Nippon Steel Corp. · TSE:5401
Nippon Steel — Shareholder Meeting (June 2021)
26 slides from Nippon Steel's shareholder meeting presentation, Jun 23, 2021
Slide 1: Nippon Steel's Business Challenges and Measures to Take
Nippon Steel’s Business Challenges and Measures to Take 1
Slide 2: Past efforts to restore profitability
Past efforts to restore profitability 2
Slide 3: Efforts to restore profitability
Efforts to restore profitability ●The biggest challenge was to pull the domestic steel business of the parent company out of the red. ●Motivation came from a sense of crisis that made large-scale structural reform inevitable. Start of structural reform, February 2020 Slash fixed costs by selective c
Slide 4: Domestic steel business at the parent company is turning to a surplus
Domestic steel business at the parent company is turning to a surplus Amt 2019 FC Marginal profit Drastic improvement of fixed costs and variable costs in fiscal 2020 2020 FC Initial plan assumption: return to profitmaking in 1H fiscal 2020 Qty 2020 2019 BEP BEP 4
Slide 5: Domestic steel business returned to profitmaking
Domestic steel business returned to profitmaking 10 50 (14) (57) (117) Profit/loss, domestic steel business of the parent Non-consolidated operating income (loss) excluding inventory valuation differences Billion yen/year (210) 1H annualized 2H annualized ’16 ’17 ’18 ’19 ’20 5
Slide 6: Rapid response to the COVID-19-driven sharp drop in demand
Rapid response to the COVID-19-driven sharp drop in demand due to corona Early transition to minimum-cost operation, based on the consolidation of facilities through structural reform Fiscal 2020 Fiscal 2021 Muroran 2BF Banking Re-start 1BF Banking Re-start Kashima 3BF Blast 2BF Banking Re-start fur
Slide 7: Selective concentration of overseas business
Selective concentration of overseas business Achieved record-high overseas business profits in 2H fiscal 2020 Profit contribution from overseas Sales and withdrawal of the VSB business, etc. * ** Selective concentration in the tinplate business Acquisition of Essar Steel '12 '13 '14 '15 '16 '17 '18
Slide 8: Consolidated business profit of ¥110 billion in fiscal 2020
Consolidated business profit of ¥110 billion in fiscal 2020 Generated profit on a consolidated full-year basis 110.0 Excl. impairment 216.5 losses, etc. 76.5 (106.5) V. 1H 2H ’14 ’15 ’16 ’17 ’18 ’19 ’20 Billion yen per year; incl. Ex-Nisshin Steel 8
Slide 9: Forecast: ¥450 bil consolidated business profit for fiscal 2021
Forecast: ¥450 bil consolidated business profit for fiscal 2021 Strive for achieving record-high profits, renewing the post- integration high profits in fiscal 2014 471.3 450.0 Excl. impairment losses, etc. 76.5 V. 1H 2H ’21 ’14 ’15 ’16 ’17 ’18 ’19 ’20 forecast Billion yen per year; incl. Ex-Nisshin
Slide 10: Challenge of the external environment in fiscal 2021, worse than in fiscal 2014
Challenge of the external environment in fiscal 2021, worse than in fiscal 2014 Domestic Nippon Steel (parent) Iron ore price High-margin Yen/$ steel demand crude steel Dollars/ton seamless pipe exchange rate Mil tons/year production shipment volume ▼ Approx. 20% Mil tons/year 130 Tons/year ▼ Approx
Slide 11: Nippon Steel Group Medium- to Long-Term Management Plan
Nippon Steel Group Medium- to Long-Term Management Plan 11
Slide 12: Medium- to Long-Term Management Plan
Medium- to Long-Term Management Plan 1. Rebuilding our domestic steel business 2. Deepening and expanding overseas business 3. Taking on the challenge of Zero-Carbon Steel 4. Promoting DX strategies 12
Slide 13: 1. Domestic Restructuring: Change in Japan to optimize the production framework
1. Domestic Restructuring: Change in Japan to optimize the production framework ● Install profit resilience even in an adverse environment Greater structural reform than announced in February 2020 Total number of domestic BFs Shutdown Blast furnaces 5 units 15 ⇒ 10 units Crude steel production capac
Slide 14: 1. Domestic Restructuring: Reduction in fixed costs
1. Domestic Restructuring: Reduction in fixed costs Amt Strategic investments to refurbish facilities and supply high-grade steel 2H 2020 2H 2020 FC ≒ Fiscal 2025 FC Marginal Profit products Further reduction of total fixed costs is difficult Qty 2H 2020 BEP 14
Slide 15: 1. Domestic Restructuring: Profit structure independent of production volume
1. Domestic Restructuring: Profit structure independent of production Amt volume Fiscal 2025 Marginal Profit Advanced order mix with a higher proportion in high value-added products 2H 2020 Marginal Profit Fiscal 2025 FC Expand revenues and profit despite reduced domestic production volume Qty Fisca
Slide 16: 1. Domestic Restructuring: Strategic investments
1. Domestic Restructuring: Strategic investments ● Continued rise in high-grade steel product demand resulting from investment to achieve carbon neutrality Investment in a next-generation hot strip mill for stable and economical mass production of ultra-high-tensile strength steel sheets, to contrib
Slide 17: 2. Deepening and expansion of overseas business
2. Deepening and expansion of overseas business World steel demand India ASEAN Mil t/y Bil t/y 300 16.8 180 101 140 2020 78 7.6 2019 2030 20XX 2019 2030 2000 AM/NS India capacity Acquisition of and Aim to achieve global expansion equity participation in crude steel capacity (including the second an
Slide 18: 3. Taking on the challenge of Zero-Carbon Steel
3. Taking on the challenge of Zero-Carbon Steel Contributing to the realization of a green society by providing our technology and products Make advance investments in business opportunities 18
Slide 19: 3. Taking on the challenge of Zero-Carbon Steel
3. Taking on the challenge of Zero-Carbon Steel Taking on the challenge of development and implementation of new production process technology, which realizes carbon neutral in steelmaking processes Nippon Steel’s 2030 total CO2 emissions 30% reduction (Mil t/y) 102 91 70 2050 Carbon Neutral 2013 20
Slide 20: 4. Promoting DX strategies
4. Promoting DX strategies Aim to become a leading digitally-advanced steel company Strengthen business competitiveness by making full use of data and digital technology Production process innovation Business process innovation Accelerate decision-making; strengthen problem-solving capabilities 20
Slide 21: A decisive year when we are put to the test
A decisive year when we are put to the test A true V-shaped recovery in fiscal 2021 471.3 450.0 Excl. impairment losses, etc. 76.5 Bil y/r incl. Ex-Nisshin Steel 1H 2H ’21 ’14 ’15 ’16 ’17 ’18 ’19 ’20 Forecast Strive for achieving record-high post-integration profits Kickoff for achieving the medium-
Slide 22: Thank you, our shareholders, for your continued understanding and support.
Thank you, our shareholders, for your continued understanding and support. 22
Slide 23: English translation of the presentation speech
English translation from the original Japanese-language presentation for reference purpose only June 23, 2021 Nippon Steel Corporation The 97th General Meeting of Shareholders Nippon Steel’s Business Challenges and Measures to Take Presenter: Eiji Hashimoto, President I would like to explain about N
Slide 24: Speech transcript: consolidating production facilities and overseas focus
and move quickly to the minimum-cost operation stance we decided to take, calling for consolidating production facilities through structural reform. With regard to existing overseas businesses, we concentrated operations, narrowed our focus to certain businesses and withdrew from other businesses wh
Slide 25: Speech transcript: strategic investments and green steel
The plan is not intended to merely arrive at a lower equilibrium. We are now at the stage to invest a large amount of money, such as for strategic investments to refurbish aging facilities and to supply of high-grade steel products. We therefore find it difficult to further reduce the total fixed co
Slide 26: Speech transcript: digital transformation and fiscal 2021 outlook
We will also strategically promote digital transformation. Aiming to become a digital advanced company in the world steel industry, we will make full use of our treasure chest of vast, sophisticated data and digital technologies, innovate our production and business processes, accelerate decision-ma