Yodogawa Steel Works, Ltd.

Actions to Implement Management that is
Conscious of Cost of Capital and Stock Price
May 14, 2024

Copyright(C) 2024 Yodogawa Steel Works, Ltd. All Rights Reserved.

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Analysis of Current Situation - PBR and ROE

Yodogawa Steel Works, Ltd.

n PBR: 0.70 (as of the end of FY3/24)
à The PBR has been consistently below 1 during the past 10 years, remaining in a range of0.34-0.70.
n ROE: 2.4% (FY3/24)
à The ROE was above 5% in FY3/22 and FY3/23, but declined sharply in FY3/24 due to a large
extraordinary loss. Has not yet achieved a return on equity that exceeds the cost of equity.
10.0%

1.20
PBR (left axis)

ROE (right axis)

1.00

5.9%
4.8%

0.80
0.60

1.8%

0.40

0.50

5.0%

4.1%

8.0%

6.1%
0.70

4.0%

4.0%

2.6%
0.63
0.53

2.4%

0.56
0.40

-1.9%
0.20

6.0%

0.43

0.44

2.0%
0.0%

0.44

0.34

-2.0%

0.00

-4.0%
FY3/15

FY3/16

FY3/17

FY3/18

FY3/19FY3/20FY3/21

FY3/22

FY3/23

FY3/24

An ROE higher than the cost of equity is the highest priority for achieving an appropriate
valuation of Yodogawa Steel stock.
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Sustained Growth and Medium/Long-termCorporate Value GrowthYodogawa Steel Works, Ltd.

n The ROE target for FY3/26 has been increased to 7%.
n Yodogawa Steel maximizes earnings by reexamining its business portfolio andoptimizes capital use by reviewing its capital policy. The goal is an ROE of at least 8%
by the end of the next medium-term plan.

IImprove ROE
Improve PBR(1) Reexaminationn of thebusiness portfolioolioStrengthen current businesses
Creation of new businesses

Optimize use of capitalOital(2) Financial strategy
egy/capital policy

Improve PER(3) IR strategy

Reduction ofcross-shareholdings

Use proceeds to fundinvestments for growth

Maximize earningss

Distributions
stributions to shareholdeshareholders

More IR activities
More disclosure activities

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Sustained Growth and Medium/Long-term
Corporate Value Growth

Yodogawa Steel Works, Ltd.

Upcoming Initiatives(1) Reexamination of the business portfolio
Maximization of earnings by strengthening current businesses while creating newbusinessesn Strengthen current businessesØ Capital expenditures to become more competitive and a shorter cash conversion cycle(inventory reductions and other measures) for higher efficiency

Ø Determination of actions for building a stronger business portfolio (identify
nonprofitable businesses, group reorganization, etc.)
n Creation of new businessesØ Seek opportunities for more alliances and M&A, mainly in business sectors associatedwith current operations, to add new businesses

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Sustained Growth and Medium/Long-term
Corporate Value Growth

Yodogawa Steel Works, Ltd.

Upcoming Initiatives(2) Financial strategy/capital policy
Planning on more sales of cross-shareholdings and more distributions to shareholders
The goal is the optimum capital structure, including the appropriate use of interest-bearing debt
n Reduction of cross-shareholdings
Planned reduction during the Medium-Term Management Plan 2025
Ø Medium-term plan:April 2023-March 2026 (3 years)
Ø Planned reduction: About 30% of End-March 2023 cross-shareholdings, which were 28 billion yen(Billions of yen)

End-March 2023

End-March 2026

ResultForecast
28.0

TargetReduction amount

19.6

8.4

Reduction rate
30.0%Medium/long-term reduction policy
Ø The goal is to reduce cross-shareholdings (balance sheet valuations) to less than 10% ofconsolidated net assets.

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Sustained Growth and Medium/Long-term
Corporate Value Growth

Yodogawa Steel Works, Ltd.

Upcoming Initiatives(2) Financial strategy/capital policyn Distributions to shareholders (Dividend policy)
Ø The amount of equity will be controlled in a suitable manner with the goal of raising theROE to at least 8%.
Ø During the current medium-term plan, the plan is a consolidated dividend payout ratio ofat least 75% while maintaining a fiscal year dividend of no less than 200 yen.
n Cancellation of treasury sharesØ The policy is to keep holdings of treasury shares below 10% of the total number ofoutstanding shares.
Ø Plan to cancel 3 million shares of treasury stock (8.61% of outstanding shares prior to thiscancelation) on May 31, 2024.

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6Sustained Growth and Medium/Long-term
Corporate Value Growth

Yodogawa Steel Works, Ltd.

Upcoming Initiatives(3) IR strategy
Yodogawa Steel places priority on communications with shareholders and investors
and is committed to giving everyone a sound understanding of the Yodogawa SteelGroup by increasing opportunities for shareholder and investor dialogues.
n More investor relations and disclosure activities
Ø Further upgrade earnings announcement presentations and meetings with investors
Ø Enhance information provision to investors through various IR tools

Ø Provide English translations of timely disclosure announcements as required by the Tokyo
Stock Exchange

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Medium-Term Management Plan 2025 Targets

Yodogawa Steel Works, Ltd.

n Some targets in the Yodogawa Steel Group Medium-Term Management Plan 2025 havebeen revised to reflect actions for management with emphasis on the cost of capital andstock price.
Initial Targets

New Management Targets

PeriodObjective

PeriodObjective

Consolidated
operating profit

Every fiscal year

At least 10 billion yen

FY3/26

At least 13 billion yen

ROE

FY3/26

5% or more

FY3/26

7%

Capital expenditures

Three-year total

20 to 25 billion yen

Three-year total

20 to 25 billion yen

Distributions toshareholders

Every fiscal year

Annual dividend of at least 50yen
Consolidated payout ratio of atleast 30%

Every fiscal year

Annual dividend of at least 200 yen
Consolidated payout ratio of at least
75%

Criteria for treasury
share ownershipٕٕEvery fiscal year

About less than 10% of the total numberof outstanding shares

Reduction of CrossshareholdingsٕٕMedium-term plan
period (3 years)

Reduction rate: 30% equivalent
Reduction amount: About 8.4 billion yen

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