Mitsui(US:MITSY)2021-02-04 06:09Financial Data and Key Metrics Changes - Core operating cash flow for the third quarter increased by JPY 21.2 billion year-on-year to JPY 493.4 billion, recovering to pre-COVID-19 levels [3][14] - Profit for the period decreased by JPY 136.2 billion year-on-year to JPY 188.9 billion, reaching the yearly forecast announced in October [3][4] - The yearly core operating cash flow forecast was upwardly revised by JPY 120 billion to JPY 600 billion, and yearly profit forecast was revised upward by JPY 90 billion to JPY 270 billion [4][14] Business Line Data and Key Metrics Changes - In Mineral & Metal Resources, core operating cash flow increased by JPY 35 billion to JPY 205.2 billion, driven by higher iron ore prices [15] - Energy segment saw a core operating cash flow decrease of JPY 81.4 billion to JPY 102.7 billion due to declining oil and gas prices [16] - Machinery & Infrastructure reported a core operating cash flow increase of JPY 4.6 billion to JPY 64.5 billion, benefiting from recovery in automotive and construction sectors [16] - Chemicals achieved a core operating cash flow of JPY 48.5 billion, a year-on-year increase of JPY 21.2 billion, supported by strong trading performance [16] Market Data and Key Metrics Changes - The global economy is on a recovery track, led by China, although concerns remain regarding the renewed spread of COVID-19 [4][10] - The iron ore market remained strong, contributing significantly to the company's recovery [6][14] Company Strategy and Development Direction - The company is focused on executing its Medium-term Management Plan 2023, "Transform and Grow," to build a mid- to long-term competitive advantage [5][10] - There is an ongoing restructuring and reorganization in the Machinery & Infrastructure area to enhance competitiveness [7][10] - The company is shifting its strategy in Exploration & Production (E&P) to prioritize quality over quantity in asset management [13][62] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the recovery of operating results, despite concerns about regional disparities and the potential for a double-dip recession [4][10] - The company aims to improve profits across all business areas by leveraging its capabilities as a sogo shosha [10][12] - Management acknowledged the need for ongoing damage control in sectors significantly impacted by the pandemic [10][12] Other Important Information - The annual dividend forecast remains unchanged at JPY 80 per share [4][14] - The company is actively pursuing new business opportunities while reconfiguring its portfolio to strengthen competitiveness [10][12] Q&A Session Summary Question: Cash upside status and shareholder returns - The company noted a significant recovery in core operating cash flow, with potential for additional shareholder returns being considered based on fourth-quarter performance [27][30] Question: Portfolio review and negative factors - Management indicated that the portfolio review has not fully reflected COVID-19 impacts, with ongoing negotiations and damage control in various sectors [32][33] Question: Continuity of business in steel products and Lifestyle segments - Management highlighted strong performance in Chemicals and a recovery in Iron & Steel Products due to increased demand, while acknowledging ongoing challenges [36][39] Question: Shareholder returns policy - The company confirmed its policy of allocating approximately one-third of core operating cash flow to shareholder returns, with no major changes anticipated [37][42] Question: Upward revision factors and credit rating concerns - Management explained that upward revisions were influenced by strong iron ore prices and restructuring efforts, while also addressing concerns regarding credit ratings [46][52]