Japan’s economy continued on track to recovery in the first half of fiscal 2013 (April 1 - September 30, 2013). On the back of monetary, fiscal and other economic measures, export industries began to pick up owing to a correction in the yen, which remained high until last year.
Public investment, including recovery demand from the Great East Japan Earthquake, also increased. In overseas markets, Europe remained weak, while the economy in the United States continued to recover. Although China maintained economic growth, the economy continued to decelerate.
As a result, Kobe Steel’s (Group) consolidated net sales for the first half of fiscal 2013 increased 30.7bn yen (US$313.9M) compared with the same period last year to 889.3bn yen ($9.09bn). Operating income increased 48.9bn yen ($500M) compared with the same period last year to 54.4bn yen ($556.2M). Ordinary income (also known as pre-tax recurring profit) increased 54.1bn yen ($553.1M) compared with the same period last year to 43.1 billion yen.
But the company posted an impairment loss taken as an extraordinary loss on plans to shut down facilities at Kobe Works. To reform the structure of its steel business, Kobe Steel will transfer upstream production from the Kobe Works to the Kakogawa Works.
The sales volume of steel products increased compared with the same period last year. Demand has been recovering in the domestic automotive sector, and the export environment improved owing to strong performance overseas, mainly in the United States, and a correction in the high yen, enabling Kobe Steel to steadily address overseas demand.
Consolidated segment sales for Iron & Steel in the first half of fiscal 2013 were flat compared with the same period last year at 389.9bn yen ($3.98bn). Ordinary income increased 39.6bn yen ($404.9M) compared with the same period last year to 15.5bn yen ($158.4M) owing to progress in reducing overall costs, a change in the depreciation method of fixed assets, and a large upturn in inventory valuation.