Mitsubishi Steel Mfg. Co., Ltd. FY2015 Financial Results May 27, 2016
Ⅰ .Opening Remarks Ⅰ . Opening Remarks Ⅱ . FY2015 Results Ⅲ . FY2016 Forecast Ⅳ . Mid-term Business Plan (as of 2016) 1
Ⅱ . FY2015 Result ended March 31, 2016 Ⅰ . . Opening Remarks Ⅱ . FY2015 Results Ⅲ . FY2016 Forecast Ⅳ . Mid-term Business Plan (as of 2016) 2
Summary Ⅱ . FY2015 Result ended March 31, 2016 Sales and profits decreased due to sluggish demand from the construction machinery sector. Operating and ordinary incomes exceeded the forecast for the 2 nd half of the fiscal year as a result of cost saving efforts, including standardized operation implemented at MSR (Mitsubishi Steel Mfg., Muroran Works.) (¥100M) FY 2014 ended FY2015 ended March 31, 2016 March 31, 2015 B/W than B/W from the Actual Forecast Actual forecast previous fiscal year △ 25 △ 122 1,187 1,090 1,065 Net Sales Operating △ 6 49 38 43 5 Income △ 25 58 31 33 2 Ordinary Income Net Income △ 7 △ 10 35 32 25 attributable to owners of parent ※Forecasted figures are based on the official numbers released on October 29, 2015. 3
Net Sales / Operating Income by Segment Ⅱ . FY2015 Result ended March 31, 2016 (¥100M) FY2015 ending March, 2016 Special steel bars FY2014 Net sales were greatly affected by the sluggish B/W B/W than Actual Asian economy as well as diminished demand Forecast Actual year on forecast from our primary customers for construction year machinery. Net △ 10 △ 99 505 416 406 Cost reduction efforts at MSR were successful Sales Special enough to generate profit exceeding the forecast. steel bars Ope. △ 15 26 7 11 4 Spring Income Declined net sales were due to the appreciation in Net △ 13 △ 19 501 495 482 the Japanese yen at the end of the fiscal year, Sales Springs resulting in a loss in the translation of overseas Ope. 10 15 15 0 5 sales from their local currencies. Income • Profit gain was sustained from the previous fiscal Net △ 4 △ 13 104 95 91 year as expected. Castings Sales and Castings and Forgings Ope. Forgings 5 4 5 1 0 • Product launch was delayed in part. Some steel Income castings for construction machinery decreased in Net △ 4 93 102 98 5 demand as well. Sales Machinery • Net sales from special alloy powder products was Ope. △ 1 6 11 10 4 higher owing to their larger margins, resulting in Income the same profit level as the previous fiscal year. Net △ 16 △ 18 △ 11 7 5 Consolidated Sales Machinery adjustments Ope. Sales were in part deferred into the new fiscal Other 2 1 2 1 0 Income year, resulting in our not achieving the ¥10 Net billion target for FY2015. △ 25 △ 122 1,187 1,090 1,065 Sales The improved trend in profitability continued TOTAL Ope. with profits significantly better than the previous △ 6 49 38 43 5 Income year and operating income exceeding 10%. 4
Factors Impacting on Operating Income Ⅱ . FY2015 Result ended March 31, 2016 (¥100M) 50.0 △ 2.1 Net △ 1.7 +5.6 Sales Currency Net 40.0 △ 19.4 Other 1,187 Sales +11.0 One-time Expenses 1,065 30.0 42.9 △ 7.8 Cost savings +8.0 Sales / Volume 49.3 Pricing and Mix Material Economics 20.0 10.0 0.0 FY2015 FY2014 5
Earnings for FY2015 （ with Ordinary Income) Ⅱ . FY2015 Result ended March 31, 2016 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. (¥100M) FY2014 FY2015 ending March 31, 2016 B/W than B/W year on Actual (A) Forecast (B) Actual (C) year (C)-(A) Forecast (C)-(B) Operating Income △ 6 49 38 43 5 Non-operating income △ 7 △ 10 △ 3 △ 19 9 Translation (exchange profit & loss) △ 2 △ 2 △ 11 9 0 Investment income by equity method △ 2 △ 8 △ 11 △ 3 △ 9 JATIM ※ △ 2 △ 8 △ 6 △ 4 2 5S ※ △ 5 △ 5 △ 5 0 0 Other 2 1 3 2 1 Ordinary Income △ 25 58 31 33 2 ※ JATIM: Joint venture to manufacture special steel in Indonesia 5S: ： Joint venture to manufacture and sell spring products for automotive suspension systems in India FY2014 Actual (A) FY2015 Plan (B) FY2015 Actual (C) (C)-(B) (C)-(A) HQ Net Loans in US$ (US$1M) △ 38 50 14 12 2 Exchange Rate at the end of March (¥ / US$) △ 7 △ 7 120 120 113 6
Earnings for FY2015 （ Extraordinary profit/loss and other gains/losses) Ⅱ . FY2015 Result ended March 31, 2016 Ⅱ.2016年３月期実績 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. (¥100M) Fiscal YR2015 ending March 31, 2016 Fiscal YR2014 B/W than Forecast B/W year on year Actual (A) Forecast (B) Actual (C) （ C ） - （ A ） （ C ） - （ B ） Ordinary Income 58 31 33 33 2 △25 Extraordinary profit 0 3 3 0 3 Extraordinary loss 0 - △8 △8 △8 MSSC CANADA 0 0 △ 4 △ 4 △ 4 INC ． MSM NINGBO 0 0 △ 4 △ 4 △ 4 SPRING CO., LTD. Tax expenses △21 △1 △1 0 20 Net Income attributable 35 32 25 △7 △10 to owners of parent 7
Earnings for FY2015 （ Result of Overseas Operations ） Ⅱ . FY2015 Result ended March 31, 2016 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. (¥100M) FY2014 ended 3/31/15 FY2015 ended 3/31/16 FY2016 ending 3/31/17 ■ Overseas consolidated subsidiaries (11 entities) Operating Operating Operating Established Net Sales Net Sales Net Sales Income Income Income All consolidated 335 4 308 6 320 9 subsidiaries ★ 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. △ 2 △ 2 135 130 139 2 2009 MSM Ningbo Spring Co., 37 3 25 1 22 2 2006 Ltd. (China) ★ Construction △ 0.9 △ 1.2 △ 0.5 1.2 0.9 1.4 2012 machinery springs ■ Overseas subsidiaries under the equity method (3 subsidiaries) 5S (India) 22 1 21 1 25 1 2014 ※ Operating income includes loyalty paid to their parent company, Mitsubishi Steel Mfg., Co., Ltd. 8
Business indicators / Financial standing Ⅱ . FY2015 Result ended March 31, 2016 (¥100M) FY2015 ended March 31, 2016 FY2014 Ended 3/31/15 Forecast Full-year Variance 3.5 4.0 0.5 ROS ( ％ ) 4.2 △ 1.2 5.4 4.2 ROE ( ％ ) 6.2 △ 14 △ 6 15 9 Free cash-flow (¥100M) 6.0 6.0 0 Dividend (¥) 6.0 ( ％ ) 28.8 37.1 8.3 Dividend payout ratio 26.1 Total assets 1,224 (¥100M) 1,234 643 Net assets 658 (¥100M) Interest-bearing debt 259 (¥100M) 187 47.6 Equity capital ratio ( ％ ) 48.5 9
ＩＩＩ . FY2016 Forecast ending March 31, 2017 I. Opening Remarks II. FY2015 Results Ⅲ . FY2016 Forecast Ⅳ . Mid-term Business Plan (as of 2016) 10
Forecast for FY2016 ＩＩＩ . FY2016 Forecast ending March 31, 2017 Ⅲ.2017年３月期通期業績予想 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. (¥100M) FY2015 ended FY2016 ending March 31, 2017 March 31, 2016 Forecast Variance Actual △ 65 Net Sales 1,065 1,000 △ 8 Operating Income 43 35 Ordinary Income 33 33 0 Net Income attributable 25 33 8 to owners of parent 11
Forecast by Segment ＩＩＩ . FY2016 Forecast ending March 31, 2017 (¥100M) FY2015 FY2016 ending March 31, 2017 ended 3/31/2016 Forecast Variance Actual 406 350 △ 56 Net Sales Special steel bars △ 7 11 4 Operating Income △ 17 482 465 Net Sales Springs 15 16 1 Operating Income 91 95 4 Net Sales Castings and Forgings △ 1 5 4 Operating Income 98 113 15 Net Sales Machinery 10 10 0 Operating Income Consolidated △ 11 △ 23 △ 12 Net Sales adjustments 2 1 △ 1 Operating Income Other △ 65 1,065 1,000 Net Sales TOTAL △ 8 43 35 Operating Income 12
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