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News Release

JFE Holdings, Inc.

2017 New Year’s Message to Employees

Eiji Hayashida President and CEO, JFE Holdings

Eiji Hayashida
President and CEO, JFE Holdings

Happy New Year and warmest greetings as we begin 2017!

The Japanese economy levelled off last year as business remained weak. Although consumer spending appeared to have bottomed out, business was sluggish. One bright spot, however, was the forecast for a moderate recovery aided by continued public investment going forward.

Overseas, the United Kingdom’s decision to exit the European Union and the outcome of the U.S. presidential election have triggered a shift towards protectionism and increasing uncertainty in financial markets. Such causes of concern could have a tremendous impact on many nations, including Japan. At the start of 2017, the steel industry is facing an extremely harsh environment due to prolonged oversupply in China and rapidly increasing prices for coking coal and other natural resources. We must cope with these challenges now.

Determined Efforts to Improve Profitability

Current Business Plan’s Final Year
Given the increasingly harsh conditions, JFE Steel and JFE Shoji Trade might have difficulty achieving their targets for the fiscal year ending in March, the last year of our current three-year plan. But for the past two years they have been steadily implementing measures for sustainable growth in accordance with the plan, so steps will be taken to produce tangible results as quickly as possible. JFE Engineering, however, is close to achieving its profit target, so it will continue to implement concrete measures aimed at laying a foundation for further growth.

Dealing with the Current Crisis
JFE Holdings’ ordinary income for the fiscal year is forecast to be the smallest since the company was created in 2002. Among our three operating companies, JFE Steel, which is facing the harshest business conditions, is forecasting its first full-year ordinary loss. As we work to achieve results under our current business plan, we must show special determination to improve profitability. Each manufacturing, sales and administrative unit immediately needs to do everything possible towards this end, while also remaining mindful of our long-term goals.

My Expectations

We are now in an age when traditional thinking and accepted practices are no longer reliable. Unless we drastically change our way of thinking, we will be left behind. So I have two things to ask of everyone. First, as we face our current crisis, instead of fearing it, embrace it as an opportunity for growth. Strive to create new value based on our group’s superior manufacturing capabilities. Second, ask yourself if you have broken away from traditional thinking and if you are creating value through your work. And, as always, please adhere to our corporate values — a challenging spirit, flexibility and sincerity.

In Closing

The current situation is the most difficult ever experienced by JFE, and our comprehensive group strength is being tested like never before. I pledge to work with you to leverage our strengths and overcome these difficulties to the best of our abilities.

In the meantime, I am very pleased to extend my very best wishes to you and your family for health and prosperity in 2017.