None

(ii)

Other changes

None

(iii)

Changes in accounting estimates

None

(3) Number of shares :

June 30, 2021

March 31, 2021

Number of shares of common stock issued, including treasury stock

1,687,104,808

1,717,104,808

Number of shares of treasury stock

49,602,472

48,628,466

Three-month period ended

June 30, 2021

Three-month period ended

June 30, 2020

Average number of shares of common stock outstanding

1,652,601,680

1,694,434,804

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 13.

Supplementary Materials and IR Meetings on Financial Results:

Supplementary materials on financial results can be found on our web site.

We will hold an IR meeting on financial results for analysts and institutional investors on August 3, 2021.

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

2. Management Policies

11

3. Other Information

13

4. Condensed Consolidated Financial Statements

(1)

Condensed Consolidated Statements of Financial Position

14

(2)

Condensed Consolidated Statements of Income and Comprehensive Income

16

(3)

Condensed Consolidated Statements of Changes in Equity

17

(4)

Condensed Consolidated Statements of Cash Flows

18

(5)

Assumption for Going Concern

19

(6)

Segment Information

19

(7)

The Fire Incident of Intercontinental Terminals Company LLC

20

(8)

Taxation on Capital Gain in India

20

(9)

Impact of the Security Situation in Northern Mozambique on LNG Project

20

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.

As used in this report, "Mitsui" and the "Company" refer to Mitsui & Co., Ltd. (Mitsui Bussan Kabushiki Kaisha), and "we", "us", "our" and the "companies" are used to indicate Mitsui & Co., Ltd. and its subsidiaries, unless otherwise indicated.

(1) Operating Environment

In the three-month period ended June 30, 2021, the global economy continued to rebound, with the U.S. and China leading the overall trend.

In the U.S., the pace of growth increased, especially in consumption, benefiting from large-scale economic stimulus measures and progress in vaccination. It is expected that the effects of the economic resumption will run their course in the second half of the year, but that corporate capital investment will recover and that the recovery will continue to be supported by robust consumption. In Europe, progress in vaccination and the easing of restrictions on activities led to a recovery in consumption. The economic recovery is expected to strengthen in the second half of the year, partly due to allocations from the European Recovery Fund. In Japan, although exports continued to recover, consumption weakened against the backdrop of intermittent declarations of a state of emergency, which weighed on the economic recovery. However, the economy is expected to rebound from autumn onwards due to progress in vaccination and recovery in capital investment. In China, the recovery continued to be supported by exports and investment. In the future, the special demand for Chinese products in exports is expected to fade away, and the growth of investment is expected to slow down due to the government’s restraint measures. Nevertheless, moderate growth is expected to continue overall. In Russia and Brazil, exports are expected to increase against the backdrop of rising prices for resources, energy, and food.

Going forward, it is expected that, while China and the U.S., which have already recovered to the level before the spread of COVID-19 will continue to lead the global economic recovery although the pace of growth will slow down, Europe and Japan are also expected to return to a recovery track in the second half of the year due to progress in vaccination. Japan is expected to return to its pre-COVID-19 level by the end of this year, and Europe by the first half of next year.

(2) Results of Operations

1) Analysis of Consolidated Income Statements

(Billions of Yen)

Current Period

Previous Period

Change

Revenue

2,658.0

1,845.4

+812.6

Gross profit

268.2

189.7

+78.5

Selling, general and administrative expenses

(138.6)

(134.7)

(3.9)

Other Income (Expenses)

Gain (Loss) on Securities and Other Investments—Net

(4.7)

8.4

(13.1)

Impairment Reversal (Loss) of Fixed Assets—Net

0.2

(0.3)

+0.5

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

1.7

(0.1)

+1.8

Other Income (Expense)—Net

8.9

0.3

+8.6

Finance Income (Costs)

Interest Income

4.7

6.2

(1.5)

Dividend Income

33.7

13.9

+19.8

Interest Expense

(14.4)

(15.4)

+1.0

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

96.4

34.0

+62.4

Income Taxes

(56.2)

(35.3)

(20.9)

Profit for the Period

200.0

66.7

+133.3

Profit for the Period Attributable to Owners of the Parent

191.3

62.6

+128.7

* 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, 2021 ("current period") was ¥2,658.0 billion, an increase of ¥812.6 billion from ¥1,845.4 billion for the corresponding three-month period of the previous year ("previous period").

* The figure for the previous period has been restated to conform to the presentation for the current period. This restatement has no impact on gross profit, profit for the period attributable to owners of the parent, or total equity attributable to owners of the parent. For further details, please refer to "4. Condensed Consolidated Financial Statements (2) Condensed Consolidated Statements of Income and Comprehensive Income".

Gross Profit

Mainly the Mineral & Metal Resources Segment, the Chemical Segment and the Innovation & Corporate Development Segment recorded an increase while the Energy Segment recorded a decrease.

Selling, General and Administrative Expenses

Overall selling, general and administrative expenses recorded an increase while the Mineral & Metal Resources Segment recorded a decrease. The table provides a breakdown of selling, general and administrative expenses.

Billions of Yen

Current Period

Previous Period

Change

Personnel

¥

(76.8)

¥

(72.3)

¥

(4.5)

Welfare

(2.8)

(2.2)

(0.6)

Travel

(2.2)

(1.4)

(0.8)

Entertainment

(0.5)

(0.4)

(0.1)

Communication

(11.9)

(11.2)

(0.7)

Rent

(2.6)

(2.2)

(0.4)

Depreciation

(8.2)

(9.8)

+1.6

Fees and Taxes

(3.0)

(2.8)

(0.2)

Loss Allowance

(5.1)

(8.0)

+2.9

Others

(25.5)

(24.4)

(1.1)

Total

¥

(138.6)

¥

(134.7)

¥

(3.9)

Other Income (Expenses)

Gain (Loss) on Securities and Other Investments—Net

For the previous period, a gain on sale of securities was recorded in the Machinery & Infrastructure Segment.

Other Income (Expense)—Net

Mainly the Energy Segment recorded a decrease.

Finance Income (Costs)

Dividend Income

Mainly the Mineral & Metal Resources Segment and the Energy Segment recorded an increase.

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

Mainly the Mineral & Metal Resources Segment, the Lifestyle Segment and the Machinery & Infrastructure Segment recorded an increase.

Income Taxes

Income taxes for the current period were ¥56.2 billion, an increase of ¥20.9 billion from ¥35.3 billion for the previous period. The effective tax rate for the current period was 21.9%, a decline of 12.7 points from 34.6% for the previous period. The major factors for the decline were unrecognized tax effect in respect to a part of increase in the "Share of Profit (Loss) of Investments Accounted for Using the Equity Method" and a decrease in proportion of tax burden out of resource-related high rate taxes in the Energy Segment.

Profit for the Period Attributable to Owners of the Parent

As a result, profit for the period attributable to owners of the parent was ¥191.3 billion, an increase of ¥128.7 billion from the previous period.

2) Operating Results by Operating Segment

The fluctuation analysis for the results by operating segment is below.

The description order of reporting segments has been changed in the segment information from the current period and this change also applies for the previous period.

Mineral & Metal Resources Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

119.0

32.2

+86.8

Gross profit

106.8

50.3

+56.5

Profit (loss) of equity method investments

31.8

13.4

+18.4

Dividend income

21.7

2.5

+19.2

Selling, general and administrative expenses

(7.4)

(10.4)

+3.0

Others

(33.9)

(23.6)

(10.3)

・ Gross profit increased mainly due to the following factors:

- Iron ore mining operations in Australia recorded an increase of ¥51.2 billion mainly due to higher sales prices.

- Coal mining operations in Australia recorded an increase of ¥3.4 billion mainly due to higher sales prices and a reduction in operating costs.

・ Profit (loss) of equity method investments increased mainly due to the following factors:

- Iron ore mining operations in Australia recorded an increase of ¥8.2 billion mainly due to higher sales prices.

- Compañía Minera Doña Inés de Collahuasi SCM, a copper mining company in Chile, recorded an increase of ¥5.2 billion mainly due to higher sales prices.

・ Dividend income increased mainly due to higher dividends from Vale S.A. and iron ore mining operations in Australia.

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

- For the previous period, an impairment loss of ¥4.1 billion for doubtful debts was recorded regarding the Moatize mine business in Mozambique following the revisions to our various assumptions.

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

- For the current period, a reversal of deferred tax liability of ¥6.2 billion was recorded related to the reorganization of Japan Collahuasi Resources B.V., which invested in Compañía Minera Doña Inés de Collahuasi SCM, a copper mining company in Chile.

Energy Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

(1.2)

3.5

(4.7)

Gross profit

18.0

25.6

(7.6)

Profit (loss) of equity method investments

6.5

5.7

+0.8

Dividend income

4.1

2.1

+2.0

Selling, general and administrative expenses

(12.3)

(11.1)

(1.2)

Others

(17.5)

(18.8)

+1.3

・ Gross profit decreased mainly due to the following factors:

- Business division at the Headquarters recorded a decrease mainly due to less profit related to LNG trading business.

- Mitsui & Co. Energy Trading Singapore Pte. Ltd. recorded a decrease of ¥6.8 billion mainly due to a swing-back effect following the good trading performance in the previous period.

- Mitsui E&P Middle East B.V. recorded a decrease of ¥4.1 billion mainly due to a decline in production.

- Mitsui E&P USA LLC recorded an increase of ¥3.8 billion mainly due to a higher gas price.

・ Dividends from six LNG projects (Sakhalin II, Qatargas 1, Abu Dhabi, Oman, Qatargas 3 and Equatorial Guinea) were ¥4.0 billion in total, an increase of ¥2.0 billion from the previous period.

・ Others increased mainly due to the absence of a one-time loss in the previous period, while there was a decrease of ¥3.0 billion due to derivative-related profit and loss in MOEX North America LLC.

Machinery & Infrastructure Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

29.2

18.5

+10.7

Gross profit

32.0

26.7

+5.3

Profit (loss) of equity method investments

28.7

17.3

+11.4

Dividend income

1.4

1.6

(0.2)

Selling, general and administrative expenses

(31.2)

(29.2)

(2.0)

Others

(1.7)

2.1

(3.8)

・ Profit (loss) of equity method investments increased mainly due to the following factors:

- For the current period, MBK USA Commercial Vehicles Inc. recorded an increase of ¥4.7 billion due to good performance in the truck leasing and rental business.

- For the current period, a gain was recorded at an automobile company in Canada due to steady sales results.

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

- For the previous period, a gain on sale of the 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

15.9

6.3

+9.6

Gross profit

44.9

29.9

+15.0

Profit (loss) of equity method investments

3.9

0.9

+3.0

Dividend income

1.3

1.1

+0.2

Selling, general and administrative expenses

(27.4)

(23.4)

(4.0)

Others

(6.8)

(2.2)

(4.6)

・ Gross profit increased mainly due to the following factor:

- European agrochemical company, Belchim Crop Protection NV/SA has been consolidated from the current period.

Iron & Steel Products Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

6.7

(1.3)

+8.0

Gross profit

7.9

5.4

+2.5

Profit (loss) of equity method investments

5.8

(1.9)

+7.7

Dividend income

0.5

0.7

(0.2)

Selling, general and administrative expenses

(6.0)

(5.6)

(0.4)

Others

(1.5)

0.1

(1.6)

Lifestyle Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

13.9

(5.6)

+19.5

Gross profit

34.6

27.8

+6.8

Profit (loss) of equity method investments

13.9

(3.8)

+17.7

Dividend income

2.2

2.2

0

Selling, general and administrative expenses

(32.1)

(31.7)

(0.4)

Others

(4.7)

(0.1)

(4.6)

・ Profit (loss) of equity method investments increased mainly due to the following factors:

- WILSEY FOODS INC. recorded an increase of ¥5.3 billion due to the good performance of Ventura Foods LLC, a U.S. manufacturer of processed oil food, reflecting higher soybean oil prices and recovery in demand for food service.

- IHH Healthcare Berhad recorded an increase of ¥5.1 billion due to the absence of an impairment loss of goodwill over subsidiary in India and the effect of the COVID-19 pandemic for the previous period, and an operation improvement and increased demand for COVID-19 related services for the current period.

- For the current period, PHC Holdings Corporation recorded an increase due to a gain on valuation for convertible bonds and good sales performance of COVID-19 related products.

Innovation & Corporate Development Segment

(Billions of Yen)

Current Period

Previous Period

Change

Profit for the period attributable to owners of the parent

10.4

10.5

(0.1)

Gross profit

23.8

23.2

+0.6

Profit (loss) of equity method investments

5.8

2.3

+3.5

Dividend income

2.0

3.1

(1.1)

Selling, general and administrative expenses

(17.2)

(16.1)

(1.1)

Others

(4.0)

(2.0)

(2.0)

・ Gross profit increased mainly due to the following factor:

- For the current period, a gain of ¥3.5 billion in the valuation of fair value was recorded following the public listing of Proterra Inc.

(3) Financial Condition and Cash Flows

1) Financial Condition

(Billions of yen)

June 30, 2021

March 31, 2021

Change

Total Assets

13,105.5

12,515.8

+589.7

Current Assets

4,447.7

4,207.5

+240.2

Non-current Assets

8,657.8

8,308.4

+349.4

Current Liabilities

2,990.4

2,701.7

+288.7

Non-current Liabilities

5,049.4

4,991.2

+58.2

Net Interest-bearing Debt

3,396.2

3,299.8

+96.4

Total Equity Attributable to Owners of the Parent

4,809.8

4,570.4

+239.4

Net Debt-to-Equity Ratio (times)

0.71

0.72

(0.01)

Assets

Current Assets:

・ Cash and cash equivalents declined by ¥87.6 billion.

・ Trade and other receivables increased by ¥62.9 billion, mainly due to the following factors:

- An increase in trade receivables by ¥110.3 billion, mainly due to an increase in trading volume in the Energy Segment, and due to higher market price and the increase in trading volume as well as consolidation of European agrochemical company, Belchim Crop Protection NV/SA in the Chemicals Segment; and

- A decrease in the current portion of long-term receivables by ¥53.9 billion, mainly due to loan collection of ¥57.6 billion in the copper business.

・ Other financial assets increased by ¥134.8 billion, mainly due to market fluctuation and increases in trading volume of derivative trading in the Innovation & Corporate Development Segment and the Lifestyle Segment.

・ Inventories increased by ¥103.6 billion, mainly due to consolidation of European agrochemical company, Belchim Crop Protection NV/SA in the Chemicals Segment, and due to market fluctuation and increases in trading volume in the Innovation & Corporate Development Segment and the Lifestyle Segment.

Non-current Assets:

・ Investments accounted for using the equity method increased by ¥43.3 billion, mainly due to the following factors:

- An increase of ¥25.6 billion resulting from foreign currency exchange fluctuations;

- An increase of ¥12.1 billion due to an investment in Mitsui E&P Mozambique Area 1 Limited, which participates in the Mozambique LNG Project; and

- An increase of ¥96.4 billion corresponding to the profit of equity method investments for the current year, despite a decline of ¥101.2 billion due to dividends from equity accounted investees.

・ Other investments increased by ¥301.6 billion, mainly due to the following factors:

- As a result of higher share prices, fair value on financial assets measured at FVTOCI increased by ¥223.1 billion; and

- As a result of subscription to convertible bonds of PT CT Corpora, the holding company for CT Corp., for ¥67.0 billion.

・ Property, plant and equipment decreased by ¥43.2 billion, mainly due to the following factors:

- A decline of ¥23.8 billion (including foreign exchange translation loss of ¥1.0 billion) at the oil and gas projects;

- A decline of ¥21.6 billion due to reclassification of agricultural land owned by XINGU AGRI AG to Investment property, upon conclusion of lease contracts;

- A decline of ¥11.1 billion due to sale of assets by MyPower Corp, a company engaged in the power generating business; and

- An increase by ¥12.6 billion due to acquiring ships on lease for LNG transportation.

・ Investment property increased by ¥34.5 billion, mainly due to the following factors:

- An increase by ¥21.6 billion due to reclassification of agricultural land owned by XINGU AGRI AG from Property, plant and equipment, upon conclusion of lease contracts; and;

- An increase by ¥12.0 billion due to completion of construction at Hibiya Fort Tower, redeveloped by Mitsui & Co. Real Estate Ltd.

・ Intangible assets increased by ¥29.8 billion, mainly due to consolidation of European agrochemical company, Belchim Crop Protection NV/SA.

Liabilities

Current Liabilities:

・ Short-term debt increased by ¥67.4 billion mainly due to consolidation of European agrochemical company, Belchim Crop Protection NV/SA.

・ Trade and other payables increased by ¥99.2 billion, corresponding to the increase in trade and other receivables.

・ Other financial liabilities increased by ¥83.5 billion, mainly due to corresponding increase in other financial assets.

Non-current Liabilities:

・ Deferred tax liabilities increased by ¥70.8 billion, mainly due to corresponding increase in financial assets measured at FVTOCI.

Total Equity Attributable to Owners of the Parent

・ Retained earnings increased by ¥63.3 billion.

・ Other components of equity increased by ¥194.8 billion, mainly due to the following factors:

- Financial assets measured at FVTOCI increased by ¥157.4 billion; and

- Foreign currency translation adjustments increased by ¥21.5 billion, mainly reflecting the appreciation of the Brazilian real against the Japanese yen, even though the Australian dollar has depreciated.

・ Treasury stock which is a subtraction item in shareholders' equity increased by ¥19.3 billion, mainly due to the shares buy-back for ¥74.7 billion, despite cancellation of the stock for ¥55.4 billion.

2) Cash Flows

(Billions of yen)

Current Period

Previous Period

Change

Cash flows from operating activities

179.3

164.0

+15.3

Cash flows from investing activities

(92.5)

(108.5)

+16.0

Free cash flow

86.8

55.5

+31.3

Cash flows from financing activities

(172.3)

(88.2)

(84.1)

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

(2.1)

15.4

(17.5)

Change in cash and cash equivalents

(87.6)

(17.3)

(70.3)

Cash Flows from Operating Activities

(Billions of Yen)

Current Period

Previous Period

Change

Cash flows from operating activities

a

179.3

164.0

+15.3

Cash flows from change in working capital

b

(103.9)

37.4

(141.3)

Repayments of lease liabilities

c

(13.3)

(15.8)

+2.5

Core Operating Cash Flow

a-b+c

269.9

110.8

+159.1

・ Net cash from an increase or a decrease in working capital, or changes in operating assets and liabilities for the current year was ¥103.9 billion of net cash outflow. Repayments of lease liabilities for the current period was ¥13.3 billion of cash outflow. Core Operating Cash Flow, which equaled cash flows from operating activities without both cash flows from changes in working capital and repayments of lease liabilities, for the current period amounted to ¥269.9 billion.

- Net cash inflow from dividend income, including dividends received from equity accounted investees, for the current period totaled ¥118.5 billion, an increase of ¥69.2 billion from ¥49.3 billion for the previous period; and

- Depreciation and amortization for the current period was ¥73.9 billion, an increase of ¥10.9 billion from ¥63.0 billion for the previous period.

The following table shows Core Operating Cash Flow by operating segment.

(Billions of Yen)

Current Period

Previous Period

Change

Mineral & Metal Resources

127.4

41.9

+85.5

Energy

47.2

36.4

+10.8

Machinery & Infrastructure

38.0

12.9

+25.1

Chemicals

24.5

15.7

+8.8

Iron & Steel Products

3.8

1.6

+2.2

Lifestyle

16.6

3.6

+13.0

Innovation & Corporate Development

12.1

12.7

(0.6)

All Other and Adjustments and Eliminations

0.3

(14.0)

+14.3

Consolidated Total

269.9

110.8

+159.1

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 ¥17.0 billion, mainly due to the following factor:

- An investment in Mitsui E&P Mozambique Area 1 Limited, which participates in the Mozambique LNG Project, for ¥12.1 billion.

・ Net cash outflows that corresponded to other investments (net of sales and maturities of other investments) were ¥58.2 billion, mainly due to the following factor:

- A subscription to convertible bonds of PT CT Corpora, the holding company for CT Corp, for ¥67.0 billion(Net amount of ¥100.0 billion for subscription to convertible bonds and ¥33.0 billion from redemption of corporate bonds).

・ Net cash inflows that corresponded to an increase in loan receivables (net of collections of loan receivables) were ¥58.3 billion, mainly due to loan collection of ¥57.6 billion in the copper business.

・ Net cash outflows that corresponded to purchases of property, plant, and equipment (net of sales of those assets) were ¥37.5 billion, mainly due to the following factors:

- An expenditure for iron ore mining operations in Australia for ¥13.1 billion; and

- An expenditure for the oil and gas projects for ¥10.1 billion.

Cash Flows from Financing Activities

・ Net cash inflow from net change in short-term debt was ¥34.5 billion, net cash outflow from net change in long-term debt was ¥32.9 billion, and cash outflow from repayments of lease liabilities was ¥13.3 billion.

・ The cash outflow from the purchases of treasury stock was ¥74.7 billion.

・ The cash outflow from payments of cash dividends was ¥75.1 billion.

2. Management Policies

(1) Forecasts for the Year Ending March 31, 2022

(Billions of yen)

March 31, 2022

Revised Forecast

March 31, 2022

Original Forecast

Increase /

(Decrease)

Description

Gross Profit

980.0

820.0

+160.0

Mineral & Metal Resources, Energy

Selling, General and Administrative Expenses

(590.0)

(590.0)

Gain (Loss) on Investments, Fixed Assets and Other

0.0

0.0

Interest Expenses

(30.0)

(30.0)

Dividend Income

160.0

120.0

+40.0

Mineral & Metal Resources, Energy

Profit (Loss) of Equity Method Investments

310.0

280.0

+30.0

Mineral & Metal Resources, Energy

Profit before Income Taxes

830.0

600.0

+230.0

Income Taxes

(170.0)

(130.0)

(40.0)

Mineral & Metal Resources, Energy

Non-Controlling Interests

(20.0)

(10.0)

(10.0)

Profit for the Year Attributable to Owners of the Parent

640.0

460.0

+180.0

Depreciation and Amortization

300.0

300.0

Core Operating Cash Flow

900.0

680.0

+220.0

・ Following the favorable commodity market, the Mineral & Metal Resources Segment and the Energy Segment have been revised up.

The revised forecast for Profit for the Year Attributable to Owners of the Parent by operating segment compared to the original forecast is as follows:

(Billions of yen)

March 31, 2022

Revised Forecast

March 31, 2022

Original Forecast

Increase /

(Decrease)

Description

Mineral & Metal Resources

420.0

260.0

+160.0

Steady iron ore, copper and coal prices

Energy

70.0

50.0

+20.0

Steady oil and gas prices

Machinery & Infrastructure

80.0

80.0

Chemicals

40.0

40.0

Iron & Steel Products

10.0

10.0

Lifestyle

20.0

20.0

Innovation & Corporate Development

30.0

30.0

Others / Adjustments

and Eliminations

(30.0)

(30.0)

Consolidated Total

640.0

460.0

+180.0

The revised forecast for Core Operating Cash Flow by operating segment compared to the original forecast is as follows:

(Billions of yen)

March 31, 2022

Revised Forecast

March 31, 2022

Original Forecast

Increase /

(Decrease)

Description

Mineral & Metal Resources

480.0

290.0

+190.0

Steady iron ore, copper and coal prices

Energy

200.0

170.0

+30.0

Steady oil and gas prices

Machinery & Infrastructure

100.0

100.0

Chemicals

55.0

55.0

Iron & Steel Products

5.0

5.0

Lifestyle

30.0

30.0

Innovation & Corporate Development

30.0

30.0

Others / Adjustments

and Eliminations

0.0

0.0

Consolidated Total

900.0

680.0

+220.0

(2) Profit Distribution Policy

Our profit distribution policy is as follows:

・ In order to increase corporate value and maximize shareholder value, we seek to maintain an optimal balance between (a) meeting investment demand in our core and growth areas through re-investments of our retained earnings, and (b) directly providing returns to shareholders by paying out cash dividends.

・ In addition to the above, share buy-backs aimed at improving capital efficiency should be decided in a prompt and flexible manner as needed concerning buy-back timing and amount by taking into consideration the business environment such as, future investment activity trends, free cash flow and interest-bearing debt levels, and return on equity.

For the current period, we had repurchased our own stock for ¥24.6 billion from April 1 to April 26, 2021 and ¥50.0 billion from May 6 to June 23, 2021 following the announcements "Notification of Stock Repurchase" on February 24, 2021 and April 30, 2021. Furthermore, on August 3, 2021, we announced a new buy-back program up to ¥50.0 billion of our own shares from August 4, 2021 to October 29, 2021. For details, please refer to the "Notification of Stock Repurchase and Cancellation of Treasury Stock" on our website.

We will continue to flexibly and strategically allocate funds for investment in growth and additional shareholder returns (additional dividends and share buy-backs) according to the business performance during the Medium-term Management Plan period.

For the fiscal year ending March 31, 2022, we plan to pay an annual dividend of ¥90 per share (an increase of ¥5 from the previous fiscal year).

3. 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) business investment risks, (2) country risks, (3) risks regarding climate changes, (4) commodity market risks, (5) foreign currency risks, (6) stock price risks of listed stock Mitsui and its subsidiaries hold, (7) credit risks, (8) risks regarding fund procurement, (9) operational risks, (10) risks regarding employee’s compliance with laws, regulations, and internal policies, (11) risks regarding information systems and information securities, (12) risks relating to natural disasters, terrorism, violent groups and infectious diseases. 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.

4. Condensed Consolidated Financial Statements

(1) Condensed Consolidated Statements of Financial Position

(Millions of Yen)

Assets

June 30,

2021

March 31,

2021

Current Assets:

Cash and cash equivalents

¥

975,517

¥

1,063,150

Trade and other receivables

1,874,887

1,811,990

Other financial assets

564,817

429,986

Inventories

718,763

615,155

Advance payments to suppliers

154,465

143,714

Other current assets

159,219

143,477

Total current assets

4,447,668

4,207,472

Non-current Assets:

Investments accounted for using the equity method

3,087,342

3,044,001

Other investments

2,257,174

1,955,607

Trade and other receivables

297,915

305,952

Other financial assets

147,771

141,848

Property, plant and equipment

2,131,870

2,175,072

Investment property

309,322

274,847

Intangible assets

218,358

188,555

Deferred tax assets

103,236

112,055

Other non-current assets

104,848

110,436

Total non-current assets

8,657,836

8,308,373

Total

¥

13,105,504

¥

12,515,845

(Millions of Yen)

Liabilities and Equity

June 30,

2021

March 31,

2021

Current Liabilities:

Short-term debt

¥

367,938

¥

300,485

Current portion of long-term debt

443,302

450,941

Trade and other payables

1,412,542

1,313,341

Other financial liabilities

454,791

371,298

Income tax payables

74,304

58,915

Advances from customers

138,701

123,806

Provisions

40,697

36,909

Other current liabilities

58,117

46,027

Total current liabilities

2,990,392

...

Non-current Liabilities:

Long-term debt, less current portion

3,991,586

3,995,311

Other financial liabilities

110,544

116,531

Retirement benefit liabilities

39,182

40,253

Provisions

259,997

261,365

Deferred tax liabilities

621,605

550,776

Other non-current liabilities

26,438

27,000

Total non-current liabilities

5,049,352

4,991,236

Total liabilities

8,039,744

7,692,958

Equity:

Common stock

342,080

342,080

Capital surplus

396,816

396,238

Retained earnings

3,611,078

3,547,789

Other components of equity

568,572

373,786

Treasury stock

(108,750)

(89,473)

Total equity attributable to owners of the parent

4,809,796

4,570,420

Non-controlling interests

255,964

252,467

Total equity

5,065,760

4,822,887

Total

¥

13,105,504

¥

12,515,845

(2) Condensed Consolidated Statements of Income and Comprehensive Income

Condensed Consolidated Statements of Income

(Millions of Yen)

Three-month

period ended

June 30, 2021

Three-month

period ended

June 30, 2020

(As restated)

Revenue

¥

2,658,034

¥

1,845,373

Cost

(2,389,797)

(1,655,666)

Gross Profit

268,237

189,707

Other Income (Expenses):

Selling, general and administrative expenses

(138,599)

(134,708)

Gain (loss) on securities and other investments-net

(4,669)

8,427

Impairment reversal (loss) of fixed assets-net

213

(305)

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

1,680

(97)

Other income (expense) -net

8,924

282

Total other income (expenses)

(132,451)

(126,401)

Finance Income (Costs):

Interest income

4,658

6,218

Dividend income

33,692

13,896

Interest expense

(14,390)

(15,433)

Total finance income (costs)

23,960

4,681

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

96,445

34,003

Profit before Income Taxes

256,191

101,990

Income Taxes

(56,186)

(35,327)

Profit for the Period

¥

200,005

¥

66,663

Profit for the Period Attributable to:

Owners of the parent

¥

191,264

¥

62,557

Non-controlling interests

8,741

4,106

(Note)

Considering the presentation of revenue in the condensed consolidated statement of income in more detail in accordance with IFRS 15 "Revenue from Contracts with Customers", we have presented the "revenue" and corresponding "cost" of certain transactions in gross amounts for the three-month period ended June 30, 2021. Those amounts for the three-month period ended June 30, 2020 have also been restated to conform to the presentation for the three-month period ended June 30, 2021. This restatement has no impact on gross profit, profit for the period attributable to owners of the parent, or total equity attributable to owners of the parent.

Condensed Consolidated Statements of Comprehensive Income

(Millions of Yen)

Three-month

period ended

June 30, 2021

Three-month

period ended

June 30, 2020

Profit for the Period

¥

200,005

¥

66,663

Other Comprehensive Income:

Items that will not be reclassified to profit or loss:

Financial assets measured at FVTOCI

225,395

97,758

Remeasurements of defined benefit plans

300

(1,374)

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

2,156

(16,031)

Income tax relating to items not reclassified

(67,714)

(9,247)

Items that may be reclassified subsequently to profit or loss:

Foreign currency translation adjustments

(300)

72,176

Cash flow hedges

(6,834)

3,275

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

51,955

(40,096)

Income tax relating to items that may be reclassified

(5,813)

(887)

Total other comprehensive income

199,145

105,574

Comprehensive Income for the Period

¥

399,150

¥

172,237

Comprehensive Income for the Period Attributable to:

Owners of the parent

¥

388,605

¥

160,312

Non-controlling interests

10,545

11,925

(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, 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

(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, 2021

¥

342,080

¥

396,238

¥

3,547,789

¥

373,786

¥

(89,473)

¥

4,570,420

¥

252,467

¥

4,822,887

Profit for the period

191,264

191,264

8,741

200,005

Other comprehensive income for the period

197,341

197,341

1,804

199,145

Comprehensive income for the period

191,264

197,341

388,605

10,545

399,150

Transaction with owners:

Dividends paid to the owners of the parent

(75,083)

(75,083)

(75,083)

Dividends paid to non-controlling interest

shareholders

(10,962)

(10,962)

Acquisition of treasury stock

(74,725)

(74,725)

(74,725)

Sales of treasury stock

(11)

(14)

25

0

0

Cancellation of treasury stock

(55,423)

55,423

-

-

Compensation costs related to share-based payment

448

448

448

Equity transactions with non-controlling

interest shareholders

141

(10)

131

3,914

4,045

Transfer to retained earnings

2,545

(2,545)

-

-

Balance as at June 30, 2021

¥

342,080

¥

396,816

¥

3,611,078

¥

568,572

¥

(108,750)

¥

4,809,796

¥

255,964

¥

5,065,760

(4) Condensed Consolidated Statements of Cash Flows

(Millions of Yen)

Three-month period ended

June 30, 2021

Three-month period ended

June 30, 2020

Operating Activities:

Profit for the period

¥

200,005

¥

66,663

Adjustments to reconcile profit for the period to cash flows

from operating activities:

Depreciation and amortization

73,885

63,018

Change in retirement benefit liabilities

889

(398)

Loss allowance

5,052

7,953

(Gain) loss on securities and other investments-net

4,669

(8,427)

Impairment (reversal) loss of fixed assets-net

(213)

305

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

(1,680)

97

Interest income, dividend income and interest expense

(31,382)

(12,835)

Income taxes

56,186

35,327

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

(96,445)

(34,003)

Valuation (gain) loss related to contingent considerations and others

303

(3,656)

Changes in operating assets and liabilities:

Change in trade and other receivables

(86,278)

225,662

Change in inventories

(84,175)

24,209

Change in trade and other payables

71,394

(123,169)

Other-net

(4,826)

(89,302)

Interest received

13,145

14,923

Interest paid

(14,994)

(17,451)

Dividends received

118,508

49,339

Income taxes paid

(44,736)

(34,215)

Cash flows from operating activities

179,307

164,040

Investing Activities:

Net change in time deposits

(35,600)

(677)

Net change in investments in equity accounted investees

(16,968)

(2,211)

Net change in other investments

(58,229)

(148)

Net change in loan receivables

58,285

7,966

Net change in property, plant and equipment

(37,466)

(78,831)

Net change in investment property

(2,545)

(34,637)

Cash flows from investing activities

(92,523)

(108,538)

Financing Activities:

Net change in short-term debt

34,540

2,601

Net change in long-term debt

(32,875)

32,572

Repayments of lease liabilities

(13,336)

(15,796)

Purchases and sales of treasury stock

(74,725)

(39,067)

Dividends paid

(75,083)

(68,301)

Transactions with non-controlling interest shareholders

(10,775)

(250)

Cash flows from financing activities

(172,254)

(88,241)

Effect of Exchange Rate Changes on Cash and Cash Equivalents

(2,163)

15,394

Change in Cash and Cash Equivalents

(87,633)

(17,345)

Cash and Cash Equivalents at Beginning of Period

1,063,150

1,058,733

Cash and Cash Equivalents at End of Period

¥

975,517

¥

1,041,388

"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) Segment Information

Three-month period ended June 30, 2021 (from April 1, 2021 to June 30, 2021)

(Millions of Yen)

Mineral & Metal Resources

Energy

Machinery & Infrastructure

Chemicals

Iron & Steel Products

Lifestyle

Innovation & Corporate Development

Total

Others / Adjustments and Eliminations

Consolidated Total

Revenue

469,926

558,696

172,241

664,439

139,521

601,781

50,607

2,657,211

823

2,658,034

Gross Profit

106,833

17,967

31,993

44,881

7,944

34,649

23,784

268,051

186

268,237

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

31,804

6,463

28,720

3,890

5,822

13,932

5,808

96,439

6

96,445

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

118,975

△1,243

29,241

15,865

6,654

13,858

10,401

193,751

△2,487

191,264

Core Operating Cash Flow

127,425

47,249

38,033

24,542

3,827

16,594

12,074

269,744

112

269,856

Total Assets at June 30, 2021

2,684,839

2,662,525

2,339,150

1,449,941

585,482

2,130,630

1,328,257

13,180,824

△75,320

13,105,504

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

(Millions of Yen)

Mineral & Metal Resources

Energy

Machinery & Infrastructure

Chemicals

Iron & Steel Products

Lifestyle

Innovation & Corporate Development

Total

Others / Adjustments and Eliminations

Consolidated Total

Revenue

299,926

174,551

262,628

403,997

102,368

552,374

47,771

1,843,615

1,758

1,845,373

Gross Profit

50,266

25,647

26,736

29,933

5,447

27,797

23,203

189,029

678

189,707

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

13,395

5,682

17,316

914

△1,874

△3,769

2,321

33,985

18

34,003

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

32,182

3,451

18,510

6,329

△1,263

△5,599

10,536

64,146

△1,589

62,557

Core Operating Cash Flow

41,860

36,426

12,926

15,673

1,589

3,589

12,732

124,795

△13,951

110,844

Total Assets at March 31, 2021

2,566,491

2,566,305

2,291,278

1,345,469

566,020

2,009,315

1,191,842

12,536,720

△20,875

12,515,845

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, 2021 and June 30, 2021 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 ¥ 7,202,925 million and ¥ 7,098,166 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, 2021 and June 30, 2021 includes elimination of receivables and payables between segments amounting to ¥ 7,223,800 million and ¥ 7,173,486 million, respectively.

5.

Core Operating Cash Flow is calculated by deducting the total of the "Changes in Operating Assets and Liabilities" from the "Cash Flows from Operating Activities", and further deducting the "Repayments of lease liabilities" in the "Cash Flows from Financing Activities" from it, in the Condensed Consolidated Statements of Cash Flows.

6.

The description order of reporting segments has been changed in the segment information from the three-month period ended June 30, 2021, and this change also applies for three-month period ended June 30, 2020.

7.

As described in the Note in Condensed Consolidated Statements of Income, we have reconsidered the presentation of revenue from certain transactions, and have restated revenues for three-month period ended June 30, 2020, based on the results of the reconsideration.

(7) 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, 2021 and 2020, and the outstanding balance of related provision as of June 30, 2021 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.

(8) 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 24.0 billion Indian Rupees (¥36.0 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. On February 17, 2021, EG commenced arbitration under the UK-India bilateral investment treaty in order to dispute this tax payment notice.

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

(9) Impact of the Security Situation in Northern Mozambique on LNG Project

The Company participates in the Mozambique LNG Project through Mitsui E&P Mozambique Area 1 Limited, its joint venture in the Energy Segment. In April 2021, all project personnel evacuated the project site due to the deteriorating security situation in northern Mozambique where the project site is located, and on April 26, the project operator, TotalEnergies SE of France, announced that it had declared force majeure under the Joint Operating Agreement.

While the prospect of this project is still under examination, the company do not expect a significant impact on our consolidated financial position, operating results and cash flow at this stage.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210803005450/en/

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Mitsui & Co Ltd

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