Note: These figures include inter-segment sales.

Our fluidized bed pyrolysis melting furnace minimizes emissions of dioxin and other toxic substances and recycles waste.

Kobe Steel's supercritical water technology is used to recycle plastics and to decompose dioxin in contaminated soil.	Hydraulic excavators in the SR series feature a rear swing radius that stays within the track width, allowing the operator to concentrate on the job. They also offer the stability and comfort of conventional models.	March screw compressors feature low energy consumption, ease of maintenance, and a long operating life.

Our urban infrastructure engineering business posted a rise in orders for water treatment plants and open grid steel dams. However, total orders declined as the fiscal period corresponded with a trough in demand cycles for municipal refuse treatment plants, new urban transit systems, and soundproofing materials for highways, all of which generated higher orders in the previous fiscal year. In plant engineering, stepped-up marketing efforts yielded successive orders in overseas markets for the world's largest-class desulphurization reactors. Nevertheless, the total number of plant engineering orders decreased because of declining capital investment in Japan as well the economic downturns in Asia, Russia, and South America. In machinery, although we recorded a large-scale order for a crusher, total orders were at a low level as a result of slumping demand in Japan and other Asian markets. Turning to sales, in our urban infrastructure engineering business, we posted firm sales of water treatment and municipal refuse treatment plants but sales from bridge cable work declined due to the completion of a large bridge project. In plant engineering, the completion of a direct-reduction iron plant in Venezuela significantly ahead of schedule contributed to an increase in sales. However, nuclear power-related sales declined because of a decrease in sales of nuclear waste treatment facilities. These factors, along with a decrease in orders during the fiscal year, resulted in lower sales in our urban infrastructure engineering and plant engineering businesses. Sales were also down in machinery and construction machinery operations, mirroring such factors as lower private-sector capital investment in Japan and a decrease in orders in Southeast Asia. Our factory automation and robotics operations and cutting tool operations also encountered difficult operating environments. As a result, total sales in the Machinery Sector were down 21.4%, to 398.0 billion yen. In R&D, we vigorously progressed with the development of new technologies that respond to various environmental problems. We are commercializing technologies for converting urban refuse into fuel (RDF), for generating electricity from municipal refuse, and for recovering heavy metals. Also, in the field of industrial waste treatment, we are commercializing technologies for recovering aluminum from dross as well as treatment plants for recovering chlorofluorocarbons (CFCs) from used refrigerators. Along with a fluidized bed pyrolysis melting furnace that is attracting attention as a next-generation furnace for treating municipal refuse, we also completed the development of a direct melting furnace for automobile shredder dust. Our supercritical water technology was selected by Japan's Ministry of Health and Welfare as a possible new technology for the remediation of dioxin-contaminated soil and for detoxifying water. Certification testing for this technology has commenced and is focused on cost-effectiveness and processing times. To develop technologies for spunbond, we commenced operation of a commercial-scale R&D line with an annual production capacity of over 3,000 tons. Spunbond is a nonwovens fabric with applications in hygienic, agricultural, and industrial products. Also, in machinery-related areas, we are developing and introducing such equipment as the Hybrid Curex, a new integrated tire curing press; a new sandwich molding process for recycling plastics; and an unbalanced magnetron sputtering system for hard-film and lubrication-film coatings. We also developed and introduced new models of hydraulic excavators, cranes, and palletizing robots. To strengthen our municipal refuse treatment business, we signed a licensing agreement with Lurgi Entsorgung GmbH, a German environmental plant engineering company, to use their grate technology in our municipal solid waste incinerators. Together with Lurgi, we aim to explore opportunities in Private Finance Initiative projects in domestic and overseas markets. In capital investment, taking into consideration the current difficult business environment, we focused our investments on improving productivity and strengthening our cost-competitiveness. Overseas, Midrex Direct Reduction Corporation, a subsidiary in the United States that provides engineering services for direct reduction plants, continued to post favorable business results. On the other hand, projects in Venezuela for the production and sale of direct-reduced iron faced difficult conditions because of plunging prices. In construction machinery, we operate manufacturing bases in Japan, the United States, China, and Thailand. Among these production bases, our subsidiary in the United States recorded particularly strong profits during the fiscal year under review. We are implementing comprehensive restructuring measures in this sector, particularly in businesses that are facing difficult profit environments. For example, we will merge the Construction Machinery Company (formerly called the Construction Machinery Division), Kobelco Construction Machinery Co., Ltd., and Yutani Heavy Industries, Ltd. into a single subsidiary on October 1, 1999. The aim of this reorganization is to strengthen the profitability of our construction machinery business by consolidating production and marketing and by improving the efficiency of management functions. Moreover, we reorganized and merged domestic regional sales companies and formed sales tie-ups with other manufacturers of construction machinery. Through such measures, we are raising the efficiency of our production and sales activities. In the FA and robotics businesses as well, Kobe Steel is aiming to increase the production efficiency and competitiveness of each product line by transferring and reallocating production from its Toyohashi FA & Robotics Center. Thus, from April 1999, production of welding robots was transferred to Fujisawa Plant and painting robots and handling robots were shifted to Takasago Works. In the coming fiscal year, the difficult environment is expected to continue in Japan due to the ongoing sluggishness in private-sector capital investment, while the outlook in overseas markets is uncertain. Under these conditions, we will focus on strengthening our marketing capabilities and cost-competitiveness, developing new products, and aggressively entering new markets as we strive to further expand the volume of orders. We are also involved in the urban development business, which centers on the development of company-owned land. Our wide-ranging projects include the New City Center in Eastern Kobe, the "O's Town" development project in Akashi, and a project in Hachinohe. Through such projects, we are steadily progressing with the building of communities that incorporate the characteristics of the local regions.