Jfe Holdings, Inc. · TSE:5411

Jfe — Q3 FY2018 Earnings Presentation

59 slides from Jfe's earnings presentation, Feb 1, 2019

  1. Slide 1: Financial Results through Third Quarter of Fiscal Year 2018

    Securities Code: 5411.T JFE Group Financial Results through Third Quarter of Fiscal Year 2018 ending March 31, 2019 JFE Holdings, Inc. February 1, 2019

  2. Slide 2: A table of contents

    A table of contents JFE Holdings’ Financial Results through Third Quarter of Fiscal Year 2018 (April 1 to December 31, 2018) and Financial Forecasts for Fiscal Year 2018 (April 1, 2018 to March 31, 2019) JFE Steel JFE Engineering JFE Shoji Dividends Adoption of International Financial Reporting Stan

  3. Slide 3: Summary

    Summary Financial Forecasts for Fiscal Year 2018 JFE Holdings Inc. revises downward its ordinary income forecast to 220.0 billion yen (30.0 billion yen decrease from previous forecast) mainly due to decrease in crude steel production volume of 1 million tons from previous forecast related to operati

  4. Slide 4: Consolidated Results through Third Quarter of Fiscal Year 18

    Consolidated Results through Third Quarter of Fiscal Year 2018 (April 1 to December 31, 2018) 4

  5. Slide 5: Financial Results through Third Quarter of Fiscal Year 2018

    JFE-HD Financial Results through Third Quarter of Fiscal Year 2018 (billion yen) FY2017 FY2018 Through 3Q Through 3Q Change Net Sales 2,670.8 2,939.1 268.3 Operating Income (Loss) 172.3 170.8 (1.5) Non-operating Income (Expenses) (1.8) 30.4 32.2 Ordinary Income (Loss) 170.4 201.2 30.8 Extraordinary

  6. Slide 6: Financial Results through Third Quarter of Fiscal Year 2018 (by Segment)

    JFE-HD Financial Results through Third Quarter of Fiscal Year 2018 (by Segment) (billion yen) FY2017 FY2018 Change Through 3Q Through 3Q Steel Business 1,991.9 2,126.2 134.3 Engineering Business 256.6 317.9 61.3 Trading Business 1,410.5 1,558.6 148.1 Adjustments (988.2) （1,063.6) (75.4) Net Sales 2,

  7. Slide 7: Forecasts of Consolidated Financial Results in Fiscal Year 2018

    Forecasts of Consolidated Financial Results in Fiscal Year 2018 (April 1, 2018 to March 31, 2019) 7

  8. Slide 8: Financial Forecasts for Fiscal Year 2018

    JFE-HD Financial Forecasts for Fiscal Year 2018 (billion yen) Previous Forecasts Updated Forecasts (Feb. 1. 2019) Change (Oct. 30. 2018) Full year Apr-Dec Jan-Mar Full year Full year Net Sales 4,000.0 2,939.1 960.9 3,900.0 (100.0) Operating Income 220.0 170.8 19.2 190.0 (30.0) Non-operating Income (

  9. Slide 9: Financial Forecasts for Fiscal Year 2018 (by Segment)

    JFE-HD Financial Forecasts for Fiscal Year 2018 (by Segment) (billion yen) Previous Forecasts Updated Forecasts (Oct. 30. (Feb. 1. 2019) Change 2018) Full Full year Apr-Dec Jan-Mar Full year year Steel Business 2,880.0 2,126.2 703.8 2,830.0 (50.0) Engineering Business 480.0 317.9 162.1 480.0 0.0 Tra

  10. Slide 10: Financial Forecasts for Fiscal Year 2018

    JFE-HD Financial Forecasts for Fiscal Year 2018 (billion yen) FY2017 (A) FY2018 (F) Change Full year Apr-Dec Jan-Mar Full year Full year Net Sales 3,678.6 2,939.1 960.9 3,900.0 221.4 Operating Income 246.6 170.8 19.2 190.0 (56.6) Non-operating Income (Expenses) （30.3) 30.4 (0.3) 30.0 60.3 Ordinary I

  11. Slide 11: Financial Forecasts for Fiscal Year 2018 (by Segment)

    JFE-HD Financial Forecasts for Fiscal Year 2018 (by Segment) (billion yen) FY2017 (A) FY2018 (F) Change Full Full year Apr-Dec Jan-Mar Full year year Steel Business 2,715.4 2,126.2 703.8 2,830.0 114.6 Engineering Business 391.3 317.9 162.1 480.0 88.7 Trading Business 1,907.9 1,558.6 491.4 2,050.0 14

  12. Slide 12: JFE Steel

    ＪＦＥ Steel Financial Results through Third Quarter of Fiscal Year 2018 12 12

  13. Slide 13: Production and Shipment

    JFE Steel Production and Shipment FY2017 FY2018 Full Unit 1Q 2Q 3Q 4Q 1Q 2Q 3Q year Crude Steel Mt 7.12 6.98 7.23 7.14 28.46 7.10 6.94 6.39 (Standalone) Crude Steel Mt 7.53 7.38 7.63 7.52 30.06 7.51 7.33 6.79 (Consolidated) Shipment Mt 6.14 6.28 6.38 6.50 25.30 6.13 5.93 6.24 (Standalone) Export Rat

  14. Slide 14: 6.8 billion Yen increase in JFE Steel's Ordinary Income

    JFE Steel 6.8 billion Yen increase in JFE Steel’s Ordinary Income (FY17 through 3Q vs. FY18 through 3Q) (billion yen) FY2017 FY2018 Change JFE Steel Apr-Dec 1Q 2Q 3Q Apr-Dec Apr-Jun Jul-Sep Oct-Dec Ordinary Income 150.2 64.4 49.7 42.8 157.0 6.8 Cost ± 0.0 ・Cost reduction +12.0 ・One-off effect due to

  15. Slide 15: JFE Steel Financial Forecasts for Fiscal Year 2018

    ＪＦＥ Steel Financial Forecasts for Fiscal Year 2018 15

  16. Slide 16: Current Business Environment

    JFE Steel Current Business Environment Domestic business environment Domestic steel demand remains robust. But, there is a risk of slowdown of foreign demand including the impact of trade friction. In construction sector, demand of non-residential building is expected to remain solid with urban rede

  17. Slide 17: Outlook for domestic auto production

    JFE Steel Domestic Market Environment Outlook for domestic auto production (million units） 3.5 FY16 (9.36) FY17 (9.68) FY18 (9.80[F]) 3.0 2.48 2.57 2.55 2.53 2.60 2.40 2.5 2.30 2.32 2.31 2.37 2.32 2.11 2.0 1.5 1.0 0.5 0.0 Apr - Jun Jul - Sep Oct - Dec Jan - Mar JFE Forecast 17

  18. Slide 18: 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） 3 5,000 Maker Whole Saler Coil Center Inventory Ratio (right) 4,500 4,000 3,500 2 3,000 2,500 2,000 1 1,500 1,000 Dec, 2018 500 4,171kt 0 0 Feb Feb Feb Feb Feb Jul Jul Jul Jul Jul Aug Aug Aug A

  19. Slide 19: 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 (Month) （000t） （Month） (000t) 450 Inventories 3.0 250 Inventories 4 Inventory Ratio Shipment Inventory Ratio (Right) 3.5 2.5 400 200 3

  20. Slide 20: Trend of Import Steel (Ordinary Steel)

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

  21. Slide 21: 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 2018 Y on Y Mt 50 6 change Crude Steel 928.3 +6.6% 40 4 Export 69.3 -8.1% 30 Import 13.2 -1.0% 20 2 Apparent Crude 872.1 +7.8% 10 Steel Consumption 0 0 May

  22. Slide 22: 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 Jul Jul Jul Jul Jul Aug Aug Aug Aug Aug Jun Jun Jun Jun J

  23. Slide 23: 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

  24. Slide 24: 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

  25. Slide 25: Financial Forecasts for FY2018 of JFE Steel

    JFE Steel Financial Forecasts for FY2018 of JFE Steel FY2018 FY2018 Full year Full 1H 3Q 4Q 2H Full year Change year Previous Updated Actual Actual Forecast Forecast Forecast Forecast Billion Net Sales Yen 2,880.0 1,386.6 739.6 703.8 1,443.4 2,830.0 (50.0) Ordinary Billion 190.0 114.1 42.8 3.0 45.9

  26. Slide 26: 30.0 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 30.0 Billion Yen decrease in JFE Steel’s Ordinary Income (FY18 (Previous Forecast) vs. FY18 (Updated Forecast) ) (billion yen) FY18 FY18 Change JFE Steel Previous Updated FY18→FY18 Ordinary 190.0 160.0 (30.0) Income Crude Steel (standalone) Mt 28.00 27.00 （1.00) Annual total one-off effect

  27. Slide 27: 38.8 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 38.8 Billion Yen decrease in JFE Steel’s Ordinary Income (FY17 (Actual) vs. FY18 (Forecast) ) (billion yen) FY17 FY18 Change JFE Steel Actual Forecast FY17→FY18 Ordinary 198.8 160.0 (38.8) Income Crude Steel (standalone) Mt 28.46 27.00 （1.46) Cost ± ０.0 ・Cost reduction +20.0 ・One-off effec

  28. Slide 28: JFE Engineering Financial Forecasts for Fiscal Year 2018

    JFE Engineering Financial Forecasts for Fiscal Year 2018 28

  29. Slide 29: Financial Forecasts for FY18 of JFE Engineering

    JFE Engineering Financial Forecasts for FY18 of JFE Engineering (billion yen） FY2018 (Previous) FY2018 (Updated) Change Full year Full year 2H 2H 2H Full year （F） （F） Orders 228.2 500.0 228.2 500.0 ±0 ±0 Net Sales 287.2 480.0 287.2 480.0 ±0 ±0 Ordinary 15.1 22.0 15.1 22.0 ±0 ±0 Income 29

  30. Slide 30: Financial Forecasts for FY18 of JFE Engineering

    JFE Engineering Financial Forecasts for FY18 of JFE Engineering (billion yen） FY2017 (A) FY2018 (F) Change 2H Full year 2H Full year 2H Full year Orders 273.3 495.5 228.2 500.0 (45.1) 4.5 Net Sales 231.0 391.3 287.2 480.0 56.2 88.7 Ordinary Income 16.8 19.3 15.1 22.0 (1.7) 2.7 【Change (Full year)】 -

  31. Slide 31: Classification of placed orders

    JFE Engineering Classification of placed orders （billion yen） FY2017 FY2018 Category （A） （F） Change Main Orders (FY2018) - Construction of waste incineration plants in Tottori and Shimane - Improvement works of the waste incineration plant in Miyagi Environment 234.2 210.0 (24.2) - Construction of t

  32. Slide 32: JFE Shoji Trade Financial Forecasts for Fiscal Year 2018

    JFE Shoji Trade Financial Forecasts for Fiscal Year 2018 32

  33. Slide 33: Financial Forecasts for FY2018 of JFE Shoji Trade

    JFE Shoji Trade Financial Forecasts for FY2018 of JFE Shoji Trade （billion yen） Change FY2018 (Previous) FY2018 (Updated) Change Full year Full year 2H 2H 2H Full year (F) (F) Net Sales 1,101.8 2,120.0 1,031.8 2,050.0 （70.0) (70.0) Ordinary 15.9 35.0 15.9 35.0 ±０ ±０ Income 【Change】 (Full year) ・Sale

  34. Slide 34: Financial Forecasts for FY2018 of JFE Shoji Trade

    JFE Shoji Trade Financial Forecasts for FY2018 of JFE Shoji Trade （billion yen） FY2017 (Actual) FY2018 (Forecast) Change 2H Full year 2H Full year 2H Full year Net Sales 991.7 1,907.9 1,031.8 2,050.0 +40.1 +142.1 Ordinary 16.8 33.0 15.9 35.0 （0.9) +2.0 Income 【Ordinary Income Change】 (Full year) ・In

  35. Slide 35: Net Sales of JFE Shoji Trade (by Segment)

    JFE Shoji Trade Net Sales of JFE Shoji Trade (by Segment) FY2017 FY2018 (billion yen) Change (Actual) (Forecast) Domestic Business 966.9 1,050.0 +83.1 Export 461.7 480.0 +18.3 Overseas 779.3 820.0 +40.7 Business Foreign 317.6 340.0 +22.4 Operation Raw Materials, Equipment etc. 161.7 180.0 +18.3 TOTA

  36. Slide 36: JFE Holdings Financial Forecasts for Fiscal Year 2018

    ＪＦＥ Holdings Financial Forecasts for Fiscal Year 2018 36

  37. Slide 37: Financial Forecasts for Fiscal Year 2018

    JFE-HD Financial Forecasts for Fiscal Year 2018 (billion yen) FY2017 (A) FY2018 (F) Change Full year Apr-Dec Jan-Mar Full year Full year Net Sales 3,678.6 2,939.1 960.9 3,900.0 221.4 Operating Income 246.6 170.8 19.2 190.0 (56.6) Non-operating Income (Expenses) （30.3) 30.4 (0.3) 30.0 60.3 Ordinary I

  38. Slide 38: Underlying Profit before One-off Effects

    JFE-HD Underlying Profit before One-off Effects (billion yen) 300 ・Inventory valuation +27 ・Inventory valuation +33 ・Carry over of raw materials +4 ・Carry over of raw materials -3 ・Foreign exchange valuation -4 ・Foreign exchange valuation +3 250 －60 200 27 33 150 ・Volume decrease －40 ・Cost increase

  39. Slide 39: Debt / EBITDA Ratio

    JFE-HD Debt / EBITDA Ratio (billion yen) Debt / EBITDA (times) 1,000 Ratio 6.0 (right axis) 5.4 4.9 3.6 3.4 500 3.0 389 280 254 EBITDA 410 (left axis) 0 (forecast) 0.0 Debt FY15 FY16 FY18 FY18 Outstanding 1,379.3 1,375.4 1,330.9 1,490.0 (billion yen) EBITDA = Ordinary income + Interest expense + Dep

  40. Slide 40: Cash Flow Forecast for FY2018

    JFE-HD Cash Flow Forecast for FY2018 (billion yen) Source Usage Dividends 55 Net Income 160 Capex, 310 Investments Depreciation 180 Debt 160 Working 135 Capital etc. 40

  41. Slide 41: Dividends

    Dividends 41

  42. Slide 42: 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. 42

  43. Slide 43: Adoption of International Financial Reporting Standards (IFRS)

    Adoption of International Financial Reporting Standards (IFRS) 43

  44. Slide 44: Adoption of International Financial Reporting Standards

    JFE-HD Adoption of International Financial Reporting Standards JFE Holdings, Inc. announces herewith that its board of directors passed a resolution approving the company’s adoption of International Financial Reporting Standards (IFRS), replacing the Japanese Generally Accepted Accounting Principles

  45. Slide 45: Comparative Table of JGAAP and IFRS

    JFE-HD Comparative Table of JGAAP and IFRS -JFE Holdings Financial Forecast for FY2018- (billion yen) JGAAP IFRS Net Sales 3,900.0 Sales Revenue 3,800.0 Operating Income 190.0 Business Income A 233.0 Non-operating Income (Expenses) 30.0 Financial Income B (13.0) Ordinary Income (Loss) 220.0 Segment

  46. Slide 46: Appendix

    Appendix 46

  47. Slide 47: Main Financial Data

    JFE-HD Main Financial Data (Forecast) FY03 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 (bn. Yen, times) Ordinary Income 218.3 502.9 400.5 69.2 165.8 52.9 52.2 173.6 231.0 64.2 84.7 216.3 220.0 EBITDA ＊1 432.3 741.4 670.8 337.1 428.9 306.3 260.6 368.9 421.5 254.4 279.9 388.8 410.0 ROS

  48. Slide 48: Comparative Table of JGAAP and IFRS Profit and Loss statement

    JFE-HD Adoption of International Financial Reporting Standards Comparative Table of JGAAP and IFRS Profit and Loss statement JGAAP IFRS Net Sales Sales Revenue Cost of Sales Cost of Sales Gross Profit Gross Profit Selling, general and administrative expenses Selling, general and administrative expen

  49. Slide 49: 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 Domestic Ma y Ju n 20 14 Ju l A ug Sep Import Steel from S. Korea Oct Market Environment Nov Data: Japanese Steel Association Dec Jan Feb Ma r A pr Ma y Ju n 20 15 Ju l A ug Sep Oct Nov D

  50. Slide 50: Automobile Sales in Key Countries

    Overseas JFE Steel Market Environment Auto Sales in Key Countries Automobile Sales in Key Countries (YoY Change) 60.0% S.Korea China Indonesia Thailand India 40.0% 20.0% 0.0% (million units） -20.0% Auto Sales 2018 YoY Korea 1.7 ▲3.5% China 28.0 ▲3.1% -40.0% Indonesia 1.1 ＋8.4% Thailand 1.0 ＋19.2% In

  51. Slide 51: Trend of Metals' Market Price

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

  52. Slide 52: Raw Materials 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

  53. Slide 53: Trend of exchange rate (USD against JPY RMB)

    Trend of exchange rate（USD against JPY RMB） （JPY/USD） （RMB/USD） 130 8 JPY/USD RMB/USD 7.5 120 7 110 6.5 100 6 90 5.5 80 5 2013.7 2014.1 2014.7 2015.1 2015.7 2016.1 2016.7 2017.1 2017.7 2018.1 2018.7 2019.1 53

  54. Slide 54: 6.9 billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 6.9 billion Yen decrease in JFE Steel’s Ordinary Income (FY18 2Q vs. FY18 3Q) (billion yen) Change JFE Steel 1Q 2Q 3Q 4Q FY2018 2Q Apr-Jun Jul-Sep Oct-Dec Jan-Mar →3Q Ordinary Income 64.4 49.7 42.8 3.0 160.0 (6.9) Cost ー 3.5 Volume and Mix ー 4.5 Sales and Raw materials － 8.0 ・Inventory val

  55. Slide 55: 68.2 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 68.2 Billion Yen decrease in JFE Steel’s Ordinary Income (FY18 1H (Actual) vs. 2H (Forecast)) (billion yen) FY2018 (Forecast) Change JFE Steel 1H (A) 2H (F) Total 1H→2H Ordinary 114.1 45.9 160.0 (68.2) Income ・Cost reduction +4.0 Cost ー 10.0 ・One-off effect due to operational troubles -14.

  56. Slide 56: 39.8 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 39.8 Billion Yen decrease in JFE Steel’s Ordinary Income (FY18 3Q (Actual) vs. FY18 4Q (Forecast)) (billion yen) Change JFE Steel 1H (A) 2H (F) FY2018 3Q 3Q (A) 4Q (F) (F) Oct-Dec Jan-Mar →4Q Ordinary Income 114.1 42.8 3.0 45.9 160.0 (39.8) Volume and Mix ＋ 2.0 Sales and Raw materials ー 20

  57. Slide 57: GI JAZ High-lubricity GI Steel Sheet for Automobiles

    JFE Steel （Topics) Product development for enhancing competitiveness of automotive steel ~ “GI JAZTM” High-lubricity GI Steel Sheet for Automobiles ~ （released on November 15, 2018） Surface treatment “GI JAZTM” High-lubricity GI Steel Sheet for Automobiles Begun producing “GI JAZ” high-lubricity hot

  58. Slide 58: 1310 MPa High-tensile Steel Sheet Adopted for First Time

    JFE Steel （Topics) Product development for enhancing competitiveness of automotive steel ~ 1310 MPa High-tensile Steel Sheet Adopted for First Time ~ （released on January 10, 2019） High- 1310 MPa High-tensile Steel Sheet Adopted for First Time in Cold-press- tensile forming Vehicle Body-frame Parts

  59. Slide 59: Copyright © 2019 JFE Holdings, Inc.

    Copyright © 2019 JFE Holdings, Inc. All Rights Reserved 59

JFE Holdings — Q3 FY2018 Earnings Presentation on 6ix