For Immediate Release
April 26, 2018
JFE Holdings, Inc.
JFE Group’s Sixth Medium-term Business Plan
Maximizing Comprehensive Strengths to Make Great Leaps Forward
The JFE Group has formulated its sixth medium-term business plan, which lays out strategic
guidelines for the period from April 1, 2018 to March 31, 2021.
I. Overview
During the previous medium-term plan (April 2015 – March 2018), the JFE Group enhanced its
competitiveness through measures such as strengthening its domestic profit base. The Group also
strengthened corporate governance and environmental management, and worked to establish a
corporate structure conducive to sustainable growth. As for financial and profitability metrics,
however, the Group did not achieve its ROE target of more than 10% owing to factors including
sluggish demand in certain areas and problems with equipment that led to lower production levels.
Current economic conditions are sound both in Japan and abroad as global economies continue
to expand. We believe that well-timed responses to structural changes in the automotive and theenvironment & energy fields—key fields for the Group—and the utilization of advanced digitaltechnologies will enable the Group to take advantage of new business opportunities and strengthen
its competitiveness. At the same time, potential concerns include Japan’s declining birthrate and theaging of its population, wide fluctuations in the prices of raw materials and other resources, the risingrisk of trade protectionism and other changes in the external environment. Meanwhile, international
efforts are underway to implement global frameworks for a more sustainable future, such as theUnited Nations adopting sustainable development goals (SDGs) and the Paris climate accord
coming into effect. Accurately assessing and swiftly responding to these external developments willbe crucial.
Our sixth medium-term business plan strategically addresses growth areas by making maximaluse of leading-edge technological capabilities, advanced IT, Group coordination and a diverse
workforce. By increasing the Group’s value over the medium/long term and contributing tosustainable societies, the JFE Group aims to achieve its corporate vision of “contributing to society
with the world’s most innovative technology.”
The plan’s key undertakings are outlined below.
II. Main Measures1. Group-wide Measures(1) Pursue growth by meeting social needs with leading-edge technologies
To address increasingly sophisticated and diverse needs in society, we will strengthen
coordination within the Group and make effective use of external resources to drive innovative
research and development to produce leading-edge technologies. We will also actively deploy
data-science technologies—including AI, IoT and big data—and robotics, to greatly improve
productivity and enhance our competitive edge.
We see business opportunities in trends that are taking place in the automotive field, such as
lighter vehicles and the shift to EVs, and structural changes in the energy & environmental field, so
we intend to respond by making well-timed strategic investments, deploying leading-edge
technologies and expanding operations-focused projects.
1To combat global warming and contribute to recycling societies, we will aim to provide processes
for saving resources and energy, products and solutions.
(2) Continue to expand domestic profit base and strengthen manufacturing capabilities
For future growth, we will systematically make domestic capital investments on a level exceedingthat of our previous medium-term results. Facilities will be renovated for stable production, cost
reductions and enhanced competitiveness, as well as to broaden our profit base by expanding
capacity and capabilities for developing and manufacturing high-grade steel.
In areas of ongoing structural change, we will carefully assess customer needs and draw on ourGroup’s comprehensive strengths to deliver highly value-added products and services when andwhere they are needed.
(3) Advance overseas business and expand overseas profit base
Under the sixth medium-term plan, we will implement activities to focus on expanding the profit
base by ensuring that investment projects initiated during the previous plan begin operating.
Through effective vertical specialization in conjunction with domestic business and by using ourGroup network (e.g., steel sheet and construction materials business in Myanmar), we will build
optimal supply chains and manage projects according to local needs for maximized profitability.
In addition to expanding profits in existing investment projects, we will execute new project
investments in priority areas and strategic regions. At present, we expect to invest around 100
billion yen in new projects under the sixth medium-term business plan, but we are prepared toinvest beyond this level if other projects offer attractive benefits.
(4) Strengthen business structure for sustainable growtha. Continuously address ESG issues
We will address a range of environmental, social and governance (ESG) issues to contribute tosustainable societies, a key priority.
Environmental: Global environmental protection is one of our top concerns, so we will continue
to reduce environmental loads by reducing CO2 emissions in steelmaking processes, reusing
water and energy resources, developing environmentally friendly products and process
technologies, and providing resource-recycling solutions.
Social: Providing products and services of superior functionality and quality helps to enrichsociety, so recruiting and developing people who can make this possible is crucial. In accord with
the Basic Policy on Human Resources Management laid out in our previous medium-term planand in our JFE Group Health Declaration, we will continue to create workplaces where our diverse
workforce can demonstrate its full potential. Initiatives will include instituting workstyle andoperational reforms, developing human resources and ensuring that technical skills are passed
on, and promoting diversity.
Governance: To date, we have formulated a Basic Policy on Corporate Governance,
established a nomination committee and remuneration committee, partially revised the structure ofour board of directors and audit & supervisory board based on evaluations of their effectivenessand the results of those evaluations, and taken other steps to enhance governance. We continue
to enhance the transparency and fairness of Group management by ensuring the effectiveness ofthese initiatives, we engage in two-way communication with stakeholders and we are stepping up
information disclosure.
In addition to these ongoing activities, we will also take the following new initiatives:• Set key performance indicators (KPIs) for CSR priorities, including customer service,environmental protection, employment health & safety and human resources development,
and work to attain these goals through our operating companies.
• Introduce an executive pay scheme linked to medium/long-term financial performance2• Issue an Integrated Report to enhance communication with stakeholders
b. Recruit diverse human resources and create workplaces where they can demonstrate their fullpotential
We will continue to recruit and develop diverse people to implement our sixth medium-termbusiness plan. To ensure that all Group employees can demonstrate their full potential, we willcontinue to pursue workstyle reforms by instituting health-conscious management practices andcarrying out operational reforms through the proactive use of advanced IT (data science
technologies, logistics technologies and robotic process automation [RPA]), the revamping ofsystems, and so forth.
Recruiting outlook (nonconsolidated basis, approximate figures)
JFE Steel

830 people per year

JFE Engineering

150 people per year

JFE Shoji Trade

60 people per yearc. Financial/profitability targets and returns to shareholders
We aim to achieve a return on equity (ROE) of 10% by strengthening the domestic profit baseand expanding overseas profitability, for which measures already are being implemented. We will
also work to improve earnings and cash flow to achieve a financial standing equal to the level
required by international credit agencies for an A-grade rating (the target is a debt/EBITDA ratio of
below 3x).
We are targeting 280 billion yen in consolidated ordinary income and 200 billion yen in profit
attributable to owners of the parent. Measures will be implemented to meet and sustain thesefinancial goals.
Our financial and profitability targets for the consolidated Group and individual operatingcompanies have been set with respect to the specific characteristics of each business and thechanging external environment. The goal is to achieve the targeted levels stably over the threeyear term (average basis) rather than pointing exclusively to the plan’s final year.
Returns to shareholders: The JFE Group aims to raise its dividend payout ratio from the current
level of around 25–30% to around 30%.
Consolidated ordinary income
Net profit attributable to owners of the parent
Debt/EBITDA ratio
Total investment

280 billion yen per year
200 billion yen per year
Around 3x

Around 1,000 billion yen over 3 years(around 900 billion yen in Japan and 100 billion yenoverseas)

2. Basic Policies and Measures for Operating Companies(1) JFE Steel (steel business)
Pursue growth through leading-edge technologies and strengthened manufacturing
JFE Steel will develop technologies to meet the needs of society and customers and implement
customer-oriented sales. By pursuing growth through leading-edge technologies and further
cementing and expanding awareness of the JFE brand, JFE Steel aims to constantly create new3

value and build a global supply chain for steel that grows in step with customers.
In Japan, rather than merely continue to maintain the production base, the company aims todramatically strengthen its production capabilities by increasing capacity and maximizing
performance, particularly at its West Japan Works. Overseas, the company will build out its global
production operations and work to make even greater use of upstream facilities.
Consolidated ordinary income

220 billion yen per year

a. Pursue growth through leading-edge technologies
To keep pace with technological innovations in the automotive field, such as lighter vehicles
and the shift to EVs, JFE Steel will accelerate and evolve its technology development byfocusing on high-tensile steel for products and solutions targeted at the priority fields ofautomobiles, infrastructure materials and energy.
JFE Steel aims to develop environmentally friendly production technologies, such as thosefor the eco-responsible processing of ferro-coke and other raw materials. Data-science
technologies—such as AI, IoT and big data—and robotics, will be actively used in pursuingthese objectives and addressing the needs of society and customers.
Research & development outlays

110 billion yen over 3 years(+10% vs. previous medium-term results)

Technology development guidelines for priority fields• Automobiles: Respond to technological innovation for lighter vehicles and EVs• Infrastructure: Respond to highly efficient construction• Energy: Respond to demands for suitability in severe environmentsb. Strengthen production capabilities
Under the previous medium-term plan, JFE Steel made large-scale investments to renew
facilities (e.g., coke oven overhauls), fundamentally strengthen operations and stabilize
production, aiming to swiftly strengthen production capabilities.
Under the sixth medium-term plan, while continuing with measures to fundamentallystrengthen operations, JFE Steel will also make strategic capital investments that vastly exceed
outlays made under the previous plan. To increase capacity and maximize performance, newcontinuous casting lines, etc. will be installed, particularly in the company’s core West Japan
Works. Also, innovative production technologies will be developed, focusing on upstream
processes, to facilitate the use of inexpensive raw materials and the like.
Through these initiatives, JFE Steel aims to achieve stable annual crude steel production of 30
million tons and additional cost reductions of around 105 billion yen over the plan’s three-year
term. By stabilizing production in this manner, the company intends to pave the way to recovery
and enhance the resilience of its production capabilities.
Crude steel production
Cost reductions
Domestic capital investment

Stable at 30 million tons (JFE Steel, nonconsolidated)
105 billion yen over 3 years
Around 850 billion yen over 3 years (+10% vs. previous
medium-term results)

c. Pursue overseas business to shore up long-term growth
JFE Steel Group aims to continue expanding profitability with a focus on priority fields whereefforts have been made to expand global production suited to the maturity of each region and4market. In Asia’s high-growth economies, in addition to pursuing traditional verticalspecialization, JFE Steel will build integrated production operations in high-demand markets tomake greater use of upstream facilities.
Main investments slated to enter operation in sixth medium-term plan(start-up target in parentheses)• Automobiles
Nucor-JFE Steel Mexico (2019)—Mexico: CGL
Shanghai Baowu JFE Clean Iron Powder (2018)—China: ironpowder• Infrastructure
JFE Meranti Myanmar (2020)—Myanmar: CGL• EnergyAL Gharbia Pipe (2018)—UAE: large-diameter welded steel pipe
• Integrated steelworks Formosa Ha Tinh Steel (2018)—Vietnam: No. 2 blast furnace
JSW Steel (2018)—India: Dolvi Works extended project• Resource rights
Byerwen Coal (2018)—Australia: coal mine (full-fledgedshipments)
d. Implement sales and product lineup strategies to address customer needs
Besides strengthening production capabilities, etc. to handle volumes of any size, JFE Steelwill further integrate product development and sales practices and build up capabilities topropose and deliver comprehensive solutions that customers truly need. Through these
initiatives, the company aims to raise global brand recognition and continuously expandprofitability.
e. Realize the full potential of human resources and workplaces
To cope with business expansion and a changing environment, JFE Steel will continue toemploy diverse people, including women and non-Japanese nationals, and take steps todevelop and enhance the technical skills of its human resources. It will continue to create
appealing workplaces through workstyle reforms and operational reforms, namely, the overhaulof core steelworks systems.
(2) JFE Engineering (engineering business)
Expand operations projects and tighten project management to enhance earnings
In Japan, JFE Engineering will strengthen and expand projects encompassing operations andmaintenance activities, in addition to existing engineering, procurement and construction activities.
Overseas, the company will lay the foundations for stable earnings with a focus on urban
infrastructure, the environment and energy. Risk-management practices will be tightened to ensurethat projects are executed properly and generate returns. Through such measures, JFE
Engineering aims to “Create” and “Underpins” the foundations for life.
Consolidated ordinary income
Orders

30 billion yen per year
600 billion yen (plan’s final year)

a. Expand operations projects
Through a consultative-solutions model that draws on a diverse array of energy sources—
including waste products, biomass fuels, geothermal power and LNG—JFE Engineering will
expand its operations projects in areas including public-private partnerships and energy
services.

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b. Develop and expand sales of new products
JFE Engineering aims to swiftly bring to market and expand orders for new products that
address customer and market needs, such as high-efficiency waste-to-energy plants and AIsolutions.
c. Achieve profitability in overseas business
Focusing on areas where the company has competitive advantages, such as waste
incinerators (waste-to-energy), water-processing plants and steel structures (bridges, etc.), JFE
Engineering will increasingly localize operations by transferring technology and designing
functions and other means to strengthen its global engineering operations. The company will
also carry out business suited to the characteristics of each region to expand orders and secure
profits.
d. Improve productivity and institute workstyle reforms
JFE Engineering will continue to hire highly specialized career-track individuals while also
pursuing technology development in step with broader trends—for example, using advanced ITfor design and construction to promote efficiency—with the goal of streamlining operations andraising productivity. The company will also pursue workstyle reforms, such as introducing
telecommuting and two-day weekends for construction sites.
(3) JFE Shoji Trade (trading business)
Build a stable profit base and expand profitability of trading and operating activities
JFE Shoji Trade will further deepen coordination with other JFE Group companies to expand its
existing profit base and generate future growth, ultimately for a stable and growing profit base.
Consolidated ordinary income

35 billion yen per year

a. Build a stable profit base
JFE Shoji Trade will fully utilize JFE Group resources to address customer and market needs
and expand steel product sales volumes. It will also expand business outside of the Group toincrease earnings from trading operations.
In addition to maintaining its steel supply chain, the company will work to expand profitabilityby strengthening its processing and distribution centers to capture demand, strengthening its
corporate structure through operational reorganizations, etc., and expanding the scope of its
activities.
b. Strengthen global/regional strategies
JFE Shoji Trade will strengthen operations under a four-region structure (Japan, Americas,China and ASEAN). Operations will continue to center on Japan, which will be responsible for
optimizing sales/processing structure to meet needs in respective product categories/fields, andfor formulating overseas strategies. To capture demand in growing markets, the functions ofoverseas operations will be expanded and enhanced, and coordination with the Group andamong the company’s offices will be strengthened.
c. Build operational foundations
To swiftly and flexibly respond to business expansion and changes in the externalenvironment, JFE Shoji Trade will take steps to systematically develop core personnel, such as
posting more young employees overseas, and further enhance business-risk management. Thecompany will also utilize advanced IT, such as RPA and AI, to improve productivity, and will
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step up efforts to further promote workstyle reforms and diversity.
Performance and Profitability Targets and Dividend Policy for Sixth Medium-term Business Plan
FY2017 actual
6th medium-term plan
(previous mediumtargetsterm plan)
Consolidated ordinary
280 billion yen / year
216.3 billion yen
incomeProfit attributable to200 billion yen / year
144.6 billion yen
Entire Groupowners of the parent
Debt/EBITDA ratio
Around 3x
3.4x
Ordinary income
by operatingcompany

Steel business

220 billion yen / year

198.8 billion yen

Engineering business

30 billion yen / year

19.3 billion yen

Trading business

35 billion yen / year

33 billion yen6th medium-term plan
Dividend Policy(dividend payout ratio)

Around 30%

5th medium-termplan
Around 25-30%###For further information, please contact:
Public Relations Section, Investor Relations and Corporate Communications Department
JFE Holdings, Inc.
Tel: +81-3-3597-3842

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