JFEJFE GroupGroup FinancialFinancial ResultsResults forfor FiscalFiscal YearYear 20152015 endedended MarchMarch 31,31, 20162016
JFE Holdings, Inc. Ａｐｒｉｌ , 2016 A table of contents
¢ JFE Holdings’ Financial Results in Fiscal Year 2015 ended March 31,2016 ¢ JFE Holdings’ Financial Forecasts for Fiscal Year 2016 ending March 31, 2017 ¢ Progress of JFE Group Fifth Midium-Term Business Plan ¢ Dividends
This presentation material is for information and discussion purpose only. Any statements in the presentation which are not historical facts are future projections based on certain assumptions and currently available information. Please note that actual performance may vary significantly due to various factors 2 ConsolidatedConsolidated ResultsResults inin FiscalFiscal 20152015 (April(April 1,1, 20152015 toto MarchMarch 31,31, 2016)2016)
33 JFE-HD Financial Results in Fiscal Year 2015
FY2014 FY2015 Change FY2015 Change Full Year Full Year Forecast （Mt, billion yen ） 1H 2H (B-A) (B-C) (A) (B) (C)
Crude Steel Production 28.44 13.45 13.91 27.36 (1.08) Approx.27.5
Crude Steel Production Approx.30.0 (Consolidated) 31.04 14.69 15.06 29.75 (1.29) Net Sales 3,850.3 1,713.2 1,718.5 3,431.7 (418.6) 3,420.0 (11.7)
Steel Business 188.5 38.6 (10.8) 27.8 (160.7) 30.0 (2.2) Engineering Business 18.0 (0.0) 20.0 20.0 2.0 20.0 0 Trading Business 24.6 9.8 5.9 15.7 (8.9) 15.5 0.2 Adjustments (0.2) (0.0) 0.6 0.6 0.8 (0.5) 1.1 Ordinary Income 231.0 48.3 15.9 64.2 (166.8) 65.0 (0.8) [ROS] [6.0%] [2.8%] [0.9%] [1.9%] [(4.1% ）] [1.9%] [0.0%]
Extraordinary Profit (Loss) (4.3) - 10.0 10.0 14.3 0 10.0
Income Before Income Taxes and Minority Interest 226.6 48.3 26.0 74.3 (152.3) 65.0 9.3 Tax Expense and Profit Attributable to Non-controlling (87.3) (18.4) (22.2) (40.6) 46.7 (40.0) (0.6) Interests Profit Attributable to Owners of Parent 139.3 29.9 3.7 33.6 (105.7) 25.0 8.6 4 ＪＦＥＪＦＥ SteelSteel FinancialFinancial ResultsResults inin FiscalFiscal YearYear 20152015
55 JFE Steel Financial Results in FY15 of JFE Steel
(billion yen) FY2014 FY2015 FY2015 Change Change 2014 Forecast JFE steel Actual Forecast Actual →2015 →Actual AB C C-A C-B
Net sales 2,873.8 2,460.0 2,445.1 (428.7) (14.9)
Ordinary 188.5 30.0 27.8 (160.7) (2.2) Income
ROS 6.6% 1.2% 1.1% (5.4%) (0.1%)
6 JFE Steel Production and Shipments
(million tons) ■Crude Steel Production and Shipments (non-consolidated basis)
FY2014 FY2015 Change 1H 2H (A) (B) (B)-(A) Oct-Dec Jan-Mar Actual Actual Actual Actual Actual Actual Actual
Crude Steel 28.44 13.45 6.98 6.93 13.91 27.36 (1.08)
Shipments 26.07 12.37 6.45 6.56 13.02 25.39 (0.68)
Av g. Sales Price (000y en/t) 77.1 71.0 65.1 60.6 62.8 66.8 (10.3) Exchange rate (y en/$) 109.2 121.8 121.2 117.7 119.5 120.6 11.4 Period end rate (yen/$) 120.2 120.0 120.6 112.7 112.7 112.7 (7.5) ■Crude Steel Production (consolidated basis)
Crude Steel 31.04 14.69 7.57 7.48 15.06 29.75 (1.29)
7 JFE Steel 2.2 Billion Yen decrease in JFE Steel’s Ordinary Income （FY15 （Forecast ） vs. FY15 （Actual ））
(billion yen） FY2014 FY2015FY2015(Actual) Change Change FY2014 Forecast JFE Steel Actual Forecast 1H 2HFull Year →FY2015 →Actual A B C C-A C-B Ordinary 188.5 30.038.6 (10.8) 27.8 (160.7)(2.2) Income
¢ Sales and Raw materials ±±0 000
¢ Cost reduction ±±0 000
¢ Others －－2.2 2.2 Exchange loss, etc.
TOTAL ---2.2 -2.2
8 JFE Steel 160.7 Billion Yen decrease in JFE Steel’s Ordinary Income (FY14 (Actual) vs. FY15 (Actual))
(billion yen) FY2014 FY2015FY2015(Actual) Change Change FY2014 Forecast JFE Steel Actual Forecast 1H 2HFull year →FY2015 →Actual A B C C-A C-B Ordinary 188.5 30.038.6 (10.8) 27.8 (160.7)(2.2) Income
Decline in sales volume, product mix and ¢ Sales and Raw materials ---120.0 -120.0 export sales price etc.
¢ Cost reduction ＋＋35.0 35.0
¢ Inventory valuation ---40.0 -40.0 Decrease in profit of subsidiary companies Increase in depreciation, labor and ¢ Others ---35.7 -35.7 outsourcing costs Impairment loss of mining interests etc.
TOTAL ---160.7 -160.7
9 ＪＦＥＪＦＥ EngineeringEngineering FinancialFinancial ResultsResults inin FiscalFiscal YearYear 20152015
1010 JFE Engineering Financial Results in FY2015 of JFE Engineering
(billion yen ）
FY2014 (Actual) FY2015 (Actual) Change
2H Full year 2H Full year Full year
Orders 244.7 459.5 312.2 509.4 49.9 Net Sales 222.7 367.3 244.0 397.5 30.2 Ordinary Income 17.4 18.0 20.0 20.0 2.0
【Change: FY2014 Full year to FY2015 Full year 】
- Orders: +49.9 Increase in orders of environment plants, biomass power generation plants, and overseas large-scale bridge construction etc. [Historical Record]
- Net Sales: ＋30.2 Increase with increase in orders [Historical Record]
- Ordinary Income: +2.0 Increase with increase in net sales [Historical Record]
11 JFE Engineering Classification of placed orders
（billion yen ） FY2014 FY2015 Category Change Main Orders (FY2015) (Actual) (Actual) - Improvement works of waste incineration in Mie Pref., Hokkaido Pref., Chiba Pref. and Mie Pref. - Waste Incineration Power Plant in Myanmar. - Treatment and Recycling sewage sludge PFI Environment, 345.2 367.6 22.4 project in Yokohama City Energy - Biomass Power Generation Plants -Construction of gas pipelines for JAPEX between Souma City and Iwanuma City - 18 Solar power stations - Hybrid seawall for Okawa-Kesennuma Port in Miyagi Pref. - Construction of steel bridges in Bangladesh. - Manufacturing jackets for piers in Myanmar. Steel Structure, Industrial 114.2 141.8 27.6 - Construction and setting up a crane for Machinery etc. containers in Tokyo-Bay - Feed mill for J-OIL MILLS, Inc. - Install of Ballast water management system, ”Ballast Ace”, for 409 ships
Total 459.5 509.4 49.9 1212 Received order of renovation work of waste JFE Engineering incineration plant in Suzuka City -Adopt DBO method, including Main facility Renovation Work, and Operation and Maintenance- DBO ： Design, Building, Operation DBO style ・Received order with DBO method which includes renovation work of main facilities of incineration plant and operation work for 17 years in Suzuka City. ・By renovating aged main facilities and by efficient operation and appropriate maintenance, the plant can be used for longer time in the future.
● ■Project period: EPC Apr 2016 – Mar 2021 JFE Engineering Construction Performance Operation & Maintenance Apr 2017 – Mar 2034 Total Orders ■Capacity ： 90 ton ×24 hour ×3 incinerators Received ■Power generation amount ： 3,000 ｋｗｈ 19 Orders (*) ■First Building ：2003 (Designed and Built by JFE Engineering) ■Orders received ： 19 billion yen （Main facility renovation ： 5.1 billion yen Operation & Maintenance ： 14.0 billion yen ） *After starting financial aid from Ministry of the Environment in 2010 ・The demand for replacement of incineration plants is growing because about a half of 1,200 waste incineration plants in Japan is operated for more than 15 years since they were built. ・DBO method will increase in renovation work of main facilities, although the method has been common for construction of new plants and replacement. As the leading company in the environment and energy plant field, JFE Engineering continues to contribute to help reducing financial cost of municipal
and conserving environment. 13 ＪＦＥＪＦＥ ShojiShoji FinancialFinancial ResultsResults inin FiscalFiscal YearYear 20152015
1414 JFE Shoji Financial Results in FY2015 of JFE Shoji
（billion yen ）
FY2014 FY2015 Change (Actual) (Actual)
2H Full year 2H Full year Full year
Net Sales 988.2 1,934.4 841.9 1,756.4 (178.0)
Ordinary Income 13.2 24.6 5.9 15.7 (8.9)
【Change: FY2014 Full year to FY2015 Full year 】 - Ordinary Income: -8.9 ・Decrease in sales price and volume both in domestic and overseas market
・Valuation losses; ・Foreign-currency debt valuation loss of subsidiaries in China due to RMB depreciation ・Inventory valuation loss of subsidiaries in North America due to price decline of energy- related steel products 151515 JFE Shoji Net Sales of JFE Shoji (by Segment)
(billion yen) FY2014 (A) FY2015 (A) Change
Domestic Business 1,007.1 905.3 (101.8)
Export 452.7 417.7 (35.0) Overseas 743.8 689.0 (54.8) Business Foreign 291.1 271.3 (19.8) Operation Raw Materials, Equipment etc. 183.5 162.1 (21.4)
TOTAL 1,934.4 1,756.4 (178.0)
16161616 ForecastsForecasts ofof ConsolidatedConsolidated FinancialFinancial ResultsResults inin FiscalFiscal 20162016 (April(April 1,1, 20162016 toto MarchMarch 31,31, 2017)2017)
1717 CurrentCurrent BusinessBusiness EnvironmentEnvironment
1818 JFE Steel Current Business Environment
•Domestic Business Environment ‹Domestic steel demand remains robust, although some products are experiencing a delay in demand recovery. •Overseas Business Environment ‹Steel market in China has been maintaining an upward trend since the beginning of Dec. 2015, after a sharp fall of steel prices in 2015 due to growing oversupplies in China ‹Need to watch the situation of crude steel production cut and continuity of price hike in China, and final effects to international steel market 【 Supply-demand Gap in China 】 【Steel sheet market trend in China 】 900 300 550 （Mｔ） ($/t) Crude Steel 500 800 250 Production 450 (left axis) 700 200 400 Apparent CRC 600 Steel Use 150 350 (left axis) 300 500 Gap (right axis) 100 (Crude Steel Production – 250 HRC Apparent Steel Use) 400 50 200
300 0 2015/1 2015/2 2015/3 2015/4 2015/5 2015/6 2015/7 2015/8 2015/9 2016/1 2016/2 2016/3 2016/4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2015/10 2015/11 2015/12 Source：World Steel Association Source ：Chinese spot basis 19 JFE Steel The Actions for Solving Overcapacity of Steel Industry in China
(1) The statement announced by China State Council on February 4, 2016
【【【Target【TargetTarget】】】】 To reduce crude steel production capacity by 100 to 150 million tons within five years starting from 2016 ＜＜＜Measures＜MeasuresMeasures＞＞＞＞ ①①①Prohibit①Prohibit to increase production capacity ＜＜＜Actions＜ActionsActions＞＞＞＞ ②②②Resolve②Resolve overcapacity ① To enforce the law and the policy regarding Enhance incentive and subsidy environment conservation (*) and energy saving and The central government establishes to drive the companies which do not meet the standards the fund to move steel workers to out of the market. other industries ③Reinforce law-enforcement and government’s ②Develop related tax policy supervisory ※In Jan 2015, the new law for environmental ④Improve sophistication of steel industry conservation has been put into operation.
(2) The government’s report released at 12th National People’s Congress starting from Mar 5, 2016 ・ Reduce overcapacity orderly ・Prohibit new production capacity and ・Resolve “Zombie companies” dispose aging facilities ・Support to move steel workers to other ・Promote M&A, debt-workout, liquidation industries (up to 0.5 million people) ・Prepare・ 100 billion Yuan for restructuring 20 JFE Steel Overseas Daily Average Crude Steel Market Environment Production in China
(Mt/day) 2.5 2.28
2.0
1.5
1.0
0.5
0.0 2014 Mar May Jul Sep Nov 2015 Mar May Jul Sep Nov 2016 Mar Jan Jan Jan
※Daily Average Production ＝ Monthly Production / Dates 21 JFE Steel Overseas Metal Spread Trend Market Environment (Chinese Spot Basis)
700 ($/t) ($/t) 700
600 600
500 500 HRC 400 400
300 300
200 200 Metal Spread 100 100
0 0 Jul-15 Jul-14 Jul-13 Jul-12 Jul-11 Jul-10 Apr-16 Apr-15 Apr-14 Apr-13 Apr-12 Apr-11 Apr-10 Jan-16 Jan-15 Jan-14 Jan-13 Jan-12 Jan-11 Oct-15 Oct-14 Oct-13 Oct-12 Oct-11 Oct-10 Metal Spread ＝ HRC Price － Raw Materials Cost *HRC Price ： Chinese Spot basis ： Raw Materials Cost Calculated from market price of Iron Ore and Hard Coking Coal 22 JFE Steel Domestic Outlook for Domestic Auto Production Market Environment
（Million units） 3.53.53.5 FY11（9.27M units） FY12(9.55M units） FY13(9.91M units） FY14(9.59M units） 3.03.03.0 FY15(9.25M, 1H: 4.5M units） FY16(E)(1H: 4.6M units） 2.8 2.6 2.7 2.5 2.4 2.5 2.5 2.5 2.5 2.52.52.5 2.4 2.4 2.4 2.4 2.4 2.4 2.3 2.3 2.3 2.3 2.2 2.2
2.02.02.0
1.5 1.51.51.5
1.01.01.0
0.50.50.5
0.00.00.0 Apr-Jun Jul-Sep Oct-Dec Jan-Mar
JFE’s estimation 23 JFE Steel Domestic Combined Inventories of HR, Market Environment CR and Coated Steel Sheet
（000t） Maker Whole Saler （Month） 5,000 Coil Center Inventory Ratio (Right) 4
4,500
4,000 3 3,500
3,000
2,500 2
2,000
1,500 1 1,000 Feb, 2016
500 4,170kt
0 0 Jul Jul Jul Jul Jul Apr Apr Apr Apr Apr Jan Jan Jan Jan Jan Jan Jun Jun Jun Jun Jun Feb Feb Feb Feb Feb Feb Oct Oct Oct Oct Oct Mar Mar Mar Mar Mar Aug Aug Aug Aug Aug Sep Sep Sep Sep Sep Nov Nov Nov Nov Nov Dec Dec Dec Dec Dec May May May May May 2011 2012 2013 2014 2015 2016
24 JFE Steel Domestic Inventories of Plate (Plate Shear) Market Environment and Wide Flange Shapes
Inventories of Plate (Plate Shear) Inventories of Wide Flange Shapes
（000t） （Month） (000t) (Month) Inventories Shipment Inventory Ratio (Right) Inventories Inventory Ratio 450 3.0 250 4.0
3.5 2.5 400 200 3.0 2.0 2.5 350 150
1.5 2.0 300 100 1.0 1.5
250 Feb, 2016 1.0 0.5 50 Mar, 2016 381kt 203kt 0.5 200 0.0 0 0.0 Jul Jul Jul Apr Apr Apr Jan Jan Jan Jan Jun Jun Jun Feb Feb Feb Feb Oct Oct Oct Mar Mar Mar Aug Sep Aug Sep Aug Sep Jul Jul Jul Nov Nov Nov Dec Dec Dec May May May Apr Apr Apr Jan Jan Jan Jan Jun Jun Jun Feb Feb Feb Feb Oct Oct Oct Mar Mar Mar Mar Aug Sep Aug Sep Aug Sep Nov Nov Nov Dec Dec Dec May May May
2013 20142013 2015 2016 2014 2015 2016
25 JFE Steel Domestic Trend of Import Steel Market Environment (Ordinary Steel)
（000t） 600 S. Korea China Taiwan Others
500
400
300
200
100
0 Jul Jul Jul Jul Jul Apr Apr Apr Apr Apr Jan Jan Jan Jan Jan Jan Jun Jun Jun Jun Jun Feb Feb Feb Feb Feb Feb Oct Oct Oct Oct Oct Mar Mar Mar Mar Mar Aug Aug Aug Aug Aug Sep Sep Sep Sep Sep Nov Nov Nov Nov Nov Dec Dec Dec Dec Dec May May May May May 2011 2012 2013 2014 2015 2016
26 JFE Steel Overseas Market Environment Crude Steel & Im/Export, China
Mt Export Import Crude Steel (right) Mt 12 80
70 10 60 8 50
6 40
2015 Mt Change 30 4 Crude Steel 804 -2.3% 20 2 Export 112 +19.9% 10
0 0 Jul Jul Jul Jul Jul Apr Apr Apr Apr Apr Jan Jan Jan Jan Jan Jan Jun Jun Jun Jun Jun Feb Feb Feb Feb Feb Feb Oct Oct Oct Oct Oct Mar Mar Mar Mar Mar Mar Aug Sep Aug Sep Aug Sep Aug Sep Aug Sep Nov Nov Nov Nov Nov Dec Dec Dec Dec Dec May May May May May
2011 2012 2013 2014 2015 2016
*Crude Steel in Jan and Feb, 2015: WSA’s estimation 27 JFE Steel RawRaw MaterialsMaterials Raw Materials Price
（$/t） 330 350 315 300 285 Hard Coking Coal 300 Iron Ore (Fe62%) 225 225 250 209 210 200 235 172 200 225 165172 152 145 143 125 150 116 120120120120119117 171169167 170 110 939393 147 898989 848484 137 144 136 137 818181 100 129 127 130 126 555555 120 117 118122118 464646 989898 103 999999 909090 858585 50 707070 606060 626262 464646505050 525252515151474747 0 383838 393939 191919222222 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q
03040506070809 2010 2011 2012 2013 2014 2015 2016
28 ＪＦＥＪＦＥ HoldingsHoldings FinancialFinancial ForecastsForecasts forfor FiscalFiscal YearYear 20162016
2929 JFE-HD Financial Forecasts for Fiscal Year 2016
In the steel business, it is difficult to forecast future trends due to various uncertainties, such as the prices of raw materials used in steel production, and steel sale prices. If prices were to remain at current levels, however, JFE Steel forecasts ordinary income to decrease by approximately 10.0 billion yen from fiscal 2015.
The engineering business is expected to increase sales given the high value of orders placed, and the trading business is expected to improve profitability overseas. As a result, these two businesses are expected to increase their combined ordinary income by 10.0 billion yen from fiscal 2015.
The JFE Group forecasts consolidated ordinary income to be around 65.0 billion yen, similar to that of fiscal 2015.
30 JFE-HD Financial Forecasts for Fiscal Year 2016
Breakdown of Changes in Ordinary Income
Forecast for FY 2016 compared to FY2015: roughly unchanged (64.2 →65.0) (billion Yen) Steel Business:
Sales and Raw materials (60.0) Cost reduction 30.0 Inventory valuation etc. 20.0
Sub Total of Steel Business (10.0)
Engineering Business: 10.0 Trading Business:
31 JFE-HD Underlying Profit before One-off Effects
(billion yen) FY2014 FY2015 FY2016 Actual Actual Estimate
Net Sales 3,850.3 3,431.7 - Ordinary Income 231.0 64.2 65.0 ROS (*) 6.0% 1.9% - One-off Effects (32.0) (78.0) (38.0)
Underlying Profit 260.0 140.0 100.0 before One-off Effects ROS (*) 6.8% 4.1% -
*Return on Sales: Ordinary Income / Net Sales 32 ProgressProgress ofof JFEJFE GroupGroup FifthFifth MediumMedium--TermTerm BusinessBusiness PlanPlan
3333 JFE Steel Progress of Fifth Medium-Term Plan (Domestic)
Further strengthen the manufacturing base in Japan with stable production and reduce costs by continuous capital investments 【【【Capital investments 】】】 650billion yen Accelerating Capex plan (adopted 40% planned investments in FY15)
No.6B Chiba 20 Coke oven 35 1H FY2018 No.4 West (scheduled) 0 Energy Chiba Jul. 2015 Power plant (billion FY15 FY16 Target for yen) (plan) 3 years 【【【Strengthen the manufacturing base 】】】 - Intensive maintenance of the manufacturing facilities ◆Accelerating maintenance work under the current low operational rate - Strengthen subsidiaries functioning maintenance and renewal ◆Integration of JFE Mechanical and JFE Electrical & Control Systems in Apr. 2016 34 JFE Steel Progress of Fifth Medium-Term Plan (Overseas)
-Strengthen business in prioritized field especially in auto sector -Pursue growth investment from a middle- & long-term perspective
Prioritized Asia Southeast Southwest NAFTA MENA Business Field East Asia Asia Asia Automobiles ・・・China CGL ・・・Thailand （（（GJSS ））） CGL(JSGT ））） ・・・India ・・・USA Adopt for global ・・・China ・・・Indonesia （（（JSW ））） （（（AK Steel ））） procurement （（（JJP ））） CGL （（（JSGI ））） ・・・China Energy ・・・USA （（（CSI) ・・・UAE （（（PYP ））） ・・・Singapore ・・・USA （（（AL Localization in ・・・China （（（JFE-TC ））） demand region （（（Benoit ））） GHARBIA ））） （（（BHNK ））） ・・・ Infrastructure ・・・ Egypt Vietnam （ Target in （（Kandil) （（（J-Spiral ））） growing Asia Prioritized region of the fifth medium-term Overseas BF ・・・Vietnam Aiming JFE Brand 40 （（（ ））） Projects developed during the fifth medium-term million tons FHS (invested, started operation etc.) 35 JFE Steel Progress of Fifth Medium-Term Plan (Overseas)
Equity Main products Field Company Country Main progress share （（（Capacity ））） Expanding sales of galvanized sheet mainly for Japanese auto Automotive steel GJSS China 50% makers and maintaining profits. Promoting local production of Automobiles （1.8Mt/y ） ultra high-tensile steel sheet. Automotive steel Aiming to be full production with transfer from JFE Steel. JSGT Thailand 100% （0.4Mt/y ） Promoting local production of ultra high-tensile steel sheet. Automotive steel Started operation as the first automotive CGL ahead of JSGI Indonesia 100% （0.4Mt/y ） schedule in Jan. 2016. Automotive steel JSW India 15% Promoting technology transfer for automotive high-grade steel （2.3Mt/y ） Automotive pipe JJP China 51% Started operation in July 2015 （0.24Mt/y ）
Energy HRC, CRC, Coated CSI USA 50% Aiming to improve operation ratio of new pipe mill sheet and pipes Large-diameter AL Started construction in Apr 2016 and will be operational in Oct., UAE 27% welded steel pipe 2018 GHARBIA （0.24Mt/y ） Started operation of coke oven and hot strip mill in Dec. 2015. Slab and HRC Infrastructure FHS Vietnam 5% #1 blast furnace and steelmaking plant will be operational in （7.0Mt/y ） mid 2016. Promoting technical support from JFE. CRC, Coated sheet Acquired stake and started technical support in Mar. 2016. Kandil Egypt 4% （approx. 0.6Mt/y ） Promote to increase supply of steel sheet for re-roll. Dongkuk Plate Final profit of stand-alone basis turned into black through Korea 15% Steel （1.5Mt/y ） technical support from JFE and consolidation of plate mills etc. Started operation of Chongquing plant in Apr. 2016 and JFE Steel 75- Steel Drum China achieved 4 production bases including Shanghai, Zhejiang, and （9.6M /y ） Drum 80% Jiangsu in China 36 Progress of Fifth Medium-Term Plan JFE Steel (Technological development) 【Main items released in FY2015 】
Field Item Title 980MPa grade high-tensile cold rolled steel sheet with excellent ductility and Developed formability Automobiles Developed Forming technology for auto parts difficult to press
Awarded Resource-saving and heat-resistant stainless steel “JFE-TF1 ”
Developed Hydrogen station accumulator to contribute to cost reduction
Awarded Earthquake-resistant line pipe, “HIPER ®” Energy Awarded Welded steel pipe for line pipe, “Mightyseam ®”
Awarded Highly efficiency manufacturing process using large-diameter welded steel pipe facility
Developed New construction method applicable to high intensity steel pipe pole, “NC Base P”
Developed New construction method for composite underground wall using steel sheet pile, “J-WALL II” Infra- Developed Large-diameter construction method, “Urban Ring” structure Awarded Supported technology for huge earthquake by using high performance steel for construction
Awarded Highly accurate and highly efficient manufacturing process of high tensile strength heavy plate
Developed World first application of arrest structure technology for 14,000TEU grade container ship Shipbuilding Developed World first application of high strength heavy plate to LPG carrier to enhance safety to collision Developed New ecological preliminary treatment process of pig iron Process Awarded New manufacturing process of sinter, “Super-SINTER” 37 JFE Engineering Progress of Fifth Medium-Term Plan （Engineering ）
(ｂillion Yen) 【【【Main actions in FY 2015 】】】 6,000 600 509509509 500 500 Focusing Fields 5,000 500 【【【Expand overseas business 】】】 4,000 400 ©Expand orders received for large-scale steel structure Focusing Fields projects 3,000 300 FY15FY15FY15 ‹Expanded production capacity of J&M Steel Solutions Orders (to 20 k tons / month) 2,000 200 ‹ Construction of the piers with steel jackets in Myanmar 1,000 100 ‹ Construction and renovation of steel bridges on the 0 highway in Bangladesh FY14 FY15 FY17 ©Waste incineration power plant （Target） ‹ First waste incineration power plant in Myanmar ‹ SPSH (*) delivered large Incineration power plant in 【【【Develop and launch products and services 】】】 England ©Expand ballast water management system (*) SPSH: Standardkessel Power Systems Holding GmbH ‹ Cooperate with JMU subsidiary company ©Develop and offer new products in smart- 【【【Support electric energy generation at various plants 】】】 agriculture field ‹Expand orders received of biomass power plants ‹Increase solar power stations (18 stations in Japan) 【【【Ensure profit in Existing Technology Field 】】】 【【【Offer proposal-based services 】】】 ‹Renovation of waste incineration plant ©Offer total solutions for upgrading of infrastructure ‹Construction of Soma-Iwanuma pipeline ‹ Received order of PFI project from Yokohama-City ‹Hybrid coast levee in Miyagi Pref. 38 JFE Engineering Agreement for the Integration of the Shield Tunneling Machine Businesses （announced on Apr. 26, 2016 ）
【【【Domestic 】】】 Demand is expected to expand in the foreseeable future Market Forecast 【【【Overseas 】】】 Demand is expected to grow with a need for infrastructure construction such as subway route expansion
Shield Tunneling Machine Need to establish a business organization that can reliably capture The machine is used for tunneling such as growing domestic demand and accelerate expansion overseas. constructing subways, roads and sewers Integration Scheme Japan Tunnel Systems Corporation(“JTSC”) and Mitsubishi Heavy Industries Mechatronics Systems, Ltd(“MHI-MS”) will split off their shield businesses which will be transferred to the new operating company.
IHI JFE MHI IHI IHI Corporation 100% 51% 49% JFE JFE Engineering Corporation MHI-MS JTSC Mitsubishi Heavy MHI Industries, Ltd. 40% Other Shield 60% Business Business Shield New Company Business Succession Division Shield Business Division ※The number : equity share 39 JFE Shoji Progress of Fifth Medium-Term Plan (Trading)
【【【Main actions in FY 2015 】】】 【【【North and Central America 】】】 ©Acquired Kelly Pipe and expanding business in North America ‹Recognized inventory valuation losses due to price decline of energy-related steel products in FY2015 ©Established a steel pipe joint-venture company in Mexico ‹Targeting on demand of steel pipe for automobile in North and Central America (to start operation in the fall of 2016 【【【ASEAN 】】】 ©Enhanced coil center facilities in Indonesia (JSSI) ‹Introduction of large slitter machine for growing demand of automotive steel sheet in Indonesia (to start operation in the fall of 2016 ） 【【【Domestic 】】】 ©Strengthen domestic distribution and selling base ‹Established JFE Shoji Tin Center Integrated JFE Shoji Osaka Tin Center and Shin Kiyoi Kogyo in Oct, 2015 40 JFE-HD Financial Indices （ROE, Dividend Pay-out Ratio ）
ROE (Yen per share) Dividend
300 60% 12% ：ROE before One-off effect 51.4％ More than10% 50% 250 241.6 10% Approx. 8.5% 40% Dividend Pay-out Ratio 200 【【【 】】】 8% 7.7％ Basic Policy 30% 24.8％ (Approx. 25 ～～～30%) 150 20% 6% Dividend Approx. 4% (Yen per share) 10% 100 4% 0% 60 58.4 50 Profit Attributable to 2% 30 -10% 1.8％ Owners of Parent (Yen per share) 0 -20% 0% FY14 FY15 FY17 （Target） FY14 FY15
ROE = Profit Attributable to Owners of Parent / Average Shareholders’ equity in the fiscal year 41 JFE-HD Financial Indices（Debt Outstanding, D/E Ratio）
(billion yen) 1,800 100% Ref: Cash Flow of FY2015 (billion Yen ） D/E Ratio
80% Sources Usages 59.059.0％％％％ 1,700 56.956.9％％％％ Net Income Dividends Approx. 50％50 ％ Approx. 50 ％％ 60% 34 35 Depreciation Capex, Investment 40% 1,600 178 236 Debt Outstanding 20% 1,502 1,500 0% Asset Sales 1,379 -20% 115 1,400 Repayment of debt -40% 122
1,300 -60% Working Capital etc. FY17 FY14 FY15 (Target) 66 D/E Ratio = Debt Outstanding / Shareholders’ Equity 393 393 For debt having a capital component, 75% of the 300 billion yen issue price is deemed to be capital, as assessed by rating agencies. 42 DividendsDividends
4343 JFE-HD Dividends
JFE Holdings will propose at its forthcoming General Meeting of Shareholders a payment of 10 yen per share for the year-end dividend to return some profit to shareholders. That will result in a dividend for the year totaling 30 yen per share.
JFE Holdings is not issuing a dividend forecast for fiscal 2016 at this time, as it is still determining its earnings outlook.
44 AppendixAppendix
4545 JFE-HD Main Financial Data
FY03 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Ordinary Income (bn. Yen) 218.3 502.9 400.5 69.2 165.8 52.9 52.2 173.6 231.0 64.2
ROS ※※※1 8.8 ％％％ 14.2 ％％％ 10.2 ％％％ 2.4 ％％％ 5.2% 1.7% 1.6% 4.7% 6.0% 1.9%
ROE ※※※2 15.9 ％％％ 17.5 ％％％ 13.7 ％％％ 3.3 ％％％ 4.1% -2.6% 2.7% 6.3% 7.7% 1.8%
ROA ※※※3 6.5 ％％％ 13.0 ％％％ 10.0 ％％％ 2.2 ％％％ 4.6% 1.7% 1.6% 4.5% 5.5% 1.7%
Debt Outstanding 1,837 1,282 1,769 1,468 1,496 1,594 1,596 1,534 1,502 1,379
D/E Ratio ※※※4 246.2 ％％％ 61.4 ％％％ 98.9 ％％％ 75.5 ％％％ 76.5% 83.5% 76.9% 67.9% 59.0% 56.9%
Profit attributable to owners of parent (yen/share) 185.8 450.5 355.6 86.3 110.7 -68.7 71.2 177.4 241.6 58.4
Dividend (yen/share) 30 120 90 20 35 20 20 40 60(E) 30
Pay-out Ratio 16.1% 26.6% 25.3% 23.2% 31.6% －－－ 28.1% 22.5% 24.8% 51.4%
• Interim: 20 ※ 1 ROS = Ordinary income / Net sales Year-end: 10 (E) ※2 ROE = Profit attributable to owners of parent / Shareholders’ equity, ※3 ROA = Ordinary income before interest expenses / Total assets (average), ※4 D/E ratio = Debt outstanding / Shareholders’ equity. For debt having a capital component, 75% of the 300 billion yen issue price is deemed to be capital, as assessed by rating agencies. 46 JFE Steel 15.2 Billion Yen decrease in JFE Steel’s Ordinary Income (FY15 3Q (Actual) vs. FY15 4Q (Actual)
(billion yen)
JFE Steel 1H 2HFY2015 Change 3Q 4Q 3Q Oct-Dec Jan-Mar →４ Q Ordinary Income 38.6 2.2 (13.0) (10.8) 27.8 (15.2)
¢ Cost reduction ＋＋3.0 3.0
¢ Sales and Raw materials －－7.0 7.0 Decline in export sales price etc.
¢ Inventory valuation ＋＋1.0 1.0
¢ Others －－12.2 12.2 Impairment loss of mining interests etc.
TOTAL －－15.2 15.2
47 JFE Steel 49.4 Billion Yen decrease in JFE Steel’s Ordinary Income (FY15 1H (Actual) vs. FY15 2H (Actual))
(billion yen)
JFE Steel 1H 2HFY2015 Change 3Q 4Q 1H →2H Oct-Dec Jan-Mar Ordinary Income 38.6 2.2 (13.0) (10.8) 27.8 (49.4)
¢ Cost reduction ＋＋9.0 9.0
¢ Sales and Raw materials －－35.0 35.0 Decline in export sales price etc.
¢ Inventory valuation ＋＋6.0 6.0 Decrease in profit of subsidiary companies ¢ Others －－29.4 29.4 Impairment loss of mining interests Increase in depreciation etc.
TOTAL －－49.4 49.4
48 JFE Steel Domestic Market Environment Price Trend of Import Steel
(000 yen/ton) 70
65
60
55
50
45
40 Jul Jul Jul Apr Apr Apr Jan Jan Jan Jan Feb Jun Feb Jun Feb Jun Feb Oct Oct Oct Mar Mar Mar Aug Sep Aug Sep Aug Sep Nov Nov Nov Dec Dec Dec May May May 2013 2014 2015 2016
Data: Japanese Steel Association Import Steel from S. Korea 49 JFE Steel Overseas Market Environment Auto Sales in Key Countries
Automobile Sales in Key Countries (YoY Change)
60% S. Korea China Indonesia Thailand India
40%
20%
0%
-20%
-40%
-60% Jul Jul Jul Jul Jul Apr Apr Apr Apr Apr Jan Jan Jan Jan Jan Jan Jun Jun Jun Jun Jun Feb Feb Feb Feb Feb Feb Oct Oct Oct Oct Oct Mar Mar Mar Mar Mar Mar Aug Aug Aug Aug Aug Sep Sep Sep Sep Sep Nov Nov Nov Nov Nov Dec Dec Dec Dec Dec May May May May May
2011 2012 2013 2014 2015 2016
50 JFE Steel Overseas Market Environment Production Trend in China
Crude Steel Production Finished Steel by Products
000t 000t 60,000 50,000
45,000 50,000 40,000
40,000 35,000
30,000 30,000 Top 10 + Major Mills Minor Mills 25,000 Bar&Shapes Plates
20,000 20,000 Sheets Pipes etc.
15,000 10,000 10,000
0 5,000 Jul Jul Apr Apr 0 Jan Jan Jan Jun Feb Jun Feb Feb Oct Oct Mar Mar Aug Sep Aug Sep Nov Nov Dec Dec May May Jul Jul Apr Apr Jan Jan Jan Jun Jun Feb Feb Feb Oct Oct Mar Mar Aug Aug Sep Sep Nov Nov Dec Dec May 2014 2015 2016 May 2014 2015 2016 51 JFE Steel Overseas Market Environment Exports from China by Products
000t CGL
12,000 CRC
HRC 10,000 HRC (Alloy)
8,000 Rod&Wire etc.
6,000
4,000
2,000
0 Jul Jul Jul Jul Jul Apr Apr Apr Apr Apr Jan Jan Jan Jan Jan Jan Jun Jun Jun Jun Jun Feb Feb Feb Feb Feb Oct Oct Oct Oct Oct Mar Mar Mar Mar Mar Aug Aug Aug Aug Aug Sep Sep Sep Sep Sep Nov Nov Nov Nov Nov Dec Dec Dec Dec Dec May May May May May
2011 2012 2013 2014 2015 2016
52 JFE Steel Overseas Market Environment Inventories in China by Products
（000t） 35,000 Bar Rot & Wire Plate HR CR Change by previous year(%) 100%
30,000 50%
25,000 0%
20,000 -50%
15,000 -100%
10,000 -150%
5,000 -200%
0 -250% Jul Jul Jul Jul Jul Apr Apr Apr Apr Apr Jan Jan Jan Jan Jan Jan Jun Jun Jun Jun Jun Feb Feb Feb Feb Feb Feb Oct Oct Oct Oct Oct Mar Mar Mar Mar Mar Aug Sep Aug Sep Aug Sep Aug Sep Aug Sep Nov Nov Nov Nov Nov Dec Dec Dec Dec Dec May May May May May 2011 2012 2013 2014 2015 2016
53 JFE Steel RawRaw MaterialsMaterials Trend of Scrap Price
(yen/ton) 80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0 2005/4/1 2006/4/1 2007/4/1 2008/4/1 2009/4/1 2010/4/1 2011/4/1 2012/4/1 2013/4/1 2014/4/1 2015/4/1 2016/4/1 2005/10/1 2006/10/1 2007/10/1 2008/10/1 2009/10/1 2010/10/1 2011/10/1 2012/10/1 2013/10/1 2014/10/1 2015/10/1
54 JFE Steel RawRaw MaterialsMaterials Trend of Spot Bulker Price
($/day) 300,000
250,000
200,000
150,000
100,000
50,000
0 2005/4/1 2006/4/1 2007/4/1 2008/4/1 2009/4/1 2010/4/1 2011/4/1 2012/4/1 2013/4/1 2014/4/1 2015/4/1 2016/4/1 2005/10/1 2006/10/1 2007/10/1 2008/10/1 2009/10/1 2010/10/1 2011/10/1 2012/10/1 2013/10/1 2014/10/1 2015/10/1
55 JFE Steel RawRaw MaterialsMaterials Trend of LNG Price
(yen/ton)
120,000
100,000
80,000
60,000
40,000
20,000
0 2005/4/1 2006/4/1 2007/4/1 2008/4/1 2009/4/1 2010/4/1 2011/4/1 2012/4/1 2013/4/1 2014/4/1 2015/4/1 2005/10/1 2006/10/1 2007/10/1 2008/10/1 2009/10/1 2010/10/1 2011/10/1 2012/10/1 2013/10/1 2014/10/1 2015/10/1
56 JFE Steel RawRaw MaterialsMaterials Trend of Oil Price
(crude oil: $/bbl) (Bunker oil: $/t)
160 900 DUBAI
WTI 800 140 Bunker (JAPAN 380CST)
700 120
600 100
500 80 400
60 300
40 200
20 100
0 0 Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct 2016-… 2015-… 2014-… 2013-… 2012-… 2011-… 2010-… 2009-… 2008-… 2007-… 2006-…
2005-Apr 57 JFE Steel Cost Reduction (Steel Business)
(billion yen)
140
120
100
80
60 120 120 92 40 80 70 56 50 50 20 41 40 33 30 35 - 03 04 05 06 07 08 09 10 11 12 13 14 15
JFE Steel (non-consolidated basis) 58 Copyright © 2016 JFE Holdings, Inc. All Rights Reserved
59