Overview of Business Results
for the 1st Quarter of Fiscal Year Ending March 31, 2019
(April 2018 → June 2018)

Contents
1. FY2018 1Q Results
Outline of Statements of Income
Net Sales and Ordinary Income(quarterly)
Ordinary Income Variance Analysis
Earnings by Business Segment, Changes in Business Segment(quarterly)
Balance Sheets(Reference) Capital Expenditure and Depreciation

2. FY2018 Forecast
Revision of Business Forecast for FY18
Revision of Dividend Forecast for FY18
Ordinary Income Variance Analysis

3. Reference
Changes in Financial Indicators
Other Topics

2Business Results

Outline of Statements of Income(Unit：Billion yen)

FY18/1Q(A)FY17/1Q(B)

Ratio
(%)

AmountChange(B) → (A)

Ratio
(%)

AmountAmountRatio(%)

Net Sales

43.9

100.0

38.3

100.0+5.6+14.7

Operating
Income

3.7

8.4

3.6

9.3+0.1+3.0

ROSROS

Ordinary
Income

3.9

8.8

3.5

9.1+0.4 +11.4

Net Income*1

4.0

9.1

2.3

6.1+1.7

ROE(%) *2

11.8

7.3+71.8+4.5*1 Profit attributable to owners of parent. FY18 1Q includes gains on step acquisition (1.5 billion yen) by making
Mahindra Sanyo Special Steel Pvt. Ltd. our subsidiary.
*2 ROE is annualized3

Business Results

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

Sales Volume(Thousands of ton per month)

50

82

84

89

90898691

94

40

Operating Income
Ordinary Income(Billion yen)

100

580

4ROS(%)
12.5

8.5

20

37.3

34.7

39.4 38.3

37.8

39.5

41.9

43.9

60

340

2

100

2.9 2.9

2.7 2.7

3.1 3.00

3.9

5.0

2.6 2.6
1.7

Operating Income03.7

1

Sales Volume

7.5

3.6
3.6 3.5

20

Net Sales

6.7

6.8

3.0 2.9

10.0

8.07.7308.8

9.1

Ordinary Income

2.5

1.5
ROS
0.04

Business Results

Ordinary Income Variance Analysis
FY17 1Q (3.5) → FY18 1Q (3.9) (+0.4 Billion yen)(Billion yen)10.0+3.7

7.5+0.4
Sales
volumeSales price+0.3
Variable
cost
reductions+0.1
NonOperating

Raw

profit andmaterial

loss, etc.

andand5.0-3.1

Increase+4.5 Billion yen
Decrease-4.1 Billion yen── ── ── ── ── ── ── ── ──
Total+0.4 Billion yen

fuel prices-0.9

product mix-0.1
Consumable,

2.5

FY171Q

3.5

Time lag of iron scrap surcharge pricing+ 0.4 Billion yen（ FY17 1Q -0.2 →FY18 1Q +0.1）

outsourcing,

Exchange

logistic

rate

cost,

changes

etc.

(Operatingprofit andloss)

FY181Q

3.9

0.05

Business Results

Ordinary Income Variance Analysis
FY17 4Q (1.5) → FY18 1Q (3.9) (+2.4 Billion yen)(Billion yen)
5.0+0.4+0.4
4.0+1.6

Sales

3.0

volumeSales price
and

2.0

1.0+0.2

product mix

FY174Q

1.5+0.1
Variablecost+0.2
Fixedcost

NonOperating
profit andloss

Others-0.4
Rawmaterial
andfuel prices-0.1
Consumable,outsourcing,logistic
cost,etc.

reductions

Increase+2.9 Billion yen
Decrease-0.5 Billion yen── ── ── ── ── ── ── ── ── ── ──
Total+2.4 Billion yen

FY181Q

3.9

Time lag of iron scrap surcharge pricing+ 0.6 Billion yen（ FY17 4Q -0.5 →FY18 1Q +0.1）

0.06

Business Results

Earnings by Business Segment(Unit : Billion yen)

FY18/1Q (A)
Net
Sales

Operating
IncomeFY17/1Q (Ｂ)ROS(%)Net
Sales

Operating
IncomeChange (B) → (A)ROS(%)Net
Sales

OperatingIncomeROS(%)

Steel
Products*

40.4

3.2

8.0

34.5

2.9

8.3

+5.8

+0.4

-0.3

MetalPowders*
Formed andFabricatedMaterials*

1.2

0.2

16.4

1.2

0.3

22.8

+0.0

-0.1

-6.4

4.7

0.2

4.6

4.5

0.4

8.8

+0.2

-0.2

-4.2

Sub-total

46.3

3.6

7.9

40.2

3.5

8.8

+6.1

+0.1

-0.9

Other

0.3

-0.0

-0.3

0.3

-0.0

-2.9

+0.0

+0.0

+2.6

Adjustments*

-2.7

0.0

─

-2.20.0

─

-0.5

-0.0

─

Consolidated
Total

43.9

3.7

8.4

38.33.6

9.3

+5.6

+0.1

-0.9

* As a result of the management method change, adjustments of inventory value, which had been included in “Adjustments" ,are allocated to operating income of each reporting segment from FY18 1Q .
Segment information of FY17 is also described after this change.
7

Business Results

Changes in Business Segment(quarterly)
Net Sales*(Billion yen)

Operating Income*(Billion yen)
4.0

50

0.22

4.7
4.8

40

4.7

4.5

4.4

1.2

1.2

0.39

1.2

1.2

3.0

1.3

0.27

0.20
0.06
0.24
0.19

30

0.21
2.020
34.533.9

35.6

38.0

0.05
0.20

40.4
2.88

2.72
2.18

1.0
10

3.24

1.45

Formed and Fabricated Materials

Formed and Fabricated Materials

Metal Powders

Metal Powders

Steel Products

Steel Products

00.0

FY17/1Q

FY17/2Q

FY17/3Q

FY17/4Q*Including intersegment transactions

FY18/1Q

FY17/1Q

FY17/2Q

FY17/3Q

FY17/4Q

FY18/1Q*Including intersegment transactions
Revised by the management method change

8Business Results

Balance Sheets(Billion yen)(Billion yen)

Assets225.6
12.3

209.1 *1
15.7

200

68.6
61.1

150

225.6
Cash and Deposits

2001001.050

0

70.1

16.8

51.1

150

Other Current Assets *1

60.8
18.6

15.4

209.1 *1
18.4
44.1

3.6

15.8
2.0

133.8

129.0

100

1.9
Tangible/Intangible

23.2
49.6

Trade Receivables
Inventories

56.7

Liabilities and Net Assets

Trade Payables

Interest-bearing Debt

Other Current Liabilities*1
Other Fixed Liabilities*150

Fixed Assets

Net Assets

Investments *10

FY18/1Q

FY17

FY18/1Q
FY17
Major changes in Assets+16.5 billion yen

Major changes in Liabilities and Net Assets +16.5 billion yen

Trade Receivables
Inventories
Tangible/Intangible Fixed Assets+7.6+5.6+9.3

Trade Payables
Interest-bearing Debt
Net Assets+4.9+5.5+4.8*1 As a result of applying “ Partial Amendments to Accounting Standard for Tax Effect Accounting”, etc.,
the figures of FY17 have been adjusted.
*2 The impact of making Mahindra Sanyo Special Steel Pvt. Ltd. our subsidiary is about 14.2 billion yen.

9

Business Results(Reference) Capital Expenditure and Depreciation(Billion yen)

15

Capital Expenditure
Depreciation

10

12.5

11.05

9.8

9.9

9.3

9.8

9.1

7.2

8.1

9.0

9.5

4.60FY13FY14FY15

FY16

FY17

FY18 Forecast

10Business Forecast

Revision of Business Forecast for FY18(Unit : Billion yen)

Revised forecast (A)FY18
1st Half

FY18
1st Half

FY18
2nd Half

98.0 104.5 101.3

96.5

103.0

99.8

Net Sales*1

90.0

95.0

185.0

90.0

95.0

185.0

─

──

Operating
Income*2

5.5

4.5

10.0

5.0

5.0

10.0

+0.5

-0.5

─

Ordinary
Income*2

5.5

4.0

9.5

4.5

4.5

9.0

+1.0

-0.5

+0.5

Net Income*2,3

5.0

3.0

8.0

3.1

3.1

6.1

+2.0-0.1+1.9

Sales Volume(Thousands of ton permonth) *1

FY18
2nd HalfChange(B) → (A)Previous forecast (B)

FY18

FY18

*1 Including sales of MSSSPL (*4) which has been our subsidiary since June 2018
MSSSPL’s Sales volume:13,000 t /M, Net Sales : 5 billion yen/Q(from FY18 2Q)*2 Revised forecast includes amortization of goodwill (0.3 billion yen) related toMSSSPL.
*3 Profit attributable to owners of parent. Revised forecast includes gains on
step acquisition (1.5 billion yen) by making MSSSPL our subsidiary.
*4 MSSSPL : Mahindra Sanyo Special Steel Pvt. Ltd.

FY18
1st Half

FY18
2nd Half

1.5

1.5

FY18

1.5

Major assumptions
・Scrap iron
34,500 yen/t(H2 market price in Himeji area)
・Crude oil(Dubai) 75$/BL
・Exchange rate

110 yen/US$
11

Business Forecast

Revision of Dividend Forecast for FY18
Change(B) → (A)Revised forecast (A)Previous forecast (B)FY18
1st Half

FY18
2nd Half

FY18

FY18
1st Half

FY18
2nd Half

FY18

FY18
1st Half

FY18
2nd Half

FY18

5.0

3.0

8.0

3.1

3.1

6.1+2.0-0.1+1.9

7.0─

246.394.7

─

189.4 +60.5

─

+56.9

218.3

Dividend*2 ¥/share 45.0 26.5 71.5

27.0

27.0

54.0 +18.0-0.5 +17.5

58.5

28.5

─

28.5

─

+0.5

26.8

Net Income*1Billion
yenEarnings Per¥/share 155.2
Share*2,3

PayoutRatio*3,4％

29.0

─

29.0+0.5(Ref.)
FY17*1 Profit attributable to owners of parent.
*2 We conducted a one-for-five reverse stock split of our company‘s shares effective on October 1, 2017.
Earnings Per Share and Dividend are adjusted after the one-for-five reverse stock split .
*3 We will conduct a third-party allotment effective on March 28, 2019.
Earnings Per Share and Payout Ratio in Revised forecast are calculated based on average number of shares
after this issuance.
*4 Payout Ratio ・・・Dividend / Earnings Per Share＜Dividend Policy＞

Dividend payout ratio target (consolidated basis)

25 ～ 30 ％12

Business Forecast

Ordinary Income Variance Analysis
Previous forecast
Revised forecast
stFY18 1 Half (4.5) → FY18 1st Half (5.5)(+1.0 Billion yen)(Billion yen)
7.5

+0.5
5.0SalesSales
price andFY18
2.5+0.3

product mix

volume+0.1
Consumable,

outsourcing,logistic+0.3
Consolidated
subsidiaries

-0.1
Raw
materialand-0.1
Fixedcost,etc.

fuel prices

cost,etc.

FY181H

1H(Revised(Previousforecast)

forecast)

4.5

Increase+1.2 Billion yen
Decrease-0.2 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total+1.0 Billion yen

5.50.013

Business Forecast

Ordinary Income Variance Analysis
FY18 1st Half (5.5) → FY18 2nd Half (4.0)(-1.5 Billion yen)(Billion yen)
10.0

7.5+1.1+0.6
VariableSalesprice and

5.0

2.5

FY18

reductions

-2.0

Fixed

Consolidated

Raw

cost

subsidiaries

materialand-0.9

fuel prices-0.6

product mix
Consumable,

1H

outsourcing,Non-(Revisedlogisticcost,Operatingforecast)

5.5
0.0

cost

+0.2+0.1

Increase+2.0 Billion yen
Decrease-3.5 Billion yen── ─ ── ─ ─ ── ── ─ ── ── ── ──
Total-1.5 Billion yen

etc.

profit andloss ,etc.

FY182H(Revisedforecast)

4.0

14

Reference

Changes in Financial Indicators
FY13

FY14

FY15

FY16

FY17

FY181QROE (Net Income to Net Assets) *1％

4.1

6.1

6.6

6.6

5.6

11.8

ROS (Ordinary Income to Net Sales)

％

4.2

5.7

7.7

8.5

6.8

8.8

ROA (Ordinary Income to TotalAssets) *1,2％

3.4

4.8

6.0

6.5

5.4

6.9

Equity Ratio*2％

50.2

55.8

62.4

66.7

61.0

57.5

Billion yen

47.8

33.2

14.3

12.7

28.4

37.3

Net D/E Ratio *3

Times

0.46

0.29

0.13

0.10

0.22

0.28

Earnings Per Share*4¥/share

126.0

203.0

230.0

241.5

218.3 123.8

Net Assets Per Share*4¥/share

3,167

3,498

3,483

3,797

3,961 4,029

Number of Employees at End ofPeriod*5Persons

2,775

2,706

2,625

2,598

2,666 3,765Interest-bearing Debt (Net)The 10thMid-termBusinessPlan

7.0
9.0

7.0

0.20

*1 ROE and ROA are annualized*2 As a result of applying “Partial Amendments to Accounting Standard for Tax Effect Accounting”, etc.,

the figures of FY17 have been adjusted.
*3 Net Debt Equity Ratio ・・・ Interest-bearing Debt (net) / Net Assets*4 We conducted a one-for-five reverse stock split of our company‘s shares effective on October 1, 2017.
Earnings Per Share and Net Assets Per Share are adjusted after the one-for-five reverse stock split .
*5 For FY18 1Q,Number of Employees increased by making Mahindra Sanyo Special Steel Pvt. Ltd. our subsidiary in June 2018.
15

Reference

Other Topics(1) Completion of making MSSSPL(*) our consolidated subsidiary・We further acquired shares of MSSSPL and made it our consolidated
subsidiary on June 21,2018.
1) The proportion of voting rights : 29.0% to 51.0%
2) The consideration for purchase additional share: About INR 1.5 billion (About JPY 2.4 billion)
・MSSSPL is our first subsidiary, both inside and outside Japan,that engages in integrated manufacturing and sales of special
steel products.
・MSSSPL aims to be a leading Indian manufacturer in quality,productivity, cost and competitiveness as our factory in orderto strengthen our capabilities to respond to market growthand customers’ requests in India.

MSSSPL’sAppearance【MSSSPL’s outline】(*)
Name
Location
Establishment
Sales
Business：Mahindra Sanyo Special Steel Pvt. Ltd.
：Maharashtra, India：1962(joint business started from 2012)：About INR 9.1 billion (About JPY 15.5 billion) (note1,2)：Manufacture and Sale of Special Steel ProductsLocation(note)
1 The figures are for FY 2017.
2 JPY figures are for reference, calculated at the rate of INR1.00 = JPY1.7.

16

Reference

Other Topics(2) Making Sanyo (*1) a Subsidiary of NSSMC (*2) andMaking Ovako (*3) a Subsidiary of Sanyo・We announced in the press release titled “Commencement of Discussions Regarding
Making Sanyo a Subsidiary of NSSMC and Other Matters” dated March 15, 2018.
We have come to an agreement on the terms and conditions, and an agreement wasexecuted on August 2, 2018.
・We intend to conduct the following transactions on March 28, 2019.
1) Making Sanyo a Subsidiary of NSSMCSanyo’s third-party allotment underwritten by NSSMC forprocuring funds to acquire all the shares of Ovako
2) Making Ovako a Subsidiary of Sanyo
Transfer of all the shares of Ovako to Sanyo
from NSSMC【Ovako’s outline】
・The policy is to maintain the listing of Sanyo on the First
Section of the Tokyo Stock Exchange.
*For the details, please refer to the document titled “Regarding theAgreement to Make Sanyo Special Steel a Subsidiary of Nippon
Steel & Sumitomo Metal and Other Matters” on our website.
*1 Sanyo : Sanyo Special Steel Co., Ltd.
*2 NSSMC : Nippon Steel & Sumitomo Metal Corporation*3 Ovako : Ovako AB

NameLocation
Sales：Ovako AB：Sweden(headquarter)：About EUR 0.92 billion(About JPY 120 billion) (note1,2)(note1)
Sales volume ：About 780,000 tons
Employees：About 3,000
Business：Manufacture and Sale of Special
Steel and Secondarily ProcessedProducts(note)
1 The figures are for FY 2017.
2 JPY figures are for reference, calculated at therate of EUR1.0 = JPY130.

17Reference

Other Topics(3) Development of Sanyo Ultra Refining Process (SURP)・ We have developed the Sanyo Ultra Refining Process (SURP), marking additional progress in
Sanyo New Refining Process (SNRP).

・ SNRP is a process that allows the mass production ofhigh-quality ultra-high-cleanliness steel. It not only reduces
the volume of inclusions, it also controls (reduces) the size oflarge inclusions.
・We found new ways to reduce the frequency of large
inclusions by means of controlling their composition (type,quantity, and fraction of their trace components).
・We have developed SURP, helping to reduce the frequencyof large non-metallic inclusions by adding to the inclusioncontrol technology of SNRP.

・ We expect that applying this technology to bearings and otherrotating parts for high-speed rail train components, wind turbines,
and industrial equipment, which involve heavy loads that require stable operation in extreme,
severe lubrication environments enables to respond to needs for higher reliability andmaintenance-free operation.
18

Reference

Other Topics(4)Die & Mould India International Exhibition

・This exhibition, the most popular mould & die show in India,
was held in Mumbai from April 11 to 14, 2018.
・About 260 companies exhibited from 19 countries worldwide.
・We introduced our highly reliable products such as
Cold/Hot working tool steels, Plastic mold steels,
P/M high speed steels and others.

・More than 150 visitors came to our booth.

(5) Cultural lecture sponsored by Sanyo Special Steel Culture Promotion Foundation
・It was held at Himeji City Cultural Center in May 2018.

・The lecture was presented by Junichiro Kawaguchi of the Japan
Aerospace Exploration Agency (JAXA) with a sense of humor.
・He explained the following things.
1) Struggling stories about development of
the asteroid explorer "Hayabusa“.
2) The status of the development competitionof space explorers in Europe in those days.
19(Cautionary Statement)

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

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