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News Release

JFE Holdings, Inc.

New Year’s Message for 2012
Hajime Bada, President and CEO, JFE Holdings, Inc.

Hajime Bada

Hajime Bada
President and CEO

Happy New Year and greetings at the start of 2012!

Last year we unfortunately encountered a number of natural disasters, including the Great East Japan Earthquake and the floods in Thailand. The JFE Group suffered serious damage from the earthquake, especially in the Sendai area of northeastern Japan. Thanks to the tremendous support and encouragement of people throughout our group, however, we have successfully resumed normal operations, so I wish to take this opportunity once again to sincerely thank everyone for their committed efforts to ensure our quick recovery.

New medium-term business plan

Looking back over the 10 years since the JFE Group was founded, I believe that our customers, shareholders and other stakeholders were impressed by the synergies we achieved in many areas of the organization soon after our consolidation.

Since 2008, however, we have seen a number of drastic changes take place in our business environment. It is not an exaggeration to say that current conditions are even more challenging than those at the time of our founding, including  both structural and global developments such as the European debt crisis and the sharp appreciation of the yen.

Moreover, the business environment in Japan has been evolving at a staggering pace in areas such as domestic production shifting to overseas bases and the increasing procurement of materials from global sources. We must consider the possibility of conditions becoming even harsher in the period ahead.

Group companies are now helping us to work out the details of our newly starting fourth medium-term business plan, which will be based on a long-term vision looking 10 years ahead. The keys to such planning are to abandon fixed, traditional ways of thinking and to apply new approaches in addressing the challenges of mega-scale global competition. It also is crucial for us to improve our financial standing in view of future uncertainties regarding the global financial environment. For us to ascend to the next stage, we must demonstrate the will to transform our organization into a group that is truly adapted to the new era.

Key challenges for the Group

There are five key challenges that the JFE Group must address this year.

The first is to rebuild our earnings base at an early point. We must overhaul and strengthen our profitability for sustainable growth as we respond to the drastic changes taking place in our business environment. In addition to our relentless pursuit of ever-higher productivity, we will strengthen cost competitiveness on a consolidated basis and also reform our business structure, including through stronger cooperation with other companies. We also will complete our detailed plan for synergy creation with JFE Shoji Trade, which will become a wholly owned subsidiary of JFE Holdings this coming October.

Our second challenge is to provide customers with exactly what they need by developing innovative process technologies, application technologies and revolutionary new products in fields including the environment and energy. Rival companies are steadily increasing their capabilities in terms of quality and technology, so we must exceed their efforts by developing technologies that not only are superior, but also delivered faster, to ensure that more customers choose the JFE brand.

The third challenge is to be chosen not only by Japanese customers but also overseas customers. We will do this by penetrating deeply and widely into the markets of Asia and other global regions where we will leverage our strengths and expertise. The time has come for us to fully demonstrate our capabilities on the world stage by leveraging the experience, wisdom and know-how we have cultivated for decades.

The fourth key is to develop human resources capable of helping us to achieve true globalization. The JFE Group will welcome new employees from various countries, mainly in Asia, this year. Accordingly, we must embrace new cultures, strengthen our communication with people of different backgrounds and step boldly into new environments through overseas businesses. To support such developments, we will offer employees enhanced educational and OJT opportunities.

The fifth and final challenge is to thoroughly fulfill our corporate responsibilities. With the past as our benchmark, we now will pursue even higher levels of responsible corporate activity based on a proper understanding and implementation of rules in each workplace. We also will further to strengthen our corporate governance to ensure JFE’s continued operation as a sound and transparent company deserving of society’s trust.

Key challenges for each company

Let me discuss the key challenges that each group company needs to address.

JFE Steel must steadily capture demand both in Japan and fast-growing markets of Asia. Also, it must optimize its balanced reinforcement of domestic production and foreign investments by clarifying priorities under the premise of operating with limited resources. Additionally, the necessary profitability must be secured for investments targeted at future growth.

For JFE Engineering, the challenges are to strengthen its position in specialty fields such as the environment and energy, develop products that leverage new technologies, expand businesses overseas and thoroughly reduce costs while enhancing profitability.

Universal Shipbuilding needs to focus on winning more orders by strengthening customer relationships through efforts to develop and sell advanced products such as energy-saving ships, in addition to reducing costs.

The challenges for Kawasaki Microelectronics are to enhance profitability as a fabless company and to stabilize business structure through new product development and collaboration with strategic partners.

Speed and action

It has become more difficult than ever to forecast the future due to the increasing competitiveness of our global environment. To ensure that our company can overcome unforeseeable conditions and continue moving forward, we must accurately assess our environment, make sound decisions and then act quickly, including by constantly prioritizing our activities, but also setting aside enough time to think creatively. At the same time, we must speed up operations by simplifying management structure, clarifying key challenges and communicating closely.

These are my thoughts in the dawn of our new year.

Very best wishes to you and your family for a prosperous 2012!