Top Banner
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 5401: JP NSSMY: ADR (US) October 27 th , 2017 ‘NIPPON STEEL & SUMITOMO METAL CORPORATION’ is abbreviated as ‘NSSMC’ All volume figures are presented in metric tons Unless otherwise noted, all financial figures are on a consolidated basis Notes on this presentation material Second Quarter FY2017 Earnings Summary Katsuhiro Miyamoto Managing Executive Officer
50

Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

Mar 17, 2018

Download

Documents

vukhue
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

5401: JPNSSMY: ADR (US)

October 27th, 2017

• ‘NIPPON STEEL & SUMITOMO METAL CORPORATION’ is abbreviated as ‘NSSMC’• All volume figures are presented in metric tons• Unless otherwise noted, all financial figures are on a consolidated basis

Notes on this presentation material

Second Quarter FY2017Earnings Summary

Katsuhiro MiyamotoManaging Executive Officer

Page 2: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Agenda 2

1. FY2017 1H Results & Full Year Forecast

2. Progress in Mid-Term Management Plan

3. Appendix

Page 3: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

3

1. FY2017 1H Results & Full Year Forecast

Page 4: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Overview: FY2017 1H Results & Full Year Forecast 4

Business Environment

Topics

Financial Highlights

Domestic: Economy is expected to maintain a moderate recovery, supported by stable private consumption and capital investment, despite some restraint in business activities caused by labor shortages. Demand for steel will stay firm, led principally by demand in the automotive sector.

Overseas: Overall moderate conditions will continue, supported by favorable business conditionsin USA and Europe, sustained firm conditions in China, and ongoing gradual economic recovery in developing countries.

Commodity Price: Prices of commodities such as alloy and scrap have surged this year to date. Sales price: Keep negotiating to improve the metal margin for sustainable reproduction.Technological superiority: Japanese Ministry of Trade, Economy and Industry honors NSSMC with award for

Yawata works’ newly-developed Eco-friendly stainless steel manufacturing process. This process enabled 100% recycle of stainless steel scraps generated in Yawata works.

Application of IT: NS Solutions launched the Artificial Intelligence R&D center in its Systems R&D center . Asset compression: Sellout of SUMCO shares. Ownership ratio 13.42→7.92%. Sales 27.8 bn¥. (Oct,17)

FY2017 1H FY2017 (E)Ordinary Profit (bn ¥) 157.6 (ROS 5.7%) 300.0 (ROS 5.4%)

Net Profit (bn ¥) *1 99.1 (¥112.3/share) 170.0 (¥193.0/share)

Profit attributable to owners of parent*1

Interim dividend: ¥30.00/share(+¥5.0 from the prev. forecast as of Jul.28)

Consolidated payout ratio: 26.7%

Page 5: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

11.0

119.999.1

70.9

0.8%

8.6% 6.6%

16/1H 16/2H 17/1H 17/2H(E)

28.0

146.5157.6 142.41.3%

5.9% 5.7% 5.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

16/1H 16/2H 17/1H 17/2H(E)

2,160.7 2,472.0 2,745.0 2,855.068.0

77.183.5 85

40.0

45.0

50.0

55.0

60.0

65.0

70.0

75.0

80.0

85.0

90.0

16/1H 16/2H 17/1H 17/2H(E)

107 110 111

21.51 21.11

20.09

21.50

19.68 20.09

18.72

20.30

16/1H 16/2H 17/1H 17/2H(E)

*1

FOREX$・¥

Key Indicators: FY2017 1H Results & Full Year Forecast 5

ROS

Ordinary Profit Net ProfitROE(annualized)

Profit attribute to owners of parent

bn¥

bn¥

MMT

Avr. Steel Selling Price

Crude Steel Production

Steel Shipments

Volume Sales

bn¥

MMT k¥/t

*2*1 Non-consolidated+Nippon Steel & Sumikin Koutetsu Wakayama Co.

*2

110

Page 6: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

1,808

2,891

2,511

2,933

1,904

3,430

2,259

3,198

1,920

3,0002,780

3,300

1Q 2Q 3Q 4Q1,000

1,500

2,000

2,500

3,000

3,500

4,000 2015 2016 2017

* *1.10

1.23

1.14

1.47

1.08

1.23 1.19

1.58

1.20 1.25 1.20

1.43

1Q 2Q 3Q 4Q1.00

1.20

1.40

1.60

1.80

2015 2016 2017

* *

Key Indicators of Domestic Steel Demand 6

Finished Auto Production (million units) Non-Residential Construction Starts (million m2)

Auto Sales (million units) Public Works Orders (¥ in bn)

*

2.17

2.28

2.35 2.39

2.11

2.31

2.40

2.55

2.30 2.39 2.43

2.49

1Q 2Q 3Q 4Q2.00

2.10

2.20

2.30

2.40

2.50

2.602015 2016 2017

* *

13.68

12.80

12.02

11.49

13.59 13.20

12.47 12.07

13.90 13.25 13.25

12.50

1Q 2Q 3Q 4Q10.00

11.00

12.00

13.00

14.00

15.002015 2016 2017

**

Figures as of the end of August*

Page 7: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

12.3Q-12.4Q

13.1Q

13.2Q

13.3Q

13.4Q14.1Q

14.2Q

14.3Q

14.4Q

15.1Q15.2Q

15.3Q

15.4Q

16.1Q ’16.2Q’16.3Q

‘16.4Q

17.1Q

‘17.Jul.-Aug.

-6

-4

-2

2

4

6

8

-8 -6 -4 -2 0 2 4 6

0.5 0.50.4

0.50.6

0.50.5 0.5 0.5 0.5 0.5 0.6 0.5

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H Jul. Aug.

CY2012 CY2013 CY2014 CY2015 CY2016 CY2017

Domestic Steel Supply-Demand 7

3.92

4.32 4.26 4.18 4.03

3.91

4.05 4.08

4.01 3.95

4.14

0.0

0.5

1.0

1.5

3.00

4.00

5.00

'13/

03 06 09 12

'14/

03 06 09 12

'15/

03 06 09 12

'16/

03 06 09 12

'17/

03 06 08

Rolled sheets inventory (Left axis)Ordinary steel products inventory turnover ratio (Right axis)

Rolled Sheets Inventory*2(MMT)

Steel Imports by Region (MMT/Month) Steel Inventory Cycle

RecoveryAdjustment

Increase↑

DomesticOrdinary

SteelInventory

(YoY increase(%))

↓Decrease

Decrease← Ordinary steel shipped domestically →Increase(YoY increase (%))

Excessive Accumulation

Decrease

Steel Consumption (MMT)

China

Korea

Taiwan

Hot-rolled, Cold-rolled and Coated sheets*2

(Times)

15.2 15.4 15.4 15.0

14.8

15.5 16.0

15.6 15.3 15.616.0

15.6

1Q 2Q 3Q 4Q12

13

14

15

16

172015 2016 2017

*1

Figures as of the end of August*1

*1

Page 8: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

2013 2014 2015 2016 20170%

5%

10%

15%

20%

25%

30%

Key Indicators of Steel Demand Overseas 8

Rig Counts

997

1,094 1,167

1,234 1,296

1,337 1,167

955 948 1,089

1,546

1,875 1,919 1,761 1,862

977 510

859

249 249 395 324 326 354

205 126 221

0

500

1,000

1,500

2,000

2,500

CY2009

CY2010

CY2011

CY2012

CY2013

CY2014

CY2015

CY2016

足下('17/9)

International (excluding U.S., Russia, China)U.S.Deep Well (included in U.S. total)

latest(Sep.’17)

Fixed Asset Investment in China(ratio of growth over the previous year)*

Construction Spending in USA (bn$/Y)

Fixed Asset Investment

(PrivateInvestment)

(Real EstateInvestment)

(GovernmentInvestment)

(Source: National Bureau of Statistics of China)

(Sep.’17)

(Source: Baker Hughes)Calculated by using cumulative figures from Jan. in each year

*

( ): included in Fixed Asset Investment

Manufacturers' New Orders in USANondefense Capital Goods Excluding Aircraft (bn$/M)

2013 2014 2015 2016 201759

61

63

65

67

69

71

2013 2014 2015 2016 2017280

330

380

430

480

530

Residential

Non-residential

Page 9: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Crude Steel Production: Sharp increase since Spring 2017. Stable domestic demand and substitutional production foreliminated illegal induction furnaces which were out of statistics.

Inventory: Restocking in preparation for strong demand in fall and production cut in winter. Export: Downtrend since 2016. Jan. - Sep., 2017 vs. the same period of 2016 : -31% . Market Prices: Mar. - Aug, 2017: Upward trend. Early Sep.: Soft patch after one-off surge by Benxi BF trouble.

After National Day holiday(1-8th Oct.): Rebound & uptrend.

China’s Steel Supply-Demand & Market Trend 9

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

2.3

2.4

2.5

0.0

0.5

1.0

1.5

2.0

2.5

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9

CY13 CY14 CY15 CY16 CY17

Long Product Inventory(left axis)

Flat Product Inventory(left axis)

(MMT)Ave. Daily Crude Steel Production

(right axis)

4.7

5.2 5.2 5.0

6.0

7.3 7.9

9.3

8.4 8.7

10.0 9.6 9.1

9.6 9.2

7.7

6.8 6.6

6.8 6.3

5.0

0

2

4

6

8

10

1-3

7-9

1-3

7-9

1-3

7-9

1-3

7-9

1-3 7 9

CY13 CY14 CY15 CY16 CY17

Pipe

Long ProductExport

Flat Product Export

(MMT/month)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

0

100

200

300

400

500

600

700

800

10 1 4 7 10 1 4 7 10 1 4 7

2014 2015 2016 2017

China HC(right axis)

China DB(right axis)

East Asia HC(left axis)

Raw Material Cost /t INDEX*

($/t) (CNY/t)

China’s Export by Product Hot Rolled Sheets Prices by Region

Calculated by Iron Ore Market Price x 1.7 + Coal Market Price x 0.9*(Source: Japan Steel Association, SteelHome, CISA, MYSTEEL, NSSMC, etc.)

(MMT/day)

Crude Steel Production & Channel Inventories in China

Page 10: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

World Steel Demand Forecasts 10

WSA World Steel Demand Short Range Outlook

1,515

1,535 1,548

1,578

1,6221,648

2016 2017(E) 2018(E)

as of Apr.17

Estimatesas of Oct.17

Estimatesillegal induction furnaces

+44MMT

+26MMT

+13MMT+20

MMT

398.7401.5

406.2398.8

408.1412.0

2016 2017(E) 2018(E)

+9.3MMT

+3.9MMT

+4.7MMT

+2.8MMT

681.0 681.0 667.4

743.4

765.7 765.7

2016 2017(E) 2018(E)

Illegal induction furnaces 62.4MMT

+22.3MMT

+0.0MMT

▼13.6MMT

+0.0MMT

435.3

452.7

474.9

436.0448.2

470.4

2016 2017(E) 2018(E)

+22.2MMT

+12.2MMT

+17.4MMT

+22.2MMT

(MMT)

*Illegal induction furnaces (out of statistics) CY2014:52.4MMT, CY2015:57.6MMT, CY2016:62.4MMT

2017 2018

World Developed Em.andDev. China World Developed Em.and

Dev. China

Oct.17 3.6 2.2 4.6 6.8 3.7 2.0 4.9 6.5

Jul.17 3.5 2.0 4.6 6.7 3.6 1.9 4.8 6.4

Apr.17 3.5 2.0 4.5 6.6 3.5 2.0 4.8 6.2

Cf. IMF World Economic Outlook Projections (%)

Emerging and Developingexcl. China

China

DevelopedWorld

(Source: World Steel Association, IMF)

“Upward revision: Ongoing moderate growth”◆CY2017 +44MMT (vs.CY2016)Expanding demand in the global steel market. Higher performance than expected for both developed and developing economies except MENA.◆CY2018 +26MMT(vs.CY2017)Increase in global steel demand for 3 consecutive years despite leveling offin Chine.

Page 11: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Raw Materials and HC Price Trend 11

Hard Coking Coal Price (US$/wmt)

Fine Iron Ore Price (US$/dmt)

50

100

150

200

250

300'1

3/2Q

'13/

3Q

'13/

4Q

'14/

1Q

'14/

2Q

'14/

3Q

'14/

4Q

'15/

1Q

'15/

2Q

'15/

3Q

'15/

4Q

'16/

1Q

'16/

2Q

'16/

3Q

'16/

4Q

'17/

1Q

'17/

2Q

'17/

3Q

Contract Price

Market Price

$309 $314

$150

30

50

70

90

110

130

'13/

2Q

'13/

3Q

'13/

4Q

'14/

1Q

'14/

2Q

'14/

3Q

'14/

4Q

'15/

1Q

'15/

2Q

'15/

3Q

'15/

4Q

'16/

1Q

'16/

2Q

'16/

3Q

'16/

4Q

'17/

1Q

'17/

2Q

'17/

3Q

(Source: LME, Bloomberg, Japan Metal Daily)

East Asia HC ($/t)

Domestic HC (k¥/t)

350

390

430

470

510

550

590

630

16/2

Q

16/3

Q

16/4

Q

17/1

Q

17/2

Q

17/3

Q

5759616365676971737577

16/2

Q

16/3

Q

16/4

Q

17/1

Q

17/2

Q

17/3

Q

(2.3×4×8)

Page 12: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

8090

100110120130140150160170180

'16.

01

'16.

04

'17.

01

'17.

04

'17.

10FY16 FY17

HC FeCr(US¢/lb-Cr)

660

760

860

960

1,060

1,160

1,260

1,360

1,460

'16.

01

'16.

04

'17.

01

'17.

04

'17.

10FY16 FY17

HC FeMn(75%)(US$/t)

Commodity Price Hike 12

1,450

1,650

1,850

2,050

2,250

2,450

2,650

2,850

3,050

3,250

'16.

01

'16.

04

'17.

04

'17.

10

FY16 FY17

LME(US$/t)

1,420

1,520

1,620

1,720

1,820

1,920

2,020

2,120

'16.

01

'16.

04

'17.

04

'17.

10FY16 FY17

LME(US$/t)

(Source : LME, Bloomberg, Japan Metal Daily)

Manganese

Chromium

Scrap

Freight

Zinc

Aluminum

12

17

22

27

32

37

160

200

240

280

320

360

'16/

01

'16/

04

'17/

04

'17/

10

USA Scrap(No1HMS)(US$/t, CIF Korea)(Left axis)

Iron Scrap Bid Prices in Kanto Region(k\/t)(Right axis)

FY16 FY17

(US$/WMT, Cape size 170 thousand tons hull form)

2

6

10

14

18

22

'16/

01

'16/

04

'17/

04

'17/

10

From Brazil

From Western Australia

FY16 FY17

Page 13: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

1Q 2Q 1H 2H 1Q 2Q 1H[E] 1H 2H[E] [E]

10.49 10.76 21.26 20.89 42.15 9.92 10.13 20.20 20.05 21.40 41.50 -1.21 -0.15 +1.35 -0.65

11.16 11.53 22.70 22.47 45.17 11.44 11.69 23.50 23.12 24.80 47.90 +0.43 -0.38 +1.68 +2.73

10.58 10.93 21.51 21.11 42.62 9.90 10.19 20.40 20.09 21.50 41.60 -1.42 -0.31 +1.41 -1.02

9.60 10.09 19.68 20.09 39.78 9.34 9.39 19.40 18.72 20.30 39.00 -0.96 -0.68 +1.58 -0.78

0.24 0.23 0.47 0.46 0.93 0.24 0.25 0.46 0.49 0.50 0.99 +0.02 +0.03 +0.01 +0.06

111 103 107 110 109 111 111 110 111 110 110 4 1 1 1

424343

68.1 67.9

42

77.1

43

68.0

FY16

72.6

FY17 Change16/1H

vs.17/1H

17/1H[E]vs.

17/1H

17/1Hvs.

17/2H[E]

FY16 VS.

FY17[E]

84.0 83.0 83 83.5

42 42 41 42

+1185 84 +15.5 +0.5 +1

-1 +1 -1 -141 41

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

approx. approx.

NSSMC Operational Highlights 13

Forex ($・¥)

(million tons)

Pig-iron production

Consolidated Crude Steel Production

Non-ConsolidatedCrude Steel Production

Steel Shipments

Seamless PipeShipments

Average Steel Selling Price (1,000 yen/ ton)

Steel Export Ratio(Value basis (%))

Includes pig-iron production of Hokkai Iron & Coke corp. and Nippon Steel & Sumikin Koutetsu Wakayama Co.

Depreciate

*2*1

*1

*2

Includes crude steel production of Nippon Steel & Sumikin Koutetsu Wakayama Co.

Depreciate Appreciate Depreciate

*3 Figures as of July 28, 2017

*3

Page 14: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

1Q 2Q 1Q 2Q

1,051.1 1,109.6 2,160.7 2,472.0 4,632.8 1,355.4 1,389.6 2,700.0 2,745.0 2,855.0 5,600.0 +584.3 +45.0 +110.0 +967.2

(7.3) 25.2 17.8 96.3 114.2 66.5 33.4 99.9 +82.1

(12.0) 40.0 28.0 146.5 174.5 107.9 49.6 150.0 157.6 142.4 300.0 +129.6 +7.6 -15.2 +125.5

(6.2) (2.9) (9.1) 16.2 7.1 - (2.9) (2.9) +6.2

(14.6) 25.6 11.0 119.9 130.9 71.3 27.8 85.0 99.1 70.9 170.0 +88.1 +14.1 -28.2 +39.1

[(16.4)] [ 29.1 ] [ 12.4 ] [135.9] [148.0] [80.8] [31.5] [ 96.0 ] [112.3] [80.7] [193.0] [+99.9] [+16.3] [-31.7] [+45.0]

64.1 99.0 163.0 255.9 418.9 148.0 113.2 261.2 +98.2

6.1% 8.9% 7.5% 10.4% 9.0% 10.9% 8.1% 9.5% +2.0%

-1.1% 3.6% 1.3% 5.9% 3.8% 8.0% 3.6% 5.6% 5.7% 5.0% 5.4% +4.4% +0.2% -0.8% +1.6%

-2.2% 3.9% 0.8% 8.6% 4.6% 9.6% 3.7% 6.6% +5.8%

1H

FY16FY16 VS.

FY17[E]

Change17/1H

vs.17/2H[E]

17/1H[E]vs.

17/1H2H

16/1Hvs.

17/1H1H1H[E] 2H[E] [E]

FY17

FY2017 1H Results & Full Year Forecast 14

(¥ in billions)

Net Sales

Operating Profit

Ordinary Profit Extraordinary Profit

(Loss)

Net Profit

[ EPS ]

EBITDA

ROS

EBITDA / Sales

ROE

*1

Profit attribute to owners of parent*1*2

*2

Figures as of July 28, 2017

Page 15: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Extraordinary Profit & Loss 15

1Q 2Q 1Q 2Q

(6.2) (2.9) (9.1) 16.2 7.1 - (2.9) (2.9)

Gain on sales of shares of subsidiaries and associates - - - 24.1 24.1 - - -

- - - 10.0 10.0 - - -

Loss on inactive facilities - (2.7) (2.7) (10.0) (12.7) - (2.9) (2.9)

Loss on disaster - - - (7.8) (7.8) - - -

Restructuring Loss (6.2) (0.2) (6.4) - (6.4) - - -

1H(¥ in billions)

Extraordinary Profit (Loss)

FY17

1H2H

FY16

Gain on step acquisitions

Page 16: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

(Adjustment Page) 16

Page 17: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

28.0

157.687.0 -29.0

-279.0+249.0

+12.0 -10.0 -15.0 +14.0 +59.0+10.0

97.6

Ordinary Profit Variance Analysis [FY16/1H vs. FY17/1H] 17

(¥ in billions) FY16/1H[A]

FY17/1H[B]

Change[A→B]

Ordinary Profit 28.0 157.6 +129.6Steel 14.0 128.7 +114.7

Non-Steel 13.4 23.2 +9.8

Adjustment 0.4 5.6 +5.2

FY161H FY17

1H

*2

*3

*6*5

*7

PositiveNegative

Exclude Inventory Valuation Impact Exclude Inventory

Valuation Impact

*1

*1

*8

Volume

Raw MaterialPrices

Cost Reduction Others Forex

Group Companies

Non-Steel*4

Oita Works’ Fire Accident

Inventory valuation: +119.0 (-59.0 → 60.0) Crude steel production: -1.42MMT (21.51→20.09)Steel shipment: -0.96MMT (19.68→18.72)

* Figures above incl. impacts of Oita Plate Mill fire accident, but not incl. impacts on earnings.

Incl. carry overBoth volume decrease & cost increaseIncrease in depreciation etc. Stock: +19.0 (-20.0→ -1.0) Flow: -5.0Mining interests, Nisshin Steel, Business overseas etc.Engineering +0.4, Chemicals +8.5, New Materials +0.4, System Solutions +0.4

*1

*2

*3

*4*5

*6

*7*8

*2

Steel Prices &Product Mix

Page 18: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

150.0 100.0 97.6 157.6

-16.0 -6.0 +4.0 ~ ~ -3.0 +1.0 +11.0 +7.0

Ordinary Profit Variance Analysis [FY17/1H(E) vs. FY17/1H] 18

(¥ in billions)FY17/1H(E)as of Jul. 27

[A]FY17/1H

[B]Change[A→B]

Ordinary Profit 150.0 157.6 +7.6Steel 130.0 128.7 -1.3

Non-Steel 16.0 23.2 +7.2

Adjustment 4.0 5.6 +1.6

FY171H(E)

FY171H

*2*5

*7

PositiveNegative

Exclude Inventory Valuation Impact

Exclude Inventory Valuation Impact

*1 *1

Volume Others Forex

Group Companies

Non-Steel

Cost Reduction

*3Raw Material

Prices

Steel Prices &Product Mix Oita Works’

Fire Accident *4*2

*7

*6

Inventory valuation: +10.0 ( 50.0 → 60.0) Crude steel production: -0.31MMT (approx. 20.40→20.09)Steel shipment: -0.68MMT (approx. 19.40→18.72)* Figures above incl. impacts of Oita Plate Mill fire

accident, but not incl. impacts on earnings. Incl. carry overBoth volume decrease & cost increaseStock: +1.0 (-2.0→ -1.0) Flow: ~Nisshin Steel etc.Engineering +1.9, Chemicals +4.3, New Materials +0.6, System Solutions +0.2

*1

*2

*3

*4

*5*6

Page 19: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

157.6 163.4 142.497.6+33.0 +55.0

+38.0+10.0 -25.0 -39.0

-6.0

Ordinary Profit Variance Analysis [FY17/1H vs. FY17/2H(E)] 19

(¥ in billions) FY17/1H[A]

FY17/2H(E)[B]

Change[A→B]

Ordinary Profit 157.6 142.4 -15.2Steel 128.7 131.3 +2.6

Non-Steel 23.2 16.3 -6.9

Adjustment 5.6 (5.1) -10.7

FY171H

FY172H(E)

*2

*3

*6

*5

*7

PositiveNegative

Exclude Inventory Valuation Impact

Exclude Inventory Valuation Impact

*1 *1

Volume

andRaw Material

Prices

Cost Reduction

Others

Group Companies

Non-Steel

Inventory valuation: -81.0 (60.0 → -21.0) Crude steel production: approx. +1.41MMT

(20.09→approx. 21.50)Steel shipment: approx. +1.58MMT

(18.72 →approx. 20.30)* Figures above incl. impacts of Oita Plate Mill fire

accident, but not incl. impacts on earnings. Incl. carry overBoth volume decrease & cost increaseForex +2.0 (Stock: +2.0 (-1.0→ 1.0) Flow: ~),Increase in depreciation etc.Nisshin Steel, Business overseas etc.Engineering -0.3, Chemicals -7.6, New Materials -0.2, System Solutions +1.6

*1

*2

*3

*4*5

*6

*7*4Oita Works’

Fire Accident *2

Steel Prices &Product Mix

Page 20: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

174.5213.5

261.0 300.0

-37.0 +38.0+50.0 -51.0

+43.0 +5.0

Ordinary Profit Variance Analysis [FY16 vs. FY17(E)] 20

(¥ in billions) FY16[A]

FY17(E)[B]

Change[A→B]

Ordinary Profit 174.5 300.0 +125.5Steel 138.0 260.0 +122.0

Non-Steel 35.2 39.5 +4.3

Adjustment 1.2 0.5 -0.7

FY16 FY17(E)

PositiveNegative

Exclude Inventory Valuation Impact

Exclude Inventory Valuation Impact

*1 *1

*2

*3

*6*5*7

Volume

Cost Reduction

Others Group Companies

Non-Steel

Inventory valuation: +78.0 ( -39.0 → 39.0) Crude steel production: approx. -1.02MMT

(42.62→ approx.41.60)Steel shipment: approx. -0.78MMT

(39.78 → approx. 39.00)* Figures above incl. impacts of Oita Plate Mill fire

accident, but not incl. impacts on earnings. Incl. carry overBoth volume decrease & cost increaseForex +3.0 (Stock: +9.0 (-9.0→ ~) Flow: -6.0),Increase in depreciation, Decrease in non-operating assets sales etc.Mining interests, Nisshin Steel, Business overseas etc.Engineering -3.3, Chemicals +6.5, New Materials +0.3, System Solutions +0.9

*1

*2

*3

*4

*5

*6

*7

Steel Prices & Product Mix

Oita Works’ Fire Accident

*2*4

and Raw Material

Prices

Page 21: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

1H 1H (YoY)

106.0 232.5 116.5 242.0 (+9.5)

10.3 22.1 10.7 23.0 (+0.9)

FY2016 FY2017(E)

1H 1H (YoY)

81.2 174.2 98.3 185.0 (+10.8)

0.8 4.5 9.3 11.0 (+6.5)

FY2016 FY2017(E)

1H 1H (YoY)

17.1 34.5 17.9 38.0 (+3.5)

0.7 1.7 1.1 2.0 (+0.3)

FY2016 FY2017(E)

1H 1H (YoY)

116.5 267.5 134.1 280.0 (+12.5)

1.5 6.8 1.9 3.5 (-3.3)

FY2016 FY2017(E)

13.4 21.7 23.2 16.3

321.0387.7 366.9 378.1

16/1H 16/2H 17/1H 17/2H(E)

Non-Steel Business 21

Sales & Ordinary Profit(Non-steel business total)

Profit increase thanks to market recovery in chemicals, strong sales of functional materials and needle coke .

Profit decline due to drop in oil prices & overseas steel makers’ investment.

Both sales & profit increase mainly thanks to business solution, despite of SG&A increase.

Profit increase thanks to strong demand for electrical industries’ materials such as coated copper & carbon fiber.

(¥ in billions)

Sales

Ordinary Profit

Change in Ordinary Profit (FY16 vs. FY17(E))

System Solutions

Engineering & Construction

Chemicals

New Materials

Decrease

Increase

Increase(¥ in billions)

Engineering & Construction

New Materials

Chemicals

Sales

OrdinaryProfit

Sales

Sales

Sales

OrdinaryProfit

OrdinaryProfit

OrdinaryProfit

SystemSolutions

Increase

Page 22: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Balance Sheet 22

End of Mar. 2017 End of Sep. 2017 Change

Total assets (bn¥) 7,261.9 7,477.0 +215.1Interest bearing debt (bn¥) 2,104.8 2,174.5 +69.7Equity capital (bn¥) 2,948.2 3,055.8 +107.6DER 0.71 0.71 -

(¥ in billions)End of

Mar. 2017End of

Sep. 2017

Current Assets 2,244.4 2,372.7

Inventories 1,215.6 1,350.7

Fixed Assets 5,017.4 5,104.2Tangible fixedassets 2,840.8 2,860.0

Investment insecurities 816.3 884.2

Investment 1,041.3 1,034.9

Assets 7,261.9 7,477.0

(¥ in billions)End of

Mar. 2017End of

Sep. 2017

Liabilities 3,970.9 4,065.7Interest-bearingdebt 2,104.8 2,174.5

Net Assets 3,291.0 3,411.3

Equity capital 2,948.2 3,055.8Unrealized gains on available-for-sale securities 269.2 312.5

non-controlling Interest in consolidated subsidiaries 342.7 355.4

Liabilities & net assets 7,261.9 7,477.0 2,394.0

2,683.6

2,978.62,773.8

2,948.23,055.8

2,543.02,296.3

1,976.52,008.2

2,104.82,174.5

1.06

0.86

0.66

0.72

0.71

0.71

End ofMar.2013

End ofMar.2014

End ofMar.2015

End ofMar.2016

End ofMar.2017

End ofSep.2017

D/E Ratio

D/E ratio

Equity Capital

Interest-bearing debt

Page 23: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Interim Dividend 23

[Basic Profit Distribution Policy] Allocate profits according to earnings Factors below need to be considered as well

Reserves for future investment / Earnings forecast / Consolidated and non-consolidated financial structureTargeted dividend payout ratio: around 20% - 30% (consolidated basis)

20 20 30 3010

30 35 154510

5055

45 4517.4% 18.7%

23.4%28.4% 30.4%

26.7%

0%

5%

10%

15%

20%

25%

30%

35%

0

20

40

60

80

100

120

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017Interim

Year-end dividend (left axis)Interim dividend (left axis)Payout ratio (right axis)

¥/share

In accordance with the basic profit distribution policy, NSSMC has decided to increase interim dividend by ¥5.0 from ¥25.0, as previously disclosed,

to ¥30.0 (representing a dividend payout ratio of 26.7%).NSSMC plans to determine the forecast for the year-end dividend distribution amount, with

due consideration of the full-year outlook for profit attributable to owners of parent, and announce it at the time of its third-quarter results announcement.

Page 24: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

CAPEX and Depreciation 24

0

200

400

600

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17見

( ¥ in billions)

NSSMC(Upper : NSCLower :SMI)

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17(E)

CAPEX490.0

(310.0)(178.8)

460.0(300.0)(159.1)

465.0(330.0)(136.6)

400.0(290.0)(109.9)

380.0(265.0)(115.7)

420.0 257.0 304.3 304.6 351.0 450.0

Depreciation346.5

(244.0)(102.5)

383.5(273.7)(109.8)

404.8(284.0)(120.8)

417.7(291.5)(126.2)

403.8(280.9)(122.9)

338.5 331.8 320.0 308.2 304.7 350.0

CAPEX420.0

338.5

CAPEX

DEPSMI

257.0331.8DEP

SMI

NSCNSC

304.3320.0

FY17(E)

308.2304.6 304.7

351.0 aprrox.350.0

approx.450.0

approx.Incld. Nisshinapprox. 41.0

approx.Incld. Nisshinapprox. 36.0

Page 25: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

25

2. Progress in Mid-Term Management Plan

Page 26: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

0.66 0.72 0.71 0.71

FY14 FY15 FY16 FY171H

40.0

60.0

FY14 FY15 FY16 FY17

8.1%

1.8%

0.8%

8.6%6.6%

FY151H

FY152H

FY161H

FY162H

FY171H

5.2%3.0%

1.3%

5.9% 5.7%5.0%

2017 Mid-Term Plan:Targeted KPIs 26

TargetFY17

ROS

Cost Reduction

10 %ROE

TargetFY17

TargetFY17

D/E ratio

TargetFY17

0.5

10 % or more or more

Approx.or more per year

¥150 bn

Base

FY151H

FY152H

FY161H

FY162H

FY171H

FY172H(E)

50.0

Page 27: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Progress of Mid-Term Plan 27

Company / Works Action FY152H FY16 FY17 FY18

Later

Domestic

Kimitsu Close No.3 BF

Yawata Reorganize production frame work

Kashima/ Kimitsu/ Muroran Start up Coke Oven

Nisshin Steel (Kure Works) Relining No.1 BF/Close No.2 BF

Overseas

ICI Started operation of No.4 line

NSCh Started operation

VSB ・ VBR Integration Business merger

AGIS Started operation of No.2 galvanizing Line

VAM® BRN Started operation

WTC Execution of Agreement to sell shares

KOS Started operation

KNSS Started operation

NSCI Start operation(E)

NS BlueScope Installation of No.3 Metal Coating Line

Mar.

Oct.

Oct.

Dec.

FY18~FY20(E)

FY17(E)

(Kimitsu/4A) Aug.

(Kashima/1F)Aug.

Nov.

FY18(E)

Oct.

(Kimitsu/4B)Jan.

Jan.

Jul.

(Kashima/2E)

FY18.Apr.(E)

Dec.

(Kimitsu No.5)

FY18.2H(E)

(MuroranNo.5)

FY19.1H(E)

FY23(E)

(Thailand: Construction/ JV with BlueScope Steel)

(UAE: Construction/ JV with Saif Al Ghurair Gr.)

(China: Auto/ Ramp up capacity of NBC)

(Indonesia: Auto/ JV with PTKS)

(USA: Crankshaft/ No.4 Forging Press Line)

(Brunei: Pipe/ JV with SC and Vallourec)

(USA: Auto/ JV with secondary processors)

(Indonesia: Structural/ JV with Osaka & PTKS)

(Brazil: Pipe / Merger with Vallourec’s subsidiary)

(USA: ERW / Agreement to sell shares)

Page 28: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

METI Honors NSSMC for Eco-friendly Stainless Steel Making Process28

*called “YES”: Yawata Environment-friendly Smelter

*

Recycle ratio of stainless steel scrapgenerated in Yawata 2% 100%

Notable cost Reduction

Slag volume -38%

Consumption of ferrochromium alloyConsumption of ferrosilicon alloy

・Enlarged heat energy・More effective reduction by YES compared to it by converter, utilizing silicon contained in ferrochromium alloy as reducing agent instead of ferrosilicon alloy.

1.Shortage of heat → low recycle ratio of stainless steel scrap, chromium (rare metal) loss2.Ferrosilicon alloy use as reducing agent in converter → high cost, large slag volume & chromium loss

-11%

-88%

Japanese Ministry of Trade, Economy and Industry honors NSSMC with award for Yawata works’ newly developed Eco-friendly stainless steel manufacturing process*

YES

Problems of Conventional Process

Effect of YES installation

*1

METI = Ministry of Economy, Trade and Industry*1

Page 29: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

NSSMC Group’s Quality Management 29

Quality always prevails production(delivery deadline, cost, etc.)

NSSMC’s Value in manufacturing

⇒Clear notification on NSSMC’s Quality Guidelines

Under the principal of “Quality always prevails production”,

NSSMC has persistently carried out measures to cope with “Guideline for Reinforcement of Quality Assurance Structure”

established by the Japan Iron and Steel Federation in 2008.

Page 30: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

NSSMC Group’s Quality Management Structure in line with JISF Guideline 30

Educate relevant employees by e-Learning every year Thorough compliance training according to each employee’s grade and work contents

Headquarter‘s Quality Control Department executes all group’s quality audit Keep updating checklist reflecting other quality incidents in steel sector

【Management Principles】 1.We continue to emphasize the importance of integrity and reliability in our actions.【Employee Action Guidelines】 We observe rules, keep our promises and pierce to the heart of matters by actively investigating the facts.

Quality Control Department directs the how of inspection for each lot Promote to automate inspection data input Check soundness of inspection system periodically Preserve record of sampling and inspection effectively and check periodically

Separate Quality Control Department from manufacturing department in all works Obtain ISO9001 certification in all works of NSSMC & main works of group companies Receive certifications from JIS・API, etc. and third party’s audit periodically Educate and issue internal qualification for employees who direct or prosecute

inspections

Education of basics of quality assurance

Thorough awareness of compliance with rules

(laws, contracts& standards)

Reinforcement ofquality assurance

management

Improvement in reliability of inspection data

Group-wide reinforcement of quality audit

Thorough awareness of compliance and quality assurance

Mechanism to prevent nonconformity

Mechanism to detect nonconformity

Reinforcement of inspection certificate management

* frequency, manner and method etc.

*

*1

Inspection certificate must be issued by Quality Control Departmentwhich is independent from manufacturing department

JISF = The Japan Iron and Steel Federation*1 *2 JIS=Japanese Industrial Standards

*2

Page 31: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

NSSMC Group’s Contribution to SDGs 31

Job creation in emerging countries Reduction of vulnerability to

disaster based on use of Nonframe method

Use of converter slag fertilizer to improve farming productivity and salt damage in farmland

Provision of titanium and stainless steel, which have excellent seawater corrosion resistance, for seawater desalination plants, securing agriculture water

Conducting science classes, sending lecturers, hosting Tatarasteelmaking experiments to promoting interest in manufacturing

Study sessions for teachers, internship for students

Establishment of in-house 24-hour nursery to support working women

More hiring of women in production and other workplaces

Recycling and reuse of limited water resources

Promotion of water quality risk management

Provision of titanium and stainless steel for seawater desalination plants

Provision of lining steel pipes for delivery of clean water

Promotion of air, water, soil risk management and chemical substance management

Development and provision of high-tensile steel sheets with excellent collision safety performance

Development and provision of steel products that contain no substances of concern, etc.

Page 32: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

NSSMC Group’s Contribution to SDGs 32

Efficient use of energy, such as 100% use of by-product gas

Diffusion of CDQ that generates power from waste heat and waste power generation in emerging countries

Development and provision of steel materials for high-pressure hydrogen to support a hydrogen-oriented society, etc.

Thorough compliance training, such as for the Anti-Monopoly Act

Promotion of employment of people with handicaps

Expanded hiring of women and non-Japanese

Provision of various indispensable Eco ProductsTM

Provision of earthquake-resistance steel products

Conservation and management of the Yawata Works, an industrial world heritage site, etc.

Taikan Program (an experience-based safety education program)

Promotion of health management programs for employees

Enhanced measures to support the work-life balance, etc.

Pursuit of Eco ProcessesTM

Introduction of advanced technologies through bilateral cooperation (India, ASEAN, etc.)

Use of steel slag in road materials and materials for civil engineering

Promotion of air, water, soil risk management and chemical substance management

Full recycling of by-products Promotion of recycling of waste

plastics and waste tires Curbing the used amount of rare

metals while ensuring high performance, etc

Page 33: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

NSSMC Group’s Contribution to SDGs 33

Raising awareness of and compliance with anti-bribery guidelines

Elimination of antisocial forces Thorough confirmation of no use of

conflict materials Thorough management of security

export control Compliance with the OECD

Guidelines for Multinational Enterprises across a wide range of topics

Eco solutions to transfer and spread environmental, energy-saving technologies to emerging markets

Japan-India and Japan-ASEAN regular exchanges among public and private steel-related parties

Active participation in various activities of the World Steel Association (LCA, CO2 data collection, environmental committee, etc.)

Pursuit of Eco ProcessesTM

Development and provision of Eco ProductsTM

Promotion of Eco SolutionsTM

Promotion of innovative technology development, such as reduction of iron ore by hydrogen, separation, collection, and use of CO2, etc.

Promotion of water and soil risk management and chemical substance management

Regeneration of seaweed beds with the use of steel slag

Collaboration with an NPO, Mori wa Umi no Koibito

Promotion of air, water, soil risk management and chemical substance management

“Creation of Hometown Forests” to promote greenery within steelworks

Page 34: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

34

3. Appendix

Page 35: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

1Q 2Q 1H 2H 1Q 2Q 1H[E] 1H 2H[E] [E]

0.25 0.25 0.50 0.47 0.97 0.25 0.25 (0.48) 0.50 0.44 0.93 -0.00 +0.01 -0.06 -0.04

13.59 13.20 26.79 24.54 51.33 13.90 13.25 (26.48) 27.15 25.75 52.90 +0.36 +0.67 -1.40 +1.57

1,904 3,430 5,333 5,456 10,790 1,920 3,000 (5,260) 4,920 6,080 11,000 -414 -340 +1,160 +210

2.11 2.31 4.41 4.95 9.36 2.30 2.39 (4.68) 4.69 4.91 9.60 +0.28 +0.01 +0.22 +0.24

1.08 1.18 2.26 2.38 4.64 1.12 1.25 (2.37) 2.37 2.49 4.86 +0.11 -0.00 +0.12 +0.22

4.62 4.57 9.19 9.71 18.90 4.74

16 16 32 35 66 20 17 (34) 37 34 71 +5 +3 -3 +5

88 90 178 188 366 102 96 (185) 198 204 401 +19 +12 +6 +35

3.07 3.27 6.34 6.27 12.61 2.90 2.90 (5.80) 5.80 5.75 11.55 -0.54 +0.00 -0.05 -1.06

ChangeFY16 VS.

FY17[E]

16/1Hvs.

17/1H

17/1Hvs.

17/2H[E]

17/1H[E]vs.

17/1H

FY16 FY17

Key Indicators of Demand 35

Large & Middle sized Shovel Production

Overseas Auto Production(8 Japanese car makers)

(million houses)

(thousand tons)

(thousand units)

(million m³)

(million units)

(million units)

(million units)

(mil. gross tons)

(¥ in billion)

Housing StartsNon-residential Construction Starts

Public Works Orders

Finished Auto Production

Export of Finished Auto

Metal Machine Tool ProductionKeel-laid New Ships

[ Domestic ]

(Source: Baker Hughes, Smith international, NSSMC est.)Estimates as of early Sep., 2017

Rig Count CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 Latest Peak Bottom

USA 1,089 1,546 1,875 1,919 1,761 1,862 977 510 859 940 (Sep.‘17) 2,031 (Sep.‘08) 404 (May.‘16)

Deep well (≧15,000ft) 249 249 395 324 326 354 205 126 221 221 (Aug.‘17) 413 (Nov.‘11) 98 (May.’16)

World Total (Exc. N. America,Russia & China)

997 1,094 1,167 1,234 1,296 1,337 1,167 955 948 931 (Sep.’17) 1,382 (Jul.‘14) 920 (Oct.’16)

*1*2

*1

*2Figures published on July 28, 2017

*2 *2 *2 *2

Page 36: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

1Q 2Q 1H 2H 1Q 2Q 1H[E] 1H 2H[E] [E]

26.21 26.33 52.54 52.62 105.17 26.09 25.94 52.37 52.03 -0.51 -0.34

14.78 15.45 30.23 31.62 61.85 15.29 15.63 30.76 30.92 31.57 62.50 +0.69 +0.16 +0.65 +0.65

63.2 63.1 63.1 62.8 63.0 63.2 62.6 62.6 62.9 62.1 62.5 -0.2 +0.3 -0.7 -0.5

11.68 12.23 23.91 25.14 49.05 12.10 12.38 24.37 24.49 25.12 49.61 +0.58 +0.12 +0.63 +0.56

5.17 5.41 10.58 11.23 21.81 5.37 5.56 10.96 10.93 11.38 22.31 +0.35 -0.03 +0.46 +0.50

6.51 6.81 13.33 13.90 27.23 6.74 6.82 13.41 13.56 13.73 27.29 +0.23 +0.15 +0.17 +0.06

1.05 1.07 2.12 2.09 4.21 0.99 0.99 1.98 1.98 1.94 3.92 -0.14 +0.00 -0.04 -0.29

2.56 2.75 5.31 5.67 10.98 2.73 2.82 5.51 5.55 5.67 11.22 +0.24 +0.04 +0.12 +0.24

1.09 1.15 2.24 2.32 4.55 1.17 1.16 2.28 2.34 2.32 4.66 +0.10 +0.06 -0.02 +0.10

0.68 0.74 1.42 1.45 2.87 0.70 0.73 1.41 1.44 1.44 2.88 +0.02 +0.03 +0.01 +0.03

3.10 3.23 6.32 6.48 12.81 3.19 3.25 6.40 6.44 6.46 12.90 +0.11 +0.04 +0.02 +0.09

1.50 1.58 3.08 3.37 6.46

10.28 10.42 20.70 19.77 40.47

16/1Hvs.

17/1H

FY17FY16 VS.

FY17[E]

Change17/1H

vs.17/2H[E]

FY1617/1H[E]

vs.17/1H

Domestic Steel Consumption by Industrial Sector 36

(million tons)

Crude Steel Productionin Japan

Domestic Steel Consumption (A + B)

% for manufacturing sector

Ordinary Steel Consumption (A)

Construction

Manufacturing

Shipbuilding

Automotive

Industrial Machine

Electronic Machine

Specialty Steel Consumption (B)

Steel Imports

Steel Exports

( Source : NSSMC est.)Estimates as of early Sep., 2017

*1

*2Figures published on July 28, 2017

*1*2*2 *2 *2 *2

Page 37: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16

3.0 -0.5 5 .3 3 .9 3 .4 3 .4 3 .4 3 .4 3 .2 (3.5) 3.6 (3.6) 3.7

0.5 -3.4 3 .2 1 .7 1 .2 1 .4 1 .9 2 .1 1 .7 (2.0) 2.2 (1.9) 2.0

0.4 -2.6 3 .0 1 .8 2 .3 2 .2 2 .4 2 .6 1 .6 (2.1) 2.2 (2.1) 2.3

0 .6 -4.1 1 .9 1 .5 -0.7 -0.4 0 .9 2 .0 1 .8 (1.9) 2.1 (1.7) 1.9

-1.2 -6.3 4 .4 -0.6 1 .5 1 .6 0 .0 1 .1 1 .0 (1.3) 1.5 (0.6) 0.7

6 .1 2 .7 7 .5 6 .2 5 .1 5.0 4 .6 4 .3 4 .3 (4.6) 4.6 (4.8) 4.9

9 .6 9 .2 10.4 9 .3 7 .7 7.7 7 .3 6 .9 6 .7 (6.7) 6.8 (6.4) 6.5

7 .3 6 .8 10.6 6 .3 4 .7 6.9 7 .2 8 .0 7 .1 (7.2) 6.7 (7.7) 7.4

4 .7 1 .7 7 .0 4 .5 6 .2 5.1 4 .6 4 .9 4 .9 (5.1) 5.2 (5.2) 5.2

5 .6 -7.8 4 .3 4 .3 3 .4 1 .3 0 .7 -2.8 -0.2 (1.4) 1.8 (1.4) 1.6

5 .1 -0.6 7 .5 2 .7 1 .0 2 .7 0 .1 -3.8 -3.6 (0.3) 0.7 (1.3) 1.5

CY17見通し

CY18見通し

World Economic Outlook <Released on Oct. 10, 2017 by IMF>37

( ): Outlook as of Jul. 24, 2017

*

World Total

Developed Countries

USA

EU27

Japan

DevelopingCountries

China

India

ASEAN5

Russia

Brazil

(GDP growth rate)

*ASEAN 5 : Thailand, Malaysia, Indonesia, Philippines, Vietnam(Source : IMF)

[E] [E]

Page 38: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

World Steel Demand <Released on Oct. 16, 2017 by WSA>38

0.66

0.740.71

0.67

0.74

0.77 0.77

74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18E

China

Others

Japan/NorthAmerica/Europe

CY74

0.55

(Source : World Steel Association, Apparent finished steel consumption)

Figures in parentheses are previous forecasts as of Apr.21, 2017

( billion tons )CY14 1.54

CY081.22

CY121.44

CY161.58CY13

1.53CY15 1.50

CY171.62

CY181.65

<CY12> <CY13>

1.53<CY14>

1.54<CY15>

1.50WorldTotal 1.44 1.578

(1.515)

<CY16> <CY17(E)>1.622

(1.535)

<CY18(E)>1.648

(1.548)

* * *

*including illegal induction furnaces

Page 39: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Jul Aug Sep

1,609.2 836.0 144.7 144.8 141.4 430.9 1,266.9 1,689.2 +80.0(+0.7%) (+4.4%) (+7.3%) (+7.2%) (+5.6%) (+6.7%) (+5.2%) (+5.0%)

104.8 52.3 8.6 8.7 8.6 25.9 78.3 104.4 -0.4(-0.4%) (+0.5%) (-4.3%) (-2.0%) (+2.0%) (-1.5%) (-0.2%) (-0.4%)

68.6 34.7 6.2 6.1 5.9 18.1 52.8 70.4 +1.8(-1.6%) (+3.8%) (+2.3%) (+3.5%) (+2.8%) (+2.9%) (+3.5%) (+2.7%)

78.5 40.7 7.0 7.1 6.7 20.8 61.5 81.9 +3.5162.0 86.1 14.1 12.5 13.8 40.4 126.4 168.6 +6.5

70.8 35.7 6.2 6.2 6.0 18.5 54.2 72.3 +1.531.3 16.7 2.8 3.0 3.0 8.7 25.5 34.0 +2.795.6 50.3 8.3 8.5 8.2 25.0 75.3 100.4 +4.8

808.4 418.3 74.0 74.6 71.8 220.4 638.7 851.6 +43.3(+0.6%) (+4.0%) (+10.3%) (+8.7%) (+5.3%) (+8.1%) (+5.4%) (+5.4%)

CY16[A]

Change(A → C)

CY17[C]

(B*12/9)Jan -Sep[B]

Jul - Sep

Jan -Jun

CY17

World Crude Steel Production 39

(Source : World Steel Association) Total of 66 countries *

*World Total

(million tons)

Japan

Korea

USA

EU28

Russia

Brazil

India

China

(YoY)

(YoY)

(YoY)

(YoY)

Page 40: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Hot Rolled Sheets Prices by Region 40

( Prices of Hot Rolled Sheets in Local Currency as of Apr. 2014=1.0 )

(Source : The Japan Iron and Steel Federation)

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

'14/04 06 09 12 '15/03 06 09 12 '16/03 06 09 12 17/03 06 09

Japan

USA

Europe

S.Korea

China

BaoSteel Prevailing List Price

Page 41: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

120

114

102

108

101 105

113

107 103

96 100

106 104

96

102 106

108 112

106

99 97 101 100 101 103

91

98

107 102

110 111 113 113 118

122

106

96

111 106 107

112 110

104

105

26

34 31

37 34

31 31 30 30 29 33 33 32

30 25 23

19 17 18 19 24 24 23 21

24 27

30 28 33

36 35 35 32

36 38

34 39

44 40

44 42 42 41 41

74

64 58 59 59

63

71 69 67 63 64

68 69 68

74

81

88

94 89

82

75 76 77 81

77

69 70 72 71 71 73 76 78 79 79

70

57 60 62 61

65 64 61 62

0

20

40

60

80

100

120

Consumption(Manufacturing Sector)Consumption(Construction and Civil Engineering Sector)Crude Steel ProductionSteel Exports

Domestic Steel Consumption Trend 41

(million tons)

Manufacturing Sector

Construction and Civil Engineering Sector

Crude Steel Production

Steel Exports

(Source : NSSMC estimation)

Page 42: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

4.82 7.70

7.95

10.40 11.05

11.50 11.52 11.63

11.01 11.29

11.59

11.20 10.88

10.31 10.76

10.56 10.55

10.58

10.93 10.84

10.28 9.90

10.19

2.28

3.07 3.38

25.91

28.08 28.14 27.89

26.74 25.86

26.33

25.84

26.33 26.23 26.09

25.9526.51

0.00

5.00

10.00

15.00

20.00

25.00

30.00

0.00

5.00

10.00

15.00

20.00

SMI (Left axis)

NSC,NSSMC (Left axis)

All Japan (Right axis)

Domestic Crude Steel Production 42

7.10

All Japan (million tons) (Domestic Crude Steel Production of FY17/3Q(E) released by METI )

FY17/3Q(E)

(MMT) (MMT)

Includes Sumitomo Metals(Kokura), Sumitomo Metals(Naoetsu) and Sumikin Iron & Steel Co.*1Includes NIPPON STEEL & SUMIKIN KOUTETSU WAKAYAMA CORP *2

Total Production of Crude Steel ( NSC (non-consolidated)+SMI )

*1

*2

FY07121.51

FY08105.50

FY0996.45

FY10110.79

FY11106.46

FY12107.30

FY13111.52

FY14109.84

FY15104.23

FY16105.17

46.73 41.48 39.15 45.37 42.92 43.55 45.67 44.96 42.17 42.62FY17(E)41.60

Page 43: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Domestic Steel Products Prices 43

50

60

70

80

90

'13/

03 06 09 12'1

4/03 06 09 12

'15/

03 06 09 12'1

6/03 06 09 12

'17/

03 06 09

Hot-rolled sheets (2.3xS)

Cold-rolled sheets(1.0xS)

50

60

70

80

90

'13/

03 06 09 12'1

4/03 06 09 12

'15/

03 06 09 12'1

6/03 06 09 12

'17/

03 06 09

H-flange beams (200×100)

Plates(19mm)

Hot-rolled sheets & Cold-rolled sheetsPlates & H-flange beams(thousand yen / ton ) (thousand yen / ton )

(Source : Japan Metal Daily)

77.0

80.0

82.0

75.0

26th, Oct

26th, Oct

Page 44: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

0.0

0.5

1.0

1.5

3.0

4.0

5.0

6.0

7.0

'13/

03 06 09 12

'14/

03 06 09 12

'15/

03 06 09 12

'16/

03 06 09 12

'17/

03 06 09

Ordinary steel products inventory (Left axis)Rolled sheets inventory (Left axis)Ordinary steel products inventory turnover ratio (Right axis)

Domestic Steel Inventory 44

(MMT) (Times)

Rolled Sheets Inventory H-flange beams*2 Inventory(MMT) (Times)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0

0.1

0.2

0.3

0.4

0.5

'13/

03 06 09 12'1

4/03 06 09 12

'15/

03 06 09 12'1

6/03 06 09 12

'17/

03 06 09

Inventory quantity (Left axis)

Inventory turnover ratio (Right axis)

(Source : Japan Iron and Steel Federation) Inventories of the distributors dealing with H-flange beams manufactured by NSSMC

*2Hot-rolled, Cold-rolled and Coated sheets*1

*1

*1

Page 45: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Iron Ore & Coking Coal Prices 45

0

100

200

300

400

FY04

FY06

FY08

10/ 1

Q

10/3

Q

11/ 1

Q

11/3

Q

12/ 1

Q

12/3

Q

13/ 1

Q

13/3

Q

14/ 1

Q

14/3

Q

15/ 1

Q

15/3

Q

16/1

Q

16/3

Q

17/1

Q

17/2Q

0

50

100

150

200

FY04

FY06

FY08

10/ 1

Q

10/3

Q

11/ 1

Q

11/3

Q

12/ 1

Q

12/3

Q

13/ 1

Q

13/3

Q

14/ 1

Q

14/3

Q

15/ 1

Q

15/3

Q

16/1

Q

16/3

Q

17/1

Q

17/2Q

(US$/dmt) (US$/wmt)

Iron Ore (Fine) Hard Coking CoalNSSMC Contract Price

FOB from Australia to JapanNSSMC Contract Price

FOB from Australia to Japan

Page 46: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Market Trends <Crude Oil & Scrap>46

0.0

20.0

40.0

60.0

0

200

400

600

'13/

03 06 09 12'1

4/03 06 09 12

'15/

03 06 09 12'1

6/03 06 09 12

'17/

03 06 09

USA Scrap(No1HMS) (US$/t, CIF Korea)(Left axis)

Iron Scrap Bid Prices in Kanto Region(thousand yen/ton)(Right axis)

0.0

150.0

300.0

450.0

600.0

750.0

900.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

'13/

03 06 09 12'1

4/03 06 09 12

'15/

03 06 09 12'1

6/03 06 09 12

'17/

03 06 09

Arabian Light Crude (Left axis)

Bunker (Right axis)

Scrap(US$/ton) (thousand yen/ton)(US$/bbl) (US$/MT)

Crude Oil

50.4362.5

33032.2

Page 47: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Market Trends <Freight & Mold Pig Iron>47

0

100

200

300

400

500

600

'13/

03 06 09 12'1

4/03 06 09 12

'15/

03 06 09 12'1

6/03 06 09 12

'17/

03 06 09

Mold Pig Iron(US$/t,CIF Korea)

0

5

10

15

20

25

30

35

'13/

03 06 09 12'1

4/03 06 09 12

'15/

03 06 09 12'1

6/03 06 09 12

'17/

03 06 09

From Brazil

From Western Australia

(US$/T, CIF Korea)(US$/WMT, Cape size 170 thousand tons hull form)

Mold Pig IronFreight

380

18.2

7.7

Page 48: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

51.08

0

20

40

60

80

100

120

140

Jan-

05

May

-05

Sep-

05

Jan-

06

May

-06

Sep-

06

Jan-

07

May

-07

Sep-

07

Jan-

08

May

-08

Sep-

08

Jan-

09

May

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

May

-11

Sep-

11

Jan-

12

May

-12

Sep-

12

Jan-

13

May

-13

Sep-

13

Jan-

14

May

-14

Sep-

14

Jan-

15

May

-15

Sep-

15

Jan-

16

May

-16

Sep-

16

Jan-

17

May

-17

Sep-

17

Energy Sector : Oil Price / Rig Count 48

US Oil Price (WTI Spot)

$62.9

Rig Counts (Jan. 2005=100)

World Bank Estimates

(as of Apr.,2017)

CY2020

(US$/bbl)

As of Oct. 26Oct. Avr.

0

50

100

150

200

Jan-

05

May

-05

Sep-

05

Jan-

06

May

-06

Sep-

06

Jan-

07

May

-07

Sep-

07

Jan-

08

May

-08

Sep-

08

Jan-

09

May

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

May

-11

Sep-

11

Jan-

12

May

-12

Sep-

12

Jan-

13

May

-13

Sep-

13

Jan-

14

May

-14

Sep-

14

Jan-

15

May

-15

Sep-

15

Jan-

16

May

-16

Sep-

16

Jan-

17

May

-17

Sep-

17

North America (BakerHughes)

World (BakerHughes)

Page 49: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Forex Trend 49

700

850

1,000

1,150

1,300

1,450

1,600

70

85

100

115

130

145

160

'08/

04 06 09 12'0

9/03 06 09 12

'10/

03 06 09 12'1

1/03 06 09 12

'12/

03 06 09 12'1

3/03 06 09 12

'14/

03 06 09 12'1

5/03 06 09 12

'16/

03 06 09 12'1

7/03 06 09

Oct. 26. 2017113.5 USD/JPY

1,125 USD/KRWUSD/KRW

USD/JPY

(USD/JPY) (USD/KRW)

Apr.1.2008101.9 USD/JPY985 USD/KRW

Page 50: Second Quarter FY2017 Earnings Summary - NSSMC 1.20 1.43 2Q 3Q 4Q 1.00 1.20 1.40 1.60 1.80 2015 2016 2017 * * Key Indicators of Domestic Steel Demand 6 Finished Auto Production (million

© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

50

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 Corp. 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.