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Kobe Steel to increase capital investments 15% in fiscal 2007

April 24, 2007

TOKYO, April 24, 2007 - Kobe Steel, Ltd. plans capital investments of 110 billion yen in fiscal 2007, ending March 31, 2008, up 15% from the estimated 96 billion yen in fiscal 2006.

Most of the investments are in the Iron & Steel segment and the Aluminum and Copper segment to improve the manufacturing capabilities of "Only One"upper-end products that increase the competitiveness of the company. For the stable production of steel products, Kakogawa Works will complete the refurbishment of its No. 2 blast furnace, while Kobe Works will reline its blast furnace. In the Aluminum and Copper segment, work will continue at the Chofu Plant on the upgrade of the cold temper rolling mill and installation of a new plating line.

In addition to environment-related investments, other work includes modernizing and necessary repairs.

Construction costs and outlays (parent only)
(in billions of yen) FY2006 (estimated) FY2007 (planned) % of change
Construction costs
Iron & Steel only
96
70
110
84
15%
20%
Outlays
Iron & Steel only
76
52
100
76
32%
46%
Depreciation
Iron & Steel only
56
40
81
59
 
Note: Iron & Steel segment figures are a subset of each category.
Depreciation in fiscal 2007 includes the effect of a change in the depreciation method (an increase of 13 billion yen, of which 10 billion yen is from the Iron & Steel segment) due to a revision in the tax system.


Investments by segment (parent only, construction cost basis)
(in billions of yen) FY2006 (estimated) FY2007 (planned)
Iron & Steel 70 84
Aluminum & Copper 14 15
Others 12 11
Total 96 110


Main projects
The main projects for fiscal 2007 are as follows:

Iron & Steel Segment
Kakogawa Works  
Project: Refurbishing of No. 2 blast furnace
Products: Steel sheet, plate, wire rod
Amount in FY2007: 12 billion yen
Total investment: 40 billion yen
Construction period: September 2004-March 2007

Kobe Works  
Project: Relining of the No. 3 blast furnace
Products: High quality specialty steel
Amount in FY2007: 10 billion yen
Total investment: 10 billion yen
Construction period: November ? December 2007


Aluminum & Copper Segment


Chofu Plant:
Project: Upgrading of cold temper rolling mill
Products: Copper sheet
Amount in FY2007: 1.5 billion yen
Total investment: 1.8 billion yen
Construction period: October 2005-April 2007

Chofu Plant:  
Project: Installation of new plating line
Products: Copper sheet
Amount in FY2007: 700 million yen
Total investment: 700 million yen
Construction period: April 2006-June 2007


Reference Information

Capital investment in previous 10 years (in billions of yen)
Fiscal years Construction costs Outlays Depreciation
1998 77.0 69.0 74.1
1999 56.0 69.0 71.8
2000 57.0 40.0 69.2
2001 43.9 51.3 65.7
2002 24.0 25.0 61.4
2003 35.8 33.1 56.5
2004 46.2 35.3 54.8
2005 58.5 54.1 51.9
2006 (estimated) 96.0 76.0 56.0
2007 (planned) 110.0 100.0 81.0
*Depreciation in fiscal 2007 includes the effect of a change in the depreciation method (an increase of 13 billion yen) due to a revision in the tax system.
*The highest capital expenditure in the past 20 years was 186 billion yen in fiscal 1991.