119th Term Report
April 1, 2017– March 31, 2018

Yodogawa Steel Works, Ltd.
Securities identification code: 5451

To Our Stakeholders

To Our Stakeholders

Since our founding in 1935, we have been an
independent iron and steel manufacturer focusing on
surface-treated steel sheet and its downstream building
materials business, in addition to steel roll and steel
grating business derived from the electric furnace business,to which we have added engineering and real estatebusinesses as well. With these segments, we have grown
as a corporate group that enjoys a unique presence.

(which is a three-year plan) in order to achieve sustainablegrowth under this environment and to act on our belief
that sharing a future vision with stakeholders will beeffective for increasing the vitality of the Group. With
this fiscal year marking the second year of the plan, we
will put the Group’s collective strength toward further
accelerating initiatives for achieving the medium-term
management plan targets and boosting corporate value.

As the business environment surrounding the Groupchanges with increasing volatility, we formulated aLong-Term Vision and, from FY2017, the Yodogawa
Steel Group Medium-Term Management Plan 2019

We would like to sincerely ask for your continued
support and encouragement going forward.

Yodogawa Steel Group Business Philosophy
Basic Philosophy

Business Philosophy

Create Value with New Originality.

Win the trust of customers and shareholders, and create
the functional capabilities expected by them. Aim to be thebest manufacturer to meet the broad needs of society.
Grow by taking up the challenge to innovate and by
expanding based on the individual creativity of each
employee. Work in harmonious coexistence with society
and the natural environment.

The Yodogawa Steel Group declares its basic philosophy
to be, “Create Value with New Originality,” centered on
surface-treated steel sheets with the goal of being a valued,
needed company that has earned the trust of society.

June 2018

Yodoko’s History of Challenging Itself to Pursue Value Creation
1935 Founded the Company (at the siteof the existing Osaka Plant) in Osaka
city, Japan on January 30 for the
purpose of production and sales ofsteel sheets and other products

1940 Started manufacture of galvanizedsteel sheet

1948 Started manufacture of cast iron andsteel rolls

1951 Constructed Izumiotsu Plant for

manufacture of various steel
products

1954 Constructed Kure Plant for

Satoshi Nitta

Takaaki Kawamoto

President andRepresentative Director

Chairman and
Representative Director

manufacture of cold rolled steel
sheets and other products

1963 Started manufacturing using acontinuous hot-dip galvanized steel
sheet line

1964 Started manufacture of pre-painted

steel sheet

11965 Started manufacture and sales ofbuilding materials

1970 Started manufacture and sales ofexterior products

1972 Constructed Ichikawa Plant for

manufacture of cold rolled steel
sheets and other products

1986 Started manufacture of galvalume

steel sheets

1994 Made Sheng Yu Steel Co., Ltd.

(Taiwan) a subsidiary1999 Established PCM Processing(Thailand) Ltd. in Thailand

2007 Started sales of chromate-free

pre-painted steel sheet for roofing
and siding (first in this industry)

2011 Established Yodogawa-Shengyu(Hefei) High-Tech Steel Co., Ltd. in
China

2

What is YODOKO?

Our Position in the Iron and Steel Industry

We develop and deliver distinctive products addressing
safety, security, the environment, and esthetics ina variety of business areas.
Blast furnace steelmaker business

Steel Sheet-related Business

Steel Sheet Segment

Steel material

Steelmaking
and casting

Blast furnace

Raw material①
Continuous
Picking②Coldrolling③
Continuous
galvanizing④
Continuouscolor coating

Steel Sheet Segment

Cold rolled steel sheets,
steel strips

Limestone

Galvanized steel sheets

Hot rolled
steel sheets

Coal

Delivering Products that
Perfectly Match Customer Needs

Pre-painted steel sheets

Example of product use
in electric appliances

Iron ore❷ Cold rolling▼ Net sales by business segment
Grating
2.0%Real Estate & Other

2.8%

Rolls

❸ Continuous galvanizing❹ Continuous color coating

Example of product use
in interior building
materials

Building Material Segment⑤
Molding/processing
and assembly

Building Material &Exterior Products Segment⑦
Construction
Building material products

Building Materials and Exteriors:
Part of our Society and Daily Lives

Exterior Products Segment

2.2%
173,805⑥
Molding/processing
and assembly

Exterior products

YODO fire-proof panel
Grand Wall installation
examplemillion yen

Steel Sheet-related

93.0%
3

❺ Molding/processing(Building materials)❻ Molding/processing(exterior products)❼ Construction(Building materials)

High-quality steel sheets originating fromyears of accumulated technologies areused for a variety of industrial purposes,
such as in construction and in the
manufacture of electric appliancesand housing equipment. Through thedevelopment of highly functional,
value-added, and environmentallyfriendly products, our Company
meets the demands of customers
and the modern age.

From molding and processing technology
gained through our integrated steel sheet
manufacturing, to our nationwide sales
and service network, we make themost of years of experience to produce
a variety of pioneering products that
include steel-sheet building materials
and exterior products.

Roll Business

World-Renowned Rolls Built
on Sound Technology and Quality
With products that range from rolls forthe steel industry created with one of
the world’s largest centrifugal casting
facilities, to equipment for the paperindustry including rolls and peripheral
equipment, Yodogawa is one ofJapan’s leading roll manufacturers.
Grating Business

Yodogawa Gratings Support Safe andComfortable Environments
Gratings are an integral part of the roads,
parks, and different infrastructure that
supports safe and secure lifestyles.
With these lifestyles in mind, we provide
a range of products that areenvironmentally friendly, people-friendly,and safe.
Real Estate & Other Businesses
The Real Estate business operates
buildings and parking lots for rent andalso manages and skillfully utilizes
the Company’s real estate holdings.

Yodo-Garage Emerge II

4

What is YODOKO?

Production and Sales Frameworks Providing Our Momentum• Production bases located evenly throughout Japan and a network of 21 sales bases that achieve close

regional ties with customers and communities.
• Overseas production and sales bases rolled out in Asia ahead of other companies in our industry.
• Sheng Yu Steel Co., Ltd. (SYSCO Taiwan) has successfully promoted locally rooted business, including

being listed on the Taiwan Stock Exchange and having strong brand recognition within Taiwan.
• Working from a network of bases evenly balanced throughout Asia, we supply high-quality

surface-treated steel sheets around the world, including North / Central / South America, Southeast Asia,
Oceania, Africa, and elsewhere.

China
■

▼ Net sales by country and region
North / Central /South America
6.3%
Southeast
Asia
3.9%
China &
Hong Kong
5.0%▼ No. of employees by region
Oceania
1.3%

Thailand

Other
2.0%

China

173,805

128

563

Sales bases
Production bases

63.8%(Year ended March 31, 2018)

Japan
Yodogawa Steel Works, Ltd.

(Year ended March 31, 2018)

Southeast Asia

0.4%

North /
Central /South
AmericaHead Office

5

Taiwan▼ Net sales by country
and region

1.2%

■

2,425

Japan

Taiwan17.7%

Thailand

1,479

Japan

Taiwan255
Taiwanmillion yen

Japan

Sheng Yu Steel Co., Ltd.

China

▼ Net sales by country
and region

Other

Oceania

Other

Japan,
domestic

Southeast
Asia

Taiwan,domestic

1.1%

4.8%

97.3%

6.2%

7.3%

million yen

North /
Central /South
America

SYSCO Taiwan(Year ended March 31, 2018)

China,
domestic

PCM Processing(Thailand) Ltd.

95.6%

(Year ended March 31, 2018)

Other

Southeast
Asia

99.4%

4,218

8,658

million yen

million yen

YSS China▼ Net sales by country
and region

0.6%

0.3%

million yen

19.7%

Other

Southeast
Asia

62.0%

Thailand▼ Net sales by country
and region

4.2%

49,027

106,357(Year ended March 31, 2018)

Yodogawa-Shengyu (Hefei)
High-Tech Steel Co., Ltd.

PPT Thailand(Year ended March 31, 2018)

6

What is YODOKO?

Process of Value Creation

We aim to contribute to the sustainable development of society and to grow as a corporation
through value creation addressing safety, security, the environment, and esthetics.
Business Environment &Business Philosophy• A declining and aging

population with a low birth rate

• Depletion of natural resources• Disaster mitigation andCreating Value
through Business

Strengths of
the Yodogawa Steel Group
Business Activities

Social challenges(1) Sales
A domestic and international sales
framework closely tied toregional customers

p.3-6• Steel Sheet Segment(2) Technology
Technical capabilities to precisely meetcustomers’ needs

Basic Philosophy
Create Value withNew Originality

Dynamic
Mobility• Building Material &Exterior Products Segment

customer needs

Flexible procurement due to ouradvantage of being independent• Emergence of protectionist
tendencies• Accelerated globalization andRecord stable consolidated
ordinary income of 10 billion yen.
Basic Policy
Maximallyleverage thedynamic
mobility andGroupcapabilities thatare our strength(4) Production
Well-balanced production bases deployed
domestically and internationally

Roll
Business

Grating
BusinessReal
Estate &OtherBusinesses

p.17-18

Long-Term Vision
The SAKURA 100

Basic Strategy

Basic Strategy

Challenge ourselves to enter new
business areas
Stimulate new business stemming from existing businessEnter downstream business areas outside Japan

Basic Strategy
Simultaneously target a strong financial standing while
proactively investing in growth
Foster human resources and improve organizational
strength
Coexist with all of our stakeholders• Maximize corporate value byachieving sustainable growth• Provide stable, continuous
returns to shareholders

Customers andbusiness partners• Deliver safe and reliable

Increase the depth of our business model
Dedicate effort to niche markets, product differentiation,and development of product applications
Strengthen collaboration and ties within the Group

products and services that
address the needs ofcustomers and society• Use our more than 80 yearsof history to build trusting
relationships with business
partners

Security
Ideal Corporate Image
A nimble company
adaptable to manychanging environments
A prolific company thatchallenges itself in new
business areas
A lasting company thatis admired globallyintensifying competition

We created a logo for Sakura 100, the Group’s
long-term vision (formulated in March 2017), withthe objective of increasing awareness of the visionin each Group company, while also deepening
our stakeholders’ understanding of the vision.

Environment

SafetyEmployees
Esthetics• Provide a safe and secure

We engage in the various activities of
product development,
manufacturing, and sales while
addressing safety, security,
the environment, and esthetics, anddelivering diverse value to all of our
stakeholders.

environment conducive to
productive work
• Foster human resources
eager to engage in innovationand develop personal
character oriented toward
growthSociety and nature• Contribute to lower

Yodogawa Steel Group Long-Term Vision
Sakura 100

7

The Group will continue to achievesustainable growth by pursuingbusiness that leverages our dynamic
mobility supported by our Business
Philosophy, while putting thecomprehensive strengths of theGroup into practice.

Establish a resilient profit structure

Build a robust business foundation• Corporate integration andrestructuring (iron and steel
industry)

Group Business Activities Medium-Term Management Plan 2019
Objective

Focus onbuilding afoundation for
our Long-Term
Vision(3) Procurement• More diverse and complex

Yodogawa Steel

Steel Sheet-related Businesspreparedness• Achieving a sustainable society

Shareholders andinvestors

environmental burdens bysupplying environmentallyconscious products
Contributeto social•
infrastructure by supplying
aesthetically pleasing
products

8What is YODOKO?

Financial and Non-financial Highlights

Net sales, overseas net sales (consolidated)

Total assets, net assets (consolidated)(Millions of yen)

(Millions of yen)■■Net sales ■■Overseas net sales■■Total assets ■■Net assets

250,000

200,000
175,889

157,551

159,214173,805

154,221

207,775

220,071

156,533
100,000

205,859

164,899

209,977

153,399

Cash flow from operating activities, cash flow frominvesting activities, free cash flow (consolidated)

No. of employees (consolidated, non-consolidated)(Millions of yen) ■■Cash flow from operating activities ■■Cash flow from investing activities(People)54,75658,999161,374

170,574

0-7,200(115th term)

2015/3(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)

Operating income, ordinary income, profit (loss)
attributable to owners of parent (consolidated)
15,00013,168
7,500

7,590
6,122

7,173
3,428

0

3,270

13,763(115th term)

2015/3(116th term)(117th term)

2017/3(118th term)

2018/3(119th term)

150,000(115th term)

147,212

12,284

137,149

143,2418,444(116th term)

2016/3(117th term)

151,586(117th term)

2017/3(118th term)-7,093

2018/3(119th term)

2014/3■■Capital investment ■■Depreciation and amortization(115th term)

2015/3(116th term)

2016/3(117th term)

75,000

5,000

5,774
4,230

0

2017/3(118th term)(Year ended(119th term) March 31)(115th term)

2015/3(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3

7.6

8.1

6

6

8.1

(119th term)

7.7

6.9
6

7

5

0

0

2014/3(Year ended
March 31)

(Year ended
March 31)40

2014/3

2018/3

6

4,0674,067 4,196
3,024

2018/3(119th term)■■No. of employees using the child care leave system (Hours)■■ Average monthly overtime
10(People)12

5,076
4,286 3,851

2017/3(118th term)

No. of employees using the child care leave system,
average monthly overtime* (non-consolidated)

8,062

7,360

6,734

1,196
1,156

1,156

0

(Year ended
March 31)

10,0002,729

2016/3-9,026

Capital investment, depreciation and amortization(consolidated)(Millions of yen)

140,3132015/3

1,157-1,559-10,278

2014/3(Year ended
March 31)

(Millions of yen)

-2,771

2014/3(116th term)

2016/3

1,197

10,856

7,302
2,617

-3,000(115th term)

2015/3

Shareholders’ equity (consolidated)■■Operating income ■■Ordinary income■■Profit (loss) attributable to owners of parent(Millions of yen)

2014/3(Year ended
March 31)

1,223

1,250

1,933

-1,355-9,0520

2014/3

2,827 1,472

1,852-10,000
0■■Consolidated ■■Non-consolidated
2,452
2,425
2,402

2,496

2,491

2,500

10,2189,125
8,658 8,658

10,00062,902

54,244

19,404

216,142

125,000
69,191■■Free cash flow

20,000(115th term)

2015/3(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)

2013(Year ended
March 31)

2014

2015

2016

2017

(Year)*Regular employees only

Profit per share, dividends per share (consolidated)■■Profit per share ■■Dividends per share

(Yen)

250

125

224

103
50

83

50

50

70

4,449

75

■■Total dividends ■■Amount of treasury stock acquired(Millions of yen)

(Yen)

5,000

247

Total dividends, amount of treasury stock acquired(non-consolidated)

Net assets per share (consolidated)
4,757

4,500

4,805

5,112

2,500

1,250

2,500

1,582
1,568
1,544
1,319
1,222
1,193

2,110
1,802

Environmental preservation costs, CO2 emissions(reduction vs. FY 1990 emissions*) (non-consolidated)
800

2,245

■Investment amount ■Preservation costs■ CO2 reduction rate

(Millions of yen)

39

37

720

400

735

0
486
-125

2014/3(115th term)

2015/3(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)(Year ended
March 31)

Note: Data before the 117th Term have been adjusted to account for shareconsolidation.

9

0

0

-90

2014/3(115th term)

2015/3(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)(Year ended
March 31)

Note: Data before the 117th Term have been adjusted to account for shareconsolidation.

0

2014/3(115th term)

2015/3(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)(Year ended
March 31)

34
760

180

200

2014/3

2015/3

36

35

644

760

(114th term)

40

20

326

302

2016/32017/338

2013/3(%)

0(115th term)(116th term)(117th term)(118th term)(Year ended
March 31)

*Under the Japan Iron and Steel Federation’s Voluntary Action Program(formulated in 1996), the commitment was made to save energy in iron- andsteel-making processes, setting a 10% reduction in energy consumption as
its goal for the fiscal year 2010 compared to fiscal 1990 levels.

10Interview with Top Management

Interview with Top Management

Embarking on a New Start with
Our Long-Term Vision andMedium-Term Management Plan
let us know your aspiration
Q. Pleaseas the new president.
Thank you. I am Satoshi Nitta, the new president andrepresentative director. After I joined Yodogawa Steel Works,
I spent many years in the area of manufacturing technology,
including providing technical guidance at Sheng Yu Steel Co., Ltd.
After that, I served as Senior General Manager of the Corporate
Planning Division, then devoted effort to the Chinese businessas the President of Yodogawa-Shengyu (Hefei) High-Tech SteelCo., Ltd. Cultivating the Chinese market is one of the Yodogawa
Steel Group’s key management goals, and concerted effort
has been dedicated to building that foundation. I feel that
results leading us to growth have started to emerge. While YSS
China has announced its mission of becoming “the company
most trusted by customers,” what I have personally emphasized
as a craftsperson is accumulating the trust of all of those withwhom we work.
As I assume the position of president and representative
director, I feel that I must brace myself to take on the task ofmanaging the Group, and would like to proceed while honoring
the trust of everyone supporting the Yodogawa Steel Group.

Q.

What is your assessment of operating
results for the year ended March 31, 2018?
In a harsh business environment in which ourfell, we were able to exceed the targets
A. profitof the Medium-Term Management Plan.

Although raw materials prices and energy costs are rising in thisbusiness environment, we were able to exercise our dynamic
mobility on many fronts, which is our strength as an independentcompany. We strove to make price adjustments, focusing on thesteel sheet-related business, and grew revenue thanks to ameasure of sales performance from YSS China. In terms of profit,
the numbers were lower year on year; however, we endeavoredto minimize the extent of the decline from rising costs.
A major factor in the decreased profit was the performanceof Sheng Yu Steel Co., Ltd. in Taiwan, which has a highproportional influence on a consolidated basis. Stagnating
domestic demand in Taiwan, and protectionist measures in the
U.S., our primary export market, had an impact that broadly

lowered profit. Rising raw materials prices hit PCM Processing(Thailand) Ltd. and lowered its profit as well.
In the Group’s Medium-Term Management Plan, we
announced a goal of recording stable consolidated ordinary
income of 10 billion yen. Considering the severe environment interms of earnings, I think it was an achievement to be able tomeet our profit target. At the same time, however, there are still
many challenges to reaching a true level of strength, and we willproceed toward making a more resilient corporate structure witha strong emphasis on substance.
In working to strengthen our corporate structure, an example
of real results in our core area of steel sheet-related business, isthe YODO Hyper Panel Series, which came from collaboration
between our steel sheet and building materials businesses.
The panels launched in September of last year and use steel
sheet specialized for exterior walls. In particular, the YODO
fire-proof panel Grand Wall has had strong sales in the series as
we started a new production line for the product at our Himeji
Plant in the first half of the previous year, as part of our systemof two production bases, one in the east and one in the westof the country.

Satoshi Nitta President and Representative Director

YODO Hyper Panel Series advertisement

11

YODO fire-proof panel Grand Wall installation example

12Interview with Top Management

Interview with Top Management

Q.

If there are any particular points tohighlight for each business segment,
please share those with us.
Results leading us to growth in our Chinese

which has been one of the Group’s
A. business,
key goals, have started to emerge.
With the Chinese business being a priority for the Group and anarea that I personally have worked on cultivating, we dedicatedeffort during this fiscal year to getting the two pillars of the building
materials and home appliance domains on track. With regard tohome appliances, this fiscal year, we established the joint venture
Shanghai Yodoko Trading Co., Ltd. (SYT China), a sales andmarketing company in China, and we are proceeding to open
sales channels to appliance manufacturers other than Japanesemakers. Also, with regard to building materials, our sales activities(including technical proposals) have begun to show results; forexample, collaborative efforts between YSS China and Yodoko
Building Material (Hangzhou) Co., Ltd. (YBMH China) led toreceiving orders for pre-painted steel sheets for the roofing of theterminal of the New Beijing International Airport (tentative name).
The scale of the Chinese construction market is orders ofmagnitude larger than Japan’s and highly durable pre-painted
steel sheets are garnering attention as a replacement for the
stainless-steel products that have conventionally seen much use inpublic construction projects. A management approach with quick
decisions and quick actions is required in the Chinese market.
While ensuring quality and performance, we have high expectations
for growing future sales by advancing in a speedy fashion.
In the steel sheet domain, we launched the previously
mentioned YODO Hyper Panel Series, which uses specific steel
sheets for three kinds of exterior wall panels. In the constructionindustry, ALC (autoclaved lightweight aerated concrete) panels
have been widely used as siding on mid- and low-rise buildings.
The shift from this material to metal panels, which are easier toinstall and do not need to be painted on site, has been
accelerating. Going forward, we will augment and strengthen our
production structure to prepare for greater demand in this area.
In the exterior products domain, we have seen strong results
for large warehouses and garages, with Dust Pit for garbage
collection sheds doing extremely well. In the construction domain,orders for large, non-residential projects, such as distribution
warehouses and factory buildings, helped results.
Meanwhile, in the roll business, we shipped orders for films as
a new business field applying roll technology for papermaking.

YODO SOUKO warehouse storage in use

13

are the first-year results and challenges
Q. Whatof the Medium-Term Management Plan 2019?
were able to make a certain degree ofA. We
progress in strengthening our profit structure.
In our Medium-Term Management Plan 2019, we announced
two basic strategies related to our business: establish a resilient
profit structure and challenge ourselves to enter new businessareas. The first strategy is for boosting the earnings of our existing
business. We are striving to further increase our high value-added
products, while also maneuvering quickly to unlock niche fields.
Our strategic efforts in the sale and marketing of highvalue-added products led, as mentioned, to steady results for
the YODO Hyper Panel Series, which is an example of successful
collaboration between our steel sheet and building materials
businesses. Our steel sheet and building materials collaboration
has also made progress overseas. As in the example of the New
Beijing International Airport (tentative name) highlighted above,
results have started to emerge for our aggressive sales
proposals, which include superior technology such as

Illustration of the expected appearance of
the New Beijing International Airport (tentative name)folded-plate roofs*, which were developed exclusively in Japanto weather the country’s typhoons, heavy rain, and other harshweather conditions.
In terms of unlocking new niche business areas, one
example is the use of pre-painted steel sheets for train station
platform doors. While it is not a large market, it is significant tohave pre-painted steel sheets used in a field that has used
post-painted sheets to date. We will continue to highlight their
durability and other merits as we pursue proposals that will
increase the use of pre-painted steel sheets in markets that
other companies have not yet tapped.
In the exterior products domain, we are working to leverage
our strength as an integrated manufacturer developing products
from raw materials. We will continue to design distinctive
products, such as those with disaster prevention-related
features, and drive forward initiatives aiming to make our
products the top brand in sheds.
Regarding the second strategy to challenge ourselves to enternew business areas, at present, we are still gathering information,*Folded-plate roofs: a characteristic style of constructing metal roofs with design,
strength, water-resistance, and economical features well suited to large, long-dimension
roofs. Yodogawa’s folded-plate roofs use a unique innovation (called haze) for the shapeof the connection seams.

New commercial for Yodo-Monooki storage sheds

14

Interview with Top Management

Interview with Top Management

but we recognize this as a long-term priority issue and I feelthat aggressive investment of management resources isrequired going forward.
The third basic strategy highlighted in our Medium-Term
Management Plan is to build a robust business foundation.
As one element towards doing so, we decided to add one
additional Outside Director, making three in total, to the Boardof Directors in June 2018, as a way of further strengthening theCompany’s governance.
Issues of impropriety with regard to quality in Japan’s
manufacturing industry have received attention this year. Having
many years of experience in technical departments, I feel thatneglecting sound product quality and only pursuing efficiency
does not constitute true technical expertise.
Yodogawa Steel Works has instilled a deep culture ofdiligently pursuing work while
growing business emphasizing
safety, security, theenvironment, and aesthetics.
Going forward, we will devote
Yodogawa Steel Group Long-Term Visionourselves to fostering a
Sakura 100
corporate culture that carries
Logo for the Long-Term Vision
this forward.

tell us about initiatives
Q. Please
dedicated to ESG.

is the policy for returns to
Q. Whatshareholders?

are steadfastly striving to coexist with
A. We
all of our stakeholders.

on our dividend indicators, we boosted
A. Based
the dividend to 75 yen for the fiscal year.

In our Long-Term Vision, we have announced the goal to coexist
with all of our stakeholders. With regard to ESG (environment,social, and governance), on the environmental front, we havededicated effort toward leading our industry in developing
chromate-free plates that do not contain hexavalent chromium
and offer superior corrosion and weather resistance. On thegovernance front, we are striving to quickly expand and enhance
our governance structure.
Also, with regard to social contributions, we have long been
involved in preserving the Yodoko Guest House, an important
cultural asset, while also participating in the SAKURA+
PROJECT for supporting recovery after the Tohoku Earthquake.
Going forward, we intend to continue enhancing ESG activities
connected with diverse value creation related to safety, security,
the environment, and aesthetics.

We recognize stable, continuous returns to shareholders as
one of our highest business priorities. This requires sustainablegrowth, which is why maintaining a robust financial position isa pillar of our basic policy for making both aggressive
investments and maximizing returns to shareholders.
As an indicator for dividend payments, our goal for theduration of the current Medium-Term Management Plan is tomaintain annual dividends per share of 50 yen or more, whileaiming for a consolidated annual payout ratio of approximately
30-50%. Following this policy, we paid a 75-yen dividend (a35-yen interim dividend and a 40-yen year-end dividend), witha consolidated annual payout ratio of 30.2%.

Dividends per share
Dividends per share

(Yen)

100

75

70

50

50

50

50

2014/3

2015/3

2016/375

37
25

2013/3

Installation example of YODO shed Erumo(with earthquake auto-lock release)15

2017/3

2018/3(114th term) (115th term) (116th term) (117th term) (118th term) (119th term)

Mechanical earthquake sensor

Yodoko Guest House(Year ended
March 31)

what is your message to
Q. Last,stakeholders?
will dedicate ourselves to
A. We
straight-forward and direct management.
In the next fiscal year (ending March 31, 2019), the global
economy is expected to be firm overall, with a gradual recovery
in Japanese markets. In the iron and steel market, however,
the outlook is predicted to be increasingly opaque under theeffects of U.S. protectionist trade measures to raise steel importtariffs, and from an expected rise in raw materials prices.
As a business person, and as a person in general, I havealways valued the word “trust.” In order to earn trust fromstakeholders, I intend to be open with information and approachbusiness in a straight-forward and direct manner. At the sametime, in order to remain in business for 100 or even 200 more
years, I believe that it is important to take an approach thatchallenges us both inside and outside Japan.
As we rally under our SAKURA 100 Long-Term Vision, we
ask that you continue to expect great things from the Yodogawa
Steel Works Group and bestow your on-going understanding
and support.

Note: Data before the end of September 2015 have been adjusted to account forshare consolidation.

16

Medium-Term Management Plan

Medium-Term Management Plan

Positioning of the Current Medium-Term Management Plan
FY
2018

FY
2019

Medium-Term
Management
Plan 2019

FY
2020

FY
2021

FY
2022

2nd Medium-Term
Management Plan

FY
2023

FY
2024

FY
2025

FY 2026 – FY 2035

3rd Medium-Term
Management Plan

Long-Term Vision
the SAKURA 100

Objective

Policyreview/execution

Run-up period

Finalization
periodPolicy roll out
Solidifying results

New policy
examination/roll out

Record stable consolidated
operating income of 10 billion yen

Structure building

Record stable consolidated
ordinary income of 10 billion yen

Preparation
periodObjective

Graceful cherry tree
Company adaptable tomany changing
environments

Blossoming company
Company that challenges
itself in new business areas

SAKURA
Lasting company
that is admired globally

Develop into a 100-year corporation

FY
2017

Medium-Term Operating Objectives
Ordinary income(consolidated)

Record stable consolidated ordinary
income of 10 billion yen(100 millions of yen)

150

137.6

100
50

71.7

122.8

84.4

0

2015/3(116th term)

17

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)

2019/3(120th term)

2020/3(121th term)• In the first year of the plan (the year ended
March 31, 2018), a harsh economic
climate has prevailed, with rising energy
prices and emerging protectionist measuresin the overseas iron and steel market.
Nevertheless, we were able to leverage our
key strength of dynamic mobility and achieve¥12.2 billion in consolidated ordinary income.
• In the year ending March 31, 2019 andbeyond, we will strive to move initiatives
forward and achieve our targets in an
increasingly harsh business environment.

Main Initiatives by Business Segmentin the Year Ended March 31, 2018
Basic strategies

Status of major initiatives

Establish
a resilient
profit structure• Achieved a solid measure of results from entering new fields and unlocking new sales channels.
Steel Sheet Business

Building Material Business

Exterior Products Business

Unlocked new applications and entered nichemarkets, such as train station platform doors
and EV chargers.

Started receiving orders for the Hyper Panel
Series that uses YODO Hyper GL Color sheets.

Prepared for changes to our garage models (forlaunch in the fall of 2018) with the objective of
meeting diverse customer needs.

Roll Business

Grating Business

Applied technology for papermaking rolls andnewly entered the films domain.

Entered new fields, for example targeting therailroad business and energy-related products.

• Promoted sales expansion for highly functional building exterior products that are a strategic
collaboration between the steel sheet and building materials businesses.
• Overseas, Chinese subsidiaries received orders for steel sheets for roofing on large-scale projects
as a result of collaboration between the steel sheet and building materials businesses, which will be
deepened going forward.
Steel Sheet Business (overseas)

Building Material Business (overseas)

Established Shanghai Yodoko Trading Co., Ltd. (SYT) with the objectiveof selling steel sheets for home appliances to YSS China. We will strive toincrease customer numbers and expand sales volume.

Collaborative efforts between YSS China and YBMH China led to receiving
orders for public projects such as the New Beijing International Airport(tentative name), which contributed to results such as increased recognitionof our business.

Challenge ourselves
to enter new
business areas• Gathered information for planning new business that will use existing exterior andbuilding material product technologies to gain a foothold in new ventures.

Build a robust
businessfoundation• Proceeded to strengthen IR activities, including issuing the YODOKO REPORT (integrated report).
• Increased the number of Outside Directors as part of further strengthening governance.

YODO Hyper GL Color
installation example

YODO fire-proof panel Grand Wall installation example

Illustration of the expected appearance of
the New Beijing International Airport (tentative name)18Overview by Segment

Overview by Segment

Steel Sheet-Related Business
119th term (actual)

Steel Sheet Segment

YoY

Net sales

161,674 million yen +13.2%

Operatingincome10,818 million yen -16.6%

Looking back on the year ended March 31, 2018
● The volume of tied sales in the Japan market (sales to specifichigh-demand customers) dipped slightly from the previous fiscal
year, though profit increased with aggressive price adjustments.
● With regard to retail sales in Japan (for general distribution), there
was a decrease in housing demand.
At the same time, in the non-housing area, companies’ capital
expenditures were strong and, although sales volume decreased,
profit increased as a result of adjusting prices.
● Overseas, Sheng Yu Steel Co., Ltd. faced tough competition insideand outside Taiwan, with profit falling compared to the previous fiscal
year’s strong numbers. At Yodogawa-Shengyu (Hefei) High-Tech
Steel Co., Ltd. in China, sales volume grew due to successful efforts
to strengthen new order acquisition and a measure of progress wasmade in improving profit. PCM Processing (Thailand) Ltd. required
time to adjust prices, which hurt their performance.

Net sales(Millions of yen)

180,000

161,674

163,173
147,758

146,791

142,811130,549
120,000

60,000

Outlook for the year ending March 31, 2019
● As we predict raw material prices to linger within their high range,0
ended2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 (YearMarch 31)(114th term) (115th term) (116th term) (117th term) (118th term) (119th term)

we will continue to aggressively adjust sales prices.
● We will dedicate the collective strength of the Group to bring
Yodogawa-Shengyu (Hefei) High-Tech Steel Co., Ltd. (China) on track.

Operating income

Initiatives for achieving the Medium-Term
Management Plan

(Millions of yen)

● As we move toward expanding sales of

15,000high value-added pre-painted steel sheets,
we will work to develop pre-painted steel
sheet applications, enter niche markets,and strengthen our ability to handle small
lot production.
● We will further boost internal Group
collaboration and competitiveness byhaving procurement and steel
sheet/building material divisions work
together.

12,96910,81810,000
7,181

6,702
5,000

4,522
3,450

Looking back on the year ended March 31, 2018
on profitability in accepting orders amid stiff pricing competition forroofing products, our mainstay building material, net sales remainedon par with the previous fiscal year due to price adjustments.
● Exterior products in the second half of the year faced difficult
headwinds, especially for large products, due to inclement
weather; however, sales for the full year increased slightly on
favorable performance for large warehouses and other products.
● For construction, profit grew considerably due to completinglarge-scale buildings and increasing adoption of high value-added
insulating and fire-proof panels.

Outlook for the year ending March 31, 2019

YODO fire-proof panel Grand Wallinstallation example

Building material● For building materials, inquiries are increasing for YODO fire-proof

panel Grand Wall on distribution warehouses and factories, and also
on building exteriors. Inquiries are also increasing for our mainstay
roofing products.
● With regard to exterior products, we will create separate sales
strategies for each region and dedicate effort to aggressively
expanding sales in order to seize more market share.
● For construction, we will strive to keep attracting orders for highvalue-added insulating and fire-proof panels.

sales of highly functional products (insulated siding).

YODO Hyper GL Color is
promoted for use on theexterior of detached homes

Exterior products

Construction

March 31)

Production facilities forpre-painted steel sheets

119th term (actual)

YoY

9,782 million yen-0.6%

14,540 million yen +1.4%
3,477million yen +78.3%

Net sales(Millions of yen)

30,0002,049
20,000● For exterior products, we will strengthen sales activities closely tied

to customers, while fortifying earnings capacity by utilizing our
integrated expertise in steel sheet and building materials.
● For construction, we will strive to attract more orders throughproposals for new construction methods conducive to streamlined
construction.
● In terms of development, we will strive to meet customer needs
related to our objectives of merging steel sheet and building material
technology, as well as further expanding streamlined construction
products.

YODO SOUKO warehouse storage
in useBuilding Material & Exterior Products
Segment (Yodogawa Steel Works, Ltd., non-consolidated)

Reference● In terms of building materials, we will dedicate effort to expanding

2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 (Year ended

19©（株）竹中工務店● For building materials, while sales volume declined due to focusing

Initiatives for achieving the Medium-Term
Management Plan

0
(114th term) (115th term) (116th term) (117th term) (118th term) (119th term)

Building Material &Exterior Products Segment

14,083■ Building material ■ Exterior products ■ Construction

3,477

1,650

2,208

2,828

14,454

14,094

14,335

14,342

14,54010,367

10,572

10,339

9,842

9,782

1,949

10,0009,752
02013/3 2014/3 2015/3 2016/3 2017/3 2018/3 (Year ended(114th term) (115th term) (116th term) (117th term) (118th term) (119th term) March 31)

20Overview by Segment

Overview by Segment

Roll Business

Real Estate & Other Businesses

119th term (actual)YoY

Net sales

3,759 million yen+11.0%

Operatingincome57million yen-78.2%

Looking back on the year ended March 31, 2018
showed solid results with sales achieving a level on par with theprevious fiscal year. For products in the non-ferrous industry, sales
to the papermaking industry and sales in new business fields
contributed to higher net sales.

Outlook for the year ending March 31, 2019

YoY

119th term (actual)● For products in the iron and steel industry, rolls for thin plates

Net sales

4,823 million yen +10.8%

Operatingincome1,098 million yen+2.2%

industry.

Net sales● For products in the non-ferrous industry, we will strive to secure

5,000
3,535

3,476

3,474

3,385

3,759

2,508

2,500

orders from the papermaking industry, while continuing to expand
sales in new business fields.

Initiatives for achieving the Medium-Term
Management Plan

2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 (Year ended(114th term) (115th term) (116th term) (117th term) (118th term) (119th term) March 31)

and sales; we will develop new domains; and we will strengthen
earnings capacity through product differentiation and cost reductions.

Grating Business
119th term (actual)YoY

Net sales

3,547million yen-3.4%

Operatingincome114 million yen-29.5%

Looking back on the year ended March 31, 2018
● Roadway-related business faced a severe environment, with themain driver being budgets for disaster recovery projects, maintenance,
and inspections; however, we were able to sell products on par withthe previous fiscal year on the back of strong demand for privatebuilding projects, such as distribution warehouses and plants.

Outlook for the year ending March 31, 2019
● In a challenging environment due to surging raw

Net sales(Millions of yen)

4,000

3,349

3,598

3,510

3,550

3,672

3,547

Initiatives for achieving the Medium-Term
Management Plan

2,000

YODO karugaru
grating● We will expand our share of the roadway sector through careful0

2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 (Year ended(114th term) (115th term) (116th term) (117th term) (118th term) (119th term) March 31)

21

material prices, we will strive to strengthen sales
proposals to customers, make progress in sales
price adjustments, and grow sales for value-added
products.

community-based sales, development of highly functional products,
and through strengthening our corporate structure by unifying production.
● We will strive to develop new product applications and strengthen
earnings capacity.

Outlook for the year ending March 31, 2019business.

Net sales
5,728(Millions of yen)

5,000

4,653

4,430

4,351

4,823

3,650

● In our engineering business, we will dedicate

effort to selling steel sheet processing
equipment overseas.

Initiatives for achieving
the Medium-TermManagement Plan

2,500

● We will strengthen our corporate structure by unifying production

0

buildings and grew revenue. Additionally, we renovated former sites
for employee housing, striving to repurpose them as daycare centers,
thereby effectively leveraging assets and contributing to local
communities.

● We will continue to effectively leverage assets in the real estate● We forecast steady progress in products for the iron and steel(Millions of yen)

Looking back on the year ended March 31, 2018
● In the real estate business, we improved our occupancy rate in rental● We will effectively leverage assets in the real0

2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 (Year ended(114th term) (115th term) (116th term) (117th term) (118th term) (119th term) March 31)

Topicsestate business in order to contribute toimproving the Group’s earnings capacity.
● We will leverage the engineering business tocapture demand primarily with steel sheet
processing equipment.

Renovating former sites
for employee housing
and repurposing themas daycare centers

Disaster Prevention Initiatives through Exterior Products

In recent years, there have been frequent natural disasters, suchas earthquakes and typhoons, prompting greater awareness of
disaster prevention nationwide.
YODO Monooki storage sheds have excellent outdoor durability,
including the insulated YODO Kura MD, which is ideal for long-term
storage of emergency water and rations. We also offer sheds with
auto-lock release mechanisms that function during earthquakes
around the lower 6 range (on the Japanese magnitude scale).
Furthermore, sheds also have optional floor-space partitions, which
are useful for converting the interior to emergency toilets or changing
rooms after emergency supplies are removed.
Leveraging these product features, the disaster preparedness
sheds we provide have been installed by many municipalities,
schools, and condominiums around Japan, which allows us tolend support to regional disaster mitigation efforts.

Going forward, we will strive to make social contributions
connected to safety, security, environment, and aesthetics bycontinuing to develop diverse products and offering
recommendations for their use.

YODO Monooki storage shed Erumo(with earthquake auto-lock release)

Mechanical earthquake
sensor22

Status of Overseas Business

Status of Overseas Business

SYSCO Taiwan

PCM Thailand

Trade name: Sheng Yu Steel Co., Ltd.
Established: May 19, 1973
Paid-in capital: NT$ 3.2118 billion

Location: Kaohsiung, Taiwan R.O.C
Chairman of the board: Soichi Kitamura
President: T.Y. Cheng
No. of employees: 563
Business activities: Steel sheet manufacturing and sales
Main facilities: 1 pickling line 2 cold rolling lines 2 galvanizing lines 2 color coating lines

Taiwan■Thailand■

Looking back on the year ended March 31, 2018

Outlook for the year ending March 31, 2019

Looking back on the year ended March 31, 2018

Outlook for the year ending March 31, 2019

● In FY2017, the Taiwanese economy was supported by recovery● Due to the effects of protectionist measures in various countries, and● Amidst globally surging raw materials prices and intensifying● Forecasting the possibility of rapidly increasing imports of iron andin the global economy and its growth was led by strong exports insemiconductor-related products and machinery.
● In the first six months, raw material prices remained high and madefor a challenging environment, though favorable market tailwinds led
to profit on par with last fiscal year.
● For the full year, protectionist measures in the U.S., our primaryexport market, had a harsh impact on orders, lowering profit
compared to the strong numbers of last year.

lagging domestic demand in Taiwan, we predict the challenging
circumstances to continue.
● As a response to protectionist measures, we will devote effort tounlocking new export markets, boosting our domestic market sharein Taiwan, and expanding sales of high value-added products.
● Even amid the difficult business environment, we will strive tostrengthen our management structure so that we can securestable profits.

YSS China
Trade name: Yodogawa-Shengyu (Hefei)
Location: Anhui, China
High-Tech Steel Co., Ltd.
Chairman of the Board: Satoshi Nitta
Established: October 28, 2011
President: Noboru Hochi
Paid-in capital: USD 220 million
No. of employees: 255
Business activities: Steel sheet manufacturing and sales
Main facilities: 1 galvanizing line 2 color coating lines

China

■

Looking back on the year ended March 31, 2018

Outlook for the year ending March 31, 2019

● Efforts to increase customers in the building materials and home

● We will strive to boost our brand image by promoting the use of ourappliance fields led to new orders that delivered a measure of
progress in higher sales and profit year on year.
● In collaboration with Yodoko Building Materials (Hangzhou) Co., Ltd.,we made aggressive sales approaches to clients and generalcontractors, leading to steel sheet orders for the roofing of theterminal at the New Beijing International Airport (tentative name).
● We hosted the annual meeting of the China National Building
Waterproof Association and made efforts to raise our brandawareness by introducing installation examples of steel sheet roofing.
23

Trade name: PCM Processing (Thailand) Ltd.
Location: Amatanakorn Industrial Estate
Established: April 1999
Representative: Shohei Kozaki
Paid-in capital: THB 1,377,259,000
No. of employees: 128
Business activities: Pre-painted steel manufacturing, processing and sales
Main facilities: 1 continuous color coating line 2 large leveler lines 1 sheet slitterbuilding materials in the New Beijing International Airport (tentativename), while also uncovering new customers.
● For home appliances, we will cooperate with Shanghai Yodoko
Trading Co., Ltd. to expand sales of pre-painted steel sheets foruse in home appliances.
● While working to strengthen cost competitiveness and further
boost quality, we will try to increase the sales ratio of highvalue-added colored products and improve profits.

competition for products used in our mainstay large household
electrical appliances, we strove to revise sales prices and reduce
costs. However, it took time to adequately reflect higher materials
costs in sales prices (including the effect from exchange rates), whichpulled down performance.
● Assuming use in products such as air-conditioning units installed
outdoors, which requires strong weather resistance, we strove tostrengthen sales of high value-added products, such as pre-painted
steel sheets with excellent processability.

Topicssteel products into Thailand due to U.S. protectionist measures, wewill keep a close eye on price fluctuations.
● Aiming to move into the black for the full year, we will launch highvalued-added products, such as pre-painted stainless steel sheets,
while also directing effort to uncovering new customers.

New Beijing International Airport (tentative name)——A Collaborative Project between YSS China andYodoko Building Materials (Hangzhou) Co., Ltd.

The New Beijing International Airport (tentative name), currently
under construction and opening in 2019, will be the world’s largest,
at 1.03 million-m2 of total building space, 1.60 million-m3 of concrete,
and 52,000 tons of steel. Of the approximately 300,000 m2 ofsteel roofing, about 200,000 m2 will be YSS China’s fluororesin
pre-painted hot-dip 55% Al-Zn alloy-coated steel sheets. With
technical support from Yodogawa Steel Works and Yodoko
Building Materials (Hangzhou) Co., Ltd., the local construction
company completed molding and installation of the sheets.
Among Chinese state projects, the New Beijing International
Airport (tentative name) is positioned as an important undertaking.
Going forward, we will promote the use of the Group’s productson this project to raise brand awareness in China of YSS China
and Yodoko Building Materials (Hangzhou) Co., Ltd., and proceed
toward leveraging
these companies asa major base for theGroup.

Illustration of the expected appearance of the
New Beijing International Airport (tentative name)24

ESG Information

The Foundation that Supports Value Creation (ESG Information)

Working to co-exist with all of our stakeholders,
we continually strive to enhance ESG activities.

SafetySecurity

By creating value through the Yodogawa Steel Group’s core goals of safety, security, environment,
and aesthetics, we strive toward our Long-Term Vision to coexist with all of our stakeholders
and contribute to achieving a sustainable society.

Environment

Esthetics

Contribute to the preservation of the Earth’s
environment.
Conduct business with respect for the naturalenvironment.

Basic Environmental Guidelines
1. Instill awareness of environmental preservation
Provide our employees and partner company employees withenvironmental education to promote awareness of environmental
preservation and instill an action-oriented mindset.

2. Ensure consideration for the environment in ourbusiness activities
1) In all of our business activities, strive to minimize environmental
burdens while preventing harmful pollution, conserving resources,
reducing energy usage, rationalizing logistics, and reducing
and recycling waste. (Preventing harmful pollution: adhering
to environmental laws and standards)
2) Strive to minimize environmental burdens from waste whendeveloping products by improving durability, reusing materials,
and utilizing materials that are easy to recycle.

3. Establish internal organizations
In order to pursue the objectives above, strengthen environmental
management organizations at the head office and each businesssite, while also implementing environmental preservation
activities.

25

Prevent global
warming

Reduce CO2 from production divisions
Reduce CO2 from transport
Reduce CO2 from business offices

Create arecycling-oriented society Promote reduction of resource usage

Environment
Basic Environmental Principles▼Purpose and objectives of environmental activities

Environmental Management System
Under our Basic Environmental Principles, we are responding to
global environmental problems and advancing initiatives to lessen
environmental burdens. We created the Yodoko Environmental
Management System in order to address regulations andrequirements related to environmental preservation, while also making
our initiatives more proactive. We established an Environment
Committee with the Company President as chairperson and withmembers comprising a Director in charge of environmental issues
and Environmental Officers from each division. This committee
handles overall decisions on fundamental matters concerning theenvironment. Additionally, the committee regularly holds contact
meetings with each business site and is working to ensure
widespread awareness.

ISO 14001 Certified Business Sites
Our three steel sheet plants inside Japan and the plants of our three
consolidated subsidiaries overseas carry out on-going environmental
preservation activities in order to minimize environmental burdens.
The same plants have received ISO 14001 certification as part ofefforts to manage and improve these activities.
Business site

Date certified

Date renewed

Ichikawa Plant

June 2000

June 2018

Osaka Plant

December 2000 December 2015

Kure Plant

December 2000 October 2017

Examining/certifying agency

Reduce environmentally
harmful substances

Reduce VOC emissions

Consideration for
the environment

Contribute to local societies
Environmentally conscious products andtechnology development

We are striving to take waste products created during production
activities and reuse them as resources. Sludge is recycled as raw
material for cement or utilized for its metal content, while used oil isrecycled or used for supplemental fuel. Slag, meanwhile, is used forroadbed base layers. In FY2016, our total volume of waste created
was 86,000 t (an approximate 4% increase year on year). As forreused resources, we boosted our recycling rate 0.3% year on year.

▼ Waste products, valuable waste volume,and recycling rate (non-consolidated)(1,000t)120

40Prevent Global Warming(10,000 t-CO2)30
1990 (actual) Versus 1990
20

Sheng Yu Steel Co., Ltd. (Taiwan) December 1997 December 2015

DNV・GL

10

Yodogawa-Shengyu (Hefei)
December 2015 2018 (projected)
High-Tech Steel Co., Ltd. (China)

SGS

0November 2013 November 2016

UKAS

35%

26
-36%
16

cut

17

64.1
80

■■Volume recycled■■ Recycling rate

62.9

66.1

67.3

67.6

90

90

83

86

▼Energy consumption
(TJ)
6,000
4,000

1990 (actual)

4,988

2,000

Versus 1990

38%

57

60

56

58

20

2012

2013

2014

2015

2016

(fiscal)0

Reduce Environmentally Harmful Substances
Yodogawa Steel Works participates in the Voluntary Action Programof the Japan Iron and Steel Federation. We have adopted theprogram’s goal “not to let emissions exceed FY 2010 levels” and we
strive to lower our VOC emissions. To date, we have taken steps
including upgrading the deodorizing apparatus on our pre-painted
steel sheet lines, while lowering FY 2016 VOC emissions 37.0%
versus FY 2010.

▼ VOC emissions and reduction rate(t)
50

2010 (actual)

40

-40%

cut

30

3,025

3,118

20

37

-9.2%

-8.7%

-12.9%

34

34

32-14.2% Versus 2010
37%
cut
32
23

0

0
(base year)

2015

2016 (fiscal)

40

51

10

1990

(%)
80
60

0

As countermeasures to global warming and electricity supply issues,
we are making efforts to increase efficiency by upgrading equipmentin production divisions, while also improving operations and using
LEDs for equipment lighting. In terms of logistics, our efforts include
shifting to rail and marine transport, in addition to improving ourloading efficiency ratio on trucks, etc. We are also encouraging all
offices to moderate room temperatures (to 28ºC in summer and 20ºC
in winter) and to follow activities such as “Cool Biz” (avoiding suits
in summer).
In FY2016, we cut CO2 emissions by 35% and energy consumption
by 38% (both over FY1990).

▼CO2 emissions■■Total volume created80

Ensure risk management

JICQA

PCM Processing (Thailand) Ltd.

Reduce usage of toxic chemical substances

Create an Environmentally Recycling-oriented Society

1990(base year)

2015

2016 (fiscal)

2010(base year)

2012

2013

2014

2015

2016

(fiscal)26

ESG Information

The Foundation that Supports Value Creation (ESG Information)

Social
Product Development Initiatives
R&D Philosophy

Steel Sheet, Building Material &Exterior Product Segments

Following our basic philosophy of“Create value with new originality,”
we engage in research and development whileconstantly considering whether projects do infact have originality and generate new value.
In the process, we ensure a company-wide
vigilance toward safety, security, theenvironment, and esthetics.

▼Creating value through business

Steel sheets

SafetySecurity

Environment

Esthetics

Grating

Rolls

Building
materials &exterior
products

Roll and Grating Businesses

Roll BusinessWe pursue a basic policy of emphasizing thecustomer’s ideas, developing differentiatedproducts, ensuring safety and security, making
products environmentally friendly and durable,
and trying to streamline construction.
Our steel sheet products can be separated into two broad
categories. The first category is steel sheets we provide as
material with specifications that meet manufacturers’ performanceneeds for electrical appliances and building materials. The
second category is steel sheets that we sell through intermediaries
as material for general purpose building. Sheets in the former
category are made to fit each customer’s exact needs and are
produced by our technology development divisions at the Kure,
Ichikawa, and Osaka Plants. Sheets in the latter category are
made in collaboration with each plant’s technology development
division after the Head Office development division researches
market needs.
Our Head Office development division also handles thedevelopment of processed products that include exterior products,
building materials, and the like. By merging our steel sheet,exterior, and building material development divisions, we havebeen able to organically interconnect each group’s technology
and expertise from the product planning stage. This has allowed
us to develop steel sheets optimal for processed products, while
engaging in development that makes the most of the propertiesof steel sheets.
This type of development framework has become the sourceof Yodoko’s primary advantage of integrated production fromsteel sheet to final product, in a process that creates safe andsecure products for users.

Technical Research Center (Ichikawa Plant)

Test Calendar machine for Paper Making(gloss finish)

Grating Business
Fire-proof and Fire-resistance Test Equipment (Osaka Plant)

Water Spray and Air Blast Test Equipment (Osaka Plant)

27

With the development division located in the Osaka Plant, we carryout development of rolls for section steel by having engineers andsales staff work together to meet customer demands and provide
follow up support. We are developing systems for paper manufacturing
rolls customized for Japaneseclients through our businessalliance with the German
company ANDRITZ Küsters
GmbH, a global manufacturer.

At the development division located in the Izumiotsu Plant, we havecreated a database from diverse information on customer needs andmany types of information from sales staff, while carrying out
development of innovative new products that are safe, durable, andaesthetically pleasing.
We recently developed atype of grating that includes
insect growth inhibitor andserves as an anti-pest barrier
for gutters, ditches, etc.

Load testing28

ESG Information

The Foundation that Supports Value Creation (ESG Information)

Our Products Helping Solve Social Issues
Reducing Usage of
Security
SafetyEnvironment
Environmentally Harmful
Substances with Our Chromate-free Products
For our steel sheet products, we have dedicated effort to developing
chromate-free plates as quickly as possible. These plates do notcontain hexavalent chromium, which is an environmentally harmful
substance, and therefore help us minimize environmental burdens
in our product creation.
In 2005, we completely removed chromate from products forcustomers in the electrical appliance industry, and, in 2007, we
became the first in the industry to launch chromate-free treatedsteel sheet for roofing and siding (brand name Eco Green) for use
in exposed environments.
Our YODO Hyper GL Color chromate-free pre-painted steel
sheet for building exteriors, which launched in January 2017, wasdeveloped following the concept of “long-term use that is friendly
to people and the environment.” The product’s durability was
improved overall by reevaluating the pre-painting process, coating,and other aspects. It has garnered strong praise for achieving a
25-year warranty against perforation.
As a pioneer of chromate-free treated steel sheet, we willcontinue to meet the demands of society and realize a new level ofcontributing to minimize environmental burdens through on-goingproduct development.

Contributing to Global Warming Prevention
through Insulation Solutions

SafetyExterior walls and siding in non-residential building construction
follow two broad approaches: cement construction, exemplified by
ALC (autoclaved lightweight aerated concrete) panels, and metal
construction.
The mainstay metal siding products that we sell, which arelightweight and have excellent design properties, are YODO
fire-proof panel Grand Wall Hyper (with a sandwich panel structure)
and YODO sandwich panel Fine Panel Hyper.
The insulation in YODO fire-proof panel Grand Wall Hyper usesrock wool, which is artificial mineral fiber with excellent heat
resistance. This allows the product to have approximately threetimes the insulating properties of ALC panel. Meanwhile, YODO
sandwich panel Fine Panel Hyper uses rigid urethane foam, whichis plastic foam that also has excellent heat resistance.

▼Thickness comparison for
attaining comparable insulating effects
YODO
sandwich panel
Fine Panel Hyper

Security

Recycling Glass as
Grating Material

Used glass bottles,
ceramics, etc.

Pulverize

273
100

150

200

250

Fill

Edges removed

Attractive

Filler is at a thickness of 15 mm,
which preserves aesthetic qualities.

Water flow

Unfilled grate sections allow
generous water flow on par withconventional grating.

Filled grate sections do
Permeability not pool water and are
extremely permeable.

253

50

Crush

Side view

91

0Esthetics

YODO Crystal Grating takes pulverized recycled glass andceramics and fills them into sections of the grate lattice. Collected
glass bottles, ceramics, and similar items are sorted by color,crushed and pulverized, then processed to round and remove
sharp edges. The resulting grains, several millimeters in size, canbe used as filler. This creates safe grating that has excellent design
features while still preserving water permeability. At the supply
source for YODO Crystal Grating raw material, color selection iscarried out to a more detailed degree than at normal waste
processing facilities, which allows for richer color and design
choices for this product.

Features

YODO
fire-proof panel
Grand Wall Hyper

Environment©（株）竹中工務店(mm)

ALC panel

300

Note: Drywall and ALC panel figures are for standard brands
YODO fire-proof panel Grand Wall installation example

29

Esthetics

YODO fire-proof panel Grand Wall Hyper and YODO sandwich panel
Fine Panel Hyper increase heating and cooling effects with theirsuperior insulating qualities, which contributes to reducing energy
usage. Additionally, these products use special steel sheet, basedon YODO Hyper GL Color chromate-free pre-painted steel sheet,with added stain and heat resistance features, resulting in further
reduction of environmental burdens. YODO fire-proof panel Grand
Wall Hyper has received fireproof certification as a stand-alone
exterior building material, while also boasting superior wind pressure
and seismic resisting qualities, as well as sound insulating qualities.
In recent years, with the heightening awareness of environmental
problems, environmental performance has started to receive greater
emphasis during customers’ product selection. Our highly functional
metal siding contributes to global warming prevention efforts by
reducing CO2 emissions through superior energy-saving features.

35

Drywall

Example of productuse in electric
appliances

Environment

Ceramic utensils are said to make up approximately 6% of
non-burnable garbage. Ceramics, with their firing temperature thatis higher than typical glass, have gained a reputation as being
difficult to recycle and many municipalities bury them as waste.
YODO Crystal Grating can take this material, pulverize it the sameas glass, then dye and use it as raw material, which helps cut down
on buried waste.

Example of product use in building materials

30

ESG Information

The Foundation that Supports Value Creation (ESG Information)

Human Resources Development for Sustainable Growth

Quality Assurance Initiatives

Social Contribution Activities

Human Resources Development

Basic Policy

Participating in the SAKURA+ PROJECT

Based on the Yodogawa Steel Group Business Philosophy, and inorder to meet customer expectations and trust, we have establishedquality management systems in each business division. While
productively running and maintaining these systems, we are striving
to evaluate and continually improve their efficacy.
In the process, our highest priority is adhering to rules, such as
laws, contracts with customers, and standards, while strengthening
systems for preventing and detecting defects and inadequacies.
Additionally, we have established a QMR Committee,* and QMRWorking Group, tasked with strengthening the overall quality assurance
framework of the Group.
Members of these cross-divisional organizations comprise quality
assurance managers in each division, including at affiliatedcompanies. Duties involve ensuring compliance with Guidelines forStrengthening Quality Assurance Systems (stipulated by industry
bodies), sharing and spreading quality-related information andexamples of initiatives to address quality issues, and carrying out
reciprocal quality audits among business sites.
Through these types of activities, we are working to further raise
the level of our quality assurance.

The name of this project incorporates the sentiment of wanting toincrease the number of cherry trees, cherry tree sightseeing spots,
and human connections created through cherry trees. From March
2012, we have donated a portion of the sales of our Esumo and
Erumo lines of Yodo storage cabinets and sheds to sponsor the
SAKURA + PROJECT and in November 2012, the PROJECT carriedout it first tree planting festival in Otsuchi-cho (Iwate Prefecture).
Currently, trees are being planted in Fukushima Prefecture along
national highways.

*QMR: Quality Management Reinforcing

Displaying the Yodoko Guest House to the Public

Basic Policy

We are realizing part of our Business Philosophy, namely, to “takeup the challenge to innovate and expand based on the individual
creativity of each employee,” by training and educating our humanresources.

Training Programs

We are striving to support career development for employees,
while also boosting skills and motivation, through OJT (On-the-Job
Training) focusing on daily work tasks and OFF-JT leveraging
internal and external resources. Furthermore, through training andother programs, we are fostering employees who each maintain aconstant awareness of issues, who can think for themselves, andwho can take action to deliver products that meet the needs of ourtimes. We target employee training that enables workers tocontribute to peoples’ lives and the development of society.

▼ Main training programs
New employee training

jishu for voluntary,( K:J: kanri
for management )We carry out self-management
activities in small groups addressing
the themes of quality improvement,
cost reduction, productivity
Yodogawa Steel Group JK Meeting
improvement, safety, andenvironmental preservation. Once a year, we also have a large
meeting that brings Group companies together in Osaka, with our50th meeting taking place in 2016.
Presentations are made at this Group-wide meeting to provide
opportunities to study effective examples that we can leverage toimprove business practices. We utilize these types of activities inorder to strive for growth and self-realization for each employee.

Diversity

Fundamental skills training for
new college-graduate employees
On-the-Job Training (OJT)

Rank-based training

Business Improvement
Activities (JK Activities)

Young employee training
Core employee training
New manager training(early management phase)

Mental health training
Language training (English, Chinese)

We hire diverse human resources regardless of gender, nationality,or the presence or absence of disability. Similarly, we aim to be a
Company with a broad array of values and a global outlook thatenables us to contribute to cities, lifestyles, and society in general.
We also believe that establishing a work environment conducive
to energetic participation will stimulate the growth of individual
employees with diverse talents and values, while also contributing
to greater corporate value. One key component of this objective isencouraging the participation of female professionals. Specifically,
we have created a hiring goal to make female professionals 20% of
our college-graduate career-path employees. Furthermore, we arecarrying out training, including language and other types of training,in order to establish and spread the idea of female career-path
employees. One aspect of this is also having female employees be
active overseas.

▼Yodogawa Steel Group Quality Assurance Framework
President
Director in charge of Quality Assurance (Corporate Planning Division Manager)

Secretariat
Yodogawa Steel Group QMR Committee

SAKURA + PROJECT logo

Symbolic tree in Otsuchi-cho,
Iwate prefecture

The Yodoko Guest House was designed by Frank Lloyd Wright,
lauded as one of the preeminent architects of the 20th century,and built as a vacation villa for the eighth-generation sake brewer
Yamamura Tazaemon of Nada, Kobe Prefecture. We have owned
it since 1947. This villa has been designated a National Important
Cultural Property by the Japanese government and, since 1989, we
have made it open to the public as part of our social contribution
activities. Currently, the building is temporarily closed for historicalpreservation work that started in November 2016 and is scheduled
to take approximately two years.

Chairperson: Yodogawa Steel Works President
Vice-chair: Director in charge of Quality Assurance
Members: Managing directors of each business site,
Group company managers, et al.

Yodogawa Steel Group QMR-WG
Young employee training

31

New manager training

Supervisor: Director in charge of Quality Assurance
Members: Quality assurance managers of each business site

Yodoko Guest House (former vacationvilla of the Yamamura Family)

A tour during construction

32

ESG Information

The Foundation that Supports Value Creation (ESG Information)

Governance
Basic Philosophy
In order to achieve sustainable growth and increase corporate
value over the mid-to long-term, we have pursued a variety of
initiatives taking into consideration the standpoints of all stakeholders,
including shareholders, customers, business partners, employees,
and local societies, while positioning transparency, fairness, andprompt and courageous decision making as the objective of ourcorporate governance.

Corporate Governance Structure
We emphasize nimble management suited to the scale of ourcompany and have elected to be organized as a company with
an Audit & Supervisory Board. Furthermore, we have adopted an
Executive Officer system that aims to keep a measure of efficientdistance between Directors’ oversight/decision making and businessexecution, while still maintaining continuity, from the standpointof sharing information, between management decisions andbusiness execution.
In order to build a Board of Directors with a dynamic structure

Directors
and one that is optimal with regard to clarifying management
responsibilities and responding to changes in the businessenvironment, we have Directors elected for one-year terms andthe Company’s Articles of Incorporation stipulate no more thanseven Directors. By appointing diverse Directors with differingexperiences and knowledge, we aim to ensure an appropriate
size and diverse composition of the Board of Directors, while
facilitating more energetic, constructive, and engaging discussions
during Board meetings. Additionally, in order to strengthen thetransparency of oversight and decision making processes, we
also appoint independent Outside Directors who meet the Tokyo
Stock Exchange’s criteria for independence. As of June 30, 2018,
the Company has a total of seven Directors, three of whom are
Independent Outside Directors.
With regard to the structure of the Audit & Supervisory Board,
the Companies Act and our Articles of Incorporation stipulate that
we have no more than four Audit & Supervisory Board members,
with at least half being independent Outside Audit & Supervisory
Board members.

▼History of corporate governance reforms
June 2003

The Company elected to have one-year terms for Directors, in order to build a dynamic structure for the Board of Directors, and one that is optimal forclarifying management responsibilities and responding to changes in the business environment.

June 2004

The Company adopted an Executive Officer system, reducing the number of Board of Directors members from no more than 18 to no more than 7, inorder to have a measure of distance between oversight/decision making functions and business execution functions, to increase the strength andefficiency of the oversight functions of the Board of Directors, and to increase the speed of business execution.
After abolishing the Directors’ retirement benefits program, the Company adopted a stock option (stock-based remuneration) program for Directors
and Executive Officers. This program utilizes stock options and is intended to further increase the correlation between Company performance andCompany stock price, while also raising commitment and motivation toward growing the stock price and improving business performance.

June 2006

The Company decided to include Outside Directors on the Board of Directors and appointed one Outside Director in order to facilitate more energetic,
constructive, and engaging discussions during Board meetings, while also strengthening the transparency of oversight and decision making processes.

June 2015

The Company decided to include multiple, independent Outside Directors on the Board of Directors and appointed two Outside Directors in order tofacilitate more energetic, constructive, and engaging discussions during Board meetings, while also strengthening the transparency of oversight anddecision making processes.

Takaaki Kawamoto

Satoshi Nitta

Toyomi Omori

Toshio Kumamoto

Toshikazu Saeki

Hiroshi Okamura

Mitsuaki Yuasa

Chairman and
Representative Director

President andRepresentative Director

Director, Senior Managing
Executive Officer

Director, Managing
Executive Officer

Director (Independent
Outside Director)

Director (Independent
Outside Director)

Director (Independent
Outside Director)

Maomi Hayashi

Shiro Morioka

Osamu Utsuro

Tomotaka Iwata

Audit & Supervisory Board
Member (full-time)

Audit & Supervisory Board
Member (full-time)

Audit & Supervisory Board
Member (Independent
Outside Audit & Supervisory
Board Member)

Audit & Supervisory Board
Member (Independent
Outside Audit & Supervisory
Board Member)

33

In order to further strengthen governance, the Company decided to add one additional Outside Director on the Board of Directors, giving the Company
a total of seven Directors, three of whom are Independent Outside Directors.

Name

Attendance at Boardof Directors meetings

Attendance at
Audit & Supervisory
Board meetings

Toshikazu Saeki

15 times present
at 15 meetings—

Hiroshi Okamura

15 times present
at 15 meetings

Osamu Utsuro

15 times present
at 15 meetings

Tomotaka Iwata

14 times present
at 15 meetings—
16 times present
at 16 meetings
15 times present
at 16 meetings▼Diagram of governance structure
General Meeting of Shareholders(Report)(Appointment)

Audit & Supervisory
Board Members(Audit & Supervisory
Board)(Audit)Board of Directors(Directors)

Compliance & Risk Management Committee[Report]Yodoko Hot Line
(whistleblowing system)(Report)(Appointment)(Audit)Accounting auditors(Report)Working Group forCompliance & Risk
Management[Compliance promotion][Risk management promotion][Violation prevention & education]

Auditing Office
Executive Committee(Executive Officers)[Internal audits]
Company-wide
Committees

Accompanying the adoption of a corporate governance code, the Company enacted the Yodogawa Steel Works, Ltd. Corporate Governance
December 2015 Guidelines as the Company’s second highest regulations after the laws and regulations of Japan and our Articles of Incorporation.

June 2018▼FY 2017
Meeting attendance by outside directors andoutside audit & supervisory board members

Audit & Supervisory Board Members

Arrows indicate appointments, reporting, auditing,
instructions, surveys, whistleblowing, training, etc.

[Whistleblowing][Surveys]

Business and Management Divisions
Employees

34

Financial Information

Overview of Consolidated Operational Results

environmental regulations, and other events. In the fiscal year’s final
months, steel prices started declining in part because of worries
about growing inventories and U.S. restrictions on steel imports.

Market environment
During the fiscal year ended March 31, 2018, the gradual recoveryof the Japanese economy continued as consumer spending
maintained its upturn against the background of further
improvement in corporate earnings, the labor market, andpersonal income.
In the global economy, the U.S. Federal Reserve raisedinterest rates in June and December 2017 and March 2018,
which went along with increasing exports fueled by global
economic growth as well as strong consumer spending andcapital expenditures. Furthermore, economies in Europe weregenerally healthy, too. In China, there were concerns thatmeasures to stop real estate speculation and tighten financial
controls may cause economic growth to slow. However, China’s
economy remained sound with the support of strength in exports
and consumer spending. Then, late in the fiscal year, stock prices
worldwide began to fall in response to rising long-term interest
rates due to expectations for higher inflation in the United States,
where labor statistics were better than forecast. Financial
markets have remained unstable since then, partly because ofadditional worries created by U.S. trade protectionism.
In the steel industry, shipments of ordinary steel products inJapan were strong overall as production continued to grow in
the automobile, industrial machinery, and other key industries.
The global steel market began to weaken in the spring of 2017,
starting in China. But prices of steel products then began toclimb in response to China’s elimination of low-quality steel madefrom ferrous scrap, production limitations caused by tighter

Net sales

Operating profit(Millions of yen)

(Millions of yen)

180,000
154,22190,000Up

14,000173,805

12.7% YoY

Future outlook
Financial results
Given this environment, Group operational results for the
consolidated fiscal year amounted to net sales of 173,805
million yen (up 19,584 million yen, year on year), operating
profit of 10,856 million yen (down 2,311 million yen, year onyear), ordinary profit of 12,284 million yen (down 1,478 million
yen year on year), profit attributable to owners of parent of
7,360 million yen (up 625 million yen year on year).
Net sales increased primarily because of price revisions in the
Steel Sheet-related Business. Some progress in the form of higher
sales at Yodogawa-Shengyu (Hefei) High-Tech Steel Co., Ltd.
(YSS), a subsidiary in China, also contributed to the sales growth.
Operating profit was lower in Japan as the higher cost of primary
raw materials, secondary materials, energy and other items morethan offset the positive effect of price revisions. Overseas, there
was a sharp decline in operating profit despite a measure of
improvement at YSS. The main reason was lower earnings at
Taiwan subsidiary Sheng Yu Steel Co., Ltd. (SYSCO), caused byflat steel demand in Taiwan and a resumption in the downturn inexports to the United States, which had been recovering, becauseof U.S. trade protectionism. Ordinary profit decreased less thanoperating profit primarily because of an increase in dividend
income and gains on sales of investment securities. Profit
attributable to owners of parent increased primarily due to the

13,168

Total assets(Millions of yen)

220,000

8,000

10,8567,000

17.6% YoY0

2017/3

2018/3(118th term) (119th term)

35(Year ended
March 31)2017/3

2018/3(118th term) (119th term)(Year ended
March 31)

The outlook for the global economy is generally positive, despite
a number of risk factors. There are concerns about trade friction
associated with the emergence of trade protectionism that began
in the United States and risks from tension involving the Middle
East and North Korea. In Japan, the outlook is for a continuationof a slow economic recovery. The Japanese economy willprobably benefit from the growth of expenditures related to theTokyo Olympics in 2020 and private-sector capital expenditures,
as well as from steady consumer spending.
The overseas steel market is expected to continue to growbecause of support from the strength of the global economy. But
there are concerns about the effects of protectionist trade policies
worldwide, such as the U.S. import tariff hike for steel products(U.S. Trade Expansion Act, Section 232). In Japan, the demand
for steel is strong because of the high level of private-sector
capital expenditures and the start of many construction projects
for the Tokyo Olympics in 2020. But the Yodogawa Steel Group
expects that higher prices of hot-rolled steel sheets and zinc, theprimary raw materials for the Group’s steel products, and otherfactors will create a challenging business climate.
The fiscal year ending in March 2019 is the second year of
the Yodogawa Steel Group Medium-Term Management Plan
2019. To achieve the goals of this plan, all companies are taking
full advantage of the flexibility and organizational capacity that

Profit attributable to ownersof parent
6,734

4,000

Up

Down
0

rebound from the extraordinary loss for the impairment of
non-current assets at YSS recorded in the previous fiscal year.

(Millions of yen)

209,977 216,142

9.3% YoY0

110,000Up

2.9% YoY

2017/3

2018/3(118th term) (119th term)(Year ended
March 31)2017/3

2018/3(118th term) (119th term)(Year ended
March 31)

The Company sees returns to shareholders as one of our highest
priorities and is committed to a policy of paying dividends andbuying back shares in line with operating results. Our basic policy
is to pay continuous and stable dividends that match our operating
results, while considering the outlook for future results, capitalrequirements necessary for investments to boost corporate value,
and resources needed to maintain a robust financial standing.
Our objective to “pay dividends in line with operating results”
aims for a consolidated annual payout ratio of approximately
30–50%. We are committed to maintaining a 50-yen or higher
annual dividend per share for the three years covering FY
2017-2019.
The dividend per share for the fiscal year ending March 31,2018 is set at 75 yen, which combines a 35-yen interim dividendwith a 40-yen year-end dividend.

Dividends per share(Millions of yen)

80

(Yen)

39,04727,277Down

2017/3

30.1% YoY
2018/3(118th term) (119th term)

7075

2017/3

2018/340

20,0000

0Returns to shareholders

Cash and cash equivalents at
the end of the year
40,0007,360

have always been key strengths of the entire group. To become
more profitable, Group companies are continuing to revise selling
prices, establish positions in new markets, and increase salesof value-added products. To put the operations of YSS on a
successful track, which is of the highest priority for the
Yodogawa Steel Group, we will further promote cooperation
with Shanghai Yodoko Trading Co., Ltd. (SYT), which wasestablished in November 2017 for the home appliance andelectronics market, and Yodoko Building Material (Hangzhou)Co., Ltd. (YBMH), a non-consolidated subsidiary for the building
materials market.

(Year ended
March 31)0(118th term) (119th term)(Year ended
March 31)36

Financial Information

Consolidated Financial Statements

Consolidated Balance Sheet(Millions of yen)

The year ended March 31, 2017
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Securities
Merchandises and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other current assets
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment, net
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

37(Millions of yen)

The year ended March 31, 2018

The year ended March 31, 2017

The year ended March 31, 2018

Liabilities
40,761
41,103—
11,404
3,457
10,646
528
6,400
(113)
114,188

30,71643,9382,888
16,081
4,684
13,122
446
5,376
(149)
117,104

Current liabilities
Notes and accounts payable – trade
Short-term loans payable669

18,154—

177

772

Income taxes payable

2,770

2,165

Provision for bonuses

1,052

1,056

Other

7,978

6,098

Total current liabilities

30,44828,247

Lease obligations

Non-current liabilities
743

19

3,942

4,564

Deferred tax liabilities for land revaluation

856

856

Provision for directors’ retirement benefits

94

66

8,278

7,569

Lease obligations
Deferred tax liabilities

59,869(43,213)
16,656130,699(117,628)
13,071
18,685
1,408
(529)
879
765
11,993(11,163)829
50,88860,924(44,632)
16,291133,033(120,453)
12,57918,848
1,504
(717)
787
1,135
12,084(11,217)867
50,509

10
1,416
1,427

7
1,475
1,482

Accumulated other comprehensive income

46,3380278
427—
47,04599,037
216,142

42,574
3
403
492
(0)
43,474
95,789209,977

17,800Net defined benefit liability
Other

4,240

4,244

Total non-current liabilities

18,154

17,32048,60345,567

Capital stock

23,22023,220Capital surplus

20,38820,393Retained earnings

95,664

100,775

Total liabilities
Net assets
Shareholders’ equity

Treasury shares(12,199)(12,679)

Total shareholders’ equity

127,074

131,710

Valuation difference on available-for-sale securities

14,477

16,420

Revaluation reserve for land

1,626

1,646

Foreign currency translation adjustment

1,580

2,798

Remeasurements of defined benefit plans(1,516)(990)

Total accumulated other comprehensive income

16,167

19,875

Share acquisition rights

205

223

Non-controlling interests

17,927

18,764

Total net assets

161,374

170,574

209,977

216,142

Total liabilities and net assets

38

Financial Information

Consolidated Financial Statements

Consolidated Statement of Operations(Millions of yen)

The year ended March 31, 2017
April 1, 2016 to（ From）March 31, 2017

Shareholders’ equity

The year ended March 31, 2018
April 1, 2017 to（ From）March 31, 2018

Net sales

154,221

173,805

Balance at beginning of current period

Cost of sales

123,884

144,973

Changes of items during period

Gross profit

30,336

28,831Dividends of surplus

Selling, general and administrative expenses

17,16817,974

Operating profit

13,16810,856

Non-operating income

1,579

2,113

984

685

13,763

12,284Extraordinary income

224Extraordinary losses

965

222

Profit before income taxes

12,80012,087

Income taxes : current

4,126

3,537

Income taxes : deferred

73

(145)

Total income taxes

4,199

3,391

Profit

8,600

8,695

Profit attributable to non-controlling interests

1,866

1,335

Profit attributable to owners of parent

6,734

7,360

Non-operating expenses
Ordinary profit

Consolidated Statement of Operations

Treasuryshares23,22020,38895,664(12,199)(5)

Purchase of shares of
consolidated subsidiaries

11

Reversal of revaluation reserve for land

Valuation
Total
difference onshareholders’ available-for-sale
equitysecurities

127,074

Total changes of items during period
Balance at end of current period

14,477

Revaluation
reserve for
land

Share

Non-

Foreign currency Remeasurements Total accumulatedacquisition controllingothertranslationof definedrightsinterests
comprehensive
adjustment
benefit plansincomeTotal net
assets17,927

161,374

1,626

1,580

(1,516)

16,167205(2,230)(2,230)(2,230)

7,360

7,360

7,360

(495)

(495)

(495)

15

9

9

11

11

(19)

(19)

(19)

Net changes of items otherthan shareholders' equity

1,943

20

1,218

526

3,708

—

5

5,110

(480)

4,635

1,943

20

1,218

526

3,708

18

836

9,199

23,22020,393

100,775(12,679)

131,710

16,420

1,646

2,798

(990)

19,875223

18,764

170,574(Millions of yen)

The year ended March 31, 2017
April 1, 2016 to（ From）March 31, 2017

The year ended March 31, 2018
From April 1, 2017 toMarch 31, 2018）

The year ended March 31, 2018
April 1, 2017 to（ From）March 31, 2018

Cash flows from operating activities

10,218

1,933

Cash flows from investing activities(1,559)(9,026)

Cash flows from financing activities(9,897)(5,288)

(503)

611

Effect of exchange rate changes on cash and cash equivalents

Profit

8,600

8,695

Net increase (decrease) in cash and cash equivalents(1,742)(11,769)

Other comprehensive income

3,322

4,618

Cash and cash equivalents at beginning of period

40,79039,047

13,314

Cash and cash equivalents at end of period

39,04727,277

Comprehensive income

11,923

4,564

836

18

Consolidated Statement of Cash Flows

From April 1, 2016 to
March 31, 2017（

Retainedearnings

Purchase of treasury shares

The year ended March 31, 2017）

Capitalsurplus

Disposal of treasury shares(Millions of yen)

Accumulated other comprehensive income

Capitalstock

Profit attributable toowners of parent(Millions of yen)（

39

Consolidated Statement of Changes in Net Assets (From April 1, 2017 to March 31, 2018)40

Company Outline

Corporate Profile (as of March 31, 2018)

Corporate Profile

Directors and Executive Officers (as of June 22, 2018)

Principal Shareholders
Name

Company name

Yodogawa Steel Works, Ltd.

Directors

Established

January 30, 1935

Capital23,220,815,228 yen

Chairman and
Representative Director

Employees

1,196

Executive Officers
Takaaki Kawamoto
Satoshi Nitta

President andRepresentative Director

Major Offices & Plants

Director

Senior Managing
Executive Officer

Toyomi Omori

Director

Managing Executive
Officer

Toshio Kumamoto

4-1-1, Minamihonmachi, Chuo-ku,
Osaka 541-0054, Japan
81-6-6245-1111

Director

Toshikazu Saeki

Director

Hiroshi Okamura

Tokyo branch

1-3-7, Shintomi, Chuo-ku, Tokyo 104-0041, Japan
81-3-3551-1171

Director

Mitsuaki Yuasa

Sales offices

Sapporo, Morioka, Sendai Regional, Niigata, Nagano,Takasaki, Tokyo Regional, Yokohama, Shizuoka,
Hokuriku, Nagoya Regional, Osaka Regional, Kobe,
Okayama, Hiroshima, Takamatsu Regional, Kochi,
Yahata, Fukuoka Regional, Kagoshima, Okinawa

Head officePlantsOsaka (Osaka prefecture), Kure (Hiroshima prefecture),
Ichikawa (Chiba prefecture), Fukui (Fukui prefecture),
Izumiotsu (Osaka prefecture), Himeji (Hyogo prefecture)

Main Affiliated Companies

Senior Executive Officer

Tadashi Hattori

Senior Executive Officer

Yoichiro Nakano

Senior Executive Officer

Yoshihiro Kawamoto

Executive Officer

Yasunori Osumi

Executive Officer

Eiichi Tanaka

Executive Officer

Shoji Umehara

Executive Officer

Atsushi Hirata

Note: Toshikazu Saeki, Hiroshi Okamura, and Mitsuaki Yuasa are all Outside
Directors in accordance with the Companies Act.

Maomi Hayashi

Audit & Supervisory Board Member (full-time)

Shiro Morioka

Audit & Supervisory Board Member

Osamu Utsuro
Tomotaka Iwata

Steel sheet processing, sales, and warehousing

Sheng Yu Steel Co., Ltd.

Steel sheet manufacturing and sales

Yodoko Shoji Co., Ltd.

Steel wholesaling and transportation

Keiyo Tekko Futo Co., Ltd.

Distribution and warehousing

Audit & Supervisory Board Member

Yodoko Kohatsu Co., Ltd.

Golf course and other management andreal estate leasing

Note: Osamu Utsuro and Tomotaka Iwata are both Outside Audit andSupervisory Board Members in accordance with the Companies Act.

Equity-Method Affiliated Companies
Sadoshima Corporation

41

Audit & Supervisory Board Member (full-time)

Takada Kozai Kogyo Co., Ltd.

Yodogawa-Shengyu (Hefei)
Steel sheet manufacturing and sales
High-Tech Steel Co., Ltd.
PCM Processing (Thailand) Ltd. Prepainted steel sheet manufacturing,processing, and sales

Steel wholesaling

Shares Owned Shareholding Ratio (%)

Mizuho Trust & Banking Co., Ltd.

1,094,000

3.65

Resona Bank, Limited.

1,068,400

3.56

Mizuho Bank, Ltd.

1,062,105

3.54

The Master Trust Bank of Japan, Ltd. (Trust Account)

986,400

3.29

Yodoko Partners’ Shareholding Association

942,042

3.14

Japan Trustee Services Bank, Ltd. (Trust Account)879,200

2.93

Nippon Life Insurance Company

618,637

2.06

POSCO

600,000

2.00

JFE Steel Corporation

587,377

1.96

Sadoshima Corporation

566,700

1.89

8,404,861

28.07

Total

Share Ownership by Category
Securities corporations

Financial institutions

0.57%

27.01%

Individuals
and others

11.85%
35,837,230

Treasurystockshares

16.46%

Overseas
investors

Other companies
in Japan19.17%

24.91%

Notes: 1. The Company holds 5,901,681 shares as treasury stock and is not included in theabove list of major shareholders.
2. Treasury stock (5,901,681 shares) is deducted from calculations of the shareholding ratio.

Movements in Stock Price and Trading Volume■Trading volume

Trading volume(thousand shares)

Audit & Supervisory Board Members
Consolidated Subsidiaries

Stock Information

Stock Information (as of March 31, 2018)

Stock price

Stock price
(yen)

5,000

3,500

4,000

2,800

3,000

2,100

2,000

1,400

1,000

700

0

0

3/20129/20123/20139/20133/20149/20143/20159/20153/20169/20163/20179/20173/2018

Note: Data before the end of September 2015 have been adjusted to account for share consolidation.

42

Shareholder Reminders
Account closing date

March 31

Ordinary general meeting ofshareholders

June

Record dateOrdinary general meeting of shareholders,
year-end dividend March 31
Interim dividend September 30
Other dates shall be in accord withpre-announced schedules.

Number of shares per trading unit 100 shares
Shareholder registryadministrator & special accountadministrator

Mizuho Trust & Banking Co., Ltd.

Address of shareholder
registry administrator's
office of operations

1-2-1, Yaesu, Chuo-ku, Tokyo 103-8670,
Japan
Mizuho Trust & Banking Co., Ltd.
Method of public notice

Stock transfer
agency department

Electronic notice
Please see our website
http://www.yodoko.co.jp/english/index.html

Mizuho Trust & Banking Co., Ltd.
Stock Transfer Agency Department Contact

Yodogawa Steel Works, Ltd.
4-1-1 Minami-honmachi, Chuo-ku, Osaka
541-0054, Japan
Tel. (06) 6245-1111 (main switchboard)

http://www.yodoko.co.jp/

Tel.
OnlinePostal address

0120-288-324 (toll free in Japan)
http://www.mizuho-tb.co.jp/daikou/
Stock Transfer Agency Department
Mizuho Trust & Banking Co., Ltd.
2-8-4 Izumi, Suginami-ku, Tokyo 168-8507, Japan

Procedures Regarding Stock
Stock handling procedures differ depending on whether shares are held in asecurities brokerage account or in a special account. Please see below forwhom to contact in each case.
Shares held in a securities brokerage accountProcedures and information

Contact• Selling or purchasing odd-lot shares• Change of name, address, etc.
• Changes to dividend receipt and payment

Securities brokerage managing
your account• Information on mail and returned mail• Information on unpaid dividends*• Information on other stock handlingprocedures

Shareholder
registryadministrator

Mizuho Trust &Banking Co., Ltd.
Stock Transfer Agency
Department

Shares held in a special accountProcedures and information

Contact• Selling or purchasing odd-lot shares• Change of name, address, etc.
• Changes to dividend receipt and payment

Specialaccount
managementadministrator

Mizuho Trust &Banking Co., Ltd.
Stock Transfer Agency
Department• Information on mail and returned mail• Information on unpaid dividends*• Information on other stock handlingprocedures

Shareholder
registryadministrator

Mizuho Trust &Banking Co., Ltd.
Stock Transfer Agency
Department*Payment of unpaid dividends can be handled at the Mizuho Bank, Ltd. Head Office or at
one of the branch offices.