Second Quarter FY2014 Earnings Summary - Nippon …...2014/10/30 · 5401: JP 1 NSSMY: ADR (US)...
Transcript of Second Quarter FY2014 Earnings Summary - Nippon …...2014/10/30 · 5401: JP 1 NSSMY: ADR (US)...
15401: JPNSSMY: ADR (US)
Second Quarter FY2014Earnings Summary
Katsuhiro MiyamotoExecutive Officer and Head of Div., Accounting & Finance Div.
October 30, 2014
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. © 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
• ‘NIPPON STEEL & SUMITOMO METAL CORPORATION’ is abbreviated as ‘NSSMC’• All output figures are presented in metric tons• Unless otherwise noted, all financial figures are consolidated
In this presentation,
2Agenda
1. FY2014 1H Results & Full Year Forecast
22. Progress in Mid-term Management Plan
3. Reference
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
3
1. FY2014 1H Results & Full Year Forecast
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
4Overview: FY2014 1H Results & Full Year Forecast
Excess capacity of global steel industry Domestic demand will remain generally firmPositives: Challenges:Business Environment Forecast
Operation Forecast
Excess capacity of global steel industry Domestic demand will remain generally firm• Esp. demand from private equipment investment • Oversupply from China will continue
Production : Expecting 46.10MMT crude steel production
Other Efforts: Keep pursuing our Mid-term Plan Put more efforts into achieving stable• In spite of accidents in Nagoya crude steel
*1
Put more efforts into achieving stable operation & supply
• In spite of accidents in Nagoya, crude steel production will be the same level as beforefinancial crisis Investment on coke ovens to enhance
cost reduction (Kimitsu, Kashima)
Financial HighlightsFY2014 1H Earnings: FY2014 Full Year Guidance:
O di fi ¥1 6 3 Ordinary profit : ¥400 0 bn
( , )
*2 Ordinary profit : ¥176.3 bn (+ 26.3 bn)
Net income : ¥112.2 bn (+ 27.2 bn)
Ordinary profit : ¥400.0 bn
Interim dividend : ¥2/share Net income : ¥250.0 bn No change from previous announcement*2
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Non-consolidated volume, but includes NIPPON STEEL & SUMIKIN KOUTETSU WAKAYAMA
ROS: 6.3%, ROE: 8.2% ROS: 7.1%
Changes from forecast as of July 31, 2014*2*1
5Key Indicators of Demand
1H 2H 1Q 2Q 1H(E) 1H 2H(E) (E)
14/1H VS.
14/2H(E)
FY13 VS.
FY14(E)
Change
14/1H(E) VS.14/1H
FY13 FY14
13/2H VS.14/1H
*2*2*2*1*2*2
0.50 0.49 0.99 0.22 0.22 (0.42) 0.44 0.45 0.89 -0.05 +0.01 +0.01 -0.10
29.15 27.12 56.27 13.98 14.20 (27.82) 28.18 28.64 56.82 +1.06 +0.36 +0.47 +0.55
4 042 4 129 8 171 2 196 1 856 (3 872) 4 052 3 552 7 604 -77 +180 -500 -568
(million houses)
(million m³)
(¥ in billion)
Housing Starts
Non-residential Construction Starts
Public Works Orders 4,042 4,129 8,171 2,196 1,856 (3,872) 4,052 3,552 7,604 -77 +180 -500 -568
4.74 5.17 9.91 2.40 2.39 (4.82) 4.80 4.95 9.75 -0.37 -0.03 +0.16 -0.16
2.35 2.28 4.63 1.09 1.22 (2.39) 2.31 2.44 4.75 +0.02 -0.08 +0.14 +0.12
(million cars)
(million cars)
(¥ in billion)Public Works Orders
Finished Auto Production
Export of Finished Auto
7.90 8.46 16.37 4.27 4.15 8.42 -0.04
38 42 80 19 18 (36) 37 34 71 -5 +1 -3 -9(thousand units)
( )
(million cars)Overseas Auto Production( 8 Japanese car makers)
Large & Middle sized Shovel Production
154 190 344 108 94 (203) 202 202 404 +11 -1 +0 +59
5.99 6.65 12.64 3.45 3.48 (6.94) 6.94 6.96 13.90 +0.29 +0.00 +0.02 +1.26
(thousand tons)
(m. gross tons)
Metal Machine Tool Production
Keel-laid New Ships
Rig Count CY08 CY09 CY10 CY11 CY12 CY13 Latest
USA 1,879 1,089 1,546 1,875 1,919 1,761 1,927 (October 24, 2014)
Deep well (≧15,000ft) 283 249 249 395 324 326 370 (August, 2014)
World total (Except N America 1 323
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
(Source: Baker Hughes, Smith international, NSSMC est.)
World total (Except N. America, Russia & China) 1,079 997 1,094 1,167 1,234 1,296 1,323 (September, 2014)
Figures as of July 31st, 2014*1
*2 Estimates as of end of August, 2014
6Domestic Steel Consumption by Industrial Sector
1H 2H 1Q 2Q 1H(E) 1H 2H(E) (E)14/1H VS.
14/2H(E)
FY13 VS.
FY14(E)
ChangeFY1313/2H VS.14/1H
14/1H VS.
14/1H(E)
FY14(Million tons)
C d S l P d i
*2*1 *2*2*2*2
55.82 55.71 111.52 27.67 27.88 (55.62) 55.56 -0.15 -0.06
31.71 33.36 65.07 15.94 15.98 (31.97) 31.93 32.78 64.71 -1.43 -0.05 +0.85 -0.36
Crude Steel Production in Japan
Domestic Steel Consumption (A + B)
62.8 62.7 62.7 63.2 62.8 (63.5) 63.0 62.2 62.6 +0.2 -0.6 -0.8 -0.2
25.16 26.68 51.84 12.70 12.70 (25.36) 25.40 26.25 51.65 -1.28 +0.04 +0.85 -0.18
11 17 11 80 22 97 5 55 5 63 (11 03) 11 18 11 77 22 95 -0 62 +0 15 +0 59 -0 02
% for manufacturing sector
Ordinary Steel Consumption (A)
Construction 11.17 11.80 22.97 5.55 5.63 (11.03) 11.18 11.77 22.95 -0.62 +0.15 +0.59 -0.02
13.99 14.88 28.87 7.14 7.08 (14.33) 14.22 14.48 28.70 -0.66 -0.11 +0.27 -0.16
1.98 2.18 4.16 1.12 1.13 (2.55) 2.25 2.26 4.51 +0.07 +0.00 +0.01 +0.35
Construction
Manufacturing
Shipbuilding
5.64 5.90 11.54 2.77 2.78 (5.62) 5.55 5.73 11.28 -0.35 -0.07 +0.18 -0.26
2.45 2.65 5.10 1.30 1.24 (2.55) 2.53 2.43 4.97 -0.11 -0.02 -0.10 -0.13
1.53 1.62 3.15 0.80 0.78 (1.58) 1.59 1.58 3.17 -0.04 +0.01 -0.00 +0.01
Automotive
Industrial Machine
Electronic Machine
6.55 6.68 13.23 3.25 3.28 (6.61) 6.53 6.53 13.06 -0.15 -0.08 -0.00 -0.17
2.77 3.78 6.55 1.76
Specialty Steel Consumption (B)
Steel Imports
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20.28 18.87 39.15 9.49
( Source : NSSMC est.)Estimates as of end of August, 2014
Steel Exports
*1 Figures as of July 31st, 2014
*2
7NSSMC Operational Highlights
1H 2H 1Q 2Q 1H (E) 1H 2H(E) (E)
FY13 FY14 Change14/1HVS.
14/2H(E)
FY13VS.
FY14(E)
14/1H(E)VS.
14/1H
13/2HVS.
14/1H
(million tons) *2
22.77 22.03 44.80 11.05 11.60 (23.00) 22.64 23.30 45.90 +0.61 -0.36 +0.66 +1.10
24.27 23.89 48.16 11.86 12.16 (24.30) 24.02 24.60 48.60 +0.13 -0.28 +0.58 +0.44
Pig-iron production
Consolidated Crude Steel Production
*1
23.02 22.64 45.67 11.29 11.59 (23.20) 22.88 23.20 46.10 +0.24 -0.32 +0.32 +0.43
20.97 21.05 42.02 10.43 10.68 (21.30) 21.11 21.80 42.90 +0.06 -0.19 +0.69 +0.88
Non-ConsolidatedCrude Steel Production
Steel Shipments
0.58 0.62 1.20 0.30 0.29 (0.62) 0.58 0.60 1.18 -0.04 -0.04 +0.02 -0.02Seamless PipeShipments
A St l84.4 87.6 -1.8 +0.0
48
86.0 87.6 86.0
+1 +145 46 46 47 46 47 47
85.0 86.086.8 +0.8
+0
-0.8
+1
(86.0)
(46)
Average Steel Selling Price (000 yen/ ton)
Steel Export Ratio( l b i (%))
98 102 100 102 103 (102) 103 107 105 1 1 4 5
48 +1 +145 46 46 47 46 47 47 +0+1(46)
FOREX (¥/$)
(value basis (%))
DepreciateDepreciateDepreciateDepreciate
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Includes pig-iron production of Hokkai Iron & Coke corp. and NIPPON STEEL & SUMIKIN KOUTETSU WAKAYAMA CORP.Figures as of July 31st, 2014*2
*1
8FY2014 1H Results & Full Year Forecast
1Q 2Q1H 2HFY13VS.
FY14(E)
FY13 FY14 Change
1H 2H14/1HVS.
14/2H(E)1H(E)
14/1H(E)VS.
14/1H
13/2HVS.
14/1H(¥ in billion) *1
2,674.5 2,841.5 5,516.1 1,361.4 1,417.0 [2,750.0] 2,778.4 2,871.6 5,650.0 -63.1 +28.4 +93.2 +133.9
139.2 159.0 298.3 59.6 75.8 135.5 -23.5
173 6 187 4 361 0 74 3 102 0 [150] 176 3 223 7 400 0 11 1 26 3 47 4 39 0
Net Sales
Operating Profit
173.6 187.4 361.0 74.3 102.0 [150] 176.3 223.7 400.0 -11.1 +26.3 +47.4 +39.0
16.5 21.5 38.0 - -4.9 -4.9 -26.4
Ordinary ProfitSpecial Profit & Loss
115.5 127.1 242.7 48.3 63.9 [85.0] 112.2 137.8 250.0 -14.9 +27.2 +25.6 +7.3
[ 12.7 ] [ 13.9 ] [ 26.7 ] [ 5.3 ] [ 7.0 ] [ 9.3 ] [ 12.3 ] [ 15.1 ] [ 27.4 ] [ -1.6 ] [ 3.0 ] [ 2.8 ] [ 0.7 ]
Net Income
[ EPS ]
300.7 329.4 630.2 135.8 154.2 290.1 -39.3
11.2% 11.6% 11.4% 10.0% 10.9% 10.4% -1.2%
EBITDA
ROS
EBITDA / Sales
6.5% 6.6% 6.5% 5.5% 7.2% [5.5%] 6.3% 7.8% 7.1% -0.3% 0.8% 1.5% 0.6%
9.4% 9.8% 9.6% 7.2% 9.2% 8.2% -1.6%
ROS
ROE
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*1 Figures as of July 31st, 2014
9Ordinary Profit Variance Analysis [FY13/2H→FY14/1H ]
(¥ in billion )FY13/2H
[A]FY14/1H
[B]Change[A→B]
Ordinary Profit 187 4 176 3 -11 1
Inventory evaluationFY13/2H:+5.0 → FY14/1H:-10.0 Incl. carry overPrice increase in logistics & electricity, etc.
*1
*2*3Ordinary Profit 187.4 176.3 -11.1
Steel 163.0 159.1 -3.9
Non-Steel 25.7 17.6 -8.1
Adj stment 1 3 0 5 +0 8
Price increase in logistics & electricity, etc.Incl. the merger synergy +10.0Engineering -9.2, Chemical +1.3, New Materials+0.4, System Solution -0.7
3*4*5
Adjustment -1.3 -0.5 +0.8
PositiveRaw Materials
+40.0-22.0
+15 0 2 0 4 0
Negative
*2 Cost Reduction
Non-Steel
*5187 4 Volume
Raw Materials Prices Steel Prices
& Product MixGroup
CompaniesNagoya Accident *4
+4.040.0
-11.0 +15.0-7.0 -9.0
-2.0 +4.0-8.0 176.3
( +0.06MMT:21.05→21.11)
187.4
*3Procurement, etc. Others FOREX
FY13/2H FY14/1H
186.3182.4
Exclude Inventory Exclude Inventory
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FY13/2H FY14/1Hc ude e to yEvaluation Impact*1
c ude e to yEvaluation Impact*1
10Ordinary Profit Variance Analysis [FY14/1H(E)→FY14/1H ]
(¥ in billion )FY14/1H(E)
[A]FY14/1H
[B]Change[A→B]
Ordinary Profit 150 0 176 3 +26 3
Inventory evaluationFY14/1H(E):-20.0 → FY14/1H:-10.0 Engineering-0.2, Chemical+1.3, New Materials+0.6, System Solution+2.2
*1
*2
*
Ordinary Profit 150.0 176.3 +26.3Steel 136.0 159.1 +23.1
Non-Steel 13.5 17.6 +4.1
Adj stment 0 5 0 5 1 0
New Materials 0.6, System Solution 2.2
Adjustment 0.5 -0.5 -1.0
Positive
~ +4.0 176.3
Negative
Raw Materials P i
Procurement, etc. Nagoya
Group Companies
-3.0~ +18.0 -5.0
-6.0 -7.0 +5.0
+10.0
186.3150.0
VolumePrices
Steel Prices& Product Mix
Cost Reduction Others
Accident
FOREX
Non-Steel*2
FY14/1H(E) FY14/1H
( -0.19MMT:21.30→21.11 Approx.)170.0
Exclude InventoryExclude Inventory
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FY14/1H(E) FY14/1HExclude Inventory Evaluation Impact*1
c ude e to yEvaluation Impact*1
* Figures as of July 31st, 2014
11Ordinary Profit Variance Analysis [FY14/1H→FY14/2H (E)]
(¥ in billion )FY14/1H
[A]FY14/2H(E)
[B]Change[A→B]
Ordinary Profit 176 3 223 7 +47 4
Inventory evaluation FY14/1H:-10.0 → FY14/2H:-20.0 Incl. carry overPrice increase in logistics & electricity etc.
*1
*2*3Ordinary Profit 176.3 223.7 +47.4
Steel 159.1 195.9 +36.8
Non-Steel 17.6 25.4 +7.8
Adj stment 0 5 2 5 +3 0
Price increase in logistics & electricity etc.Incl. the merger synergy +14.0Relining blast furnace :+10.0(14/1H-10.0→14/2H(E)~),Accidents in Nagoya works:+2.0(14/1H-17.0→14/2H(E)-15.0)Engineering +7.0, Chemical ~、New Materials ~ System Solution +1 0
3*4*5
*6Adjustment -0.5 2.5 +3.0
Positive
New Materials ~, System Solution +1.0
Raw Materials Prices Non Steel
+100.0 -100.0+4.0 +12.0 +9.0
-6.0
+8.0 223.7Negative *6
( +0.70MMT:21.11→21.80 Approx.)
Volume
Prices*2
Steel Prices& Product Mix
Cost Reduction
*4
Others
FOREX
Group Companies
Non-Steel
+15.0-10.0
+25.0 243.7176.3
186.3*5
Volume & Product Mix
Procurement, etc. *3
BF Relining & Nagoya Accident
FY14/1H FY14/2H(E)Exclude Inventory Exclude Inventory
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FY14/1H FY14/2H(E)Exclude Inventory Evaluation Impact*1
Exclude Inventory Evaluation Impact*1
12Ordinary Profit Variance Analysis [FY13 → FY14 (E)]
(¥ in billion )FY13[A]
FY14(E)[B]
Change[A→B]
Ordinary Profit 361 0 400 0 +39 0
Inventory evaluationFY13:+16.0 → FY14:-30.0 Inc. carry overPrice increase in logistics & electricity, etc.
*1
*2*3Ordinary Profit 361.0 400.0 +39.0
Steel 321.2 355.0 +33.8
Non-Steel 41.9 43.0 +1.1
Adj stment 2 1 2 0 +4 1
Price increase in logistics & electricity, etc.Inc. the merger synergy +40.0Engineering-1.0, Chemical-1.0,
New Materials+0.5, System Solution+2.5
3*4*5
Adjustment -2.1 2.0 +4.1
PositiveCost
Reduction*4 Others
-120.0+80.0
-35.0-24.0
-10.0
+13.0 +1.0Steel Prices& P d t Mi
400.0Volume
Group Companies
Negative
FOREX
4Non-Steel
*5( +0.88MMT:42.02→42.90 Approx.)
361 0
Nagoya Accident
+20.0+200.0
-40.0& Product Mix
430.0Raw Materials
Prices
361.0
345.0Procurement, etc.
*3
FY13 FY14(E)Exclude Inventory
Prices*2
Exclude Inventory
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FY13 FY14(E)Exclude Inventory Evaluation Impact*1
yEvaluation Impact*1
13Non-Steel Business: FY2014 1H Results & Full Year ForecastSales & Ordinary Profit Trend Change in Ordinary Profit (FY13 → FY14(E))
350 0411.3 380.7 400.3
Sales & Ordinary Profit Trend(Non-steel business total)
Sales
(¥ in billion)
Change in Ordinary Profit (FY13 → FY14(E))
Engineering & Construction
: Steady progress in efforts for cost reduction & margin improvement, but profit will decrease due to change in sales mixDecrease
25 7 25 4
350.0
Ordinary ProfitChemicals
System Solutions
: Decline of margin because of weak chemical marketDecrease
: SG&A increase, but profit will increase due to strong earning of solution business
16.1 25.7 17.6 25.4
FY13/1H FY13/2H FY14/1H
SolutionsNew
Materials
due to strong earning of solution business
: Demand shift from gold to copper wire continued & sales will decrease, but cost reduction efforts will work effectively to increase profit.
Increase
(¥ in billion)FY14/2H(E) Increase
115.0 230.1 112.2 230.0
FY2013 FY2014(E)1H 1H
134.3 314.1 155.3 320.0
FY2013 FY2014(E)1H1H Chemicals
Sales
Engineering & Construction
Sales
( )
FY2013 FY2014(E)
7.0 10.0 4.3 9.0
FY2013 FY2014(E)
3.6 17.7 4.8 16.5
N M t i lSystem
OrdinaryProfit
OrdinaryProfit
19.2 37.2 18.2 36.0
0 6 1 3 1 1 2 0
1H1H
81.4 179.8 94.8 195.0
8 12 2 1
( )1H 1H New MaterialsSystem
SolutionsSales
Ordinary
Sales
Ordinary
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0.6 1.3 1.1 2.04.8 12.7 7.2 15.5OrdinaryProfit
OrdinaryProfit
14Balance Sheets
As of March 31,2014(¥ in billion) (¥ in billion)
As of September 30,2014
Current Assets Other Liabilities Current Assets Other Liabilities
2,273.31,547.9
2 296 3
2,242.3 1,637.6
2 077 9
Current Assets
Interest-bearing Debt
Current Assets
Interest-bearing Debt2,296.3
2 683 64,808.9
2,077.9
2 816 94,846.9
Fixed AssetsEquity Capital
Fixed AssetsEquity Capital
2,683.6
554.3
2,816.9
556.8Minorit Interests in Consolidated S bsidiaries
End of March, 2014 End of September, 2014 Changes
Total assets (bn¥) 7,082.2 7,089.2 +7.0
Minority Interests in Consolidated Subsidiaries
Total assets (bn¥) , ,Interest-bearing debt (bn¥) 2,296.3 2,077.9 -218.3Equity Capital (bn¥) 2,683.6 2,816.9 +133.2DER 0 86 0 74 0 12
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
DER 0.86 0.74 -0.12
15Interim Dividend
As announced on July 31, 2014, NSSMC has decided to di t ib t i t i di id d f ¥2 0 h ( lid t ddistribute a interim dividend of ¥2.0 per share(consolidated dividend payout ratio of 16%).
NSSMC plans to determine and announce the forecast of the NSSMC plans to determine and announce the forecast of the year-end dividend distribution amount at the 3Q result briefing.
[Cash Dividend Policy] Allocate profits according to earnings Factors below need to be considered as well
・Reserves for future investment ・Earnings forecastC lid t d d lid t d fi i l t t・Consolidated and non-consolidated financial structure
Target dividend payout ratio: approx. 20% (consolidated basis)
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
16CAPEX and Depreciation( ¥ in billion)
NSSMC(Upper : NSCLower :SMI)
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 (E)
C A P E X490.0(310.0)(178.8)
460.0(300.0)(159.1)
465.0(330.0)(136.6)
400.0(290.0)(109.9)
380.0(265.0)(115.7)
420.0 257.0 320.0
346 5 383 5 404 8 417 7 403 8 338 5 331 8 320 0
Major CAPEX plan
Depreciation346.5(244.0)(102.5)
383.5(273.7)(109.8)
404.8(284.0)(120.8)
417.7(291.5)(126.2)
403.8(280.9)(122.9)
338.5 331.8 320.0
600
CAPEX
420 0 CAPEX DEP
Kimitsu: Relining No.4 Coke oven ¥29bn
Kashima: Replacing Coke oven ¥18bn
400420.0
338.5CAPEX DEP
SMI
257.0331.8DEP
SMI
320.0 320.0
0
200
NSCNSC
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0FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14見FY14 (E)
17
2. Progress in Mid-term Management Plan
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
18
10%I. Financial Indicators Target & Progress
ROS bn ¥Asset Compression
6.5% 6.6%7.8%
90
70
240
330400
300
ROSAt least 5%
& bring to 10%
- bn ¥ -Asset Compression
1.2%
2.3%6.3%
140
90
100
240
*15%
Over 3001.2%
100
1H 2HFY12
1H 2HFY13
1HFY14 Target
1H 2HFY12
1H 2HFY13
1HFY14 Target
2H(E)*1Base
1.20
200DER - bn ¥ -Merger Synergy( ), improvement in production cost
Annual basis 100(62)140(90)
0
1.06
0.96 0.86 1.0
At least 1.0& b i t 0 8
Annual basis<given term x 2>
35(21)50(31)
15(10)
70(45)
15(10)
20(14)
20(12)50(30)
70(42)100(62)
Over 2000.96
0.74 0.8
3Q 2H 1H 2H 1HT t
& bring to 0.8
Base 10(6)
15(9)10(6)
25(15)
10(6)
15(9)
10(6)
*110(6)
15(9)
10(6)
10(6)
2H(E)10(6)
15(9)
10(6)
1H 2H 1H 2H 1H
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
QFY12 FY13 FY14 Target
Total of NSC+SMI*1
Target2H(E)
FY12 FY13 FY14
19Ⅱ. Pursuing Global Business Strategy
JV with Indonesian steelmaker : Capture local demandKNSS : Auto sheet JV in Indonesia
• Name of company: KNSS (PT Kurakatau Nippon Steel Sumikin)
• JV partner: PTKS (PT Kurakatau Steel (Persero) Tbk)CGL
Annealing AND Galvanizing
• Business description:Production & sales of automotive flat steel products
• Equity ratio: NSSMC 80 %, PTKS 20%g g
• Investment amount : Approx. US$ 300 million• Facility: GAPL (Galvanizing, Annealing & Processing Line)
• Capacity: 0 48 MMT / year
All materials are galvanized
GAPL
Estimate of auto production in Indonesia*
• Capacity: 0.48 MMT / yearGAPLAnnealing Galvanizing
On /offpossible
ANDOR
Annealing ONLY• Expected start of operation: Mid 2017
1.2 1.740% growth
Galvanizing could be skipped
(Million Units)
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2014 (E) 2020 (E)
* NSSMC estimate
Galvanizing could be skipped
20Ⅱ. Pursuing Global Business Strategy
JV with Indonesian steelmaker : Establish production base in growth marketKOS : Construction Products JV in Indonesia
• Name of company: KOS (PT Kurakatau Osaka Steel)
• JV partner: PTKS (PT Kurakatau Steel (Persero) Tbk)Estimate of construction product
demand in Indonesia*
• Equity ratio: OSC 80 %, PTKS 20%* NSSMC estimate• JV partner: PTKS (PT Kurakatau Steel (Persero) Tbk)
(MMT) ** NSSMC’s subsidiary (NSSMC investment ratio:66.3%)
demand in Indonesia
60% growth
• Business description:Production & sales of small & middle shapes, rebar and flat bar
2012 2019 (E)
PTKS • Investment amount : Approx. US$ 200 million
• Facility: Combined mill for small & middle shapes, b d fl t b
PTKS•Establishment:
• Business description:
1971(Indonesian government:80%)
rebar and flat bar
• Capacity: 0.5 MMT / yeari
• Business description:Production & sales of plate, shapes, bar & wire rod and pipe & tube
• Capacity:2 4 ( )
• Expected start of operation: By end of 2016
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Approx. 2.4MMT/Y (CY2013) Expected start of operation: By end of 2016
21
I t t M j P d ti
Ⅲ. Key Overseas Investment Plan & Progress%: NSSMC group investment ratio Investment
AmountMajor
FacilityProduction
Capacity FY13 FY14 FY15
1.55bn$5.3MMT/Y
- Hot stripApprox. Hot Strip,
PLCL,CGL, etc(USA)AM/NS Calvert 50%
Feb/14(JV with ArcelorMittal)
*
300MM$ CGL 0.4MMT/Y
40bn¥ CAPL 0.6MMT/Y
Approx.
Aug/13
May/14Approx.
TENIGAL(Mexico)
49%
JCAPCPL(India)
49%
(JV with Ternium)
(JV with TATA)
Auto300MM$ GAPL 0.48MMT/Y
300MM$ CGL 0.36MMT/Y
May/14(India) ( )
Oct/13Approx.NSGT
(Thailand)100%
(Indonesia)KNSS
(JV with PTKS)80%
Approx. FY17 Start-up
46MM$No4 ForgingPress Line 1.3MM
crankshafts/Y
1.1 bn CNYNo4 CGL 0.42MMT/Y
( )
(New Forging Press Line) FY15 Start-upCrankshafts/Y)(USA)
ICI 80% Approx.Forging press capacity(2.7 →4.0MM
Approx.
CGL capacity(1 25 →1 67MMT/Y)
FY15 Start up
BNA(China)
Approx.
(JV with Bao)50%
(New line)1.1 bn CNY
3.2bn¥ 0.042MMT/Y
554MM$ CGL etc 1.40MMT/Y Mar/13NSBS 50%
NSCh(China)
42%(Capacity expansion
of NBC China) Approx. Pickling, wire
drawing, etc FY15 Start-up
(1.25 →1.67MMT/Y) Start-up(China) (JV with Bao) (New line)
Const-ruction
554MM$ CGL, etc- CGL
1,150MM$(JV total)
CDCM 1.20MMT/Y
Small and iddl h 0 5
Mar/13JV Established
Apr/13
(Singapore, etc.)50%
CSVC(Vietnam) 30%
(JV with BSL)
(JV with CSC)
KOS 80% Approx. FY16
Approx.
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
200MM$middle shapes, Rebar, Flat bar
0.5MMT/YKOS
*(Indonesia) (JV with PTKS)
80% pp FY16 Start-up
Figures are from press releases announced when JV agreements were concluded or investment decisions were made.
22Ⅳ. Pursuing Domestic Business Strategy
Products Works Action Equipment FY13 FY14 FY15
Restructuring of production framework Facility close down schedule
Products Works Action Equipment FY13 FY14 FY15
Up streamprocess
Kimitsu CloseNo.3 BFNo.5 CC
4Q2Q Done
pWakayama Suspend No.2 BF (Postpone opening of new BF)
Kashima Close No.2 CPL, No.1 Cold Strip Mill No.1 CAL , BAL No.1 CGL, No.2 EGL
Wakayama Close No 3 PL No 1 Cold Strip Mill CGL ACL
4Q
1Q DoneSheet
Wakayama Close No.3 PL, No.1 Cold Strip Mill, CGL, ACL
Nagoya CloseNo.4 CGLEGL
Kimitsu Close No 1 CAP
1Q Done4Q4Q
1Q Done
Kimitsu Close No.1 CAPPipe & tube Kimitsu Close Butt welded pipe line
4Q4Q Done
C D i ti FY13 FY14 FY15 Works and facility close down schedule at subsidiary
Company Description FY13 FY14 FY15NSPC
NISC
Close: 24-inch mill at Wakayama works 3QClose: Sakai Works (Aug. 2015), Kawasaki Works (Nov.,2015) 2Q~3Q(ERW reorganization)Close: PL and Cold strip mill at Nishi-Nihon Works Amagasaki 4Q Done*2
*1
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
NISC p gClose: PL and Cold strip mill at Funabashi Works 1Q Done
*1 Nippon Steel & Sumikin Pipe Corporation *2 Nippon Steel & Sumikin Coated Sheet Corporation
(Sheet reorganization)
23
3. Reference
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
24World Economic Outlook <Released on October 7, 2014 by IMF>
( ): Outlook as of July. 24, 2014
2007 2008 2009 2010 2011
W ld T t l
2012 2013 2014outlook
2015outlook
( ) y ,
World Total 5.2 3.0 -0.5 5.3 3.9
DevelopedCountries 2.7 0.5 -3.4 3.2 1.7
3.4
1.2
3.3
1.4
(3.2)
(1.3)
3.3
1.8
(3.4)
(1.8)
3.8
2.3
(4.0)
(2.4)
USA 2.1 0.4 -2.6 3.0 1.8
EU27 2.7 0.6 -4.1 1.9 1.5
2.3
-0.7
2.2
-0.4
(1.9)
(-0.4)
2.2
0.8
(1.7)
(1.1)
3.1
1.3
(3.0)
(1.5)
(1 1)Japan 2.3 -1.2 -6.3 4.4 -0.6
DevelopingCountries 8.3 6.1 2.7 7.5 6.2
1.5
5.1
1.5
4.7
(1.5)
(4.7)
0.9
4.4
(1.6)
(4.6)
0.8
5.0
(1.1)
(5.2)
China 13.0 9.6 9.2 10.4 9.3
India 9.4 7.3 6.8 10.6 6.3
7.7
4.7
*1
7.7
5.0
(7.7)
(5.0)
7.4
5.6
(7.4)
(5.4)
7.1
6.4
(7.1)
(6.4)
ASEAN5 6.3 4.7 1.7 7.0 4.5
Russia 8.1 5.6 -7.8 4.3 4.3
Brazil 5 7 5 1 0 6 7 5 2 7
6.2
3.4
1 0
15.2
1.3
2 5
(5.2)
(1.3)
(2 5)
4.7
0.2
0 3
(4.6)
(0.2)
(1 3)
5.4
0.5
1 4
(5.6)
(1.0)
(2 0)
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
(Source : IMF)ASEAN 5 : Thailand, Malaysia, Indonesia, Philippines, Vietnam*
Brazil 5.7 5.1 -0.6 7.5 2.7 1.0 2.5(2.5) 0.3(1.3) 1.4(2.0)
25Worldwide Steel Demand Trend
(Source: WSA Apparent finished steel consumption released on October 2014)*<CY11> <CY12>
1.43<CY13>
1.53<CY14(E)>
1.56* *Worldwide
Total 1.38( )
(Source: WSA, Apparent finished steel consumption released on October., 2014)*<CY15(E)>
1.59 bn tons*
ChinaOthers
CY14
1.56
From CY13 approx.+2~3 %/yearCY13
1.53
(billion tons)
CY12
CY15
1.59
7.4
7.5
7.5Japan/North America/Europe CY08
1.221.43
6.6
CY74CY74
0.55
74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
26World Crude Steel Production
(million tons)
Jul Aug Sep Jul -Sep
Change(A→ C)Jan -
JunJan -
Sep [B]
CY13[A]
CY14CY14
[C](B*12/9)
*1World Total
J
(RC)*2
p1,582.5 820.5 137.1 135.2 138.0 410.3 1,230.8 1,641.0 +58.5
(+4.0%) (+3.8%) (+3.3%) (+3.1%) (+4.2%) (+3.5%) (+3.7%) (3.7%)
110 6 55 2 9 3 9 3 9 2 27 9 83 1 110 8 0 3Japan
Korea
(RC)*2
110.6 55.2 9.3 9.3 9.2 27.9 83.1 110.8 +0.3(+3.1%) (+1.0%) (+0.0%) (+2.2%) (-0.4%) (+0.6%) (+0.8%) (0.2%)
66.0 36.1 5.9 5.6 5.7 17.2 53.3 71.0 +5.0
USA
EU28
(RC)*2 (-4.4%) (+9.1%) (+6.2%) (+14.4%) (+10.3%) (+10.1%) (+9.5%) (7.6%)
87.0 43.6 7.7 7.8 7.3 22.7 66.3 88.4 +1.5165 8 87 6 13 9 12 1 14 1 40 1 127 7 170 3 +4 5EU28
Russia
Brazil
165.8 87.6 13.9 12.1 14.1 40.1 127.7 170.3 +4.569.4 35.2 6.1 6.2 5.9 18.2 53.4 71.2 +1.834.2 16.7 2.9 2.9 2.9 8.7 25.5 34.0 -0.2
India
China
(RC)*2
81.2 41.6 6.9 7.0 6.8 20.8 62.4 83.2 +2.0779.0 409.6 68.3 68.9 71.2 208.4 618.0 824.0 +45.0(+8 7%) (+5 3%) (+4 4%) (+4 0%) (+8 8%) (+5 7%) (+5 4%) (5 8%)
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. ( Source :World Steel Association)Total of 65 countries *1 Rate of Change from a year earlier period*2
(RC)*2 (+8.7%) (+5.3%) (+4.4%) (+4.0%) (+8.8%) (+5.7%) (+5.4%) (5.8%)
27Hot Rolled Sheets Prices by Region
2.5 1.0
October 21
October 22
( Prices of Hot Rolled Sheets in local currency as of Apr. 2009=1.0 ) Cf.) The Latest Spot Price of Hot Rolled Sheets
Guangzhou/ China
2.0
EU
USA0.6
USAOctober 21
1 5
EU
1.5
Bao Steel Prevailing Listprice
1.0
Japan
0.5
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
( Source : The Japan Iron and Steel Federation )
28
Consumption(Manufacturing Sector)
Domestic Steel Consumption Trend – Long Term
120114 113 112 111113113
118122
111 112120
p ( g )Consumption(Construction and Civil Engineering Sector)Crude Steel ProductionSteel Exports
Crude Steel Production
( million tons)
102
108
101105 107
103
96100
106104
96102
106108 106
99 97101100101103
91
98
107102
110111
106
96
111106
112
100
8894
89
107
96
80 74
64 63
71 69 6763 64
68 6968
74
81
8882
75 76 7781
77
69 7072 71 71 73
76 78 79 79
70
62 6165 65
37 36 35 3638 39
4440
44 42
40
6058 59 59 57
60 62 61
Manufacturing SectorSteel Exports
26
3431
37 3431 31 30 30 29
33 33 32 3025 23
19 17 18 1924 24 23 21
2427 30 28
3336 35 35
3236 34
20
40
0Construction and Civil Engineering Sector
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
( Source:JISF Steel Consumption/ NSSMC est.)
29Domestic Crude Steel Production Trend
All J ( illi t ) (D ti C d St l P d ti f 3Q (E) FY14 l d b METI O t b 2 2014)All Japan (million tons) (Domestic Crude Steel Production of 3Q (E), FY14 released by METI on October 2, 2014)
FY07121.51
FY08105.50
FY0996.45
FY10110.79
FY11106.46
FY12107.30
FY14/3Q(E)(million tons)
(million tons)FY13
111.52
28.08
27.74
28.14
27.57 27.67
27.88 27.98
25 0
30.020.0
SMI (Left axis)*1
FY14/3Q(E)
*2
11 63 11.5920.0
25.0
15.0
NSC (Left axis)
All Japan (Right axis)
*2
FY14/2H(E)23.20
11.5011.52
11.63
11.0111.29
3.073.38
17.6015.010.0
7.10
10.4011.05
4.827.70
7.952.28
5.0
10.0
5.0
45 6746 73 43 55FY14 (E)
0.00.0Total Production of Crude Steel ( NSC (non-consolidated)+SMI )
45.6746.73 41.48 39.15 45.37 42.92 43.55( )
46.10
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Includes Sumitomo Metals(Kokura), Sumitomo Metals(Naoetsu) and Sumikin Iron & Steel Co.*1Includes NIPPON STEEL & SUMIKIN KOUTETSU WAKAYAMA CORP *2
30Domestic Steel Products Prices
90 90 )
Hot-rolled sheets & Cold-rolled sheetsPlates & H-flange beams( thousand yen / ton ) ( thousand yen / ton )
Hot-rolled sheets (2.3xS)
Cold-rolled sheets(1.0xS)
H-flange beams (200×100)
Plates(19mm)October 28
81.0 O t b 2880 80
74
81.0
7778.0
October 28
70 70
66.0
60 60
50 50
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
31Domestic Steel Inventory Trends
*2
Ordinary steel products inventory (Left axis)
Rolled sheets inventory (Left axis)(MMT)
Rolled Sheets Inventory
(Ti )
H-flange beams Inventory
(Times)(MMT)*1
*2
Inventories of the distributors dealing with H-flange beams manufactured by NSSMC
*2
1 5
7.0Rolled sheets inventory (Left axis)
Ordinary steel products inventory turnover ratio (Right axis)
3.0
3.5 0.5 Inventory Quantity (Left axis)Inventory Turnover Ratio (Right axis)
(Times)( )
Hot-rolled, Cold-rolled and Coated sheets*1
1.5
6.02.5
0 3
0.4
1.05.0
1.5
2.0
0 2
0.3
0.54.0
1.0
0.1
0.2
0.03.0 0.0
0.5
0
0.1
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
( Source : Japan Iron and Steel Federation )
32Iron Ore & Coking Coal Price Trends
400200(US$/dmt) (US$/wmt)
Iron Ore Coking CoalFOB from Australia to Japan FOB from Australia to Japan
300150 300150
200100
10050
0
FY04
FY05
FY06
FY07
FY08
FY09
/ 1Q 2Q 3Q 4Q / 1Q 2Q 3Q 4Q / 1Q 2Q 3Q 4Q / 1Q 2Q 3Q 4Q / 1Q 2Q 3Q
0
FY04
FY05
FY06
FY07
FY08
FY09
/ 1Q 2Q 3Q 4Q / 1Q 2Q 3Q 4Q / 1Q 2Q 3Q 4Q / 1Q 2Q 3Q 4Q / 1Q 2Q 3Q
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
F F F F F F 10 11 12 13 14F F F F F F 10 11 12 13 14
33Market Trends <Crude Oil & Scrap>
60.0600800 0
(US$/bbl)
ScrapCrude Oil(US$/MMT) (US$/ton) (thousand yen/ton)
700.0
800.0
140.00
40.0400
500.0
600.0
120.00 340
515
400.0
120.00 340
30.5
20.0200
USA Scrap(No1HMS) (US$/t CIF Korea)(Left axis)
200.0
300.0
100.00
Arabian Light Crude
0.00
(US$/t, CIF Korea)(Left axis)
Iron Scrap Bid Prices in Kanto Region(thousand yen/ton, in terms of high grade scrap)(Right axis)
0.0
100.0
80.00
g(Left axis)Bunker (Right axis)
82.7
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
34Market Trends <Freight & Mold Pig Iron>
60035
(US$/T,CIF Korea)(US$/WMT, Cape size 170 thousand tons hull form)
Mold Pig IronFreight
500
Mold Pig Iron(US$/t,CIF Korea)
30
400
20
25
18 7 375
300
15
20
From Brazil
From Western Australia
18.7 375
100
200
10
From Western Australia
7.6
0
100
0
5
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
35
Apr 1 2008 Latest (Won /$)(¥/$)
FOREX Trend
1,600 160Apr. 1, 2008101.85 ¥/$985 won/$ Oct. 28, 2014
108.15 ¥/$1,050 won/$
Latest (Won /$)(¥/$)
1 300
1,450
130
145 Won /$
1,150
1,300
115
130
1,000 100
850 85 ¥/$
700 70
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
36
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ti i t i iti f i ti d h i i d t k th i i d d t i ti ti d i l f thprospective investors in securities of any issuer mentioned herein are required to make their own independent investigation and appraisal of the business and financial condition of such company and the nature of the securities. Any decision to purchase securities in the context of a proposed offering, if any, should be made solely on the basis of information contained in an offering circular published in relation to such an offering. By participating in this presentation, you agree to be bound by the foregoing limitations. This presentation contains statements that constitute forward looking statements. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of Nippon Steel & Sumitomo Metal Corp. or its officers with respect to its financial condition and results of operations, including, without p pp p p p , g,limitation, future loan loss provisions and financial support to certain borrowers. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in such forward looking statements as a result of various factors. The information contained in this presentation, is subject to change, including but not limited, to change of economic conditions, financial market conditions, and change of legislation / government directives.
Any statements in this document other than those of historical facts are forward looking statements about future performance of Nippon Steel &Any statements in this document. other than those of historical facts, are forward-looking statements about future performance of Nippon Steel & Sumitomo Metal Corp. and its group companies, which are based on management’s assumptions and beliefs in light of information currently available, and involve risks and uncertainties. Actual results may differ materially from these forecasts.
© 2014 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.