26/05/2016

2016 Mid-term Business Plan (FY2016 to FY2020)
~Transform our business model from "Processing Special Steel " into "Creating Added Value from Materials " ~

Financial Results Overview 1 - Growth & Profitability -

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

Financial Results Overview 2 - Financial Soundness -

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

2016 Mid-term Business Plan - Slogan and Vision -

Slogan

Vision

Corporate Objectives 1 - Mid-term Business Plan -

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

Corporate Objectives 2 - KPI and Financial Targets -

  • Targets for FY2020: sales; 170 Billion Yen, ROE; 8%, overseas sales ratio; 47%,
  • Targets for FY2025: sales; 250 Billion Yen, ROE; over 10%, overseas sales ratio; 65%
  • Budget 26 Billion Yen to facilities and 21 Billion Yen to M&A from FY2016 to FY2018.
  1. *1:Overseas Sales is based on the customer's country or area,
  2. *2:ROE = Net cash/Equity (at year's end)
  3. *3:Net D/E Ratio = ((Interest bearing debt - cash & equivalents) ÷ Equity,
  4. *4:Investment = Increase of fixed assets + affiliated company's stocks

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

Three Tactics

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

Basic Strategy 2 - Transformation Agendas and Key Initiatives -

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

Key Initiatives by Division - Steel -

Special Steel Business

  • 【Key Initiatives 1】Investment: invest 9 billion Yen on renewal of old facilities and other strategies in FY2016 to FY2018
    • Bearing the burden of depreciation for the time being, turning to be profitable after FY2018
    • After FY2019, initiate plans to investment on cost reduction, productivity and quality control.
  • 【Key Initiatives 4】Sales Expansion : sell special steel in Indonesia
    • Increase sales of special steel made by JTS, especially to local Japanese customers.
    • Develop materials and manufacturing methods to reduce Spring's weight.
  • 【Key Initiatives 8】Overseas expansion: worldwide expansion with Spring's facilities.
    • Develop manufacturing capability in Indonesia and expand into North America and India
    • Create supply chains and sell our products in respective areas.
  • R&D : Tie up with new Technology Center, and promote industrialization

Key Initiatives by Division - Springs -

Springs Business

  • Key Initiatives 7 : Expand worldwide sales of Leaf Springs by the vertically-integrated manufacturing (from material to spring product) in local sites of Indonesia
    • Improve cost-competitiveness by vertically-integrated manufacturing in Indonesia → Expand sales in Japan, India and Thailand. Enhance to North America.
  • Key Initiatives 2 : Build a worldwide supply chain for Coil Springs and Stabilizer business.
    • Early launch of new manufacturing site of Mexico
    • Expansion to Euro market → Expand manufacturing capability by M&A → Establish a position as worldwide supplier
  • Key Initiatives 3 : Boost technological development
    • Reduce weight and production cost.

Key Initiatives by Division - Castings & Forgings -

Castings & Forgings Business

  • Key Initiatives 10: Build an Integrated model, from material to assembly, by melting furnaces of special steel
    • Turn to vertically-integrated business model by investing in new VIM furnaces and self-manufacturing master heat as materials for precision forming
    • Invest newly in furnaces for mass production of gas-atomized alloy powders and melting furnaces for water-atomized alloy powders
  • Key Initiatives 9: Expand sales to turbocharger market.
    • Build an vertically-integrated business model in both sub-assembly and alloy powder businesses in turbocharger market by utilizing M&A as one of its approch.
  • Optimize production facilities
    • Optimize labor intensive process among factories overseas
    • Generate an efficient manufacturing process for thriving demand of turbine wheel and nozzle vane.

Key Initiatives by Division - Machinery -

Machinery Business

  • Forge rolling machinery: Receive customer order as business package, and accelerate overseas business
    • Sales of machines in production lines as a package, fully utilizing our strength of technology and development as a total engineering company.
    • Sales expansion especially into North America utilizing our facility network including subsidiaries of other divisions, and newly into such areas as China, Korea, Taiwan and India.
  • Support investments of other divisions
    • Renewal of Muroran (MSR) and any other affiliated companies.
  • Protective equipment: Stretching from military markets to commercial market
    • Expand sales of the products for natural disasters and counter- terrorism commercial sector, backed by Tokyo Olympic Games and nuclear power plants
  • Environmental machines: Expand with new technology and know-hows in facility operation
    • Exhibition and sales expansion of "METHASAURUS ", a sewage treatment plant, by a new technology in Nagasaki.
    • Sales expansion of new technology(hydrothermal technics) to such overseas markets as China.
<Notes on future prospects>
Any statements in this document, other than those of historical facts, are forward-looking statements about future performance of Mitsubishi steel Mfg. and its group companies, which are based on management's assumptions and beliefs in light of information currently available, and involve risks and uncertainties. Actual results may differ materially from these forecasts.