Reflection on the Year 2025

At the start of the New Year, I would like to extend my New Year's greetings to all employees of the JFE Shoji Corporation Group in Japan and around the world.

Let me begin with a review of last year.

Although we started the fiscal year 2013 with a target of 50 billion yen in ordinary income in our initial plan, the business environment in steel continued to be challenging due to global uncertainties. The widening supply-demand gap resulting from stagnant domestic demand in China and the resulting marked increase in steel exports from China to other countries have been factors in the global steel market slump.

The impact of trade measures in various countries triggered by the tariff policy of the United States and other factors have slowed global growth, and protectionism is accelerating in many countries. Despite the severe business environment for trading companies, with "sluggish demand" and "trade barriers," we are able to secure the latest forecast of 45 billion yen, thanks to the efforts of all the employees of the JFE Shoji Corporation Group. Once again, I would like to express my sincere gratitude to all the employees of the JFE Shoji Group.

The Environment in 2026

The year 2026 will be a year in which the pace of change will further accelerate. In Japan, while progress is being made toward carbon neutrality, structural issues such as a declining population and labor shortage are becoming more serious. As a result, domestic steel demand is expected to continue to decline, and domestic steel consumption (domestic demand) is projected to fall below 50 million tones.

Although there are positive factors in the global economy, such as firm demand in the U.S. and growth in India, the environment remains uncertain due to global fragmentation caused by protectionist policies in various countries and geopolitical risks, requiring flexible responses on a region-by-region basis. In addition, the reorganization of the global supply chain based on U.S. tariffs is expected to progress gradually, and we need to rebuild our supply chain accordingly.

The 8th Mid-term Business Plan has started this fiscal year, and there are no major changes in our approach policy. Our key strategies of renewing our management foundation, increasing our presence in the domestic market, and expanding our business in overseas markets are in response to the current environment, and we believe it is important to move forward with these strategies ahead of schedule. I hope that you will see the rapidly changing environment as rather an opportunity to engage in lively discussions in your respective departments, sometimes transcending organizational boundaries, and take on the challenges of the mid-term plan.

Safety and Quality and Compliance

Next, I would like to talk about "safety and quality. Last year, unfortunately, the number of accidents increased both in Japan and overseas. There were many instances where work was performed without clarifying compliance requirements. In order to prevent recurrence, please work on "enhancement of work standards" and "thorough safety confirmation before work". Safety and quality are our top priorities. Aiming for zero accidents, we will ensure the quality and product quality required by our customers by adhering to the correct work procedures as determined by the company.
quality and products required by customers.

Next is compliance. Our business activities are based on the trust of society. In order to earn that trust
In order to earn that trust, compliance is a top priority in all of our operations. Our group does not require any unfair profits from violations of rules, and I would like everyone to be aware of and practice compliance in their daily work.

Response to Important Issues

We will also continue our efforts to address climate change issues and contribute to the realization of a recycling-oriented society. As part of our efforts to address climate change issues, we aim to reduce domestic CO2 emissions by 27.5% in FY27 compared to 2019 through the use of renewable energy electricity at our domestic operating companies. As indirect contributions, we will focus on expanding our handling of environmental commercial materials such as Metal Recycling, waste tires, and biomass, as well as increasing our handling of electromagnetic steel sheets and automotive steel products in terms of energy efficiency, and we will work to address environmental issues as our responsibility.

We will also promote human capital management initiatives. In terms of diversity equity and inclusion (DEI), we will promote career development with the goal of increasing the ratio of female managers to more than 20% by 2030, and in terms of human resource development, we will promote new dispatches and rotations overseas. Accepting diverse values means "caring for one's fellow workers". As a result, we will create an environment where each individual can work comfortably, maximize individual performance, and lead to organizational and individual growth.

In Closing

In the 8th Mid-term Business Plan, we have set a target of 100 billion yen in ordinary income in 10 years. To achieve this target, we need to create a corporate culture of "thinking up and implementing new systems. The key words "challenge" and "change" mean to think hard about new things that have never been done before. Thinking and implementing new things requires time and energy. For this reason, this year we would like to take another step forward in streamlining and standardizing our operations. Let each of you take a leading role and compete to change our operations, without being bound by the customs and precedents that have been followed for many years. Naturally, in order to review your operations, you need the understanding of your superiors, including management, and if there are any difficult issues, please proceed by making maximum use of "business process innovation activities" and "J-MUSCLE activities" and the like. Let's make this year the first year of corporate culture reform for JFE Shoji Corporation.

Last but not least, our company is supported by the activities of all of you who work day in and day out at our offices around the world. Our company's mission is "Connecting the world.
Our corporate mission is "Connecting the world with steel. Connecting the world with steel. As stated in our company's corporate mission statement, "Connecting the World with Steel," we, the employees of JFE Shoji Corporation, are all connected.

I would like to conclude my New Year's greeting by wishing all employees and their families a healthy and fruitful year in 2026.