Capital Increase for North American Subsidiaries

Company

2024/03/29

Mitsubishi Steel has decided to increase its capital for our group's spring business overseas subsidiaries, MSSC CANADA INC. and MSSC US INC (MSSC).

MSSC has been recording losses for a long time due to rising material prices and labor costs. However, by implementing fundamental structural reforms such as significant price negotiations for unprofitable products, the company's earnings have improved significantly this fiscal year, and a path to reconstruction has been established.

In light of these circumstances, although we have provided financial support through loans from our company in the past, we have decided to strengthen our financial structure and pursue further growth by implementing this capital increase.

Amount　:　Approximately 22 billion yen　(converted at the exchange rate at the time of the capital increase)

Implementation Period　:　March 2024

By increasing the capital of MSSC and receiving repayment of the loans provided to them, we expect the impact on the consolidated performance and finances of the Mitsubishi Steel Group to be minimal.

Initially, the plan was to proceed with the reconstruction by closing the US factory and integrating it into the Canadian factory in order to improve profitability through increased operating rates and cost reduction in response to a temporary decline in orders. However, the technical expertise and quality of our spring products in the local market have been highly regarded by our customers, and significant price negotiations for unprofitable products that were conducted with the expectation of withdrawal have made substantial progress, resulting in a significant improvement in profitability. In addition, discussions on the adoption of lightweight springs and stabilizers in the next model are also progressing, which is why we have decided to continue production at the US factory.

With this capital increase, we will further promote financial restructuring and continue to reduce manufacturing costs, accelerating the transformation towards a sustainable profit-generating corporate structure. As a result, our plan is to transition from reconstruction to a phase of growth and expansion in the coming fiscal year and beyond.