Shinsho Corporation May 24, 2010

Long Term Management Vision

‐1 ‐

Accelerate global business

1. Desired Shape of Company After 10 Years-1. Vision and Overall Strategy

Aim to be a global trading company at the core of KOBELCO(Kobe Steel Group)

Aim to be a global trading company at the core of KOBELCO(Kobe Steel Group)

VisionVision

Envisioned a desired shape after 10 years, derived long term management issues for a milestone 5 years in future, and created a long term vision incorporating strategy for issues.

Enhance business foundation

Obtain & develop human resourcesStronger financial baseEnhance management system

Stronger trading company functions

Expand business operations type businessStronger proposal type businessCore trading company of Kobe Steel GroupInitiatives in growth fields

Expand and enhance global locationsUtilize global locations to expand supply of raw materials, materials and machinery, and combined product salesOverseas trading ratio: 50%

Overall Overall StrategyStrategy

‐2‐

1. Desired Shape of Company After 10 Years-2. Numerical Targets

Sales ≥ ¥ 1,350 billion Ordinary income ≥ ¥13 billionEquity ratio: ≥ 20%Sales ≥ ¥ 1,350 billion Ordinary income ≥ ¥13 billionEquity ratio: ≥ 20%

Year 2020Year 2020business targetsbusiness targets

Change in Stockholders’ equity/Equity Ratio

FY08 FY09 FY15target

FY20target

FY07 FY10forecast

FY11target

FY08 FY09 FY15target

FY20target

FY07 FY10forecast

FY11target

50.3 55.7 40.7 43.3 43.1 60 8079.9 83.8 57.9 53 64

90130

212.9 179.3141.1 180.2 197.9

230

310103.4334.9

420

470

273.6

304.1

214.5

290.4234.9

410.7

360

300269.7

237.9

1,350

689.4

1,100

910

805

1,034.3

720.9

4.5

13

9.4

6.9

4.3

6.9

10

0

500

1,000

1,500

15年0

5

10

15Iron & steelRaw materialsNonferrous metalsMachinery/IT

Welding suppliesOrdinary income

∼ ∼ ∼ ∼

¥billion

Change in Sales/Ordinary Income

78

22.127.7

50

19.9 18.823.9

11.7%10.9%

≥ 20%

8.7%8.4%

12.7%

17.8%

0

50

100

0%

4%

8%

12%

16%

20%

24%

∼ ∼ ∼ ∼

¥billion

Stockholders' equityEquity ratio

‐3 ‐

HQ & foreign subsidiariesOverseas officesOverseas investments

(as of April, 2010)

Australia & OceaniaAustralia & Oceania180

120

0

50

100

150

200

FY09 FY20

38

215

050

100150200250

FY09 FY20

ChinaChina

37

105

0

50

100

150

FY09 FY20

North AmericaNorth America

Future location: Future location: BrazilBrazil

IndiaIndia

6

50

0255075

FY09 FY20

357

02550

FY09 FY20

EuropeEurope

230

105

050

100150200250

FY09 FY20

AsiaAsia

3015

02550

FY09 FY20

2. Overall Strategy Towards Achieving Vision -1-1. Accelerate Global Business

TotalTotal

¥billion

New location:New location:Middle EastMiddle East

¥billion

¥billion

328845

0

500

1,000

1,500

FY09 FY20¥billion ¥billion

¥billion

¥billion ¥billion

Graphs are overseas transaction volume (including imports to Japan)

‐4 ‐

2. Overall Strategy Towards Achieving Vision -1-2. Accelerate Global Business

AsiaAsia

Australia & OceaniaAustralia & Oceania

ChinaChina North AmericaNorth America

IndiaIndia

EuropeEurope

Middle EastMiddle East

Strategies by locations

・Expand business with European companies in Middle East and Asia, centering on Shinsho Europe, (Düsseldorf, Germany)

・Develop new business opportunities in Middle East region and Asia centering on machinery and equipment, with Dubai representative office as the basic point

・Develop and reinforce infrastructure of Kobe Steel Group for branching out into India

(Investigation of transforming New Delhi representative office into a local corporation, establishment of offices in Kobe Steel Group’s manufacturing locations such as Chennai)

・Expand locations of Kobelco Trading (Shanghai) ・Expand transactions by expanding and

enhancing locations of wire products processing, steel sheets C.C., aluminum C.C.,tire machinery manufacturing, and welding material manufacturing

・Investigation of entering into thick aluminum plate/information-related processing business

・Expand and enhance business investment type business centering on automotive wire products

・Develop new business in machinery/IT and nonferrous metals units

・Expand raw material business centering on new iron sources

・Expand business in Vietnam and Indonesia (transforming Ho Chi Minh/Jakarta offices into local corporations)

・Stronger partnerships between locations in Thailand, Malaysia, Singapore, Philippines, Indonesia, Taiwan, and Korea

BrazilBrazil

・Expand raw materials business with Shinsho Australia as the basic point(Interest investment in iron ore and coal)

・Location for development of new businesses such as resources and energy

‐5 ‐

2. Overall Strategy Towards Achieving Vision -2-1. Stronger Trading Company Functions

Stronger Stronger proposal type proposal type

businessbusiness

Work closely with customers, accurately understand customer needs, strengthen proposal type business

Take the lead in globalization of Kobe Steel Group and in developing new customers and new needs, become a true group core trading company

Core trading Core trading company of Kobe company of Kobe

Steel GroupSteel Group

Proposal

NeedsIssues

Expand business Expand business operations type operations type

businessbusiness

With agent business as a base, invest in other business as a business partner and become leader of business operations（See the list of P.9）

New energy

Production, facilities & equipment

Environ-mental

productstechnology

IT,electronics

Medical, welfare & education

Construction& disaster prevention

Transport

ShinshoMaterials/machines

engineering business

‐6 ‐

3. Overall Strategy Towards Achieving Vision-2-2. Stronger Trading Company Functions

Initiatives in Initiatives in growth growth fieldsfields

Resources fieldResources fieldStronger partnerships on Kobe Steel projects(ITmk3, obtain rights to mine)Expand commercial rights to various iron & steel raw materialsExpand triangular trade in such areas as new iron source, cold iron source and non-ferrous metal scrapsetc.

IT equipment fieldIT equipment fieldEstablish supply system of semi conductor lead frames and materials for terminal connectors (copper strips) in Asia regionExpand overseas developments of target materials for LCDs and LCDs touch panelsStronger overseas development of aluminum blank materials for HDDs and polishing/inspection devicesExpand and enhance aluminum tubing supply business for photoconductive drums in the locations of Asia regionetc.

Expand initiatives in growth fields with core business as foundation

Resources Resources fieldfield

Energy/ Energy/ environment environment

fieldfield

IT equipment IT equipment fieldfield

‐7 ‐

3. Overall Strategy Towards Achieving Vision -2-3. Stronger Trading Company Functions

Energy/environment fieldEnergy/environment fieldBusiness utilizing steam energy

Storage batteries

Wind powerNuclear power

Water resourceMaking lighter automobiles

Making electric vehiclesManufacturing equipment of LCD, semiconductors, and solar cells

Start Project 2020 (Project running across all growth areas of the entire company)Efforts to achieve the standards of low-carbon society by utilizing

renewable energyKeyword:

Raw materials

Iron & steel

Machinery/IT

Nonferrous metals

Welding supplies

Nonferrous metals

UnitUnit

Iron & steel

Machinery/IT

Nonferrous metals

Iron & steel

Nonferrous metals

Promote new product development following SteamStar as sole agent

Development of positive electrode material for lithium-ion batteries

Expand and enhance thick plates for towers

Sales of in-car battery case material (aluminum) and investment in companies that process it

Welding materials for nuclear power

Titanium tubing for heat exchangers, copper alloy tube

Thick plate, high-grade reinforcing iron bars

Examine possibilities for water processing business overseas in cooperation with Kobe Steel Group

Expand sales of aluminum suspension parts (forged products/plates) in China

Expand products handled in the area of automotive steel sheets

Commercialization of heat radiating components for EV battery and motor case component processing

Business development of aluminum thick plate high-precision processing for LCDs/semiconductor manufacturing equipment in China

DetailsDetails

Nonferrous metals

Expanding sales

‐8 ‐

Stronger fundraising ability (capital increase and bond issue, etc.) to handle expansion of business operation investmentFurther enhance stockholder’s equity by building up income flow

Aim for 20% or higher Equity ratio by FY2020

Stronger Stronger financial financial

basebase

Enhance Enhance management management

systemsystem

Improve competitive strength via more advanced IT infrastructureDevelop information infrastructure using English-version of in-house intra blog and promote global management, sharing information with national staff in each countryDevelop the company’s group network of security export control, carry out expansion into Kobe Steel Group, and contribute to improving group management

Obtain & Obtain & develop develop human human

resourcesresources

Promote recruiting global human resources including national staff around the world, regardless of gender, nationality and ageDevelop human resources to handle global business

Overseas training of younger staff, training of national staff in Japan

Develop human resources who can shoulder business operation typebusiness in addition to agent type business

3. Overall Strategy Towards Achieving Vision -3. Enhance Business Foundation

‐9 ‐

Planning new investment of ¥40 billion by 2015 to realize desired shape of company after 10 years

Iron & steelraw materials

Iron & steel

Machinery/IT

Nonferrous metals

Welding materials

HQ（IT investments and others)

TotalTotal

UnitUnit Planned steps Planned steps （（targets for new investmenttargets for new investment））

AustraliaAustralia

IndiaIndia

China, India, China, India, Middle EastMiddle East

ChinaChinaThailandThailand

ChinaChina

JapanJapan

Investment in iron ore mines and coal mines (securing rights)Investment in iron ore mines and coal mines (securing rights)

Investment in establishment of thick plate fusion cutting Investment in establishment of thick plate fusion cutting company, etc.company, etc.

Investment in industrial machinery and compressor business,Investment in industrial machinery and compressor business,establishment of plant service/machine maintenance companies establishment of plant service/machine maintenance companies

and othersand others

Establishment of aluminum thick plate processing companyEstablishment of aluminum thick plate processing companyInvestment in air piping manufacturing companyInvestment in air piping manufacturing company

Investment in welding supplies manufacturing Investment in welding supplies manufacturing Company, etc.Company, etc.

SAP version up, other system developmentSAP version up, other system development

AmountAmount

２３２３

５５

３３

４４

１１

４４

４０４０ ： FY 2010-2015（Unit: ¥billion）

4. New Investment Plan

‐10 ‐

5. Priority Strategies by Unit -1. Iron & Steel Unit

Wire productsExpand and enhance utilizing secondary processing locations［USA: Grand Blanc Processing, Aiken Wire Processing, Aiken Precision Technologies, Thailand: Kobe CH Wire (Thailand), Mahajak Kyodo, China: Kobe Special Steel Wire Products (Pinghu) ］Expand auto parts business (establishment of joint venture in India)

Steel sheetsExpansion of sales including exploitation of new supply sources in Japan and overseas (Investment in EG, high tensile strength steel sheets from Kobe Steel and from Coil Center in China, establishment of thick plate fusion cutting Plant in India , etc.)Enhancement of automotive field

Enhance handling of new users and new menu of titanium, stainless and cast/forged steel

New expansion of sales for India, Vietnam and Europe

Iron & steelIron & steel

Maintain stable earnings & develop

new regions

Wire products Wire products secondary processing plantGrand Blanc Processing, L.L.C., U.S.A.

‐11 ‐

5. Priority Strategies by Unit -2. Raw Materials Unit

Stabilize earnings base by expanding & enhancing contracted businessCold iron source: Global development, introduction of yard function, stronger overseas raw materials network foundations and functionsParticipate in and develop overseas projects

(Cooperation with Kobe Steel regarding acquiring rights to mine, ITmk3)Stronger proposal type business to handle the business environment

Raw materialsRaw materials

Develop & promote iron & steel raw

materials overseas

Coal mine (Australia)

‐12 ‐

5. Priority Strategies by Unit -3. Non-ferrous Unit

Utilize Shinsho Non-Ferrous Metals to expand aluminum sheet business, alliance with Suzhou Shinko-Shoji Material Utilize Suzhou Shinko-Shoji Material to expand sales of electrical equipment and automotive aluminum sheetsASEAN region: Expand sales of air conditioning materials, automotive materials, electronics materials, and OPC drumsEurope region: Sales expansion & promotion focused on air conditioning materials and automotive materialsIndia & Vietnam: Sales expansion & promotion, priority in automotive fieldIncrease our efforts to new demand fields (solar & battery related business, etc.). Revitalize relations with distribution (wholesalers), and investigation of new distribution structure

NonNon--ferrous ferrous metalsmetals

International specialized trading company for non-ferrous products

Shinsho Non-Ferrous Metals

SUZHOU SHINKO-SHOJI MATERIAL

【Company’s nonferrous coil center supply chains】

Ｃｈｉｎａ

2 processing locations Japan

Overseas (Thailand, etc.)

‐13 ‐

5. Priority Strategies by Unit -4. Machinery & IT Unit

Establish earnings base with Kobe Steel Group products at coreExpand sales of compressors and industrial machinery, which are well grounded in energy saving

Establishment and earnings stability of energy system business including SteamStarOverseas business: Gain stable earnings, new development

Stronger sales and marketing in China and ASEAN and develop India/Middle East market

Materials & equipment supply business: Build stability & strength, promote overseas procurement

Stronger overseas procurement service to each company of Kobe Steel Group and important customers

Project promotion, new business creation, development of investment projectsInvestment in tire machines/compressors in China, creation of business in growing fields such as sunlight, LCD and target materials, participation in new iron source business

Machinery & ITMachinery & IT

Promote overseas & energy systems

business

Screw type small steam generatorNow it is possible to generate highly-efficient electricity with160kW capacity, making effective use of steam energy!

BoilerＥｘhaust duct

Ｒeducing valve

Ｒeducing valve Heating and hydration etc

Sample steam extractor

‐14 ‐

5. Priority Strategies by Unit-5. Welding Materials Unit

Expand sales base as “Trading company specialized in welding with technical sales ability” in Kobe Steel Group– Give full display to our role and function by enhancing our

technical sales ability, continuing to be a reliable trading company specializing in welding

Expand sales base to match globalization strategy of Kobe Steel– Sales development in the same direction as the overseas

strategies of welding operational department of Kobe Steel– Actively develop in the industries of shipbuilding,

automobiles, construction machinery, chemical equipment, and energy infrastructure

溶材溶材Welding Welding materialsmaterialsTrading company specialized in welding with technical sales ability

Welding materials Welding robot system

29.5 30.3 27.7 28.6 30.8 35.8 40.1 50.3 55.7 40.790.7 95.7 96.9 96.8 83.1 94.8 78.7 79.9 83.8 57.9

118.7 108 106.2 126.1 143.5 201.3 212.9 179.3141.1

74.2 69.5 93.289.9

80.2103.4

410.7

162.9 146.6 142 147.5180

218.4238.9

273.6

304.1

214.5

108.6

65.4 69.1 234.92.82.6

1.7

3.1

5

7

8.59.4

6.9

4.3

689.4

1,034.3

720.9642.1

589522.1

460461.3460.3481

0

200

400

600

800

1,000

1,200

0

2

4

6

8

10

12

‐15 ‐

6. Growth History -1. Results in Past 10 Years

○ Expanded investments in Asia regionEstablished Kobelco Trading (Shanghai), Suzhou Shinko-Shoji Material and TES E&M Service, opened Ho Chi Minh office and New Delhi office,expanded investment to China corporations

○ Established Shinsho Europe○ Started handling iron & steel raw material imports for Kobe Steel○ Obtained credit rating (BBB+), established Auditing Dept., renovated core IT

system

○Established local subsidiaries in Asia region, accelerated investmentsEstablished Shinsho Korea, Shinsho (Philippines)

○ Withdrew from real estate business, transferred general-purpose machinery business and consumer goods business

○ Established compliance committee, did public offering to increase capital

○ Expanded investment in U.S. subsidiary

○ Shrunk electronics business○ Obtained ISO14001

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

Iron & steelRaw materialsNonferrous metalsMachinery & ITWelding suppliesOrdinary income

¥billion

‐16 ‐

7. Change in Main Management Indices

Sales

Operating income

Ordinary income

Consolidated net inc.

Stockholders’ equityInterest-bearing debt*1

Debt/Equity ratioTotal assetsEquity ratio

Employees

689.45.74.32.9

FY2009 results

22.144.5

2.0203.4

10.9％

1,039

*Unit: ¥billion

8056.44.52.6

FY2010 forecasts

23.944.2

1.8205.4

11.7％

1,075

1,034.38.46.92.7

FY2008 results

18.846.9

2.5216.98.7％

1,100－10

6

FY2015 targets

5044

0.9280

17.8％

1,160

1,350－13

7.8

FY2020 targets

7858

0.7340

≥ 20％

Domestic 741 740 740Overseas 298 335 420

(Breakdown)

1,014738276

*1: End of year

‐17 ‐

8. Summary of Previous Medium Term Plan (FY2006 to FY2008)-1. Priority Strategies and Results

Expanded/enhanced Kobelco Trading (Shanghai)(Opened Beijing branch, Guangzhou & Dalian contact offices)Suzhou Shinko-Shoji Material full scale operationInvested equity in Kobe Special Steel Wire Products (Pinghu), VSC AdvancedMaterial (Kunshan), Kobe Welding of Quindao

Opened Ho Chi Minh officeStarted investigating business in Indian marketEstablished Shinsho EuropeMerged Sydney office with Shinsho Australia

SteamStar: Market launch and start of overseas expansion

■ Initiative in new technology and new product of Shinsho Group

¥ 12.7 billion (Strengthen relations with customers/suppliers: ¥ 9.2 billion, Overseas investment: ¥2.3 billion, Other: ¥1.2 billion)

■ Investment and financing

China

AsiaEuropeAustralia

■Stronger overseas business

‐18 ‐

Shinsho Global Network

Shinsho Europe

Beijing Office

Kobelco Trading (Shanghai)

Shanghai Shinsho Trading

Shinsho K'Mac PrecisionParts (Shanghai)

Suzhou Shinko-Shoji Material

KOBE SPECIAL STEEL WIRE PRODUCTS(PINGHU)

VSC Shinsho Company ＆Guangzhou Shen-Chang

Metal Products

Kobelco Trading (Guangzhou)

New Delhi Office

Dubai Office

Thai Escorp・Bangkok・Pinthong

・Ayuthaya・Amatanakorn

ＴＥS E＆M Ｓｅｒｖice

Ho Chi Minh Office

Kobe & Shinsho Tube Specialities

Shinko Shoji Singapore

Jakarta Office

Kobelco Trading (Beijing)

Kobelco Trading (Dalian)

Shinsho Korea

Allmet

China Employees 120Taiwan Shinsho

Ｓｈｉｎｓｈｏ (Ｐｈｉｌｉｐｐｉｎｅｓ)

Shinsho Australia

Legends:

Office

SubsidiariesEquity-method affiliates

Brazil Office （Investigating）

Aiken Precision Technologies

Shinsho American (SC)

Shinsho-Meihoku Wire

Shinsho K‘Mac Precision Parts

Shinsho American (LA)

ＳＳＴ Forming Roll

Shinsho American (Detroit)

Grand Blanc Processing

Shinsho American (CT)

U.S.A. Employees 71

Australia Employees 3

Asia Employees 127

Europe Employees 5

Shinsho (Malaysia)

Middle East Employees 4

‐19 ‐

【Other major overseas investment companies】

China Thailand●Shanghai Teqiang Production and sales of automotive fasteners ●Mahajak Kyodo Co.,Ltd. Production and sales of cold-finished steel bars

●Hexas Precision Technologies Production and sales of automotive high-intensity fasteners ●Futaba JTW (Thailand) Ltd. Production and sales of mold parts

●CAMP(Kunshan) Ltd. Investment in Kunshan C.C.(steel sheet coil center） ●Kobe CH Wire (Thailand) Co.,Ltd. Production and sales of CHQ wire

●Zhuoshen Non-ferrous Metals Plant & Equipment Production and sales of non-ferrous metals processing machines ●U-Shin (Thailand) Co.,Ltd. Sales of automotive key sets

●Tianjin Figaro Electronic Production and sales of gas sensors and security alarms ●Saga Fastener (Thailand) Co.,Ltd. Production and sales of automotive fasteners

●Tianjin Shinko Electric Production and sales of electromagnetic clutches and brakes ●SHINSHO K’MAC PRECISIONPARTS （BANGKOK） Co.,Ltd. Sales of automotive parts

●Yiyang Yishen Rubber Machinery Production and sales of tire vulcanizers ●Haidai Industry (Thailand) Co.,Lｔd. Production and sales of molds for cold rolled bolts

●Kobelco Compressors (Shanghai) Production and sales of compressors ●Matsuda Compressor Service Co.,Ltd. Maintenance service of compressors

●Tianjin Tiancheng Tunnel Equipment Manufacturing Production and sales of shield machines ●Thai Kobe Welding Co.,Ltd. Production and sales of arc welding electrodes

●Kobe Welding of Tangshan Production and sales of welding wires ●Kobe Mig Wire (Thailand) Co.,Ltd. Production and sales of welding wire

●Kobe Welding of Quindao Production and sales of welding materials ●J & T Welding Supply Co.,Ltd. Sales of welding electrodes, wire and machines

Malaysia Vietnam●Sugihara Grand Industries Sdn. Bhd. Production and sales of automotive interior materials ●New Generation Engineering (Vietnam)Co.,Ltd. Contractor of electrical work and installation work

●United Sanoh Inc. Production and sales of automotive brake tubes, etc. India●Ortech Malaysia Sdn. Bhd. Assembly, production and sales of automotive key sets ●Kobelco Machinery India Pvt. Ltd. (KMI) Sales of iron and steel making machines

●Naito Asia Sdn. Bhd. Cutting and sales of aluminum tubing for photoconductive drums America●System Seiko (M) Sdn. Bhd. Maintenance of personal computer's HD manufacturing/inspection equipment ●O&K Steel (USA) Inc. Investment holding company

●Kobe Welding (M) Sdn. Bhd. Production and sales of welding electrodes ●Dexter Fastener Technologies Inc. Production and sales of automotive fasteners

Indonesia ●Ondo USA Corporation Sales of automotive parts

●PT UPGRADED BROWN COAL INDONESIA Contractor of upgraded brown coal manufacturing control Germany

Philippines ●NedRight Technologies, GmbH Sales of automotive fasteners

●Sanoh Fulton (Phil.) Inc. Production and sales of tubes for automobiles, etc.

Legends:　●：Iron & steel,　●Raw materials,　●Nonferrous metals, ●Machinery,　●Welding supplies