Overview of Business Results
for the 3rd Quarter of Fiscal Year Ending March 31, 2021
(April 2020 → December 2020)

January 29, 2021

© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

1

Table of Contents
1. FY2020 3Q Results

Outline of Statements of Income
Income (Structural Basis)
Net Sales and Income (quarterly)
Ordinary Income Variance Analysis
Earnings by Business Segment
Balance Sheets
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)
Dividend Forecast for FY20

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, Outline of Statements of Income(Details)© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

2

Business Results

Outline of Statements of Income

１. Outline of 2020FY 1~3Q Result

We regrettably recorded an ordinary income in 1Q through 3Q of 2020 of negative 6.7 billion yen, deteriorating by 7.8 billion yen from same
period of FY19 due to stagnant sales volume caused by the diminishing demand which was triggered by the expansion of COVID-19 infection.
Ovako‘s sales volume in 3Q has decreased due to the impact of COVID-19 infection and summer outage. Sanyo’s sales volume in 3Q
recovered due to the improvements in the automobile market, etc. compared to 2Q which was the bottom when the impact of corona reached its
peak. Consequently, Sanyo secured a positive ordinary income of 1.2 billion yen.（Please refer to Page 5）(Reference) 2020FY 1~3Q Sales Volume (for Ovako and MSSS; January 2020 to September 2020)

FY20 1~3Q (A)Sales Volume

967(Sanyo)

478
427
62

(Thousands of ton )(Ovako)(MSSS)FY19 1~3Q B)

107.4

1,283

53.1
47.4
6.9

682
526
75

(per month)

Change(B) → (A)

142.6

-316

75.8
58.4
8.4

-204
-99
-13

(per month)

2. Statements of Income (FY20 1~3Q vs FY19 1~3Q )FY20 1~3Q (A)FY19 1~3Q (B)AmountRatio(%)
AmountRatio(%)
Net Sales
148.7
100.0
203.7
100.0
Operating Income
-6.5
-4.4
1.5
0.7
Ordinary Income-6.7 ROS -4.5
1.1 ROS 0.5(Sanyo)-0.5
4.4*1(Ovako)-2.4-0.0(MSSS) *1-1.1-1.0(Amortizationof goodwill )-1.9

Net Income*2-5.9

Net Income-3.9(Structural Basis) *3

-

-3.9
-2.6

-2.1

0.0

2.2

-

0.0
1.1

(per month)

-35.2
-22.6
-11.0
-1.5

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

-55.0
-8.0

-27.0

-5.0
-2.4
-0.1

-

-7.8

+0.2

-

-

-5.9

-

-6.1

-

*1 The consolidated accounting period for Ovako and MSSS is January to September 2020. *2 Profit attributable to owners of parent*3 Adjusted by amortization of goodwill© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

3

Income (Structural Basis) FY19 1~3Q vs. FY20 1~3Q

Business Results

Ordinary Income
Amortizationof goodwill

1.1
Billion yen+2.1

Ordinary Income at Structural Basis (billion yen)

-8.0 (3.2 → -4.8)

3.2

Billion yen
FY19 1~3Q
Structural Basis

FY19 1~3Q

FY20 1~3Q
Structural Basis

FY20 1~3Q-6.7

Billion yen
Net Income-4.8

Amortizationof goodwill

Billion yen+1.9

Net Income at Structural Basis (billion yen)

-6.1 (2.2 → -3.9)

Amortizationof goodwill

0.0
Billion yen
FY19 1~3Q

+2.1

2.2

Billion yen
FY19 1~3Q
Structural Basis

FY20 1~3Q
Structural Basis

FY20 1~3Q-5.9

Billion yen

Amortizationof goodwill-3.9

Billion yen+1.9© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

4

Business Results

Net Sales and Income (quarterly)

Sanyo; Sales volume decreased in Apr. - Sept. due to the impact of COVID-19 but recovered in Oct. - Dec.
Ovako ; Sales volume decreased in July - Sept. due to the impact of COVID-19 and summer outage.
MSSS ; Sales volume increased in July - Sept. from Apr. - June partly due to the lift of lockdown.

Net Sales(Billion yen)

Sales Volume(Thousands of ton per quarter)

Net Sales

100
90

5

Sales Volume(Sanyo+Ovako+MSSS)
Sales Volume(Sanyo)

291

60

281

251

310
270

10

0

292

77.2

3

Ordinary Income(Sanyo)

3.9
3.9

1
350
300

2.3
1.9
2.0 2.2

2.0 2.32.5
1.3

0

0.7

219
172 173191 13968.9

206

57.6 58.8 137 135

53.0

1.2
-0.5

-1.2
-2.6

-3

-0.8 -0.9-1.8 -2.2

-2.7

200

147

141

250

1.3

-0.1

-1
-2

196 20743.9 45.8

340

258 255

49.5 46.6

Ordinary Income

400

290

30

4

2

381
332 335

40

20

450

423

Sales Volume(MSSS)

70

50

500

479

Sales Volume(Ovako)

80

Ordinary Income(Billion yen)

44.1

107
51.6

40 39 31
28 25 23 19 25
27
10

ROS
(%)

150
100
50

0

15
10
5
0
-5
-10
-15

9.3

8.8

5.3

5.3

5.0

6.3

4.1 4.7 2.9 3.0
ROS(Ordinary Income)ROS(Ordinary Income:Sanyo)

2.1

4.2

3.8

-0.1 -2.0-1.7 -3.8-4.4-4.4 -3.3 -5.0 -5.3

© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

5

Business Results

Ordinary Income Variance Analysis (FY19 1~3Q → FY20 1~3Q)(Billion yen)

+2.3 -7.1

8.0

+3.9

6.0

+0.4
Variable

4.0

cost

Raw

2.0
0.0
-2.0

Drop of Sanyo’s sales
volume by 30%-204 : 682→478(thousands of ton )

Fixed
cost

Sales

reductions

-4.2

and
fuel prices

FY19

Sales

1~3Q

product mix

price and

-4.0
-6.0
-8.0

<Ovako>Sales volume-6.2(-99: 526→427 thousands of ton )Sales price and product mix -2.0
Variable cost reductions+1.0
Repair&maintenance exp. +0.6
Fixed cost
+ 4.0

volumematerial

1.1

Increase+ 7.0 Billion yen
Decrease-14.8 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total-7.8 Billion yen

FY20-0.1 -0.2 -2.6

1~3Q

Consumable,

Time lag of iron scrap surcharge pricing-1.4 Billion yen(FY19 1-3Q +0.8 →FY20 1-3Q -0.6)

Ovako'soutsourcing,logistic

Repair andoperatingcost,etc.

maintenance

Incomeexpenses

Sanyo’s Non Consolidated Operating Income Variance-5.0 billion yen-0.6+0.2 +0.2-6.7

Consolidated

Amortization

Non-affiliatedof

Operatingcompanies

goodwill

profitandloss© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

6Ordinary Income Variance Analysis (FY20 2Q → FY20 3Q)(Billion yen)

Increase of Sanyo’s sales volume by 52%+70 : 135→206 (thousands of ton )

3.0

+1.2

2.0

+0.5 +0.1 -0.8
-0.4

Metal
powders

1.0
0.0
-1.0
-2.0

+2.3

RepairSales

andprice andRaw

maintenanceproduct mix

material+0.5
Variable

FY20
2Q

-2.2

expenses

cost
Sales

reductions

andfuel prices

-0.6
-0.7
loss onFixed
costvolumeConsumable,

outsourcing,logistic

Time lag of iron scrap surcharge pricing-0.4 Billion yen(FY20 2Q -0.2 →FY20 3Q -0.6)

Income+0.2 -0.7

Consolidated
affiliated

-3.0

-5.0

FY20

Ovako'soperatingcost,etc.

-4.0<Ovako>Sales volume-2.3(-40: 147→107 thousands of ton )Sales price and product mix +0.7
Variable cost reductions-0.2
Repair & maintenance exp. -0.3
Foreign exchange gains+0.1
and losses(Operating income)
Fixed cost
-0.1

-2.1

Valuation
inventory

Business Results

Sanyo’s Non Consolidated
Operating Income Variance +2.1 billion yen

Increase+4.8 Billion yen
Decrease-5.3 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total-0.5 Billion yen

companies

3Q

-2.7

NonOperating
profit
and
loss

(*)

(*) Including Ovako’s foreign exchange
gains and losses -0.6 billion yen© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

7

Business Results

Earnings by Business Segment
FY20 1~3Q (A)
Net
Sales

FY19 1~3Q (Ｂ)ROS

Operating
Income(Unit : Billion yen)

(%)

Net
Sales

Change (B) → (A)ROS

Operating
Income

Net
Sales

(%)

ROS

Operating
Income(%)

Steel Products

141.1

-6.1

-4.4

193.5

1.1

0.6

-52.4

-7.3

-5.0

Metal Powders

2.5

0.1

5.5

3.2

0.2

5.0

-0.7

-0.0

+0.5

Formed andFabricatedMaterials

9.5

-0.5

-5.7

13.4

0.2

1.1

-3.9

-0.7

-6.8

Sub-total

153.0

-6.6

-4.3

210.0

1.4

0.7

-57.0

-8.0

-5.0

Other

1.1

0.0

2.9

1.2

0.0

3.1

-0.1

-0.0

-0.2

Adjustments

-5.3

0.0

─

-7.5

0.0

─

+2.1

-0.0

─

Consolidated
Total

148.7

-6.5

-4.4

203.7

1.5

0.7

-55.0

-8.0

-5.1

Change in Business Segment

Metal Powders(unit: billion yen)

Formed and Fabricated Materials(unit: billion yen)

Steel Products(unit: billion yen）
5.0

100.0

73.8
65.4
4.0
80.0
54.9
40.4
48.7
54.3
45.3
50.3
3.0
60.0
42.0
41.7 42.9
2.0
1.0

40.0

3.2

1.8 1.8 1.6

2.2

20.0

0.2

0.0
▲1.0
▲2.0
▲3.0

0
-1.3

Operating income

-1.0
-2.8

-2.4 -2.8

Sales

1.2

0.25
0.20

Operating income

1.3

1.0

1.2
1.1

0.15
0.10

Sales

1.2

1.0

0.9
0.8

1.0
0.8

0.20

0.22
0.17

0.05

FY19

FY20

1.5

0.60

1.3

0.40

1.0

0.10

4.7

0.07 0.00

0.09 0.11

0.04 0.02 0.08

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

FY19

FY20

6.0

4.6

4.5

5.4

4.7

4.0

4.2

4.6

3.1

0.20
0.22 0.17

0.8

0.29

0.21 0.19

3.5
2.8

0.06

0.3

0.0
-0.09

▲0.20

2.0

0.11

0.00

Operating income

-0.24
-0.28

-0.42

-2.0

Sales
0.0

FY18

5.1

0.5

0.00

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

FY18

0.30

▲0.40

-4.0

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

FY18

FY19

FY20

© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

8

Business Results

Balance Sheets(Billion yen)

309.8
300.0

26.9
50.4

200.0

69.1
4.2
34.1

Assets
328.0
27.8
50.9

Liabilities and Net Assets
328.0
309.8

Cash and Deposits (*)
Trade Receivables

300.0

22.3
74.5

Inventories
78.7
6.2
35.6

100.0

0.0

(Billion yen)

116.7

120.5

8.3
2020/128.3
2020/3

Other Current Assets

20.5

200.0

18.2

Goodwill
Tangible/Intangible
Fixed Assets(excluding Goodwill)
Investments

100.0

Trade Payables

76.5
29.2
17.7
182.2

Interest-bearing Debt
Other Current Liabilities
Other Fixed Liabilities
Net Assets(*) Including deposits paid 0.0
to affiliated company

Major changes in Assets- 18.2 billion yen (-6%)
Inventories- 9.6
Tangible/Intangible Fixed Assets- 3.7
Goodwill
- 1.6

174.2

22.4

2020/122020/3Major changes in Liabilities and Net Assets – 18.2 billion yen (-6%)
Other Current Liabilities
Net Assets(Reference) Assets of Sanyo, Ovako and MSSS (non consolidated basis)
Sanyo 243.3 billion yen, Ovako 84.9 billion yen, MSSS 13.1 billion yen

- 8.6
- 8.0
Equity Ratio

2020/1255.2％

2020/3

54.4％

Ovako’s goodwill
・ According to the Japanese accounting standard for impairment of fixed assets, it would be “Indicators of impairment”, in case Ovako
fails to achieve 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 -2.6 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.
© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

9

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) 9.4 billion yen for Sanyo (including 5.0 billion yen for Sanyo Factory Renovation to resolve bottlenecks at No.2 Bar &Wire Rod Mill)2) 4.0 billion yen for Ovako 3) 0.4 billion yen for MSSS.
Depreciation of 14.0 billion yen in FY20 forecast includes
1) 7.2 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 full-scale operation commencement of new facilities in the No.2 Bar &Wire Rod Mill◆ Depreciation in FY20 will decrease by 2.4 billion yen and profit improvement effect will be 1.9 billion yen compared to previous method.

© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

10

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
0.3

45

0.22
0.2

0.1

35.9 38.8

0.13

52.1 51.6 47.8

69.0

0.27

48.7 47.6

0.10

33.2

0.27

28.4

30

15

14.3 12.7
0

0
FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20/3Q* Interest-bearing Debt(Net) = Interest-bearing Debt – (cash + deposits paid to affiliated company)© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

11

Business Forecast

Business Forecast for FY20 (announced on January 29,2021)(Reference)2020FY Sales volume outlook(Thousands of ton/Q)
400
・Sanyo’s ordinary income for FY20 2H is expected to be 2.3 billion yen(-0.4 billion yen from previous
335
292 340
forecast ) as a result of increase in iron scrap prices despite of the sales volume increase.
29
400
27
25
10
On the other hand, Ovako’s ordinary income for FY20 2H is expected to be negative 2.8
300
145
107
173
200
billion yen (+1.0 billion yen from previous forecast ) due to an increase in sales volume,etc.
147
226
206
Ordinary income in FY20 2H will be negative 2.5 billion yen(+1.0 billion yen from previous forecast ). 100
137
135
0
・Consequently, ordinary income in FY20 will be negative 6.5 billion yen.
FY20/1Q FY20/2Q FY20/3Q FY20/4Q
・Ordinary income for FY20 4Q will be 0.2 billion yen due to the recovery in customer demand.
Forecast
We will continue our utmost efforts to improve sales price and to further reduce cost,
MSSS Ovako Sanyoto increase the consolidated earnings.

１. 2020FY Outlook(Unit：Billion yen)

２. 2020FY Forecast

Revised forecast(A)

1H

Net Sales
Operating Income

97.2
-3.9

Previous forecast(B)As of January 29,2021
2H
3Q
4Q(f)

ChangeAs of October 29,2020

FY20

2H

FY20

107.8
-3.4

205.0
-7.3

51.6

62.3

113.8

211.0

-2.6

-0.2

-2.8

-6.7

2H
(B→A)

FY20
(B→A)

3Q→4Q

+6.0

+6.0

+10.7

-7.5

+0.6

+0.6

+2.4

+1.0

+1.0

+2.9

1.0
-3.4
-1.4

－0.4
＋1.0
＋0.1

－0.4
＋1.0
＋0.1

－0.1
＋2.9
＋0.2

Ordinary Income

-4.0

-2.7

0.2

-2.5

-6.5

(Sanyo)

1.2

1.1

2.3

0.6

-2.8

0.0

-2.8

-2.4

(MSSS)

-1.7
0.4
-0.8

-0.4

-0.2

-0.5

-1.3

2.7
-3.8
-0.6

(Amortizationof goodwill)

-1.2

-0.7

-0.7

-1.4

-2.6

-1.4

-2.6

－

－

－

Net Income

-3.3

-2.5

0.2

-2.4

-5.7

-3.3

-6.6

+0.9

+0.9

+2.7

Net Income

-2.1

-1.9

0.8

-1.0

-3.1

-1.9

-4.0

+0.9

+0.9

+2.7

Sales Volume(Thousands of ton )

627

340

400

739

1,366

679

1,306

+60

+60

+60

(Sanyo)

273
320
35

206

226

432

704

+50

+20

145

252

572

+11

+11

+38

27

29

56

91

654
560
92

+50

107

381
241
57

－1

－1

+2

(Ovako)(Structural Basis)(Ovako)(MSSS)
Major assumptions after January 2021

･Scrap iron 41,000 yen/t (H2 market price in Himeji area)-3.5･Crude oil(Dubai) 60$/BL･Exchange rate 105 yen/US$, 125 yen/€© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

12

Business Forecast

Ordinary Income Variance Analysis (FY20 2H Previous Forecast to FY20 2H Revised Forecast)(Billion yen)Time lag of iron scrap surcharge pricing-2.0 Billion yen（ FY20 2H Previous Forecast -0.5
→FY20 2H Revised Forecast -2.5）

2.0

Increase of Sanyo’s sales volume by 13%+50: 381→432 (thousands of ton )

0.0

FY20
2H
-2.0

Increase+4.1 Billion yen
Decrease-3.1 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total+1.0 Billion yen

+2.0

+0.3

+0.2

+0.3

-2.4

Consumable,

Raw

Variableoutsourcing,material

Forecast

cost

logistic

andreductions

cost,etc.

fuel prices-3.5

volumeFY20
2HPrevious
Sales<Ovako>Sales volume+0.7(+11: 241→252 thousands of ton )Sales price and product mix-0.1
Fixed cost
+0.1

Valuation
loss on

Revised
Forecast

+0.4
-0.2

inventorySales

price and-4.0

product mix

-0.5

-2.5

+0.7 +0.2
Non-

Fixed

Ovako's

Consolidated Operating
profitaffiliatedcost

operatingcompanies

incomeandloss

Sanyo’s Non Consolidated Operating Income Variance-0.3 billion yen© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

13

Business Forecast
Ordinary Income Variance Analysis (FY20 3Q → FY20 4Q Forecast)
Increase+5.2 Billion yen
Decrease-2.3 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total+2.9 Billion yen(Billion yen) Increase of Sanyo’s sales volume by 10%(+20: 206→226 thousands of ton )2.0Time lag of iron scrap surcharge pricing-1.3 Billion yen(FY20 3Q -0.6 →FY20 4Q -1.9)

+0.2
0.0

+0.8 +0.1

FY20
3Q
-2.0

Variable

+0.8

-2.7

Sales
volumecost
reductions

Sales

+0.4

+0.1

Fixed

-2.1

cost
Consumable,

Raw

Repairoutsourcing,material

andlogistic

and

-0.2

maintenancecost,etc.

fuel prices

Valuation

expenses

price and

+0.2

Non-

FY20

Operating4Q

profitloss onOvako'sandoperatingloss

IncomeForecast(*)

inventory

product mix

Sanyo’s Non Consolidated Operating Income Variance
-4.0

+2.2

+0.6

+0.1 billion yen(*) Including Ovako’s foreign exchange gains and losses +0.6 billion yen<Ovako>Sales volume+1.9(+38: 107→145 thousands of ton )Variable cost reductions+0.3
Repair&maintenance exp. +0.3
Foreign exchange gains-0.4
and losses(Operating income)
Fixed cost
+0.2
© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

14

Business Forecast
Ordinary Income Variance Analysis (FY19 to FY20 Revised Forecast)(Billion yen)
4.0

+0.9

2.0

FY19

+2.3

0.0

-2.0

+0.3

+0.6

+0.3

Fixed
cost

Valuation

Sales

Repair andloss onvolumeVariablemaintenanceinventory

cost

expenses

reductions

-1.5

-6.0

-8.0

-4.8

Drop of Sanyo’s sales volume by 18%-150: 854→704 (thousands of ton )Consumable,Rawoutsourcing,material

logistic

andcost,etc.

fuel prices-4.0

Increase+ 7.4 Billion yen
Decrease-12.4 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total- 5.0 Billion yen+2.4 -5.2

Sales

FY20

price andproduct mix

Time lag of iron scrap surcharge pricing-3.4 Billion yen（ FY19 +0.9 →FY20 Forecast -2.5）

Sanyo’s Non Consolidated Operating Income Variance-3.2 billion yen<Ovako>Sales volume-6.1(-95: 667→572 thousands of ton )Sales price and product mix -2.5
Variable cost reductions+1.6
Repair&maintenance exp. +0.6
Fixed cost
+4.5

Forecast-2.0

Ovako's

-6.5
-0.4

+0.3

+0.3

operating
Non-

IncomeConsolidated
affiliatedcompanies

Amortization

Operatingof goodwill

profitandloss© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

15

Business Forecast

Review of Performance <Sanyo>
Overview of FY 2020

Inventory circulation diagram (Bearing products)

COVID-19 Impact
Due to the decline of demand, our customer industry re-entered into a
destocking phase resulting into a significant drop of sales volume until
last summer, but recently the demand has started to recover.
(Please refer to the figure on the right)(Overview of FY2020)

The ordinary loss for FY20/1H was 1.7 billion yen as a result of negative effects
from the drop of sales volume (decreased by 41% compared to FY19/1H) due to
COVID-19 impact. Positive effects from “emergency profit improvement measuresand actions” and “reduction of depreciation expenses by change in depreciation
methods” contributed to offset the above mentioned negative effects.
The ordinary income of the FY20/3Q was 1.2 billion yen positive due to increaseof sales volume mainly driven by recovery of demand in Automotive, Industrial
machinery and Construction machinery industry. The ordinary income of the
FY20/4Q is expected to be 1.1 billion yen positive due to further sales increase
from 3Q offset by rise of scrap price. (Please refer to the figure below).
Consequently, the ordinary income for the FY20/2H and FY 20 are expected tobe 2.3 billion yen and 0.6 billion yen respectively.
We will pursue further profit improvement by the following actions;a) Practicing sales price improvement measures and actions promptly.
b) Pursuing cost optimizing operation in production, and fully capturing
customer order recovery simultaneously.

(Billion yen)

4.0
3.0
2.0
1.0
0.0

FY20
3Q

1.2

Time lag of iron scrap
surcharge pricing-0.6 Billion yen

+0.8
Sales
volumeTime lag of iron scrap
surcharge pricing-1.9 Billion yen

+0.4

-2.1

Repair and

Raw

Sales

maintenancematerial

Forecast

price andexpenses,etc.

and

1.1

+0.8

procuct mix

fuel prices

FY20
4Q

(Y-axis) Inventory change ratio
COVID-19
Impact2018.4Q

Destocking
Phase(X-axis)Shipmentchange
ratio

50.0

25.0

2017.4Q

April,
2020

50.0

May,
2020

Stock
LoadingPhase

November,2020

August,2020

2019.4Q

Stock Raising
Phase

25.0

Recovery Phase

Source: METI Mechanical Statistics

Securing profit measures and actions(1) Continuation of fixed cost reduction measures and actions

We will practice the followings to strengthen financial soundness, a) Applying
voluntary partial return of executive compensation and manager’s salary
as planned, b) Reducing overtime and further utilizing the unemployment
insurance program for temporary leave, c) Reducing fixed cost, repair andmaintenance expenses and others.

(2) Reinforcing corporate robustness to secure profit

We will bolster the corporate robustness, even if production and sales volume
remain at present level, by the following measures.
a) Sales ; Securing an appropriate margin by increasing sales price tonon-surcharge sales items and expanding sales by fully capturing
customer order recovery.
b) Production ; Pursuing cost optimizing operations by flexibly corresponding
to production volume fluctuation.

© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

16

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.

Units of automobile sales in Europe

Overview of FY 2020

(Year-on-year rate )(Profit improvement measures and actions, support system)
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(until December 2020)
・Reduction of 120 employees which accounts approx.5% of the total personnel.
・Maximizing synergies among the 3 companies, Ovako, Sanyo and Nippon Steel (Continued)a)Sales promotion activities b)Reduction of operational cost c)Reduction of procurement cost

2,500,000

0%1,500,000

-20%

8.0

438

367

416

-40%

1,000,000

0

4.0
2.0
0.0

FY20
3Q

+1.9 +0.3 +0.3

-2.8

-4.0

2.0

5.0

8.0
3.3

2.5

0.0
-2.0
-4.0

-1.2

-1.1

Operating income(billion yen)･･･left scale

Sales

cost

Repair andvolumereductions

maintenanceprofitexpensesand loss

FY20
4Q
Forecast

500

320
252

0.6
-2.3

Ordinary income(billion yen)･･･left scale

Non-

400
300

200

1.4

-1.2

-100%

+0.6 0.0

Fixed
cost

Operating

280
1.7

4.2

+0.2 -0.4

Variable

6.0

4.0

-80%

Source ： ACEA

Foreign exchange
gains and losses(Operating income)

387

347

-60%

WLTP effectSales plunge

500,000

-2.0

10.0

20%

2,000,000(Billion yen)

Trend of Operating income, Ordinary income and Sales volume

40%

Recovery

2018/1
2018/3
2018/5
2018/7
2018/92018/112019/1
2019/3
2019/5
2019/7
2019/92019/112020/1
2020/32020/52020/72020/92020/11(Overview of FY2020 ; January to December 2020)
The demand for special steel in Europe recovered in 2020/1Q;Jan.-Mar.2020, and the COVID-19 impact onsales 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.
The impact of COVID-19 was peaked in 3Q;Jul.-Sep.2020, and together with the effect of regular maintenanceoutage in July, the sales volume for 3Q dropped, resulting in an ordinary loss for FY20 3Q of 2.8 billion yen. The
ordinary income of the FY20/4Q is expected to be 0.0 billion yen due to sales recovery from 3Q and cost
reduction despite regular maintenance in Dec. (Ordinary income is expected to improve by 2.9 billion yen;
3Q -2.8 → 4Q +0.0 )Consequently, Ovako’s ordinary loss for FY20 2H and FY20 are expected to -2.8 and -2.4 billion yen,respectively. Sales order bottomed out in 2020/3Q and it is expected to recover thereafter. In the 2020/3Q,
approx. 0.3 billion yen in expenses associated with staff reductions were recorded as extraordinary losses.

COVID-19 impact Sales plunge

100

0.4

0

-2.3

-3.2

-2.8

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© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

17

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

MSSS earnings outlook ; January to December 2020

‣ MSSS’s sales volume of FY20 1Q increased from FY19 4Q,
partly owing to the restart of shipments to railways,
but in 2Q sales volume significantly decreased due to COVID-19
impact, and Ordinary loss for the 1H was 0.8 billion yen.
‣The drop of sales volume has bottomed out in FY20 2Q, thesales volume has recovered in FY20 3Q and 4Q.
Ordinary loss for 4Q is expected to increase by 0.2 billion yen than 3Q(3Q -0.4 →4Q -0.2) by sales volume increase and sales price rise.
‣Consequently, the ordinary income for 2H is expected to be
0.5 billion yen negative and for full FY 20 to be 1.3 billion yen
negative.
‣We will endeavor to secure further sales volume and higher sales price,and continue to implement profit improvement measures.

Sign of Recovery

60%
40%
20%
0%
-20%
-40%
-60%
-80%
-100%
-120%

Recovery

600,000
400,000
200,000

30

2020/92020/112020/72020/52020/32020/1

2019/112019/92019/7

2019/5

2019/3

2019/1

2018/112018/92018/7COVID-19 impact Sales plunge

0

Impact of COVID-19‣Lockdown of the surrounding region of MSSS site,
Khopoli, Maharashtra ordered to halt operation fromlate March to mid May and from mid July to end of July.
‣Limited supply of oxygen for operation due to state ordergiving priority to supply to medical institutions (already solved)‣Demand for automobiles at low level until July 2020, butturned positive on YoY basis since August, 2020and steadily recovering since then.

(Year-on-year rate )Source ： MarkLines Co., Ltd.

2018/5Since 2018/11 YoY negative trend
2019/08
YoY ▼30% and over
2019/10~2020/2 sales volume bottoms out→ Destocking was predicted to end
2020/3~7 sales volume decline due to COVID-19 impact
2020/8~ sales volume recovering

800,000

2018/3

Domestic car sales in India

Units of automobile sales in India

2018/1

Overview of FY 2020

MSSS’s sales volume (kt)

20
10

23

19

FY19/3Q

FY19/4Q

25

27

29

FY20/3Q

FY20/4Q
Forecast

100FY20/1Q

FY20/2Q

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

© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

18

Business Forecast

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

Operating Income
Ordinary Income(Billion yen)

COVID-19 impact

300

30.0

262.5
250

The 2008 financial crisis impact

200

159.5

171.8
138.3

150

100

161.6

171.5

211.0

185.8
149.1

138.7

25.0

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-6.7 -6.5-5.0

Net Sales

-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.
© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

19

Business Forecast

Dividend Forecast for FY20

To our deepest regret, we consider to halt the year-end dividend for FY20,
in accordance with our negative business forecast for FY20.
FY19
167
(*2)

FY12
63.4

(Yen per share)
200.0
160.0

40.0
0.0

50.0
40.0

120.0

80.0

(%)

20.6

22.7

24.6
19.8

50.0 45.0
25.0
25.0

50.0

25.0 35.0
20.0
10.0 10.0
25.0

10.0

Year-end dividend

15.0

15.0

26.1

25.9 26.8

29.0

69.0

60.0 62.5

58.5

30.0

37.5

25.0

24.0

30.0

25.0

33.5

45.0

Interim dividend

30.0

20.0

15.5
15.5

10.0
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*3 A total treasury stock of 2,930,000 shares(former possession 1,200,000 shares +repurchase 1,730,000 shares)
was cancelled on Dec. 27, 2019. It is 5.1% of the total number of issued shares before cancellation.
© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

20

Topics

TopicsESG(1) Our efforts toward carbonization neutrality
Our innovation challenge in the “Challenge Zero”

1. Contribution to zero CO₂ emissions by developing
bearing steel for long-life wind power generation

・Wind power generation is an effective measure for zero CO₂emissions in power generation.
・In order to make the equipment highly-reliable that cancontinuously 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.

steel products with high reliability
will further increase in order topursue carbon neutrality andimproving energy efficiency toAppearance of wind power
generation equipment

Our innovation challenge in the “Challenge Zero”

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.

Demand for high quality special

realize a sustainable society.
We consider this situation as
a positive opportunity and willcapture the emerging demandthrough our advanced
technical resources, such as
high reliability & cleanliness steel,and alloy design & microstructure
Outline of heat exchange
in the recuperator

control technology.

3. Ovako first in the world to heat steel using hydrogen・Ovako has conducted a full-scale trial in Hofors plant using hydrogen to heat steel before rolling
together with Linde Gas AB at first in the world.
・This historic development proves that carbon dioxide emissions from rolling can be eliminatedwith a great positive effect on the environment.
・According to Ovako’s estimate, this development would save 20,000 tons of carbon dioxidein Hofors plant each year.

Heating steel in pit furnace© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

21

Topics

TopicsESG(2) Promoting Diversity Management (January 2021~)
・We established a new organization, “Diversity Promotion Group”, to support all employees tofully exert their abilities in accordance with the growing need from the society.
・We will further enhance female participation at the workplace
together with improvements in supporting programs and facilities.
・The percentage of female employees is currently 25% at staff
positions, and 6% at manufacturing site positions.
(non-consolidated basis)
・Sanyo is steadily developing its global presence.
On consolidated basis, only 30% are Japanese employees.

The ratio of employees
in our group per countries

Japan

Northern
Europe6,518
employees
Others
Mexico

China

India

(December 2020, Consolidated basis)

We established a new organization that specializes to enhance and stimulate the maximum facilitation of
the capability and potential of all employees, irrespective of gender, age, and other conditions or
preferences.
We will mainly focus on the following three issues and strive for being
an even more respected member of the society;1. Further promoting female participation
2. Facilitate support from employees exceeding retirement age
Diversity Promotion Group Manager
3. Enhanced employment of people with disabilities
MINAMI Chikako© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

22

Topics

TopicsOthers(3) Completion of our renovation to eliminate bottlenecks at No.2 Bar & Wire Rod Mill (January 2021)
New heating furnace

・In January 2021, the construction of the new heating furnaceand thereby our renovation to eliminate bottlenecks at
No.2 Bar & Wire Rod Mill was completed, a core element of
the 10th medium-term management plan.
・The No.2 Mill was refreshed to correspond to the transformationof the future demand structure, such as increase of reduced diameterand small lot products, simultaneously with capacity expansion.

・By decreasing rolling stands through higher reduction and free size rolling,
the new Reducing and Sizing Block(RSB) rolling mill can reduce process downtime andimprove productivity.
・RSB rolling mill corresponds to the transformation of the demand structure, without lowering
production efficiency.
・Henceforth, we will further pursue quality improvement, shorter lead time and cost competitiveness.
2020/01
Addition of cooling bed
and cold shear

Eliminating bottlenecks at No.2 Bar & Wire Rod Mill
2019/07
Introduction of RSB rolling mill

2021/01
Renewal of heating furnace

2019/07
2 bundling lines© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

23

Topics

Topics
ESG(4) Publishing ”SANYO REPORT” (Japanese version announced on November 26, 2020)
・We have issued ” SANYO SPECIAL STEEL REPORT 2020”,
which is a report about our effort on environment, society,and (corporate) governance(ESG).
・The contents disclosed in the report were enrichedbased on the evaluation reports from MSCI and FTSE,
for example, about our effort on Carbon Neutrality.

(5) Cleaning activity of our local environment (November 19, 2020)
・We held a cleaning activity project of our surrounding areaof the factory as part of our contribution to society.

・We annually organize this activity and many employees
are voluntarily participating in this activity.
*While cleaning, we are strictly implementing measures to prevent the spread of COVID-19, such as wearing masks.
© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

24

Countermeasures of COVID-19 Infection (as of January 29,2021)

Reference

Countermeasures in Japan

Restricting countermeasures to prevent the spread of COVID-19 after the declaration of state of
emergency (blue letters)
・Only minimum required numbers of employees will go to their workplace.
Staff workers will return home at the latest by 20:00.
・Promoting working from home especially for Staff workers(30% work in the office)・Utilizing the web for meetings and events, in principle, and minimizing the attendee and time・Restricting of face to face meetings with the external entities
・Upgraded telework environment
・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 for employees andvisitors
・Promoting periodical hand-washing, mouth rinsing, disinfection with alcohol, wearing ofmasks, and frequent ventilation of room
・Prohibition of foreign and domestic business trips, utilization of web meetings, in principle.
・Abstaining from both public and private social gatherings and occasions, in principle.

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.
・Individual measurement of body temperature before entering workplace.
・Promoting periodical hand-washing, mouth rinsing, disinfection with alcohol,
and wearing of masks.
© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

25

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).
© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

26

Reference

Trends in Automobile Market
Units of automobile sales in Japan

Units of automobile sales in U.S.

(Year-on-year rate )(Year-on-year rate )(Unit：1car)
2,000,000(Unit：1car)
30%

Source ：Japan Automobile Dealers Association
1,750,000

20%

1,500,000

10%

1,250,000

0%0％1,000,000-10%

750,000-20%

500,000-30%

250,000

-40%

0

-50%

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
2020/10 ; +29% on YoY basis due to reduction of sales
in 2019 triggered by the consumption tax hike2020/12 ; +10% on YoY basis

4,000,000

30%

Source ： MarkLines Co., Ltd.
3,500,000

20%

3,000,000

10%2,500,000

0%0％2,000,000-10%

1,500,000-20%

1,000,000-30%

500,000

-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
2020/11 ; ▼14% due to fewer business days
2020/12 ; +9％ on YoY basis© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

27

Reference

Trends in Automobile Market

Units of automobile sales in China(Factory shipment base) (Year-on-year rate )Units of automobile sales in India(Year-on-year rate )(Unit：1car)
1,600,000
1,400,000

60%

Source ： MarkLines Co., Ltd.

40%

1,200,000

20%

1,000,0000%

800,000-20%

600,000-40%

400,000-60%

200,000

-80%

0

-100%

(Unit：1car)30%
5,000,000

Source ： MarkLines Co., Ltd.

10%
0%
0％

4,000,0000％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
2020/12 ; +10% on YoY basis

20%

-10%
3,000,000

-20%
-30%

2,000,000

-40%
-50%

1,000,000

-60%
-70%

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 from 2018 summer.
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
2020/12 ; +7% on YoY basis© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

28

Reference

Trends in Automobile Market

Units of automobile export from Germany

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

900,000

3,000,000

50%

Source ： ACEA
2,500,000

2,000,000

1,500,000

1,000,000

500,0000

750,000

50%

Source ： VDA

25%

25%
600,0000%0％

450,000-25%

300,000-50%

150,000

-75%

0

-100%

0%
0％

-25%

-50%

-75%

-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
2020/12 ; ▼4％ 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
2020/12 ; ▼0％ on YoY basis© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

29

Reference

Trends in Industrial Machinery and Construction Machinery Market

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

Sales amount of machine tool orders（Japan）(Unit：billion yen)

600

(Year-on-year rate )Source ：Japan Machine Tool Builders’ Association

500

60%

40%

400

20%

300

0%
0％

200

-20%

100

-40%

0

-60%

(Unit：billion yen)
700

Source ： SEAJ

600

50,00040,000(Year-on-year rate )Source ： Ministry of Economy, Trade and Industry

20,000

400

10%

300

0％
0%

200

-10%

100

-20%

0

-30%

Sales amount of world wide semiconductor equipment
120%
80%

(Unit：billion dollars)(Year-on-year rate )Source ： SEAJ,SEMI,SEMI Japan

40%
30%

50

20%

40%

40

10%

20%

30

0%
0％

20

-10%

-40% 10

-20%

0%
0％

-60%
0

70

100% 60-20%
10,000

30%
20%

60%
30,00040%

500

Domestic production of excavator-based construction machinery(Unit：1car)(Year-on-year rate )

-80%

0

-30%

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 2020/12 ; +9% on YoY basis
Semiconductor equipment: Recovery from autumn 2019 attributable to increase of 5G and data-center related demand & 2020/7~ drop due
to U.S.-China trade dispute
Construction machinery: 2019/10~11 drop due to the consumption tax hike & 2020/2~ continuous drop due to COVID-19 impact & 2020/9~ ; increase of sales. 2020/11; +100% on YoY basis due to recovery of demand in China and Europe© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

30

Trends in Special Steel Market
Volume of order booked (Specialty steel products)(Unit：Thousands of ton)
3,500
3,000

(Year-on-year rate )Source ：The Japan Iron and Steel Federation

60%

20%

2,000

0％
0%

1,500

-20%

1,000

-40%

500

-60%

0

-80%

Volume of order booked (Bearing steel)(Unit：Thousands of ton)
175
150

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

40%

2,500

Reference

30%

20%

Source ：The European Steel Association

10%

0%
0％
-10%

(Year-on-year rate )Source ：The Japan Iron and Steel Federation

60%

-20%

40%

125

20%

100

0%
0％

75

-20%

50

-40%

25

-60%

0

-80%

-30%

-40%

-50%

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 due to recovery of sales in China and Europe
2020/11 ; +27% on YoY basis

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.
2020/5~ ; easing decline due to recovery ofdeliveries & 2020/10; +6% on YoY basis© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

31

Reference

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

NickelElectricity

LNG

175

163

154

173

150

128
125

119
100

100
75

86
76

105
92

84

107
90

87

85

80

87

71

68

62

50
FY15

FY16

FY17

110

FY18

FY19

FY20
Forecast* Based on purchase price© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

32

Outline of Statements of Income(Details)

Reference(Unit：Billion yen)

FY20 1~3Q (A) FY19 1~3Q (B)Sales Volume(Thousands of ton )(Sanyo)(Ovako) *1(MSSS) *1

Change(B) → (A)

（％）

967

1,283

-316

478
427
62
148.7

682
526
75
2,03.7

-204
-99
-13
－55.0

(Sanyo)

71.1

106.7

-35.6

(Ovako)

65.4
7.0
-6.5
-0.8
-2.1

81.2
10.2
1.5
4.1
0.4

-15.7
-3.2
－8.0
-5.0
-2.6

Net Income*2
Operating Income(Structural Basis) *3

-0.9
-1.9
-6.7
-0.5
-2.4
-1.1
-1.9
-5.9
-4.6

-0.6
-2.1
1.1
4.4
-0.0
-1.0
-2.1
0.0
3.7

-0.2
+0.2
－7.8
－5.0
－2.4
-0.1
+0.2
－5.9
－8.2

-24.7
-29.9
-18.9
-17.9
-27.0
-33.3
-19.4
-31.3
－
－
－
－
－
－
－
－
－
－
－
－

Ordinary Income(Structural Basis) *3

-4.8

3.2

－8.0

－

Net Income

-3.9

2.2

－6.1

－

Net Sales(MSSS)

Operating Income(Sanyo)(Ovako)(MSSS)(Amortization of goodwill)

Ordinary Income(Sanyo)(Ovako)(MSSS)(Amortization of goodwill)(Structural Basis) *3*1 The consolidated accounting
period for Ovako and MSSS is
January to September 2020.
*2 Profit attributable toowners of parent*3 Adjusted by amortizationof goodwill© 2021 Sanyo Special Steel Co., Ltd. All Rights Reserved.

33

(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.