The Japanese economy continues to remain in a slump. Although public works
projects are increasing and housing construction is recovering, private-sector
capital investments continue to remain sluggish. The Korean and Southeast
Asian economies are improving, but overseas markets continue to be severe due
to strong competition.
With this background, Kobe Steel is striving to improve profitability under its
KOBELCO-21 midterm management plan. In the first half of fiscal 1999, ending
September 30, 1999, Kobe Steel estimates non-consolidated sales of 430 billion
yen, unchanged from the previous forecast in May.
Kobe Steel forecasts an ordinary loss (also called pretax recurring loss) of 6
billion yen, a 2 billion yen decrease in comparison to the previous estimate,
due to improved profits in the Iron and Steel Sector and the Aluminum and
Copper Sector.
However, extraordinary losses due to business restructuring increased over the
previous estimate. As a result, after-tax net loss is estimated at 13 billion
yen for the half-year period, unchanged from the previous estimate.
In the second half of the fiscal year, the operating environment is expected to
continue to be severe. Kobe Steel anticipates greater cost reductions and
higher sales in the Machinery and Information Sector. As a result, fiscal 1999 parent
sales are estimated at 850 billion yen with ordinary income of 9 billion yen.
Net loss is expected to be 7 billion yen.
Due to the severe business conditions, Kobe Steel's Board of Directors have
decided to forego dividend payments for the first half of fiscal 1999.
Under a policy called "selective consolidation," Kobe Steel is focusing its
management resources on businesses of promising growth, while improving its
capital ratio by divesting unprofitable businesses. These decisive steps are
intended to promote strategic changes in Kobe Steel's corporate structure.
NON-CONSOLIDATED FINANCIAL ESTIMATES
| Current estimates | Previous estimates | FY1998 | |||
| 1st half | full year | 1st half | full year | (full year) | |
| Net sales | 430 | 850 | 430 | 850 | 938.4 |
| Ordinary income* (loss) | (6) | 9 | (8) | 7 | (9.8) |
| Net income (loss) | (13) | (7) | (13) | (7) | (23.3) |
| Current estimates | Previous estimates | Fiscal 1998 |
| Net sales | 1,340 | 1,350 | 1,305.4 |
| Ordinary income* (loss) | 12 | 15 | (22.6) |
| Net income (loss) | (19) | (6) | (38.8) |
Notes:
Figures are in billions of yen.
* also known as pretax recurring profit
Figures in parentheses denote losses.
MEDIA CONTACT:
Gary Tsuchida
Publicity Group
Tokyo, Japan
tel (03) 5739-6010
INVESTOR RELATIONS:
(TOKYO)
Corporate Planning Dept.
tel (03) 5739-6043
(NEW YORK)
Kobe Steel USA, Inc.
tel (212) 751-9400
