Nippon Steel Corp. · TSE:5401
Nippon Steel — Merger or Acquisition (September 2011)
31 slides from Nippon Steel's merger presentation, Sep 22, 2011
Slide 1: Creating the Best Steelmaker with World-Leading Capabilities
Creating C ti th the B Bestt St Steelmaker l k with World World-Leading Leading Capabilities September 22, 2011 1
Slide 2: Note Regarding Forward-looking Statements
Note Regarding Forward-looking Statements This presentation includes “forward-looking statements” that reflect the plans and expectations of Nippon Steel Corporation and Sumitomo Metal Industries, Ltd. in relation to, and the benefits resulting from, their business integration described below. To th
Slide 3: Agenda
Agenda 1. Highlights of the Merger 2. Growth Strategy 3 Financial Strategy 3. 3
Slide 4: 1. Highlights of the Merger
Best for the new company 1. Highlights of the Merger 4
Slide 5: Overview of the Integrated Company
Overview of the Integrated Company Trade Name Nippon Steel & Sumitomo Metal Corporation Location of Chiyoda-ku, Tokyo, Japan Head Office Date of Merger October 1, 2012 (planned) (Effective date) Method of the A merger (a business holding company) Business Integration – Nippon Steel to be the survivi
Slide 6: Creating the Best Steelmaker with World-Leading Capabilities
Creating the Best Steelmaker with World-Leading Capabilities Maximize the potential of steel through utilization of world-leading technology. Contribute to the growth of global economies and the impro ement of global societ improvement society. Globalizing the Steel Business The Best Steelmaker with
Slide 7: Maximizing Corporate Value
Maximizing Corporate Value • Re-organize/Expand existing bases mainly in emerging countries Globalizing • Establish /Reinforce the bases incl. integrated steelworks outside the Steel Business Japan • Improve I capabilities biliti tto offer ff solutions l ti t customers to t Utilizing the World’s • R
Slide 8: Integrated Company's Scale
Globalization Integrated Company’s Scale 2010 Sales Arcelor Nippon Nippon Baosteel JFE TATA Jiangsu Gerdau POSCO U.S. Sumitomo Ansteel Mittal Steel & Steel Steel Shagang Sumitomo Steel Metals Metal ( Source : Published Information of each company) 2010 Crude Steel Production Nippon TATA U.S. Arcelor
Slide 9: Roadmap to Merger
Roadmap to Merger S t b 22, September 22 2011 Execution of the Master Integration Agreement April, 2012 Execution of a Merger Agreement (Planned) （予定）2012 June, Shareholders meetings to approve the Merger Agreement (Planned) （予定） Date of Merger g (Effective ( date)) October 1 1, 2012 (Planned) （予定）
Slide 10: 2. Growth Strategy
Best for the new company 2. Growth Strategy 10
Slide 11: (1) Globalizing the Steel Business
(1) Globalizing the Steel Business 11
Slide 12: Capture the Growing Demands in Emerging Countries
Capture the Growing Demands in Emerging Countries Globalization The Trend of Apparent Consumption of Crude Steel (Consumption in 1970 =1.0) 10.0 Emerging 8.0 (China, Brazil, India, ASEAN5) 6.0 4.0 Global 2.0 0.0 Japan, North America, Europe 1970 1975 1980 1985 1990 1995 2000 2005 2010 (Source: World
Slide 13: Expand Local Production in Emerging Countries
Globalization Expand Local Production in Emerging Countries Continue to produce in Japan as the core base Supply high quality products in growth markets Produce in Japan as the core base Develop and manufacture leading-edge products JAPAN ASIA AMERICAs Growth Market Re-organize / expand ma
Slide 14: Global No.1 Product Line-up for Automotives
Globalization Global No.1 Product Line-up for Automotives (million units) Global Auto Production 10,000 100 80 8,000 Emerging E i 60 6,000 countries <Growth Market> 40 4,000 Japan Europe 2,000 20 North America 0 2000 2005 2010 2012E 2015E 2020E (Source: Automobile Manufacturers Associations of Each
Slide 15: Growing Global Demand for Energy
Globalization Growing Global Demand for Energy Correlation between Energy consumption by region (Mtoe) # of rigs and oil demand (Mtoe) ((units)) 18 000 18,000 8,000 4,000 16,000 Oil/Gas consumption 7,000 (left) 3,500 14,000 China 6,000 3,000 12,000 5,000 2,500 10,000 US 4,000 # of rigs (right) 2,000
Slide 16: High-end Products for Energy Sector
Globalization High-end Products for Energy Sector Exploration / Production T Transportation t ti / St Storage Power Generation Power-Generation 16
Slide 17: Growing Demand for Railway Infrastructure
Globalization Growing Demand for Railway Infrastructure Railway market: € 136 billion with approx. 3% growth p.a. Global market size (projected) € in billions Breakdown by type (annual average) € in billions 160 160 € 136 bn € 136 bn 140 140 € 122 bn 11 12 120 10 120 6 27 100 22 100 80 80 45 37 60 1
Slide 18: Best Quality for Growing Railway Demand
Globalization Best Quality for Growing Railway Demand Deliver the best quality rails and wheels from US/Japan production bases Nippon Steel & S it Sumitomo M Metal t l Standard Steel Wheels 0.24 million pieces/year (Export ratio 50%) Sole US manufacturer of forged railway wheels and axles Rails 0.62
Slide 19: (2) Utilizing the World's Leading Technologies
(2) Utilizing the World’s Leading Technologies 19
Slide 20: Maximizing the Potential of Steel
Technology Maximizing the Potential of Steel Increasing sophisticated, efficient, and quicker R&D R&D: JPY 70 billion Better solutions for customer needs Joint Researches with Customer: 450 themes Developing new technologies incl. innovative production processes Improving competitiveness by developi
Slide 21: Integration of Manufacturing and Product Technologies
Technology Integration of Manufacturing and Product Technologies Technology to solve customer problems Nippon Steel Sumitomo Metals Up-stream •Diagnose and repair technologies of coke-oven ・Development of new-generation technologies for Process restoring steelmaking process •Automotive high-strength
Slide 22: Transforming Customer Needs into Opportunities
Technology Transforming Customer Needs into Opportunities Trend in body weight Regulations for CO2 emissions (Frame Format) 300 (g/km) For fuel efficiency For safety For global warming 中国 China 日本 Japan 250 欧州 Europe Lighter body Heavier body Wider application 米国 US Body of functional high 200 via h
Slide 23: (3) Improving Cost Competitiveness
(3) Improving Cost Competitiveness 23
Slide 24: Realization of Synergies
Cost Realization of Synergies Generate synergies of JPY 150 billion per annum in approx.3 years after merger Approx. Amount of Main measures y g Synergies Expansion of global development 1. Accelerating overseas expansion by utilizing the Companies’ human resources JPY 30 bn / year 2. Re-organizing
Slide 25: Best Practices among Domestic Steelworks
Cost Best Practices among Domestic Steelworks Reinforce ties among domestic steelworks Steelworks in Japan Crude Steel Energy Raw Materials Transportation Maintenance Raw Materials Inventory Materials / Equipment Infrastructure etc. Share the Best Practice p Hot Strip 6 Plate 4 Seamles
Slide 26: The World's Highest Energy Efficiency
Cost The World’s Highest Energy Efficiency 40% of large capacity / highly advanced BF in the world is operated by Integrated Company BF Ranking (by Capacity) Energy Efficiencies in Steel Industry 1 Jiangsu Shagang No.4BF 5,800㎥ 日本 Japan 100 Japan=100 Nippon Steel & Oita 1BF 5,775㎥ 2 Sumitomo Metal O
Slide 27: Investment in Raw Materials Interests
Cost Investment in Raw Materials Interests Securing access to ores and coals / mitigating price risk by acquiring stakes in quality mines and diversifying suppliers Raw Material Self Sufficiency Ratio Iron ore Approx. 30% Coal Approx. 20% C Canada d (FY2010/A) Procurement Elkview 2.5% 68 million ton
Slide 28: 3. Financial Strategy
Best for the new company 3. Financial Strategy 28
Slide 29: Earned Cash goes to Good Investments and Shareholders
Earned Cash goes to Good Investments and Shareholders Profit ＋ D Depreciation i ti & Amortization A ti ti ＋ Asset Compression, etc Improvement of Re-organize/Expand Competitiveness of Investment in Raw Improve Return to Production Facilities Domestic Steel Materials Interests Financial Condition Sha
Slide 30: Creating the Best Steelmaker with World-Leading Capabilities
Creating the Best Steelmaker with World-Leading Capabilities Maximize the potential of steel through utilization of world-leading technology. Contribute to the growth of global economies and the impro ement of global societ improvement society. Globalizing the Steel Business The Best Steelmaker with
Slide 31: Best for the new company
Nippon Steel Corporation <> SUMITOMO METALS Best for the new company 31
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