JFE Group Growth Strategy
Securities code: 5411
JFE Group Growth Strategy November 30, 2010 Hajime Bada, President and CEO JFE Holdings, Inc. 1
Table of Contents 1.
JFE Key Facts
page 3
2.
JFE Steel’s Overall Strengths
page 7
3.
JFE Steel’s Technological Strengths
page 11
4.
JFE Steel’s Growth Strategies
page 19
5.
Results Forecast for FY 2010
page 34
This presentation material is not a disclosure document based on the Financial Instruments and Exchange Act, and neither its accuracy nor integrity are ensured. Forecasts made in this material are based on information available at the time of this investor meeting and may include uncertainties. Please refrain from making any investment decision based solely on this material. The company does not assume any responsibility for any loss resulting from the use of this material. 2
JFE Key Facts
1. JFE Key Facts
3
Group Structure (FY 2009) JFE Steel Corporation Net sales: 2,281.4 billion yen
JFE Holdings Inc.
Net sales:
2,844.3 billion yen
Ordinary income: 69.2 billion yen Employees:
53,892
JFE Engineering Corporation Net sales: 294.2 billion yen Universal Shipbuilding Corporation Net sales: 286.7 billion yen JFE Urban Development Corporation Net sales: 26.9 billion yen
(Consolidated, as of March 2010)
Kawasaki Microelectronics, Inc. Net sales: 24.6 billion yen
4
Upward-trending Output and Results Production: Crude Steel Production (million tons) 35.00
33.00
30.00
26.48
27.01 27.65 26.72
FY 02
FY 03
29.04
30.52
29.00 26.55 25.83
25.00
20.00
FY 04
FY 05
FY 06
FY 07
FY 08
FY 09
FY 10
FY 11 (Target)
Profit: Ordinary Income (billion yen)
600 500 400 300 200 100 0
460.6
517.3
513.5
502.9 400.5 220
218.4 104.7
FY 02
69.2 FY 03
FY 04
FY 05
FY 06
FY 07
FY 08
FY 09
FY 10
5
Four Key Challenges The JFE Group is addressing four key challenges in response to major developments following the global economic crisis, particularly downturns in developed economies including Japan and the robust recovery of emerging economies centered on Asia.
Technological evolution looking to 2020 Development of business in Asia Development of environmental and energy business Balancing financial base versus long-term investment
6
2. JFE Steel’s Overall Strengths Strengths
7
Large, Concentrated Steelworks ⅰ） 9 blast furnaces (BF) in east and west works （11at 2003 merger) ⅱ）Now operating 8 BFs and revamping 1 (~May,2011） ⇒33m-ton capacity after revamp （26.5m-ton at 2003 merger) ⅲ）6 BFs with inner volume over 5,000m3 （2
at 2003 merger)
※ only 21 such BFs globally Number of BFs and Inner Volume JFE Steel
Company A (Japan)
Company B (Japan)
Company C (Japan)
Company D (S. Korea)
Company E (China)
Inner volum e over 5,000m 3
6
4
2
1
1
0
(Idling)
(1)
Total
9
9
5
3
10
22
8
Stable Customer Bases both Domestic and Asia FY 09
Exports 55%
Domestic 45%
88% of exports for Asia Exports by Customer Spot etc. 25%
Domestic Shipments by Customer
Contract customers 32% (autos, appliances & shipbuilding)
Dealers 11%
Group Companies/Allied Secondary Processing makers 28%
Contract Customers 61%
Allied steelmakers 43%
ⅰ）Achieve high export ratio of 55% by capturing Asian demand ⅱ）89% of domestic shipments are for contract customers, group companies, allied secondary processing makers ⅲ）75% of exports are for allied and contract customers.
9
Expansion of shipments to Allied Steelmakers Shipments to allied steelmakers, following a temporary decrease due to the global economic crisis triggered by the collapse of Lehman in FY2008, continue to increase as the company captured growing demand for high-end steel in Asian markets. Shipments to Allied Steelmakers (in thousand ton)
5500 5000 4500 4000 3500 FY2010(e)
FY2009
FY2008
FY2007
FY2006
FY2005
FY2004
FY2003
3000
10
3. JFE Steel’s Technological Strengths
11
Increasing Needs for High-end Steel The demand for quality will continue to rise: • More safety • More comfort • More cost reduction • More energy efficiency • More advanced (frontier) energy Customers will increasingly demand high-end steel for sophisticated quality needs, sometimes even seemingly contradictory needs (ex., high strength and high formability) .
12
Asia’s High-end Steel Market Growth Additional demand 33 million tons by 2020 Additional demand by 2020: 33 million tons Shares: Automobiles 13 million tons, petroleum gas 10 m/t, electrical appliances 7 m/t, and shipbuilding 3 m/t (million tons) 120 100
Automobiles
80
Packages
60
Electrical appliances Shipbuilding
40
Petroleum gas
20 0 2010
11
12
13
14
15
16
17
18
19
20 13
Strong Collaboration with Customers Industry’s first facility for joint testing and research with customers, aiming to maintain competitive edge Simulation technologies to predict workability, impact characteristics, durability, etc. Customers Solution Laboratory (CSL)
Steel Materials for Application Research & Technology (THiNK SMART)
14
Superior Materials: High-tensile Steel (Automotive Steel Sheet)
Formability
Elongation: EL(%)
Quality of products depends on balance between the strength and formability(elongation) JFE products
CompanyX products (JFE estimate)
Tensile strength: TS (MPa)
Strength
Our studies show that JFE product’s high formability is superior to Competitors’ products at all strength levels. 15
JFE Automotive Steel Sheet is Used Worldwide ※
■JFE Steel’s steel sheet technology is used in 12% of all automobiles produced worldwide. - Among Japanese autos, more than 25% worldwide and 35% in Asia-Oceania region. ※JFE Steel’s steel sheet consists of that shipped from JFE and JFE-licensed alliance partners overseas.
■Automakers rate JFE Steel highly for - Advanced technologies - Sophisticated business capabilities ・ Early vendor involvement ・ Dependable deliveries ・ Skilled sales force ■Our advantages will increase with the rise of new demand for hybrid automobiles and electric-motor automobiles which need high-end electrical steel sheets for their motors. 16
World’s first completely continuous high-end plate production process Plate Manufacturing Line Rougher
Super-OLAC
Cooling bed HOP
Hot leveler
Finishing train Furnace for slab
Rolling
Quenching
Tempering
Super-OLAC
HOP
○High speed cooling technology
○Induction heating system
⇒Achieve the same level of cooling
⇒Enhance efficiency on tempering
speed as that of sheet
Heating speed :70× faster (0.15 to 10℃/s )
○Homogeneous cooling technology
○Uniform temperature control
⇒Halve the dispersion （60 to 27Mpa）
⇒Increase temperature accuracy to ±10℃
Achieving large scale cut in production term (1/20th) Saves energy and reduces inventories
17
World-class Research and Development JFE is One of the World Leaders in Patents
(2008+2009)
3000 2500 S. Korea China
2000
U.S. Europe
1500
Japan
1000 500
H A US
US
A
G
F IN
DI
A
E RO EU
RO EU
IN CH
D
C A
B
KO
RE
A
N PA JA
JF
E
St
ee
l
A
0
18
4. JFE Steel’s Growth Strategies
19
Emerging Countries’ Growing Use of Steel • Chinese and Japanese consumption are equal • Potential increase in India
Crude Steel Consumption (kg/ per person)
1400
Apparent Crude Steel Consumption per Person Japan S. Korea China India
1200 1000 800
1964 Tokyo Olym pics
600
974.1
1988 Seoul Olym pics
1970 Osaka Expo
Lehm an crash
Japan
2008 Beijing Olym pics
S. Korea
400
2010 Shanghai Expo
447 422.1
200
China
India
4 9 .8
0 50
55
60
65
70
75
80
85
90
95
2000
05
20
Steel is Growth Industry: To Double by 2050 World’s Crude Steel Production
(billion tons/year)
3
(JFE estimate)
1.8b tons in 2020 ⇒2.6b tons in 2050 (Almost twice current production)
2.5
2
1.5
1
1950
1975
2010
2050
2050 (if per-capita
(JFE forecast)
remains level)
Crude steel production (kg / per-capita / year)
75
159
190
281
190
World population (billion)
2.54
4.08
6.91
9.19
9.19
Crude steel production (billion tons / year)
0.19
0.65
1.32
2.58
1.76
50
45
40
35
30
25
20
15
10
'05
2000
95
90
85
80
75
70
65
60
55
50
0
1945
0.5
21
Middle Class Drives High-end Steel Demand (%)
Example: Growing ratio of India’s middle-class population
100
Wealthy
80
Middle
60
Poor 40
20
0
2001
2009
The Indian middle class is driving high-end steel demand through its growing consumption of the 3Cs (cars, [air]coolers and color TVs), the same phenomenon seen in Japan’s “economic miracle” era in the 1960s. 22
Export Expansion Focusing on Asia Regional Import Volumes in 2009 (see legend) Middle and Near East
China
(6.63 mil tons)
(10.25 mil tons)
Total imports are smaller than the exports from Japan.
0.94
2.56
3.96
2.84 5.35
1.23
35.06 mil tons
South Western Asia
East Asia
(5.40 mil tons)
(12.78 mil tons)
0.58 1.39
35 30 25
3.42
3.51
6.63 5.4
8.32 mil tons
Middle and Near East
South Western Asia
20
5.56
15
12.78
East Asia
10
Legend Plate
Hotrolled sheet Coldrolled sheet
3.71
5
10.25
China
4.25 3.13
0
Total imports
Exports from Japan 23
Develop Business Models that Respond to Each Market
Distance from Japan
S. Korea
China
Thailand
East Asia
Localization
Dongkuk Hyundai Hysco Tongbu
GJSS Tin Plate Mill
TCR TCS JSG
Tin Plate Mill
Study feasibility of integrated steel work projects
Localization
Technologica l Alliances
Middle East
North America
South America
Europe
Expand Sales
Exports
Vertical Alliances (Export semifinished goods)
India
Dongkuk Hyundai Hysco
CSI
(JSW)
AK Steel
AK Steel (USS)
Tin Plate Mill
Study feasibility of slab projects
TKS GMH
24
For 33 million tons capacity (9 BFs) Production Increase Raise production from 29 million tons in 2010 (8 blast furnaces) to about 33 million tons (9 blast furnaces) from 2011 ⇒＋3.5 million tons increase in exports Export Increase High-end products for autos, ships, electrical appliances, etc.: increase of 33 million tons over 10 years Customized commodity-grade steel Strategies Leverage strengths of partner trading companies in specific countries Strengthen established relationships and develop new alliances Strengthen relationships with core rerollers
25
Reference : Alliances with Overseas Steelmakers China ・Bohai NKK Drill Pipe ・Fujian Sino-Japan Metal ・Hainan Haiwoo Tinplate ・Guangzhou JFE
Sheet
South South Korea Korea ・・Dongkuk Dongkuk Steel Steel ・・Hyundai Hyundai HYSCO HYSCO ・・Dongbu Dongbu Steel Steel
Canada ・DJG
Germany ・ThyssenKrupp ・Georgsmarienhuette
JFE Steel
Greece ・Corinth Pipeworks India ・JSW
Taiwan ・Ton-yi
Steel
Thailand ・JSG,TCR, TCS ・TTP
U.S.A. ・CSI ・AK Steel
Indonesia ・Sermani Steel Malaysia Vietnam ・Perstima ・Mycron,
Sunsco, SPR
Colombia ・Holasa
26
JFE Steel to Construct CGL for Autos in Thailand Announced on Oct.22, 2010 □JFE determined to construct Thailand’s first CGL for Automobiles, -to capture the growing demand of high-end automotive steel sheets . -to respond to the automakers’ strategies of local procurement. □Overview of the company -Total investment： About USD 300million -Ownership: JFE Steel Corporation 100% -Product: Hot-dip galvanized steel sheet -Production capacity: 400,000 tons/year -Sizes: Sheet thickness: 0.4mm – 2.3mm Sheet width: 800mm – 1,880mm
Hemaraj Eastern Seaboard Industrial
-Operation startup (planned): April 2013 27
Expansion of Capacity in Guangzhou, China Guangzhou JFE Steel Sheet (JFE ownership: 50%) Phase 2: Construction start from Oct.,2007. Operation start in FY2011
Equipment
JFE Steel
Shipments
(operating)
No.1 CGL 400
Providing HRC
Under Construction PL-TCM 1,800
No.2 CGL 400
CAL
(1,000t/p.a.)
High-end Steel Auto (GA)
600
Electric (GI)
200
Auto (CRC)
500
Electric (CRC)
200
CRC
200
900
28
JFE STEEL & JSW STEEL COME TOGETHER IN A STRATEGIC COLLABORATION Announced on Jul. 27th ,2010 (A) Collaboration for Automotive Steel Production: ・ Supply of substrate materials for hot rolled, cold rolled and galvanized products. ・Joint service activities including application engineering and product development for automotive customers.
（B) Further Collaboration in the near future: ・Production of steel products other than automotive steel. ・Saving energy ・Quality and yield improvement programs ・Performance audit of JSW facilities ・Benchmarking of techno-economic parameters between the parties ・JFE’s shareholding of JSW
29
ＪＦＥ Steel Acquires Spiral Steel Pipe Maker in Vietnam Announced on Nov.15th,2010 JFE has determined to acquire Jeong An Vina Co to capture the strong demand for construction steel pipe especially in Vietnam where many projects for ports, railways and other major infrastructures are being launched.
Company Overview Share: JFE Steel 35%, Maruichi Steel Tube 35%, Toyota Tsusho 30% Total investment:18 billion Korean won (about 1.3billion Yen) Production capacity: 50,000 tons/year Facilities: Spiral steel pipe production Coating Products: Steel pipe pile Steel pipe sheet pile 30
Increasing Self-Sufficiency Ratio 40%
30%
Increased from 15% to 18% by acquisition of Australian Coal Mine interests （JFE Shoji Trade announced on Oct. 20, 2010)
30%
30%
Ore Coal
18%
20%
15% 10%
0%
Current
FY2011
Ex. Ore：Acquired a 6.5% interest in NAMISA in Brazil （‘08) Ex. Coal： Acquired a 20% interest in new Byerwen Coal in Australia（‘09）
31
Plan for the Investment and Capex 700 Billion yen is scheduled to spend by FY2011. ・100 Bn for JSW (Completed) ・400 Bn for Capex ・200 Bn for prospective investments -mainly for the mining interests acquisition -remainder for expansion of alliance network
32
（Appendix）JFE-Group expansion to China
Bohai NKK Drill Pipe
Inner Mongolia ERDOS EJM Manganese Alloy
Auto Tinplate Jiangsu Ton Yi
Wuhan Excellent Steel Center Fujian SinoJapan Metal
Pancheng Yihong Pipe Guangzhou JFE Steel Sheet
SMLS pipe Drum Resources Coil center
Fujian Ton Yi
Named companies: JFE steel equity holding Hainan Haiwoo Tinplate
Non-named companies:JFE Group companies equity holding
33
５． Results Forecast for FY 2010
34
Results Forecast for FY 2010 Improving to three times of FY2009
（billion yen）
FY2009 (A) Net Sales
FY2010(e) 1H Total
2,844
1,572
3,360
Operating income
89
115
230
Ordinary Income
69
105
220
Net Income
46
46
110 35
Financial Forecast for FY10 Sales/Recurring Profit by Business Segment
FY2009 Steel
Net Sales Ordinary Income Engineering Net Sales Ordinary Income Shipbuilding Net Sales Ordinary Income Others Net Sales Ordinary Income Adjustments Net Sales Ordinary Income Total Net Sales Ordinary Income
1H 1,062 ▲ 72 117 3 139 10 23 ▲2 ▲ 34 4 1,307 ▲ 58
2H 1,219 105 177 11 148 11 29 ▲1 ▲ 36 1 1,537 127
Total 2,281 32 294 13 287 22 52 ▲3 ▲ 70 5 2,844 69
FY2010(e) 1H 2H(e) 1,370 1,531 88 112 105 165 3 5 107 103 13 1 21 17 0 ▲1 ▲ 30 ▲ 29 1 ▲1 1,572 1,788 105 115
Total 2,900 200 270 8 210 13 38 ▲1 ▲ 58 ▲1 3,360 220 36
Proactive Return to Shareholders Basic Policy for pay-out ratio is around 25%.
Midterm dividend in 2010 :20 yen/share
200
80
Yen/Share Payout Ratio
(billion yen)
80
69.7
150 70
60
60
58.5
50 100
40 30
17.5
20 50 10 0
16.1 FY 03
120
100 70.5
90
40
68.8
26.3
26.6
23.4
45 15
120
16.4
49.025.3
23.2 10.5
18
20 30 FY 04
FY 05
FY 06
FY 07
FY 08
FY 09
0
0 FY02
Yield(%)
20
FY03
FY04
FY05
FY06
FY07
FY08
FY09
2.0%
1.6%
3.3%
2.5%
1.7%
2.0%
0.5%
37
Thank you very much for your kind attention
38
JFE Group Growth Strategy November 30, 2010 Hajime Bada, President and CEO JFE Holdings, Inc. 1
Table of Contents 1.
JFE Key Facts
page 3
2.
JFE Steel’s Overall Strengths
page 7
3.
JFE Steel’s Technological Strengths
page 11
4.
JFE Steel’s Growth Strategies
page 19
5.
Results Forecast for FY 2010
page 34
This presentation material is not a disclosure document based on the Financial Instruments and Exchange Act, and neither its accuracy nor integrity are ensured. Forecasts made in this material are based on information available at the time of this investor meeting and may include uncertainties. Please refrain from making any investment decision based solely on this material. The company does not assume any responsibility for any loss resulting from the use of this material. 2
JFE Key Facts
1. JFE Key Facts
3
Group Structure (FY 2009) JFE Steel Corporation Net sales: 2,281.4 billion yen
JFE Holdings Inc.
Net sales:
2,844.3 billion yen
Ordinary income: 69.2 billion yen Employees:
53,892
JFE Engineering Corporation Net sales: 294.2 billion yen Universal Shipbuilding Corporation Net sales: 286.7 billion yen JFE Urban Development Corporation Net sales: 26.9 billion yen
(Consolidated, as of March 2010)
Kawasaki Microelectronics, Inc. Net sales: 24.6 billion yen
4
Upward-trending Output and Results Production: Crude Steel Production (million tons) 35.00
33.00
30.00
26.48
27.01 27.65 26.72
FY 02
FY 03
29.04
30.52
29.00 26.55 25.83
25.00
20.00
FY 04
FY 05
FY 06
FY 07
FY 08
FY 09
FY 10
FY 11 (Target)
Profit: Ordinary Income (billion yen)
600 500 400 300 200 100 0
460.6
517.3
513.5
502.9 400.5 220
218.4 104.7
FY 02
69.2 FY 03
FY 04
FY 05
FY 06
FY 07
FY 08
FY 09
FY 10
5
Four Key Challenges The JFE Group is addressing four key challenges in response to major developments following the global economic crisis, particularly downturns in developed economies including Japan and the robust recovery of emerging economies centered on Asia.
Technological evolution looking to 2020 Development of business in Asia Development of environmental and energy business Balancing financial base versus long-term investment
6
2. JFE Steel’s Overall Strengths Strengths
7
Large, Concentrated Steelworks ⅰ） 9 blast furnaces (BF) in east and west works （11at 2003 merger) ⅱ）Now operating 8 BFs and revamping 1 (~May,2011） ⇒33m-ton capacity after revamp （26.5m-ton at 2003 merger) ⅲ）6 BFs with inner volume over 5,000m3 （2
at 2003 merger)
※ only 21 such BFs globally Number of BFs and Inner Volume JFE Steel
Company A (Japan)
Company B (Japan)
Company C (Japan)
Company D (S. Korea)
Company E (China)
Inner volum e over 5,000m 3
6
4
2
1
1
0
(Idling)
(1)
Total
9
9
5
3
10
22
8
Stable Customer Bases both Domestic and Asia FY 09
Exports 55%
Domestic 45%
88% of exports for Asia Exports by Customer Spot etc. 25%
Domestic Shipments by Customer
Contract customers 32% (autos, appliances & shipbuilding)
Dealers 11%
Group Companies/Allied Secondary Processing makers 28%
Contract Customers 61%
Allied steelmakers 43%
ⅰ）Achieve high export ratio of 55% by capturing Asian demand ⅱ）89% of domestic shipments are for contract customers, group companies, allied secondary processing makers ⅲ）75% of exports are for allied and contract customers.
9
Expansion of shipments to Allied Steelmakers Shipments to allied steelmakers, following a temporary decrease due to the global economic crisis triggered by the collapse of Lehman in FY2008, continue to increase as the company captured growing demand for high-end steel in Asian markets. Shipments to Allied Steelmakers (in thousand ton)
5500 5000 4500 4000 3500 FY2010(e)
FY2009
FY2008
FY2007
FY2006
FY2005
FY2004
FY2003
3000
10
3. JFE Steel’s Technological Strengths
11
Increasing Needs for High-end Steel The demand for quality will continue to rise: • More safety • More comfort • More cost reduction • More energy efficiency • More advanced (frontier) energy Customers will increasingly demand high-end steel for sophisticated quality needs, sometimes even seemingly contradictory needs (ex., high strength and high formability) .
12
Asia’s High-end Steel Market Growth Additional demand 33 million tons by 2020 Additional demand by 2020: 33 million tons Shares: Automobiles 13 million tons, petroleum gas 10 m/t, electrical appliances 7 m/t, and shipbuilding 3 m/t (million tons) 120 100
Automobiles
80
Packages
60
Electrical appliances Shipbuilding
40
Petroleum gas
20 0 2010
11
12
13
14
15
16
17
18
19
20 13
Strong Collaboration with Customers Industry’s first facility for joint testing and research with customers, aiming to maintain competitive edge Simulation technologies to predict workability, impact characteristics, durability, etc. Customers Solution Laboratory (CSL)
Steel Materials for Application Research & Technology (THiNK SMART)
14
Superior Materials: High-tensile Steel (Automotive Steel Sheet)
Formability
Elongation: EL(%)
Quality of products depends on balance between the strength and formability(elongation) JFE products
CompanyX products (JFE estimate)
Tensile strength: TS (MPa)
Strength
Our studies show that JFE product’s high formability is superior to Competitors’ products at all strength levels. 15
JFE Automotive Steel Sheet is Used Worldwide ※
■JFE Steel’s steel sheet technology is used in 12% of all automobiles produced worldwide. - Among Japanese autos, more than 25% worldwide and 35% in Asia-Oceania region. ※JFE Steel’s steel sheet consists of that shipped from JFE and JFE-licensed alliance partners overseas.
■Automakers rate JFE Steel highly for - Advanced technologies - Sophisticated business capabilities ・ Early vendor involvement ・ Dependable deliveries ・ Skilled sales force ■Our advantages will increase with the rise of new demand for hybrid automobiles and electric-motor automobiles which need high-end electrical steel sheets for their motors. 16
World’s first completely continuous high-end plate production process Plate Manufacturing Line Rougher
Super-OLAC
Cooling bed HOP
Hot leveler
Finishing train Furnace for slab
Rolling
Quenching
Tempering
Super-OLAC
HOP
○High speed cooling technology
○Induction heating system
⇒Achieve the same level of cooling
⇒Enhance efficiency on tempering
speed as that of sheet
Heating speed :70× faster (0.15 to 10℃/s )
○Homogeneous cooling technology
○Uniform temperature control
⇒Halve the dispersion （60 to 27Mpa）
⇒Increase temperature accuracy to ±10℃
Achieving large scale cut in production term (1/20th) Saves energy and reduces inventories
17
World-class Research and Development JFE is One of the World Leaders in Patents
(2008+2009)
3000 2500 S. Korea China
2000
U.S. Europe
1500
Japan
1000 500
H A US
US
A
G
F IN
DI
A
E RO EU
RO EU
IN CH
D
C A
B
KO
RE
A
N PA JA
JF
E
St
ee
l
A
0
18
4. JFE Steel’s Growth Strategies
19
Emerging Countries’ Growing Use of Steel • Chinese and Japanese consumption are equal • Potential increase in India
Crude Steel Consumption (kg/ per person)
1400
Apparent Crude Steel Consumption per Person Japan S. Korea China India
1200 1000 800
1964 Tokyo Olym pics
600
974.1
1988 Seoul Olym pics
1970 Osaka Expo
Lehm an crash
Japan
2008 Beijing Olym pics
S. Korea
400
2010 Shanghai Expo
447 422.1
200
China
India
4 9 .8
0 50
55
60
65
70
75
80
85
90
95
2000
05
20
Steel is Growth Industry: To Double by 2050 World’s Crude Steel Production
(billion tons/year)
3
(JFE estimate)
1.8b tons in 2020 ⇒2.6b tons in 2050 (Almost twice current production)
2.5
2
1.5
1
1950
1975
2010
2050
2050 (if per-capita
(JFE forecast)
remains level)
Crude steel production (kg / per-capita / year)
75
159
190
281
190
World population (billion)
2.54
4.08
6.91
9.19
9.19
Crude steel production (billion tons / year)
0.19
0.65
1.32
2.58
1.76
50
45
40
35
30
25
20
15
10
'05
2000
95
90
85
80
75
70
65
60
55
50
0
1945
0.5
21
Middle Class Drives High-end Steel Demand (%)
Example: Growing ratio of India’s middle-class population
100
Wealthy
80
Middle
60
Poor 40
20
0
2001
2009
The Indian middle class is driving high-end steel demand through its growing consumption of the 3Cs (cars, [air]coolers and color TVs), the same phenomenon seen in Japan’s “economic miracle” era in the 1960s. 22
Export Expansion Focusing on Asia Regional Import Volumes in 2009 (see legend) Middle and Near East
China
(6.63 mil tons)
(10.25 mil tons)
Total imports are smaller than the exports from Japan.
0.94
2.56
3.96
2.84 5.35
1.23
35.06 mil tons
South Western Asia
East Asia
(5.40 mil tons)
(12.78 mil tons)
0.58 1.39
35 30 25
3.42
3.51
6.63 5.4
8.32 mil tons
Middle and Near East
South Western Asia
20
5.56
15
12.78
East Asia
10
Legend Plate
Hotrolled sheet Coldrolled sheet
3.71
5
10.25
China
4.25 3.13
0
Total imports
Exports from Japan 23
Develop Business Models that Respond to Each Market
Distance from Japan
S. Korea
China
Thailand
East Asia
Localization
Dongkuk Hyundai Hysco Tongbu
GJSS Tin Plate Mill
TCR TCS JSG
Tin Plate Mill
Study feasibility of integrated steel work projects
Localization
Technologica l Alliances
Middle East
North America
South America
Europe
Expand Sales
Exports
Vertical Alliances (Export semifinished goods)
India
Dongkuk Hyundai Hysco
CSI
(JSW)
AK Steel
AK Steel (USS)
Tin Plate Mill
Study feasibility of slab projects
TKS GMH
24
For 33 million tons capacity (9 BFs) Production Increase Raise production from 29 million tons in 2010 (8 blast furnaces) to about 33 million tons (9 blast furnaces) from 2011 ⇒＋3.5 million tons increase in exports Export Increase High-end products for autos, ships, electrical appliances, etc.: increase of 33 million tons over 10 years Customized commodity-grade steel Strategies Leverage strengths of partner trading companies in specific countries Strengthen established relationships and develop new alliances Strengthen relationships with core rerollers
25
Reference : Alliances with Overseas Steelmakers China ・Bohai NKK Drill Pipe ・Fujian Sino-Japan Metal ・Hainan Haiwoo Tinplate ・Guangzhou JFE
Sheet
South South Korea Korea ・・Dongkuk Dongkuk Steel Steel ・・Hyundai Hyundai HYSCO HYSCO ・・Dongbu Dongbu Steel Steel
Canada ・DJG
Germany ・ThyssenKrupp ・Georgsmarienhuette
JFE Steel
Greece ・Corinth Pipeworks India ・JSW
Taiwan ・Ton-yi
Steel
Thailand ・JSG,TCR, TCS ・TTP
U.S.A. ・CSI ・AK Steel
Indonesia ・Sermani Steel Malaysia Vietnam ・Perstima ・Mycron,
Sunsco, SPR
Colombia ・Holasa
26
JFE Steel to Construct CGL for Autos in Thailand Announced on Oct.22, 2010 □JFE determined to construct Thailand’s first CGL for Automobiles, -to capture the growing demand of high-end automotive steel sheets . -to respond to the automakers’ strategies of local procurement. □Overview of the company -Total investment： About USD 300million -Ownership: JFE Steel Corporation 100% -Product: Hot-dip galvanized steel sheet -Production capacity: 400,000 tons/year -Sizes: Sheet thickness: 0.4mm – 2.3mm Sheet width: 800mm – 1,880mm
Hemaraj Eastern Seaboard Industrial
-Operation startup (planned): April 2013 27
Expansion of Capacity in Guangzhou, China Guangzhou JFE Steel Sheet (JFE ownership: 50%) Phase 2: Construction start from Oct.,2007. Operation start in FY2011
Equipment
JFE Steel
Shipments
(operating)
No.1 CGL 400
Providing HRC
Under Construction PL-TCM 1,800
No.2 CGL 400
CAL
(1,000t/p.a.)
High-end Steel Auto (GA)
600
Electric (GI)
200
Auto (CRC)
500
Electric (CRC)
200
CRC
200
900
28
JFE STEEL & JSW STEEL COME TOGETHER IN A STRATEGIC COLLABORATION Announced on Jul. 27th ,2010 (A) Collaboration for Automotive Steel Production: ・ Supply of substrate materials for hot rolled, cold rolled and galvanized products. ・Joint service activities including application engineering and product development for automotive customers.
（B) Further Collaboration in the near future: ・Production of steel products other than automotive steel. ・Saving energy ・Quality and yield improvement programs ・Performance audit of JSW facilities ・Benchmarking of techno-economic parameters between the parties ・JFE’s shareholding of JSW
29
ＪＦＥ Steel Acquires Spiral Steel Pipe Maker in Vietnam Announced on Nov.15th,2010 JFE has determined to acquire Jeong An Vina Co to capture the strong demand for construction steel pipe especially in Vietnam where many projects for ports, railways and other major infrastructures are being launched.
Company Overview Share: JFE Steel 35%, Maruichi Steel Tube 35%, Toyota Tsusho 30% Total investment:18 billion Korean won (about 1.3billion Yen) Production capacity: 50,000 tons/year Facilities: Spiral steel pipe production Coating Products: Steel pipe pile Steel pipe sheet pile 30
Increasing Self-Sufficiency Ratio 40%
30%
Increased from 15% to 18% by acquisition of Australian Coal Mine interests （JFE Shoji Trade announced on Oct. 20, 2010)
30%
30%
Ore Coal
18%
20%
15% 10%
0%
Current
FY2011
Ex. Ore：Acquired a 6.5% interest in NAMISA in Brazil （‘08) Ex. Coal： Acquired a 20% interest in new Byerwen Coal in Australia（‘09）
31
Plan for the Investment and Capex 700 Billion yen is scheduled to spend by FY2011. ・100 Bn for JSW (Completed) ・400 Bn for Capex ・200 Bn for prospective investments -mainly for the mining interests acquisition -remainder for expansion of alliance network
32
（Appendix）JFE-Group expansion to China
Bohai NKK Drill Pipe
Inner Mongolia ERDOS EJM Manganese Alloy
Auto Tinplate Jiangsu Ton Yi
Wuhan Excellent Steel Center Fujian SinoJapan Metal
Pancheng Yihong Pipe Guangzhou JFE Steel Sheet
SMLS pipe Drum Resources Coil center
Fujian Ton Yi
Named companies: JFE steel equity holding Hainan Haiwoo Tinplate
Non-named companies:JFE Group companies equity holding
33
５． Results Forecast for FY 2010
34
Results Forecast for FY 2010 Improving to three times of FY2009
（billion yen）
FY2009 (A) Net Sales
FY2010(e) 1H Total
2,844
1,572
3,360
Operating income
89
115
230
Ordinary Income
69
105
220
Net Income
46
46
110 35
Financial Forecast for FY10 Sales/Recurring Profit by Business Segment
FY2009 Steel
Net Sales Ordinary Income Engineering Net Sales Ordinary Income Shipbuilding Net Sales Ordinary Income Others Net Sales Ordinary Income Adjustments Net Sales Ordinary Income Total Net Sales Ordinary Income
1H 1,062 ▲ 72 117 3 139 10 23 ▲2 ▲ 34 4 1,307 ▲ 58
2H 1,219 105 177 11 148 11 29 ▲1 ▲ 36 1 1,537 127
Total 2,281 32 294 13 287 22 52 ▲3 ▲ 70 5 2,844 69
FY2010(e) 1H 2H(e) 1,370 1,531 88 112 105 165 3 5 107 103 13 1 21 17 0 ▲1 ▲ 30 ▲ 29 1 ▲1 1,572 1,788 105 115
Total 2,900 200 270 8 210 13 38 ▲1 ▲ 58 ▲1 3,360 220 36
Proactive Return to Shareholders Basic Policy for pay-out ratio is around 25%.
Midterm dividend in 2010 :20 yen/share
200
80
Yen/Share Payout Ratio
(billion yen)
80
69.7
150 70
60
60
58.5
50 100
40 30
17.5
20 50 10 0
16.1 FY 03
120
100 70.5
90
40
68.8
26.3
26.6
23.4
45 15
120
16.4
49.025.3
23.2 10.5
18
20 30 FY 04
FY 05
FY 06
FY 07
FY 08
FY 09
0
0 FY02
Yield(%)
20
FY03
FY04
FY05
FY06
FY07
FY08
FY09
2.0%
1.6%
3.3%
2.5%
1.7%
2.0%
0.5%
37
Thank you very much for your kind attention
38
