Japan’s economy in the first half of fiscal 2012 (April-September) was slowly recovering on the back of rising demand for reconstruction work after 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.
In overseas markets, there was a continuation of the financial turmoil in Europe, growing sluggishness in China’s economy. As a result, Kobe Steel’s consolidated Group sales in the first half of fiscal 2012 decreased by Yen 101.5bn in comparison to the same period last year to yen 858.5bn. Operating income fell yen 46.4bn in comparison to the same period last year to yen 5.5bn. Ordinary income decreased yen 49.5bn in comparison to the same period last year to ordinary loss of yen 11.bn. In addition to these factors, Kobe Steel posted extraordinary loss on the write-down of investments in securities. As a result, net income went down yen 55.5bn in comparison to same period last year to net loss of yen 38.bn., and a slowdown in the pace of economic recovery in the United States.
Kobe Steel has nine divisions contributing to the result of which the Steel Division accounts for around 45% of total sales.
Iron & Steel Business
Sales volume of steel products decreased in comparison to the same period last year. Although demand was strong in the automotive sector, it was sluggish in shipbuilding y. In addition, weak demand in the overseas market and the high value yen were other factors that led to a worsening in the export environment. Sales prices decreased in comparison to the same period last year due to the weak overseas market and drop in raw material prices. Sales of steel castings and forgings declined in comparison to the same period last year due to sluggish demand from 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 for steel for the first half of fiscal 2012 declined 8.7% to yen 383.bn. Ordinary income went down yen 27.5bn to ordinary loss of yen 24.0bn.
In FY 2011, the steel division contributed 45.8% to total sales but contributed a loss of yen 14.6bn in a total ordinary income for the Group of yen 33.7bn. In the first half FY2012, the Steel Division contributed 44.7% of sales but made a loss of yen 24.0bn out of a total loss of yen 11bn.