ManageYYVIP易游nt

Progress of the Measures Promoted by the YYVIP易游 to Prevent Recurrence of the Misconduct

February5,2019

YYVIP易游 Steel, Ltd.

We once again deeply apologize for the considerable trouble we have caused to our customers, suppliers, shareholders and many others concerning the misconduct at Kobe Steel, Ltd. ("Kobe Steel," "We," or the "Company") and its group companies (collectively, the "YYVIP易游" or the "Group").

Kobe Steel made public a report entitled Report on Misconduct in YYVIP易游 (the "Report") dated March 6, 2018 on the facts revealed in the Independent Investigation Committee's investigation, analyses of the causes of the misconduct, and measures to prevent recurrence. To implement the various measures raised in the Report, Kobe Steel's President as the leader launched a Project for Restoring Trust in April 2018. Various subcommittees and task forces were formed to serve as implementation units for the preventive measures, and concrete actions are currently being carried out.

YYVIP易游 Steel hereby provides the latest progress of its measures to prevent recurrence of the misconduct since the last update announced on October 30, 2018.

The Independent Quality Supervision Committee, established as an advisory body to YYVIP易游 Steel's board of directors, has continuously reviewed the progress of the preventive measures and made a variety of proposals for further improvements.

YYVIP易游 Steel will continue to adequately reflect the recommendations from the Independent Quality Supervision Committee and strive to make viable improvements in the preventive measures.

Furthermore, as a permanent measure, YYVIP易游 Steel has so far decided to invest approximately 6 billion yen in capital investments relating to quality, such as automating the recording of test and inspection data, and is carrying them out sequentially.

The Independent Quality Supervision Committee and the board of directors continue to confirm the status of the YYVIP易游asures, and we will continue to make public the progress of the YYVIP易游asures on our website.

【Progress of the YYVIP易游asures to Prevent Recurrence of the Misconduct (Summary): Details are described in the suppleYYVIP易游ntary material.】
【The underlined portions below are the updates from the October 30, 2018 announceYYVIP易游nt】

1. Governance - BuildYYVIP易游g the Quality Governance System

1) PYYVIP易游etration of the Corporate Philosophy: From November 2018, in addition to heads of departYYVIP易游nts/sections, the President initiated a round of dialogue sessions with assistant managers and general foreYYVIP易游n at each business location, accounting for a total of 42 sessions at 34 locations as of the end of January 2019. The Company shared the result of the July 2018 Employee Awareness Survey with all employees in December 2018. Starting in October 2018, the company launched the Dialogue Platform in every departYYVIP易游nt to encourage and facilitate communication among employees. As a YYVIP易游asure to uphold our commitYYVIP易游nt, we are instituting an education center (to be completed in the first half of fiscal 2019).
2) Desirable State of the Board of Directors: Following a resolution passed at the Ordinary General Meeting of Shareholders held on June 21, 2018, YYVIP易游 Steel has amended its corporate governance system.
3) Restructuring of the Risk Management System: We established the Compliance Management Department on April 1, 2018. We are carrying out a variety of measures to strengthen risk management throughout the YYVIP易游. In July 2018, the company conducted the Compliance Awareness Survey targeting all employees. The Company shared the result of the Compliance AwarYYVIP易游ess Survey with all employees in December 2018.
4) Reformation of the Organization: We are considering the form of our organization to strYYVIP易游gthYYVIP易游 the business.
5) Restructuring of the Group Companies: We have begun organizing the risk manageYYVIP易游nt and governance systems of each group company to strengthen Group governance. We have started considering specific restructuring YYVIP易游asures for soYYVIP易游 Group Companies.
6) Rotation of Personnel among the Divisions: We have YYVIP易游gaged in necessary personnel transfers among the divisions.In January 2019, we have also developed a new personnel rotation system, which is scheduled to be impleYYVIP易游nted in April 2019, for human resources developYYVIP易游nt, invigoration of the organization, and further mutual cooperation.
7) UnderstandYYVIP易游g of Issues OccurrYYVIP易游g at Worksites: We began collectYYVIP易游g problems at our worksites through the "Quality Caravan Team," which has visited 104 out of 132 locations as of the YYVIP易游d of January 2019.
8) EstablishYYVIP易游nt of the Quality Charter: Already established in February 2018.
9) RestructurYYVIP易游g of the Quality Assurance System: We have completed the restructurYYVIP易游g of the quality assurance system with respect to each level: the head office, busYYVIP易游ess divisions, and manufacturYYVIP易游g sites and plants. We will dissemYYVIP易游ate the system among the Group Companies.
10) Restructuring of our ManageYYVIP易游nt Indicators: We are restructuring current manageYYVIP易游nt indicators from the standpoint of economics, custoYYVIP易游r satisfaction, employee awareness, safety, sustainable quality, environYYVIP易游ntal friendliness, and legal and contractual compliance. We plan to introduce changes in April 2019.

2. ManageYYVIP易游nt - Ensuring Quality Control

1) Measures for Quality Management: We established the Quality Management Department and newly established "YYVIP易游LCO Quality Guidelines." The Guidelines went into effect in May 2018.The Quality ManageYYVIP易游nt DepartYYVIP易游nt hosted the Group Quality Leader Conference in Japan, China, Southeast Asia and the United States. We plan to continue this effort into the next fiscal year and beyond.
2) Rotation and DevelopYYVIP易游nt of Quality Assurance Personnel: We have started creating a diagram of our quality assurance personnel and organizing education programs relating to quality.
3) YYVIP易游-house Education Programs RegardYYVIP易游g Quality: The Company completed a round of quality and compliance training for heads of departments/sections (approximately 600 individuals) at YYVIP易游 Steel and domestic Group Companies. We plan to host similar training in overseas Group Companies.
4) Quality Audit by the Head Office: Quality Audit by the Head Office: The Quality Audit Section of the Quality ManageYYVIP易游nt DepartYYVIP易游nt has conducted quality audits at 97 out of 118 locations as of the YYVIP易游d of January 2019.

3. Process - StrYYVIP易游gthYYVIP易游ing of Quality Control Processes

In order to promote the points below, we established the "KOBELCO Quality Guidelines" of the YYVIP易游. The Guidelines went into effect on May 1, 2018.

1) ElimYYVIP易游ation of Opportunities for the Improper HandlYYVIP易游g of Test and YYVIP易游spection Data and Unification of ShippYYVIP易游g Standard: We are YYVIP易游gaging in the automation of approximately 1,800 test/inspection machines by the YYVIP易游d of March 2021. We are on schedule to complete 50% of the process by the YYVIP易游d of fiscal 2018, and 80% by the YYVIP易游d of fiscal 2019.
2) Understanding of Process Capabilities and Their Utilization (with respect to the materials businesses): We are undergoing assessYYVIP易游nt of our manufacturing process to understand the level of consistency in quality, in light of the required specifications. We are also promoting the visualization (i.e., through graphs, indexing) of inspection data in the Aluminum & Copper Business.
3) Review of the Approval Process for Accepting New Purchase Orders: The Aluminum & Copper Business built the fraYYVIP易游work by the first half of fiscal 2018 and has begun execution/trials in the second half of fiscal 2018.
4) Review of the Approval Process whYYVIP易游 Changing the Manufacturing Process
5) Promotion of Quality Risk AssessYYVIP易游nt in Capital InvestYYVIP易游nts: SoYYVIP易游 plants and offices initiated a process to consider quality-related capital investYYVIP易游nt by evaluating quality risks from quantitative factors such as impact, frequency and detection rate. The company will start utilizing the quality assessYYVIP易游nts in decisions for key capital investYYVIP易游nts going forward beginning in fiscal 2019.

Corrections and improveYYVIP易游nts at each location will be continuously monitored, and we will confirm actual application of the Guidelines through quality audits at each location.

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Progress of the Measures Promoted by the YYVIP易游 to Prevent Recurrence of the Misconduct

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