2017

FY

Business Results for the Six Months of
the Fiscal Year Ending March 31, 2018
November 15,2017
The Japan Steel Works, LTD.
Naotaka Miyauchi, Representative Director & President©2017 The Japan Steel Works, LTD. All Rights Reserved.

INDEX
JSW ARE～Evolution of The Japan Steel Works, Ltd. ～０３ Introduction of JSW’s president
０４ JSW ARE① Corporate vision and Management philosophy
０５Innovation/Market Creation
０６
JSW Core Competence
０７
Manufacturing and Development Bases with Strong“Monozukuri” DNA
０８
Track Record of Trail-blazing Initiatives
０９ JSW ARE② Growing Industrial Machinery
１０
Trend of Business Results by Segment(Net sales and Operating income)
１１
Share by products
１２
Promising Business Domains (plastics)

Business Results and Projections～ Business Results for the FY2017 Interim Period and Projections
for FY2017～
１４ Consolidated Actual Results
１５ Increase/Decrease in Operating Income
１６ Net Sales, Operating Income and Orders Received by Segment
１７ Steel and Energy Products Business１８ Industrial Machinery Products Business１９ Capital Investment ,Depreciation（forecast), Cash Flows andFinancial Position
２０ Projection for FY2017
２１ Forecast for Increase/Decrease in Operating Income
２2 Projected Net Sales, Operating Income and Orders Received by
Segment
２3 Forecast for Steel and Energy Products Business

２４ Forecast for Industrial Machinery Products Business
２５ Trend and Forecast for Order Backlog

Medium-term Management Plan
～Progress of Medium-term Management Plan “JGP2017”and direction～
２７ Summary of Medium-term Management Plan JGP2017 (FY2015-2017)
２８ Progress of Medium-Term Management Plan JGP2017 (FY2015-2017)
２９ JGP2017 Results and Issues by Product Group
３０ Direction of Next Medium-term Management Plan
３１ ①Keyword to the feature
３２ ②Steel and Energy Products Business
３３ ③Industrial Machinery Products Business／Plastic production and processing

３４ ④Industrial Machinery Products Business／Molding machines
３５ ⑤Industrial Machinery Products Business／Service business

Topics ～Latest Topics～
３７ Film and sheet equipment
３８ Laser annealing systems
３９ Clad steel pipe

Financial Strategies
４１ Financial Strategies
Reference（４３～４４）：
Trends of Net sale, Operating income and Profit/Trends of assets situation and cash
flow

【Cautionary Note】
The performance forecasts and other forward-looking statements included in this report are based on the information that 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 variety of reasons.
Unless otherwise noted, “previous forecast values” are those released on May 19, 2017.

©2017 The Japan Steel Works, LTD. All Rights Reserved.

1

JSW ARE
Evolution of The Japan Steel Works, LTD.

©2017 The Japan Steel Works, LTD. All Rights Reserved.

2

Introduction of JSW’s
president
We will continue to do all in our power to meet our stakeholders’expectations, aiming to achieve stable growth as a company
through “monozukuri” and value creation. In so doing, we remaincommitted to performing our obligations on four different fronts,
ensuring satisfaction for customers, employees, and shareholders,
as well as fulfillment of our responsibilities to society.

Representative Director & President

宮内 直孝
NAOTAKA MIYAUCHI

Birth：January 30,1958
Education：Chuo University, Faculty of Science and Engineering
Experience：
April,1981： Entered the Japan Steel Works, LTD.
April,2011： Deputy General Plant Manager, Hiroshima plant
April,2013： Executive Officer,
General Plant Manager, Hiroshima Plant
April,2015： Managing Executive Officer
Deputy Director of Machinery Business Division（Chief of Machinery Business Unit）
April,2016： In charge of Ordnance Business Headquarters
Director of Machinery Business Division
June,2016： Director Managing Executive Officer
April,2017： Representative Director & President（Present）©2017 The Japan Steel Works, LTD. All Rights Reserved.

3

JSW ARE①：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 the development of society
We aim to be a “Change-Creating Company” that contributes to the developmentof society by actively exploring new needs among the needs of society that arechanging daily, through our proprietary technologies that have been cultivated overmany 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 and the spirit of challenge, while firmly sustaining our corporate culture
in which products are launched with consistency and stability. We thoroughly pursue
the “three real principles” (Sangen-shugi) of real places, real things and real situations, plus real people.
©2017 The Japan Steel Works, LTD. All Rights Reserved.

4

JSW ARE①

市場を創るものづくり
Innovation / Market Creation©2017 The Japan Steel Works, LTD. All Rights Reserved.

5

JSW ARE①：JSW Core Competence
A company that, alongside its customers, embarks on “first steps” that areahead of the times
JSW is a company that creates value through “monozukuri” (good manufacturing practices). DNA that refuses to compromise on
quality plus a high level of technological strength demonstrated even when faced with unprecedently difficult requests, attention

to detail distinctive of Japanese companies, and a strong customer base built up precisely because JSW has tirelessly continued
to meet highly technical requirements - this is why customers choose JSW as their partner when embarking on first steps.

技術力

先見力

イノベーション力

Technology

PrescientInnovation

The DNA of a “monozukuri” company is
to make products that are durable,
unbreakable and good quality

Accurately reading the current of
the times and resolutely taking
on unprecedented challenges

Leveraging technological strength andexpertise to establish new technologies
and open up new markets©2017 The Japan Steel Works, LTD. All Rights Reserved.

6

JSW ARE①： Manufacturing and Development Bases with Strong “Monozukuri” DNA“Mastery” supporting JSW in Becoming “No. 1 Global Company in Monozukuri”

Hiroshima Plant
Dedicated to technological innovations
especially in the fields of plastics andmechatronics, the Hiroshima Plant with its
leading-edge manufacturing and assemblylines produces world-renowned large-size
pelletizers and extruders, film and sheet
production systems, and the latest plastics
injection molding machines.

Muroran Plant

Yokohama Plant

Since founding, the Muroran Plant has played
a valuable part in the development of Japan′s
heavy and chemical industries as a materials
production center. Making use of large
production facilities, such as a 14,000-ton
hydraulic press, and cutting-edge equipment,
including a 150-ton electro-slag remelting
furnace, the plant supplies the world withhigh-quality products that include variety ofsizes of cast and forged steel products, steel
plates and pipes and others for the energy
field.

Our excimer laser annealing (ELA) system
for IT products, enabling mass productionof high-quality LCD panels and organic EL
panels, has the top share of its market. We
are also developing and commercializing
systems for the next generation of panels.

©2017 The Japan Steel Works, LTD. All Rights Reserved.

7

JSW ARE①：Track-record of Trail-blazing Initiatives
Utilization of artillery manufacturing technology
to manufacture extruders

Expansion of overseas sales of pressure vessels
for oil refining

Launch of laser annealing system and entry to
the panel manufacturing market

JSW uses hydraulic control technology built up from before the war
to manufacture extruders.
This marks the start of expansion of JSW’s business with the plastics
industry.

JSW’s large pressure vessels for oil refining utilizing forging
and welding technologies build a strong reputation globally.

JSW contributes to expansion of the LCD market
as a leading manufacturing of laser annealing systems.

1950

1960

1970

Post-war reconstruction period

One of the first Japanese companies to introduce injection
molding technology from Europe
JSW introduces technology from a company in West Germany, andbecomes one of the first Japanese companies to start manufacturing andselling injection molding machines. It later adds blow molding machinesand various other molding machines to its line-up and combines thiswith plastic and rubber manufacturing systems to establish a position as
a comprehensive resin machinery manufacturer.

©2017 The Japan Steel Works, LTD. All Rights Reserved.

1980

1990

High growth period

First company in the world to achieve integrated
manufacturing of nuclear reactor pressure vessels
components through development of special
forging process
JSW develops a special forging process for manufacturing
large rings. This enables integrated manufacturing of
nuclear reactor pressure vessels components from large
steel ingots.

2000

2010

Post-bubble era

Start of full-scale mass production of clad
steel pipes
JSW concludes framework agreements with oilcompanies, recognition of clad steel pipes as pipes
for transportation of natural gas increases, and
JSW starts mass production.

8

JSW ARE②

産業機械事業を成長の牽引役に
Growing Industrial Machinery©2017 The Japan Steel Works, LTD. All Rights Reserved.

9

JSW ARE②：Trend of Business Results by Segment (Net sales and Operating income)
Major business changed from steel energy products
to industrial machinery products
Net sales（Billions of yen）

Operating income

Steel and Enegy Products Business

180.0

Industrial Machinery Products Business

159.3

164.5

35.0

160.0

30.1
144.3

140.0

130.1
121.9
112.9

120.0

30.0
25.0

126.3

25.0

118.3

113.9

19.0

20.0

105.0

16.7

97.6

100.0
80.0

Steel and Enegy Products Business(Billions of yen)

Industrial Machinery Products Business

88.2

15.0

77.3
67.6

12.1

11.5

74.8

15.1
11.3

12.4

10.0

66.2

60.0

51.2
44.0

40.0

3.2

5.0
1.3
0.0

20.0

0.7

-0.5
-3.6

-3.9

FY2013

FY2014

0.3
-2.8

-5.0

0.0
FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017（Forecast)©2017 The Japan Steel Works, LTD. All Rights Reserved.

-10.0
FY2009FY2010FY2011FY2012FY2015FY2016FY2017(Forecast)

10

JSW ARE②：Share by products
World’s No.1 Comprehensive Plastic Machinery Manufacturer
Polymerization reactor (Petrochemical Plant）

Pelletizer

Twin Screw Extruder（TEX）

Equipment for mass production of the base material of plastics (pellets)

Equipment for manufacturing high performance plastic pellets mixed with additives

FeatureMarketEnvironment：

Manufactures some of the world’s
largest equipment that produces
plastic pellets at constant rate of
70t/h

：

Global plastic demand is increasing
at a rate of 2-3% per year

Global share
Feature35～40％:

Offers a wide range of solutions, including
JSW’s unique technologies for enhancing
mixing performance and eco-friendly
manufacturing through devolatization

Global share

MarketDemand is strong, especially in Japan, China
Environment ：and Southeast Asia

20～30％※Domestic market share is over 70％

Film and sheet equipment

Injection and Blow Molding Machines

Equipment for manufacturing various types of plastic films and sheets

Equipment for manufacturing various types of
injection molded products and blow molding products

FeatureMarketEnvironment

Extensive product lineup
ranging from high performance： optical and industrial films, etc.
to general packaging
applications
Demand for separator film for： lithium-ion batteries is growing
particularly strongly

Global share

For separator film

60～70％

FeatureLine-up that meets diverse needs ranging： from small to ultra large equipment anddifferentiated multi-layer technology

Demand for injection molding equipment
is growing in the automotive market,
Market： while demand for blow molding
Environment
equipment is strong in Asia and North
America

Global share
Large electric injection
molding machines

35～40％（According to the company’s research）©2017 The Japan Steel Works, LTD. All Rights Reserved.

11

Promising Business Domains (Plastics)
The plastics market has good growth potential.

自動車関連©2017 The Japan Steel Works, LTD. All Rights Reserved.

12

BUSINESS RESULTS AND PROJECTIONSBusiness Results for the FY2017 Interim Period and Projections for FY2017©2017 The Japan Steel Works, LTD. All Rights Reserved.

13

Consolidated Actual Results for FY2017 Interim Period
Orders received were better than expected, and profit increased, reflecting
improvement in costs（Unit：Billions of yen）

FY2016
Interim（A）

FY2017
Previous
forecast（B）

Interim
Actual results（C）

Compared toCompared tothe previous

the previous

year

forecast（C）-（A）（C）-（B）

Orders received

96.1

95.0

115.1

19.0

20.1

Net sales

107.0

105.0

105.1

(1.9)

0.1

Operating income

7.3

6.5

10.4

3.1

3.9

(ratio)

6.9%

6.2%

10.0%

Ordinary income

7.4

6.5

10.3

2.9

3.8

Profit(Loss)

5.1

4.0

7.5

2.4

3.5

69.53

52.82

103.32

33.79

50.50

12.5

12.5

17.5

5.0

5.0

Profit(Loss)per share(yen)Dividends per
share (yen)※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.

©2017 The Japan Steel Works, LTD. All Rights Reserved.

14

Increase/Decrease in Operating Income for FY2017 Interim Period
Operating income increased 43% year on year thanks to increased production andsales in Industrial Machinery Product Business and improvement in costs.
（Unit：Billions of yen）

-1.0

+1.9

-0.1
+2.6
7.3

Increase/decrease in
fixed costs-0.3
Increase
Increase/decrease in/decrease invariable
production,
costs
sales andprice

Foreignexchange
loss/gain

10.4

Increase/decrease in
unclassifiable
costs

Average exchange ratein sales at USD
FY2016： ¥115／USD

FY2017 ： ¥107／USD

17.3期中間期
FY2016
実績
Interim

生産・売上・代価増減

Actual results©2017 The Japan Steel Works, LTD. All Rights Reserved.

変動費

固定費

為替差損

配分不能他

18.3期中間期
FY2017
実績

Interim
Actual results

15

Net Sales,Operating Income and Orders Received by Segment for FY2017 Interim Period
Industrial Machinery Products Business posted gains in sales and income on the back of strong
orders received, while Steel and Energy Products Business recorded decreased sales.
（Unit：Billions of yen）

Steel and Energy Products Business
FY2017FY2016

AnnualInterim Period

Interim

Previous

Actual（A）

forecast

results（B）（C）

Compared to

Annualthe previous

Projection

year

Progress（C）-（A）（C）÷（B）

Orders received

18.3

42.2

25.2

6.9

60%

Net sales

23.4

45.2

19.4

(4.0)

43%

(1.7)

(1.1)

(0.5)

1.2

-45%

-7.2%

-2.4%

-2.8%

Operatingincome(loss)(ratio)Industrial Machinery Products Business
FY2017FY2016

AnnualInterim Period

Interim

Previous

Actual（A）

forecast

results（B）（C）

Compared to

Annualthe previous

Projection

year

Progress（C）-（A）（C）÷（B）

Orders received

76.7

156.0

89.1

12.4

57%

Net sales

82.5

158.0

84.7

2.2

54%

9.0

15.0

11.1

2.1

74%

10.9%

9.5%

13.1%

Operatingincome(loss)(ratio)©2017 The Japan Steel Works, LTD. All Rights Reserved.

16

Steel and Energy Products Business for FY2017 Interim Period
Sales fell despite solid orders received, with large orders received for clad steel pipes.
（Unit：Billions of yen）

Net sales, Operating income
FY2017

Electric andCompared

FY2016

AnnualInterim period

to theInterim

Previous

Actualprevious（A）

forecast

results

year

（B）

（C）

（C）-（A）

Orders received
FY2017
AnnualProjection
Progress（C）÷（B）

Compared

FY2016

AnnualInterim period

to theInterim

Previous

Actualprevious（D）

forecast

results

year

（E）

（F）

（F）-（D）

AnnualProjection
Progress（F）÷（E）

9.9

18.5

8.6

(1.3)

46%

6.0

14.5

6.5

0.5

45%

1.6

1.0

0.4

(1.2)

40%

0.2

1.0

0.9

0.7

90%

3.5

13.0

4.1

0.6

32%

6.5

14.5

9.7

3.2

67%

Wind turbines

3.0

0.7

0.6

(2.4)

86%

0.3

0.7

1.0

0.7

143%

Other

2.4

5.5

1.7

(0.7)

31%

2.2

5.0

3.0

0.8

60%

3.0

6.5

4.0

1.0

62%

3.1

6.5

4.1

1.0

63%

23.4

45.2

19.4

(4.0)

43%

18.3

42.2

25.2

6.9

60%

(1.7)

(1.1)

(0.5)

1.2

45%

nuclear powerPressure vessels
for oil refineries
Clad steel plates
and clad steel

Consolidated
Group
Total
Operatingincome (loss)©2017 The Japan Steel Works, LTD. All Rights Reserved.

17

Industrial Machinery Products Business for FY2017 Interim Period
Growth was driven by continued strong performances in film and sheet
manufacturing equipment and molding machines.
（Unit：Billions of yen)

Net sales, Operating income
FY2016Compared
FY2017
Annual Interim period
to theInterim

Previous

Actualprevious（A）

forecast

results

year

（B）

（C）

（C）-（A）

Plastic production
and processing

Orders received
AnnualProjection
Progress（C）÷（B）

FY2016Compared
FY2017
Annual Interim period
to theInterim

Previous

Actualprevious（D）

forecast

results

year

（E）

（F）

（F）-（D）

AnnualProjection
Progress（F）÷（E）

18.2

45.0

26.1

7.9

58%

19.0

48.0

28.6

9.6

60%

29.1

58.0

30.8

1.7

53%

28.8

59.0

34.3

5.5

58%

26.7

35.0

19.7

(7.0)

56%

20.9

28.0

16.2

(4.7)

58%

8.5

20.0

8.1

(0.4)

41%

8.0

21.0

10.0

2.0

48%

82.5

158.0

84.7

2.2

54%

76.7

156.0

89.1

12.4

57%

9.0

15.0

11.1

2.1

74%

machinery

Molding machines(consolidated)
Other
Consolidated Group
companies,etc.

Total

Operating income©2017 The Japan Steel Works, LTD. All Rights Reserved.

18

Capital Investment ,Depreciation（forecast), Cash Flowsand Financial Position
20

Capital investment and depreciation（Forecast)（Unit：Billions of yen）

Capital investment
15

14.0

Depreciation

12.9
11.0

10.7

9.5

10
7.9

7.8
6.5

5.2

4.7

5

0
FY2013

FY2014FY2015

Operating cash flows

Investing cash flows

Free cash flows

140
120

Net assets

Interest-bearing debt

12.0

12.9

Net interest-beraing debt

100

0.70

0.60

107.5
0.48
0.44

8.2

D/E ratio

116.3

114.4

14.1

15

0.50

0.44

80
0.40

5

60

51.1

51.0

50.4

0.30

0
-1.0
-5
-10

Financial position

FY2017(Forecast)

Cash Flows20

10FY2016

-1.5

-1.2

40

0.20
20

-9.2

-15

0.10

0

-13.5

-8.7

-9.8

-20

0.00
-20.4

-20
FY2016FY2016

Interim Period©2017 The Japan Steel Works, LTD. All Rights Reserved.

FY2017
Interim Period

-40

-0.10
FY2016End of September

FY2016FY2017
End of September

19Projection for FY2017
The company raised its projections for orders received, net sales and profits andincreased the interim dividend.
（Unit：Billions of yen）

Compared to

FY2017 forecast
FY2016

Interim Period（A）

Actualresults

Second fiscal

Previous

half (forecast)

forecast

Amendedthe previous

forecast

year

（B）

（B）-（A）

Orders received

177.5

115.1

104.9

200.0

220.0

42.5

Net sales

212.4

105.1

104.9

205.0

210.0

-2.4

Operating income

12.3

10.4

7.6

12.5

18.0

5.7

(ratio)

5.8%

10.0%

7.2%

6.1%

8.6%

Ordinary income

12.1

10.3

7.7

12.5

18.0

5.9

Profit(Loss)

-4.9

7.5

3.5

8.0

11.0

15.9

-67.61103.3246.36

108.85149.68217.29

25.0

17.5

17.5

25.0

35.0

10.0

Profit(Loss)per share (yen)Dividends per
share(yen)©2017 The Japan Steel Works, LTD. All Rights Reserved.

20

Forecast for Increase/Decrease in Operating Income for FY2017
Operating income is expected to increase by 46% year on year due to increased production
and sales in Industrial Machinery Products Business and improvement in costs.
（Unit：Billions of yen）

-0.8

+2.7
+4.4

-1.1

18.0

(-0.5)(-1.2)
Foreignexchange Increase/decreasein unclassifiable
Increase/decrease loss/gaincosts
in fixed costs(+2.0)

12.3+0.5(-1.6)
Increase/decreasein production,
sales and prices

FY2016FY2016※（12.5(+1.5)
Increase/decreasein variable costs

Exchange rate
FY2016 ： ¥112／USD
FY2017

Increase/decrease in Increase/decrease in Increase/degrease inproduction,sales andvariable costs
fixed costs
prices）・・・FY2017 Previous forecast©2017 The Japan Steel Works, LTD. All Rights Reserved.

： ¥109／USD

Foreign exchange
loss/gain

Increase/decreasee in
unclassifiable costs

FY2017amendedFY2017
forecast

Amendedforecast

18.3期当初予想
FY2017

Previous
forecast

21

Projected Net Sales, Operating Income and Orders Received by Segment
for FY2017
Although the net sales forecast for the Steel and Energy Products Business has been
lowered, all other projections have been raised.
（Unit：Billions of yen）

Steel and Energy Products Business
FY2017FY2016

Interim Period（A）

Actualresults

Compared to

Second fiscal

Previous

half (forecast)

forecast

Amendedthe previous

forecast

year

（B）

（B）-（A）

Orders received

19.5

25.2

34.8

42.2

60.0

40.5

Net sales

51.2

19.4

24.6

45.2

44.0

(7.2)

(2.8)

(0.5)

0.8

(1.1)

0.3

3.1

-5.5%

-2.8%

3.3%

-2.4%

0.7%

Operatingincome(loss)(ratio)Industrial Machinery Products Business
FY2017FY2016

Interim Period（A）

Actualresults

Compared to

Second fiscal

Previous

half (forecast)

forecast

Amendedthe previous

forecast

year

（B）

（B）-（A）

Orders received

156.2

89.1

69.4

156.0

158.5

2.3

Net sales

159.3

84.7

79.8

158.0

164.5

5.2

15.1

11.1

7.9

15.0

19.0

3.9

9.5%

13.1%

9.9%

9.5%

11.6%

Operatingincome(loss)(ratio)©2017 The Japan Steel Works, LTD. All Rights Reserved.

22

Forecast for Steel and Energy Products Business for FY2017
Although orders received for clad steel pipes are expected to increase, sales areprojected to fall, lagging behind orders received.

（Unit：Billions of yen）

Net sales, Operating income
FY2017
Interim
PeriodActual

FY2016(A)

FY2017
Previous
forecast

results

Electric and

FY2017
Amendedforecast（B）

Order Received

Compared

FY2017to theInterimprevious

Periodyear

Actual(B)-(A)

results

FY2016(C)

FY2017
Previous
forecast

FY2017
Amendedforecast（D）

Comparedto thepreviousyear(D)-(C)

8.6

19.3

18.5

17.5

(1.8)

6.5

11.1

14.5

15.0

3.9

0.4

1.7

1.0

1.0

(0.7)

0.9

0.5

1.0

1.0

0.5

4.1

13.5

13.0

10.0

(3.5)

9.7

8.2

14.5

29.0

20.8

Wind turbines

0.6

3.9

0.7

1.0

(2.9)

1.0

(13.3)

0.7

1.0

14.3

Other

1.7

5.3

5.5

6.0

0.7

3.0

5.4

5.0

6.0

0.6

4.0

7.5

6.5

8.5

1.0

4.1

7.6

6.5

8.0

0.4

19.4

51.2

45.2

44.0

(7.2)

25.2

19.5

42.2

60.0

40.5

(0.5)

(2.8)

(1.1)

0.3

3.1

nuclear powerPressure vessels
for oil refineries
Clad steel plates
and clad steel

Consolidated
Group
Total
Operatingincome(loss)©2017 The Japan Steel Works, LTD. All Rights Reserved.

23

Forecast for Industrial Machinery Products Business
Projections for orders received and net sales for both plastic production andprocessing machinery and molding machines have been raised.

（Unit：Billions of yen)

Net sales, Operating income
FY2017
Interim
PeriodActualPlastic production

FY2016(A)

FY2017
Previous
forecast

results

Order Received

FY2017Compared toAmendedthe previous

forecast

year

（B）

(B)-(A)FY2017
Interim
PeriodActual

FY2016(C)

FY2017
Previous
forecast

results

FY2017Compared toAmendedthe previous

forecast

year

（D）

(D)-(C)

26.1

36.1

45.0

50.0

13.9

28.6

44.7

48.0

50.0

5.3

30.8

57.6

58.0

61.0

3.4

34.3

57.5

59.0

60.0

2.5

19.7

46.8

35.0

35.5 (11.3)

16.2

34.2

28.0

30.0

(4.2)

8.1

18.8

20.0

18.0

(0.8)

10.0

19.8

21.0

18.5

(1.3)

Total

84.7

159.3

158.0

164.5

5.2

89.1

156.2

156.0

158.5

2.3

Operating income

11.1

15.1

15.0

19.0

3.9

and processing
machinery

Molding machines(consolidated)
Other
Consolidated Group
companies,etc.

©2017 The Japan Steel Works, LTD. All Rights Reserved.

24

FY2017: Trend and Forecast for Order Backlog
Trends andForecasts for Order Backlog by Segment
セグメント別受注残高の推移と予想
Steel and Energy Products Business

300.0

Industrial Machinery Products Business

Real Estate and Other Businesses（Unit：Billions of yen）

250.0

210.9
200.0

0.7

199.2
0.6
164.4

150.0

0.6

105.6

174.4

174.3

0.5

0.6

129.1
100.0

50.0

125.9

130.3

119.9

104.6
69.5

53.8

37.8

43.6

FY2016FY2017FY2017end of Sep(forecast)

0.0
FY2014©2017 The Japan Steel Works, LTD. All Rights Reserved.

FY201525

MEDIUM-TERM MANAGEMENT PLAN
Progress of Medium-term Management Plan “JGP2017” and direction©2017 The Japan Steel Works, LTD. All Rights Reserved.

26

Summary of 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

Policy 2
Foster new products & businesses and makethem competitive as soon as possible

Numerical Targets "Renew the Challenge: Net sales of ¥250.0 billion in 2020"

Policy 3
Reinforce Group management andpromote alliances

More than 250.0

More than 220.0
194.6

Operating Income 7.5

FY2014

Operating Income
more than 13.0
ROA 3％ above
ROE 8％ above

Operating Income
more than 20.0
ROA 5％ above
ROE 10％ above

FY2017

FY2020Strict management control based on Action Plan (implement PDCA)©2017 The Japan Steel Works, LTD. All Rights Reserved.

27

Progress of Medium-Term Management Plan JGP2017（FY2015～2017）
Steel and Energy Products Business looks set to return to profitability, and Industrial
Machinery Products Business achieved targets early and is expected to grow even further.
Historical Results

Steel and Energy Products Business

Increase profitability of existing businesses

Strategy for steady business growth and renewed growth after JGP2017
through “defensive management”

Billions of yen

FY2016FY2017
forecast

JGP2017(FY2017)

Net Sales

51.2

44.0

60.0

Operatingincome

(2.8)

0.3

0

Although fixed costs were reduced due
to an impairment loss, an operating
loss was posted, reflecting a significant
decrease in sales of clad steel pipes fornatural gas.

Order environment remains challenging
but loss is expected to be eliminatedmainly due to contribution of impairment
for two consecutive fiscal years and staff
mobility, etc.

Industrial Machinery Products Business
Identify growth opportunities and accelerate business expansion through“offensive management”

Billions of yen

FY2016FY2017
forecast

159.3

164.5

158.0

Operation
income

15.1

19.0

14.0

Performance will be strong, driven byfilm and sheet manufacturing equipment
and molding machines. Net sales andoperating income are expected to further
exceed the medium-term management
plan targets reached in FY2016.

©2017 The Japan Steel Works, LTD. All Rights Reserved.

Foster new products & businesses and make themcompetitive as soon as possible
・Slow in fostering new businesses generally
・R&D Headquarters was reorganized into Technology
Strategy Office and New Business Promotion
Headquarters on October 1 to promote development.
Need to promote and increase fostering of new businesses.

JGP2017(FY2017)

Net Sales

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

・Achieved higher productivity and lower costs in film
and sheet manufacturing systems and injection
molding machines through capital investment
・Profitability also grew through expansion of service
business・Although market conditions in Steel and Energy Products
Business are challenging, a return to profitability through the
reduction of fixed costs is in sight.

Reinforce Group management and promote alliances
・ Made steady progress investing management resourcesin Hiroshima Plant, improving profitability of affiliatedcompanies, and strengthening corporate governance.
・ Although small business acquisitions are underway,
far-reaching initiatives to strengthen alliances arelacking.
・ Muroran reconstruction project is advancing steadily.

28

JGP2017 Results and Issues by Product Group

Product Group

Status at Start of JGP2017 (March 31, 2015)

Steel and Energy Products
Business
Industrial Machinery Products BusinessElectric and nuclear
power products【Reinforce competitiveness】
・Develop in full-scale large size monoblock LP
rotor using 670 ton steel ingot.
・Win overseas orders by strengthening costcompetitiveness and maintaining competitive
advantages.

Clad steel plates
and clad steel
pipes【Expand businesses】
・Increase capital investment and productivity.
・Improve response to natural gas projects andextend range of specifications.

Film and sheet
equipment【Expand businesses】
・Enhance response to full-line systems.
・Accelerate global expansion (China plus one
and others）.
・Expand business domain though alliances.
【Expand businesses：Medium- and large-size injection

Injection molding
machines

Laser plasma
related equipment

molding Machines】
・Reinforce production systems and introduce/market
new series of models.
【Optimize businesses: Small-size injection molding
machines】
・Strengthen product competitiveness based onalliances.

【Reinforce competitiveness】
・Develop differentiated technologies for HD
panels.
・Reinforce service business (China).

©2017 The Japan Steel Works, LTD. All Rights Reserved.

JGP2017 Results and Issues【Nuclear power】Monitored the status of resumption of operation in
Japan and demand trends overseas, mainly in China
and the U.K. Orders are not likely to increase in the
short term.
【Thermal power】Large thermal power plants, which is the company’s
strength, declined, while small-scale plants increased.
Need to further improve cost competitivenessContinue developing environmentally friendly highefficiency power generation applications【Clad pipes】The number of projects fell and orders received decreased
due to demand off season.
Made capital investment in some areas but has no evident
effect as production volume was low.
【Clad plates】Falling oil prices led to fewer projects and lackluster
demand.
Applications in new markets need to be developed.

・Demand for use in separator film remained strong.
・Promote expansion of production capacity and strengthening ofalliances.

・Expanded production capacity for medium- and large-sized injection
molding machines through capital investment. Achieved sales
expansion through market introduction of J-ADS series.
・Make a start on new sales and technology strategies for further rapid
growth as a comprehensive manufacturer under the next mediumterm management plan.

・Promoted development of differentiated technologies for large models,
high performance, high productivity, etc.
Service business grew steadily.
・Secure market for OLEDs and enter markets where growth can be
expected.

29

Direction of Next Medium-term Management Plan
JGP2020～Lay foundations looking ahead to 2030～◆ ”Growth” in Industrial Machinery Products Business,“Rebirth in Steel and Energy Products Business(1) Optimize management resources and strengthen alliances
Rationalization through reallocation of management resources⇒ Actively invest in Industrial Machinery Products Business and restructure Steel and Energy Products
Business according to sales
Scale up business by promoting alliances and M&A⇒ Move away from principle of self-sufficiency(2) Strengthen after-sales services (stock-based business)
Strengthen foundations of service structure focusing on Industrial Machinery Products Business⇒ Generate stable profits and increase customer satisfaction
Build strong customer base through service business⇒ Lay foundations for next businesses(3) Increase exploration and fostering of new businesses
Technology Strategy Office ⇒ Explore new businesses with an eye on megatrends
New Business Promotion Headquarters ⇒ Foster and develop business in four areas: aircraft components,hydrogen, crystal device and film formation©2017 The Japan Steel Works, LTD. All Rights Reserved.

30

Direction of Next Medium-term Management Plan 1“Growth” in Industrial Machinery Products Business,“Rebirth” in Steel and Energy Products BusinessIndustrial Machinery Products
Business

Steel and Energy Products Business

Growth Rebirth©2017 The Japan Steel Works, LTD. All Rights Reserved.

31

Direction of Next Medium-term Management Plan ２ Steel and Energy Products Business

Steel and Energy Products Business
Expand into new fields and develop
new products

Basic policy●Switch to business structure for achieving profitability inexisting products●Expand into new fields and develop new products
Measures●Complete cost reforms for existing products bystreamlining production structure●Use management resources effectively
Production resources: Examine collaboration with

Tsukishima Kikai Co., Ltd.
Human resource：Move to other business departments
or plants●Promote development investment to enter new fields
related to materials other than steel (Aircraft components
and crystal device etc.)

Muroran plant©2017 The Japan Steel Works, LTD. All Rights Reserved.

32

Direction of Next Medium-term Management Plan ３

Industrial Machinery Products Business ～Plastic production and processing～Industrial Machinery Products Business～Plastic production and processing～Upscale business and pursue profitability

Basic policy●Establish a leading position among comprehensive plastics
machinery manufactures in the world.

●Expand business domains and profitability in existing
businesses

Measures●Expand profitability by actively investing in growing
products (LiB separators, products for automotive
applications)●Promote alliances and M&A systematically to expand thebusinesses●Strengthen operations in new growth markets (carbon
fiber market, cellulose nanofiber market)

Twin-Screw Extruders©2017 The Japan Steel Works, LTD. All Rights Reserved.

TEX54αⅢ33

Direction of Next Medium-term Management Plan ４
Industrial Machinery Products Business ～Molding machines～

Industrial Machinery Products Business～Molding machines～

Mass customization strategy【Mass customization strategy】
Provide differentiated, customized machines basedon a common base to meet the needs of areas andcustomers

Basic policy●Build well-established JSW molding machine brands
through mass customization strategy
Measures●Focus strength on four priority regions: Japan, North
America, China and Southeast Asia, and provide distinctive
products and services for each region to meet their specificneeds●Provide products under the mass customization
strategy and improve profits●Offer customers total solutions through products andtechnology with an even more advanced controller, andincorporation of the IoT and AI●Pursue and increase Group synergy with Meiki, and enter
market for large-size machines exceeding 2-platen (clamp
capacity exceeding 3,000 tons)●Strengthen capabilities to deal with customized products at
plants in China and other overseas plants.
Injection Molding Machine/J-ADS series（J100ADS)©2017 The Japan Steel Works, LTD. All Rights Reserved.

34

Direction of Next Medium-term Management Plan ５
Industrial Machinery Products Business ～Service business～

Industrial Machinery Products Business～Service business～

Strengthen foundations and increasecustomer satisfaction

Basic policy●Further strengthen and expand service business as sourceof stable income
Measures● Plastic production and processing machinery,Sales of Service business

Injection molding machine：
Innovate and improve services by strengthening global（Index：2012=1）

structure and utilizing the IoT

1.5

Shift from passive services to proposal of solutions

1●Laser annealing equipment：
Strengthen service structure with overseas subsidiaries

0.5(China) playing a key role

0
FY20122016©2017 The Japan Steel Works, LTD. All Rights Reserved.

●Collaborate with manufacturers of related equipment inproviding services

35

TOPICS
Latest Topics©2017 The Japan Steel Works, LTD. All Rights Reserved.

36

Film and sheet equipment
Systematically promoting increased production to meet strong demand for lithium-ion
batteries (LiB)（Unit：MWh） Trend and Forecast
for Global Market of Automotive Lithium-on Batteries
車載用LiB世界市場推移と予測
300,000
EV ■PHEV
PHEV
■EV

■HEV
HEV

200,000

100,000

0

FY2013
2014
2015
2016
2017
2018
2019
2020
2013年 2014年
2015年
2016年
2017年
2018年
2019年
2020年

2025
2025年

(Forecast) (Forecast)（見込） (Forecast)（予測） （予測） （予測）(Forecast)(Forecast)

Film and sheet equipment（予測）（Yano Research institute, Ltd. “Study of Global Market of Automotive Lithium-ion Batteries (2017)” published Oct. 20, 2017）

To strengthen position as world’s No. 1

Production capacity（Index: FY2015 = 1）

10

ResultAim

Forecast

manufacturer of film and sheet
manufacturing equipment

Measures5●Increase production capacity to meet special
demand for separator film
●Enhance alliance0
FY201520162017©2017 The Japan Steel Works, LTD. All Rights Reserved.

2018

2019

2020

●Enhance service

37

Laser annealing systems
Increasing share and profitability in the expanding display market
Expansion ofbusiness opportunities

Laser annealing systems （ELA）
Market forecast of OLED forPanel (unit: hundreds)■To organic EL（Smart phone）

OLED

smart phone

LCD

2,000
1,500
1,000
500
0
2016 2017 2018 2019 2020 2021 2022

Liquid Crystal Display(LCD） Organic EL display (OELD)
ELA system for OLED

■Expansion of screen size
Use

Sales of ELA&Service
Service

3.0
Thin film transistor (TFT)
manufacturing process 2.5（amorphous silicon thin film crystallization）2.0

ＥＬＡ

1.5

High output laser oscillator (optical)
Feature Uses large-scale high-precision stage

1.0
0.5
0.0
2011

2012

2013

2014

2015

2016

2017

■To high definition (Large display）

Launch of new products

TV
FHD

4K

■Flexible→Bend、Fold、Round©2017 The Japan Steel Works, LTD. All Rights Reserved.

8K●ELA system：Large high-precision display (TVs, etc.)●Peel system：Flexible display（glass peeling）●Film formation equipment: Flexible display（sealing film）

38

Clad steel pipe
Demand for natural gas continues to increase～Ongoing demand expected～
石油換算(Million tonnes
100万トンoil equivalent)

Production of Natural gas

5,000
3,843
3,574
3,200

2,894
3,000
180

2,000

251
181

218
164

159

155

108

46

108
62
36

2010

273
199
163

135
146

121

0

4,322

4,110

4,000

1,000

2010 global production(average of sevenregions) = 100

52

46
46
39

46
39

2015

2020
2020（予）2020

Breakdown of sales for clad steel pipes

350

by district

300

9%

309

322

207
177

213
192

200

171

183

150

250

31%

30%

164
51

57
40

68
27

39

33
40

41

2025
2025（予）

2030
2030（予）

2035
2035（予）South America
南米
CIS独立国家共同体
CIS
アジア太平洋Asia Pacific
2020

世界生産量
World
production
欧州
Europeアフリカ
Africa

FY2010-2016

100

30%

50
0

■Asia Pacific 中東■MiddleEast ■CIS ■Europe
アジア太平洋CIS独立国家共同体
欧州North America
北米
2025

During the next-medium-term management plan JGP2020, the中東
Middle East

2025

・Source: Index produced by the company based on BP’s Natural gas - Statistical Review 2017

company would like to win projects, focusing on the Middle East andAsia Pacific regions where the production of corrosive gases is
expected.

(million tonnes of oil equivalent)

What are clad steel pipes？：
Corrosion-resistant composite steel
pipes used to transport natural gas
Stainless steel or highalloy steel cladding

Carbon-steel
outer pipe

©2017 The Japan Steel Works, LTD. All Rights Reserved.

Strengths of JSW clad steel pipes(1) Only clad steel pipe manufacturer in the world capable of integrated
production from clad steel plates（Uses metallurgically bonded high performance clad steel plates）(2) High level of technological strength and reliability（High level of knowledge and extensive expertise in materials andwelding technology）(3) Extensive track record (main customers are leading oil companies）

39

FINANCIAL STRATEGIES©2017 The Japan Steel Works, LTD. All Rights Reserved.

40

Financial Strategies
Enhance corporate value by strengthening cash-generating ability and utilizing
cash flows effectively.
FY2020Returning
to shareholders

ROA ≧ 5％

●Implement stable dividends

ROE ≧ 10％

●Improvement of CCC（Cash Conversion Cycle）●Evaluation of profitability
based on ROIC

Increase operating
incomeOperating Cash Flows

Improvement ofasset efficiency（Target：30％ payout ratio）●Target of operating income（FY2017）over 13 billions of yen
・Improve gross profit
・Enhance productivity
・Cut costs©2017 The Japan Steel Works, LTD. All Rights Reserved.

※Consider total-return ratio
in balance with growth investment

Investment in Growth
Effective investment ofmanagement resources【Capital Investment】●Systematic capital investment●Improvement of productivity andexpansion of capacity【R&D Investment】●Fostering of new businesses●Strengthening of basic technologies【Alliance】●M&A, capital alliance, businessalliances, production alliances

Creation of new seeds
41

REFERENCE©2017 The Japan Steel Works, LTD. All Rights Reserved.

42

Trends of Net sale, Operating income and Profit
FY2011Net Sales

FY2012FY2013

FY2014FY2015FY2016FY2017（forecast）

221.3

220.6

188.7

194.6

223.3

212.4

210.0

105.0

88.2

67.6

66.2

74.8

51.2

44.0

Electric and nuclear power

49.0

37.4

22.6

27.4

19.2

19.3

18.0

Pressure vessels for oil
refineries

5.5

4.3

4.1

4.2

1.4

1.7

1.0

Clad steel plates and pipes

31.7

29.3

26.7

16.2

39.3

13.5

10.0

Wind turbines

3.9

1.1

1.7

5.7

1.2

3.9

1.0

Other

8.9

12.3

7.2

7.0

6.9

5.3

6.0

Consolidated Group
companies, etc.

6.0

3.8

5.3

5.7

6.8

7.5

8.0

Industrial Machinery Products
Business

113.9

130.1

118.3

126.3

144.3

159.3

164.5

Plastic production andprocessing machinery

33.8

37.0

28.3

32.5

36.4

36.1

50.0

Molding
machines(consolidated)

34.7

40.9

47.0

53.6

56.4

57.6

61.0

Other

32.5

37.7

31.8

25.0

32.6

46.8

35.5

Consolidated Group
companies, etc.

12.7

14.5

11.2

15.2

18.9

18.8

18.0

2.4

2.2

2.7

2.0

4.0

1.8

1.5

23.9

16.6

8.8

7.5

14.4

12.3

18.0

Steel and Energy Products Business

11.5

-0.5

-3.6

-3.9

0.7

-2.8

0.3

Industrial Machinery Products
Business

11.5

16.7

12.1

11.3

12.4

15.1

19.0

Real Estate and Other Businesses

0.7

0.8

1.1

0.9

2.0

0.9

0.8

12.5

8.2

5.5

-5.3

-16.6

-4.9

11.0

Steel and Energy Products Business

Real Estate and Other Businesses
Operating Income

Profit©2017 The Japan Steel Works, LTD. All Rights Reserved.

43

Trends of assets situation and cash flow
FY2011
Total assets

FY2012FY2013

FY2014FY2015FY2016FY2017
Interim

325.6

303.9

293.1

319.6

293.1

275.3

281.2

Steel and Energy Products
Business

147.2

120.2

111.5

111.4

60.2

37.5

-

Industrial Machinery
Products Business

93.1

96.8

99.3

108.4

124.3

123.7

-

Real Estate and Other
Businesses

13.5

13.3

12.9

13.0

12.0

11.8

-

Net assets

128.6

134.3

139.2

138.2

111.3

107.5

116.3

Net assets per share (JPY)※Since FY2016,amount isafter reserve split of stocks

344.28359.29372.83368.81

299.41

1,446.44

1,564.75

Equity ratio（％）

39.21

43.83

47.09

42.72

37.53

38.6

40.9

ROE（％）

10.17

6.35

4.07

-3.88

-13.46-4.6-

Operating cash flow

32.5

23.7

11.5

11.5

19.7

12.0

14.1

Investing cash flow

-18.6

-5.8

-5.7

-2.6

-12.1

-13.5

-1.2

Financial cash flow

-6.8

-15.2

-15.0

-2.9

4.7

-1.2

-1.1

Cash and cash equivalents at
end of period

48.1

50.9

42.2

49.1

61.4

58.6

70.3

©2017 The Japan Steel Works, LTD. All Rights Reserved.

44©2017 The Japan Steel Works, LTD. All Rights Reserved.

45

©2017 The Japan Steel Works, LTD. All Rights Reserved.