Jfe Holdings, Inc. · TSE:5411

Jfe — H1 FY2019 Earnings Presentation

57 slides from Jfe's earnings presentation, Nov 12, 2019

  1. Slide 1: Fiscal Year 2019 Results

    Securities Code: 5411.T JFE Fiscal Year 20: 19 e JFE Holdings, Inc. November 12, 2019

  2. Slide 2: Table of contents

    ~)) A table of contents JFE 1. JFE Holdings’ Financial Results in First Half of Fiscal Year 2019 (April 1 to September 30, 2019) and Financial Forecasts for Fiscal Year 2019 (April 1, 2019 to March 31, 2020) @ JFE Steel @ JFE Engineering @ JFE Shoji Trade 2. Dividends This presentation material is f

  3. Slide 3: Consolidated Results in First Half of Fiscal Year 2019

    JFE Consolidated Results in First Half of Fiscal Year 2019 (April 1 to September 30, 2019)

  4. Slide 4: Financial Results in First Half of Fiscal Year 2019

    *)) Financial Results in First Half of Fiscal Year 2019 JFE-HD 0) (billion yen) FY2018 * 1H (Apr-Sep) FY2019 1H (Apr-Sep) Change Revenue 1,892.3 1,871.2 (21.1) of Parent Financial Income/Costs (6.2) (6.3) (0.1) Segment Profit 148.4 42.7 (105.7) Exceptional Items - - - Profit before Tax 148.4 42.7 (1

  5. Slide 5: Financial Results in First Half of Fiscal Year 2019 (by Segment)

    Financial Results in First Half of Fiscal Year 2019 (by Segment) 0) JFE-HD Financial Income/Costs (B) 1,892.3 (6.2) | FY2018 * FY2019 Change (billion yen) 1H (Apr-Sep) 1H (Apr-Sep) Steel Business 1,402.5 1,353.1 (49.4) Engineering Business 202.1 238.9 36.8 Trading Business 570.6 557.5 (13.1) Adjustm

  6. Slide 6: Consolidated Financial Forecasts for Fiscal Year 2019

    JFE Consolidated Financial Forecasts for Fiscal Year 2019 (April 1, 2019 to March 31, 2020)

  7. Slide 7: Financial Forecasts for Fiscal Year 2019

    )) Financial Forecasts for Fiscal Year 2019 0) JFE-HD FY2019 FY2019 (Previous Forecast (Updated Forecast Change Aug. 9 2019) Nov. 12 2019) (billion yen) 1H val 1H ion 1H val Revenue 1,870.0} 3,960.0] 1,871.2 3,730.0 1.2} (230.0) Financial Income/Costs (5.0) (15.0) (6.3) (13.0) (1.3) 2.0 Segment Prof

  8. Slide 8: Financial Forecasts for Fiscal Year 2019 (by Segment)

    Financial Forecasts for Fiscal Year 2019 (by Segment) JFE-HD 1,870.0 (5.0), 3,960.0 1,871.2 3,730.0 FY2019 FY2019 (Previous Forecast (Updated Forecast Change Aug. 9 2019) Nov. 12 2019) (billion yen) 1H Year 1H Year 1H Year Steel Business 1,400.0 2,900.0 1,353.1 2,690.0 (46.9) (210.0) Engineering Bus

  9. Slide 9: Financial Forecasts for Fiscal Year 2019

    )) Financial Forecasts for Fiscal Year 2019 0) JFE-HD FY2018 (Actual) FY2019 (Forecast ) Change (billion yen) 1H* | full 1H full 1H yall Revenue 1,892.3] 3,873.6] 1,871.2] 3,730.0 (21.1) } (143.6) Financial Income/Costs (6.2) (12.5) (6.3) (13.0) (0.1) (0.5) Segment Profit 148.4 219.5 42.7 47.0} (105

  10. Slide 10: Financial Forecasts for Fiscal Year 2019 (by Segment)

    JFE-HD Financial Forecasts for Fiscal Year 2019 (by Segment) Bad FY2018 (Actual) FY2019(Forecast) Change (billion yen) wH* | a 1H Year 1H Year Steel Business 1,402.5] 2,830.6] 1,353.1] 2,690.0 (49.4) | (140.6) Engineering Business 202.1 485.8 238.9 520.0 36.8 34.2 Trading Business 570.6| 1,125.8 557

  11. Slide 11: JFE Steel Financial Results in First Half of Fiscal Year 2019

    JFE JFE Steel Financial Results in First Half of Fiscal Year 2019 11 11

  12. Slide 12: Production and Shipment

    *)) Production and Shipment 0d | JFE Steel FY2018 FY2019 FY2019 (Previous Forecast) unit! 19 | 29 | 1H | 3 | 4Q | 2H | V4 | iq | 29 | 1H | 4H Crude Steel Approx rude Steel | mt | 7.10] 6.94] 14.04] 6.39] 5.88 | 12.27] 26.31] 7.00] 6.79] 13.79] 14.00 (Standalone) Approx. Crude Steel! me | 7.51] 7.33]

  13. Slide 13: Segment profit in 1H FY2019 vs previous forecast

    Segment profit in 1H of FY2019 was 17.7billion yen, decreased by 8.3 billion, compared to the previous forecast. Cost : -5.0 billion yen Maintenance cost increased due to the impacts of typhoons and small operating issues. Sales Volume and Mix : -9.0 billion yen Decrease of steel demand and the dr

  14. Slide 14: Segment profit in 1H FY2019 year-on-year

    Segment profit in 1H of FY2019 was 17.7 billion yen, decreased by 99.6 billion year-on-year. Cost : ＋13.0 billion yen Sales Volume and Mix : -7.0 billion yen Decrease of steel demand and the drop of price in overseas market caused the production adjustment, which decreased both crude steel product

  15. Slide 15: Financial Forecasts for Fiscal Year 2019 - JFE Steel

    JFE Financial Forecasts for Fiscal Year 2019 JFE Steel 15 15

  16. Slide 16: Current Business Environment (Overview)

    JFE Stee Current Business Environment (Overview) Od | Steel Demand-Supply Domestic: >» Industrial machinery sector and construction sector show further decrease in demand. > Decrease of demand and the certain amount of imported steel keep inventory level high. Overseas: >» Intensified trade friction

  17. Slide 17: Current Business Environment (Domestic)

    JFE Current Business Environment (Domestic) JFE Stee previous year. furthermore. > Domestic ordinary steel orders in this August decreased significantly by 10.6% from the > Demand in shipbuilding, industrial machinery and building sectors shows slowing down (Trend of Ordinary Steel Orders) 20.0% Yea

  18. Slide 18: Combined inventories of HR, CR and Coated Steel

    Combined inventories of HR, CR and Coated Steel as of the end of September 2019 were 4,435K tons. From August 2019 : 132K tons decrease From September 2018: 39K tons increase A certain amount of imported steel maintains the inventory level higher. The demand-supply state needs to be watched cautious

  19. Slide 19: Inventories of Plate and Wide Flange Shapes

    [Inventories of Plate (Plate Shear) Inventories of plate shear as of the end of September 2019 was 449K tons. From August 2019 : 5K tons decrease From September 2018: 73K tons increase Although the inventory had been increasing under the weak demand until the end of this August, the inventory at the

  20. Slide 20: Volume of imported ordinary steel

    The volume of imported ordinary steel in September 2019 was 355K tons. From August 2019: 17K tons decrease From September 2018: 55K tons increase A certain amount of steel has been imported continuously. Steel products from China and Korea seem to be flowing into the Japanese market because of the d

  21. Slide 21: Current Business Environment (Overseas)

    JFE Steel Current Business Environment (Overseas) SE >» Global growth of Real GDP revised downward from the previous forecast. » Signs of a slow down is glowing in the whole global economy. > Escalated uncertainty coming from trade friction is spreading to the global economy, which makes the percept

  22. Slide 22: Crude steel production and exports in China

    Crude steel production in September 2019 in China was 82.8M tons (2.8M tons on daily basis: slightly decreased compared to the previous month. However, it still remains high.). From August 2019: 1.6M tons decrease From September 2018: 7.3M tons increase Export of steel from China in September 2019 w

  23. Slide 23: Inventories in China

    Inventories in China as of the end of October 2019 was approximately 9.4M tons. From September 2019: 13.4% decrease From October 2018: 4.3% decrease After Chinese New Year, the volume of inventories decreased as the seasonal pattern, and it remained high for a while. However, currently, it tends to

  24. Slide 24: Metal spread

    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 this June and July due to the decrease of the HRC price and the rise of the iron ore price. Afterwards, metal spread increased to $180/t d

  25. Slide 25: Materials Price

    JFE Steel Materials Price JFE | Iron ore (iron ore fines from Australia) [ Coking Coal (Hard Coking Coal from Australia) | ($/DMT) ($/WMT) $400 $130 Spot FOB Spot FOB $120 = —Term-contract FOB = _=Term-contract FOB $350 $110 $100 $300 #20 $250 $80 $200 $70 $60 $150 $50 $100 $40 g39 Lea 5 Lt tt tt at

  26. Slide 26: Financial Forecasts for FY2019 of JFE Steel

    JFE Stee Financial Forecasts for FY2019 of JFE Steel JFE FY2018 FY2019 FY2019 Full Full Full Unit | Year 1H 2H Year Year (Actual) (Actual) (Forecast) | (Forecast) Oe cet) Revenue Oyen 2,830.6] 1,353.1] 1,336.9] 2,690.0 2,900.0 oeee es, Mt 26.31) 13.79] 13.20)427,00) | 4?>"28.00 Crude Steel (Consolid

  27. Slide 27: Segment profit forecast for FY2019 vs previous forecast

    Segment profit forecast for FY2019 is 0 billion yen, decreasing by 70.0 billion yen from the previous forecast. Cost reduction: -10.0 billion yen Maintenance cost increased due to the impacts of the typhoons and small operating issues. Sales Volume and Mix : -30.0 billion yen • Decrease in product

  28. Slide 28: Segment profit forecast for FY2019 year on year

    Segment profit forecast for FY2019 is 0 billion yen, decreasing by 161.3 billion yen year on year. Cost : ＋50.0 billion yen Cost reduction : +28.0 billion yen: Cost effects of investment in West japan works etc. One-off effect in FY2018 : +22.0 billion yen Sales Volume and Mix : ±0 billion yen Whi

  29. Slide 29: Segment profit forecast for 2H of FY2019

    Segment profit forecast for 2H of FY2019 is -17.7 billion yen, decreasing by 35.4 billion yen from 1H of FY2019.  Cost : +14.0 billion yen Cost effects of investment in West japan works etc. Sales Volume and Mix : -10.0 billion yen • Crude steel production is estimated to decrease with the fall of

  30. Slide 30: JFE Engineering Financial Forecasts for Fiscal Year 2019

    JFE Engineering Financial Forecasts for Fiscal Year 2019 30 30

  31. Slide 31: Financial Forecasts in FY2019 of JFE Engineering

    Financial Forecasts in FY2019 of JFE Engineering OS | JFE Engineering (Full Year) (billion yen) FY2019 FY2019 Chanae (Previous Forecast) (Updated Forecast) g 1H Full Year 1H Full Year 1H Full Year Orders 180.0 450.0 189.5 450.0) +9,5) 0) Revenue 230.0 520.0 238.9 520.0 +8.9 ) pegment 9.0 23.0 11.9 2

  32. Slide 32: Financial Forecasts in FY2019 of JFE Engineering

    JFE Engineering Financial Forecasts in FY2019 of JFE Engineering 0) | (billion yen) FY2018 FY2019 Change (Actual) (Forecast) g 1H* Full Year 1H Full Year 1H Full Year Orders 271.8 482.8 189.5 450.0 (82.3) (32.8) Revenue 202.1 485.8 238.9 520.0 +36.8) +34.2 Segment 7.7 20.1 11.9 23.0) 3 +4.2) 42.9) P

  33. Slide 33: Classification of placed orders

    JFE Engineering *)) Classification of placed orders a (billion yen) Category FY2018 | FY2019 Change Main Orders (FY2019 1H) (Actual) | (Forecast) *: New projects received in FY2019 Q2 V Reconstruction of facility of the water purification plant Environment) 212.6 200.0 (12.6)” ohcoke ae] work of the

  34. Slide 34: JFE Shoji Trade Financial Forecasts for Fiscal Year 2019

    JFE Shoji Trade Financial Forecasts for Fiscal Year 2019 34 34

  35. Slide 35: Financial Forecast in FY2019 of JFE Shoji Trade

    Financial Forecast in FY2019 of JFE Shoji Trade Bd | JFE Shoji Trade (billion yen) FY2019 FY2019 (Previous Forecast) (Updated Forecast) Change 1H Full Year 1H Full Year 1H Full Year Revenue 553.0) 1,200.0 557.5} 1,120.0 +4.5 (80.0) Segment Profit 15.0 36.0 14.6 32.0 (0.4) (4.0) (Change) (1H) (Full Y

  36. Slide 36: Financial Forecast in FY2019 of JFE Shoji Trade

    Financial Forecast in FY2019 of JFE Shoji Trade ad | JFE Shoji Trade and spread in US and other regions mainly due to continuing trade friction between US and China (billion yen) FY2018 FY2019 (Actual) (Forecast) Change 1H* Full Year 1H Full Year 1H Full Year Revenue 570.6, 1,125.8 557.5} 1,120.0 (1

  37. Slide 37: JFE Holdings Financial Forecasts for Fiscal Year 2019

    JFE Holdings Financial Forecasts for Fiscal Year 2019 37 37

  38. Slide 38: Financial Forecasts for Fiscal Year 2019

    °)) Financial Forecasts for Fiscal Year 2019 Od JFE-HD FY2018 (Actual) FY2019 (Forecast ) Change (billion yen) 1H* Your 1H Vener 1H Your Revenue 1,892.3} 3,873.6} 1,871.2 3,730.0 (21.1)] (143.6) (0.1) Financial Income/Costs (6.2) (12.5) (0.5) Segment Profit 148.0 219.5 42.7 47.0] (105.7)} (172.5) Ex

  39. Slide 39: Measures for Maintaining Financial Strength

    )) Measures for Maintaining Financial Strength JFE JFE-HD Under the severe business environment, consider the following items to maintain financial strength. + Sale of holding shares (over 100 billion yen) 2. Compress CAPEX in steel business compared to the CAPEX plan, 1 trillion yen (based on decis

  40. Slide 40: Debt/EBITDA Multiple

    JFE-HD )) Debt/EBITDA Multiple JFE eee nnn ea naan (billion yen) (times) 1,000.0 8.0 Debt/EBITDA Multiple right exis. (rig) ) e x6.4 Target of 6 Mid-term Plan x3.6 Approximately 3 times i @ = 500.0 | 3.0 EBITDA(left axis) Interest-bearin tas sake debt outstanding 1,523.8 (billion yen) 1,860.0 (billi

  41. Slide 41: Dividends

    Dividends 41 41

  42. Slide 42: Dividends

    JFE-HD )) Dividends JFE | m@ JFE Holdings has decided to pay an interim dividend of 20 yen per share at its Board of Directors. m= The company is withholding its decision regarding the year-end dividend to carefully observe performance going forward. 42 42

  43. Slide 43: 43

    43 43

  44. Slide 44: Revamp of No.4 Blast Furnace and Data Science Introduction

    JFE Steel °)) Revamp of No.4 Blast Furnace at West Japan Works (Kurashiki), Introduction of Data Science to All Steel works Blast Fumaces @Kurashiki No.4 BF* Project outline 1. Cost: Approx. 50 billion yen 2. Schedule: Sep. 2021 - Dec. 2021 (planned) 3. Other: Post-revamp inner volume will be 5,100

  45. Slide 45: Initiatives for Improving Corporate Value in Mid to Long-term

    JFE-HD Initiatives for Improving Corporate Value in Mid to Long-term JFE @ sresteel @ sFEEngineering Q 3IFE Shoji Trade Standardkessel Baumgarte GmbH Received Large-scale Orders in Belgium and Scotland Acquires Cogent, an Electrical Steel Processing Company in Canada >» Achieves one of the world's l

  46. Slide 46: ESG initiatives

    ESG initiatives 46

  47. Slide 47: Disclosure in line with the TCFD Recommendations

    *)) Disclosure in line with the TCFD Recommendations 7” - Scenario Analysis - JE Ey JFE Holdings endorsed the final report of the TCFD* in May 2019, and has conducted and disclosed results of scenario analysis. > Bold policies and technological reforms will > Even with the new policies in various ho

  48. Slide 48: Appendix

    Appendix 48 48

  49. Slide 49: Main Financial Data

    e)) Main Financial Data ad | J-GAAP IFRS JFE-HD Forecast Fyis5 FY16 FY19 Profit attributable to owners: Ordinary Income 52.2] 173.6 | 231.0 64.2 847 | 216.3 | 221.1 Business profit 232.0 60.0 EBITDA 260.6 | 3689 | 4215] 2544] 2799| 3888 | 405.9 EBITDA ¥1 428.2 290.0 ROS 1.6% | 4.7% | 6.0% 9% | 2.6%

  50. Slide 50: Cash Flow Forecast for FY2019

    )) Cash Flow Forecast for FY2019 Consolidated (billion yen) Net Income 33.0 Dividends 40.0 Depreciation - 4: Capex, & Amortization 230.0 Investments ; 410.0 Interest-bearing debt outstanding 230.0 | Working Capital etc 43. Impact of application of IFRS 16 Lease | Fixed asset (right-of-use assets) et

  51. Slide 51: Price Trend of Import Steel

    JFE Stee ice Trend of Import Steel _ Pr | Domestic Market Environ (000 yen/ton) oe poe 70 65 55 50 45 2019 2018 2017 2016 2015 2014 Data: The Japan Iron and Steel Federation 51 Import Steel from S. Korea 51

  52. Slide 52: Trend of Metal's Market Price

    JFE Steel e)) Trend of Metal’s Market Price ed Zn (US/t) FeCr (@ Mb) 3,800 180.0 3,300 160.0 2,800 140.0 120.0 100.0 2,300 1,800 1,300 80.0 £6102 T'6T02z £8102 T'8T0z £2102 T2102 L£9T0% T9102 L£ST02 T'stoz L£vtoz T'vT0z 800 60.0 L'6T02 T'6T0Z L802 T'st0z LL102 T'2T02 £9702 T'9T 0c LST0e T'stoe LeT0e

  53. Slide 53: Trend of Sub Material's Market Price

    JFE (yen/t) Scrap Raw Mat 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 oO uy i or rr S £2 484 6 eee sega sss5 53 53 SF SSE SES R 8 8 8 RRR RKRKRR AN 125 120 115 110 105 100 95 Freight Index Data: Japan Tracking Association (Jan,

  54. Slide 54: Segment profit 1H FY2019 vs 2H FY2018

    Segment profit result for 1H of FY2019 was 17.7 billion yen, decreasing 26.3 billion yen compared to that for 2H of FY2018.  Cost : +23.0 billion yen Sales Volume and Mix : +17.0 billion yen Recovery of the crude steel production from the operating issues in FY2018 Crude steel (Standalone) +1.52Mt

  55. Slide 55: Segment profit 2Q FY2019 vs 1Q

    Segment profit for 2Q of FY2019 was 3.2 billion yen, decreasing 11.3 billion yen from 1Q in FY2019.  Cost : -3.0 billion yen Sales Volume and Mix : -7.0 billion yen The volume of crude steel production went down due to the production adjustment along with the decrease in steel demand and decline o

  56. Slide 56: Trend of exchange rate

    e)) Trend of exchange rate (USD against JPY RMB) SEE (RMB/USD) (JPY/USD) 130 ——JPY/USD ==-RMB/USD o N a 110 100 ~=--? 90 80 OT 6T0C £6107 bv 6TO7 T6TOC OT'8T0¢ Z8T0¢ v'8toc T8TOc OT'ZTOC L£LT0C pb Lt0c TZT0c OT'9TOC L9TOC v9T07 T9T02 OT'STOC Z£ST0¢ bSTOC 56 56

  57. Slide 57: Copyright

    JFE Copyright © 2019 JFE Holdings, Inc. All Rights Reserved 57 57

JFE Holdings — H1 FY2019 Earnings Presentation on 6ix