Overview of Financial Results for the Fiscal Year Ended March 2020 - - PowerPoint PPT Presentation

Overview of Financial Results for the Fiscal Year Ended March 2020 and 2020 Mid-term Business Plan

May May 29, 29, 2020 2020

1

Message

As a measure to prevent novel coronavirus infection, the briefing on financial results has been

• canceled. Instead, related materials have been posted to the Company website.

Please address any questions to the Public & Investor Relations Department or submit them via

• ur website.

・ At the end of the first half, many overseas facilities recorded impairment losses, leading to a net loss for the period. For this reason, we have been forced to suspend dividends. ・ Results for the fiscal year ended March 2020 were slightly better than the revised profit plans announced with the results for the first half. ・ Progress has been made on restructuring overseas subsidiaries, a topic of concern for

• investors. The extent of losses has been trimmed recently both at North American MSSC in the

Springs business and JATIM in Indonesia in the Special Steel Bars business. ・ In light of changes in the business environment and in recognition of delays in thoroughgoing response to emerging issues, we have formulated the 2020 Mid-term Business Plan one year

• early. The Plan is presented below.

・ As a three-year business plan reflecting our vision for a decade into the future, this Mid-term Business Plan is based on a framework that calls for progress in the first fiscal year on business revitalization at loss-making overseas businesses, as well as efforts targeting sustained growth through enhancing product strengths and growing the businesses that handle integrated production from the materials stage. ・ The future outlook remains uncertain due to effects of the global coronavirus pandemic. The planned figures do not incorporate the impact of the pandemic. Motoyuki Sato President

Overview of Financial Results for the Fiscal Year Ended March 2020

May May 29, 29, 2020 2020

3

• I. FY2019 Results
• II. Full-year Forecasts for FY2020

4

Summary

FY2018

Result

FY2019

Previous forecast* Result

• vs. forecast

Year-on-year change

Net sales

1,294 1,200 1,171 △29 △123

Operating income

11 4 4 △7

Ordinary income

1 △13 △3 10 △4

Net income attributable to

• wners of parent

company

3 △160 △141 19 △144

• I. FY2019 Results

(JPY100M)

 Net sales fell, due mainly to the following factors: ・ Lower sales in the domestic Special Steel Bars business to makers of construction machinery, industrial machinery, and machine tools ・ Lower sales for automotive uses at overseas subsidiaries, including North American MSSC, as well as lower domestic sales for construction machinery uses, in the Springs business  Operating income fell significantly due to lower sales, despite reduced amortization costs by recording of impairment losses and the effects of inventory buildup in preparation for blast furnace renovations at Muroran.  Lower operating income pushed ordinary income into negative territory.  Due to impairment losses recorded at numerous overseas facilities, we posted a significant net loss this period.

* Figures announced publicly with results on November 12, 2019

5

11

+8

Raw material prices *2 (extraordinary factors related to Muroran) Selling prices

+8 +2 +18

Decreased sales volumes R&D expenses, depreciation

△43

Raw material prices (market conditions)

Other

4

+1

Effects of inventory buildup in preparation for blast furnace renovations at Muroran Decreased amortization costs due to impairment

△1

1,294

*1 Increased volume under contract Consolidation adjustments, etc.

△202 +2 +61 ＋26 △10

Selling prices

1,171

Decreased sales volumes

Factors contributing to changes in net sales and

• perating income

FY2018 result FY2019 result (JPY100M) (JPY100M) FY2018 result FY2019 result

Foreign exchange gains/losses

Operating income Net sales

*2 Temporary expenses for coke oven repairs at Muroran in FY2018 *1 Volume of OEM products and rolling piecework (subcontracted rolling) under contract to Nippon Steel Corporation

• I. FY2019 Results

6

(JPY100M)

Net sales/operating income by segment

FY2018 FY2019 Result

Previous forecast* Result

• vs. forecast

Year-on-year change

Special Steel Bars

Net sales

648 560 559 △1 △89

Operating income

12 9 12 3

Springs

Net sales

497 485 452 △33 △45

Operating income

△9 △13 △14 △1 △5

Formed & Fabricated Products

Net sales

114 100 96 △4 △18

Operating income

4 1 1 △3

Machinery

Net sales

93 100 102 2 9

Operating income

2 3 4 1 2

Other

Net sales

42 35 36 1 △6

Operating income

2 1 1 △1

Consolidated adjustments

Net sales

△99 △80 △74 6 25

Operating income

Total

Net sales

1,294 1,200 1,171 △29 △123

Operating income

11 4 4 △7

• I. FY2019 Results

 Net sales fell in the Special Steel Bars, Springs, and Formed & Fabricated Products businesses.  Operating income was largely unchanged in the Special Steel Bars business; down in the Springs and Formed & Fabricated Products businesses; and up in the Machinery business.

* Figures announced publicly with results on November 12, 2019

7 12

JATIM Other

12

+5 +8 △8 △2

Effects of inventory buildup in preparation for blast furnace renovations

+4 △10 +18

Selling prices Product lineup R&D expenses, depreciation Revaluation of product inventory

△27

Lower sales

Production costs (excluding effects of inventory buildup)

Raw material prices (extraordinary factors)**

+8 +4 12

Revaluation of product inventory Raw material prices (extraordinary factors)**

+5 9

Raw material prices (market conditions)

+18 △8 △28 +9 △2 △1 △1 △4

Lower sales Other

+5

JATIM

Selling prices

+4

Product lineup

Production costs (excluding effects of inventory buildup)

R&D expenses, depreciation

Effects of inventory buildup in preparation for blast furnace renovations

Results by segment (Special Steel Bars business) I. FY2019 Results

FY2018 result

Sales 559 Sales 648

(JPY100M)

Raw material prices (market conditions)

FY2019 result

Decreased amortization costs due to impairment (+JPY0.4B)

(JPY100M) FY2018 result FY2019 forecast

Sales 560 Sales 648 Previous forecast*

Decreased amortization costs due to impairment (+JPY0.4B) Effects of lower domestic sales volumes (△JPY19.6B) Effects of increased earnings due to increased volume under contract (JPY9B)

Result

* Figures announced publicly with results on November 12, 2019 ** Temporary expenses for coke oven repairs at Muroran in FY2018

(JPY100M) FY2018 FY2019

Result Previous forecast* Result vs. forecast Year-on- year change

Net sales

648 560 559 △1 △89

Operating income

12 9 12 3

【Result】  Net sales In domestic businesses, sales volumes of our products fell significantly. Contributing factors included continued decreases in production among major customers, including those in the construction machinery sector, and accompanying inventory adjustments. Despite improved selling prices in response to rising raw material prices (iron

• re) and effects of increased earnings due to higher volumes of materials

processed under contract, net sales fell by JPY7.5 billion. Furthermore, sales volume decreased at JATIM in Indonesia, resulting in a decrease of JPY0.1 billion in net sales in overseas businesses (see the next page for details). This, combined with eliminations of intercompany transactions for consolidation, resulted in a total decline of JPY1.4 billion.  Operating income Operating income was impacted strongly by lower sales volume in domestic businesses, resulting in a decline of JPY0.5 billion, despite improvements in selling prices, inventory buildup in preparation for blast furnace renovations in FY2020, and cost improvements achieved from associated efficiency improvements. Operating income improved by JPY0.5 billion in overseas businesses (JATIM), due to factors including lower amortization costs resulting from impairment losses (see the next page for details). As a result, operating income in the Special Steel Bars business as a whole remained largely unchanged.

8

△12 Selling prices Decreased sales volumes Product lineup △7 Decreased amortization costs due to impairment △1 △1 +1 +4 △1 +3 Production costs Raw material prices Other (discontinuation

• f amortization of land)

△12 Selling prices Decreased sales volumes Product lineup △7 Decreased amortization costs due to impairment △1 △1 +1 +4 △1 +3 Production costs Raw material prices Other (discontinuation

• f amortization of land)

FY2018 result FY2019 result Sales 62 Sales 63

(JPY100M)

Results by segment (Special Steel Bars business: JATIM in Indonesia)

Result FY2018 result FY2019 forecast Sales 60 Sales 63

(JPY100M)

* Figures announced publicly with results on November 12, 2019

Previous forecast*

(JPY100M) FY2018 FY2019

Result Previous forecast* Result vs. forecast Year-on- year change

Net sales

63 60 62 2 △1

Operating income

△12 △7 △7 5

• I. FY2019 Results

【Result】  Net sales Despite progress on transition to JATIM materials according to plan, lower sales of flat bars for leaf springs due to sluggish demand for commercial vehicles in Indonesia led to a decrease

• f JPY0.1 billion in net sales.

 Operating income Operating income improved by JPY0.5 billion thanks to effects

• f costs reduced by JPY0.6 billion due to lower amortization

costs attributable to impairment of fixed assets and the discontinuation of amortization of land. The amount of improvement was smaller than the amount of reduction in costs. This is due to rising costs associated with rising prices for auxiliary materials and production problems in the first three quarters, in addition to lower sales volumes. Thanks to steady improvements in manufacturing costs, JATIM recorded an operating profit starting in the fourth quarter. (See the next page for details.)

9

Recent progress <JATIM in Indonesia>

• I. FY2019 Results

109 118 124 127 100 102 104 105 104 1－3月 4－6月 7－9月 10-12月 1-3月 2019年 2020年 丸鋼 平鋼

Yield improvement rate

(With January-March 2019 level set to 100)

January- March April- June July- September October- December January- March 2019 2020

Round bars Flat bars

Operating income in the black Manufacturing cost improvement initiatives

 Operating income has been in the black since October- December, thanks to greater emphasis on profitability and cost cutting than sales volumes.

 Yield improvements resulted in lower manufacturing costs.  Fixed costs are down thanks to a large-scale staff reduction and other measures.  Low-profit orders received have been reviewed.  Results for the third quarter and beyond reflect lower amortization costs resulting from impairment.

 Significant cost improvements were realized in round bars for which yields had been poor.

 Yields improved by narrowing down mass produced product lineup for round bars.  A review of suppliers made it possible to cut materials costs and maintain appropriate inventories.  Cost cutting has made products more price competitive. JATIM received new orders for leaf springs. This will lead to improvements in utilization rates.  JATIM is currently adopting equipment to improve the dimensional precision of round bars, a step intended to achieve yield improvements and sales growth.

New fiscal year △JPY210M △JPY380M △JPY140M JPY70M JPY70M

January- March April- June July- September October- December January- March 2019 2020

New fiscal year

10

Selling prices (discounts)

△2

Selling prices (market conditions) Decreased amortization costs due to impairment

△2 △1 △3

△13

Selling prices (price revisions) Other

△9

R&D expenses, depreciation Tariff effects

△1

Selling prices (price revisions)

+3

Raw material prices Decreased amortization costs due to impairment

△2 △10 △3

△14

Selling prices (market conditions) Other

△9

R&D expenses, depreciation Tariff effects

Results by segment (Springs business)

FY218 result FY2019 result

Sales 497 Sales 452

Reduced expenses Decreased sales volumes (N. America)

(JPY100M)

【Result】  Net sales Net sales were lower due to slow demand for use in construction machinery in Japan and overseas, in addition to lower sales for automotive uses in North America and foreign exchange effects. (Net sales in North America decreased due to the impact of the novel coronavirus in March.)  Operating income Operating income fell further because lower sales outpaced the effects of cost improvements in precision parts, domestic expense reductions, and reduced amortization costs due to

• impairment. Problems with the launch of new stabilizer products

in North America also contributed. (For detailed information on North American MSSC, see “Analysis of Changes at North American MSSC.”)

+1 △1 +3 +4 +4 △1

Decreased sales volumes (other than N. America)

• I. FY2019 Results

Production problems in N. America

Result

FY2018 result FY2019 forecast

Sales 497 Sales 485

Raw material prices Decreased sales volumes (N. America)

+2 △2 +2

△2 +2

+3

Decreased sales volumes (other than N. America)

Previous forecast*

(JPY100M)

Production problems in N. America

* Figures announced publicly with results on November 12, 2019

(JPY100M)

△3

Cost improvements (precision)

FY2018 FY2019

Result Previous forecast* Result vs. forecast Year-on- year change

Net sales

497 485 452 △33 △45

Operating income

△9 △13 △14 △1 △5

11

△9

Germany Other India +1 Japan China

△14

△6 +2

• N. America

△1 Mexico △1 FY2018 result FY2019 result

Sales 497 Sales 452

(JPY100M)

• I. FY2019 Results

Results by segment (Springs business: Analysis of changes by region)

【Result】  Results in North America worsened significantly. For details, see “Analysis of Changes at North American MSSC.”  In Japan, profits were up JPY0.1 billion thanks to effects of switching to JATIM’s leaf spring materials and up JPY140 million due to selling price revisions for automotive coil springs.  Profits in Germany were lower due to lower sales accompanying the economic slowdown in the European market and the slow Chinese market.  Profits in other businesses were up JPY170 million for precision parts and down JPY170 million for spring spare part products and JPY90 million in Thailand.

* Figures announced publicly with results on November 12, 2019

Result

△9

Germany Other India +1 Japan China

△13

△6

• N. America

△1 +1 Mexico +1

Sales 497 Sales 485 Previous forecast*

(JPY100M) FY2018 result FY2019 forecast

12

△2 △1

Raw material prices Decreased amortization costs due to impairment Tariff effects Inventory revaluation

△1 +1

Production problems Decreased sales volumes

△2

Selling prices (price revisions) Selling prices (market conditions)

△3 +4 △3 +1

Foreign exchange gains/losses

△2

Raw material prices Decreased amortization costs due to impairment

+1

Tariff effects Inventory revaluation

+2

Production problems Other Decreased sales volumes

△2

Selling prices (market conditions) Selling prices (price revisions)

+1 △3 +1 △3

Foreign exchange gains/losses

△1

△6 Decrease in income

FY2018 result FY2019 result (JPY100M)

• I. FY2019 Results

Results by segment

【Result】  Lower sales volumes due to orders lost during the transition to new models.  Lower sales in March due to effects of the novel coronavirus.  Differences of selling prices and raw material prices from market conditions improved by adjusting the timing of reflecting raw material prices in selling prices.  Profits worsened due to rising labor costs and expenses resulting from problems with the launch of new stabilizer products.

* Negotiations on price increases with a major customer, a topic of concern, concluded with an agreement reached on new pricing starting June 2020. △6 Decrease in income

Result

FY2018 result FY2019 forecast (JPY100M)

Previous forecast*

* Figures announced publicly with results on November 12, 2019

(Springs business: Analysis of changes at North American MSSC)

13

• I. FY2019 Results

Recent progress <North American MSSC>

△JPY1.1 billion △JPY0.4 billion △JPY0.2 billion 4-9月 10-12月 1-3月 2019 2020 April-September October-December January-March

Improvements in operating losses

Problems with the startup of mass production have largely been resolved. Integration of coil spring production lines in Canada: Completed on schedule Negotiations on price increases with a major customer, a topic of concern, have largely been concluded as planned (new pricing to take effect in June 2020). Reduced amortization costs due to impairment are reflected from the second half.

14

4

Startup costs for the mother plant Decreased sales volumes Selling prices Other

△2 △4 +4 +1 △4 +1 +1

Quality and cost improvements Raw material prices

R&D expenses, depreciation

1

Lower amortization costs due to impairment

4

Decreased sales volumes Selling prices Other Lower amortization costs due to impairment Startup costs for the mother plant

1 △4 +1 △3 +5 +1 △2 △1

Quality and cost improvements

Raw material prices R&D expenses, depreciation

Results by segment (Formed & Fabricated Products business)

FY2018 result FY2019 result

Sales 96 Sales 114

(JPY100M) 【Result】  Net sales Net sales fell due to lower sales volumes following slowing demand in Chinese and Taiwanese markets for special alloy powders and lower surcharge sale prices due to falling alloy raw material prices. Sales of precision casting products were lower due to lower demand as a result of the economic downturn.  Operating income Despite a boost in profits due to falling alloy raw material prices, lower sales of special alloy powders and precision casting products, combined with higher costs resulting from the startup of the mother plant led to lower operating income.

• I. FY2019 Results

Result

(JPY100M) FY2018 result FY2019 forecast

Sales 100 Sales 114 Previous forecast*

* Figures announced publicly with results on November 12, 2019

(JPY100M) FY2018 FY2019

Result Previous forecast* Result

• vs. forecast

Year-on- year change

Net sales

114 100 96 △4 △18

Operating income

4 1 1 △3

15

2

Increased sales volumes

△1 +1

Profitability of

• rders awarded

4 +1

Electric power machinery inventory revaluation losses

△1

Product lineup

+2

Other

Sales 102 Sales 93

(JPY100M) FY2018 result FY2019 result

• I. FY2019 Results

Results by segment (Machinery business)

【Result】 ◆ Net sales Net sales rose due to orders received for products related to offshore wind power generation. ◆ Operating income Despite worsening profitability due to harsh order receiving conditions, operating income grew JPY0.2 billion due to effects of increased earnings, fixed cost reductions, and the absence of electric power equipment product inventory revaluation losses recorded in the previous year.

Result

2

Increased sales volumes

△1 3 +1

Profitability of

• rders awarded

Electric power machinery inventory revaluation losses

△1

Product lineup

+2

Other

FY2018 result FY2019 forecast Sales 93 Sales 100

Previous forecast*

(JPY100M) (JPY100M) FY2018 FY2019

Result Previous forecast* Result

• vs. forecast

Year-on- year change

Net sales

93 100 102 2 9

Operating income

2 3 4 1 2

* Figures announced publicly with results on November 12, 2019

16

FY2018 FY2019 Result Result Year-on-year change

Operating income

11 4 △7

Non-operating income/loss

△9 △7 2

Translation (exchange profit and loss)

△4 △1 3

Interest paid

△10 △11 △1

Interest and dividends received

3 3

Ordinary income

1 △3 △4

Extraordinary income/loss

13 △157 △170

Impairment loss

• △150

△150

Gain/loss on disposal of fixed assets

2

*1 △3

△5

Gain on sale of equities

20

• △20

Losses due to disasters

△0

*2 △1

△1

Revaluation losses on investment securities

△8 △2 6

Net income before income taxes and other adjustments

14 △159 △173

Tax expenses

△20 △20 △0

Net losses attributable to non-controlling interests

8

*3 39

31

Net income attributable to owners of parent company

3 △141 △144

(JPY100M)

Impact of non-operating income/loss and extraordinary income/loss

 Impairment losses at overseas subsidiaries led to significant net losses.  Tax expenses include △JPY1.2 billion for transfers from deferred tax assets at JATIM in Indonesia.

• I. FY2019 Results

*1 Equipment removal costs were recorded due to a transformer fire at JATIM. Insurance compensation is expected in FY2020. *2 Allowance for losses was recorded due to typhoon damage to the Chiba Plant. Insurance compensation is expected in FY2020. *3 Since JATIM and others recorded losses, final income or losses are adjusted for net losses attributable to non-controlling interests.

17

Impairment losses (by region)

 At the end of the first half, overseas subsidiaries recorded impairment losses of JPY15 billion as extraordinary losses. Business Region Loss

Special Steel Bars Indonesia

• PT. JATIM TAMAN STEEL MFG.

△92 Springs

US

MSSC US INC.

△14 Canada

MSSC CANADA INC.

△6 Mexico

MSSC MFG MEXICANA, S.A. DE C.V.

△7 Germany

MSSC Ahle GmbH

△16 China

MSM NINGBO SPRING CO., LTD.

△7 India

MSM SPRING INDIA PVT. LTD.

△4

Springs subtotal △54 Formed & Fabricated Products Thailand MSM (THAILAND) CO.,LTD. △4

Total △150

(JPY100M)

Breakdown of impairment losses by region

• I. FY2019 Results

* Impairment losses recorded at the end of the first half totaled JPY14.8 billion. The difference is due to the effects of exchange rates at the end of the fiscal year.

18

Business indicators and financial conditions

FY2018 FY2019 full-year full-year

Total assets

(JPY100M)

1,533 1,414

Net assets

(JPY100M)

674 483

Equity capital ratio

(%)

38.5 30.1

ROE

(%)

0.5 △27.7

Net D/E ratio

(times)

0.3 0.7

Dividends

(yen)

60.0 0.0

Dividend payout ratio

(%)

329.0

•  Regrettably, due to the recording of ordinary losses and net losses attributable to owners of

parent company, the Company has chosen not to pay interim and year-end dividends for FY2019. We offer our heartfelt apologies to shareholders and request their continued support. We are committed to making dividend payments once again at the earliest possible date.

• I. FY2019 Results

19

52 33 53 36 60 44 77 36

20 40 60 80 100

Depreciation Capital investment

FY2019 result FY2018 result FY2017 result FY2016 result

11 15 16 14

5 10 15 20 FY2016 result FY2017 result FY2018 result FY2019 result

R&D expenses, Capital investment, Depreciation

Depreciation Capital investment

(JPY100M)

*Includes R&D-related depreciation.

 As we strove to reduce R&D expenses, we focused on research reflecting customer needs.  The amount subject to acceptance inspections increased because work that had already begun was implemented according to plan. However, we will pare capital investment significantly in FY2020 due to a review of new capital investment started in FY2019.

(JPY100M) (JPY100M)

[R&D expenses] [Capital investment, Depreciation]

• I. FY2019 Results

20

Urgent measures

Topic Details Partial return of executive compensation

• Partial return of executive compensation will continue.

(Began December 2019) Partial return of managerial salaries

• A portion of the monthly salaries of those at the section

chief level and above will be returned. (For the time being, starting with April 2020 salaries) Reducing fixed costs and expenses

• Reducing labor costs through continued staff reductions

Groupwide (approximately 1,000 positions cut overseas in FY2019), reducing bonus amounts, etc. Efforts will continue to hone selectiveness with regard to capital investment and R&D and to reduce non-urgent costs, including repair costs. Other (employment measures)

• The Company and domestic Group member companies

(with some exceptions) will implement temporary furloughs using the employment adjustment subsidy program

• I. FY2019 Results

 To improve business results quickly, urgent measures to improve profitability will continue, including the introduction of some new measures.

21

Responding to the novel coronavirus pandemic

 The Group’s measures to prevent novel coronavirus infection

• Reducing the risk of infection during commutes

⇒ Staggered working hours; effective use of the flextime system; working from home; encouraging employees to take paid leave; promoting web conferencing

• Reducing the risk of infection inside the Company

⇒ Reducing numbers of employees coming to Company facilities; measuring temperatures on arrival; wearing masks during commutes and working (distributing masks to employees)

• Reducing the risk of infection outside the Company

⇒ Prohibiting business travel (both domestic and overseas) except when necessary and urgent; prohibiting participation in meetings and seminars as a rule Asking employees to refrain from overseas travel, long-distance travel, and use of enclosed recreation facilities in their time off work

• Thorough information management

⇒ Protecting personal information of those infected and those in close contact with infected persons

• Measures at overseas facilities (measures in accordance with laws, regulations, and the

infection prevention policies of individual countries) ⇒ Taking measures such as having employees work from home and sending resident personnel back to their home countries, in accordance with stay-at-home orders and suspension of business operations  Future response We will continue thoroughgoing efforts to prevent infection in accordance with the guidelines established by national and local government agencies and other authorities.

• I. FY2019 Results

22

• I. FY2019 Results
• II. Full-year Forecasts for FY2020

23

Forecasts of full-year results and dividends

• II. Full-year Forecasts for FY2020

Issues related to the novel coronavirus pandemic have raised concerns regarding worldwide declines in consumption, suspension of production activities, and a dramatic slowdown in the global economy. While the pandemic has had significant impacts on activities of the Company's major customers, including those in the automotive, construction machinery, and industrial machinery industries, it is not possible at this time to predict the impact of the pandemic or the timing of returning to normality. Due to difficulties in making reasonable estimates at this time, forecasts of results for FY2020 will remain undetermined. Forecasts will be released as soon as it is feasible to do so. Forecasts of interim and year-end dividends for FY2020 are yet to be determined at this time.

May May 29, 29, 2020 2020

2020 Mid-term Business Plan

(FY2020 to FY2022)

25

• I. Introduction
• II. Review of the 2016 Mid-term

Business Plan

• III. The 2020 Mid-term Business Plan
• IV. Initiatives in Individual Divisions

Reasons for revising the Mid-term Business Plan

26

• I. Introduction

Worsening business results Impairment losses totaling JPY15 billion Deviation from planned figures

Both external and internal conditions have changed significantly since the time the 2016 Mid-term Business Plan was drafted…

Worsening business environment

Slowing automotive and construction machinery demand due to the rise of trade protectionism, alongside automakers’ change in global procurement policies

Declining strengths in manufacturing and products

Slow sales and profits because progress on overseas business development has failed to lead to technological development and stable procurement

In recognition of the delays in achieving thoroughgoing solutions in response to dramatic changes in the business environment, we have formulated a new three-year Mid-term Business Plan starting in FY2020, one year ahead of schedule.

<Key points underlying the formulation of the new Mid-term Business Plan>

• Start in the first year by stopping the hemorrhage (JATIM* in

Indonesia, North American MSSC)

• Formulating a plan for the coming three years that reflects our vision

for 10 years into the future

• In technological development, establishing the new Sales Strategy

Office to implement systematic enhancements ranging from grasping and analyzing information through new product development and mass production

• Implementing structural reforms in material procurement, which accounts

for 50% or more of manufacturing costs

• Strengthening organizational structures capable of responding swiftly to

environmental changes to minimize risks

* PT. JATIM TAMAN STEEL MFG.

Recent progress <North American MSSC>

27

• I. Introduction

Improvements in operating losses

△JPY1.1 billion △JPY0.4 billion △JPY0.2 billion 4-9月 10-12月 1-3月 2019 2020 April-September October-December January-March

 Reducing operating losses

 Problems with the startup of mass production have largely been resolved.  Integration of coil spring production lines in Canada: Completed on schedule  Negotiations on price increases with a major customer, a topic of concern, have largely been concluded as planned (new pricing to take effect in June 2020).  Reduced amortization costs due to impairment are reflected from the second half.

Progress in gaining orders for stabilizers, which account for 70% of North American sales

 Progress on receipt of stabilizer orders

 Progress on receipt of orders in 2019 through the introduction of lightweight products  Expected to contribute to net sales starting with the introduction of new vehicle models in 2022

While product strengths and manufacturing are improving…

We plan to strive to achieve profitability early by shifting and consolidating production of stabilizers in Canada and Mexico and ceasing production in the US for further cost improvements.

Ability to manufacture at planned costs

➡ Achieving profitability by increasing utilization rates

 Quickly realizing a profitability structure by integrating North American facilities in addition to winning new orders

2020年 2021年 2022年 2023年

 US production

Production capacity (6-day operation) (5-day operation) (5-day operation)

In Canada:  Anticipated

• rders received

 Transfers from the US  Finalized orders received

2020 2021 2022 2023

Recent progress <Regions other than the US and Canada>

28

• I. Introduction

Survival of other automotive suspension spring production facilities

 Projections of order reception for automotive springs at each facility

 Numbers of coil springs and stabilizers for which receipt of orders is finalized or confidently projected (indexation by setting 2019 levels to 100)  While overseas facilities were enhanced under the Mid-term Business Plan, securing of orders was delayed.  The introduction of lighter weight products led to a buildup of new orders received in FY2019. Deliveries are expected to increase with the next model changes.

2019 2020 2021 2022 2023

Philippines sales*

Figures for the newly launched plant not subject to indexation Projections through FY2023 are shown below.

 Adopting a six-region structure consisting of Canada, Japan, China, Mexico, the Philippines, and India (JV)

* Mass production of automotive springs is to begin in FY2020 in the Philippines.

100% 133% 244% 211% 2019 2020 2021 2022

Mexico sales

100% 98% 104% 110% 2019 2020 2021 2022

Japan sales

100% 115% 129% 149% 2019 2020 2021 2022

China sales

Recent progress <JATIM in Indonesia>

29

• I. Introduction

Operating income in the black

 Operating income has been in the black since October-December, thanks to greater emphasis

• n profitability and cost cutting than sales

volumes.

 Yield improvements resulted in lower manufacturing costs.  Fixed costs are down thanks to a large-scale staff reduction and

• ther measures.

 Low-profit orders received have been reviewed.  Results for the third quarter and beyond reflect lower amortization costs resulting from impairment.

Manufacturing cost improvement initiatives

 Significant cost improvements were realized in round bars for which yields had been poor.

 Yields improved by narrowing down mass produced product lineup for round bars.  A review of suppliers made it possible to cut materials costs and maintain appropriate inventories.  Cost cutting has made products more price competitive. JATIM received new orders for leaf springs. This will lead to improvements in utilization rates.  JATIM is currently adopting equipment to improve the dimensional precision of round bars, a step intended to achieve yield improvements and sales growth.

109 118 124 127 100 102 104 105 104 1－3月 4－6月 7－9月 10-12月 1-3月 2019年 2020年 丸鋼 平鋼

Yield improvement rate

(With January-March 2019 level set to 100)

→ New fiscal year

Round bars Flat bars 2020 2019

January- March April- June July- September October- December January- March

△JPY210M △JPY380M △JPY140M JPY70M JPY70M January- March April- June July- September October- December January- March 2019 2020

→ New fiscal year

30

• I. Introduction
• II. Review of the 2016 Mid-term

Business Plan

• III. The 2020 Mid-term Business Plan
• IV. Initiatives in Individual Divisions

Trends in business results

31

• II. Review of the 2016 Mid-

term Business Plan

 Despite increases attributable to the acquisition of Ahle in Europe and making JATIM in Indonesia a consolidated subsidiary, the declining business environment led to net sales far below plans.  Due to pressure on profits from manufacturing difficulties in overseas businesses, the gap between planned and actual results was greater for operating income than for net sales.

1,700 2,500

1,037 1,187 1,294 1,171

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025

90

93 111 29 47 49 43 39 32 11 4

8.0 10.0

% %

7.7 6.4 2.1 6.3 6.2 4.2 5.9 4.7 0.5

▲28

’ 1 6年中計 目標値 ’ 1 6年中計 目標値

% % % % % % % % % %

Net sales

Operating income

ROE ROE/

• perating income/

net sales (JPY100M)

Results 2016 Mid-term Business Plan targets

Overview of the 2016 Mid-term Business Plan

32 The Fist Step for Coming 10 Years ,

Shift from “Processing Special Steel” to

“Creating Added Value from Materials”

Slogan

Strengthening Our “Processing Special Steel” Business Model with Worldwide Acceleration and Synergy between the Steel Bar and Spring Divisions Building the “Creating Added Value from Materials” Business Model with Expansion into New Industrial Sectors and Making the Formed & Fabricated Products Division a Third Profit Center

Vision

Building a worldwide supply chain

Expansion of the Springs business into European market Technological development in weight reduction Advancing into the turbocharger assembly business Material production by VIM*

Building the

“Creating Added Value from Materials” business

model in the Formed & Fabricated Products business Strengthening the

“Processing Special Steel” business model and

generating benefits from Indonesia

Expanding leaf spring sales worldwide and steel bar sales in South East Asia

Three Tactics Ten Key Initiatives

* Vacuum induction melting (VIM) furnace

• II. Review of the 2016 Mid-

term Business Plan

Ten key initiatives and results

33

① Investments in renovations of MSR*1;

strategic investment Renovations of aged facilities was completed according to plan. However, strategic investment targeting cost savings was delayed.

② Building a worldwide supply chain for

springs Although a supply chain was built largely according to plan, external environmental changes have led to the need to review strategies.

③ Strengthening technological

development of springs A recovery in spring weight reduction, on which we lagged behind the competition, has led to orders received.

④ Expanding steel bar sales in Indonesia

Changing course from securing volumes to improving quality and prioritizing profitability

⑤ Cross-functional projects

New business evaluation management and sales synergies are proceeding according to plan.

⑥ Research & Development Center

Although the Center has opened and generated certain results in areas such as the development of spring materials, long-term development remains inadequate at this point.

⑦ Expanding leaf spring sales worldwide

Progress has been made on growing sales through synergies with JATIM.

⑧ Overseas advance of steel bar

businesses Getting the JATIM business on track has been prioritized. Advance into India was considered but has been postponed.

⑨

Building an integrated production model for the Formed & Fabricated Products business (Advance into T/C*2 subassemblies) M&A plans were postponed due in part to the rapid shift away from diesel engines and shift toward EVs.

⑩

Building an integrated production model for the Formed & Fabricated Products business (Internal production of materials) Despite delays in completion of both VIM equipment for materials development use and gas atomizer mass production furnaces for alloy powders, a development structure has largely been achieved. The Special Steel Bars and Formed & Fabricated Products businesses stay on the same course and continue to make progress. The Springs business needs a major course correction to adapt to the drastically changing business environment. Although planned initiatives were mostly implemented, delays to the plan have been an issue.

*1 Mitsubishi Steel Muroran Inc. *2 Turbocharger

Toward the 2020 Mid-term Business Plan:

• II. Review of the 2016 Mid-

term Business Plan

Profitability issues at overseas facilities

34

Mexico India Germany Philippines China Thailand Parts Sales Division JATIM US Formed & Fabricated Products business (domestic) Machinery business Canada Springs business (domestic) Special Steel Bars business (domestic)

Net sales and operating income by region (FY2019)

Vertical axis: Operating profit margin Horizontal axis: Net sales Size of circle: Operating income

Pressing need to improve profitability at

• verseas facilities

Especially urgent is the need to stop the hemorrhage early and reestablish the Springs business in North America early and JATIM in Indonesia. Facilities will be maintained in newly entered markets; despite losses, progress is being made in these markets

• n orders received.
• II. Review of the 2016 Mid-

term Business Plan

35

• I. Introduction
• II. Review of the 2016 Mid-term

Business Plan

• III. The 2020 Mid-term Business Plan
• IV. Initiatives in Individual Divisions

Framework of the 2020 Mid-term Business Plan

36

• III. The 2020 Mid-term

Business Plan

Three-year plan reflecting our vision for 10 years into the future

Customer feedback

• Structural reforms at

loss-making

• verseas

businesses

Growth strategies

• Enhancing product

strengths

• Expanding integrated

production businesses from the raw materials stage

• Responding to the shift to EVs
• Strategies after reestablishing

JATIM

• New business creation

Sustained growth Business revival and reform

FY2020 FY2021 to FY2022 FY2023 to FY2030

2020 Mid-term Business Plan Next Business Plan and beyond

Framework of the 2020 Mid-term Business Plan

37

Slogan

Provide the customers with added value by manufacturing seamlessly from materials to products

What we aim to be

 Achieve higher profitability and stabilize earnings by exercising the comprehensive capabilities of the Group  Develop products keeping a half-step ahead of customer needs and provide them with the products as new value

Key performance indicators (KPI)  Net sales: JPY150 billion  Operating income: JPY7 billion  ROE: 8% or more Three main directions

① Restructure our overseas businesses ② Strengthen our product appeal further ③ Expand our business model for seamless production from materials

• III. The 2020 Mid-term

Business Plan

Numerical targets

38

Key performance indicators (KPI)

2015 2019 2022 result result targets Net sales 1,065 1,171 1,500 Operating income 43 4 70 Ordinary income 33 △3 63 ROE*1 4.2% △27.7% 8% or higher Operating profit margin 3.9% 0.4% 4.7% Net D/E ratio*2 △0.1 0.7 0.5 Equity capital ratio 48% 30% 36% Investment*3 303 during four years 150 during three years Depreciation expenses 180 during four years 122 during three years

*1 ROE = Net income/equity (starting/ending average) *2 Net D/E ratio = (Interest-bearing debt – cash and deposits – short-term securities) / equity *3 Investment = Increase in tangible and intangible fixed assets + increase in shares of subsidiaries and associates

(JPY100M)

• III. The 2020 Mid-term

Business Plan

Three main directions

39

• 1. Restructure our overseas businesses

<urgent needs for swift upgrading of the profitability of our overseas bases>  Achieve profitability at our Indonesian subsidiary JATIM and stop loss-posting by our North American subsidiary MSSC and turn it around promptly  Integrate, shut down or merge overseas businesses and bases

• 2. Strengthen our product appeal further

<products keeping a half-step ahead of customer needs>  Reinforce our comprehensive ability to obtain customer feedback promptly and reflect it in products  Expedite development by revising technology development items flexibly

• 3. Expand our business model for seamless production from materials

 Exercise the strength of the Company’s seamless production from materials by deploying our business model of seamless production of lightweight springs using steel materials from Mitsubishi Steel Muroran Inc. and JATIM material-based leaf springs to construction machinery springs and stabilizer bars  As a seamless production model, strengthen the Formed & Fabricated Products Business that has to date had a standalone-centric product lineup, including its upstream and downstream segments

• III. The 2020 Mid-term

Business Plan

Eleven initiatives (1/2)

40

Initiatives Specific measures

① Pursuit of synergies between springs and steel bars Enhancing the integrated production business model for leaf springs using JATIM materials and deploying horizontally to other products

Spring Steel Bar

② Restructuring the production capacity of Springs business facilities Consolidating production of North American MSSC from the US to Canada and Mexico; optimizing the two plants in the Philippines after ascertaining future risks and incentives

Spring

③ Improving manufacturing strengths Enhancing manufacturing strengths in Japan and transplanting them

• verseas

Strengthening the function of the mother plant Sharing information with management from the order receipt stage

Spring Steel Bar Formed & Fabricated Products

④ Improving product development strengths Improving marketing strengths Timely development of products suited to customer needs Successively sharing development strategies with management

R&D Center* Sales

⑤ Improving MSR’s cost competitive strengths Implementing strategic investment to help reduce manufacturing costs Improving production efficiency by strengthening joint efforts within the Muroran Works

Steel Bar

⑥ Shifting to a two-pillar production facility structure for steel bars Strengthening sales expansion in ASEAN through quality improvements and cost cutting at JATIM, the only Japanese-affiliated special steel bars manufacturer in the ASEAN region

Steel Bar

* Research & Development Center

Related divisions

• III. The 2020 Mid-term

Business Plan

Eleven initiatives (2/2)

41

Initiatives Specific measures

⑦ Building an integrated production model for the Formed & Fabricated Products business Accelerating mass production of products from the materials development stage after the completion of the Chiba mother plant

Formed & Fabricated Products

⑧ Measures in environment- related businesses Expanding businesses such as renewable energy-related machinery, magnetic separators, lightweight springs, and turbocharger components

Spring Machinery Formed & Fabricated Products

⑨ Structural reforms in procurement Consolidating functions such as procurement strategy and new supplier development in the Head Office Procurement Department Shifting to a procurement structure utilizing trading companies and

• ther external organizations instead of relying solely on in-house

supplier development

Corporate

⑩ Visualization of business risks Strengthening the investment and credit committee and received

• rder screening functions

Supporting business divisions by strengthening the capabilities needed to identify signs of business risks

Corporate

⑪ Restoration of financial foundations Restrained capital investment until recovery of earning power Continuing Companywide cost reductions

Corporate

Related divisions

• III. The 2020 Mid-term

Business Plan

42

• I. Introduction
• II. Review of the 2016 Mid-term

Business Plan

• III. The 2020 Mid-term Business Plan
• IV. Initiatives in Individual Divisions

11 12 40

Initiatives in the Special Steel Bars business

43

• IV. Initiatives in

Individual Divisions

JPY40.6B JPY55.9B JPY80.0B

2015年 2019年 2022年 国内 海外 Operating income

Net sales

【Key Initiative ①】 Pursuit of synergies between springs and steel bars

 Horizontal deployment of the integrated production model for leaf springs using JATIM materials for construction machinery springs, stabilizers, and other products

【Key Initiative ③】 Improving manufacturing strengths

 Making progress at MSR on quality improvements and the production of high-value-added materials  Pursuing quality improvements at JATIM through capital investment

【Key Initiative ⑤】 Improving MSR’s cost competitive strengths

 Reducing costs through strategic investment; improving production efficiency by intensifying joint efforts at Muroran Works

【Key Initiative ⑥】 Shifting to a two-pillar production facility structure for steel bars

 Achieving a two-pillar structure by reestablishing JATIM  Growing sales at JATIM through products of Japanese quality and cost savings through the stabilization of mass production

Domestic Overseas

2015 2019 2022

Initiatives in the Springs business

44

JPY48.2B JPY45.2B JPY56.0B

2015年 2019年 2022年 国内 北米 その他海外 15

▲14

19 Operating income

Net sales

【Key Initiative ②】 Restructuring the production capacity of Springs business facilities

 In North America, consolidating production of stabilizers in addition to coil springs in Canada and Mexico to increase utilization rates  Ceasing investment in automotive springs in Europe  Optimizing operations at Cebu and Manila plants in the Philippines after identifying future risks and incentives associated with the environment and administration in both areas

【Key Initiative ③】 Improving manufacturing strengths

 Shifting from facility construction to improving manufacturing strengths (shifting human resources to manufacturing)  Supporting manufacturing process improvements at overseas plants from the Chiba mother plant

【Key Initiative ①】 Pursuit of synergies between springs and steel bars

 Horizontal deployment of the integrated production model using JATIM materials for construction machinery springs, stabilizers, and other products; enhancing cost-competitive strengths

【Key Initiative ④】 Improving product development strengths

 Promoting development to enhance our own unique strengths into the future, based on the recognition that we have caught up with competitors in lightweight technologies

• IV. Initiatives in

Individual Divisions

2022 2019 2015

Domestic North America Other

• verseas

Initiatives in the Formed & Fabricated Products business

45

JPY9.1B JPY9.6B JPY10.0B

2015年 2019年 2022年 国内 海外 5 1 5 Operating income

Net sales 【Key Initiative ③】 Improving manufacturing strengths

 Strengthening cost improvements through distribution of responsibilities, with plants specializing in mass production and the Chiba AMC* concentrating on technological development and improvements in production processes  Enhancing the growing powders business and Chiba AMC by injecting resources made available by the withdrawal from the magnet business

【Key Initiative ④】 Improving product development strengths

 Establishing mass production technologies for metal powders for applications such as 3D printers and electrification using gas atomization and water atomization  Improving product strengths through new product development based on materials development using Chiba AMC’s VIM furnace

【Key Initiative ⑦】 Building an integrated production model for the Formed & Fabricated Products business

 Producing and supplying master ingots for turbine wheels and materials for precision machined products using Chiba AMC’s VIM furnace  In parallel with the establishment of mass production technologies for metal powders, examining potential ventures into secondary product markets, including alliances

【Key Initiative ⑧】 Measures in environment-related businesses

 Producing products suited to lighter weight, more efficient turbocharger components that help reduce environmental impact through improved fuel consumption of gasoline engine and hybrid vehicles

* Advanced Materials Center: New facility established at the Chiba mother plant to pursue development, trial production, and improvement

• IV. Initiatives in

Individual Divisions

Domestic Overseas

2015 2019 2022

Initiatives in the Machinery business

46

Policy ①: Establishing a highly profitable structure by improving production efficiency and competitive strengths

 Establishing a new second plant specializing in small and midsized products, thereby increasing production efficiency by allowing the main plant to specialize in large products

Policy ②: Building new business foundations

 Drawing on core technologies to build new business foundations in areas such as equipment related to offshore wind power generation, ultrahigh pressure equipment, and steelmaking machinery

Policy ③: Taking on the challenges of next technologies

 Seeking to mass produce intermediate storage containers for nuclear power plant facilities in three to four years  Advancing the development of packages for sorting lines based on the development of anti-vibration equipment for high- speed presses and the adoption of color sorting machines

【Key Initiative ⑧】 Measures in environment-related businesses

 Growing sales of machinery for offshore wind farm construction SEPs*  Reducing costs by shifting the production of anti-vibration equipment and magnetic separators to China; enhancing sales in the Chinese market

JPY9.8B JPY10.2B JPY11.0B

2015年 2019年 2022年 10 4 4 Operating income

Net sales

* Self-elevating platform (SEP): A barge with legs for raising and lowering a platform that makes it possible to achieve stability for offshore operations unaffected by wind and waves, by raising the platform above sea level

• IV. Initiatives in

Individual Divisions

2015 2019 2022

Technological development initiatives

47

【Key Initiative ④】 Improving product development strengths

Establishing the new Sales Strategy Office to implement systematic enhancements ranging from grasping and analyzing information through new product development and mass production

Issues to date

× Inadequate joint efforts among business divisions, Sales Division, and Research & Development Center × No perspective on medium- to long-term development × R&D oriented toward technologies, not customers × Falling behind due to too much time devoted to promising development activities Customers

Future initiatives

 Coordination of R&D strategy and management by Sales Strategy Office  Sharing medium- to long-term R&D strategies  Process management to bring products to market in a timely manner  Enhanced development through cross-licensing and technological alliances  Enhanced patent and other IP strategies  Successively sharing development strategies with management

営業戦略室 Sales Strategy Office

Manage- ment

Business Divisions Sales Division Research & Development Center

Customers

Basic research on advanced technologies Patent and other IP strategies Grasping customer needs Timely product commercialization Coordination of Companywide R&D strategies Macro trend analysis Drafting development roadmaps

Manage- ment

Business Divisions Sales Division Research & Development Center

• IV. Initiatives in

Individual Divisions

Initiatives to improve production technologies

48

【Key Initiative ③】 Improving manufacturing strengths

Clarifying the mother plant function of domestic plants to shift from a structure based on responding after problems arise to one based on problem prevention

Issues to date

× A succession of problems arose in trying to launch new products under the leadership of overseas plants, due to insufficient experience and technologies. × Due to lack of clarity regarding the mother plant function of domestic plants, support has focused on responding after problems arise.

Domestic plant Overseas plant Overseas plant Overseas plant

Engineers geographically dispersed Support after problems arise Mass production technologies independently developed by each plant Technologies and information not adequately shared among plants

Future initiatives

 Clarifying the mother plant function of domestic plants  Establishing mass production technologies and verifying adopted equipment by mother plant  Sharing information with management from the order receipt stage  Sharing information on past problems with all facilities to prevent potential problems at overseas plants Manage- ment

Mother plant Overseas plant Overseas plant Overseas plant

Centralized assignment of engineers to support

• verseas operations

Development of production technologies Verification of equipment adopted Establishing mass production technologies Preventing problems Smooth startup

• IV. Initiatives in

Individual Divisions

Procurement structural reform initiatives

49

【Key Initiative ⑨】 Structural reforms in procurement Consolidating procurement strategy functions at the Head Office Procurement Department to support each plant from a global perspective Issues to date

× Production disorders due to inability to ensure stable procurement when a supplier goes bankrupt × Concerns about the risks posed by excess inventory during wild swings in market prices of procured materials × Inadequate ability to negotiate with suppliers due to dependence on specific component suppliers × Delays in new supplier development and decisions on adopting them

Overseas plant

Supplier

Disorganized purchasing Supplier bankruptcy

Domestic plant

Supplier

Management Purchasing

Overseas plant

Supplier

Purchasing

Overseas plants were too busy with purchasing activities to achieve the necessary negotiating capabilities and procurement strategies. Procurement handled by each plant independently Some facilities had difficulty in maintaining appropriate inventories.

Future initiatives

 Stabilizing procurement and optimization of inventories utilizing external procurement capabilities and resources, such as trading companies  Establishing Companywide projects for key procured items to rapidly promote cost savings and improvements in competitive strength  Successively sharing procurement strategies and risks with management

Manage- ment

Head Office Procurement Department

Supplier Supplier Supplier Overseas plant Domestic plant Overseas plant

Trading companies, etc. Proactive use of trading companies, etc. New supplier development and inventory optimization

• Information gathering
• Market condition

analysis

• Drafting procurement

strategies

• Supplier credit control
• Enhancing negotiation

abilities The Head Office Procurement Department supports individual facilities by sharing procurement strategies and risks for all domestic and overseas facilities with management.

• IV. Initiatives in

Individual Divisions

Corporate initiatives

50

【Key Initiative ⑩】 Visualization of business risks

 Strengthening functions such as preventive management, investment and financial decision-making, and screening of orders received

【Key Initiative ⑪】 Restoration of financial foundations

 Cutting 1,250 positions (including temporary personnel), chiefly at JATIM and in the US, the Philippines, and Thailand  Selling dormant assets  Investment planning

 Investment planning based on a varied approach, focusing on investments to enhance product strengths while postponing the opening of new facilities  Plans to invest a total of approximately JPY15 billion over the three years of the Mid-term Business Plan, while considering the restoration of financial foundations (vs. approximately JPY30 billion invested during the four years of the previous Mid- term Business Plan)

• IV. Initiatives in

Individual Divisions

Conclusion

• This Mid-term Business Plan is intended to stop the hemorrhage at loss-

making overseas facilities at an early date and to restore earning power toward sustained growth.

• Uncertainty regarding the global economy due to the novel coronavirus

pandemic continues to grow. However, numerical targets for FY2022 do not reflect the effects of the pandemic. For now, we will move forward with efforts to achieve the targets of this plan. We will also consider other streamlining measures, including measures after the coronavirus is brought under control, based on actual circumstances.

• In light of the impact of the pandemic, this Mid-term Business Plan has

experienced a difficult start in its first year, FY2020. Nevertheless, we plan to move steadily forward to implement the plan’s framework, with all employees working as one to achieve the targets set forth in the plan.

51

Note on forward-looking statements These materials are meant solely to provide investors with information and are not to be interpreted as

• solicitations. The forecasts provided in these materials are based on targets and projections and do not

constitute promises or guarantees of future performance. Please refer to this information with the understanding that the Company’s future performance may differ from this business outlook. While these earnings materials were prepared based on data believed to be reliable, we cannot guarantee their accuracy

• r reliability. The Company assumes no liability for these materials, regardless of the purpose for which they

are used by investors. We encourage all investors to make their final investment decisions based on their

• wn judgment.