— How do you interpret Mitsui’s performance for this three-month period?

Net income for the three month period ended December 31, 2009 was ¥20.2 billion. During this third quarter our results were impacted by some one-off factors, such as the impairment loss recognized on preferred shares in Japan Airlines Corporation, but excluding such one-time items we see that our results have actually been improving quarter by quarter, proving again that we are on the right track.

— Mitsui’s forecast for full-year net income was upwardly revised to ¥140 billion at the end of the third quarter, after being unchanged at the end of the first half. What is the background to this?

Although performance has been uneven, the global economy has been recovering gradually, lead by recovery in emerging economies, in particular China. Mitsui’s performance has also been improving, supported by stronger prices and volumes in Mineral Resources and Energy. We have therefore upwardly revised our original forecast of ¥120 billion, which we left unchanged at the end of the first half, by ¥20 billion. Looking ahead, we will be aiming to maintain a solid and healthy financial condition while paying close attention to the risk of a double-dip recession that could be triggered by a range of factors-such as trying to remove the stimulus measures too quickly, and the success or otherwise of measures taken to prevent or control asset bubbles in emerging economies.
For the full year, net income of ¥140 billion would give an annual dividend of ¥16 per share based on our dividend policy of targeting a consolidated payout ratio of 20%. Deducting the ¥7 per share already paid as an interim dividend, we therefore plan to propose a year-end dividend of ¥9 per share.

Net Income by Quarterly Result

— As of the end of the third quarter Mitsui had implemented approximately ¥250 billion of its investments and loans. Can you comment on this, taking into account Mitsui’s balance sheet?

Looking first at the balance sheet, total assets as of December 31, 2009 were ¥8.4 trillion, largely the same as at the end of March 2009. Shareholders’ equity was ¥2.1 trillion, an increase of approximately ¥230 billion that was primarily attributable to a steady accumulation of retained earnings. With a decrease in net interest-bearing debt, net DER stood at 1.02 times. Nearly all our key financial indices have been improving, which I believe reflects a successful effort to ensure a sound financial platform from which to aggressively pursue the opportunities arising in the current economic environment.

Our investments and loans plan at the start of the year was around ¥360 billion, of which we had implemented around ¥250 billion as of the end of the third quarter, primarily in the expansion of existing production basis in Mineral Resources and Energy. Net capital outflow for the period was around ¥120 billion, as a result of portfolio optimization that resulted in capital recovery of approximately ¥130 billion, including an additional capital redemption from the Sakhalin II project.

Accordingly, we recorded positive free cash flow(*1) of ¥313.9 billion. If we look at investments and loans in more detail in each area, in Mineral Resources & Energy the amount was around ¥100 billion, with around ¥70 billion in Global Marketing Networks, around ¥50 billion in Consumer Services, and around ¥30 billion in Infrastructure. So as of the end of the third quarter our investment and loans program and portfolio optimization has generally proceeded on track. Looking ahead, investments and loans already announced but not yet implemented include approximately ¥480 billion for shale gas development in the U.S.(*2), around ¥110 billion for power generation in Mexico, and approximately ¥28 billion for a display manufacturing and sales operation in Taiwan (depending on the outcome of a TOB). At the same time, we have already confirmed the sale of upstream oil and gas assets in the Gulf of Mexico for approximately ¥25 billion.

At the beginning of this financial year we stated our intention to aggressively pursue attractive investment opportunities that showed a good strategic fit with Mitsui, and that we would not necessarily restrict our investment to the planned amount of ¥360 billion. There is no change to our intention in this regard, and although there is not much of the year left, we will continue to actively pursue high-quality investment and loan opportunities.

Investments and Loans