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2020 New Year’s Message to Employees


WEBWIRE
Koji Kakiji, President and CEO, JFE Holdings
Koji Kakiji, President and CEO, JFE Holdings

Happy New Year and warmest greetings to everyone in the JFE Group as we begin 2020!

In assessing where we stand today, our external business environment continues to be harsh. In the steel sector, overseas markets for steel products continue to worsen due to trade friction between the United States and China as well as other negative trade policies. Factors including changes in the supply chain have weakened demand, even in Japan, and global uncertainties are mounting due to geopolitical risks, such as the United Kingdom’s planned withdrawal from the EU and tensions in the Middle East. In Japan, long-term structural changes, such as the labor shortage and decreased steel demand due to a declining birthrate and aging population, are becoming more problematic.

Meanwhile, a growing emphasis on environmental, social and governance (ESG) investing is rapidly adding weight to the need for ESG responses, particularly in regard to climate change. Japan was hit with numerous typhoons and other natural disasters last year, another sign that abnormal weather is becoming the norm. How we respond to climate change will be key issue influencing our future business.

Global trends including economic development in emerging nations and population growth are raising hopes for sustainable long-term economic growth. At the same time, however, geopolitical risks persist, so fluctuations in the business climate could likely expand.

In the midst of such extreme changes, we will sharply focus on, and build a consensus for, our future direction, including maximizing our collective strengths to rapidly recover profitability and ensure sustainable group-wide growth.

2020 agenda

Although we have steadily executed the strategies and other measures outlined in our sixth mediumterm business plan, revenue in the current fiscal year unfortunately is expected to fall significantly short of our target. Clearly, we are facing one of the most critical periods since JFE’s founding. We are carefully examining whether these changes are structural or temporary, but in either case we must recognize that we are transitioning to a new environment, or a new normal, from which we cannot easily revert to our old ways. Going forward, if we determine that basic reforms are required, then we will resolutely determine whatever reforms are necessary to thoroughly strengthen our base for future stability.

Critical issues

Safety
Safety will continue to be our top priority, above all else. As we go about our individual duties, we all must diligently remain aware of the need for constant safety.

Profitability
Restoring profitability is a critical issue for the entire JFE Group. We must be united in our efforts toward this end, guided by the concept of strategic allocation of corporate resources. In this harsh environment, we will determine exactly what needs to be done in each company and division, and then carry out these plans boldly and with determination.

JFE Steel is our main revenue base, so restoring group revenue as quickly as possible depends on JFE Steel building a stronger revenue system. Also, JMU must press forward with critical structural reforms based on its partnership with Imabari Shipbuilding.

JFE Engineering and JFE Shoji Trade will pursue rapid progress by strengthening and expanding their business structures for more solid revenue bases.

ESG and sustainable growth

We will address ESG issues, particularly climate change, as an important part of our effort to secure sustainable growth and strengthen the quality of our business. Last May, we announced JFE’s endorsement of the Task Force on Climate-related Financial Disclosures (TCFD) proposals, after which we identified how to align our business with these proposals and then disclosed these findings in our 2019 annual and CSR reports. Interest in these areas continues to increase among investors and society in general, so we are positioning ESG initiatives issues as keys to our sustainable growth. I ask for everyone’s cooperation in rethinking our business from an ESG perspective.

Conclusion

The current external environment is extremely challenging and we are not in a position to take an overly optimistic view. To raise our corporate value and achieve sustainable growth in this type of environment, it is imperative that we fully leverage the collective strengths of the JFE Group, including our world-leading technologies, to quickly restore profitability. I urge everyone to move forward with confidence and pride, guided by our enduring corporate values: “Challenging Spirit, Flexibility and Sincerity.”

In closing, as we embark on another year, I extend my very best wishes to you and your family for health and prosperity in 2020.


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