Financial Results for the Third Quarter of Fiscal Year Ending March 2025

Feb 6, 2025 at 6:23 AM UTC · Issued by Mitsubishi Steel Mfg.co., Ltd.

February 6, 2025

Summary of 3Q results

Net sales declined YoY due to decreased sales volumes of various products, including products for construction machinery and for automobiles, despite the start of mass production on a large-scale project in the strategic business of precision spring components.
Despite the effects of decreased sales volumes, operating income grew YoY due to contributions from the precision spring components and improvements in costs and selling prices.
Ordinary income and net income rose YoY due to various factors, including higher operating income and reduction of non-operating expenses, despite the recording of extraordinary losses on our withdrawal from the German springs business and litigation related to a North American subsidiary.

Exchange rates				(JPY100M)
End of December	End of December

2023	2024	FY2023 3Q results	FY2024 3Q results	YoY change
$1 = JPY142	$1 = JPY158

Net sales	1,260	1,19６	△64

Operating income	28	50	22

Ordinary income	8	41	33

Net income attributable to	△6	10	16
owners of parent company


	1

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

Net sales

(JPY100M)

Sales

Selling

Consolidation

Sales under

Foreign

volumes

prices

adjustments,

contract*

exchange

etc.

gains/losses

FY2023 3Q

FY2024 3Q

results

Operating income

*: Sales under contract to Nippon Steel Corporation

(JPY100M)

Production

Inventory

Energy

Raw

costs

valuation,

costs

material

etc.

prices

Sales

Selling

volumes

prices

FY2023 3Q

FY2024 3Q

results

Results by segment

				(JPY100M)

		FY2023 3Q results	FY2024 3Q results	YoY change

Special Steel	Net sales	686	616	△70
Bars	Operating income	20	31	11

Springs	Net sales	513	502	△11
Operating income	△1	12	13

Formed &	Net sales	67	69	2
Fabricated

Products	Operating income	3	3	0
Machinery	Net sales	66	65	△1
Operating income	5	3	△2

Other	Net sales	26	28	2
Operating income	1	1	0

Consolidation	Net sales	△98	△83	15
adjustments	Operating income	△0	△0	0

Total	Net sales	1,260	1,196	△64
Operating income	28	50	22

		3

Results by segment

Special Steel Bars

(JPY100M)

	FY2023	FY2024	YoY
	3Q	3Q	change
Net sales	686	616	△70
Operating income	20	31	11

Springs

			(JPY100M)

	FY2023	FY2024	YoY
	3Q	3Q	change
Net sales	513	502	△11
Operating income	△1	１2	13

Formed & Fabricated Products

(JPY100M)

	FY2023	FY2024	YoY
	3Q	3Q	change
Net sales	67	69	2
Operating income	3	3	0

Machinery	(JPY100M)

	FY2023	FY2024	YoY
	3Q	3Q	change
Net sales	66	65	△1
Operating income	5	3	△2

 Net sales declined due to decreased sales volumes	Domestic sales of Special
Steel Bars (cumulative)
• Japan: Declining sales for construction
	FY2023 3Q	279 kt
machinery and for other uses		FY2024 3Q	254 kt

• Indonesia: Slow automobile sales due to tightening of loan approval process
Due to progress in margin improvements, operating income grew sharply despite decreased sales volumes. FY2024 3Q is significantly more profitable compared to FY2023 3Q because FY2023 3Q was heavily impacted by a sharp decrease in quantity and resulting decline in productivity.
Net sales declined due to decreased sales volumes for automobiles and for construction machinery.
Operating income returned to profitability due to contributions from the start of a large-scale project in precision spring components, improvements made in selling prices, and improved earnings at the North American subsidiary.
Due to further increases in orders, MSM plans additional investment in equipment for precision spring components.
Net sales increased due to sales volumes of precision castings.
Due to product mix, operating income remained almost unchanged YoY despite increasing sales volumes.
While net sales remained almost unchanged YoY, operating income

declined due to a product mix and other factors.

Orders in FY2024 are projected to12.2 billion yen. These orders contribute to the future income in FY 2025 and after.

Impact of non-operating income/loss and extraordinary income/loss

Non-operatingincome/loss improved due to the reduction of non-operating expenses such as the improvement in foreign exchange profit and loss.
Extraordinary income/loss worsened YoY due to the recording of losses related to litigation related to a North American subsidiary in the third quarter (See the next page for more information) as well as the withdrawal from the German springs business.

	Exchange rates					(JPY100M)
	End of December 2023	End of December 2024

						FY2023 3Q results	FY2024 3Q results	YoY change
			$1 = JPY142	$1 = JPY158

Operating income			28	50	22
		Non-operating income/loss	△19	△9	10
			Translation (exchange profit and loss)	△7	1	8
			Interest paid			△13	△11	2

Ordinary income			8	41	33
		Extraordinary income/loss	△0	△16	△16
			Insurance income	０	2	2
			Loss on business liquidation (Including	ー	△11	△11
			provision of allowance)
			Provision for loss on litigation	ー	△7	△7
Net income before income taxes and other	8	25	17
adjustments

Tax expenses			△11	△13	△2
Net income attributable to non-controlling interests	△2	△2	0
Net income attributable to owners of parent	△6	10	16
company

						5

Litigation and recording of extraordinary loss on North American subsidiary

Summary and background of litigation

This issue emerged when our North American subsidiary MSSC received a demand for price revisions on parts supplied from AirBoss Flexible Products Co., its supplier.
While our claims were initially upheld, the court decision ultimately upheld the claims made by Flexible.

December 2019 MSSC received notice of a demand for price revisions on parts supplied from Flexible its supplier, indicating that the supply of parts would cease if the demand was not met.

February 2020 MSSC filed with a local court for a preliminary injunction to ensure continuing supply. In response, a preliminary injunction was issued to continue the supply of the products at the current price. Flexible appealed against the judgement upholding MSSC claims.

July 2023

The Supreme Court remanded the case to the Circuit Court, where it resumed.

December 2024 The Circuit Court for the State of Michigan ordered MSSC to pay the demanded price retroactively and to pay

late payment charge.
January 2025 MSSC appealed the decision.

Impact on profit/loss

As a result of the court decision, we recorded an extraordinary loss of 0.7 billion yen as provisions for losses on litigationin the third quarter.
we are proceeding to negotiate with customers on rising procurement costs and on covering price revisions and other resultsin preparation for the event that MSSC loses the lawsuit and obligations for payment arise.
The point at issue in this decision is retroactive payments. We have already reached agreement with Flexible and customers regarding current prices.
⇒ Accordingly, we do not expect this case to result in losses beyond those recorded at this time.

Full-year performance forecasts

Forecasts for net sales, operating income, and ordinary income remain unchanged from previous forecasts. Progress toward these results is proceeding largely as planned.
The forecast of net income also remain unchanged from previous forecasts due to proceeding to negotiate with customers on covering price revisions, despite the recording of losses related to litigation involving the North American subsidiary in the third quarter.

We project an exchange rate of $1 = JPY150 (unchanged from the initial forecast).

		Forecasts for FY2024
	1H results	3Q results	4Q	Full-year
	projections	forecasts

Net sales	805	391	454	1,650

Operating income	32	18	30	80

Ordinary income	17	24	21	62

Net income attributable to		10	23	33
owners of parent company


Dividends	30.	34.0	64.0

(JPY100M)

(Reference)

FY2023

results

1,699

△10

60.0

Progress toward operating income of 3Q result and 4Q projections is proceeding largely as planned. Operating income is projected to improve in 4Q compared to 3Q for the following reasons:
- Conclusion of price negotiations, including retroactive prices, mainly in the Springs Business
- The tendency for Machinery Business sales to cluster toward the end of the year

Note on forward-looking statements

These materials are meant solely to provide investors with information and are not to be interpreted as solicitations. The forecasts provided in these materials are based on targets and projections and do not constitute promises or guarantees of future performance. Please refer to this information with the understanding that the Company's future performance may differ from this business outlook. While these earnings materials were prepared based on data believed to be reliable, we cannot guarantee their accuracy or reliability. The Company assumes no liability for these materials, regardless of the purpose for which they are used by investors. We encourage all investors to make their final investment decisions based on their own judgment.

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