JFE Holdings, Inc.
Q1 Financial Results Briefing for the Fiscal Year Ending March 2023
August 3, 2022

Presentation
Moderator: Ladies and gentlemen, we would now like to begin the financial results briefing of JFE Holdings,
Inc.
Today’s speakers are Mr. Masashi Terahata, Representative Director and Executive Vice President, and Mr.
Toshihiro Tanaka, Senior Vice President.
The duration of the briefing will be 60 minutes, consisting of a 30-minute presentation and a 30-minute Q&A
session. Questions and answers will be received in a lump after the presentation.
First, Mr. Terahata, Representative Director and Executive Vice President, will give an overview of the financial
results and business outlook announced today.

Terahata: I am Terahata. Thank you very much for joining us today. Let me briefly explain the key points.
First of all, Q1 financial results showed an increase of JPY116.6 billion from the same period of the previous
year due to improved sales prices in the steel business and inventory valuation gains resulting from the impactof the sharp rise in coking coal prices.
For the full year of FY2022, we are projecting a business profit of JPY235 billion, a decrease of JPY181.4 billion
from the previous year.

1The current business environment has become very unfavorable due to the prolonged situation in Ukraine,
softening of the overseas steel market, soaring commodity prices, and the sharp depreciation of the yen
during this period.
On the other hand, we expect a gradual recovery in the supply and demand of steel products in the future.
However, it is also true that there are some points that require close attention, such as trends in crude steel
production and demand in China, and the future impact of restrictions on the supply of parts for automobile
production.
Although the business environment is quite challenging, the steel business is implementing various measures
to improve profitability, such as improving domestic sales prices.
In the engineering and trading businesses, earnings have remained stable, despite the impact of soaring prices.
As for dividends, the Board of Directors has resolved to pay an interim dividend of JPY40. The year-end
dividend is undecided at this time, as the Company will consider this issue while also monitoring future
performance trends.
At this investors meeting, we would like to make some supplementary explanations of carbon neutrality
initiatives, a roadmap and process structure for carbon neutrality in 2050.
We are planning to hold another meeting on September 1 to explain the carbon neutral strategy from JFE
Steel.
That is all for my explanation.
Now, I would like to hand over to Senior Vice President Tanaka.

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Tanaka: My name is Tanaka. I will now give a detailed explanation of our financial results and outlook.
The table of contents is as shown.

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First, I would like to present our financial results for Q1 and the outlook for the full year.
As shown in the table, business profit for Q1 was JPY116.6 billion.
As for the annual forecast, revenue is expected to exceed JPY5 trillion, reaching JPY5.37 trillion. Revenue is
expected to increase by JPY1 trillion compared to last year.
On the other hand, business profit for the year is expected to be JPY235 billion, a JPY181.4 billion decrease
from the previous year.
For the first half of the year, we forecast business profit of JPY165 billion. Net profit for the first half of theyear is expected to be JPY100 billion, and for the full year JPY140 billion.

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Next are the figures by segment.
From the left side, you see figures for Q1, H1, and full year. The upper row shows the breakdown of revenue.
The total segment profit is expected to be JPY220 billion for the year.
By business segment, profit of the steel business is expected to be JPY150 billion, the engineering business to
be JPY20 billion, and the trading business to be JPY55 billion.
In Q1, the engineering business has posted a loss of JPY1.2 billion, which is for the first time in a long time. In
Q1 of this fiscal year, we were affected by the rising cost of materials and equipment, which had a negative
impact on the profit and loss of construction projects, as well as by the difference in the composition of
construction projects. As I mentioned earlier, however, we plan to secure a profit of JPY20 billion for the full
year.

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I would like to give you an overview of the business environment and our perception of the earnings situation
in FY2022, especially in the first half of the year.
Compared to last year, when the steel market was extremely favorable, the business environment for thecurrent fiscal year has deteriorated significantly.
As mentioned at the beginning of this report, high production in China under China's zero-COVID-19 policy
continued, resulting in high inventories and softening overseas market conditions. In addition, commodity
prices rose further due to the situation in Ukraine, and the yen depreciated sharply.
In terms of foreign exchange rates, the yen has depreciated by about JPY20 compared to last year, and interms of overseas market conditions, the metal spread has fallen significantly as shown with the red line in
the graph. In addition, the import price index at the bottom of the graph shows that prices have risen
significantly.
Under such circumstances, we have been working on raising steel prices as a major theme since last year, andwe expect to make considerable progress in H1 of this fiscal year as well.
As for the H1 situation, please look at the figure on the right. The bar graph standing on the left side indicatesthe profit/loss for H2 of FY2021. Consolidated business profit was JPY217.5 billion, of which JPY104 billion isthe amount of inventory valuation difference in the steel business, etc. Excluding this, business profit for theengineering business was JPY52.3 billion and for the trading business was JPY61.2 billion. The increase in raw
materials and other prices, as well as the cost increase due to the depreciation of the yen, had a large negative
impact of JPY156 billion on business profit.

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In contrast, the positive impact on earnings, mainly through sales price improvements, amounted to JPY141.8
billion, which has almost offset the impact of the cost increase, albeit not completely.
The profit and loss of group companies and the profit and loss of engineering and trading companies areadded to this. In particular, the negative effect from the engineering business in the first half is unavoidable
because of the seasonal nature of the business. In addition, the very favorable results of overseas groupcompanies in the previous year had an adverse impact on the period under review.

Next is the supply and demand trend in China, which is the most important point.
In H1 of this year, crude steel production continued to increase due to expectations of economic stimulus
measures by the Chinese government.
The lower left-hand side shows crude steel production in China. The average for the January to June period of2022 was 88 million tons, which is higher than last year's annual average of 86 million tons. However, thezero-COVID-19 policy and other factors have resulted in sluggish demand, deteriorating steel market
conditions in China, and consequently an increase in exports.
As you can see from the steel market in China on the right, the price of hot-rolled coils has fallen significantlyin H1 of this fiscal year.
Looking ahead, the Chinese government continues its policy of curbing crude steel production. Therefore, as
shown in the figure on the left, the monthly average for the July to December period is expected to be around84 million tons, assuming that crude steel production does not exceed last year's level. In addition, the market

7for steel products is expected to recover as a result of the government's economic stimulus measures tostimulate domestic demand.

Next, I would like to explain a little more about our efforts to raise sales prices in H1 of this fiscal year.
Since the announcement of our mid-term plan last year, we have been strongly promoting the improvementof sales prices to realize our goal of shifting from quantity to quality.
As I explained earlier, there was a large increase in costs in H1 of this fiscal year due to soaring prices of main
raw materials and the impact of the weak yen. At this point in time, we expect to be able to pass on those
impacts to the prices without delay.
Furthermore, as we have been saying since last year, the cost increase of other raw materials is also a major
issue, but we are also promoting activities to pass on this. Although we expect to pass on a certain amount of
the cost to our customers, there are still some items left over from the first half of the year, and we recognizethat this will be an ongoing issue.
The bar graph in the middle below shows the image of sales price increase of the domestic and export
products, excluding exports of so-called commodity products. The bar graph colored red shows the material
costs increases, divided into key raw materials and other raw materials. As for other materials, the graphshows not only the current period but also the cumulative increase. On the other hand, the blue graph shows
the sales price increase, and this will grow by September 2022. The profit and loss plan for H1 of the fiscal
year is based on this assumption.

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We will continue to promote specific efforts to improve sales prices, as mentioned in our mid-term plan, whichis also written on the right, in order to ultimately achieve a profit of JPY10,000 per ton of steel products.

Next, I will talk about dividends.
As mentioned at the beginning of this document, the Board of Directors has decided to pay an interim dividendof JPY40 per share for the current fiscal year.
The year-end dividend has not yet been decided, as it will be considered in light of future businessperformance trends.

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I will now explain the specifics by operating company.
First, JFE Steel. The page shows steel's Q1 results and the main factors behind the forecast for the fiscal year.
As I mentioned earlier, we are forecasting segment profit of JPY150 billion for the full year, and the breakdown
for the April to June period is JPY93 billion, and JPY120 billion for the first half of the year.
The non-consolidated crude steel production volume in Q1, April to June, was 6.43 million tons. The profit
forecast is based on the assumption that the first half of the year will be just under 13 million tons, and thefull year will be just under 26 million tons.
The second line from the bottom shows the average sales price of steel products, which was JPY126,700 in
Q1. Although there is no indication on the left, it was JPY116,700 in Q4 of FY2021. So, it has increased exactly
by JPY10,000.
The last line shows the exchange rate. Last year, the average exchange rate for the year was JPY112, but thistime, the exchange rate will be JPY135 from August onward. Based on this, the average rate for the year will
be JPY133, a drop of JPY21 from the previous year.

10Based on this assumption, I would like to start with a breakdown of the change in profit for the April to June
period compared to the same period of last year.
Last year's April to June quarter, segment profit was JPY69.7 billion, and in this quarter, it was JPY93 billion,so the increase is JPY23.3 billion. As you can see, the breakdown is as follows: JPY5 billion in cost, JPY1 billion
in volume, and zero in sales price and raw materials. In fact, sales prices have increased significantly for both
domesticand export markets.
As for the raw material costs, iron ore price was lower than last year, which is also a positive factor, but thiswas offset by the large increase in coking coal prices.
In addition, we have made a change to include metals and scrap metals in this sales and raw materials section,
starting from the current fiscal year. In the past, metals and scrap were presented in the others section, while
the sales and raw materials section focused only on changes in the cost of iron ore and coking coal.
The spread came out even, including an increase in metals, but the JPY72 billion increase in inventory
valuation difference was a major contributor to the YoY increase.
The others category includes what we call the foreign exchange effects on trade, which corresponds to thecost increase due to the weaker yen.

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Now, I would like to discuss our perception of the business environment, which is the premise for our annual
forecast.
First, domestic.
With regard to the automotive sector, the supply of parts is still constrained, and the production cutback is
prolonged.
However, the COVID-19 infection in China is gradually calming down, and the supply chain activity level is
expected to gradually recover toward the latter half of the second half of 2022, and the supply-demandbalance for steel products is expected to start tightening.
However, we have to keep a close watch on the postponement of demand in various fields due to the effects
of soaring prices.
The left-hand side shows the domestic steel consumption forecast. The consumption in Q1, second from theright, shows a slight decline, followed by a recovery from Q2.
As I have already mentioned, the automobile industry is currently experiencing a prolonged production
cutback, but we expect this to gradually dissipate.
As for shipbuilding, we believe that demand for steel products will remain strong, but we expect it to be only
a gradual recovery.
As for building, the overall recovery will be moderate. As for civil engineering, the public sector is expected tomaintain a high level, but overall, we expect a slight decrease.

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Next is overseas.
In general, we believe that the recovery trend will continue overseas, but the current demand for steel
products is weakening. However, we believe that the market conditions will improve along with a certain
recovery in demand for steel products as the rainy season in Asia starts to end or as a result of the economic
stimulus measures in China that we have been talking about.
On the left side, we have listed the number of automobiles sold in each country, and it is clear that there is atrend of a slight decline in this most recent Q1.
Also, in the lower right-hand corner, we have included steel export trends for each country. As for China, as I
have mentioned, exports have increased recently, but we expect exports to fall as domestic demand recovers
toward the second half of the year. In India, exports to Southeast Asia have increased due to the recent lowdemand period caused by the rainy season, but once the rainy season is over, domestic demand will returnand the situation will be slightly settled.
In such a situation, what must be watched closely is the movement of Russian materials. Materials have been
exported at quite low prices to Turkey and the Middle East. It is necessary to keep a close eye on this area.

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Trend of raw materials.
Iron ore prices have been weak due to factors including slightly weak demand, and coking coal prices soared
to USD526 in the April to June period but have been on a downward trend since the latest period due to thedeteriorating overseas steel market.
As for the future, we expect raw material market prices to rise from current prices in the second half of theyear as the supply-demand balance for steel products tightens. Although both iron ore and coking coal prices
have fallen sharply, we are assuming that raw material prices will rise in line with a recovery in steel demand
and market conditions in the second half of the year. We do not expect the price of raw materials to rise
sharply, but to rise in line with the steel market conditions.
On the other hand, the prices of metals and scraps are currently on a downward trend but are expected toremain in a high price range.

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With that in mind, here is a comparison of the segment profit forecast of JPY150 billion with the previous year.
Since the amount was JPY323.7 billion last fiscal year, this means a decrease of JPY173.7 billion.
As I mentioned in May, we are planning to post costs of JPY10 billion. The volume will be almost the samelevel as last year.
The metal spreads will have a positive impact of JPY70 billion. Iron ore is expected to decrease from theprevious year, but coking coal is expected to rise significantly, and metals are also expected to rise.
Under such circumstances, we have incorporated improvements in selling prices. Especially when compared
YoY, the improvement in domestic selling prices will make a significant contribution.
On the other hand, we have a new item for the impact of foreign exchange fluctuations, called foreignexchange effects on trade, which we expect will have an impact of about JPY100 billion. Including this cost
increase, even if the metal spread is improved by JPY70 billion, there will still be a portion of JPY30 billion thatcannot be offset this year.
Inventory valuation is also a negative factor. The absolute value is positive because of the sharp rise in pricesof raw materials and other commodities, but there was a very large valuation gain last year, so compared with
that, it will decline.
In addition, we have also included the profit and loss of group companies in the others section. The profit ofoverseas group companies such as JSW and CSI, which performed very well last year, is expected to decrease
this year.

15Here is another summary of the impact of the yen's depreciation on the steel business.
As described in the upper part, the balance of foreign currency payments has fallen into a large excess of
payments due to soaring raw material market prices and sluggish overseas steel market conditions.
As for the foreign exchange effects on trade, JPY1 depreciation will worsen profit by just under JPY5 billion,
which means the excess payment of just under USD5 billion. Of course, this is being reflected in product prices
through domestic sales price improvement activities.
We have given some structural points below. For example, in the past, a weaker yen had the effect ofincreasing sales volume by improving the competitiveness of our customers and our company's exports, but
the current situation is that this has not been translated into an increase in sales volume due to the supply
constraints of parts in the automotive sector and the sluggish overseas market for our direct exports.
However, due to the current sharp rise in the market price of raw materials, the ratio of imported raw
materials to total production costs has risen to approximately 70%. As a result, the foreign currency balance
has recently been significantly in excess of payments.
As you can see, in 2015 and 2016, receipts and payments were almost even, so profit and loss were basicallyneutral even if the exchange rate fluctuated. In the current situation, however, the positive impact ofvaluation, which is the impact of converting our foreign currency-denominated assets and the profits andlosses of overseas group companies into yen basis, was surpassed by the negative effects on trade.

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The trend of group companies in the steel business.
As mentioned at the top, the overall business environment is difficult, but as a result of the efforts of eachcompany to increase earnings, we expect the earnings of group companies for the current fiscal year to be
the second highest in our history, although they will be slightly lower than last year, when they were verystrong.
In terms of the profit/loss image in the graph on the right above, it will be a bit lower than in FY2021, but stillquite high in FY2022. Divided into domestic and overseas, we actually expect profit of domestic companies tobe even better this year than last year, when they did well. One of the major factors behind this is that rawmaterial and resource-related subsidiaries have considerably increased their earnings against the backdropof rising raw material prices.
Overseas, we expect a decline in profits, especially for JSW and CSI, due to falling market conditions, but thelevel of profits is still expected to be high.

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Next is JFE Engineering.
In engineering, as I mentioned at the beginning of this presentation, we are projecting segment profit of JPY20
billion. The domestic environment and energy-related and infrastructure sectors continue to be strong.
However, the engineering business has also been affected by the soaring cost of materials and equipment,
and segment profit is expected to decrease by JPY6 billion YoY.
In terms of orders and sales, orders that have been strong since last year have also been accumulating. We
expect orders to be JPY550 billion and revenue JPY520 billion. If we can achieve these figures, we expect
orders and sales to reach record highs, but earnings will be affected by soaring prices.

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Next, JFE Shoji.
We expect that the profit of Shoji, which is involved in the trading business, especially in the first half of theyear, will be at a very high level of JPY35 billion, and JPY55 billion for the full year, almost the same level aslast year.
As for the price range, absolute values remain very high. Sales have been strong and are expected to continue
to generate a high level of profit. In North America, especially in the first half of the year, sales have beenstrong since last year. Based on those, segment profit is expected to reach the same level as last year.
That is all for the explanation of our business performance.

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As mentioned at the beginning, I would like to explain several topics about our efforts toward carbon
neutrality in the steel business.
For more information, JFE Steel will hold a separate briefing on September 1.

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The first page outlines the process conversion toward 2050.
This is basically the same figure as the roadmap we presented in May. 18% reduction of CO2 emissions by2024, 30% or more by 2030, and carbon neutrality by 2050, as I mentioned in the previous presentation.
We will introduce electric furnaces and expand the use of reduced iron until 2030, while developing ultrainnovative technologies. From 2030 to 2050, we will establish and implement these ultra-innovativetechnologies and, depending on external conditions, introduce the optimal process. Broadly speaking, there
are such phases.
This time, we have added the second item, the direct reduction ironmaking method. This is hydrogenironmaking, which GI Fund is also involved in. By using high-grade HBI in parallel with this as an iron source inelectric furnaces or in existing blast furnaces, we will contribute to the reduction of CO2 emissions, from anearlier stage as far as possible.
As written in the section of the direct reduction ironmaking method, we are considering the use of carbon
recycling technology, the technology to be used for the carbon recycling blast furnace, in the direct reduction21

process.

This

is

what

we

added

from

the

previous

roadmapannounced

in

May.

The next page is our vision of carbon neutrality.
In the middle, it shows the breakdown of CO2 reduction by measure toward carbon neutrality in 2050.
Conceptually, it starts with the reduction of energy consumption, which is written in the upper right corner,
then the increased use of scrap, and then the introduction of large, high-efficiency electric furnaces, and soon. These items correspond to more than 30% reduction by 2030.
In addition, we will utilize direct reduction iron, and are going to develop our own carbon-recycling blast
furnace as our proprietary technology. As I mentioned earlier, we will expand the application of this carbon
recycling technology not only to the carbon-recycling blast furnace but also to direct reduction, and we will
work to expand the scope of wise use.
Including the use of CCUs and CCS, this is an image of 100% carbon neutrality, or CO2 reduction.

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One
more thing, in relation to the carbon recycling blast furnace, I will touch on the construction of coke ovens.
The left side shows the outline of the carbon recycling blast furnace, which I have mentioned in the past. We
will use coke of 0.3 tons. This is basically the same whether the furnace is an ordinary blast furnace or acarbon-recycle blast furnace.
One of the changes is that the 0.2 tons of pulverized coal that is found on the right side of the blast furnace
will be replaced by recycled carbon. Therefore, a certain amount of coke will still be required even after the
carbon-recycling blast furnace is used. Please see the construction of new coke ovens on the right. The newhigh-efficiency coke oven will reduce CO2 emissions and meet the required amount of coke after the
introduction of the carbon recycle blast furnace.
The new furnace will be built for a stamp-charge method instead of the conventional top-charge method. This
will reduce CO2 emissions and improve production efficiency. We have decided to continue this project in the
Fukuyama district as 6A and 6B, with 6A scheduled for 2025.
As shown in the lower right-hand corner, the amount of reducer required for blast furnaces is currently 60
coke and 40 pulverized coal. After the introduction of carbon-recycle blast furnaces, a little less than 40 coke
will be required.
Coke production capacity is shown to the right of it. The production capacity in 2050 with the coke we have
now is roughly equivalent to the amount shown in purple, and we expect that the 6A and B ovens in Fukuyama,
which we call the new coke ovens, will be just enough to meet this amount.
Therefore, even if we build a new coke this time, it does not mean that it will be unnecessary for the year
2050, but rather that it will be built as a necessary coke oven.

23Finally, as I explained earlier, the use of CCUS will be very important in ultimately achieving carbon neutrality.
We have newly established CCUS Green Infrastructure Study Team in the Carbon Neutral Promotion Team.
The main initiatives on the right-hand side are examples of current research and development activities. In
addition to those existing R&D activities, the team will promote studies on utilization of technologies related
to separation and collection, use, and retention of CO2, including cooperation between complexes andcompanies.
That's all from me.

[END]
This document does not purport to address the requirements of the Financial Instruments and Exchange Act. It is the
responsibility of the user of this document to determine the correctness and integrity of the information in regard to its
use. The forecasts presented are prepared on the basis of information available at the time of the briefing session andinclude uncertain factors. It is strongly recommended NOT to rely only on the forecasts in this document when making
investment decisions. In no respect will JFE Holdings, Inc. incur any liability for any damage arising out of, resulting
from, or in any way connected to the use of the information contained herein.

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