Mitsubishi Chemical : The First Quater (Aug. 4, 2021)

August 4, 2021

Consolidated Financial Results

for the First Quarter of the Fiscal Year Ending March 31, 2022

(Under IFRS)

Company name:	Mitsubishi Chemical Holdings Corporation	Listing:	Tokyo Stock Exchange
Securities code:	4188	URL: https://www.mitsubishichem-hd.co.jp/english
Representative:	Jean-Marc Gilson
	Representative Corporate Executive Officer, President&Chief Executive Officer
Contact:	Osamu Shimizu			TEL: [+81] (0)3-6748-7120
	General Manager, Corporate Communications Office

Scheduled date to file quarterly securities report:	August 10, 2021
Scheduled date to commence dividend payments:	－
Preparation of supplementary material on financial results:	Yes
Holding of financial results briefing:	Yes (for securities analysts and institutional investors)

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the First Quarter of the Fiscal Year Ending March 31, 2022("FY2021") (from April 1, 2021 to June 30, 2021)

1. Results of Operations:

(Percentages indicate year-on-year changes.)

			Core	Operating			Net income	Comprehensive
	Sales Revenue	Operating	Net income	attributable to
	income	Income
			Income *			owners of the parent
Three months ended		%		%		%		%		%		%
June 30, 2021	928,264	28.4	88,676	490.8	87,022	266.8	59,200	619.2	49,927	865.7	90,532	323.8
June 30, 2020	722,737	(21.1)	15,010	(78.6)	23,722	(66.1)	8,231	(83.2)	5,170	(86.3)	21,361	－

Reference: Income before taxes

Three months ended June 30, 2021: ¥85,291 million(317.9%)

Three months ended June 30, 2020: ¥20,408 million((69.3)%)

* Core operating income is calculated as operating income excluding certain gains and expenses attributable to non-recurring factors.

Basic earnings

Diluted earnings

per share

per share

Three months ended

Yen

Yen

June 30, 2021

35.14

32.31

June 30, 2020

3.64

3.39

(2) Financial Position:

Ratio of equity

Total assets

Total equity

Equity attributable to

attributable to owners

owners of the parent

of parent to total

assets

As of

%

June 30, 2021

5,286,715

1,638,663

1,298,846

24.6

March 31, 2021

5,287,228

1,571,148

1,236,339

23.4

2. Cash dividends

Annual dividends per share

First quarter-

Second

Third

Fiscal

Total

end

quarter-end

quarter-end

year-end

Fiscal year ended

Yen

Yen

Yen

Yen

Yen

March 31, 2021

－

12.00

－

12.00

24.00

March 31, 2022

－

March 31, 2022

12.00

－

12.00

24.00

(Forecast)

Note:

Revisions to the forecast of cash dividends most recently announced: None

3. Forecast for the Current Fiscal Year

(Percentages indicate changes in comparison with the same period of the previous fiscal year)

			Core		Operating				Net income		Basic
	Sales Revenue	Operating			Net income	attributable to		earnings
		income
			Income *					owners of the parent	per share
		%			%			%		%			%	Yen
First Half of	1,860,000	23.6	149,000	172.7	147,000		－	97,000	－	79,000		－	55.60
FY2021
FY2021	3,660,000	12.4	230,000	31.6	216,000	354.6	140,000	516.1	97,000		－	68.29

Reference: Income before taxes

First Half of FY2021: ¥141,000 million(－%), FY2021: ¥200,000 million(507.8%)

Note:

The forecast for the first half of FY2021 has been revised to the above from those announced on May 12, 2021.

* Notes

(1)	Changes in significant subsidiaries during the period		:	None
(2)	Changes in accounting policies and changes in accounting estimates
(i) Changes in accounting policies required by IFRS	:	None
(ii) Changes in accounting policies due to other reasons	:	None
(iii) Changes in accounting estimates	:	None

(3) Number of issued shares (ordinary shares)

(i)Total number of issued shares at the end of the period (including treasury shares)

As of	1,506,288,107 Shares	As of March	1,506,288,107 Shares
June 30,2021	31,2021
(ii)Number of treasury shares at the end of the period
As of	85,411,057 Shares	As of March	85,865,812 Shares
June 30,2021	31,2021
(iii)Average number of shares outstanding during the period
Three months ended	1,420,721,525 Shares	Three months ended	1,420,093,628 Shares
June 30,2021	June 30,2020

*Mitsubishi Chemical Holdings Corporation adopted a performance-based share compensation plan that uses executive compensation Board Incentive Plan (BIP) trusts. Mitsubishi Chemical Holdings Corporation stocks held by BIP trust are included in treasury shares.

(Reference)

Number of Company's shares in executive compensation BIP trust:

June 30, 2021	2,994,552 shares
March 31, 2021	2,994,552 shares

Disclosure regarding quarterly review procedures

Financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.

Proper use of earnings forecasts, and other special matters

*The forward-looking statements are based largely on the Company's expectations and information available as of the date hereof, and are subject to risks and uncertainties which may be beyond the Company's control. Actual results could differ materially due to numerous factors. The Company's stance on forward-looking statements is described on page [5] hereof.

*This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Contents:

1. Qualitative Information on Financial Results for the Term
(1)	Business Performance	P.	2
(2)	Financial Position	P.	4
(3) Explanation of Consolidated Financial Results Forecast and Other Forward-Looking	P.	5
	Information
2. Condensed Consolidated Financial Statements
and Notes Concerning Condensed Consolidated Financial Statements
(1)	Condensed Consolidated Statement of Profit or Loss	P.	6
(2)	Condensed Consolidated Statement of Comprehensive Income	P.	7
(3)	Condensed Consolidated Statement of Financial Position	P.	8
(4)	Condensed Consolidated Statement of Changes in Equity	P.	10
(5)	Condensed Consolidated Statement of Cash Flow	P.	12
(6)	Notes to Condensed Consolidated Financial Statements	P.	14
(Segment Information)	P.	14

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1. Qualitative Information on Financial Results for the Term

1. Business Performance

Performance Overview

In the business environment of the consolidated first quarter (April 1, 2021 - June 30, 2021; same hereafter) of the Mitsubishi Chemical Holdings Corporation (MCHC) Group, demand in Japan and abroad trended toward recovery, reflecting a gradual return to normal economic activities in each country in tandem with the progress in vaccinations.

Against this backdrop, sales revenue in the consolidated quarter under review increased ¥205.6 billion, or 28.4%, to

¥928.3 billion. In the profit front, core operating income rose ¥73.7 billion, or 490.8%, to ¥88.7 billion. Operating income climbed ¥63.3 billion, or 266.8%, to ¥87.0 billion. Income before taxes was up ¥64.9 billion, or 317.9%, to ¥85.3 billion. And net income attributable to owners of the parent improved ¥44.7 billion, or 865.7% to ¥49.9 billion.

Overview of Business Segments

The overview of financial results by business segment for the first quarter of fiscal 2021 is shown below. Segment gains or losses are stated as core operating income, which excludes gains or losses from non-recurring factors and including losses from business withdrawals, streamlining, and other factors.

Performance Products Segment, Performance Products Domain

In comparison with the same quarter in the previous consolidated fiscal year, sales revenue increased ¥59.7 billion, to ¥283.1 billion and core operating income expanded ¥15.3 billion, to ¥26.6 billion.

In polymers and compounds, sales revenue increased reflecting a rise in sales volumes for products used in automobiles and other applications, and also an upturn in market prices for some polymers.

In films and molding materials, sales revenue increased reflecting a rise in sales of molding materials for use in automobiles and other applications, and also owing to a growth in sales of films used for optical applications for displays as well as for other applications.

In advanced solutions, sales revenue grew underpinned primarily by an increase in sales volume accompanying a recovery in demand.

Although raw material prices trended upward, core operating income in this segment climbed, chiefly attributable to overall higher sales volume, mainly for advanced solutions for automobiles.

Major initiative in the Performance Products segment during the first quarter of fiscal 2021:

• In April 2021, Mitsubishi Chemical Corporation (MCC) decided to make a capital investment in C.P.C. SRL (CPC; Head office: Modena, Italy) in order to strengthen the carbon fiber and composite material business. The investment includes plans for the addition of 5,000-metric ton press machines, which will be among the largest in the world. CPC is an equity-method affiliate of MCC that manufactures and sells carbon fiber reinforced plastic (CFRP) automotive parts. The facility is scheduled for operation in 2023.
• In May 2021, Mitsubishi Chemical Corporation, as a part of its portfolio reforms, agreed to transfer its shareholdings in equity-method affiliate Sinopec Mitsubishi Chemical Polycarbonate (Beijing) Co., Ltd. (Head office: Beijing, PRC) to China Petroleum & Chemical Corporation (Head office: Beijing, PRC) by the end of October 2021.

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• In May 2021, Mitsubishi Chemical Corporation and the Japan Steel Works, Ltd. (Head office: Shinagawa-ku, Tokyo) jointly completed construction of a verification facility for mass production of gallium nitride (GaN) single-crystal substrates at the Muroran Plant of Japan Steel Works M&E, Inc. The aim is to conduct verification tests for mass production throughout FY2021, and start market supply from early FY2022. The goal is to contribute to contribute to an energy minimum society, which is the improvement of fuel and power generation efficiency through the supply of high- quality GaN substrates.

Chemicals Segment, Industrial Materials Domain

In comparison with the same quarter in the previous consolidated fiscal year, sales revenue increased ¥106.2 billion, to ¥291.9 billion and core operating income expanded ¥52.4 billion, to ¥34.8 billion.

In MMA, sales revenue expanded owing to a rise in the market price for MMA monomer given strong demand trends.

In petrochemicals, sales revenue expanded. In addition to a growth in sales prices in tandem with higher raw material prices, sales volumes also rose reflecting smaller impact from scheduled maintenance and repairs at the ethylene production facility and a recovery in demand.

In carbon products, sales revenue rose reflecting higher sales volumes in tandem with an overall recovery in demand as well as a rise in selling prices for export coke.

Core operating income in this segment was up owing to performance in petrochemical products, which was highlighted by an increase in sales volume and an improvement in inventory valuation gain in tandem with higher raw material prices, and also in part due to a rise in market prices mainly for MMA monomers and export coke.

Major initiatives in the Chemicals segment during the first quarter of fiscal 2021:

• Japan Polychem Corporation (JPC), a consolidated subsidiary of Mitsubishi Chemical Corporation, decided in April 2021 to acquire equity in six overseas group companies owned by Japan Polypropylene Corporation, a joint venture of JNC Petrochemical Corporation and JPC, including Mytex Polymers US Corporation (Head office: Indiana, US), and turned them into wholly-owned subsidiaries in July. Mytex Polymers deploys the polypropylene compound and long glass reinforced thermoplastic business. The goal is to accelerate growth in response to an increase in demand, including prominent parts that will contribute to making automobiles lighter, through the use of technological strengths and business infrastructures in Japan and abroad.
• Mitsubishi Chemical Corporation (MCC) and Mitsubishi Chemical Methacrylates Japan Co., Ltd., a consolidated subsidiary of MCC, constructed a verification facility in Japan in June 2021, and decided in May 2021 to carry out verification testing in preparation of the commercialization of chemical recycling for acrylic resins. Regarding the recovery, chemical recycling and reuse of acrylic resins, including tail lights from scrapped cars, both companies are carrying out an examination of a scheme along with Honda Motor Co., Ltd. (Head office: Minato-ku, Tokyo) and are jointly implementing a verification of a recycling system that uses this verification facility.
• In June 2021, Mitsubishi Chemical Corporation entered into a licensing agreement with Mura Technology Limited (Mura; Head office: London, UK) pertaining to technology to manufacture of raw materials for chemical products and fuel oil products from waste plastics. MCC plans to accelerate considerations for the commercialization of the chemical recycling business to realize a circular economy.

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