1

2

3

4

5

6

Segment profit for FY2019 was -8.7 billion yen, decreased from the previous forecast
0 billion yen.
◆Cost︓-3.0 billion yen
Cost increased due to the raw material mix (-2.0 billion yen) and increased repairingcosts by having furnace repairing done ahead of schedule (-1.0 billion yen).
◆Sales Volume and Mix: -6.0 billion yen
Production and sales volume decreased amid the spread of COVID-19 for thefollowing reasons.
• Direct impact from customers who suspended their operation from March 2020.
• Indirect impacts amid economic slowdown, such as decreasing the level ofproduction activity, delay of construction works, inventory adjustment, anddropping steel market price・ Crude steel (Standalone) 27.00 Mt → 26.73 Mt （-0.27 Mt）
・ Shipment (Standalone) 23.80 Mt → 23.47 Mt （-0.33 Mt）◆Sales Prices and Raw Materials (Metal Spread)︓+5.0 billion yen（+200 yen/t-shipment）

Metal spread improved through drop in raw material price and increased in sales
price for exports.
◆Inventory valuation etc.: +1.0 billion yen◆Others︓-5.7 billion yen• Foreign exchange valuation in overseas subsidiaries• Increase in loss of disposal and sales of assets

etc.

8Segment profit for FY2019 was -8.7 billion yen, decreased by 170.0 billion yen year onyear.
◆Cost: +42.0 billion yen
Cost reduction: +20.0 billion yen: Cost effects of investment in spite of the negative
impacts from reduction of production, typhoons and raw material mix.
One-off effect in FY2018: +22.0 billion yen◆Sales Volume and Mix︓-6.0 billion yen
While sales volume increased due to one-off effect in FY2018, product mix deterioratedboth overseas and domestic.
・ Crude steel (Standalone) 26.31 Mt →26.73 Mt（＋0.41 Mt）
・ Shipment (Standalone) 23.78 Mt→ 23.47 Mt（-0.31 Mt）◆Steel Prices and Raw materials (Metal Spread)︓-81.0 billion yen（-3,500 yen/t-shipment）
Metal spread shrank with decreased steel prices in overseas market and increased pricesof iron ore.
◆Inventory valuation etc.︓-67.0 billion yen◆Sub materials cost etc. ︓-15.0 billion yen
・Sub materials: -5.0 billion yen ・Logistics: -4.0 billion yen ・outsourcing: -5.0 billion yen◆Others: -43.0 billion yen• Decrease in profit of subsidiary companies• Increase in depreciation and loss of asset disposal cost with strengthening
manufacturing capabilities

9

10

11

12

13

18

Cost reduction of approx. 100.0 billion yen is almost equally divided into fixed
cost reduction and variable cost reduction.
• Fixed cost reduction︓mainly repairing cost reduction and emergency laborcost-reduction measures• Variable cost reduction︓full-year effects coming from large-scale CAPEX suchas No.3 Coke Oven (A) and No,3 sintering machine in Fukuyama district, bothof which has started operation in FY2019, and execution of extra measures.

23

24

25

26

31

32

33

34

35

Segment profit for 4Q of FY2019 was -20.1 billion yen, decreased by 13.8 billion yen
from 3Q of FY2019.
◆Cost︓+7.0 billion yen
Cost reduction: Cost effects of investments in West Japan works, one-off effect ofFY2018
Cost increase: Raw material mix (-2.0 billion yen) , rescheduling ahead of repairing(-1.0 billion yen) during４Q◆Sales and Raw material︓+4.0 billion yen
Crude steel production and shipment recovered in 4Q as a result of the rebound ofsteel price in overseas market.
・ Crude steel (Standalone) 6.24 Mt → 6.70 Mt（+0.46 Mt）
・ Shipment (Standalone) 5.59 Mt → 6.09 Mt（+0.51 Mt）◆Sales Prices and Raw materials (Metal spread)︓+6.0 billion yen（+1,000 yen/t-shipment）
Metal spread improved due to drop in iron ore price and recovery of steel price inoverseas market.
◆Inventory valuation etc. ︓+4.0 billion yen◆Others : -34.8 billion yen• Increase in loss on disposal of assets• Decrease in profit of subsidiary companiesetc.

39

Segment profit for 2H of FY2019 was -26.4 billion yen, decreased by 44.1 billion
yen from 1H of FY2019.
◆Cost︓+6.0 billion yen
Cost reduction: Cost effects of investments in West Japan works
Cost increase: Impacts from typhoons and rapid decrease in production amount(-5.0 billion yen), raw material mix (-2.0 billion yen) , rescheduling ahead ofrepairing (-1.0 billion yen)
◆Sales Volume and Mix: -16.0 billion yen
Crude steel production decreased with the fall of both domestic and overseas
steel demand and sluggish steel price in overseas market. Additionally, thespread of COVID-19 decreased domestic and overseas demand.
・ Crude steel (Standalone) 13.79 Mt → 12.94 Mt （-0.85 Mt）
・ Shipment (Standalone) 11.80 Mt → 11.68 Mt （-0.12 Mt）◆Sales Prices and Raw materials (Metal spread): +1.0 billion yen（+100 yen/t-shipment）
Metal spread improved due to significant drop of coal price although the steel
price in overseas market fell and iron ore price stayed high.
◆Inventory valuation etc. : -22.0 billion yen◆Others; -13.1 billion yen• Increase in depreciation cost with strengthening manufacturing capabilities• Increase in loss on disposal of assets

etc.

4041 Combined inventories of HR, CR and Coated Steel as of the end of February2020 were 4,484K tons.
From January 2020: 40K tons increase
From February 2019: 76K tons increase[Inventories of Plate (Plate Shear)
Inventories of plate shear as of the end of February 2020 was 418K tons.
From January 2020 : 5K tons decrease
From February 2019: 20K tons increase
Since the end of August 2019, the amount of inventory has decreasedslightly. Although the shipment activity level for the construction and industry
machinery and building industry has kept sluggish, plate shear companies
have reduced buying-in level, which decreased the amount of inventories.
[Inventories of Wide Flange Shapes]
Inventories of wide flange shapes as of the end of March 2020 was 194Ktons.
From February 2020 : 1K tons decrease
From March 2019
: 25K tons decrease
The amount of inventory has decreased for 2 months sequentially. The
reduced buying-in level made the inventory level in March the same as that in
the previous month. It is necessary to carefully monitor the demand trends
because of the market uncertainty coming from the spread of COVID-19 andthe postponement of Tokyo Olympics.

44

The volume of imported ordinary steel in March 2020 was 398K tons.
From February 2020: 44K tons increase
From March 2019: 65K tons decrease
The deteriorated demand for steel in each country due to the spread of COVID19 has decreased the imported steel prices, which widened the deference
between the domestic steel price and imported steel price in some areas. It
should be monitored more cautiously.

45

Crude steel production in March 2020 in China was 79.0M tons (2.55M tons on
daily basis, which was lower than the average of the previous two months, 2.58Mtons.). While the figure shows the decrease trends compared to the previousmonths, the reduction level stays small.
From February 2020: 5.9M tons increase
From March 2019: 1.4M tons decrease

Export of steel from China in March 2020 was 6.5M tons.
From February 2020: 2.6M tons increase
From March 2019: 0.2M tons decrease
Export of steel from China in March increased though the trends until Februaryhad kept showing decrease year-on-year. It should be monitored carefully
including the domestic demand trends that have declined due to the impact ofCOVID-19.

47

Inventories in China as of the end of March 2020 was 24.37M tons.
From February 2020: 2.5% increase
From March 2019: 52.1% increase
In addition to the seasonal change during and after Chinese new year,
inventories both in market and steel plants increased until the end of Marchbecause the steel demand and supply chains had stagnated due to the spread ofCOVID-19.

48

Metal spread, calculated based on Chinese spot market price of HRC andinternational spot market prices of iron ore and hard coking coal, dropped
below $150/t in the first half of FY2019 due to the decrease of HRC priceand the rise of the iron ore price. Afterwards, in the second half of FY2019,
metal spread rebounded due to decrease of the raw material price. AfterNovember 2019, the steel market price has shown the signs of recovery, andthe metal spread remained around $200/t.
From the mid January in 2020, the Chinese economic activity stopped due tothe spread of COVID-19, which made the HR price dropped. Therefore, themetal spread also dropped to around $150/t. Additionally, coking coal prices
decreased as steel industry declined its production. Although the metal
spread slightly improved at the end of March 2020, the steel market price isstill showing downward trend.

49

51

52

54

55