Jfe Holdings, Inc. · TSE:5411

Jfe — FY2016 Earnings Presentation

56 slides from Jfe's earnings presentation, Apr 27, 2017

1. Slide 1: Financial Results for Fiscal Year 2016 ended March 31, 2017

   JFE Group Financial Results for Fiscal Year 2016 ended March 31, 2017 JFE Holdings, Inc. Ａｐｒｉｌ 27, 2017

2. Slide 2: Table of Contents

   A Table of Contents  JFE Holdings’ Financial Results in Fiscal Year 2016 ended March 31, 2017  JFE Holdings’ Financial Forecasts for Fiscal Year 2017 ending March 31, 2018  Progress of JFE Group Fifth Medium-Term Business Plan  Dividends  Progress of Enhancement of Corporate Governance Structur

3. Slide 3: Consolidated Financial Results in Fiscal Year 2016

   Consolidated Financial Results in Fiscal Year 2016 (April 1, 2016 to March 31, 2017) 33

4. Slide 4: Financial Results in Fiscal Year 2016

   JFE-HD Financial Results in Fiscal Year 2016 FY2015 FY2016 Change FY2016 Change Full Year Full Year Forecast (billion yen) 1H 2H (B-A) (B-C) (A) (B) (C) Net Sales（a） 3,431.7 1,499.5 1,809.4 3,308.9 (122.8) 3,320.0 (11.1) Steel Business 27.8 (24.4) 64.9 40.5 12.7 25.0 15.5 Engineering Business 20.0 7

5. Slide 5: Underlying Profit before One-off Effects

   JFE-HD Underlying Profit before One-off Effects FY2015 FY2016 Actual Actual Net Sales (a) 3,431.7 3,308.9 Ordinary Income (b) 64.2 84.7 ROS * (b/a) 1.9% 2.6% One-off Effects (78.0) 28.0 Underlying Profit 142.2 56.7 before One-off Effects (c） ROS * (c/a) 4.1% 1.7% *Return on Sales: Ordinary Income /

6. Slide 6: JFE Steel Financial Results in Fiscal Year 2016

   JFE Steel Financial Results in Fiscal Year 2016 66

7. Slide 7: Financial Results in Fiscal Year 2016

   JFE Steel Financial Results in Fiscal Year 2016 FY2015 FY2016 FY2016 Change 2H Forecast 1H （ A） 3Q 4Q (B) (B-A) （C) Billion Net Sales yen 2,445.1 1,072.4 583.1 693.6 2,349.1 (96.0) 2,330.0 Billion Ordinary Income yen 27.8 (24.4) 38.0 26.9 40.5 12.7 25.0 [ROS] [%] [1.1%] [(2.3%)] [6.5%] [3.9%] [1.7%]

8. Slide 8: 15.5 Billion Yen Increase in JFE Steel's Ordinary Income

   JFE Steel 15.5 Billion Yen Increase in JFE Steel’s Ordinary Income （FY16（Forecast） vs. FY16（Actual）） (billion yen） FY2015 FY2016 FY2 0 1 6 (Ac t u al) Change Change FY2015 Forecast JFE Steel Actual Forecast 1H 2H F ul l Yea r →FY2016 →Actual A B C C-A C-B Ordinary 27.8 25.0 (24.4) 64.9 40.5 12.7 15.

9. Slide 9: 12.7 Billion Yen Increase in JFE Steel's Ordinary Income

   JFE Steel 12.7 Billion Yen Increase in JFE Steel’s Ordinary Income (FY15 (Actual) vs. FY16 (Actual)) (billion yen) FY2015 FY2016 FY2 0 1 6 (Ac t u al) Change Change FY2015 Forecast JFE Steel Actual Forecast 1H 2H F ul l y ea r →FY2016 →Actual A B C C-A C-B Ordinary 27.8 25.0 (24.4) 64.9 40.5 12.7 15

10. Slide 10: JFE Engineering Financial Results in Fiscal Year 2016

    JFE Engineering Financial Results in Fiscal Year 2016 10 10

11. Slide 11: Financial Results in FY2016 of JFE Engineering

    JFE Engineering Financial Results in FY2016 of JFE Engineering (billion yen） FY2015 FY2016 FY2016 Change Change (Actual) (Forecast) (Actual) A B C (C-A) (C-B) Orders 509.4 500.0 424.4 (85.0) (75.6) Net Sales 397.5 450.0 426.1 28.6 (23.9) Ordinary Income 20.0 27.0 26.6 6.6 (0.4) 【Change: FY2015 Actua

12. Slide 12: Classification of Placed Orders

    JFE Engineering Classification of Placed Orders （billion yen） FY2015 FY2016 Category Change Main Orders (FY2016) (Actual) (Actual) - Construction of waste incineration plants (New: 2, Renovation: 4) Environment 208.0 157.4 (50.6) - Construction of Gasifying and Direct Melting Furnace in Singapore -

13. Slide 13: JFE Shoji Financial Results in Fiscal Year 2016

    JFE Shoji Financial Results in Fiscal Year 2016 13 13

14. Slide 14: Financial Results in FY2016 of JFE Shoji

    JFE Shoji Financial Results in FY2016 of JFE Shoji (billion yen） FY2015 FY2016 FY2016 Change Change (Actual) (Forecast) (Actual) A B C (C-A) (C-B) Net Sales 1,756.4 1,640.0 1,671.0 （85.4） 31.0 Ordinary Income 15.7 21.0 21.8 6.1 0.8 【Change: FY2015 Actual to FY2016 Actual 】 ◆Domestic Business ・Almost

15. Slide 15: Net Sales of JFE Shoji (by Segment)

    JFE Shoji Net Sales of JFE Shoji (by Segment) (billion yen) FY2015 (A) FY2016 (A) Change Domestic Business 905.3 880.5 (24.8) Export 417.7 383.4 (34.3) Overseas 689.0 638.3 (50.7) Business Foreign 271.3 254.9 (16.4) Operation Raw Materials, Equipment etc. 162.1 152.2 (9.9) TOTAL 1,756.4 1,671.0 (85.

16. Slide 16: Consolidated Financial Forecasts for Fiscal Year 2017

    Consolidated Financial Forecasts for Fiscal Year 2017 (April 1, 2017 to March 31, 2018) 16 16

17. Slide 17: Current Business Environment

    Current Business Environment 17 17

18. Slide 18: Current Business Environment (Domestic)

    JFE Steel Current Business Environment (Domestic) Domestic steel demand remains robust mainly due to construction activities including urban redevelopment projects and projects connected with the Tokyo 2020 Olympics and Paralympics, and steady auto production. Ordinary steel orders in February 201

19. Slide 19: Domestic Market Environment: Inventories of Steel Sheet

    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 Feb, 2017 1 1,000 3,878kt 500 0 0 Apr Apr Apr Apr Apr Aug Aug Aug Aug Aug Oct Oct Oct

20. Slide 20: 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) Inventories Inventory Ratio (Month) （000t） Inventories Shipment Inventory Ratio (Right) （Month） 450 3.0 250 4.0 3.5 2.5 400 200

21. Slide 21: Trend of Import Steel

    0 100 200 300 400 500 600 Jan Feb Mar （000t） Apr May Jun Jul 2012 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Domestic Jun Jul 2013 Aug Sep Market Environment Oct S. Korea Nov Dec Jan Feb Mar Apr China May Jun Jul 2014 Aug Sep Oct Nov Taiwan Dec Jan Feb Mar Apr May (Ordinary Steel) Others Jun Jul 2015 A

22. Slide 22: Current Business Environment (Overseas)

    JFE Steel Current Business Environment (Overseas) Steel demand in China remains robust, although steel price in China is currently in a correction phase. Investment in fixed assets recorded +9.2% and auto production recorded +9.0% on a year-on-year basis in January to March quarter. Crude steel pr

23. Slide 23: Crude Steel & Im/Export, China

    JFE Steel Overseas Market Environment Crude Steel & Im/Export, China Mt Export(left) Import(left) Crude Steel (Right) Mt 12 80 70 10 60 8 50 6 40 30 4 20 2 10 0 0 Mar Mar Mar Mar Mar Mar May May May May May Sep Sep Sep Sep Sep Jun Jul Jul Jun Jul Jun Jul Jun Jul Jun Feb Feb Feb Feb Feb Feb Apr Apr A

24. Slide 24: Metal Spread Trend

    JFE Steel Overseas Metal Spread Trend Market Environment (Chinese Spot Basis) 700 ($/t) ($/t) 700 600 600 500 500 HRC 400 400 300 300 Metal Spread 200 200 100 100 0 0 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Apr-14 Apr-12 Apr-13 Apr-15 Apr-16 Apr-17 Jul-13 Jul-12 Jul-14 Jul-15 Jul-16 Jan-15 Jan-12 Jan-13

25. Slide 25: Raw Materials Price

    JFE Steel Raw Materials Raw Materials Price （$/t） 350 330 315 300 Hard Coking Coal 300 285 285 Iron Ore (Fe62%) (FY16 4Q) 250 225 225 209 210 200 235 200 225 200 172 165 1 4 51 5 21 4 3 150 125 1 7 11 6 91 6 7 170 116 1 2 01 2 01 1 91 1 7 147 144 110 93 137 1 3 01 3 6 137 93 89 129 1 2 7 126 122 100

26. Slide 26: Financial Forecasts for Fiscal Year 2017

    JFE Holdings Financial Forecasts for Fiscal Year 2017 26 26

27. Slide 27: Financial Forecasts for Fiscal Year 2017

    JFE-HD Financial Forecasts for Fiscal Year 2017 JFE Holdings has decided to refrain from publishing consolidated financial results forecasts for fiscal 2017 because forecasting with any reasonable degree of accuracy is not possible at this stage, given that coking coal prices are rising rapidly due

28. Slide 28: The Activities for Improvement of Profits in Fiscal Year 2017

    JFE-HD The Activities for Improvement of Profits in Fiscal Year 2017 [Main items for improvement of profits from Fiscal Year 2016 (Steel Business)]  Sales Price : Continuous efforts to raise price  Cost Reduction : Plan to reduce by 45 billion yen per year (plan to achieve 110 billion yen cost red

29. Slide 29: Progress of JFE Group Fifth Medium-Term Business Plan

    Progress of JFE Group Fifth Medium-Term Business Plan 29 29

30. Slide 30: Progress of Strengthening Domestic Manufacturing Base

    JFE Steel Progress of Strengthening Domestic Manufacturing Base Domestic capital investments of 650 billion yen are in progress (adopted more than 70% planned by FY16) <Progress of main items> Fifth Medium-Term Process Area Facility FY14 FY15 FY16 FY17 FY18 FY19 Kura- No.3 Jan. 2016 Shiki Coke oven

31. Slide 31: Progress of Cost Reduction

    JFE Steel Progress of Cost Reduction Achieve 110billion yen cost reduction for 3 years as planned (billion yen） Progress of Cost Reduction Main items of investment effects 1,200 Renovation of coke ovens Main investment effects of FY17 1,000 ・Kurashiki No2 coke oven Improve self-sufficiency rate of

32. Slide 32: Progress of Reorganization within JFE Group

    JFE Steel Progress of Reorganization within JFE Group Strengthen systems of JFE Group through reorganization 【Main items】 ■ Business integration of facility maintenance and renewal ：JFE Plant Engineering Co., Ltd.（Apr. 2016） Merger of JFE Mechanical (mechanical system field) and JFE Electrical & Con

33. Slide 33: Progress of Overseas Business

    JFE Steel Progress of Overseas Business -Strengthen business in prioritized field especially in auto sector -Pursue growth investment from a middle- & long-term perspective Prioritized Asia Southwest NAFTA MENA Business Field China Southeast Asia To start Asia operation in Automobiles ・GJSS（CGL） ・NJ

34. Slide 34: Build a Supply Chain for Infrastructure Material in Vietnam

    JFE Steel Build a Supply Chain for Infrastructure Material in Vietnam ～To capture the expanding steel demand in ASEAN～ To capture the further expanding steel demand in ASEAN focusing on infrastructure material from Vietnam, the largest steel consuming country in the region （Investment ratio by JFE G

35. Slide 35: The Effort for Expansion of Profits of Engineering Business

    JFE Engineering The Effort for Expansion of Profits of Engineering Business Orders & Ordinary Income （billion yen） ■Targets and activities of Fifth Medium-Term Plan 40 600 509.4 Orders [right axis]  Environment ： Waste incineration plant, Waterworks and Sewerage plant 459.4 etc. 424.4 Capture the

36. Slide 36: The Effort for Expansion of Profits of Trading Business

    JFE Shoji The Effort for Expansion of Profits of Trading Business 30 Ordinary Income（billion yen） 24.6  Overview of ordinary income 21.8 In FY16, profit was increased with 20 improvement of profitability of overseas 15.7 subsidiaries including Kelly Pipe and coil centers. 10  The effort for expans

37. Slide 37: Financial Indices (ROE, Dividend Pay-out Ratio)

    JFE-HD Financial Indices (ROE, Dividend Pay-out Ratio) ROE Dividend Dividend Pay-out Ratio 【Basic Policy】 (Yen per share) (Approx. 25 - 30%) 12% 300 60% More than10% 51.4% 50% 10% 250 241.6 40% 7.7% 8% 200 24.8% Profit Attributable to 25.5% 30% Owners of Parent (Yen per share) 6% 150 20% Dividend 11

38. Slide 38: Financial Indices (Debt Outstanding, D/E Ratio)

    JFE-HD Financial Indices (Debt Outstanding, D/E Ratio) (billion yen) Ref: Cash Flow of FY2016 (billion Yen） 1,800 100% D/E Ratio Source Usage 80% Net Income Dividends 1,700 59.0% 56.9% 51.4% 68 6 Approx. 50％ 60% Working Capital etc. 1,600 40% 77 Debt Outstanding 20% Depreciation Capex, Investments 1

39. Slide 39: Dividends

    JFE Dividends 39

40. Slide 40: Dividends

    JFE-HD Dividends JFE Holdings will propose at its forthcoming General Meeting of Shareholders a payment of 30 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 f

41. Slide 41: Progress of Enhancement of Corporate Governance Structure

    Progress of Enhancement of Corporate Governance Structure 41 41

42. Slide 42: Improvement of Composition of Board of Directors and Audit & Supervisory Board

    JFE-HD Improvement of Composition of Board of Directors and Audit & Supervisory Board (Plan to change after general meeting of Shareholders held in June) The company changed the composition of the Board of Directors and Audit & Supervisory Board in accord with the discussion about evaluation of the

43. Slide 43: Appendix

    Appendix 43 43

44. Slide 44: Main Financial Data

    JFE-HD Main Financial Data FY03 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 (bn. Yen) Ordinary Income 218.3 502.9 400.5 69.2 165.8 52.9 52.2 173.6 231.0 64.2 84.7 EBITDA ※1 432.3 741.4 670.8 337.1 428.9 306.3 260.6 368.9 421.5 254.4 279.9 ROS ※2 8.8％ 14.2％ 10.2％ 2.4％ 5.2% 1.7% 1.6% 4.7% 6.0% 1

45. Slide 45: 11.1 Billion Yen Decrease in JFE Steel's Ordinary Income

    JFE Steel 11.1 Billion Yen Decrease in JFE Steel’s Ordinary Income (FY16 3Q (Actual) vs. FY16 4Q (Actual) (billion yen) JFE Steel 1H 2H Change FY2016 3Q 4Q 3Q Oct-Dec Jan-Mar →4Q Ordinary Income (24.4) 38.0 26.9 64.9 40.5 (11.1)  Volume and Mix ＋ 1.0  Sales and Raw materials ＋ 5.0  Cost reduction

46. Slide 46: 89.3 Billion Yen Increase in JFE Steel's Ordinary Income

    JFE Steel 89.3 Billion Yen Increase in JFE Steel’s Ordinary Income (FY16 1H (Actual) vs. FY16 2H (Actual)) (billion yen) JFE Steel 1H 2H FY2016 Change 3Q 4Q 1H→2H Oct-Dec Jan-Mar Ordinary Income (24.4) 38.0 26.9 64.9 40.5 89.3  Volume and Mix ＋ 7.0  Sales and Raw materials － 45.0  Cost reduction

47. Slide 47: Domestic Market Environment: Price Trend of Import Steel

    JFE Steel Domestic Market Environment Price Trend of Import Steel (000 yen/ton) 70 65 60 55 50 45 40 Jun Jul Jul Jul Jun Jun July June Feb Feb Feb Feb Feb Apr Apr Apr Apr Aug Aug Oct Oct Aug Oct Aug Oct Mar Dec Dec Nov Mar Nov Dec Nov Mar May Nov Mar Dec May May May Jan Jan Jan Jan Jan Sep Sep Sep S

48. Slide 48: Overseas Market Environment: Auto Sales in Key Countries

    JFE Steel Overseas Market Environment Auto Sales in Key Countries Automobile Sales in Key Countries (YoY Change) S. Korea China Indonesia Thailand India 60% 40% 20% 0% -20% -40% -60% Jan Sep Jan Sep Jan Sep Jan Sep Jan Jul Jul Jul Jul Oct Oct Oct Jun Jun Oct Jun Jun Apr Apr Apr Apr Aug Aug Aug Aug F

49. Slide 49: Exports from China by Products

    2,000 4,000 6,000 8,000 10,000 12,000 0 Jan 000t Feb Mar Apr May Jun Jul 2011 Aug Sep Oct Nov Dec CGL HRC CRC Jan Feb Mar Apr HRC (Alloy) May Rod&Wire etc. Jun Overseas Jul 2012 Aug Sep Oct Nov Dec Market Environment Jan Feb Mar Apr May Jun Jul 2013 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 20

50. Slide 50: Inventories in China by Products

    JFE Steel Overseas Market Environment Inventories in China by Products （000t） Bar Rot & Wire Plate HR CR Change by previous year(%) 35,000 100% 30,000 50% 25,000 0% 20,000 -50% 15,000 -100% 10,000 -150% 5,000 -200% 0 -250% Jun Jan Jan Jan Jun Jan Jun Jan Jun Jan Jun Jun Jan Jul Jul Jul Jul Jul Jul M

51. Slide 51: Daily Average Crude Steel Production in China

    JFE Steel Overseas Daily Average Crude Steel Market Environment Production in China (Mt/day） 2.5 115% 2.0 110% Daily average production： left axis 1.5 105% 1.0 100% 0.5 YoY % changes： right axis 95% 0.0 90% ※Daily Average Production ＝ Monthly Production / Dates 51

52. Slide 52: Raw Materials Trend of Metals' Market Price

    JFE Steel Raw Materials Trend of Metals’ Market Price （￠/lb） FeCr （U$/t） Zn 3,400 180 2,900 160 140 2,400 120 1,900 100 1,400 80 900 60 400 （U$/t） FeMn （U$/lb） Mo 58

53. Slide 53: Raw Materials Trend of Market Price

    10000 15000 20000 25000 30000 35000 40000 45000 2010/4/1 20,000 40,000 60,000 80,000 100,000 120,000 0 2010/4/1 2010/10/1 2010/10/1 2011/4/1 2011/4/1 (yen/t） Scrap 2011/10/1 2011/10/1 (yen/t）LNG Price 2012/4/1 2012/4/1 2012/10/1 2012/10/1 2013/4/1 2013/4/1 2013/10/1 2013/10/1 2014/4/1 2014/4/1 2014/

54. Slide 54: Cost Reduction (Steel Business)

    JFE Steel Cost Reduction (Steel Business) (billion yen) 140 120 100 80 60 120 120 (forecast) 40 92 80 70 56 50 50 45 20 41 33 30 40 35 30 - 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 JFE Steel (stand-alone basis) 54

55. Slide 55: Trend of Exchange Rate (against USD, KRW)

    Trend of Exchange Rate（against USD,KRW） JPY/USD JPY/KRW 130 0.14 0.13 120 JPY/USD 0.12 (left axis) 110 0.11 100 0.10 JPY/KRW (right axis) 0.09 90 0.08 80 0.07 70 0.06 Jul-16 Jan-11 Jul-12 Jun-13 Jan-15 May-14 Apr-11 Apr-15 Oct-16 Oct-13 Dec-11 Nov-12 Dec-15 Aug-11 Sep-14 Aug-15 Mar-16 Mar-12 Feb-17

56. Slide 56: Copyright © 2017 JFE Holdings, Inc. All Rights Reserved

    Copyright © 2017 JFE Holdings, Inc. All Rights Reserved 56

JFE Holdings — FY2016 Earnings Presentation on 6ix