Message from the President

I would like to extend my heartfelt gratitude for the continued support and patronage of our shareholders. In presenting the Annual Report for our 140th year (from April 1, 2021 to March 31, 2022), I would like to offer a few words.

In the fiscal year under review, the Japanese economy was impacted by delayed recovery in consumer spending centered on the restaurant and service industry with the issuance of two successive declarations of emergency and pre-emergency measures with the continued spread of the novel coronavirus infectious disease (hereinafter, “COVID19”). Additionally, with a rapid increase in cases and close contacts starting in January 2022 with the sixth wave, the manufacturing industry was also impacted by temporary production stoppages due to furloughed workers. However, with the move toward increased demand from the relaxation of restrictions on international economic activities, a gradual economic recovery continued due to increased exports.

Hisashi Kubota Hisashi Kubota

In the stainless and specialty steel industry, capital investment in production machinery remained strong. The recovery in production quantities of electronics such as semiconductors and transportation equipment for vehicles as well as expanded product exports for electrical equipment with the recovery in consumer spending starting in China also led to increased demand. Rising price trends for raw materials, materials, and energy, starting with increases in the LME nickel market and oil market continued to be large factors in significant rising costs. Russia’s invasion of Ukraine in February 2022 led to extreme market turmoil, including the LME temporarily suspending nickel transactions. With regard to the Group’s strategic field of high-performance alloys, demand for devices to manufacture solar power generating equipment in China, for semiconductor production facilities, and for sheathed heaters and bimetals for home appliances remained strong. We also saw a move toward demand recovery in the oil and gas related fields with the rise in oil prices.

In response to this type of external environment, the Group has worked to enhance productivity and reduce lead times for high-performance alloys, while also securing roll margins commensurate with rising raw materials prices and implementing thorough cost-reduction measures. As a result, sales volume of the Company for the fiscal year under review increased 16.6% year on year (an increase of 24.4% in high-performance alloys and an increase of 15.0% in standard grade stainless steel), net sales were ¥148,925 million, an increase of ¥36,443 million year on year, operating profit was ¥13,966 million, an increase of ¥7,822 million year on year, ordinary profit was ¥12,807 million, an increase of ¥7,817 million year on year, and profit attributable to owners of parent was ¥8,471 million, an increase of ¥4,707 million year on year.

On the subject of dividends of surplus, our basic policy is one of paying stable dividends while taking into account the investments necessary to maintain the business foundation and the outlook for business results, in addition to working to further improve the financial condition of the Company. With regard to the year-end dividend for the fiscal year under review, the dividend will be ¥80 per share. Accordingly, including the interim dividend with the record date of September 30, 2021 (¥40 per share), the annual dividend per share for the fiscal year will total ¥120 per share.

In the stainless steel and specialty steel industry, there are concerns over surging costs for raw materials starting with nickel, materials, and energy, and while continuing to maintain appropriate sales prices commensurate with these cost increases, we need to secure roll margins. We also recognize the need to focus on trends of increase in imported stainless steel materials against the backdrop of excess facilities in the Asian region.

In the final fiscal year of the Group’s Medium-Term Management Plan 2021, to expand sales of our strategic field of high-performance alloys and secure our position as a preeminent manufacturer in the domestic market, by maximizing the capacity of our highly efficient electric arc furnaces that began operations in January 2022, we will steadily reap the investment effects, reinforce our sales capabilities, promote policies including cost reductions, and work to strengthen profitability.

Furthermore, we see our response to the SDGs and ESG issues and our carbon-neutral initiatives as essential in the medium- to long-term enhancement of the Company’s corporate value and are promoting these initiatives centered on the Sustainability Committee established in August 2021. We humbly request the continued support and cooperation of our shareholders as we move forward.

June 2022