Annual Report

Message from the President

Image: Hisashi Kubota President

Hisashi Kubota

I would like to extend my heartfelt gratitude for the continued support and patronage of our shareholders.

In presenting the annual report for our 137th year (from April 1, 2018 to March 31, 2019), I would like to offer a few words.

In the fiscal year under review, the Japanese economy showed gradual recovery supported by factors such as steady levels of consumer spending and capital investment amid improving employment and income environments.

However, from the latter part of the year, exports stagnated due to the slowing global economy, and business conditions have since generally stayed unchanged. The global economy has remained robust centering on

consumer spending in the U.S., while Chinese and European economies have been sluggish, and recovery of business conditions have leveled off. In addition, the outlook for the global economy is increasingly uncertain due to intensification of trade friction between the U.S. and China, as well as turmoil in the European economy from the U.K.’s exit from the EU.

In the stainless and specialty steel industry, against a circumstance of a gradually improving Japanese economy, demand centered on construction applications indicated robust performance. But plant capacity has continuously been excessive in Asian countries including China, there are high levels of standard grade stainless steel being imported, and since the second quarter, inventory adjustments continued due to oversupply in the market inventory.

On the other hand, in the Company’s strategic field of highperformance alloys (high-nickel alloy products in sheet and coil forms with a nickel content of 20% or more), demand from applications in the oil and gas industry, the environmental and energy industries, such as Flue Gas

Desulfurization and SOx scrubbers for ships, jigs for manufacturing OLED displays, and demand from applications in durable consumer goods, including bimetals and sheathed heaters in various industries was favorable, centering on overseas.

Amid this business environment, the Group has been working to achieve more appropriate selling prices to meet production costs, while maintaining sales volume to meet demand and normalize inventory levels in the standard grade stainless steel division. On the other hand, we have been focusing on expanding sales even more in the highperformance alloys division, our strategic field. In addition, we have been working to reduce costs even more centered on aspects related to raw materials.

As a result, sales volume for the Company the fiscal year under review increased 9.3% year on year (an increase of 23.2% in high-performance alloys and an increase of 4.8% in standard grade stainless steel), net sales were ¥143,740 million, an increase of ¥24,649 million year on year, ordinary profit was ¥8,178 million, an increase of ¥4,792 million year on year, and profit attributable to owners of parent was

¥7,686 million, an increase of ¥3,111 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 ¥3 per share.

As for the Group, we are continuing to strengthen profitability by implementing measures such as strengthening our competitiveness, increasing production capacity, and reducing costs in order to improve our domestic market presence and optimize selling prices in the standard grade stainless steel division, and aggressively capture high demand domestically and overseas in the highperformance alloys division in accordance with the Medium-Term Management Plan 2017.

We humbly request the continued support and cooperation of our shareholders as we move forward.

June 2019

Hisashi Kubota

Hisashi Kubota

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