May 2, 2017 2:30 am JST
Earnings preview

Mitsui Mining heads toward best profit in 7 years

Demand growing for engineered materials

Mitsui Mining controls over 90% of the global market for ultrathin copper foil used in smartphones.

TOKYO -- Mitsui Mining & Smelting is on track to a consolidated pretax profit of nearly 30 billion yen ($268 million) in the current fiscal year, more than 10% higher than the estimate for fiscal 2016 as strong sales of engineered materials for smartphones patch over poor earnings in its metals business. 

The result would be the second straight year of profit growth and the highest profit since fiscal 2010's 34 billion yen. Improved sales of ultrathin copper foil used in smartphones, for which the Tokyo-based company controls over 90% of the global market, are making up for deteriorating earnings in its zinc business.

Sales are expected to rise about 10% to 480 billion yen thanks to the copper foil, ranging in thickness from 1.5 microns to 5 microns. Mitsui Mining has maintained its high market share owing to the advanced technology required to make the material so thin.

The engineered-materials business is likely to contribute about 70% to pretax profit. The company expects major smartphone manufacturers will increase per-phone usage of ultrathin copper foil as they ready the release of new models as early as this year. Mitsui Mining sees demand growing for several years, and will invest in raising production capacity both domestically and in Malaysia.

Sales of materials in China for indium tin oxide used in LCD panels for televisions and other devices have been brisk. A sales rebound is expected for a catalyst used in purifying emissions from motorbikes and scooters popular in India, as consumption recovers in that country following the government's demonetization policy.

On the other hand, profit in Mitsui Mining's metals segment is seen dropping. Closures of large mines are stirring concerns about a shortage of zinc, its main business, and worsening the terms on which the company purchases ore. The company is also expecting higher electricity costs, which are not likely to be absorbed by improved profitability from higher zinc prices.

Sales for the year ended last month are seen falling 2% to 440 billion yen. Pretax profit will likely beat the original projection by more than 1 billion yen, reaching 25 billion yen and bouncing back from an 11.2 billion yen loss the previous year. An impairment loss recorded in fiscal 2015 for a copper mine in Chile is now off the books and profitability improved in the zinc-smelting business. Better sales in functional materials also contributed to profit.

Earnings results will be announced May 10.

(Nikkei)

Mitsui Mining & Smelting Co., Ltd.

Japan

Market(Ticker): TKS(5706)
Sector:
Industry:
Producer Manufacturing
Metal Fabrication
Market cap(USD): 2,919.57M
Shares: 572.96M

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