Jfe Holdings, Inc. · TSE:5411

Jfe — H1 FY2021 Earnings Presentation

52 slides from Jfe's earnings presentation, Nov 5, 2021

  1. Slide 1: JFE Group Financial Results for First Half of Fiscal Year 2021

    Securities Code：5411.T JFE Group Financial Results for First Half of Fiscal Year 2021 ending March 31, 2022 JFE Holdings, Inc. November 5, 2021

  2. Slide 2: A table of contents

    A table of contents  JFE Holdings’ Financial Results for First Half of Fiscal Year 2021 (April 1 to September 30, 2021)  JFE Holdings’ Financial Forecasts for Fiscal Year 2021 (April 1, 2021, to March 31, 2022)  Dividends  Financial Results for First Half of Fiscal Year 2021 and Financial Foreca

  3. Slide 3: Consolidated Results for First Half of Fiscal Year 2021

    Consolidated Results for First Half of Fiscal Year 2021 (April 1 to September 30, 2021) 3

  4. Slide 4: Financial Results for First Half of Fiscal Year 2021

    JFE-HD Financial Results for First Half of Fiscal Year 2021 Strong demand for steel and market prices amid continuous recovery of global economy since 2H of FY2020 led to a significant increase in profit, particularly in the steel business. FY2020 FY2021 （billion yen） Change 1H(Apr-Sep) 1H(Apr-Sep)

  5. Slide 5: Financial Results for First Half of Fiscal Year 2021 (by Segment)

    JFE-HD Financial Results for First Half of Fiscal Year 2021 (by Segment) FY2020 FY2021 (billion yen) Change 1H(Apr-Sep) 1H(Apr-Sep) Revenue Steel Business 1,027.2 1,410.4 383.2 Engineering Business 221.9 229.2 7.3 Trading Business 451.7 544.4 92.7 Adjustments (208.6) (241.1) (32.5) Total 1,492.2 1,9

  6. Slide 6: Consolidated Financial Forecast for Fiscal Year 2021

    Consolidated Financial Forecast for Fiscal Year 2021 (April 1, 2021 to March 31, 2022) 6

  7. Slide 7: Financial Forecast for Fiscal Year 2021

    JFE-HD Financial Forecast for Fiscal Year 2021 • Segment profit in the steel business is expected to be 280 billion yen, the same as the previous forecast. While initiatives to improve steel prices are expected to be executed significantly even in the face of soaring raw material prices, metal and s

  8. Slide 8: Financial Forecast for Fiscal Year 2021 (by Segment)

    JFE-HD Financial Forecast for Fiscal Year 2021 (by Segment) FY2021 FY2021 Change （billion yen） （Previous Forecast） (Updated Forecast) 1H Full Year 1H Full Year 1H Full Year Revenue Steel Business 1,450.0 3,130.0 1,410.4 3,190.0 (39.6) 60.0 Engineering Business 240.0 520.0 229.2 520.0 (10.8) 0.0 Trad

  9. Slide 9: Financial Forecast for Fiscal Year 2021

    JFE-HD Financial Forecast for Fiscal Year 2021 • Business profit in 1H is expected to get into a significant surplus of 198.8 billion yen mainly caused by demand recovery and market price increase in the steel business. • Full-year business profit is expected to be 360.0 billion yen, increased by 37

  10. Slide 10: Financial Forecast for Fiscal Year 2021 (by Segment)

    JFE-HD Financial Forecast for Fiscal Year 2021 (by Segment) FY2020(Actual) FY2021(Forecast) Change （billion yen） 1H Full Year 1H Full Year 1H Full Year Revenue Steel Business 1,027.2 2,255.2 1,410.4 3,190.0 383.2 934.8 Engineering Business 221.9 485.7 229.2 520.0 7.3 34.3 Trading Business 451.7 932.

  11. Slide 11: Progress of Cash Flow Improvements, Debt/EBITDA Ratio

    JFE-HD Progress of Cash Flow Improvements, Debt/EBITDA Ratio At the end of FY2021, the Debt/EBITDA ratio is expected to reach the target level of 7 th mid-term business plan (3.0x). FY2021 Progress of Debt/EBITDA Ratio Consolidated Cash Flow Forecast Debt/EBITDA Ratio （billion yen） (billion yen) (ti

  12. Slide 12: Dividends

    Dividends 12

  13. Slide 13: Interim dividend of 60 yen per share

    JFE-HD Dividends JFE Holdings has decided to pay an interim dividend of 60 yen per share at its Board of Directors. A decision regarding the year-end dividend has been postponed while the company carefully monitors its ongoing performance. 13

  14. Slide 14: JFE Steel: Financial Results and Forecast for Fiscal Year 2021

    JFE Steel Financial Results for First Half of Fiscal Year 2021 and Financial Forecast for Fiscal Year 2021 14

  15. Slide 15: Financial Results for First Half of Fiscal Year 2021

    JFE Steel Financial Results for First Half of Fiscal Year 2021 FY2020 FY2021 1H Unit (Previous Full Forecast) 1Q 2Q 1H 2H 1Q 2Q 1H Year billion Revenue 508.7 518.6 1,027.2 1,227.9 2,255.2 638.5 771.9 1,410.4 1,450.0 yen billion Segment Profit (57.8) (78.4) (136.2) 70.8 (65.4) 69.7 88.8 158.5 160.0 y

  16. Slide 16: 1.5 Billion Yen Decrease in JFE Steel's Segment Profit

    JFE Steel 1.5 Billion Yen Decrease in JFE Steel’s Segment Profit (1H of FY2021 (Previous Forecast) vs. 1H of FY2021(Actual)) Segment profit was almost on par with the previous forecast due to the steady execution of price-improvement initiatives. FY2021 FY2021 Change JFE Steel 1H (Forecast) 1H (Actu

  17. Slide 17: 294.7 Billion Yen Increase in JFE Steel's Segment Profit

    JFE Steel 294.7 Billion Yen Increase in JFE Steel’s Segment Profit (FY2020.1H (Actual) vs. FY2021.1H (Forecast)) Actual segment profit increased by 294.7 billion yen due to an improvement in steel selling price, an increase in crude steel production and profit improvement of both domestic and overse

  18. Slide 18: Current Business Environment (Domestic)

    JFE Steel Current Business Environment（Domestic）  Domestic steel demand is expected to be strong particularly in manufacturing industry. Steel demand is expected to continue recovery trend.  Outlook for domestic ordinary steel consumption in３Q of FY2021 increases by +1.0% YonY, and by +4.6% from t

  19. Slide 19: Current Business Environment (Overseas)

    JFE Steel Current Business Environment（Overseas）  Steel demand is mostly expected to remain in a recovery trend along with the recovery of the global economy.  Supply-demand balance is expected to remain tight as long as the Chinese government’s control of crude steel production and steel exports

  20. Slide 20: Assumptions for Financial Forecast (price of raw materials, steel price)

    JFE Steel Assumptions for Financial Forecast （price of raw materials, steel price） ($/DMT) Iron ore（Iron Ore Fines from Australia） （CFR $/t） HRC price in Southeast Asia $225 $1,000 $200 $950 $175 $900 $150 Spot FOB $850 $125 Term-contract FOB $100 Term- FY2021 $800 contract $75 FOB Apr-Jun Jul-Sep O

  21. Slide 21: Assumptions for Financial Forecast

    JFE Steel Assumptions for Financial Forecast Forecast of Crude Steel Production • Standalone crude steel production in FY2021 is expected to be approximately 26.50 Mt. • Kurashiki No. 4 BF aims to resume operations in mid-December. (Schedule advanced from the end of December to the middle of Decembe

  22. Slide 22: Initiatives to Improve Our Sales Price and Its Progress

    JFE Steel Initiatives to Improve Our Sales Price and Its Progress • Steel prices in export markets have remained high due to rising raw material prices and tight supply and demand. • Domestic sales prices have steadily been improved as a result of the following initiatives. Initiatives  Quick refle

  23. Slide 23: Financial Forecast for Fiscal Year 2021

    JFE Steel Financial Forecast for Fiscal Year 2021 FY2021 Updated Forecast FY2021 FY2020 Full Year Unit 1H 2H Full Year Full Year Previous Actual Forecast Forecast Forecast billion Revenue yen 2,255.2 1,410.4 1,779.6 3,190.0 3,130.0 billion Segment Profit yen (65.4) 158.5 121.5 280.0 280.0 Excluding

  24. Slide 24: JFE Steel's Segment Profit (Previous vs Updated Forecast)

    JFE Steel JFE Steel’s Segment Profit (FY2021 (Previous Forecast) vs. FY2021(Updated Forecast)) Segment profit is expected to be on par with the previous forecast due to the steady execution of selling price improvement initiatives. FY2021 FY2021 Change JFE Steel Previous Forecast Updated Forecast (b

  25. Slide 25: 345.4 Billion Yen Increase in JFE Steel's Segment Profit

    JFE Steel 345.4 Billion Yen Increase in JFE Steel’s Segment Profit (FY2020 (Actual) vs. FY2021 (Forecast)) • The steel demand is expected to recover significantly from FY2020, which was greatly affected by COVID-19. • Segment profit is expected to improve significantly from FY2020 due to an increase

  26. Slide 26: 37.0 Billion Yen Decrease in JFE Steel's Segment Profit

    JFE Steel 37.0 Billion Yen Decrease in JFE Steel’s Segment Profit (FY2021.1H vs. FY2021.2H) • Crude steel production is expected to increase, and further cost reduction is anticipated in 2H. • In addition to the key raw materials, prices of other raw materials is expected to increase. • Despite the

  27. Slide 27: JFE Engineering Financial Forecast for Fiscal Year 2021

    JFE Engineering Financial Forecast for Fiscal Year 2021 27

  28. Slide 28: JFE Engineering Financial Forecast for Fiscal Year 2021

    JFE Engineering Financial Forecast for Fiscal Year 2021 Current Business Environment/ Overview of Financial Status  Domestic demand both in the environment & energy sector and infrastructure sector is expected to remain solid.  Regarding the overseas market, demand of environment-related field in

  29. Slide 29: JFE Shoji Financial Forecast for Fiscal Year 2021

    JFE Shoji Financial Forecast for Fiscal Year 2021 29

  30. Slide 30: JFE Shoji Financial Forecast for Fiscal Year 2021

    JFE Shoji Financial Forecast for Fiscal Year 2021 Current Business Environment/ Overview of Financial Status  In 1H, segment profit increased significantly due to the profit increase in domestic and overseas subsidiary companies amid the rapid rise in steel market price, as well as the demand recov

  31. Slide 31: Topics (ESG Initiatives etc.)

    Topics (ESG Initiatives etc.) 31

  32. Slide 32: Initiatives Regarding Environment (1)

    JFE-HD Initiatives Regarding Environment (1) JFE Steel: Reorganized Structure of Carbon JFE Engineering: Launched Offshore Wind Neutral Promotion Turbine Project Team Released on 22nd September 2021 Released on 31st August 2021 • Established Carbon Neutral Promotion Committee • Project Team can take

  33. Slide 33: Initiatives Regarding Environment (2)

    JFE-HD Initiatives Regarding Environment (2) JFE Steel: JFE Engineering: Decision to commercialize “BETTER RECYCLE Shonan” Project* woody biomass power plant Released on 16th September 2021 Released on 27th October 2021 • Construct and operate a woody biomass power plant in Tahara City, Aichi Prefec

  34. Slide 34: Initiatives Regarding DX

    JFE-HD Initiatives Regarding DX JFE Steel : Deployment of Data Science-Based Equipment Anomaly Detection System at All Hot-Rolling Mills Released on 29th September 2021 • This system uses big-data analysis techniques to analyze vast amount of data on operating conditions, and it prevents equipment f

  35. Slide 35: Restructuring of Group Companies

    JFE-HD Restructuring of Group Companies JFE Steel : Integrating JFE Mineral, Mizushima Ferroalloy and JFE Material Released on 1st November 2021  JFE Steel determined that it will integrate three wholly owned subsidiaries – JFE Mineral Co., Ltd., Mizushima Ferroalloy Co., Ltd., and JFE Material CO.

  36. Slide 36: Other Topics

    JFE-HD Other Topics Published JFE Group Report 2021 (October 19 th ) and CSR Report (October 25 th) 1. Challenge of the Greatest Transformation since Establishment ～7 th Mid-Term Business Plan～ • Planning 7th Mid-Term Business Plan English version is coming soon • “JFE Group Environmental Vision for

  37. Slide 37: Appendix

    Appendix 37

  38. Slide 38: Main Financial Data

    JFE-HD Main Financial Data J-GAAP IFRS (Forecast) FY13 FY14 FY15 FY16 FY17 FY18 FY18 FY19 FY20 FY21 (bn. Yen, times) (bn. Yen, times) Ordinary Income 173.6 231.0 64.2 84.7 216.3 221.1 Business profit 232.0 37.8 -12.9 360.0 EBITDA 368.9 421.5 254.4 279.9 388.8 405.9 EBITDA ＊1 428.2 269.4 223.4 610.0

  39. Slide 39: 87.7 Billion Yen Increase in JFE Steel's Segment Profit

    JFE Steel 87.7 Billion Yen Increase in JFE Steel’s Segment Profit (FY2020.2H (Actual) vs. FY2021.1H (Actual)) FY2020 FY2021 Change JFE Steel 2H (Actual) 1H (Actual) (billion yen) Segment Profit 70.8 158.5 +87.7 1. Cost ±0.0 2. Volume • Crude steel (Standalone) 12.59⇒12.70 Mt and Mix ±0.0 3. Sales an

  40. Slide 40: 19.1 Billion Yen Increase in JFE Steel's Segment Profit

    JFE Steel 19.1 Billion Yen Increase in JFE Steel’s Segment Profit (FY2021.1Q (Actual) vs. FY2021.2Q (Actual)) FY2021 Change JFE Steel (billion yen) 1Q (Actual) 2Q (Actual) 1H Segment Profit 69.7 88.8 158.5 +19.1 1. Cost ±0.０ 2. Volume • Production increase because of concentration of and Mix +2.0 ma

  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 （000ｔ） （Month） 5,000 5 Maker Whole Saler Coil Center Inventory Ratio(Right axis) 4,000 4 3,000 3 2,000 2 Change Sep, From From Aug, 2021 Sep, 2020 2021 previous previous 1,000 1 month year Inventories +218 +6

  42. Slide 42: Inventories of Plate and Wide Flange Shapes

    JFE Steel Domestic Inventories of Plate (Plate Shear) Market Environment and Wide Flange Shapes （000ｔ） Inventories of Plate (Plate Shear) （Month） （000ｔ） Inventories of Wide Flange Shapes （Month） 500 3.5 Inventories 250 3.5 Inventories Shipment Inventory Ratio(Right axis) Inventory Ratio(Right axis)

  43. Slide 43: Trend of Import Steel (Ordinary Steel)

    JFE Steel Domestic Market Environment Trend of Import Steel (Ordinary Steel) （千ｔ） 600 S.Korea China Taiwan Others 500 400 300 200 Change Sep, From From Aug, Sep, Unit: 000t 100 2021 Previous Previous 2021 2020 Month Year +42 +62 Import Steel 362 321 300 (+12.9%) (+20.7%) 0 Jan Mar May Jul Sep Nov Ja

  44. Slide 44: Crude Steel & Im/Export, China

    JFE Steel Overseas Market Environment Crude Steel & Im/Export, China （Mｔ） Export（Left axis） Import（Left axis） Crude steel（Right axis） （Mｔ） 9 120 8 100 7 6 80 5 60 4 3 Sep, From Jan-Sep, From 40 2021 Previous 2021 Jan-Sep, 2 month 2021 Crude Steel（Mt） 73.8 -11.4% 806.4 +2.8% 20 1 Export（Mt） 4.9 -2.6%

  45. Slide 45: Inventories in China by Product

    JFE Steel Overseas Market Environment Inventories in China by Product （Mｔ） 30.0 Bar Rod & Wire Plate HR CR Change by Previous year(%) 100.0% 50.0% 25.0 0.0% 20.0 -50.0% 15.0 -100.0% -150.0% 10.0 Change -200.0% Sep, From From Aug, Sep, 5.0 2021 Previous Previous 2021 2021 month Year -250.0% -1.9 -1.8

  46. Slide 46: Metal Spread Trend (Chinese Spot Basis)

    JFE Steel Overseas Metal Spread Trend Market Environment (Chinese Spot Basis) （$/t) （$/t) 1,000 1,000 900 900 800 800 700 700 600 HRC 600 500 500 400 400 300 300 200 200 100 Metal Spread 100 0 0 Metal Spread ＝ HRC Price － Raw Materials Cost *HRC Price： Chinese Spot basis Raw Materials Cost： Calculat

  47. Slide 47: Price Trend of Import Steel

    JFE Steel Domestic Market Environment Price Trend of Import Steel （000 yen /ｔ） 100 90 80 70 60 50 40 Mar May Mar May May Mar Mar May Sep Mar May Sep Jul Sep Sep Mar May Jan Nov Jul Jul Sep Jan Nov Nov Jul Sep Jan Jan Nov Jul Jan Nov Jul Jan 2016 2017 2018 2019 2020 2021 Data: The Japan Iron and Stee

  48. Slide 48: Trend of Sub Material's Market Price

    (￠/lb) 60 80 100 120 140 160 180 200 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 600 800 2016.1 2016.1 2016.7 FeCr (US$/t)FeMn 2016.7 2017.1 2017.1 2017.7 2017.7 2018.1 2018.1 2018.7 2018.7 2019.1 2019.1 2019.7 2019.7 Raw Materials 2020.1 2020.1 2020.7 2020.7 2021.1 2021.1 2021.7 2021.7 (US$/t)

  49. Slide 49: Trend of Sub Material's Market Price

    JFE Steel Raw Materials Trend of Sub Material’s Market Price （yen/ｔ） Scrap ($/B) Spot Bulker 60,000 100,000 55,000 90,000 50,000 80,000 45,000 70,000 40,000 60,000 35,000 50,000 30,000 40,000 25,000 30,000 20,000 20,000 15,000 10,000 10,000 0 2016.1 2016.7 2017.1 2017.7 2018.1 2018.7 2019.1 2019.7 2

  50. Slide 50: Strategic Investments

    JFE Steel Progress of Initiatives of Steel Business （Structural Reforms and Strategic Investment in Japan） Facilities ～FY19 FY20 FY21 FY22 FY23～ To be shut down Structural Reforms Upstream Facilities (~23.9) Keihin To be shut down Hot rolling Facilities District (~23.9) Cold-rolling & Hot-dip Shut d

  51. Slide 51: Orders by Business Area

    JFE Engineering Orders by Business Area （billion yen） Business FY2020 FY2021 Main orders received in FY2021 Change Area Actual Forecast ★: New projects received in FY2021 2Q Construction of domestic waste treatment plant [★Nara Waste prefecture] to 220.0 230.0 10.0Improvement works of domestic waste

  52. Slide 52: Copyright © 2021 JFE Holdings, Inc.

    Copyright © 2021 JFE Holdings, Inc. All Rights Reserved 52

JFE Holdings — H1 FY2021 Earnings Presentation on 6ix