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Miyahara: To all participants, thank you for your very long patience. NIPPON STEEL CORPORATION will now hold a financial results meeting for Q1 of FY2025. First, let me introduce the attendees on our side. This is Mori, Representative Director, Vice Chairman and Executive Vice President. This is Mr. Iwai, Managing Executive Officer. I am Miyahara of the Investor Relations Office, Corporate Communications Department, and I will be the moderator for today's session. It is my pleasure to speak to you all today. As we begin the meeting, I would like to ask you few things. Today, we are conducting a live video stream on the web and a Webex conference at the same time. To prevent feedback, please attend only one or the other. Also, please note that today's meeting will be recorded and made available for viewing after the briefing. We will now begin the meeting. Mr. Vice President, please go ahead.
Takahiro Mori: Good evening, everyone. Thank you for your time. First, let me explain the most recent situation. The current business environment remains very difficult due to China. Furthermore, the Trump tariffs have been bad for the Chinese economy in the construction and real estate sectors, but there is a possibility that even the manufacturing sector will take a hit, spurring overproduction and over-exporting. The situation is truly critical for the global steel industry, and the crisis could deepen further. Despite these very difficult circumstances, we must continue to grow as a company. As we have explained in the past, we have drawn and implemented a broad growth roadmap in a short period of time, including drastically strengthening the competitiveness of our domestic steelmaking business, promoting overseas business strategies in India, ASEAN, et cetera; developing a deep management base in raw material distribution, and, in recent years, pursuing synergies with group companies. However, in this difficult business environment, we believe that the acquisition of U.S. Steel is precisely the way to achieve growth. We will seek capturing public work projects in the US, which will strengthen and expand U.S. Steel. We will concentrate on getting U.S. Steel back on track as soon as possible. Unfortunately, due to the timing of the closing, FY2025 will be a transitional period for our efforts on U.S. Steel to strengthen its profitability and incorporating it. Since the income statement will not be consolidated until Q2, only one-time expenses and loss from U.S. Steel are reported, especially in this Q1. Nevertheless, U.S. Steel's contribution to consolidated business profit on an actual basis has been JPY80 billion in these nine months. Please see page six of the IR material. If we adjust this JPY80 billion to an annualized basis, and since Big River 2, which is currently in the process of being launched, will be in normal operation in the period between January to March of next year, the annualized figure would be JPY250 billion. This is a number that is already being realized, so please consider this a very solid number. Then later, the number will be boosted by significant operational improvements from the implantation of our technology, as well as some of the benefits of the JPY11 billion investment. As a result, the underlying annual consolidated business profit will reach the level of JPY250 billion in FY2028. We aim to actually achieve that. This represents an increase in revenue of JPY170 billion from the current JPY80 billion. Therefore, even assuming that other businesses remain unchanged, the underlying consolidated business profit will reach JPY900 billion. From FY2028 onward, when the full effects of the JPY11 billion investment will be realized, we will use that as a baseline to move to even higher levels. This is the biggest message I want to convey today. With the acquisition of U.S. Steel, we are now much closer to achieving our vision of 100 million tons and JPY1 trillion. We will keep working on meeting your expectations. Now, let’s look at some specific figures. Please see page four. Excluding U.S. Steel, the forecast for FY2025 is JPY650 billion. Since U.S. Steel's forecast is JPY80 billion, the underlying consolidated business profit excluding inventory adjustments, et cetera, is JPY730 billion; meaning these numbers are revised upward by JPY50 billion, JPY80 billion, and JPY180 billion, respectively. This means that consolidated business profit is JPY480 billion. This is also an increase of JPY80 billion compared to the previous announcement. If you look at page five, you can see how severe the deterioration of our business environment is. We started with JPY793.7 billion in FY2024 and expected to see improvements resulting from our structural reforms, including plus JPY40 billion from structural reforms and plus JPY60 billion from cost improvements, meaning the expected total plus was approximately JPY100 billion. Furthermore, we also expected to see increase from structural improvements of electromagnetic steel sheets, boosting the total sum of plus to JPY120 billion. Therefore, the anticipated level of our business results was above JPY900 billion. However, we then saw the deterioration of our business environment. This brought a negative impact of JPY100 billion due to the deteriorated sales environment, and another negative impact of JPY100 billion due to the decline in raw material prices. As a result, the business profit has fallen to JPY700 billion; and since we expect that the tariffs will cause the global effect of approximately JPY50 billion, the figure we previously said would be more than JPY600 billion is now forecasted to be JPY650 billion. This, together with the consolidation effect of U.S. Steel of JPY80 billion, brings the current forecast to JPY730 billion. Next is the net income. Please see page seven. This time, as I mentioned earlier, only one-time costs and losses are recorded, thus reducing the loss on Calvert's withdrawal, which amounted to JPY230 billion. As a result, the figure is negative. However, excluding this one-time negative figure, net income would have been JPY220 billion positive. Dividends will not change in any substantial way. As you can see on the next page, which is page nine, we are aiming to further expand our investor base through a stock split, so although the year-end dividend will be JPY12, due in part to the impact of this stock split, nothing has substantially changed. The dividend itself has not changed in any way from what it has been in the structure of the past period, as it will result in the average dividend payout ratio of 30% over the period from 2021 to 2025. From this point forward, we would like to only briefly explain about each sheet. Pages 11, 12, and 13 explain about the environment, but nothing has changed since the last time. Please kindly skip them. What I would like you to see is page 26. This page explains our efforts for realizing the Global 100 MT Vision, and recently, our production has reached 86 million tons already. If we include the effect of the investment already decided by AM/NS India, the 86 million tons is actually 92 million tons, which means that 100 million tons is already in sight. In addition, U.S. Steel will be joining us. One thing I would like to show you is on page 31. I was in the US and came back to Japan only two days ago. Anyway, there were several purposes of my visit, one of which was to have a meeting with the executives of U.S. Steel. I also met with employees of the entire company at its town hall meeting. Although virtually, I met all of them. Then, I ran my first board meeting with new directors of the company. During my visit, I felt very strong momentum for strengthening U.S. Steel. By the way, approximately 40 employees of our company who were sent to U.S. Steel were off to a good start. This page shows the eight pillars, which mean eight issues, and 66 initiatives further broken down from the issues. We are working on examining them and promoting them. Described as a 100-day plan here, we plan to complete working on them by the end of August, and after that we will incorporate them into more detailed action plans. That is what we are working on now. Through these efforts, we want to achieve the JPY250 billion goal as quickly as possible. The market for AM/NS India itself is currently very strong, but we are still having a somewhat difficult time overcoming the impact of prices and market conditions originating in China. The monsoon has also had a very large impact this year. G/GJ has not changed significantly either. We are trying to find a way by continuing an integrated operation with NS-SUS. The major change is on page 37. We are working on the full acquisition of Krosaki Harima and will launch a tender offer for this. The start date is early February next year, and the price is JPY4,200 per share. Depending on the outcome, we are aiming to make the company a wholly-owned subsidiary through a squeeze-out. Krosaki Harima is a manufacturer of bricks and, after all, bricks are essential for steel production. Bricks can be the key to the quality, competitiveness, and cost competitiveness of steel, and I believe that the acquisition is also important in terms of securing human resources. Since Krosaki Harima has also been expanding its business overseas to a great extent, we are considering synergies from that as well. For those reasons, we will make Krosaki Harima a wholly owned subsidiary. In addition, there are a few changes or enhancements. Please see page 44. The page breaks down the Carbon Neutral Vision 2050 roadmap into a bit more detail. The roadmap has been renewed by considering the recently announced investment in conversion from the blast furnace process to the electric furnace process. The high-grade steel production in the large electric furnace will be completed by 2029. The technology for hydrogen reduction production will also be established by 2040. In addition, we are planning to establish the technology for hydrogen injection into blast furnaces, named as Super-COURSE 50, by around 2040, and then commercialize the technology. While our actions on carbon neutralization have recently been slowed down, we would like to establish the technology without being affected by that and make it ready to be implemented any time. That's all for my explanation. [END]