Financial Results Briefing · 2016. 7. 14. · Devoted to Steel Tubes Financial Results Briefing...

Devoted to Steel Tubes

Financial Results BriefingFor the Year Ending March 31, 2016

Chairman & CEO Hiroyuki Suzuki

I. Consolidated Financial Highlights for the Year Ending March 31, 2016 ・・・P. 2

II. Nonconsolidated Financial Highlights for the Year Ending March 31, 2016 ・・・P. 12

III. Performance Forecasts for the Year Ending March 31, 2017 ・・・P. 20

IV. Progress of the ‘Fourth Medium-Term Management Plan’ ・・・P. 26

(Reference) Overview and Trends in Business Performance of Overseas Group Companies ・・・P. 46

(Reference) Features of the Maruichi Group ・・・P. 55

May 12, 20161


I. Consolidated Financial Highlights for the Year Ending March 31, 2016

2


15,600 15,412

20,080

17,734 17,027 17,657 17,553

22,586

19,919 18,944

7,453

10,617

13,748

9,299 11,184

FY2012 FY2013 FY2014 FY2015 FY2016

Operating incomeOrdinary income

Net income attributable to owners of parent

Profits (Millions of yen)

Net sales (Millions of yen)

120,615 117,688

136,547

152,668 144,968

FY2012 FY2013 FY2014 FY2015 FY2016

Consolidated Operating Results

3

FY2015Results

FY2016Results

Increase/decrease

Forecasts announced in

April

Increase/decrease

Net sales 152,668 144,968 ▲ 5.0% 144,500 ＋0.3%

Operating Income 17,734 17,027 ▲ 4.0% 17,100 ▲ 0.4%

Ordinary Income 19,919 18,944 ▲ 4.9% 18,700 ＋1.3%Net income attributable to

owners of parent 9,299 11,184 ＋20.3% 10,800 ＋3.6%

(Millions of yen)


Consolidated Operating Results Statements of Income

4

AmountPercentage

of total(%)

AmountPercentage

of total(%)

AmountPercentage

of total(%)

AmountPercentage

of total(%)

AmountPercentage

of total(%)

Net sales 120,615 100.0 117,688 100.0 136,548 100.0 152,668 100.0 144,969 100.0

Cost of sales 94,136 78.0 91,482 77.7 104,571 76.6 122,198 80.0 114,974 79.3

Gross profit 26,479 22.0 26,206 22.3 31,977 23.4 30,470 20.0 29,995 20.7

Selling, general andadministrative expenses 10,879 9.0 10,793 9.2 11,896 8.7 12,736 8.3 12,967 8.9

Operating income 15,601 12.9 15,413 13.1 20,080 14.7 17,734 11.6 17,028 11.7

Non-operating income 3,133 2.6 2,660 2.3 3,109 2.3 2,882 1.9 2,933 2.0

Non-operating expenses 1,076 0.9 519 0.4 602 0.4 697 0.5 1,015 0.7

Ordinary income 17,658 14.6 17,554 14.9 22,587 16.5 19,919 13.0 18,945 13.1

Extraordinary income 1,019 0.8 1,191 1.0 3,529 2.6 856 0.6 1,952 1.3

Extraordinary losses 2,882 2.4 248 0.2 3,842 2.8 5,444 3.6 2,844 2.0

Income before income taxesand minority interests 15,795 13.1 18,496 15.7 22,274 16.3 15,331 10.0 18,053 12.5

Income taxes 8,382 6.9 7,746 6.6 8,035 5.9 7,324 4.8 7,457 5.1

Net income attributable tonon-controlling interests (39) (0.0) 133 0.1 491 0.4 (1,293) (0.8) (589) (0.4)

Net income attributable toowners of parent 7,453 6.2 10,618 9.0 13,748 10.1 9,300 6.1 11,185 7.7

FY2012 FY2013 FY2014 FY2015 FY2016

(Millions of yen)


The Year Ending March 31, 2016Consolidated P/L results: Factors for changes from FY2015

5

Net salesFactors attributable to the Company ¥-7.96 billion

FY2015 FY2016 Increase/decrease

Percentageincrease/decrease

MAC ¥+0.70 billion

MKK USA INC. (MOST　¥+4.32 billion） ¥+2.83 billion

MMX ¥+0.62 billion

SUNSCO（including Hanoi） ¥-3.66 billion

KUMA ¥+0.57 billion

Other domestic subsidiaries ¥-13.87 billionIncrease/decrease in consolidated elimination and reclassification ¥+13.07 billion

Operating incomeFactors attributable to the Company ¥-0.14 billionMAC ¥-0.27 billionMKK USA INC. ¥-0.91 billionMMX ¥+0.22 billionSUNSCO（including Hanoi） ¥+0.76 billionKUMA ¥+0.03 billion

(Interest income, dividends, etc.) 1.21 1.27 ＋ 0.07 Alpha Metal ¥-0.11 billion(Equity in earnings of affiliated companies, etc.) 0.58 0.73 ＋ 0.15 Increase in profits in other domestic subsidiaries ¥-0.32 billion

(Other non-operating income) 1.09 0.93 -0.17 Increase/decrease in consolidated elimination and reclassification ¥+0.04 billion

(Interest expense) (0.29) (0.34) -0.06 Ordinary income(Exchange loss, net) 0.00 (0.25) -0.25 Factors attributable to the Company ¥+0.25 billion

(Expenses of real estate rent) (0.23) (0.29) -0.06 MAC ¥-0.25 billion

(Other non-operating expenses) (0.18) (0.14) ＋ 0.04 MKK USA INC. ¥-1.05 billion

Ordinary income 19.92 18.94 -0.97 (4.9)% MMX ¥+0.20 billion(Gains on sales of investments in securities) 0.82 1.87 ＋ 1.06 SUNSCO（including Hanoi） ¥+0.74 billion

(Other extraordinary income) 0.04 0.08 ＋ 0.04 KUMA ¥-0.05 billion

Impairment loss (5.36) (2.76) ＋ 2.60 Alpha Metal ¥-0.05 billion(Losses on disposal of property, plant and equipment,etc.) (0.03) (0.08) -0.05 Increase in profits in other domestic subsidiaries ¥-0.34 billion

(Other extraordinary losses) (0.06) (0.01) ＋ 0.04 Affiliated companies accounted for by the equity method ¥+0.15 billionIncome before income taxes and minorityinterests 15.33 18.05 ＋ 2.72 +17.8% Increase/decrease in consolidated elimination and reclassification ¥-0.57 billion

(Income taxes) (7.32) (7.46) -0.13 Impact of impairment loss on net profit attributable to parent company shareholders

(Net income) 8.01 10.60 ＋ 2.59(Net income attributable to non-controlling interests) (1.29) (0.59) ＋ 0.70 FY2015 \3.91 billion　　FY2016 \2.28 billion

Net income attributable to owners of parent 9.30 11.18 ＋ 1.88 +20.3%

Operating income 17.73 17.03 -0.71 (4.0)%

(5.0)%

FY2016(Billions of yen)

Net sales 152.67 144.97 -7.70


Consolidated Business Results by Segment

6

Netsales

ShareOperatingincome

ShareNet

salesShare

Operatingincome

Share

Japan 101,204 66.3% 17,906 101.0% 91,960 63.4% 17,316 101.7%

NorthAmerica

21,684 14.2% (223) (1.3)% 25,829 17.8% (1,259) (7.4)%

Asia 30,812 20.2% (45) (0.3)% 27,748 19.1% 811 4.8%

Reconciliations (1,032) (0.7)% 97 0.5% (568) (0.4)% 160 0.9%

Total 152,668 100.0% 17,734 100.0% 144,969 100.0% 17,028 100.0%

FY2015 FY2016

(Millions of yen)



7

Statements of IncomeMajor factors for changes from forecastsannounced in April

Net sales Forecast Result Amount of impact

Factors attributable to Maruichi ¥89.20 billion ¥89.62 billion ¥0.42 billionMAC ¥7.29 billion ¥7.29 billion ¥0.00 billionMKK USA INC. ¥12.20 billion ¥12.35 billion ¥0.15 billion

MOST ¥4.29 billion ¥4.32 billion ¥0.02 billion

MMX ¥1.87 billion ¥1.87 billion ¥0.00 billionSUNSCO (including Hanoi) ¥23.39 billion ¥23.42 billion ¥0.04 billionKUMA ¥4.44 billion ¥4.33 billion ¥(0.11) billionAlpha Metal ¥3.00 billion ¥2.79 billion ¥(0.21) billionConsolidated adjustments (mainly for machinery sales andrelated steel strip) ¥(1.18) billion ¥(1.02) billion ¥0.16 billion

Operating income Forecast Result Amount of impactFactors attributable to Maruichi ¥15.60 billion ¥15.97 billion ¥0.37 billionMAC ¥0.15 billion ¥0.05 billion ¥(0.10) billionMKK USA INC. ¥(1.51) billion ¥(1.51) billion ¥0.01 billionMOST ¥(0.03) billion ¥(0.06) billion ¥(0.02) billionMMX ¥0.39 billion ¥0.33 billion ¥(0.06) billionSUNSCO (including Hanoi) ¥0.57 billion ¥0.56 billion ¥(0.02) billionKUMA ¥0.22 billion ¥0.26 billion ¥0.03 billionAlpha Metal ¥0.08 billion ¥0.08 billion ¥(0.00) billionOther domestic subsidiaries ¥1.23 billion ¥1.15 billion ¥(0.08) billionGoodwill ¥0.00 billion ¥0.00 billion ¥0.00 billionConsolidated adjustments ¥0.39 billion ¥0.20 billion ¥(0.19) billion

Ordinary income Forecast Result Amount of impactFactors attributable to Maruichi ¥18.50 billion ¥18.94 billion ¥0.44 billionMAC ¥0.18 billion ¥0.08 billion ¥(0.10) billionMKK USA INC. ¥(1.54) billion ¥(1.62) billion ¥(0.08) billionMOST ¥(0.12) billion ¥(0.06) billion ¥0.60 billionMMX ¥0.35 billion ¥0.31 billion ¥(0.04) billionSUNSCO (including Hanoi) ¥0.06 billion ¥0.58 billion ¥(0.02) billionKUMA ¥0.12 billion ¥0.16 billion ¥0.04 billionAlpha Metal ¥0.10 billion ¥0.10 billion ¥(0.00) billionOther domestic subsidiaries ¥1.58 billion ¥1.51 billion ¥(0.07) billionAffiliated companies accounted for by the equity method ¥0.66 billion ¥0.73 billion ¥0.07 billionConsolidated adjustments ¥(1.72) billion ¥(1.78) billion ¥(0.06) billion

Net income attributable to owners of parent Forecast Result Amount of impact

Factors attributable to Maruichi ¥4.60 billion ¥5.05 billion ¥0.45 billionMAC ¥0.11 billion ¥(0.01) billion ¥(0.11) billionMKK USA INC. ¥(3.50) billion ¥(3.49) billion ¥0.01 billionMOST ¥(0.09) billion ¥(0.14) billion ¥(0.05) billionMMX ¥0.27 billion ¥0.26 billion ¥0.02 billionSUNSCO (including Hanoi) ¥0.30 billion ¥0.44 billion ¥0.15 billionKUMA ¥0.07 billion ¥0.08 billion ¥0.01 billionAlpha Metal ¥0.07 billion ¥0.07 billion ¥(0.00) billionOther domestic subsidiaries ¥1.06 billion ¥1.04 billion ¥(0.02) billionConsolidated adjustments ¥7.91 billion ¥7.89 billion ¥(0.02) billion

Net sales 144.50 144.97 0.47

Net incomeattributable toowners ofparent

10.80 11.18 0.38

Operatingincome 17.10 17.03 -0.07

Ordinaryincome 18.70 18.94 0.24

Forecastsannounced in

AprilFY2016 results Change

(Billions of yen)

FY2016



8

Maruichi SteelTube 89.20 15.60 18.50 4.60

MAC 7.29 0.15 0.18 0.11

MKK USA INC. 12.20 (1.51) (1.54) (3.50)

MOST 4.29 (0.03) (0.12) (0.09)

MMX 1.87 0.39 0.35 0.27SUNSCO(including

Hanoi)23.39 0.57 0.60 0.30

KUMA 4.44 0.22 0.12 0.07

Alpha Metal 3.00 0.08 0.10 0.07

Other domesticsubsidiaries 2.16 1.23 1.58 1.06

Affiliated companiesaccounted for by the

equity method0.66

Goodwill 0.00

Consolidatedadjustments (3.34) 0.39 (1.72) 7.91

Total 144.50 17.10 18.70 10.80

Netsales

Operatingincome

Ordinary

income

Netincome

attributableto ownersof parent

Forecasts announced in Apr. 2016

Change Change Change Change

89.62 0.42 15.97 0.37 18.94 0.44 5.05 0.45

7.29 0.00 0.05 -0.01 0.08 -0.10 (0.01) -0.11

12.35 0.15 (1.51) 0.01 (1.62) -0.08 (3.49) 0.01

4.32 0.02 (0.06) -0.02 (0.06) 0.06 (0.14) -0.05

1.87 0.00 0.33 -0.06 0.31 -0.04 0.26 -0.02

23.42 0.04 0.56 -0.02 0.58 -0.02 0.44 0.15

4.33 -0.11 0.26 0.03 0.16 0.04 0.08 0.01

2.79 -0.21 0.08 (0.00) 0.10 (0.00) 0.07 (0.00)

2.16 0.00 1.15 -0.08 1.51 -0.07 1.04 -0.02

0.73 0.07

0.00 0.00

(3.18) 0.16 0.20 -0.19 (1.78) -0.06 7.89 -0.02

144.97 0.47 17.03 -0.07 18.94 0.24 11.18 0.38

Net sales Operating income Ordinary incomeNet income

attributable to ownersof parent

Results for FY2016

Differences between forecasts announced inApril and actual results of major companies

(Billions of yen)



9

(Billions of yen)Cash and bankdeposits

Japan ¥+4.44billion Overseas ¥-0.48 billion Consolidatedadjustments

¥+0.01 billion

Previous Year Current Year Change Trade notes andaccounts

Japan ¥-4.97 billion Overseas ¥-1.10 billion Consolidatedadjustments

¥+1.74 billion

Current assets 153.8 148.0 -5.83 Inventories Japan ¥-2.10 billion Overseas ¥-5.10 billion Consolidatedadjustments

¥-0.25 billion

(Cash and bank deposits) 61.3 65.3 +3.97 Others SubsidiaryNCD

¥+0.40 billion Others ¥+1.30 billion Consolidatedadjustments

¥+0.28 billion

(Trade notes and accountsreceivable) 35.0 30.6 -4.33(Inventories) 30.0 22.5 -7.44(Others) 27.5 29.5 +1.98 Maruichi ¥+0.04billion Domestic

subsidiaries¥+1.41billion MOST ¥-0.11 billion

Long-term assets 167.7 146.9 -20.75 MAC ¥+0.25billion MKK USAINC.

¥-2.27 billion SUNSCO ¥-1.87 billion

(Property, plant andequipment) 87.3 84.8 -2.43 KUMA ¥-0.21 billion MMX ¥+0.37 billion Consolidated

adjustments¥-0.06 billion

(Intangible assets) 3.3 2.2 -1.16 Intangible assets Maruichi ¥-0.00 billion Subsidiaries ¥-1.16 billion Consolidatedadjustments

¥-0.00 billion

(Investments and otherassets) 77.1 59.9 -17.16

Total assets 321.5 294.9 -26.58Current liabilities 46.0 38.3 -7.67

(Trade notes and accountspayable) 24.5 17.9 -6.63 Trade notes and

accounts payableJapan ¥-5.90 billion Overseas ¥-2.91 billion Consolidated

adjustments¥+2.18 billion

(Short-term bank loans) 10.6 9.3 -1.26 Alpha Metal ¥+0.18 billion SUNSCO ¥-0.96 billion MKK USA INC. ¥-0.60 billion

(Accrued income taxes) 3.0 4.1 +1.14 KUMA ¥+0.00 billion MMX ¥+0.12 billion Consolidatedadjustments

¥+0.00 billion

(Others) 7.9 7.0 -0.91 Accrued incometaxes

Maruichi ¥+1.19 billion Subsidiaries ¥-0.06 billion Consolidatedadjustments

¥+0.00 billion

Long-term liabilities 21.1 14.7 -6.42 Others Maruichi ¥-0.79 billion Subsidiaries ¥-0.26 billion Consolidatedadjustments

¥-0.33 billion

Total liabilities 67.1 53.0 -14.09Net assets 254.4 241.9 -12.50

(Common stock) 9.6 9.6 +0.00 Maruichi ¥-3.56 billion Domesticsubsidiaries

¥-0.02 billion Consolidatedadjustments

¥-0.04 billion

(Additional paid-in capital) 15.8 15.8 -0.00 SUNSCO ¥-2.34 billion KUMA ¥-0.01 billion MKK USA INC. ¥-0.45 billion

(Retained earnings) 223.2 228.3 +5.14 MMX ¥+0.00 billion MAC ¥+0.00 billion MOST ¥+0.00 billion

(Treasury stock) (20.5) (27.0) -6.46(Unrealized holding gains onavailable-for-salesecurities ) 14.4 4.6 -9.80(Foreign currency translationadjustments) 1.3 0.9 -0.38 Retained earnings Japan ¥-0.72 billion Overseas ¥-3.44 billion Consolidated

adjustments¥+9.30 billion

(Remeasurements of definedbenefit plans) (0.1) (0.1) +0.04 ¥-2.06 billion

(Stock options) 0.1 0.1 -0.01(Minority interests) 10.6 9.6 -1.03 Foreign currency

translation End of December 2014: ¥120.55/US$　→　End of December 2015: ¥120.61/US$

Total liabilities and netassets 321.5 294.9 -26.58

Consolidatedadjustments

Long-termliabilities

Unrealized holdinggains on available-for-sale securities

Maruichi ¥-7.74 billion Subsidiaries ¥-0.00 billion

Factors for increases/decreases of current assets

FY2016 full-year results

Factors for increases/decreases of long-term liabilities

¥+7.99billion

Factors for increases/decreases of net assets

Factors for increases/decreases of long-term assets

Property, plantand equipment

Factors for increases/decreases of current liabilities

Short-term bankloans

Investments andother assets Japan ¥-24.22 billion Overseas ¥-0.92 billion


Balance Sheets compared with the previous fiscal year



5.6

12.5

9.9 8.8

6.2

3.0

2.8

4.7 4.45.2

6.06.7

2.9

3.2

Depreciation

Capital investment

(Billions of yen)

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

10

Capital investment anddepreciation

Budget for 2H

Budget for 1H

Budget for 1H

Budget for 2H


623 637 634 642 632 647 634 644

405 392 396 400 396 387 388 384

809 891 936 964 971 1023 1016 960

1,837 1,920 1,966 2,006 1,999 2,057 2,038 1,988

0

500

1000

1500

2000

2500

Sep. 2012 Mar. 2013 Sep. 2013 Mar. 2014 Sep. 2014 Mar. 2015 Sep. 2015 Mar. 2016

（32）（36）（44）（40）（41）（41）（40）（40）

Employees： : Overseas consolidated subsidiaries

11

: Domestic consolidated subsidiaries

: Maruichi Steel Tube

Figures in parentheses indicate employees temporarily transferred overseas


II. Nonconsolidated Financial Highlights for the Year Ending March 31, 2016

12


90,784

86,653

94,132

97,576

89,615

FY2012 FY2013 FY2014 FY2015 FY2016

Nonconsolidated Operating Results

14,567 14,228

17,320

16,108 15,968 17,094 16,720

19,932

18,688 18,936

4,975

9,717

12,332 12,926

5,049

FY2012 FY2013 FY2014 FY2015 FY2016

Operating income

Ordinary income

Net income

Profits (Millions of yen)

Net sales (Millions of yen)

13

FY2015

Results

FY2016

Results

Increase/

decrease

Forecasts

announced

in April

Increase/

decrease

Net Sales 97,576 89,615 -8.2% 89,200 ＋0.5%

Operating Income 16,108 15,968 -0.9% 15,600 ＋2.4%

Ordinary Income 18,688 18,936 ＋1.3% 18,500 ＋2.4%

Net Income 12,926 5,049 -60.9% 4,600 ＋9.8%

(Millions of yen)


Nonconsolidated Operating Results Statements of Income

14

AmountPercentageof total (%)

AmountPercentageof total(%)



AmountPercentageof total (%)

Net sales 90,784 100.0% 86,654 100.0% 94,133 100.0% 97,576 100.0% 89,616 100.0%

Cost of sales 70,210 77.3% 66,280 76.5% 70,265 74.6% 74,875 76.7% 67,194 75.0%

Gross profit 20,574 22.7% 20,374 23.5% 23,868 25.4% 22,701 23.3% 22,422 25.0%

Selling, general andadministrative expenses 6,007 6.6% 6,145 7.1% 6,547 7.0% 6,592 6.8% 6,454 7.2%

Operating income 14,568 16.0% 14,228 16.4% 17,321 18.4% 16,109 16.5% 15,968 17.8%

Non-operating income 2,965 3.3% 2,862 3.3% 3,000 3.2% 2,901 3.0% 3,464 3.9%

Non-operating expenses 437 0.5% 370 0.4% 388 0.4% 321 0.3% 495 0.6%

Ordinary income 17,095 18.8% 16,721 19.3% 19,932 21.2% 18,688 19.2% 18,937 21.1%

Extraordinary income 67 0.1% 1,190 1.4% 3,432 3.6% 823 0.8% 1,945 2.2%

Extraordinary losses 5,283 5.8% 2,374 2.7% 4,070 4.3% 41 0.0% 9,213 10.3%

Profit before income taxes 11,878 13.1% 15,537 17.9% 19,294 20.5% 19,471 20.0% 11,669 13.0%

Income taxes 6,785 7.5% 5,559 6.4% 6,707 7.1% 6,065 6.2% 6,833 7.6%

Income taxes - deferred 118 0.1% 260 0.3% 254 0.3% 479 0.5% (214) (0.2)%

Net income 4,976 5.5% 9,717 11.2% 12,333 13.1% 12,927 13.2% 5,050 5.6%

FY2012 FY2013 FY2014 FY2015 FY2016

(Millions of yen)



15

Increase/decrease

Domestic pipe sales volume ¥-2.87 billionFY2015 FY2016 Increase/

decreasePercentage increase/

decrease Domestic pipe unit selling price ¥-4.25 billionExport pipe sales volume ¥-0.90 billionExport pipe unit selling price ¥-0.13 billionSteel strip sales volume ¥0.15 billionSteel strip unit selling price ¥-0.53 billionPole Division ¥-0.16 billionRelated steel strip ¥0.73 billionMachinery, others ¥-0.00 billion

Increase/decrease

Gross sales volume ¥-0.66 billionGross unit selling price ¥-3.95 billionCost of sales ¥4.60 billionSelling, general and administrative expenses ¥-0.13 billion

(Dividend income, interest from bonds, etc.) 1.91 2.30 +0.39(House rent income) 0.57 0.65 +0.08 Increase/decrease

(Royalty income) 0.29 0.26 -0.03 From operating income ¥-0.14 billion(Other non-operating income) 0.13 0.25 +0.13 Dividend income, interest on securities, etc. ¥0.39 billion(Rent expenses) (0.28) (0.37) -0.09 Other non-operating income ¥0.17 billion(Other non-operating expenses) (0.04) (0.12) -0.08 Non-operating expenses ¥-0.17 billion

(Gains on sales of investments in securities) 0.82 1.87 +1.06 Increase/decrease

(Gains on sales of property, plant and equipment) 0.01 0.07 +0.07 From ordinary income ¥0.25 billion(Other extraordinary income) 0.00 0.00 +0.00 Gains on sales of investmentsin securities ¥1.06 billion(Losses on sales of securities) 0.00 0.00 +0.00 Gains on sales of property, plant and equipment ¥0.07 billion

(Losses on valuation of securities) 0.00 (9.14) -9.14 ¥-9.14 billion(Costs of disposal and removal of property, plant andequipment, etc.) (0.02) (0.07) -0.05 ¥-0.05 billion

(Other extraordinary loss) (0.02) (0.00) +0.02 Others ¥0.02 billion

(Income taxes) (6.07) (6.83) -0.77 From income before income taxes ¥-7.80 billion(Income taxes–deferred) (0.48) 0.21 +0.69 Income taxes ¥-0.77 billion

Income taxes–deferred ¥0.69 billion

Increase/decrease

Net sales

Operating income

Ordinary income

Income before income taxes

Net income

Costs of disposal and removal of property, plant andequipment, etc.

Losses on valuation of securities(loss of valuation of MKK USA INC.)

-40.1%

1.3%

-60.9%

18.69Ordinary income

-7.8011.6719.47Income before income taxes

-0.9%-0.1415.97

-7.96 89.62

(Billions of yen)

FY2016

-8.2%97.58Net sales

16.11Operating income

-7.885.0512.93Net income

+0.2518.94

Statements of IncomeMajor factors for changes fromFY2015



16

(Billions of yen)

Increase/decrease

Domestic pipe sales volume ¥-0.16 billionDomestic pipe unit selling price ¥＋0.39 billionExport pipe sales volume ¥＋0.00 billionExport pipe unit selling price ¥＋0.00 billionSteel strip sales volume ¥-0.03 billionSteel strip unit selling price ¥＋0.01 billionPole Division ¥＋0.19 billionRelated steel strip ¥-0.02 billionMachinery, others ¥＋0.05 billion

Increase/decrease

¥-0.03 billion¥＋0.58 billion

（Factors attributable to domestic pipe unit selling price） (¥＋0.43 billion)Cost of sales ¥-0.36 billionSelling, general and administrative expenses ¥＋0.17 billion

Increase/decrease

From operating income ¥＋0.37 billionDividend income, interest on securities, etc. ¥-0.02 billionOther non-operating income ¥＋0.16 billionNon-operating expenses ¥-0.07 billion

Increase/decrease

From ordinary income ¥＋0.44 billion¥＋0.00 billion

¥＋0.00 billion

¥-0.03 billion

Loss on valuation of investment securitie ¥＋0.06 billionOthers ¥＋0.00 billion

Increase/decrease

From income before income taxes ¥＋0.47 billionIncome taxes ¥-0.23 billionIncome taxes-deferred ¥＋0.21 billion

Net income

Costs of disposal and removal of property, plantand equipment, etc.

Gains on sales of property, plant and equipment

Gains on sales of investments in securities

Factors attributable to company-wide unit selling price

Net salesFY2016

Operating income

Income before income taxes

Ordinary income

Factors attributable to company-wide sales volume

FY2016forecasts

announced inApril

FY2016results Change

Net sales 89.20 89.62 +0.42

Ordinaryincome 18.50 18.94 +0.44

Operatingincome 15.60 15.97 +0.37

Net income 4.60 5.05 +0.45

Income beforeincome taxes 11.20 11.67 +0.47

Statements of IncomeMajor factors for changes fromforecasts announced in April



17

Balance Sheets compared withthe previous fiscal year

Current assetsCash and bank dep¥+8.44 billion

(Billions of yen) Income beforeincome taxes ¥+11.67 billion Depreciation ¥+2.44 billion Purchase of treasury

stock ¥-6.46 billion Losses on valuation ofinvestments ¥＋9.14 billion

Stock-related ¥+1.39 billion Bond-related ¥+0.82 billionOperatingfunds ¥+3.53 billion

Previous Year Current Year Change Dividendsand taxes

¥-11.91 billion Capitalinvestments

¥-2.36 billion Others ¥＋0.19 billion

Current assets 88.38 93.28 +4.90 Accountsreceivable

¥-3.28 billion

(Cash and bank deposits) 43.83 52.28 +8.44 Trade notesreceivable

¥-0.15 billion Tradeaccounts

¥-3.13 billion

(Trade notes and accountsreceivable) 29.74 26.45 -3.28 Inventories ¥-1.69 billion

(Inventories) 10.76 9.06 -1.69 Finishedgoods

¥-0.29 billion Raw materials ¥-1.42 billion Suppliesand others

¥+0.02 billion

(Others) 4.05 5.49 +1.44 Others ¥+1.44 billion

Long-term assets 146.28 122.12 -24.15 Advancespaid

¥-0.02 billion Others ¥+1.45 billion

(Property, plant and equipment) 43.93 43.96 +0.04 Long-term assets

(Intangible assets) 0.05 0.05 -0.00 Property, plantand equipment

¥＋0.04 billion

(Investments and other assets) 102.30 78.11 -24.19 Newinvestments

¥+2.48 billion Depreciation ¥-2.44 billion

Total assets 234.65 215.41 -19.25 Investmentsand other

¥-24.19 billion

Current liabilities 22.30 21.82 -0.48 ¥-11.25 billion Stock-related ¥-1.38 billion Bond-related ¥-2.40 billion

(Trade notes and accountspayable) 14.47 13.59 -0.88 ¥-9.14 billion Others ¥-0.02 billion

(Accrued income taxes) 2.71 3.91 +1.19 Current liabilities

(Others) 5.12 4.33 -0.79 Trade notesand accounts

¥-0.88 billion

Long-term liabilities 7.87 4.31 -3.56 Trade notespayable

¥＋0.04 billion Tradeaccounts

¥-0.92 billion

Total liabilities 30.18 26.13 -4.05 Others ¥-0.79 billion

Net assets 204.47 189.27 -15.20 ¥-0.40 billion Others ¥-0.39 billion

(Common stock) 9.60 9.60 +0.00 Long-term liabilities

(Additional paid-in capital) 14.63 14.63 -0.00 Long-termliabilities

¥-3.56 billion

(Retained earnings) 187.40 186.40 -0.99 ¥+0.05 billion ¥-3.62 billion Others ¥+0.00 billion

(Treasury stock) (20.51) (26.96) -6.46 Net assets(Unrealized holding gains onavailable-for-sale securities) 13.22 5.49 -7.74 Retained earnin¥-0.99 billion

(Stock options) 0.13 0.12 -0.01 Net income ¥+5.05 billion Dividends ¥-3.94 billion Interim dividends ¥-2.09 billion Loss on disposal oftreasury stock ¥-0.01 billion

Total liabilities and net assets 234.65 215.41 -19.25 ¥-7.74 billion

Bonds/investment trusts ¥＋0.09 billion Listed stock ¥-6.58 billion ¥-1.25 billionListed stock (overseas)

FY2016

Long-term deferred taxliabilities

Valuation difference oninvestments in securities

Equipment accounts payable-other/notes payable

Accrued retirement benefits

Unrealized holding gains onavailable-for-sale securities

Loss on valuation of investment securities

-


174.9 181.8 192.2 204.5 189.2

9.9 12.6

14.9

15.7

12.6 12.7

11.4

13.5

14.5

13.6 196.6 205.8

220.6

234.7

215.4

FY2012 FY2013 FY2014 FY2015 FY2016

27.0

2.6 6.5 6.0 6.8 6.6

41.1 43.2 43.2 43.9 44.0

29.8 25.9 28.6 35.5

26.3

51.3 59.1

63.7 64.2

50.6

10.6 9.4

10.1 10.8

9.1

30.4 28.8

29.3 29.7

26.5

30.8 32.9

39.7

43.8

52.3

196.6205.8

220.6

234.7

215.4

FY2012 FY2013 FY2014 FY2015 FY2016

Nonconsolidated Operating Results Changes in balance sheets

Cash and

bank

deposits

Investment

securities

Accounts

receivable

Inventories

Property,

plant and

equipment

Otherassets

Accounts

payable

Other

liabilities

Assets Liabilities and net assets

Bank loans

Net assets

(Billions of yen)

(including treasury stock)

(including treasury stock

）

(including treasury stock

）

(including treasury stock )

19.8 20.5

(including treasury stock)20.5 20.5

Investments

in affiliated

companies

18



2.0

4.1

5.7

2.9

2.4

1.8

1.5

2.5 2.1 2.1 2.2

2.4

1.1

1.4

Depreciation

Capital investments

(Billions of yen)

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

19

Capital investments anddepreciation

Budget for 2H

Budget for 2HB

udget for 1H

Budget for 1H


III. Performance Forecasts for the Year Ending March 31, 2017

20


Consolidated and Nonconsolidated Sales Results and forecasts

(Millions of yen)

117,688

136,548

152,668 144,969

138,700

86,653 94,133

97,576

89,616 86,400

58,072 63,559

75,146 74,317

66,300

42,004 43,704 47,988

44,582 41,500

FY2013 FY2014 FY2015 FY2016 FY2017 Forecasts

Consolidated net sales (full year)Nonconsolidated net sales (full year)Consolidated net sales (1H)Nonconsolidated net sales (1H)

21


Consolidated and Nonconsolidated Ordinary IncomeResults and forecasts

(Millions of yen)

15,412

22,587

19,919 18,945

22,200

14,228

19,932

18,688 18,937 18,100

7,069

10,834 10,230

8,595

11,200

6,402

9,753 9,666 9,203 8,900

FY2013 FY2014 FY2015 FY2016 FY2017 Forecasts

Consolidated ordinary income (full year)Nonconsolidated ordinary income (full year)Consolidated ordinary income (1H)Nonconsolidated ordinary income (1H)

22


Consolidated Operating Results ForecastsCompared with ‘Fourth Medium-Term Management Plan’ by Segment

－23－

FY2017 Forecasts Fourth Medium-Term Management Plan FY2018 Targets

Net sales Share Operatingincome Share Net sales Share Operating

income Share

Japan 87,356 63.0% 18,042 85.5% 108,500 58.6% 19,100 84.9%

North America 21,842 15.7% 1,285 6.1% 39,600 21.4% 1,800 8.0%

Asia 29,502 21.3% 1,773 8.4% 36,900 19.9% 1,600 7.1%

Reconciliations 0 0.0% 0 0.0% 0 0.0% 0 0.0%

Total 138,700 100.0% 21,100 100.0% 185,000 100.0% 22,500 100.0%

(Millions of yen)


Consolidated and Nonconsolidated Profit Forecasts

24

Consolidatedfinancial forecasts

1H Forecasts 2H ForecastsFull-year

Forecasts Sales profit ratio

Net sales 66,300 72,400 138,700 - 144,969 (4.3)%

Operating income 10,200 10,900 21,100 15.2% 17,028 23.9%

Ordinary income 11,200 11,000 22,200 16.0% 18,945 17.2%

Net income attributableto owners of parent 7,700 8,000 15,700 11.3% 11,185 40.4%

Nonconsolidatedfinancial forecasts

1H Forecasts 2H ForecastsFull-year

Forecasts Sales profit ratio

Net sales 41,500 44,900 86,400 - 89,616 (3.6)%

Operating income 7,300 8,800 16,100 18.6% 15,968 0.8%

Ordinary income 8,900 9,200 18,100 20.9% 18,937 (4.4)%

Net income 6,200 6,500 12,700 14.7% 5,050 151.5%

FY2017 ForecastsFY2016Results

Full-year forecastsYoY

increase/decrease

FY2017 ForecastsFY2016Results

Full-year forecastsYoY

increase/decrease

(Millions of yen)


Full-year Forecasts by Consolidated Major Companies FY2017

－25－

Compared withthe previous

period


period


period


period

MaruichiSteel Tube

41,500 (3,082) 7,300 160 8,900 (303) 6,200 (1,426)

MAC 3,170 (679) 161 32 177 38 106 22

MKK USA INC. 4,957 (2,113) 397 1,375 385 1,383 316 1,095

MOST 2,014 318 213 238 220 249 132 161

MMX 1,032 144 179 11 190 62 133 38

SUNSCO(including Hanoi) 10,953 (1,728) 815 515 829 592 829 727

KUMA 1,995 (142) 123 32 112 103 74 80

Alpha Metal 1,833 505 33 1 39 (5) 27 (3)

Other domesticsubsidiaries

1,104 73 727 182 1,001 154 693 113

Affiliated companiesaccounted for by the

equity method194 (42)

Goodwill 0 0


(2,258) (1,312) 252 110 (845) 374 (810) 309

Total 66,300 (8,017) 10,200 2,657 11,200 2,605 7,700 1,116

1H Forecasts

Net salesOperating

incomeOrdinaryincome

Net incomeattributable to

ow ners of parentCompared with

the previous

period

Compared with

the previous

period

Compared with

the previous

period

Compared with

the previous

period

86,400 (3,216) 16,100 132 18,100 (837) 12,700 7,650

6,033 (1,258) 267 216 296 220 178 184

9,954 (2,400) 443 1,948 448 1,984 372 3,862

3,736 (581) 283 340 290 432 174 315

2,119 245 292 (40) 275 (36) 193 (62)

25,511 2,087 1,527 972 1,432 852 1,432 990

3,991 (336) 245 (11) 224 64 148 64

3,766 979 90 10 102 2 71 5

2,192 32 1,364 213 1,668 159 1,156 120

499 (232)

0 0

(5,002) (1,820) 488 292 (1,134) 648 (723) (8,614)

138,700 (6,269) 21,100 4,072 22,200 3,255 15,700 4,515

Full-year Forecasts

Net salesOperating

incomeOrdinaryincome

Net incomeattributable to

ow ners of parent

(Millions of yen)


IV. Progress of the ‘Fourth Medium-Term Management Plan’

26


FY2014Results

FY2015Results

FY2016Forecasts

FY2017Targets

Net sales 152.7 145.0 138.7 185.0

Operating income 17.7 17.0 21.1 22.5

Operating margin 11.6% 11.7% 15.2% 12%

ROE 3.9% 4.7% 6.6% 6.5% or over

Shareholderreturn ratio

(3-year average)

52.2%(3-year average) 255.2% 49.5%

70% orover (3-year

average)

Returning profitsto society

(3-year average)

¥14 million(3-year average) ¥21 million

Approximately 0.5% of nonconsolidated

net income after payment of dividends

Approximately 0.5% of nonconsolidated

net income after payment of dividends

(3-year average)

Targets and Results of the ‘Fourth Medium-Term Management Plan’

27

Final Year of ‘Fourth Medium-Term Management Plan’

Final Year of ‘Third Medium-Term Management Plan’ Fourth Medium-Term Management Plan(Billions of yen)


Major Initiatives of the ‘Fourth Medium-Term Management Plan’

1. Growth strategy

2. Shareholder-focused capital policy

3. Social contribution

28


80.9 89.1 90.8 86.7 94.1 97.5 100.5 89.6 104.2

86.4 105.1

2.6 3.1 1.6 2.3 2.6 3.0

1.8 3.1

1.0

3.4

10.5 10.1 12.7 14.1

17.4 21.7

34.6

25.8

36.7

21.8

39.6

11.0 13.9 14.0 15.4

22.7 30.8

36.1

27.7

36.5

29.5

36.9

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015(Targets)

FY2015(Results)

FY2016(Targets)

FY2016(Forecasts)

FY2017(Targets)

Net Sales (Billions of yen)Nonconsolidated sales in Japan Other sales in JapanNorth America Asia

29

Targets during the Fourth Medium-TermManagement Plan

Net Sales Targets and Progress

185.0

102.4 115.7 120.6 117.8 136.5 152.6 174.2 144.9 180.5 138.7 185.0Total

Devoted to Steel Tubes 30

Operating Income Targets and Progress

10.4 14.9 14.6 14.2

17.3 16.1 16.6 16.1 17.2 16.1 18.0 1.5

0.7 0.3 1.1

1.8 1.8 1.4 1.3 1.4 1.9

1.1

-0.8

0.3 0.8 0.1

0.4

-0.2

1.1

-1.2

1.8 1.3 1.8

-0.2

0.7

-0.2

0.6 1.4

0.8 1.5 1.8 1.6

(5.0)

0.0

5.0

10.0

15.0

20.0

25.0Operating Income (Billions of yen) Nonconsolidated operating income in Japan

Other operating income in JapanNorth AmericaAsia

Targets during the Fourth Medium-Term Management Plan

22.5

10.9 16.6 15.5 15.4 20.1 17.7 20.5 17.0 21.9 21.1 22.5Total

13% 13%15%

12% 12% 12% 12%15%

12%

16%17%

20%18% 17%

19%17%

21%

18%

2%0%

2%0%

3%

-1%

5%

6%

4%

-5%

0%

5%

10%

15%

20%

25%

FY2011 FY2012 FY2013 FY2014 FY2015(Targets)

FY2015(Results)

FY2016(Targets)

FY2016(Forecasts)

FY2017(Targets)

Operating Margin Overall Domestic Overseas Targets of FY2017: 12%


3.9%

5.0%

3.6%

5.0%

6.1%

3.9%

4.7%

6.6%

70.3%53.7%

130.4%

61.5%50.5%

46.9%

255.2%

49.5%

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

300.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016(Forecasts)

ROE Shareholder return ratio

Capital Policy Targets and Progress

3-year average of shareholder return ratio →70% or moreROE of FY2017 →6.5%or more


Moving ahead with overhauls of domestic facilities and increasing production efficiency

32

FY2015 FY2016 FY2017 3-yeartotal

Planned Results Planned Planned Planned

Total capital investment 9.9 6.2 5.8 3.7 15.7

Domestic group

companies

Capitalinvestment 7.4 4.3 4.1 2.7 11.1

Depreciation 2.7 3.0 3.2 2.8 9.0

Overseas group

companies

Capitalinvestment 2.5 1.9 1.7 1.0 4.6

Depreciation 3.7 3.6 2.8 4.3 10.7

(Billions of yen)

Major capital investments results (FY2015)Domestic Sakai Plant: (Renovation of No. 1 Unit and

terminal piers)： ¥0.8 billion Relocation of Yokohama Sales Office of

Maruichi Kohan: ¥0.8 billionOverseas MAC: Facilities renewal: ¥0.6 billion MMX: No. 2 Plant: ¥0.6 billion

Major capital investments plan (FY2016)Domestic Tokyo Plant: Renewal of tube manufacturing units, etc.:

¥0.8 billion Takuma Plant: Renewal of CGL and rolling mills: ¥0.8

billion Sakai Plant: Renovation of tube manufacturing units and

slitter： ¥0.5 billionOverseas MAC: Establishment of new warehouse：¥0.6 billion KUMA: Establishment of new stainless steel line (large

diameter)： ¥0.3 billion

Capital Investment Plan (announced March 2015) and Results of ‘Fourth Medium-Term Management Plan’


Restructuring and streamlining the domestic production framework and properly allocating human resources

• Overview: Terminate steel tube manufacturing at the Osaka Plant and transfer electrical conduit manufacturing to the Sakai Plant, with the aim of consolidating and streamlining the Company’s electrical conduit manufacturing

• Total investment: Approx. ¥0.5 billion*The consolidation has left no manufacturing equipment at the Osaka Plant. It is therefore renamed the “Osaka Warehouse.”

Overview of Sakai Plant (at end of March 2016)• Location: Nishi-ku, Sakai city, Osaka• Area: 154,002㎡• Monthly production: 220,000,000tons• Number of employees: 139

Improvements Made by Consolidation with the Sakai Plant

Limits on night operation at the Osaka Plant due to proximity to residential area

→Sakai Plant located in industrial zone where night operation is possible

Reduction in transport costs

Efficient allocation of human resources

Sakai Plant No. 6 Unit

Consolidating Osaka Plant with Sakai Plant (Completed March 2016)


• March 2015: Structural tubing business acquired from Evraz NA INC., established MOST, Inc.

Further enhancing production where demand exists within the U.S., together with MAC (Los Angeles) and Leavitt (Chicago), and expanding business in the U.S. and Canada.

MOSTPortland, Oregon

34

Expanding sales on the U.S. West Coast

【FY2016】Renewing welding and plating equipment (scheduled completion in May)

LeavittChicago,

Illinois

【FY2015】March: Completed upgrades to tube manufacturing units and slitterIncreased efficiency by consolidating and renewing existing equipment

【FY2016】Scheduled construction of new warehouse (scheduled completion in December)

MACLos Angeles,

California

Strengthening sales in the northwest of the U.S. and the west of Canada with MOST as a base

MAC: Increasing productivity by investing in improved equipment, and expanding sales by strengthening sales force

MAC No. 4 Unit


【FY2015】June: Commencement of operation of 2-inch millManufacturing of exhaust pipes (stainless steel pipes) for automobiles and motorcycles

Bangalore Plant (Appearance) Opening Ceremony for Bangalore Plant, October 2015

【FY2016】Introduction of equipment for large-

diameter (4-inch) exhaust pipes (stainless steel pipes) for trucks and buses (scheduled completion in October)

Manesar Plant(near New Delhi)

Continuing necessary investments in automobile and motorcycle related business and strengthening transactions with Japanese manufacturers

Bangalore Plant

【India】 KUMA: Expanding sales and strengthening profitability through utilization of the new Bangalore Plant


(Domestic) Initiatives for training and developing human resources

New initiatives for the ‘Fourth Medium-Term Management Plan’【Recruitment Activities】・ Enhancing activities to improve candidates’awareness of firm(Participating in open and university-based job fairs in Kanto and Kansai)【Training human resources】

・ Enhancing training of new recruits(Short-term dispatches overseas, introduction of training in languages and business accounting,

enhancement of safety training, and introduction of training aimed at improving communication skills in group situations)・ Introducing training for management positions on different levels (e.g., introduction of leadership coaching)

March 2016 Formulating an action plan based on the “Act to Advance Women’s Success in Their Working Life”【Current Initiatives】

・Active recruitment of female candidates (three out seven college graduates employed in 2016)・Active effort to employ staff on temporary contracts on a permanent basis.【Targets】

(1) To increase average length of service of female employees(2) To employ women in management positions

Training program for new employees, 2016

Increased focus on recruitment and training human resources

Initiatives relating to “Act to Advance Women’s Success in Their Working Life”


◆ Number of new employees dispatched from Japan to overseas for training

37

Destination No. of participants

2004 China 262005 Korea 272006 China 372007 Vietnam 322008 Indonesia 362009 Vietnam 282010 China 242011 Vietnam 282012 China Canceled2013 Vietnam 292014 Vietnam 202015 Indonesia 20Total 307

◆ Number of employees dispatched from Japan to overseas for short-term training (persons)

Developing human resources that can perform overseas and enhancing local human resources

No. of employees2012 62013 62014 72015 10

2016 (plan) 8Total 37

(persons) 海外出向者人数2011 232012 252013 362014 402015 412016 40

23 2536 40 41 40

0

20

40

60

2011 2012 2013 2014 2015 2016

(persons) Number of employees dispatched overseas

Training in Indonesia in 2015

◆ Number of employees by destination country (March 31, 2016)

the U.S. 10Mexico 6

Vietnam 16China 4

Indonesia 1India 3Total 40

(persons)

Development of “human resources that can perform overseas” with a focus on young employees

Increasing the ratio of employees in Japan who have experience of overseas posting, and having them play an active role leveraging their overseas experience after they return to Japan


No. of short-term trainees

No. of long-term trainees

2006 0 42007 2 02008 1 42009 0 32010 7 22011 8 42012 12 142013 12 02014 5 02015 0 3Total 47 34

No. of trainees

2013 22014 32015 2Total 7

(persons)

◆ Number of short-term/long-term trainees accepted from SUNSCO and SUNSCO Hanoi of Vietnam in Japan

◆ Number of engineering trainees accepted from MAC USA

*Training period is about two months.

(persons)

MAC trainees (Nagoya Plant)

◆8 short-term trainees from ISTW of Indonesia were accepted in October 2015

ISTW trainees (Nagoya Plant)

ISTW trainees (Nagoya Plant)

Developing human resources that can perform overseas and enhancing local human resources

Development of “human resources that can perform overseas” with a focus on young employees

Employing local human resources


・Continuation of the dividend policy of setting 50% of expected net income (*) in the nonconsolidated statements of income as annual dividend*Expected net income calculated as “nonconsolidated ordinary income x (1-effective corporate tax rate) x 50%)”, with an estimated effective corporate tax rate for FY2017 of 30.7%・Maintaining the minimum annual dividend at ¥50 per share

High profitability and a policy that prioritizes shareholders

(Figures in the parenthesis indicate dividend per share in yen.) (Millions of yen)

Interim dividendYear-end dividendAnnual dividend

(25.00) (46.50) (71.50)2,118 3,940 6,058 ― 12,926 46.9% 46.9% 3.9%

500,000 shares5,930 11,566 17,496 763 34,975 50.0% 52.2% 5.0%

(25.00) (52.00) (77.00) 2,000,000 shares2,094 4,303 6,396 6,491 5,050 126.7% 255.2% 4.7%

(25.00) (51.00) (76.00)2,069 4,220 6,289 12,700 49.5% 49.5% 6.6%

ＲＯＥ(consolidated)

Share buybacksNumber of shares/price

Net income Dividend payout ratio

Total return ratio

FY2017 forecasts

FY2015

FY2013 to FY2015 3-year total

FY2016

(Reference) Status of dividend paid

Maintaining a high dividend payout ratio

・Maintaining high profitability Achieving shareholder return ratio of 70% or over (as a three-year average)

・Active share buybacks ROE of 6.5% or above

39

Updated

・ Buy-back of one million shares in July 2015 and a further million shares in January 2016


Initiatives for FY2015 Support for NPO Asia Prevention of Blindness Association Sponsoring Osaka Philharmonic Association Sponsoring the 67th Shōsōin Exhibition Support for “iPS Cell Research Fund” at the Center for iPS Cell Research and Application, Kyoto University

Support world-class research into iPS cells which can establish the causes of disease and contribute to development of safe drugs, and also have potential applications in the promising field of regenerative medicine.

Sponsoring the “Theater of the Heart” activities of Shiki Theatre CompanySupported “Theater of the Heart” program that provides free tickets to elementary schoolchildren throughout Japan to inspire children to express their dearest thoughts and emotions through the medium of the stage.

40

Culture Education Sports Environmental protection

Social contribution

Returning a fixed amount of revenue to society as a sustainable corporate group that grows and develops together with society

Providing approximately 0.5% of nonconsolidated net income after payment of dividends

Updated


2,260

2,935

3,660

3,300

2,110 1,896

2,055 1,932

2,215

2,669 2,846

2,700

3,085

11,669

17,060 17,288

12,526

8,110

11,090 9,755

10,084

12,398

14,828

19,207

17,388

16,759

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Mar.2005

Mar.2006

Mar.2007

Mar.2008

Mar.2009

Mar.2010

Mar.2011

Mar.2012

Mar.2013

Mar.2014

Mar.2015

Sep.2015

Mar.2016

(Reference) Change in the Stock Prices(based on the closing price of the month)

Sto

ckp

riceo

fM

aru

ichi

Ste

el

Tu

be

(Yen)

Nikkei Stock Average

Stock price of Maruichi Steel Tube

Nik

ke

iS

toc

kA

vera

ge


30,446 29,905 29,443 27,778 28,616 27,767 27,366

24,835 24,310 26,654 25,316 23,964 23,547 22,439

12,262 12,955 12,843

15,420 17,458 18,727 19,479

19,378 19,256 16,285 16,215 14,697 14,688 13,461

7,079 7,574 8,775 9,271 9,265 9,271 11,255

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar. 2010 Mar. 2011 Mar. 2012 Mar. 2013 Mar. 2014 Mar. 2015 Mar. 2016

Trading unit of share was lowered to 100 shares in October 2005.In April 2008, 4,260,000 shares of the treasury stocks were canceled.

(Figures on the bars indicate the number of shares.)(Unit: thousand of shares)

Treasury stock

Individuals andothers

Foreign investors

Financialinstitutions

Domesticcorporations

10,796

Number ofShareholders(persons) 10,3739,481 11,015

32.4% 31.8% 31.3 % 29.6% 30.4%

26.4% 25.8% 28.4%26.9% 25.5%

13.1% 13.8% 13.7% 16.4% 18.6%

20.6% 20.5% 17.3% 17.2% 15.6%

7.5% 8.1% 9.3% 9.9% 9.9% 9.9%

15.6%

19.9%

25.1%

29.5%

11,942

42

12.0%

14.3%

20.7%

23.9%

29.1%

10,3069,364

(Reference) Change in Shareholder Distribution



1. Growth strategy

1) Maintaining high profit ratio in domestic operations and overhauling and streamlining facilities at domestic plants

Major issues Major initiatives Related page

i) Moving ahead with overhauls of domestic facilities and increasing production efficiency

ii) Restructuring and streamlining domestic production framework and properly allocating human resources

iii) Further strengthening the manufacturing and sales framework for the purpose of maintaining domestic competitiveness

a) Replacing facilities at domestic plants:3-year total investment: ¥15.0 billion (including affiliated plants)

b) Consolidating Osaka Plant into Sakai Plant

c) Further focusing efforts on recruitment and human resources education

P. 32

P. 33

P. 36

2) Bolstering profitability by utilizing overseas investments to dateMajor issues Major initiatives Related

page

i) Increasing profitability through full operation of new facilities at SUNSCO/Leavittand reinforcing sales capabilities

a) SUNSCO (HCM): Expanding sales of 16-inch, two small-diameter tube lines, CGL and CCL products by strengthening sales capabilities in Vietnam, selling API products to the U.S. and other regions, and improving export profits

b) Leavitt: Stably operating facilities, strengthening sales capabilities for API/ASTMA53B and products for automobiles and other users

43


2) Bolstering profitability by utilizing overseas investments to date


ii) Expanding sales on the U.S. West Coast

iii) Continuing necessary investment in automobile and motorcycle related business, and strengthening trading with Japanese manufacturers in various regions

iv) Tackling new business in non-automobile related fields

v) Focusing efforts on development of “human resources that can perform overseas” and “enhancing local human resources”

a) MAC: Streamlining production through investment in overhauling facilities and expanding sales by strengthening sales capabilities

b) Strengthening sales in the northwest of the U.S. and the west of Canada with MOST as the base

a) Mexico: Actively responding to the shift of production by various automobile companies and expanding transactions with European and the U.S. companies

b) India: Expanding sales and strengthening profitability through utilization of the new Bangalore Plant in India

c) Ensuring profitability by further increase of competitiveness in China (MMP), Vietnam, Indonesia, and the U.S. (Leavitt)

d) Considering expansion into new regions and new areas in the automobile field

a) Strengthening response for users in various regions including Japanese companies that are expanding into the regions

a) Continuing development of “human resources that can perform overseas” with a focus on young employees

b) Employing local human resources. Increasing the ratio of employees in Japan who have experience of overseas posting, and having them play an active role leveraging their overseas experience after they return to Japan

P. 34

P. 34

P. 35

P.37.38


44



i) Maintaining a high dividend payout ratio

ii) High profitability and a policy that prioritizes shareholders

a) Continuing dividend policy of “nonconsolidated ordinary income x (1-effective corporate tax rate) x 50%)”Returning the effect of the decrease in the effective corporate tax rate as dividendsRaising the minimum dividend from the current ¥30 per share to ¥50 per share

b) Raising shareholder return ratio (70% and over) and ROE (6.5% and over) by implementing share buyback

P. 39

2. Shareholder-focused capital policy

3. Social contribution

Major initiatives Related page

a) Providing approximately 0.5% of nonconsolidated net income after payment of dividends for cultural, educational, sports, environmental protection and other activities in local communities in Japan and overseas

P. 40


Maintaining a high dividend payout ratio and raising shareholder return ratio and ROE

Returning a fixed amount of revenue to society as a sustainable corporate group that grows and develops together with society

45


(Reference) Overview and Trends in Business Performance of Overseas Group Companies

46


Trends in business performance (including Hanoi) (Millions of US$)

Net salesOperatingincome

161 (3)

205 2

256 (2)

196 5

December 2016 Forecasts 236 13

277 54th Medium-Term Management Plan (December 2017) Targets

December 2015 Results

December 2014

December 2012

December 2013

Company name:

Maruichi Sun Steel Joint Stock Company(SUNSCO)

Founded: June 1996 (Capital participation in 2006)

Location: Ho Chi Minh and Hanoi, Vietnam

Capital: US$130 million

Shareholder distribution:

Maruichi Steel Tube 72.53%Toyota Tsusho 9.73%JFE Steel 8.00%Taiwanese shareholders 9.74%

Employees: 514

Production results:

233,600mt/year

47

Announced in May 2016


Company name:

Maruichi Leavitt Pipe & Tube, LLC (Leavitt)

Founded: 1956 (Capital participation in 2008)

Location: Chicago, Illinois

Capital: US$25,225 thousand


MKK USA. INC 74.71%

Sumitomo Corporation of America25.29%

Employees: 133

Production results:

116,000mt/year

48


Trends in business performance (Millions of US$)


107 (1)

113 1

130 (5)

94 (11)

92 4

150 14th Medium-Term Management Plan (December 2017) Targets


December 2014

December 2012

December 2013

December 2016 Forecasts




69 3

66 2

62 3

60 0

56 2

70 54th Medium-Term Management Plan(as of December 2017) Targets

December 2014


December 2012

December 2013


Company name:

Maruichi American Corporation(MAC)

Founded: December 1978

Location: California

Capital: US$7.5 million


Maruichi Steel Tube 53.00%

Metal One Corporation 30.00%

Maruichi Kohan 8.00%The Bank of Tokyo-MitsubishiUFJ, Ltd. 5.00%Sumitomo Mitsui BankingCorporation 4.00%

Employees: 68

Productionresults:

65,500mt/year

49



Company name:

Maruichi Oregon Steel Tube, LLC(MOST)

Founded: 2015

Location: Portland, Oregon

Capital: US$55 million (equivalent)


MKK USA 100%

Employees: 53

Production volume

40,300mt/year



35 0

35 2

74 3


4th Medium-Term Management Plan(December 2017) Targets


50



(Millions of US$)


1 (1)

12 1

15 3

19 3

30 44th Medium-Term Management Plan(December 2017) Targets

Trends in business performance

December 2013

December 2014



Companyname:

MARUICHIMEX S.A. de C.V. (Maruichimex)

Founded: January 2012

Location: Aguascalientes, Mexico

Capital: US$20.80 million (equivalent)

Shareholderdistribution:

MAC 30.00%

MKK USA 30.00%

Marubeni-ItochuSteel Group 20.00%Toyota Tsusho 20.00%

Employees: 44

Production results:

7,700mt/year

51

Announced In May 2016


(Millions of US$)


30 4

31 3

34 2

35 2

39 2

44 34th Medium-Term Management Plan (March2018) Targets

March 2016 Results

Trends in business performance

March 2015

March 2014

March 2013

March 2017 Forecasts

Company name:

Maruichi KUMA Steel Tube Private Limited(KUMA)

Founded: November 2003 (Capital participation in 2009)

Location: Manesar, Gurgaon, Haryana, and Bangalore, India

Capital: INR89 million (equivalent)Shareholder distribution:

Maruichi Steel Tube 70.00%Toyota Tsusho 30.00%

Employees: 78

Production results:

16,100 mt/year

52


Bangalore Plant


Company name:

Maruichi Metal Product (Foshan) Co., Ltd. (MMP)

Founded: April 2005

Location: Foshan, Guangdong

Capital: US$18 million (equivalent)



LARGE CROWN LIMITED 35.00%

Chung Mao Trading 15.00%

Toyota Tsusho 10.00%


Employees: 236

Maruichi Metal Product (Foshan) Co., Ltd.

Wuhan Branch

Maruichi Metal Product (Tianjin) Co., Ltd.53


Company name: PT. Indonesia Steel Tube (ISTW)

Founded: December 1972

Location: Jakarta

Capital: US$4.35 million (equivalent)




Local 20.00%

Employees: 614

Cikarang Plant in eastern Jakarta(Completion in August 2013) Semarang Plant

Jakarta Plant

54


(Reference) Features of the Maruichi Group

55


• As a leading steel tube company, our mission is to contribute to society by providing outstanding products and responding to the trust of customers.

• We respect all stakeholders, including shareholders, business partners, employees and local communities.

• We promote the creation of energy for growth and new values for the future by enhancing product reliability, technological capability, and sales capability by means of the wisdom, passion and action of each employee.

• We will continue being an outstanding company filled with dreams that all of our employees feel worthy of entrusting their lives to.

1. Management Philosophy

56


2. Domestic Production and Sales System

57

Head Office

Office and Sales Office

Plant

Warehouse and Pipe Center

Maruichi Group Companies

Maruichi Steel Tube Ltd. Head OfficeMaruichi Kohan Ltd. Head Office

Ginowan Pipe Center

Okinawa Maruichi Ltd.

Hokkaido Maruichi Steel Tube Ltd.

Kyushu Maruichi Steel Tube Ltd.

Shikoku Maruichi Steel Tube Ltd.

Kasuga Industry Ltd.

Alpha Metal Co., Ltd.

Sapporo Office

Tokyo Plant

Maruichi Kohan Tokyo Sales Office

Nagoya Plant

Sakai PlantSakai Pole PlantOsaka Pole Marketing Department

Tokyo OfficeTokyo Pole Marketing Department

Maruichi Kohan Sendai Sales Office

Maruichi Kohan Kitakami Sales OfficeMaruichi Kohan Niigata Sales Office

Maruichi Kohan Kitakanto Sales Office

Maruichi Kohan Yokohama Sales Office

Maruichi Kohan Hamamatsu Sales Office

Maruichi Kohan Hokuriku Sales Office

Nagoya OfficeMaruichi Kohan Okayama Sales Office

Takuma Plant

Hiroshima Office

Fukuoka Office

Maruichi Kohan Fukuoka Sales Office

Maruichi Kohan Shikoku Sales Office

Maruichi Steel Tube Osaka OfficeMaruichi Kohan Osaka Sales Office

Nankou Pipe Center

Nagasu Pipe Center

Shikoku Tube Tachibana Maruichi Steel Plant

Ichikawa Warehouse

Kashima Pole Plant

Maruichi Steel Tube Kitakami Processing Center

Maruichi Kohan Nagoya Sales Office


3. Overseas Production Facilities

MAC(the U.S)

Leavitt(the U.S)

ISTW Semarang Plant

(Indonesia)

MMP (Foshan)(China)

ISTW Jakarta Plant(Indonesia)

SUNSCO(Vietnam)

KUMA (India)Manesar Plant

SUNSCO (Hanoi)(Vietnam)

Asia Americas

MMP (Tianjin)(China)

J-Spiral(Vietnam)

MMP (Foshan)Wuhan Branch (China)

Maruichimex(Mexico)

ISTW Cikarang Plant(Indonesia)

Alphamex(Mexico)

MOST(the U.S)

KUMA (India)Bangalore Plant

58


Production Where Demand Exists

Maruichi Steel Tube operates 12 plants, including affiliated companies, which

cover the areas from Hokkaido to Kyushu. Such wide-coverage plant operation

significantly contributes to the improvement of service to users, as well as the

reduction of distribution cost.

Variety of Products

Maruichi Steel Tube provides a variety of products to meet the diverse needs of

users.

Material Manufacturing and Processing

Steel strips of optimum quality processed at the Takuma Plant are used at each

plant of the Maruichi Group.

Independent Management

Maruichi Steel Tube’s management is independent of any affiliation and not

subject to restrictions regarding suppliers and customers. Maruichi Steel Tube

therefore is able to constantly conduct business operations in pursuit of

maximum profit.

Sound Financial Structure

The sound financial structure serves as the strong backbone of Maruichi Steel

Tube.

Dedicated to Tube Manufacturing

Maruichi Steel Tube is dedicated to steel tube manufacturing and related

businesses.

Adoption of Proprietary Sales System

Maruichi Steel Tube sells products through two channels: general trading

companies and Maruichi Kohan Ltd. Maruichi Kohan has its own warehouse

and also stocks and sells products. Under this system, Maruichi Steel Tube can

clearly grasp customer needs, demand trends and price trends, thus enabling

the company to devise management strategies that are sensitive to the market

at all times.

Business Development in the Pacific Rim

It has become easier to grasp market conditions, such as supply and demand

trends of hot coils and products.

4. Features

59

Independent Management

Material Manufacturing

and Processing

Adoption of Proprietary

Sales System

Business Development in the Pacific

Rim

Sound Financial Structure

Production Where Demand Exists

Dedicatedto Tube

ManufacturingVariety of Products


１９２６ Maruichi Production founded as a bicycle parts manufacturer.

１９３５ Started manufacturing bicycle steel pipes.

１９４０ Changed company name to Maruichi Steel Tube Works.

１９４７ Established Maruichi Steel Tube Ltd.

１９５６ Reorganized Osaka Office and established Maruichi Kohan Ltd.

１９５７ Newly constructed Osaka Plant.

１９５８ Established Tokyo Office.Imported electric tube welding system manufactured byAbby Etona Co. of the U.S., and shifted to an electricresistance welded tube manufacturer.

１９６０ Changed the trade name to Maruichi Steel Tube Ltd.Established Nagoya Office.

１９６１ Newly constructed Tokyo Plant.

１９６２ Listed on the Second Sections of the Tokyo StockExchange and the Osaka Securities Exchange.

１９６４ Listed on the First Sections of the Tokyo StockExchange and the Osaka Securities Exchange.Established the Fukuoka Office.

１９６５ Newly constructed Sakai Plant.

１９６６ Newly constructed Nagoya Plant (integrated into currentNagoya Plant in 1984).Established Hiroshima Office.

１９７０ Established Hokkaido Maruichi Steel Tube Ltd.Established Sapporo Office.

１９７１ Established ISTW in Indonesia.

１９７２ Newly established Pole Plant.

Established Osaka Office.

１９７３ Newly constructed Tokyo No. 2 Plant.

１９７４ Established Shikoku Maruichi Steel Tube Ltd.

Established Kyushu Maruichi Steel Tube Ltd.

１９７７ Newly constructed Nagoya Second Plant (current Nagoya Plant).

Relocated the head office to the present location atatKitahorie, Nishi-ku, Osaka.Established MAC in the U.S.

１９８９ Newly constructed Takuma Plant.

１９７８

１９９５ Newly constructed Kashima Pole Plant.

１９９８

２０００Completed construction of the new Hiroshima Officeand warehouse.

２００２ Constructed the new warehouse in Tokyo No. 2 Plant.

２００３Expanded the distribution warehouse and processingplant within Nagoya Plant.

２００５ Took over the lighting pole business of JFE Steel Pipe Co., Ltd.

２００６ Completed the cutting-to-size warehouse building in Nagoya Plant.Started operation of MMP in China.Invested in Toyo Superior Steel Tube Works.Invested in SUNSCO of Vietnam.

２００８ Converted SUNSCO and Leavitt into consolidated subsidiaries.Completed renovation of Sakai Plant.

２００９ Converted KUMA of India into a subsidiary.Started operation of Sakai Production Facility of SeikeiSteel Pipe Corporation.

２０１０ Converted Alpha Metal into a consolidated subsidiary.Started operation of SUNSCO Hanoi.Invested in J-Spiral Steel Pipe Co., Ltd. in Vietnam.

２０１１ Started operation of MMP Tianjin in China.Newly constructed the stainless steel tube factory atTokyo No. 2 Plant.Newly constructed the No. 2 factory at Sakai Pole Plant.

２０１２ Newly established Wuhan Branch for MMP in China.Newly constructed the No. 3 factory at Tokyo No. 2 Plant.Established Maruichimex in Mexico.

Started operation of the mega solar power facility in theTakuma Plant.Started operation of the second CGL/CCL of SUNSCO.

Completed consolidation of Tokyo Plant.Converted Maruichimex into a consolidated subsidiary.

２０１５ Converted MOST into a consolidated subsidiary.

２０１６ Completed consolidation of Osaka Plant.

２０１３

２０１４

Integrated Sapporo Plant of Hokkaido Maruichi SteelTube Ltd. into Tomakomai Plant.

5. History

60


1. We are intent on continuing pursuing shareholder-focused

management and making constant efforts to maximize shareholder

value in the future. Also, we will grow and develop into a corporate

organization that can be considered globally as number one in the

world in terms of both quality and quantity in the steel pipe industry.

2. This fiscal year is the second year of the fourth medium-term

management plan. The Group will make concerted efforts with a

view to achieving strong growth in Japan and abroad by flexibly

coping in a timely manner with a domestic and overseas business

environment that is constantly changing substantially.

Direction of the Maruichi Steel Tube Group

61


DisclaimerPlans and forward-looking statements herein are based on the Company’s judgment drawn from currently available information. Please note that actual results may differ significantly from such plans and forward-looking statements due to various important factors.

62

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