Commencement of Discussions Regarding. NSSMC s Supply of Steel Slabs to Nisshin Steel

Transcription

1 541: JP NSSMY: ADR (US) 1 Commencement of Discussions Regarding Making Nisshin Steel A Subsidiary of NSSMC and NSSMC s Supply of Steel Slabs to Nisshin Steel February 1 st, 216 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 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 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 uncertainties. Actual results may differ materially from these forecasts. 216 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

2 Commencement of Discussions February 1, 216 Execution of the MOU regarding the Discussions regarding Making Nisshin Steel A Subsidiary of NSSMC On the premise of subsidiary acquisition iti NSSMC s Constant Supply of Steel Slabs to Nisshin Steel 2 Mid-May 216 (target) March 217 (target) Within FY219 Execution of Definitive Agreement and Timely Disclosure Nisshin Steel becoming NSSMC s subsidiary (will continue to be a listed company) After obtaining clearance from domestic and overseas competition authorities and other required procedures are taken Commencement of supply of steel slabs to Nisshin Steel 216 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

3 Necessity : Severe Business Environment Surrounding the Steel Industry Worldwide :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 Imports from overseas giants is increasing in domestic market Crude Steel Capacity, Production & Demand in China and Export of Steel products from China 1,2 MMt/Y 1,1 1, ~ Capacity Production Demand (in crude steel) Export Over Capacity Net Export '1 '11 '15 '16 1 MMT/Y Domestic Steel Consumption Manufacturing Setror Construction and Civil Engineering sector 見 6 Worldwide Share of Production Capacity of Stainless Slab Tsingshan 他 Baosteel Outokump Jindal 3 Acerinox Tyssen Krupp AST POSCO TAIYUAN YUSCO NSSMC s estimation 216 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

4 Historical Inevitability: Aim and Circumstances 4 Stre ngths Technology &Product Readiness Cost Competitiveness Global Network Oct. 212 Integration of Nippon Steel & Sumitomo Metals Merger Synergy Effects (Optimizing Production Network, Transferring the Best Practice) Strengthening the position as the Best Steelmaker with World-Leading Capabilities Long History of Alliance Capital 1951~Nippon Steel invested in Nisshin The Largest Shareholder Human Resources Operation Mutual Supply of Stainless Hot Coil Processing Byproduct dust from Kure in RHF in Hirohata Works Stre ngths Customer and Market Readiness by Meticulous Development and Marketing Oct Integration of Nisshin and Nippon Metal Industry (Apr. 214 merger) 24 th Medium-Term Plan(212~216) Consider Structural Measures Enhance Core Products Strategies Expand dkure 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 Discussion Subsidiary acquisition Promoting Alliance Measures Supply of Slabs Decrease Fixed Cost Increase operation rate 216 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

5 Vision of Improving Corporate Value 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 Creating a Synergy Effect by Exploiting the Management Resources of NSSMC and Nisshin Groups Provide better products, technologies, and services that meet customer needs; Enhance profitability; Contribute to the creation and development of a more affluent society Promoting Alliance Measures 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) Maximizing Corporate Value and Improving Recognition by Shareholders and Capital Markets Enhance financial strengths by efficient use of funds and assets, Ensure healthy and sustainable growth NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

6 Method of the Proposed Transaction and Related Matters Publicly disclose as soon as an agreement is reached with the target date being the middle of May 216 Method of the Transaction 1) Acquisition of Nisshin Steel s ordinary shares by tender offer 2) Acquisition of ordinary shares issued or disposed by Nisshin Steel by way of third-party allotment 3) 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 Transaction 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. Nisshin Steel will continue to be a listed company after becoming NSSMC s subsidiary. Acquisition price and related matters The acquisition iti price (in total) t 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 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

7 Appendix: Manufacturing Bases in Japan 7 Blue:Nippon Steel & Sumitomo Metal Nippon Steel & Sumikin Stainless Steel (NSSC) Green:Nippon Steel & Sumikin Coated Sheet (NISC) Red:Nisshin Steel Inner Volume(m3) :Blast t Furnace :Electric Furnace Cease operation of No.2 BF in Kokura In FY218 Cease operation of No.2BF (Discussing) Nisshin Stainless Steel Tubing (Amagasaki) NISC Amagasaki Shunan Kure Osaka Yawata Tobata Area Yawata Area Kokura Area NSSC Yawata Hirohata Amagasaki Osaka Steel Works NISC Konan Naoetsu 292 Muroran Kamaishi Kashima NSSC Kashima Ichikawa Spin-off to Nisshin Steel A&C In Apr Oita NSSC Hikari Oita Area Hikari Area Toyo Wakayama Wakayama Areaa Sakai Area Kainan Area NISC Sakai Sakai Kinuura Nagoya NISC Funabashi Kimitsu Kimitsu Area Tokyo Area Cease operation of No.3BF in Mar NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

8 Appendix: Manufacturing Bases Overseas 8 China Stainless Steel & Pipe For Infra-structure Home appliances Baoxin, Tianjin, Tianjin, Chang Fu Chang Fu, Ri hong, NJJ Sheets Bar Crankshaft, Tinp For Pipe and Tube &Wire Railway late Wheels Automotive Rod Nantong, ZNW BNA, Ring-Techs Guanzhou Baoji, GYA, WINSP NSCh WINSteel, PATIN Huizhou ASEAN Bahru, NJW, NIMS(S) NIMS(M) CSVC, N-EGALV, NSBS SUS, NSGT, KNSS TSP, SNP, VSP, NPV, INP NSPPT STP, Latinusa India ANS JCAPCPL ANS NPI SMAC North America NAT, North American Stainless Wheeling-Nisshin NSBS I/N Tek, I/N KOTE, AM/NS Calvert STI, PEXCO, WTC NSCI ICI, SS, NSCRANKSHAFT LATAM TENGAL, UNIGAL VSB, NPM Europe Acerinox Suzuki Garphyttan Others Columbus AGIS MRM SAFAL NPC 216 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

9 Appendix: Nisshin s Manufacturing Bases Overseas 9 Tianjin Rihua (1%) ACERINOX (15.3%)[11] Columbus Stainless Baoxin (2%)[66] Chang Fu (24.83%) ANS (24.5%) Ri Hong (25%) NJW (47.5%) Bahru (3%) NIMS(M) (75%) Nantong (9%) NIMS(S) (1%) ZNW (55%) NJJ (4%) North American Stainless Nisshin Automotive Tubing (88.5%)[.7] Wheeling-Nisshin (1%)[6] Stainless Steel Stainless pipe Coated sheet Ordinary steel pipe p Speciall steel ( ) equity share [ ] Production Capacity(1 thousandt/y) 216 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

10 Appendix: NSSMC s Manufacturing Bases Overseas 1 SuzukiGarpyttan (1%)[4] AGIS(2%)[46] NPC(51%)[43] NPI (99.28%)[2.4] Huishou (6%) SMAC (4%) Baoji (25%)[2] WINSteel (5%)[8] BNA(5%)[24] NSCh(25%)[4.8] WNSP(71%)[2.4] Ribg-Techs Guanzhou PATIN(25%)[2] GYA(66%)[3.6] CSVC(3%)[12] NSCI (42%)[4] NS CRANKSHAFT (6%) WTC (96.7%)[24] JCAPCPL(49%)[6] VSP(6%)[4.8] TENIGAL NPM NPV(76.3%)[6] (49%)[4] (8%)[2.4] MRM N-EGALV (1%)[3] (5.1%)[12] VSB(4.4%)[6] SAFAL (2.4%)[3] Pipe Automotive steel sheet NSBS(5%)[14] Latinusa(35%)[16] INP(96.3%)[4.2] Sheet for Infra-structiure, home appliances etc. Bar & Wire Rod Others KNSS(8%)[48] SUS(67%)[1] NSGT(1%)[36] NSSPT(58.9%)[1] STP(15.6%)[27] TSP(55%)[8.4] SNP(6.5%)[7.1] USIMINAS(29.2%) 2%) UNIGAL(3%)[13] I/N Kote (5%)[95] I/N Tek (4%)[17] SS(8%) PEXCO(3%)[1.2] ICI(8%) ( ) equity share [ ] Production Capacity(1 thousandt/y) AM/NS Calvert (5%)[53] STI(8%)[8.4] 216 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

11 Appendix: Companies Profile 11 Company Name Nippon Steel & Sumitomo Metal Corporation Nisshin Steel Co., Ltd Headquarters Marunouchi, Chiyoda-ku, Tokyo Marunouchi, Chiyoda-ku, Tokyo Representative Kosei Shindo Representative Director and President Toshinori Miki President & Chief Executive Officer and Representative Director Common Stock* 419,524 million 3, million Common Shares (issued)* 9,53 millon shares 19 million shares Total Asset * 7,157 billion 77 billion Employees* 84,447(Parent company 23,775) 6,879(Parent company 4,128) Fiscal Year End March 31 March 31 Shareholders* * As of the end of March 215 Japan Trustee Services Bank 41% 4.1% Nippon Steel & Sumitomo Metal 8.3% The Master Trust Bank of Japan 3.3% Japan Trustee Services Bank 6.8% Nippon Life Insurance 2.6% The Master Trust Bank of Japan 4.8% Sumitomo Corporation 1.9% Taiyo Life Insurance 2.4% Mizuho Bank 1.7% The Bank of Tokyo-Mitsubishi UFJ 2.2% 216 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

12 Appendix: Financial Indexes 12 Crude Steel Production Sales 6 MMT/Y Subsidiaries , bn /Y 5, , 3 Non-Consolidated 3, , 1 1, 212 includes Ex-Sumitomo Metals1H '15[E] 212 includes Ex Sumitomo Metals 1H '15[E] 5 7 MMT/Y bn /Y Stainless 4 Ordinary Steel and Special Steel '1 12 ' includes Ex-Nippon Metal Industry 1H '1 14 '15[E E] '1 12 ' includes Ex Nippon Metal Industry 1H ' '15[E E] 216 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

13 Appendix: Financial Indexes 13 Ordinary Profit, ROS Net Profit, ROE bn /Y 212 includes Ex-Sumitomo Metals 1H 7 8.1% *incl. Inventory 6 6.5% Evaluation Loss bn /Y % % 3.2% % 2. '15[E] 1.2% 6.5 * 9% 8% 7% 6% 5% 4% 3% 2% 1% % 3% 2% 1% % -1% -4.1% -5% 2 '1 3 '1 4 '1 212 includes Ex-Nippon Metal Industry 1H ** ** Incl. Inventory Evaluation Loss -14 '15[E E] -2% -3% -4% bn /Y bn /Y % 9.6% % : surviving i company base 9.2% % : surviving company base 2 '1 3 '1 4 '1 14 '15[E] 1. '15[E E] 1% 8% 6% 4% 2% % -2% -4% -6% -8% -1% 1% 8% 6% 4% 2% % -2% -4% -6% -8% -1% 216 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

14 Appendix: Financial Indexes Total Asset, Shareholders equity ratio 11, 5% 3,5 bn 1.6 bn 1, 41.6% 43.2% 45% 3, 9, 37.9% 4% 8, 33.8% 2,5 35% 7, 3% 2, 6, 25% 5, 1,5 2% 4, % 1, 3, 2, 1% 5 1, 5% % 1,2 bn 1,1 1, % 28.% '15.9 4% 34.1% 34.1% 35% '15.9 3% 25% 2% 15% 1% 5% % Interest-bearing Debt, DER 7 bn Net DER 1.11 (based on the credit rating) DER Net DER ' ' NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.