Mitsui Kinzoku Q1 FY2027: Operating profit soars 84%, full-year forecast raised

Mitsui Kinzoku (Mitsui Mining & Smelting) announced consolidated first-quarter results showing a sharp recovery. Revenue rose 19.3% year on year to ¥201.5 billion, operating profit surged 84.1% to ¥21 billion, ordinary profit climbed 134.3% to ¥23.4 billion, and net income attributable to owners of the parent swung to a ¥16.8 billion profit from a ¥5.9 billion loss in the same period last year. The improvement was amplified by the absence of a ¥19.7 billion provision for loss on sale of shares of an affiliate that had weighed on prior-year results.

The strong performance was driven by three main factors: increased copper foil sales volumes against a backdrop of solid semiconductor demand, with price revisions boosting margins; a turnaround in inventory valuation gains thanks to higher prices for non-ferrous metals such as zinc and copper; and a weaker yen. Although palladium and rhodium prices declined from the start of the quarter, their average remained above the prior-year level, which also supported profits in the Metals segment.

Reflecting the strong start, Mitsui Kinzoku raised its full-year consolidated forecast. Revenue is now seen at ¥850 billion (up 12.1% year on year), operating profit at ¥94 billion (down 28.2%), and net income at ¥80 billion (down 12.3%). The previous forecast had been revenue of ¥830 billion, operating profit of ¥91 billion, and net income of ¥75 billion. While the first quarter already accounts for a high proportion of the full-year profit targets, management has taken a conservative stance on the second half, anticipating softer market conditions.

The company operates three business segments: Functional Materials, Metals, and Other Businesses. The automotive segment was folded into Other Businesses following the sale of an auto parts subsidiary in the previous fiscal year.

Functional Materials delivered the strongest growth, with sales of ¥100.5 billion (up 41.1%) and ordinary profit of ¥18.2 billion (up 73.8%). Volumes of ultra-thin copper foil with carrier and electrolytic copper foil for printed wiring boards expanded on the back of demand for semiconductor package substrates. Price revisions also lifted gross margins. Shipments of exhaust gas purification catalysts for motorcycles, mainly in India, remained solid. Copper foil operations achieved a dramatic profit recovery.

Metals posted sales of ¥98.2 billion (up 32.7%) and ordinary profit of ¥6.8 billion (up 105.0%). Higher market prices for zinc, lead, copper, indium and other metals turned inventory valuation effects from a drag last year into a tailwind. Major repair work was carried out at zinc smelters, but positive market factors more than offset the impact.

Other Businesses saw sales decline 28.9% to ¥38.1 billion, largely due to the sale of the auto parts unit, which had contributed ¥24.5 billion in sales and a ¥400 million loss a year earlier. Despite the top-line contraction, ordinary profit swung to a ¥500 million profit from a ¥500 million loss, supported by equity-method investment income and engineering operations.

Total assets at the end of the first quarter stood at ¥719.2 billion, up ¥21.7 billion from the previous fiscal year-end. Inventories increased by ¥26.3 billion, while cash and deposits decreased by ¥4.6 billion. Liabilities rose ¥12.2 billion to ¥288.8 billion, reflecting higher notes and accounts payable and issuance of commercial paper. Net assets grew ¥9.5 billion to ¥430.4 billion, with the equity ratio remaining solid at 58.7% (versus 59.1% at end-FY2026).

A 1-for-10 stock split is scheduled to take effect on October 1, 2026. On a post-split basis, the annual dividend forecast is an interim ¥140 and a year-end ¥14 (pre-split equivalent: ¥280 per share). Compared with the prior year’s ¥245 per share (pre-split), this represents an effective dividend increase. The split will lower the investment unit and make shares more accessible to individual investors, while signaling stronger shareholder returns.

Note: No quarterly cash flow statement was published. Depreciation amounted to ¥6.88 billion, down from ¥7.52 billion a year earlier, potentially indicating a lull in capital investment.

Although the full-year forecast was raised, operating and net profit are still projected to decline year on year. Management has adopted relatively cautious assumptions for the second half, including an assumed exchange rate of ¥160 per dollar and a zinc LME price of $3,400 per ton, which are below the levels seen in the first quarter. This reflects wariness over downside risks in resource prices.

Geopolitical risks, sharp currency moves, and a potential peak in semiconductor demand could directly affect copper foil volumes. The downtrend in palladium and rhodium prices remains a profit headwind for the Metals segment. The medium-term management plan “25 Mid-Term Plan” aims to align economic and social value, but progress in reshaping the business portfolio will be a key yardstick.

Given the high external uncertainty, the risk of earnings falling short of assumptions warrants attention.

Alongside the quarterly results, Mitsui Kinzoku revised upward its full-year consolidated forecasts for fiscal 2027. The new targets are: revenue ¥850 billion (up 12.1% year on year), operating profit ¥94 billion (down 28.2%), ordinary profit ¥100 billion (down 26.9%), and net income ¥80 billion (down 12.3%).

Comparison with previous forecast:

At the segment level, the full-year operating profit forecast for Functional Materials was raised sharply from ¥67.0 billion to ¥78.0 billion, while the Metals forecast was cut drastically from ¥37.5 billion to ¥26.5 billion, reflecting lower assumed prices for zinc and palladium.

Despite the strong first quarter, the company is penciling in slower earnings momentum in the second half, leaving the full-year outlook for a year-on-year decline unchanged. That caution defines the tone of this earnings season.