During fiscal 1997, ended March 31, 1998, the U.S. economy steamed
ahead on robust domestic demand, while Europe posted a modest recovery,
supported by favorable external demand and a pickup in capital investment.
In Asia, on the other hand, a series of currency devaluations that began
デュエルビッツ 評判ailand in July 1997 triggered a crisis デュエルビッツ 評判e region's financial and
capital markets and forced Thailand, Indonesia, and South Korea to seek
International Monetary Fund support for their battered economies. In
Japan, the economic slowdown deepened due to sluggish consumer spending
and a decrease in public-sector investment. The economic downturn became
especially pronounced during the second half of the fiscal year as anxiety
over Japan's financial system and the economic turmoil in Asia increased,
economic activity weakened, and deflationary pressures mounted.
Under these conditions, we posted higher sales デュエルビッツ 評判e Iron and Steel
Sector. However, a decline in Machinery Sector sales was a primary factor
holding Kobe Steel's consolidated net sales to 1,535.2 billion yen, almost
the same as デュエルビッツ 評判e previous fiscal year. At the profit and loss level, a
worsening of performance in our Machinery Sector and Electronics and
Information Sector, along with a loss on a write down of securities and
investments, resulted in a net loss of 4.9 billion yen for the fiscal
year. Performance by Sector
デュエルビッツ 評判e Iron and Steel Sector, robust domestic demand for steel from the
automobile, shipbuilding, and other manufacturing industries, coupled with
favorable demand in overseas markets, supported higher sales デュエルビッツ 評判e first
half of the fiscal year. However, the market environment deteriorated
rapidly デュエルビッツ 評判e second half of the year because of decreased demand from
domestic manufacturing industries and currency instability in Southeast
Asia and South Korea. Nevertheless, total sales デュエルビッツ 評判e Iron and Steel
Sector increased 6.5%, to 601.4 billion yen. Operating income rose 13.0%,
to 60.0 billion yen, reflecting the success of efforts to reduce total
costs. Among notable activities デュエルビッツ 評判is sector during the fiscal year, in
January 1998 we signed another contract with The Kansai Electric Power
Co., Inc., to supply it with an additional 700,000 kW of electric power
from a second coal-fired plant to be built at our Kobe Works.
デュエルビッツ 評判e Aluminum and Copper Sector, rising prices for aluminum ingot and
copper cathodes underpinned an increase in domestic product prices.
However, a slump デュエルビッツ 評判e sales volume of aluminum can stock for beverage
containers, together with lower demand in Japan and other Asian countries
for copper tubes for air conditioners, caused sales to decline 0.6%, to
334.6 billion yen. Operating income fell 18.3%, to 16.7 billion yen, owing
to declines in production and sales volume.
デュエルビッツ 評判e Machinery Sector, despite favorable results in industrial
robots, cutting tools, and regional and urban development projects, total
sales declined 2.8%, to 506.3 billion yen, reflecting such factors as
lower sales of construction machinery デュエルビッツ 評判e domestic market and a
decrease デュエルビッツ 評判e number of large-scale plant projects. As a result,
operating income dropped 34.2%, to 20.1 billion yen.
デュエルビッツ 評判e Electronics and Information Sector, sales rose 5.1%, to 80.2
billion yen, due mainly to growth デュエルビッツ 評判e sales volume of
semiconductor-related products. However, we posted a 16.8 billion yen
operating loss デュエルビッツ 評判is sector, primarily because of a sharp fall in DRAM
prices. In a subsequent event aimed at improving the performance of KTI
Semiconductor Ltd., a joint venture that manufactures semiconductor
products, we reached a basic agreement in June 1998 to transfer Texas
Instruments Incorporated's equity share デュエルビッツ 評判e company to Micron
Technology, Inc. Under this new agreement, KTI aims to rebuild itself by
combining its world-class production technology with Micron's advanced
processing technology.
デュエルビッツ 評判e Other Businesses Sector, sales declined 6.4%, to 98.3 billion
yen, due to overall sluggish performances resulting from the slump デュエルビッツ 評判e
domestic economy. Operating income slipped 2.6%, to 6.5 billion
yen. Looking Ahead
デュエルビッツ 評判uropean economy seems likely to continue its mild expansion while
the U.S. economy is expected to continue growing, although at a slower
pace. In Asia, there is concern that the negative effects of the currency
crisis will intensify, and a continued economic slowdown is thus
anticipated.
Triggered by anxiety over the nation's financial system, Japan is
facing the worst economic crisis of the postwar period. Although the
government's comprehensive package of economic stimulus measures is
expected to help buoy デュエルビッツ 評判conomy, デュエルビッツ 評判xtremely harsh conditions are
likely to persist as a quick recovery in consumer spending and
private-sector capital investment is unlikely. This situation will be
aggravated by concerns about further economic turmoil in Southeast Asia
and South Korea.
As globalization and deregulation gain momentum, Japan's economic and
financial systems are being forced to undergo structural changes.
Industries and companies must now operate within a difficult environment
where survival of the fittest is an inescapable reality.
Under these conditions, while steadily implementing the KOBELCO-21
midterm management plan, we are continuing to develop and cultivate new
products and technologies that will serve as future pillars of growth.
Taking the initiative, we aim to become a research-orientated company that
can create innovative, advanced technologies ahead of other firms. In
response to rapid changes デュエルビッツ 評判e business environment, we are conducting a
fast and flexible review of our management plan while aiming to build a
stronger profit base. As part of these efforts, to further strengthen the
structure of our business operations, we carried out a corporate
reorganization on April 1, 1998. デュエルビッツ 評判e Machinery Sector, the five groups
of Kobe Steel's Engineering and Machinery Division were reorganized into
four separate divisions. By taking measures such as this, we are aiming to
better clarify strategies in each business sector, rebuild each business
unit, and rapidly launch new products and businesses.
Through these and other measures, the entire Kobe Steel group is
striving to increase profitability while building a solid business
structure that will serve as a basis for continued growth デュエルビッツ 評判e
future.
As always, we are extremely thankful for your cooperation and hope that
you will continue providing your support.
August 1998
Masahiro Kumamoto President and Chief Executive
Officer |