02 2-0 1.20-.

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..1 2-Copyright© 2020 Marubeni-Itochu Steel Inc.

FY2019 Financial Results Summaryn Despite a strong performance by our U.S. construction material business, revenues declined due to factors such as sluggish
market conditions in both Japan and overseas and an overall decline in demand. Moves to reorganize or withdraw from
unprofitable businesses also prompted decreases in both revenue and earnings from the previous fiscal year.

FY2018FY2019Over previousfiscal year

Consolidated
net income¥ 24.2 billion¥ 22.3 billion− ¥1.9 billionTotal assets¥ 1.2 trillion¥ 1.1 trillion− ¥0.1 trillion

ROA

2.1%

1.9%

−0.2%

Ratio of shareholders’(*1)
equity

24.2%

26.0%

+1.8%

Net debt equity ratio
(*2)
(DER)

1.46 times

1.38 times−0.08 times

PL rate ¥/US$

110.91108.74

2.17

BS rate ¥/US$

110.99108.83

2.16

Factors affecting
financial results

ImpactSteel price declines
Export transactions increase
Domestic demand declines
Robust construction material
business in U.S.
North American rig countdecreases
Automobile unit production falls*1: Ratio of shareholders’ equity = equity attributable to owners of the parent/total assets*2: Net debt equity ratio (DER) = net interest-bearing liabilities/equity attributable to owners of the parent
Copyright© 2020 Marubeni-Itochu Steel Inc.

Unprofitable businessreorganizations/withdrawals

2Summary of Group Companies
n The liquidation and asset sales of low-revenue businesses brought a decline in red-ink companies from 20 at the end ofFY2018 to 12 during FY2019.
n Considering the impact of the spread of COVID-19, strengthening the management of unprofitable businesses will remain akey theme into FY2020.
Number of Deficit Group
Companies

No. of Companies

End of FY2019

Change from theEnd of FY2018

Percentage of Deficit Group
Companies

Change from theEnd of FY2018

End of FY2019

End of FY2019

Change from theEnd of FY2018

Domestic

20-

0-

0.0%

-

Overseas51

14

27.8%

3.7%

No. of subsidiaries

71

14

25.6%

2.7%

Domestic

14-1+17.1%+7.1%

Overseas26

27726.9%

23.1%

No. of associates and joint
ventures40

28

620.0%15.7%

Total

111

312

810.8%

6.7%3Copyright© 2020 Marubeni-Itochu Steel Inc.

Profit and Loss Statement(Unaudited, IFRS basis)
Operating Result

Total volume of trading transactions (*1)

(Unit: Millions of yen)
FY2019Results

FY2018Results

2,408,621

2,437,345

Change28,724

Gross profit

134,951

135,862

911

Selling, general and administrative expenses(90,239)(88,858)

1,381(956)(1,665)+709

Operating income (*1)

43,75645,339

1,583

Net interest expenses(8,809)(8,141)

668

Dividend income

1,532

1,442+90

Gain (loss) on investments

(153)

(742)

+589

Gain (loss) on property, plant and equipment

(162)

(82)

80

717

93+624

Share of profits (losses) of associates and joint ventures(2,040)(272)

1,768

Profit before tax

34,841

37,637

2,796

Income taxes(9,218)(10,889)+1,671

Profit25,623

26,748

1,125

Profit attributable to owners of the parent

22,32024,204

1,884

Profit attributable to non-controlling interests

3,303

2,544

+759

Provision for doubtful accounts

Other non-operating income (loss)     
Despite the steel price decline, shrinking domestic demand,decreased North American rig count, falling automobile unit
production and other negatives, the robust U.S. construction
material business and increased export transactions helped
limit the loss in this category from the previous fiscal year to¥28.7 billion.

  
Impact included rising interest rates

Gain (loss) on investments
Affected by a reaction to previous fiscal year’s impairment lossof equity investment in affiliates, etc.
Other non-operating income (loss)
Impact of foreign exchange gains/losses, etc.
Share of profits (losses) of associates and joint venturesImpact included lower performance of affiliates that adopted theoverseas equity method*1 Total volume of trading transactions includes all transactions involving the Company and its consolidated subsidiaries regardless of transaction type. Total volume of trading transactions
and operating income are presented in accordance with Japanese accounting practice for investors’ convenience and are not required by IFRS. Ordinary income reflecting the Japanese
GAAP basis has been provisionally calculated at ¥35.4 billion.
Copyright© 2020 Marubeni-Itochu Steel Inc.

4

Balance Sheet(Unaudited, IFRS basis)
Financial PositionFY2019 Results

FY2018 Results

900,755

1,013,184

112,429

Cash and cash equivalents

41,837

46,3954,558

Trade receivables

560,363637,729

77,366Inventories

263,462

289,805

26,343Other

35,09339,255

4,162

215,743

214,889+854

Property, plant and equipment

88,012

74,419+13,593

Intangible assets

15,837

18,031

2,194

Current assets

Non-current assets

Investments and other assets

ChangeComprehensive Income

111,894

122,439

10,545

1,116,498

1,228,073

111,575

Current liabilities

635,434

725,868

90,434

Trade payables

275,819346,225

70,406

Short-term debts

304,943

318,254

13,311

Other

54,672

61,3896,717

Non-current liabilities

165,226

180,657

15,431Long-term debts

137,522160,983

23,461

Other

27,704

19,674+8,030Total liabilities

800,660

906,525

105,865

Equity attributable to owners of the parent

290,790

297,300

6,510

Capital/Capital surplus

51,082

51,10220

Retained earnings

216,086

206,607+9,479

Accumulated other comprehensive income

23,622

39,591

15,96925,04824,248+800

Non-controlling interests
Total equity
Total liabilities and equity(Unit: Millions of yen)

(Unit: Millions of yen)

315,838

321,548

5,710

1,116,498

1,228,073

111,575

FY2019Results

FY2018Results

ChangeProfit25,623

26,7481,125

Net unrealized gain (loss) on FVTOCI
Exchange differences on translating
foreign operations
Other(9,851)(7,398)2,453(5,649)

3,559

9,208

(777)

(1,418)+641

Comprehensive income

9,346

21,491

12,145

6,230

19,337

13,107

3,116

2,154

+962

Comprehensive income attributable toowners of the parent
Comprehensive income attributable tonon-controlling interests

Total assets¥1,116.5 billion (down ¥111.6 billion from the end of previousfiscal year)→ A contraction in trade receivables due to a decline in unit
prices and decreased demand, efforts to reduce inventories
Ratio of shareholders’ equity
26.0% (plus 1.8 percent from the end of previous fiscal year)→ Contribution by total asset downscaling
Net DER
1.38 times (down 0.08 from the end of previous fiscal year)→ Improvements through reductions in net interest-bearing
liabilities accompanying downscaled working capital

5Copyright© 2020 Marubeni-Itochu Steel Inc.