News Release
JFE Holdings, Inc.
2024 New Year’s Message to Employees
Koji Kakigi
President and CEO, JFE Holdings
On the occasion of the New Year, I would like to greet everyone who works in the JFE Group.
First of all, I would like to express my heartfelt sympathy to those affected by the Noto Peninsula Earthquake of 2024, which occurred on January 1 this year, and sincerely pray for a speedy recovery.
Last year, even as the turmoil of the COVID-19 pandemic subsided, geopolitical risks persisted around the world, including the protracted war in Ukraine and the destabilization of the Middle East. The global economic outlook was further clouded by sharp monetary tightening in response to global inflation and liability issues in China’s real estate sector. Despite this challenging global landscape, JFE continued to make steady progress toward its FY2023 medium-term targets through the bold implementation of measures under its Seventh Medium-term Business Plan.
JFE Steel shut down upstream processes and hot-rolling facilities in its Keihin District last September, one of the final structural reforms prioritized in the medium-term plan. This will help reduce fixed costs and enhance the sales mix as JFE Steel continues to transition from quantity to quality. In addition, JFE Holdings unveiled its Ohgishima 2050 vision to repurpose certain bayside properties, also in the Keihin District south of Tokyo. The Ohgishima area has served as a hub for the global steel industry over the past century, but is now being targeted for new industries and job creation over the next 100 years as an initiative to contribute to the sustainable development of the surrounding area and all of Japan.
While coking coal prices have risen sharply since September in a stagnant market due to weak demand, especially overseas, JFE Steel expects to achieve year-on-year profit growth thanks to its structural reforms and efforts to improve sales prices, primarily in Japan. As part of its transition from quantity to quality, JFE Steel will expand electrical steel sheet production capacity in its Kurashiki District, and gradually bring this added capacity up to full strength in FY2024. In addition, the company has entered into an agreement with JSW India to jointly set up a manufacturing and sales company in India to capture the country’s growing demand for grain-oriented electrical steel sheet.
Regarding carbon neutrality, JFE Steel is making the necessary capital investments to achieve its CO2 emission targets by FY2030. Last year the JFE Holdings raised over 200 billion yen through a public offering of new shares and the issuance of convertible bonds, which were well received by the market. JFE Steel hopes to install a large, high-efficiency electric-arc furnace in its Kurashiki District, with commissioning targeted at FY2027. In addition, JFE Steel began supplying JGreeX™ green steel products in the first half of FY2023. Using the mass balance approach to allocate cuts in manufacturing-process emissions to specific steel products, the JGreeX™ lineup achieves significantly lower CO2 emissions compared with conventional products. Several companies in the shipping and construction industries have already adopted these green products, and JFE Steel continues to develop newer and more advanced technologies for early implementation. In FY2023, for example, construction began in the Chiba District on facilities for testing a carbon-recycling blast furnace and other ultra-innovative technologies.
As for other major group companies, although JFE Engineering’s earnings worsened in the previous fiscal year due to declining profits from overseas construction projects, in the current fiscal year the company has made steady progress toward its earnings targets by laying the groundwork in key areas identified in the medium-term plan. For example, the Nyuzen Offshore Wind Power Farm is now operational and the construction of a waste-to-energy plant in Bac Ninh Province, Vietnam is progressing smoothly.
JFE Shoji, which posted a record profit in FY2022, expects to exceed its targets for the current fiscal year despite a global slump in steel prices, particularly in the United States. The company is steadily expanding its earnings base in Japan and overseas by strengthening its supply chains in the electrical steel sheet and automotive businesses and making investments focused on construction-materials business in overseas markets.
Agenda for FY2024
FY2024 will be the last year of our current medium-term plan. I urge all employees to review the challenges and outcomes of your efforts to date as you continue to work toward achieving our medium-term goals. This year, we will also begin formulating our next medium-term plan. We welcome your efforts to help us identify the key issues that JFE Holdings and each group company needs to address as part of a plan that will guide us into the future.
As countries strive to promote investment in a more carbon-neutral world, innovation in decarbonization technologies will become increasingly competitive. Achieving carbon neutrality in the steel business is a key priority, but many challenges remain. Establishing the technologies and processes to do this ahead of others would give us a valuable asset for new long-term growth, similar to the era when we possessed world-leading expertise in constructing large coastal steelworks. We must work together to achieve this as well as to help reduce CO2 emissions through our engineering business.
I would like to outline what each operating company needs to do this year, while also keeping a watchful eye on changes in the external environment.
● Improve profitability and pursue growth
JFE Steel, the cornerstone of our earnings, will continue to transition from quantity to quality, a core medium-term initiative, and improve its profitability, supported by its recent structural reforms. It will also strengthen its earnings base through overseas business, with a focus on India, introduce digital transformation (DX) technologies, and expand its solutions business.
JFE Engineering will capture demand in the ever-expanding environmental/recycling and renewable-energy markets, and steadily generate earnings from existing projects. In addition, the company will contribute to human society in Japan and abroad through its operations business and support for infrastructure renewal. It will also expand its business scale to make even greater contributions to the achievement of global SDGs, in addition to working toward its own medium-term goals.
JFE Shoji, in addition to cooperating in JFE Steel’s structural reforms, will continue to strengthen its own trading supply chain in the key areas of electrical steel sheet and automobiles, and will strive to make its earnings base more stable and robust in both trading and operations.
JMU will continue to focus on improving the earnings and financial position of its shipping business, including by building on its technological capabilities to develop ships powered by next-generation fuel ahead of its domestic and international competitors.
Collectively, the entire group will support the launch of JFE Engineering’s monopile plant in Kasaoka, Okayama Prefecture, the first such plant in Japan, as part of our expanding offshore wind-power business. JFE Steel will manufacture the materials—specifically J-TerraPlate™ large, heavy plate steel—at its West Japan Works in Kurashiki, JFE Shoji will establish and operate the supply chain, and JMU will build the work barges for constructing the wind turbines, demonstrating our groupwide synergy. We are also expecting groupwide collaboration in other areas, as well as increased efforts to support customers with our value-added DX technologies.
We will also actively address human capital management, including strengthening diversity and inclusion (D&I) initiatives and workstyle reforms, which will become even more important in the future. To promote and expand such reforms, we will work to change both our individual and collective mindsets, including at the executive and management levels.
● Strengthening safety
Based on our fundamental stance that safety is paramount, we will continue to strive to prevent occupational accidents throughout our global operations by strengthening the safety of our work environments and making our facilities fundamentally safe through application of the latest technologies, such as DX, to ensure that all of our diverse employees can work with peace of mind.
Conclusion
Although the changes in our external environment are becoming increasingly dramatic, we envision many opportunities for our group as the world pursues green transformation, industrial structure based on clean energy, and carbon neutrality. By working together and leveraging our world-class technologies, I am excited about the possibilities for JFE to support the sustainable development of human society and safe, comfortable lifestyles for all.
As we embark on another year together, I extend to all of you and your families my very best and most sincere wishes for health and prosperity in 2024.
