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Message from the President

Aspiring to Be a Highly Trusted Corporate Group That Contributes to a Better Society

More than a century has passed since Kobe Steel was founded in 1905. Through the years, the Kobe Steel Group has contributed to society through our commitment to monozukuri, or skilled manufacturing, a commitment that has remained steady despite the changing times. We will continue to fulfill our societal mandate by providing trusted technologies, products, and services in fields as varied as iron and steel, welding, aluminum and copper, industrial machinery, construction machinery, engineering, environmental business, wholesale power supply, and electronic materials. In addition, we will further bolster our efforts to ensure corporate compliance so that we can continue to prosper in a mutually beneficial relationship with society.

The Common Basis for All of Our Corporate Activities: Enhanced Monozukuri and an Expanded Range of "Only One" Products

For three years from fiscal 2006 through fiscal 2008, we implemented a medium-term business plan dedicated to the goals of stability and growth. Two of the main objectives defined by that plan were the enhancement of monozukuri and the expansion of our range of Only One products.

By monozukuri, we mean the ability to develop new, advanced technologies, enhance production techniques, provide stable production, and encourage creativity on the factory floor so that we increase our overall effectiveness as a manufacturer. This is the strength that provides the foundation for public trust in our technologies and products. By thoroughly committing ourselves to quality assurance, making plant investments oriented toward higher added value, and bolstering our R&D system, the Kobe Steel Group strengthens its manufacturing capabilities, while creating and nurturing Only One products that only we can supply.

We will remain committed to monozukuri and Only One products as the foundation for all of our business activities. We aspire to be a corporate group with a substantial presence through our commitment to reducing the burden on the global environment; making effective use of underutilized energy and mining resources; and providing a variety of technologies and products that contribute to solving environmental and energy problems.

Group-Wide Dedication to Stronger Compliance

We at the Kobe Steel Group take our corporate social responsibility (CSR) very seriously as an important principle of doing business. We are fully dedicated to strengthening our environmental conservation activities; dealing honestly with customers, business partners and shareholders; contributing to the well-being of local communities and international society; and creating a pleasant working environment for our employees.

Unfortunately, it was recently discovered that certain parties employed at Kobe Steel's Kakogawa Works, Takasago Works, and Chofu Works provided inappropriate financial support to local council members. This breach impaired the relationship of trust that we had enjoyed with local residents, business partners, shareholders, and many others connected with our businesses. Although we strengthened our corporate compliance system in the aftermath of incidents in 2006 in which Kakogawa Works and Kobe Works exceeded permissible air emission standards, this most recent incident indicates that even more must be done. Management therefore treats it very seriously and is taking the initiative to implement even stricter measures to prevent recurrence. While working to ensure that everyone involved understands the laws and regulations related to our business operations, we will also take additional steps to nurture a higher level of awareness about compliance within the organizational culture of the Group as a whole. In this way we will make every effort to regain the trust of our stakeholders.

This fiscal 2009 edition of the Kobe Steel Group Sustainability Report explains the environmental measures we are currently implementing while introducing our various CSR programs. I hope it serves as a useful guide to our commitment to sustainability.

June 2009

Hiroshi Sato
President, CEO and Representative Director
Kobe Steel, Ltd.

The Kobe Steel Group's Corporate Philosophy

1.	We provide reliable and advanced technologies, products and services that satisfy customers.
2.	We support each employee in developing his or her abilities, while respecting mutual cooperation within the Kobe Steel Group.
3.	Through continuous efforts for innovative change, we aim to enhance our corporate values.

With the tremendous support of our stakeholders, we have contributed to the development of society and the happiness of working people by meeting societal needs through the advancement of our technologies, skills, products and services. We have also created a workforce composed of people who respect each other, promote Group harmony, and cooperate as they work together toward a common goal. Amid a dramatically evolving business environment, we remain committed to maintaining a sense of challenge while quickly and appropriately responding to change.

Our Group Corporate Philosophy reflects these concerns. As we develop in step with society, we will work to ensure that these precepts are shared by all Kobe Steel Group employees.