Jfe Holdings, Inc. · TSE:5411
Jfe — FY2019 Earnings Presentation
55 slides from Jfe's earnings presentation, May 12, 2020
Slide 1: JFE Holdings, Inc.
JFE Holdings, Inc. May 12, 2020 Securities Code: 5411.T
Slide 2: Table of contents
e)) A table of contents 0d a 1. JFE Holdings’ Financial Results in Fiscal Year 2019 2. JFE Holdings’ Financial Forecasts for Fiscal Year 2020 3. Impacts from the spread of COVID-19 and our countermeasures 4. Initiatives for mid-and-long-term growth This presentation material is for information and d
Slide 3: Consolidated Results for Fiscal Year 2019
Consolidated Results for Fiscal Year 2019 (April 1, 2019 to March 31, 2020)
Slide 4: Financial Results in Fiscal Year 2019
e)) Financial Results in Fiscal Year 2019 0d JFE-HD FY2018 | FY2019 | Change FY2019 | Change (billion yen) Full Year(A) | Full Year(B) (B-A) Forecast(C) fT (B-C) Revenue 3,873.6] 3,729.7| (143.9) 3,720.0 9.7 Finance Income/costs (12.5) (12.5) 0.0 (13.0) 0.5 Segment Profit 219.5 25.3| (194.2) 32.0 (6
Slide 5: Financial Results in Fiscal Year 2019 (by Segment)
JFE-HD e)) Financial Results in Fiscal Year 2019 (by Segment) 0d FY2018 | FY2019 | Change FY2019 | Change (billion yen) Full Year(A) | Full Year(B) (B-A) Forecast(C) (B-C) Steel Business 2,830.6 2,681.3 (149.3) 2,700.0 (18.7) Engineering Business 485.8 512.2 26.4 520.0 (7.8) Trading Business 1,125.8
Slide 6: JFE Steel Financial Results for Fiscal Year 2019
JFE Steel Financial Results for Fiscal Year 2019
Slide 7: Production and Shipment
JIFE Steel re) Production and Shipment Oak FY2018 FY2019 FY2019 Full Year 2H ee on Forecast 1H (C) Unit (A) 3Q 4Q Approx. Crude Steel Mt 26.31] 13.79| 6.24] 6.70] 26.73} 0.42] | 27.00 (Standalone) Approx. Crude Steel | me | 27.88] 14.50] 6.59] 7.00] 28.09] 0.21] | 28.40 (Consolidated) : Approx. Ship
Slide 8: Segment profit for FY2019 vs previous forecast
Segment profit for FY2019 was -8.7 billion yen, decreased from the previous forecast 0 billion yen. ◆Cost︓-3.0 billion yen Cost increased due to the raw material mix (-2.0 billion yen) and increased repairing costs by having furnace repairing done ahead of schedule (-1.0 billion yen). ◆Sales Volume
Slide 9: Segment profit for FY2019 vs previous year
Segment profit for FY2019 was -8.7 billion yen, decreased by 170.0 billion yen year on year. ◆Cost: +42.0 billion yen Cost reduction: +20.0 billion yen: Cost effects of investment in spite of the negative impacts from reduction of production, typhoons and raw material mix. One-off effect in FY2018:
Slide 10: JFE Engineering Financial Results for Fiscal Year 2019
JFE Engineering Financial Results for Fiscal Year 2019 10 10
Slide 11: Financial Results in FY2019 of JFE Engineering
JFE Financial Results in FY2019 of JFE Engineering ad | Engineering (billion yen) FY2018 FY2019 FY2019 (Actual) (Forecast) (Actual) Change Change A B c (C-A) (C-B) Orders 482.8 450.0 413.0 (69.8) (37.0) Revenue 485.8 520.0) 512.2 26.4 (7.8) Segment 20.1 23.0 23.1 3.0 0.1 Profit (Change: FY2019 Forec
Slide 12: JFE Shoji Financial Results for Fiscal Year 2019
JFE Shoji Financial Results for Fiscal Year 2019 12 12
Slide 13: Financial Results in FY2019 of JFE Shoji
*)) Financial Results in FY2019 of JFE Shoji JFE Shoji JFE (billion yen) FY2018 FY2019 | FY2019 Chanae Chanae (Actual) |(Forecast)} (Actual) 9 9 A B c (C-A) (C-B) Revenue 1,125.8} 1,090.0) 1,084.1 (41.7) (5.9) Segment Profit 35.7 29.0 27.0 (8.7) (2.0) (Change: FY2019 Forecast vs FY2019 Actual] Segme
Slide 14: Dividends
Slide 15: Dividends
JFE-HD °)) Dividends a m™ Based on the current business condition, JFE Holdings decided not to implement its year-end dividend policy. Interim dividend : 20 yen per share Year-end dividend : (no dividend) Annual dividend : 20 yen per share m JFE Holdings and JFE Steel implemented a return of compens
Slide 16: Financial Forecasts for Fiscal Year 2020
JFE Holdings Financial Forecasts for Fiscal Year 2020 16
Slide 17: Consolidated Financial Forecasts of FY2020
JFE-HD e)) Consolidated Financial Forecasts of FY2020 JE Ee Our consolidated financial results forecasts for fiscal 2020 remain pending because of uncertainties surrounding COVID-19, which make it impossible to form reasonable demand estimates, particularly in the steel business, at this point in ti
Slide 18: Impacts from the spread of COVID-19 and our countermeasures
Impacts from the spread of COVID-19 and our countermeasures 18 18
Slide 19: JFE's Situation amid the Spread of COVID-19
JFE JFE-HD JFE’s Situation amid the Spread of COVID-19 To ensure employees’ safety and health as top priority, the following countermeasures are implemented. O Domestic Situation > JFE Holdings and its operating companies have introduced teleworking until May 31, 2020, based on the state of emergenc
Slide 20: Current Business Environment
JFE-HD e)) Current Business Environment JE O Domestic > Spread of COVID-19 has significantly deteriorated the domestic economic activity. > Signs of bottom-out have not yet seen as the automotive industry, which had performed strongly, has partially stopped operation, and the demand for shipbuilding
Slide 21: Countermeasures of Steel Business (Operation)
JFE Steel e)) Countermeasures of Steel Business@ (Operation) iF =) =n | @ Measures In response to the current significant decrease of steel demand, JFE steel has decided to implement the following measures in a view of both pursuing effective operating structure and maintaining employment. (Announce
Slide 22: Cost reduction of approx. 100.0 billion yen
Cost reduction of approx. 100.0 billion yen is almost equally divided into fixed cost reduction and variable cost reduction. • Fixed cost reduction︓mainly repairing cost reduction and emergency labor- cost-reduction measures • Variable cost reduction︓full-year effects coming from large-scale CAPEX s
Slide 23: Current Business Environment and Countermeasures of Engineering Business
r ‘3 JFE Engineering Current Business Environment and Countermeasures of Engineering Business JFE lacie eo _ Domestic: Spread of COVID-19 is causing temporary postponement of some undergoing construction work, though demand relating liberalization of energy and projects of infrastructure are expecte
Slide 24: Current Business Environment and Countermeasures of Trading Business
pi : IFE Shoji Current Business Environment and Countermeasures of Trading Business JFE ei | > Domestic and overseas steel demand is expected to decrease due to slowdown of global economy and it is still uncertain, though strengthening supply chain is steadily progressing in priority fields such as
Slide 25: Measures for Maintaining Financial Strength
JFE-HD e)) Measures for Maintaining Financial Strength 1. Compression of assets to generate cash flows <Sale of cross-holding shares, compression of inventories : approx. 150 billion yen from FY19 to FY20> Achieved approx. 35 billion yen during FY19. Selling shares step-by- step based on no-sharehol
Slide 26: Initiatives for mid-and-long-term growth
Initiatives for mid-and-long-term growth 26 26
Slide 27: Measures to Aim Sustainable Growth
JFE-HD re) Measures to Aim Sustainable Growth ad | ™ Current Business Environment > Slump in steel demand among manufacturing industries, due to US-China trade tensions > Rising raw-material prices driven by China's increased output of crude steel > Rising prices for various commodities and services
Slide 28: Main Structural Reforms (announced in FY2019)
JIFE Steel °)) Main Structural Reforms (announced in FY2019) 1-1 =n Review production operations by strategically focusing resources on key products and production operations to enhance competitiveness * Transition to a domestic operating configuration based on 7 BFs, down from 8 at present: product
Slide 29: Progress of Initiatives of Steel Business (Domestic)
JFE Steel Progress of Initiatives of Steel Business (Domestic) JFE Bi Chiba | District Kurashiki District Fukuyama District @ shut down Upstream Facilities Cold-rolling & Hot-dip Galvanizing Facilities Blast Furnace Tin Mills Blast Furnace Continuous Casting Machine Electrical Steel Sheet Facilities
Slide 30: Progress of Initiatives of Steel Business (Overseas)
JFE Steel Progress of Initiatives of Steel Business (Overseas) JFE © Done @ Plan (in progress) Fyis_ | Fyio_| Fy20_ | Fy2i | Head | @ Established the new Global Business Development Center [China-Iron powder] © BJCMx started commercial production @China-Speciaity steel for bars and wire rods] Signed
Slide 31: Progress of Initiatives of Engineering Business
JFE Engineering Progress of Initiatives of Engineering Business JE Ee Strengthen business structure by expanding operation businesses and increasing profitability of overseas business . . Progress of major initiatives (Billion yen) Expanding mainly recycling and electricity business Expand > Establi
Slide 32: Progress of Initiatives of Trading Business
JFE e)) Progress of Initiatives of Trading Business JFE Shoji Build a stable profit base and strengthen global and regional strategy Progress of major initiatives = Acquired all shares of Cogent in Canada, an electrical steel processing company including core processing for transformers etc. @ Estab
Slide 33: ESG Initiatives (1)
JFE-HD re) ESG Initiatives (1) ET TTT Teena Major Initiatives in FY2019 @ Declared agreement with the summary of the Final TCFD Report, E | and conducted information disclosure following TCFD recommendations including scenario analysis @ Achieved a target to increase the number of female employees i
Slide 34: ESG Initiatives (2)
JFE-HD re) ESG Initiatives (2) ad Major Initiatives in FY2020 # Promote initiatives to ultimately achieve Zero Carbon Steel | E | Production (Promote the development of Ferro Coke, an innovative iron making process etc.) @ Promote initiatives to expand utilization of renewable energy |e | (Expand wa
Slide 35: ESG Initiatives (3)
re) ESG Initiatives (3) JFE Initiatives for recycling and reduction of CO2 emission R&D for carbonate fixing technology by using JFE-HD Released on 20 Apr. 2020 steel slags and concrete wastes Socinarta eee Ca ee Establish a research group between JFE Steel, Taiheiyo ™ An! k nH Cement, and Research
Slide 36: Appendix
Appendix 36
Slide 37: Cash Flow Results for FY2019
JFE Holdings °)) Cash Flow Results for FY2019 SE (billion yen) Source Usage Net income 37.8 Dividends & Tax & . Interest Payment 78.3 Depreciation and Amortization CAPEX & Investments 231.5 388.1 Asset Compression *! 35.8 Interest-bearing Debt Outstanding Working Capital etc. 184.7 23.4 *1 Sales of
Slide 38: Main Financial Data
re) Main Financial Data JFE-HD Fyi2 Fyi3 FY14 Fyis. FY16 FY1i7 FY18 FY18 FY19 Ordinary Income 52.2 | 173.6 | 231.0 64.2 84.7 | 216.3] 221.1 Business profit 232.0 37.8 EBITDA 260.6 | 368.9] 421.5 | 254.4 | 279.9] 388.8 | 405.9 EBITDA *1 428.2 269.4 ROS 1.6% | 4.7% | 6.0% | 1.9% | 2.6% | 5.9% | 5.6% R
Slide 39: Segment profit for 4Q of FY2019 vs 3Q
Segment profit for 4Q of FY2019 was -20.1 billion yen, decreased by 13.8 billion yen from 3Q of FY2019. ◆Cost︓+7.0 billion yen Cost reduction: Cost effects of investments in West Japan works, one-off effect of FY2018 Cost increase: Raw material mix (-2.0 billion yen) , rescheduling ahead of repairin
Slide 40: Segment profit for 2H of FY2019 vs 1H
Segment profit for 2H of FY2019 was -26.4 billion yen, decreased by 44.1 billion yen from 1H of FY2019. ◆Cost︓+6.0 billion yen Cost reduction: Cost effects of investments in West Japan works Cost increase: Impacts from typhoons and rapid decrease in production amount (-5.0 billion yen), raw material
Slide 41: Orders by Business Field
)) Orders by Business Field a JFE Engineering (billion yen) Business Field FY2018 Actual FY2019 Actual Main Orders %* +++New projects received in FY2019 4Q Environment 212.6 187.1 Change (25.5), Reconstruction of domestic facility of water purification plant Power generation using digestion gas of s
Slide 42: Current Business Environment (Domestic)
JFE Steel Current Business Environment (Domestic) ad | (Trend of Ordinary Steel Orders) {Outlook for Domestic Auto Production] 20.0% Year on Year Increase (Decrease) 350 . mFY17(9.38M units) mFY18(9.75M units) Automobiles - aoe 300 m= FY19(9.50M units) Total (ne domestic 10.0% orders em 0.0% 200 -10
Slide 43: Combined inventories of HR, CR and Coated Steel
Combined inventories of HR, CR and Coated Steel as of the end of February 2020 were 4,484K tons. From January 2020: 40K tons increase From February 2019: 76K tons increase
Slide 44: Inventories of Plate and Wide Flange Shapes
[Inventories of Plate (Plate Shear) Inventories of plate shear as of the end of February 2020 was 418K tons. From January 2020 : 5K tons decrease From February 2019: 20K tons increase Since the end of August 2019, the amount of inventory has decreased slightly. Although the shipment activity level f
Slide 45: Volume of imported ordinary steel
The volume of imported ordinary steel in March 2020 was 398K tons. From February 2020: 44K tons increase From March 2019: 65K tons decrease The deteriorated demand for steel in each country due to the spread of COVID- 19 has decreased the imported steel prices, which widened the deference between th
Slide 46: Current Business Environment (Overseas)
JFE Steel Current Business Environment (Overseas) Os | {Real GDP growth forecast 20192021) {Automobile Sales) —®— Forecast (Jan-20) 40.0% Year on Year Change World 5.8% 2.9% y 8 3.0% a Fa 3.4% 20.0% (Year-on-year %change) 0% — 2019202092021 us 2.1% pratand China 5.8% 2.3% 7 wipes 17%)! 6.4 1.7% 5.8%
Slide 47: Crude steel production in China
Crude steel production in March 2020 in China was 79.0M tons (2.55M tons on daily basis, which was lower than the average of the previous two months, 2.58M tons.). While the figure shows the decrease trends compared to the previous months, the reduction level stays small. From February 2020: 5.9M to
Slide 48: Inventories in China
Inventories in China as of the end of March 2020 was 24.37M tons. From February 2020: 2.5% increase From March 2019: 52.1% increase In addition to the seasonal change during and after Chinese new year, inventories both in market and steel plants increased until the end of March because the steel dem
Slide 49: Metal spread trend
Metal spread, calculated based on Chinese spot market price of HRC and international spot market prices of iron ore and hard coking coal, dropped below $150/t in the first half of FY2019 due to the decrease of HRC price and the rise of the iron ore price. Afterwards, in the second half of FY2019, me
Slide 50: Raw Materials Price
Raw Materialalill Raw Materials Price JFE Steel JrE | Iron ore (iron ore fines from Australia) | Coking Coal (Hard Coking Coal from Australia) | ($/DMT) ($/WMT) $130 $400 ——Spot FOB —— Spot FOB $120 — —Term-contract FOB —_—Term-contract FOB $350 $110 $100 $300 90 $ $250 $80 $70 $200 $60 $150 $50 $10
Slide 51: Price Trend of Import Steel
70 65 60 55 50 45 40 (000 yen/ton) JFE Steel D ti . )) vor Price Trend of Import Steel JFE 2014 2015 2016 2017 2018 Data: The Japan Iron and Steel Federation Import Steel from S. Korea 2019 2020 S1 51
Slide 52: Price trend of Metal's Market Price
JFE Steel Ice re) er trend of Metal’s Market Pr Enns Zn (US/t) (eb) FeCr 3,800 180.0 3,300 160.0 2,800 140.0 2,300 1,800 1,300 120.0 100.0 80.0 800 60.0 T0202 L6T0e T'6T0Z L£8T0z Tstoz LL0% T2002 L£9T0e T9t0z “£St0% T’stoz LvTae Troe T'0z0z £6107 T6roz L£8t0z T'st oz L£L10Z T2002 L£9T0e T'9t0z “£ST0
Slide 53: Trend of Sub Material's Market Price
JFE Steel Raw Ma ja! j Trend of Sub Material’s Market Price JFE (ent) Scrap (s/8) Spot Bulker 45,000 40,000 _ 35,000 30;000 30,000 25,000 25,000 20,000 20,000 15,000 15,000 10,000 i600 5,000 000 es Re eR eR Ra ° se 4488nrn5 8S Baas a RRR RRRRA RARE 2222 2R 8 eo aa 8 ges< SF Rese RGeRRKRRBR Freight I
Slide 54: Links to the reports published during FY2019
e)) Links to the reports published during FY2019 as Report JFE Group REPORT 2019 _JFE Group CSR REPORT 2019 JFE Group CSR REPORT 2019 Environmental Data Book IT REPORT 2019 URL https://www. jfe- holdings.co.jp/en/investor/library/gro up-report/index.html https://www. jfe- holdings.co.jp/en/csr/pdf/c
Slide 55: JFE
JFE Copyright © 2020 JFE Holdings, Inc. All Rights Reserved 55 55