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Company Overview & Core Business

• Mitsubishi Steel is a special steel manufacturer with integrated production from raw special steel to finished spring products, with roots dating back over 120 years as Japan's oldest spring manufacturer.
• The company has 4 domestic production bases (Muroran, Hokkaido; Ichihara, Chiba; Aizuwakamatsu, Fukushima; Nagasaki, Nagasaki) and a global production network covering North America and Asia, with approximately 3,800 consolidated employees.
• Domestic special steel production at Muroran uses a blast furnace process (lower impurities, higher quality than competing electric furnace production), while the Indonesian overseas production base uses an electric furnace process with scrap as raw material.

2030 Growth Strategy & Mid-Term Management Plan Progress

• The company's 2030 vision is to strengthen cash generation from core businesses (domestic steel, automotive springs) and actively invest in 5 strategic growth businesses and new businesses to achieve sustainable growth.
• The 2023 Mid-Term Management Plan (current fiscal year is the final year) has seen on-schedule progress in strategic business development, with some businesses already contributing to profits, but overall profit is expected to miss the full-year target due to significant profit deterioration in the domestic core steel business driven by temporary issues such as blast furnace troubles.
• ROIC-based management has been introduced to optimize the business portfolio: active capital allocation to high ROIC, high market growth sites; fundamental restructuring or exit for low-profit businesses, including withdrawal from the unprofitable German spring business in 2024.

Strategic Business Progress

• Precision Spring Components: High-function hinges for electronic devices already entered mass production for large projects last year and are contributing significantly to profits; capital expenditure is underway to further expand production capacity.
• Overseas Steel (Indonesia JATIM): Already contributing steadily to profits. Since October last year, 100% of electricity has switched to renewable energy, reducing CO2 emissions by approximately 80%, and obtained Indonesia's first Green Industry Certification for the special steel sector, enabling response to customer decarbonization demand.
• Special Alloy Powder: Used in fast-growing end markets including 3D printing, inductors for communication/control devices, aerospace, and defense. Capacity expansion investment is ongoing, with the first phase scheduled for completion this fiscal year, and full operation starting in mid-next fiscal year after customer approval, when it will begin contributing to profits.
• Commercial Vehicle & Rail Springs: New research facilities have been established to capture growing demand in emerging economies, and an integrated production model for leaf springs from raw material at JATIM has been built; supply of the world's first green leaf spring will be possible once green steel production launches at JATIM.
• Offshore Wind Power Related: The company's large processing capabilities are well-positioned to meet the trend of larger equipment, and has already supplied 8-meter diameter foundation components for the Goto Islands, Nagasaki floating offshore wind project that started operation in January this year. A 4.6 billion yen new factory for Mitsubishi Nagasaki Kiko is under construction, with phase 1 operation scheduled for January next year, to meet growing demand for bulletproof steel plate for defense and future offshore wind demand.

Cash Allocation & Shareholder Returns

• Capital generated from business operations and idle asset sales will be balanced allocated to growth investment, balance sheet improvement, and enhanced shareholder returns to improve corporate value.
• A lower limit for dividend per share has been established to stabilize shareholder returns. Last May, the target payout ratio was raised from 30% to 40%, and the lower dividend limit per share was raised from 64 yen to 80 yen. The policy of prioritizing shareholder returns remains unchanged, with next fiscal year's policy to be announced in the new mid-term plan.

ESG & Human Capital Management

• The 2030 CO2 emission reduction target was raised to 50% reduction from the base year (exceeding the Japanese government's target), and progress is on track to achieve carbon neutrality by 2050.
• Significant wage improvements have been implemented over the past two years, and investment in human capital has been accelerated via expanded training, regular engagement surveys, and town hall meetings to build a high-performance organization.

• The next mid-term management plan will be publicly released in May 2026, which will lay out a clearer growth path toward the 2030 vision, with no change to the core policy of generating cash from core businesses and developing high-growth strategic businesses.
• For the current fiscal year, strategic businesses are expected to outperform their original profit plans, but the overall consolidated profit target will not be achieved due to the impact of the Muroran blast furnace trouble and subsequent fire.
• Defense-related sales are expected to reach 4 billion yen in the current fiscal year, up from 2 billion yen annually in prior years, and are expected to continue growing in coming years.
• Strategic business revenue is expected to grow from the current 6 billion yen scale to 12 billion yen by fiscal 2030.
• Next fiscal year's overall performance is expected to improve compared to the current fiscal year, as the temporary impact of the Muroran blast furnace trouble is resolved and domestic steel operations recover, while all other business segments remain on solid growth trajectories.
• The new factory for machinery and equipment is scheduled to start phase 1 operation in January next year, with initial production focused on defense products before expanding capacity for offshore wind products.

Overall consolidated net sales are approximately 160 billion yen. 1. Special Steel Products: Accounts for approximately 50% of total sales, centered on construction machinery and machine tool applications. It holds the No.1 domestic market share for large-diameter steel products used in construction machinery. 2. Springs: Accounts for approximately 40% of total sales. Over half of spring sales come from automotive applications, and it holds the No.1 global market share for large-diameter springs for construction machinery. 3. Shaped Materials: Small sales scale, produces cast steel products and specialty alloy metal powder. 4. Machinery and Equipment: Accounts for approximately 6% of total sales, covering energy, defense, and environmental products.

• The domestic core steel business has historically had high earnings volatility and sensitivity to macroeconomic conditions, and was heavily impacted by temporary blast furnace trouble and a subsequent fire at the Muroran complex, leading to large negative impacts on current fiscal year profits that are already partially included in current financial statements, with further potential additional impacts pending final assessment.
• Supply restrictions on rare earths from China could impact automotive and construction machinery production, which would indirectly spill over to Mitsubishi Steel's operations and is a key risk to monitor for next fiscal year.
• Indonesian special steel demand is currently depressed, with automotive production falling below earlier growth projections, and demand is not expected to recover in the near term.
• Offshore wind project construction start dates have been pushed back by 1-2 years across the industry, leading to delayed order bookings that were originally expected by this point.
• The company's current share price has a PBR below 1x, which does not meet the eligibility criteria for inclusion in the new TOPIX index that will be assessed in August this year.
• Growth investment carries inherent risk of failure; the company mitigates this via staged investment, multi-scenario profitability testing, and pre-set exit/shrinkage thresholds based on prior experience with the failed German spring business investment.

Q: Is a dividend cut possible for the current fiscal year?

A: The company has no plan to change the 80 yen per share lower dividend limit. The Muroran blast furnace trouble is a temporary issue, and all other businesses are performing well, so the company has decided not to cut the dividend for the current fiscal year. Next fiscal year's dividend policy is under review as part of the next mid-term management plan, with a continued focus on shareholder value.

Q: Is the company considering introducing a DOE (Dividend on Equity) policy?

A: The company is aware of investor demand for DOE introduction, and will broadly review this request as part of the next mid-term management plan, alongside considerations for dividend yield targets.

Q: What is the current scale of the defense business, and what is the growth outlook?

A: Defense-related products are handled across both the machinery and equipment segment and the shaped materials segment. Sales were approximately 2 billion yen annually through two years ago, and are projected to reach 4 billion yen in the current fiscal year backed by Japanese government policy support. Additional orders are already secured for coming years, and sales are expected to continue growing, which supported the decision to build the new Nagasaki factory.

Q: What are the specific use cases for defense-related products?

A: Detailed disclosure is not possible due to confidentiality obligations. The company produces bulletproof steel plate leveraging Mitsubishi Nagasaki Kiko's advanced heat treatment technology, and other products that leverage the company's advanced processing capabilities for shaped materials.

Q: What is the impact of the Muroran complex fire accident on financial performance?

A: A blast furnace trouble occurred in September last year, and after a brief restart, an auxiliary equipment fire in December shut down operations again, which are still halted. Restart is targeted for the end of March this year. The shutdown period has led to very large damage and impact costs; all currently identified costs have already been incorporated into current fiscal year financial results, with any additional costs to be disclosed promptly once finalized. The company is working to minimize costs and restore production and orders for next fiscal year.

Q: What is the impact of the Trump administration's tariff policy?

A: The initial projection was for a 1.5 billion yen impact, but as of now, the impact is almost negligible. Automotive production in Japan has not fallen sharply as feared, and the temporary tariff impact on exports from the US to Canada was resolved via a Canadian government exemption, so there is effectively no material net impact.

Q: What is the timeline for commercialization and profit generation for green products?

A: The timing of full profit generation is still unclear, as customer demand for green steel in the ASEAN region has not yet fully matured, even though the Indonesian operation has already achieved 80% CO2 reduction for its special steel. The current phase is preparation: the company is completing development, certification, and supply chain preparation to be able to launch products including green leaf spring immediately once demand grows, so the company is positioned to respond quickly once market conditions shift.

Q: Are there energy-related products other than offshore wind power?

A: Demand for gas turbine products for thermal power generation has grown rapidly against a backdrop of global power shortages driven by AI adoption and digitalization, and the company's order volume for gas turbine components has grown nearly 10-fold from very low prior levels, making this a high-growth area. The company is also working on tidal power generation components, which is another promising future energy-related product area.

Q: Is offshore wind power still a growing business after the Mitsubishi Corporation withdrawal?

A: Mitsubishi Steel did not include any Mitsubishi Corporation projects in its mid-term plan, so there is no direct impact. While overall project development is slightly delayed, there are many ongoing projects domestically and internationally, and the overall direction of growth driven by decarbonization policy remains unchanged, so the company continues to prepare for future demand growth with the new factory. The new factory will initially launch with defense production before expanding into offshore wind products.

Q: Which businesses will become the future core growth pillars?

A: While the company plans to strengthen all four existing businesses, the two businesses expected to become medium and long-term core growth drivers are the machinery and equipment business, and the spring business centered on precision springs.

Q: How does the company manage the risk of growth investment failure?

A: The company learned from the experience of withdrawing from the German spring business, so it maintains strong risk awareness for all new investments. Risk is controlled via staged investment, profitability testing across multiple scenarios, and pre-establishing exit or downsizing thresholds before committing to full investment.

Q: What is the performance outlook for next fiscal year, including upside and downside factors?

A: The main upside factor is the resolution of the Muroran blast furnace trouble, which will restore domestic steel performance; all other businesses (springs, shaped materials, machinery) are already performing solidly, so overall performance will improve once domestic steel recovers. The key downside risk to monitor is potential spillover impacts from Chinese rare earth supply restrictions on automotive and construction machinery production.

Q: What is the current order status for offshore wind power projects?

A: Project start dates have been pushed back 1 to 2 years both domestically and internationally, so expected orders have not yet been finalized. However, order development activities are progressing steadily, with increasing inquiries and ongoing negotiations, and the company will disclose orders promptly once they are formally finalized.

Q: What is the outlook for steel demand in Indonesia?

A: Near-term demand is expected to remain depressed, as automotive production has fallen below earlier growth projections, due to lower consumer spending. Even so, the company's Indonesian special steel business has continued to grow revenue and profit via strict cost management, pricing adjustments, and sales expansion, and the company is building operational resilience to capture demand when it eventually recovers.

Q: What is management's view of the current share price level?

A: Management views the current share price level (closing price of 1,922 yen on the seminar date) as still too low, and is not satisfied with the current level that leaves PBR below 1x. The company plans to present a clearer, more concrete growth story and profit plan in the May 2026 mid-term management plan to improve investor understanding and expectations, and drive share price appreciation to meet the new TOPIX inclusion criteria.

Q: What is the 2030 revenue target for strategic businesses?

A: Strategic businesses currently generate approximately 6 billion yen in revenue, and the company targets to double this to 12 billion yen by fiscal 2030, which management views as a firm target that will be achieved via steady growth.