FY

2020 / JGP2020
Business Results for the First Half of the
Fiscal Year 2020 (Ending March 31, 2021)
November 18, 2020

Naotaka Miyauchi
Representative Director & President, The Japan Steel Works, Ltd.

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

Cautionary Note

The performance forecasts and other forward-looking statements included in this report are based on the informationthat was available to The Japan Steel Works, Ltd. (the “Company”) and certain assumptions deemed to be reasonable
at the time this report was prepared, and the actual results may differ significantly from these forecasts due to a varietyof reasons.
Unless otherwise noted, values of “previous forecast” means those released on September 18, 2020.

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

1

ＩＮＤＥＸＰＡＲＴ Ⅰ

Results for the First Half of FY2020
05 Results of Orders Received, Net Sales and Income
06 Results of Changes in Factors for Operating Income
07 Results by Segments
08 Results in Industrial Machinery Products Business
09 Results in Material and Engineering BusinessＰＡＲＴ Ⅱ

26 Action for “Rebirth" in Material and Engineering Business
27 Engineering service
28 Exploration and Development of New Businesses: Actions in 5 fields
29 Photonics Business

Reference (32-36):
Change in Business Segment / Change in Sub-segment / Trends of Net
Sales, Operating Income and Profit / Trends of Situation in Assets andCash Flow / Corporate Code of Behavior of JSW (revised on April 1, 2018)

Forecast for FY2020
11 Forecast of Orders Received, Net Sales and Income
１2 Forecast of Changes in Factors for Operating Income
１3 Forecast by Segments
１4 Forecast in Industrial Machinery Products Business
１5 Forecast in Material and Engineering Business16 Capital Investment, Depreciation, Cash Flows,

Financial Position and R&D costs
１7 Trend for Order Backlog

ＰＡＲＴ ⅢMEDIUM-TERM MANAGEMENT PLAN
“JGP2020”AND BUSINESS OVERVIEW
19 Medium-Term Management Plan “JGP2020” andCorporate Vision for FY2030
20 JGP2020：3 Basic Policies (priority issues)
21 Market Conditions of Major Products in Industrial Machinery Business
22 Market Condition of Major Products in Material and Engineering Business
23 Film and sheet manufacturing equipment
24 Molding machine
25 After-sales service©2020 The Japan Steel Works, Ltd. All Rights Reserved.

2

Composition of Business Segments and Major Products
Business
Segments

Industrial Machinery
Products Business

Material and Engineering
Business

Other
Businesses

Organizations

Plastic Machinery B.D. / Injection Molding Machinery B.D. /Industrial Machinery B.D. / Ordnance Business H.Q.

Japan Steel Works M&E, Inc.

New Business
Promotion H.Q.

Hiroshima

NagoyaYokohama

MuroranProduction
Bases

Plastic production and processing
machinery・Pelletizers
・Film and sheet manufacturing
equipment
・Twin-screw extruders
・After-sales services

Steel castings and forgings

Molding machines
・Plastic injection molding
machines
・Magnesium alloy injection
molding machines
・Blow molding machines
・After-sales services

・Parts for reactors(shell, head etc.)
・Parts for steam
generators

・Rotor shafts
・Turbine Casings
・Die steel
・Steel rolls for steel
manufacturing

New
Business・Aircraft
・Hydrogen・Crystal・Thin film
・Advanced
materials

Products

Clad Steel Products

Engineering Services

・Clad steel plates
・Clad steel pipes

・Steel structure for plant andmaterials
infrastructure
・Non-destructive inspection andanalytical inspection services, etc.

・Metallic

Other machinery・Excimer laser annealing ・Laminators(ELA) systems
・Deposition systems
・Defense equipment
・After-sales services
・Railway products・Hot press devices

Markets

Petrochemicals

Industrial
Machinery

Automobiles©2020 The Japan Steel Works, Ltd. All Rights Reserved.

Information
Technology

DefenseElectric Powerand SteelOil andNatural Gas

NaturalEnergyNew
Business

3

RESULTS FOR THE FIRST HALF OF
THE FISCAL YEAR 2020 (ENDING MARCH 31, 2021)
PART Ⅰ©2020 The Japan Steel Works, Ltd. All Rights Reserved.

4

Results of Orders Received, Net Sales and Income

Orders received, net sales and profit decreased year on year.
（in billions of yen)

FY2019FY2020First half
resultFirst half
resultChange fromyear-ago
period(A)(B)(B)-(A)FY2020
Full year
revisedforecast(C)

Ratio torevisedforecast(B)/(C)

Orders received

112.8

78.5

(34.3)

205.0

38.3%

Net sales

106.2

90.1

(16.1)

195.0

46.2%

Operating income

11.1

4.7

(6.4)

10.0

47.0%

(ratio)

10.5%

5.2%

(5.2%)

5.1%-

Ordinary income

12.1

5.0

(7.1)

10.0

50.0%

Profit/Loss

5.2

3.5

(1.7)

6.5

53.8%

Profit/Loss per
share (yen)

70.82

48.69

△22.13

88.40

55.1%

Dividends per share
(yen)

27.5

17.5

△10.0

35.0

50.0%

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

5

Results of Changes in Factors for Operating Income
Decreased by 6.4 billions of yen due to production, sale and price levels
and retirement allowance reserves.
（in billions of yen）

11.1

(4.9)

+8.0

Production,
sale andprice levels

FY2019
1st half
result©2020 The Japan Steel Works, Ltd. All Rights Reserved.

Variable
costs

(1.6)
(0.7)
Retirement
allowance
reserves

4.7
Unclassifiable
costs, etc.

FY2020
1st half
result6

Results by Segments
In both segments, net sales and operating income decreased year on year.
Industrial Machinery Products Business（in billions of yen)

FY2019FY2020First half
resultFirst half
resultChange fromyear-ago
period(A)(B)(B)-(A)FY2020
Full year
revisedforecast(C)

Ratio torevisedforecast(B)/(C)

Orders received

86.5

60.3

(26.2)

153.0

39.4%

Net sales

87.2

73.1

(14.1)

152.0

48.1%

Operating income

10.7

8.2

(2.5)

15.0

54.7%

(ratio)

12.3%

11.2%

(1.1%)

9.9%-

Material and Engineering Business（in billions of yen)

FY2019FY2020First half
resultFirst half
resultChange fromyear-ago
period(D)(E)(E)-(D)

FY2020
Full year
revisedforecast(F)

Ratio torevisedforecast(E)/(F)

Orders received

24.9

16.7

(8.2)

48.5

34.4%

Net sales

17.4

15.9

(1.5)

40.0

39.8%

Operating income

1.6

0.2

(1.4)

1.5

13.3%

(ratio)

9.2%

1.3%

(7.9%)

3.8%-©2020 The Japan Steel Works, Ltd. All Rights Reserved.

7

Results in Industrial Machinery Products BusinessNet sales decreased mainly in molding machines.
Orders received decreased in all products.
Orders
Received

Net Sales andOperating Income（in billions of yen)

FY2019(B)-(A)FY2020
Full year
revisedforecast
(C)

29.2

(2.1)

61.0

47.9%

34.3

20.8

(13.5)

60.0

34.7%

34.5

23.5

(11.0)

50.0

47.0%

29.1

21.8

(7.3)

50.0

43.6%

Other products

21.4

20.4

(1.0)

41.0

49.8%

23.1

17.7

(5.4)

43.0

41.2%

Total

87.2

73.1

(14.1)

152.0

48.1%

86.5

60.3

(26.2)

153.0

39.4%

Operatingincome

10.7

8.2

(2.5)

15.0

54.7%

First half
resultFY2020（in billions of yen)

ChangeFirst half from yearresult ago period

(A)

(B)

Plastic
production andprocessing
machinery

31.3

Molding
machines©2020 The Japan Steel Works, Ltd. All Rights Reserved.

Ratio torevisedforecast

FY2019FY2020First half
result(B)/(C)(D)(E)(E)-(D)

FY2020
Full year
revisedforecast(F)

ChangeFirst half from yearresult ago period

Ratio torevisedforecast(E)/(F)

8

Results in Material and Engineering Business

Orders received decreased mainly in clad steel plates and pipes.
Orders
Received

Net Sales andOperating Income（in billions of yen)

FY2019First half
result(A)

FY2020(B)-(A)FY2020
Full year
revisedforecast(C)

ChangeFirst half from yearresult ago period(B)（in billions of yen)

FY2019FY2020

Ratio torevisedforecast

First half
result(B)/(C)(D)(E)(E)-(D)

FY2020
Full year
revisedforecast(F)

ChangeFirst half from yearresult ago period

Ratio torevisedforecast(E)/(F)

Steel castings
and forgings

9.5

9.5

0.0

20.5

46.3%

11.5

10.1

(1.4)

21.0

48.1%

Clad steel
plates and pipes

2.9

2.7

(0.2)

11.0

24.5%

9.3

0.9

(8.4)

18.0

5.0%

Engineering,
etc.

5.0

3.7

(1.3)

8.5

43.5%

4.1

5.7

1.6

9.5

60.0%

Total

17.4

15.9

(1.5)

40.0

39.8%

24.9

16.7

(8.2)

48.5

34.4%

Operatingincome

1.6

0.2

(1.4)

1.5

13.3%

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

9

FORECAST FOR THE FISCAL YEAR 2020
(ENDING MARCH 31, 2021)
PART Ⅱ©2020 The Japan Steel Works, Ltd. All Rights Reserved.

10Forecast of Orders Received, Net Sales and Income
We revised up our financial forecast. Still, Orders received, net sales andoperating income decrease year on year.
(in billions of yen)

Full Year

Changefrom last
year

(C)

(C)-(A)

Changefromprevious
forecast(C)-(B)

205.0

(6.5)

7.0

104.9

195.0

(22.5)

5.0

4.7

5.3

10.0

(8.7)

3.0

3.7%

5.2%

5.1%

5.1%

(3.5%)

1.4%

19.9

7.0

5.0

5.0

10.0

(9.9)

3.0

9.3

4.0

3.5

3.0

6.5

(2.8)

2.5

Profit/Loss per
share (yen)126.66

5.40

48.69

39.71

88.40

(38.26)

83.00

Dividends per share
(yen)

45.0

3.5

17.5

17.5

35.0

(10.0)

31.5

FY2019FY2020ResultPrevious
forecast(A)(B)

Orders received

211.5

198.0

78.5

126.5

Net sales

217.5

190.0

90.1

Operating income

18.7

7.0

(ratio)8.6%

Ordinary income

Profit/Loss©2020 The Japan Steel Works, Ltd. All Rights Reserved.

FY2020 Revised forecast
1st Half

2nd Half11Forecast of Changes in Factors for Operating Income
Decrease by 8.7 billions of yen due to production, sale and price levels andretirement allowance reserves. 3.0 billions increase from previous forecast.
187（in billions of yen）

△77

+19

+1

△16
△14
100
（70）

（+3）
（△94）

（+4）

Production,
sale andprice levels

Variablecosts

FY2019Result©2020 The Japan Steel Works, Ltd. All Rights Reserved.

Fixed costs（△16）
Retirement
allowance
reserves（△14）
Unclassifiable
costs, etc.

※（ ）indicates previous forecast

FY2020
Forecast
12Forecast by Segments

Orders received, net sales and operating income increase from previous
forecast in industrial machinery products business.
Industrial Machinery Products Business
FY2019Result(in billions of yen)

FY2019FY2020Previous forecast Revised forecast

(A)

(B)

(C)

Change fromlast year

Change fromprevious forecast(C)-(A)(C)-(B)

Orders received

162.6

147.0

153.0

(9.6)

6.0

Net sales

171.4

147.0

152.0

(19.4)

5.0

Operating income

19.2

11.5

15.0

(4.2)

3.5

(ratio)

11.2%

7.8%

9.9%

(1.3%)

2.0%

Material and Engineering Business
FY2019Result(in billions of yen)

FY2019FY2020Previous forecast Revised forecast

(D)

(E)

(F)

Change fromlast year

Change fromprevious forecast(F)-(D)(F)-(E)

Orders received

46.2

48.5

48.5

2.3

0.0

Net sales

42.8

40.0

40.0

(2.8)

0.0

Operating income

2.7

1.5

1.5

(1.2)

0.0

(ratio)

6.3%

3.8%

3.8%

(2.6%)

0.0%©2020 The Japan Steel Works, Ltd. All Rights Reserved.

13

Forecast in Industrial Machinery Products Business
We revised up from previous forecast. Still, decrease is forecasted due tomolding machines year on year.
Net Sales andOperating Income
FY2019FY2020

FY2020ResultPrevious
forecast

Revisedforecast

Orders
Received(in billions of yen)
ChangeChangefromfrom last
previous
year
forecast(C)-(A)(C)-(B)FY2019FY2020

FY2020ResultPrevious
forecast

Revisedforecast

(D)

(E)

(F)

(in billions of yen)
ChangeChangefromfrom last
previous
year
forecast(F)-(D)(F)-(E)

(A)

(B)

(C)

Plastic
production andprocessing
machinery

61.3

61.0

61.0

(0.3)

0.0

60.8

59.0

60.0

(0.8)

1.0

Molding
machines

65.3

45.0

50.0

(15.3)

5.0

53.3

45.0

50.0

(3.3)

5.0

Other products

44.8

41.0

41.0

(3.8)

0.0

48.5

43.0

43.0

(5.5)

0.0

Total

171.4

147.0

152.0

(19.4)

5.0

162.6

147.0

153.0

(9.6)

6.0

Operatingincome

19.2

11.5

15.0

(4.2)

3.5

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

14

Forecast in Material and Engineering BusinessNet sales decrease while orders received increase year on year.
Net Sales andOperating Income

Orders
Received(in billions of yen)
ChangeChangefromfrom last
previous
year
forecast(C)-(A)(C)-(B)FY2019FY2020

FY2020ResultPrevious
forecast

Revisedforecast

(A)

(B)

(C)

Steel castings
and forgings

19.6

20.5

20.5

0.9

Clad steel
plates and
pipes

12.8

11.0

11.0

Engineering,
etc.

10.4

8.5

Total

42.8

Operatingincome2.7(in billions of yen)
ChangeChangefromfrom last
previous
year
forecast(F)-(D)(F)-(E)FY2019FY2020

FY2020ResultPrevious
forecast

Revisedforecast

(D)

(E)

(F)

0.0

22.9

21.0

21.0

(1.9)

0.0

(1.8)

0.0

14.9

18.0

18.0

3.1

0.0

8.5

(1.9)

0.0

8.4

9.5

9.5

1.1

0.0

40.0

40.0

(2.8)

0.0

46.2

48.5

48.5

2.3

0.0

1.5

1.5

(1.2)

0.0

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

15

Capital Investment, Depreciation, Cash Flows,
Financial Position and R&D costs
Capital investment and depreciation
Capital Investment

10.5

6.4
4.0

4.4

FY2017FY2018

0.44

6.6

5.7

FY2020
Forecast(27.6)FY2017(22.8)FY2018

Free cash flow

26.7
12.0

18.9

50.8

56.7

(24.6)FY2019(28.3)FY2020 Mid

Industrial Machinery

Material and Engineering

New Business

4.2

4.3

4.5

4.7

FY2016FY2017FY2018FY2019

5.0

10.5

1.1
(1.6)
(5.0)

5.7

(0.2)
(1.3)
(13.1)(13.6)FY20160.42

R&D costs

Investing cash flow

21.7

0.38

51.5

Cash flows
Operating cash flow

134.8

132.4

0.40

51.4

FY2019Interest-bearing debt
D/E ratio

129.8

118.6

7.8

FY2016

Net assets
Net interst-bearing debt

14.0

Depreciation

9.9

9.5

Financial position（in billions of yen）

FY2017FY2018FY20191.0(9.5)
FY2020
Forecast©2020 The Japan Steel Works, Ltd. All Rights Reserved.

FY2020
Forecast

16

Trends of Order Backlog（in billions of yen）

Trend for Order Backlog by Business Segments
Industrial Machinery

187.8

Material and Engineering

183.7

Other Business

187.8
177.7

164.4
43.7

36.5

143.0

145.1

FY2017FY2018

40.1

49.2

37.8

125.9

FY2016

136.4

137.4

FY2019FY2020
Forecast©2020 The Japan Steel Works, Ltd. All Rights Reserved.

17

MEDIUM-TERM MANAGEMENT PLAN “JGP2020”AND
BUSINESS OVERVIEWPART Ⅲ©2020 The Japan Steel Works, LTD. All Rights Reserved.

18

Medium-Term Management Plan “JGP2020” and Corporate Vision for
FY2030Developing Foundations for Growth FY2030

JGP2020 To establish the ground to realize our growthin the “Next 10 Years”

JGP2020
Industrial Machinery Products Business
Material and Engineering Products Business

JGP2017

Apr. 2019
Absorption mergerof Nikko
Information
System Co.

Apr. 2019
Acquisition of
GM Engineering
Co.

Nov. 2019
Acquisition of
Nichiyu MachineryCo., Ltd.

2018～2020
Investment for greater production capacity
at Hiroshima plant

Expansion of theexisting businessRestructuring of the
production system“Aggressive Management”
Sowing and nurturing of seeds
for expansion of our business fields
Securing profitability in the current scale
Exploration of the new opportunities
Apr. 2019
Cooperation with
Tsukishima Kikai Co.
2018～2020©2020 The Japan Steel Works, Ltd. All Rights Reserved.

Jul. 2019
Establishment of
Muroran Copper
Alloy, Co.

New business,
M&A

2020
Absorption merger
with Meiki Co.

Expansion of the businessscalesFosteringnew businessContinuous profit making
from the existing business
Apr. 2020
Establishment of Japan
Steel Works M&E, Inc.

Investment for clad steel business

19

JGP2020：3 Basic Policies (priority issues)

ＪＧＰ２０２０ ～Developing foundation for 2030～◆”Growth” in Industrial Machinery Products Business,“Rebirth in Material and Engineering Business
Achievement up to the Second Quarter of FY2020
I.

Optimization ofManagement Resources
and Strengthening ofAlliances

II. Strengthening after-sales
services (stock-based
business)
III. Increase exploration andfostering of new
businesses©2020 The Japan Steel Works, Ltd. All Rights Reserved.

 Expansion of plastic processing machine complex
Acquisition of GM Engineering Co. and Nichiyu Machinery Co. , Ltd.
Absorption merger of with Meiki, Co.

 Split out of Material and Engineering Business(Establishment of Japan Steel Works M&E, Inc.) Cooperation with Tsukishima Kikai Co.
 Establishment of Muroran Copper Alloy, Co.
 Building factory specialized for after-sales services in
Hiroshima Plant
 Built new parts center in Europe
 Established promotion offices and facilitating thecommercialization in 5 fields

20Market Conditions of Major Products in Industrial Machinery
Business
Industrial Machinery
Products BusinessClimate(Sep. 18th ⇒Nov. 18th)

Film and sheet
manufacturing
equipment
Pelletizers

Market Condition
There are signs of recovery from downturn by
COVID-19. For separator-film-use, market is in trendof recovery.
Active market continues mainly in China.

Twin-screw extruders

While the market is unclear for the recession fromlast year and COVID-19, the number of quotation isincreasing.

Molding machine

While market was severe due to the recession fromlast year and COVID-19, recovery is expected.

FPD Equipment

While demand for smartphone is recovering mainly in
China, market for FPD Equipment is not active yet.
Recovery is expected in the next fiscal year or later.

After-sales services

While the demand decreased in the first quarter due
to COVID-19, the market is expected to recovergradually.

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

21

Market Condition of Major Products in Material and Engineering
Business
Material andEngineering BusinessClimate(Sep. 18th ⇒Nov. 18th)

Market Condition

Steel forgings andcastings

Severe condition continues due to COVID-19.

Clad steel plates andpipes

There is a concern that a large amount of order shifts
to the next year because of delay in LNG project due
to the downfall of crude oil prices.

Engineering service

While market is unclear due to COVID-19, plantrenovation is steady.

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

22

Film and Sheet Manufacturing Equipment
Forecast for numbers of units produced
for electric vehicle (PHEV＋EV)
Policy-based forecast（thousandsof units）

Market-based forecast

Our action

35,00030,00025,0001Strengthening quality

2

Strengthening maintenancefor increased numbers ofexisting equipment

20,00015,000approx.
3 times

10,000
5,000
0
2020

2021

2022

2023

2024

2025

: making efforts to develop
equipment for high-density
batteries together with ourcustomers

2030

Reference: Made by The Japan Steel works, Ltd. based on "2020 CURRENTSTATUS AND FUTURE PROSPECTS OF XEV LIB MARKET ～1ST HALFREPORT～" (※) by Yano Research Institute Ltd.

While the difference is large between policybased forecast and market-based forecast,numbers will increase within this range.
※ Values for 2020 are estimate and values for 2021 and beyond are forecast (as of July 2020).
Values indicate manufacturer production volume. Both PHEV and EV include commercial vehicles(buses, trucks, logistics vehicles, special-purpose minivans, etc.). Policy-based forecast is basedon a scenario where the EV market will continue to grow in 2020, especially in Europe, against the
backdrop of global moves to tighten environmental regulations, promotion policies in eachcountry, and a shift to electrification by automakers. The market-based forecast is based on a
scenario in which the EV market in 2020 will also be below the previous year's level due to theeconomic slowdown caused by COVD-19, backed by consumer needs such as ease of use andaffordability of vehicles.

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

Film and sheet manufacturing equipment

23

Molding Machine
Orders received for molding machines（in millions of yen）

25,00020,00015,00010,0005,000
0FY2017
1Q

2Q

3Q

4Q

FY2018
1Q

2Q

3Q

Market condition
Domestic

4Q

FY20191Q

3Q

4Q

FY2020
1Q

2Q

3Q

4Q

Our action and target market

Moderate recovery after bottoming
out in the first quarter

1

 The automotive sector will start to recover in
3Q, due to electric vehicles and emissions
regulations.

Strengthening the household goods andsundries sector

2

Targeting the automotive sector
I.
Introducing a new series of large
machines
II. Expand the lineup of 2 Platen Ultra
Large Injection Molding Machine
III. Introduction of a large-scale
magnesium molding machines

3

Expanding the supply capacity of locallymanufactured machines in China and North
America

Differences in recovery pace by region

Overseas2Q

 China, Taiwan and part of ASEAN:
Electronic components are strong, medical
and containers are also firm.
 North America:
Signs of recovery starting from 3Q
 Europe: needs more time for recovery, but
after the end of Corona, investment in theautomotive sector is expected to increase.

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

24After-sales Service
Sales of after-sales services

（※）

Sales

2.5

Proportion

25%

2.0

20%

1.5

15%

1.0

10%

0.5

5%

0.0

0%
FY2014FY2015FY2016FY2017FY2018FY2019FY2020※ The index with FY2014 sales set at 1

Characteristics

stability

Our action
1

Providing a high level of service2

Solution Proposal

3

Expansion of remotecorrespondence

Profitability

 Growth in proportion to the cumulative
number of machines delivered.
 We aim to further increase through ouractions.
©2020 The Japan Steel Works, Ltd. All Rights Reserved.

• Establishment of a new factory dedicatedto after-sales service• Local service personnel augmentation in
China to increase the number of
equipment deliveries

25Action for “Rebirth" in Material and Engineering Business
Strengthening earning base through reorganization of business portfolio

RebirthSteel Castings andForgings

For reorganization of theentire group in material andengineering business, Japan
Steel Works M&E, Inc. wasestablished. (April 2019)

Reorganize product portfolio
and expand product line up.

Engineering
Services
Establish the third pillar in thefield of plant, infrastructure,
construction, maintenance,
testing and inspection services

Clad Steel Plates
and Pipes
With investment for production
efficiency, further strengthen
our "strong products" that are
expected to grow.

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

26

Engineering Service
We provide comprehensive engineering services that consolidate the various
technologies we have worked on, from design, fabrication and construction toinspection, repair and maintenance.
Inspection Services

Maintenance
Maintenance in oil refinery and petrochemical plants
Weld repair / maintenance suggestions / material
evaluation and life assessment

Integrated Construction

Inspection of plant
equipment, fromgeneral nondestructive
testing to the latest
inspection methods

Engineering
Service

Wide range of construction, civilengineering, and greening work

Welded Structure
Manufacturing
Manufacture of welded structures in various
fields, from bridge components to industrialuse
Deviation
saddleTowersaddleEastsaddleFerris wheel
spindleDeviation
saddleSpindle©2020 The Japan Steel Works, Ltd. All Rights Reserved.

27

Exploration and Development of New Businesses: Action in 5 Fields
We have established promotion offices to tap into six areas and are in the process offacilitating the commercialization of their products.
Photonics Office

JSW Afty Co.,Ltd.

Fine Crystal Co., Ltd.
Fine Crystal Iwaki Co., Ltd.

Metallic Materials
Business
Promotion Office

Aircraft Business
Promotion Office

Advanced
Materials Business
Promotion OfficeHydrogen
Business
Promotion Office

Muroran Copper
Alloy, Co.

JSW MuroranGroup

JSW Hiroshima

Japan SteelWorks M&E, Inc.

Film-forming equipment
such as ECR film-forming
equipment and ALD
equipment

Development andprocessing of artificial
crystals and lithium
niobate crystals

Manufacture of copper
alloys and other different
types of new metalmaterials

Manufacture ofcomponents and materials
for privately operated
aircraft using CFRP
composite materials,
among other materials

Manufacture of organic
composite materials forautomotive and battery
applications

Manufacture of highly
durable hydrogenpressure vessels/storagetanks

Semiconductors
and electronic
devices

Cameras, 5G
and sensing

Electronic partsand metal
materials

Aircraftequipment andparts

Automobiles andbatteries

HydrogenenergyNew materials
Mobility

Telecommunications & 5G

Environment & Energy

Megatrends
Increase in population and change in structure
Progress of urbanization

Progress of technologies

Climate change andresource shortages

We will contribute to providing solutions to future social issues with an eye on the megatrends.
We will contribute to the sustainable growth of society and achieve the sustainable enhancement of corporate value.

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

28

Photonics Business
Developed a mass production method for gallium nitride single crystal substrates
 Jointly with Tohoku University and Mitsubishi
Chemical Co., we developed a crystal growthmethod that enables the mass production of singlecrystal substrates larger than 2 inches.
 We will contribute to realize the next generation of
power electronics through supply of larger-diameterhigh quality substrates.

5mm

GaN crystal grown on a seed crystal

Contributing to the development of the information and communication field witha focus on “crystals” and “LN crystals”
 We began full-scale mass production of
optical low-pass filters for digital cameras at
an affiliate in China.
 We will establish a supply system for various
crystal substrates as device materials for
optical communication and sensing fields
within 5 years.

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

100mm

Manufacturing ofartificial crystal

Production of lithium
niobate (LN) crystal29©2020 The Japan Steel Works, Ltd. All Rights Reserved.

REFERENCE©2020 The Japan Steel Works, Ltd. All Rights Reserved.

31

Change in Business Segment

Until FY2019

From FY2020

Industrial Machinery Products
Business

Industrial
Products
Industrial Machinery
Machinery Products
Business
Business

Steel and Energy Products
Business

Other Businesses©2020 The Japan Steel Works, Ltd. All Rights Reserved.

Maintenance ofwind turbine

Material
Engineering
Material andand Engineering
Business
Business
Other Businesses

32Change in Sub-segment
Until FY2019

Industrial Machinery Products
Business

From FY2020

Industrial Machinery Products
Business

GM Engineering Co., Ltd.
Nichiyu Machinery Co., Ltd.
SM Platek Co., Ltd.

Plastic production and processing machinery

Plastic production and processing machinery

Molding machine (Consolidated)

Molding machine

FPD Equipment (Consolidated)
Other Products

Other Products
Consolidated subsidiaries, etc.

※GM Engineering：Sheet manufacturer
Nichiyu Machinery：Wider manufacturer
SM Platek (South Korea) ：Twin-screw extruder manufacturer

Steel and Energy Products
Business
Steel castings and forgings

Pressure vessel foroil refineries

Material and Engineering
Business
Steel castings and forgings

Clad steel plates and pipes

Clad steel plates and pipes

Consolidated subsidiaries, etc.

Engineering, etc.
Maintenance ofwind turbine

Other Businesses©2020 The Japan Steel Works, Ltd. All Rights Reserved.

Other Businesses
33Trends of Net Sales, Operating Income and Profit(in billions of yen)

FY2014FY2015FY2016FY2017FY2018FY2019FY2020(forecast)

194.6

223.3

212.4

212.9

220.1

217.5

195.0

Industrial Machinery Products Business

126.3

144.3

159.3

170.2

173.6

171.4

152.0

Plastic production and processing machinery

32.5

36.4

36.1

50.2

52.5

56.9

61.0

Molding machines

53.6

56.4

57.6

64.5

72.7

65.3

50.0

FPD equipment

-

-

-

-

16.4

11.4

-

Other products

25.0

32.6

46.8

37.0

20.4

22.5

41.0

Consolidated subsidiaries, etc.

15.2

18.9

18.8

18.5

11.6

15.3

-

66.2

74.8

51.2

40.8

41.2

41.4

40.0

Steel castings and forgings

-

-

-

-

-

22.3

20.5

Electric and nuclear power

27.4

19.2

19.3

17.2

12.5

-

-

Pressure vessel for oil refineries

4.2

1.4

1.7

1.0

-

-

-

Clad steel plates and pipes

16.2

39.3

13.5

7.0

13.0

12.8

11.0

Engineering, etc.

-

-

-

-

-

-

8.5

Wind turbines

5.7

1.2

3.9

1.6

-

-

-

Other products

7.0

6.9

5.3

5.5

9.5

-

-

Consolidated subsidiaries, etc.

5.7

6.8

7.5

8.5

6.2

6.3

-

Other Businesses

2.0

4.0

1.8

1.7

5.2

4.6

3.0

7.5

14.4

12.3

21.3

24.2

18.7

10.0

Industrial Machinery Products Business

11.3

12.4

15.1

23.8

23.5

19.2

15.0

Material and Engineering Business

(3.9)

0.7

(2.8)

(1.5)

2.6

2.4

1.5

0.9

2.0

0.9

0.8

0.3

(0.1)

(0.5)

(5.3)

(16.6)

(4.9)

10.7

19.9

9.3

6.5

Net Sales

Material and Engineering Business

Operating Income

Other Businesses
Profit※Sub-segment changed in FY2020;
 Three subsidiaries (GME, Nichiyu and SMP), which used to be included in “Consolidated subsidiaries, etc.,” is now included in “Plastic production and processing machinery.” “FPD equipment” and “Consolidated subsidiaries, etc.” is now included in “Other products.”
 Pressure vessel for oil refineries, which used to be included in “Steel castings and forgings,” and maintenance of wind turbines, which used to be included in “Other Businesses,” is now included in “Engineering, etc.”©2020 The Japan Steel Works, Ltd. All Rights Reserved.

34

Trends of Situation in Assets and Cash Flow(in billions of yen)

FY2014FY2015FY2016FY2017FY2018FY2019FY2020(forecast)

Total Assets

319.6

293.1

275.3

297.4

305.5

297.1

-

Industrial Machinery Products Business

108.4

124.3

123.7

128.1

150.0

149.9

-

Material and Engineering Business

111.4

60.2

37.5

40.3

39.3

39.3

-

Other Businesses

13.0

12.0

11.8

11.7

14.6

8.0

-

Net Assets

138.2

111.3

107.5

118.6

129.8

132.4

-

Net Assets per Share (yen) ※368.81

299.41

1,446.44

1,592.47

1,746.91

1,778.94-

Equity Ratio (%)

42.7

37.5

38.6

39.3

42.0

44.0

-

Return on Equity (%)(3.9)(13.5)

(4.6)

9.6

16.3

7.2

-

Operating Cash Flow

11.5

19.7

12.0

26.7

1.1

18.9

-

Investing Cash Flow

(2.6)

(12.1)(13.5)

(5.0)

(1.3)

(13.1)-

Financing Cash Flow

(2.9)

4.7

(1.2)

(2.4)

(3.7)

(6.1)

-

Cash and Cash Equivalents at End of the Period

49.1

61.4

58.6

77.8

73.8

74.4

-

※Since FY2016, amounts are after reserve split of stocks©2020 The Japan Steel Works, Ltd. All Rights Reserved.

35

Corporate Code of Behavior of JSW (revised on April 1, 2018)
At The Japan Steel Works, Ltd., we will comply with all laws and international rules, both to the letter and in spirit, and fulfill our social
responsibilities with a strong sense of ethics in Japan and overseas as a company that aims to realize a sustainable society based on thefollowing ten principles.
1. To promote sustainable economic growth and the resolution of social issues, we will develop useful products, technologies and services thatgive consideration to safety through innovation and provide them to society.
2. We will conduct appropriate transactions and responsible procurement based on fair and free competition. We will also maintain soundrelationships with political and government bodies.
3. To enhance our corporate value, we will make appropriate corporate information available to the public willingly and fairly and haveconstructive dialogues with a wide range of stakeholders.
4. We will respect the human rights of all people.
5. We will earn the trust and satisfaction of society and customers by responding promptly to inquiries from customers after reflecting themarket and customer needs in our products, technologies and services.
6. We will provide a sound working environment by developing workstyles that respect the diversity, personality and individuality of employees.
7. We will take actions proactively, recognizing that addressing environmental issues is an important duty for us as a company.
8. We will participate in the community and contribute to its development as a corporate citizen.

9. We will conduct thorough and systematic crisis management against antisocial forces, terrorism, cyberattacks and natural disasters, etc.
that will pose a threat to civil society and corporate activities.
10. Recognizing the realization of the spirit of this code of behavior as its own role, our management will make it fully known to the employeesof the Company and its affiliates after establishing effective governance and encourage the chains to perform acts based on the spirit ofthis code of behavior.
If any situation that will lose the trust of society occurs in conflict with the spirit of this code of behavior, our management will take theinitiative in solving the problem, investigating the cause and preventing recurrence to fulfill our responsibility.

©2020 The Japan Steel Works, Ltd. All Rights Reserved.

36