I would like to begin by extending a special thank you to all of our shareholders for your ongoing support of the business activities of Sumitomo Metal Mining Co., Ltd. (SMM)
While the world economy in this fiscal year saw increasing protectionism and antiforeignism in the US alongside heightened geopolitical risks, the overall track was from recovery to growth with improvements including globally increasing share prices against a backdrop of improving corporate results. With regards to foreign exchange, the yen was on average weaker this year in comparison with the previous year, which had suffered the impact of a stronger yen as a result of the UK’s decision to leave the EU. However, due to factors including clear protectionist moves by the US government, the yen strengthened towards the end of this fiscal year. With regards to the price of non-ferrous metals, both copper and nickel experienced a rising price trend, with the price of both exceeding the last fiscal year. In industries related to the materials business, demand for automobile battery materials continued to increase. Materials for smartphones and other such products enjoyed an overall robust sales environment, but crystal materials were significantly impacted by an ongoing inventory adjustment. Against this backdrop, sales for this fiscal year increased year-on-year by 147.4 billion yen to 933.5 billion yen due to factors including a rise in the price of non-ferrous metals and the impact of the weaker yen.
Operating profit grew year-on-year by 33.8 billion yen to 110.2 billion yen due to increased income. Recurring profit saw a year-on-year turnaround of 126.5 billion yen to reach 124.9 billion yen due to a decrease in equity method investment losses pertaining to the Sierra Gorda copper mine (Chile) in addition to an increase in operating profit, resulting in the first current account surplus in three years. Net profit attributable to the parent company for this year saw a turnaround of 110.1 billion yen from the previous year to reach 91.6 billion yen.
The Morenci copper mine (USA), in which SMM acquired additional interest in May 2016, contributed significantly to business results due to factors including an increase in copper prices. The Sierra Gorda copper mine saw an increase in capacity utilization as a result of tackling operational improvement as a priority issue. Furthermore, an on-site feasibility study* is currently underway for the Côté Gold Project (Canada), in which SMM acquired an interest in June 2017.
*Feasibility study: A survey and investigation carried out in advance into whether a project is feasible or not (potential profit, etc.)
Taganito HPAL Nickel Corporation (Philippines) completed work to increase annual production capacity for nickel intermediate material to 36,000 tonnes from 30,000, and is currently operating at its full 36,000 tonnes production capacity.
Work at the Harima Refinery (Hyogo Prefecture, Japan) to increase annual production capacity for nickel sulfate to 49,000 tonnes from 45,000 has also been completed, and the plant is currently operating at its full 49,000 tonnes production capacity. As well as this, production of scandium is planned to start in 2018, and business structure reforms after withdrawal from lead and zinc operations have made great progress. In the materials business, while the decision was made in November 2016 to withdraw from the lead frame business, overseas transfer of operations is now almost complete, and progress has been made on structural reforms focusing on advanced materials. Regarding expansion of production for lithium nickel oxide which is used in automobile battery materials, work to create a monthly production capacity of 3,550 tonnes is now complete, and further work is currently underway to build a monthly production capacity of 4,550 tonnes.
Sumitomo Metal Mining's growth to date has in no way been underpinned solely by the business climate; it has also been built up by the efforts made by its employees and stakeholders. The SMM Group will continue to make the utmost effort to implement its growth strategy as it has in the past, based on economic conditions and the business climate. Based on our motto, "deeds, not words," we will fulfill our objectives in an effort to further increase our corporate value.
We will actively distribute information relating to projects as well as new products and technologies in order to familiarize stakeholders more deeply with SMM and retain your trust.
We look forward to the continued support and understanding of stakeholders in these endeavors.
President & Representative Director