Jfe Holdings, Inc. · TSE:5411

Jfe — FY2018 Earnings Presentation

52 slides from Jfe's earnings presentation, May 14, 2019

  1. Slide 1: Financial Results in Fiscal Year 2018

    Securities Code: 5411.T JFE Group Financial Results in Fiscal Year 2018 ended March 31, 2019 JFE Holdings, Inc. May 14, 2019

  2. Slide 2: A table of contents

    A table of contents 1. JFE Holdings’ Financial Results in Fiscal Year 2018 ended March 31, 2019 2. JFE Holdings’ Financial Forecasts for Fiscal Year 2019 ended March 31, 2020 3. Progress of Sixth Medium-Term Business Plan This presentation material is for information and discussion purpose only. Any

  3. Slide 3: Consolidated Results in Fiscal Year 2018

    Consolidated Results in Fiscal Year 2018 (April 1, 2018 to March 31, 2019) 3

  4. Slide 4: Financial Results in Fiscal Year 2018 (IFRS)

    JFE-HD Financial Results in Fiscal Year 2018（IFRS） FY2017 FY2018 Change FY2018 Change （billion yen） Full Year(A) Full Year(B) (B-A) Forecast(Ｃ) (B-C) Revenue 3,627.2 3,873.6 246.4 3,800.0 73.6 Business Profit 218.3 232.0 13.7 233.0 (1.0) Financial income/costs (14.4) (12.5) 1.9 (13.0) 0.5 Segment Pr

  5. Slide 5: Financial Results in Fiscal Year 2018 (J-GAAP)

    JFE-HD Financial Results in Fiscal Year 2018（J-GAAP） FY2017 FY2018 Change FY2018 Change （billion yen） Full Year(A) Full Year(B) (B-A) Forecast(Ｃ) (B-C) Net Sales 3,678.6 3,961.7 283.1 3,900.0 61.7 Operating Income 246.6 191.2 (55.4) 190.0 1.2 Non-operating Income (Expenses) (30.3) 29.9 60.2 30.0 (0.

  6. Slide 6: Transition from J-GAAP to IFRS

    JFE-HD Transition from J-GAAP to IFRS （billion yen） Net sales/ Ordinary income/ Revenue Business profit Japanese GAAP 3,961.7 221.1 Reclassifications Financial income － 12.5 Transaction as agent etc. (88.1) － Recognition and measurement differences Retirement benefit liability etc. － (1.6) IFRS 3,87

  7. Slide 7: JFE Steel Financial Results in Fiscal Year 2018

    ＪＦＥ Steel Financial Results in Fiscal Year 2018 7 7

  8. Slide 8: Production and Shipment

    JFE Steel Production and Shipment FY2017 FY2018 FY2018 Change Full year 2H Full year Forecast 1H Unit （A） 3Q ４Q (B) (B-A) (Ｃ) Crude Steel Approx. Mt 28.46 14.04 6.39 5.88 26.31 (2.15) (Standalone) 27.00 Crude Steel Approx. (Consolidated) Mt 30.06 14.84 6.79 6.25 27.88 (2.18) 28.50 Shipment Approx. (

  9. Slide 9: 1.3 Billion Yen Increase in JFE Steel's Segment Profit

    JFE Steel 1.3 Billion Yen Increase in JFE Steel’s Segment Profit (FY18 (Forecast) vs. FY18 (Actual) ) 【IFRS】 (billion yen) FY2017 FY2018 FY2018 Change Change FY2017 Forecast JFE Steel Actual Forecast Actual →FY2018 →Actual （A) （B） （C） （C-A） （C-B） Segment Profit 187.2 160.0 161.3 (25.9) ＋1.3 Annual t

  10. Slide 10: 25.9 Billion Yen Decrease in JFE Steel's Segment Profit

    JFE Steel 25.9 Billion Yen Decrease in JFE Steel’s Segment Profit (FY17 (Actual) vs. FY18 (Actual) ) 【IFRS】 (billion yen) FY2017 FY2018 FY2018 Change Change FY2017 Forecast JFE Steel Actual Forecast Actual →FY2018 →Actual （A) （B） （C） （C-A） （C-B） Segment Profit 187.2 160.0 161.3 (25.9) ＋1.3 ・Cost red

  11. Slide 11: JFE Engineering Financial Results in Fiscal Year 2018

    JFE Engineering Financial Results in Fiscal Year 2018 11

  12. Slide 12: Financial Results in FY2018 of JFE Engineering

    JFE Engineering Financial Results in FY2018 of JFE Engineering 【IFRS】 (billion yen） FY2017 FY2018 FY2018 Change Change (Actual) (Forecast) (Actual) A B C (C-A) (C-B) Orders 488.7 500.0 482.8 (5.9) (17.2) Revenue 401.5 480.0 485.8 84.3 5.8 Segment Profit 18.7 22.0 20.1 1.4 (1.9) 【Change: FY2018 Forec

  13. Slide 13: JFE Shoji Trade Financial Results in Fiscal Year 2018

    JFE Shoji Trade Financial Results in Fiscal Year 2018 13

  14. Slide 14: Financial Result in FY2018 of JFE Shoji Trade

    JFE Shoji Trade Financial Result in FY2018 of JFE Shoji Trade 【IFRS】 （billion yen） FY2017 FY2018 FY2018 Change Change (Actual) (Forecast) (Actual) A B C （C-A） （C-B） Revenue 999.3 1,090.0 1,125.8 ＋126.5 ＋35.8 Segment Profit 35.1 35.0 35.7 +0.6 +0.7 【Change: FY2017 to FY2018】 (Full year) ・Increase wit

  15. Slide 15: Dividends

    Dividends 15

  16. Slide 16: Dividends

    JFE-HD Dividends JFE Holdings has decided to propose at its general meeting of shareholders a year-end dividend of 50 yen per share, which would bring the annual dividend of 95 yen per share. 16

  17. Slide 17: Financial Forecasts for Fiscal Year 2019

    ＪＦＥ Holdings Financial Forecasts for Fiscal Year 2019 17

  18. Slide 18: Current Business Environment

    JFE-HD Current Business Environment Steel Demand Both domestic and overseas steel demands are forecast to remain robust overall though a risk of trade friction still needs to be watched carefully. Domestic construction: demand remains solid mainly with capital expenditures in public sector and urban

  19. Slide 19: (Appendix) Trend of Iron Ore Price

    JFE-HD (Appendix) Trend of Iron Ore Price Spot price of iron ore has increased with concern about tight supply due to a mining dam breach in Brazil in late January, and cyclone in Australia in the end of March. Iron ore fines from Australia $110 ($/DMT) Spot FOB Term-contract FOB $100 Cyclone in Aus

  20. Slide 20: Consolidated Financial Forecast for Fiscal Year 2019 ①

    JFE-HD Consolidated Financial Forecast for Fiscal Year 2019 ① Business profit of 180.0 billion yen is forecast in fiscal year 2019. （billion yen） FY2018 FY2019 Change Actual Forecast Business profit 232.0 180.0 (52.0) Segment profit Steel Business 161.3 105.0 (56.3) Engineering Business 20.1 23.0 2.

  21. Slide 21: Consolidated Financial Forecast for Fiscal Year 2019 ②

    JFE-HD Consolidated Financial Forecast for Fiscal Year 2019 ② ＜Breakdown of changes in segment profit in Steel Business from FY2018(Actual) to FY2019(Forecast)＞ （billion yen） ・Cost reduction ＋38.0 Cost + 60.0 ・One-off effect in FY2018＋22.0 Volume and Mix + 50.0 Sales and Raw materials - 75.0 Invento

  22. Slide 22: Progress of Sixth Medium-Term Business Plan

    Progress of Sixth Medium-Term Business Plan 22

  23. Slide 23: Key Financial/Profitability Targets Under Sixth Medium-Term Business Plan

    Key Financial/Profitability Targets JFE-HD Under Sixth Medium-Term Business Plan １．Entire Group Released on 26 th April 2018 IFRS Japanese GAAP Business profit 290.0 Consolidated ordinary 280.0 billion yen/year income billion yen/year Profit attributable to 200.0 Profit attributable to 200.0 owners

  24. Slide 24: Steel Business: Segment Profit Summary of FY2018 Actual

    JFE Steel Progress of Sixth Medium-Term Business Plan [Steel Business] 【Segment profit】 Summary of FY2018 Actual （billion yen） 250 Target (ave.basis) vs FY2018 Actual 200 Decrease in volume and increase in cost due to natural disasters and 150 operational troubles 100 220.0 220 （Action-based cost re

  25. Slide 25: Steel Business: Stabilize blast furnace operations

    JFE Steel Progress of Sixth Medium-Term Business Plan [Steel Business] ~ Stabilize blast furnace operations ~ The blast furnace trouble task team addressed direct causes for troubles, and is implementing permanent measures to stabilize blast furnaces. <Damages of auxiliary facilities of blast furnac

  26. Slide 26: Steel Business: Strengthen production capabilities ①

    JFE Steel Progress of Sixth Medium-Term Business Plan [Steel Business] ~ Strengthen production capabilities① ~ Strengthen efforts to achieve stable operation in addition to investments for capacity increase, performance maximization and cost reduction particularly in West Japan Works. ＜Domestic capi

  27. Slide 27: Steel Business: Strengthen production capabilities ②

    JFE Steel Progress of Sixth Medium-Term Business Plan [Steel Business] ~ Strengthen production capabilities② ~ Self-sufficient coking capacity for entire steelworks was established after renovation of No.6 coke oven in Chiba. Investments for renovation and increasing capacity are progressed as sched

  28. Slide 28: Steel Business: Overseas business development

    JFE Steel Progress of Sixth Medium-Term Business Plan [Steel Business] ~ Overseas business development ~ Invest mainly in priority fields to grow from long-term perspective and expand local production and improve profitability of overseas business further. Business FY FY FY Company/Project 2018 2019

  29. Slide 29: Engineering Business progress

    JFE Engineering Progress of Sixth Medium-Term Business Plan [Engineering Business] Expanding operations projects and strengthening profitability of overseas business （billion （billion （billion yen） Orders and Segment profit yen） yen） Orders of Operations Project 50 700 1,500 600 486 FY2020 Target 40

  30. Slide 30: Trading Business progress

    JFE Shoji Trade Progress of Sixth Medium-Term Business Plan [Trading Business] Aim of 6 th mid-term Build a stable profit base and enhance profitability of trading and business plan operating business. （billion yen） Segment profit Summary of segment profit in FY2018 50 Achieved the target with incre

  31. Slide 31: Debt / EBITDA Multiple

    JFE-HD Debt / EBITDA Multiple (billion yen) (times) 1,000 6.0 Debt / EBITDA Target of 6 th Multiple Mid-term Plan (right axis) Approximately 3 times 3.5 3.6 500 3.0 428 401 EBITDA (Left axis) 0 Interest-bearing 0.0 debt outstanding 1,391.2 17年度 1,523.8 18年度 FY2017 FY2018 EBITDA＝Business Income＋Depre

  32. Slide 32: Strengthen Business Structure for Sustainable Growth

    JFE-HD Strengthen Business Structure for Sustainable Growth To achieve Paris Agreement’s Long-Term Target, Japan’s steel industry Environ has formulated a new long-term vision for climate change mitigation that extends to 2100 (Nov.2018) and aims to achieve zero- mental carbon steel. The JFE Steel i

  33. Slide 33: Appendix

    Appendix 33

  34. Slide 34: Main Financial Data

    JFE-HD Main Financial Data J-GAAP IFRS FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY18 (bn. Yen, times) (bn. Yen, times) Ordinary Income 52.9 52.2 173.6 231.0 64.2 84.7 216.3 221.1 Business profit 232.0 EBITDA 306.3 260.6 368.9 421.5 254.4 279.9 388.8 405.9 EBITDA ＊1 428.2 ROS 1.7% 1.6% 4.7% 6.0% 1.9%

  35. Slide 35: Cash Flow Results for FY2018

    JFE-HD Cash Flow Results for FY2018 (billion yen) 35

  36. Slide 36: Comparative Table of J-GAAP and IFRS Profit and Loss statement

    JFE-HD Comparative Table of J-GAAP and IFRS Profit and Loss statement J-GAAP IFRS Net Sales Revenue Cost of Sales Cost of Sales Gross Profit Gross Profit Selling, general and administrative expenses Selling, general and administrative expenses Operating Income Other Income (Expenses) Share of profit

  37. Slide 37: 35.1 Billion Yen Decrease in JFE Steel's Ordinary Income

    JFE Steel 35.1 Billion Yen Decrease in JFE Steel’s Ordinary Income (FY18 3Q (Actual) vs. FY18 4Q (Actual)) J-GAAP (billion yen) FY2018 Change JFE Steel 3Q 3Q 4Q →4Q 1H Oct-Dec Jan-Mar 2H Full year Ordinary Income 114.1 42.8 7.7 50.5 164.6 (35.1) Volume and Mix ー 8.0 Sales and Raw materials ー 20.0 ・I

  38. Slide 38: 63.6 Billion Yen Decrease in JFE Steel's Ordinary Income

    JFE Steel 63.6 Billion Yen Decrease in JFE Steel’s Ordinary Income (FY18 1H (Actual) vs. 2H (Actual)) J-GAAP (billion yen) FY2018 Change JFE Steel 1H 3Q 4Q →2H 1H Oct-Dec Jan-Mar 2H Full year Ordinary Income 114.1 42.8 7.7 50.5 164.6 (63.6) Cost ー 10.0 Volume and Mix ー 24.0 Sales and Raw materials －

  39. Slide 39: Classification of placed orders

    JFE Engineering Classification of placed orders （billion yen） FY2017 FY2018 Category （A） （A） Change Main Orders (FY2018) - Construction of waste incineration plants in Tottori and Shimane - Improvement works of the waste incineration plant in Miyagi - Construction of the treatment facility of seepag

  40. Slide 40: Trend of Domestic auto production

    JFE Steel Domestic Market Environment Trend of Domestic auto production (million units） 3.5 FY16 (9.36) FY17 (9.68) FY18 (9.75[F]) 3.0 2.57 2.55 2.53 2.55 2.48 2.40 2.5 2.30 2.32 2.31 2.37 2.31 2.11 2.0 1.5 1.0 0.5 0.0 Apr - Jun Jul - Sep Oct - Dec Jan - Mar JFE Forecast 40

  41. Slide 41: 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 Mar, 2019 500 4,462kt 0 0 Feb Feb Feb Feb Feb Feb Jul Jul Jul Jul Jul Aug Aug A

  42. Slide 42: 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 3.0 250 Inventories 4 Inventories Inventory Ratio Shipment Inventory Ratio (Right) 3.5 2.5 400 200 3

  43. Slide 43: Trend of Import Steel

    0 100 200 300 400 500 600 Jan Feb Mar （000t） Apr May Jun 2014 Jul Aug Sep Oct Nov Dec Jan Domestic Feb Mar Apr May Jun Market Environment S. Korea 2015 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Chine Jun 2016 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Taiwan Jun (Ordinary Steel) 2017 Jul Aug Sep

  44. Slide 44: Price Trend of Import Steel

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

  45. Slide 45: 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 50 6 40 4 30 20 2 10 0 0 May May May May May Mar Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar Apr Aug Aug Aug Aug Aug Jul Jul Jul Jul Jul Jun Jun Jun Jun Jun De

  46. Slide 46: 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 Feb Jul Jul Jul Jul Jul Aug Aug Aug Aug Aug Jun Jun Jun J

  47. Slide 47: Metal Spread Trend (Chinese Spot Basis)

    JFE Steel Overseas Metal Spread Trend Market Environment (Chinese Spot Basis) ($/t) ($/t) 700 700 600 600 HRC 500 500 400 400 Metal Spread 300 300 200 200 100 100 0 0 2012.3 2012.6 2012.9 2013.3 2013.6 2013.9 2014.3 2014.6 2014.9 2015.3 2015.6 2015.9 2016.3 2016.6 2016.9 2017.3 2017.6 2017.9 2018.3

  48. Slide 48: 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

  49. Slide 49: Trend of Metals' Market Price

    100.0 120.0 140.0 160.0 180.0 60.0 80.0 1,000 1,200 1,400 1,600 400 600 800 2013.1 2013.1 2013.7 2013.7 （￠/lb） FeCr 2014.1 2014.1 （U$/t） FeMn 2014.7 2014.7 2015.1 2015.1 2015.7 2015.7 2016.1 2016.1 2016.7 2016.7 2017.1 2017.1 2017.7 Raw Materials 2017.7 2018.1 2018.1 2018.7 2018.7 2019.1 2019.1 2.0

  50. Slide 50: 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 2019.1 2

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

    80 90 100 110 120 130 2014.4 2014.7 （JPY/USD） 2014.10 JPY/USD 2015.1 RMB/USD 2015.4 2015.7 2015.10 2016.1 2016.4 2016.7 2016.10 2017.1 2017.4 2017.7 2017.10 2018.1 2018.4 2018.7 2018.10 2019.1 Trend of exchange rate（USD against JPY RMB） 2019.4 5 6 7 8 5.5 6.5 7.5 51 （RMB/USD）

  52. Slide 52: Copyright © 2019 JFE Holdings, Inc. All Rights Reserved

    Copyright © 2019 JFE Holdings, Inc. All Rights Reserved 52

JFE Holdings — FY2018 Earnings Presentation on 6ix