Thank you for your ongoing support.

For the 125th period (April 1, 2023, to March 31, 2024), the Toho Zinc Group's net sales declined by 10% from the previous year to 130,803 million yen due to the lower market price of zinc and a decrease in the sales of lead and silver products.
Profits decreased in the smelting and refining business as well as the environment and recycling business. Furthermore, they also fell in the mineral resources business due to the lower grade of crude ore at Rasp Mine in Australia, losses from the unstable operations at Abra Mine in Australia, and equity in losses of affiliates, including impairment losses from the shares of Abra Mine. As a result, profits declined compared to the previous year, resulting in an operating loss of 690 million yen and an ordinary loss of 10,727 million yen. Net income attributable to the owners of the parent company significantly decreased to 46,452 million yen. This decline was a result of impairment losses incurred by the decision to close the Rasp Mine, losses related to the sale of an affiliate in China, and the posting of allowances for bad debts and an allowance for losses on debt guarantee, both of which were for Abra Mine.
We regretfully announce that we will not pay year-end dividends for this period due to the substantial losses incurred during this period.

Business restructuring plan

We have spent a long time examining the factors that have brought us to our current situation. We will thoroughly analyze the factors that have led to the predicament, review our business performance, and implement proactive measures to ensure that similar situations will not arise again. We will specifically promote organizational and human resource system reform as we strongly believe that strengthening governance and ensuring an effective decision-making process is of paramount importance.
To tackle the more challenging business environment than expected, we have decided to review the 2030 Vision that we have been promoting and to develop and implement a radical business restructuring plan, including a strategy to improve our profit structure as soon as possible. The key aspects of the plan are described below.

1. Our vision

   Foster a corporate culture and mindset that embraces change. Rebuild our business portfolio in terms of a recycling-oriented society, decarbonization, technical capabilities to successfully deal with environmental challenges, and development capabilities trusted by customers. Change and grow to transform into a new Toho Zinc.

2. Review of core business operations

   Continue to improve the profitability of the zinc smelting and refining business operations, which has a high-cost business structure. Conduct a comprehensive review of the operational processes. Withdraw from the mineral resources business as soon as possible through the closure or divestment of our mines.

3. A core business and growth business of the new Toho Zinc

   Undertake a radical business portfolio restructuring and strengthen the core business. These efforts will be made by enhancing production through an increase in the ratio of recycled materials and improving the recovery of silver and other byproducts in the lead smelting business, and increasing the efficiency in zinc oxide production in the zinc recycling business. To achieve growth and increase our corporate value, direct our business management resources primarily to the growth business as follows: the electrolytic iron business, which has the world's largest market share, and the electronic component business, where market expansion is expected.

4. Rebuilding of a solid business foundation

   To transform into a new Toho Zinc, drastically reduce costs, enhance profitability through efficient cash flow management, and dispose of idle assets. Adapt to changes in the business environment, undertake an organizational restructuring to make appropriate business decisions, and strengthen governance. Consider recapitalization with the aim of restoring a solid financial foundation as soon as possible.

We are currently engaged in the meticulous development of the business restructuring plan. A new Toho Zinc will effectively adapt to the changing external environment and achieve sustainable growth. We hope to share a roadmap outlining the transformation into a new Toho Zinc with our shareholders in due course, along with a scenario for restoring our financial foundation.

I would like to extend my appreciation to our shareholders for your ongoing cooperation and support.

ITO Masahito
President