Mitsui E&S : Consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (Under Japanese GAAP) (1,245KB)

(Percentages indicate year-on-yearchanges.)

June 28, 2023

June 29, 2023

June 28, 2023 Yes

Yes (for analysts)

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

Note: 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.

May 15, 2023

	Consolidated Financial Results
	for the Fiscal Year Ended March 31, 2023
	(Under Japanese GAAP)
Company name:	MITSUI E&S Co., Ltd.
Listing:	Tokyo Stock Exchange
Securities code:	7003
URL:	https://www.mes.co.jp/
Representative:	Takeyuki Takahashi, President, Representative Director, and CEO
Inquiries:	Kazuo Hayashi, General Manager of Accounting Dept.
Telephone:	[phone]

Scheduled date of annual general meeting of shareholders:

Scheduled date to commence dividend payments:

Scheduled date to file annual securities report:

Preparation of supplementary material on financial results:

Holding of financial results briefing:

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (from April 1, 2022 to March 31, 2023)

(1) Consolidated Operating Results

	Net sales		Operating income (loss)	Ordinary income (loss)	Profit (loss) attributable
		to owners of parent
Fiscal year ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen		%
March 31, 2023	262,301	(54.7)	9,376	-	12,532	-	15,554		-
March 31, 2022	579,363	(10.1)	(10,029)	-	(25,742)	-	(21,825)		-

Note: Comprehensive income

For the fiscal year ended March 31, 2023:

¥ 37,473 million

[ - % ]

For the fiscal year ended March 31, 2022:

(¥ 8,780) million

[ - % ]

Earnings per share

Earnings per share

Return on equity

Ordinary profit to

Operating profit to

(diluted)

total assets ratio

net sales ratio

Fiscal year ended

Yen

Yen

%

%

%

March 31, 2023

177.47

174.92

19.0

3.0

3.6

March 31, 2022

(269.94)

-

(36.0)

(4.4)

(1.7)

Reference: Share of profit (loss) of entities accounted for using equity method

For the fiscal year ended March 31, 2023:

¥ 3,810 million

For the fiscal year ended March 31, 2022:

(¥ 14,645) million

(2) Consolidated Financial Position

Total assets

Net assets

Shareholders' equity to

Net assets per share

total assets ratio

As of

Millions of yen

Millions of yen

%

Yen

March 31, 2023

439,959

110,686

24.2

1,107.02

March 31, 2022

409,150

62,949

14.0

706.06

Reference: Equity

As of March 31, 2023: ¥ 106,404

million

As of March 31, 2022: ¥ 57,091

million

(3) Consolidated Cash Flows

Cash flows from

Cash flows from

Cash flows from

Cash and cash

operating activities

investing activities

financing activities

equivalents at end of year

Fiscal year ended

Millions of yen

Millions of yen

Millions of yen

Millions of yen

March 31, 2023

(15,043)

(2,999)

9,515

43,468

March 31, 2022

(20,265)

(70,923)

806

50,818

2. Dividends

		Annual dividend per share		Total cash	Payout ratio	Dividends to
Common Stock	First	Second	Third	Fiscal		dividends	net assets ratio
Total	(Consolidated)
	quarter-end	quarter-end	quarter-end	year-end	(Total)	(Consolidated)
Fiscal year ended/ending	Yen	Yen	Yen	Yen	Yen	Millions of yen	%	%
March 31, 2022	-	0.00	-	0.00	0.00	-	-	-
March 31, 2023	-	0.00	-	3.00	3.00	262	1.7	0.3
March 31, 2024 (Forecast)	-	0.00	-	3.00	3.00		11.1

Note: The above "2. Dividends" shows dividends for Common stock. For details of dividends for Preferred shares (unlisted), the rights of which

are different from those of Common stock issued by the Company, please refer to "Reference 2: Dividends for Preferred Shares" below.

3. Forecast of Financial Results (from April 1, 2023 to March 31, 2024)

(Percentages indicate year-on-year changes.)

		Net sales		Operating income	Ordinary income	Profit attributable to	Earnings
			owners of parent	per share
	Fiscal year ending	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
	March 31, 2024	280,000		6.7	10,000	6.7	4,000	(68.1)	3,000	(80.7)	27.14
	Reference: Estimate is based on exchange rate of USD1.00 = JPY135.0
* Notes
(1) Changes in significant subsidiaries during the period
(changes in specified subsidiaries resulting in the change in scope of consolidation):			Yes
	Newly included:	-
	Excluded:	1 company (Mitsui E&S Shipbuilding Co., Ltd.)

1. Changes in accounting policies, changes in accounting estimates, and restatement
2. 1. ) Changes in accounting policies due to revisions of accounting standards: None

ii )	Changes in accounting policies due to other reasons:	None
iii )	Changes in accounting estimates:	None
iv )	Restatement:	None

1. Number of issued shares (common stock)
2. 1. ) Number of issued shares at the end of the period (including treasury stock)

	As of	shares
	March 31, 2023	89,737,117
	March 31, 2022	83,098,717
ii )	Number of treasury stock at the end of the period
	As of	shares
	March 31, 2023	2,226,686
	March 31, 2022	2,238,851
iii )	Average number of shares outstanding during the period
	Fiscal year ended	shares
	March 31, 2023	84,661,277
	March 31, 2022	80,852,727

(Percentages indicate year-on-yearchanges.)

Reference 1: Overview of Non-consolidated Financial Results

1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (from April 1, 2022 to March 31, 2023)

(1) Non-consolidated Operating Results

		Operating revenue	Operating income	Ordinary income	Profit (loss)
	Fiscal year ended	Millions of yen		%	Millions of yen		%	Millions of yen	%	Millions of yen		%
	March 31, 2023	15,539		1.7		6,297		9.6	3,681	139.0	13,175		-
	March 31, 2022	15,285		(33.4)		5,744		(50.6)	1,540	(81.7)	(7,323)		-
		Earnings per share	Earnings per share
		(diluted)
	Fiscal year ended			Yen				Yen
	March 31, 2023		149.38			147.23
	March 31, 2022		(90.57)			-
(2) Non-consolidated Financial Position
		Total assets	Net assets	Shareholders' equity to	Net assets per share
		total assets ratio
	As of	Millions of yen		Millions of yen		%			Yen
	March 31, 2023	335,171			49,987		14.9	460.82
	March 31, 2022	321,220			25,883		8.0	318.57
	Reference: Equity	As of March 31, 2023:	¥ 49,855	million
		As of March 31, 2022:	¥ 25,759	million

• Financial results reports are exempt from audit conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters

(Notice regarding forward-looking statements)

The forecasts for financial results are based on information available at the time this report was released. These forecasts and other forward-looking statements are not guarantees of future performance. Actual operating results may differ from the above forecasts due to known and unknown risks, uncertainties, and other factors. Please refer to " 1. Overview of Operating Results and Others, (4) Future Outlook" on page 4 (attached materials) for the assumptions used in forecasting business results and precautions regarding the use of business results forecasts, etc.

(Where to get the supplementary explanatory materials)

Financial results briefing for analysts is scheduled for May 15, 2023. Supplementary material, which will be distributed at the said briefing, is planned to be posted on our web site.

Reference 2: Dividends for Preferred Shares

Dividend per share for Class-A Preferred shares are as follows:

Class-A Preferred Shares		Annual dividend per share
First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end	Total
Fiscal year ended/ending	Yen	Yen	Yen	Yen	Yen
March 31, 2022	-	-	-	-	-
March 31, 2023	-	-	-	29.38	29.38
March 31, 2024 (Forecast)	-	-	-	39.00	39.00

Note: Each dividend per share is rounded to the nearest thousandths place, and then converted to units of yen which are rounded to the nearest hundredth place.

Table of Contents of Appendix

1. Overview of Operating Results and Others ……………………	……………………………………………………………….	2
(1)	Overview of Operating Results for the Fiscal Year …………………………………………………………………………	2
(2)	Overview of Financial Position for the Fiscal Year …………………………………………………………………………	4
(3)	Overview of Cash Flows for the Fiscal Year.……………	………………………………………………………………….	4
(4)	Future Outlook ……………………………………………………………………………………	…………………………	4
(5)	Dissolution of Significant Events Related to the Premise of Going Concern ………………………………………………	7
2. Basic Policy on the Selection of Accounting Standards ………………………………………………………………………..	7
3. Consolidated Financial Statements and Major Notes …………………………………………………………………………..	8
(1)	Consolidated Balance Sheets ………………………………………………………	………………………………………..	8
(2)	Consolidated Statements of Operations and Comprehensive Income ………………………………………………………	10
(Consolidated Statements of Operations) ………………………………	…………………………………………………….	10
(Consolidated Statements of Comprehensive Income) ………	……………………………………………………………….	11
(3)	Consolidated Statements of Changes in Net Assets …………………………………………………………………………	12
(4)	Consolidated Statements of Cash Flows …………………………	………………………………………………………….	16
(5)	Notes to Consolidated Financial Statements ……………	…………………………………………………………………..	18
(Notes on Going Concern Assumption) …………………………………………	……………………………………………	18
(Segment Information, etc.) ……………………………………………………………	……………………………………..	18
(Per Share Information) ………………………………………………………………………	………………………………	22
(Significant Subsequent Events) …………………………………………………	…………………………………………..	23

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1. Overview of Operating Results and Others

1. Overview of Operating Results for the Fiscal Year

i) Outline of Consolidated Operating Results

During the fiscal year under review, the global economy showed signs of recovery due to anti-COVID-19 measures and measures for socioeconomic activities. However, the speed of recovery is now slowing due to high global inflation and the rapid monetary tightening intended to control it. In addition, the concern is growing that the rapid interest rate hikes in the U.S. and Europe will trigger instability in financial systems, and this leads to status that the future outlook remains uncertain.

In the U.S. economy, although there are signs of steady consumer spending due to withdrawals of savings and favorable employment conditions, high inflation and higher policy interest rates are expected to put downward pressure on the economy, leading to a slowdown. The European economy is also expected to weaken due to a slow recovery in consumer confidence caused by the tense situation in Ukraine as well as the growing financial system instability originating in the United States. The Chinese economy is expected to recover at a moderate pace as economic activities normalize with the lifting of the zero-COVID policy and growing consumption of services, but the recovery will remain fragile in non-service demand due to slow auto sales, a less-active real estate market, and weak exports. On the other hand, the domestic economy is on the road to recovery due to solid consumer spending and corporate earnings that generally remain high, but with concerns about a slowdown in the global economy, rising prices, and future interest rate trends, uncertainty is high and the situation remains unpredictable.

Under such circumstances, in line with the "Mitsui E&S Group Business Revival Plan" (announced in May 2019 and partially reviewed in November 2019, hereinafter, the "Business Revival Plan"), we have executed the restructuring and withdrawal of unprofitable businesses including the shipbuilding business, which is our founding business. We have sold approximately 20 businesses and assets totaling over 120.0 billion yen, including subsidiaries and real estates by the end of FY2022. Regarding the civil engineering construction projects for thermal power plants in the Republic of Indonesia, which were our biggest concern, their commercial operations have already started and the risk has been significantly reduced as a result. The remaining work is limited to parts that do not directly affect its operation, and is being carried out in an orderly manner that accommodates commercial operation. Furthermore, on March 31, 2022, we announced fund raising totaling approximately 17.0 billion yen as a capital measure to improve our financial soundness and invest in growth through the "issuance of Class A preferred shares through third-party allotment and issuance of 1st series of share acquisition rights with an exercise price amendment clause through third-party allotment" and completed the payment procedure for 9.0 billion yen of "Class A Preferred Shares" on June 30, 2022. As of March 31, 2023, approximately 33%, or approximately 2.3 billion yen, of the "1st series of share acquisition rights with an exercise price amendment clause" had been exercised, and our financial soundness has been improved. The Group has implemented all of these measures as planned and has now successfully completed the Business Revival Plan.

On May 13, 2022, we announced starting the "Mid-Term Business Plan 2023" in FY2022, one year ahead of schedule, in the light of the significant changes in the business environment surrounding us. As part of this Growth strategies, and with the aim of strengthening development, production, and after-sales service in the core marine propulsion engine business, on September 27, 2022, the Company concluded a "Share transfer agreement regarding succession of business related to marine large bore engines and its incidental business of IHI Power Systems Co., Ltd." and Mitsui E&S DU Co., Ltd. was established in April 2023. In addition, the Company has begun construction to expand its production facilities on the premises of the Group's Tamano Machinery Works in Okayama Prefecture to launch new marine engines using the next-generation fuels. (Announced on November 9, 2022)

Furthermore, the Company merged Mitsui E&S Machinery Co., Ltd. and Mitsui E&S Business Service Co., Ltd. and changed our corporate name to "MITSUI E&S Co., Ltd." on April 1, 2023. Through this merger, we aim to increase the speed of strategy planning and its execution by reducing the gap between business and management and integrating them into a single entity for the purpose of future growth and improved profitability. In addition, subject to approval at the Annual General Meeting of Shareholders to be held in June 2023, the Company plans to transition to a company with an Audit Committee after the Annual General Meeting of Shareholders. (Announced on January 26, 2023)

The Group endeavor to enhance the corporate value of the new MITSUI E&S Group by strengthening the foundation for the execution of the growth strategies in the Mid-Term Business Plan 2023 and by implementing and accelerating further growth strategies.

Orders received in the current fiscal year decreased by 188,738 million yen (down 36.9% year on year) from the previous fiscal year to 322,351 million yen. Net sales were 262,301 million yen, decreased by 317,062 million yen (down 54.7%) year on year due to the exclusion of MODEC, Inc. from the scope of consolidation in Ocean Development. Operating income was 9,376 million yen (previous fiscal year was operating loss of 10,029 million yen), mainly due to improved profitability in Engineering resulting from progress in civil engineering construction projects for thermal power plants in the Republic of Indonesia. Ordinary income was 12,532 million yen (previous fiscal year was ordinary loss of 25,742 million yen) due to the recording of operating income, foreign currency exchange gains, and share of profit of entities accounted for using equity method. Profit attributable to owners of parent was 15,554 million yen (previous fiscal year was loss attributable to owners of parent of 21,825 million yen).

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