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Company Overview and Competitive Position

• Chubu Steel Plate is a Japanese electric arc furnace (EAF) thick plate manufacturer founded in 1950, with ~500 consolidated employees, dual-listed on the Tokyo Stock Exchange Prime Market and Nagoya Stock Exchange Premier Market. It achieved 75 years of operation in 2025.
• The company runs a circular economy business model that recycles domestic iron scrap into thick steel plate. It has the No.1 operating profit margin among listed Japanese common steel EAF manufacturers for two consecutive years (2022 and 2023 fiscal years).
• Core competitive advantages:
  • Favourable location: It is the only thick plate mill in central Japan, within 300km of Japan's 3 major metropolitan areas, lowering logistics costs for both product delivery and iron scrap procurement.
  • EAF thick plate specialization: 70+ years of exclusive expertise enables high quality matching blast furnace (BF) standards, with differentiated products including laser-cutting steel plates and high-tensile steel plates that command high added value.
  • Reliable fast delivery: The company guarantees next-month shipment after receiving orders, a capability that is rare in the industry and highly valued by customers.
  • Low carbon footprint: Its EAF production generates only 1/5 of the CO2 emissions of BF production (2023 fiscal result), aligning with decarbonization trends.

Strategic Focus (2024-2026 Mid-Term Management Plan)

• Core targets: Reach 800,000 tons of annual steel product sales, 15 billion yen in consolidated ordinary profit, and a target market capitalization of 100 billion yen, leveraging the supply gap created by BF manufacturers' production consolidation and rising decarbonization demand.
• Growth initiatives:
  • Expand sales in the building materials sector, where growing decarbonization demand among general contractors is driving increased adoption of low-emission EAF steel. A dedicated building materials sales team was established, and EcoLeaf environmental certification was obtained to support expansion.
  • Leverage the business alliance with Nakayama Steel Works to supply semi-finished slab, increasing sales volume after the new EAF is fully operational.
  • Expand production capacity: Invest in downstream capacity expansion alongside the new high-efficiency EAF completed in October 2024, targeting a total production capacity of 1 million tons by approximately 2030.
• Decarbonization initiatives:
  • The new completed EAF is a high-efficiency environmentally friendly model that recycles waste heat to preheat scrap, reducing electricity consumption and lowering noise and dust emissions.
  • Added off-site corporate power purchase agreement (PPA) for renewable energy in 2024 fiscal year, alongside existing on-site rooftop solar power, to further cut scope 2 emissions.
• Human capital strategy: Launched a new personnel system in April 2024 to raise base pay for young and senior employees, clarify evaluation standards, and improve employee engagement to support long-term growth.

2025 March Fiscal Year Full-Year Performance

• Full-year results are expected to be a significant year-on-year decrease in revenue and profit, driven by two main factors: 1) Soft demand from core end markets (weak overseas performance in the industrial/construction machinery sector, project delays in construction due to chronic labor shortages); 2) Production outages from EAF modernization construction, followed by an unplanned molten steel leakage accident in January 2025 that halted production in Q4.
• As of the IR seminar, the rolling mill resumed operation on March 17, and full steelmaking production resumption is targeted for the end of March 2025. No human injuries were reported from the accident.
• Shareholder return policy changed to target a 3.5% dividend on equity (DOE) as a base, replacing the previous payout ratio system to deliver more stable dividends. The 2024 fiscal year annual dividend is set at 101 yen per share, an increase year-on-year despite the downward earnings revision. Additional returns via share buybacks will be considered in high-profit periods.

• The 2025 March fiscal year full-year guidance is a significant downward revision, with large expected declines in revenue and profit compared to the prior year, driven by demand softness and production disruptions from the January 2025 accident.
• For the 2024-2026 mid-term plan, management maintains its target of 800,000 tons of annual sales, 15 billion yen in consolidated ordinary profit, and 100 billion yen in market capitalization, with production capacity expansion on track to reach 1 million tons by around 2030.
• Management expects steady demand for industrial machinery and construction thick plate, supported by Japan's national land resilience plan, and expects to capture growing market share from the supply gap created by BF manufacturers' production consolidation and rising decarbonization demand for low-emission EAF steel.

Chubu Steel Plate operates 4 business segments:

1. Iron and Steel Related Business: The core majority segment, accounting for over 90% of total consolidated revenue, consisting of Chubu Steel Plate (厚板 manufacturing) and CK Shoji (trading functions).
2. Rental Business: Operated by CK Clean Ad, it rents grease filters for restaurant kitchen exhaust ducts and provides advertising sign production services.
3. Logistics Business: Operated by CK Logistics, it handles loading/transportation of the company's products and runs a high-margin, stable hazardous material warehouse business for storing lithium-ion batteries and other dangerous goods.
4. Engineering Business: Operated by Meitoku Sangyo, it provides design, manufacturing, and maintenance of production equipment for external clients including other steel manufacturers.

All 4 non-core consolidated subsidiaries collectively generate approximately 0.6 billion yen in annual ordinary profit, supporting the group's overall earnings.

• A molten steel leakage accident combined with a steam explosion occurred at the newly completed EAF in January 2025, causing major production disruption for the 2025 March fiscal year. The accident was caused by the combination of water leakage from a water-cooled facility and accumulated water in an underground pit. Root-cause modifications (replacing water-cooled equipment with non-water-cooled designs and improving pit drainage to prevent water accumulation) have been completed ahead of production resumption.
• Domestic steel demand is expected to remain flat or decline long-term due to Japan's shrinking population, creating industry-wide pressure.
• Intense price competition exists in non-thick plate steel product segments among EAF manufacturers, though this does not materially impact the company's core thick plate market.
• Intensifying competition for talent due to Japan's shrinking working age population creates human resource acquisition and retention challenges.

Q: What are the most impactful differentiators that set your company apart from competing EAF manufacturers? / A: The top differentiator is our central Japan location, which cuts both outbound logistics costs for product delivery and inbound procurement costs for iron scrap, because scrap suppliers prefer to deliver to nearby mills to save on transport. We also have 70+ years of exclusive thick plate manufacturing experience unmatched by any other EAF manufacturer, earning strong customer trust for quality. Finally, we have a strict next-month shipment policy, a rare, highly valued capability in the long-lead, uncertain steel industry that has become a core competitive strength.

Q: How will you increase production capacity to hit your mid-term sales and profit targets, and which sales channels will you prioritize? / A: We are actively implementing capacity expansion investments: we completed our new EAF in October 2024, and are now expanding downstream production capacity and increasing headcount to build out a full 1 million ton annual production capacity. For sales growth, we are prioritizing the building materials segment, where we still have low market share and significant room to grow, supported by rising industry demand for low-CO2 EAF steel driven by general contractor decarbonization efforts. Our alliance with Nakayama Steel Works will also contribute: we will supply them with semi-finished slab, which will directly increase our sales volume once our production constraints from the EAF upgrade are removed.

Q: How would you describe the current competitive environment and price competition in your core thick plate market? / A: Recent BF price increases have benefited us, as they improve our relative price competitiveness vs BF products. Competition among EAF manufacturers is very intense in non-thick product segments, but the thick plate market has very few competing players, so competition is moderate, with clear market segmentation. While occasional price cuts occur, most often due to overseas competition, they have little material impact on our business. We also produce unique products other EAF manufacturers do not offer, so we do not need to match competitor price cuts for these differentiated lines.

Q: What is the background for your recent shareholder return policy enhancements? / A: We view decarbonization as a major growth tailwind for our low-emission EAF business, and we see both growth investment and shareholder returns as two equally important pillars to drive corporate value growth. We adjusted our capital structure and return policy to align with this strategic view, adopting a stable 3.5% DOE base dividend policy with additional share buybacks for strong profit years.