Jfe Holdings, Inc. · TSE:5411

Jfe — Q1 FY2020 Earnings Presentation

52 slides from Jfe's earnings presentation, Aug 12, 2020

  1. Slide 1: JFE Group Financial Results for First Quarter of Fiscal Year 2020

    Securities Code: 5411.T JFE Group Financial Results for First Quarter of Fiscal Year 2020 ending March 31, 2021 JFE Holdings, Inc. August 12, 2020

  2. Slide 2: A table of contents

    A table of contents  JFE Holdingsʼ Financial Results for First Quarter of Fiscal Year 2020 (April 1 to June 30, 2020)  JFE Holdingsʼ Financial Forecasts for Fiscal Year 2020 (April 1, 2020 to March 31, 2021)  Dividends  Business Performance by Segment  JFE Steel  JFE Engineering  JFE Shoji 

  3. Slide 3: Consolidated Results for First Quarter of Fiscal Year 2020

    Consolidated Results for First Quarter of Fiscal Year 2020 (April 1 to June 30, 2020) 3

  4. Slide 4: Financial Results for First Quarter of Fiscal Year 2020

    JFE-HD Financial Results for First Quarter of Fiscal Year 2020 The impact of the COVID-19 outbreak depressed economic conditions substantially both in Japan and overseas. Revenue was 743.9 billion yen, decreased by 183.5 billion yen from 1Q of FY2019. Business profit was -47.2 billion yen, decreased

  5. Slide 5: Financial Results for First Quarter of Fiscal Year 2020 (by Segment)

    JFE-HD Financial Results for First Quarter of Fiscal Year 2020 (by Segment) FY2019 FY2020 (billion yen) Change 1Q (Apr-Jun) 1Q (Apr-Jun) Revenue Steel Business 666.6 508.7 (157.9) Engineering Business 113.2 105.0 (8.2) Trading Business 286.6 238.0 (48.6) Adjustments (139.2) (107.9) 31.3 Total 927.4

  6. Slide 6: Consolidated Financial Forecast for Fiscal Year 2020

    Consolidated Financial Forecast for Fiscal Year 2020 (April 1, 2020 to March 31, 2021) 6

  7. Slide 7: Financial Forecast for Fiscal Year 2020

    JFE-HD Financial Forecast for Fiscal Year 2020 • Business profit for FY2020 is expected to be -100.0 billion yen due to the decrease in demand for steel resulting from reduced customer activities. • 1H is expected to post the deficit of 125billion yen due to lower production levels in Steel Business

  8. Slide 8: Financial Forecast for Fiscal Year 2020 (by Segment)

    JFE-HD Financial Forecast for Fiscal Year 2020 (by Segment) FY2019 (Actual) FY2020 (Forecast) Change （billion yen） 1H Full Year 1H Full Year 1H Full Year Revenue Steel Business 1,353.1 2,681.3 1,010.0 2,240.0 (343.1) (441.3) Engineering Business 238.9 512.2 215.0 490.0 (23.9) (22.2) Trading Business

  9. Slide 9: Our countermeasures in response to the current business environment

    JFE-HD Our countermeasures in response to the current business environment  Implement the emergency measures and put them into concrete to overcome the greatest difficulty since establishment of JFE  Put the following measures into implementation as group united Current operation measures（Steel Bu

  10. Slide 10: Progress of cash flow improvements

    JFE-HD Progress of cash flow improvements Domestic CAPEX compression in steel business Domestic CAPEX (decision making basis) previous (Nov.2019) 100.0 ⇒ updated 130.0 billion yen Implement further CAPEX compression by careful 130.0 screening and thorough cost reduction approx. Billion yen 1 trillio

  11. Slide 11: Dividends

    Dividends 11

  12. Slide 12: Dividends

    JFE-HD Dividends  JFE has decided that it unfortunately cannot pay a first-half dividend in response to current earnings.  A decision regarding the year-end dividend has been postponed while the company carefully monitors its ongoing performance. 12

  13. Slide 13: JFE Steel

    JFE Steel Financial Results for First Quarter of Fiscal Year 2020 and Financial Forecast for Fiscal Year 2020 13

  14. Slide 14: JFE Steel Financial Results for First Quarter of Fiscal Year 2020

    JFE Steel Financial Results for First Quarter of Fiscal Year 2020 FY2019 FY2020 Unit 1Q 2Q 3Q 4Q Full Year Apr-Jun Revenue billion yen 666.6 686.5 652.7 675.5 2,681.3 508.7 Segment Profit billion yen 14.5 3.2 (6.3) (20.1) (8.7) (57.8) Excluding Inventory billion yen 22.5 (0.8) 8.7 (9.1) 21.3 (34.8)

  15. Slide 15: 72.3 Billion Yen Decrease in JFE Steel's Segment Profit

    JFE Steel 72.3 Billion Yen Decrease in JFE Steelʼs Segment Profit (FY2019.1Q (Actual) vs. FY2020.1Q (Actual)) （billion yen） FY2019 FY2020 Change FY2019.1Q JFE Steel → １Q ２Q 3Q 4Q Full Year Apr-Jun FY2020.1Q Segment Profit 14.5 3.2 (6.3) (20.1) (8.7) (57.8) (72.3) 1. Cost • Fixed cost reduction mainl

  16. Slide 16: Current business environment

    JFE Steel Current business environment As the state of emergency made the economy sluggish, the outlook for domestic ordinary steel Domestic consumption (mainly automobiles) hit the bottom in 1Q of FY2020 (Apr-Jun), and decreased by 26% year-on-year. Automobile sales in each region except China in A

  17. Slide 17: Business environment outlook

    JFE Steel Business environment outlook • The business activity level is expected to recover toward 2H in some sectors, particularly in automotive sector, which is our main customer, while full recovery will take time in some sectors, such as shipbuilding. • The business activity level in 2H of FY202

  18. Slide 18: Forecast of Production and Metal Spread

    JFE Steel Forecast of Production and Metal Spread 1. Forecast of Crude Steel Production Crude Steel Background Production level was adjusted to the low demand level due to the 1Q 4.79Mt impact of COVID-19 outbreak.（4/25~ Stopped Kurashiki No.4 BF, （actual） 6/20~Banking Fukuyama No.4 BF） 2Q Approx.5.

  19. Slide 19: Countermeasures for Profit Improvement

    JFE Steel Countermeasures for Profit Improvement  Cost reduction Approx. 100,0 billion yen in FY2020, including variable cost increase amid production reduction ■Fixed cost reduction︓ • Repairing cost reduction （surely preventing machinery troubles, carefully screening the items to repair) • Labor

  20. Slide 20: Financial Forecast for Fiscal Year 2020

    JFE Steel Financial Forecast for Fiscal Year 2020 FY2019 FY2020 Unit Full Year 1Q 2Q 1H 2H Full Year Revenue billion yen 2,681.3 508.7 501.3 1,010.0 1,230.0 2,240.0 Segment Profit billion yen (8.7) (57.8) (87.2) (145.0) 0 (145.0) Excluding Inventory billion yen 21.3 (34.8) (47.2) (82.0) (19.0) (101.

  21. Slide 21: 136.3 Billion Yen Decrease in JFE Steel's Segment Profit

    JFE Steel 136.3 Billion Yen Decrease in JFE Steelʼs Segment Profit (FY2019 (Actual) vs. FY2020 (Forecast)) Segment profit in steel business is expected to significantly decreased from the previous fiscal year amid decrease in production and sales volume, and decrease in profit of subsidiary companie

  22. Slide 22: 145.0 Billion Yen Increase in JFE Steel's Segment Profit

    JFE Steel 145.0 Billion Yen Increase in JFE Steelʼs Segment Profit (FY2020.1H vs. FY2020.2H) Segment profit in 2H will remarkably recover from 1H and eliminate the deficit, thanks to increase in crude steel production toward 2H, cancellation of the loss in inventory valuation in 1H, and increase in

  23. Slide 23: JFE Engineering Financial Forecast for Fiscal Year 2020

    JFE Engineering Financial Forecast for Fiscal Year 2020 23

  24. Slide 24: JFE Engineering Financial Forecast for Fiscal Year 2020

    JFE Engineering Financial Forecast for Fiscal Year 2020 Current Business Environment  Domestic demands in environmental sector, and social infrastructure such as steel structures are expected to remain solid.  Due to the impact of COVID-19, some overseas projects were suspended. Although new proje

  25. Slide 25: JFE Shoji Financial Forecast for Fiscal Year 2020

    JFE Shoji Financial Forecast for Fiscal Year 2020 25

  26. Slide 26: JFE Shoji Financial Forecast for Fiscal Year 2020

    JFE Shoji Financial Forecast for Fiscal Year 2020 Current Business Environment  Global economy decelerates rapidly due to COVID-19, and domestic economic activity stagnates.  Although there are signs of a recovery in automobile production in Japan, demand for industrial machinery and construction

  27. Slide 27: ESG Initiatives

    ESG Initiatives 27

  28. Slide 28: Included in One of the World's Leading ESG Investment Indices

    JFE-HD Included in One of the World's Leading ESG Investment Indices E S G Included in leading ESG investment indices, “FTSE4Good Index Series”* and 「FTSE Blossom Japan Index」**, at first time Released on 8th July 2020 *FTSE4Good Index Series https://www.ftserussell.com/ja/products/indices/ftse4good

  29. Slide 29: Solutions Promoting Decarbonization - Renewable Energy

    JFE Engineering JFE Shoji Solutions Promoting Decarbonization -Renewable Energy- E S G Engineering Business Trading Business Start providing new electricity plan Developed “Dam Optimum Operation System” “Hachimantai Geothermal Zero-Emission Plan” using AI with Hokuriku Electric Power Co. Released on

  30. Slide 30: Solutions Promoting Decarbonization - Recycle

    JFE Engineering Solutions Promoting Decarbonization -Recycle- E S G J&T Recycling participates in R Plus Japan Ltd., a new joint venture of business for used plastics recycling  Established Jointly with 11 cross-industry companies Released on 30th June 2020 (commencement of business: June 2020）  U

  31. Slide 31: Appendix

    Appendix 31

  32. Slide 32: Main Financial Data

    JFE-HD Main Financial Data J-GAAP IFRS Forecast FY20 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY18 FY19 (1H) (bn. Yen, times) (bn. Yen, times) Business profit 232.0 37.8 -125.0 Ordinary Income 52.2 173.6 231.0 64.2 84.7 216.3 221.1 EBITDA ＊1 428.2 269.4 -10.0 EBITDA 260.6 368.9 421.5 254.4 279.9 388.8 405

  33. Slide 33: Interest-bearing Debt Outstanding

    JFE-HD Interest-bearing Debt Outstanding Interest-bearing （billion yen） （billion yen） 2,000.0 Debt Outstanding 200.0 （Left axis） 1,800.0 180.0 1,600.0 160.0 1,400.0 140.0 1,200.0 Cash and deposit 120.0 （Right axis） 130.0 1,000.0 1,950.0 100.0 1,814.3 800.0 80.0 86.7 600.0 60.0 400.0 40.0 200.0 20.0

  34. Slide 34: Progress of Initiatives of Steel Business (Domestic)

    JFE Steel Progress of Initiatives of Steel Business (Domestic) （Structural Reforms and Initiatives to Reinforce Manufacturing Capabilities in Japan） Attempt to further strengthen competitiveness by investing strategically in its domestic steelworks Shut down Planning to operate (in progress) In oper

  35. Slide 35: Progress of Initiatives of Steel Business (Overseas)

    JFE Steel Progress of Initiatives of Steel Business (Overseas) Promote initiatives to enhance new earning bases Done Plan (in progress) FY18 FY19 FY20 FY21 FY22 FY23 Established the new Global Business Development Center Head • To maximize earnings from existing overseas businesses [China・Iron powde

  36. Slide 36: 29.4 Billion Yen Decrease in JFE Steel's Segment Profit

    JFE Steel 29.4 Billion Yen Decrease in JFE Steelʼs Segment Profit (FY2020.1Q (Actual) vs. FY2020.2Q (Forecast)) （billion yen） FY2020 Forecast Change JFE Steel 1Q→2Q 1Q (Actual) 2Q (Forecast) 1H Segment Profit (57.8) (87.2) (145.0) (29.4) 1. Cost • Fixed cost reduction mainly sourced from repairing c

  37. Slide 37: 162.7 Billion Yen Decrease in JFE Steel's Segment Profit

    JFE Steel 162.7 Billion Yen Decrease in JFE Steelʼs Segment Profit (FY2019.1H (Actual) vs. FY2020.1H (Forecast)) （billion yen） Change FY2019 FY2020 JFE Steel 1H (Actual) 1H (Forecast) FY2019.1H →FY2020.1H Segment Profit 17.7 (145.0) (162.7) 1. Cost • Fixed cost reduction mainly sourced from repairin

  38. Slide 38: 118.6 Billion Yen Decrease in JFE Steel's Segment Profit

    JFE Steel 118.6 Billion Yen Decrease in JFE Steelʼs Segment Profit (FY2019.2H (Actual) vs. FY2020.1H (Forecast)) （billion yen） Change JFE Steel FY2019 FY2020 FY2019.2H 2H (Actual) 1H (Forecast) →FY2020.1H Segment Profit (26.4) (145.0) (118.6) 1. Cost • Fixed cost reduction mainly sourced from repair

  39. Slide 39: 37.7 Billion Yen Decrease in JFE Steel's Segment Profit

    JFE Steel 37.7 Billion Yen Decrease in JFE Steelʼs Segment Profit (FY2019.4Q vs. FY2020.1Q) （billion yen） FY2019 FY2020 Change JFE Steel 1Q FY2019.4Q 1Q 2Q 3Q 4Q Full Year →FY2020.1Q Segment Profit 14.5 3.2 (6.3) (20.1) (8.7) (57.8) (37.7) 1. Cost • Fixed cost reduction mainly sourced from repairing

  40. Slide 40: 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) 4,500 4,000 4 3,500 3,000 3 2,500 2,000 2 1,500 This month Month-over-month Year-on-year Unit︓000ｔ Jun, 2020 From From Volume

  41. Slide 41: 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） 500 3.5 250 3.5 Inventories Inventories Inventory Ratio (right axis) 450 3.0 200 3.0 400 2.5 150 2.5 350 2.0

  42. Slide 42: 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 Month-over-month Year-on-year This month From From Unit︓000t Volume previous Volume previous Jun, 2020 [May, 2020] month [Jun, 2019] year 100 [Change] [Change] ▲17 ▲62

  43. Slide 43: Crude Steel & Im/Export, China

    JFE Steel Overseas Market Environment Crude Steel & Im/Export, China Export (Left axis) Import (Left axis) （Mｔ） （Mｔ） 12 100 90 10 80 70 8 60 6 50 Jun 2020 Jan-Jun, 2020 Y on Y Y on Y 40 Mt Mt Change Change 4 Crude Steel 91.6 +4.6% 504.0 ＋2.5% 30 Export 3.7 ▲30.3% 28.7 ▲16.6% 20 2 10 0 0 Jan Mar May

  44. Slide 44: Inventories in China by Product

    Overseas Market Environment Inventories in China by Product （千ｔ） 35,000 100% Bar Rod & Wire Plate HR CR Change by previous year (%) 30,000 50% 25,000 0% 20,000 -50% 15,000 -100% 10,000 -150% This month Month-over-month Year-on-Year From previous From previous 5,000 Unit︓000ｔ Jun, 2020 Volume month V

  45. Slide 45: Metal Spread Trend (Chinese Spot Basis)

    JFE Steel Overseas Metal Spread Trend Market Environment (Chinese Spot Basis) （$/t) （$/t) 700 700 600 600 500 HRC 500 400 400 300 300 200 200 100 Metal Spread 100 0 0 Metal Spread ＝ HRC Price － Raw Materials Cost *HRC Price︓ Chinese Spot basis Raw Materials Cost︓ Calculated from market price of Iron

  46. Slide 46: 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 Jan Mar Jul Sep Jan Mar Jul Sep Jan Mar Jul Sep Jan Mar Jul Sep Jan Mar Jul Sep Jan Mar May Nov May Nov May Nov May Nov May Nov May 2015 2016 2017 2018 2019 2020 Data: The Japan Iron and Steel Federa

  47. Slide 47: Raw Materials Price

    JFE Steel Raw Materials Raw Materials Price Iron ore (iron ore fines from Australia) Coking Coal （Hard Coking Coal from Australia) ($/DMT) ($/WMT) $130 $400 Spot FOB Spot FOB Term-contract FOB Term-contract FOB $120 $350 $110 $100 $300 $90 $250 $80 $200 $70 $60 $150 $50 $100 $40 $30 $50 17/1 17/4 17

  48. Slide 48: Trend of Metal's Market Price

    60 80 100 120 140 160 180 (￠/lb) 400 600 800 1,000 1,200 1,400 1,600 2015.1 2015.1 2015.7 FeCr (U$/t) FeMn 2015.7 2016.1 2016.1 2016.7 2016.7 2017.1 2017.1 2017.7 2017.7 2018.1 2018.1 2018.7 2018.7 Raw Materials 2019.1 2019.1 2019.7 2019.7 2020.1 2020.1 2020.7 2020.7 (U$/lb) (U$/t) 2.0 4.0 6.0 8.0 1

  49. Slide 49: Trend of Sub Material's Market Price

    JFE Steel Raw Materials Trend of Sub Materialʼs Market Price (yen/t) Scrap ($/B) Spot Bulker 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 2015.1 2015.7 2016.1 2016.7 2017.1 2017.7 2018.1 2018.7 2019.1 2019.7 2020.1 2020.7 20

  50. Slide 50: Orders by Business Field

    JFE Engineering Orders by Business Field （billion yen） FY2019 FY2020 Business Field Change Main Orders received in FY2020 1Q Actual Forecast  Construction of waste treatment plant [Fukui]  Improvement works of waste treatment plant [Hiroshima] Environment 187.1 260.0 72.9  Improvement works of Ts

  51. Slide 51: Links to the reports published during FY2019

    JFE-HD Links to the reports published during FY2019 Report URL QR code JFE Group REPORT https://www.jfe- 2019 holdings.co.jp/en/investor/library/gro up-report/index.html JFE Group CSR https://www.jfe- REPORT 2019 holdings.co.jp/en/csr/pdf/csr2019e.p df JFE Group CSR https://www.jfe- REPORT 2019 hold

  52. Slide 52: Copyright © 2020 JFE Holdings, Inc. All Rights Reserved

    Copyright © 2020 JFE Holdings, Inc. All Rights Reserved 52

JFE Holdings — Q1 FY2020 Earnings Presentation on 6ix