News Release
May 9, 2019
Marubeni-Itochu Steel Inc.
Nihonbashi 1-chome Bldg.
4-1 Nihonbashi, 1-chome, Chuo-ku
Tokyo 103-8247
Results for FY2018
Marubeni-Itochu Steel Inc. (MISI; headquartered in Chuo-ku, Tokyo; Tomohito Kaneda, Presidentand CEO) is pleased to announce the following results for FY2018 (April 2018 through March2019).

Economic Environment
Reflecting on the global economy during FY2018, the numerous causes for concern
included growing protectionism in many nations, currency anxieties in newly emerging
regions, slackened economic growth in China prompted by bilateral trade friction with
the United States, fears of economic stagnation in Europe, unstable crude oil pricetrends and related developments. In spite of that, key nations such as the U.S. sustained
firm economic trends, while the newly emerging markets of Southeast Asia and otherareas generally grew above their previous fiscal year levels.
Despite a sluggish rate of increase in commodity prices, a series of natural disasters
during the summer months and slow growth in personal consumption, the Japanese
economy saw capital investment remain steady and construction demand was robust. Asa result, the domestic economy was in a general state of expansion during the year underreview.
Turning to the steel industry, worldwide crude steel production in 2018 (January toDecember) was tracked at 1.81 billion tons, up 4.6 percent from the previous year basedon figures from the World Steel Association. Contributing factors included strong
overall demand in the U.S., China, Southeast Asia and other regions.
In Japan, while demand remained generally strong in major sectors such as
construction and automobiles, production at certain steel manufacturers was affected bydisasters occurring during the summer. As a result, domestic crude steel output for theperiod under review (April 2018 through March 2019) fell by 1.9 percent from theprevious fiscal year to 102.89 million tons (according to figures from the Japan Iron andSteel Federation). This was the second consecutive year-on-year decline for Japanese
steel production in this category.
Results of Operations for the Term under Review
Under this background, MISI’s transactions in Japan and the earnings of its domestic
business companies matched the levels of the previous year, while its overseas steel
pipe business performed well on the strength of a U.S.–focused recovery inenergy-related demand. Likewise fueled by bullish U.S. market conditions, thecompany’s construction material business in that nation showed solid earnings.
The MISI Group’s consolidated financial settlement for FY2018 showed a total
trading transaction volume of ¥2,439.4 billion, operating income of ¥45.3 billion, andprofit attributable to owners of the parent of ¥24.2 billion. All of these figures surpassed
the previous fiscal year’s levels.
Consolidated Statement of Income (Unaudited, IFRS basis)
MISI’s consolidated statement of income figures for the FY2018 are as follows:(Billions of yen)
Results forResults for
Category
Increase/decrease
FY2018FY2017
Total volume of trading
2,439.4
2,152.4+287
transactions
Gross profits
135.7
118.3
+17.5
Operating income

45.3

32.9

+12.4

Profit before taxes
Profit attributable to ownersof the parent
Comprehensive income
attributable to owners of theparent

37.6

31.4

+6.2

24.2

18.5

+5.7

19.3

14.9+4.5

For further information, please contact: https://www.benichu.com/inquiry/index_e.html

Marubeni-Itochu Steel Inc.
May 9, 2019

Consolidated Financial Results in FY2018 (April 1, 2018 to March 31, 2019)(Unaudited, IFRS basis)(Unit: Millions of yen)

Operating Result

Total volume of trading transactions (*1)

FY2018Results

FY2017
Results(Unit: Millions of yen)

Financial Position

Change2,439,444

2,152,397+287,047

Gross profit

135,737

118,285+17,452

Selling, general and administrative expenses(88733)(85536)

Provision for doubtful accounts(1665)FY2019Results

Current assets

1,013,462

FY2018esults880,514

Outline of consolidated financial results in FY2018

Change+132,948

Cash and cash equivalents

46,836

41,930+4,906

Trade receivables

637,061

574,875+62,186-3,197

Inventories

289,990

226,578+63,412194-1,859Other

39,575

37,131+2,44445,33932,943+12,396

214,979

226,842-11,863

Property, plant and equipment

74,41971,238+3,181

Net interest expense(8,141)(5,030)-3,111Intangible assets

18,031

16,923+1,108Dividend income

1,442

1,352

+90

Investments and other assets

122,529

138,681-16,152

Gain (loss) on investments

(742)

(123)

-619

1,228,441

1,107,356+121,085

Gain (loss) on property, plant and equipment

(82)

(69)

-13

Current liabilities

745,873

633,924+111,949

Other non-operating income (loss)

93

1,370

-1,277

Trade payables

357,297

300,552+56,745

Share of profits of associates and joint ventures

(272)

951

-1,223

Short-term debts

327,510

283,915+43,595

Profit before tax

37637

31394

+6,243

Other

61,06649,457+11,609

Non-current liabilities

161,020

162,929-1,909Operating income(*1)

Non-current assets

Total assets

Income taxes(10,889)(10,501)-388

Long-term debts

141,346

139,805+1,541

Profit26,74820,893+5,855

Other

19,674

23,124-3,450

Profit attributable to owners of the parent

24,204

18,492+5,712

Total liabilities

906,893

796,853+110,040

Profit attributable to non-controlling interests

2,544

2,401+143

Equity attributable to owners of the parent

297,300

287,194+10,106

2,072,682

922,784+1,149,898

Revenue
*1

*2

(*2)

Total volume of trading transactions includes all transactions involving the Company and its
consolidated subsidiaries regardless of transaction type. Total volume of trading transactions andoperating 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 ¥38.5 billion.
Includes an increase of approximately ¥1,000 billion in earnings resulting from the adoption of the new
accounting standard Revenue from Contracts with Customers – International Financial ReportingStandards (IFRS) No. 15.

Capital/Capital surplus

51,102

51,087+15

Retained earnings

206,607

191,633+14,974

Accumulated other comprehensive income

39,59144,474-4,883

Non-controlling interests
資本合計

24,24823,309+939

Total equity

321,548

310,503+11,045

1,228,441

1,107,356+121,085

Total liabilities and equity§Management indexes pertaining to assets, liabilities and capital

Comprehensive Income

FY2018Results

FY2017
Results

Ratio of shareholders’ equity

(*3)

24.2%

25.9%

- 1.7%Net debt equity ratio (DER)(*4)

1.4 times

1.3 times+0.1 times

Change*3: Ratio of shareholders’ equity = equity attributable to owners of the parent/total assets
Profit26,74820,893+5,855Net unrealized gain(loss) on FVTOCI(7,398)1,804-9,202

Exchange differences on translating foreign operations

3,559(6,738)+10,297

Other(1,418)1,358-2,776Comprehensive income

21,491

17,317+4,174*4: Net debt equity ratio (DER) = net interest-bearing liabilities/equity attributable to owners of the parent

Reflecting on the global economy during FY2018, the numerous causes for concern included growing protectionism in many nations, currency anxieties in newly
emerging regions, slackened economic growth in China prompted by bilateral trade friction with the United States, fears of economic stagnation in Europe,
unstable crude oil price trends and related developments. In spite of that, key nations such as the U.S. sustained firm economic trends, while the newly emerging
markets of Southeast Asia and other areas generally grew above their previous fiscal year levels.
Despite a sluggish rate of increase in commodity prices, a series of natural disasters during the summer months and slow growth in personal consumption, theJapanese economy saw capital investment remain steady and construction demand was robust. As a result, the domestic economy was in a general state ofexpansion during the year under review.
Turning to the steel industry, worldwide crude steel production in 2018 (January to December) was tracked at 1.81 billion tons, up 4.6 percent from the previousyear based on figures from the World Steel Association. Contributing factors included strong overall demand in the U.S., China, Southeast Asia and other regions.
In Japan, while demand remained generally strong in major sectors such as construction and automobiles, production at certain steel manufacturers was affected bydisasters occurring during the summer. As a result, domestic crude steel output for the period under review (April 2018 through March 2019) fell by 1.9 percent
from the previous fiscal year to 102.89 million tons (according to figures from the Japan Iron and Steel Federation). This was the second consecutive year-on-year
decline for Japanese steel production in this category.
Under this circumstances, MISI’s transactions in Japan and the earnings of its domestic business companies matched the levels of the previous year, while its
overseas steel pipe business performed well on the strength of a U.S.–focused recovery in energy-related demand. Likewise fueled by bullish U.S. marketconditions, the company’s construction material business in that nation showed solid earnings.
The MISI Group’s consolidated financial settlement for FY2018 showed a total trading transaction volume of ¥2,439.4 billion, operating income of ¥45.3 billion,
and profit attributable to owners of the parent of ¥24.2 billion. All of these figures surpassed the previous fiscal year’s levels.
Explanation of consolidated statements
1. Total volume of trading transactions and gross profits
The effects of the market’s recovery and the rise in steel product prices merged with other factors to push total FY2018 trading transactions up by ¥287 billion overthe previous year to ¥2,439.4 billion. Gross profits recorded an ¥17.5 billion year-on-year gain to ¥135.7 billion.
2. Selling, general and administrative expenses and provision for doubtful accounts
Selling, general and administrative expenses during FY2018 grew by ¥3.2 billion from the previous year as a result of factors such as higher personnel expenses.
Provisions for doubtful accounts increased by ¥1.9 billion year-on-year. Operating income for the year expanded by ¥12.4 billion over FY2017 to ¥45.3 billion.
3. Profit attributable to owners of the parent

Net interest expenses worsened by ¥3.1 billion compared to FY2017, linked to factors such as the impact of higher U.S. dollar interest rates. Despite favorable
developments such as profits accompanying changes in the consolidation method of domestic subsidiaries, the gain/loss figures for investment securities fell by ¥0.6 billion under the impact from a lower share of profits from associates and joint ventures. Gain/loss results for other categories were down by ¥1.3 billion fromFY2017 under the impact of factors such as deterioration of foreign exchange gains and losses. The share of profits from associates and joint ventures declined by¥1.2 billion from the previous year, reflecting the impact of performance downturns at overseas affiliates. As a collective result, profit before tax grew by ¥6.2billion over the previous year, while profit attributable to owners of the parent rose by ¥5.7 billion year-on-year to ¥24.2 billion (after subtracting income taxes andprofit attributable to noncontrolling interests).

4. Comprehensive income attributable to owners of the parent
Comprehensive income attributable to owners of the parent during FY2018 improved by ¥4.5 billion over the previous fiscal year, finishing the period at ¥19.3billion. Factors behind this gain included improved profit attributable to owners of theparent and an increase in the exchange differences at foreign operations under the impact of the yen’s depreciation. This gain came despite the decline in net
unrealized gains from securities revaluations.
5. Equity attributable to owners of the parent
Equity attributable to owners of the parent at the end of FY2018 was tracked at ¥297.3 billion, up ¥10.1 billion from the previous fiscal year’s close. This was theresult of an increase in other accumulated comprehensive income affected by the yen’s depreciation, accumulated current profits attributable to owners of theparent, and other contributing factors. The ratio of shareholder’s equity worsened by 1.7 percent to 24.2 percent, reflecting a total asset increase of ¥121.1 billion to¥1,228.4 billion linked to increased asset inventory, expanded trade receivables and other dynamics.
6. Interest-bearing liabilities
Gross interest-bearing liabilities at the end of FY2018 totaled ¥468.9 billion, an increase of ¥45.1 billion from the previous fiscal year. Net interest-bearing
liabilities rose by ¥40.2 billion compared to the end of FY2017, closing out the fiscal year at ¥422.0 billion. This contributed to a net debt equity ratio of 1.4.

Number of Group companies reporting a profit/loss§Exchange rate information (¥/US$)
Average rate during period (PL rate)

FY2018110.91
End March 2019

End of period rate (BS rate)

110.99No. of Companies

FY2017

End of FY2018

Domestic

20-1200100.0%

Overseas52+146688.5%

110.85
End March 2018106.24

Profitable and unprofitable companies: a breakdown by numbers

Change from thePrevious Term

ProfitRatio of Companies
Making a Profit

Loss

Comprehensive income attributable to owners of the parent

19,337

14,855+4,482

No. of subsidiaries

72-66

691.7%

Comprehensive income attributable to non-controlling interests

2,154

2,462-308Domestic

14+2

140

100.0%

Overseas28-141450.0%42+2281466.7%114+294

2082.5%

No. of associates and joint ventures

Total