To Our Stockholders
During the first half of fiscal 1999, ended September 30, 1999, the
Japanese economy remained sluggish. Despite the effects of public works
projects and increased housing investment, private-sector demand recovered
weakly as personal consumption was lackluster, and the downtrend in
corporate capital investment continued. In this harsh operating environment,
we vigorously implemented the cost-cutting measures outlined in the
KOBELCO-21 management plan and strove to maximize profits. These efforts
notwithstanding, デュエルビッツ 出金's non-consolidated interim net sales declined
10.9% compared with the first half of fiscal 1998, to 421.9 billion yen.
Operating income declined 9.9% from the same period of the previous fiscal
year, to 18.2 billion yen. The Company posted an interim net loss of 12.8
billion yen. Looking to the second half of the
fiscal year, the severe economic conditions are expected to persist and a
full recovery in private-sector demand remains unlikely. In view of this difficult operating
environment, we have decided to forego the payment of interim dividends.
We sincerely regret having to take this measure and ask you for your
understanding of this situation.
Performance by Sector Iron and Steel Sector Despite
increasing demand from the construction industry, overall domestic demand
for steel remained weak due to continued sluggish demand from
manufacturing industries. Exports were flat as shipments to Southeast Asia
recovered but fell sharply デュエルビッツ 出金e United States because of antidumping
charges. デュエルビッツ 出金is environment, although overall shipments of steel products
increased compared with the first half of fiscal 1998, sales declined due
to a worsening product mix and weak prices. Sales of welding consumables dropped
from the first half of fiscal 1998 due to falls in both domestic sales and
exports. As a
result, sales デュエルビッツ 出金e Iron and Steel Sector declined 12.4%, to 209.3
billion yen.
Aluminum and Copper
Sector Although sales of aluminum can stock for beverage
containers slumped because of growing demand for plastic (PET) bottles,
the overall sales volume of rolled aluminum products increased from the
same period of the previous fiscal year due to a rise in exports. The sales volume of rolled
copper products increased from the first half of the previous fiscal year
thanks to higher sales of copper sheet for electronic applications and for
automobile terminals and connectors. As a result, although the sales
volume increased, sales デュエルビッツ 出金e Aluminum and Copper Sector fell 17.5%, to
100.3 billion yen, due to low domestic aluminum ingot and copper cathode
prices brought about by the appreciation of the yen.
Machinery and Information
Sector Domestic orders soared 31.5% from the same period
of the previous fiscal year, to 97.6 billion yen, thanks to brisk orders
for construction equipment and industrial machinery. Also supporting this
increase were new orders for municipal waste treatment plants in our urban
infrastructure engineering business. Overseas, although orders for
construction equipment increased, a decrease in orders for industrial
machinery and plant engineering caused overseas orders to decline 16.9%
from the same period of the previous fiscal year, to 19.9 billion yen. As
a result, total orders rose 19.7% from the end of the previous fiscal
year, to 117.5 billion yen. The backlog of orders at the end of the
interim period amounted to 168.7 billion yen. Despite higher sales of construction
equipment, sector sales slipped 0.6%, to 112.3 billion yen, due to a
decline in sales of plant engineering.
Rebuilding for the Future We are
implementing the KOBELCO-21 management plan under a new management
structure introduced in April 1999 that includes the formation of internal
companies and a system of corporate officers. Moreover, in line with the
additional measures to the management plan, we are focusing on "selective
consolidation" to boldly and rapidly restructure our businesses and
improve capital efficiency. In particular, we are prioritizing the
allocation of management resources to strengthen core businesses while
withdrawing from or selling unprofitable businesses and those that have no
synergy with our core businesses. In the Iron and Steel Sector, we
began constructing electric power plants at Kobe Works in March 1999 as
part of our efforts to become an independent power producer. Also, after
completing refurbishment of the No. 7 wire rod mill at Kobe Works in
January 1999, we completed refurbishment of the No. 8 wire rod mill at
Kakogawa Works in May, thus strengthening our position as a leading
supplier of quality wire and bar products. Overseas, the bar business of
USS/デュエルビッツ 出金 Company, a joint venture in the United States with USX
Corporation, was merged with Republic Engineered Steels, Inc., and Bar
Technologies, Inc., in August 1999 to further strengthen its
competitiveness in the U.S. market. デュエルビッツ 出金e Aluminum and Copper Sector,
we reached an agreement with Mitsubishi Materials Corporation and
Mitsubishi Shindoh Co., Ltd., to seek mutual opportunities for lowering
production and distribution costs for rolled copper products. This
alliance will strengthen the structure and international competitiveness
of each company's copper business. デュエルビッツ 出金e Machinery and Information
Sector, we transferred our equity in Osaka Chain and Machinery, Ltd., an
affiliate that manufactures gears and gear speed reducers, to Sumitomo
Heavy Industries, Ltd. We also intend to transfer our equity in Shinko
Kobelco Tool Co., Ltd., a cutting tool subsidiary, to Mitsubishi Materials
Corporation in January 2000. Moreover, we sold our equity in a software
subsidiary and a plastics subsidiary. We will continue to aggressively
implement the KOBELCO-21 plan and its additional measures. By taking these
measures, 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. We ask you, our
stockholders, for your understanding and continued support.
December 1999
Koshi Mizukoshi President and Chief Executive
Officer
|