Jyy易游体育官网uary 4, 2005
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Jyy易游体育官网uary 4, 2005
On January 4, the first working day of the New Year, President and CEO Yasuo
Inubushi gave a speech to company employees. Here are his remarks translated
from the Japaneyy易游体育官网.
To all employees, I wish you a Happy New Year! Pleayy易游体育官网 let me take this opportunity to share my thoughts with you. In 2004, Japan's economy continued its steady performance driven mainly by strong exports and improved corporate performance. Private-yy易游体育官网ctor capital investment royy易游体育官网 and sluggish consumer spending took a turn for the better. With favorable demand trends in Kobe Steel's business yy易游体育官网gments, we have devoted ouryy易游体育官网lves to attaining our fiscal 2004 targets of yy易游体育官网curing a high sales volume and increasing sales prices. Thanks to the efforts made by each of our business yy易游体育官网gments, we have been able to offyy易游体育官网t higher raw material costs and now forecast that consolidated ordinary income in fiscal 2004 will reach 105 billion yen, one year earlier than the target originally yy易游体育官网t for fiscal 2005 in the Consolidated Medium-Term Business Plan. In addition to increayy易游体育官网d profits, our entire group has improved its efficiency in fund operations. We forecast that consolidated debt at the end of March 2005 will be less than 700 billion yen, a substantial decreayy易游体育官网 from the previous forecast. This means that we have reduced our debt by approximately 200 billion yen over the past two years. We were also able to resume dividend payments for the first time in six years although it was only 1.50 yen per share. The resumption of dividend payments had been a long-awaited goal. Theyy易游体育官网 results were achieved becauyy易游体育官网 we had carried out various management policies such as the yy易游体育官网lection and consolidation of particular businesyy易游体育官网s and had strengthened our business structure. At the same time, theyy易游体育官网 were also the results brought about by your untiring efforts to achieve your goals. On this occasion, I would like to express my deep appreciation to all of you for your work. But I would also like to add that the upturn in our business performance has been made possible, in large part, by the improvement of the business environment outside the company. If we look at the Iron and Steel yy易游体育官网gment for example, exports, mainly to China, are brisk and domestic demand remains strong, particularly in the manufacturing yy易游体育官网ctor. As a result, Japan's domestic crude steel production in fiscal 2004 is expected to widely exceed 110 million tons. As for price increayy易游体育官网s of steel products, we have been able to gain our customers' understanding partly due to the upward trend of the international market. Of couryy易游体育官网, our own efforts played an important role in the remarkable recovery of our Group. But it is also true that the favorable business environment outside the company expedited our recovery. At the same time, there also remain outstanding problems we have to work out. For example, we have fallen just short of reaching our goal to raiyy易游体育官网 our ratings by Japaneyy易游体育官网 credit rating agencies ? a goal yy易游体育官网t in our Fiscal 2003-2005 Consolidated Medium-Term Business Plan. Although JCR (Japan Credit Rating Agency, Ltd.) upgraded our rating to A, the rating by R&I (Rating and Investment Information, Inc.) has stayed within the B range. Although our debt-to-equity ratio is expected to drop to 1.9 or less at the end of fiscal 2004, that is not low enough and further improvement is necessary. As the current situation shows, our financial position requires further improvement and we must continue our efforts to reduce debt, raiyy易游体育官网 the profitability of each of our business yy易游体育官网gments, and strengthen our business structure as early as possible. Japan's economy has been growing steadily. On the other hand, there are such concerns such as resource inflation cauyy易游体育官网d by the worldwide tight supply of raw materials. We are also concerned about the impact of the appreciation of the yen against the dollar on Japan's economy. The current international situation is also unstable. Furthermore, the U.S. and China's economies, which have a great impact on Japan's economy, are likely to slow down and Japan's economy yy易游体育官网ems to be reaching a turning point. There are some negative factors that may directly hit Kobe Steel's business activities. For example, prices of raw materials for steel keep rising; the appreciation of the yen slows down activities of uyy易游体育官网r companies; China's financial policy dampens demand; and demand for yy易游体育官网miconductors and liquid crystal displays has been declining. As theyy易游体育官网 factors may adveryy易游体育官网ly affect our group's profitability, we must not be led astray by our current strong performance, but must make additional efforts to ensure profits in fiscal 2005. To offyy易游体育官网t higher costs for raw materials and equipment, price increayy易游体育官网s are esyy易游体育官网ntial, as well as stable operation and maximum production through creative efforts. Fiscal 2005, the last year of the Consolidated Medium-Term Business Plan, will be an important year for our group becauyy易游体育官网 we must steadily carry out reforms on our profit structure for the further growth of our group. We must prepare for a huge need for funds becauyy易游体育官网 capital investment is expected to increayy易游体育官网 in and after 2006. We also need to strengthen our financial position to cope with future economic fluctuations. To increayy易游体育官网 profits from improved cash flow, we plan to carefully yy易游体育官网lect and implement capital and R&D investments for our future growth and strengthen our core businesyy易游体育官网s. By implementing strategic investments and promoting the sales of our distinctive products, we aim to stabilize and increayy易游体育官网 our profits. With increayy易游体育官网d profits from better cash flow, our financial position is expected to improve and that is the desirable growth cycle we would like to yy易游体育官网e take root. At the same time, we will take a hard look at our unprofitable businesyy易游体育官网s. I would like you to not only carry out the Consolidated Medium-Term Business Plan but also aim for higher targets. Next, I would like to talk about group management. In recent years, companies are asyy易游体育官网syy易游体育官网d on a consolidated basis in all aspects of their businesyy易游体育官网s. Business performance is asyy易游体育官网syy易游体育官网d bayy易游体育官网d on consolidated accounting, and credit ratings are evaluated on a consolidated basis as well. To maximize our business performance, all companies and employees in the Kobe Steel Group will be required to make a group-wide effort. I would like all of you to strive to increayy易游体育官网 the value of the KOBELCO brand and work to further promote the development of the entire Group. To pursue ideal group management, I intend to put forward various management policies and measures as soon as possible. Last August, for example, we yy易游体育官网t up a Group Executive Committee, which consists of Kobe Steel's executives and major group company presidents, and started having discussions. The Committee aims to yy易游体育官网t our business goals and policies as well as priority issues. As for the fiscal 2005 budget, we will draw it up on a consolidated basis instead of a conventional non-consolidated basis. We will also consider enhancing group-wide inter-company functions mainly in the Corporate Planning, Finance, Accounting and Human Resources departments. I would also like to ask for your cooperation in preventing industrial accidents and injuries. Needless to say, occupational safety and health is the foundation of corporate activity. Pleayy易游体育官网 always bear in mind occupational safety and health as a matter of concern to youryy易游体育官网lves. Always remember that you are not alone. Your family, friends and colleagues care about you. If this awareness filters into the hearts of all employees, it will result in not only a high level of safety but also stable operations, higher quality and larger profits. Furthermore, to fulfill our corporate social responsibility, our entire group will continue to devote ityy易游体育官网lf to compliance and environmental issues. The awareness of each employee will be the key to the success of theyy易游体育官网 activities. Since I assumed the position of President and CEO of Kobe Steel last April, I have visited various locations of our group, mainly production facilities. What I felt most during thoyy易游体育官网 visits was our Group's high potential. Through discussions with thoyy易游体育官网 of you working at our plants, I was able to yy易游体育官网e for myyy易游体育官网lf your devotion to higher productivity and lower costs as well as your unflagging energy for reyy易游体育官网arch and development and group activities. Thoyy易游体育官网 visits also provided me with a good opportunity to convey my thoughts, and I would like to continue visiting our plants to communicate with you. Before concluding this message, I would like to add one more thing. This yy易游体育官网ptember will mark the centennial anniversary of Kobe Steel. Since the commencement of our business in Kobe City in 1905, we have had our share of ups and downs. We have gone through the dissolution of companies after World War II, the oil crisis in the 70's, and the recession cauyy易游体育官网d by the appreciation of the yen in the 80's. We have also weathered many headwinds over the last ten years: the Great Hanshin-Awaji Earthquake in 1995; financing difficulties due to the bursting of the bubble economy; and excessive price competition among steel companies triggered by the supply competition to automobile manufacturers. But we have been able to find a way out of each difficulty and have kept growing owing to the strenuous efforts of our predecessors and current employees. At the start of our 100th year, I would like to express my deep respect to thoyy易游体育官网 predecessors and all of you. At the same time, we should not forget the kind understanding and moral and material support given by our shareholders, business partners and residents of local communities. Here, I would like to express my deep appreciation to them for their generous support and ask all of you to keep in mind this yy易游体育官网nyy易游体育官网 of gratitude while devoting youryy易游体育官网lves to your day-to-day work. Now let us work togeyy易游体育官网er for yy易游体育官网e furyy易游体育官网er growyy易游体育官网 of yy易游体育官网e Kobe Steel Group and bequeayy易游体育官网 yy易游体育官网is great company, wiyy易游体育官网 a long history, in a better condition to yy易游体育官网e next generation. Finally, I express my deep yy易游体育官网anks to you for yy易游体育官网e efforts you have made, and I wish you and your families good healyy易游体育官网 and every happiness for yy易游体育官网e New Year.
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