Jfe Holdings, Inc. · TSE:5411

Jfe — Q1 FY2017 Earnings Presentation

56 slides from Jfe's earnings presentation, Aug 1, 2017

  1. Slide 1: JFE Group Financial Results in First Quarter of Fiscal Year 2017

    JFE Group Financial Results in First Quarter of Fiscal Year 2017 ending March 31, 2018 JFE Holdings, Inc. August 1, 2017

  2. Slide 2: A table of contents

    A table of contents  JFE Holdings’ Financial Results in First Quarter of Fiscal Year 2017 (April 1 to June 30, 2017) and Financial Forecasts for Fiscal Year 2017 (April 1, 2017 to March 31, 2018)  JFE Steel  JFE Engineering  JFE Shoji  Dividends This presentation material is for information and

  3. Slide 3: Consolidated Results in First Quarter of Fiscal Year 2017

    Consolidated Results in First Quarter of Fiscal Year 2017 (April 1 to June 30, 2017) 33

  4. Slide 4: Financial Results in First Quarter of Fiscal Year 2017

    JFE-HD Financial Results in First Quarter of Fiscal Year 2017 (billion yen) FY2016 FY2017 Change 1Q (Apr-Jun) 1Q (Apr-Jun) Net Sales 740.6 846.8 106.2 Operating Income (Loss) (4.2) 49.8 54.0 Non-operating Income (Expenses) (9.1) 6.3 15.4 Ordinary Income (Loss) (13.3) 56.2 69.5 Extraordinary Profit -

  5. Slide 5: Financial Results in First Quarter of Fiscal Year 2017 (by Segment)

    JFE-HD Financial Results in First Quarter of Fiscal Year 2017 (by Segment) (billion yen) FY2016 FY2017 Change 1Q (Apr-Jun) 1Q (Apr-Jun) Steel Business 528.4 636.4 108.0 Engineering Business 80.4 72.3 (8.1) Trading Business 393.0 465.1 72.1 Adjustments (261.2) (327.0) (65.8) Net Sales 740.6 846.8 106

  6. Slide 6: Forecasts of Consolidated Financial Results in Fiscal Year 2017

    Forecasts of Consolidated Financial Results in Fiscal Year 2017 (April 1, 2017 to March 31, 2018) 66

  7. Slide 7: Financial Forecasts for Fiscal Year 2017

    JFE-HD Financial Forecasts for Fiscal Year 2017 (billion yen) FY2016(A) FY2017(F) Change Change 1H Full year 1H Full year 1H Full year Net Sales 1,499.5 3,308.9 1,700.0 200.5 Operating Income 4.0 96.7 100.0 96.0 Non-operating Income (14.1) (12.0) 0.0 14.1 (Expenses) Ordinary Income (Loss) (10.1) 84.

  8. Slide 8: Financial Forecasts for Fiscal Year 2017 (by Segment)

    JFE-HD Financial Forecasts for Fiscal Year 2017 (by Segment) (billion yen) FY2016(A) FY2017(F) Change Change 1H Full year 1H Full year 1H Full year Steel Business 1,072.4 2,349.1 1,300.0 227.6 Engineering Business 175.3 426.1 160.0 (15.3) Trading Business 775.8 1,671.0 905.0 129.2 Adjustments (524.0

  9. Slide 9: Change in Depreciation Method for Property, Plant and Equipment

    JFE-HD Change in Depreciation Method for Property, Plant and Equipment Depreciation method for property, plant and equipment of JFE Steel Until FY2016 ： Primarily applied declining balance method From FY2017 ： Began applying straight-line method  Reason for the change ・In the long run, Japan’s decl

  10. Slide 10: JFE Steel

    ＪＦＥ Steel Financial Results in First Quarter of Fiscal Year 2017 10 10

  11. Slide 11: Production and Shipment

    JFE Steel Production and Shipment FY2016 FY2017 Unit 1Q 2Q 3Q 4Q 1Q Actual Actual Actual Actual Actual Actual Crude Steel (Standalone) Mt 6.94 7.06 7.12 7.02 28.14 7.12 Crude Steel (consolidated) Mt 7.52 7.62 7.66 7.61 30.41 7.53 Shipment (Standalone) Mt 6.26 6.34 6.43 6.68 25.70 6.14 Export Ratio (

  12. Slide 12: 21.7 Billion Yen increase in JFE Steel's Ordinary Income

    JFE Steel 21.7 Billion Yen increase in JFE Steel’s Ordinary Income (FY16 4Q vs. FY17 1Q) (billion yen) FY16 FY16 FY16 FY16 FY17 Change JFE Steel 1Q 2Q 3Q 4Q 1Q 4Q→1Q Ordinary (20.3) (4.1) 38.0 26.9 48.6 21.7 Income  Cost reductions ＋ 7.0  Volume and Mix ＋ 2.0  Sales and Raw materials ＋ 20.0  Inv

  13. Slide 13: JFE Steel Financial Forecasts for Fiscal Year 2017

    ＪＦＥ Steel Financial Forecasts for Fiscal Year 2017 13 13

  14. Slide 14: Current Business Environment (Domestic)

    JFE Steel Current Business Environment (Domestic) Domestic steel demand in FY17 is forecast to slightly increase from FY16. Automobile sector and construction sector are forecast to remain robust (for automobile use：＋0.3% for construction use：＋0.5%) despite －4.7% decrease in shipbuilding sector. 【

  15. Slide 15: 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） Maker Whole Saler （Month） 5,000 Coil Center Inventory Ratio (Right) 4 4,500 4,000 3 3,500 3,000 2,500 2 2,000 1,500 1 Jun, 2017 1,000 4,009kt 500 0 0 Aug Aug Aug Aug Aug Apr Apr Apr Apr Apr Apr Oct Oct

  16. Slide 16: Domestic 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 （000t） （Month） (000t) (Month) Inventories 450 Inventories Inventory Ratio 3.0 250 Shipment 4.0 Inventory Ratio (Right) 3.5 2.5 200 400

  17. Slide 17: Trend of Import Steel (Ordinary Steel)

    0 100 200 300 400 500 600 Jan Feb Mar Apr （000t） May Jun Jul 2012 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Domestic Jun Jul 2013 Aug Sep Oct Market Environment Nov Dec S. Korea Jan Feb Mar Apr May Jun China Jul 2014 Aug Sep Oct Nov Dec Jan Taiwan Feb Mar Apr May Jun (Ordinary Steel) Jul 2015 Aug Othe

  18. Slide 18: Current Business Environment (Overseas)

    JFE Steel Current Business Environment (Overseas) Steel demand in China remains robust due to economic stimulus measures. Investment in fixed assets recorded +6.4% and auto production recorded +8.6% on a year-on-year basis from January to May period. Steel market in China has been maintaining an u

  19. Slide 19: Crude Steel & Im/Export, China

    JFE Steel Overseas Market Environment Crude Steel & Im/Export, China (Mt) Export(Left) Import(Left) Crude Steel (Right) (Mt) 12 80 70 10 60 8 50 6 40 30 4 20 2 10 0 0 Mar Mar Mar Mar Mar Mar May May May May May May Sep Sep Sep Sep Sep Jun Jun Jun Jul Jul Jul Jun Jul Jun Jul Jun Feb Feb Feb Feb Feb F

  20. Slide 20: Inventories in China by Products

    5,000 0 20,000 10,000 15,000 25,000 30,000 35,000 Jan Feb （000t） Mar Apr May Jun Jul 2011 Aug Sep Oct Nov Dec Jan Feb Bar Mar Apr May Jun Jul 2012 Overseas Aug Sep Oct Nov Dec Jan Rot & Wire Feb Market Environment Mar Apr May Jun Jul 2013 Aug Sep Oct Plate Nov Dec Jan Feb Mar Apr May HR Jun Jul 2014

  21. Slide 21: Metal Spread Trend

    JFE Steel Overseas Metal Spread Trend Market Environment (Chinese Spot Basis) 700 ($/t) ($/t) 700 600 600 500 500 HRC 400 400 300 300 200 200 100 Metal Spread 100 0 0 Apr-13 Apr-12 Apr-14 Apr-15 Apr-16 Apr-17 Oct-16 Oct-12 Oct-13 Oct-14 Oct-15 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jan-12 Jan-13

  22. Slide 22: 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 /1 /4 /7 /1 /4 /7 0 /1 /4 /

  23. Slide 23: Financial Forecasts for FY2017 of JFE Steel

    JFE Steel Financial Forecasts for FY2017 of JFE Steel FY2016 FY2017 Full Full year 1Q 2Q 1H 2H year Actual Actual Forecast Forecast Forecast Forecast Billion Net Sales Yen 2,349.1 636.4 663.6 1,300.0 Ordinary Income Billion yen 40.5 48.6 36.4 85.0 65.0 150.0 [ROS] [%] [1.7%] [7.6%] [5.5%] [6.5%] Cru

  24. Slide 24: 12.2 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 12.2 Billion Yen decrease in JFE Steel’s Ordinary Income (FY17 1Q (Actual) vs. FY17 2Q (Forecast) ) (billion yen) FY2017（Forecast） Change JFE Steel 1Q 2Q 1H 1Q→2Q Ordinary 48.6 36.4 85.0 (12.2) Income  Volume and Mix ＋ 5.0  Sales and Raw materials ＋ 20.0  Inventory valuation － 21.0 ・Inc

  25. Slide 25: 20.1 Billion Yen increase in JFE Steel's Ordinary Income

    JFE Steel 20.1 Billion Yen increase in JFE Steel’s Ordinary Income (FY16 2H (Actual) vs. FY17 1H (Forecast) ) (billion yen) FY 16 2H FY 17 1H Change JFE Steel (Actual) (Forecast) FY16 2H→FY17 1H Ordinary 64.9 85.0 20.1 Income  Cost reductions ＋ 15.0  Volume and Mix ＋ 5.0  Sales and Raw materials

  26. Slide 26: 20.0 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 20.0 Billion Yen decrease in JFE Steel’s Ordinary Income (FY17 1H (Forecast) vs. 2H (Forecast)) (billion yen) FY2017 (Forecast) Change JFE Steel 1H 2H Total 1H→2H Ordinary 85.0 65.0 150.0 (20.0) Income  Cost reductions ＋ 10.0  Volume and Mix ± 0.0  Sales and Raw materials ＋ 10.0  Inven

  27. Slide 27: 109.5 Billion Yen increase in JFE Steel's Ordinary Income

    JFE Steel 109.5 Billion Yen increase in JFE Steel’s Ordinary Income (FY16 (Actual) vs. FY17 (Forecast) ) (billion yen) FY 16 FY 17 Change JFE Steel (Actual) (Forecast) FY16→FY17 Ordinary 40.5 150.0 109.5 Income  Cost reductions ＋ 45.0  Volume and Mix ＋ 15.0  Sales and Raw materials ＋ 105.0  Inve

  28. Slide 28: JFE Engineering Financial Forecasts for Fiscal Year 2017

    ＪＦＥ Engineering Financial Forecasts for Fiscal Year 2017 28 28

  29. Slide 29: Financial Forecasts for FY17 of JFE Engineering

    JFE Engineering Financial Forecasts for FY17 of JFE Engineering (billion yen） FY2016(A) FY2017(F) Change Change 1H Full year 1H Full year 1H Full year Orders 186.9 424.4 240.0 53.1 Net Sales 175.3 426.1 160.0 (15.3) Ordinary Income 7.6 26.6 1.5 25.0 (6.1) (1.6) 【Change】 (FY2016 1H to FY2017 1H) - Or

  30. Slide 30: Classification of placed orders

    JFE Engineering Classification of placed orders （billion yen） FY2016 FY2017 Category Change Main Orders (FY2017 1Q) 1H(A) 1H(F) - Improvement works of the waste incineration plant in Morioka- City Environment 89.1 107.0 17.9 - Construction of the waste incineration plant in Meguro-Ward Energy 53.1 7

  31. Slide 31: Receiving order for renovation work of the water purification plant overseas

    JFE Engineering Receiving order for renovation work of the water purification plant overseas for the first time （announced on June 12, 2017） Receiving order for renovation work of the largest water purification plant in the Philippines  To treat much water equivalent to the half amount (approx. 6 m

  32. Slide 32: JFE Shoji Financial Forecasts for Fiscal Year 2017

    ＪＦＥ Shoji Financial Forecasts for Fiscal Year 2017 32 32

  33. Slide 33: Financial Forecasts for FY2017 of JFE Shoji

    JFE Shoji Financial Forecasts for FY2017 of JFE Shoji （billion yen） FY2016(A) FY2017(F) Change Change Full Full 1H 1H 1H Full year year year Net Sales 775.8 1,671.0 905.0 129.2 Ordinary 7.6 21.8 15.0 28.0 7.4 6.2 Income 【Ordinary Income Change】 （FY2016 1H to FY2017 1H) ・Increase with sales price inc

  34. Slide 34: Net Sales of JFE Shoji (by Segment)

    JFE Shoji Net Sales of JFE Shoji (by Segment) FY2016 FY2017 (billion yen) Change 1H (A) 1H (F) Domestic Business 416.9 503.9 87.0 Export 178.6 211.7 33.1 Overseas 289.7 362.1 72.4 Business Foreign 111.1 150.4 39.3 Operation Raw Materials, Equipment etc. 69.2 39.0 (30.2) TOTAL 775.8 905.0 129.2 34

  35. Slide 35: JFE Holdings Financial Forecasts for Fiscal Year 2017

    ＪＦＥ Holdings Financial Forecasts for Fiscal Year 2017 35 35

  36. Slide 36: Financial Forecasts for Fiscal Year 2017

    JFE-HD Financial Forecasts for Fiscal Year 2017 (billion yen) FY2016(A) FY2017(F) Change Change 1H Full year 1H Full year 1H Full year Net Sales 1,499.5 3,308.9 1,700.0 200.5 Operating Income 4.0 96.7 100.0 96.0 Non-operating Income (14.1) (12.0) 0.0 14.1 (Expenses) Ordinary Income (Loss) (10.1) 84.

  37. Slide 37: Underlying Profit before One-off Effects

    JFE-HD Underlying Profit before One-off Effects （billion yen） FY2016 1H 2H FY2017 Ac t u al Est im at e Est im at e Est im at e Net Sales 3,308.9 1,700.0 - - Ordinary Income 84.7 100.0 100.0 200.0 ROS(*) 2.6% 5.9% - - One-off Effects 28.0 5.0 (15.0) (10.0) Un de r lyin g Pr o fit be fo r e On e - o

  38. Slide 38: Debt Outstanding, D/E Ratio, Debt/EBITDA Ratio

    JFE-HD Debt Outstanding, D/E Ratio, Debt/EBITDA Ratio (billion yen) (times) (billion yen) 1,500 D/E Ratio 60% 800 Debt / EBITDA Ratio 6.0 (right axis) (right axis) 56.9% 5.4 4.9 Calculated from annualized EBITDA forecast for 1H FY2017 51.4% 49.4% 3.7 1,400 45% 400 3.0 372 1,379 1,375 [(Forecast for

  39. Slide 39: Dividends

    JFE Dividends 39

  40. Slide 40: Dividends

    JFE-HD Dividends  JFE Holdings has now decided to pay an interim dividend of 30 yen per share at its Board of Directors.  The company is withholding its decision regarding the year-end dividend to carefully observe performance going forward. 40

  41. Slide 41: Appendix

    Appendix 41 41

  42. Slide 42: Main Financial Data

    JFE-HD Main Financial Data (Forecast) FY17 FY03 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 (1H) (bn. Yen) Ordinary Income 218.3 502.9 400.5 69.2 165.8 52.9 52.2 173.6 231.0 64.2 84.7 100.0 EBITDA ※1 432.3 741.4 670.8 337.1 428.9 306.3 260.6 368.9 421.5 254.4 279.9 186.0 ROS ※2 8.8％ 14.2％ 10.2

  43. Slide 43: 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 Jul Jul Jul Jun Jun Jun Jun Jul June Feb Feb Feb Feb Feb Apr Apr Apr Apr Apr Aug Oct Aug Oct Aug Oct Oct Aug Mar Mar Mar May Mar Mar May May May May Nov Dec Nov Nov Nov Dec Dec Dec Jan Jan Jan Jan Ja

  44. Slide 44: Auto Sales in Key Countries

    JFE Steel Overseas Market Environment Auto Sales in Key Countries Automobile Sales in Key Countries (YoY Change) 60% S. Korea China Indonesia Thailand India 40% 20% 0% -20% -40% -60% Jan Sep Jan Sep Jan Sep Jan Sep Jan Jul Jul Jul Jul Oct Oct Oct Jun Jun Jun Oct Jun Apr Apr Apr Apr Apr Aug Aug Aug F

  45. Slide 45: Exports from China by Products

    2,000 4,000 6,000 8,000 10,000 12,000 0 (000t) Jan Feb Mar Apr May Jun Jul 2011 Aug Sep Oct Nov Dec CGL HRC CRC Jan Feb Mar Apr HRC (Alloy) May Jun Rod&Wire etc. Jul 2012 Overseas Aug Sep Oct Nov Dec Market Environment Jan Feb Mar Apr May Jun Jul 2013 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

  46. Slide 46: Trend of Metals' Market Price

    100.0 120.0 160.0 180.0 140.0 60.0 80.0 1,200 1,400 1,600 1,000 400 600 800 2013.1 2013.1 （￠/lb） FeCr （U$/t） FeMn 2013.7 2013.7 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 2017.7 2017.7 10.00 14.00 16.00 12.00 6.00 2.00 4.00 8.00 1,800 2,300 2,80

  47. Slide 47: Trend of Market Price

    10000 15000 20000 25000 30000 35000 40000 45000 2010.4 20,000 40,000 60,000 80,000 100,000 120,000 0 2010.4 2010.10 2010.10 2011.4 2011.4 (yen/t） Scrap 2011.10 2011.10 2012.4 (yen/t）LNG Price 2012.4 2012.10 2012.10 2013.4 2013.4 2013.10 2013.10 2014.4 2014.4 2014.10 2014.10 2015.4 2015.4 2015.10 201

  48. Slide 48: Cost Reductions (Steel Business)

    JFE Steel Cost Reductions (Steel Business) (billion yen) 140 120 100 80 60 120 120 (forecast) 92 40 80 70 56 50 50 20 41 40 45 33 30 35 30 - 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 JFE Steel (non-consolidated basis) 48

  49. Slide 49: Trend of exchange rate (against USD, KRW)

    Trend of exchange rate（against USD,KRW） JPY/USD JPY/KRW 130 0.14 0.13 120 JPY/USD 0.12 (left axis) 110 0.11 100 0.10 JPY/KRW (right axis) 0.09 90 0.08 80 0.07 70 0.06 May-14 Oct-13 Oct-16 Mar-12 Mar-16 Dec-11 Dec-15 Jan-11 Jan-15 Sep-14 Jul-16 Aug-11 Jul-12 Aug-15 Jun-13 Jun-17 Apr-15 Apr-11 Feb-14

  50. Slide 50: 68.9 billion Yen increase in JFE Steel's Ordinary Income

    JFE Steel 68.9 billion Yen increase in JFE Steel’s Ordinary Income (FY16 1Q vs. FY17 1Q) (billion yen) FY16 FY16 FY16 FY16 FY17 Change JFE Steel 1Q 2Q 3Q 4Q 1Q 1Q→1Q Ordinary (20.3) (4.1) 38.0 26.9 48.6 68.9 Income  Cost reductions ＋ 9.0  Volume and Mix ＋ 8.0  Sales and Raw materials － 11.0  Inv

  51. Slide 51: 109.4 billion Yen increase in JFE Steel's Ordinary Income

    JFE Steel 109.4 billion Yen increase in JFE Steel’s Ordinary Income (FY16 1H (Actual) vs. FY17 1H (Forecast)) (billion yen) FY 16 1H FY17 1H Change JFE Steel Actual Forecast FY16 1H→FY17 1H Ordinary (24.4) 85.0 109.4 Income  Cost reductions ＋ 20.0  Volume and Mix ＋ 15.0  Sales and Raw materials ＋

  52. Slide 52: Progress of Fifth Medium-Term Business Plan

    Progress of Fifth Medium-Term Business Plan 52 52

  53. Slide 53: Progress of Strengthening Domestic Manufacturing Base

    JFE Steel Progress of Strengthening Domestic Manufacturing Base Domestic capital investments of 650 billion yen are in progress (adopted more than 70% planned by FY16) <Progress of main items> Fifth Medium-Term Process Area Facility FY14 FY15 FY16 FY17 FY18 FY19 Kura- No.3 Jan. 2016 Shiki Coke oven

  54. Slide 54: Progress of Cost Reduction

    JFE Steel Progress of Cost Reduction Achieve 110billion yen cost reduction for 3 years as planned (billion yen） Progress of Cost Reduction Main items of investment effects 1,200 Renovation of coke ovens Main investment effects of FY17 1,000 ・Kurashiki No.2 coke oven Improve self-sufficiency rate of

  55. Slide 55: Progress of Overseas Business

    JFE Steel Progress of Overseas Business -Strengthen business in prioritized field especially in auto sector -Pursue growth investment from a middle- & long-term perspective Prioritized Asia Southwest NAFTA MENA Business Field China Southeast Asia Asia ・Held ground- Automobiles ・GJSS（CGL） breaking ce

  56. Slide 56: Copyright © 2017 JFE Holdings, Inc. All Rights Reserved

    Copyright © 2017 JFE Holdings, Inc. All Rights Reserved 56

JFE Holdings — Q1 FY2017 Earnings Presentation on 6ix