JFE Holdings’ Financial Results in First Quarterof Fiscal Year 2016 Ending March 31, 2017
— All financial information has been prepared in accordance with generally accepted accounting principles in Japan —(Note: The following is an English translation of an original Japanese document)

July 29, 2016
Official name:
Listings:
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Representative:
Contact:

JFE Holdings, Inc.
Tokyo and Nagoya stock exchanges
5411
www.jfe-holdings.co.jp/en
Eiji Hayashida, President and CEO
Moriyoshi Hara, Manager, Public Relations Section
Investor Relations and Corporate Communications
Department+81-3-3597-3842
August 3, 2016
Yes
Yes

Phone:
Scheduled date to submit Quarterly Securities Report:
Preparation of supplementary materials for quarterly results:
Quarterly results briefing:(Figures are rounded down to the nearest million yen.)

1. Consolidated Results in First Quarter of Fiscal 2016 (April 1 to June 30, 2016)(1) Consolidated Operating Results (cumulative total)
Net
sales
(million yen)

Year-onyearchangeOperating
Income(loss)

Year-onyearchangeOrdinary
Income(loss)(%)(million yen)(%)(million yen)

Profit (loss)
Year-onYear-on- Net income Net income
attributable(loss)
year
year
per share
to ownerschangechange per share[fully diluted]
of parent(%)(%)(million yen)

(yen)

(yen)

1Q FY 2016

740,665(13.6)(4,215)-(13,368)-(11,722)-(20.33)-

1Q FY 2015

857,102(7.6)

24,600(21.5)

28,707(17.3)

17,349

11.9

30.09

-

Note: Comprehensive income:(45,331 million yen) in 1Q FY 2016 (-)
19,628 million yen in 1Q FY 2015 (down 37.3%)(2) Consolidated Financial Position
Total assets

Net assets(million yen)(million yen)

Equity capitalratio

Net assets per share
(yen)

(%)

End 1Q FY 2016

4,236,860

1,805,556

41.4

3,038.44

End FY 2015

4,234,884

1,857,921

42.6

3,128.36

Note: Shareholders' equity: 1,752,323 million yen as of June 30, 2016
1,804,196 million yen as of March 31, 2016

2. Dividends
Dividend per share (yen)Interim

FY 2015

30.00

20.00

10.00

-

0.00

-

FY 2016 (estimate)
Note:

Year-end

Revisions to dividend forecast announced most recently: Yes
The year-end dividend and the total dividend are not yet determined.

3. Forecasts of Consolidated Financial Results in Fiscal 2016 (April 1, 2016 to March 31, 2017)
Net
sales
(million yen)

1H FY 2016
FY 2016

Year-onyearchangeOperating
Income(loss)

Year-onyearchangeOrdinary
Income(loss)

Year-onyearchange(%)(million yen)(%)(million yen)(%)

ProfitYear-on- Net income
attributable(loss)
year
to owners
per sharechangeof parent(%)(million yen)

(yen)

1,530,000(10.7)(5,000)-(20,000)-(18,000)-(31.21)

-

-

-

-

65,000

1.2

-

-

-

Note: Revisions to consolidated financial results forecasts announced most recently: Yes

Notes
1. Significant changes in subsidiaries during the term (changes in designated subsidiaries resulting in changes in consolidated
structure): No

2. Application of special accounting methods in the preparation of quarterly consolidated financial statements: No

3. Changes in accounting policies, accounting estimates and restatements
1) Changes in the accounting policies resulting from amendments to accounting standards: Yes
2) Changes other than 1) above: No
3) Changes in accounting estimates: No4) Restatements: No
Note: For more details, see “Notes to Summary Information/Changes in Accounting Policies, Accounting Estimates andRestatements” on page 4 of the attached document.

4. Number of outstanding shares (common stock)
1) Outstanding shares at the end of term (including treasury stock)
As of June 30, 2016: 614,438,399 shares
As of March 31, 2016: 614,438,399 shares
2) Treasury stock at the end of term
As of June 30, 2016: 37,720,273 shares
As of March 31, 2016: 37,714,629 shares
3) Average number of shares during the term (quarterly consolidated cumulative period)
1Q FY 2016: 576,720,766 shares
1Q FY 2015: 576,675,117 shares

Status of Quarterly Review
At the point of disclosing these quarterly financial results, the review of consolidated balance sheets in accordance with the
Financial Instruments and Exchange Act was still underway.

Explanation of Appropriate Use of Results Forecasts, and Other Matters of Note
1. Forecasts are based on information available on the date of publication of this document as well as rational assumptions that
we have made regarding certain factors. Actual results may vary significantly from these forecasts due to a wide range ofcircumstances. For a description of the results forecasts, see “(2) Consolidated Results Forecasts” on page 2 of the attacheddocument.
2. Notes to the financial results can be viewed at the JFE Holdings website.

Attachments
1. Qualitative Information··········································································································· 2(1) Consolidated Business Results ·························································································· 2(2) Consolidated Results Forecasts·························································································· 2
2. Notes to Summary Information ································································································ 4
Changes in Accounting Policies, Accounting Estimates and Restatements ······································· 4
3. Consolidated Financial Statements··························································································· 5(1) Consolidated Balance Sheets ···························································································· 5(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ········· 7
Consolidated Statements of Income (First Quarter)······························································· 7
Consolidated Statements of Comprehensive Income (First Quarter) ········································· 8(3) Notes Pertaining to the Presumption of a Going Concern ························································· 9(4) Notes In Case of Significant Changes to Shareholders’ Equity ·················································· 9
4. Reference··························································································································10

11. Qualitative Information(1) Consolidated Business Results
Although corporate earnings and employment remain robust in Japan in the first quarter of fiscal
2016 (ended June 30, 2016), the economy came to a standstill on weak demand, the result ofsluggish domestic consumer spending and slow export growth caused by the yen’s sharp
appreciation. The global economy became increasingly uncertain, reflecting the risks of slumping
emerging economies and the United Kingdom’s decision to exit the European Union.
On a consolidated basis for the quarter, JFE’s net sales of 740.6 billion yen decreased 116.5 billion
yen from the year earlier. The company booked an operating loss of 4.2 billion yen following
operating income of 24.6 billion yen in the previous year, and an ordinary loss of 13.3 billion yen
compared with last year’s ordinary income of 28.7 billion yen. The loss before income taxes cameto 13.3 billion yen, whereas last year’s profit before income taxes totaled 28.7 billion yen. The loss
attributable to owners of parent was 11.7 billion yen compared to a profit of 17.3 billion yen in theprevious year.
By segment, steel business saw overseas selling prices begin to bottom out after dropping
significantly since the summer of 2015. In some areas, prices even recovered to some extent. The
enormous oversupply in Asia and resulting price drops, however, pushed JFE Steel’s net sales
down by 92.4 billion yen to 528.4 billion yen. Despite continuous efforts to improve profitability, JFE
Steel posted an ordinary loss of 20.3 billion yen, a reversal from last year’s profit of 21.5 billion yen,
due to harsh sales conditions, a reduction in the valuation of inventory caused by falling raw
material prices, and unfavorable foreign exchange fluctuations.
Engineering business net sales rose 11.0 billion yen to 80.4 billion yen thanks to steady
implementation of existing projects by JFE Engineering. Ordinary income of 1.8 billion yen was an
improvement over last year’s loss of 300 million yen.
Trading business net sales decreased 72.1 billion yen to 393.0 billion yen partly because selling
prices fell both in Japan and overseas. Ordinary income fell 900 million yen to 4.5 billion yen.

(2) Consolidated Results Forecasts
The following are full-year forecasts for each business segment.
In steel business, demand in Japan is forecast to begin recovering slowly in the second half offiscal 2016. Consumer spending and capital investment are expected to recover, and construction
connected with the Tokyo 2020 Olympic and Paralympic Games will get under way. Overseas, thinplate prices are showing signs of recovering after bottoming out, but overall steel prices haven’t
reached to a full-blown recovery due to the sluggish energy sector. The outlook remains unclear as
global oversupply continues. In the face of harsh business conditions, the company will strive to cut
costs and pursue sales strategically in response to market conditions. The strong yen and othernegative factors, however, are expected to lower JFE Steel’s ordinary income to 20.0 billion yen.
The company will strengthen its profit base by steadily implementing measures in its fifth mediumterm business plan, including strengthening its manufacturing base, improving its product mix anddeveloping more business overseas.
2

In engineering business, JFE will aim to achieve growth by aggressively pursuing orders in theenvironment and energy business and the infrastructure business. A record ordinary income of
25.0 billion yen is forecast.
In trading business, despite falling steel prices and foreign exchange fluctuations, ordinary incomeof 20.0 billion yen is forecasted, up from the year earlier, thanks to improving profitability among
overseas group companies.
Overall, JFE Holdings forecasts full-year consolidated ordinary income of 65.0 billion yen.
The company expects to forgo an interim dividend in response to current earnings. A decision
about the year-end dividend will be reached once actual performance becomes clearer.

32. Notes to Summary Information
Changes in Accounting Policies, Accounting Estimates and Restatements
Application of Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016
Effective as of the first quarter of fiscal 2016, JFE Holdings began applying the Practical Solution
on a Change in Depreciation Method Due to Tax Reform 2016 (Accounting Standards Board ofJapan’s [ASBJ] Practical Issues Task Force [PITF] No. 32 of June 17, 2016) as a result of revisions
to Japan’s Corporate Tax Act. The solution was adopted to change from the declining-balancemethod to the straight-line method for depreciation of facilities attached to buildings or structuresacquired since April 1, 2016.
Consequently, the fiscal 2016 first-quarter operating loss, ordinary loss and loss before income
taxes each decreased by 36 million yen.

4

3. Consolidated Financial Statements(1) Consolidated Balance Sheets

As ofMarch 31, 2016

(million yen)
As ofJune 30, 2016

AssetsCurrent assets:
Cash and deposits
Notes and accounts receivable – trade
Merchandise and finished goods
Work in progress
Raw materials and supplies
Other current assets
Allowance for doubtful accounts
Total current assets
Non-current assets:
Property, plant and equipment:
Machinery, equipment and vehicles, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets:
Investments securities
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

564,654

209,863

720,639311,234
43,657
402,406
166,672(1,434)
1,707,829

618,615
299,941
61,060382,295
178,740(1,312)
1,749,203

606,546497,285
523,354
1,627,186
81,403627,252
497,001
497,320
1,621,574
79,175749,177
73,809(4,521)
818,465
2,527,054
4,234,884

709,985
80,524(3,604)786,906
2,487,656
4,236,860

As ofMarch 31, 2016

(million yen)
As ofJune 30, 2016

422,331353,382
36,00020,00011,185315,286
1,158,185

396,130
290,623
70,00010,289300,036
1,067,079

125,000
844,990
51,354125,283
72,1481,218,776
2,376,962

75,0001,048,707
50,703
123,244
66,5681,364,224
2,431,304

147,143646,380
1,065,037(178,654)
1,679,906

147,143646,383
1,047,544(178,660)
1,662,409

101,70983,479(3,119)16,32814,503(5,130)124,290
53,724
1,857,921
4,234,884(3,338)16,328(2,146)(4,409)89,91353,233
1,805,556
4,236,860

Liabilities
Current liabilities:
Notes and accounts payable – trade
Short-term loans payable
Commercial papers
Current portion of bonds
Provision
Other current liabilities
Total current liabilities
Non-current liabilities:
Corporate bonds
Long-term borrowings
Provision
Net defined-benefit liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity:
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-salesecurities
Deferred gains (losses) on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

6

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive
IncomeConsolidated Statements of Income (First Quarter)
First Quarter of
Fiscal 2015

(million yen)First Quarter of
Fiscal 2016

857,102753,637
103,465
78,86524,600740,665
666,638
74,02678,242(4,215)

251
5,842
8,857

284
5,486
5,158

14,951

10,928Non-operating expenses:
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses

3,268
7,574
10,843

2,781
7,069
10,231
20,082

Ordinary income (loss)
Profit (loss) before income taxes
Income taxes
Profit (loss)
Profit attributable to non-controlling interests
Profit (loss) attributable to owners of parent

28,70728,707
10,661
18,046696
17,349(13,368)(13,368)(2,557)(10,811)910(11,722)Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Non-operating income:Interest income
Dividend income
Other
Total non-operating income

7Consolidated Statements of Comprehensive Income (First Quarter)

Profit (loss)
Other comprehensive income:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted forusing equity method
Total other comprehensive income
Comprehensive income:(breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

8First Quarter of
Fiscal 2015
18,046(million yen)First Quarter of
Fiscal 2016
(10,811)

6,382
(909)
(2,552)
150(18,249)
400(6,340)556(1,488)
1,582
19,628(10,886)(34,519)(45,331)

18,782845(46,099)768

(3) Notes Pertaining to the Presumption of a Going Concern
There is no item for this period.
(4) Notes In Case of Significant Changes in Stockholders’ Equity
There is no item for this period.

9

4. Reference(1) Consolidated Results in First Quarter and Earnings Forecasts for First Half of Fiscal 2015
(billion yen)
FY 2015

FY 2016

Change1Q

1H

Full year

1Q

1H

620.8

1,246.0

2,445.1

528.4

1,100.0

Engineering Business

69.4

153.5

397.5

80.4

180.0

11.0

26.5

Trading Business

465.1

914.5

1,756.4

393.0

780.0

(72.1)(134.5)Adjustments(298.4)(601.0)(1,167.4)(261.2)(530.0)

37.2

71.0

Net Sales

857.1

1,713.2

3,431.7

740.6

1,530.0(116.5)(183.2)

Operating Income (Loss)

24.6

49.4

90.6

(4.2)

(5.0)

(28.8)(54.4)

Non-operating Income (Expenses)

4.1

(1.0)

(26.3)(9.1)(15.0)(13.2)(14.0)

Steel Business

21.5

38.6

27.8

(20.3)(33.0)

20.0(41.8)(71.6)(7.8)

Engineering Business

(0.3)

(0.0)

20.0

1.8

5.5

25.0

2.1

5.5

5.0

Trading Business

5.4

9.8

15.7

4.5

7.5

20.0

(0.9)

(2.3)

4.3

Adjustments

2.1

(0.0)

0.6

0.6

0.0

0.0

(1.5)

0.0

(0.6)

Ordinary Income (Loss)

28.7

48.3

64.2

(13.3)(20.0)

65.0(42.0)(68.3)

0.8

-

-

10.0

-

-

-

-

Profit (loss) before income taxes

28.7

48.3

74.3

(13.3)(20.0)(42.0)(68.3)Tax Expense and Profit (Loss)
AttributabletoNon-controlling
Interests(11.3)(18.4)(40.6)

1.6

2.0

12.9

20.4

Profit Attributable to Owners of Parent

17.3

29.9

33.6

(11.7)(18.0)(29.0)(47.9)

Steel Business

Extraordinary Profit (Loss)

Full year

1Q

1H(92.4)(146.0)

Full year(2) Consolidated Financial IndicesFiscal 2015

1H Fiscal 2016

1

1.9%

(1.3%)(3.2%)

Return on Assets (ROA)2

1.7%(0.3%)(2.0%)

Return on Sales (ROS)

Return on Equity (ROE)3

Change1.8%(2.0%)(3.8%)

Debt Outstanding

1,379.3 billion yen

1,440.0 billion yen

60.7 billion yen

Shareholders' Equity

1,804.1 billion yen

1,730.0 billion yen(74.1 billion yen)

4

56.9%

58.1%

1.2%

D/E Ratio
1

ROS = Ordinary income / net sales
ROA (full year) = Ordinary income before interest expenses / Total assets (average)
ROA (first half) = Ordinary income before interest expenses x 2 / Total assets (average)
3
ROE (full year) = Profit attributable to owners of parent / Shareholders' equity
ROE (first half) = Profit attributable to owners of parent x 2 / Shareholders' equity
4
D/E ratio = Debt outstanding / Shareholders' equity. For debt having a capital component*, a portion of its issue price is deemed to becapital, as assessed by rating agencies.
2*Debt having a capital component (subordinated borrowings)
Borrowing Execution Date
Amount Borrowed
Assessment of Equity Content
March 18, 2013
300.0 billion yen
75%
June 30, 2016
200.0 billion yen
25%

10

Amount Deemed to be Capital
225.0 billion yen
50.0 billion yen

(3) Crude Steel Production (JFE Steel)
FY 2015

Non-consolidated
Consolidated

1Q
6.54
7.19

2Q
6.91
7.50

1H
13.45
14.69

FY 2016

Non-consolidated
Consolidated

6.94
7.52

7.00*
7.60*

14.00*
15.20*

3Q
6.98
7.57

4Q
6.93
7.48

(million tons)
2H
Full year
13.91
27.36
15.06
29.75

*estimate(4) Shipments (JFE Steel on non-consolidated basis)
1Q

2Q

1H

3Q

4Q

2H

(million tons)
Full year

FY 2015

5.98

6.39

12.37

6.45

6.56

13.02

25.39

FY 2016

6.26

6.70*

13.00**estimate(5) Export Ratio on Value Basis (JFE Steel on non-consolidated basis)
1Q

2Q

1H

3Q

4Q

2H

(%)
Full year

FY 2015

46.2

48.6

47.4

44.8

43.3

44.0

45.8

FY 2016

43.6

45*

44*
*estimate(6) Foreign Exchange Rate (Yen/US dollar)
1Q

2Q

1H

3Q

4Q

2H

(JPY/USD)
Full year

FY 2015

121.0

122.6

121.8

121.2

117.7

119.5

120.6

FY 2016

111.1

104*

108*
*estimate(7) Average Selling Price (JFE Steel on non-consolidated basis)
1Q

2Q

1H

3Q

4Q

(thousand yen/ton)
2H
Full year

FY 2015

73.5

68.8

71.0

65.1

60.6

62.8

FY 2016

58.5

58*

58*

66.8
*estimate(8) Engineering Business Orders (including inter-segment transactions)
1H FY 2016(billion yen)
220.0*

11.6% increase from previous year
*estimate11(9) Breakdown of Changes in Ordinary Income for Steel Businessa. First quarter of FY 2016, compared to same period of FY 2015
ChangeOrdinary income- Sales volume, sales prices and raw
materials prices- Cost reductions(41.8)

1Q of FY 2015

(billion yen)
1Q of FY 201621.5(20.3)FY 2015(billion yen)
FY 2016(15.0)
8.0-

Unrealized gains (losses) on inventories(23.0)-

Others(11.8)

b. FY 2016 (forecast), compared to FY 2015
ChangeOrdinary income- Sales volume, sales prices and raw
materials prices- Cost reductions(7.8)(45.0)
30.0-

Unrealized gains (losses) on inventories

23.0

-

Others(15.8)*Approximate estimate
###

12

27.8

20.0*