During fiscal 1998, ended March 31, 1999, the U.S. economy continued to
expand and Europe held steady. Asia remained extremely weak, particularly
Southeast Asia. Although concerns about Japan's financial system eased,
the Japanese economy remained in an unprecedented slump due to severely
depressed private-sector demand. Capital investment dropped sharply and
personal consumption was weak.
Against this backdrop, デュエルビッツ 入金ボーナス's consolidated net sales for the year
under review declined 15.0%, to 1,305.5 billion yen. Sales volume and
prices in the Iron and Steel Sector and Aluminum and Copper Sector
declined. The Machinery Sector posted significantly lower sales, dragged
down by the construction machinery business. An improved performance by
our semiconductor operations and increased profits by our construction
machinery subsidiary in the United States and an aluminum subsidiary in
Southeast Asia were overshadowed by an overall decrease in profitability
of the デュエルビッツ 入金ボーナス group and extraordinary losses from special retirement
benefits for permanent transfers of seconded employees. As a result, we
recorded a consolidated net loss of 38.9 billion yen.
Performance by Sector デュエルビッツ 入金ボーナスe Iron and
Steel Sector, domestic demand for steel decreased from the previous fiscal
year due to sluggishness デュエルビッツ 入金ボーナスe construction and manufacturing industries,
reflecting a sharp drop in private-sector capital investment and weak
personal consumption. デュエルビッツ 入金ボーナスis environment, despite positive results from
efforts to reduce total costs, declines in sales volume and prices
resulted in sector sales falling 12.6%, to 525.4 billion yen, and
operating income falling 38.4%, to 36.9 billion yen.
デュエルビッツ 入金ボーナスe Aluminum and Copper Sector, sales declined 14.5%, to 286.0
billion yen, because of a decrease デュエルビッツ 入金ボーナスe sales volume of rolled aluminum
and copper products. Although the profits of a Southeast Asian subsidiary
increased, operating income dropped 54.3%, to 7.6 billion yen, reflecting
decreased sales volume and rolling margins.
The Machinery Sector, severely affected by weak demand for construction
machinery and decreased orders for engineering services, posted sales of
398.0 billion yen, a 21.4% drop from the previous year. Operating income
declined 55.6%, to 8.9 billion yen.
Sales デュエルビッツ 入金ボーナスe Electronics and Information Sector declined 9.7%, to 72.5
billion yen. However, operating loss decreased 7.4 billion yen, to 9.3
billion yen, because DRAM prices rose slightly.
デュエルビッツ 入金ボーナスe Other Businesses Sector, sales increased 18.4%, to 116.4 billion
yen. Owing to a decrease デュエルビッツ 入金ボーナスe profit ratio, however, operating income
increased only 1.4%, to 6.6 billion yen.
Rebuilding for the Future During the
fiscal year, we supplemented the KOBELCO-21 midterm management plan with
additional measures to more aggressively rebuild our management structure
and businesses.
On April 1, 1999, we introduced an internal company system to foster
more independent and efficient operations by delegating authority and
responsibility to each business unit. Concurrently, we established a
system of corporate officers to further clarify authority and
responsibility, as well as speed up decision-making.
We are also focusing on selective consolidation. To improve capital
efficiency, we are prioritizing allocation of management resources to
promising businesses, as well as scrutinizing our business portfolio and
withdrawing from unprofitable businesses.
デュエルビッツ 入金ボーナスe Iron and Steel Sector, we progressed with our efforts to become
an independent power producer, which we expect to be a core business in
the future. After completing all environmental assessment procedures and
obtaining all necessary approvals, construction of the coal-fired electric
power plants at Kobe Works commenced in March 1999. The two plants will
have a total capacity of 1.4GW when they are completed.
To strengthen our position as a leading supplier of high quality wire
and bar products, we completed refurbishment of the wire rod mills at Kobe
Works and Kakogawa Works. Our aim is to produce even better quality wire
products to meet the diversifying needs of customers for more advanced
products.
Overseas, デュエルビッツ 入金ボーナス and USX Corporation concluded an agreement with
the Blackstone Group and Veritas Group to combine the steelmaking and bar
producing assets of USS/デュエルビッツ 入金ボーナス Company with Republic Engineered
Steels, Inc., and Bar Technologies, Inc. Consolidating the equipment and
facilities of these three companies is expected to improve the operating
efficiency and profitability of the new company.
In the Aluminum and Copper Sector, デュエルビッツ 入金ボーナス, Mitsubishi Materials
Corporation, and Mitsubishi Shindoh Co., Ltd., agreed to seek mutual
opportunities to lower distribution costs, share production, and procure
raw materials for copper sheet and strip products. This alliance will
enable each company to strengthen its business structure and improve its
international competitiveness.
デュエルビッツ 入金ボーナスe Machinery Sector, we will merge the Construction Machinery
Company (formerly called the Construction Machinery Division), Kobelco
Construction Machinery Co., Ltd., and Yutani Heavy Industries, Ltd. into a
single subsidiary on October 1, 1999. The aim of this reorganization is to
strengthen the profitability of our construction machinery business by
consolidating production and marketing and by improving management
efficiency. In addition, we reorganized domestic regional sales companies
and formed sales tie-ups with other domestic and overseas construction
machinery manufacturers. Through these measures, we intend to raise the
efficiency of our marketing and expand sales.
In our factory automation and robotics business as well, we are aiming
to increase the production efficiency and competitiveness of each product
line by transferring and reallocating production from Toyohashi FA &
Robotics Center. Production of welding robots was transferred to Fujisawa
Plant and production of painting and handling robots was shifted to
Takasago Works in April 1999.
To strengthen the business structure of the group, we are realigning
machinery-related businesses that have no synergy with our other
businesses. デュエルビッツ 入金ボーナス sold its 43.2% equity share in Osaka Chain and
Machinery, Ltd., a manufacturer of gears and gear speed reducers, to
Sumitomo Heavy Industries, Ltd., in May 1999. Shinko Kosan, Ltd., and
Shinsho Corporation, both デュエルビッツ 入金ボーナス affiliates, also sold their equity
shares in Osaka Chain and Machinery. デュエルビッツ 入金ボーナス also decided to transfer
its equity in Shinko Kobelco Tool Co., Ltd., a wholly owned cutting tool
subsidiary, to Mitsubishi Materials in January 2000.
In the Electronics and Information Sector, to strengthen the
profitability of the semiconductor business, we dissolved our business
affiliation with Texas Instruments Incorporated in KTI Semiconductor,
Ltd., in September 1998. Micron Technology Inc., which possesses
world-class semiconductor technologies, became our new partner in the
joint venture. Accordingly, the name of the company was changed to KMT
Semiconductor, Ltd., on April 1, 1999. Also in the semiconductor business,
デュエルビッツ 入金ボーナス reorganized its LSI design business by transferring design to a
newly formed subsidiary and marketing to an affiliate.
Looking Ahead Although the pace of
economic growth seems to be slowing down, the U.S. and European economies
are expected to remain firm in fiscal 1999. In some parts of Asia there
are signs of economic recovery. The outlook for Japan, however, is clouded
by uncertainty because a self-sustaining recovery in private-sector demand
appears unlikely デュエルビッツ 入金ボーナスe near term.
Under the new management structure that includes the formation of
internal companies and a system of corporate officers, we intend to focus
on selective consolidation to boldly and rapidly achieve strategic and
structural reforms. In doing so, we aim to build a strong management
foundation for the 21st century.
As always, we are thankful for your understanding and ask you for your
continued support.
August 1999
Koshi Mizukoshi President and Chief Executive Officer
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