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Nippon Steel Sumitomo released a new medium-term business plan

recently, Nippon Steel Sumitomo announced a three-year business plan from fiscal 2018 to fiscal 2020 ("2020 plan"), clarifying the company's development direction in the next three years

Nippon Steel Sumitomo predicts that the current world economic development situation is good, and the demand for steel will continue to grow for a long time, especially in the housing and infrastructure construction of emerging economies; At the same time, the demand for steel in the renewal and reconstruction of relevant urban infrastructure in Japan is also growing; With the rapid development of artificial intelligence, IOT, big data and other information technologies, the demand of major automobile manufacturers for lightweight and high-intensity body is increasing day by day. The popularity of new energy vehicles such as electric vehicles and autonomous driving will bring great changes to society and the steel industry; At the same time, in dealing with climate change and environmental protection, the whole society is expecting steel enterprises to make due contributions to sustainable development

in view of the external situation and environment faced by the company, Nippon Steel and Sumitomo determined that in the next three years, by further strengthening "technical strength, cost competitiveness and international response ability", the role and value of steel will be brought into full play, and continue to work towards the goal of "the world's first steel enterprise with comprehensive strength". In order to achieve this goal, Nippon Steel Sumitomo formulated the "mid-term business plan for fiscal year 2020", including the three-year plan from fiscal year 2018 to fiscal year 2020, and discussed the long-term development strategy after 2021

the main contents of the mid-term business plan from fiscal 2018 to fiscal 2020 are as follows:

provide materials and solutions to meet the changes in downstream industries and user needs

under the background of the development of lightweight and electrification in the automotive field, and the demand of lighter, thinner, shorter, smaller and higher reliability in the electronic material field, materials are developing in the direction of diversification and high-grade. In this regard, Nippon Steel Sumitomo will expand to provide material development and processing technology solutions that meet the changing needs of users. For example, ensure the quality and stable supply of high-grade steel such as high-strength steel plate, high-efficiency electrical steel plate, high-corrosion-resistant stainless steel pipe, stainless steel for high-pressure hydrogen, high-strength steel rail, further improve product performance, and provide services to users, so as to create value for users, and the government will make contributions to the introduction of standards to expand the sales of the company's products. At the same time, by integrating steel with the company's non steel business (Chemistry and new materials), we can meet the diversified needs of users for materials. In order to seek this development, Nippon Steel Sumitomo chemical (Co., Ltd.) and Nippon Steel Sumitomo materials (Co., Ltd.) will be merged to strengthen the ability to provide comprehensive material solutions (the merger is planned to be implemented in October 2018)

strengthen the global development of the company

give full play to the product technical strength, cost competitiveness and international supply network owned by Nippon Steel and Sumitomo, and expand the steel supply in various fields such as automobile, resources and energy, infrastructure at home and abroad. Especially for the demand of overseas market, the equipment selection is from 40kN (3) 00kn, which combines the export of Japanese domestic high-grade steel with overseas manufacturing companies to provide products for users. In addition, in order to expand the steel supply to regions with rapid growth in steel demand in the field of infrastructure construction, avoid trade protectionism and improve the self-sufficiency rate, Nippon Steel Sumitomo will expand the construction of the whole process production base

in order to realize the above plan, Nippon Steel Sumitomo will strengthen cooperation with powerful enterprises in the future and carry out enterprise mergers and acquisitions more flexibly

continue to strengthen the manufacturing capacity of the domestic parent company in Japan

while continuing to carry out technological development and strengthen the manufacturing capacity of the domestic parent company, Nippon Steel Sumitomo Corporation should reduce costs and improve production efficiency, so as to ensure stable supply to domestic and overseas markets and provide support for overseas businesses

1) further strengthening of "equipment" and "people"

about the strengthening of "equipment", on the basis of increasing equipment investment in the mid-term business plan of fiscal 2017, an additional investment of 100 billion yen will be made to actively promote the upgrading of blast furnaces, coke ovens and other equipment and the introduction of advanced equipment, thus bringing about the effects of stable production, efficiency improvement and cost improvement

with regard to the strengthening of "people", maintain the employment scale increased in the medium-term business plan of fiscal 2017, and promote technology inheritance and education. In addition, in order to cope with the shortage of human resources caused by the reduction of Japan's population, Nippon Steel Sumitomo also implemented the "labor saving" strategy (including the application of information and automation technology, the realization of unmanned operation, etc.)

2) construction of optimal production system

in order to flexibly respond to changes in the business environment and establish a strong manufacturing system, Nippon Steel Sumitomo Corporation promoted the construction of optimal production system. Based on the rapid development of polyurea spraying technology in China in fiscal 2017, the intensification of rolling and surface treatment equipment implemented in the medium-term business plan, and the shutdown of No. 3 blast furnace in junjin plant, Nippon Steel Sumitomo will also implement the following measures in the new medium-term business plan:

① after the advanced continuous casting equipment in Bafan plant is put into operation (fiscal 2019), According to the plan, smelting equipment (including blast furnace and steel-making equipment) in xiaocang area will be shut down before the end of fiscal year 2020. The output of special steel rod and wire rod products in xiaocang area will maintain the current level

② at the end of fiscal 2018, the No. 5 blast furnace of hegeshan plant will be replaced by the new No. 2 blast furnace to be put into operation. By then, the crude steel production capacity will increase by 500000 tons/year. The steel-making workshop of Nippon Steel Sumitomo iron and steel (Co., Ltd.) located in the plant is planned to stop production at the end of fiscal 2019, and Wakayama plant will provide billets instead

③ the small caliber seamless pipe factory of junjin plant is planned to stop production in May 2020, and the production will be incorporated into the Hainan region of hegeshan plant

promote technology development that leads the world

Nippon Steel and Sumitomo plans to build the largest and highest level R & D center in the global steel industry (including 800 R & D personnel) to give full play to its own technology development strength and promote technology development with key driving forces. It mainly includes the design and processing technology of high-performance goods (such as light weight, high strength, high corrosion resistance, low power loss) that are ahead of the changes in user needs, and the technological development of minimizing environmental load in the whole life cycle of steel products, so as to give full play to the role of steel and lead the development of steel and iron technology in the world

the ever-changing application of information technology (it) has become an important factor affecting the competitiveness of enterprises. In the recent business development, Nippon Steel Sumitomo will give full play to the advantages of having system solution business within the group, actively make use of advanced IT technology (artificial intelligence, IOT, big data), provide a safe and competitive production site, and realize stable production, quality improvement and intellectualization

strengthen the business system of the group

in order to strengthen the core competitiveness of the main steel industry and provide more steel materials and solutions to the society and users to create higher value, Nippon Steel Sumitomo will strengthen cooperation with the group's subsidiaries, improve its comprehensive strength, and further promote the structural reorganization within the group

1) give play to the synergy of Nissin steel making

by the end of 2020, in addition to putting forward specific product requirements for Nangang, customers will give play to the synergy of 20billion yen/year with the subsidiary Nissin steel making in March 2017. On this basis, we will further expand cooperation in various businesses such as sheet metal and stainless steel and upstream steelmaking production. In addition, due to the application of the blast furnace longevity technology of Nippon Steel and Sumitomo, the overhaul of Wuchang No. 1 blast furnace will be postponed from the end of fiscal 2019 to the end of fiscal 2023

2) Nippon Steel Sumitomo Corporation strengthens the ability to respond to the cutting-edge needs of automobiles, batteries, etc., and seeks the progress of business development through the cooperation between the main business of steel and other businesses of the company, such as chemistry and new materials

3) in terms of engineering technology business, while strengthening the competitiveness of various businesses and group cooperation, from the perspective of pursuing coordinated development with other companies, we should give full play to the collaborative advantages of Nippon Steel, Sumitomo engineering company and Toyo Engineering Company, and strive to improve profitability

4) further develop the system solution business and strengthen the group's it foundation

Nippon Steel Sumitomo system solutions company expanded to provide solutions to users in the field of IOT and artificial intelligence by playing the role of "ioxsolution business promotion department (established in April 2016)" and "AI research and Development Center (established in October 2017)"

at the same time, we will give full play to the advantages of the company within the group and devote ourselves to the strengthening of the group's it foundation and the application of advanced IT technology

actively invest in operating resources to achieve development

1) Japan's domestic capital expenditure

in order to strengthen "equipment", promote the renewal of equipment including blast furnace and coke oven overhaul, maintain the smooth operation of equipment, and capture demand in promising areas to carry out production. Compared with the 2017 fiscal year medium-term business plan, Nippon Steel Sumitomo's "2020 fiscal year medium-term business plan" will increase investment by about 350billion yen in three years, The total scale of capital expenditure increased to about 1700billion yen

2) business investment

in addition to the development investment to obtain the rights and interests of raw materials for carrying out business at home and abroad according to varieties, user industries, regions, etc., Nippon Steel Sumitomo will also provide funds for the implementation of enterprise mergers and acquisitions, with a total of about 600billion yen in three years

3) personnel

the employment scale of Nippon Steel Sumitomo will be equivalent to the medium-term business plan of fiscal 2017, with about 1100 new employees each year

in parallel with the above resource investment, the group will implement asset compression (a total of about 100billion yen in three years) as a whole and serve as part of the funding source of the above investment

in terms of profits, financial objectives and shareholder returns

1) in the 2017 fiscal year medium-term business plan, Nippon Steel and Sumitomo Corporation, despite the implementation of measures to strengthen equipment and people and improve cost competitiveness, but due to equipment accidents and other reasons, the production was significantly reduced, and due to the downturn in crude oil prices, the demand in the energy sector was reduced. It is expected that ROS and roe could not reach the expected 10% level

2) in order to achieve the goal of "building the world's first steel enterprise with comprehensive strength", Nippon Steel Sumitomo will continue to carry out international business, strengthen "manufacturing capacity" and optimize the group's operation structure

through these efforts, Nippon Steel Sumitomo seeks medium and long-term interest growth and the expansion of value creation capacity, and strives to achieve the goals of ros10% and roe10% by 2020 fiscal year

3) on the basis of strengthening equipment and investing development funds, the d/e ratio (debt to equity ratio) target of Nippon Steel Sumitomo at the end of fiscal year 2020 is the same as that expected at the end of fiscal year 2017, which is about 0.7

4) with regard to the return of shareholders' allotment, the current policy of "comprehensive payment rate of 20%-30% is changed to" about 30% (implemented from fiscal year 2018)

build an enterprise trusted by the society

1) the development philosophy of Nippon Steel Sumitomo is to continuously improve technology and manufacturing strength and provide high-quality products and services for the society

2) in terms of values of Nippon Steel and Sumikin, the first place is safety, environment and disaster prevention, the second is quality, and the third is production, and the cost and income are given priority. Don't forget the lessons of past accidents, continue to carry out risk management, and implement countermeasures to prevent accidents before they happen

3) comply with relevant laws and regulations, in order to ensure the credibility of financial reports and the effectiveness and efficiency of business,