commencement of discussions regarding making nisshin … · 5401: jp 1 nssmy: adr (us) commencement...

15401: JPNSSMY: ADR (US)

Commencement of Discussions Regarding Making Nisshin Steel A Subsidiary of NSSMC andMaking Nisshin Steel A Subsidiary of NSSMC and

NSSMC’s Supply of Steel Slabs to Nisshin SteelFebruary 1st, 2016

This presentation does not constitute an offer or invitation to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. This presentation is being furnished to you solely for your information and may not be reproduced or redistributed to any other person No warranty is given as to the accuracy or completeness of the information contained herein Investors and prospective investors in securities ofother person. No warranty is given as to the accuracy or completeness of the information contained herein. Investors and prospective investors in securities of any issuer mentioned herein are required to make their own independent investigation and appraisal of the business and financial condition of such company and the nature of the securities. Any decision to purchase securities in the context of a proposed offering, if any, should be made solely on the basis of information contained in an offering circular published in relation to such an offering. By participating in this presentation, you agree to be bound by the foregoing limitations. This presentation contains statements that constitute forward looking statements. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of Nippon Steel & Sumitomo Metal Corporation or its officers with respect to its financial condition and results of operations including without limitation future loan loss provisions and financial support to certain borrowers Such forward looking statements areand results of operations, including, without limitation, future loan loss provisions and financial support to certain borrowers. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in such forward looking statements as a result of various factors. The information contained in this presentation, is subject to change, including but not limited, to change of economic conditions, financial market conditions, and change of legislation / government directives.

Any statements in this document. other than those of historical facts, are forward-looking statements about future performance of Nippon Steel & Sumitomo Metal Corporation and its group companies, which are based on management’s assumptions and beliefs in light of information currently available, and involve risks and

© 2016 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

p g p p g p g yuncertainties. Actual results may differ materially from these forecasts.

2Commencement of Discussions

Execution of the MOU regarding theExecution of the MOU regarding the Discussions regardingFebruary 1, 2016

Making Nisshin SteelMaking Nisshin SteelA Subsidiary of NSSMCO th i f b idi i itiOn the premise of subsidiary acquisition

NSSMC’s Constant Supply of Steel Slabsto Nisshin Steel

Mid-May 2016(target) Execution of Definitive Agreement and Timely Disclosure

Nisshin Steel becoming NSSMC’s subsidiary （will continue to be a listed company）

March 2017(target) After obtaining clearance from domestic and overseas competition authorities and

WithinFY2019 Commencement of supply of steel slabs to Nisshin Steel

After obtaining clearance from domestic and overseas competition authorities and other required procedures are taken


FY2019 Commencement of supply of steel slabs to Nisshin Steel

3Necessity : Severe Business Environment Surrounding the Steel Industry

Worldwide ：Stalling of Chinese economy⇒Decrease in demand for steel productsWorldwide ：Stalling of Chinese economy⇒Decrease in demand for steel products⇒Increase of export⇒Rapid deterioration of global supply-demand condition

Domestic： Demand cannot be expected to expand considering decrease in population Stainless： Production capacity of overseas manufacturers enhanced

Crude Steel Capacity, Production& Demand in China and Export Worldwide Share of Production Domestic

Stainless： Production capacity of overseas manufacturers enhancedImports from overseas giants is increasing in domestic market

1,100

1,200

MMt/Y

CapacityO

& Demand in China and Export of Steel products from China Capacity of Stainless SlabSteel Consumption

Tsingshan OutokumpAcerinox

80

100MMT/Y

800

900

1,000

Production

OverCapacity

Tyssen Krupp AST

他60

80

60

80

Manufacturing Setror

600

700

800

Demand（i d l）

ProductionNet Export

POSCO

TAIYUAN20

40

Manufacturing Setror

400

500（in crude steel）

Export100

～

TAIYUAN

YUSCOJindalBaosteel0

20

1975

1980

1985

1990

1995

2000

2005

2010

015見

Construction and Civil Engineering sector


300'10 '11 '12 '13 '14 '15 '16

0 NSSMC’s estimation

20

4Historical Inevitability: Aim and Circumstances

Technology &Product ReadinessCost Competitiveness

Customer and Market Readiness by Meticulous StreLong History of

AllianceStre p

Global Network

Oct. 2012 Integration of Nippon Steel & Sumitomo Metals

Oct. 2012. Integration of Nisshin and Nippon Metal Industry (Apr. 2014 merger）

Capital1951～Nippon Steel invested

i i hi

yDevelopment and MarketingngthsAlliance ngths

Merger Synergy Effects（Optimizing Production Network,

Transferring the Best Practice）

Strengthening the position as “the

24th Medium-Term Plan（2012～2016）

in NisshinThe Largest Shareholder

Human Resources Consider Structural Measures • Enhance Core Products Strategies• E d K N 1 BF dStrengthening the position as the

Best Steelmaker with World-Leading Capabilities”

OperationMutual Supply of Stainless Hot Coil

Processing Byproduct dust from Kure in RHF in Hirohata Works

• Expand Kure No.1 BF and Cease Operations at Kure No.2 BF⇒ Propose to NSSMC

constant supply of steel slabs

Share a view that it is necessary to bring together respective management resources and create a synergy effect to overcome this severe business environment

Commence the

Subsidiaryacquisition

Supply ofSlabs

Decrease Fixed CostIncrease operation rate

Promoting Alliance Measures

Discussion


acquisition Slabs Increase operation rateAlliance Measures

5Vision of Improving Corporate Value Further Strengthen the position of NSSMC Group as “the Best Steelmaker with

Creating a Synergy Effect

Further Strengthen the position of NSSMC Group as the Best Steelmaker with World –Leading Capabilities” with the addition of Nisshin Steel

Contribute to our customers and society

Provide better products, technologies, and services that meet customer needs;Enhance profitability; Contribute to the creation and development of a more affluent society

Creating a Synergy Effect by Exploiting the Management Resources of NSSMC and Nisshin Groups

Alliance in areas of Operation, Technology, Facilities, Procuring raw materials, resources and equipment, Management of the manufacturing sites (such as safety, environment, disaster prevention, and maintenance)

Promoting Alliance Measures

g g ( y, , p , )

Enhance financial strengths by efficient use of funds and assets,

Maximizing Corporate Value and Improving Recognition by Shareholders and Capital Markets

Ensure healthy and sustainable growth


6Method of the Proposed Transaction and Related MattersPublicly disclose as soon as an agreement is reached

Method of the Transaction

Publicly disclose as soon as an agreement is reachedwith the target date being the middle of May 2016

1) Acquisition of Nisshin Steel’s ordinary shares by tender offer2) Acquisition of ordinary shares issued or disposed by Nisshin Steel

by way of third-party allotment3) A bi ti f b th th th d3) A combination of both, or other methods⇒ Both companies plan to discuss the method of the Proposed Transaction by considering an acquisition by tender offer as the first choice, and comparing it with other methods, which will be set forth in the definitive agreement

Shareholding Ratio after the Transactiong

Currently, envisaged to be within the range of 51% to 66% (Percentage of Voting Rights Held )

⇒ Both companies plan to discuss the ratio which will be set forth in the definitive agreement

Acquisition price and related matters

⇒ Both companies plan to discuss the ratio which will be set forth in the definitive agreement. Nisshin Steel will continue to be a listed company after becoming NSSMC’s subsidiary.

Th i iti i (i t t l) d th t f id ti ( h iti d th ) fThe acquisition price (in total) and the type of consideration (cash, securities and others) for acquisition of Nisshin Steel’s ordinary shares is yet to be determined. Both companies plan to discuss these matters, and provide in the definitive agreement.If NSSMC decides to choose cash as consideration, NSSMC intends to use its funds on hand or


,funds to be borrowed from outside sources

7Appendix: Manufacturing Bases in JapanBlue：Nippon Steel & Sumitomo Metal

：Bl t FBlue Nippon Steel & Sumitomo MetalNippon Steel & Sumikin Stainless Steel (NSSC)

Green：Nippon Steel & Sumikin Coated Sheet (NISC)Red：Nisshin Steel

：Blast Furnace

：Electric Furnace

Inner Volume(m3)

Cease operation ofNo.2BF

(Discussing)2902Muroran

Kamaishi

Amagasaki NaoetsuHirohata

Shunan Kure OsakaNISC

Amagasaki

Nisshin StainlessSteel Tubing（Amagasaki）

2650 2080

Kashima

OsakaSteel WorksYawata

Tobata AreaYawata Area NSSC Kashima

Cease operation ofNo.2 BF in Kokura

In FY2018

NISC

5370 537050002150

Kokura Area

S k i

Ichikawa

Kinuura

NSSC Yawata

NISCFunabashi

NISCKonan Spin-off to

Nisshin Steel A&C In Apr. 2016

KimitsuNagoya

Oita

Kimitsu AreaWakayama Areaa

Oita AreaHikari Area Wakayama

Sakai

Toyo

Kinuura

k

Cease operation ofNo.3BF

in Mar.2016

NISCSakai

4500 4822 5555430054433700 2700

5775 5775


Tokyo Areay

Sakai AreaKainan Area

NSSC Hikari

8Appendix: Manufacturing Bases OverseasStainless Sheets Bar Crankshaft,Stainless

Steel & Pipe Pipe and Tube &Wire Rod

Tinplate

Crankshaft, Railway Wheels

For Infra-structureHome appliances

ForAutomotive

Baoxin Tianjin Ti ji Ch F

Nantong, ZNW

China

ASEAN

NSCh HuizhouBaoji , GYA , WINSPBNA , Ring-Techs Guanzhou

Baoxin, Tianjin , Chang Fu, Ri hong, NJJ

Tianjin , Chang FuWINSteel, PATIN

ASEAN

India

NSPPT

SMAC

TSP , SNP , VSP , NPV, INP

STP,Latinusa

NPI

ANSANS

SUS , NSGT , KNSS

JCAPCPL

Bahru , NJW , NIMS(S)、NIMS(M)

CSVC , N-EGALV , NSBS

North America NSCI

SMAC

ICI , SS , STI , PEXCO , WTC

NPI

I/N Tek , I/N KOTE,

JCAPCPL

NAT , North American St i l

Wheeling-Nisshin

NSBS

LATAM

NSCI , ,NSCRANKSHAFT

VSB , NPM

, ,/ , / ,AM/NS Calvert

TENGAL , UNIGAL

Stainless

Europe

Others

SuzukiGarphyttan

NPC

Acerinox

Columbus


OthersAGIS、MRM、SAFAL

9Appendix: Nisshin’s Manufacturing Bases Overseas

ACERINOX

Wheeling-Nisshin(100%)[60]

Tianjin Rihua(10%)

Ri Hong(25%)

Chang FuACERINOX(15.3%)[110] North American Stainless

Nisshin Automotive Tubing(88.5%)[0.7]

Nantong(90%)

ZNW(55%)

Baoxin(20%)[66]

Chang Fu(24.83%)

ANS

NJＪ(40%)

NJW(47.5%) Bahru

NIMS(M)(75%)

NIMS(S)(100%)

(24.5%)

ColumbusStainless

(30%) (100%)

Stainless Steel

Ordinary steel pipe

Stainless pipe

Coated sheet


y p p

Speciall steel ( ) equity share [ ] Production Capacity(10 thousandｔ/Y)

10Appendix: NSSMC’s Manufacturing Bases Overseas

I/N Tek(40%)[170]

I/N Kote(50%)[95]BNA(50%)[240]WINSteel

(50%)[80]

NS CRANKSHAFT(60%)Huishou

(60％)

SuzukiGarpyttan(100%)[4]

Ribg-Techs Guanzhou

(50%)[80]

PATIN(25%)[20]PEXCO(30%)[1.2]

Baoji(25%)[20]

WNSP(71%)[2.4]

NPI

SS(80%)

ICI(80%)

SMAC(40%)

(60％)NSCh(25%)[4.8]

NSCI(42%)[4]

AM/NS Calveｒt(50%)[530]

( )[ ]

CSVC(30%)[120]

AGIS(20%)[46]

NPC(51%)[43] STI(80%)[8.4]

GYA(66%)[3.6]

( )[ ]

(99.28%)[2.4] WTC(96.7%)[24]

ICI(80%)

USIMINAS(29 2%)

JCAPCPL(49%)[60]

N-EGALV(50.1%)[12]

MRM(10%)[30] VSB(40.4%)[60]

NPM(80%)[2.4]

TENIGAL(49%)[40]

VSP(60%)[4.8]

NPV(76.3%)[6]

UNIGAL(30%)[103]

USIMINAS(29.2%)

NSGT(100%)[36]SUS(67%)[100]

STP(15.6%)[27]

NSBS(50%)[140]

Latinusa(35%)[16]

SAFAL(2.4%)[30]

INP(96 3%)[4 2]

NSSPT(58.9%)[10]

Pipe

Bar & Wire Rod

Automotive steel sheet

Sheet for Infra-structiure, home appliances etc.

KNSS(80%)[48]TSP(55%)[8.4]

SNP(60.5%)[7.1]

INP(96.3%)[4.2]

( ) equity share [ ] Production Capacity(10 thousandｔ/Y)


Others

11Appendix: Companies’ Profile

Company NameNippon Steel & Sumitomo Metal

i Nisshin Steel Co., Ltdp yCorporation Nisshin Steel Co., Ltd

Headquarters 2-6-1 Marunouchi, Chiyoda-ku, Tokyo 3-4-1 Marunouchi, Chiyoda-ku, Tokyo

Kosei Shindo Toshinori MikiRepresentative

Kosei ShindoRepresentative Director and President

Toshinori MikiPresident & Chief Executive Officer and

Representative Director

Common Stock* ¥419,524 million ¥30,000 millionCommon Shares

(issued)*9,503 millon shares 109 million shares

Total Asset * ¥7,157 billion ¥770 billionEmployees* 84,447（Parent company 23,775） 6,879（Parent company 4,128）

Fiscal Year End March 31 March 31

Japan Trustee Services Bank 4 1% Nippon Steel & Sumitomo Metal 8 3%

Shareholders*

Japan Trustee Services Bank 4.1%The Master Trust Bank of Japan 3.3%Nippon Life Insurance 2.6%Sumitomo Corporation 1.9%

Nippon Steel & Sumitomo Metal 8.3%Japan Trustee Services Bank 6.8%The Master Trust Bank of Japan 4.8%Taiyo Life Insurance 2.4%


Mizuho Bank 1.7% The Bank of Tokyo-Mitsubishi UFJ 2.2%* As of the end of March 2015

12Appendix: Financial IndexesCrude Steel Production Sales

46.03 48.16 47.32 44.80 50

60 MMT/Y

Crude Steel Production Sales

5083.5 5516.1 5610.0

4970.0 5,000

6,000 bn¥/Y

30

40

Non-Consolidated

Subsidiaries

3,000

4,000

43.90 45.67 44.96 42.40

10

20

1,000

2,000

0 '1

2

'13

'14

'15[

E]

2012 includes Ex-Sumitomo Metals1H

5 MMT/Y 576 4 617.5700 bn¥/Y

0

'12

'13

'14

'15[

E]

2012 includes Ex Sumitomo Metals 1H

0.74 0.75 0.71 0.66

4.02 3.93 3.98 3.85

2

3

4

MMT/Y

Stainless

Ordinary Steel and Special Steel

551.7 576.4 617.5 549.0

300

400

500

600 bn¥/Y

3.28 3.18 3.27 3.19

0

1

2

12 13 14 E]

y p

0

100

200

300

12 13 14 E]


'1 '1 '1

'15[

E

2012 includes Ex-Nippon Metal Industry 1H

'1 '1 '1

'15[

E

2012 includes Ex Nippon Metal Industry 1H

13Appendix: Financial IndexesOrdinary Profit ROS Net Profit ROE

8.1%8%

9%

600

700 *incl.InventoryE l i

bn¥/Y 2012 includes Ex-Sumitomo Metals 1H

243 214

9.6%7.6%

8%

10%

300

400

bn¥/Y

Ordinary Profit, ROS Net Profit, ROE

361.0

451.76.5%

4.0%4%

5%

6%

7%

300

400

500

600 EvaluationLoss-80

214140

0%

2%

4%

6%

0

100

200

300

87.7

200.01.7%

1%

2%

3%

4%

100

200

300*

-125-5.2%

-8%

-6%

-4%

-2%

-300

-200

-100

2012 i i b0%0'1

2

'13

'14

'15[

E] -10%-400

'12

'13

'14

'15[

E]

2012 : surviving company base

9.2%

8%10%60

bn¥/Y3.4% 3.2%

3%60bn¥/Y

17.7 16.91.00.7%

2%0%2%4%6%8%

0

20

40

19.7 19.66.5

1.2%

-1%0%1%2%3%

200

204060

**

-37.3-10%-8%-6%-4%-2%

-60

-40

-20

2 3 4 E]

2012 : surviving company base

-22.4

-4.1% -5%-4%-3%-2%

100806040

2 3 4 E]**

Incl.InventoryEvaluationLoss -14

© 2016 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.'1 '1 '1

'15[

E'1 '1 '1

'15[

E

2012 includes Ex-Nippon Metal Industry 1H

14Appendix: Financial IndexesTotal Asset, Interest bearing Debt DERShareholders’ equity ratio Interest-bearing Debt, DER

37.9%41.6% 43.2%

40%

45%

50%

9,00010,000 11,000 bn¥

1.06

0.860 75

1.03,000

3,500

DER

bn¥

33.8%

20%

25%

30%

35%

40%

5,000 6,000 7,000 8,000 9,000

0.660.75

0.6

0.8

1,500

2,000

2,500

7089.4 7082.2 7157.9 6758.2

5%

10%

15%

20%

1,000 2,000 3,000 4,000 2543.0 2296.3

1976.5 2179.5

0 0

0.2

0.4

0

500

1,000

0%0 '1

2

'13

'14

'15.

9

0.00

'12

'13

'14

'15.

9

34.1% 34.1%35%

40%

1 0001,100 1,200 bn¥ 1.69

1.361 35 1.4

1.6600

700

Net DER

bn¥

24.8%28.0%

15%

20%

25%

30%

500 600 700 800 900

1,000

1.00 1.021.35

1.11

0.86 0.87

0 6

0.8

1.0

1.2

300

400

500 Net DER

Net DER（based on the credit rating）

694.2 741.7 770.5 752.3

0%

5%

10%

15%

0 100 200 300 400 500

334 324 290 285

0.0

0.2

0.4

0.6

0

100

200

3 9


'12

'13

'14

'15.

9 '12

'13

'14

'15.

9

commencement of discussions regarding making nisshin … · 5401: jp 1 nssmy: adr (us) commencement...

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