Kobe Steel, Ltd.
Tokyo Stock Exchange No. 5406

TOKYO (March 7, 2001) - Kobe Steel, Ltd. announces its earnings forecast for fiscal 2000, ending March 2001.

CONSOLIDATED FORECAST
For the year ending March 31, 2001, Kobe Steel anticipates sales of 1,370 billion yen, unchanged from the initial forecast on November 22, 2000.

Pretax ordinary income (also known as pretax profit) is forecast to be 50 billion yen, unchanged from the initial forecast. In the Iron & Steel segment, falling steel prices are expected to slightly lower profits, but earnings in the other business segments are projected to remain unchanged.

However, aftertax net income is expected to be 7 billion yen, down 7 billion yen from the initial forecast of 14 billion yen. As the sale price of KMT Semiconductor, Ltd. was lower than originally estimated, Kobe Steel forecasts extraordinary loss to increase 11 billion yen.

While the Japanese economy in the first half of fiscal 2000 experienced a gradual recovery supported by investments in information technology, personal spending continues to be weak and capital expenditures are sluggish. The future of the Japanese economy now appears to be unclear. Overseas, the strong U.S. economy has begun to show signs of decelerating, while high inventories in Southeast Asia has rapidly led to a decrease in exports.

Amid this situation, Kobe Steel and its group companies have been implementing the Consolidated Midterm Management Plan launched in May 2000 and are making vigorous efforts to increase profitability.

CONSOLIDATED FORECAST

	Sales	Ordinary Income	Net Income
Current forecast	1,370	50	7
Previous forecast	1,370	50	7
Initial forecast	1,370	50	14
Fiscal 1999 results	1,252.5	13.7	(53)

Figures are in billions of yen.
Ordinary income is also known as pretax profit.
Figure in parenthesis denotes loss.

NON-CONSOLIDATED FORECAST
Non-consolidated sales are expected to be 820 billion yen, unchanged from the initial forecast. Pretax ordinary income (also known as pretax profit) is forecast to be 15 billion yen, unchanged from the initial forecast. In the Iron & Steel segment, falling steel prices are expected to slightly lower profits, while the Machinery segment, centered on the infrastructure business, is anticipated to show a gain in profits.

However, aftertax net loss is expected to widen by 7 billion yen to an estimated loss of 64 billion yen. As in the consolidated forecast, the sale price of KMT Semiconductor, Ltd. was lower than originally anticipated, and Kobe Steel forecasts extraordinary loss to increase 11 billion yen.

NON-CONSOLIDATED FORECAST

	Sales	Ordinary Income	Net Income
Current forecast	820	15	(64)
Previous forecast	820	15	(64)
Initial forecast	820	15	(57)
Fiscal 1999 results	837.7	8.2	(15.1)

Figures are in billions of yen.
Ordinary income is also known as pretax profit.
Figures in parentheses denote losses.

DIVIDENDS
As Kobe Steel expects undisposed deficits to remain, Kobe Steel unfortunately anticipates that it will have to forgo dividend payments, in accordance with Japan's Commercial Code.

By seeking further reforms in its business structure and a quick recovery in its financial position, the Kobe Steel Group is focusing its total capabilities to improve the corporate value of the entire Kobe Steel Group under the Consolidated Midterm Management Plan.

Media Contact:
Gary Tsuchida
Tel (03) 5739-6010

Investor Relations:
Tel (03) 5739-6043

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