Final Results -1-
May 15 2003 - 3:03AM
UK Regulatory
RNS Number:1227L
Mitsubishi Corporation
14 May 2003
May 14, 2003
Mitsubishi Corporation
Results for Fiscal 2003 (Year Ended March 2003),
and Outlook for Fiscal 2004 (US GAAP)
Major indices Year ending Year ended Year ended
Mar.31,2004 Mar.31,2003 Increase or decrease Mar.31,2002
Crude oil (USD/BBL) 24.0 25.9 -1.9 ( -7.3%) 22.0
Foreign exchange (YEN/USD) 115.0 122.0 -7.0 (6% Yen appreciation) 125.0
Interest (%)TIBOR 0.10 0.09 0.01 ( +11% ) 0.09
Consolidated Income
For the fiscal For the fiscal Outlook for the fiscal year
year ended year ended Mar.2003 ending Mar.2004
Mar.31,2002
(Billions of Yen) (UNAUDITED) Gain (loss) on a Gain (loss) on a
year earlier year earlier
Operating transactions 13,230.7 13,328.7 98.0 a 14,300.0 971.3
Gross profit 643.9 718.6 74.7 b 775.0 56.4
(+11.6%) (+7.8%)
Selling, general & (542.8) (595.4) (52.6) c (645.0) (49.6)
administrative expenses
Provision for (32.9) (22.6) 10.3 d (10.0) 12.6
doubtful receivables
Operating income 68.2 100.6 32.4 120.0 19.4 l
(+47.6%) (+19.3%)
Interest expense - net (11.8) (14.0) (2.2) (20.0) (6.0)
Dividends 36.3 28.2 (8.1) 25.0 (3.2)
Gain on marketable 34.9 (43.1) (78.0) f
securities and
investments - net
Gain (loss) on (8.5) (5.6) 2.9 g 25.0 79.0
property and equipment - net
Other expenses (19.6) (5.3) 14.3 h
Income from consolidated 99.5 60.8 (38.7) 150.0 89.2 m
operations before income taxes (-38.9%) (+146.7%)
Income taxes (45.9) (38.3) 7.6 (80.0) (41.7)
Minority interests in (2.1) (8.0) (5.9) (15.0) (7.0)
net income
Equity in earnings of 8.8 39.7 30.9 i 45.0 5.3
affiliated companies - net
Cumulative effect of 0 8.1 8.1 j 0 (8.1)
a change in accounting
principle - net
Net income 60.3 62.3 2.0 100.0 37.7 n
(+3.2%) (+60.5%)
(For Reference)
Core earnings 134.4 177.1 42.7 180.0 2.9
capabilities (*1)
(*1) Core earnings capabilities = Operating income (before the deduction of
provision for doubtful receivables) + Interest expense-net + Dividends + Equity
in earnings of affiliated companies - net
Assets and Liabilities Mar.31,2002 Mar.31,2003 Mar.31,2004
(UNAUDITED) Increase or Increase or
decrease decrease
Total assets 8,146.3 8,097.9 (48.4) 8,000.0 (97.9)
(Current assets) 3,979.9 3,922.1 (57.8) 3,900.0 (22.1)
(Investments and 2,705.5 2,510.0 (195.5) 2,400.0 (110.0)
non-current receivables)
(Property and equipment 1,460.9 1,665.8 204.9 1,700.0 34.2
and other assets)
Total shareholders' equity 1,029.9 937.1 (92.8) 1,000.0 62.9
(For Reference)
Interest bearing 4,239.8 3,912.9 (326.9) 3,800.0 (112.9)
liabilities (*2)
Debt-to-equity ratio (Gross) 4.1 4.2 0.1 3.8 (0.4)
Debt-to-equity ratio (Net) 3.7 3.8 0.1 3.4 (0.4)
(*2) Interest bearing liabilities do not include notes and bills discounted and
impact of adopting FAS 133.
Cash Flows Mar.31,2002 Mar.31,2003
Operating activities 161.6 270.3 Reflects strong cash flows from metal resources and
food-related businesses, among others.
Investing activities 38.1 (24.4) Reflects outflows by the acquisition of airplane
leasing assets.
Free Cash Flow 199.7 245.9
Financing activities (129.6) (282.7) Strong cash flows from operating activities were
used to reduce debt.
Increase/decrease of cash and 80.3 (46.4)
cash equivalents
(For Reference)
*1 Core earnings capabilities: The sum of recurring profit and expense items.
This yardstick is used to measure Mitsubishi Corporation's ability to generate
earnings.
*2 Interest-bearing liabilities: The portion of interest-bearing liabilities on
the balance sheet representing funds procured that Mitsubishi Corporation is
obliged to repay.
Summary of Fiscal 2003 Results
Overview
(1) Operating income reaches Y 100 billion
Operating income jumped about 50% to Y 100.6 billion on a 12% rise in gross
profit, resulting from an upswing in overseas automobile operations and
expansion in metal resources and food-related fields, as well as a decrease in
provision for doubtful receivables. This was the first time in a decade, since
fiscal 1993 at the end of the Japanese bubble, that operating income has
exceeded Y 100 billion.
(2) Posted record core earnings
MC posted record core earnings of Y 177.1 billion, up 32%. This reflected the
high operating income and a sharp increase in net equity in earnings of
affiliated companies resulting from the absence of the prior-year one-time
write-off of an impairment loss on equity method goodwill in Lawson, Inc. and a
recovery in earnings at overseas automobile operations.
(3) Year on year increase in consolidated net income
While MC failed to achieve its original Y 85 billion target due to large write-
offs of marketable securities available for sale, stemming from a stock market
decline, the consolidated net income rose Y 2.0 billion to Y 62.3 billion, the
third-highest level behind fiscal 2001 and fiscal 1991.
Major Year-on Year Changes
a. Operating transactions ( Increased Y 98.0 billion )
The overall increase of Y 98.0 billion resulted from a recovery in market
conditions for petrochemical products and expansion in the food-related fields.
However, metals transactions decreased, as steel products operations were
transferred to a new company Metal One (accounting for the three-months period
from January through March 2003). In addition, lower volumes of crude oil and
petroleum products brought down transactions in the energy business.
b. Gross profit ( Increased Y 74.7 billion )
The sharp 12% increase of Y 74.7 billion reflected the recovery in overseas
automobile operations and strong performances by subsidiaries involved in metal
resources. The expansion of food-related operations through M&As and the
consolidation of subsidiaries wholesaling food products to convenience stores
also boosted gross profit.
c. SG&A expenses (Increased Y 52.6 billion )
These expenses rose 10% due to the consolidation of new subsidiaries in
food-related operations. The increase was also due to higher early retirement
and pension expenses.
d. Provision for doubtful receivables (Decreased Y 10.3 billion )
The Y 10.3 billion improvement mainly reflects the absence of the large bad
debts in fiscal 2002 that stemmed from the withdrawal from North American metal-
related subsidiaries.
e. Net financial income ( Decreased Y 10.3 billion )
Reflected a slight increase in net interest expenses and lower dividends due to
the absence of higher dividends at energy-related businesses in the previous
fiscal year.
f. Gain on marketable securities and investments Y net(Decreased Y 78.0 billion)
Write-off of marketable securities (available for sale) : Increased Y 25.5
billion (-Y 40.4 ss - -Y 14.9 )
Write-off related losses on non-performing assets : Increased Y 13.1 billion
(-Y 38.8 ss - -Y 25.7 ) (Losses on sale and write-down losses)
Gain on contribution to pension trust : Decreased Y 8.2 billion (+18.0 -- +26.2)
Other gains on sales of shares, etc. : Decreased Y 31.2 billion (+18.1 -- +49.3)
g. Loss on property and equipment (Decreased Y 2.9 billion )
Improvement resulted from gains on sales of parent company-owned leased office
buildings and the absence of impairment losses on real estate overseas recorded
in fiscal 2002.
h. Sundry - net (Increased Y 14.3 billion )
Reflects lower loss related to lawsuit concerning graphite electrode trading.
i. Equity in earnings of affiliated companies -- net (Increased Y 30.9 billion)
Large increase resulted from the absence of a one-time write-off in the prior
fiscal year of an impairment loss on equity method goodwill in Lawson, Inc. and
improving results in overseas automobile operations.
j. Cumulative effect of a change in accountable principle -- net (Increased Y
8.1 billion )
Resulted from recognizing of the aggregate unamortized amount of negative
goodwill and equity method goodwill based on a new accounting standard that was
adopted effective from fiscal 2003. As a result, the companies recognized a gain
for the cumulative effect of an accounting change.
Outlook for the fiscal year ending March 2004
Overview
Under MC2003, its current three-year management plan, MC has been actively
reshaping its business portfolio under the banner of the Portfolio Management
Strategy and reallocating resources to fields where growth is expected. These
actions have yielded a steady increase in MCfs core earnings, essentially
operating income and net equity in earnings of affiliated companies. Although MC
is unlikely to hit its MC2003 target of consolidated net income of Y 120 billion
due to increasing pension expenses and other factors, the company is targeting
its first ever net income in the Y 100 billion range in the last year of MC2003.
Main Points
k. Operating transactions/gross profit... Y 14.3 trillion/Y 775.0 billion
Operating transactions are projected to increase approximately Y 970 billion to
Y 14.3 trillion. The consolidation of steel products subsidiary Metal One is
expected to boost operating transactions by Y 1.25 trillion, but a stronger yen
will partly offset this.
Gross profit is projected to increase Y 56.4 billion to Y 775.0 billion, boosted
Y 49.0 billion by consolidation of Metal One and by higher earnings in the
nursing care rental products subsidiary.
l. Operating income... Y 120.0 billion
MC projects a Y 50.0 billion increase in SG&A expenses due to increasing pension
expenses at the parent company, as well as expenses resulting from the
consolidation of Metal One and other new subsidiaries. However, this is expected
to be outweighed by a higher rate of increase in gross profit, leading to higher
operating income. MC also expects to see a reduction in doubtful receivables and
thus a decline in provision for doubtful receivables due to past write-offs.
These factors underpin an expected approximate Y 20.0 billion increase in
operating income to Y 120.0 billion.
m. Income from consolidated operations before income taxes... Y 150.0 billion
The higher estimated operating income, combined with an expected sharp decrease
in write-offs of marketable securities, are projected to result in an
approximate Y 90.0 billion increase in income from consolidated operations
before income taxes to Y 150.0 billion.
n. Net income... Y 100.0 billion
Net income is forecast to climb roughly Y 38.0 billion to Y 100 billion due to
the higher income from consolidated operations before income taxes and an
expected increase in already-strong net equity in earnings of affiliated
companies.
Forward-looking Statements
Earnings forecasts and other forward-looking statements in this release are
managementfs current views and beliefs in accordance with data currently
available, and are subject to a number of risks, uncertainties and other factors
that may cause actual results to differ materially from those projected.
This information is provided by RNS
The company news service from the London Stock Exchange
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