Maruichi Steel Tube : Financial Results Briefing For the First Half of the Year Ending March 31, 2020

Financial Results Briefing

For the First Half of the Year Ending March 31, 2020

Chairman & CEO Hiroyuki Suzuki

I.	Consolidated Financial Highlights for the First Half of the Year Ending March 31, 2020	・・・P. 2
II.	Nonconsolidated Financial Highlights for the First Half of the Year Ending March 31, 2020	・・・P. 12
III. Performance Forecasts for the Year Ending March 31, 2020	・・・P. 20
IV. Progress of the 'Fifth Medium-Term Management Plan'	・・・P. 27
(Reference) Overview and Trends in Business Performance of Overseas Group Companies	・・・P. 50
(Reference) Features of the Maruichi Group	・・・P. 60

November 11, 2019

Devoted to Steel Tubes

1

I. Consolidated Financial Highlights

for the First Half of the Year Ending

March 31, 2020

Devoted to Steel Tubes

2

Consolidated Operating Results

Net sales (Millions of yen)

82,565

(Millions of yen)

	1H of FY2019	1H of FY2020	Increase/	Forecasts announced	Increase/
	Results	Results	decrease	in August	decrease
Net sales	82,565	78,113	-5.4%	78,800	-0.9%

74,31775,861

65,809

78,113

Operating income	10,041	6,965	-30.6%	7,600	-8.4%
Ordinary income	11,153	8,268	-25.9%	8,600	-3.9%
Net income attributable to	7,385	3,981	-46.1%	5,600	-28.9%
owners of parent

Profits (Millions of yen)								Operating income
																Ordinary income
					12,852								Net income attributable to owners of parent
12,217				12,101
					11,056		11,153
						10,041
8,595							8,158						8,268
7,542													7,385 6,965
	6,842	6,584

3,981

1H/FY2016 1H/FY2017 1H/FY2018 1H/FY2019 1H/FY2020	1H/FY2016	1H/FY2017	1H/FY2018	1H/FY2019	1H/FY2020
				Devoted to Steel Tubes	3

Consolidated Operating Results Statements of Income

(Millions of yen)

	1H of	FY2016	1H of	FY2017	1H of	FY2018	1H of	FY2019	1H of	FY2020
	Amount	Percentage of	Amount	Percentage of	Amount	Percentage of	Amount	Percentage of	Amount	Percentage of
	total (%)	total (%)	total (%)	total (%)	total (%)
Net sales	74,317	100.0	65,809	100.0	75,861	100.0	82,565	100.0	78,113	100.0
Cost of sales	60,293	81.1	47,388	72.0	58,362	76.9	65,928	79.9	64,150	82.1
Gross profit	14,023	18.9	18,421	28.0	17,499	23.1	16,636	20.1	13,962	17.9
Selling, general and administrative	6,480	8.7	6,204	9.4	6,442	8.5	6,594	8.0	6,997	9.0
expenses
Operating income	7,542	10.1	12,217	18.6	11,056	14.6	10,041	12.2	6,965	8.9
Non-operating income	1,496	1.8	1,348	2.0	1,475	1.9	1,692	2.0	1,663	2.1
Non-operating expenses	443	0.6	713	1.1	430	0.6	580	0.7	359	0.5
Ordinary income	8,595	11.6	12,852	19.5	12,101	16.0	11,153	13.5	8,268	10.6
Extraordinary income	1,951	1.0	198	0.3	223	0.3	3	0.0	658	0.8
Extraordinary losses	12	0.0	1,883	2.9	14	0.0	59	0.1	2,094	2.7
Income before income taxes	10,534	14.2	11,166	17.0	12,310	16.2	11,097	13.4	6,832	8.7
Income taxes	4,045	5.4	3,554	5.4	3,846	5.1	3,299	4.0	2,789	3.6
Net income attributable to non-controlling	(94)	(0.1)	617	0.9	306	0.4	412	0.5	61	0.1
interests
Net income attributable to owners of	6,584	8.9	6,994	10.6	8,158	10.8	7,385	8.9	3,981	5.1
parent

Devoted to Steel Tubes

4

First Six Months of the Year Ending March 31, 2020 Consolidated P/L results: Factors for changes from FY2019

(Billions of yen)

		1H of FY2020
	Previous 1H	Current 1H	Increase/	Percentage
	decrease	increase/decrease
Net sales	82.57	78.11	-4.45	-5.4%

Operating income

10.04

6.97

-3.08

-30.6%

(Interest income, dividends)	0.96	0.97	0.01
(Equity in earnings of affiliated companies, etc.)	0.24	0.15	-0.10
(Other non-operating income)	0.49	0.55	0.06
(Interest expense)	0.11	0.16	-0.05
(Exchange loss, net)	0.28	0.04	0.24
(Expenses of real estate rent)	0.15	0.13	0.02
(Other non-operating expenses)	0.05	0.03	0.02
Ordinary income	11.15	8.27	-2.88	-25.9%
(Gains on sales of property, plant and equipment)	0.00	0.45	0.45
(Gains on sales of investment securities)	0.00	0.20	0.20
(Other extraordinary income)	0.00	0.01	0.01
(Loss on sales of property, plant and equipment)	0.00	0.01	-0.01
(Loss on disposal of property, plant and equipment,	0.04	0.02	0.01
etc.)
(Loss on valuation of investment securities)	0.00	2.04	-2.04
(Other extraordinary losses)	0.02	0.02	0.00
Income before income taxes	11.10	6.83	-4.26	-38.4%
(Income taxes)	3.30	2.79	0.51
(Net income)	7.80	4.04	-3.75
(Net income attributable to non-controlling interests)	0.41	0.06	0.35
Net income attributable to owners of parent	7.39	3.98	-3.40	-46.1%

Net sales
Factors attributable to the Company	¥+1.17 billion
MAC	¥-1.19 billion
MKK USA INC.	¥-0.84 billion
MOST	¥-1.31 billion
MMX	¥+0.10 billion
SUNSCO (including Hanoi)	¥-1.50 billion
KUMA	¥-0.53 billion
Other domestic subsidiaries	¥-0.04 billion
Increase/decrease in consolidated elimination and reclassification	¥-0.30 billion
Operating income
Factors attributable to the Company	¥+0.10 billion
MAC	¥-0.88 billion
MKK USA INC.	¥-0.92 billion
MOST	¥-0.74 billion
MMX	¥-0.04 billion
SUNSCO (including Hanoi)	¥-0.22 billion
KUMA	¥-0.28 billion
Alpha Metal	¥-0.04 billion
Other domestic subsidiaries	¥-0.07 billion
Increase/decrease in consolidated elimination and reclassification	¥+0.02 billion
Ordinary income
Factors attributable to the Company	¥-0.02 billion
MAC	¥-0.87 billion
MKK USA INC.	¥-0.95 billion
MOST	¥-0.72 billion
MMX	¥-0.06 billion
SUNSCO (including Hanoi)	¥-0.19 billion
KUMA	¥-0.08 billion
Alpha Metal	¥-0.02 billion
Profits in other domestic subsidiaries	¥-0.06 billion
Affiliated companies accounted for by the equity method	¥-0.10 billion
Increase/decrease in consolidated elimination and reclassification	¥+0.19 billion
Devoted to Steel Tubes	5

Consolidated Business Results by Segment

(Millions of yen)

		1H of FY2019
	Net sales	Share	Operating	Share
	income
Japan	49,816	60.3%	7,464	74.3%
North America	17,351	21.0%	1,869	18.6%
Asia	15,830	19.2%	576	5.7%
Reconciliations	(432)	(0.5%)	133	1.3%
Total	82,565	100.0%	10,042	100.0%

1H of FY2020

Net sales	Share	Operating	Share
income
50,689	64.9%	7,402	106.3%
13,731	17.6%	(771)	(11.1%)
13,811	17.7%	219	3.1%
(117)	(0.2%)	115	1.7%
78,114	100.0%	6,965	100.0%

Devoted to Steel Tubes

6

Consolidated Operating Results	Statements of Income
Major factors for changes from forecasts
	announced in August

			(Billions of yen)
		1H of FY2020
	Forecasts announced	1H results	Change
	in August

Net sales

78.80

78.11

-0.69

Operating income	7.60	6.97	-0.63

Ordinary income

8.60

8.27

-0.33

Net income

attributable to owners 5.603.98-1.62 of parent

Net sales

Factors attributable to Maruichi

MAC

MKK USA INC.

MOST

MMX

SUNSCO (including Hanoi)

KUMA

Alpha Metal

Other domestic subsidiaries

Consolidated adjustments (mainly for machinery sales and related steel strip)

Operating income

Factors attributable to Maruichi

MAC

MKK USA INC.

MOST

MMX

SUNSCO (including Hanoi)

KUMA

Alpha Metal

Other domestic subsidiaries

Goodwill

Consolidated adjustments

Ordinary income

Factors attributable to Maruichi

MAC

MKK USA INC. MOST

MMX

SUNSCO (including Hanoi)

KUMA Alpha Metal

Other domestic subsidiaries

Affiliated companies accounted for by the equity method

Consolidated adjustments

Net income attributable to owners of parent

Factors attributable to Maruichi

MAC

MKK USA INC.

MOST

MMX

SUNSCO (including Hanoi)

KUMA

Alpha Metal

Other domestic subsidiaries

Consolidated adjustments

Forecast	Result	Amount of impact
¥49.10 billion	¥48.80 billion	¥(0.29) billion
¥3.90 billion	¥3.91 billion	¥0.01 billion
¥6.32 billion	¥6.47 billion	¥0.15 billion
¥2.21 billion	¥2.24 billion	¥0.03 billion
¥1.24 billion	¥1.24 billion	¥0.00 billion
¥11.31 billion	¥11.29 billion	¥(0.01) billion
¥3.09 billion	¥2.80 billion	¥(0.29) billion
¥2.30 billion	¥2.33 billion	¥0.03 billion
¥1.21 billion	¥1.21 billion	¥0.00 billion
¥(1.88) billion	¥(2.18) billion	¥(0.31) billion
Forecast	Result	Amount of impact
¥7.02 billion	¥6.70 billion	¥(0.32) billion
¥(0.21) billion	¥(0.21) billion	¥0.00 billion
¥(0.26) billion	¥(0.24) billion	¥0.02 billion
¥(0.42) billion	¥(0.43) billion	¥(0.01) billion
¥0.19 billion	¥0.17 billion	¥(0.02) billion
¥0.00 billion	¥(0.00) billion	¥(0.00) billion
¥0.35 billion	¥0.07 billion	¥(0.28) billion
¥(0.01) billion	¥(0.01) billion	¥(0.00) billion
¥0.68 billion	¥0.58 billion	¥(0.09) billion
¥0.00 billion	¥0.00 billion	¥0.00 billion
¥0.26 billion	¥0.33 billion	¥0.07 billion
Forecast	Result	Amount of impact
¥9.28 billion	¥9.05 billion	¥(0.23) billion
¥(0.15) billion	¥(0.15) billion	¥0.00 billion
¥(0.28) billion	¥(0.29) billion	¥(0.01) billion
¥(0.43) billion	¥(0.44) billion	¥(0.01) billion
¥0.19 billion	¥0.17 billion	¥(0.01) billion
¥(0.11) billion	¥(0.11) billion	¥0.01 billion
¥0.37 billion	¥0.08 billion	¥(0.28) billion
¥0.02 billion	¥0.01 billion	¥(0.00) billion
¥0.97 billion	¥0.87 billion	¥(0.09) billion
¥0.15 billion	¥0.15 billion	¥(0.01) billion
¥(1.40) billion	¥(1.09) billion	¥0.32 billion
Forecast	Result	Amount of impact
¥6.50 billion	¥4.86 billion	¥(1.64) billion
¥(0.09) billion	¥(0.15) billion	¥(0.06) billion
¥(0.25) billion	¥(0.26) billion	¥(0.01) billion
¥(0.28) billion	¥(0.44) billion	¥(0.17) billion
¥0.12 billion	¥0.10 billion	¥(0.02) billion
¥(0.13) billion	¥(0.12) billion	¥0.01 billion
¥0.23 billion	¥0.09 billion	¥(0.15) billion
¥0.01 billion	¥0.01 billion	¥0.00 billion
¥0.98 billion	¥0.91 billion	¥(0.07) billion
¥(1.49) billion	¥(1.00) billion	¥0.48 billion
Devoted to Steel Tubes	7

Consolidated Operating Results Differences between forecasts announced in August and actual results of major companies

(Billions of yen)

Forecasts for 1H announced in Aug. 2019

	Net		Ordinary	Net income
	Operating	attributable
	sales	income	income	to owners of
	parent
Maruichi Steel	49.10	7.02	9.28	6.50
Tube
MAC	3.90	-0.21	-0.15	-0.09
MKK USA INC.	6.32	-0.26	-0.28	-0.25
MOST	2.21	-0.42	-0.43	-0.28
MMX	1.24	0.19	0.19	0.12
SUNSCO	11.31	0.00	-0.11	-0.13
(including Hanoi)
KUMA	3.09	0.35	0.37	0.23
Alpha Metal	2.30	-0.01	0.02	0.01
Other domestic	1.21	0.68	0.97	0.98
subsidiaries
Af f iliated companies			0.15
accounted f or by the
equity method
Goodwill		0.00
Consolidated	-1.88	0.26	-1.40	-1.49
adjustments
Total	78.80	7.60	8.60	5.60

		Results for 1H of FY2020
Net sales	Operating income	Ordinary income	Net income attributable
to owners of parent
	Change		Change		Change		Change
48.80	-0.29	6.70	-0.32	9.05	-0.23	4.86	-1.64
3.91	0.01	-0.21	0.00	-0.15	0.00	-0.15	-0.06
6.47	0.15	-0.24	0.02	-0.29	-0.01	-0.26	-0.01
2.24	0.03	-0.43	-0.01	-0.44	-0.01	-0.44	-0.17
1.24	0.00	0.17	-0.02	0.17	-0.01	0.10	-0.02
11.29	-0.01	-0.00	-0.00	-0.11	0.01	-0.12	0.01
2.80	-0.29	0.07	-0.28	0.08	-0.28	0.09	-0.15
2.33	0.03	-0.01	-0.00	0.01	-0.00	0.01	0.00
1.21	0.00	0.58	-0.09	0.87	-0.09	0.91	-0.07
				0.15	-0.01
		0.00	0.00
-2.18	-0.31	0.33	0.07	-1.09	0.32	-1.00	0.48
78.11	-0.69	6.97	-0.63	8.27	-0.33	3.98	-1.62
					8
				Devoted to Steel Tubes

Consolidated Operating Results	Balance Sheets compared with the
previous fiscal year

			(Billions of yen)
		1H of FY2020
	Previous	Current	Change
	Year	Year
Current assets	165.7	170.9	+5.21
(Cash and bank deposits)	60.8	79.7	+18.96
(Trade notes and accounts	36.8	34.8	-1.98
receivable)
(Inventories)	33.2	32.0	-1.27
(Others)	34.9	24.4	-10.50
Long-term assets	155.4	150.5	-4.84
(Property, plant and equipment)	79.4	79.0	-0.33
(Intangible assets)	1.6	1.4	-0.27
(Investments and other assets)	74.4	70.1	-4.24
Total assets	321.0	321.4	+0.37
Current liabilities	36.6	40.5	+3.84
(Trade notes and accounts payable)	19.1	21.6	+2.50
(Short-term bank loans)	8.8	9.5	+0.71
(Accrued income taxes)	2.7	2.7	-0.04
(Others)	6.0	6.7	+0.67
Long-term liabilities	9.5	8.4	-1.04
Total liabilities	46.1	48.9	+2.80
Net assets	274.9	272.5	-2.43
(Common stock)	9.6	9.6	+0.00
(Additional paid-in capital)	15.9	15.9	+0.01
(Retained earnings)	256.1	256.0	-0.08
(Treasury stock)	(27.0)	(27.0)	+0.03
(Unrealized holding gains on	11.0	9.8	-1.17
available-for-sale securities)

Factors for increases/decreases of current assets

Cash and bank deposits	Japan	¥+18.24 billion	Overseas	¥+0.41 billion	Consolidated
					adjustments
Trade notes and accounts	Japan	¥-7.28 billion	Overseas	¥+0.40 billion	Consolidated
receivable					adjustments
Inventories	Japan	¥+0.70 billion	Overseas	¥-1.83 billion	Consolidated
					adjustments
Others	Subsidiary	¥-9.77 billion	Others	¥-1.35 billion	Consolidated
	NCD				adjustments

Factors for increases/decreases of long-term assets

	Maruichi	¥-0.02 billion	Domestic	¥+0.34 billion	MOST
	subsidiaries
Property, plant and	MAC	¥-0.21 billion	MKK USA	¥-0.27 billion	SUNSCO
equipment	INC.
	KUMA	¥-0.00 billion	MMX	¥-0.01 billion	Consolidated
					adjustments
Intangible assets	Maruichi	¥+0.12 billion	Subsidiaries	¥-0.39 billion	Consolidated
					adjustments
Investments and other	Japan	¥-3.27 billion	Overseas	¥-0.10 billion	Consolidated
assets					adjustments

Factors for increases/decreases of current liabilities

Trade notes and accounts	Japan	¥-0.61 billion	Overseas	¥-2.03 billion	Consolidated
payable					adjustments
	Alpha Metal	¥+0.06 billion	SUNSCO	¥+0.26 billion	MKK USA
	INC.
Short-term bank loans
				Consolidated
	KUMA	¥-0.20 billion	MMX	¥+0.08 billion
					adjustments
Accrued income taxes	Maruichi	¥-0.13 billion	Subsidiaries	¥+0.08 billion	Consolidated
					adjustments
Others	Maruichi	¥+0.74 billion	Subsidiaries	¥-0.25 billion	Consolidated
					adjustments

Factors for increases/decreases of long-term liabilities

	Maruichi	¥-0.59 billion	Domestic	¥-0.05 billion	Consolidated
			subsidiaries		adjustments
Long-term liabilities	SUNSCO	¥-0.66 billion	KUMA	¥-0.09 billion	MKK USA
INC.
	MMX	¥+0.00 billion	MAC	¥-0.00 billion	MOST

¥+0.31 billion

¥+4.90 billion

¥-0.15 billion

¥+0.61 billion

¥-0.18 billion ¥-0.59 billion ¥+0.60 billion

¥+0.00 billion

¥-0.86 billion

¥+5.14 billion

¥+0.31 billion

¥+0.20 billion

¥+0.00 billion

¥+0.18 billion

¥+0.35 billion

¥-0.00 billion ¥+0.00 billion

(Foreign currency translation	(1.5)	(2.6)	-1.13
adjustments)
(Remeasurements of defined benefit	(0.1)	(0.0)	+0.03
plans)
(Stock options)	0.2	0.2	+0.00
(Minority interests)	10.8	10.7	-0.12
Total liabilities and net assets	321.0	321.4	+0.37

Retained earnings

Unrealized holding gains on available-for-sale securities

Foreign currency translation adjustments

Factors for increases/decreases of net assets

Japan	¥+0.90 billion	Overseas	¥-1.26 billion	Consolidated	¥+0.29 billion
				adjustments
Maruichi	¥-1.36 billion	Subsidiaries	¥-0.00 billion	Consolidated	¥+0.18 billion
				adjustments
End of December 2018: ¥111.00/US$	→ End of June 2019: ¥107.79/US$
		Devoted to Steel Tubes	9

Capital investment and

Consolidated Operating Results depreciation

(Billions of yen)

8.8

Depreciation

Capital investment

2HforBudget	3.9	2HforBudget
		3.3

	6.2	6.7		6.3	6.4		6.2
6.0		5.8	5.7
			5.6

1Hfor Result		1HforResult
	3.0	3.2

FY2015	FY2016	FY2017	FY2018	FY2019	FY2020
				Devoted to Steel Tubes	10

Employees

2500

2000

1500

1000

500

0

1,988	1,942	1,955	1,960

960	949	948	955

384

372

376

386

644
	621		631		619
(40)		(37)		(34)		(37)

: Overseas consolidated subsidiaries

: Domestic consolidated subsidiaries

: Maruichi Steel Tube

Figures in parentheses indicate employees temporarily transferred overseas

1,967	1,930	1,984	1,951

939	934	976	970

395

386

385

384

633				623
	610			597
(31)		(30)		(32)		(29)

Mar. 2016

Sep.2016

Mar. 2017

Sep. 2017

Mar. 2018

Sep. 2018

Mar. 2019

Sep. 2019

Devoted to Steel Tubes

11

1. Nonconsolidated Financial Highlights for the First Half of the Year Ending March 31, 2020

Devoted to Steel Tubes

12

Nonconsolidated Operating Results

Net sales (Millions of yen)

				(Millions of yen)
	1H of FY2019	1H of FY2020	Increase/	1H Forecasts	Increase/
	Results	Results	decrease	announced in August	decrease
Net Sales	47,628	48,803	+2.5%	49,041	-0.5%

47,628

46,027

44,581

41,549

48,803

Operating Income	6,602	6,697	+1.4%	6,837	-2.0%
Ordinary Income	9,077	9,053	-0.3%	8,987	+0.7%
Net Income	6,441	4,861	-24.5%	6,221	-21.9%

Profits (Millions of yen)		10,650			Operating income		Ordinary income
													Net income
9,904
9,203									9,077		9,053
			8,171				8,031		7,719
				7,626
7,139
					5,303				6,602		6,441	6,697		4,861

1H/FY2016 1H/FY2017 1H/FY2018 1H/FY2019 1H/FY2020

1H/FY2016

1H/FY2017

1H/FY2018

1H/FY2019

1H/FY2020

Devoted to Steel Tubes

13

Nonconsolidated Operating Results Statements of Income

(Millions of yen)

	1H of FY2016	1H of FY2017	1H of FY2018	1H of FY2019	1H of FY2020
	Amount	Percentage	Amount	Percentage	Amount	Percentage	Amount	Percentage	Amount	Percentage
	of total (%)	of total (%)	of total (%)	of total (%)	of total (%)
Net sales	44,581	100.0	41,549	100.0	46,027	100.0	47,628	100.0	48,803		100.0
Cost of sales	34,306	77.0	30,197	72.7	34,853	75.7	37,833	79.4	38,574		79.0
Gross profit	10,275	23.0	11,352	27.3	11,174	24.3	9,794	20.6	10,228		21.0
Selling, general and	3,135	7.0	3,180	7.7	3,142	6.8	3,191	6.7	3,530		7.2
administrative expenses
Operating income	7,139	16.0	8,171	19.7	8,031	17.4	6,602	13.9	6,697		13.7
Non-operating income	2,299	5.2	2,015	4.9	2,858	6.2	2,686	5.6	2,560		5.2
Non-operating expenses	235	0.5	283	0.7	239	0.5	211	0.4	205		0.4
Ordinary income	9,203	20.6	9,904	23.8	10,650	23.1	9,077	19.1	9,053		18.6
Extraordinary income	1,944	4.4	185	0.4	222	0.5	1	0.0	205		0.4
Extraordinary losses	8	0.0	1,875	4.5	13	0.0	36	0.1	2,074		4.3
Income before income taxes	11,139	25.0	8,214	19.8	10,859	23.6	9,042	19.0	7,184		14.7
Income taxes	3,513	7.9	2,911	7.0	3,140	6.8	2,601	5.5	2,323		4.8
Income taxes - deferred	0	0.0	0	0.0	0	0.0	0	0.0	0		0.0
Net income	7,626	17.1	5,303	12.8	7,719	16.8	6,441	13.5	4,861		10.0
							Devoted to Steel Tubes	14

Statements of Income

Nonconsolidated Operating Results Major factors for changes from

FY2019 1H

				(Billions of yen)
		1H of FY2020
			Increase/	Percentage
	Previous 1H	Current 1H	increase/
	decrease
			decrease
Net sales	47.63	48.80	＋1.18	＋2.5%
Operating income	6.60	6.70	＋0.10	＋1.4%
(Dividend income, interest from bonds, etc.)	2.01	1.92	-0.09
(House rent income)	0.37	0.36	-0.01
(Royalty income)	0.23	0.19	-0.04
(Other non-operating income)	0.07	0.09	＋0.01
(Rent expenses)	0.19	0.19	-0.00
(Other non-operating expenses)	0.02	0.02	-0.01
Ordinary income	9.08	9.05	-0.02	-0.3%
(Gains on sales of investment securities)	0.00	0.20	＋0.20
(Gains on sales of property, plant and equipment)	0.00	0.00	＋0.00
(Other extraordinary income)	0.00	0.01	＋0.01
(Loss on sales of securities)	0.00	0.00	-0.00
(Loss on valuation of securities)	0.00	2.04	＋2.04
(Costs of disposal and removal of property, plant	0.02	0.02	＋0.00
and equipment, etc.)
(Other extraordinary loss)	0.02	0.02	-0.00
Income before income taxes	9.04	7.18	-1.86	-20.5%
(Income taxes)	2.60	2.32	-0.28
(Income taxes-deferred)	0.00	0.00	＋0.00
Net income	6.44	4.86	-1.58	-24.5%

Net sales	Increase/decrease
Domestic pipe sales volume decrease	¥-0.39 billion
Domestic pipe unit selling price rise	¥+0.99 billion
Export pipe sales volume increase	¥+0.05 billion
Export pipe unit selling price drop	¥-0.01 billion
Steel strip sales volume increase	¥+0.11 billion
Steel strip unit selling price rise	¥+0.01 billion
Pole Division	¥+0.64 billion
Related steel strip	¥+0.37 billion
Machinery, others	¥-0.58 billion
Operating income	Increase/decrease
Gross sales volume decrease	¥-0.04 billion
Gross unit selling price rise	¥+1.43 billion
Cost of sales increase	¥-0.94 billion
Selling, general and administrative expenses increase	¥-0.36 billion
Ordinary income	Increase/decrease
From operating income	¥+0.10 billion
Dividend income, interest on securities, etc. decrease	¥-0.09 billion
Other non-operating income decrease	¥-0.03 billion
Non-operating expenses increase	¥+0.01 billion
Income before income taxes	Increase/decrease
From ordinary income	¥-0.02 billion
Gains on sales of investment securities increase	¥+0.20 billion
Gain on sales of property, plant and equipment	¥+0.00 billion
Loss on sales of investment securities	¥+0.00 billion
Loss on valuation of investment securities increase	¥-2.04 billion
Costs of disposal and removal of property, plant and	¥-0.00 billion
equipment, etc. decrease
Others	¥+0.01 billion
Net income	Increase/decrease
From income before income taxes	¥-1.86 billion
Income taxes increase	¥+0.28 billion
Income taxes-deferred	¥+0.00 billion	15
Devoted to Steel Tubes

Statements of Income

Nonconsolidated Operating Results Major factors for changes from forecasts announced in August

(Billions of yen)

1H of FY2020

1H forecasts	1H		Percentage
announced in	Change	increase/
results
August		decrease

Net sales

49.04

48.80

-0.24

-0.5%

Operating income

6.84

6.70

-0.14

-2.0%

Ordinary income

8.99

9.05

+0.07

+0.7%

Income before	8.96	7.18	-1.77	-19.8%
income taxes

Net income

6.22

4.86

-1.36

-21.9%

Net sales

Domestic pipe sales volume

Domestic pipe unit selling price

Export pipe sales volume

Export pipe unit selling price

Steel strip sales volume

Steel strip unit selling price

Pole Division

Related steel strip

Machinery, others

Operating income

Factors attributable to company-wide sales volume Factors attributable to company-wide unit selling price (Factors attributable to domestic pipe unit selling price)

Cost of sales

Selling, general and administrative expenses

Ordinary income

From operating income

Dividend income, interest on securities, etc. Other non-operating income Non-operating expenses

Income before income taxes

From ordinary income

Gains on sales of investment securities

Gains on sales of property, plant and equipment

Costs of disposal and removal of property, plant and equipment, etc.

Loss on sales/valuation of investment securities Others

Net income

From income before income taxes

Income taxes

Income taxes-deferred

Increase/decrease

¥-0.23 billion ¥-0.07 billion ¥+0.04 billion ¥+0.00 billion ¥-0.10 billion ¥-0.01 billion ¥+0.11 billion ¥-0.05 billion ¥+0.05 billion

Increase/decrease

¥-0.04 billion ¥+0.04 billion (¥-0.08 billion) ¥-0.23 billion ¥+0.09 billion

Increase/decrease

¥-0.14 billion ¥+0.09 billion ¥+0.08 billion ¥+0.03 billion

Increase/decrease

¥+0.07 billion ¥+0.20 billion ¥+0.00 billion

¥+0.01 billion

¥-2.04 billion ¥-0.01 billion

Increase/decrease

¥-1.77 billion ¥+0.41 billion ¥+0.00 billion

Devoted to Steel Tubes

16

Nonconsolidated Operating Results	Balance Sheets compared with
	the previous fiscal year

(Billions of yen)

		1H of FY2020
	Previous	Current 1H	Change
	1H
Current assets	108.02	109.24	+1.22
(Cash and bank deposits)	51.92	59.47	+7.55
(Trade notes and accounts	36.00	30.20	-5.80
receivable)
(Inventories)	11.21	11.86	+0.65
(Others)	8.90	7.71	-1.19
Long-term assets	134.10	131.01	-3.09
(Property, plant and	43.42	43.40	-0.02
equipment)
(Intangible assets)	0.22	0.34	+0.12
(Investments and other	90.47	87.27	-3.20
assets)
Total assets	242.12	240.25	-1.87
Current liabilities	22.28	21.51	-0.77
(Trade notes and accounts

Current assets

Cash and bank deposits	¥+7.55 billion
Income before	¥+7.18 billion
income taxes
Stock-related	¥+0.00 billion
Dividends and	¥-6.40 billion
taxes paid
Accounts receivable	¥-5.80 billion
Trade notes	¥+0.13 billion
receivable
Inventories	¥+0.65 billion
Finished goods	¥+0.17 billion
Others	¥-1.19 billion
NCD	¥+0.00 billion
Long-term assets
Property, plant and	¥-0.02 billion
equipment
New investments	¥+1.25 billion
Investments and
other assets

Valuation difference on investment

securities

Loss on valuation of investment securities

Depreciation Bond-related

Capital investments

Trade accounts

Raw materials

Others

Depreciation ¥-3.20billion ¥-2.04billion ¥-2.04billion

¥+1.27 billion	Loss on valuation of
investment securities
¥+3.70 billion	Operating funds
¥-1.44 billion	Investments in
affiliated companies
¥-5.93 billion
¥+0.42 billion	Supplies and
others
¥-1.19 billion
¥-1.27 billion
Stock-related	¥+0.67 billion
Investment-trust-	¥+2.51 billion
related

¥+2.04 billion Deposit into NCD

¥+3.80 billion	Purchase of
investment trust
¥-0.68 billion	Others

¥+0.06 billion

Bond-related	¥-2.41 billion
Others	¥+0.12 billion

¥+0.00 billion ¥-2.51billion ¥+0.59 billion

payable)	16.62	15.24	-1.38

Current liabilities

(Accrued income	2.35	2.23	-0.13
taxes)
(Others)	3.31	4.04	+0.74
Long-term liabilities	5.71	5.12	-0.59
Total liabilities	27.99	26.63	-1.36
Net assets	214.13	213.62	-0.51
(Common stock)	9.60	9.60	+0.00

Trade notes and	¥-1.38 billion
accounts payable
Electronically recorded	¥-0.43 billion
monetary claims payable
Others	¥+0.74 billion

Equipment accounts payable- other/notes payable

Long-term liabilities

Long-term liabilities

¥-0.59 billion

Trade accounts	¥-0.95 billion
payable
¥+0.47 billion Others	¥+0.27 billion

(Additional paid-in capital)

14.73

14.74

+0.01

Accrued retirement benefits

¥+0.09 billion Long-term deferred tax liabilities

¥-0.68 billion Others

¥+0.00 billion

(Retained earnings)	206.36	207.16	+0.80
(Treasury stock)	(27.05)	(27.01)	+0.03
(Unrealized holding gains on	10.30	8.95	-1.36
available-for-sale securities)
(Stock options)	0.19	0.19	+0.00
Total liabilities and net assets	242.12	240.25	-1.87

Net assets

Retained earnings	¥+0.80 billion
Net income	¥+4.86 billion	Dividends
Unrealized holding gains on available-for-	¥-1.36 billion
sale securities
Bonds/	¥+0.15 billion	Listed stock
investment trusts

¥-4.06 billion	Interim dividends
¥-0.81 billion	Listed stock
(overseas)

Loss on disposal

¥+0.00 billion of treasury stock

¥-0.70 billion

¥+0.00 billion

Devoted to Steel Tubes

17

Nonconsolidated Operating Results Changes in balance sheets

Assets
234.9	239.0	242.6	242.1	240.3
47.1	49.8	52.8	51.9	Cash and
bank	59.5
			deposits
32.6	34.2	33.0	36.0	Accounts	30.2
				receivable
10.6	10.0	11.3	11.2 Inventories 11.9
64.8	66.9	68.1	65.5 Investment 60.5
				securities
27.0	27.0			Investments
28.0	28.2	companiesin affiliated	28.9
43.7	44.0	43.8	43.4	Property,	43.4
	plant and
				equipment
9.1	7.1	5.6	5.9	Other assets	5.9

Liabilities and net assets

(Billions of yen)

234.9	239.0	242.6	242.1	240.3
	15.1	16.6	Accounts
12.7	15.5	15.2
			payable
	13.5	13.4	11.4	Other	11.5
13.5	liabilities
					213.6
		214.1	214.1
	210.0
206.4
stock treasury (Including	stock treasury (Including	stock treasury (Including	stock treasury (Including	Net assets	stock treasury (Including
23.6	27.1	27.1	27.1		27.0
	)	)	)		)
)

As of Sep. 30,	As of Mar. 31,	As of Sep. 30,	As of Mar. 31,	As of Sep. 30,	As of Sep.30,	As of Mar. 31,	As of Sep.30,	As of Mar. 31, As of Sep.30,
2017	2018	2018	2019	2019	2017	2018	2018	2019	2019
							Devoted to Steel Tubes	18

Nonconsolidated Operating Results	Capital investments and
depreciation

(Billions of yen)

Depreciation

Capital investments

2H for Budget

		3.2
2.9
2.4	2.4	2.5	2.6	2.5	2.6
2.2					2.2

1H for Result

2.0

1.4

1.4 1.3

2H for Budget

1H for Result

FY2015	FY2016	FY2017	FY2018	FY2019	FY2020
				Devoted to Steel Tubes	19

1. Performance Forecasts for the Year Ending March 31, 2020

Devoted to Steel Tubes

20

Consolidated and Nonconsolidated Sales

Results and forecasts (announced in November)

(Millions of yen)

Consolidated net sales (full year)

Nonconsolidated net sales (full year)

Consolidated net sales (1H) Nonconsolidated net sales (1H)

144,969

137,277

74,317	89,616		87,518
		65,809

156,267

95,601

75,861

167,437

157,500

100,540100,800

82,565

78,114

44,582		46,027
41,549

47,62848,803

FY2016	FY2017	FY2018	FY2019	FY2020 Forecasts	21
				Devoted to Steel Tubes

Consolidated and Nonconsolidated Ordinary Income

Results and forecasts (announced in November)

(Millions of yen)

26,192

18,945			20,063
		18,937

12,852

8,595
	9,904
		9,203

22,986

12,102

Consolidated ordinary income (full year)

Nonconsolidated ordinary income (full year)

Consolidated ordinary income (1H) Nonconsolidated ordinary income (1H)

21,634

19,200	17,900
				18,374
	17,600

11,153

10,650

8,269

9,0779,053

FY2016	FY2017	FY2018	FY2019	FY2020 Forecasts
				Devoted to Steel Tubes	22

Consolidated Operating Results Forecasts

Compared with 'Fifth Medium-Term Management Plan' by Segment

(Millions of yen)

FY2020 Forecasts

Fifth Medium-Term Management Plan FY2021 Targets

Net sales	Share	Operating	Share		Net sales	Share	Operating	Share
income		income

Japan

103,585

65.8%

16,786

106.2%

106,000

60.6%

18,400

76.7%

North America	26,039	16.5%	-1,543	-9.8%	32,000	18.3%	2,600	10.8%

Asia

27,876

17.7%

557

3.5%

37,000

21.1%

3,000

12.5%

Reconciliations

0

0.0%

0

0.0%

0

0.0%

0

0.0%

Total	157,500	100.0%	15,800	100.0%	175,000	100.0%	24,000	100.0%
						Devoted to Steel Tubes	23

Consolidated and Nonconsolidated Profit Forecasts

Consolidated financial						(Millions of yen)
forecasts
		FY2020 Forecasts		FY2019	Full-year forecasts
					YoY
					Results
	1H Results	2H Forecasts	Full-year Forecasts	Sales profit ratio	increase/decrease
Net sales	78,114	79,386	157,500	-	167,438		(5.9)%
Operating income	6,965	8,835	15,800	10.0%	19,266	(18.0)%
Ordinary income	8,269	9,631	17,900	11.4%	21,635	(17.3)%
Net income attributable	3,982	6,118	10,100	6.4%	14,254	(29.1)%
to owners of parent
Nonconsolidated financial
forecasts
		FY2020 Forecasts		FY2019	Full-year forecasts
					YoY
					Results
	1H Results	2H Forecasts	Full-year Forecasts	Sales profit ratio	increase/decrease
Net sales	48,803	51,997	100,800	-	100,541		0.3%
Operating income	6,698	8,422	15,120	15.0%	13,920		8.6%
Ordinary income	9,053	9,321	18,374	18.2%	17,601		4.4%
Net income	4,861	6,465	11,326	11.2%	12,074		(6.2)%
					Devoted to Steel Tubes	24

Full-year Forecasts by Consolidated Major Companies FY2020

	Forecasts announced in August 2019
				Net income
	Net sales	Operating	Ordinary	attributable
		income	income	to ow ners
				of parent
Maruichi Steel	101.63	15.23	18.39	12.73
Tube
MAC	8.02	-0.07	0.02	0.01
MKK USA INC.	11.50	-0.25	-0.25	-0.23
MOST	4.69	-0.16	-0.16	-0.12
MMX	2.56	0.44	0.43	0.29
SUNSCO	23.76	0.41	0.19	0.15
(including Hanoi)
KUMA	6.40	0.75	0.76	0.48
Alpha Metal	4.79	0.02	0.07	0.05
Other domestic	2.48	1.46	1.77	1.54
subsidiaries
Affiliated companies accounted for			0.46	0.46
by the equity method
Goodwill		0.00
Consolidated	-3.82	0.67	-1.38	-2.06
adjustments
Total	162.00	18.50	20.30	13.30

									(Billions of yen)
Comparison of forecasts (August 2019 and November 2019)
									Net income
Net sales		Operating income		Ordinary income		attributable to
									owners of parent
	Change			Change			Change			Change
100.80	-0.83	15.12	-0.11	18.37	-0.01	11.33	-1.41
7.50	-0.51	-0.53	-0.46	-0.44	-0.46	-0.44	-0.45
11.47	-0.02	-0.71	-0.45	-0.72	-0.48	-0.70	-0.47
4.47	-0.22	-0.73	-0.57	-0.69	-0.53	-0.69	-0.57
2.59	0.04	0.42	-0.02	0.41	-0.02	0.26	-0.02
22.54	-1.22	0.21	-0.20	0.29	0.09	0.25	0.09
5.33	-1.07	0.35	-0.40	0.35	-0.41	0.21	-0.27
4.79	0.01	0.01	-0.01	0.06	-0.01	0.05	-0.00
2.43	-0.05	1.21	-0.25	1.52	-0.24	1.35	-0.19
					0.40	-0.06	0.40	-0.06
				0.00
-4.44	-0.62	0.44	-0.23	-1.66	-0.28	-1.91	0.15
157.50	-4.50	15.80	-2.70	17.90	-2.40	10.10	-3.20

Devoted to Steel Tubes

25

Nonconsolidated Profit/Loss Forecasts for Full Year

Major factors for changes from forecasts announced in August

(Billions of yen)

FY2020 Full Year

FY2020	FY2020
forecasts	forecasts	Change
announced in	announced in
August	November

Net sales

101.63

100.80

-0.83

Operating income

15.23

15.12

-0.11

Ordinary income

18.39

18.37

-0.01

Income before	18.33	16.49	-1.84
income taxes
Net income	12.73	11.33	-1.41

Net sales

Domestic pipe sales volume

Domestic pipe unit selling price

Export pipe sales volume

Export pipe unit selling price

Steel strip sales volume

Steel strip unit selling price

Pole Division

Related steel strip

Machinery, others

Operating income

Factors attributable to company-wide sales volume

Factors attributable to company-wide unit selling price

Cost of sales

Selling, general and administrative expenses

Ordinary income

From operating income

Dividend income, interest on securities, etc. Other non-operating income Non-operating expenses

Income before income taxes

From ordinary income

Gains on sales of investment securities

Gains on sales of property, plant and equipment

Costs of disposal and removal of property, plant and equipment, etc.

Loss on valuation of investment securities

Loss on sales of investment securities

Others

Net income

From income before income taxes

Income taxes

Increase/decrease

¥-0.74 billion ¥-0.11 billion ¥+0.07 billion ¥-0.01 billion ¥-0.10 billion ¥-0.01 billion ¥+0.19 billion ¥-0.11 billion ¥-0.02 billion

Increase/decrease

¥-0.12 billion ¥-0.03 billion ¥-0.09 billion ¥+0.13 billion

Increase/decrease

¥-0.11 billion ¥+0.05 billion ¥+0.09 billion ¥+0.03 billion

Increase/decrease

¥-0.01 billion ¥+0.20 billion ¥+0.00 billion ¥+0.01 billion ¥-2.04 billion

¥-0.00 billion ¥+0.00 billion

Increase/decrease

¥-1.84 billion ¥+0.43 billion

Devoted to Steel Tubes

26

Ⅳ. Progress of the

'Fifth Medium-Term Management Plan'

Devoted to Steel Tubes 27

Progress of the 'Fifth Medium-Term Management Plan'

(Numerical Targets)

(Billions of yen)

Final Year of 'Fourth

Fifth Medium-Term Management Plan

Target

Medium-Term

achieved

Management Plan'

FY2019

FY2019

FY2020 Medium-Term

FY2021 Medium-

FY2018 Results

Management Plan Targets

Term

Targets

Results

Management

(FY2020 Forecasts)

Plan Targets

*Announced March 2018

156.2

164.5

170.0

175.0

Net sales

167.4

（157.5）

19.6

Operating income

20.8

18.9

19.2

24.0

（15.8）

11.5％

11.5％

11.5％

13.7％

Operating margin

13.3%

（10.0%）

6.2％

5.3％

5.5％

6.5％

ROE

5.5

％

（3.8％）

50.0％

Shareholder return

80.5％

50.0％

50.7％

50.0％

ratio

（78.6％）

(3-year average)

¥30 million

Return of profit to

¥22 million

¥30 million

¥25 million

¥30 million

society

(3-year average)

（¥30 million）

Devoted to Steel Tubes

28

Net Sales Targets and Progress

Net Sales (Billions of yen)		Nonconsolidated sales in Japan		Other sales in Japan
						North America				Asia		Results, Forecasts and
200.0													Targets during the Fifth
													Medium-Term
180.0													Management Plan
160.0
																		37.0
												31.1
140.0							30.8				30.7					27.9
				22.7	27.7	26.1									32.0
120.0								32.5
										26.0
	13.9	14.0	15.4			21.7				26.7
			17.4	25.8
100.0			12.7			22.4
11.0	10.1		2.6										3.0
14.1	2.3			3.2		3.3			2.8
	10.5	2.6	3.1	1.6				1.8	1.2
80.0
60.0													100.5			100.8			103.0
80.9	89.1	90.8	86.7	94.1	97.5	89.6	87.5		95.6
40.0
20.0
0.0
FY2010	FY2011	FY2012	FY2013		FY2014	FY2015	FY2016	FY2017	FY2018	FY2019	FY2020	FY2021
												(Results)	(Forecasts)	(Targets)
Total	102.4	115.7	120.6	117.8	136.5	152.6	144.9	137.2	156.2	167.4	157.5	175.0
														*Announced Mar. 2018

Devoted to Steel Tubes 29

Operating Income Targets and Progress

Operating Income (Billions of yen)		Nonconsolidated operating income in Japan		Results, Forecasts and
	Other operating income in Japan
30.0
				North America					Targets during the Fifth
25.0									Medium-Term
				Asia			2.9			Management Plan
20.0				0.6			1.9	1.1							3.0
			0.4			0.7					2.6
				0.8	2.2
				1.8		2.0
	0.7			1.8		2.5		0.6
	0.8	0.1			1.3
				2.2		1.7
15.0	0.7 0.3
0.3	1.1								2.1		1.6
10.0	1.5
14.9	14.6	14.2	17.3	16.1	16.1	17.5	15.5	13.9	15.1	16.7

5.0 10.4

0.0-0.8

-0.2

-0.2

-1.2

-1.5

-0.2FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

-5.0

(Results)

(Forecasts)

(Targets)

Total	10.9	16.6	15.5	15.4	20.1	17.7	17.0	24.5	20.8	19.2	15.8	24.0
										*Announced Mar. 2018

Operating Margin

	25%							22%
	20%		17%	20%		18%	19%
			18%	18%
	16%
				15%	16%	17%
								13%
Overall	15%			15%	12%	12%
13%	13%	10%	12%	10%	14%
	10%
Domestic								5%	5%		8%
	5%	2%	0%	2%
			0%	-1%				-2%
Overseas
0%
		FY2012	FY2013	FY2014	FY2015	FY2016	FY2017	FY2018	FY2019	FY2020	FY2021
	-5%									(Results)	(Forecasts)	(Targets)

*Announced Mar. 2018
Devoted to Steel Tubes	30

Capital Policy Targets and Progress

Targets of the 'Fifth Medium-Term Management Plan' (As of March 2018)

	・Shareholder return ratio（FY2019・FY2020・FY2021）⇒	50.0％
	・Targets of ROE：FY2019⇒5.3％、FY2020⇒5.5％、FY2021⇒6.5％
8.0%										Results, Forecasts and	300.0%
										Targets during the Fifth
7.0%							255.2%	7.4%	Medium-Term
						Management Plan	6.5%
									250.0%
6.0%					6.1%
								6.2%
									5.5%		200.0%
5.0%		5.0%	5.0%
4.0%							4.7%						150.0%
3.9%				3.9%					3.8%
	3.6%
3.0%			130.4%
												100.0%
											78.6%
2.0%	70.3%		61.5%				48.2%	50.8%		50.0%
			50.5%
		53.7%
1.0%				46.9%	49.6%					50.0%
0.0%	FY2010	FY2011	FY2012	FY2013	FY2014	FY2015	FY2016	FY2017	FY2018	FY2019	FY2020	FY2021	0.0%
										(Results)	(Forecasts)	(Targets)

ROE		Shareholder return ratio	*Announced Mar. 2018
			Devoted to Steel Tubes	31

Capital Investment Plan and Progress during the 'Fifth Medium-Term Management Plan'

				*Payment basis	(Billions of yen)
		3-year Total of		FY2020	Progress
		Medium-Term	FY2019 Results
		Forecasts	(%)
		Management Plan
		*Announced on Mar. 2018
Total capital investment	21.0	5.7	6.9	60%
	Capital	13.0	3.1	5.1	63%
Domestic	investment
group
companies	Depreciation	10.7	3.2	3.4	-
	Capital	8.0	2.6	1.8	54%
Overseas	investment
group
companies	Depreciation	10.9	3.0	3.1	-

Devoted to Steel Tubes

32

【Domestic】 Capital Investment Plan

during the 'Fifth Medium-Term Management Plan'

							FY2020		(Billions of yen)
					*Announced March 2018			Forecast
			Medium-Term Management Plan
	Domestic group companies	Capital investment				5.1		5.1
Depreciation				3.6		3.4
										(Billions of yen)
					Medium-Term		Total budget
		Project		Management			Completion period
				(Amount used)
					Plan budget
		Completed/to be completed in FY2020
	Relocation of Niigata Sales Of f ice of Maruichi Kohan (Settlement period: February )		0.89		1.0 (1.0)		Completed in Mar. 2019
	Renewal of No. 1 Slitter at Toky o Plant		0.41		0.3 (0.3)		Completed in May 2019
	Renewal of SR heater at Sakai Plant		0.43		0.42 (0.42)		Completed in May 2019
	Renewal of electrical substation f acilities at Sakai Plant		0.52		0.53 (0.37)		Scheduled in Dec. 2019
	Expandable tube processing f acilities at Kashima Pole Plant		0.38		0.3 (0.18)		Scheduled in Dec. 2019
	Purchase of buildings f or Meister (a subsidiary of Alpha Metal)	-	0.13		Scheduled in Dec. 2019

To be completed in FY2021 onwards

Construction of No. 4 Plant and completion of new color painting line/C steel mill at Ky ushu Plant

Completion of new cutting-to-size plant at Hamamatsu Sales Of f ice of Maruichi Kohan

Extension of No. 1 Plant and completion of new color painting line at Tomakomai Plant

Renewal of electrical components of No. 11 and No. 12 mills at Toky o Plant

Renewal of crane and ref urbishment of shutter at No. 2 warehouse of Toky o Plant

• 1.11 (0.26)

0.11 1.14 (0.3)

• 1.49

0.260.15

0.120.13

Scheduled in May 2020

Scheduled in Dec. 2020

Scheduled in Dec. 2020

Scheduled in Mar. 2021

Scheduled in Mar. 2021

Devoted to Steel Tubes

33

【Overseas】 Capital Investment Plan

during the 'Fifth Medium-Term Management Plan'

				FY2020	(Billions of yen)
			*Announced March 2018		Forecast
			Medium-Term Management Plan
	Overseas group companies	Capital investment		1.9		1.8
Depreciation		3.6		3.1
						(Billions of yen)
			Medium-Term	Total budget
		Project	Management	Completion period
		(Amount used)
			Plan budget

Completed/to be completed in FY2020

MPST Philippines: construction of plant/office buildings, establishment of new production facilities

MMX Mexico: completion of cutting plant construction and installation of new cutters

1.57 1.35 (1.35)

0.42 0.36 (0.36)

Completed in May 2019

Completed in Sep. 2019

To be completed in FY2021 onwards

KUMA India: construction of new Gujarat Plant

SUNSCO Vietnam: completion of new No. 2 cold-rolling mill

• 0.92 (0.16)

3.3 2.81 (0.35)

Scheduled in Mar. 2020

Scheduled in Jun. 2021

Devoted to Steel Tubes

34

【Domestic】【Overseas】 Topics regarding Capital Investment (May 2019～)

Renewal of No. 1 Slitter at Tokyo Plant

Renewal work completed in May 2019

Renewal of electrical substation facilities at Sakai Plant

Scheduled Dec. 2019

Renewal work to be completed

Renewal of SR heater at Sakai Plant

Renewal work completed in May 2019

MMX Mexico: installation of new cutters

Installation completed in Sep. 2019

Tubes 35

Progress during the 'Fifth Medium-Term Management Plan' (Issues and Major Initiatives)

Commitments in Japan

Issues and Major Initiatives

i) Maintaining high profitability and further strengthening sales capabilities

	ii)	• Increasing production and clerical
andworkers	Responding
work efficiency using IoT and AI
		• Renewal of facilities, and review of
productivityincreasing	ofshortagethe to	recruitment policy and work styles
• Use of female and overseas human
		resources

Initiative Results

• Renewal of No. 2 Mill at Tokyo Plant (Jun. 2018)
• Relocation of Niigata Sales Office of Maruichi Kohan Ltd. (Mar. 2019)
• Renewal of No. 1 Slitter at Tokyo Plant (May 2019)
• Renewal of SR heater at Sakai Plant (May 2019)

See P. 37

• Merger/relocation of four group facilities, including head office
• Renewal of recruit website and leaflet
• Enhancement of support system for early return from childcare leave
• Recruitment of international students (Hired one student during FY2019)
• Acceptance of international technical interns (Accepted two at Sakai Plant, two at Tokyo Plant during FY2020; Planned to accept four during FY2021)
• Acceptance of SUNSCO technical employees (Accepted two at Tokyo Plant during FY2020; Planned to accept four during FY2021)

Devoted to Steel Tubes

36

Revised

Increasing production and clerical work efficiency (using IoT and AI)

FY2019	FY2020	FY2021

Promotion of production visualization aimed at improving operation rates

• Digitally manage equipment abnormal stop data and defect data, analyze reasons for equipment stoppage and data for stoppage duration, identify causes of divergences between production plans and actual production results
• Organize work conditions, and apply in worksites to enable stable pipe production

Sakai Plant No. 1 Mill (introduced)

Sakai Plant all lines (introducing)

Tokyo Plant No. 2 and No. 11 Mills (introducing)

Nagoya Plant No. 2 and No. 13 Mills (introducing)

Shikoku and Kyushu Plants (introduction scheduled)

Introduction of facility maintenance system aimed at efficient maintenance/ preventive maintenance

• Daily work reports containing records of production facility maintenance are converted into data form and analyzed based on the data
• Create equipment ledgers and manage equipment spare parts on a company-wide, shared basis

Introducing at Sakai, Tokyo, and Nagoya Plants

Increasing clerical work efficiency using	New salary calculation system introduced
AI and RPA	Introducing RPA for routine clerical work
	Devoted to Steel Tubes 37

Progress during the 'Fifth Medium-Term Management Plan' (Issues and Major Initiatives)

Commitments Overseas
Issues and Major Initiatives	Initiative Results
i) Three U.S. companies:	• MOST: completion of new plant, completion of new 2-inch mill
Expanding operations using newly established or
• Leavitt: constructed new cutting-to-size facilities, renewal of 2-inch mill
replaced facilities and by further strengthening
• MAC: renewal of 2-inch mill
marketing capabilities
ii) SUNSCO (HCM):
Strengthening domestic sales capabilities, mainly	• Focusing on boosting domestic sales staff and increasing number of
focusing on pipes and further reducing costs	distributors
through improvement in equipment operation	• Strengthen company-wide initiatives to reduce manufacturing costs
rates and yields, as well as achieving stable	• Dispatching of Vietnamese international students after training in Japan
profitability
iii) Automobiles and motorcycles:
Implementing capital investments and	• Started operation of MPST Philippines (May 2019)
strengthening sales capabilities in line with the
expanded production in each country
iv) Procuring prospective local human resources and
further level enhancement/facilitating the	• Continuing to focus on developing local production and sales
replacement of employees dispatched from the	executives at overseas companies
head office with local human resources
v) Using overseas revenue to increase profit
redistribution in Japan in the form of dividend,	• Dividends and royalties: received US$10.5 million in FY2019
royalty, or the like
	Devoted to Steel Tubes	38

Progress during the 'Fifth Medium-Term Management Plan' (Issues and Major Initiatives)

Commitments in Japan and Overseas

Issues and Major Initiatives	Initiative Results
i) Giving further consideration to the environment,	See P. 43
enhancing energy efficiency, and strengthening
(Maruichi Steel Tube Group SDGs initiative results)
safety measures
	• Started operation of system using IoT technology for
ii) Increasing labor productivity per working hour	production lines and facility maintenance at core
domestic plants
and labor cost
• Advanced renewal of aging lines and harnessed effects
	to improve productivity and safety
iii) Proactively considering M&A and other	• Continuing to consider business potential in new fields
business investments in Japan and overseas	and regions in Japan

Devoted to Steel Tubes

39

Progress during the 'Fifth Medium-Term Management Plan' (Issues and Major Initiatives)

Shareholder-Focused Policy and Social Contribution Policy

Issues and Major Initiatives	Results
i) Divided policy: Firmly upholding the policy of
"nonconsolidated ordinary income x (1- effective	See P. 41
corporate tax rate) x 50%"
ii) Continuing to provide approximately 0.5% of	Nonconsolidated net income after payment of dividends in FY2019:
nonconsolidated net income after payment of	5,944 million yen
dividends as social contribution	Social contribution in FY2019: 25 million yen
iii) Increasing social contributions in Japan and overseas
• Japan: Contributing to the fields of culture, art,
sports, medical care, education, and natural
environment protection	See P. 47
• Emerging countries: Increasing contributions to
poverty eradication, health care, medical care,
and education promotion
	Devoted to Steel Tubes	40

Progress during the 'Fifth Medium-Term Management Plan' (Issues and Major Initiatives)

Shareholder-Focused Policy and Social Contribution Policy

1. Maintaining the divided policy

• The dividend policy of setting 50% of expected net income (*) in the nonconsolidated statements of income as annual dividend
• • Expected net income calculated as "nonconsolidated ordinary income x (1-effective corporate tax rate)"
• Maintaining the minimum annual dividend at ¥50 per share

(Reference) Status of dividend paid	(Figures in the parenthesis indicate dividend per share in yen.) (Millions of yen)

	Interim dividend
FY2018	(25.00)

		Share buybacks	Net income
		Number of
Year-end dividend Annual dividend	(nonconsolidated)
shares/price
(55.50)	(80.50)

Dividend payout ratio	Total return ratio	ROE (consolidated)
(nonconsolidated)	(nonconsolidated)

	2,071
FY2019	(25.00)
2,071
FY2020 (Forecast)	(40.00)
3,314
FY2021 targets (last
year of the 'Fifth
Medium-Term
Management Plan')

4,598 (49.00) 4,059 (67.50) 5,593

6,669
(74.00)
6,130
(107.50)
8,907	Payment of
	commemorative
	dividends

13,828 12,074 11,326

14,200

48.2%	48.2%	6.2%
50.8%	50.8%	5.4%
78.6%	78.6%	3.8%
50.0%	50.0%	6.5%

• Buy-backof one million shares in July 2015 and a further million shares in January 2016

• Payment of commemorative dividends

Scheduled to pay commemorative dividends to express

gratitude for the Company's 70th anniversary in March 2018

and based on the policy to create new value shared with shareholders, aiming toward a 100-year company.

FY2020	Ordinary dividend	Commemorative
dividend
Interim	25.00	15.00
Year-end	52.50	15.00
Total	77.50	30.00

Devoted to Steel Tubes

41

Maruichi Steel Tube Group SDGs initiatives

The Maruichi Steel Tube Group recognizes the importance of contributing to the achievement of Sustainable Development Goals (SDGs), and has identified the following as targets. In its promotion of the 'Fifth Medium-Term Management Plan,' the Group will strive to firmly establish these SDGs within the Group so that it can work as one to solve the Group's critical issues.

Creating value through business activities

Provide superior quality steel tube products

Meet customer needs and live up to customer trust

Fundamental philosophy supporting corporate value

Diverse human		Environmental
		・		E
resources	S	consideration
• Dedicate effort to		•	Improve energy
human resource			efficiency
development		•	Reduce energy usage
• Foster a culture of		•	Effectively use
diversity			resources

Strengthen safety measures S

• Eliminate occupational accidents
• Safety education
• Ensure the health of employees

	Governance G	Social contribution
•	Timely and appropriate	activities	S
• Support for a wide range
	disclosure of information
	of social areas, such as
•	Improve management	education, medicine,
	transparency	cultural activities,
	environmental protection,
•	Ensure thorough compliance
and sports, both
•	Implement BCP measures
domestically and
		overseas

Engage in tasks related to ESG（As shown by E S G )

Devoted to Steel Tubes 42

Revised

Maruichi Steel Tube Group SDGs initiative results

Environmentalconsideration E

Using renewable energy (Mega solar business)

• Installation of solar power generation equipment nationwide (7 plants and 10 sites domestically)

(10 thousand kWh)	Solar power generation by plant
1,800
1,600	Shikoku
1,400
1,200	Tomakomai
1,000	Tokyo
800	Nagoya

Measures to prevent global warming

Reducing emissions from FY2014 levels in accordance with the Paris Agreement (adopted at 2015 COP21)

FY2019 results in proportion to FY2014 baseline

• CO2 emissions: 1.5% reduction
• Energy per unit of production*: 2.3％ reduction
• • Energy consumption (crude oil equivalent) ÷ production volume

(Initiative results thus far)

•	Replacement of welding equipment to
	energy-saving types
•	Introduction of waste heat utilization

600 400 200 0

・ ル

・ ネ

・ の

の向E上Sakai Pole Sakai Takuma

	equipment
•	Adoption of inverter control to motors
•	Adoption of energy saving equipment such as
	high-efficiency transformers and LEDs

2013

2014

2015

2016

2017

2018

*Takuma and Shikoku Plants counted separately since FY2018

Reduction and recycling of wastes

• Held monthly energy conservation

conferences

• Changed teas and cups provided to customers from plastic containers to paper cups and bottle cans in order to reduce plastic wastes at head office

Devoted to Steel Tubes

43

Training at a hazard simulation facility (Sakai Plant)

Revised

Maruichi Steel Tube Group SDGs initiative results

Diverse human S resources

Recruitment of international students FY2019: 1 Chinese student

Acceptance of Vietnamese technical

interns

FY2020: 2 students at Sakai Plant, 2 students at Tokyo Plant

FY2021: scheduled to accept 4 students

Global business training

Provided training on intercultural communication mainly for employees scheduled for overseas assignments

Understanding of LGBT

Included in compliance training targeting all employees of domestic Group

SUNSCO of Vietnam

Acceptance of technical employees

FY2020: 2 employees at Tokyo Plant

FY2021: scheduled to accept 4 employees

Promotion of women in

the workplace

• Workshops for female employees
• Workshops for male managers
• Development of an environment where women can continue to work on (childcare support/job return support systems)

Strengthen safety measures S

Enhancement of safety

education

• Establishment of Safety Education Department (from Oct. 2015)
• Safety education for new employees
• Safety education by year of joining company

Mental health consideration

• Training for managers/supervisors
• Implementation of stress checks
• Development of follow-up system for those with high stress

Initiatives towards eliminating

occupational accidents

• Holding of Company-wide production safety conference
  Conference is held once every two months including site inspection at different plant each time

Creation of Overtime Work

Reduction Committee

Created committee, where management and labor periodically discuss overtime work reduction

Devoted to Steel Tubes

44

Revised

Maruichi Steel Tube Group SDGs initiative results

Initiatives to improve corporate governance (1)	G
Composition of Board of	Board of Directors Evaluation
Directors
• Introduction of Outside Directors	• Evaluated operations, composition, and other aspects of
(As of June 2019 General Meeting of	Board of Directors
Shareholders: 4 Internal and 3 Outside Directors)	(Conducted yearly since April 2016)

Director Nomination and

Compensation

• Created Advisory Committee for Director nomination and compensation (November 2015)
• Introduced stock compensation system for Directors and Managing Officers (July 2016)
• Introduced restricted stock compensation system for Internal Directors (August 2019)

Formulation and Revision of		Compliance Training
Corporate Governance環境Guidelineへの配慮	Training provided to all employees in domestic Group
	・エネルギー効率の向上E
• Formulation of Corporate Governance
Guidelines (2015)	・省エネ	FY held	Training topic
・資源の有効活用
• Update of Corporate Governance	FY2020	Power harassment (abuse of authority)
Guidelines in accordance with the
revision of Corporate Governance Code	FY2019	Sexual harassment (pregnancy discrimination/LGBT)
(2018)		Power harassment (abuse of authority)
		FY2018	Communication using SNS
		FY2016	Diverse employment styles; sexual harassment
			Devoted to Steel Tubes	45

Maruichi Steel Tube Group SDGs initiative results

	Initiatives to improve corporate governance (2)	G
	Preparation and distribution of compliance manual
			Compliance Rules (Summary)
1.	Respect for human rights; prohibition of		6.	Intellectual property related laws	11.	Appropriate use of information
	discrimination, sexual harassment, and			and regulations		systems
	power harassment; protection of
	personal information
2.	Compliance with Antimonopoly Act and		7.	Prohibition against bribery, and	12.	Appropriate accounting, tax filing,
	related laws and regulations			rules on gifts, entertainment, etc.		and disclosure of company
						information
3.	Prohibition against unfair competition		8.	Prohibition against providing	13.	Prohibition against conflicts of
				benefits to antisocial forces		interest
4.	環境への配慮		9.	Environmental conservation	14.	Reporting to authorities and
Compliance with laws and regulations
				E		cooperation with investigations
	・エネルギー効率の向	上
5.	・省エネ		10.	Appropriate management of	15.	Rules for participation in political
Regulations against insider trading
	・資源の有効活用			information		movements, etc.
	Creation of Compliance Committee and Compliance hotline
	Creation of:
	• Compliance Committee		• External compliance hotline
	• Internal compliance hotline		• Internal compliance hotline for women

Devoted to Steel Tubes

46

Maruichi丸一鋼管SteelグルTubeープのGroupSDGsへSDGsの取組initiative実績 results

Social contribution activities

S

Japan	Contributing to the fields of culture, art, sports, medical care, education,
and natural environment protection

• Sponsoring the Shōsōin Exhibition (from FY2013)
• Sponsoring the One Coin Bunraku (from FY2019)
• Sponsoring the "Theater of the Heart" activities of
  Shiki Theatre Company (from FY2016)
• Sponsoring "2025 Japan World Expo Committee" (from FY2018)
• Support for 2019 G20 Osaka Summit (FY2020)
• Support for the Osaka Marathon 2019 (FY2020)

Promoting contribution to the community through supporting sports events in Osaka

Making a Rainbow

Together.

Overseas	Emerging countries: Increasing contributions to poverty eradication,
health care, medical care, and education promotion

• Support for the Asia Prevention of Blindness Association (from FY2016)
  Provided scholarships to students at Bal Niketan Senior Secondary School in India (Provided by KUMA; started in FY2018; increase planned in FY2020)

Devoted to Steel Tubes

47

(Reference) Change in Shareholder Distribution

(Figures on the bars indicate the number of shares.) (Unit: thousand of shares)

	100%									14,000
		9.9%	9.9%	12.0%	12.0%	11.9%		11.9%	11.9%	Treasury stock
	90%								12,645
			11,942		12,117		11,804			12,000
		16.9%	15.6%				13.9%	13.8%	Individuals
	80%	14.3%	15.8%	14.9%
	11,015
								and others
	70%							10,179		10,000
Ratio			10,306
		19.9%					Foreign
	17.4%	20.7%				22.0%	21.1%
	20.6%	21.7%		investors
60%
by									8,000
shareholders	50%
40%	26.3%	25.1%	23.9%	22.0%	21.8%		21.6%	22.2%	6,000
				Domestic
									corporations
	30%									4,000
	20%
		29.6%	29.5%	29.1%	29.7%	29.7%		30.6%	31.1%	2,000
	10%									Financial
										institutions
	0%									0
		Mar. 2014	Mar. 2015	Mar. 2016	Mar. 2017	Mar. 2018	Mar. 2019	Sep. 2019
			Financial institutions	Domestic corporations	Foreign investors
			Individuals and others	Treasury stock		Number of shareholders

Trading unit of share was lowered to 100 shares in October 2005, and in April 2008, 4,260,000 shares of the treasury stocks were canceled.

Devoted to Steel Tubes

48

(Reference) Change in the Stock Prices

(based on the closing price of the month)

																	(Yen)
	25000															8,000
																22,927
														21,454	21,206	7,000
	20000										19,207		18,909				Stock
			17,288									16,759				6,000
		17,059.66
Average Stock Nikkei	15000								14,828						5,000	Steel Maruichi of price
			12,526					12,398
		3,660			11,090									4,000
					10,084
			3,300								3,165	3,255	3,225
					9,755					3,085
10000	2,935			8,110								2,980
							2,846
									2,669					3,000
				2,110				2,215
						2,055									Tube
						1,932
						1,896
														2,000
	5000
																1,000
	0															0
		Mar.	Mar.	Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar.	Mar.	Mar.	Mar.	Mar.	Oct.
		2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2019
							Stock price of Maruichi Steel Tube		Nikkei Stock Average						49
														Devoted to Steel Tubes

(Reference) Overview and Trends in

Business Performance of Overseas

Group Companies

Devoted to Steel Tubes

50

Company name:	Maruichi Sun Steel Joint Stock Company
	(SUNSCO)
Founded:	June 1996 (Capital participation in 2006)
Location:	Ho Chi Minh and Hanoi
Capital:	US$130 million
Shareholder distribution:	Maruichi Steel Tube	72.53%
	Toyota Tsusho	9.73%
	JFE Steel	8.00%
	Taiwanese shareholders	9.74%
Employees:	554
Production results:	251,000 mt/year	Building
		extension

Product warehouse of Maruichi Sun Steel (Hanoi)

Company Limited (completed March 2018)

	Trends in business performance
	(including Hanoi)			(Millions of US$)
			Net sales	Operating
			income
	December 2014		256	(2)
	December 2015		196	(1)
	December 2016 Results		202	17
	December 2017 Results		226	(1)
	December 2018 Results		230	(3)
	December 2019 Forecasts	Announced	208	(2)
	in November
Maruichi Sun Steel Joint Stock Company (Ho Chi Minh)	5th Medium-Term Management Plan	258	20
(December 2020) Targets
		Devoted to Steel Tubes	51

Company name:

Founded:

Location:

Capital:

Shareholder distribution:

Employees:

Production results:

Maruichi Leavitt Pipe & Tube, LLC

(Leavitt)

1956 (Capital participation in 2008)

Chicago, Illinois
US$25,225 thousand
MKK USA. INC	90.00%

Sumitomo Corporation of America

10.00%

117

109,500 mt/year

		Trends in business performance		(Millions of US$)
				Net sales	Operating
				income
		December 2014		130	(17)
		December 2015		102	(26)
		December 2016		90	5
		December 2017 Results		106	6
		December 2018 Results		127	10
		December 2019 Forecasts	Announced	103	(7)
		in November
		5th Medium-Term Management Plan	123	9
		(December 2020) Targets
2-inch mill (updated July 2018)
	Devoted to Steel Tubes	52

Company name:	Maruichi American Corporation (MAC)
Founded:	December 1978
Location:	California
Capital:	US$7.5 million
Shareholder distribution:	Maruichi Steel Tube	53.00%
	Metal One Corporation	30.00%
	Maruichi Kohan	8.00%
	MUFG Bank, Ltd.	5.00%
	Sumitomo Mitsui Banking
	Corporation	4.00%

Employees:67

Production results:

73,900 mt/year

2-inch mill (completed December 2018)

Trends in business performance		(Millions of US$)
		Net sales	Operating
		income
December 2014		62		3
December 2015		60		0
December 2016		60		6
December 2017 Results		68		3
December 2018 Results		87		9
December 2019 Forecasts	Announced	69		(5)
in November
5th Medium-Term Management Plan	74		6
(December 2020) Targets
	Devoted to Steel Tubes	53

Company	Maruichi Oregon Steel Tube, LLC (MOST)
name:
Founded:	2015
Location:	Portland, Oregon
Capital:	US$55 million
Shareholder	MKK USA 100%
distribution:
Employees:	55
Production	46,000 mt/year
results:

	Trends in business performance		(Millions of US$)
				Net sales	Operating
				income
	December 2015			35		0
	December 2016			39		4
	December 2017 Results		48		3
	December 2018	Results		54		1
	December 2019	Forecasts	Announced	41		(7)
	in November
MOST: 2-inch mill: (newly established November 2018)	5th Medium-Term Management Plan	59		5
(December 2020) Targets
			Devoted to Steel Tubes	54

Company name:

Founded:

Location:

Capital:

Shareholder distribution:

Employees:

Production results:

MARUICHIMEX S.A. de C.V. (Maruichimex)

January 2012

Aguascalientes

US$20.80 million (equivalent)

MAC	30.00%
MKK USA	30.00%
Marubeni-Itochu
Steel Group	20.00%
Toyota Tsusho	20.00%
74
11,100 mt/year

Cutting plant (completed April 2019)

Trends in business performance		(Millions of US$)
		Net sales	Operating
		income
December 2014		12		1
December 2015		15		3
December 2016		18		4
December 2017 Results		19		4
December 2018 Results		20		3
December 2019 Forecasts	Announced	24		4
in November
5th Medium-Term Management Plan	29		6
(December 2020) Targets
	Devoted to Steel Tubes	55

Company name:

Founded:

Location:

Capital:

Shareholder distribution:

Employees:

Production results:

Maruichi KUMA Steel Tube Private Limited (KUMA)

November 2003 (Capital participation in 2009)
Manesar, Gurgaon, Haryana, Bangalore,
and Gujarat (under construction)
INR139 million
Maruichi Steel Tube	70.00%
Toyota Tsusho	30.00%
109			Bangalore Plant
28,500 mt/year
		Trends in business performance	(Millions of US$)
				Net sales	Operating
				income
		March 2015		34	2
		March 2016		35	2
		March 2017		41	4
		March 2018		57	6
		March 2019 Results		56	6
		March 2020 Forecasts	Announced	48	5
		in November

	5th Medium-Term Management Plan	74	8
	(March 2021) Targets
Gujarat Plant (under construction)
		Devoted to Steel Tubes	56

Company name:

Founded:

Location:

Capital:

Shareholder distribution:

Employees:

Maruichi Metal Product (Foshan) Co., Ltd. (MMP)

April 2005
Foshan, Guangdong
US$18 million
Maruichi Steel Tube	35.00%
LARGE CROWN LIMITED	35.00%
Chung Mao Trading	15.00%
Toyota Tsusho	10.00%
	Wuhan Branch
Metal One Corporation	5.00%
229

Maruichi Metal Product (Foshan) Co., Ltd.	Maruichi Metal Product (Tianjin) Co., Ltd.
	Devoted to Steel Tubes	57

Company name:	PT. Indonesia Steel Tube (ISTW)
Founded:	December 1972
Location:	Jakarta
Capital:	US$4.35 million (equivalent)
Shareholder	Maruichi Steel Tube	20.00%
distribution:	Metal One Corporation	60.00%
	Local	20.00%
Employees:	540	Jakarta Plant

Cikarang Plant in eastern Jakarta	Semarang Plant
(new plant building completed March 2019)	Devoted to Steel Tubes	58

Company name:

Founded:

Location:

Capital:

Shareholder distribution:

Maruichi Philippines Steel Tube Inc. (MPST)

February 2018

Batangas

US$15.50 million (equivalent)

Maruichi Steel Tube	70.00%
Toyota Tsusho	30.00%

Devoted to Steel Tubes 59

(Reference) Features of the Maruichi Group

Devoted to Steel Tubes 60

1. Management Philosophy

• As a leading steel tube company, our mission is to contribute to society by providing outstanding products and responding to the trust of customers.
• We respect all stakeholders, including shareholders, business partners, employees and local communities.
• We promote the creation of energy for growth and new values for the future by enhancing product reliability, technological capability, and sales capability by means of the wisdom, passion and action of each employee.
• We will continue being an outstanding company filled with dreams that all of our employees feel worthy of entrusting their lives to.

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2. Domestic Production and Sales System

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61

3. Overseas Production Facilities

Asia

MMP (Tianjin)

Americas

MMP (Foshan)

(China)

Wuhan Branch (China)

KUMA (India)	MMP (Foshan)
Manesar Plant	(China)

SUNSCO (Hanoi)	MPST
(Vietnam)	(Philippines)

KUMA (India)	SUNSCO	J-Spiral
Bangalore Plant	(Vietnam)	(Vietnam)

ISTW Cikarang Plant	ISTW Jakarta Plant	ISTW Semarang
Plant
(Indonesia)	(Indonesia)	(Indonesia)

MOST
(the U.S)	Leavitt
	(the U.S)

MAC

(the U.S)

Alphamex Maruichimex

(Mexico)(Mexico)

Devoted to Steel Tubes 62

4. Features

Material

IndependentManufacturing

Managementand

Processing

Dedicated

to Tube

Manufacturing

Variety of		Adoption of
	Proprietary
Products
Production Where	Sales System
	Demand Exists

Sound	Business
Development
Financial
in the Pacific
Structure
Rim

Production Where Demand Exists

Maruichi Steel Tube operates 12 plants, including affiliated companies, which cover the areas from Hokkaido to Kyushu. Such wide-coverage plant operation significantly contributes to the improvement of service to users, as well as the reduction of distribution cost.

Variety of Products

Maruichi Steel Tube provides a variety of products to meet the diverse needs of users.

Material Manufacturing and Processing

Steel strips of optimum quality processed at the Takuma Plant are used at each plant of the Maruichi Group.

Independent Management

Maruichi Steel Tube's management is independent of any affiliation and not subject to restrictions regarding suppliers and customers. Maruichi Steel Tube therefore is able to constantly conduct business operations in pursuit of maximum profit.

Sound Financial Structure

The sound financial structure serves as the strong backbone of Maruichi Steel Tube.

Dedicated to Tube Manufacturing

Maruichi Steel Tube is dedicated to steel tube manufacturing and related businesses.

Adoption of Proprietary Sales System

Maruichi Steel Tube sells products through two channels: general trading companies and Maruichi Kohan Ltd. Maruichi Kohan has its own warehouse and also stocks and sells products. Under this system, Maruichi Steel Tube can clearly grasp customer needs, demand trends and price trends, thus enabling the company to devise management strategies that are sensitive to the market at all times.

Business Development in the Pacific Rim

It has become easier to grasp market conditions, such as supply and demand trends of hot coils and products.

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64

5. History

1926 Maruichi Production founded as a bicycle parts manufacturer.

1935 Started manufacturing bicycle steel pipes.

1940 Changed company name to Maruichi Steel Tube Works.

1948 Established Maruichi Steel Tube Ltd.

1956 Reorganized Osaka Office and established Maruichi Kohan Ltd.

1957 Newly constructed Osaka Plant.

1958 Established Tokyo Office.

Imported electric tube welding system manufactured by Abby Etona Co. of the U.S., and shifted to an

electric resistance welded tube manufacturer.

1960 Changed the trade name to Maruichi Steel Tube Ltd. Established Nagoya Office.

1961 Newly constructed Tokyo Plant.

1962 Listed on the Second Sections of the Tokyo Stock Exchange and the Osaka Securities Exchange.

1964 Listed on the First Sections of the Tokyo Stock Exchange and the Osaka Securities Exchange.

Established the Fukuoka Office.

1965 Newly constructed Sakai Plant.

1966 Newly constructed Nagoya Plant (integrated into current Nagoya Plant in 1984.)

Established Hiroshima Office.

1970 Established Hokkaido Maruichi Steel Tube Ltd. Established Sapporo Office.

1971 Established ISTW in Indonesia.

1972 Newly established Pole Plant. Established Osaka Office.

1973 Newly constructed Tokyo No. 2 Plant.

1974 Established Shikoku Maruichi Steel Tube Ltd. Established Kyushu Maruichi Steel Tube Ltd.

1977 Newly constructed Nagoya Second Plant (current Nagoya Plant).

1978 Relocated the head office to the present location at Kitahorie, Nishi-ku, Osaka.

Established MAC in the U.S.

1989 Newly constructed Takuma Plant.

1998 Integrated Sapporo Plant of Hokkaido Maruichi Steel Tube Ltd. into Tomakomai Plant.

2000 Completed construction of the new Hiroshima Office and warehouse.

2001 Annealing facilities built in Takuma Plant.

2002 Constructed the new warehouse in Tokyo No. 2 Plant.

2003 New warehouse and cutting factory opened in Nagoya Plant. 2005 Took over the lighting pole business of JFE Steel Pipe Co., Ltd.

2006 Completed Nagoya Plant cutting-to-size warehouse building. Started operation of MMP in China.

Invested in Tokyo Superior Steel Tube Works. Invested in SUNSCO of Vietnam.

2007 Constructed the new 0.5-inch mill at Nagoya Plant. Newly established and started operation of No.6 plant at Sakai Plant.

Carried out modification work for the galvanizing furnace and installed the pickling line and trimming facility at Takuma Plant.

2008 Converted SUNSCO and Leavitt into consolidated subsidiaries. Competed renovation of Sakai Plant.

2009 Converted KUMA of India into a subsidiary.

Started operation of Sakai Production Facility of Seikei Steel Pipe Corporation.

2010 Converted Alpha Metal into a consolidated subsidiary.

16-inch mill built in SUNSCO. Started operation of SUNSCO Hanoi.

Invested in J-Spiral Steel Pipe Co., Ltd. in Vietnam.

2011 Started operation of MMP Tianjin in China.

Newly constructed the stainless steel tube factory at Tokyo No. 2 Plant.

Newly constructed the No. 2 factory at Sakai Pole Plant.

2012 Newly established Wuhan Branch for MMP in China. Newly constructed the No. 3 factory at Tokyo No. 2 Plant. Established Maruichimex in Mexico.

2013 Started operation of the mega solar power facility in the Takuma Plant.

Started operation of the second CGL/CCL of SUNSCO.

2014 Completed consolidation of Tokyo Plant.

Converted Maruichimex into a consolidated subsidiary.

2015	Converted MOST into a consolidated subsidiary.
2016	Completed consolidation of Osaka Plant.
2018	Established MPST in Philippines.
	Relocation of head office, Osaka Office, Sales
	Department Conduit Section, Maruichi Kohan head
	office/Osaka Sales Office to Namba, Chuo-ku, Osaka.
2019	Started operation of MPST in Philippines.

Devoted to Steel Tubes 65

Direction of the Maruichi Steel Tube Group

1. We are intent on continuing pursuing shareholder-focused management and making constant efforts to maximize shareholder value in the future. Also, we will grow and develop into a corporate organization that can be considered globally as number one in terms of both quality and quantity in

the steel pipe industry.

２. Based on the 'Fifth Medium-Term Management Plan,' the Company will

maintain high profitability while continuing to meet the needs of society,

actively engage in future-oriented growth investment, and strive to achieve

further growth amidst the rapidly changing business environment.

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66

Disclaimer

Plans and forward-looking statements herein are based on the Company's judgment drawn from currently available information. Please note that actual results may differ significantly from such plans and forward-looking statements due to various important factors.

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