Jfe Holdings, Inc. · TSE:5411

Jfe — Q1 FY2018 Earnings Presentation

50 slides from Jfe's earnings presentation, Jul 31, 2018

  1. Slide 1: Financial Results in First Quarter of Fiscal Year 2018

    Securities Code: 5411 JFE Group Financial Results in First Quarter of Fiscal Year 2018 ending March 31, 2019 JFE Holdings, Inc. July 31, 2018

  2. Slide 2: A table of contents

    A table of contents  JFE Holdings’ Financial Results in First Quarter of Fiscal Year 2018 (April 1 to June 30, 2018) and Financial Forecasts for Fiscal Year 2018 (April 1, 2018 to March 31, 2019)  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 2018

    Consolidated Results in First Quarter of Fiscal Year 2018 (April 1 to June 30, 2018) 3

  4. Slide 4: Financial Results in First Quarter of Fiscal Year 2018

    JFE-HD Financial Results in First Quarter of Fiscal Year 2018 (billion yen) FY2017 FY2018 1Q (Apr-Jun) 1Q (Apr-Jun) Change Net Sales 846.8 936.3 89.5 Operating Income (Loss) 49.8 59.3 9.5 Non-operating Income 6.3 20.2 13.9 (Expenses) Ordinary Income (Loss) 56.2 79.5 23.3 Extraordinary Profit 21.4 －

  5. Slide 5: Financial Results in First Quarter of Fiscal Year 2018 (by Segment)

    JFE-HD Financial Results in First Quarter of Fiscal Year 2018 (by Segment) (billion yen) FY2017 FY2018 Change 1Q (Apr-Jun) 1Q (Apr-Jun) Steel Business 636.4 685.9 49.5 Engineering Business 72.3 86.8 14.5 Trading Business 465.1 512.1 47.0 Adjustments (327.0) (348.4) (21.4) Net Sales 846.8 936.3 89.5

  6. Slide 6: Forecasts of Consolidated Financial Results in Fiscal Year 2018

    Forecasts of Consolidated Financial Results in Fiscal Year 2018 (April 1, 2018 to March 31, 2019) 6

  7. Slide 7: Financial Forecasts for Fiscal Year 2018

    JFE-HD Financial Forecasts for Fiscal Year 2018 (billion yen) FY2017(A) FY2018(F) Change Change Full Full Full 1H year 1H year 1H year Net Sales 1,725.3 3,678.6 2,020.0 294.7 Operating Income 96.5 246.6 117.0 20.5 Non-operating Income (Expenses) 4.9 (30.3) 18.0 13.1 Ordinary Income (Loss) 101.4 216.

  8. Slide 8: Financial Forecasts for Fiscal Year 2018 (by Segment)

    JFE-HD Financial Forecasts for Fiscal Year 2018 (by Segment) (billion yen) FY2017(A) FY2018(F) Change Change Full 1H Full year 1H year 1H Full year Steel Business 1,294.7 2,715.4 1,450.0 155.3 Engineering Business 160.2 391.3 190.0 29.8 Trading Business 916.2 1,907.9 1,050.0 133.8 Adjustments (645.9

  9. Slide 9: JFE Steel: Financial Results in First Quarter of Fiscal Year 2018

    ＪＦＥ Steel Financial Results in First Quarter of Fiscal Year 2018 9

  10. Slide 10: Production and Shipment

    JFE Steel Production and Shipment FY2017 FY2018 Unit 1Q 2Q 3Q 4Q 1Q Crude Steel Mt 7.12 6.98 7.23 7.14 28.46 7.10 (Standalone) Crude Steel Mt 7.53 7.38 7.63 7.52 30.06 75.1 (Consolidated) Shipment Mt 6.14 6.28 6.38 6.50 25.30 61.3 (Standalone) Export Ratio % 42.1 44.2 45.1 45.9 44.4 42.4 (Standalone

  11. Slide 11: 15.8 billion Yen increase in JFE Steel's Ordinary Income

    JFE Steel 15.8 billion Yen increase in JFE Steel’s Ordinary Income (FY17 1Q vs. FY18 1Q) (billion yen) FY17 FY17 FY17 FY17 FY18 Change JFE Steel 1Q 2Q 3Q 4Q 1Q 1Q→1Q Ordinary 48.6 36.0 65.6 48.6 64.4 15.8 Income  Cost reductions ＋ 9.0  Volume and Mix ± ０.0  Sales and Raw materials + 35.0  Invent

  12. Slide 12: JFE Steel: Financial Forecasts for Fiscal Year 2018

    ＪＦＥ Steel Financial Forecasts for Fiscal Year 2018 12

  13. Slide 13: Current Business Environment (Domestic)

    JFE Steel Current Business Environment (Domestic)  Domestic ordinary steel consumption in FY18 is forecast to slightly increase from FY17.  Demand for construction sector and automobile sector is forecast to remain robust from previous year and demand for industry machinery sector is forecast to i

  14. Slide 14: 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 3 Maker Whole Saler Coil Center Inventory Ratio (right) 4,500 4,000 3,500 2 3,000 2,500 2,000 1 1,500 1,000 May, 2018 500 4,319kt 0 0 Dec Dec Dec Dec Jan Jan Jan Jan Jan Mar Mar Mar Mar M

  15. Slide 15: 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 (000 (Month) （000t） （Month） Inventories Inventories 450 3.0 250 4.0 Inventory Ratio Shipment Inventory Ratio (Right) 3.5 2.5 400 200 3.

  16. Slide 16: Domestic Trend of Import Steel

    JFE Steel Domestic Trend of Import Steel Market Environment (Ordinary Steel) （000t） 500 S. Korea China Taiwan Others 450 400 350 300 250 200 150 Jun, 2018 100 376kt 50 0 Mar May Mar May Mar May Mar May Apr Apr Apr Apr Aug Aug Aug Jun Jul Jun Jul Jun Jul Jun Dec Dec Dec Oct Oct Oct Feb Nov Feb Nov Fe

  17. Slide 17: Current Business Environment (Overseas)

    JFE Steel Current Business Environment (Overseas)  Automobile sales in main Asian countries demonstrate in upward trend.  Investment in fixed assets in China shows slowdown, but private investment remains robust.  Demand environment is generally strong in spite of unclear outlook for movement tow

  18. Slide 18: Crude Steel & Im/Export, China

    Overseas JFE Steel Market Environment Crude Steel & Im/Export, China (Mt) Export(Left) Import(Left) Crude Steel (Right) (Mt) 12 90 80 10 70 8 60 Jun, 2018 Jan-Jun, 2018 50 6 Y on Y Y on Y Mt change Mt change 40 4 Crude Steel 80.2 +7.5% 451.1 +6.0% 30 Export 6.9 +1.9% 35.4 -13.2% 20 2 10 0 0 Mar Mar

  19. Slide 19: Inventories in China by Products

    Overseas JFE Steel Market Environment Inventories in China by Products （000t） 35,000 100% Bar Rot & Wire Plate HR CR Change by previous year(%) 30,000 50% 25,000 0% 20,000 -50% 15,000 -100% 10,000 -150% 5,000 -200% 0 -250% May May May May May Aug Aug Aug Aug Mar Mar Mar Mar Mar Jun Jun Jun Jun Jun J

  20. Slide 20: Metal Spread Trend (Chinese Spot Basis)

    JFE Steel Overseas Metal Spread Trend Market Environment (Chinese Spot Basis) 70 0 70 0 ($/t) ($/t) 60 0 60 0 HRC 50 0 50 0 40 0 40 0 30 0 30 0 20 0 20 0 10 0 10 0 Metal Spread 0 0 Jul-12 Jul-17 Jul-18 Jul-13 Jul-14 Jul-15 Jul-16 Jan-12 Jan-13 Jan-17 Jan-18 Jan-14 Jan-15 Jan-16 Oct-12 Oct-16 Oct-17

  21. Slide 21: 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 鉄鉱石 ＦＯＢ 豪州強粘炭FOB 鉄鉱石 ターム契約FOB 豪州強粘炭 ターム契約FOB $90 $350 $80 $300 $70 $250 $60 $200 $50 $150 $40 $100 $30 $50 Hard Coaking Coal Term-contract FOB

  22. Slide 22: Financial Forecasts for FY2018 of JFE Steel

    JFE Steel Financial Forecasts for FY2018 of JFE Steel FY2017 FY2018 Full Full year 1Q 2Q 1H 2H year Actual Actual Forecast Forecast Forecast Forecast Billion Net Sales Yen 2,715.4 685.9 764.1 1,450.0 Billion Ordinary Income yen 198.8 64.4 45.6 110.0 90.0 200.0 Crude Steel (Standalone) Mt 28.46 7.10

  23. Slide 23: 18.8 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 18.8 Billion Yen decrease in JFE Steel’s Ordinary Income (FY18 1Q (Actual) vs. FY18 2Q (Forecast) ) (billion yen) FY2018（Forecast） Change JFE Steel 1Q 2Q 1H 1Q→2Q Ordinary 64.4 45.6 110.0 (18.8) Income  Volume and Mix ＋ 2.0  Sales and Raw materials + 10.0  Inventory valuation － 4.0 ・Inc

  24. Slide 24: 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) FY2018 (Forecast) Change JFE Steel 1H 2H Total 1H→2H Ordinary 110.0 90.0 200.0 (20.0) Income  Cost reductions ＋ 4.0  Volume and Mix + 8.0  Sales and Raw materials ± 0.0  Invent

  25. Slide 25: 1.2 Billion Yen increase in JFE Steel's Ordinary Income

    JFE Steel 1.2 Billion Yen increase in JFE Steel’s Ordinary Income (FY17 (Actual) vs. FY18 (Forecast) ) (billion yen) FY17 FY18 Change JFE Steel (Actual) (Forecast) FY17→FY18 Ordinary 198.8 200.0 1.2 Income  Cost reductions ＋ 20.0  Volume and Mix + 10.0  Sales and Raw materials + 80.0  Metals, ma

  26. Slide 26: Progress of Sixth Medium-Term Business Plan

    JFE Steel Progress of Sixth Medium-Term Business Plan Domestic Strengthen production capabilities  Finished renovation of Chiba No.6 coke oven (June, 2018） ⇒Become self-sufficient in coke Overseas Strengthen global supply system and Expand the JFE brand  【Vietnam】 Formosa Ha Tinh Steel (FHS) No.2

  27. Slide 27: JFE Engineering: Financial Forecasts for Fiscal Year 2018

    JFE Engineering Financial Forecasts for Fiscal Year 2018 27 27

  28. Slide 28: Financial Forecasts for FY18 of JFE Engineering

    JFE Engineering Financial Forecasts for FY18 of JFE Engineering (billion yen） FY2017(A) FY2018(F) Change 1H Full year 1H Full year 1H Full year Orders 222.2 495.5 290.0 67.8 Net Sales 160.2 391.3 190.0 29.8 Ordinary 2.5 19.3 5.0 25.0 2.5 5.7 Income 【Change】 (FY2017 1H to FY2018 1H) - Orders: Increas

  29. Slide 29: Classification of placed orders

    JFE Engineering Classification of placed orders （billion yen） FY2017 FY2018 Category Change Main Orders (FY2018 1Q) 1H(A) 1H(F) - Improvement works of the waste incineration plant in Miyagi Environment 114.5 122.0 7.5 - Construction of treatment facility of seepage water at final waste disposal site

  30. Slide 30: Progress of Sixth Medium-Term Business Plan

    JFE Engineering Progress of Sixth Medium-Term Business Plan  Expanding “Operations projects” in the situation of public-private partnerships are expected to expand Operations Operations of New Design and construction, and operation start wastewater treatment plant orders and maintenance of waste in

  31. Slide 31: JFE Shoji Trade: Financial Forecasts for Fiscal Year 2018

    JFE Shoji Trade Financial Forecasts for Fiscal Year 2018 31

  32. Slide 32: Financial Forecasts for FY2018 of JFE Shoji Trade

    JFE Shoji Trade Financial Forecasts for FY2018 of JFE Shoji Trade （billion yen） FY2017(A) FY2018(F) Change Change 1H Full year 1H Full year 1H Full year Net Sales 916.2 1,907.9 1,050.0 133.8 Ordinary 16.2 33.0 18.5 35.0 2.3 2.0 Income 【Ordinary Income Change】 （FY2017 1H to FY2018 1H) ・Increase with

  33. Slide 33: Net Sales of JFE Shoji Trade (by Segment)

    JFE Shoji Trade Net Sales of JFE Shoji Trade (by Segment) FY2017 FY2018 (billion yen) Change 1H (A) 1H (F) Domestic Business 470.8 515.0 44.2 Export 222.2 246.0 23.8 Overseas 368.7 419.0 50.3 Business Foreign 146.5 173.0 26.5 Operation Raw Materials, Equipment etc. 76.7 116.0 39.3 TOTAL 916.2 1,050.

  34. Slide 34: JFE Holdings: Financial Forecasts for Fiscal Year 2018

    ＪＦＥ Holdings Financial Forecasts for Fiscal Year 2018 34

  35. Slide 35: Financial Forecasts for Fiscal Year 2018

    JFE-HD Financial Forecasts for Fiscal Year 2018 (billion yen) FY2017(A) FY2018(F) Change Change Full Full Full 1H year 1H year 1H year Net Sales 1,725.3 3,678.6 2,020.0 294.7 Operating Income 96.5 246.6 117.0 20.5 Non-operating Income (Expenses) 4.9 (30.3) 18.0 13.1 Ordinary Income (Loss) 101.4 216.

  36. Slide 36: Underlying Profit before One-off Effects

    JFE-HD Underlying Profit before One-off Effects (billion yen) 300 250 9 200 27 150 260 251 216 100 189 28 50 85 57 0 Ordinary One-off Underlying Ordinary One-off Underlying Ordinary One-off Underlying Income Effects Profit before Income Effects Profit before Income Effects Profit before One-off One-

  37. Slide 37: Debt/EBITDA Ratio

    JFE-HD Debt/EBITDA Ratio (billion yen) Debt / EBITDA (times) 1,000 Ratio 6.0 (right axis) Calculated from 5.4 annualized EBITDA forecast for 1H FY2018 4.9 3.4 3.0 500 3.0 452 389 280 254 [Forecast for 1H FY2018 x 2] EBITDA 226 (left axis) 0 0.0 Debt FY15 FY16 FY18 FY18 Outstanding 1,379.3 1,375.4 1,

  38. Slide 38: Dividends

    Dividends 38

  39. Slide 39: Dividends

    JFE-HD Dividends  JFE Holdings has now decided at its Board of Directors to pay an interim dividend of 45 yen per share and a year end dividend of 50 yen per share, making a total annual dividend of 95 yen per share at its Board of Directors. 39

  40. Slide 40: Appendix

    Appendix 40

  41. Slide 41: Main Financial Data

    JFE-HD Main Financial Data (Forecast) FY18 FY03 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 (1H) (bn. Yen, times) Ordinary Income 218.3 502.9 400.5 69.2 165.8 52.9 52.2 173.6 231.0 64.2 84.7 216.3 135.0 EBITDA ＊1 432.3 741.4 670.8 337.1 428.9 306.3 260.6 368.9 421.5 254.4 279.9 388.8 226.

  42. Slide 42: Price Trend of Import Steel

    65 40 45 50 55 60 70 Jan Feb Mar Apr May Jun (000 yen/ton) Jul 2013 Aug Sep Oct Nov Dec Jan Feb Mar Apr Domestic May Jun Jul 2014 Aug Import Steel from S. Korea Sep Market Environment Oct Data: Japanese Steel Association Nov Dec Jan Feb Mar Apr May Jun Jul 2015 Aug Sep Oct Nov Dec Jan Feb Mar Apr Ma

  43. Slide 43: Exports from China by Products

    JFE Steel Overseas Market Environment Exports from China by Products (000t) 12,000 CGL CRC 10,000 HOT (Alloy) HOT Rod & Wire .etc 8,000 6,000 4,000 2,000 2018 Mar 5,850 (kt) 0 Feb Feb Feb Feb Feb May May May May Mar Mar Mar Mar Mar Sep Sep Sep Sep Jun Jun Jun Jun Jul Jul Jul Oct Jul Oct Oct Oct Dec

  44. Slide 44: Trend of Metals' Market Price

    60 80 100 140 160 180 120 1,000 1,200 1,400 1,600 400 600 800 2013.1 2013.1 2013.7 2013.7 2014.1 （￠/lb） FeCr （U$/t） FeMn 2014.1 2014.7 2014.7 2015.1 2015.1 2015.7 2015.7 2016.1 2016.1 2016.7 2016.7 2017.1 Raw Materials 2017.1 2017.7 2017.7 2018.1 2018.1 2018.7 2018.7 12 14 16 10 2 4 6 8 1,300 1,800

  45. Slide 45: Raw Materials Trend of Market Price

    JFE Steel Raw Materials Trend of Market Price (yen/t） Scrap ($/day） Spot Bulker 45,000 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 2016.7 2013.1 2013.7 2014.1 2014.7 2015.1 2015.7 2016.1 2017.1 2017.7 2018.1 2018.7 2013.1 2

  46. Slide 46: Trend of exchange rate (USD against JPY, RMB)

    Trend of exchange rate（USD against JPY RMB） （JPY/USD） （RMB/USD） 130 8 JPY/USD RMB/USD 7.5 120 7 110 6.5 100 6 90 5.5 80 5 2015.7 2013.7 2014.1 2014.7 2015.1 2016.1 2016.7 2017.1 2017.7 2018.1 2018.7 46

  47. Slide 47: 25.4 billion Yen increase in JFE Steel's Ordinary Income

    JFE Steel 25.4 billion Yen increase in JFE Steel’s Ordinary Income (FY17 1H (Actual) vs. FY18 1H (Forecast)) (billion yen) FY 17 1H FY18 1H Change JFE Steel Actual Forecast FY17 1H→FY18 1H Ordinary 84.6 110.0 25.4 Income  Cost reductions ＋ 13.0  Volume and Mix ＋ 5.0  Sales and Raw materials ＋ 49.

  48. Slide 48: 15.8 Billion Yen increase in JFE Steel's Ordinary Income (FY17 4Q vs. FY18 1Q)

    JFE Steel 15.8 Billion Yen increase in JFE Steel’s Ordinary Income (FY17 4Q vs. FY18 1Q) (billion yen) FY17 FY17 FY17 FY17 FY18 Change JFE Steel 1Q 2Q 3Q 4Q 1Q 4Q→1Q Ordinary 48.6 36.0 65.6 48.6 64.4 15.8 Income  Cost reductions ＋ 2.0  Volume and Mix ± 0.0  Sales and Raw materials ＋ 15.0  Invent

  49. Slide 49: 4.2 Billion Yen decrease in JFE Steel's Ordinary Income

    JFE Steel 4.2 Billion Yen decrease in JFE Steel’s Ordinary Income (FY17 2H (Actual) vs. FY18 1H (Forecast) ) (billion yen) FY17 2H FY18 1H Change JFE Steel (Actual) (Forecast) FY17 2H→FY18 1H Ordinary 114.2 110.0 (4.2) Income  Cost reductions ＋ 3.0  Volume and Mix ± 0.0  Sales and Raw materials ＋

  50. Slide 50: Copyright © 2018 JFE Holdings, Inc. All Rights Reserved

    Copyright © 2018 JFE Holdings, Inc. All Rights Reserved 50

JFE Holdings — Q1 FY2018 Earnings Presentation on 6ix