[PPT] - Mitsubishi Steel Mfg. Co., Ltd. FY2015 Financial Results May 27, PowerPoint Presentation

SLIDE 1

Mitsubishi Steel Mfg. Co., Ltd. FY2015 Financial Results

May 27, 2016

SLIDE 2

1

Ⅰ. Opening Remarks Ⅱ. FY2015 Results Ⅲ. FY2016 Forecast Ⅳ. Mid-term Business Plan (as of 2016)

Ⅰ.Opening Remarks

SLIDE 3

2

Ⅰ. . Opening Remarks Ⅱ. FY2015 Results Ⅲ. FY2016 Forecast Ⅳ. Mid-term Business Plan (as of 2016)

Ⅱ. FY2015 Result ended March 31, 2016

SLIDE 4

3

(¥100M)

Summary

Ⅱ. FY2015 Result ended March 31, 2016

FY 2014 ended March 31, 2015 FY2015 ended March 31, 2016 Actual Forecast Actual B/W than forecast B/W from the previous fiscal year Net Sales

1,187 1,090 1,065 △25 △122

Operating Income

49 38 43 5 △6

Ordinary Income

58 31 33 2 △25

Net Income attributable to

wners of parent

35 32 25 △7 △10

 Sales and profits decreased due to sluggish demand from the construction machinery sector.  Operating and ordinary incomes exceeded the forecast for the 2nd half of the fiscal year as a result of cost saving efforts, including standardized operation implemented at MSR (Mitsubishi Steel Mfg., Muroran Works.)

※Forecasted figures are based on the official numbers released on October 29, 2015.

SLIDE 5

4

(¥100M)

Net Sales / Operating Income by Segment

FY2014 Actual

FY2015 ending March, 2016

Forecast Actual

B/W than forecast

B/W year on year

Special steel bars Net Sales

505 416 406 △10 △99

Ope. Income

26 7 11 4 △15

Springs Net Sales

501 495 482 △13 △19

Ope. Income

10 15 15 5

Castings and Forgings Net Sales

104 95 91 △4 △13

Ope. Income

5 4 5 1

Machinery Net Sales

93 102 98 △4 5

Ope. Income

6 11 10 △1 4

Consolidated adjustments Other

Net Sales

△16 △18 △11 7 5

Ope. Income

2 1 2 1

TOTAL Net Sales

1,187 1,090 1,065 △25 △122

Ope. Income

49 38 43 5 △6

Ⅱ. FY2015 Result ended March 31, 2016

Special steel bars

Net sales were greatly affected by the sluggish

Asian economy as well as diminished demand from our primary customers for construction machinery.

Cost reduction efforts at MSR were successful

enough to generate profit exceeding the forecast.  Spring

Declined net sales were due to the appreciation in

the Japanese yen at the end of the fiscal year, resulting in a loss in the translation of overseas sales from their local currencies.

Profit gain was sustained from the previous fiscal

year as expected.  Castings and Forgings

Product launch was delayed in part. Some steel

castings for construction machinery decreased in demand as well.

Net sales from special alloy powder products was

higher owing to their larger margins, resulting in the same profit level as the previous fiscal year.  Machinery

Sales were in part deferred into the new fiscal

year, resulting in our not achieving the ¥10 billion target for FY2015.

The improved trend in profitability continued

with profits significantly better than the previous year and operating income exceeding 10%.

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Factors Impacting on Operating Income

49.3

Sales / Volume Material Economics Pricing and Mix △1.7 △19.4 △7.8 +8.0 +11.0 +5.6 △2.1 0.0 10.0 20.0 30.0 40.0 50.0 Cost savings One-time Expenses

42.9

Currency Other FY2014 FY2015

Ⅱ. FY2015 Result ended March 31, 2016

Net Sales 1,187 Net Sales 1,065

(¥100M)

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Earnings for FY2015（with Ordinary Income)

FY2014 FY2015 ending March 31, 2016

Actual (A) Forecast (B) Actual (C) B/W than Forecast (C)-(B) B/W year on year (C)-(A)

Operating Income 49 38 43 5 △6 Non-operating income 9 △7 △10 △3 △19

Translation (exchange profit & loss)

9 △2 △2 △11

Investment income by equity method

△2 △8 △11 △3 △9 JATIM ※ △2 △8 △6 2 △4 5S ※ △5 △5 △5 Other 2 1 3 2 1 Ordinary Income 58 31 33 2 △25

 JATIM (※see reference below) was able to reduce its start-up deficit earlier than the plan. However, 5S (※see reference below) in India fell below the profit plan, resulting in a lump-sum amortization of goodwill.  Foreign currency translation in non-operating income negatively impacted profits due to a rise in the yen exchange rate at the end of the fiscal year.

FY2014 Actual (A) FY2015 Plan (B) FY2015 Actual (C) (C)-(B) (C)-(A) HQ Net Loans in US$ (US$1M)

50 14 12 2 △38

Exchange Rate at the end of March (¥ / US$)

120 120 113 △7 △7

※ JATIM: Joint venture to manufacture special steel in Indonesia 5S: ：Joint venture to manufacture and sell spring products for automotive suspension systems in India

Ⅱ. FY2015 Result ended March 31, 2016

(¥100M)

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Ⅱ.2016年３月期実績

Earnings for FY2015 （Extraordinary profit/loss and other gains/losses)

 Among MSM’s spring manufacturing subsidiaries, MSSC Canada Inc. and MSM Ningbo Spring Co., Ltd. (construction machinery springs’ operation only) showed poor performance. This forced them to execute a one-time amortization and impairment loss on the facilities.  MSM proceeded with the sales of some stockholdings as announced in the previous report.

Fiscal YR2014

Fiscal YR2015 ending March 31, 2016

Actual (A)

Forecast (B)

Actual (C)

B/W than Forecast

（C）-（B） B/W year on year （C）-（A）

Ordinary Income

58 31 33 33 2 △25

Extraordinary profit

3 3 3

Extraordinary loss

△8

△8 △8

MSSC CANADA INC．

△4 △4 △4

MSM NINGBO SPRING CO., LTD.

△4 △4 △4

Tax expenses

△21 △1 △1 20

Net Income attributable to owners of parent

35 32 25 △7 △10

Ⅱ. FY2015 Result ended March 31, 2016

(¥100M)

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8

Earnings for FY2015（Result of Overseas Operations）

 A total of three (3) overseas subsidiaries in Canada, China, and India incurred losses and write- downs, while overall overseas operations have been in line with plans.  Among these 3 subsidiaries, the only subsidiary that actually ended up in the red was MSSC

Canada. Nevertheless, all overseas subsidiaries are expected to secure profit for this fiscal year.

FY2014 ended 3/31/15 FY2015 ended 3/31/16 FY2016 ending 3/31/17 Established Net Sales Operating Income Net Sales Operating Income Net Sales Operating Income

All consolidated subsidiaries 335 4 308 6 320 9

★ Impairment of fixed assets as well as a one-time amortization of goodwill were recorded at the end of 2015 fiscal year.

★MSSC CANADA INC. 2009

135 △2 130 △2 139 2

MSM Ningbo Spring Co.,

Ltd. (China)

2006

37 3 25 1 22 2

★Construction

machinery springs 2012

1.2 △0.9 0.9 △1.2 1.4 △0.5

5S (India) 2014

22 1 21 1 25 1

※Operating income includes loyalty paid to their parent company, Mitsubishi Steel Mfg., Co., Ltd.

■Overseas consolidated subsidiaries (11 entities)

■ Overseas subsidiaries under the equity method (3 subsidiaries)

(¥100M)

Ⅱ. FY2015 Result ended March 31, 2016

Ⅱ. FY2015 Result ended March 31, 2016

(¥100M)

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I. Opening Remarks
II. FY2015 Results

Ⅲ. FY2016 Forecast Ⅳ. Mid-term Business Plan (as of 2016)

ＩＩＩ. FY2016 Forecast ending March 31, 2017

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Ⅲ.2017年３月期通期業績予想

Forecast for FY2016

FY2015 ended March 31, 2016 Actual FY2016 ending March 31, 2017 Forecast Variance

Net Sales

1,065 1,000 △65

Operating Income

43 35 △8

Ordinary Income

33 33

Net Income attributable to owners of parent

25 33 8

 Lower sales and earnings (operating income) are expected to be sustained due to sluggish demand continuing in the construction machinery sector.  Negative causals, such as the one-time amortization of goodwill, no longer exist, while the sale of stockholdings will continue. As a result, net profit is expected to increase.

ＩＩＩ. FY2016 Forecast ending March 31, 2017

(¥100M)

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Forecast by Segment

FY2015 ended 3/31/2016 FY2016 ending March 31, 2017 Actual

Consolidated adjustments Other Net Sales

△11 △23

△12

Operating Income

2 1

△1

TOTAL Net Sales

1,065 1,000

△65

Operating Income

43 35

△8

ＩＩＩ. FY2016 Forecast ending March 31, 2017

(¥100M)

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13

11

Sales / Volume Pricing and Mix Cost Savings R & D

△2 △13 +5 +5 △1 △1

5.0

0.0 5.0 10.0 15.0 20.0

４ Other Material Economics

 The sluggish Asian economy, as well as the weak demand from the construction machinery sector, are expected to continue. The harsh business environment is anticipated to remain the same as well.  Cost saving efforts that began in FY2015 are expected to help offset some negative factors; however, profit decline may be inevitable again this fiscal year, partly due to lower selling price.

Forecast by Segment (Special steel bars)

Net Sales 350 Net Sales 406

FY2015 ended 3/31/16 FY2016 ending 3/31/17 Actual Forecast Variance Net Sales

406 350 △56

Operating Income

11 4 △7

Operating income margin

2.7% 1.1% △1.6%

FY2015 Actual FY2016 Forecast ＩＩＩ. FY2016 Forecast ending March 31, 2017

(¥100M) (¥100M)

Causals that affect operating income

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14

15

Sales / Volume

Material Economics

Pricing and Mix Cost savings

△3 △4 ＋1 +４ +１＋３ △１

0.0 5.0 10.0 15.0 20.0 25.0

16 R & D Fixed Cost Goodwill / Amortization

FY2015 Actual FY2016 Forecast

Forecast by Segment (Springs)

 Spring products that are currently shipped to customers will go through a model change both in Japan and the US, resulting in a decline in sales.  Nevertheless, relief from burden, such as reduced amortization cost, will help the profit level remain unchanged from the previous fiscal year.

Causals that affect operating income

Net Sales 482 Net Sales 465

FY2015 ended 3/31/16 FY2016 ending 3/31/17 Actual Forecast Variance Net Sales

482 465 △17

Operating Income

15 16 1

Operating income margin

3.1% 3.4% 0.3%

ＩＩＩ. FY2016 Forecast ending March 31, 2017

(¥100M) (¥100M)

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５

Sales / Volume Pricing and Mix Material Economics Fixed Cost Cost Savings R & D

+２ △４ +２ +２ △２ △１

0.0 5.0 10.0 15.0 20.0 25.0

４

FY2016 Forecast

Forecast by Segment (Castings and Forgings)

 While increased sales are expected particularly through market expansion by precision machinery parts, income will be slightly lowered by the advance investments based on mid-to- long term strategies.

FY2015 ended 3/31/16 FY2016 ending 3/31/17 Actual Forecast Variance Net Sales

91 95 4

Operating Income

5 4 △1

Operating income margin

5.5% 4.2% △1.3%

Net Sales 91 Net Sales 95

ＩＩＩ. FY2016 Forecast ending March 31, 2017

(¥100M)

Causals that affect operating income

(¥100M)

FY2015 Actual

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16

10

Sales / Volume Pricing Product Mix Cost Savings

+4 △4 +1 △1

0.0 5.0 10.0 15.0 20.0 25.0

10

Forecast by Segment (Machinery)

 The remaining sales that were carried over from FY2015 should help total sales exceed 10 billion yen.  Operating income is expected to remain at the level of 100 billion yen, regardless of challenging product mix.

FY2015 ended 3/31/16 FY2016 ending 3/31/17 Actual Forecast Variance Net Sales

98 113 15

Operating Income

10 10

Operating income margin

10.2% 8.8% △1.4%

Net Sales 98 Net Sales 113 ＩＩＩ. FY2016 Forecast ending March 31, 2017

(¥100M)

Causals that affect operating income

(¥100M)

FY2015 Actual FY2016 Forecast

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Forecast by Segment (Ordinary Income with extraordinary

profit and loss)

 Investment gains and losses on equity method are initially meeting the plan firmly enough to secure increase in profit.  Net profit is expected to increase as well, owing to continuous sale of stockholdings lacking economic rationales. FY2015 ended 3/31/16 FY2016 ending 3/31/17 Actual Forecast Variance

Operating Income

43 35 △8

Non-operating income

△10 △2 8

Translation (exchange profit & loss)

△2 2

Investment gains & losses on equity method

△11 △4 7

Other

3 2 △1 Ordinary Income

33 33

Extraordinary profit

3 18 15

Extraordinary loss

△8 8

Tax expenses

△1 △16 △15

Net Income attributable to owners of parent

25 33 8

ＩＩＩ. FY2016 Forecast ending March 31, 2017

(¥100M)

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（億円）

Capital Investment / Depreciation Cost

15 31 22 30 31 30 54 35 10 20 30 40 50 60 Depreciation Cost FY2014 FY2013 Capital Investment FY2015 FY2016 Forecast

ＩＩＩ. FY2016 Forecast ending March 31, 2017

(¥100M)

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R & D

8.1 8.3 8.0 11.9 10 FY2014 FY2013 FY2015 FY2016 Forecast The Research and Development Center was established in April, 2016, for the purpose

f developing technology to implement corporate strategy.

ＩＩＩ. FY2016 Forecast ending March 31, 2017

(¥100M)

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Strategic Plan for the future

（１）Investment for Growth

Although the current business environment is very challenging, MSM is committed to investing for the future, allocating its resources to the following implementation of mid-and-long-term growth strategies: ・ Establish R&D Center (opened in April, 2016) to reinforce testing and researching platform ・ Explore M&A opportunities for business growth through active use of external consulting services ・ Expand the capacity of the Business Planning Management Division to succeed in new business endeavors and strengthen management capabilities. ・ Maximize cross-departmental efforts to create a synergetic effect for the expansion of sales into new

markets. This includes spring products sold through the Thai location where steel castings and forgings are made,

and specialty steel bars sold off of the spring manufacturing locations in North America.

（２）Cost reduction

・ As a short-term strategy, continue to implement cost saving plans, such as ongoing improvement in standardizing MSR’s operation, as reported previously. ・ Improve efficiency in manufacturing lines at overseas locations through robotic operation and other measures.

（３）Exchange risk hedges

・ Move forward with a full-fledged plan, including altering currency exchange positions, to hedge exchange risks triggered by continued expansion of global business.

Other

・ Plant tour for Chiba Works and R&D Center is scheduled this fall. ・ In June, MSM is dispatching approximately 10 employees as volunteers to Kumamoto where an earthquake disaster happened recently.

ＩＩＩ. FY2016 Forecast ending March 31, 2017

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I. Opening Remarks
II. FY2015 Results

Ⅲ. FY2016 Forecast Ⅳ. Mid-term Business Plan (as of 2016)

Ⅳ. Mid-term Business Plan

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 After the structural reform of Steel division in late 90s, we generated the growth of sales and profit by strong demand of thriving construction sector and China market in 2000s. The both have declined at the moment.

848 913 803 828 920 1,008 1,206 1,214 1,336 1,288 749 1,250 1,329 1,062 1,116 1,187 1,065 500 1,000 1,500 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

11

30

3

18 9 40 126 109 131 76

19

89 108 37 59 58 33

132
200
100

100 200

Sales Ordinary Income Net Income

Financial Results Overview 1 - Growth & Profitability -

Ⅳ. Mid-term Business Plan

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 As a consequence of the financial results in the previous page, the amount of interest-bearing debt has been reduced up to one-fourths, and currently in net cash position(the amount of cash and equivalents exceeds interest-bearing debt)  Although the demand of construction sector, which used to be a growth driver after the recession in 2008, is currently depressed, we resumed investment in overseas business.

0.5

0.0 0.5 1.0 1.5 2.0 2.5 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Financial Results Overview 2 - Financial Soundness -

0% 2% 4% 6% 8% 10% 12% 14% 16% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Investment to Sales Ratio

*Investment = Net cash used in investing activities

Company A B C (Fiscal Year)

In Net Cash Position

(Fiscal Year)

*: Net Debt/Equity ratio = (Interest bearing debt – cash & equivalents) ÷Equity

Net Debt/Equity Ratio

Ⅳ. Mid-term Business Plan

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Strengthen Our “Processing Special Steel” Business Model with its Worldwide Acceleration and the Synergy between Steel and Springs Divisions. Generate “Creating Added Value from Materials” Business Model with its Expansion into New Industrial Sectors, and make Casting & Forging Division the Third Profit Center.

Slogan Vision

Shift from “Processing Special Steel” to “Creating Added Value from Materials”

The First Step for Coming 10 Years,

2016 Mid-term Business Plan - Slogan and Vision -

Ⅳ. Mid-term Business Plan

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25

 In FY2020, generate 170 Billion Yen sales and 8% ROE by M&A in casting & forging business and thriving automotive sector.  In FY2025, generate 250 Billion Yen sales and more than 10% ROE with profits from the synergy between Steel and Springs divisions, which is one of the key initiatives in the mid-term business plan.

Corporate Objectives 1 - Mid-term Business Plan -

Ⅳ. Mid-term Business Plan

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 Targets for FY2020: sales; 170 Billion Yen, ROE; 8%, overseas sales ratio; 47%,  Targets for FY2025: sales; 250 Billion Yen, ROE; over 10%, overseas sales ratio; 65%  Budget 26 Billion Yen to facilities and 21 Billion Yen to M&A from FY2016 to FY2018.

(Billion Yen) 2013 2014 2015 2020 2025 Actual Actual Actual Target Target Sales

111.6 118.7 106.5 170.0 250.0

Operating Profit

4.7 4.9 4.3 9.0

Ordinary Profit

5.9 5.8 3.3 8.5

Overseas Sales Ratio

（*1）

32% 36% 38% 47% 65%

ROE（*2）

6.3% 6.2% 4.2% 8.0% Over 10%

ROA： Net profit basis

3.0% 3.0% 2.0% 3.0%

ROA：Ordinary profit basis

5.2% 4.9% 2.7% 5.0%

Net D/E Ratio（*3）

0.11
0.07
0.06

0.41

Equity Capital Ratio

47% 49% 48% 45%

Payout Ratio

23% 26% 37%

ver 30%

2016~2018

Investment（*4）

1.5 6.9 4.0 47.0 (total)

Depreciation

3.1 3.0 3.0 4.7 (average)

*1: Overseas Sales is based on the customer’s country or area, *2: ROE= Net cash／Equity（at year’s end） *3: Net D/E Ratio= （(Interest bearing debt – cash & equivalents) ÷Equity, *4: Investment =Increase of fixed assets + affiliated company’s stocks

Corporate Objectives 2 - KPI and Financial Targets -

Ⅳ. Mid-term Business Plan

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Three Tactics

 In Springs business, build a worldwide supply chain and an integration model(collaboration with steel division)  Build an integration model in casting & forging business and generate benefits from Indonesia.

1. Build a worldwide

supply chain Build “Creating Added Value from Materials” business model in Casting & Forging business. Strengthen “Processing Special Steel” business model and generate benefits from Indonesia

For FY2020 For FY2025

Expansion of Spring

Business into Europe market

Technological

development in weight reduction

Generate a synergy between

Steel and Springs businesses

Expand Leaf Springs sales in

worldwide and Steel sales in South East Asia

2. Basic Strategy 1 - Mid-term plan and the Three tactics -

3 2 1 2 3.

Advance into assembly

business in turbocharger market

Casting by VIM(vacuum

induction melting), and sales expansion of alloy powders and precision machined products.

Ⅳ. Mid-term Business Plan

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1. Build a worldwide supply chain for Springs business

Expansion into Europe market
Technological development in weight reduction

2. Strengthen “Proceeding Special Steel” business model and generate benefits from Indonesia

Generate a synergy between Steel and Springs businesses
Promote Leaf Springs in worldwide and Steel in South East Asia

3. Build “Creating Added Value from Materials” business model in casting & Forging business.

Advance into assembly business in turbocharger market
Casting by VIM(vacuum induction melting), expand sales of alloy

powders and precision machined products.

Strengthen “Processing Special Steel” Model with its Worldwide Acceleration and the Synergy between Steel and Springs Divisions. Generate “Creating Added Value from Materials” Model with its Expansion into New Industrial Sectors, and make Casting & Forging Division the Third Profit Center.

Core New M&A New Supply Chain for turbocharger business Material Assembly Process Sub Assembly High Alloy Steel （new facility for VIM） Casting & Forging Alloy Powders Precision Machined Products MIM

Japan North America Europe

（New）

Asia

Chiba（mother Plant) ＋ R&D Center USA, Canada, Mexico(New) China（Ningbo）＋Stabilizers(New) India ＋Heavy-Duty coil springs ＋Southeast Asia (New expansion) Muroran（MSR） Indonesia（JATIM）＋Rolling of flat steel& steel bars Indonesia（Leaf Springs: ISP） Integrated Production

f Leaf Springs

鋼材・ビレット供給鋼材現地調達化技術支援 Springs Steel

Basic Strategy 1 - Mid-term Plan and the Details -

Billet Supply and Tech Support for Local Procurement

Ⅳ. Mid-term Business Plan

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Basic Strategy 2 - Transformation Agendas and Key Initiatives -

 Add another agenda of Alliance and M&A on the current one for transformation, and it increases to 5 from 4.  5 agendas are composed of 10 key initiatives.

5 Agendas for Transformation 10 Key Initiatives

Reinforce domestic functions

Accelerate overseas business development

Build an effective organization （Structural reform of Headquarters) Synergy among the Divisions Synergy with Partners (Alliance, M&A)

Springs Steel Springs Steel Steel Springs

Castings

Castings HQ HQ

1. Investment on renewal of Muroran (MSR)
3. Strengthen technological development of

Springs

4. Expand Steel sales in Indonesia
6. R&D Center
8. Expand Steel sales in worldwide
7. Expand Leaf Springs sales in worldwide
9. Integrated model of Casting(M&A)
5. Strengthen internal synergy(cross-functional

project)

10. Integrated model of Casting (internal

manufacturing of material)

2. Worldwide supply chain of Springs

Ⅳ. Mid-term Business Plan

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R&D/ Corporate Office

 Key Initiatives 6: R&D Center

Integrate each division’s technology functions and collaborate with headquarters.

 Generate synergy among divisions and go along with corporate objectives.

 Enhance R&D (e.g. fundamental research) which will lead mid-and long-term growth

 Key Initiatives 5: Generate internal synergy (a cross-functional project among divisions)

Strengthen management by Corporate office and create a mechanism for internal synergy

among divisions through four cross functional projects, Management control, Human resource, Sales & Marketing, and Manufacturing.

New business and development process management

 strengthen assessment on new business plans, as advance into overseas markets or M&A, by Corporate office. Dedicated team assesses risk, manages progress and evaluates results.

 Established in April, 2016.  Location Chiba Works (Ichihara, Chiba)  Officer in charge

Mr. Jun Takayama

R&D Center (Est. Apr, 2016)

Strengthen the Organization

Ⅳ. Mid-term Business Plan

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Special Steel Bars Business

 【Key Initiatives 1】 Investment: invest 9 billion Yen on renewal of old facilities and other strategies in FY2016 to FY2018

Bearing the burden of depreciation for the time being, turning to be profitable after FY2018
After FY2019, initiate plans to investment on cost reduction, productivity and quality control.

 【Key Initiatives 4】 Sales Expansion : sell special steel in Indonesia

Increase sales of special steel made by JTS, especially to local Japanese customers.
Develop materials and manufacturing methods to reduce Spring’s weight.

 【Key Initiatives 8】 Overseas expansion： worldwide expansion with Spring’s facilities.

Develop manufacturing capability in Indonesia and expand into North America and India
Create supply chains and sell our products in respective areas.

 R&D : Tie up with new Technology Center, and promote industrialization

20 40 60 80 100 120 140 FY 2015 FY 2020 FY 2025

Sales (Billion Yen)

MSM I MSM

40.6 61

Key Initiatives by Division - Special Steel Bars -

Ⅳ. Mid-term Business Plan

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32

Springs Business

 Key Initiatives 7 : Expand worldwide sales of Leaf Springs by the vertically-integrated manufacturing (from material to spring product) in local sites of Indonesia

Improve cost-competitiveness by vertically-integrated manufacturing in Indonesia  Expand sales in

Japan, India and Thailand. Enhance to North America.

 Key Initiatives 2 : Build a worldwide supply chain for Coil Springs and Stabilizer business.

Early launch of new manufacturing site of Mexico
Expansion to Euro market  Expand manufacturing capability by M&A  Establish a position as

worldwide supplier

 Key Initiatives 3 : Boost technological development

Reduce weight and production cost.

10 20 30 40 50 60 70 80 90 FY 2015 FY 2020 FY 2025 Europe Asia North America Japan

Sales (Billion Yen) 48.2 63

Key Initiatives by Division - Springs -

Ⅳ. Mid-term Business Plan

SLIDE 34

33 91 340

Key Initiatives by Division - Castings & Forgings -

Sales (Oku Yen)

Existing Business

Castings & Forgings Business

 Key Initiatives 10: Build an Integrated model, from material to assembly, by melting furnaces of special steel

Turn to vertically-integrated business model by investing in new VIM furnaces and self-manufacturing

master heat as materials for precision forming

Invest newly in furnaces for mass production of gas-atomized alloy powders and melting furnaces for

water-atomized alloy powders

 Key Initiatives 9: Expand sales to turbocharger market.

Build an vertically-integrated business model in both sub-assembly and alloy powder businesses in

turbocharger market by utilizing M&A as one of its approch.

 Optimize production facilities

Optimize labor intensive process among factories overseas
Generate an efficient manufacturing process for thriving demand of turbine wheel and nozzle vane.

10 20 30 40 50 FY 2015 FY 2020 FY 2025

Sales (Billion Yen)

MIM M&A ASSY M&A Existing Business

9.1 34

Ⅳ. Mid-term Business Plan

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Machinery Business

 Forge rolling machinery： Receive customer order as business package, and accelerate overseas business

Sales of machines in production lines as a package, fully utilizing our strength of technology and

development as a total engineering company.

Sales expansion especially into North America utilizing our facility network including subsidiaries of other

divisions, and newly into such areas as China, Korea, Taiwan and India.  Support investments of other divisions

Renewal of Muroran (MSR) and any other affiliated companies.

 Protective equipment: Stretching from military markets to commercial market

Expand sales of the products for natural disasters and counter- terrorism commercial sector, backed by

Tokyo Olympic Games and nuclear power plants  Environmental machines： Expand with new technology and know-hows in facility operation

Exhibition and sales expansion of “METHASAURUS”, a sewage treatment plant, by a new technology in

Nagasaki.

Sales expansion of new technology(hydrothermal technics) to such overseas markets as China.

5 10 15 20 FY 2015 FY 2020 FY 2025

Sales (Billion Yen)

General Machinery Environmental Equipment Forging Rolling Machinery Protection Equipment Steel Structural Products

9.8 16

Key Initiatives by Division - Machinery -

Ⅳ. Mid-term Business Plan

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Corporate Management

 Corporate Governance

Reform the corporate governance system for worldwide business development
Establish a corporate governance committee, and strengthen investors relations activities

 Human resource development

Create and adjust schemes to recruitment and cultivate human resources to make it

possible to handle global business.

Increase diversity in management, including promoting female employees.

 Policy of capital and dividend

Stock buyback, resulting from gradual dissolution of cross-held stocks.
Adopt dividend payout ratio (maintain minimum level of 30% for the moment)

Enhance corporate value of Mitsubishi Steel Mfg. Group and build a firm business foundation.

Key Initiatives by Division - Headquarters -

Ⅳ. Mid-term Business Plan

SLIDE 37

Any statements in this document, other than those of historical facts, are forward-looking statements about future performance of Mitsubishi steel Mfg. 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.