2000/09/08 Kobe Steel's earnings forecast for fiscal 2000

TOKYO (September 8, 2000) - Kobe Steel, Ltd. predicts consolidated net sales of 640 billion yen for the half-year period ending September 30, 2000. Consolidated pretax ordinary income is estimated to reach 17 billion yen with net income of 5 billion yen. All estimates are higher than the previous forecast made in May.

Japan's economy has yet to fully recovery. Private-sector spending, spurred by growing investment in information technology, is on a recovery path, and exports to Asia continue to be strong. Although the domestic economy is showing signs of a mild recovery, personal spending continues to be stagnant.

Against this background, Kobe Steel is placing its full efforts into increasing profitability, under a consolidated midterm management plan launched in May 2000.

Consolidated net sales for first-half fiscal 2000 are expected to increase to 640 billion yen, up 10 billion yen from the previous forecast in May. In the Iron and Steel segment and the Aluminum and Copper segment, shipments are expected to rise over the previous forecast. In the semiconductor business, rising chip prices will also contribute to higher sales.

Pretax ordinary income (also known as pretax recurring profit) is forecast to reach 17 billion yen, up 12 billion yen from the previous estimate, owing largely to higher steel shipments and the improving financial performance of the semiconductor business. Consolidated net income is forecast at 5 billion yen, due to extraordinary loss brought about by changes in accounting standards for employees' retirement benefits and for equity method accounting of subsidiaries and affiliates.

In the second half of fiscal 2000, investment in public works is anticipated to fall off and steel exports are expected to be dampened by high inventories in Asia. The semiconductor business is forecast to continue being strong.

As a result, consolidated net sales for the full year are anticipated to rise to 1,320 billion yen, up 10 billion yen from the previous estimate. Pretax ordinary income is expected to reach 45 billion yen, up 15 billion from the previous forecast. Aftertax net income is forecast to rise to 17 billion yen, up 12 billion yen from the previous estimate.

CONSOLIDATED FORECAST FOR FISCAL 2000
Current Estimates Previous Estimates FY1999
1st half full year 1st half full year
Net sales 640 1,320 630 1,310 1,252.5
Ordinary income* 17 45 5 30 13.7
Net income (loss) 5 17 -0- 5 (53)


Notes: Figures are in billions of yen.
* Also known as pretax recurring profit.
Figure in parentheses denote loss.

NON-CONSOLIDATED FORECAST FOR FISCAL 2000
In the first half of the fiscal year, the metals segments, primarily steel, forecast a rise in shipments. As a result, parent net sales are anticipated to increase to 390 billion yen, up 10 billion yen, from the previous estimate. Pretax ordinary income is expected to be 4 billion yen, up 2 billion yen, unchanged.

Aftertax net loss is forecast to be 40 billion yen, due to extraordinary loss brought about by changes in accounting standards for employees' retirement benefits and on write down of securities and investments.

For the full year, parent net sales are forecast at 800 billion yen and pretax ordinary income is expected to be 15 billion yen, unchanged from the previous estimate, due to the uncertain outlook of the economy. Aftertax net loss is estimated at 45 billion yen, 5 billion yen less than the previous estimate, due to a decrease in write down of securities and investments.

Current Estimates Previous Estimates FY1999
1st half full year 1st half full year
Net sales 390 800 380 800 837.7
Ordinary income* 4 15  2 15 8.2
(Net loss) (40) (45) (40) (50) (15.1)


Notes:
Figures are in billions of yen.
* Also known as pretax recurring profit.
Figures in parentheses denote losses.

INTERIM DIVIDENDS
As Kobe Steel had accumulated deficits for the year ended March 2000, the Company regrets that it must forego interim dividend payments, in accordance with Japan's Commercial Code.

To continue growing in the years ahead, Kobe Steel is rebuilding its business structure and improving its financial position, under the consolidated midterm management plan. These moves are aimed at increasing the corporate value of the entire group and its overall capabilities.


Media Contact:
Gary Tsuchida
Publicity Group
Tokyo, Japan
Tel +81 (0)3 5739-6010
Fax +81 (0)3 5739-5971

Investor Relations:
Corporate Planning Dept.
Tel +81 (0)3 5739-6043

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www-admin@kobelco.co.jp