Jfe Holdings, Inc. · TSE:5411

Jfe — Q3 FY2021 Earnings Presentation

52 slides from Jfe's earnings presentation, Feb 8, 2022

  1. Slide 1: JFE Group Financial Results for Third Quarter of Fiscal Year 2021

    Securities Code：5411.T JFE Group Financial Results for Third Quarter of Fiscal Year 2021 ending March 31, 2022 JFE Holdings, Inc. February 8, 2022

  2. Slide 2: A table of contents

    A table of contents  JFE Holdings’ Financial Results for Third Quarter of Fiscal Year 2021 (April 1 to December 31, 2021)  JFE Holdings’ Financial Forecasts for Fiscal Year 2021 (April 1, 2021, to March 31, 2022)  Dividends  Financial Results for Third Quarter of Fiscal Year 2021 and Financial F

  3. Slide 3: Consolidated Results for Third Quarter of Fiscal Year 2021

    Consolidated Results for Third Quarter of Fiscal Year 2021 (April 1 to December 31, 2021) 3

  4. Slide 4: Financial Results for Third Quarter of Fiscal Year 2021

    JFE-HD Financial Results for Third Quarter of Fiscal Year 2021 Despite sharply higher prices for raw materials and metals and scrap etc., strong demand for steel and market prices and the result of initiatives to improve sales price led to a significant increase in profit, particularly in the steel

  5. Slide 5: Financial Results for Third Quarter of Fiscal Year 2021 (by Segment)

    JFE-HD Financial Results for Third Quarter of Fiscal Year 2021 (by Segment) FY2020 FY2021 Change （billion yen） Oct-Dec Apr-Dec Oct-Dec Apr-Dec Apr-Dec Revenue Steel Business 580.2 1,607.5 832.8 2,243.2 635.7 Engineering Business 129.2 351.2 129.8 359.1 7.9 Trading Business 224.9 676.6 329.3 873.7 19

  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 improve to 303.3 billion yen from the previous forecast, due to the result of initiatives to improve steel prices and increase in profit of domestic and overseas subsidiary companies despite the impa

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

    JFE-HD Financial Forecasts for Fiscal Year 2021 (by Segment) FY2021 Change (Previous Forecast） FY2021 (Updated Forecast) (billion yen) Full Year 1H 2H Full Year Full Year Revenue Steel Business 3,190.0 1,410.4 1,799.6 3,210.0 20.0 Engineering Business 520.0 229.2 280.8 510.0 (10.0) Trading Business

  9. Slide 9: Financial Forecast for Fiscal Year 2021

    JFE-HD Financial Forecast for Fiscal Year 2021 Full-year segment profit is expected to be 390.0 billion yen, increased by 402.9 billion yen year-on-year, due to recovery of steel demand, market price increase, and the result of initiatives to improve sales price. FY2021 FY2020 (Updated Forecast) Cha

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

    JFE-HD Financial Forecasts for Fiscal Year 2021 (by Segment) FY2020 FY2021 (Updated Forecast) Change (billion yen) （Actual) Full Year 1H 2H Full Year Full Year Revenue Steel Business 2,255.2 1,410.4 1,799.6 3,210.0 954.8 Engineering Business 485.7 229.2 280.8 510.0 24.3 Trading Business 932.5 544.4

  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) (Ri

  12. Slide 12: Dividends

    Dividends 12

  13. Slide 13: Dividends

    JFE-HD Dividends JFE Holdings has decided to propose at its general meeting of shareholders a year-end dividend of 80 yen per share, which would bring the annual dividend of 140 yen per share. 13

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

    JFE Steel Financial Results for Third Quarter of Fiscal Year 2021 and Financial Forecast for Fiscal Year 2021 14

  15. Slide 15: Financial Results for Third Quarter of Fiscal Year 2021

    JFE Steel Financial Results for Third Quarter of Fiscal Year 2021 FY2020 FY2021 Unit Full 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q billion Revenue 508.7 518.6 580.2 647.6 2,255.2 638.5 771.9 832.8 yen billion Segment Profit (57.8) (78.4) 34.3 36.4 (65.4) 69.7 88.8 93.5 yen Excluding Inventory billion yen (34.8) (3

  16. Slide 16: 353.9 Billion Yen Increase in JFE Steel's Segment Profit

    JFE Steel 353.9 Billion Yen Increase in JFE Steel’s Segment Profit (FY2020 Apr-Dec vs. FY2021 Apr-Dec) Segment profit increased by 353.9 billion yen due to an improvement of selling price, an increase in crude steel production, and profit improvement of both domestic and overseas subsidiaries. （bill

  17. Slide 17: Current Business Environment (Domestic)

    JFE Steel Current Business Environment（Domestic）  Steel demand is expected to be in a recovery trend while steel demand is temporally weakening due to the reduction in automobile production resulted from shortage of semi-conductor and parts.  Outlook for domestic ordinary steel consumption in 4Q o

  18. Slide 18: Current Business Environment (Overseas)

    JFE Steel Current Business Environment（Overseas）  Steel demand is expected to remain in a recovery trend amid the global economic recovery. However, the steel supply-demand balance is temporally eased and the steel market price declined due to the prolonged production cuts in auto sector, sluggish

  19. Slide 19: 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 Spot FOB $1,000 Term-contract FOB $200 $950 $175 $900 $150 $125 $850 $100 Term- contract FY2021 $800 FOB Apr-Jun Jul-Sep Oct-D

  20. Slide 20: 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 26.00 Mt, revised down by 0.5 Mt from the previous forecast.  Resuming schedule of Kurashiki No.4 BF successfully was moved up, and its opera

  21. Slide 21: Financial Forecast for Fiscal Year 2021

    JFE Steel Financial Forecast for Fiscal Year 2021 2021年度 FY2020 FY2021 Unit 1H 2H Full Year Full Year Full Year 3Q 4Q Previous Actual Actual Forecast Forecast Forecast Forecast billion Revenue yen 2,255.2 1,410.4 832.8 966.8 1,799.6 3,210.0 3,190.0 billion Segment Profit yen (65.4) 158.5 93.5 51.0 1

  22. Slide 22: 23.0 Billion Yen Increase in JFE Steel's Segment Profit

    JFE Steel 23.0 Billion Yen Increase in JFE Steel’s Segment Profit (FY2021 (Previous Forecast) vs. FY2021 (Updated Forecast)) Segment profit is expected to increase from the previous forecast due to selling price improvements, such as quick reflection of raw material cost in selling prices, as well a

  23. Slide 23: 368.4 Billion Yen Increase in JFE Steel's Segment Profit

    JFE Steel 368.4 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 quick refle

  24. Slide 24: 14.0 Billion Yen Decrease in JFE Steel's Segment Profit

    JFE Steel 14.0 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 • While the metal spread is expected to increase due to the selling price improvements, such as quick reflecti

  25. Slide 25: JFE Engineering Financial Forecast for Fiscal Year 2021

    JFE Engineering Financial Forecast for Fiscal Year 2021 25

  26. Slide 26: Financial Forecast for Fiscal Year 2021 (JFE Engineering)

    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

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

    JFE Shoji Financial Forecast for Fiscal Year 2021 27

  28. Slide 28: Financial Forecast for Fiscal Year 2021 (JFE Shoji)

    JFE Shoji Financial Forecast for Fiscal Year 2021 Current Business Environment/ Overview of Financial Status  Domestic business is expected to remain solid due to the recovery of steel demand for shipbuilding and the general rise in steel market price, despite the impact of the decline in productio

  29. Slide 29: Topics (ESG Initiatives etc.)

    Topics (ESG Initiatives etc.) 29

  30. Slide 30: CO2 Emissions Reduction Target for JFE Group

    JFE-HD CO2 Emissions Reduction Target for JFE Group Released on February 8 th, 2022 • JFE holdings has raised 2030 CO2 emissions reduction target to 30% or more above FY2013 ーボンニュートラルに カJFE’s Announcement about CO2 emissions reduction CO2 emissions reduction target for steel business *All targets ar

  31. Slide 31: CO2 Emissions Reduction Target for JFE Group

    JFE-HD CO2 Emissions Reduction Target for JFE Group Released on February 8 th, 2022 ＜Background to revise the target＞ • JFE revised the target due to ongoing advancement of carbon-neutrality initiatives and steady progress of external conditions surrounding steel business. Initiatives  Establishmen

  32. Slide 32: CO2 Emissions Reduction Target for JFE Group

    JFE-HD CO2 Emissions Reduction Target for JFE Group Released on February 8 th, 2022 • JFE is also contributing to CO2 reduction across society through its engineering business in addition to CO2 emissions reduction by steel business. ＜JFE’s Internal and External CO2 Emission Reduction＞ （Mt/year） CO₂

  33. Slide 33: JFE's proposal adopted as Green Innovation Fund Project

    JFE-HD JFE's proposal of carbon neutral technologies was adopted as the Green Innovation Fund Project Released on January 7 th, 2022 • Proposal* to develop carbon-neutral technologies which includes JFE Steel’s proprietary Carbon-recycling Blast Furnace, was adopted as part of the Green Innovation F

  34. Slide 34: JFE Holdings Decided to Issue Transition Bonds in FY2022

    JFE-HD JFE Holdings Decided to Issue Transition Bonds in FY2022 Released on January 20 th, 2022 • JFE Holdings has decided to issue transition (corporate) bonds through a public offering in FY2022 in order to promote carbon-neutrality initiatives • JFE will be the first member of Japan’s manufacturi

  35. Slide 35: Appendix

    Appendix 35

  36. Slide 36: 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 -12.9 390.0 EBITDA 368.9 421.5 254.4 279.9 388.8 405.9 EBITDA ＊1 428.2 269.4 223.4 640.0

  37. Slide 37: 4.7 Billion Yen Increase in JFE Steel's Segment Profit (2Q vs 3Q)

    JFE Steel 4.7 Billion Yen Increase in JFE Steel’s Segment Profit (FY2021.2Q (Actual) vs. FY2021.3Q (Actual)) FY2021 Change JFE Steel 1Q 2Q 3Q 4Q Full Year (billion yen) Actual Actual Actual Forecast Forecast Segment Profit 69.7 88.8 93.5 51.0 303.0 +4.7 1. Cost +7.5 • Variable cost reduction etc. 2.

  38. Slide 38: 42.5 Billion Yen Decrease in JFE Steel's Segment Profit (3Q vs 4Q)

    JFE Steel 42.5 Billion Yen Decrease in JFE Steel’s Segment Profit (FY2021.3Q (Actual) vs. FY2021.4Q (Forecast)) FY2021 JFE Steel Change 1Q 2Q 3Q 4Q Full Year (billion yen) Actual Actual Actual Forecast Forecast Segment Profit 69.7 88.8 93.5 51.0 303.0 (42.5) 1. Cost ±0.0 2. Volume and Mix +8.0 • Cru

  39. Slide 39: Domestic 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 Dec, From From Nov, Dec, 2021 previous previous 2021 2020 month year 1,000 Inventories +76 +988

  40. Slide 40: Domestic 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） Inventories 500 3.5 250 3.5 Shipment Inventories Inventory Ratio(Right axis) Inventory Ratio(Right axis)

  41. Slide 41: Trend of Import Steel (Ordinary Steel)

    JFE Steel Domestic Market Environment Trend of Import Steel (Ordinary Steel) （000ｔ） 600 S.Korea China Taiwan Others 500 400 300 200 Change 100 Dec, From From Nov, Dec, Unit: 000t 2021 previous previous 2021 2020 month year -23 +4 Import Steel 363 386 359 0 (-6.0%) (+1.1%) Jan Mar May Jul Sep Nov Jan

  42. Slide 42: Crude Steel & Im/Export, China

    JFE Steel Overseas Market Environment Crude Steel & Im/Export, China Export（Left axis） Import（Left axis） Crude steel（Right axis） （Mｔ） （Mｔ） 9 120 8 100 7 6 80 5 60 4 3 40 Dec, From Jan-Dec, From 2 2021 previous 2021 Jan-Dec, month 2020 20 1 Crude Steel（Mt） 86.2 +24.4% 1,033.5 -2.1% Export（Mt） 5.0 +15

  43. Slide 43: 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% Dec, From From Nov, Dec, （Mt） 5.0 2021 previous previous 2021 2020 month year -250.0% -1.6

  44. Slide 44: Metal Spread Trend (Chinese Spot Basis)

    JFE Steel Overseas Metal Spread Trend Market Environment (Chinese Spot Basis) （$/t) （$/t) 1,200 1,200 1,000 1,000 800 800 600 HRC 600 400 400 Metal Spread 200 200 0 0 Metal Spread ＝ HRC Price － Raw Materials Cost *HRC Price： Chinese Spot basis Raw Materials Cost： Calculated from market price of Iron

  45. Slide 45: Price Trend of Import Steel

    JFE Steel Domestic Market Environment Price Trend of Import Steel （000 yen /ｔ） 110 100 90 80 70 60 50 40 May May May May May May Mar Mar Mar Mar Mar Mar Sep Jul Nov Nov Nov Nov Nov Nov Sep Sep Sep Sep Sep Jan Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul 2016 2017 2018 2019 2020 2021 Data: The Japan Iron

  46. Slide 46: 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 2020.1 2020.1 Raw Materials 2020.7 2020.7 2021.1 2021.1 2021.7 2021.7 2022.01

  47. Slide 47: 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

  48. Slide 48: Progress of Initiatives of Steel Business

    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

  49. Slide 49: 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 3Q Construction of domestic waste treatment plant Waste [Nara,★Nagoya] to 220.0 220.0 0.0 Improvement works of domestic waste tre

  50. Slide 50: Evaluation for ESG initiatives etc.

    JFE-HD Evaluation for ESG initiatives etc. Evaluation by CDP 2021: A High Rating of [A-] for Climate Change and Water Security Released on December 7th, 2021 • Received [A-] for 2 areas, climate change and water security, by the CDP, a British nongovernmental organization (NGO) that conducts ESG eva

  51. Slide 51: Links to the reports published during FY2021

    JFE-HD Links to the reports published during FY2021 Report URL QR code JFE Group REPORT https://www.jfe- 2021 holdings.co.jp/en/investor/library/gro up-report/index.html JFE Group CSR https://www.jfe- REPORT 2021 holdings.co.jp/en/csr/data/index.html JFE Group CSR https://www.jfe- REPORT 2021 holdin

  52. Slide 52: Copyright © 2022 JFE Holdings, Inc. All Rights Reserved

    Copyright © 2022 JFE Holdings, Inc. All Rights Reserved 52

JFE Holdings — Q3 FY2021 Earnings Presentation on 6ix