Progress of the Measures Promoted by the Kobe Steel Group to Prevent Recurrence of the Misconduct

May 9, 2019

Kobe Steel, Ltd.

We once again deeply apologize for the considerable trouble we have caused to our customers, suppliers, shareholders and many others concerning the misconduct at Kobe Steel, Ltd. ("Kobe Steel," "We," or the "Company") and its group companies (collectively, the "Kobe Steel Group" or the "Group").

Kobe Steel made public a report entitled Report on Misconduct in Kobe Steel Group (the "Report") dated March 6, 2018 on the facts revealed in the Independent Investigation Committee's investigation, analyses of the causes of the misconduct, and measures to prevent recurrence. To implement the various measures raised in the Report, Kobe Steel's President as the leader launched a Project for Restoring Trust in April 2018. Various subcommittees and task forces were formed to serve as implementation units for the preventive measures, and concrete actions are currently being carried out.

Kobe Steel hereby provides the latest progress of its measures to prevent recurrence of the misconduct since the last update announced on October 30, 2018.

The Independent Quality Supervision Committee, established as an advisory body to Kobe Steel's board of directors, has continuously reviewed the progress of the preventive measures and made a variety of proposals for further improvements.

Kobe Steel will continue to adequately reflect the recommendations from the Independent Quality Supervision Committee and strive to make viable improvements in the preventive measures.

Furthermore, as a permanent measure, Kobe Steel has so far decided to invest approximately 6 billion yen in capital investments relating to quality, such as automating the recording of test and inspection data, and is carrying them out sequentially.

The Independent Quality Supervision Committee and the board of directors continue to confirm the status of the measures, and we will continue to make public the progress of the measures on our website.

【Progress of the Measures to Prevent Recurrence of the Misconduct (Summary): Details are described in the supplementary material.】
【The underlined portions below are the updates from the October 30, 2018 announcement.】

1. Governance - Building the Quality Governance System

2. Management - Ensuring Quality Control

3. Process - Strengthening of Quality Control Processes

In order to promote the points below, we established the "KOBELCO Quality Guidelines" of the Kobe Steel Group. The Guidelines went into effect on May 1, 2018.

Corrections and improvements at each location will be continuously monitored, and we will confirm actual application of the Guidelines through quality audits at each location.

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