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Segment profit in 1Q of FY2019 was 14.5 billion yen, decreased by 49.6 billion year-on-year.
Cost : ＋6.0 billion yen
Sales Volume and Mix : -6.0 billion yen
Crude steel production and shipment decreased slightly year-on-year. Thanks to blast furnaces resuming
normal operations, crude steel production recovered 70.0Mt in 1Q of FY2019.
Crude steel (Standalone) –0.10Mt（7.10⇒7.00Mt）
Shipment(Standalone)－2.80Mt（6.13⇒5.85Mt）

Sales Prices and Raw materials (Metal spread):-15.0 billion yen（-2,600 yen/t-shipment）
Metal spread decreased through fall in steel price in overseas market and increase in raw material price.
Inventory valuation etc.: -17.0 billion yen◆Others : -17.6 billion yen
・Increase in sub materials, logistics, and outsourcing costs : -7.0 billion yen
・Decrease in profit of subsidiary companies : -5.0 billion yen
・Increase in depreciation cost with strengthening manufacturing capabilities : -2.0 billion yen etc.

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Combined inventories of HR, CR and Coated Steel as of the end of June 2019 were 4,570K tons.
From May 2019 :53K tons decrease

From June 2018: 163K tons increase
Although overall domestic steel demand remains solid, strength of demand differs by sector, which needs tobe watched cautiously. The inventory level is still relatively high, but it is expected to decrease to appropriate
level in a certain period of time.

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[Inventories of Plate (Plate Shear)
Inventories of plate shear as of the end of June 2019 was 437K tons.
From May of 2019 : 2K tons increase
From June of 2018: ,41K tons increase
The inventories have kept upward due to delay of construction and slowing demand in construction
machinery sector, which needs to be watched cautiously.
[Inventories of Wide Flange Shapes]
Inventories of wide flange shapes as of the end of June 2019 was 220K tons.
From May of 2019 : 6K tons decrease
From June of 2018: 13K tons increase
The inventories decreased for the first time in seven months. Inventory turnover also decreased to less than
3 months since last December.
Although the inventory level is still high, it is expected to gradually decrease to appropriate level.

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The volume of imported ordinary steel in June 2019 was 373K tons.
From May 2019: 37K tons decrease
From June 2018: 3K tons decrease
The volume of imported ordinary steel decreased in recent 2 months, but a certain amount is still imported
due to fall in steel prices in overseas market, which needs to be watched cautiously.

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Crude steel production in June 2019 in China was 87.5M tons (2.92M tons on daily basis: record high).
From May 2019: 1.6M tons decrease
From June 2018: 7.3M tons increase
It is necessary to watch cautiously the trend of expansion of production in China.
Export of steel from China in June 2019 was 5.3M tons.
From May 2019: 0.4M tons decrease
From June 2018: 1.6M tons decrease
Although the volume of steel export remains still low, domestic steel demand for manufacturing in China
seems to show signs of slowdown due to the influence of trade friction, which needs to be watchedcautiously.

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Inventories in China as of the end of July 2019 was approximately 12.5M tons.
From May 2019:9.5% increase

From July 2018: 26.6% increase
The volume of inventories had continued to decrease after Chinese New Year, but it bottomed out andremains higher than usual. It needs to be watched cautiously as well as expanding crude steel production.

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Metal spread, calculated based on Chinese spot market price of HRC and international spot market prices ofiron ore and hard coking coal, had shown upward trend since the beginning of 2019, but turned to decreaseagain and keeps fluctuating due to the influence of trade friction and iron ore price hike etc.
it is necessary to watch cautiously how much metal spread will recover in a coming demand season.

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Segment profit forecast for FY2019 is 70.0 billion yen, decreasing by 35.0 billion yen from the previousforecast.
Sales Volume and Mix : -20.0 billion yen
Crude steel production is forecast to decrease by 1Mt from the previous forecast through production
adjustment based on recent slowing steel demand and relatively high domestic steel inventory level in
addition to operational troubles.
Crude steel (Standalone) –1.00Mt（29.00⇒28.00Mt）
Sales Prices and Raw materials (Metal spread):-18.0 billion yen（-700 yen/t-shipment）
・Mainly increase in iron ore priceInventory valuation etc.: +8.0 billion yen
・Increase in raw material price◆Others : -5.0 billion yen
・Decrease in profit of overseas subsidiary companies : -5.0 billion yen etc.

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Segment profit forecast for FY2019 is 70.0 billion yen, decreasing by 91.3 billion yen year on year.
Cost : ＋60.0 billion yen
Cost reduction : +38.0 billion yen: Cost effects of investment in West japan works etc.
One-off effect in FY2018 : +22.0 billion yen
Sales Volume and Mix : +30.0 billion yen
Crude steel (Standalone) ＋1.69Mt（26.31⇒28.00Mt）
Sales Prices and Raw materials (Metal spread):-93.0 billion yen（-3,700 yen/t-shipment ）Steel demand and steel price remained robust in FY2018, but current steel demand is showing signs ofslowdown in some sectors. Additionally, iron ore price remains high. Although steel price is expected tobottom out with high iron ore price, it would take a certain period of time for steel price to recover.
Inventory valuation etc.: -32.0 billion yen
Sub materials cost etc. : -15.0 billion yen
・Sub materials : -5.0billion yen

・Logistics : -4.0billion yen

・Outsourcing : -5.0billion yen◆Others : -41.3 billion yen
・Decrease in profit of subsidiary companies : -20.0 billion yen
・Increase in depreciation cost with strengthening manufacturing capabilities : -10.0 billion yen etc.

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Segment profit forecast for 2H of FY2019 is 44.0 billion yen, increasing 18.0 billion yen from 1H of FY2019.
Cost : +14.0 billion yen
Cost effects of investment in West japan works etc.
Sales Volume and Mix : ±0.0 billion yen
Crude steel (Standalone) ±0.00Mt（14.00⇒14.00Mt）
Sales Prices and Raw materials (Metal spread):-3.0 billion yen（-200 yen/t-shipment）
Steel demand is showing signs of slowdown in some sectors. Additionally, iron ore price remains high.
Although steel price is expected to bottom out with high iron ore price, it would take a certain period of time
for steel price to recover.
Inventory valuation etc.: +19.0 billion yen◆Others : -12.0 billion yen
・Increase in depreciation cost with strengthening manufacturing capabilities : -7.0 billion yen
・Decrease in profit of overseas subsidiary companies : -3.0 billion yen

etc.

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Segment profit forecast for 1H of FY2019 is 26.0 billion yen, decreasing 91.3 billion yen year-on-year.
Cost : +18.0 billion yen
Cost reduction : +15.0 billion yen

One-off effect in FY2018 : +3.0 billion yen

Sales Volume and Mix : +3.0 billion yen
Crude steel (Standalone) -0.04Mt（14.04⇒14.00Mt）
Shipment（Standalone ）+0.14Mt（12.06⇒12.20Mt）
Shipment in 1H of FY2018 includes decrease in volume due to delay of shipment caused by stormy weather.
Sales Prices and Raw materials (Metal spread):-55.0 billion yen（-4,800 yen/t-shipment）
Metal spread is forecast to decrease through fall in steel price in overseas market and increase in raw
material price.
Inventory valuation etc.: -23.0 billion yen◆Others : -34.3 billion yen
・Increase in depreciation cost with strengthening manufacturing capabilities : -5.0 billion yen
・Increase in sub materials, logistics, and outsourcing costs : -10.0 billion yen
・Decrease in profit of subsidiary companies : -15.0 billion yen

etc.

47Segment profit forecast for 1H of FY2019 is 26.0 billion yen, decreasing 18.0 billion yen from 2H of FY2018.
Cost : +28.0 billion yen
Cost reduction : +9.0 billion yen

One-off effect in FY2018 : +19.0 billion yen

Sales Volume and Mix : +27.0 billion yen
Thanks to blast furnaces resuming normal operations, crude steel production and shipment are forecast toincrease.
Crude steel (Standalone) ＋1.73Mt（12.27⇒14.00Mt）
Shipment（Standalone）+0.48Mt（11.72⇒12.20Mt）
Sales Prices and Raw materials (Metal spread):-35.0 billion yen（-2,800 yen/t-shipment）
Metal spread is forecast to decrease through fall in steel price in overseas market and increase in iron ore
price.
Inventory valuation etc.: -28.0 billion yen◆Others : -10.0 billion yen・Decrease in profit of subsidiary companies : -11.0 billion yen

etc.

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Segment profit forecast for 2Q of FY2019 is 11.5 billion yen, decreasing 3.0 billion yen from 1Q in FY2019.
Cost : +3.0 billion yen
Sales Volume and Mix : +3.0 billion yen
Crude steel (Standalone) ±0.00Mt（7.00⇒7.00Mt）
Shipment（Standalone）+0.55Mt（5.85⇒6.40Mt）
Sales Prices and Raw materials (Metal spread):-11.0 billion yen（-1,700 yen/t-shipment）
Metal spread is forecast to decrease mainly through increase in iron ore price.
Inventory valuation etc.: +9.0 billion yen◆Others : -7.0 billion yen
・Decrease in dividends received : -7.0 billion yen
・Increase in depreciation cost : -1.0 billion yen

etc.

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Segment profit in 1Q of FY2019 was 14.5 billion yen, increased by 16.3 billion yen from 4Q of FY2018.
Cost : +13.0 billion yen
Sales Volume and Mix : +16.0 billion yen
Thanks to blast furnaces resuming normal operations, crude steel production increased.
Crude steel (Standalone) +1.12Mt（5.88⇒7.00Mt）
Shipment（Standalone）+0.38Mt（5.48⇒5.85Mt）
Sales Price and Raw materials (Metal spread):-2.0 billion yen（-300 yen/t-shipment）
Metal spread decreased mainly through increase in iron ore price.
Inventory valuation etc.: -16.0 billion yen◆Others : +5.3 billion yen
・Increase in dividends received : +5.0 billion yenetc.

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