Overview of Business Results
for the 1st Half of Fiscal Year Ending March 31, 2021
(April 2020 → September 2020)© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

1

Table of Contents
1. FY2020 1st Half Results

Outline of Statements of Income
Income (Structural Basis)
Net Sales and Income (quarterly)
Ordinary Income Variance Analysis
Earnings by Business Segment
Balance Sheets
Statements of Cash Flows
Capital Expenditure and Depreciation
D/E Ratio

2. FY2020 Forecast

Business Forecast for FY20
Ordinary Income Variance Analysis
Review of Performance; Sanyo, Ovako and MSSSNet Sales and Income (fiscal)
Interim Dividend and Dividend Forecast for FY20, Dividend Trend

3. Topics
4. Reference

Countermeasures of COVID-19 Infection
Emergency Profit Improvement Measures and Actions
Trends in Automobile Market, Industrial Machinery and Construction Machinery Market, Special Steel Market

Raw Materials and Fuel Prices© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

2

Business Results

Outline of Statements of Income
１. Outline of 2020FY 1st Half Result

Sanyo’s sales volume (non-consolidated) was quite stagnant due to the dwindling demand triggered by the expansion of COVID-19 infection.
We regrettably recorded an ordinary income in FY20/1H of negative 4.0 billion yen, deteriorating by 6.2 billion yen from FY19/1H.
Ordinary income in FY20/1H increased by 1.4 billion yen(-5.4→-4.0) compared to the previous forecast (announced on July 31,2020) due to anincrease in Sanyo non-consolidated sales volume and the earlier than expected recording of inventory valuation gain.

(Reference) 2020FY 1st Half Sales Volume (for Ovako and MSSS; January 2020 to June 2020)

FY20/1H (A)Sales Volume

627(Sanyo)

273
320
35

(Thousands of ton )(Ovako)(MSSS)

FY19/1H (B)

104.5

902

45.4
53.3
5.8

463
387
52

(per month)

Change(B) → (A)

150.3

-275

77.1
64.5
8.7

-190
-67
-18

(per month)

2. Statements of Income (FY20/1H vs FY19/1H)
FY20/1H (A)FY19/1H (B)AmountRatio(%)
AmountRatio(%)
Net Sales
97.2
100.0
146.1
100.0
Operating Income
-3.9
-4.0
2.6
1.8
Ordinary Income-4.0 ROS -4.1
2.2 ROS 1.5(Sanyo)-1.7
3.2*1(Ovako)0.4
1.4(MSSS) *1-0.8-0.7(Amortizationof goodwill )-1.2

Net Income*2-3.3

Net Income-2.1(Structural Basis) *3

-

-3.4
-2.1

-1.5

1.4

2.9

*1 The consolidated accounting period for Ovako and MSSS is January to June 2020.
*3 Adjusted by amortization of goodwill

-

0.9
2.0

(per month)

-45.8
-31.7
-11.2
-2.9

(Unit：Billion yen)
Change(B) → (A)AmountRatio(%)

-48.9
-6.5

-33.5

-4.9
-0.9
-0.1

-

-6.2

+0.3

-

-68.9

-

-4.7

-

-4.9

-

*2 Profit attributable to owners of parent© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

3

Business Results

Income (Structural Basis) FY19/1H vs. FY20/1H
Ordinary Income

Ordinary Income at Structural Basis (billion yen)

2.2
Billion
yen

+1.5

3.7
Billionyen

Amortizationof goodwill

FY19/1H
Structural Basis

FY19/1H-6.4(3.7→-2.7)

FY20/1H
Structural Basis

FY20/1H-4.0

Billion yen
Net Income-2.7

Amortizationof goodwill

Billion yen+1.2

Net Income at Structural Basis (billion yen)

-4.9(2.9→-2.1)

1.4
Billionyen
FY19/1H+1.5
Amortizationof goodwill

2.9
Billionyen

FY19/1H
Structural Basis

FY20/1H
Structural Basis

FY20/1H-3.3

Billion yen

Amortizationof goodwill-2.1

Billion yen+1.2© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

4

Business Results

Net Sales and Income (quarterly)
Net Sales(Billion yen)

Sanyo
; Sales volume decreased in Apr. – Sept. due to the impact of COVID-19.
Ovako,MSSS ; Sales volume increased in Jan. - March 2020 from Oct. – Dec. 2019.
The impact of COVID-19 came into existence from Apr. 2020.
Sales Volume(Thousands of ton per quarter)

Net Sales

100
90

Sales Volume(Sanyo+Ovako+MSSS)

291

60
50

423

281

251

310

0

400

270

258 255

43.9 45.8

40

49.5 46.6

39219
172 173191 139
68.9

250

28

25

200

147

141

57.6 58.8 137 135

53.0

31

300

23

19

25

100

44.1

5.3 5.3

4

10

2
1

4.1

0

6.0

5.0

4.7

5.0

3.8

3.0

-4
-5

4.0

2.1

3.0

2.9

3.93.9
1.92.0 2.32.2

2.0

2.0 2.32.5
1.3-0.1 0.7

1.3-0.1 -1.2

-1
-2

7.0

6.3

5

-3
50

8.0

7

0
150

9.0

8.8

3

196 207

77.2

8

10.0

9.3

6
350

292

290

30

10

381
332 335

40

20

450

Sales Volume(MSSS)

70

10
9

Sales Volume(Sanyo)
Sales Volume(Ovako)

80

500

479

ROS
(%)

Ordinary Income(Billion yen)

Ordinary Income
Ordinary Income(Sanyo)

-0.5

-2.6

-2.0

-0.8

-1.8

-1.7

-0.9 0.0

-2.2

-3.3

-3.0

-4.4

-4.4

-1.0
-2.0

ROS(Ordinary Income)ROS(Ordinary Income:Sanyo)

1.0

-3.8

-5.0

© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

-4.0
-5.0

5

Ordinary Income Variance Analysis (FY19 1H → FY20 1H)(Billion yen)
6.0

4.0

+2.0
+3.3

-6.6

Raw

Sales

material

volumeand2.0

fuel prices

2.2
0.0

FY19
1H

Increase+ 5.9 Billion yen
Decrease-12.1 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total- 6.2 Billion yen

Drop of Sanyo’s
sales volume by 41%-190 : 463→273(thousands of ton )

Fixed
cost

Sales volume-4.1(-67: 387→320 thousands of ton )Variable cost reductions+0.7
Sales price and product mix -1.0
Fixed cost
+3.3

-2.1
Sales
price andproduct mix

-2.0

-1.0

Consumable,-6.0

Time lag of iron scrap
surcharge pricing- 0.4 Billion yen(FY19 1H +0.4 → FY20 1H -0.0)

FY20
1H

-0.4 -0.2-1.1

outsourcing,-4.0

Business Results

logistic

Valuation

cost,etc.

loss oninventory

Repair andmaintenanceexpenses

Ovako's-4.0-0.7(*) +0.3 +0.3

operating

IncomeAmortization

Consolidated
affiliatedcompanies

Sanyo’s Non Consolidated Operating Income Variance-5.0 billion yenofgoodwill

NonOperating
profitandloss(*) Including operating income variance as below:
MSSS -0.1 billion yen, Other affiliated companies
of formed and fabricated materials section -0.3 billion yen.
© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

6Ordinary Income Variance Analysis (FY19 2H → FY20 1H)(Billion yen)

Increase+6.4 Billion yen
Decrease-6.6 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total-0.2 Billion yen

Sanyo’s Non Consolidated Operating Income Variance-2.6 billion yen

2.0

FY19
-2.0

Drop of Sanyo’s sales volume by 30%-119 : 391→273 (thousands of ton )+1.8 +0.2 -4.2

0.0

2H

+1.4

-3.8

Fixed
cost

Valuation

Amortization

loss oninventoryof
goodwill

Sales
volume+2.8 -0.3 +0.2 -0.3

Raw

-4.0

-0.9

material
andfuel prices-8.0

Consolidated

-0.7

Sales

-6.0

Business Results

price andproduct mix

Time lag of iron scrap surcharge pricing-0.6 Billion yen(FY19 2H +0.6 →FY20 1H -0.0)-0.2

Ovako'saffiliatedoperatingcompanies

IncomeConsumable,

Repair andoutsourcing,

maintenancelogistic

expensescost,etc.

FY20
1H

-4.0

NonOperating
profitandloss

Sales volume+2.4(+40: 280→320 thousands of ton )Variable cost reductions+0.7
Sales price and product mix -1.0
Fixed cost
+ 0.7

© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

7Ordinary Income Variance Analysis (FY20 1Q → FY20 2Q)

Increase+3.0 Billion yen
Decrease-3.4 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total-0.4 Billion yen(Billion yen)
3.0
2.0
1.0
0.0
-1.0
-2.0

Time lag of iron scrap surcharge pricing-0.3 Billion yen(FY20 1Q +0.1 →FY20 2Q -0.2)

FY20+1.7 -0.1

1Q

-1.8

Valuation+0.1
Rawmaterial

-3.0
-4.0

and

loss on

Sales volume-1.7(-26: 173→147 thousands of ton )Variable cost reductions+0.1
Sales price and product mix -0.2
Fixed cost
+0.9
Foreign exchange gains-0.8
and losses(Operating income)

-0.8

Sales
volume-0.3
Consumable,

inventorySales
price andproduct mix

Business Results

outsourcing,logistic
cost,etc.

-0.1
Repair

-0.3

and

Fixed

maintenancecost

expenses

-1.7

2Q

+1.2

-2.2

(*)

Ovako'soperating
IncomeFY20-0.1

fuel prices

NonOperating

Drop of Sanyo’s sales volume by 1%-2 : 137→135 (thousands of ton )Consolidated

profitaffiliatedandcompanies

loss

-5.0

Sanyo’s Non Consolidated Operating Income Variance +0.2 billion yen(*) Including Ovako’s foreign exchange
gains and losses +1.1 billion yen© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

8

Business Results

Earnings by Business Segment
FY20/1H (A)
Net
Sales

FY19/1H (Ｂ)ROSOperating
Income(Unit : Billion yen)

(%)

Net
Sales

Change (B) → (A)ROS

Operating
Income

(%)

92.3
1.6

-3.3
0.1

-3.6
3.7

139.2
2.1

2.4
0.1

1.7
3.2

Formed andFabricatedMaterials

5.9

-0.7

-11.0

9.1

0.1

Sub-total

99.8

-3.9

-3.9 150.4

Other

0.0
0.0

2.8

Adjustments

0.7
-3.4

─

Consolidated
Total

97.2

-3.9

Steel Products
Metal Powders

4

40.4

45.3
42.9
41.7

3
2
1

3.2

1.8 1.8 1.6

65.4
80
54.9
54.3
50.3
60
42.0
40

-3.2

-0.7 -12.1

2.6

1.7

-50.6

-6.5

-5.6

0.8
-5.1

0.0
0.0

3.3

-0.0
+0.0

-0.5

─

-0.1
+1.8

-4.0 146.1

2.6

1.8

-48.9

-6.5

-5.8

2.2

20

0.2

0
▲1
▲2
▲3

0

Operating income

-1.3

-1.0
-2.8

-2.4

Sales

1.2

0.25

Operating income

1.3

1.0

1.2
1.1

0.15
0.10

Sales

1.2

1.0

0.8

1.0
0.8

0.20

0.22

FY19

FY20

1.5

0.60

1.3

0.40

1.0

0.10

4.7

0.07 0.00

0.09 0.11

FY19

3.1
0.29

0.21 0.19

2.8

0.06

0.00

0.3

FY20

4.0

4.2

4.6

0.22 0.17

▲0.20

2.0
0.0

-0.09

0.04 0.02

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

6.0

4.6

4.5

5.4

4.7

0.20

0.8

Operating income

-0.24
-0.28

-0.42

-2.0

Sales
0.0

FY18

5.1

0.5

0.17

0.05

─

Formed and Fabricated Materials(unit: billion yen)

0.00

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

FY18

0.30

0.20

-5.3
+0.5

1.1

Metal Powders(unit: billion yen)
100

(%)

-5.7
-0.0

Steel Products(unit: billion yen）
73.8

ROS

Operating
Income-46.8-0.6

Change in Business Segment
5

Net
Sales

▲0.40

-4.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

FY18

FY19

FY20

© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

9

Business Results

Balance Sheets(Billion yen)

310.2
300.0

32.1
40.8

200.0

Assets
328.0
27.8
50.9

Liabilities and Net Assets
328.0
310.2

Cash and Deposits (*)
Trade Receivables

18.9

300.0

77.4

Inventories

72.7

78.7

4.8
33.8

6.2
35.6

100.0

0.0

(Billion yen)

116.8

120.5

9.1
2020/98.3
2020/3Major changes in Assets
Trade Receivables
Inventories
Goodwill

Other Current Assets

19.9

200.0

Goodwill
Tangible/Intangible
Fixed Assets(excluding Goodwill)
Investments

100.0

Trade Payables

76.5
29.2

18.2

17.7

175.8

182.2

Interest-bearing Debt
Other Current Liabilities
Other Fixed Liabilities
Net Assets(*) Including deposits paid 0.0
to affiliated company- 17.8 billion yen (-5%)- 10.1
- 6.0
- 1.8

22.4

2020/92020/3Major changes in Liabilities and Net Assets – 17.8 billion yen (-5%)
Net Assets(Reference) Assets of Sanyo, Ovako and MSSS (non consolidated basis)
Sanyo 238.0 billion yen, Ovako 89.0 billion yen, MSSS 12.7 billion yen- 6.4

Equity Ratio

2020/955.6％

2020/3

54.4％

Ovako’s goodwill
・ According to the accounting standard for impairment of fixed assets, it would be “Indicators of impairment”, in case Ovako fails toachieve an positive EBIT of more than 2.6 billon yen in FY21 to exceed the amount of annual goodwill amortization, since Ovako is
expected to be negative in EBIT for two consecutive years by -0.6 billion yen in FY19 and -3.3 billion yen in FY20.
・ Nevertheless, even if Goodwill would be fully impaired, Sanyo continues to maintain the financial robustness,with the equity ratio nearly to 50% and the D/E ratio around 0.3 to 0.4 after full impairment of Ovako’s goodwill.
© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

10

Business Results

Statements of Cash Flows(Unit : Billion yen)

FY18 1H FY18 2H FY19 1H FY19 2H FY20 1H
Cash flows from operating activities (A)Net income before income taxes
Depreciation & Amortization of goodwill

EBITDA(simplified method )Income taxes
Working capital, etc.

Cash flows from investing activities (B)Capital expenditure
Purchase of shares of subsidiaries
Proceeds from sale of securities
OthersFree Cash Flows (A+B)
Cash flows from financing activities (C)Increase/Decrease in borrowings/bonds/commercial papers/leaseobligations

Proceeds from issuance of common shares
Purchases or Sales of treasury stock
Cash dividends
OthersTranslation Difference (D)Net Increase/Decrease in Cash and Cash Equivalents (A+B+C+D)

3.3
7.5
16.4
23.1
17.1
6.8
3.5
2.1
-5.4
-4.1
10.9
8.7
5.1
11.4
4.0
4.5
5.1
8.8
10.5
8.1
-1.5
-1.7
-1.9
-2.3
1.3
-6.5
0.6
7.4
20.3
11.8
-5.5
-63.5
-1.0
-11.4
-14.1
-3.8
-5.3
-6.6
-11.7
-13.9
-2.2
-58.3
─
─
─
─
0.1
1.1
1.0
─
0.4
0.0
4.4
-0.8
-0.2
-2.2
-56.0
15.3
11.6
3.0
-2.0
67.9
-17.2
-3.9
1.8
-1.2

1.7

-12.8

-3.5

─
-0.0
-0.8
-0.0
-0.2
-4.4

67.1
-0.0
-1.5
0.6
-0.0
11.9

─
-3.0
-1.4
-0.0
-0.6
-2.4

─
0.5
-0.9
-0.0
0.2
7.9

1.8
─
-0.0
-0.0
-0.0
-0.4
4.4

(*) Cash and cash equivalents include deposits paid to affiliated company© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

11

Business Results

Capital Expenditure and Depreciation(Billion yen)

30

Capital Expenditure25

Depreciation

20
15
10
5

0

27.6
18.2
14.7
11.6
10.9
FY11

FY12

4.6

11.0

FY13

7.2 9.8

9.9 9.3

9.8 9.1

FY14

FY15

FY16

8.1 9.0 10.6 9.3
FY17

FY18

15.0 14.014.0
FY19

FY20
Forecast*Capital Expenditure of 14.0 billion yen in FY20 forecast includes following1) 9.5 billion yen for Sanyo (including 5.3 billion yen for Sanyo Factory Renovation to resolve bottlenecks at No.2 Bar &Wire Rod Mill)2) 3.6 billion yen for Ovako 3) 0.6 billion yen for MSSS.
Depreciation of 14.0 billion yen in FY20 forecast includes
1) 7.3 billion yen for Sanyo and 2) 5.6 billion yen for Ovako and 3) 0.4 billion yen for MSSS.

*

Changes in depreciation methods◆ Since FY20, Sanyo and domestic subsidiaries have changed the depreciation method.
(declining balance method → ​straight-line method)◆ The reason for this change is unifying the our group accounting policies on global basis.
◆ We considered following issues to change the depreciation method.
・The facilities used by the our group are expected to operate steadily in the future・There is little risk that our products and equipment will become obsolete due to changes in the market environment or technology.
・Timing of changes in depreciation methods→ Synchronizing with start of full-scale operation of new facilities in the No.2 Bar &Wire Rod Mill◆ Depreciation in FY20 will decrease by 2.5 billion yen and profit improvement effect will be 1.9 billion yen compared to previous method.

© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

12

Business Results

Ｄ/Ｅ Ratio
Net D/E ratio(Times)Interest-bearing Debt
(Billion yen)

0.6

0.54

90

0.53

0.5

Interest-bearing Debt (Net)Net D/E Ratio
75

0.46

0.42 0.42
0.4

60

0.34

0.29

0.26

0.3

0.22
0.2

0.1

35.9 38.8

0.13

52.1 51.6 47.8

69.0 0.27

30

45.3

0.10

33.2

45

48.7

28.4

15

14.3 12.7
0

0
FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20/1Q* Interest-bearing Debt(Net) = Interest-bearing Debt – (cash + deposits paid to affiliated company)© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

13

Business Forecast

Business Forecast for FY20 (announced on October 29,2020)(Reference)2020FY Sales volume outlook(Thousands of ton)

１. 2020FY Outlook

・The drop of sales volume due to COVID-19 has bottomed out in July-September,even though sales volume will be relatively stagnant until December,2020.
The consolidated accounting period of Ovako and MSSS has a lag of three months.
・Ordinary loss for FY20 2H will be 3.5 billion yen as a result of following reasons.
1) Earlier than expected recording of inventory valuation gain in FY20/1H and2) Ovako and MSSS are expected to increase their profits compared to the previous forecast,・Consequently, Ordinary loss for FY20 will be 7.5 billion yen, 0.5 billion yen positive compared tothe previous forecast. We have carried out and will continue to implement profit improvement
measures in order to increase the consolidated earnings.

400
300
200
100
0

335

292

320

358

25
173
137

10
147
135

27
107
186

30
133
195

FY20/1Q

FY20/2Q

FY20/3Q
Forecast

FY20/4Q
Forecast

MSSS

Ovako

Sanyo

２. 2020FY Forecast(Unit：Billion yen)
Revised forecast (A)
1H

2H

97.2
-3.9

Ordinary Income

-4.0

107.8
-3.4

(Sanyo)(MSSS)

-1.7
0.4
-0.8

(Amortizationof goodwill)

Previous forecast (B)

FY20

2H

Change(B) → (A)

FY20

1H

2H

FY20

-8.0

+1.4

-0.9

+0.5

-7.5

95.0
-5.4

-5.4

105.0
-2.3

2.7
-3.8
-0.6

1.0
-3.4
-1.4

-2.9
0.4
-0.8

4.1
-4.1
-0.8

1.2
-3.7
-1.6

+1.2
-

-1.4
+0.3
+0.2

-0.2
+0.3
+0.2

-1.2

-1.4

-2.6

-1.2

-1.2

-2.5

-

-0.1

-0.1

Net Income

-3.3

-3.3

-6.6

-4.8

-2.3

-7.1

+1.5

-1.0

+0.5

(Structural Basis)

Net Income

-2.1

-1.9

-4.0

-3.6

-1.1

-4.6

+1.5

-0.9

+0.6

Sales Volume(Thousands of ton )

627

679

1,306

608

675

1,283

+19

+4

+23

273
320
35

381
241
57

654
560
92

253
320
35

378
255
42

631
575
77

+20
-0
-

+3
-14
+15

+23
-15
+15

Net Sales
Operating Income(Ovako)(Sanyo)(Ovako)(MSSS)
Major assumptions after October 2020

-3.5

205.0
-7.3

1H

･Scrap iron 26,000 yen/t (H2 market price in Himeji area)

-2.6

200.0
-7.7

･Crude oil(Dubai) 45$/BL

+2.2
+1.5

+2.8
-1.1

+5.0
+0.4

･Exchange rate 105 yen/US$, 125 yen/€© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

14

Business Forecast
Ordinary Income Variance Analysis (FY19 to FY20 Revised Forecast)Drop of Sanyo’s sales volume by 23%-200: 854→654 (thousands of ton )(Billion yen)

+2.9 -7.0

10.0
8.0

+6.3

6.0

+0.6 +0.5

4.0
2.0
0.0
-2.0
-4.0
-6.0

Fixed
cost
Sales
volumeVariable

FY19

-1.5

-5.6

cost

Raw
material
andfuel prices

reductions

Sales volume-6.8(-107: 667→560 thousands of ton )Variable cost reductions+0.9
Sales price and product mix -2.5
Fixed cost
+5.7

Repair andmaintenanceSales

expenses

price andproduct mix

Time lag of iron scrap surcharge pricing-1.4 Billion yen（ FY19 +0.9 →FY20 Forecast -0.5）-0.4

Consumable,
outsourcing,logistic
cost,etc.

-8.0
-10.0

Increase+10.7 Billion yen
Decrease-16.7 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total- 6.0 Billion yen

Forecast-7.5-0.2 -2.7
Metal

Ovako'spowders

operating
Income-0.7(*) +0.4
consolidated
affiliated

Sanyo’s Non Consolidated Operating Income Variance-2.9 billion yen

FY20

Companies
Amortization

-0.1
Non-

Operatingprofitandlossof goodwill(*) Including operating income variance as below:
MSSS -0.1billion yen, Other affiliated companies of formed and fabricated materials section -0.3 billion yen.
© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

15

Business Forecast

Ordinary Income Variance Analysis (FY20 Previous forecast to FY20 Revised forecast)(Billion yen)

Increase+3.3 Billion yen
Decrease-2.8 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total+0.5 Billion yen

2.0

0.0

-2.0

FY20

Time lag of iron scrap surcharge pricing-0.3 Billion yen（ FY20 Previous forecast -0.2
→FY20 Revised forecast -0.5）

FY20
Sales volume-0.9(-14: 575→560 thousands of ton )Sales price and product mix,etc. +0.1
Fixed cost
+1.0

Previous

-4.0

-6.0

-8.0

-10.0

Forecast+1.0 -1.1

-8.0
+0.9

+0.8

Fixed

Repair andSales

maintenancevolumeexpenses-0.3 -0.6

cost
Sales
price andproduct mix

-0.5

Raw
material

Variable

and

cost

fuel prices

reductions

Increase of Sanyo’s sales volume by 4%+23: 631→654 (thousands of ton )Sanyo’s Non Consolidated Operating Income Variance+0.1 billion yen

Metaloutsourcing,cost,etc.

Forecast

-7.5

+0.1
-0.2 +0.2 +0.3(*) -0.1

Consumable,

logistic

RevisedConsolidated

Ovako'spowders operating

affiliatedincomecompanies
Amortization

NonOperating
profitandlossof goodwill(*) Including operating income variance as below:
MSSS +0.1billion yen, Other affiliated companies offormed and fabricated materials section +0.2 billion yen.
© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

16

Business Forecast

Ordinary Income Variance Analysis (FY20 1H to FY20 2H Revised Forecast)(Billion yen)
6.0

4.0

Increase of Sanyo’s
sales volume by 40%+108: 273→381(thousands of ton )

2.0

+0.9
+3.9

0.0

-2.0

1H

-4.0
-4.0

volumereductions

-0.1

Metal

+0.8

powders
Repair andexpenses

cost
Sales

+1.4 +0.1 -1.3

maintenance
Variable

FY20

Increase+7.3 Billion yen
Decrease-6.8 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ─
Total
+0.5 Billion yen

Salesprice andproduct mix

Rawmaterial

-0.9
Fixed
cost

Sales volume-4.9(-79: 320→241 thousands of ton )Variable cost reductions-0.6
Sales price and product mix -0.5
Fixed cost
+1.6

-4.4

and

Consumable,

Ovako'soutsourcing,

operating

FY20
2H

logistic

IncomeForecastfuel prices

cost,etc.

Time lag of iron scrap surcharge pricing-0.4 Billion yen（ F20 1H -0.0 →FY20 2H Forecast -0.5）

+0.2

(*)

Consolidated
affiliatedcompanies-0.1 -3.5
Amortizationof goodwill-6.0

Sanyo’s Non Consolidated Operating Income Variance+4.7 billion yen(*) Including operating income variance
MSSS +0.1billion yen© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

17

Business Forecast

Review of Performance <Sanyo>
Overview of FY 2020

Inventory circulation diagram (Bearing products)(Until 2019)

Acceleration of destocking in main customer industry;a) Machine tool, b)Robot, c) Automotive, d)Industrial machinery,d) Construction machinery.
↓
Pursuing optimum production and cost minimum operation &Implementing emergency profit improvement measures from FY19/4Q↓
Inventory adjustment was expected to mostly complete at the end of FY19/4Q,
and profit improvement measures were taking effects.

COVID-19 Impact
Due to the decline of demand , the customer industry re-enteredinto a destocking phase (see figure on the right). resulting into asignificant drop of sales volume.
(FY20/1H result)

The ordinary loss was 1.7 billion yen as a result of negative effects from thedrop of sales volume (decreased by 41% compared to FY19/1H) due to COVID19 impact.
Positive effects from “emergency profit improvement measures and actions” and“reduction of depreciation expenses by change in depreciation methods”
contributed to offset the above mentioned negative effects.

(FY20 forecast)

The ordinary income of the 2nd half FY20 is expected to be positive, 2.7 billion
yen, due to gradual recovery of sales volume compared to the 1st half of FY20,
though some of COVID-19 impact will linger until Dec. 2020. As a comparison
with the previous forecast , FY20/2H profits will decrease because of the earlier
than expected recording of inventory valuation gain in FY20/1H.
Consequently, the ordinary income for the full FY 20 is expected to be1.0 billion
yen positive.

(Y-axis) Inventory change ratio
Stock Raising
Phase2018.4Q
25.0

Destocking
Phase(X-axis)Shipmentchangeratio

2017.4Q

COVID-19
Impact0.0-50.0

August,2020

-25.0

0.0

July,
2020

-25.0

25.0

Stock
Loading50.0 Phase2019.4Q

Recovery Phase
Source: METI Mechanical Statistics

Profit improvement measures and actions(1) Acceleration of profit improvement measures
We will further promote the followings to strengthen financial soundness.
a) Practicing voluntary partial return of executive compensation andmanager’s salary as planned.
b) Additional reductions in overtime and further utilization of theunemployment insurance program for temporary leave.
c) Additional reduction of fixed cost, repair and maintenance expenses
and others.

(2) Effort to lower break-even point
We will bolster the corporate robustness by pursuing further cost minimum
operation and additional reduction of fixed cost. We aim to enable
Sanyo being profitable even if production and sales volume does not return
to high level.

© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

18

Review of Performance <Ovako>

Business Forecast

Headquarter : Stockholm, Sweden Manufacture and sale of special steel bars, pipes, rings, etc.
Manufacturing sites in Sweden and Finland. An affiliated company of Sanyo since March 2019.

Overview of FY 2020

Units of automobile sales in Europe

0%
-25%

COVID-19 impact
Sales plunge

-50%
-75%

Source ： ACEA
2020/92020/72020/52020/32020/1

2019/112019/92019/7

2019/5

2019/3

2019/1

2018/112018/9-100%
2018/7

Forecast for FY2020 (January to December 2020)
The COVID-19 impact will peak in 3Q;Jul.Sep.2020, and together with the effect of regular maintenance outage
in July and December, the sales volume for the 2nd half;Jul.-Dec.2020 will drop significantly, resulting in an
ordinary loss for FY20 2H of 3.8 billion yen. Consequently, Ovako’s ordinary loss for FY20 will be 3.4 billion
yen. In the second half of the fiscal year, approximately 0.3 billion yen in expenses associated with staff
reductions will be recorded as extraordinary losses.

25%

2018/5

Profit improvement measures and actions
Ovako will vigorously continue to pursue the followings to regain profitability and increase competitiveness.
・Reduction of fixed cost, partly by utilizing the unemployment compensation scheme for temporary lay off
・Reduction of 120 employees which accounts approx. 5% of the total personnel (newly introduced measure)・Maximizing synergies among the 3 companies, Ovako, Sanyo and Nippon Steela)Sales promotion activities b)Reduction of operational cost c)Reduction of procurement cost

WLTP effectSales plunge

50%

2018/3Result of 2020 1H (January to June 2020)
The demand for special steel in Europe recovered in 2020/1Q;Jan.-Mar.2020, and the COVID-19 impact
on sales was still limited. Although the COVID-19 impact started to materialize from 2Q;Apr.-Jun.2020, Ovako’s
ordinary income for the 1st half;Jan.-Jun.2020, was in surplus by 0.4 billion yen.

(Year-on-year rate )2018/1

Recent trend of market
Since autumn 2018, the demand for special steel in Europe has been stagnant mainly due to U.S.-China tradedispute, Brexit, and automobile sales plunge triggered by WLTP. Nevertheless, the destocking process
was completed by end 2019, and the market started to show some signs of recovery in January 2020.

Trend of Operating income, Ordinary income and Sales volume
10.0
8.0

438

367

416

387

347

500

320

280

6.0

4.0
2.0

5.0

8.0
3.3

2.5

0.0
-2.0
-4.0

1.7

4.2
-1.2

-1.1

Operating income(billion yen)･･･left scale

0.6
-2.3

Ordinary income(billion yen)･･･left scale

400
300

200

1.4

-1.2

241

100

0.4

0

-2.3

-3.9

-3.8

Sales volume(kt)･･･right scale-6.0
FY17 1H

FY17 2H

FY17

FY18 1H

FY18 2H

FY18
2nd Half ～:WLTP effect sales plunge

FY19 1H

FY19 2H

FY19
Destocking in the supply chain

FY20 1H

FY20 2H

FY20 Forecast
2Q､3Q:COVID-19 impact© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

19

Review of Performance <MSSS>

Business Forecast

Mahindra Sanyo Special Steel Pvt. Ltd. Headquarter : Mumbai, India
Manufacturing and sales of special steel & Our affiliated company since June 2018

Units of automobile sales in India

Overview of FY 2020

Domestic car sales in India
Since 2018/11 YoY negative trend
2019/08
YoY ▼30%
2019/10~12 sales volume bottoms out→ Destocking was predicted to end

MSSS’s sales volume of 1Q increased by 28% from 4Q of
the previous year, partly owing to the recommencement ofshipments to railways, but sales volume in 2Q significantly
decreased due to COVID-19 impact, and Ordinary loss forthe 1H was 0.8 billion yen.

‣Lockdown of the surrounding region of MSSS site,
Khopoli, Maharashtra and ordered to halt operationfrom late March to mid May and from mid July to end of July.
‣Limited supply of oxygen for operation due to giving
precedence to supply to medical institutions‣Demand for automobiles at low level until July 2020, butturned positive on YoY basis since August,2020.

MSSS earnings outlook

The drop of sales volume has bottomed out in April-June.
The sales volume is expected to recover in FY20 2H.
Ordinary loss for the 2H is expected to be 0.6 billion yen.
Consequently, the ordinary income for the full FY 20 is
expected to be1.4 billion yen negative.

Sign of Recovery

25%
0%
-25%
-50%
-75%
-100%

30

COVID-19
ImpactSource ： MarkLines Co., Ltd.

MSSS’s sales volume (kt)20
10Impact of COVID-19(Year-on-year rate )

50%

23

19

25

27

30

FY20/3Q
Forecast

FY20/4Q
Forecast

100FY19/3Q

FY19/4Q

FY20/1Q

FY20/2Q

Profit improvement measures and actions
・Reducing operation cost by improving energy intensityand efficiency, and reducing procurement cost by useof low-cost raw materials.
・Intensifying sales network, securing higher sales
volume and increasing orders of higher margin products.
・Securing stable orders for railways.
(expected to be 2,000 t/month)・Reducing labor cost including optimization of manning.

© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

20

Business Forecast

Net Sales and Income (fiscal)

Operating Income
Ordinary Income(Billion yen)

Net Sales(Billion yen)
300

30.0

262.5
250

The 2008 financial crisis impact

200

159.5

171.8
138.3

150

100

25.0

161.6

171.5

205.0

185.8
149.1

138.7

20.0

157.5

15.0

95.5
10.0

14.213.450

11.311.0
1.5 1.7

6.9 6.7

9.2 9.7

12.211.5 11.711.7 11.0
10.7

10.1 9.4

5.0

0

0.0

-3.9 -3.6-1.4 -1.5
Operating Income

Ordinary Income-7.3 -7.5

Net Sales

-5.0

-10.0
FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20
Forecast*MSSS has been consolidated since FY18/2Q, and Ovako has been consolidated since FY19/1Q for profit and loss.
© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

21

Interim Dividend and Dividend Forecast for FY20

Business Forecast

To our deepest regret, we halt the interim dividend payment for FY20,
in accordance with our negative business result of a net loss of 3.3 billion
yen in FY20/1H.
In addition, since our business forecast for FY20 is negative,
we regrettably consider to halt the year-end dividend payment as well.
(Reference) Dividend for FY19FY19After amortizationof goodwill

Before amortizationof goodwill

Net Income

Billion yen

-3.7

0.5

Earnings per share¥/share

-67.1

9.3

Annual dividend

Payout ratio *1

A¥/sharetimes

15.5(Interim 15.5 Year-end 0.0)

0.9

Dividend
Repurchase of Shares(1,730,000shares) *2

2.5

Billion yen

3.4

Total Return to Shareholders
Total Return Ratio *3

1.7

times

-

6.5

*1 Payout Ratio ・・Dividend / Earnings Per Share*2 A total treasury stock of 2,930,000 shares(former possession 1,200,000 shares +repurchase 1,730,000 shares)
was cancelled on December 27, 2019. It is 5.1% of the total number of issued shares before cancellation.
*3 Total Return Ratio ・・・Total Return / Net Income© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

22

Business Forecast

Dividend Trend(Yen per share)

(%)

150.0

FY12
63.4

125.0

24.6

100.0

19.8

75.0

50.0

50.0 45.0
25.0

30.0

20.0

25.0

25.0

10.0 25.0
10.0

10.0
15.0

Year-end dividend

69.0

22.5

24.0

15.0

60.0 62.5 58.5
30.0

25.0

0.0

25.9 26.8

37.5

22.7
20.6

50.0

26.1

29.0

FY19
167
(*2)

37.5

25.0

15.5

35.0
15.0

30.0

Interim dividend

25.0

33.5

45.0
15.5

7.5

0.0

Payout ratio*1 We conducted a one-for-five reverse stock split of our company‘s shares effective on October 1, 2017.
Dividend is adjusted after the one-for-five reverse stock split .
*2 Calculated by Earnings Per Share before goodwill amortization© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

23

Topics

TopicsR&D(1) Commercialization of a New Copper Alloy Powder Ideal for
Laser Additive Manufacturing (announced on August 24, 2020)
We have developed new copper alloy powder that achieves both・High-relative-density additive manufacturing
・Electro-thermal conductivity【Features】
・It can be used for producing highly functional copper
components with complex shapes.
・It can achieve electro-thermal conductivity similar
to that of pure copper, and strength exceedingthat of pure copper.

Examples of moldings
by laser additive manufacturing

Our copper alloy powder is expected to ;・Optimize the shapes of parts such as electronicand electrical components and heat exchangers
・Create new markets in the automotive, aerospace,and medical fields.
We can provide copper alloy powder to suit application, such as
1. High conductivity type
(Almost 90% of the conductivity of cast pure copper)
2. High density and high strength type(1.5 times stronger than cast pure copper)© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

24

Topics

R&D

TopicsESG(2) Commercialization of a Cobalt-free Maraging Steel Powder
for Additive Manufacturing (announced on October 5, 2020)
We have developed new maraging steel powder that achieves･High strength and high toughness
comparable to that of conventional maraging steel (*1)
･Without the addition of cobalt (*2)
by using our unique alloy design and structure control technology.
Examples of moldings【Features】
by additive manufacturing･ Eliminating the need for health protection measures,
because of no addition of cobalt, which is a Specified Chemical Substance in Japan.
･ Making it easy to apply in the additive manufacturing of molds
and components that require high strength and high toughness.
(*1) Maraging Steel･ It combines both high strength and high toughness, through heat treatment.
･ It is used in a wide variety of fields including industrial machinery, automotive, and aerospace.
(*2) Cobalt･ A rare metal with a high procurement risk due to extremely uneven distribution of resource areas andinternational issues around its mining in politically unstable regions.
･ It contributes to improve strength and toughness of maraging steel.
However, since cobalt is a Specified Chemical Substance in Japan, manufacturing processes using
maraging steel powder which contains a certain percentage of cobalt as a material are required healthprotection measures such as installation of dust eliminators.
© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

25

Topics

TopicsESG(3) Announcement of the “Declaration of Partnership Building” (September 30, 2020)
We announced the “Declaration of Partnership Building” (*) for increasing value added
across supply chains.

Our Priority Items
１. Building mutually-beneficial relationships among the entirety of the supply chain
and new partnerships across business scales, groups and borders, and others.
２. Following the Promotion Standards.

Sanyo will continue to build mutually-beneficial relationships with clientsand enhance partnerships for development of both side as business partners.
*Declaration of Partnership Building

・The “Council on Promoting Partnership Building for Cultivating the Future” introduced.
This council consists of the following members: relevant ministers; Chairman of the Keidanren;
Chairman of the Japan Chamber of Commerce and Industry; and President of the JapaneseTrade Union Confederation (RENGO). Cabinet Office and Small and Medium Enterprise Agency
promote this framework.
“Declaration of Partnership Building”

・The council encourages companies to engage in the following issues:

logotype

1.Preventing SMEs and small enterprises from “bearing burdens caused by unfair trade conditions”
and continuing to advance efforts for encouraging companies to introduce appropriate trade practices,while taking into consideration impacts of the novel coronavirus disease; and2.Encouraging companies to build new partnerships involving efforts for increasing value
added across supply chains and open innovation across business scales, groups and borders, and others.
© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

26

Topics

ESG

Topics(4) Participating in the “Challenge Zero” (announced on October 13, 2020)
・In June 2020, the Japan Business Federation announced the “Declaration on ‘Challenge Zero’“
towards a “decarbonized society”.
・163 companies and organizations participate in this new initiativeand 352 innovation challenges are shown as in October 2020.
・We showed our support for it and announced concrete two actions. https://www.challenge-zero.jp/en/member/158① Contribution to zero CO₂ emissions
by developing bearing steel
for long-life wind power generation
・Wind power generation is an effective measurefor zero CO₂ emissions in power generation.
・In order to make the equipment highly-reliable
that can continuously and stably generate,
we aim to develop bearing steel for wind power
generation that can obtain stable long-life property,
based on our high-cleanliness technology for steel.
Furthermore, we will contribute to zero CO₂emissions by its implementation and spreading.

【Appearance of wind power generation equipment】② Reduction of CO₂ emissions in various industrial
furnace operations by developing high-strength
heat-resistant steel tubes for heat exchangers
・Industrial furnaces are equipped with waste heat recovery
devices, such as the heat conversion type recuperator, toimprove their energy efficiency in order to reduce CO₂ emissions.
・We will contribute to the realization of a decarbonized society by
developing high-strength heat-resistant steel tubes that can
improve the heat recovery efficiency of the recuperator
and expanding their application to industrial furnaces.

【Outline of heat exchange in the recuperator】© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

27

Topics

Others

Topics(5) Participating in three exhibitions for Metal Powders①TECHNO-FRONTIER 2020

・In September 2020, it was held online.
・We displayed High-Grade Magnetic Powders for noise suppression
parts.
・Our products contribute to advanced technologies such as 5G,
AI(Artificial Intelligence), ADAS(Advanced Driver Assistance Systems),
Autonomous driving and others.

【SEM image of Flaky Powders】②Additive Manufacturing Expo

・In September 2020, it was held in Nagoya.
・We displayed high-grade Metal Powders.

③Highly-functional METAL EXPO・In October 2020, it was held in Osaka.
・We displayed high-grade Metal Powders.
Our exhibits
・High-Grade Magnetic Powders for noise suppression parts(Application example：Noise suppression sheet for 5G)・Copper Alloy Powders for Laser Additive Manufacturing (Topics(1))
・Cobalt-free Maraging Steel Powders (Topics(2))© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

28

Countermeasures of COVID-19 Infection (as of October 29,2020)

Reference

Countermeasures in Japan・Upgraded telework environment. Promoting working from home.
・Implementation of staggered working hours.
(Only 4% of the employees commute to Himeji head office by public transportation)
・Implementation of staggered lunch time.
・Installing alcohol disinfectants to each workplace and distributing masks to all employees.
・Installing thermography camera and thermometer at workplace.
・Individual measurement of body temperature before entering workplace.
・Promoting periodical hand-washing, mouth rinsing, disinfection with alcohol,
and wearing of masks.
・Frequent ventilation of room air, maintaining inter-personal distance during work.
・Restricting of face to face conferences, recommendation of web meetings.
・Prohibition of foreign business trips in general.
・Limiting domestic business trips based on travel areas and customer’s policy.

Countermeasures in overseas’ affiliates

・All measures and actions in accordance with the laws, regulations and policy of each country.
・Collecting information of each country and supporting the representatives and their family.
・Supporting Japanese representatives to return to their global workplace, based on
the situation of medical care, living condition and immigration of each country.
(Representatives already returned to Finland in June 2020, to China and Indonesia in July
2020, ,to Sweden and Thailand in September 2020. We are monitoring the situation to decide
when to have our representatives return to India.)
・Individual measurement of body temperature before entering workplace.
・Promoting periodical hand-washing, mouth rinsing, disinfection with alcohol,
and wearing of masks.

© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

29

Emergency Profit Improvement Measures and Actions

Reference

Emergency profit improvement measures and actions to realize a swift recovery (announced on January 31, 2020)
Measures①Voluntary partial
return of executive
compensation(*)

Representative Director andPresident
Director and Managing Executive
Officer
Fellow

Term

20% of monthly
compensation
10% of monthly
compensation

From February 2020 for thetime being

Executive Officer
Executive Councilor

7% of monthly compensation②Utilizing the unemployment
insurance for temporary
leave program

Planning to utilize the unemployment insurance for temporary leave
program about two days furlough in a month for all employees
working at Head Office/Plant.

③Voluntary partial returnof manager’s salary

General Manager Position

5% of monthly salaryGroup/Section Manager Position

3% of monthly salary

Other Manager

1% of monthly salary④Reduction of otherexpenses

From March 2020 for thetime being
From February 2020 for thetime being

Promoting operational efficiency and reduce expense to the minimum, such as implementing
intensive cost-minimization operations, and curbing non urgent expenditures and investments.

(*) Full-time Audit & Supervisory Board Members have voluntarily offered to return 10% of monthly compensation in the same period as well.

・ Estimated profit improvement for year ; 0.5 Billion yen
・ Additional profit improvements of 0.5 billion yen in FY2019, and 1.0 billion yen in FY2020(+0.5 billion yen from FY2019) by reductions in bonuses and overtime.
・ Further profit improvement measures and actions being implemented by affiliated companies, including Ovako and MSSS .
After
COVID-19
(from
March
2020)

・ Utilizing the unemployment compensation scheme for temporary lay off for employees of branch offices, in addition toemployees of Himeji Head Office/Plant.
・ Higher compensation rate applied, based on the introduction of the Special Measures against Corona Act of the government.
・ More reductions in overtime by drop of production and enhancing operational efficiency. Decrease of business trip expenses.
・ Utilizing the unemployment compensation scheme for temporary lay off in Ovako, since April, 2020 ,and implementing permanent reduction of 120 employees (approx.5% of total personnel).
© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

30

Reference

Trends in Automobile Market
Units of automobile salesin Japan(Year-on-year rate )Units of automobile sales
in U.S.

(Year-on-year rate )(Unit：1car)(Unit：1car)

2,000,000

50%

Source ：Japan Automobile Dealers Association

5,000,000

30%
1,500,000

50%

Source ： MarkLines Co., Ltd.

40%
4,000,000

30%

20%
10%
1,000,000

20%
3,000,000

10%

0%
0％
-10%

0％
0%
2,000,000

-10%

-20%

-20%

500,000-30%

1,000,000

-30%

-40%
0

2019/7-9; Demand rush before VAT raise.
2019/10 ; ▼25% on YoY basis after VAT raiseand easing decline of sales until 2020/3
2020/5 ; ▼45% on YoY basis due to COVID-19 impact
2020/6～; easing decline of sales from 2020/5
2020/9 ; ▼14% on YoY basis

-50%

40%

-40%
0

-50%

2018; Stable sales
2019; Slowing sales due to the effects of labor strikeand others
2020/2 ; there is the sign of recovery
2020/4 ; ▼46% on YoY basis due to COVID-19 impact
2020/5~ ; easing decline of sales
2020/9 ; recovering to +5% on YoY basis© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

31

Reference

Trends in Automobile Market

Units of automobile sales
in China（Factory shipment base）

Units of automobile sales
in India(Year-on-year rate )(Unit：1car)(Unit：1car)

1,000,000
900,000

50%

5,000,000

Source ： MarkLines Co., Ltd.

800,000
700,000

25%

200,000

0%
0％
-10%

3,000,000

-20%

-25%

-30%
2,000,000

-40%

-50%

-50%
-75%

1,000,000-60%

100,000
0

Continuous drop since 2018/07 due to;a) higher insurance premiums, b) higher fuel prices, c)tightening automobile loans, and d) deterioration of
employment.
2020/3 ; ▼62% on YoY basis due to COVID-19 impact
2020/4 ; ▼100% on YoY basis due to lockdown resulting
from expansion of COVID-19
2020/5 ; sales activities resume
2020/6~ ; easing decline of sales
2020/9 ; +23% on YoY basis

20%
10%

4,000,0000%0％400,000
300,000

30%

Source ： MarkLines Co., Ltd.

600,000
500,000(Year-on-year rate )

-70%
-100%

0

-80%

Continuous drop due to; a) the effects of the U.S.-China
trade dispute, and b) introduction of new emission
restrictions in urban areas.
2019 summer ~ ; easing decline of sales
2020/2 ; ▼79% on YoY basis due to COVID-19 impact
2020/3~ ; recovering sales
2020/5~ ; over 10% on YoY basis© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

32

Reference

Trends in Automobile Market
Units of automobile salesin Europe(Year-on-year rate )Units of automobile export
from Germany(Year-on-year rate )(Unit：1car)(Unit：1car)

750,000

3,000,000

50%

Source ： VDA

Source ： ACEA
2,500,000

50%

25%
0%
0％

500,000
2,000,000

25%

0%
0％
-25%

1,500,000-25%
250,000

1,000,000

-50%

-50%
-75%

500,000

-75%
0

0

-100%

-100%

2018/9; Huge fluctuation due to WLTP.
Stagnate tendency due to concern of Brexit,and U.S.- China trade dispute.
Sign of recovery from 2019/9 though absolute
number of units sold is mediocre.
2020/4 ; ▼79% on YoY basis due to COVID-19 impact
2020/5~ ; easing decline of sales
2020/9 ; +1% on YoY basis

Continuous drop due to;a) demand decrease in China affected by the
U.S.- China trade dispute.
b) inventory adjustments.
2020/4 ; ▼ 92% decrease on YoY basis
2020/5~ ; easing decline of export© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

33

Reference

Trends in Industrial Machinery and Construction Machinery Market
Sales amount of machine tool orders（Japan）

Sales amount of semiconductor manufacturing equipment（3 month moving average）(Japanese equipment)

60%

40%

(Year-on-year rate )(Year-on-year rate )

40%
20%
20%

0％
0%

0%
0％

-20%

-20%

-40%

-60%

Source ：Japan Machine Tool Builders’ Association

Domestic production of excavator-based construction machinery(Year-on-year rate )40%

Source ： Ministry of Economy, Trade and Industry

Source ： SEAJ
-40%

Sales amount of world wide semiconductor equipment
40%(Year-on-year rate )

20%

20%
0%
0％
-20%
-40%

0%
0％

-20%

-40%

Source ： SEAJ,SEMI,SEMI Japan-60%

Machine tools: 2018/10～; continuous drop due to U.S.-China trade dispute & 2020/5 ; ▼53% on YoY basis due to COVID-19
impact & 2020/6~ ; easing decline of sales and 2020/9 ; ▼15% on YoY basis
Semiconductor equipment: Recovery from autumn 2019 attributable to increase of 5G and data-center related demand.
Construction machinery: 2019/10~11 drop due to the consumption tax hike & 2020/2~ continuous drop due to COVID-19 impact© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

34

Trends in Special Steel Market
Volume of order booked (Specialty steel products)(Year-on-year rate )20%

Reference

Volume of European deliveries:Bars and Flats / Alloy Engineering Steel(Year-on-year rate )

10%
30%

0%
0％
-10%

20%

-20%

Source ：The European Steel Association

-30%
10%

-40%
-50%
-60%

Source ：The Japan Iron and Steel Federation

Volume of order booked (Bearing steel)(Year-on-year rate )

20%
0%
0％

0%
0％
-10%

-20%

-30%

-20%
-40%
-40%
-50%

-60%
-80%

Source ：The Japan Iron and Steel Federation

Regarding bearing steel, big negative trend from summer 2019 due to 1)
Sluggish global demand in the domestic automotive, construction machinery,industrial machinery, and semiconductors sectors, 2) Huge inventory
adjustment , and 3) COVID-19 impact. 2020/5 ; ▼65% on YoY basis
2020/6~ ; easing decline and ▼24% on YoY basis in 2020/8

2018/10～; negative trend due to 1) Sluggish
demand in the European automotive sector,
2) Inventory adjustment in supply chain, and
3) COVID-19 impact.
2020/7 ; ▼16% on YoY basis© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

35

Reference

Raw Materials and Fuel Prices(FY15=100)
200
Scrap iron(market)

NickelElectricity

LNG

175

163

173

150

128

128
125

119
100

100
75

86
76

105
92

84

107
101
90

87

85

81

87

71

70

62

50
FY15

FY16

FY17

FY18

FY19

FY20
Forecast* Based on purchase price© 2020 Sanyo Special Steel Co., Ltd. All Rights Reserved.

36

(Cautionary Statement)
Business forecasts contained in this document are based on the information available at the time of
the release of this document, and actual results may differ from these forecasts due to various factorsthat may occur in the future. The business forecasts should not be interpreted as any commitment to or
guarantee of future performance.