Earnings Call: Q4 2026

May 7, 2026

Good morning. I am Kenichi Hori, President and CEO. Thank you for joining us today. Today, after reviewing medium-term management plan, MTMP 2026, I will explain Mitsui's vision under a new plan, MTMP 2029, Shaping Futures Through Trust and Innovation toward 2030 and beyond, as well as the strategies we will pursue to realize that vision. For FY 2026, both Core Operating Cash Flow, COCF, and profit exceeded our latest forecast. We plan to make the full year dividend JPY 115 per share. In addition, we have completed the share repurchases announced last November of up to JPY 200 billion and have canceled those shares. The three years of MTMP 2026 were a period in which companies were tested on their ability to balance their response to changes with sustainable growth amid significant volatility in the external environment. Even under such conditions, from FY March 2022 through FY March 2026, we achieved COCF in the JPY 1 trillion level for 5 consecutive fiscal years, demonstrating our robust cash generation capability. While profit in the final year of the 3-year period fell short of the MTMP target, both ROE and the shareholder returns payout ratio exceeded the targets. Over the 3 years of MTMP 2026, we pursue the enhancement of base profit by strengthening existing businesses, efficiency improvements and turnarounds, and through new businesses. As a result of steady execution across these initiatives, base profit increased by JPY 172 billion as targeted, reinforcing the foundation that supports Mitsui's sustainable growth. Reflecting this enhancement of base profit, we plan our largest dividend increase in our history for FY March 2027. Over the three years of MTMP 2026, total cash inflows, which is a combination of COCF and asset recycling, amounted to JPY 4.5 trillion. We invested JPY 0.7 trillion to sustain and strengthen existing businesses and JPY 2.4 trillion in investments for growth, totaling JPY 3.1 trillion, steadily executing initiatives towards the next stage in line with our three key strategic initiatives. By allocating the expanded management allocation generated through flexible asset recycling and other inflows across investments for growth, dividends, and share repurchases in a balanced manner, we enhance portfolio quality and bolster shareholder returns. As a result, financial leverage has been maintained at a moderate level. I will now move on to MTMP 2029. Amidst the materialization of geopolitical risks, including the situation in the Middle East, as well as changes in the environment, energy, people's lifestyles, and new technologies, we continue to face a highly volatile business environment. Against this backdrop, Mitsui continues to evolve its global portfolio, enhance its sophisticated integrated risk management, and pursue continuous business model transformation through innovation. By delivering real solutions and ensuring stable supply, we will fulfill our role in society and contribute to build brighter futures around the world. MTMP 2029 presents Mitsui's medium to long-term vision, a pathway to 2030 and beyond. We position the three-year period through FY March 2029 as a phase to firmly establish this trajectory and have adopted Shaping Futures Through Trust and Innovation as the theme. As a next stage of leveraging our comprehensive strengths, we define Nonlinear Combinatory Value as a creation of substantial new value by combining professional talent and AI's exploratory power. Through realizing this, we aim to establish a virtuous cycle between enhancing corporate value and tackling social challenges, earning trust from stakeholders. Through results yielded from Evolved Middle Game initiatives and investments for growth made during MTMP 2026, as well as new investments for growth to be executed during MTMP 2029, we have a vision for 2030 of above JPY 1.4 trillion in profit and ROE above 13%. Beyond 2030, we expect full-scale profit contributions from various large-scale projects for which investment decisions have already been made in MTMP 2026. By developing highly competitive, high-quality resource assets, we will achieve sustainable growth. In addition, by making advanced and strategic use of scarce data assets accumulated in businesses such as healthcare, we are seeking to generate a step change in value. We have newly defined our corporate strategy around 3 pillars: distinctive competitive advantages, continuously transforming earning space, and value creation driven by highly capable individuals. Based on the evolved key strategic initiatives that I will explain shortly, we aim to realize our vision for 2030. Leveraging the trust-based relationships we have built with customers and partners worldwide and the strength of our global matrix structure, we have a project pipeline exceeding JPY 6 trillion, which we continuously evaluate. From this pipeline, management works closely with on-the-ground teams to carefully select only those projects that meet criteria such as strategic fit and risk return standards. After execution, we take evolved Middle Game initiatives with determination and resolve to continuously enhance business quality. Through disciplined review processes, we take advantage of opportunities to make timely asset sales and will generate cash in a flexible manner. Under a global matrix structure, we are advancing data-driven management by utilizing data and AI across the group to carry out sophisticated decision-making. Building on this foundation, we will realize a Nonlinear Combinatory Value described earlier. As illustrated on this slide, across diverse operational front lines spanning the globe, including trading, mining, hospitals, and services, we will leverage a corporate culture that has no boundaries, utilize data across businesses and regions, thereby creating unique value. Through the various initiatives undertaken in MTMP 2026, we have gained strong conviction in the effectiveness of our three key strategic initiatives. For MTMP 2029, we have newly established the AI Strategy Unit, Integrated Energy Solutions Business Unit, and Digital & Infrastructure Solutions Business Unit. By evolving our three key strategic initiatives into Industrial Business Solutions 2.0, Global Energy Transformation 2.0, and Wellness Ecosystem Creation 2.0, we will achieve further growth against a backdrop of complex social issues and rapid digital advancement. Under Industrial Business Solutions 2.0, for iron ore and copper, we will pursue the development of Rhodes Ridge, one of Earth's largest iron ore resources, the integrated operation of Anglo American Sur in copper, and capture further prime opportunities in both fields. In mobility, we will pursue sustainable business value creation by evolving the business foundation built up with partners and creating new businesses that capture structural shifts in industries. Under Global Energy Transformation 2.0, evolved from its prior form, we will enhance value across the entire value chain, transforming gas and renewable energy into power, compute, and clean molecules such as low-carbon ammonia, increasing value and supplying society. Under Wellness Ecosystem Creation 2.0, centered on our hospital business, we will utilize the valuable data we have accumulated to expand into new domains, such as drug discovery support, by combining healthcare and data. We will also further strengthen the protein businesses established under MTMP 2026 and expand into growth markets for food demand and adjacent areas beyond the protein value chain. To continuously strengthen our management foundation, we have identified sustainability management, wellbeing and health and safety, and HR strategy as important themes to be continuously strengthened over the long term. Through sustainability management, we'll pursue medium to long-term value creation with an integrated approach. Through wellbeing and health and safety, we'll continue to create work environment where all employees can work with peace of mind. Through our HR strategy, we will empower diverse individuals across the group. For FY March 2029, we are targeting COCF of 1.2 trillion JPY, profit of 1.1 trillion JPY, and ROE of 12%. We are planning for shareholder returns as a percentage of COCF to be at the 50% level on a cumulative basis over the 3-year MTMP period. These targets are based on commodity price assumptions that factor in normalization of Middle East situation by Q2 of FY March 2027. At the same time, while carefully assessing the impact of Middle East situation on the global supply chain and the duration of such impacts, we're looking ahead to further up opportunities to demonstrate our solutions, providing functions for customers and to capture upside through our business in oil, gas, LNG, Chemicals and other areas, as well as through trading that leverages our logistics assets. In addition to the organic growth of existing businesses through evolved Middle Game initiatives, under MTMP 2029, we plan to execute investments for growth aligned with the evolved Three Key Strategic Initiatives with careful consideration of balance across businesses, regions and timing. Through earnings contributions from these investments and from large scale projects for which investment decisions were made under MTMP 2026 will further strengthen our earnings base. This slide plots the timing of earnings contribution commencement for each investment. Toward achieving FY March 2029 quantitative targets, we expect steady growth across all segments by fully leveraging fundamental competitiveness, taking advantage of changes in the external environment, improving existing businesses, and yielding results from projects for which investment decisions have already been made. I will speak on capital allocation for MTMP 2029 in more detail. The bar chart on the left side of the slide on the screen explicitly shows total cash outflows exceeding total cash inflows as our current base case assumption, while also illustrating the expansion of management's options through arrows and gradation. The key point is for Mitsui to secure a wide range of management options in an uncertain business environment. In addition to a robust COCF base, we will further enhance asset values through evolved Middle Game initiatives, flexible and timely asset recycling, and expand the management allocation. At the same time, while pursuing long-term capital efficiency and appropriate leverage, we will enhance the debt portfolio and lengthen financing maturities. Through these efforts, we will execute dynamic capital allocation toward highly competitive investments for growth and additional shareholder returns. Given that management will be maintaining a wide range of options, we will engage closely with stakeholders in the event of significant changes in the business environment, including developments in the Middle East. I'll be happy to go into more detail on this in the Q&A session. We have had a progressive dividend policy in place that has been linked to enhancements to our reproducible cash generation capability. Based on 5 consecutive years of COCF at the JPY 1 trillion level and the JPY 172 billion enhancement of base profit during MTMP 2026, we'll increase DPS by JPY 25 per share, the largest increase in our history. Looking to capital efficiency and further base profit growth, the progressive dividend policy in which the dividend will be maintained or increased will be continued for MTMP 2029, setting the full year dividend of JPY 140 per share as the floor. In the event of additional cash inflows from large-scale asset sales of favorable commodity prices, we will, after assessing the quality and timing of pipeline projects and considering share price levels and capital efficiency, execute share repurchases in a flexible manner. Under this policy, we currently expect the shareholder returns payout ratio as a percentage of COCF to be in the 50% level for MTMP 2029. Under MTMP 2029, with the theme of Shaping Futures through Trust and Innovation, and with a more sophisticated level of integrated risk management, we'll further strengthen our earnings capability by enhancing business values through evolved Middle Game initiatives and steadily yielding results from new investments along our evolved key strategic initiatives. For FY March 2029, we're targeting profit of JPY 1.1 trillion and ROE of 12%. By fully executing this new MTMP, we aim to connect these results to our vision of 2030, in which profit exceeds JPY 1.4 trillion and ROE is about 13% and drive further growth beyond that. We plan to manage the business with this as our vision. Next, Masao Kurihara, General Manager of the Global Controller Division, will explain the details for the operating results for FY March 2026 and the business plan for FY March 2027. This concludes my presentation. Good morning. This is Masao Kurihara, General Manager of the Global Controller Division. I will now explain the details for the operating results for FY March 2026 and the business plan for FY March 2027. First, I will explain main year-on-year changes in COCF by segment. COCF for FY March 2026 amounted to JPY 978.9 billion, a decrease of JPY 48.6 billion year-on-year. In Mineral & Metal Resources, there was a decrease of JPY 27.5 billion to JPY 330.4 billion, mainly due to declines in iron ore and metallurgical coal prices and a decrease in dividends from equity method investees. In Energy, despite an increase in US gas prices, there was a decrease of JPY 101.4 billion to JPY 262.0 billion, mainly due to the absence of large LNG dividends accrued in FY March 2024 that were received in FY March 2025. In Machinery & Infrastructure, there was an increase of JPY 38.9 billion to JPY 184.1 billion, mainly due to an increased dividends from equity method investees and the absence of taxes related to asset sales in the previous year. In Chemicals, there was an increase of JPY 12 billion to JPY 102.6 billion, mainly due to a gain on the reversal of provisions related to business outside Japan. In Iron & Steel Products, there was an increase of JPY 11.9 billion to JPY 17.9 billion, mainly due to increased dividends from equity method investees and trading. In Lifestyle, there was a decrease of JPY 10.3 billion to JPY 7.8 billion, mainly due to a decrease in profit from coffee trading and an inter-segment transaction with Others, Adjustments and Eliminations. In Innovation & Corporate Development, there was an increase of JPY 19.4 billion to JPY 46.4 billion, mainly due to higher earnings from commodity derivatives trading. Others, Adjustments and Eliminations, recorded an increase of JPY 8.4 billion to JPY 27.7 billion, mainly due to an inter-segment transaction with Lifestyle. Next, I will explain the year-on-year changes in profit by segment. Profit for FY 2026 amounted to JPY 834 billion, a decrease of JPY 66.3 billion year-on-year. In Mineral & Metal Resources, despite higher copper prices, there was a decrease of JPY 31.8 billion to JPY 253. JPY 253.6 billion, mainly due to declines in iron ore and metallurgical coal prices and higher costs and lower volumes of copper. In Energy, despite higher U.S. gas prices and the absence of impairment losses in the previous year, there was a decrease of JPY 9.3 billion to JPY 164.2 billion, mainly due to lower LNG volumes and lower crude oil prices. In Machinery & Infrastructure, despite FVTPL valuation gains associated with the IPO of Firefly, there was a decrease of JPY 7 billion to JPY 225.9 billion, mainly due to the absence of asset sales in the previous year. In Chemicals, despite a valuation gain on ITC Antwerp and the absence of an impairment loss in the previous year, there was a decrease of JPY 8.4 billion to JPY 67.5 billion, mainly due to the absence of gains on asset sales in the previous year and FVTPL. In Iron & Steel Products, there was an increase of JPY 5.7 billion to JPY 18.9 billion, mainly due to higher profit from trading. In Lifestyle, despite higher profit from Fertin Pharma and FVTPL valuation gains, there was a decrease of JPY 1.7 billion to JPY 52 billion, mainly due to the absence of asset sales in the previous year. In Innovation & Corporate Development, despite asset sales and higher earnings from commodity derivatives trading, there was a decrease of JPY 28.3 billion to JPY 59 billion, mainly due to the absence of asset sales in the previous year and one-time losses at JA Mitsui Leasing. Others adjustments and eliminations recorded an increase of JPY 14.5 billion to JPY 7.1 billion, mainly due to the absence of an amendment to the retirement benefit system in the previous year. This page provides a summary of the year-over-year factor comparison for profit. In base profit, there was an increase of JPY 32 billion, mainly due to higher earnings in commodity derivatives trading, profit, Vale dividends, IPP, Iron & Steel Products, construction and industrial machinery, and Chemicals, despite lower profit related to LNG and tankers. In resources costs and volumes, there was a decrease of JPY 34 billion, mainly due to higher costs and lower volumes of copper and lower volumes in Energy. In commodity prices, there was a decrease of JPY 6 billion despite higher copper, crude oil, and gas prices due to declines in iron ore and metallurgical coal prices. In foreign exchange, there was a decrease of JPY 7 billion, mainly due to yen appreciation. As a result, for commodity prices and foreign exchange, there was a combined decrease of JPY 13 billion. In asset recycling, despite asset sales such as real estate inside Japan, there was a decrease of JPY 81 billion, mainly due to the absence of large asset sales in the previous year. In valuation gains and losses and one-time factors, despite one-time losses at JA Mitsui Leasing, there was an increase of JPY 30 billion, mainly due to the absence of losses in the previous year. I will now explain the balance sheet at the end of the period. Net interest-bearing debt increased by JPY 0.8 trillion from the end of March 2025 to JPY 4.1 trillion, mainly due to increased borrowings associated with the acquisition of interest in the Rhodes Ridge Iron Ore Project. Meanwhile, shareholder equity increased by JPY 1.3 trillion compared with the end of March 2025 to JPY 8.8 trillion, reflecting an increase in foreign currency translation adjustments due to yen depreciation, an increase in FVTOCI financial assets due to higher share prices of listed companies we own shares in, and other factors. As a result, the net D/E ratio was 0.47 times. This slide shows COCF business plan for FY March 2027 by segment. Segment names reflect the post-reorganization structure, and FY March 2026 results have been reclassified accordingly. Main factors include asset sale gains in Energy, U.S. gas price, gas volumes, the absence of an inter-segment transaction with others, adjustment and eliminations in Wellness Ecosystem recorded in FY March 2026, a reduction in losses in coffee trading, and dividends from equity method investees in Mobility, Digital & Infrastructure. Based on these factors, the plan for COCF is JPY 1.05 trillion, an increase of JPY 71.1 billion year-on-year. This slide shows the business plan for profit by segment for FY March 2027. Main factors include asset sales in Energy, the U.S. gas business, the absence of one-time losses at JA Mitsui Leasing in Innovation & Corporate Development, asset sales in Mobility, Digital & Infrastructure, and absence of impairment losses in the previous year. Based on these factors, the plan for profit is JPY 920 billion, an increase of JPY 86 billion year-on-year. Here we compare the FY March 2027 business plan with the FY March 2026 results and summarize the changes by factor. Base profit is expected to increase by JPY 23 billion, mainly due to higher earnings in the Chemicals segment, Mobility, Digital & Infrastructure segment, coffee trading, and protein business, despite lower earnings related to LNG and commodity derivatives trading. Resource costs and volumes are expected to decrease by JPY 17 billion. Commodity prices and foreign exchange are expected to increase by JPY 23 billion as price increases in metallurgical coal, copper, and crude oil and gas outweigh yen appreciation. Asset recycling is expected to increase by JPY 3 billion. Valuation gains and losses and one-time factors are expected to increase by JPY 54 billion due to absence of the previous year and multiple projects. This concludes my explanation.