Kobe Steel’s consolidated net sales in the nine months to December 31, 2012 were 1247.7bn yen ($13.40bn), a decreased of 161.8bn yen ($1.738bn) or 11.5% in comparison to the same period last year.
Operating income fell 62.6bn yen ($672.6M) in comparison to the same period last year to 6.4bn yen ($68.7M) a drop of 90.7%. Ordinary income, also known as pre-tax recurring profit, decreased 66.4bn yen ($713.4M) in comparison to the same period last year to an ordinary loss of 16.2bn yen ($174.1M). Net income went down 35.2bn yen ($378.2M) in comparison to the same period last year to a net loss of 22.6bn yen ($242.8M).
Iron & Steel Business
The sales volume of steel products decreased in comparison to the same period last year. Although demand was strong in the domestic automotive industry until the second quarter, the end of eco-friendly car subsidies from the third quarter and a worsening of business conditions in China led to a slowdown. In addition, demand was sluggish in the shipbuilding industry, overseas markets were weak, and the high value of the yen led to a worsening in the export environment. Sales prices declined in comparison to the same period last year due to the weak overseas market and decrease in raw material prices.
Sales of steel castings and forgings declined in comparison to the same period last year due to sluggish demand in the shipbuilding industry and a drop in sales prices. Sales of titanium products also declined due to a decrease in overseas demand.
As a result, consolidated segment sales in the nine months to December 31, 2012 decreased 12.4% in comparison to the same period last year to 562.5bn yen ($6.04bn). Ordinary income went down 40.7bn yen ($437.3M) in comparison to an ordinary loss of 37.0bn yen ($397.5M).
Japan’s economy in the first nine months of fiscal 2012 (April 1-December 31, 2012) was slowly progressing on a recovery trend on the back of rising demand for reconstruction work from the Great East Japan Earthquake. However, the end of eco-friendly car subsidies and other factors brought about a gradual slowdown in the pace of recovery. Overseas markets saw a continuation of the financial turmoil in Europe, growing sluggishness in China’s economy, and a slowdown in the pace of economic recovery in the United States.
In comparison to the previous forecast on October 30, 2012, consolidated net sales for fiscal 2012 are expected to decline due to lower sales volume of hydraulic excavators in China. Ordinary income for fiscal 2012 is projected to remain unchanged from the previous forecast. Although the sales composition of steel products is anticipated to worsen, overall costs are expected to improve, primarily in the Machinery Business. Net loss for fiscal 2012 is anticipated to be smaller than the previous forecast owing to a reversal in the loss on some of the write-downs of investments in securities.
The Company produced 5.26Mt crude steel in the 9-month period of which 4.36Mt was sold as finished product and 26.6% of this was exported. For the full year, Kobe forecast a production volume around 7.0Mt and sales of 5.8Mt with exports close to 27%.
Kobe Steel has a number of Divisions in addition to its Steel Division but the Steel Division is the largest contributing 45% of sales during the 9-month period.
Kobe Steel has also announced that Hiroshi Sato, President & CEO Kobe Steel is appointed Chairman & CEO from 1 April