Business Results for the Fiscal Year
Ended March 31, 2017
May 19, 2017
The Japan Steel Works, LTD.
Naotaka Miyauchi, Representative Director & President

Cautionary Note

The performance forecasts and other forward-looking statements included inthis report are based on the information that was available to The Japan SteelWorks, LTD. (the “Company”) and certain assumptions deemed to bereasonable at the time this report was prepared, and the actual results may
differ significantly from these forecasts due to a variety of reasons.
Unless otherwise noted, “previous forecast values” are those released on
November 15, 2016.

Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

1

Contents
P1

Cautionary Note

P15

P2

Contents

P3

Structure and Products of Business Divisions

P4

Section 1 Actual Results for the Fiscal Year Ended March 31, 2017P5

1. Consolidated Actual Results for FY2016

P6

2. Increase/Decrease in Operating Income

4. Forecast for Steel and Energy Products Business: By Major Products[Net sales, Operating income, Orders received]

P16

5. Forecast for Industrial Machinery Products Business: By Major Products[Net sales, Operating income, Orders received]

P17

6. Order Backlog

P18

Section 3 Progress of Medium-term Management Plan “JGP2017”
and future direction(compared to the previous fiscal year)

P19

1. Medium-term Management Plan JGP2017 (FY2015-2017)

P7

3. Net Sales, Operating Income and Orders Received by Segment

P20

2. JGP2017 Trend of Business Results

P8

4. Steel and Energy Products Business: By Major Products[Net sales, Operating income, Orders received]

P21

3. Increase profitability of existing businesses (JGP2017 Basic Strategy 1)
Situation of Main Products

P9

5. Industrial Machinery Products Business: By Major Products

P22

4. Foster New Products & Businesses and Make Them Competitive
as Soon as Possible (JGP2017 Basic Strategy 2)

P23

5. Reinforce Group Management and Promote Alliances (JGP2017 Basic Strategy 3)

P24

6. Financial Strategies

P25

7. Trend of Business Results[Net sales, Operating income, Orders received]

P10

6. Capital Investment, Depreciation, Cash Flows and Financial Position

P11

Section 2 Projection for the Fiscal Year Ending March 31, 2018P12

1. Projection for FY2017

P13

2. Forecast for Increase/Decrease in Operating Income

Steel and Energy Products Business, Industrial Machinery Products Business

P26

8. Restructuring of Steel and Energy Products Business

P27-31

9. With a view to the next Medium-term Management Plan “JGP2020”(compared to FY2016 actual results)

P14

3. Projected Net Sales, Operating Income and Orders Received
by Segment

Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

2

Structure and Products of Business Divisions
Business
Segments

Steel and Energy Products BusinessIndustrial Machinery Products Business

Product Business
Divisions

Steel Business Division

Machinery Business Division / Molding Machines Business
Division/ Ordnance Business Headquarters

Muroran Plant

Hiroshima Plant

Real Estate
andOther Businesses

Yokohama Plant

Production
Bases[Cast and Forged Steel [Steel Plates and Structures]
Products]○Clad steel plates/ clad steel pipes○Electric and nuclear power

Products○Other•Steel rolls for steel
manufacturing•
Die steel[Plastics Machinery]○Plastic production and processing machinery ○Molding machines•
Plastic injection molding machines•
Pelletizers ・ Film and sheet equipment•
Blow molding machines•
Compounding twin-screw extruders(TEX/TEK)○Effective
use ofthe landowned bythe Company○Pressure vessels for oil refineries[Other Machinery]○Light alloy injection molding
machines•
Magnesium alloy injection molding
machines[Wind Turbines]○Laser plasma related equipment•
Laser annealing (ELA) systems•
Thin-film coating machines○Steel pressure vessel for hydrogenstorage○Defense equipment○Railway products

Markets

Electric powerand steelOil andnatural gas

Natural energy Petrochemicals

Copyright (C) 2017 The Japan Steel Works, LTD. All Rights Reserved.

○Compressors

Industrial
Automobiles
machinery

IT

DefenseReal estate
rental3Section 1
Actual Results for the Fiscal Year Ended March 31, 2017

Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

4

1. Consolidated Actual Results for FY2016
Although operating income was higher than the previous forecast, FY2016
ended in a loss due to the posting of an impairment loss.
(Unit: Billions of yen)

FY2015(A)

FY2016
Previous
Actualforecast
results(B)(C)

Compared
to previousyear(C)-(A)

Compared
to previous
forecast(C)-(B)

Ordersreceived

211.6

210.0

177.5

(34.1)(32.5)Net sales

223.3

220.0

212.4

(10.9)(7.6)

Operatingincome

14.4

12.0

12.3

(2.1)

0.3

(ratio)Ordinary
income

6.5%

5.5%

5.8%

14.1

12.0

12.1

(2.0)

0.1

Profit (Loss)(16.6)

8.0

(4.9)

11.7

(12.9)

Profit (Loss)per share (yen)(226.6)108.8(67.6)

159.0(176.4)

Dividends per
share (yen)

25.0

25.0

25.0

0.0

0.0

*The Company conducted a 1-for-5 reverse common stock split effective on October 1, 2016. For the sake of simplicity, the profit (loss) per
share and dividends per share in the table above are calculated using the number of shares after the reverse stock split.

Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

5

2. Increase/Decrease in Operating Income (compared to the previous fiscal year)
Operating income fell due to decreases in production, sales
and prices in the Steel and Energy Products Business.

(Unit: Billions of yen)

14.4

Increase/decreas
e in production,
sales and prices+2.9

Foreignexchange loss/
gain

Increase/decrease in
unclassifiable
costs

-0.9
+0.8
-3.5

FY2015

Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

Increase/decrease invariable costs

Increase/decrease in
fixed costs

12.3
-1.4

Exchange rate
FY2015： ¥110 / USD
FY2016： ¥115 / USD

FY2016

6

3. Net Sales, Operating Income and Orders Received by Segment
Operating income for both segments was mostly as forecast, but orders received deviatedfrom the forecast.
(Unit: Billions of yen)

Steel and Energy Products Business
FY2015(A)

FY2016
Previous
Actualforecast
results(B)(C)

Compared to Compared tothe previous
previous
year
forecast(C)-(A)(C)-(B)

Ordersreceived

39.7

43.0

19.5

(20.2)(23.5)Net sales

74.8

55.0

51.2

(23.6)(3.8)

Operatingincome (loss)

0.7

(3.0)

(2.8)

(3.5)

0.2

(ratio)

0.9%

-0.6%

-5.5%

Industrial Machinery Products Business
FY2016Compared to Compared to
FY2015the previous
previous
Previous
Actualyear
forecast(A)
forecast
results(C)-(A)(C)-(B)(B)(C)
Orders
167.8
165.0
156.2
(11.6)(8.8)
received
Net sales

144.3

163.0

159.3

15.0

(3.7)

Operatingincome

12.4

15.5

15.1

2.7

(0.4)

(ratio)

8.6%

9.2%

9.5%

Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

7

4. Steel and Energy Products Business: By Major Products [Net sales, Operating income, Orders received]
Orders received fell short of the targets, primarily due to the postponement of some clad
steel pipe orders to the following fiscal year and the cancelation of wind turbine orders.
Net sales, Operating income

Orders received(Unit: Billions of yen)
FY2016FY2016Compared tothe previousyear(C)-(A)

Compared toprevious
forecast(C)-(B)FY2015(D)

Previous
forecast(E)

Actualresults(F)

Compared tothe previousyear(F)-(D)

Compared toprevious
forecast(F)-(E)

11.1

(3.5)

(2.4)

0.5

0.5

(0.6)

0.0

11.2

15.0

8.2

(3.0)

(6.8)

0.4

(0.3)

0.5

(13.3)(13.0)(13.8)

(1.6)

(1.2)

6.2

7.0

5.4

(0.8)

(1.6)

7.5

0.7

0.5

6.9

6.5

7.6

0.7

1.1

55.0

51.2

(23.6)

(3.8)

39.7

43.0

19.5

(20.2)(23.5)

(3.0)

(2.8)

(3.5)

0.2

FY2015(A)

Previous
forecast(B)

Actualresults(C)

Electric and nuclear
power
Pressure vessels
for oil refineries
Clad steel plates andclad steel pipes

19.2

20.0

19.3

0.1

(0.7)

14.6

13.5

1.4

2.0

1.7

0.3

(0.3)

1.1

39.3

16.0

13.5

(25.8)(2.5)

Wind turbines

1.2

3.5

3.9

2.7

Other

6.9

6.5

5.3

Consolidated Group
companies, etc.

6.8

7.0

Total

74.8

Operating income(loss)

0.7

Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

* All order backlog was cancelled.

85. Industrial Machinery Products Business: By Major Products [Net sales, Operating income, Orders received]
Net sales expanded with the increase in laser plasma related equipment. Orders received in film andsheet equipment grew, but total orders received decreased, primarily due to the slump of laser
plasma related equipment.
Net sales, Operating income

Orders received(Unit: Billions of yen)
FY2016FY2016Compared tothe previousyear(C)-(A)

Compared toprevious
forecast(C)-(B)FY2015(D)

Previous
forecast(E)

Actualresults(F)

Compared tothe previousyear(F)-(D)

Compared toprevious
forecast(F)-(E)

44.7

4.5

0.7

56.0

57.5

(1.9)

1.5

49.3

44.0

34.2

(15.1)

(9.8)

(1.7)

18.9

21.0

19.8

0.9

(1.2)

15.0

(3.7)

167.8

165.0

156.2

(11.6)

(8.8)

2.7

(0.4)

FY2015(A)

Previous
forecast(B)

Actualresults(C)

Plastic production andprocessing machinery

36.4

40.5

36.1

(0.3)

(4.4)

40.2

44.0

Molding machines(consolidated)

56.4

57.0

57.6

1.2

0.6

59.4

Other

32.6

45.0

46.8

14.2

1.8

Consolidated

18.9

20.5

18.8

(0.1)

Total

144.3

163.0

159.3

Operating income

12.4

15.5

15.1

Group companies, etc.

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96. Capital Investment, Depreciation, Cash Flows and Financial Position(Unit: Billions of yen)

[Capital investment and depreciation]

20.0
15.0

Depreciation

14.0

12.9

11.0

Capital investment

10.7
7.9

10.0

7.8

5.2

9.5

7.7
4.6

5.0
0.0
FY2013(Unit: Billions of yen)

FY2014FY2015FY2016[Cash flows]

FY2017(Forecast)[Financial position](Unit: Billions of yen)

Operating cash flows
Investing cash flows

25.0
20.0

19.7

Free cash flows

15.0

12.0

Net assets

Interest-bearing debt

Net interest-bearing debt

D/E ratio

0.70

140.0
120.0

10.0
5.0

160.0

0.60
111.3

107.5

0.45

0.48

0.50

100.0

0.40

7.6
80.0

0.30
0.0

-1.5

60.0

51.0

49.6

0.20

-5.0

40.0

-10.0

20.0

0.10

0.0

0.00

-15.0

-12.1
FY2015-13.5
FY2016-20.0

FY 2015

Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

-8.7

-12.3

-0.10

FY 201610

Section 2
Projection for the Fiscal Year Ending March 31, 2018

Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

11

1. Projection for FY2017
Although the Industrial Machinery Products Business will remain strong, the projection for 2017 is for
decreased sales and increased small profit given the slump in the Steel and Energy Products Business.
(Unit: Billions of yen)

FY2017 forecast
FY2016(A)

Full year（B)

Compared tothe previous
year(B)-(A)First
fiscal half

Secondfiscal half

177.5

95.0

105.0

200.0

22.5

212.4
12.3

105.0
6.5

100.0
6.0

205.0
12.5

(7.4)
0.2

(ratio)

5.8%

6.2%

6.0%

6.1%

Ordinary income

12.1

6.5

6.0

12.5

0.4

Profit (Loss)

(4.9)

4.0

4.0

8.0

12.9

Profit (Loss)per share (yen)(67.61)

52.82

56.03

108.85176.46

Dividends per
share (yen)

25.0

12.5

12.5

25.0

0.0

Ordersreceived
Net sales
Operating income

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122. Forecast for Increase/Decrease in Operating Income (compared to FY2016 actual results)
Offsetting the decrease in production, sales and prices in the Steel and Energy
Products Business with the decrease in variable costs.
(Unit: Billions of yen)

12.3

Increase/decre
ase inproduction,
sales andprices+2.0

FY2016
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Increase/decrease invariable
costs

Increase/decrease in
unclassifiable
costs

12.5

-0.5

+1.5
Increase/decrease in
fixed costs-1.6

Foreignexchange
loss/ gain

-1.2
Exchange rate
FY2015： ¥112 / USD
FY2016： ¥110 / USD

FY201713

3. Projected Net Sales, Operating Income and Orders Received by Segment
The Industrial Machinery Products Business will achieve the Medium-Term Management Plan,
but the Steel and Energy Products Business will post another loss.
Steel and Energy Products Business
FY2016(A)(Unit: Billions of yen)

FY2017
forecast（B）

Compared tothe previous
year(B)-(A)

Orders received

19.5

42.2

22.7

Net sales

51.2

45.2

(6.0)

Operating income(loss)

(2.8)

(1.1)

1.7

(ratio)

-5.5%

-2.4%

Industrial Machinery Products Business
FY2016(A)

FY2017
forecast（B）

Compared tothe previous
year(B)-(A)

Orders received

156.2

156.0

(0.2)

Net sales

159.3
15.1

158.0
15.0

(1.3)
(0.1)

9.5%

9.5%

Operating income(ratio)Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

14

4. Forecast for Steel and Energy Products Business: By Major Products [Net sales, Operating income, Orders received](Unit: Billions of yen)

Net sales, Operating income

FY2016(A)
Electric and nuclear
power
Pressure vessels
for oil refineries
Clad steel plates andclad steel pipes

FY2017
forecast(B)

Compared tothe previous
year(B)-(A)

Orders received

FY2016(C)

FY2017
forecast(D)

Compared tothe previousyear(D)-(C)

19.3

18.5

(0.8)

11.1

14.5

3.4

1.7

1.0

(0.7)

0.5

1.0

0.5

13.5

13.0

(0.5)

8.2

14.5

6.3

Wind turbines

3.9

0.7

(3.2)

(13.3)

0.7

14.0

Other

5.3

5.5

0.2

5.4

5.0

(0.4)

Consolidated Group
companies, etc.

7.5

6.5

(1.0)

7.6

6.5

(1.1)

Total

51.2

45.2

(6.0)

19.5

42.2

22.7

Operating income(loss)

(2.8)

(1.1)

1.7

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15

5. Forecast for Industrial Machinery Products Business: By Major Products [Net sales, Operating income, Orders received](Unit: Billions of yen)

Net sales, Operating income

FY2016(A)

FY2017
forecast(B)

Compared tothe previous
year(B)-(A)

Orders received
FY2016（C)

FY2017
forecast(D)

Compared tothe previousyear(D)-(C)

Plastic production
and processing
Molding machines(consolidated)

36.1

45.0

8.9

44.7

48.0

3.3

57.6

58.0

0.4

57.5

59.0

1.5

Other

46.8

35.0

(11.8)

34.2

28.0

(6.2)

Consolidated Group
companies, etc.

18.8

20.0

1.2

19.8

21.0

1.2

Total

159.3

158.0

(1.3)

156.2

156.0

(0.2)

Operating income

15.1

15.0

(0.1)

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16

6. Order Backlog
Order backlog by segment（Unit: Billions of yen）
Steel and Energy Products Business300

Industrial Machinery Products Business
Real Estate and Other Businesses

250

200

150

199.7
0.7

96.5

210.9
0.7

199.2
0.6

105.6

164.4
0.6

159.3
0.6

125.9

123.9

37.8

34.8

FY2016FY2017(forecast)

129.1
100

50

102.4

104.6

69.5
0
FY2013Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

FY2014FY201517

Section 3
Progress of Medium-term Management Plan
“JGP2017”
and future direction

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18

1. Medium-term Management Plan JGP2017 (FY2015-2017)“Advancing toward Top Global & Niche Corporate Group”
Aiming to achieve top share at key points in customer value chains
Basic Policies
Policy 1.

Increase profitability of existing
businesses

Numerical Targets"Renew the Challenge: Net sales of ¥250.0 billion in 2020"◆Pursue product & service differentiation◆Strengthen total-cost competitiveness◆Develop service & solution businesses◆Reinforce initiatives in growth markets

Policy 2.

Foster new products & businesses andmake them competitive as soon as
possible◆Promote businesses based on core management
resources◆Optimize timeframe and systems for promoting new
products & businesses

Policy 3.

More than¥250.0 billion

Reinforce Group management andpromote alliances

More than¥220.0 billion¥194.6 billion
Operating Income:¥7.5 billion

FY2014

Operating income:More than ¥13.0 billion
ROA: Above 3%
ROE: Above 8%

Operating income:More than ¥20.0 billion
ROA: Above 4%
ROE: Above 10%

FY2017

FY2020* ROE has been revised upward from the original target value.

Strict management control based on Action Plan (implement PDCA)
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19

2. JGP2017 Trend of Business Results
Steel and Energy
Products BusinessBillions of yen

Net sales
Strategy for steadybusiness growth andrenewed growth after
JGP2017 through“defensive
management”

Operating income

FY201651.2(2.8)

Although fixed costs were reduced
due to an impairment loss, anoperating loss was posted,reflecting a significant decrease insales of clad steel pipes for natural
gas.

Industrial
Machinery
Products BusinessBillions of yen

Identify growth
opportunities andaccelerate businessexpansion throughOperating income

Net sales“offensive
management”
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FY2016

159.3
15.1

Both net sales and operating
income in FY2016 achieved thetargets for the final fiscal year of
the medium-term management
plan a year ahead of schedule on
the back of strong orders.

FY2017
forecast

JGP2017

45.2
(1.1)

60.0
0.0

Net sales will decline, reflecting slow
recovery in the electric and nuclear
power field and weak orders for clad
steel pipes. An operating loss of ¥1.1
billion will be posted.

FY2017
forecast

158.0
15.0

JGP2017

158.0
14.0

Net sales and operating income are
expected to decline slightly due to atrough in demand for LP equipment, but
to achieve the target of the mediumterm management plan.

20

3. Increase profitability of existing businesses (JGP2017 Basic Strategy 1) Situation of Main Products
Product Group

Steel and Energy
Products BusinessElectric andnuclear power
products

FY2016 Status(Nuclear power) Orders received stagnated due
to weak and limited demand worldwide.
(Thermal power) Secured orders received mainly
in China. Focused efforts on capturing actual
demand from heavy electric machinery
manufacturers.

FY2017 Outlook and Challenges(Nuclear power) Monitor the status of resumption of operation in Japanand demand trends overseas, mainly in China and the U.K. Orders are
not likely to increase.
(Thermal power) Firm demand in Japan, China, and Southeast Asia for
greater efficiency while taking environmental measures into account.

Industrial Machinery Products
Business

Clad steel
plates and clad
steel pipes(Clad pipes) Orders were weak, mainly due to theeffects of exchange rates and delays in projects.

(Clad pipes) Orders are expected to increase year on year. Tap into
demand in the Middle East and Africa, among other areas.

(Clad plates) Demand declined due to the impactof low oil prices.

(Clad plates) On a gradual recovery trend. Actual demand is expected
to recover from the second half.

Film and sheet
equipment- Demand rose sharply for use in manufacturing
LiB separator film for electric vehicles.

- Demand will remain strong, mainly for use in manufacturing LiB
separator film.

- Production capacity doubled (from FY2014).

- Respond to customer needs with diverse stretching technologies.

Injection
molding
machines- Faced tough conditions in the first half due tothe stronger yen but recovered in the second half.
- Sales of new, medium-sized machines werestrong.
- The reinforcement of production capacity(+30%) was completed in July.

Laser plasma
relatedequipment

Sales reached a record high, partly due to special
demand, but orders slowed.

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- Demand will remain firm in the automotive field worldwide.
- Demand will be strong in the miscellaneous goods and containers
field.

- Given a trough in demand, orders are expected to be on a par withthe previous year’s level.
Respond with differentiated technologies for large models, highperformance and high productivity, etc.

21

4. Foster New Products & Businesses and Make Them Competitive as Soon as Possible (JGP2017 Basic Strategy 2)

New fields and product groups of JSW GroupNEW ENERGYTELECOMMUNICATION, FPD, SENSOR
Laser annealing equipment

Low pressurehydrogen storage tankHigh pressurehydrogen storage

Manufacturing equipment for
gallium nitride crystals

Hydrogen station

Film processing equipment

Equipment applied laser
technology

Thin-film deposition equipment
for flat panel display
Crystal device

Fine foam injection
molding machines

New defense systems

DEFENSE SYSTEMSAUTOMOBILE

CFRP processing
equipment

Rubber manufacturing equipment

Aircraft components

AIRCRAFT

Developing operations in growth fields, primarily the automotive field, making the most of unique techniques
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22

5. Reinforce Group Management and Promote Alliances (JGP2017 Basic Strategy 3)
Seek maximum synergy effects
Foster new products& businesses andmake them competitive
as soon as possible

Increase profitability ofexisting businesses

Continue and strengthen further
Initiatives and Results from FY2015 to FY2016
Reallocation at Hiroshima Plant factory(commenced in FY2015  completed in first half of FY2016)
Continued to press ahead with Muroran Restructuring Project(improved production efficiency, etc.)
Increased profitability at affiliates(strengthened and expanded
subsidiaries for external sales)

Made Meiki Co., Ltd.
a wholly-owned
subsidiary

Strengthened corporate governance(formulated and executed policy; strengthened the managementof affiliates)

ReinforceGroup management
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Expand and evolve further
Initiatives and Results from FY2015 to FY2016(Film and sheet equipment)
Acquired simultaneous biaxial stretching technologies(Compounding twin-screw
extruders)Acquired South Korea’s SM
PLATEK(Molding machines)
Joint development of small
machinery with Toyo
Machinery & Metal Co., Ltd.
(started to be sold in October 2016)(Large cast and forged steel products)
Alliance with India’s LTSSHF, joint venture with Brazil’s
Gerdau (established in January 2017)

Promote alliances236. Financial Strategies
Increase shareholder value by strengthening cash generation and effective cash use.
FY2015 and FY2016 results
C/F from operating
activities

Return to shareholders,investment in growth(total for the two fiscal years)(total for the two fiscal years)

C/F from operating
activities

Return to shareholders,investment in growth¥9.5 billion + β¥32.5 billion¥10.2 billion + α

Dividends:¥3.5 billion
Acquisition of treasury
stock:¥2.9 billion
Capital investment:¥22.8 billion
M&A investment:¥2.8 billion
Other:¥0.5 billion

Profit before appreciation:¥12.6 billion
Extraordinary loss related
to wind power:-¥2.4 billion
Taxes etc.:¥α billion

Dividends:¥1.8 billion
Capital investment:¥7.7 billion
Other return toshareholders, investment
in growth:¥β billion

End of FY2016
Cash and deposits¥59.8 billion

End of FY2016
Interest-bearing
debt¥51.0 billion¥32.0 billion
Profit before depreciation,
retirement and impairment:¥45.3 billion
Extraordinary loss related towind power:-¥8.5 billion
Taxes etc.:-¥4.8 billion

FY2017 outlook

C/F from financing activities (total for the two fiscal years)¥10.0 billion(Excluding dividend payment and acquisition of treasury stock)
Change in cash and deposits at end of period (total for the two fiscal years)¥9.5 billion

Use generated cash strategically for return to shareholders and growth investment.
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24

7. Trend of Business Results Steel and Energy Products Business, Industrial Machinery Products Business
The Industrial Machinery Products Business has been growing steadily. Profitability in the Steel andEnergy Products Business needs to be improved urgently.
(Unit: Billions of yen)

<Net sales>（Net sales）

Industrial Machinery Products Business
Steel and Energy Products Business（Operation income）

30.0<Operating income>

300.0

25.0

Steel and Energy Products BusinessIndustrial Machinery Products Business

20.0

16.7

200.0

15.1
12.1

11.5

11.3

12.4
10.0

11.5

100.0
3.2

0.7

-0.5

0.0
FY2010FY2011FY2012-3.6-3.9

FY2013

FY2014-2.8
FY20150.0

FY2016-10.0

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25

8. Restructuring of Steel and Energy Products Business
FY2017

Facilities- In FY2015, an impairment loss (¥35.4 billion) was posted.
- In FY2016, an additional impairment loss (¥17.8 billion) was posted.

Capital investment:
Capital investment
targets will be carefully
selected and reduced.

Further reduction in capital investment

Human resources- Human resources were moved from Muroran Plant to Hiroshima Plant andYokohama Plant.
- Human resources were moved from Muroran Plant to the sales division todevelop new fields.

Continuous optimizationof human resources
distribution

JGP2020
To remainin theblack

Other activities- Promotion of the Muroran restructuring project.
The business domains were reviewed. Cost reduction measures were
promoted.

- Reorganization and optimization of affiliates
Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

Order expansion project
New business cultivation
project
Business reform project26

9. With a view to the next Medium-term Management Plan “JGP2017”◎Steel and Energy Products Business The business environment remains very challenging, and the present mediumterm management plan is not expected to be achieved.

 The next medium-term management plan is to be considered on the assumptionthat the current business environment will remain unchanged also the next
Medium-term.

◎Industrial Machinery Products Business Steady progress is being made, and the present medium-term management plan is
expected to be achieved.

 In the next medium-term management plan, management resources will be injected into
this business so that the business will become a growth business.

◎New Products & Businesses Results are expected to fall far short of the initial plan.
 In the next medium-term management plan, the development system will be
reviewed. A new system will not be bound by the self-reliance policy.

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27

9. With a view to the next Medium-term Management Plan “JGP2017”1) Steel and Energy Products Business

Basic policy
Continue to make a profit from the existingproducts

Expand into new fields and develop new
products

Initiatives- Change the business structure to make a profit from the existing products- Expand offshore-related equipment, aircraft components, and hydrogen energyrelated products, which are being commercialized- Promote development investment to enter new fields related to materials other thansteel (actively using alliances)

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28

9. With a view to the next Medium-term Management Plan “JGP2017” 2) Industrial Machinery Products Business, Plastic production and processing machinery

Basic policy
Expand the range of plastics machinery products andperipherals and establish a leading position among

comprehensive plastics machinery manufacturers in the world.

Initiatives- Create the No. 1 product in each product category (in terms of productivity, large capacity, energy
saving, IoT, and AI)- Strengthen operations in growth markets (LiB separators, auto parts, rubber) (pursuing QCD that will
satisfy customers)- Expand the after-sales service business globally- Promote alliances and M&A systematically to expand the range of products and compensate
for weaknesses- Strengthen operations in new growth markets (carbon fiber market, cellulose nanofiber market)(without adhering to a self-reliance policy)
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29

9. With a view to the next Medium-term Management Plan “JGP2017” 3) Industrial Machinery Products Business, Molding machines

Basic policy
Achieve a share of 10% in the global market using a mass customization strategy◆ Mass customization strategy
Provide differentiated, customized machines based on a common base tomeet the needs of areas and customers

Initiatives- Position Japan, North America, China, and Southeast Asia as priority areas (concentrate resources)- Provide products under the mass customization strategy and improve profits- Provide comprehensive assistance to customers through products and technologies using IoT and AI- Enter the market of supersized machines (with a clamping force exceeding 3,000 tons) (cooperate with Meiki Co., Ltd.)- Strengthen the global service network further- Strengthen capabilities to deal with customized products at plants in China and other overseas plants.

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30

9. With a view to the next Medium-term Management Plan “JGP2017” 4) Industrial Machinery Products Business, Laser plasma related equipment business

Basic policy
Maintain the largest share in the market of laser annealing systems
for manufacturing high-definition FPD (100% in the domestic
market and 70% in the global market)

Establish the thin-film coating system businessInitiatives- Enhance the performance of the laser annealing systems (so that they will be able to deal
with large-sized panels)- Commercialize early thin-film coating systems using plasma technology (so that they will
be able to deal with organic EL foldable smartphones, semiconductors, and components inthe communications field)- Enhance after-sales service
Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

31

Reference

Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

32

Trends of Net sales, Operating income, Profit
FY2010FY2011FY2012FY2013

FY2014FY2015FY2016

212.9

221.3

220.6

188.7

194.6

223.3

212.4

112.9

105.0

88.2

67.6

66.2

74.8

51.2

Electric and nuclear power

43.3

49.0

37.4

22.6

27.4

19.2

19.3

Pressure vessels for oil refineries

28.4

5.5

4.3

4.1

4.2

1.4

1.7

Clad steel plates and clad steel pipes

14.7

31.7

29.3

26.7

16.2

39.3

13.5

Wind turbines

9.0

3.9

1.1

1.7

5.7

1.2

3.9

Other

10.2

8.9

12.3

7.2

7.0

6.9

5.3

Consolidated Group companies, etc.

7.3

6.0

3.8

5.3

5.7

6.8

7.5

Industrial Machinery Products Business

97.6

113.9

130.1

118.3

126.3

144.3

159.3

Plastic production and processing machinery

26.5

33.8

37.0

28.3

32.5

36.4

36.1

Molding machines (consolidated)

32.0

34.7

40.9

47.0

53.6

56.4

57.6

Other

23.2

32.5

37.7

31.8

25.0

32.6

46.8

Consolidated Group companies, etc.

15.9

12.7

14.5

11.2

15.2

18.9

18.8

Real Estate and Other Businesses

2.4

2.4

2.2

2.7

2.0

4.0

1.8

28.4

23.9

16.6

8.8

7.5

14.4

12.3

Steel and Energy Products Business

25.0

11.5

-0.5

-3.6

-3.9

0.7

-2.8

Industrial Machinery Products Business

3.2

11.5

16.7

12.1

11.3

12.4

15.1

Real Estate and Other Businesses

0.7

0.7

0.8

1.1

0.9

2.0

0.9

16.5

12.5

8.2

5.5

-5.3

-16.6

-4.9

Net Sales
Steel and Energy Products Business

Operating income

ProfitCopyright (C) 2017 The Japan Steel Works, LTD. All Rights Reserved.

33

Trends of assets situation and cash flow
FY2010FY2011FY2012FY2013

FY2014FY2015FY2016

339.2

325.6

303.9

293.1

319.6

293.1

275.3

Steel and Energy Products Business

167.5

147.2

120.2

111.5

111.4

60.2

37.5

Industrial Machinery Products
Business

89.4

93.1

96.8

99.3

108.4

124.3

123.7

Real Estate and Other Businesses

13.6

13.5

13.3

12.9

13.0

12.0

11.8

Net assets

120.8

128.6

134.3

139.2

138.2

111.3

107.5

Net assets per share (JPY)*Amount in FY2016 is after reverse split of stocks.

322.98344.28359.29372.83368.81

299.41

1,446.44

Equity ratio (%)

35.34

39.21

43.83

47.09

42.72

37.53

38.6

ROE (%)

14.39

10.17

6.35

4.07

-3.88

-13.46-4.6

Net cash provided by (used in)operation activities

21.7

32.5

23.7

11.5

11.5

19.7

12.0

Net cash provided by (used in)investing activities

-28.2

-18.6

-5.8

-5.7

-2.6

-12.1

-13.5

Net cash provided by (used in)financing activities

2.1

-6.8

-15.2

-15.0

-2.9

4.7

-1.2

Cash and cash equivalents at end of
period

41.1

48.1

50.9

42.2

49.1

61.4

58.6

Total assets

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34

Corporate Vision and Management Philosophy[Corporate Vision (the ideal image of a corporation to which to aspire)]
A company that creates changes with creative technology, and contributes to thedevelopment of society
We aim to be a “Change-Creating Company” that contributes to the development of society by actively
exploring new needs among the needs of society that are changing daily, through our proprietary
technologies that have been cultivated over many years as well as newly developed technologies.

[Management Philosophy]
1) Continue to provide clients with surprise and excitement
To satisfy our customers and gain their trust, we always listen to the market and continue to provide
creative products and services that exceed customer expectations.

2) Coexist with society and sustain profits
We sustain profits while satisfying our customers, shareholders and employees, coexisting with local
communities, and fulfilling our responsibilities to stakeholders.

3) Believe in constant change
We strive to establish a vibrant corporate culture that seeks change by respecting initiative, creativity andthe spirit of challenge, while firmly sustaining our corporate culture in which products are launched withconsistency and stability. We thoroughly pursue the “three real principles” (Sangen-shugi) of real places, realthings and real situations, plus real people.

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35

Corporate Code of Conduct of The Japan Steel Works, Ltd.
The JSW Group (“the Group”), as a corporate group with responsibilities for the development of the economy and society, based on thefollowing 10 principles, shall respect human rights and comply with the provisions and spirit of all laws and international standards, both
domestically and globally, while the Group shall act in accordance with social common sense in order to create a sustainable society.
1. Development and supply of reliable products, technologies and services
With thorough consideration for safety, the Group shall develop and supply products, technologies and services that satisfy, and can be trusted by,customers and society.

2. Adherence to ethics, laws and regulations
As a corporate citizen, the Group shall adhere to ethics, laws and regulations in carrying out its business activities.

3. Fair and transparent business activities
In all its business activities, the Group shall engage in fair, transparent and free competition and transactions. It shall also maintain sound andappropriate relationships with the government and local authorities.

4. Adherence to the rules of the international community
As a global corporation, the Group shall adhere to the rules of the international community and contribute to the development of the global
economy and society.

5. Opposition to anti-social forces
As a business organization, the Group shall oppose anti-social forces and organizations that adversely affect the order and safety of civil society,and shall not accept any illegal or unfair demands.

6. Corporate information disclosure
The Group shall actively and fairly disclose appropriate corporate information to society. It shall also thoroughly protect and manage various typesof information including personal information and customer information.

7. Respect for employees and ensuring safe and good working environments
The Group shall respect employees’ personalities and individuality. It shall also recognize employees’ human rights and safety at all times, andsecure good working environments.

8. Initiatives for environmental preservation
Recognizing that environmental initiatives are important corporate responsibilities, the Group shall conduct its business activities withconsideration for the preservation of the environment.

9. Establishment of systems by senior management
Senior management shall acknowledge that it is their role to embody the spirit of this Corporate Code of Conduct, and they shall take the initiativeand set good examples in establishing systems and making the Code widely known within the Company and Group companies.

10. Problem-solving and strict action by senior management
If a situation occurs that is contrary to this Corporate Code of Conduct, senior management shall engage in resolving the issue by themselves, andendeavor to investigate the cause and prevent a recurrence. They shall also fulfill their responsibilities to provide prompt and accurate disclosure of
information and explanations to society. After clarifying the relevant authority and responsibilities with regard to the issue, they shall take strict measuresagainst those involved, including senior management themselves.

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Copyright (C) 2017 The Japan SteelWorks, LTD. All Rights Reserved.

37