Mitsubishi Steel Mfg : Financial Results for the Fiscal Year Ended March 2024

Financial Results for the Fiscal Year Ended March 2024

May 13, 2024

I. FY2023 Full-year Results

II. Full-year Forecasts for FY2024

1

Full-Year performance summary

I. FY2023 Full-year Results

• Net sales remained largely unchanged YoY due to slower demand in the Special Steel Bars business and other factors, despite progress in reflecting higher raw material costs in selling prices.
• Operating income was down YoY due to lower earnings in the Special Steel Bars business, despite significant improvements in the Springs business.
• Net income was down YoY, resulting in a net loss. Contributing factors included lower operating income along with higher non-operating expenses and impairment losses on overseas subsidiaries.
• The year-end exchange rate was $1 = JPY151 vs. an initial forecast of $1 = JPY145.

						(JPY100M)
	FY2022			FY2023
	Previous			Difference between
	results		Results	YoY change
		previous forecast
		forecast*			and results
Net sales	1,705	1,650		1,699	49	△6
Operating	55	45		48	3	△7
income
Ordinary	37	15		19	4	△18
income
Net income
attributable to	22	1		△10	△11	△32
owners of parent
company
			2
				* Announced February 7, 2024

Factors contributing to changes in net sales and operating income (YoY comparison)

I. FY2023 Full-year Results

Net sales

(JPY100M)

+7

Sales under

sales

Selling prices

Foreign

Consolidation

1,699

volumes

contract*1

exchange

adjustments, etc.

gains

FY2022 results

FY202324/3results期実績

Operating income

* Sales under contract to Nippon Steel Corporation

(JPY100M)

Selling prices

Energy

Sales

prices

Production

volumes

costs

Inventory

Raw material

valuation, etc.

prices

△4

48

FY2022		FY2023
results		results
	3

Results by segment

I. FY2023 Full-year Results

• Net sales grew in the Springs business but fell in the Special Steel Bars business.
• While operating income in the Springs business returned to profitability for the first time in six years, it declined sharply in the Special Steel Bars business.

						(JPY100M)
		FY2022		FY2023
		Previous		Difference between
		results	Results	YoY change
		forecast*	previous forecast
				and results
Special Steel	Net sales	1,001	865	889	24	△112
Bars	Operating income	64	18	23	5	△41
Springs	Net sales	599	685	706	21	107
Operating income	△22	13	10	△3	32
Formed &	Net sales	102	90	94	4	△8
Fabricated	Operating income	5	7	8	1	3
Products
Machinery	Net sales	103	100	100	0	△3
Operating income	7	7	7	0	0
Other	Net sales	36	35	34	△1	△2
Operating income	1	1	1	0	0
Consolidation	Net sales	△135	△124	△123	△1	12
adjustments	Operating income	0	0	0	0	0
Total	Net sales	1,705	1,650	1,699	49	△6
Operating income	55	45	48	3	△7

4	* Figures announced February 7, 2024

Impact of non-operating income/loss and extraordinary

income/loss

I. FY2023 Full-year Results

• Non-operatingincome/loss worsened YoY due to higher interest payments and losses on foreign exchange (higher forex hedging costs).
• Extraordinary income/loss worsened YoY due to various factors, including the recording of impairment losses (see next page for details) and lower gains on the sale of stock and insurance income than recorded last year.

							(JPY100M)
			FY2022		FY2023
			Previous		Difference between
			results	Results	YoY change
			forecast*	previous forecast
					and results
Operating income	55	45	48	3	△7
	Non-operating income/loss	△18	△30	△29	1	△11
		Translation (exchange profit and loss)	△9	△14	△13	1	△4
		Interest paid	△12	△17	△17	0	△5
			37	15	19	4	△18
Ordinary income
	Extraordinary income/loss	10	1	△12	△13	△22
		Gain on sale of investment securities	6	1	1	0	△5
		Insurance income*2	9	1	1	0	△8
		Impairment losses	△6	0	△13	△13	△7
Net income before income taxes and other adjustments	47	16	7	△9	△40
Tax expenses	△24	△13	△14	△1	10
Net income attributable to non-controlling interests	△1	△2	△3	△1	△2
Net income attributable to owners of parent company	22	1	△10	△11	△32

5	*1	Figures announced February 7, 2024
*2	Insurance income consists of insurance compensation for fire losses at MSSC

Ahle GmbH.

Recording of impairment losses

I. FY2023 Full-year Results

• In FY2023 4Q, the Company recorded an extraordinary loss of 1.3 billion yen for impairment losses related to fixed assets at overseas subsidiaries

O u t l i n e o f i m p a i r m e n t

Target location	Target impairment	Amount
MSSC Ahle GmbH (German spring subsidiary)	Fixed assets	JPY 1.1 billion
MSM Ningbo Spring Co., Ltd. (Chinese spring subsidiary)	Fixed assets	JPY 0.2 billion

B a c k g r o u n d o f

i m p a i r m e n t

（MSSC Ahle GmbH）

The business environment for this company remains challenging due to rising costs, including energy prices, and the sluggish European economy.

Despite efforts to improve selling prices, the company continues to struggle to receive orders and remains in the red, resulting in the recording of impairment losses.

（MSM Ningbo Spring Co., Ltd.)

Although the Chinese automobile market is recovering overall, the Japanese automobile manufacturers in the region, our main customers, are still struggling. They are facing weak sales, market withdrawal, and other challenging conditions, as the local automobile manufacturers are gaining a larger market share.

As a result, the Company has also experienced a slowdown in orders, which has led to the recording of impairment losses on production facilities for stabilizer products as these products have been significantly impacted and the future prospects for receiving orders remain uncertain.

6

I. FY2023 Full-year Results

II. Full-year Forecasts for FY2024

7

Full-year performance forecast summary II. Full-yearForecasts for FY2024

• Net sales are projected to grow due to various factors, including progress in reflecting higher costs in selling prices and the planned sales contributions of certain strategic businesses, although demand conditions in the Special Steel Bars business are expected to be challenging.
• Operating income is projected to grow thanks to profit contributions from strategic businesses and other factors.
• Net income is projected to increase dramatically and return to profitability, as a result of increased operating income, reduction in non-operating expenses due to the implementation of financial restructuring in North America, and resolution of special factors such as impairment losses recorded in the previous period.
• We project an exchange rate of $1 = JPY150.

					(JPY100M)
	FY2023		FY2024 forecasts
	results	1H	2H	Full-year	YoY change
Net sales	1,699	830	920	1,750	51
Operating	48	15	40	55	7
income
Ordinary	19	7	33	40	21
income
Net income	△10	7	23	30	40
attributable to owners
of parent company
		8

Factors contributing to changes in net sales and operating income (YoY comparison)

II. Full-year Forecasts for FY2024

Net sales

(JPY100M)

								Consolidation
						Foreign
							adjustments, etc.
				Sales under
Sales		Selling prices			exchange		1,750
		contract*
volumes					gains

FY2023 results		FY2024５/3期forecast予想
Operating income	* Sales produced under contract to Nippon Steel Corporation

(JPY100M)

90

80

70

60

50

40

30

20

10

0

+31

△29

0

△4

+3

+6

Raw material

Inventory

Selling prices

Energy

Sales

prices

Production

valuation, etc.

55

48

volumes

prices

costs

FY2023 results

FY2024 forecast

9