President’s Message

With a new vision geared toward the future, the Kobe Steel Group has set its sights on global growth.

Contributing to society and industry through integrated management of diverse businesses

Hiroya Kawasaki President, CEO and Representative Director

Since our founding in 1905, the Kobe Steel Group has contributed to the development of society and industry by offering superior products and technologies. Our businesses currently span an impressive range of fields. One of the Kobe Steel Group’s greatest advantages is its ability to provide integrated management of its numerous businesses.

The Kobe Steel Group also features a wide lineup of distinctive and innovative products and technologies. Many of these products hold the number one share in the world market. The diversity of the technologies we have amassed over the many years is the foundation on which we enhance our manufacturing capabilities and serves as the driving force of our corporate activities. Through distinctive manufacturing, we will continue to create new value and contribute to progress in industry and society in the years to come.

Fiscal 2016-2020 Medium-Term Management Plan and KOBELCO VISION “G+”

In April 2010, the Kobe Steel Group launched the KOBELCO VISION “G” medium- to long-term management vision. The “G” in the vision’s name stands for many elements, including “Global,” “Group” and “Growth.” Under this vision, we have been pursuing proactive global expansion and have worked to create products and services only possible through our Group.

During the second stage of the vision, the Fiscal 2013-2015 Medium-Term Business Plan, we worked to restructure our management base by strengthening profitability, focusing on the Iron & Steel Business and improving our financial standing, as well as to lay the groundwork for stable profits and growth.

Specifically, in the Iron & Steel Business, we decided to consolidate upstream operations at Kakogawa Works, establish a steel wire rod manufacturing base in Thailand, and form a manufacturing base in China to make cold-rolled, high-strength steel. In the Aluminum & Copper Business, we established an automotive panel material manufacturing base in China. In the Construction Machinery Business, we set up a plant in the United States to make excavaters. And in the Electric Power Business, we decided to build two new power plants—one in Moka, Tochigi Prefecture and one on the grounds of the Kobe Works’ blast furnace.

In this fiscal year, we embarked on our new Fiscal 2016-2020 Group Medium-Term Management Plan. This is the first step in our new business vision for strengthening growth strategies through the three core business areas of materials, machinery and electric power and for establishing a more robust business structure under KOBELCO VISION “G+.” The plus represents our desire to carry on from the previous medium- to long-term management vision to further strengthen initiatives in future growth fields.

We aim to contribute to society, while also expanding business by capitalizing on our competitive advantage and increasing the level of the original added value we offer.

New growth strategies focus on three core areas: materials, machinery and electric power

In the materials businesses, we are pursuing initiatives for weight savings in transportation and increased profitability in the Iron & Steel Business. The Kobe Steel Group handles a variety of metal products, including steel, aluminum, titanium and magnesium. Some of our greatest strengths, which we expect to bring considerable growth, are our materials technologies, such as high-strength steel and aluminum, and our ability to propose multimaterial solutions through joining and other technologies. In the aviation field, where demand is expected to grow, along with strengthening our current upstream processes for titanium manufacturing, we will also enter and expavd downstream operations. Together with our aluminum and magnesium offerings, we aim to become the leading supplier in the Asian market. We also aim to increase profitability in the Iron & Steel Business by concentrating upstream processes at Kakogawa Works and by investing further in facilities.

In the machinery businesses, we are pursuing energy and infrastructure initiatives and working to increase profitability in construction machinery. In compressors, we aim to enter new territory in the large-capacity centrifugal compressor market and strengthen our supply network for standard compressors. In the promising growth field of hydrogen-related businesses, we established a new comprehensive test center for hydrogen stations, and aim to strengthen research and development and establish differentiated technologies. In the construction machinery business, we merged Kobelco Construction Machinery and Kobelco Cranes in April 2016, in addition to restructuring our operations in the Chinese market. Through this merger we aim to expand marketing in Europe and North America and strengthen our presence in the global market.

In the electric power business, we are pursuing growth aimed at achieving stable profits by 2022. In addition to our existing Kobe Power Plant, we are moving forward with new power supply projects in Moka, Tochigi Prefecture and on the grounds of the Kobe Works’ blast furnace.

Aiming for global growth supported by a stable management base

Strengthening our corporate management base is indispensable to ensuring that new business strategies will be implemented according to plan. The Kobe Steel Group is pursuing a variety of initiatives, including to strengthen corporate governance, promote diversity, improve working styles by encouraging the use of paid vacation days reduce long working hours, and effectively utilize our diverse range of human resources. We are also focused on activities for contributing to society, including forest maintenance projects and community outreach around our plants.

The medium- to long-term vision, KOBELCO VISION “G+,” is an important initiative toward establishing a stronger framework for the Group’s future. As a global corporation, we are always ready to take the inintiative, meet new challenges and aim for greater growth.

October 2016

Hiroya Kawasaki

Chairman, President, CEO and Representative Director

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