120th Term Report
April 1, 2018 – March 31, 2019

Yodogawa Steel Works, Ltd.
Securities identification code: 5451

To Our Stakeholders

To Our Stakeholders

We would like to take this opportunity to express
our appreciation for your generous support.
The business environment surrounding
the Yodogawa Steel Works Group includes
increased risks of a global slowdown from
U.S.-China trade friction and the issue ofthe U.K.’s exit from the E.U., while the Japanese
economy has shown firm demand forconstruction investment and home appliances.
This has created conditions of uncertainty andconcern going forward for the global economy.
As for the iron and steel market, we expect
to continue facing a challenging earnings
environment from factors including consistently
high prices for hot rolled steel sheets and zinc,
our Group’s primary raw materials.
Against this background, we are coming to
the final year of our current Medium-Term
Management Plan and will focus the collective
strength of the Group to further accelerate
initiatives for achieving targets.
At the same time, with regard to the case of
inappropriate actions related to the quality of ourroll products, we would like to earnestly apologize
once again for the tremendous annoyance andconcern that this caused our stakeholders.
In order to further strengthen our quality assurance,
we will fortify our quality governanceframework, improve compliance awareness,
and automate our quality assurance processes.
Through these and other efforts, we will endeavor
to prevent recurrence and recover trust.
We would like to sincerely ask for yourcontinued support and guidance going forward.
June 20191

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.

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

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

Satoshi Nitta

Takaaki Kawamoto

President andRepresentative Director

Chairman and
Representative Director

steel sheet

1965 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

What is YODOKO?

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
Picking②
Cold rolling③
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
2.1%

Real Estate & Other

3.1%

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

2.1%
167,419⑥
Molding/processing
and assembly

Exterior products

YODO fire-proof panel
Grand Wall installation
examplemillion yen
yenmillionSteel Sheet-related

92.7%
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

Steel Rolls Instrumental
in a Variety of Industrial Fields
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

What is YODOKO?

• 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.

▼ Net sales by country and region
North / Central /South America
3.9%Southeast
Asia
4.2%
China &
Hong Kong
4.2%

Oceania
0.8%
Other
1.2%

167,419▼ No. of employees by region
Thailand

127

●

●

●

●

●
■

●
●

●
■

●

●

●

●

●
●

●
■

●

●

Sales bases
Production bases(Year ended March 31, 2019)

Southeast Asia

0.5%

1.7%

Taiwan●●Taiwan▼ Net sales by country
and region

North /
Central /South
AmericaThailand

■
●
■

2,422

68.6%

Japan

5

1,471

Japan

257

(Year ended March 31, 2019)

Head Office

●
■

Japan

Japan

Yodogawa Steel Works, Ltd.

●
■
■

■

567

Taiwan
17.1%

●

China

Taiwanmillion yen

China

Sheng Yu Steel Co., Ltd.

China

▼ Net sales by country
and region

Other

Oceania

Other

Japan,
domestic

Southeast
Asia

Taiwan,domestic

3.4%

1.1%
96.8%

North /
Central /South
Americamillion yen(Year ended March 31, 2019)

4.9%

9.2%

110,332

SYSCO Taiwan

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

PCM Processing(Thailand) Ltd.

▼ Net sales by country
and region
Other

Southeast
Asia

0.2%

99.6%

99.8%

0.1%

39,606(Year ended March 31, 2019)

China,
domestic

Southeast
Asia

3,645

6,871

million yen

11.5%

Other

0.3%

71.0%

Thailand▼ Net sales by country
and region

million yen

million yen

YSS China(Year ended March 31, 2019)

PPT Thailand(Year ended March 31, 2019)6

What is Yodoko? Process of Value Creation

What is YODOKO?

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)
200,000
175,889

159,214173,805

154,221

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

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

What is YODOKO?

■■Total assets ■■Net assets(Millions of yen)

250,000
220,071

167,419

205,859

164,899
100,000

209,977

153,399

215,638

161,374(Millions of yen)

20,00019,404

209,465

170,574

167,671

58,99962,902

54,24402,827 1,472

2015/3(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)

2019/3(120th term)

Operating profit, ordinary profit, profit (loss)
attributable to owners of parent (consolidated)■■Operating profit ■■Ordinary profit■■Profit (loss) attributable to owners of parent(Millions of yen)

15,00013,1687,500

13,763

12,284
10,8568,444
7,173 7,302
3,428

6,734

2015/3(Year ended
March 31)(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)

2019/3 (Year ended(120th term) March 31)(116th term)

137,149

143,241

151,586(117th term)

2017/3(118th term)

2018/3150,236

10,000(119th term)

6,254

5,000

75,000

5,774

5,076
3,851

4,230

4,196
4,067
3,024

2,729
0

-2,771

2015/3

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)■■Profit per share ■■Dividends per share
247
211

(Yen)

250

224

(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)

2019/3

50

50

70

75

(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)

12

8.1

6

2015/3(116th term)

2016/3

(Yen)

5,000

4,757

4,500

4,805

5,112

(117th term)(118th term)

2018/3(119th term)

2019/3(Year ended(120th term) March 31)

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

2019/3 (Year ended(120th term) March 31)

7.7

8.0

4

4

2017

2018

5

2,241
0

2014

2019/3(Year ended(120th term) March 31)■■Total dividends ■■Amount of treasury stock acquired(Millions of yen)

5,096

2,500
2,245

2,110

2,500

1,250

0

2017/3

2018/3(119th term)

6

7

2015

2016

(Year)

Environmental preservation costs, CO2 emissions(reduction vs. FY 1990 emissions*) (non-consolidated)■Investment amount ■Preservation costs■ CO2 reduction rate

(Millions of yen)

1,000

2,088

1,802

27

1,544
1,193

500

1,222

760

28

27

644

760

326

-90

2017/3(118th term)■■No. of employees using the child care leave system (Hours)■■ Average monthly overtime
10(People)6

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

Net assets per share (consolidated)486

9

2016/3(117th term)

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

0

-125

1,195

*Regular employees only

1,568
70

1,196

1,156

0

2015/3(Year ended(120th term) March 31)

12583

2015/3(116th term)

3,908

0

2015/3

2019/3 (Year ended(120th term) March 31)

Profit per share, dividends per share (consolidated)■■Consolidated ■■Non-consolidated
2,425
2,422

6.9

2,617

(116th term)

1,157

8.1

5,879

7,360

2,402

0

(Year ended(120th term) March 31)

9,829

0
-3,000

1,197

2019/3■■Capital investment ■■Depreciation and amortization(Millions of yen)

(Millions of yen)

147,2122016/3-7,093

Capital investment, depreciation and amortization(consolidated)

Shareholders’ equity (consolidated)
150,000

2015/3

1,250-9,026-10,278

0

2,452-1,559-10,000
0

2,496

2,500

8,273 9,505

1,933-1,35552,516

No. of employees (consolidated, non-consolidated)(People)

1,232

10,218
9,125
8,658
8,658

10,000125,000
69,191■■Cash flow from operating activities ■■Cash flow from investing activities■■Free cash flow

2015/3(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)

2019/3(Year ended(120th term) March 31)

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

(116th term)

2016/3(117th term)

2017/3(118th term)

2018/3(119th term)

2019/3(Year ended(120th term) March 31)

706

659

20

302

0

2015/3

30

200

437

0

29

(%)

40

2015/3(116th term)

2016/3(117th term)

2017/3(118th term)

62

58

2018/3

2019/3(119th term)0(Year ended(120th term) 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

Q
A

What is your assessment of operating
results for the year ended March 31, 2019?
We responded to surging prices for our
primary raw materials and worked hard to
make price adjustments.

This fiscal year, the iron and steel industry inside Japan wasstrong on the back of increasing automobile production andgreater construction demand related to the Tokyo Olympics.
Overseas, there was increasing uncertainty due to the impactof trade friction between the U.S. and China, as well as U.S.
protectionist trade measures.
Within this context, the Group strove for price revisions
and sales activities emphasizing profitability in response torising raw material and energy costs. However, revenue andprofit dipped overseas as headwinds confronted Sheng Yu
Steel Co., Ltd., which saw challenges inside and outside Taiwan,
and Yodogawa-Shengyu (Hefei) High-Tech Steel Co., Ltd. and

PCM Processing (Thailand) Ltd., which both faced severe
environments.
In terms of individual segments, the Steel Sheet-related
Business saw strong performance again this fiscal year for
the YODO Hyper Panel Series, which uses high value-added
steel sheet with stain resistance and heat insulating properties,
and is the result of collaboration between our steel sheet andbuilding material businesses. Also, with regard to our Exterior
Products Business, in August 2018 we implemented the firstprice revisions in 10 years as we undertook profitability
improvements by applying the Group’s dynamic mobility to ourraw material procurement, purchasing policies, and sales policies.
Given expectations for raw material prices to linger within theirhigh range going forward, we will continue to emphasize
profitability in our sales activities.
Moving into the future, with labor shortages becoming
an urgent social issue, we will consider radical measures, suchas the use of AI, in our long-term approach to every aspect ofbusiness from production to sales.

We will rebuild our governance framework whileadvancing toward a more resilient corporate structure.
Although the Japanese economy saw a temporary pause due to natural disasters in the fiscal year ended March 31, 2019,
the gradual recovery largely continued and the iron and steel market displayed stability. In the global economy, the U.S. showedstrength from the effect of lower taxes following tax reform, while there was a slowing trend in China and Europe from the impact oftrade friction and other factors.
A continually severe environment persisted for the Group, due to protectionist measures in various countries, including U.S.
import restrictions on iron and steel.
With our focus on the future, we will strive to fortify our earnings capacity. At the same time, we will take to heart the lessons of
the inappropriate quality control in our Roll Segment and make it our highest priority to rebuild our quality assurance framework as
we dedicate maximum effort to recovering the trust of customers.

Satoshi Nitta President and Representative Director
11Interview at the Yodoko Guest House

YODO fire-proof panel Grand Wall installation example

YODO shed Erumo Modular-type installation example

12Interview with Top Management

QA

If there are any particular points tohighlight for each business segment,
please share those with us.
We moved forward with sales activities,
including technology proposals, andour brand awareness improved globally.

First, with regard to the inappropriate conduct related tothe quality of our roll products, I would like to sincerely apologize
for the tremendous disruption and concern that this caused toour business partners and other related parties. In order to ensurethat this type of thing does not happen again, we are placing extraemphasis on quality compliance education in our Roll Segment
and are using additional, on-going training to transform awarenessamong all employees. Furthermore, with regard to our quality
assurance framework, we are fortifying the organization of our
Head Office quality assurance division so that its supervision ishorizontally consistent across each division and business site,while also striving to strengthen reciprocal audits. Through these
efforts, we are making a resolute shift to an organization withgreater transparency.
Next, in our Exterior Products Segment, we launched

13Interview with Top Management

Yodo-Garage Raviege III as a new product in August 2018.
In addition to enhancing this product’s functionality, we improved
its utility in other ways that meet the needs of diverse customers.
In other products as well, we expanded our lineup to incorporatea fine-tuned awareness of customer needs.
Overseas, our China business is a priority for the Group.
Stiffer financial regulations in recent years have hampered
investment in many private building projects and the severityof the business environment has increased. Despite thesecircumstances, we have been able to make solid progress
through our sales activities. Collaborative efforts between
YSS China and Yodoko Building Material (HangZhou) Co.,Ltd.
(YBMH) brought in orders for pre-painted steel sheets for the roofingof Beijing Daxing International Airport, a Chinese state project,which was followed by orders of pre-painted steel sheets
for the roofing of Shenzhen Convention & Exhibition Center,one of the world’s largest facilities of its kind. These and otherprojects have boosted the recognition and brand awareness of
the Group. Furthermore, at both Sheng Yu Steel Co., Ltd.,
where there is an extremely challenging domestic and export
business environment, as well as at PCM Processing (Thailand)Ltd., where price competition with Chinese and other rival
manufacturers is intensifying, we have taken full-fledged steps

toward proposing new applications of pre-painted steel sheets,
while also unlocking markets.

Yodo-Garage Raviege III installation example (rear shutter)

Shenzhen Convention & Exhibition Center, China(expected appearance of completed project)

Q
A

What are the second-year results andchallenges of the Medium-Term
Management Plan 2019?
We will devote further effort to developing
differentiated products, new applications,and new markets.

In the Group’s Medium-Term Management Plan 2019,
we announced a goal of recording stable consolidated ordinary
profit of 10 billion yen, but were unable to achieve this during
FY 2019. We recognize that, in order to work toward our firstbasic strategy to “establish a resilient profit structure,” we willneed to deepen strategies in each of our businesses. In particular,
we will leverage our superior, proprietary technology and develop
differentiated products that fulfill customer desires, all while
proposing new applications and stepping up efforts to unlock
new markets, such as replacing stainless-steel, aluminum, andpost-painted steel sheets with pre-coated, colored steel sheets.

Additionally, in our overseas business, we will endeavor to gain
a timely and precise understanding of local problem points
and quickly work toward resolving them as pertinent issues
for the entire Group.
With regard to our second basic strategy to “challenge
ourselves to enter new business areas,” we are proceeding toaccumulate information leveraging our existing businesses.
In order to grow sustainably without being buffeted by changes
in the business environment, it will be vital to increase the earnings
capacity of our core businesses, while simultaneously diversifying
our revenue streams. As such, I think that we will need toaggressively deploy our management resources going forward.
As pillars for our third basic strategy of “building a robust
business foundation,” we are striving to: “equally emphasize
a strong financial standing while proactively investing in growth,”“fostering human resources and improving organizational
strength,” and “coexisting with all of our stakeholders.” Withinthese efforts, we have positioned the rebuilding of our governanceframework as a critical issue for the entire Company in light ofthe case of inappropriate actions in our Roll Segment. We willreflect on our Group business philosophy and instill a corporate
culture that values “trust” first and foremost.

New TV commercial for exterior products

14Interview with Top Management

Q
A

Please tell us about initiatives
dedicated to ESG.
Following the completion of a renovation andrepair project on the Yodoko Guest House,
we reopened the residence to the public.

In our Long-Term Vision, we have announced the goal to“coexist with all of our stakeholders.” We are pursuing businessgrowth while emphasizing safety, security, the environment,
and aesthetics, as exemplified in our efforts to eliminate
environmentally harmful substances, including being the first in
our industry to develop pre-painted steel sheets for roofing andsiding that do not contain hexavalent chromium.
As for our social contribution activities, we have been
involved in preserving the Yodoko Guest House, designated as
an important cultural asset in Japan, and reopened the residence
to the public in February 2019, following an approximately
2-year renovation project.
Furthermore, we are participating in the SAKURA + PROJECT
for supporting recovery after the Tohoku Earthquake, and also
donated a total of six million yen in aid and for recovery fromInterview with Top Management

the torrential flooding in Western Japan and the eastern Iburi
earthquake that struck Hokkaido (both occurring in fiscal 2018).
On top of this, we have decided, starting this year, to takean amount equivalent to the unclaimed shareholder incentives
each fiscal year and donated it to social contribution activities.
As stated already, I recognize the inappropriate case that
occurred in our Roll Segment as an issue with our governance(including our quality assurance framework), while also seeing it
as an issue in each individual’s compliance awareness. In order
to eliminate human-intermediated tasks such as the rewritingof data, we will strive to automate inspections and record keeping,while also using on-going education to spur a thoroughtransformation in awareness for all employees. We will use both
structural- and people-oriented approaches to rebuild ourgovernance and instill an awareness of compliance.
Meanwhile, as a human resources development initiative,
we are using business improvement activities (JK Activities; J:jishu meaning voluntary, K: kanri meaning management) in ourGroup, including our overseas subsidiaries. These activities
promote the growth and self-fulfillment of each and every
employee, while also helping us aim to be a “lasting company
that is admired globally,” that responds to customer desires,and that addresses social issues.

Q
A

What is the policy for returns toshareholders?
Based on our dividend policy, we paid
a dividend of 70 yen for the fiscal year.

We recognize stable, continuous returns to shareholders as
one of our highest business priorities. Similarly, paying stable,
continuous dividends to shareholders in line with operating
results requires sustainable growth, which is why maintaining
a robust financial position is a pillar of our capital policy.
As an indicator for dividend payments, our goal for the durationof the current Medium-Term Management Plan is to maintainannual dividends per share of 50 yen or more, while aiming
for a consolidated annual payout ratio of approximately 30-50%.
Following this policy, we paid a 70-yen dividend (a 30-yen interim
dividend and a 40-yen year-end dividend), with a consolidated
annual payout ratio of 33.2%.

Dividends per share
(Yen)

100

75

50

70
50

50

75

70

50

25

0

2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 (Year ended(115th term) (116th term) (117th term) (118th term) (119th term) (120th term) March 31)
Yodoko Guest House

15

Yodoko Guest House

Yodoko Guest House (west corridor)

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

Q
A

Last, what is your message to
stakeholders?
After shoring up our near-term businessstanding, we will boldly challenge ourselvesin new fields.

For the global economy in the fiscal year ending March 31, 2020,
the outlook is increasingly uncertain as there are heightening
concerns over U.S.-China trade friction and economic stagnationin emerging countries, paired with the issue of the U.K.’s exitfrom the E.U. In the iron and steel market as well, forecasts are forprotectionist trade measures to keep surfacing, the environment
for new orders to remain severe, and the high price of raw
materials to persist, which indicates that we will continue to seevery challenging conditions for earnings.
Amidst this environment, we will work toward achieving
the Yodogawa Steel Group Medium-Term Management Plan
2019 by drastically transforming our cost structure, maximizing
our strong dynamic mobility, proceeding to unlock new markets,and expanding sales of high value-added products. As we greet
the new Reiwa era, we will solidly shore up our near-termbusiness standing, then boldly challenge ourselves beyond our
traditional boundaries.
Going forward, we would like to sincerely ask for your continued
support and understanding.
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

Policyreview/execution

FY
2022

FY
2023

2nd Medium-Term
Management Plan

FY
2024

FY
2025

FY 2026 – FY 2035

3rd Medium-Term
Management Plan

Long-Term Vision
the SAKURA 100

Objective

Objective
Record stable consolidated
operating profit of 10 billion yen

Structure building

FY
2021

Record stable consolidated
ordinary profit of 10 billion yen

Preparation
periodFY
2020

Run-up period

Finalization
periodPolicy roll out
Solidifying results

New policy
examination/roll out

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 profit(consolidated)

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

150

137.6

100
50

71.7

122.8
98.2

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(Year ended(121th term) March 31)• In the year ended March 31, 2019, there was solid
demand in the Japanese domestic market for
construction, automobile, home appliance, andother products, which provided overall stability.
At the same time, all of our overseas subsidiaries
faced severe business environments from
U.S.-China trade friction and other factors thatcreated uncertain conditions and led tounderperformance versus our targets.
• In the year ending March 31, 2020 as well, we
forecast on-going challenging conditions in
the iron and steel market, although we will
persistently undertake measures directed
toward strengthening our capabilities.

Main Initiatives by Business Segmentin the Year Ended March 31, 2019
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 BusinessContinued directing effort toward expanding
sales volume of high value-added pre-painted
steel sheets.
Replaced post-painted steel sheets withpre-coated, colored steel sheets and enteredniche markets.

Through aggressive sales activities, steadily
increased sales volume of the Hyper Panel
Series that uses YODO Hyper GL Color sheets.

Changed lineup of garage models in order to
respond to diverse customer needs.
Added new options and proposed new
applications.

Roll Business

Grating Business

Applied technology for papermaking rolls andcontinued seeking new orders in 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 continued receiving orders for steel sheets for roofing on large-scale
projects as a result of collaboration between the steel sheet and building materials businesses.
We will proceed to deepen this collaboration going forward.
Steel Sheet Business (overseas)

Building Material Business (overseas)

Through collaboration between YSS China and Shanghai Yodoko Trading
Co., Ltd. (SYT), we aimed to increase customer numbers and expand
sales volume of steel sheets for home appliances.

Through collaboration between YSS China and Yodoko Building Material(HangZhou) Co.,Ltd. (YBMH), we put effort toward receiving orders
leveraging the expertise accumulated in Yodoko’s roofing business.

Challenge ourselves
to enter new
business areas• Gathered information for planning new business that will use existing exterior and building material product

Build a robust
businessfoundation• Strengthened IR activities, including enhancing non-financial information in the YODOKO REPORT (integrated report).
• Organized and established a governance and compliance framework in the interest of strengthening ESG management

technologies to gain a foothold in new ventures.

YODO Hyper GL Color installation example

YODO fire-proof panel Grand Wall installation example

Yodo-Garage Emerge II

18

Overview by Segment

Overview by Segment

Steel Sheet-Related Business120th term (actual)YoY

Net sales

155,123 million yen -4.1％

Operatingprofit

6,052 million yen -44.1％

Net sales(Millions of yen)

180,000
163,173

161,674
147,758

146,791

142,811

155,123

120,000

60,000

Building Material & Exterior Products Segment

Looking back on the year ended March 31, 2019

Looking back on the year ended March 31, 2019

● The volume of tied sales in the Japan market (sales to specific● For building materials, we focused sales activities on profitability

high-demand customers) dipped year-on-year as we put greater
emphasis on profitability in our sales of galvanized products.
However, pre-painted steel sheets fared well, mainly being soldfor home appliances, and sales volume increased. Net sales
increased, partly due to the implementation of price revisions.
● With regard to retail sales in Japan (for general distribution),
the demand environment was strong due to factors including
disaster recovery projects, though sales volume dipped as we
directed focus to more profitable sales. We were able to record net
sales on par with the previous fiscal year through the implementationof price revisions.
● Overseas, Sheng Yu Steel Co., Ltd. faced an uphill battle insideand outside Taiwan, leading to decreased net sales.
Yodogawa-Shengyu (Hefei) High-Tech Steel Co., Ltd. faceda lagging economy inside China, which, among other factors, led
to poor growth in orders. PCM Processing (Thailand) Ltd. faced
stiff headwinds from intensifying price competition and the effects
of exchange rates.

Outlook for the year ending March 31, 2020

0
ended
2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 (YearMarch 31)(115th term) (116th term) (117th term) (118th term) (119th term) (120th term)

Operating profit(Millions of yen)

15,00010,81810,000

6,052

5,000
3,450

0

2014/3

2015/3

2016/32017/3

2018/3

their high range, we will approach sales with an emphasis on
profitability and will strive to further grasp customer needs.
● Overseas, we will direct effort toward developing high value-added
products and uncovering latent demandthrough aggressive PR activities.

ended
2019/3 (YearMarch 31)(115th term) (116th term) (117th term) (118th term) (119th term) (120th term)

developing high value-added products
and work to expand sales of differentiatedproducts directed toward unlocking
new fields and niche fields.
● We will further strengthen internal Group
collaboration by approaches such as
coordinating with overseas bases, while
also increasing our competitiveness.

from our mainstay roofing products, with sales volume seeing
a decline. Sales volume of our focus product YODO fire-proof
panel Grand Wall increased as usage ramped up, bringing a net
sales increase year-on-year.
● With regard to exterior products, we carried out price revisions
in August of 2018. In addition to strong consumer spending, newgarage models and the like were steady, leading to increased
net sales.
● For construction, we saw strong orders for distribution warehouses,
manufacturing facilities, and the like; however, net sales dippedcompared to the previous year, which saw some large-scale
projects reach completion.

YODO fire-proof panel Grand Wallinstallation example

Reference● For building materials, we expect our mainstay roofing products

to do well, while inquiries should remain steady for building
exteriors, such as our YODO fire-proof panel Grand Wall, mainly
for use on distribution warehouses and factories.
● With regard to exterior products, we will dedicate effort toexpanding sales and enhancing options, focusing on garages.
● For construction, we will work to keep expanding productapplications, including the use of high value-added insulating andfire-proof panels on high-rise buildings and commercial facilities.

120th term (actual)

10,042 million yen +2.7％

Exterior products

15,227 million yen +4.7％

Construction(Millions of yen)

30,000sales of highly functional products (insulated siding).

● With regard to exterior products, we will work to propose new

Examples of interior-designbuilding materials in use

Production facilities forpre-painted steel sheets

applications, such as launching options for smoking areas, which isrelevant as part of initiatives for improving community environments.
● For construction products, we will work to receive orders for
projects using our YODO fire-proof panel Grand Wall, while
enhancing our sales structure in the Kanto region.
● 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.

YoY

Building material

Net sales

Initiatives for achieving the Medium-Term
Management Plan

Optional smoking area as part of
YODO bicycle parking spaces

Building Material & Exterior Products
Segment (Yodogawa Steel Works, Ltd., non-consolidated)

Outlook for the year ending March 31, 2020

● In terms of building materials, we will dedicate effort to expanding● We will accelerate the speed of

7,181

6,702

● Domestically, as we forecast raw material prices to linger within

Initiatives for achieving
the Medium-Term Management Plan

12,96919

Steel Sheet Segment

20,0002,791 million yen -19.7％■ Building material ■ Exterior products ■ Construction
3,477

2,791

14,342

14,54015,227

10,339

9,842

9,782

10,042

2016/32017/3

2018/3

2,828

1,650

2,208

14,454

14,094

14,335

10,367

10,572

2014/3

2015/3

1,949

10,0000

2019/3 (Year ended(115th term) (116th term) (117th term) (118th term) (119th term) (120th term)

March 31)20

Overview by Segment

Overview by Segment

Roll Business

Real Estate & Other Businesses

120th term (actual)YoY

Net sales

3,500 million yen-6.9％

Operatingprofit-77 million yen

Looking back on the year ended March 31, 2019

120th term (actual)● Profit declined due to damage from Typhoon Jebi to somemanufacturing equipment, in addition to inappropriate conduct
leading to quality issues.
● We strove to rebuild our quality assurance systems and reformthe awareness of all employees by thoroughly educating themon quality compliance.

Looking back on the year ended March 31, 2019

YoY

Net sales

5,241 million yen +8.7％

Operatingprofit

1,076 million yen● In the real estate business, effectively leveraging assets contributed

to net sales and boosted revenue higher.

● In our engineering business, revenue increased due to the strengthof overseas plants.

-2.0％

Outlook for the year ending March 31, 2020
● We will continue to effectively leverage assets in the real estate

Outlook for the year ending March 31, 2020
Net sales● Severe market conditions are expected for products in the iron(Millions of yen)

5,000
3,474

3,476
2,500

3,385

3,759

3,500

2,508

0

2014/3

2015/3

2016/32017/3

2018/3ended
2019/3 (YearMarch 31)(115th term) (116th term) (117th term) (118th term) (119th term) (120th term)and steel industry; however, we will continue dedicating effort
toward grasping customer needs and expanding sales.
● For products in the non-ferrous industry, we will work to continue
expanding sales in new business fields.

Initiatives for achieving the Medium-Term
Management Plan
● For products in the iron and steel industry, we will expand salesof high value-added rolls for section steel.
● For products in the non-ferrous industry, we will utilize ouraccumulated roll production technology to unlock demandin new business fields.

Grating BusinessNet sales

120th term (actual)

YoY

3,554 million yen+0.2％

84 million yen -26.2％

Operatingprofit(Millions of yen)

3,598

3,510

3,550

3,672

3,547

3,554

Outlook for the year ending March 31, 2020
dedicate effort to securing projects such as those generated
by the Japanese Government’s Fundamental Plan for National
Resilience, as well as the World Expo to be held in 2025.

Initiatives for achieving the Medium-Term
Management Plan

2,000

● We will strive to continue expanding sales of products for private

0(Year ended
2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 March 31)(115th term) (116th term) (117th term) (118th term) (119th term) (120th term)

21

environment, with the priority being placed on disaster recovery
projects; however, net sales were in line with last fiscal year on
the back of strong demand for private building projects, such as
distribution warehouses and plants.

● With sales activities assertively focused on the future, we will

Net sales
4,000

Looking back on the year ended March 31, 2019
● Roadway-related business followed last year in facing a severebuilding projects.

● We will strive to develop new product applications and strengthen

earnings capacity.

business.

Net sales(Millions of yen)

5,000

● In our engineering business, we will dedicate effort to selling steel

5,728

4,653

4,430

4,351

4,823

sheet processing equipment overseas.

5,241

Initiatives for achieving the Medium-Term
Management Plan

2,500

● We will effectively leverage assets in the real estate businessin order to contribute to improving the Group’s earnings capacity.

0

2014/3

2015/3

2016/32017/3

2018/3(Year ended

2019/3 March 31)(115th term) (116th term) (117th term) (118th term) (119th term) (120th term)

Topics● We will leverage the engineering business to capture demandprimarily with steel sheet processing equipment.

Raviege III Dressed Option, A New Product Launched in May 2019

With the diversification of tastes and values in recent years, aswell as the changes in lifestyles, people’s attitudes towardgarages are putting emphasis on design as well as function.
Rather than seeing the garage as simply a place to store one’scar, increasingly more customers are wanting to customize
their garage to fit their preferences, with conventional building
materials used on the exterior and interior. We launched Raviege
III Dressed Option as Yodogawa Steel Works’ solution to thesetypes of customer needs. This product uses Yodo-span 1K & 1F
walls, which, among our building materials, have been especiallypraised for their design features and allow for individual touches
to garage exteriors and interiors.

Before Before installingthe option

After After customizing the garage interior

and exterior

22

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: Colin Hsu
No. of employees: 567
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, 2019

Outlook for the year ending March 31, 2020

Looking back on the year ended March 31, 2019

Outlook for the year ending March 31, 2020

● Although the Taiwanese economy continued a gradual recovery● For products for the domestic market, we will work to boost revenue● Broad-based revisions were necessary across the board due to● We will celebrate the company’s 20th anniversary in 2019.

in 2018, it lagged alongside the global economy in the second
half of the year. Overall, although it maintained firmness, it was
only able to record a slight gain.
● Inside Taiwan, stronger construction regulations and softer demand
for renovations were factors that held back sales of our mainstay
product, pre-painted steel sheets.
● As for exports, the effects of protectionist measures in the U.S.,
our primary export destination, made for an uphill battle. Effort
was concentrated on other regions, such as Southeast Asia, but
net sales fell year-on-year.

and profit by increasing our sales volume of galvanized products andby enhancing the value-added features of pre-painted steel sheets.
● For export products, we will respond to on-going U.S. protectionist
measures by putting effort into finding new business partners anduncovering new demand in existing markets, while also unlocking
new export markets.
● We will strive to secure further revenue and profit by strengthening
price competitiveness, while also working to enhance ourmanagement structure by fortifying sales of niche products, inaddition to sales in high-quality markets.

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: Eiichi Tanaka
Paid-in capital: USD 220 million
No. of employees: 257
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, 2019

Outlook for the year ending March 31, 2020

● Sales volume slowed and net sales fell from the effects of delays● For building materials, we will dedicate effort to continue receiving

in meeting our scheduled sales expansion to new customers, andalso from the economic stagnation in China from August onward.
● For building materials, we received steel sheet orders for the roofingof the Shenzhen Convention & Exhibition Center in collaboration
with Yodoko Building Material (HangZhou) Co.,Ltd.（YBMH）.
● For home appliances, we kicked off efforts to expand sales of
products for use in Chinese home appliances in collaboration
with Shanghai Yodoko Trading Co., Ltd. (SYT) a sales and marketingcompany.
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: 127
Business activities: Pre-painted steel manufacturing, processing and sales
Main facilities: 1 continuous color coating line 2 large leveler lines 1 sheet slitter

steel sheet orders for large-scale roofing and siding projects.

● For home appliances, we will work to expand sales volume bycooperating with Shanghai Yodoko Trading Co., Ltd. (SYT) to
follow up with existing customers and unlock new customers.
At the same time, we will aim to quickly make Yodogawa-Shengyu(Hefei) High-Tech Steel Co., Ltd. the hub of the Group’s operationsin that country.

the U.S. Trade Expansion Act, Section 232, and intensifying
competition in regions, including Southeast Asia.
● We strove to revise sales prices and reduce costs; however, it tooktime to adequately reflect higher materials costs in sales prices(including the effect from exchange rates), which pulled down profit.

Topics

We will endeavor to step up sales efforts, build a new business
scheme, and strengthen our cost competitiveness, while also
aiming to quickly return to strong performance as the Group’s
main ASEAN hub.
● We will launch high value-added products, such as fluoro-coatedsteel sheets and stainless pre-painted steel sheets, while working
to develop product applications.

——A Collaborative Project between YSS China andYodoko Building Material (HangZhou) Co.,Ltd.（YBMH）
Shenzhen Convention & Exhibition Center

Shenzhen Convention & Exhibition Center, scheduled to open in 2019, has a total area of 1.58
million m 2 across six exhibition halls. Its 500,000m 2 of indoor exhibition space is the largest
in the world. The steel roof of the exhibition center is also the largest in the world, at approximately
740,000 m2, with some three quarters (550,000 m2) of it being Yodogawa-Shengyu (Hefei) High-Tech
Steel Co., Ltd.’s fluororesin pre-painted hot-dip 55% Al-Zn alloy-coated steel sheets. A local
construction company installed the roof with technical support provided by Yodoko Building
Material (HangZhou) Co.,Ltd. (YBMH).
Following on the heels of the Beijing Daxing International Airport (a Chinese state project),the order for the Shenzhen Convention & Exhibition Center comes as part of one of the world’s
largest projects and will steadily boost the recognition and brand awareness of the Group.
We will continue to dedicate effort toward receiving orders for large-scale public works andother projects while expanding PCM sales for home appliances and aiming to steadily operatethese companies as major bases for the Group.

Shenzhen Convention &Exhibition Center, China (expected
appearance of completed project)

24

A Base that Supports Value Creation (ESG Information)

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

Environment
Basic Environmental Principles
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.

Environmental Management System
Under our Basic Environmental Principles, we are advancing
initiatives to lessen environmental burdens. We created the Yodoko
Environmental Management System in order to address regulations
and requirements 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 andEnvironmental Officers from each division. This committee handles
overall decisions on fundamental matters concerning the environment.
Additionally, the committee regularly holds contact meetings with
the Group and is working to ensure widespread awareness.

▼ Yodoko Environmental Management System

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.

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 2018

Kure Plant

December 2000

October 2018

Energy Management Planning &Promotion Officer

SGS

PCM Processing (Thailand) Ltd.

March 2018

UKAS

▼ Purpose and objectives of environmental activities
Reduce CO2 from production divisions

Head Office Environmental
Management Group

Offices Division

Yodoko Group companies

Environmental Officers

Environmental Officers

Environmental Officers

Environmental
Management
Personnel

Environmental Managers

Environmental Managers

Departmental/Division
Managers

Environmental Policy
Promoters

Reduce CO2 from transport

Create arecycling-oriented society

Promote reduction of resource usage

Environmental Managers

Consideration for
the environment

Reduce usage of toxic chemical substances
Environmentally conscious products andtechnology development
Contribute to local societies
Ensure risk management

Prevent Global Warming
As countermeasures to global warming, we are making efforts toincrease efficiency by upgrading equipment in production divisions,while also improving operations and using LEDs for equipment
lighting. In terms of logistics, our efforts include shifting to rail andmarine transport, in addition to improving our loading efficiency ratio

200
150

30%
cut

-27%

-28%

-27%

-29%

189

184

189

184

180

2014

2015

2016

2017

2018

100
50
0

1990

(base year)(fiscal)▼ Energy consumption
(TJ)
6,000
Base year

5,000

Versus 1990

4,988

33%

4,000

cut

3,000

-33%

-34%

-32%

-33%

3,354

3,295

3,409

3,345

3,323

2014

2015

2016

2017

2018

2,000
1,000
0

1990

(base year)

25

Versus 1990

257

Reduce CO2 from business offices

Reduce VOC emissions

Plants Division

Pollution Prevention
Officers
Energy Officers

DNV・GL

December 2018

Reduce environmentally
harmful substances

Director in charge ofEnvironmental Issues

Base year
250

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

Prevent global warming(1,000 t-CO2)300

December 2018

November 2013

▼ CO2 emissions

JICQA

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

President
Energy Management Officer

Examining/certifying agency

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 FY2018, we cut CO2 emissions by 30% and energy consumption
by 33% (both over FY1990).

(fiscal)26

A Base that Supports Value Creation (ESG Information)

Create an Environmentally Recycling-oriented Society
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
for roadbed base layers. In FY 2018, our total volume of waste
created was 86,000t (an approximate 1% increase year-on-y ear).
As for reused resources, our recycling rate went down by 3.3%
year-on-year.

Economical Utilization of Clean Energy
On the roofs and grounds of our Osaka, Izumiotsu, and Fukui
Plants, and at Group companies, we have installed photovoltaic
power generation systems that produced approximately 6,800 MWhof electricity in FY2018.
This photovoltaic power generation is expected to reduce annual
CO2 emissions by about 3,800 tons.

ESG Information

TopicsIn 2016, we upgraded equipment to mitigate VOCs on
the production line, which led to greatly reduced VOC emissions
from 2017 onward.

64

80
40

66.1

67.3

90

83

65.4

86

86

85
56

53

20

2014

2015

2016

2017

2018

(fiscal)0

Reduce Environmentally Harmful Substances
Yodogawa Steel Works participates in the Voluntary Action
Program of the Japan Iron and Steel Federation. We have adopted
the program’s goal “not to let emissions exceed FY 2010 levels” andwe 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 2018 VOC emissions 55.0%
versus FY 2010.

▼ VOC emissions and reduction rate
Base year

30

37

20

32

-14.2%-37.0%-45.7% Versus 2010
55.3%

32

cut

23

10

20

16

0

2010

(base year)

27

2014

2015

2016

2017

2018

2017

2018

(fiscal)As countermeasures to global warming, we are making efforts
to increase efficiency by upgrading equipment and switching
to LED lighting through our initiatives to lower energy consumption
and cut CO2 emissions.

58-12.9%

2016

Prevent Global Warming

56

40

2015

40

60

(fiscal)Solar panels in SYSCO Taiwan

Environmental Accounting
We keep track of environmental preservation costs as an indicatorthat helps us efficiently carry out environmental preservation initiatives,and prevent and suppress environmental burdens, so that we do notharm the environment through our business activities.
Our investments for environmental preservation in FY 2018 cameto 58 million yen, which included measures such as installing LED
lighting. Furthermore, our preservation expenses came to 659
million yen, consisting of 27% for air pollution prevention measures,
24% for water contamination prevention measures, and 21%
for processing industrial waste. These expenses mainly went toward
preventing pollution and recycling resources.
Notes: 1. Though we do track statistics for the Group overall, including
overseas companies, numerical data on the environment presented
on pages 26 and 27 cover the Company on a non-consolidated
basis in the interest of simplicity and clarity for expressing reduction
rates, etc. (Yodogawa Steel Works participates in The Japan Iron
and Steel Federation’s “Action Plan for a Low Carbon Society,”“Voluntary Action Plan for a Recycling-Oriented Society,” and“Voluntary Action Program to Cut VOC Emissions”).
2. FY 2018 numerical data on the environment presented on pages 26
and 27 are preliminary figures.

1) Cut electricity consumption of air compressors and cooling towers
2) Cut electricity consumption of building lights, various motors, andventilation equipment▼ Electricity consumption(1000 MWh)
150

128

122

119

120

2015

2016

2017

100

100

100

2015

2016

2017

79

96

0

2018

(fiscal)3) Installed heat recovery steam generators on some production lines

Development of GL steel sheets for solar panel mounts
By using GL steel sheets with high corrosion resistance anda higher level of galvanization, we have contributed to increasing
the number of years that photovoltaic power generation systems
can remain in use.

Others▼ Photovoltaic power generation

（MWh）
600

▼ Natural gas consumption(10,000 m3)
20
18

200

15

15

2016

2017

10

(fiscal)Development of heat insulating steel sheets
We guarantee total solar reflectance (TSR) of 25% or greater.
This is expected to yield benefits such as lowering indoor
temperatures and reducing electricity bills for ventilation systems.

400

16

2018

Following the Japanese government’s implementation of green
energy policies, we installed photovoltaic power generation
systems on the roofs of our plants in September 2015.
As of December 2018, these systems have generated
a cumulative 1,777 MWh of power.

50

2014

101

Development of Environmentally Conscious Products
15

60

0

（t）
50

2014

73
27

2014

108

80

0

67

0

■■Total volume created ■■Volume recycled ■■ Recycling rate (%)
80
67.6
62.1

(1,000 t)
12040▼ VOC emissions

（t）
80

20

and recycling rate (non-consolidated)(1,000t)
120▼ CO2 emissions

Reduce Environmentally Harmful Substances

40▼ Waste products, valuable waste volume,

Sheng Yu Steel Co., Ltd.’s Environmental Activity Initiatives

533

555

524

2016

2017

2018

145

0

12

2015

(fiscal)

0

2014

2015

2018

(fiscal)28

A Base that Supports Value Creation (ESG Information)

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
for customers in the electrical appliance industry, and, in 2007,
we became the first in the industry to launch chromate-freetreated steel 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 achievinga 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

Environment

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.

Recycling Glass as
Grating Material

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.

Used glass bottles,
ceramics, etc.

Features

91

100

150

200

Fill

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.

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.

273

ALC panel

50

Pulverize
Edges removed

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

253

0

Crush

Side view

Drywall

Esthetics

(mm)

35

YODO
fire-proof panel
Grand Wall Hyper

Environment

250

300

Note: Drywall and ALC panel figures are for standard brands

YODO fire-proof panel Grand Wall installation example

Example of productuse in electric
appliances

29

Example of product use in building materials

30

A Base that Supports Value Creation (ESG Information)

ESG Information

Social
Product Development Initiatives
Steel Sheet, Building Material &Exterior Product Segments

R&D Philosophy
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)

31With 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 testing32

A Base that Supports Value Creation (ESG Information)

Product Development Initiatives

Quality Assurance Initiatives

At Overseas Subsidiaries
In Sheng Yu Steel Co., Ltd.’s technology development division,
we are engaging in R&D on surface-treated steel sheets in orderto quickly and precisely respond to diversifying customer demands
and market needs.
The technology development division’s prototyping laboratoryis the hub of this R&D and has acquired certification from the Taiwan
Accreditation Foundation (a public certification agency), which
serves to ensure quality and reliability.
When evaluating the corrosion resistance, surface discoloration,and other properties of surface-treated steel sheets at the prototyping
laboratory, we are working to achieve speedy development by
utilizing data from outdoor-exposure tests (which check the product’s
weather resistance under realistic conditions) along with test datafrom various accelerated weathering testers.
A recent project is the development of highly durable Eco Greenproducts (chromate-free 55% Al-Zn alloy-coated pre-painted steel
sheets for building materials) in order to withstand Taiwan’s highheat and humidity, as well as the extreme environments in export
destinations.
Going forward, we will further improve functionality, including
improving the scratch resistance and adding self-cleaning featuresof PVDF pre-painted steel sheets (fluororesin pre-painted steel
sheets), as we develop products that meet customer demands
and market needs.

ESG Information

Basic Policy

Initiatives for Strengthening Quality Assurance

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 comprisequality assurance managers in each division, including at affiliatedcompanies. Duties involve ensuring compliance with Guidelines
for Strengthening 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.

Strengthening Our Quality Governance Framework*QMR: Quality Management Reinforcing

In order to eliminate human-intermediated tasks related to inspections,tests, and record keeping, we are working to introduce systems
that automate data intake and judgments of the acceptability(pass/fail status) of products.

Cyclic corrosion tester (CCT)▼ Yodogawa Steel Group Quality Assurance Framework● We fortified the organization of our Head Office quality

assurance division so that its supervision is horizontallyconsistent across each division and business site.
● We have all companies regularly implement self-checks
and we strive to eliminate quality-related risks.
● The Head Office quality assurance division offers support
for reciprocal quality audits among business sites and works
to enhance audit functions.
● In order to remove excessive organizational independence, weare promoting more employee cross-posting between divisions.

Improving Compliance AwarenessWe place extra emphasis on quality compliance education and areusing additional, on-going training to raise awareness among all
employees.

Automating Quality Assurance Processes

President
Director in charge of quality assurance (Corporate Planning Division Manager)

Secretariat
Yodogawa Steel Group QMR Committee
Chairperson: Yodogawa Steel Works President
Vice-chair: Director in charge of quality assurance
Members: managing directors of each business site,
Group company managers, etc.

Yodogawa Steel Group QMR-WG
Condensation circulation-type carbon QUV weathering testerarc weathering tester

33

Exposure testing area, southern Taiwan (Kenting, Pingtung County)

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

34

A Base that Supports Value Creation (ESG Information)

ESG Information

Human Resources Development for Sustainable Growth
Human Resources Development
Basic Policy

By training and educating our human resources, we are realizing
part of our Business Philosophy, namely, to “take up the challenge
to innovate and expand based on the individual creativity of each
employee.”

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 tasks and OFF-JT leveraging internaland external resources. Furthermore, through training and otherprograms, we are fostering employees who each maintain a constantawareness of issues, who can think for themselves, and who cantake action to deliver products that meet the needs of our times.
We target employee training that enables workers to contribute topeoples’ lives and the development of society.

▼ Main training programs
New employee training

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

Mental health training
Language training (English, Chinese)

Young employee training

35(J: “jishu” meaning “voluntary”, K: “kanri” meaning “management”)

We carry out voluntary management activities in small groups
addressing the themes of quality improvement, cost reduction,
productivity improvement, safety, and environmental preservation.
Once a year, we also have a large meeting that brings Group
companies together in Osaka,with our 50th meeting taking
place in 2016.
Presentations are made at
this Group-wide meeting to provide
opportunities to study effective
examples that we can leverage
to improve business practices.
We utilize these types of activities
in order to strive for growth andYodogawa Steel Group JK Meeting
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)

New manager training

We hire diverse human resources regardless of gender, nationality,or the presence or absence of disability. Similarly, we aim to bea 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.

Social Contribution Activities
Participating in the SAKURA + PROJECT
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
carried out its first tree planting festival in Otsuchi-cho (Iwate Prefecture).
Currently, trees are being planted in Fukushima Prefecture along
national highways.

SAKURA + PROJECT logo

Symbolic tree in Otsuchi-cho,
Iwate Prefecture

Displaying the Yodoko Guest House to the Public
The Yodoko Guest House was designed by Frank Lloyd Wright,
lauded as one of the preeminent architects of the 20th century, andbuilt as a vacation villa for the eighth-generation sake brewer
Yamamura Tazaemon of Nada, Kobe. We have owned it since 1947.
This villa has been designated a National Important Cultural
Property by the Japanese government and, since 1989, we havemade it open to the public as part of our social contribution activities.
With an approximately 2-year renovation project complete, the villa
was reopened to the public in February 2019.

Yodoko Guest House (former residence Evening illumination converted toof the Yamamura Family)
LED lighting

Social Contribution Activities at Overseas Subsidiaries
Sheng Yu Steel Co., Ltd.
● Voluntarily building road median strip flower beds on a national

highway near the company
As part of roadway beautification programs, we started voluntarily
building, in 1998, roadside flower beds on a national highway near
the company. We are actively promoting urban beautification
projects and working to enhance the reputation of Yodogawa
Steel Works.
● Promoting local arts and culture
In order to support citizen education and quality of life, while also
strengthening the positive image as a company deeply connected
to local communities, we have been donating funds to cover
the activity costs of Kaohsiung Municipal Social Education Center
since 2011. This contribution is part of efforts to promote local
arts and culture.

Sheng Yu Steel Co., Ltd. and PCM Processing(Thailand) Ltd.
● Donating to neighborhood schools

At Sheng Yu Steel Co., Ltd., one of our social contribution activities
was to donate safety gear to schools in Siaogang district in 2017,
in order to ensure, through the use of safety gear, added security
for children and supervising adults. Furthermore, one of PCM
Thailand’s contributions to its local community is participating ina scholarship program to support education at elementary schools.

Road median strip flower beds on a national highway (Zhongshan Road)
in Kaohsiung

36

A Base that Supports Value Creation (ESG Information)

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(shareholders, customers, business partners, employees, and local
societies) while positioning transparency, fairness, and prompt andcourageous decision-making as the objective of our corporate
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 ofefficient distance between Directors’ oversight/decision-making
and business execution, while still maintaining continuity, fromthe standpoint of sharing information, between management
decisions and business execution.
In order to build a Board of Directors with a dynamic structure

Directors and Audit & Supervisory Board Members (as of June 21, 2019)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 anddiverse composition of the Board of Directors, while facilitating
more energetic, constructive, and engaging discussions during
Board meetings. Additionally, in order to strengthen the transparencyof oversight and decision-making processes, we also appoint
independent Outside Directors who meet the Tokyo Stock Exchange’s
criteria for independence. As of March 31, 2019, 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.

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 set of regulations after the laws and regulations of Japan and our Articles of Incorporation.

37

June 2018

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.

June 2019

The Company decided to appoint one female Outside Director in order to facilitate more energetic discussions from diverse perspectives at Board of
Directors meetings.

Takaaki Kawamoto
Chairman and
Representative Director

Satoshi Nitta

President andRepresentative Director

Toshio Kumamoto
Director, Managing
Executive Officer

Tadashi Hattori

Toshikazu Saeki

Director, Managing
Executive Officer

Director (Independent
Outside Director)

Hiroshi Okamura
Director (Independent
Outside Director)

Mitsuaki Yuasa

Director (Independent
Outside Director)▼ FY 2018 (Directors and Audit & Supervisory Board members as of June 21, 2019)
Meeting attendance by Outside Directors and Outside Audit &Supervisory Board members

Maomi Hayashi

Audit & Supervisory Board
Member (full-time)

Shiro Morioka

Audit & Supervisory Board
Member (full-time)

Osamu Utsuro

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

Miho Ishihara

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

Name

Attendance at Boardof Directors meetings

Attendance at
Audit & Supervisory
Board meetings

Toshikazu Saeki

14 times present
at 14 meetings—

Hiroshi Okamura

14 times present
at 14 meetings—

Mitsuaki Yuasa

11 times present
at 11 meetings—

Osamu Utsuro
Miho Ishihara▼ Diagram of governance structure

14 times present
15 times present
at 14 meetings
at 15 meetings
Appointed at the General Meeting of Shareholders
held June 21, 2019

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

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

[Whistleblowing][Surveys]

Business and Management Divisions
Employees

38

Financial Information Overview of Consolidated Operational Results

Market environment
During the fiscal year ended March 31, 2019, the gradual recoveryof the Japanese economy continued, though it was lacking instrength due to decreased exports and other factors froma slowdown in overseas economies.
In the global economy, a U.S. recovery continued, buoyed
by strong consumer spending, while China suffered decreased
momentum from the effects of trade friction and lagging domestic
demand.
In the iron and steel industry, there was solid demand in
the Japanese domestic market for construction, automobile,home appliance, and other products, which provided overall
stability. The global steel market, despite a slowing Chinese
economy, saw a return to growth in crude steel production, which,combined with other factors, leaves future trends uncertain.

Financial Information

Net sales increased because of price revisions inside Japan,
though they declined on a consolidated basis due to significantly
lower earnings at Taiwan subsidiary Sheng Yu Steel Co., Ltd.
(SYSCO), which was impacted by U.S. protectionist trademeasures.
In terms of profit and loss, operating profit was lower in Japan
mainly due to smaller profit increases from inventory valuation.
Overseas, there was a sharp decline in operating profit as SYSCO
and all other overseas subsidiaries faced a severe businessenvironment.
Ordinary profit decreased less than operating profit becauseof gains on sales of investment securities.
Profit attributable to owners of parent decreased less thanordinary profit due to the significant impact of SYSCO, which
has a large proportion of non-controlling shareholders and wasa factor in lower consolidated net profit for the fiscal year.

weakness, and the impact of a consumption tax hike.
In the iron and steel market, the outlook is for uncertainty
in the overseas market as risks of a global economic slowdown
rise. In the Japanese domestic market as well, although near-term
construction demand is expected to be strong, the risk ofa future downturn is rising on concerns over lagging exports due
to overseas economic weakness. For the Group, we expect toface a difficult business environment from factors including
consistently high prices for hot rolled steel sheets and zinc, ourprimary raw materials.
Amidst this environment, we will maximize our dynamic
mobility, which is one of our strength, unlock new markets,
pursue increased sales of high value-added products, andstrengthen our earnings capacity as we work toward achieving
the Yodogawa Steel Group Medium-Term Management Plan
2019.

Future outlook

Returns to shareholders

The outlook for the global economy includes heightening concerns
over a slowdown due to risk factors such as stagnation in China
and Europe, trade problems from U.S. protectionist trademeasures, and the issue of the U.K.’s exit from the E.U.
The outlook for the Japanese economy involves increased
uncertainty from lagging exports, due to global economic

The Company sees returns to shareholders as one of our highest
priorities and, to that end, is committed to a policy of paying
dividends and buying back shares in line with operating results.
Our basic policy is to pay continuous and stable dividends thatmatch our operating results, while considering the outlook
for future results, capital requirements necessary for investments

to boost corporate value, and resources needed to maintaina robust financial standing. Our objective to pay dividends in linewith 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.
Our basic policy for dividends of surplus is to pay two dividends
annually, an interim and a year-end dividend. Also, in accordancewith Article 459, Paragraph 1 of the Companies Act, the Yodogawa
Steel Articles of Incorporation state that dividends can be paid
based on a resolution of the Board of Directors, except in cases
where stipulated otherwise by laws and regulations.
The dividend per share for the fiscal year ending March 31,
2019 is set at 70 yen, which combines a 30-yen interim dividendwith a 40-yen year-end dividend.
In line with expected operating results, we forecast a 25-yen
interim dividend in the fiscal year ending March 31, 2020. Thereis currently no forecast for the year-end dividend for the same
period, but an announcement will be made promptly once it
becomes possible to disclose a dividend forecast.

Financial results
Given this environment, Group operational results forthe consolidated fiscal year amounted to net sales of 167,419
million yen (down 6,385 million yen, year on year), operating
profit of 5,879million yen (down 4,977 million yen, year on year),ordinary profit of 9,829million yen (down 2,455 million yen year
on year), profit attributable to owners of parent of 6,254 million
yen (up 115 million yen year on year).

Net sales

Operating profit(Millions of yen)

(Millions of yen)

180,000

90,000173,805

10,000167,419

Down

3.7% YoY

0(119th term)

39

2019/3(120th term)(Year ended
March 31)

Profit attributable to ownersof parent

Total assets(Millions of yen)

220,000

8,000

5,879

5,000

0

2018/3

10,856Down

2018/3(119th term)(120th term)(Year ended
March 31)

215,638

209,465(Millions of yen)

110,000

15.0 % YoY

Down

2.9% YoY

20,0002018/3(119th term)

2019/3(Year ended
March 31)(120th term)

2018/3(119th term)

2019/3(Year ended
March 31)(120th term)

75

70

40

18.5 % YoY

0

0

(Yen)

32,31627,277Up

Down
0

Dividends per share80

40,000

6,254

4,000

45.8 % YoY
2019/3

7,360

Cash and cash equivalents at
end of period(Millions of yen)0

2018/3(119th term)

2019/3(Year ended
March 31)(120th term)

2018/3(119th term)

2019/3(120th term)(Year ended
March 31)40

Financial Information Consolidated Financial Statements

Financial Information

Consolidated Balance Sheet(Millions of yen)

FY3/18(as of Mar. 31, 2018)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
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
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Total investments and other assets
Total non-current assets
Total assets

41(Millions of yen)

FY3/19(as of Mar. 31, 2019)

FY3/18(as of Mar. 31, 2018)

FY3/19(as of Mar. 31, 2019)

Liabilities
30,71643,9382,888
16,081
4,684
13,122
5,376(149)
116,658

36,84344,0183,494
15,5194,397
12,733
3,881(132)
120,755

Current liabilities
18,154

17,858

Short-term loans payable—

327

Lease obligations

772

9

Income taxes payable

2,165

1,736

Provision for bonuses

1,056

971

Other

6,098

6,265

Total current liabilities

28,247

27,168Notes and accounts payable-tradeNon-current liabilities
19

10

4,060

2,502

Deferred tax liabilities for land revaluation

856

856

Provision for retirement benefits for directors (and other officers)

66

66

7,569

7,154

Lease obligations
60,924(44,632)
16,291133,033(120,453)
12,57918,848
1,504
(717)
787
1,135
12,084(11,217)867
50,50960,458(45,269)
15,189134,337(121,482)
12,855
18,687
47
(35)
12
554
12,004(11,175)
828
48,126

7
1,475
1,482

—
1,472
1,472

46,3380221
427
46,98798,980215,638

38,292—369
448
39,10988,709209,465

Deferred tax liabilities

Retirement benefit liability
Other

4,244

4,034

Total non-current liabilities

16,817

14,62445,064

41,793

Capital stock

23,22023,220Capital surplus

20,393

20,385Retained earnings

100,775

104,961

Total liabilities
Net assets
Shareholders’ equity

Treasury shares(12,679)(13,061)

Total shareholders’ equity

131,710

135,505

Valuation difference on available-for-sale securities

16,42012,213

Revaluation reserve for land

1,646

1,639

Foreign currency translation adjustment

2,798

1,378

Accumulated other comprehensive income

Remeasurements of defined benefit plans
Total accumulated other comprehensive income

(990)

(500)

19,875

14,730Share acquisition rights

223

210

Non-controlling interests

18,764

17,225

Total net assets

170,574

167,671

215,638

209,465

Total liabilities and net assets

42

Financial Information Consolidated Financial Statements

Financial Information

Consolidated Statement of Operations(Millions of yen)

FY3/18

Shareholders’ equity

FY3/191, 2017 to( Apr.
Mar. 31, 2018 )1, 2018 to( Apr.
Mar. 31, 2019 )Net sales

173,805

167,419

Balance at beginning of current period

Cost of sales

144,973

144,180

Changes of items during period

Gross profit

28,831

23,238Dividends of surplus

Selling, general and administrative expenses

17,974

17,358Operating profit

10,856

5,879

Non-operating income

2,113

4,292

685

342

12,284

9,829

Extraordinary income

2488Extraordinary losses

222

755

Profit before income taxes

12,087

9,162

Income taxes-current

3,537

3,174

Income taxes-deferred

(145)

(509)

Total income taxes

3,391

2,664

Profit

8,695

6,497

Profit attributable to non-controlling interests

1,335

243

Profit attributable to owners of parent

7,360

6,254

Non-operating expenses
Ordinary profit

Consolidated Statement of Comprehensive Income
FY3/18

Profit8,695

FY3/19

CapitalsurplusRetainedearnings

TreasurysharesValuation
Total
difference onshareholders’ available-for-sale
equitysecurities

23,22020,393

100,775(12,679)

131,710(17)Purchase of shares of
consolidated subsidiaries

8

Reversal of revaluation reserve for land

Balance at end of current period

Share

Non-

Foreign currency Remeasurements Total accumulatedacquisition controllingothertranslationof definedrightsinterests
comprehensive
adjustment
benefit plansincomeTotal net
assets

18,764

170,574

1,646

2,798

(990)

19,875223(2,076)(2,076)

6,254

6,254

6,254

(443)

(443)

(443)

61

43

43

8

8

7

7

7

Net changes of items otherthan shareholders’ equity
Total changes of items during period

16,420

Revaluation
reserve forland(2,076)

Purchase of treasury shares
Disposal of treasury shares(Millions of yen)

Accumulated other comprehensive income

Capitalstock

Profit attributable toowners of parent(4,207)(7)(1,419)489(5,145)(13)(1,539)(6,698)

—

(8)

4,185

(382)

3,795

(4,207)(7)(1,419)489(5,145)(13)(1,539)(2,902)

23,22020,385

104,961(13,061)

135,505

12,213

1,639

1,378

(500)

14,730210

17,225

167,671

Consolidated Statement of Cash Flows(Millions of yen)

FY3/181, 2017 to( Apr.
Mar. 31, 2018 )(Millions of yen)

1, 2017 to( Apr.
Mar. 31, 2018 )43

Consolidated Statement of Changes in Equity FY3/19 (Apr. 1, 2018 to Mar. 31, 2019)

1, 2018 to( Apr.
Mar. 31, 2019 )FY3/191, 2018 to( Apr.
Mar. 31, 2019 )Cash flows from operating activities

1,933

8,273

Cash flows from investing activities(9,026)

1,232

Cash flows from financing activities(5,288)(3,979)

611

(485)

Effect of exchange rate change on cash and cash equivalents

6,497

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

5,039

Cash and cash equivalents at beginning of period

39,04727,277

Cash and cash equivalents at end of period

27,27732,316

Other comprehensive income

4,618(5,903)Comprehensive income

13,314593

44

Corporate Profile (as of March 31, 2019)

Corporate Profile

Company Outline

Directors and Executive Officers (as of June 21, 2019)

Principal Shareholders
Name

Company name

Yodogawa Steel Works, Ltd.

Directors

Established

January 30, 1935

Takaaki Kawamoto

Capital23,220,815,228 yen

Chairman and
Representative Director

Employees

1,196

President andRepresentative Director

Satoshi Nitta

Major Offices & Plants
Head office

Tokyo branch
Sales offices

Plants4-1-1, Minamihonmachi, Chuo-ku,
Osaka 541-0054, Japan
81-6-6245-1111
1-3-7, Shintomi, Chuo-ku, Tokyo 104-0041, Japan
81-3-3551-1171
Sapporo, Morioka, Sendai Regional, Niigata, Nagano,Takasaki, Tokyo Regional, Yokohama, Shizuoka,
Hokuriku, Nagoya Regional, Osaka Regional, Kobe,
Okayama, Hiroshima Regional, Takamatsu Regional,
Kochi, Yahata, Fukuoka Regional, Kagoshima, Okinawa
Osaka (Osaka prefecture), Kure (Hiroshima prefecture),
Ichikawa (Chiba prefecture), Fukui (Fukui prefecture),
Izumiotsu (Osaka prefecture), Himeji (Hyogo prefecture)

Main Affiliated Companies

Executive Officers

Takada Kozai Kogyo Co., Ltd.

Steel sheet processing, sales, and warehousing

Sheng Yu Steel Co., Ltd.

Finished steel goods manufacturing and sales

Yodoko Shoji Co., Ltd.

Steel wholesaling and transportation

45

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

1,230,100

4.13%

Resona Bank, Limited.

1,068,400

3.59%

Mizuho Bank, Ltd.

1,062,105

3.56%

Tadashi Hattori

Yodoko Partners’ Shareholding Association

897,542

3.01%

Toshikazu Saeki

Nippon Life Insurance Company

618,637

2.07%

Director

Hiroshi Okamura

POSCO

600,000

2.01%

Director

Mitsuaki Yuasa

JFE Steel Corporation

587,377

1.97%

Managing Executive
Officer
Senior Executive Officer

Yoichiro Nakano

Sadoshima Corporation

569,000

1.91%

Yasunori Osumi

Nippon Paint Industrial Coatings Co., Ltd.

547,000

1.83%

Senior Executive Officer
Executive Officer

Eiichi Tanaka

8,492,461

28.54

Yoshihiro Kawamoto

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.

Audit & Supervisory Board Member (full-time)

Maomi Hayashi

Audit & Supervisory Board Member (full-time)

Shiro Morioka

Audit & Supervisory Board Member

Osamu Utsuro
Miho Ishihara

Yodoko Kohatsu Co., Ltd.

Golf course and other management and realestate leasing

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

Steel wholesaling

4.40%

Managing Executive
Officer

Distribution and warehousing

Sadoshima Corporation

1,312,300

Director

Keiyo Tekko Futo Co., Ltd.

Equity-Method Affiliated Companies

Japan Trustee Services Bank, Ltd. (Trust Account)

Toshio Kumamoto

Director

Share Ownership by Category

Shares Owned Shareholding Ratio (%)

Managing Executive
Officer

Audit & Supervisory Board Member

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

Stock Information

Director

Audit & Supervisory Board Members
Consolidated Subsidiaries

Stock Information (as of March 31, 2019)

Total

Securities corporations

Financial institutions

0.48％

26.64％

Individuals
and others

12.71％
35,837,230

Treasurystockshares

16.95％

Overseas
investors

Other companies
in Japan

18.79％

24.41％

Notes: 1. The Company holds 6,076,881 shares as treasury stock and is not included in theabove list of major shareholders.
2. Treasury stock (6,076,881 shares) is deducted from calculations of the shareholding ratio.

Movements in Stock Price and Trading Volume■Trading volume

Trading volume(thousand shares)

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

3/20139/20133/20149/20143/20159/20153/20169/20163/20179/20173/20189/20183/2019Note: Data before the end of September 2015 have been adjusted to account for share consolidation.

46

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.
Stock transfer agency department

Method of public noticeElectronic 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)
https://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 ina securities brokerage account or in a special account. Please see below
for whom 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.