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JFE Holdings, Inc.

2022 New Year’s Message to Employees

Koji Kakigi President and CEO, JFE Holdings

Koji Kakigi
President and CEO, JFE Holdings

 

Happy New Year and warmest greetings to everyone in the JFE group as we begin 2022! Japan and other economies are now starting to pick up following the COVID-19 slump and our business environment has been improving. On the back of solid demand and improving prices for steel products, we expect our FY2021 consolidated earnings to show a substantial improvement over the previous fiscal year, when COVID-19 emerged. Our improved performance in FY2021 reflects not only positive changes in our external environment but also the tremendous efforts of everyone in our group. Nevertheless, conditions remain very unpredictable as the world slowly recovers from COVID-19’s socioeconomic impact and as well as prolonged inflation, particularly in the steel business, among other harsh factors. Over the long term, the steel business in Japan is bound to confront both declining demand and intensifying labor shortages owing to the country’s falling birthrate and aging population. Overseas, emerging economies will continue expanding their domestic steel-production capacities as they strive to meet local demand with local production. At the same time, global steel prices will remain heavily influenced by trends in the Chinese steel industry. Under such circumstances, it is imperative that we complete the structural reform of our steel business by FY2023. In addition, increasing urgency regarding climate change is sweeping the world. Since steel is our core business, climate change could have a major impact on our business continuity, but it also will present us with new business opportunities. With interest in renewable energy surging, this year JFE Engineering is set to begin construction of Japan’s first plant for manufacturing offshore wind-power monopile foundations. By combining our strengths in everything from steel sheet manufacturing to product shipments, we are committed to contributing to the ultimate goal of a carbon-neutral world. As we see the world around us changing rapidly, we are determined to do everything possible to overcome our challenges and find opportunities to build a strong and powerful JFE for the future.

 

2022 Agenda

Ensuring that we are positioned properly in order to deal with the post-COVID world will depend on how well we execute our Seventh Medium-term Business Plan this year. Another key will be how effectively we strategically reallocate our resources in order to solidify our financial base, which will include investing in future growth while continuing to review assets and businesses that are not likely to contribute to future earnings. In the face of transformative changes taking place in our external environment, we have no choice but to enhance our ability to cope with change. To respond swiftly, our operating companies and business divisions must relentlessly address our most pressing issues head-on.

 

● Increasing profitability
JFE Steel will take decisive steps this year in order to complete its structural reforms by FY2023. Steel demand is currently strong, so we must not miss this opportunity to comprehensively review our sales prices. Meanwhile, while pursuing carbon neutrality, JFE Steel also will work toward more sustainable growth by focusing on operations that can generate stable profits largely irrespective of fluctuating external factors, such as rising costs of key raw materials. JFE Engineering will grow its business by increasingly concentrating on initiatives targeted at carbon neutrality and the environment. It also will manage a range of expanding business interests, including through M&A, to further strengthen profitability. As for JFE Shoji, it will expand its SCM operations, including by constructing the world’s leading operations for electrical steel sheet distribution and processing. JMU is expected to substantially strengthen earnings and turn a profit by fully harnessing its synergies in partnership with Imabari Shipbuilding. And finally, we will coordinate efforts across our entire group as we pursue opportunities including offshore wind power and digital transformation (DX).

● Achieving carbon neutrality
To achieve carbon neutrality by 2050, we must fully execute the plan that we unveiled last May—JFE Group Environmental Vision for 2050. Executing the initiatives in this plan will require massive investment, for which we will actively draw on government and other support to develop the necessary technology. Meanwhile, global decarbonization trends are evolving rapidly. While keeping a close eye on these moves and ensuring that we respond without delay, we also will actively communicate with external stakeholders to ensure support for our vision and initiatives.

● Enhancing safety
The above initiatives will be our key focuses in 2022, but safety will continue to remain our top priority, above all else. Under the firm belief that all accidents are preventable, we will continue to actively invest in safety to ensure that our facilities and operations are truly as safe as possible.

 

Conclusion

This September will mark the 20th anniversary of JFE Holdings. In this era of great change and unpredictability, it is time for us to return to our founding principles to enhance our sustainable growth and corporate value, placing trust in our world-leading technologies and collective strengths. Let’s overcome our challenges with confidence and pride, guided by our enduring JFE values: “Challenging Spirit, Flexibility and Sincerity.”

As we embark on another year together, I extend my very best wishes to you and your family for health and prosperity in 2022.