Mitsui & Co.,ltd · TSE:8031
Mitsui & Co.,ltd — Investor Day (2018)
58 slides from Mitsui & Co.,ltd's investor day presentation, Jun 19, 2018
Slide 1: Financial Strategy Review and Outlook
Financial Strategy Review and Outlook
Slide 2: Basic Policy
Basic Policy Support Mitsui’s growth strategy by ensuring liquidity and maintaining financial soundness Ensure long-term stable funding and maintain access to financial capital markets Maintain liquidity and mitigate refinancing risk Fully utilize loans from government financial agencies, proj
Slide 3: Progress in Financial Strategy
Progress in Financial Strategy Cash flow focused management; Strengthen financial base Introduced cash flow allocation framework from previous medium-term management plan Mar/2017: Executed hybrid loans (total ¥555bn, recognized equity content 50%) Mar/2017 onwards: Made steady progress in str
Slide 4: Core Operating Cash Flow
Core Operating Cash Flow (100 million yen) Iron Ore Crude Oil (JCC) (USD) 7,000 180 160 6,000 140 5,000 120 4,000 100 3,000 80 60 2,000 40 1,000 20 0 0 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3e 20/3e Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 4
Slide 5: Debt Maturity as of 2018/03
Debt Maturity as of 2018/03 (100 million yen) 7,000 Due within 2 years: Hybrid(1st Call) Short-Term Debt Long-Term Debt 11,400 6,000 5,000 4,000 3,000 2,000 1,000 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Copyright © MITSUI & CO., LTD. ALL RIGHTS RES
Slide 6: Net Debt to Equity Ratio
Net Debt to Equity Ratio* (100 million yen) (times) 60,000 Shareholder's Equity Net Debt Net DER 1 0.9 50,000 0.8 0.7 40,000 0.6 30,000 0.5 0.4 20,000 0.3 0.2 10,000 0.1 0 0 13/3 14/3 15/3 16/3 17/3 18/3 19/3e 20/3e *Adjusted Net DER by including 50% of subordinated syndicated loan (JPY 555bil) in c
Slide 7: Non-Current Asset / Shareholder's Equity (Multiple)
Non-Current Asset / Shareholder’s Equity (Multiple) (100 million yen) (times) 90,000 Non-Current Asset Shareholder's Equity Multiple 2.0 80,000 1.9 70,000 1.8 1.7 60,000 1.6 50,000 1.5 40,000 1.4 30,000 1.3 20,000 1.2 10,000 1.1 0 1.0 13/3 14/3 15/3 16/3 17/3 18/3 19/3e 20/3e Copyright © MITSUI & CO
Slide 8: Risk Asset / Shareholder's Equity
Risk Asset / Shareholder’s Equity* (100 million yen) (%) 50,000 Risk Asset Shareholder's Equity Risk Asset/Equity 80 75 40,000 70 65 30,000 60 55 20,000 50 45 10,000 40 35 0 30 13/3 14/3 15/3 16/3 17/3 18/3 19/3e 20/3e *Adjusted Shareholder’s Equity by including 50% of subordinated syndicated loan (
Slide 9: Core Areas
Mineral & Metal Resources Energy Core Areas Machinery & Infrastructure Chemicals Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 9
Slide 10: Mineral & Metal Resources: Shinichiro Omachi
Mineral & Metal Resources Shinichiro Omachi Mineral & Metal Resources Business Unit Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED.
Slide 11: Basic Strategies
Basic Strategies Raw Material Supply Secure competitive resources and contribute to stable supply Recovery & Value Refinery & Recycling chain Processing Establish trading and investment businesses to fulfill customer & Sales and partner needs Marketing Pursue balanced business which contributes to s
Slide 12: Quantitative Targets Profit (PAT) / Core Operating Cash Flow
Quantitative Targets Profit(PAT)／Core Operating Cash Flow Unit：¥bn Seize the upside potential on a market upturn 257.6 Valepar valuation gain 89.3 ■ Profit (PAT) ■ Core Operating 240.8 Cash Flow 168.3 175.0 200.0 Mar/2018 Mar/2019 Mar/2020 （Actual） Medium-term Management Plan Copyright © MITSUI & CO
Slide 13: Major Projects
Major Projects Vale Robe River (Australia) Rio Tinto Mt. Newman / Yandi / Goldsworthy / Jimblebar (Australia) South Walker Creek / BHP Poitrel (Australia) Iron ore Moranbah North / Mitsui Capcoal / Dawson (Australia) Anglo American Coal Moatize / Nacala (Mozambique) Copper Kestrel (Australia) Glenco
Slide 14: Progress on Key Initiatives
Progress on Key Initiatives Further enhance competitiveness Iron Ore ◆Increased equity share of production ◆Increased quality assets through Valepar reorganization ◆Automating Western Australian iron ore operations Extract returns from new projects, enhance portfolio Coal ◆Ramping-up Moatize coal mi
Slide 15: Competitive Advantages - Iron Ore
Competitive Advantages - 1 Three pillars of profit base: iron ore, coal, and copper Cost Competitiveness Equity Share of Production* World-class cost competitiveness Robust production base Iron Ore Further enhancing cost competitiveness ・Vale Carajas S11D production increase ・BHP Jimblebar pro
Slide 16: Competitive Advantages - Coal and Copper
Competitive Advantages - 1 Three pillars of profit base: iron ore, coal, and copper Cost Competitiveness Equity Share of Production* Further strengthen cost competitiveness Portfolio focused on coking coal Coal Start up of Moatize coal mine Cost Curves (image) AAS･Caserones operational impro
Slide 17: Competitive Advantages - Originating Investment Opportunities (1)
Competitive Advantages - 2 Using Mitsui’s long experience and capabilities in mineral and metal resources— trust, network, distribution—to originate investment opportunities New Businesses Iron ore Vale 1971 2003 Entered Brazil Partnered with iron ore Vale Aluminium business 2005 Increased stakes in
Slide 18: Competitive Advantages - Originating Investment Opportunities (2)
Competitive Advantages - 2 Using Mitsui’s long experience and capabilities in mineral and metal resources— trust, network, distribution—to originate investment opportunities Chemical products Erdos and other 1970~ 2004 2007 downstream Cashmere trading Ferroalloys JV with Participated in Erdos Electr
Slide 19: Changes in the business environment over 1 year: Mitsui's approach
Changes in the business environment over 1 year: Mitsui’s approach China’s Accelerated shift toward Global acceleration of rapidly changing low carbon emissions shift to EV environmental policy Increased importance of Growing need for high grade Some major mining companies securing secondary resourc
Slide 20: Basic Strategies
Basic Strategies Raw Material Supply Secure competitive resources and contribute to stable supply Recovery & Value Refinery & Recycling chain Processing Establish trading and investment businesses to fulfill customer & Sales and partner needs Marketing Pursue balanced business which contributes to s
Slide 21: Energy: Hirotatsu Fujiwara
Energy Hirotatsu Fujiwara Energy Business Unit II Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED.
Slide 22: Basic Strategies
Basic Strategies Build a competitive asset portfolio Develop a mid/downstream energy value chain Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 22
Slide 23: Quantitative targets Profit (PAT) / Core Operating Cash Flow
Quantitative targets Profit(PAT)／Core Operating Cash Flow Unit：¥bn ■ Profit (PAT) ■ Core Operating 180.0 Cash Flow 175.3 65.0 48.6 Mar/2018 Mar/2019 Mar/2020 （Actual） Medium-term Management Plan Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 23
Slide 24: Competitive advantages
Competitive advantages Equity share of crude oil & gas production and reserves; LNG production capacity Production volume; LNG production Reserves *Reserves are for post-FID projects only capacity Mozambique Production Left axis：Production ■Oil ■Gas Reserves (1,000 Boe./ day) Right axis：Reserves ■Oi
Slide 25: Business Environment
Business Environment Energy demand will increase along with economic and population growth Fossil fuels Non-fossil fuels／ Main source of primary energy for some time Renewable energy Crude Oil Gas Growing needs of society There are scenarios that anticipate crude oil demand to reach a plateau Strong
Slide 26: Acquisition of AWE Limited
1 Build a competitive upstream asset portfolio Acquisition of AWE Limited, an Australian oil and gas company E&P Business ・ Expansion of asset portfolio 2P reserves 82m BOE (December 2017), Production 2.5m BOE (forecast for 2018) ・ Acquired operatorship capabilities Waitsia gas field • Currently p
Slide 27: Mozambique Area1
1 Build a competitive upstream asset portfolio Mozambique Area1 LNG MOZAMBIQUE Top-class Restrained Business Resources entry cost Approximately 75tcf Participation from the – this amounts to over 15 Area 1 Consortium years' worth of natural exploration stage OFF SHORE AREA 1 (approx. 10 years ago)
Slide 28: Cameron LNG
2 Develop a mid/downstream energy value chain Cameron LNG Energy • Increase in Mitsui’s handling volume of LNG by 4million tons/year* Value Chain *Approximately the annual gas consumption of 12million Japanese households • Allocate 7 newly built LNG carriers to expand global trading Cameron LNG Co
Slide 29: Projects in the Pipeline
Projects in the Pipeline Gas Oil Tempa Rossa oil field Sakhalin II LNG Train 3 Kaikias oil field Cameron LNG Browse gas field Mozambique Area 1 Greater Enfield oil field Waitsia gas field Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 29
Slide 30: Machinery & Infrastructure: Shingo Sato
Machinery & & Infrastructure Shingo Sato Integrated Transportation Systems Business Unit Ⅰ Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 30
Slide 31: Quantitative Targets Profit (PAT) / Core Operating Cash Flow
Quantitative Targets Profit(PAT)／Core Operating Cash Flow Unit：¥bn ■ Profit (PAT) 158.8 ■ Core Operating 105.0 Cash Flow 89.6 90.0 85.0 85.0 Mar/2018 Mar/2019 Mar/2020 （Actual） Medium-term Management Plan Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 31
Slide 32: Competitive Advantages - Development & Expansion
Competitive Advantages Developing comprehensive business through extensive customer base and coordination with top-level partners Coordination with 160 affiliate companies ■Automobiles ■Construction equipment ■Shipping ■Aerospace ■Transportation Development & Expansion Copyright © MITSUI & CO., LTD.
Slide 33: Competitive Advantages
Competitive Advantages Existing infrastructure assets backed by stable demand Increase in value through productivity streamlining, and portfolio optimization through asset recycling Africa Asia, Renewable energy Australia 7% Power generation capacity 9.3GW 16% Middle East 34% Power Well-balanced
Slide 34: Business Environment
Business Environment Climate change Mobility market Technological bringing heightened expansion and innovation and awareness of the business model digital revolution environment change Low-carbon society Strengthening of Accelerated change Shift from owning to using environmental regulations in indu
Slide 35: Basic Strategies
Basic Strategies Thoroughly reinforce a sustainable earnings base Implement strategic lifecycle management Enter new business domains (e.g. automotive sector) Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 35
Slide 36: Thoroughly reinforce a sustainable earnings base (progress)
1 Thoroughly reinforce a sustainable earnings base (progress) Increased stake in ・Equity holding 20%30% Cameron ・Investment in 2 of 7 Penske Truck ¥48.0 bn LNG vessel long-term charter ships Leasing ・Strengthened ties with ・Assessing remaining 5 Penske Group (70%) ships ・Launched operation of 2 ・Fi
Slide 37: Digital Transformation
1 Thoroughly reinforce a sustainable earnings base Digital Transformation Sky Futures ・Drone inspections to increase safety and decrease downtime (UK) ・Improve inspection efficiency of large assets such as ships ・Optimize asset management through accumulated data and AI “Digital Transformation with
Slide 38: Power business: Develop & Sell
2 Strategic lifecycle management（2018 progress） Power Power business: Develop ＆ Sell IPP Distributed Power Large power plants Energy management Asset recycling services Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 38
Slide 39: Challenge new business domains (automotive sector)
3 Challenge new business domains（Example: automotive sector） Engineering Upstream EV Batteries outsourcing Automotive sector OEM business manufacturing & sales （continue to strengthen as core earnings 成長 source） Downstream Services／Lease, rental and sharing • Fleet Management • Mobility as a Service
Slide 40: Individual strategy 1: Lease, Rental, Sharing
Individual strategy① Lease, Rental, Sharing Penske Truck Leasing Co., L.P（”PTL”） Together with Penske Automotive Group as PTL international transportation services company (US) Secure new mobility business platforms in US and other regions Grow and horizontally extend full-service truck leasin
Slide 41: Individual strategy 2: Expand EV and batteries platforms
Individual strategy② Expand EV and batteries platforms Investing in EV development and manufacturing business to secure development and production capabilities in EVs and core components Caetano Bus（EV bus） ・Global No.1 in airport passenger buses Participate ・Aiming to expand EV bus business thru
Slide 42: Auto industry regional strategy
Auto industry regional strategy ● Logistics ▲ Assembly, mftg ◆ Dealer ○ Finance, lease, rental T TOYOTA Y YAMAHA D DAIHATSU S Subaru T CLAAS Russia ■ Distributor ■ Auto parts H HINO O Others, Various As of March 2018 H T Mitsui Bussan Automotive (Thailand) T Toyota Canada H Hino Motors Sales (Thaila
Slide 43: Chemicals: Sayu Ueno
Chemicals Sayu Ueno Basic Materials Business Unit Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED.
Slide 44: Quantitative Targets Profit (PAT) / Core Operating Cash Flow
Quantitative Targets Profit(PAT)／Core Operating Cash Flow Unit：¥bn 80.0 ■ Profit (PAT) ■ Core Operating 50.2 55.0 50.0 Cash Flow 34.2 40.0 Mar/2018 Mar/2019 Mar/2020 （Actual） Medium-term Management Plan Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 44
Slide 45: Business Environment
Business Environment Population growth in developing countries QoL improvements Personal Nutrition Care New business opportunities Increasingly where industries intersect Food & Agriculture complex industry Healthcare structure Increase in demand for Mobility ICT / industrial solutions based on New
Slide 46: Competitive Advantages
Competitive Advantages Connect the chemical industry with related industries and create new business through the power of chemistry Coating materials Electronics Food & Agriculture Advanced Agricultural materials input Dental x Digital Healthcare Performance Basic Human Mobility materials Petrochemi
Slide 47: Competitive Advantages
Competitive Advantages Projects Provide additional value Strengthen to customers and global sales capabilities our own projects Magnet effects through loop of trading and projects Deepen relationships （deal flow creation） Stay alert to industry changes with partners and and technological innovation
Slide 48: Basic Strategies
Basic Strategies Execute bolt-on investments Reinforce trading capabilities Engage in new growth opportunities Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 48
Slide 49: Strengthen methionine business
1 Execute bolt-on investments Strengthen methionine business Animal at NOVUS Nutrition • Stable demand growth(6%/yr.) 【Methionine production locations】 • Top market share in the U.S. and competitive edge (plant location and product form) • Plan to increase production capacity Novus Other producers
Slide 50: Tank Terminal
1 Execute bolt-on investments Geographic advantage & advanced Tank Terminal safety management framework Increased export of petroleum and petrochemical products due to the competitiveness of U.S. shale 3.0 3,000 2.8mil m3 Doubled tank capacity 2.0 2,000 1.4 in past 10years Continuing further e
Slide 51: Methanol
1 Execute bolt-on investments Steady demand growth（5-6%/yr.） Methanol 【Methanol production cost curve 】 Top class cost Production cash cost competitiveness Total prod. in 2017 Approx. 78 mil MT Europe NE Asia SE. etc. ME N.America Asia Africa S.America 0 40 80 Continuously pursue further capac
Slide 52: Reinforce trading capabilities
2 Reinforce trading capabilities Global trading Asset-based trading Global × Local distribution Trading Platform Function Operational flexibility based on leading market share and “Tailor made” solution model 【 Trading-related gross profit 】 volume Unit：¥bn ・Mitsui Bussan Chemicals ・Mitsui & Co. ・Mi
Slide 53: Engage in new growth opportunities
3 Engage in new growth opportunities Coating materials Semiconductor sensor Agreement to invest in Europe business Investment in Connectec Japan Performance (install sensor chips on various materials) Materials Unique surfactants IoT F/S of manufacturing and sales of SOFTANOL® products in Thailand H
Slide 54: Engage in new growth opportunities - Coating Materials
3 Engage in new growth opportunities Industry characteristics Coating “Tailor made” R&D/proposals High entry barrier Materials Expertise-intensive industry High profitability (Technology & Service Network) Mitsui Strengths Helios Group Global sales network Comprehensive coating Presence in
Slide 55: Engage in new growth opportunities - Nutrition & Agriculture
3 Engage in new growth opportunities Challenge new areas between “foods” and Nutrition & “pharmaceuticals” Agriculture Address demand for high-added value such as solutions for presymptomatic disease, QoL improvements, enhanced taste and flavor Develop agrochemical and seed businesses through
Slide 56: Quantitative Targets
Quantitative Targets Unit：¥bn 80.0 ■ Profit (PAT) ■ Core Operating 50.2 55.0 50.0 Cash Flow 34.2 40.0 Mar/2018 Mar/2019 Mar/2020 （Actual） Medium-term Management Plan Copyright © MITSUI & CO., LTD. ALL RIGHTS RESERVED. 56
Slide 57: A Cautionary Note on Forward-Looking Statements
A Cautionary Note on Forward-Looking Statements: This material contains statements (including figures) regarding Mitsui & Co., Ltd. (“Mitsui”)’s corporate strategies, objectives, and views of future developments that are forward-looking in nature and are not simply reiterations of historical facts.
Slide 58: 360° business innovation.
360° business innovation. MITSUIECO.