Jfe Holdings, Inc. · TSE:5411

Jfe — H1 FY2018 Earnings Presentation

54 slides from Jfe's earnings presentation, Oct 30, 2018

  1. Slide 1: JFE Group Financial Results in First Half of Fiscal Year 2018

    Securities Code: 5411 JFE Group Financial Results in First Half of Fiscal Year 2018 ending March 31, 2019 JFE Holdings, Inc. October 30, 2018

  2. Slide 2: A table of contents

    A table of contents JFE Holdings’ Financial Results in First Half of Fiscal Year 2018 (April 1 to September 30, 2018) and Financial Forecasts for Fiscal Year 2018 (April 1, 2018 to March 31, 2019) JFE Steel JFE Engineering JFE Shoji Dividends This presentation material is for information and discuss

  3. Slide 3: Consolidated Results in First Half of Fiscal Year 2018

    Consolidated Results in First Half of Fiscal Year 2018 (April 1 to September 30, 2018) 3

  4. Slide 4: Financial Results in First Half of Fiscal Year 2018

    JFE-HD Financial Results in First Half of Fiscal Year 2018 (billion yen) FY2017 FY2018 1H (Apr-Sep) 1H (Apr-Sep) Change Net Sales 1,725.3 1,907.2 181.9 Operating Income (Loss) 96.5 116.3 19.8 Non-operating Income (Expenses) 4.9 27.1 22.2 Ordinary Income (Loss) 101.4 143.5 42.1 Extraordinary Profit 1

  5. Slide 5: Financial Results in First Half of Fiscal Year 2018 (by Segment)

    JFE-HD Financial Results in First Half of Fiscal Year 2018 (by Segment) (billion yen) FY2017 FY2018 Change 1H (Apr-Sep) 1H (Apr-Sep) Steel Business 1,294.7 1,386.6 91.9 Engineering Business 160.2 192.8 32.6 Trading Business 916.2 1,018.2 102.0 Adjustments (645.9) (690.4) (44.5) Net Sales 1,725.3 1,9

  6. Slide 6: Forecasts of Consolidated Financial Results in Fiscal Year 2018

    Forecasts of Consolidated Financial Results in Fiscal Year 2018 (April 1, 2018 to March 31, 2019) 6

  7. Slide 7: Financial Forecasts for Fiscal Year 2018

    JFE-HD Financial Forecasts for Fiscal Year 2018 (billion yen) Previous Forecasts Updated Forecasts (Oct. 30. 2018) Change Change (Jul. 31. 2018) Full Full Full 1H year 1H year 1H year Net Sales 2,020.0 1,907.2 4,000.0 (112.8) Operating Income 117.0 116.3 220.0 (0.7) Non-operating Income (Expenses) 1

  8. Slide 8: Financial Forecasts for Fiscal Year 2018 (by Segment)

    JFE-HD Financial Forecasts for Fiscal Year 2018 (by Segment) (billion yen) Previous Forecasts Updated Forecasts (Jul. 31. 2018) (Oct. 30. 2018) Change Change Full Full Full 1H year 1H year 1H year Steel Business 1,450.0 1,386.6 2,880.0 (63.4) Engineering Business 190.0 192.8 480.0 2.8 Trading Busine

  9. Slide 9: Financial Forecasts for Fiscal Year 2018

    JFE-HD Financial Forecasts for Fiscal Year 2018 (billion yen) FY2017 (A) FY2018 (F) Change Change Full Full Full 1H year 1H year 1H year Net Sales 1,725.3 3,678.6 1,907.2 4,000.0 181.9 321.4 Operating Income 96.5 246.6 116.3 220.0 19.8 (26.6) Non-operating Income 4.9 (30.3) 27.1 30.0 22.2 60.3 (Expe

  10. Slide 10: Financial Forecasts for Fiscal Year 2018 (by Segment)

    JFE-HD Financial Forecasts for Fiscal Year 2018 (by Segment) (billion yen) FY2017 (A) FY2018 (F) Change Change Full Full Full 1H year 1H year 1H Year Steel Business 1,294.7 2,715.4 1,386.6 2,880.0 91.9 164.6 Engineering Business 160.2 391.3 192.8 480.0 32.6 88.7 Trading Business 916.2 1,907.9 1,018.

  11. Slide 11: JFE Steel

    ＪＦＥ Steel Financial Results in First Half of Fiscal Year 2018 11 11

  12. Slide 12: Production and Shipment

    JFE Steel Production and Shipment FY2017 FY2018 Full Unit 1H 2H 1H 1Q 2Q 3Q 4Q year 1Q 2Q Crude Steel Mt 7.12 6.98 14.10 7.23 7.14 14.37 28.46 7.10 6.94 14.04 (Standalone) Crude Steel Mt 7.53 7.38 14.91 7.63 7.52 15.15 30.06 7.51 7.33 14.84 (Consolidated) Shipment Mt 6.14 6.28 12.42 6.38 6.50 12.88

  13. Slide 13: 4.1 billion Yen increase in JFE Steel's Ordinary Income

    JFE Steel 4.1 billion Yen increase in JFE Steel’s Ordinary Income (FY18 1H (Forecast) vs. FY18 1H (Actual)) (billion yen) FY 18 1H FY18 1H Change JFE Steel Forecast Actual 1H (F) → (A) Ordinary 110.0 114.1 4.1 Income Cost reductions － 3.0 Volume and Mix － 9.0 Sales and Raw materials ＋ 6.0 Inventory

  14. Slide 14: 29.5 billion Yen increase in JFE Steel's Ordinary Income

    JFE Steel 29.5 billion Yen increase in JFE Steel’s Ordinary Income (FY17 1H vs. FY18 1H) (billion yen) FY 17 1H FY18 1H Change JFE Steel Actual Actual FY17 1H→FY18 1H Ordinary 84.6 114.1 29.5 Income Cost reductions ＋ 10.0 Volume and Mix ー 4.0 Sales and Raw materials ＋ 55.0 Inventory valuation ＋ 7.0

  15. Slide 15: JFE Steel Financial Forecasts for Fiscal Year 2018

    ＪＦＥ Steel Financial Forecasts for Fiscal Year 2018 15

  16. Slide 16: Current Business Environment (Domestic)

    JFE Steel Current Business Environment (Domestic) Strong demand environment is forecast to continue. Domestic ordinary steel orders recorded +1.4% growth on a year-on-year basis in January to August period in spite of natural disasters including heavy rain. By segment, construction and automobile us

  17. Slide 17: Domestic Combined Inventories of HR, CR and Coated Steel Sheet

    JFE Steel Domestic Combined Inventories of HR, Market Environment CR and Coated Steel Sheet 5,000 （000t） Maker Whole Saler Coil Center Inventory Ratio (right) （Month） 3 4,500 4,000 3,500 2 3,000 2,500 2,000 1 1,500 1,000 Aug, 2018 500 4,390kt 0 0 Jul Jul Jul Jul Jul Feb Aug Feb Aug Feb Aug Feb Aug F

  18. Slide 18: Domestic Inventories of Plate and Wide Flange Shapes

    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） 450 Inventories 3.0 250 Inventories 4.0 Inventory Ratio Shipment Inventory Ratio (Right) 3.5 2.5 400 200

  19. Slide 19: Trend of Import Steel (Ordinary Steel)

    0 100 200 300 400 500 1月 600 2月 3月 4月 （000t） 5月 6月 2014 7月 8月 9月 10月 11月 Domestic 12月 Jan Feb Mar Apr Market Environment S. Korea May Jun Jul 2015 Aug Sep Oct Nov Dec Jan Feb Chine Mar Apr May Jun Jul 2016 Aug Sep Oct Nov Dec Jan Feb Taiwan (Ordinary Steel) Mar Apr May Jun Jul 2017 Aug Sep Trend of

  20. Slide 20: Current Business Environment (Overseas)

    JFE Steel Current Business Environment (Overseas) World steel demand is forecast to maintain upward trend with India and ASEAN’s growth though China’s growth rate is expected to slow down. Strong supply and demand environment is continuing in spite of unclear outlook for movement toward protectionis

  21. Slide 21: Crude Steel & Im/Export, China

    Overseas JFE Steel Market Environment Crude Steel & Im/Export, China (Mt) Export(Left) Import(Left) Crude Steel (Right) (Mt) 12 90 80 10 70 8 60 Sep, 2018 Jan-Sep, 2018 50 6 Y on Y Y on Y Mt change Mt change 40 Crude Steel 80.9 +7.5% 699.4 +6.1% 4 30 Export 6.0 +16.0% 53.1 -10.7% 20 2 10 0 0 Mar Mar

  22. Slide 22: Inventories in China by Products

    Overseas JFE Steel Market Environment Inventories in China by Products （000t） 35,000 Bar Rod & 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% Feb Feb Feb Feb Feb Jul Jul Jul Jul Jul Aug Aug Aug Aug Aug Jun Jun Jun Jun J

  23. Slide 23: Metal Spread Trend (Chinese Spot Basis)

    JFE Steel Overseas Metal Spread Trend Market Environment (Chinese Spot Basis) 700 700 ($/t) ($/t) 600 600 HRC 500 500 400 400 300 300 200 200 100 Metal Spread 100 0 0 20 12.3 20 12.6 20 12.9 20 13.3 20 13.6 20 13.9 20 14.3 20 14.6 20 14.9 20 15.3 20 15.6 20 15.9 20 16.3 20 16.6 20 16.9 20 17.3 20 17

  24. Slide 24: Raw Materials Price

    JFE Steel Raw Materials Raw Materials Price （$/DMT） Iron ore (iron ore fines from Australia) （$/WMT） Coking Coal （Hard Coking Coal from Australia) $100 $400 Spot FOB Spot FOB Term-contract FOB Term-contract FOB $90 $350 $80 $300 $70 $250 $60 $200 $50 $150 $40 $100 $30 $50 Hard Coaking Coal Term-cont

  25. Slide 25: Financial Forecasts for FY2018 of JFE Steel

    JFE Steel Financial Forecasts for FY2018 of JFE Steel FY2017 FY2018 Full 1Q 2Q 1H 2H Full year year Actual Actual Actual Actual Forecast Forecast Billion Net Sales Yen 2,715.4 685.9 700.7 1,386.6 1,493.4 2,880.0 Billion Ordinary Income yen 198.8 64.4 49.7 114.1 75.9 190.0 Crude Steel (Standalone) Mt

  26. Slide 26: 10.0 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 10.0 Billion Yen decrease in JFE Steel’s Ordinary Income (FY18 (Previous Forecast) vs. FY18 (Updated Forecast) ) (billion yen) FY18 FY18 Change JFE Steel Previous Updated FY18→FY18 Ordinary 200.0 190.0 (10.0) Income Cost reductions － 5.0 Volume and Mix － 20.0 Sales and Raw materials + 2.0

  27. Slide 27: 8.8 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 8.8 Billion Yen decrease in JFE Steel’s Ordinary Income (FY17 (Actual) vs. FY18 (Forecast) ) (billion yen) FY17 FY18 Change JFE Steel Actual Forecast FY17→FY18 Ordinary 198.8 190.0 (8.8) Income Cost reductions ＋ 15.0 Volume and Mix － 10.0 Sales and Raw materials + 82.0 Metals, materials an

  28. Slide 28: 38.2 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 38.2 Billion Yen decrease in JFE Steel’s Ordinary Income (FY18 1H (Actual) vs. 2H (Forecast)) (billion yen) FY2018 (Forecast) Change JFE Steel 1H (A) 2H (F) Total 1H→2H Ordinary 114.1 75.9 190.0 (38.2) Income Cost reductions ＋ 5.0 Volume and Mix + 6.0 Sales and Raw materials － 10.0 Invento

  29. Slide 29: JFE Engineering Financial Forecasts for Fiscal Year 2018

    JFE Engineering Financial Forecasts for Fiscal Year 2018 29

  30. Slide 30: Financial Forecasts for FY18 of JFE Engineering

    JFE Engineering Financial Forecasts for FY18 of JFE Engineering (billion yen） FY2018 (Previous) FY2018 (Updated) Change 1H (F) Full year 1H (A) Full year 1H Full year Orders 290.0 271.8 500.0 (18.2) Net Sales 190.0 192.8 480.0 2.8 Ordinary Income 5.0 25.0 6.9 22.0 1.9 (3.0) 【Change】 (Previous Foreca

  31. Slide 31: Financial Forecasts for FY18 of JFE Engineering

    JFE Engineering Financial Forecasts for FY18 of JFE Engineering (billion yen） FY2017 (Actual) FY2018 (Updated) Change 1H Full year 1H Full year 1H Full year Orders 222.2 495.5 271.8 500.0 49.6 4.5 Net Sales 160.2 391.3 192.8 480.0 32.6 88.7 Ordinary Income 2.5 19.3 6.9 22.0 4.4 2.7 【Change (Full yea

  32. Slide 32: Classification of placed orders

    JFE Engineering Classification of placed orders （billion yen） FY2017 FY2018 Category Change Main Orders (FY2018 1H) Actual Forecast - Construction of waste incineration plants in Tottori and Shimane - Improvement works of the waste incineration plant in Environment 234.2 230.0 (4.2) Miyagi - Constru

  33. Slide 33: Integrated Company (JFE Kankyo + TRP)

    JFE Engineering Integration of waste treatment and recycle business subsidiary with TEPCO group 〜 The largest recycle company in metropolitan area〜 Expand the business through utilizing technological synergies and sales network of JFE Engineering and TEPCO Group JFE Engineering TEPCO Fuel ＆ Power En

  34. Slide 34: JFE Shoji Trade Financial Forecasts for Fiscal Year 2018

    JFE Shoji Trade Financial Forecasts for Fiscal Year 2018 34

  35. Slide 35: Financial Forecasts for FY2018 of JFE Shoji Trade

    JFE Shoji Trade Financial Forecasts for FY2018 of JFE Shoji Trade （billion yen） FY2018 (Previous) FY2018 (Updated) Change Change 1H (F) Full year 1H (A) Full year 1H Full year Net Sales 1,050.0 1,018.2 2,120.0 （31.8) Ordinary 18.5 35.0 19.1 35.0 0.6 0.0 Income 35

  36. Slide 36: Financial Forecasts for FY2018 of JFE Shoji Trade

    JFE Shoji Trade Financial Forecasts for FY2018 of JFE Shoji Trade （billion yen） FY2017 (Actual) FY2018 (Forecast) Change Change 1H Full year 1H Full year 1H Full year Net Sales 916.2 1,907.9 1,018.2 2,120.0 102.0 212.1 Ordinary 16.2 33.0 19.1 35.0 2.9 2.0 Income 【Ordinary Income Change】 (Full year)

  37. Slide 37: Net Sales of JFE Shoji Trade (by Segment)

    JFE Shoji Trade Net Sales of JFE Shoji Trade (by Segment) FY2017 FY2018 (billion yen) Change (Actual) (Forecast) Domestic Business 966.9 1,080.0 113.1 Export 461.7 505.0 43.3 Overseas 779.3 840.0 60.7 Business Foreign 317.6 335.0 17.4 Operation Raw Materials, Equipment etc. 161.7 200.0 38.3 TOTAL 1,

  38. Slide 38: JFE Holdings Financial Forecasts for Fiscal Year 2018

    ＪＦＥ Holdings Financial Forecasts for Fiscal Year 2018 38

  39. Slide 39: Financial Forecasts for Fiscal Year 2018

    JFE-HD Financial Forecasts for Fiscal Year 2018 (billion yen) FY2017 (A) FY2018 (F) Change Change Full Full Full 1H year 1H year 1H year Net Sales 1,725.3 3,678.6 1,907.2 4,000.0 181.9 321.4 Operating Income 96.5 246.6 116.3 220.0 19.8 (26.6) Non-operating Income 4.9 (30.3) 27.1 30.0 22.2 60.3 (Expe

  40. Slide 40: Underlying Profit before One-off Effects

    JFE-HD Underlying Profit before One-off Effects (billion yen) 300 250 17 200 27 150 250 233 100 216 189 28 50 85 57 0 Ordinary One-off Underlying Ordinary One-off Underlying Ordinary One-off Underlying Income Effects Profit before Income Effects Profit before Income Effects Profit before One-off One

  41. Slide 41: Debt / EBITDA Ratio

    JFE-HD Debt / EBITDA Ratio (billion yen) Debt / EBITDA (times) 1,000 Ratio 6.0 (right axis) 5.4 4.9 3.4 3.3 500 3.0 389 280 452 254 EBITDA 440 (left axis) 0 (forecast) 0.0 Debt FY15 FY16 FY18 FY18 Outstanding 1,379.3 1,375.4 1,330.9 1,450.0 (billion yen) EBITDA = Ordinary income + Interest expense +

  42. Slide 42: Cash Flow Forecast for FY2018

    JFE-HD Cash Flow Forecast for FY2018 (billion yen) Source Usage Dividends 55 Net Income 175 Capex, 320 Investments Depreciation 180 Debt 120 Working 100 Capital etc. 42

  43. Slide 43: Dividends

    Dividends 43

  44. Slide 44: Dividends

    JFE-HD Dividends JFE Holdings has decided at its board of directors to pay an interim dividend of 45 yen per share. The company maintain the plan to pay a year end dividend of 50 yen per share, making a total annual dividend of 95 yen per share 44

  45. Slide 45: (Topic) JFE Group Report 2018 and IT Report

    JFE-HD （Topic）JFE Group Report 2018 and IT Report English version will be available on the company’s website in November JFE Group Report 2018 Group Report provides overview of JFE’s sustainable value creation by consolidating medium-term to long-term management and business strategies, ESG initiati

  46. Slide 46: Appendix

    Appendix 46

  47. Slide 47: Main Financial Data

    JFE-HD Main Financial Data (Forecast) FY03 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 (bn. Yen, times) Ordinary Income 218.3 502.9 400.5 69.2 165.8 52.9 52.2 173.6 231.0 64.2 84.7 216.3 250.0 EBITDA ＊1 432.3 741.4 670.8 337.1 428.9 306.3 260.6 368.9 421.5 254.4 279.9 388.8 440.0 ROS

  48. Slide 48: Price Trend of Import Steel

    40 45 50 55 60 65 70 Jan Feb Ma r A pr Ma y Ju n (000 yen/ton) 20 13 Ju l A ug Sep Oct Nov Dec Jan Feb Ma r A pr Domestic Ma y Ju n 20 14 Ju l A ug Import Steel from S. Korea Sep Market Environment Oct Nov Data: Japanese Steel Association Dec Jan Feb Ma r A pr Ma y Ju n 20 15 Ju l A ug Sep Oct Nov D

  49. Slide 49: Trend of Metals' Market Price

    60 80 100 120 140 160 180 1,000 1,200 1,400 1,600 400 600 800 2013.1 2013.1 2013.7 （￠/lb） 2013.7 2014.1 （U$/t） FeMn 2014.1 2014.7 2014.7 2015.1 2015.1 2015.7 2015.7 2016.1 2016.1 2016.7 2016.7 2017.1 2017.1 Raw Materials 2017.7 2017.7 2018.1 2018.1 2018.7 2018.7 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 8

  50. Slide 50: Raw Materials Trend of Market Price

    JFE Steel Raw Materials Trend of Market Price (yen/t） Scrap ($/day） Spot Bulker 45,000 45,000 40,000 40,000 35,000 35,000 30,000 30,000 25,000 25,000 20,000 20,000 15,000 15,000 10,000 10,000 5,000 5,000 0 0 2013.1 2013.7 2014.1 2014.7 2015.1 2015.7 2016.1 2016.7 2017.1 2017.7 2018.1 2018.7 2013.1 2

  51. Slide 51: Trend of exchange rate (USD against JPY RMB)

    Trend of exchange rate（USD against JPY RMB） （JPY/USD） （RMB/USD） 130 8 JPY/USD RMB/USD 7.5 120 7 110 6.5 100 6 90 5.5 80 5 2013.7 2014.1 2014.7 2015.1 2015.7 2016.1 2016.7 2017.1 2017.7 2018.1 2018.7 51

  52. Slide 52: 14.7 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 14.7 Billion Yen decrease in JFE Steel’s Ordinary Income (FY18 1Q (Actual) vs. FY18 2Q (Actual) ) (billion yen) FY2018（Actual） Change JFE Steel 1Q 2Q 1H 1Q→2Q Ordinary 64.4 49.7 114.1 (14.7) Income Cost reductions － 3.0 Volume and Mix ー 7.0 Sales and Raw materials ＋ 16.0 Inventory valuatio

  53. Slide 53: 0.1 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 0.1 Billion Yen decrease in JFE Steel’s Ordinary Income (FY17 2H vs. FY18 1H) (billion yen) FY 17 2H FY18 1H Change JFE Steel Actual Actual FY17 2H→FY18 1H Ordinary 114.2 114.1 (0.1) Income Cost reductions ± 0.0 Volume and Mix ー 9.0 Sales and Raw materials ＋ 31.0 Inventory valuation ー 2.0

  54. Slide 54: Copyright © 2018 JFE Holdings, Inc. All Rights Reserved

    Copyright © 2018 JFE Holdings, Inc. All Rights Reserved 54

JFE Holdings — H1 FY2018 Earnings Presentation on 6ix