Sanyo Special Steel Co., Ltd.
Revision of the 2025 Mid-Term Management Plan andIR Briefing Regarding the Business Results for the FY2023 1Q
Q&A Summary

Date: Friday, July 28, 2023
Speaker : Katsuhiro Miyamoto, Representative Director and President
Kozo Takahashi, Director, Member of the Board and Managing Executive Officer
Takashi Yatsunami, Managing Executive Officer* Please be noted that the actual Q&A session was in Japanese and this English
translation is prepared for reference purpose only.
----------------------------------------------------------------------------------------Q．Could you tell us whether OVAKO’s transient factors of 1.6 billion yen in FY23/1Q were includedin the forecast at the beginning of this financial year? If not, may we consider the ordinary income
forecast of 20 billion yen for FY2023 to be softening at actual basis, compared to the previous
forecast, or do you take a rather conservative view for FY23/2H?
A．OVAKO’s transient factors of 1.6 billion yen occurred during FY23/1Q were not included in theforecast at the beginning of this financial year. Some impact of price differences among iron scrap
markets and of foreign exchange rates occurred in FY23/1Q. Regarding annual business forecast,
we have conservatively revised sales volume in FY23/2H considering the current relatively
stagnant market activities. In addition, some risk of sales price adjustment is included in theforecast for FY23/4Q. If the energy costs would remain at current reasonable level, there is apossibility that profit may improve compared to the current forecast.
Q．In July 2023, you have added consolidated dividend payout ratio (DPR) of approx. 35% to yourdividend policies. Which of the dividend policies, namely DPR of 35% or DPR of 30% excluding
goodwill amortization, would you give priority to?
A．We will consider DPR of 35% as basis, and depending on actual profit results, will comprehensively
take DPR excluding goodwill amortization, dividend per share level and necessary funds for future
investment into consideration, when deciding the individual dividend payout.
Q．Regarding decrease of OVAKO’s sales volume, has premium price of OVAKO’s CN steel caused
losing market share due to price disadvantage to competitors?
A．We recognize the demand of CN steel from customers to be robust and increasing in Europe.
Decrease of the sales volume is not due to any loss of market share, but due to stagnant market
environment.
Q．Regarding OVAKO’s margin deterioration from FY22/4Q to FY23/1Q, could you tell us the details?
It seems this has not happened before.
A．No particular and noteworthy events or issues have happened. It was due to multiple factors suchas inflationary cost impact, change in product mix and negative impact on time lag of iron scrap
surcharge.

Q．Regarding revision of 2025 Mid-Term Management Plan, could you tell us the breakdown ofchanges in profit?
A．Impact of margin improvement is included for both Sanyo and OVAKO. In addition, the sales volume
forecast was revised considering the current view and expectation of sales expansion and impactof shift to EVs.
Q ． Could you tell us how you view Sanyo’s margin improvement and sales volume including
destocking impact in the supply chain, from FY23/2Q onward?
A．Regarding margin improvement, positive impact is expected due to progress in passing on theenergy cost increase during FY2022 to sales prices. As for sales volume, our business has arelatively long supply chain, and sales volume increase would occur depending on progress of thedestocking. At this moment, we consider the progress to be quite dormant, which may besomewhat conservative.
Q．May we assume that cash will increase due to profit improvement and progress of sale of crossshareholdings, mentioned in your revised mid -term management plan. If yes, how do you consider
allocating the additional cash? What are your thoughts on mid- to long-term future growth scenarios
as well?
A．Just improving our financial position would not be sufficient from perspective of corporate growth.
One possibility would be to expand OVAKO’s green hydrogen plant, contributing to CN, to otherbusiness locations. We have been and will be always exploring and considering opportunities toenhance corporate value and global presence.
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