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

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 ESG Initiatives
This presentation material is for information and discussion purpose only.
Any statements in the presentation which are not historical facts are future projections based on
certain assumptions and currently available information. Please note that actual performance mayvary significantly due to various factors

2

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

3

JFE-HD

Financial Results for First Quarter of Fiscal Year 2020
The impact of the COVID-19 outbreak depressed economic conditions substantially both inJapan 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 by 77.9 billion yen.
Profit attributable to owners of parent was -39.1 billion yen, decreased by 58.8 billion yen.

（billion yen）

FY20191Q (Apr-Jun)

FY20201Q (Apr-Jun)

Change

927.4

743.9

(183.5)30.7(47.2)(77.9)

(3.2)

(3.2)

0.0

27.5

(50.4)(77.9)

Exceptional Items

－

－

－

Profit before Tax

27.5(50.4)(77.9)Tax Expense and Profit (Loss) Attributable to
Non-Controlling Interests

(7.7)

11.2

18.9

Profit Attributable to Owners of Parent

19.7(39.1)(58.8)

Revenue
Business Profit
Finance Income/costs

Segment Profit

Business profit is profit before tax excluding financial income and one-time items of a materially significant value. Segment profit is profit
4
including financial income in business profit.

JFE-HD

Financial Results for First Quarter of Fiscal Year 2020
(by Segment)
FY20191Q (Apr-Jun)(billion yen)

FY20201Q (Apr-Jun)

ChangeRevenue
Steel Business

666.6

508.7

(157.9)Engineering Business

113.2

105.0

(8.2)

Trading Business

286.6

238.0

(48.6)(139.2)(107.9)

31.3

Total

927.4

743.9

(183.5)Business Profit

（A）

30.7

(47.2)(77.9)

Finance Income/Costs

(B）

(3.2)

(3.2)

－

14.5

(57.8)(72.3)Engineering Business

4.9

1.5

(3.4)

Trading Business

7.9

4.4

(3.5)

Adjustments

0.0

1.3

1.3

27.5

(50.4)(77.9)

Adjustments

Segment Profit
Steel Business

Total

（A+B）

5

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

6

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 andlower earnings at subsidiaries.
• In 2H, steel business is expected to eliminate the deficit due to the recovery of customer activities(mainly automobiles) and promotion of profit improvement measures. Additionally, thanks to contributions
from the engineering and trading company businesses, business profit is expected to be 25.0 billion yen.

(billion yen)

FY2019 (Actual)

FY2020 (Forecast)

Change1H

Full Year

1H

Full Year

1H

Full Year

1,871.2

3,729.7

1,460.0

3,170.0(411.2)(559.7)

49.0

37.8

(125.0)(100.0)(174.0)(137.8)(6.3)(12.5)(7.0)(15.0)

(0.7)

(2.5)

42.7

25.3

(132.0)(115.0)(174.7)(140.3)-(238.8)

-

-

0.0

238.8

Profit before Tax

42.7(213.4)(132.0)(115.0)(174.7)98.4

Tax Expense and Profit (Loss)
Attributable to Non-Controlling
Interests(10.8)

15.7

22.0

15.0

32.8

(0.7)

Profit Attributable to Owners of
Parent31.9(197.7)(110.0)(100.0)(141.9)

97.7

Revenue
Business Profit
Finance Income/costs

Segment Profit
Exceptional Items

7

JFE-HD

Financial Forecast for Fiscal Year 2020 (by Segment)
FY2019 (Actual)（billion yen）

FY2020 (Forecast)

Change1H

Full Year

1H

Full Year

1H

Full Year

1,353.1

2,681.3

1,010.02,240.0(343.1)(441.3)Engineering Business

238.9

512.2

215.0

490.0

(23.9)(22.2)

Trading Business

557.5

1,084.1

430.0

900.0

(127.5)(184.1)(278.3)(548.0)(195.0)(460.0)

83.3

88.0

1,871.2

3,729.7

1,460.0

3,170.0(411.2)(559.7)

Business Profit
（A）

49.0

37.8

(125.0)(100.0)(174.0)(137.8)Finance Income/Costs
(B）

(6.3)

(12.5)(7.0)(15.0)

(0.7)

(2.5)

Steel Business

17.7

(8.7)

(145.0)(145.0)(162.7)(136.3)Engineering Business

11.9

23.1

6.0

21.0

(5.9)

(2.1)

Trading Business

14.6

27.0

5.5

12.0

(9.1)

(15.0)

Adjustments(1.5)(15.9)

1.5

(3.0)

3.0

12.9

42.7

25.3

(132.0)(115.0)(174.7)(140.3) 8

Revenue
Steel Business

Adjustments
Total

Segment Profit

Total

（A+B）

JFE-HDOur countermeasuresin 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 Business）
1.

Carrying out cost-minimum operation through production optimization:
West Japan Works (Kurashiki district) No.4 BF* was shut down and will be refitted in 2021.
Banking has been in progress for West Japan Works (Fukuyama district) No.4 BF since June.
Continuing temporary off-days for employees:
Temporary off-days which has been implemented since this May in JFE Holdings and JFE Steelwill continue for time being.

2.

Progress of cost reduction and measures for generating cash flows (JFE group)
1. Cost reduction in Steel Business2.
3.

:Cost reduction of 100.0 billion yen (FY 2020) including the negative effect of production
reduction … details in p.19

Domestic CAPEX compression in steel business: 100.0 billion yen (announced in November, 2019) 130.0 billion yen (FY19-20)

JFE Groupʼs asset compression（compression of inventories, sale of cross holding shares etc.）

Detailsin the next page: 150.0 billion yen (announced in November, 2019) 170.0 billion yen (FY19-20)
9JFE-HD

Progress of cash flow improvements
Domestic CAPEX(decision making basis)

Domestic CAPEX compression in steel businessprevious (Nov.2019) 100.0 ⇒ updated 130.0 billion yen
Implement further CAPEX compression by careful
screening and thorough cost reduction

approx.
1 trillion
yen◆ Implement steadily necessary investments forsafety, environment, disaster prevention,
strengthening manufacturing capabilities,
stabilizing blast furnace operation, IT and DS

130.0
Billion yen

6 th Medium-termbusiness plan

JFE Groupʼs asset compression
previous (Nov.2019) 150.0 ⇒ updated 170.0 billion yen

Asset compression

135.0
billion yen◆ Cross-holding shares:
steadily selling based on a principle of no share holding◆ Finished good inventories:
Optimizing rolling cycle and delivery（FY18-20）（FY18-20）

Further compression by considering and implementing
every type of asset for selling, and revising inventory level◆ Raw material inventories︓
revising inventory ratio to the lowest level

Revised35.0
billion yen
FY2019170.0
billion yen

FY202010Dividends

11Dividends

JFE-HD 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

JFE Steel

Financial Results for First Quarter of
Fiscal Year 2020 and
Financial Forecast for Fiscal Year 2020

13

JFE Steel

Financial Results for First Quarter of Fiscal Year 2020

Unit

FY2019FY2020

1Q

2Q

3Q

4Q

Full Year

Apr-Jun

Revenuebillion 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)

billion yen

22.5

(0.8)

8.7

(9.1)

21.3

(34.8)

Mt

7.00

6.79

6.24

6.70

26.73

4.79

Mt

7.36

7.13

6.59

7.00

28.09

5.09

Mt

5.85

5.94

5.59

6.09

23.47

4.59

%

39.9

42.1

39.7

44.4

41.5

44.2

000
yen/ｔ

80.4

79.4

79.6

76.1

78.8

75.3

Exchange Rate

¥/$

110.7

107.6

108.8

109.4

109.1

107.7

Exchange Rate
(End of Term)

¥/$

107.8

107.9

109.6

108.8

108.8

107.7

Excluding Inventory
Valuation etc.*

Crude Steel(Standalone)
Crude Steel(Consolidated)
Shipment(Standalone)
Export Ratio
on Value Basis（Standalone）

Average Sales Price(Standalone)＊Excluding inventory valuation, carry over of raw materials and foreign exchange valuation from segment profit

14

72.3 Billion Yen Decrease in JFE Steelʼs Segment Profit(FY2019.1Q (Actual) vs. FY2020.1Q (Actual))

JFE Steel（billion yen）
JFE SteelSegment
Profit
1. CostFull Year

Apr-JunChangeFY2019.1Q→
FY2020.1Q(8.7)(57.8)(72.3)FY2019
１Q

２Q

14.5

3Q

3.2

(6.3)

FY20204Q(20.1)+13.0• Fixed cost reduction mainly sourced from repairing costand labor cost
• Capital investment effect etc.

-49.0

Production and sales volume decreased amid decline indemand（Crude steel (Standalone): 7.00⇒4.79Mt -2.21Mt）＋1.0（+200 yen/t-shipment）
Metal spread slightly improved through drop in coking coalprice, though the price mainly for exports decreased.

4. Inventory
valuation-15.0• Inventory valuation -15.0 (-6.0→-21.0)• Carry over of raw materials -1.0 （＋1.0→±0.0)• Foreign exchange valuation＋1.0(-3.0→-2.0)

5. Others-22.3• Decrease in profit of subsidiary companies• Increase in loss of disposal and sales of assets etc.

2. Volumeand Mix
3. Sales and
Raw materials

15

JFE SteelCurrent business environment
As the state of emergency made the economy sluggish, the outlook for domestic ordinary steel
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 Apr-Jun, 2020, significantly decreased due to thestagnated economic activities in each country.
Economic activity in China bottomed out in Jan-Mar, 2020, and turned into recovery.

Domestic

Overseas

（Mｔ）

12.0
11.0

【Automobile Sales】【Outlook for Domestic Ordinary Steel Consumption】

12.0

12.2

60.0%

11.9

10.0

Year on Year Change

Thailand

40.0%

11.3

China

20.0%

9.0

8.8

8.0
7.0

0.0%
-20.0%

6.0-40.0%

5.0
4.0-60.0%

▲26％

3.0
2.0

Year-on-year

1.0
0.0
1Q

2Q

3Q
FY19

4Q

1Q
FY20

JFE Forecast-80.0%

Indonesia

India

Accumulated Apr-Jun. 2019 Apr-Jun. 2020 Y on Y
(million units) (million units)
Sales
Change
China
6.0
6.6
+10.3%
India
0.9
0.2
▲79.9%
Indonesia
0.2
0.0▲89.9%
Thailand
0.3
0.2▲36.7%-100.0%Jan-MarApr-Jun
Jul-Sep
Oct-Dec
Jan-MarApr-Jun
Jul-Sep
Oct-Dec
Jan-MarApr-Jun
Jul-Sep
Oct-Dec
Jan-MarApr-Jun
Jul-Sep
Oct-Dec
Jan-MarApr-Jun

13.0

2016

2017

2018

2019

2020

16

JFE SteelBusiness 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 FY2020 is expected to recover by approximately 20% compared to 1H of
FY2020. (Domestic demand for ordinary steel in FY2020 is expected to decrease by approximately 20% year-on-year.)

Overseas

Domestic

SectorOutlook

Automotive• Domestic production is expected to bottom out after the sharp decrease in 1Q of
FY2020. Afterwards, gradual recovery is anticipated• Demand in 2H is estimated to increase by 30% from 1H.

Shipbuilding• Postponement of negotiations with customers under COVID-19 pandemic reduced thenumber of orders. Therefore, full recovery will take time due to decline in holding
shipbuilding jobs. Business activity level of 2H is expected to be lower than that of 1H.

Civil
engineering• Compared to the other sectors where business activities have significantly decreased,business activity level is relatively stable thanks to the large scale of thegovernmentʼs public work budgets. Its activity level is expected to make a recovery due
to the budgets and seasonal factors in 2H.

Building• Redevelopment projects are forecast to continue to grow steadily, but middle and small
projects will still remain in low in 2H. Full recovery in this fiscal year is not expected.

Automotive• Positive signs can be seen in some regions as the automobile sales in China hasrecovered and the automobile sales both in Europe and the U.S. seems to havebottomed out.

Steel sheet• Vigorous demand in China has increased imports of steel products from India sinceApril, which has underpinned steel market price in Southeast Asia.
• Steel market price has turned into increase in the regions where COVID-19
pandemic has gradually been stamped out.

Shipbuilding• Postponement of negotiations with customers under COVID-19 pandemic reduced thenumber of orders. Therefore, full recovery will take time due to decline in holding
shipbuilding jobs. Business activity level of 2H is expected to be lower than that of 1H.

Energy• Full recovery will take time because of the continuous lower level of operation, although
WTI crude oil price bottomed out in April.

FY2020
1H（vs FY2019 2H）

FY2020
2H（vs1H）

17

JFE Steel

Forecast of Production and Metal Spread
1. Forecast of Crude Steel Production
Crude Steel

1Q

4.79Mt（actual）

2Q

Approx.5.20Mt

Background
Production level was adjusted to the low demand level due to theimpact of COVID-19 outbreak.（4/25~ Stopped Kurashiki No.4 BF,
6/20~Banking Fukuyama No.4 BF）

Production level will be around 25% lower than that in the previous FY
although recovery can be seen in some areas.

1H

Approx.10.0Mt

2H

Approx.12.0Mt

Crude steel production is expected to increase amid the demand
recovery mainly for automobiles.

Approx.22.0Mt

Crude steel production is expected to be around 20% lower than thatin FY2019.

FY20202. Metal Spread• Asian steel market price and metal spread bottomed out, and recovery cancurrently be seen.
• Iron ore price is expected to remain high due to Chinese strong demand.
• Coking coal price is expected to increase as Indian purchase of spot coals will
increase after the world economy makes a recovery from the impact of COVID-19
outbreak.
• Metal spread of export HRC is expected to increase toward the latter half of
FY2020-1H, and it is expected to be almost flat in 2H compared to 1H.

18

JFE SteelCountermeasures 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 cost reduction（temporary day-off, overtime work reduction）

Expenses reduction etc.

■Variable cost︓Full-year effects of CAPEX in FY2019
Minimize the disadvantages of production reduction by pursuing optimal production
configuration

 Measures to improve steel prices
Continuing close negotiations with customers to realize the appropriate sales pricelevel which meets the added value we offer, including the total process from R&D to services.

 Profitability achievement in steel business in FY2021


Based on the demand level of 2H of FY2020, we will steadily implement cost reduction
measures such as capital investment effects, and achieve profitability in FY2021.

 Execution of Structural Reforms
Considering earlier schedule of structural reforms and earlier realization of theeffects for JFEʼs optimization of domestic production operation

19

JFE Steel

Financial Forecast for Fiscal Year 2020

FY2019FY2020

Unit

Full Year

1Q

2Q

1H

2H

Full Year

Revenuebillion yen

2,681.3

508.7

501.3

1,010.0

1,230.02,240.0

Segment Profit

billion yen(8.7)(57.8)(87.2)(145.0)0(145.0)billion yen

21.3(34.8)(47.2)(82.0)(19.0)(101.0)

Mt

26.73

4.79

Mt

28.09

5.09

Mt

23.47

4.59

%

41.5

44.2

000
yen/ｔ

78.8

75.3

¥/$

109.1

107.7

Excluding Inventory
Valuation etc.*

Crude Steel(Standalone)
Crude Steel(Consolidated)
Shipment(Standalone)
Export Ratio
on Value Basis（Standalone）

Average Sales Price(Standalone)
Exchange Rate

Approx.

Approx.

Approx.

Approx.

5.20
5.50

Approx.

4.60

Approx.

Approx.

10.00

12.00

Approx.

22.00

10.60

Approx.

9.20

42

Approx.

43

71

Approx.

73

Approx. 108

Approx.

Approx. 108

Approx. 108＊Excluding inventory valuation, carry over of raw materials and foreign exchange valuation from segment profit

20

136.3 Billion Yen Decrease in JFE Steelʼs Segment Profit(FY2019 (Actual) vs. FY2020 (Forecast))

JFE SteelSegment profit in steel business is expected to significantly decreased from theprevious fiscal year amid decrease in production and sales volume, and decreasein profit of subsidiary companies by spread of COVID-19, although cost reductionof 100 billion yen is expected to be achieved.
FY2019ActualJFE Steel(8.7)

Segment Profit
1. CostFY2020
Forecast

Change（billion yen）

(145.0)(136.3)+100.0• Fixed cost reduction mainly sourced from repairing cost and laborcost• Capital investment effect etc.

-119.0• Production and sales volume decreased amid decline in demand（Crude steel (Standalone) 26.73⇒22.00Mt -4.73Mt）• Product mix deteriorated both overseas and domestic.

-23.0（-1,100 yen/t-shipment）• Metal spread shrank with decreased steel price both in domestic
and overseas market.

4. Inventory
valuation-14.0• Inventory valuation -25.0 (-22.0→-47.0)• Carry over of raw materials +12.0 （-7.0→+5.0)• Foreign exchange valuation -1.0(-1.0→-2.0)

5. Others-80.3• Decrease in profit of subsidiary companies: -70.0 billion yen etc.

2. Volumeand Mix
3. Sales and
Raw materials

21145.0 Billion Yen Increase in JFE Steelʼs Segment Profit(FY2020.1H vs. FY2020.2H)

JFE SteelSegment 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 ininventory valuation in 1H, and increase in profit of subsidiary companies.

JFE SteelSegment Profit
1. Cost（billion yen）

FY2020 Forecast
1H(145.0)2H

ChangeFull Year0(145.0)

1H→2H＋145.0+15.0• Shrink cost increase due to reduced production• Fixed cost reduction mainly sourced from repairing cost andlabor cost

+40.0

• Recovery of customersʼ activity level (mainly automobiles) is
expected toward 2H.
（Crude steel (Standalone) 10.00⇒12.00Mt +2.00Mt）-5.0（-500yen/t-shipment）• Forecast of iron ore price remaining high, andincrease in coking coal price amid the recovery of
economic activity

4. Inventory
valuation＋82.0• Inventory valuation +63.0 (-55.0→+8.0)• Carry over of raw materials +17.0 （-6.0→+11.0)• Foreign exchange valuation +2.0(-2.0→±0)

5. Others+13.0• Increase in profit of subsidiary companies etc.

2. Volumeand Mix
3. Sales and
Raw materials

22JFE Engineering
Financial Forecast
for Fiscal Year 2020

23

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 projects indomestic private sector and overseas may be suspended or orders may be postponed, the impact will
be limited.



Segment profit is expected to exceed 20.0 billion yen even under the spread of COVID-19, maintaining
Stable Earnings.

Financial Forecast
FY2019 (Actual)（billion yen）
Orders
Revenue
Segment Profit

1H
189.5
238.9
11.9

Full Year
413.0
512.2
23.1

FY2020 (Forecast)
1H
320.0
215.0
6.0

Full Year
500.0
490.0
21.0

Change1H
130.5(23.9)(5.9)

Full Year
87.0(22.2)(2.1)

【1H】
・Orders+130.5 Increase in large-scale orders in environmental sector
・Revenue(23.9) Impact of COVID-19 and decrease in work volume
・Segment Profit (5.9) Decrease in revenue and construction mix【Full Year】
・Orders+87.0 Increase mainly in large-scale orders of public works in environmental andsocial infrastructure sectors
・Revenue(22.2) Impact of COVID-19 and decrease in work volume
・Segment Profit (2.1) Decrease in revenue

24

JFE Shoji

Financial Forecast
for Fiscal Year 2020

25

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 equipment remained weak.

Customersʼ inventory adjustment becomes serious, leading sluggish cargo movement mainly inJapan.



Demand for steel products is expected to remain sluggish in 1H due to overseas slow economic
recovery.

⇒ To respond to the current situation, implement measures to improve profit and cash flow such as
asset compression, expense reduction and screening of investments.

Financial Forecast
FY2019 (Actual)(billion yen)
Revenue
Segment Profit

1H
557.5
14.6

Full Year
1,084.1
27.0

FY2020 (Forecast)
1H
430.0
5.5

Full Year
900.0
12.0

Change1H(127.5)(9.1)

Full Year(184.1)(15.0)【1H】
Revenue and profits are expected to decrease both in Japan and overseas due to decrease in sales
volume with significant drop in demand caused by the spread of COVID-19.
【Full Year】
Although the global economy and demand is expected to recover gradually in 2H, revenue and profits
are expected to decrease from the previous year due to decrease in sales volume caused by the global
economic stagnation
26

ESG Initiatives

27

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

The index is developed by FTSE Russell, a member of London Stock ExchangeGroup, and selects companies demonstrating strong Environmental, Social andGovernance (ESG) practices. Itʼs used by a wide variety of market participants
when creating or assessing sustainable investment products.

**FTSE Blossom Japan Index

https://www.ftserussell.com/ja/products/indices/blossom-japan

The index is developed by FTSE Russell, and selects Japanese companies
demonstrating strong Environmental, Social and Governance (ESG) practices.

Promote ESG initiatives such as climate change, safety and compliance etc.
to strengthen the Groupʼs competitiveness and resilience for sustainablegrowth and contribute to developing sustainable society.
28

Solutions Promoting Decarbonization -Renewable EnergyEngineering Business

JFE Engineering
JFE Shoji

E

SG

Trading BusinessStart providing new electricity plan
“Hachimantai Geothermal Zero-Emission Plan”

Developed “Dam Optimum Operation System”
using AI with Hokuriku Electric Power Co.

Released on 28th May 2020

Released on 12th June 2020100% renewable energy
Zero CO2 emission factor⇒ Contribute to effective use of geothermal energy
Matsuo-Hachimantai
Geothermal Power Plant
Electricity

Predict water flow with high accuracy⇒Contribute to increasing hydroelectric power
generation
Using AI to predict
inflow with highaccuracy

Prevent excess dam discharge
to restore dam water level
promptly for power generation

Rainfallprediction

Water flow

Hachimantai
Geothermal
Zero-Emission
Plan

Urban Energy
Corp.

Electricity
IWATE COOP

Japanʼs Non-fossil
Certificate(Certificate of CO2free electricity)

Prediction system of water flow to dam

Newly organized “Renewable Energy Steel Products Team” in July

Image of increasing power
generation

Released on 10th July 2020

Implement strategy to maximize steel business towards global renewable energy field・Further expand steel business towards renewable energy field・Formulate a supply chain model for material processing to meet specific customer needs

29

JFE EngineeringE

Solutions Promoting Decarbonization -Recycle-

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）

 Utilize technology of Anellotech, a US-based biochemical venture company,
to promote efficient recycling technology with less environmental load
(aim to commercialize by 2027)

Reduce CO2 emission
and energy
requirement by using
fewer processes thanexisting chemical
recycling throughliquefaction process30Appendix

31

JFE-HD

Main Financial DataIFRS

J-GAAP
FY12

FY13

FY14

FY15

FY16

FY17

Forecast
FY20
(1H)

FY18

FY19

Business profit

232.0

37.8

-125.0EBITDA ＊1

428.2

269.4

-10.0

ROS ＊2

6.0%

1.0%

-8.6%

ROE ＊3

8.6％

11.1%

-13.9%ROA ＊4

5.0％

0.8%

-5.4%

Interest-bearing debt
outstanding

1,524

1,814

1,950.0

FY18(bn. Yen, times)(bn. Yen, times)
Ordinary Income

52.2

173.6

231.0

64.2

84.7

216.3

221.1

EBITDA

260.6

368.9

421.5

254.4

279.9

388.8

405.9

ROS

1.6%

4.7%

6.0%

1.9%

2.6%

5.9%

5.6％

ROE

2.7%

6.3%

7.7%

1.8%

3.7%

7.6%

8.3％

ROA

1.6%

4.5%

5.5%

1.7%

2.3%

5.2%

5.1％

Debt Outstanding

1,596

1,534

1,501

1,379

1,375

1,331

1,450

Debt/EBITDA Ratio

x6.1

x4.2

x3.6

x5.4

x4.9

x3.4

x3.6

Debt/EBITDA
multiple

x3.6

x6.7

ー

76.9%

67.9%

59.0%

56.9%

51.4%

58.1%

62.0％

D/E Ratio ＊6

68.2％

96.4%

110.3%

71.2

177.4

241.6

58.4

117.8

250.8

285.0

Profit attributable to ownersof parent (yen/share)

283.8-343.4

-19.1

20

40

60

30

30

80

95

95

20

0

28.1%

22.5%

24.8%

51.4%

25.5%

31.9%

33.3％

33.5％

ー

ー

D/E Ratio

Profit attributable to ownersof parent (yen/share)

Dividend(yen/share)
Pay-out Ratio

Notes[IFRS]

Dividend(yen/share)
Pay-out Ratio＊1 EBITDA = Business profit + Depreciation and Amortization＊2 ROS = Business profit / Revenue＊3 ROE = Profit attributable to owners of parent company / Equity＊4 ROA = Business profit / Total assets＊5 Debt/EBITDA ratio = Interest-bearing debt outstanding / EBITDA＊6 D/E ratio = Interest-bearing debt outstanding / Equity attributable to owners of parent
For debt having a capital component, a portion of its issue price is deemed to be capital, as assessed by rating agencies.

32

JFE-HDInterest-bearing Debt Outstanding（billion yen）

2,000.0

Interest-bearing
Debt Outstanding（billion yen）

200.0

（Left axis）

1,800.0180.01,600.0160.0

1,400.0

140.0

Cash and deposit

1,200.0
1,000.0
800.0
600.0

（Right axis）

1,814.3130.0
1,950.0

120.0
100.0
80.0

86.7

60.0

400.0

40.0

200.0

20.0

0.0

0.0

End of March, 2020

End of September, 2020
（Forecast）

Commitment line for secure adequate liquidity (700.0 billion yen)
has not yet been exercised.

33

JFE Steel

Progress of Initiatives of Steel Business (Domestic)（Structural Reforms and Initiatives to Reinforce Manufacturing Capabilities in Japan）

Attempt to further strengthen competitivenessby investing strategically in its domestic steelworks
Shut down

Planning to operate (in progress)

FY19

In operation

KeihinDistrict

FY21

Hot rolling
Facilities

Shut
down

Shut down PLTCM・
3CGL

Blast Furnace

Refit No.6 BF
Facilities manufacturing steel sheet
for cans to be shut down

Shut down 2ETL・2CAL

Tin Mills
Refit
No.4 BF

Continuous
Casting Machine

Install new
Continuous Casting MachineElectrical Steel
Sheet Facilities
Coke Oven

Fukuyama
District

FY23
Shut
down

Blast Furnace

Kurashiki
District

FY22

Upstream Facilities

Cold-rolling & Hot-dip
Galvanizing Facilities

Chiba
District

FY20

Sintering Machine

Energy Plants

Renewed No.3 CokeOven(A)Renew
air blast flow

Reinforce Electrical Steel
Sheet Production Line

Renew No.3 CokeOven(B)

Installed new Sintering Machine
Install No.2 power generator in Joint Thermal Power34

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

Automobile• To maximize earnings from existingoverseas businesses• To develop new growth opportunities[China・Iron powder]
BJCMX started commercial production[China・Specialty steel for bars and wire rods]
Signed contract of JV, BJSS
Considering to both expand[Mexico・Steel sheets for automobiles]
business in overseas and transfer
Started NJSM production
technology[China・Materials for lithium-ion batteries]
Anode materials to start commercial production

Infrastructurematerials

Started Color-coating Line operation
JMM⼯場外観（ティラワ⼯業団地内）

EnergyPartnersʼ
upstreamfacilities
etc.

[UAE・ Large-diameter welded pipe]
AGPC started commercial production[Vietnam] FHS No.2 BF started operation[Australia・Coking Coal] Byerwen Coal Pty Ltd started shipment of hard coke[India] Expansion in JSW Dolvi steelworks to be completed

・BJCMX︓Shanghai Baowu JFE Clean Iron Powder Co., Ltd. ・BJSS︓ BaoWu JFE Special Steel Co., Ltd.
・JMM: JFE MERANTI MYANMAR CO., Ltd. ・NJSM︓NUCOR-JFE STEEL MEXICO ・AGPC︓AL GHARBIA PIPE COMPANY

35

29.4 Billion Yen Decrease in JFE Steelʼs Segment Profit(FY2020.1Q (Actual) vs. FY2020.2Q (Forecast))

JFE Steel（billion yen）
JFE SteelSegment Profit

1. Cost2. Volumeand Mix
3. Sales and
Raw materials
4. Inventory
valuation
5. Others

FY2020 Forecast
1Q (Actual)(57.8)

+15.0
+2.0
-17.0

2Q (Forecast)(87.2)

1H(145.0)Change
1Q→2Q(29.4)• Fixed cost reduction mainly sourced from repairing costand labor cost
• Capital investment effect• Suppress cost increase due to reduced production etc.
Despite the recovery of crude steel production after 1Q,
mix will be deteriorated.
（Crude steel (Standalone) 4.79⇒5.21Mt +0.42Mt）（-3,700 yen/t-shipment）
In spite of the decrease of coking coal price, metal spread
will shrink due to decline in steel market price.

-17.0• Inventory valuation -13.0 (-21.0→-34.0)• Carry over of raw materials -6.0 （±0.0→-6.0)• Foreign exchange valuation +2.0(-2.0→±0.0)-12.4• Decrease in profit of subsidiary companies• Assets inventory reduction, disposal acceleration

etc.
36

162.7 Billion Yen Decrease in JFE Steelʼs Segment Profit(FY2019.1H (Actual) vs. FY2020.1H (Forecast))

JFE Steel（billion yen）

JFE Steel

FY20191H (Actual)

17.7

Segment Profit
1. Cost2. Volumeand Mix
3. Sales and
Raw materials
4. Inventory
valuation
5. Others

＋46.0
-88.0
-9.0

FY20201H (Forecast)

ChangeFY2019.1H→FY2020.1H(145.0)(162.7)• Fixed cost reduction mainly sourced from repairing cost andlabor cost
• Capital investment effect etc.
• Production reduction amid the decline in demand.
（Crude steel (Standalone) 13.79⇒10.00Mt -3.79Mt）• Mix will be deteriorated.
（-1,000yen/t-shipment）
Metal spread for exports will shrink.

-59.0• Inventory valuation -49.0 (-6.0→-55.0)• Carry over of raw materials -11.0 （+5.0→-6.0)• Foreign exchange valuation +1.0(-3.0→-2.0)-52.7• Decrease in profit of subsidiary companies• Increase assets disposal etc.

37118.6 Billion Yen Decrease in JFE Steelʼs Segment Profit(FY2019.2H (Actual) vs. FY2020.1H (Forecast))

JFE Steel（billion yen）

JFE Steel

FY20192H (Actual)(26.4)

Segment Profit
1. Cost2. Volumeand Mix
3. Sales and
Raw materials
4. Inventory
valuation
5. Others

FY20201H (Forecast)

ChangeFY2019.2H→FY2020.1H(145.0)(118.6)+40.0• Fixed cost reduction mainly sourced from repairing cost and laborcost• Capital investment effect• Suppress cost increase due to reduced production etc.

-72.0

• Production reduction amid the decline in demand（Crude steel (Standalone) 12.94⇒10.00Mt -2.94Mt）• Mix will be deteriorated.

-10.0（-1,100 yen/t-shipment）
Metal spread will shrink amid the decline in market priceoverseas.

-37.0• Inventory valuation -39.0 (-16.0→-55.0)• Carry over of raw materials +6.0 （-12.0→-6.0)• Foreign exchange valuation -4.0(+2.0→-2.0)-39.6• Decrease in profit of subsidiary companies
3837.7 Billion Yen Decrease in JFE Steelʼs Segment Profit(FY2019.4Q vs. FY2020.1Q)

JFE Steel（billion yen）
JFE SteelSegment
Profit
1. Cost2. Volumeand Mix

FY2019
1Q

2Q

14.5

3.2

+9.0

3Q

4Q

(6.3) (20.1)

ChangeFull YearFY20201Q

FY2019.4Q→FY2020.1Q(8.7)(57.8)(37.7)• Fixed cost reduction mainly sourced from repairing costand labor cost
• Capital investment effect etc.

-39.0

• Production reduction amid the decline in demand（Crude steel (Standalone) 6.70⇒4.79Mt -1.91Mt）+1.0（+200yen/t-shipment）
Metal spread increased due to decline in coking coal price4. Inventory
valuation-12.0• Inventory valuation -16.0 (-5.0→-21.0)• Carry over of raw materials +6.0 （-6.0→±0.0)• Foreign exchange valuation -2.0(±0.0→-2.0)

5. Others+3.3• Decrease in profit of subsidiary companies• Asset disposal concentrated in 4Q of FY19 etc.

3. Sales and
Raw materials

39

Combined Inventories of HR,
CR and Coated Steel Sheet

Domestic
Market Environment
5,000

JFE Steel(000t)(Month)Maker

Whole Saler

Coil Center

Inventory Ratio (right axis)

5

4,500
4

4,000
3,500

3

3,000
2,500

2

2,000

2016

2017

2018

2019

1

May

0
Mar

Jan

Nov

1.66UP

Sep

2.60
Jul

0.19UP

May

4.07

Mar

4.26

Jan

-271
(-5.9%)

Nov

4,573

Sep

-160
（-3.6%)

Jul

4,462

May

4,302

Mar

Mar

Jan

Nov

Sep

Jul

May

Mar

Jan

（month）

From
previous year
[Change]Jan

Inventory ratio

0

Volume[Jun, 2019]

Nov

500

From
previous month[Change]

Sep

Combined inventories
of HR, CR, & Coatedsteel sheet

Year-on-year

Volume[May, 2020]

Jul

Unit︓000ｔ

1,000Month-over-monthThis monthJun, 2020
Volume

May

1,500

2020

40

JFE SteelInventories of Plate (Plate Shear)and Wide Flange Shapes

Domestic
Market Environment(000t）Inventories of Plate (Plate Shear) (Month） (000t）Inventories of Wide Flange Shapes(Month）
500

3.5

3.5

250

Inventories

Inventories
Inventory Ratio (right axis)
450

3.0

400

2.5

350

150

2.5

100

2.0

1.5

2017

2019

166

178

2017

Year-on-year

Fromprevious month[Change]

Volume[Jun, 2019]

-12

From
previous year
[Change]-54220(-6.7%)

1.5(-24.5%)

2018

2019

May

Mar

Jan

Sep

Nov

Jul

May

Mar

Jan

Nov

Sep

Jul

May

Mar

1.0
Jan

Sep

Jul

May

Jan

May

Jan

Mar

2020

0

Volume[May, 2020]

Inventories ofwide flange
shapesMar(-15.1%)Nov

Sep

Unit︓000ｔ

Month-over-monthThis monthJun, 2020
Volume

Nov

1.0

0.5
Jul

Mar

(-2.6%)

Fromprevious year
[Change]

50

-66

437
May

Sep

Volume[Jun, 2019]

-10

Nov

Jul

Jan

May

2018

Year-on-year

Frompreviousmonth[Change]

Volume[May, 2020]

381
Mar

371
Sep

Jul

May

Mar

Inventoriesof plateshear

Month-over-month

Jan

This monthJun, 2020
VolumeNov

Unit︓000ｔ

Jan

200

3.0

2.0

300

250

200

2020

41

Domestic
Market Environment
600(000t)JFE Steel

Trend of Import Steel (Ordinary Steel)

S.Korea

China

TaiwanOthers

500

400

300

200

Month-over-month
From
This month
Unit︓000t
Volumeprevious
Jun, 2020[May, 2020]
month[Change]▲17
Import steel
327
344(▲4.9%)

100

Year-on-year
From
Volumeprevious[Jun, 2019]
year[Change]▲62389（▲15.9%)

Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun

0

2016

2017

2018

2019

2020

42

Overseas
Market Environment

JFE Steel

Crude Steel & Im/Export, China

Export (Left axis)

（Mｔ）
12

Import (Left axis)

（Mｔ）
100

90
10

80
70

8

60
6

4

Jun 2020

50

Jan-Jun, 2020

Mt

Y on Y
ChangeMt

Y on Y
Change40

Crude Steel

91.6

+4.6%

504.0

＋2.5%

30

Export3.7▲30.3%

28.7▲16.6%

20

2

10
0

0
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May
2016

2017

2018

2019

2020

Crude steel in Jan. and Feb.: WSAʼs estimation

43

Overseas
Market Environment

Inventories in China by Product（千ｔ）

35,000100%

Bar

Rod & Wire

Plate

HR

CR

Change by previous year (%)

30,00050%

25,0000%

20,000-50%

15,000-100%

10,000

-150%

2016

Year-on-Year

2017

2018

-200%

2019

May

Mar

Jan

Nov

Sep

Jul

-250%
May

Jan

Nov

Sep

Jul

May

+2,867（+25.0%)Mar

11,460Jan-1,165(-7.5%)

Nov

15,492

Sep

From previous
year[Change]Jul

Volume[Jun, 2019]

May

Volume[May, 2020]

From previous
month[Change]

Mar

Month-over-month

Mar

Jan

Nov

14,327

Sep

Jul

May

Inventories in
China

Mar

0

Unit︓000ｔ

Jan

5,000

This monthJun, 2020
Volume2020

44

Overseas
Market Environment

Metal Spread Trend(Chinese Spot Basis)

JFE Steel

（$/t)

（$/t)
700

700

600

600

500

HRC

500

400

400

300

300

200

200

100

Metal Spread

0

100

0

Metal Spread ＝ HRC Price － Raw Materials Cost
*HRC Price︓ Chinese Spot basis
Raw Materials Cost︓ Calculated from market price of Iron Ore and Hard Coking Coal

45

Domestic
Market Environment

JFE SteelPrice Trend of Import Steel(000 yen/ton)
70

65

60

55

50

45

2015

2016

2017

2018

Data: The Japan Iron and Steel Federation Import Steel from S. Korea

2019

May

Mar

Jan

Nov

Sep

Jul

May

Mar

Jan

Nov

Sep

Jul

May

Mar

Jan

Nov

Sep

Jul

May

Mar

Jan

Nov

Sep

Jul

May

Mar

Jan

Nov

Sep

Jul

May

Mar

Jan

40
2020
46

JFE SteelRaw Materials Price

Raw Materials

Iron ore (iron ore fines from Australia)($/DMT)$130($/WMT)$400

Spot FOB
Term-contract FOB$120

Coking Coal （Hard Coking Coal from Australia)

Spot FOB
Term-contract FOB

$350

$110
$300

$100
$90

$250

$80
$200

$70
$60

$150

$50
$100

Hard Coaking Coal Term-contract FOB since Apr-Jun quarter 2017
（Apr-Jun ︓Mar-May spot FOB average, Jul-Sep︓Jun-Aug spot FOB average,
Oct-Dec︓Sep-Nov spot FOB average, Jan-Mar︓Dec-Feb spot FOB average)

20/7

20/4

20/1

19/10

19/7

19/4

19/1

18/10

18/7

18/4

18/1

17/10

17/7

$50
17/4

20/7

20/4

20/1

19/10

19/7

19/4

19/1

18/10

18/7

18/4

18/1

17/10

17/7

17/4

17/1

$30

17/1

$40

47

160
3,300

140
2,800

120
2,300

100
1,800

80
1,300

60
800

(U$/t) FeMn
(U$/lb)

1,600
14.0

1,400
12.0

1,200
10.0

1,000
8.0

800
6.0

600
4.0

400
2.0

2016.1
2016.72017.12017.72018.1
2018.72019.1
2019.72020.12020.72016.1
2016.72017.12017.72018.1
2018.72019.1
2019.72020.12020.7Mo

2015.7(U$/t)

2015.72015.12020.72020.1

2019.72019.1

2018.72018.12017.72017.1

2016.7FeCr

2015.12020.7

3,800

2016.1

Raw Materials

2020.1

2019.72019.1

2018.72018.12017.72017.1

2016.72016.1

2015.71802015.7(￠/lb)

2015.1

2015.1JFE Steel

Trend of Metalʼs Market Price
Zn

48

JFE SteelRaw Materials

Trend of Sub Materialʼs Market PriceScrap(yen/t)45,000Spot Bulker($/B)
40,00040,00035,00035,00030,00030,00025,00025,00020,00020,00015,00015,00010,00010,000

5,000

5,000

LNG

(yen/t)Oil

90,00070,000110

60,00090

50,000700

WTI crude oil（Left axis）

130

80,0002020.7(bunker oil: $/t)

(crude oil: $/bbl)

100,000

2020.1

2019.72019.1

2018.72018.12017.72017.1

2016.72016.1

2015.702015.12020.72020.1

2019.72019.1

2018.72018.12017.72017.1

2016.72016.1

2015.72015.10

Bunker(Japan VLSFO (Right axis)

600

Bunker(Japan 380CST) (Right axis)

500
400

2020.72020.12020.1

2019.72019.1

2018.72018.12017.72017.1

2016.72016.1

2015.72015.1

2019.702019.110

02018.7100
2018.130

10,0002017.7200

2017.150

20,0002016.730,0002016.1300

2015.770

2015.140,00049

Orders by Business Field

JFE Engineering（billion yen）

Business Field

FY2019ActualFY2020
Forecast

ChangeMain Orders received in FY2020 1Q

 Construction of waste treatment plant [Fukui] Improvement works of waste treatment plant [Hiroshima]

Environment

187.1

260.0

72.9

Energy

109.8

120.0

10.2

 Construction of BOG treatment related facility [Sakai,
Osaka]

Socialinfrastructure
etc.

116.1

120.0

3.9

 Reconstruction works of domestic bridges [No.1 Shimizu
grade Yasaka viaduct, Shizuoka]

Total

413.0

500.0

8.7

 Improvement works of Tsubame-Yahiko water purification
plant [Niigata]50

JFE-HD

Links to the reports published during FY2019
ReportURL

JFE Group REPORT
2019

https://www.jfeholdings.co.jp/en/investor/library/gro
up-report/index.html

JFE Group CSR
REPORT 2019https://www.jfeholdings.co.jp/en/csr/pdf/csr2019e.p
df

JFE Group CSR
REPORT 2019
Environmental Data
Book

https://www.jfeholdings.co.jp/en/csr/pdf/environment2019e.pdf

IT REPORT 2019https://www.jfeholdings.co.jp/en/investor/library/itre
port/index.html

QR code51

Copyright © 2020 JFE Holdings, Inc. All Rights Reserved52