2013 New Year’s Message from Hiroshi Tomono, President & COO

Jun. 04, 2013

Nippon Steel and Sumitomo Metal Corporation

2013 New Year’s Message from Hiroshi Tomono, President & COO

Three months have passed since NSSMC has started following integration of the two companies, and we are celebrating our first new year as NSSMC. In this sense it must be a special new year for everyone.

Starting from October 1, 2012, we have been working as a single team created from the two companies. You might have felt some unease about working with new colleagues or building new relationships, especially at the Tokyo Head Office, Osaka Office and other branches where the entities have been merged on Day 1. During these three months, with Mr. Muneoka, our Chairman & CEO, I have visited many of our manufacturing sites including steelworks and talked with some of you at the head office in Tokyo, other offices and branches. I was impressed with the enthusiasm and energy at every place I visited. I strongly feel that we have made a good start as a new company, and I have become more convinced that this new company will be an excellent one.

Thank you for making your best efforts at overcoming such initial challenges and making the new company move forward.

Regarding the current business environment and issues we should tackle, I will talk about two things today.

First is our performance for this fiscal year ending March 31. We need to make every effort to improve our bottom line. The current business environment is extremely severe with weak demand for steel. While I expect our sales forces to strive hard to sell more, we must seek to be more efficient especially at our manufacturing sites. Putting emphasis on safety and stable operation, please make every effort to reduce costs. I would like to ask our corporate/administrative section to support such efforts. Also, please endeavor to improve cash flow by controlling and reducing inventories and taking other suitable measures.

We have to anticipate frequent and drastic change in our business environment. I would like to ask every one of you to have closer communication with related sections and endeavor to fully realize synergies of integration and make every effort to improve our profitability.

Second is our mid-term business plan, which we will draw up and start to carry out this year. We did not integrate merely to survive over the next two or three years. We have integrated to generate profits for the long term, become a leading company in the global steel industry, and contribute to society. In this sense, you should also take a long-term standpoint in all occasions. Imagine how the company or your job would look like 10 or 20 years from now, and then think about what needs to be done in a shorter time span of three years, two years, or a year from now, and do it.

NSSMC, as a manufacturing company, will keep providing excellent products which satisfy needs of customers and society with unbeaten cost and quality. I believe this is the only way for us to become the most profitable “Best Steelmaker with World-Leading Capabilities.” Our upcoming mid-term business plan will include challenging targets which can be attained only when we work hard with courage, conviction, and passion. Remember that we now have more strategic options thanks to the integration. Let’s take the current severe business environment as a chance to become stronger and more competitive. Let’s move forward to achieve sustainable growth. Four principles of action that I would like you to keep in mind are: 1) ”customer first,” 2) “get the facts at the front line,” 3) ”act to change,” and 4) ”ensure safety, health, and compliance” which I mentioned on October 1 last year.

Regarding our labor union, I appreciate that the employee associations of both former companies have merged within a month after the integration. A healthy and cooperative relationship between management and union is essential to achieve sustainable growth under the current severe business environment. I would like to ask for your continued understanding and support.

Our group, which includes the five businesses of steel, engineering, chemicals, new materials, and system solutions, as well as supporting and subsidiaries companies, will realize synergies and contribute to society with manufacturing capabilities. In a year from now, I dream that all employees of NSSMC Group and all people supporting our group would be satisfied with their good work, and say to each other that the integration has been the best thing for us all.

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