JFE Holdings’ Financial Results in First Halfof Fiscal Year 2017 Ending March 31, 2018
— 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)

November 1, 2017
Official name:
Listings:
Code:
English URL:
Representative:
Contact:

JFE Holdings, Inc.
Tokyo and Nagoya stock exchanges
5411
www.jfe-holdings.co.jp/en
Eiji Hayashida, President and CEO
Hidetsugu Tawara, Manager, Public Relations Section,
Investor Relations and Corporate Communications
Department
Phone:+81-3-3597-3842
Scheduled date to submit Quarterly Securities Report:
November 7, 2017
Scheduled date to start paying dividends:
November 30, 2017
Preparation of supplementary materials for quarterly results: Yes
Quarterly results briefing:
Yes(Figures are rounded down to the nearest million yen.)

1. Consolidated Results in First Half of Fiscal 2017 (April 1 to September 30, 2017)(1) Consolidated Operating Results (cumulative total)
Net
sales
(million yen)

Profit (loss)
Year-onYear-onYear-onYear-on- Net income
attributable
Operating
Ordinary
year
year
year
year
(loss)
to owners
profit (loss)
profit (loss)changechangechangechangeper share(million yen)(million yen)of parent(%)(%)

1H FY 2017

1,725,305

15.1

1H FY 2016

1,499,588(12.5)

Note: Comprehensive income:(%)(million yen)

(%)

Net
incomeper share[fully diluted]

(yen)

(yen)

96,556-

101,464-

87,038-150.95-4,050(91.8)(10,125)-(8,417)-(14.60)-75,652 million yen in 1H FY 2017 (-)(65,081 million yen) in 1H FY 2016 (-)(2) Consolidated Financial Position
Total assets

Net assets

Equity capital ratio(million yen)(million yen)(%)

End 1H FY 2017

4,343,233

1,978,825

44.2

End FY 2016

4,336,069

1,921,809

43.0

Note: Shareholders' equity: 1,921,095 million yen as of September 30, 2017
1,865,836 million yen as of March 31, 2017

2. Dividends
Dividend per share (yen)Interim

FY 2016

30.00

0.00

30.00

-

30.00

-

FY 2017 (estimate)
Note:

Year-end

Revisions to dividend forecast announced most recently: No
The year-end dividend and the total dividend are not yet determined.

3. Forecasts of Consolidated Financial Results in Fiscal 2017 (April 1, 2017 to March 31, 2018)
Net
sales
(million yen)

FY 20173,650,000

Year-onyearchange(%)

10.3

Operatingprofit(million yen)

210,000

Year-onyearchange(%)

117.1

Ordinary
profit(million yen)

200,000

ProfitYear-onYear-on- Net income
attributable
year
year
(loss)
to ownerschangechangeper shareof parent
(%)

136.0

(million yen)

150,000

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

(%)

(yen)

120.8

260.15

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: No
2) Changes other than 1) above: Yes
3) Changes in accounting estimates: Yes
4) Restatements: No
Note: For more details, see “Changes in Accounting Estimates” and “Change in Accounting Policies Difficult to Distinguishfrom Changes in Accounting Estimates” on page 6 of the attached document.
4. Number of outstanding shares (common stock)
1) Outstanding shares at the end of term (including treasury stock)
As of September 30, 2017: 614,438,399 shares
As of March 31, 2017: 614,438,399 shares
2) Treasury stock at the end of term
As of September 30, 2017: 37,854,565 shares
As of March 31, 2017: 37,829,548 shares
3) Average number of shares during the term (quarterly consolidated cumulative period)
1H FY 2017: 576,597,569 shares
1H FY 2016: 576,716,832 sharesThis document is not subject to quarterly review procedures.
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.
2. Notes to the financial results can be viewed at the JFE Holdings website.

Attachments
1. Consolidated Financial Statements and Notes ············································································ 2(1) Consolidated Balance Sheets ···························································································· 2(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ········· 4Consolidated Statements of Income (First Half) ··································································· 4Consolidated Statements of Comprehensive Income (First Half) ·············································· 5(3) Notes to Consolidated Financial Statements ·········································································· 6Notes Pertaining to the Presumption of a Going Concern ······················································· 6Notes In Case of Significant Changes to Shareholders’ Equity ················································ 6
Changes in Accounting Estimates ····················································································· 6
Change in Accounting Policies Difficult to Distinguish from Changes in Accounting Estimates ········ 6
2. Reference ··························································································································· 7

11. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheets(million yen)
As of
As of
March 31, 2017 September 30, 2017
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
Shares of subsidiaries and associates
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

2

69,93664,457

798,058
313,368
50,834
408,728
169,336(1,416)
1,808,846

763,177
344,166
64,076423,868
169,471(1,197)
1,828,020

654,918
496,678499,282
1,650,879
78,368680,977495,973
498,881
1,675,832
79,099372,196
349,864
78,867(2,953)797,975
2,527,222
4,336,069

322,740
361,408
79,451(3,318)760,2812,515,212
4,343,233

(million yen)
As of
As of
March 31, 2017 September 30, 2017
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:
Bonds payable
Long-term loans payable
Provision
Net defined benefit liability
Other non-current liabilities
Total non-current liabilities
Total liabilities

446,645
204,379
8,000
50,0009,290
321,142
1,039,458

418,897
318,172
22,00015,0006,174
322,163
1,102,407

75,0001,038,089
48,516
123,745
89,4501,374,801
2,414,259

70,000933,272
50,643
127,981
80,102
1,262,000
2,364,407

147,143646,582
1,126,633(178,853)
1,741,505

147,143646,609
1,196,376(178,903)
1,811,224

112,545

96,942(544)
16,321(3,596)(395)
124,330
55,972
1,921,809
4,336,069

1,083
16,289(5,544)
1,098
109,870
57,7301,978,825
4,343,233

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 or 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 assets3(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive
IncomeConsolidated Statements of Income (First Half)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income:Interest income
Dividend income
Share of profit of entities accounted for using equity method
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Foreign exchange losses
Loss on retirement of non-current assets
Other
Total non-operating expenses
Ordinary profit (loss)
Extraordinary income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Expenses for treatment of PCB waste
Total extraordinary losses
Profit (loss) before income taxes
Income taxes
Profit (loss)
Profit attributable to non-controlling interests
Profit (loss) attributable to owners of parent

4

First Half of
Fiscal 2016

(million yen)First Half of
Fiscal 2017

1,499,588
1,339,423
160,164
156,1134,050

1,725,305
1,466,404
258,900
162,343
96,556

551
5,798
3,454
9,332

660
4,716
12,857
10,585

19,136

28,819

6,022
9,834
9,028
8,427
33,312(10,125)

6,553
7,646
9,712
23,911
101,464

3,537
3,537

23,152
23,152(6,587)(203)(6,384)
2,033(8,417)

3,850
3,850
120,766
30,87389,893
2,854
87,038

Consolidated Statements of Comprehensive Income (First Half)

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

5First Half of
Fiscal 2016
(6,384)(million yen)First Half of
Fiscal 201789,893(10,935)
1,303(19,665)984(15,267)535(2,959)1,514(30,384)(58,697)(65,081)

1,936(14,240)
75,652(65,652)570

72,583
3,069

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

Changes in Accounting Estimates
Expenses for treatment of PCB waste
JFE Holdings has revised its estimated expenses for treatment of polychlorinated biphenyl (PCB)
waste due to improved treatment and estimation methods. The first half consolidated financial
statements record the difference between the previous and current estimates of expenses fortreatment of PCB waste as an extraordinary loss, resulting in a decrease of 3,850 million yen in net
income before income taxes.
Change in Accounting Policies Difficult to Distinguish from Changes in Accounting
Estimates
Change in Depreciation Method for Property, Plant and Equipment
Effective the first quarter of fiscal 2017, JFE Holdings began primarily applying the straight-line
method to depreciate property, plant and equipment (excluding leased assets) instead of thedeclining balance method that the company had been using primarily. The company made thechange because its steelmaking facilities are expected to enjoy stable production, as stated below,
so the straight-line method was deemed more appropriate for allocating the costs of assets. Thechange in the depreciation method increased operating profit by 11,114 million yen and bothordinary profit and profit before income taxes by 11,106 million yen each.
The steel business is forecast to enjoy strong demand in Japan for some years to come, supported
by projects related to the Tokyo 2020 Olympic and Paralympic Games. In the long run, however,Japan’s declining birthrate and aging population are forecast to lead to reduced domestic demand,
making significant increases in steel demand unlikely. On a global basis, persistently excessive
steel production in China and other countries will continue to make the business environment
extremely harsh.
JFE Steel, rather than focusing on increased crude steel output, is striving to ensure stable steel
output and to cut costs at its steelworks in Japan, the company’s main production base. These
objectives are being achieved through capital investments to strengthen the manufacturing base inJapan and by making full use of existing steelmaking capacity. Investments specifically havefocused on renewing old facilities.
As of the end of the previous fiscal year, JFE Steel had renewed many upstream facilities,
including coke ovens, for improved mid- and long-term competitiveness and stabilized production.
JFE Steel will continue to strengthen its manufacturing base in Japan through lower costs, stableproduction and a product mix focused on high-grade steel for improved competitiveness.
62. Reference(1) Consolidated Results in First Half and Earnings Forecasts for Fiscal 2017(billion yen)
FY20161H
1,072.4

Steel Business

FY2017Full year
2,349.1

1H
1,294.7(Reference)
Full-year
forecasts
announced on
August 1, 2017

ChangeFull year*
2,720.0

1H
222.3

Full year*
370.9

Engineering Business

175.3

426.1

160.2

420.0

(15.1)(6.1)

Trading Business

775.8

1,671.0

916.2

1,830.0

140.4

159.0

Adjustments(524.0)(1,137.3)(645.9)(1,320.0)(121.9)(182.7)

Net Sales

1,499.5

3,308.9

1,725.3

3,650.0

225.8

341.1

4.0

96.7

96.5

210.0

92.5

113.3

(14.1)(12.0)

4.9(10.0)

19.0

2.0(24.4)

40.5

84.6

150.0

109.0

109.5

150.0

Engineering Business

7.6

26.6

2.5

25.0

(5.1)

(1.6)

25.0

Trading Business

7.6

21.8

16.2

29.0

8.6

7.2

28.0

Adjustments

(1.0)

(4.2)

(2.0)

(4.0)

(1.0)

0.2

(3.0)

Ordinary Income (Loss)(10.1)

84.7

101.4

200.0

111.5

115.3

200.0

3.5

20.7

19.3

20.0

15.8

(0.7)

20.0

(6.5)

105.4

120.7

220.0

127.2

114.6

220.0

(1.8)

(37.5)(33.7)(70.0)(31.9)(32.5)(70.0)

(8.4)

67.9

87.0

150.0

95.4

82.1

150.0

Operating Income
Non-operating Income(Expenses)
Steel Business

Extraordinary Profit (Loss)
Profit (loss) before income taxes
Tax Expense and Profit (Loss)
Attributable to Non-controlling
Interests
Profit (Loss) Attributable to
Owners of Parent*estimate(2) Consolidated Financial Indices1

Return on Sales (ROS)

2.6%

Fiscal 2017
(estimate)
5.5%

Return on Assets (ROA)2

2.3%

4.9%

2.6 percentage point
4.2 percentage point

Fiscal 2016

Return on Equity (ROE)3

Change2.9 percentage point

3.7%

7.9%

EBITDA4

279.9 billion yen

373.0 billion yen

93.1 billion yen

Debt Outstanding

1,375.4 billion yen

1,350.0 billion yen(25.4 billion yen)

Shareholders' Equity

1,865.8 billion yen

1,940.0 billion yen

74.2 billion yen

51.4%

48.5%

(2.9 percentage points)

D/E Ratio5
1

ROS = Ordinary income / net sales
ROA = Ordinary income before interest expenses / Total assets (average)
3
ROE = Profit attributable to owners of parent / Shareholders' equity
4
EBITDA = Ordinary profit + Interest expenses + Depreciation
5
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%

7

Amount Deemed to be Capital
225.0 billion yen
50.0 billion yen

(3) Crude Steel Production (JFE Steel)
FY 2016

Non-consolidated
Consolidated

1Q
6.94
7.52

FY 2017

Non-consolidated
Consolidated

7.12
7.53

2Q
7.06
7.62

1H
14.00
15.14

6.98
7.38

14.10
14.91

3Q
7.12
7.66

4Q
7.02
7.61

2H
14.13
15.27
14.60*
15.40*(4) Shipments (JFE Steel on non-consolidated basis)(million tons)
Full year
28.14
30.41
28.70*
30.40**estimate

1Q

2Q

1H

3Q

4Q

(million tons)
2H
Full year

FY 2016

6.26

6.34

12.60

6.43

6.68

13.10

25.70

FY 2017

6.14

6.28

12.42

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

2Q

1H

3Q

4Q

2H

(%)
Full year

FY 2016

43.6

44.1

43.9

43.3

44.9

44.2

44.0

FY 2017

42.1

44.2

43.2

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

2Q

1H

3Q

4Q

2H

(JPY/USD)
Full year

FY 2016

111.1

103.5

107.3

106.1

114.3

110.2

108.8

FY 2017

111.5

110.9

111.2

110*

110*
*estimate(7) Average Selling Price (JFE Steel on non-consolidated basis)
1Q

2Q

1H

3Q

4Q

(thousand yen/ton)
2H
Full year

FY 2016

58.5

58.6

58.6

61.5

72.0

66.8

FY 2017

74.4

73.3

73.8

(8) Engineering Business Orders (including inter-segment transactions)(billion yen)
Field
Environment
EnergyInfrastructure, others
Total

FY2016
157.4
148.9
118.1
424.4

FY2017200.0*
140.0*
160.0*
500.0*

Change
42.6
(8.9)
41.9
75.6
*estimate(9) Debt Outstanding, Interest Expense, and Cash and Deposits(JFE Holdings, consolidated basis)
Debt outstanding
As ofMarch 31, 2017
March 31, 2018
Cash and deposits
As ofMarch 31, 2017
March 31, 2018

Interest expense(billion yen)
1,375.4
1,350.0*

FY 2016
FY 2017(billion yen)
69.9
60.0*

(billion yen)
12.6
13.0*

*estimate8

62.8

(10) Capital Investment and Depreciation Cost (JFE Holdings, consolidated basis)(billion yen)
FY 2016

FY 2017

Capital investment

234.7

230.0*

Depreciation

182.6

160.0*(on construction basis)*estimate(11) Breakdown of Changes in Ordinary Income for Steel Businessa. First half of FY 2017, compared to same period of FY 2016
ChangeOrdinary income- Sales volume, sales prices and raw
materials prices- Cost reductions- Unrealized gains on inventories andothers- Change in depreciation method
-

109.0

1H of FY 2016(billion yen)
1H of FY 2017(24.4)

84.6

22.0
20.0
57.0
11.0

Others

(1.0)

b. FY 2017 forecast, compared to FY 2016
ChangeOrdinary income- Sales volume, sales prices and raw
materials prices- Cost reductions- Unrealized gains on inventories andothers- Change in depreciation method
-

109.5

FY 2016(billion yen)
FY 201740.5

150.0*

118.0
45.0(25.0)
28.0

Others(56.5)*Approximate estimate

c. FY 2017 revised forecasts, compared to initial forecasts on August 1, 2017
ChangeOrdinary income- Sales volume, sales prices and raw
materials prices- Cost reductions- Unrealized gains on inventories andothers- Change in depreciation method- Others

0

FY 2016(billion yen)
FY 2017150.0

150.0*

(2.0)
0
13.0
0
(11.0)*Approximate estimate###

9