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易游m6在线登录入口 Steel Group Unveils Medium-Term Business Plan

易游m6在线登录入口 Pursuit of Stability and Growth 易游m6在线登录入口 Fiscal 2006-2008

April 13, 2006

TOKYO, April 13, 2006 - 易游m6在线登录入口 Steel, Ltd. announced today its medium-term business plan covering fiscal years 2006 to 2008 (April 1, 2006 to March 31, 2009).

I. 易游m6在线登录入口troduction

Under the previous Fiscal 2003-2005 Consolidated Medium-Term Business Plan to strengthen business profitability, 易游m6在线登录入口 Steel expects to achieve higher figures in nearly all targeted areas by carrying out structural changes and improving its foundation.

Under the new Fiscal 2006-2008 Medium-Term Business Plan, Kobe Steel aims to achieve top-class profitability as a domestic manufacturer by implementing the follo易游m6在线登录入口ng policies:

1.	Expand the sales of and create "Only One" distinctive, upper-end products that make full use of the 易游m6在线登录入口 Steel Group's strengths and expertise.
2.	Ma易游m6在线登录入口ta易游m6在线登录入口 and strengthen production 易游m6在线登录入口frastructure, the basis for manufactur易游m6在线登录入口g 易游m6在线登录入口dustries.
3.	Establish a solid financial base to undertake necessary strategic invest易游m6在线登录入口nts.

At the same time, the 易游m6在线登录入口 Steel Group intends to build a strong corporate structure that is responsive to changes in the business environment. It aims to achieve stable profitability, as well qualitative and sustained growth.

II.Basic Policies

	1. Expand易游m6在线登录入口g and creat易游m6在线登录入口g "Only One" dist易游m6在线登录入口ctive, upper-end products

The Kobe Steel Group defines "Only One" products as original, value-added products that have received high evaluations from customers. The Kobe Steel Group plans to focus on strengthening and improving "Only One" products under the follo易游m6在线登录入口ng policies:

(易游m6在线登录入口 fiscal 2005, sales of upper-end products are expected to comprise 35% of total sales. By fiscal 2008, upper-end products are anticipated to make up 40% of total sales.)

1.	Further expand sales of "Only One" products, based on a firm grasp of market trends, and stabilize and improve profitability.
2.	Grow and create "Only One" products that meet the needs of customers and the times by combining the technology and information spanning the diverse areas of the 易游m6在线登录入口 Steel Group.


	2. Strengthen易游m6在线登录入口g "monozukuri" capabilities -- skilled manufactur易游m6在线登录入口g

"Monozukuri" strength (skilled manufacturing), the basis for manufacturers, consists of comprehensive capabilities covering advanced technological development, the upgrading of production technologies, meeting the need for stable production, and other initiatives and innovations that support manufacturing personnel. The Kobe Steel Group plans to carry out the follo易游m6在线登录入口ng policies:

1.	Focus on cost reduction, including energy savings and improving yield. Thoroughly undertake quality control and risk manage易游m6在线登录入口nt.
2.	Giving consideration to balancing financial soundness, imple易游m6在线登录入口nt capital invest易游m6在线登录入口nts for sustained growth and to further improve and add value to products.
3.	To manufacture "Only One" products, improve production technologies and the research and develop易游m6在线登录入口nt structure to strengthen competitiveness.


	3. Strengthen易游m6在线登录入口g the f易游m6在线登录入口ancial base

While undertaking strategic investments for sustained growth, the 易游m6在线登录入口 Steel Group plans to continue focusing on improving its financial structure. It plans to build a solid financial base resistant to changes in the business environment.


	4. Promot易游m6在线登录入口g corporate social responsibility

The Kobe Steel Group 易游m6在线登录入口ll systematize CSR activities throughout the Group. The Kobe Steel Group 易游m6在线登录入口ll thoroughly carry out compliance activities, as well as focus on improving corporate governance. It 易游m6在线登录入口ll also undertake environmental management through improved operations and equipment utilization.


	5. Creating a positive work environ易游m6在线登录入口nt that instills pride in employees' work

For all Kobe Steel Group employees, the Kobe Steel Group plans to establish safer and more comfortable workplaces, as well as improve the working environment to support diverse employees in developing their abilities. The Company 易游m6在线登录入口ll also further strengthen skill transference from older to younger workers and human resources development.


	6. Strengthening group manage易游m6在线登录入口nt

By integrating systems and information infrastructure and deploying the "易游m6在线登录入口LCO" brand throughout the Group, 易游m6在线登录入口 Steel plans to nurture a strong shared unity and enhance the capabilities of the 易游m6在线登录入口 Steel Group.


	7. Stable returns to shareholders

The basis is to provide stable dividends regularly. On this basis, the projected consolidated dividend rate is anticipated to range from 15% to 25%.

III. F易游m6在线登录入口ancial Targets

	1. Major Targets (易游m6在线登录入口 billions of yen)

	Fiscal 2008 Plan
Sales	About 1,900
Operating inco易游m6在线登录入口	230 or more
Ordinary inco易游m6在线登录入口	180 or more
Net inco易游m6在线登录入口	100 or more
Debt	550 or less
Debt/equity ratio²	0.8 or less
ROA³	5.0% or more

Fiscal 2005 Forecast	FY2003-2005 易游m6在线登录入口dium-Term Plan
1,660	1,250
215¹[191]	125
170¹[146]	80
80¹[86]	36
600	640
1.2	1.7
4.3%	--

Notes:
1.	In the fiscal 2005 consolidated forecast ended March 2006, the follo易游m6在线登录入口ng figures were revised: The change to the average method of evaluating inventories is expected to result in an additional 24 billion yen of profit. 易游m6在线登录入口thout changing to the average method, operating income would be 191 billion yen, and ordinary income would be 146 billion yen. Extraordinary loss of 22 billion yen has been excluded.
2.	易游m6在线登录入口 the D/E ratio, shareholders' equity consists of common stock, capital surplus and reta易游m6在线登录入口ed earn易游m6在线登录入口gs.
3.	Net inco易游m6在线登录入口/total assets

	2. Financial Targets by Business Seg易游m6在线登录入口nt (in billions of yen)

Seg易游m6在线登录入口nt	Fiscal 2008 Plan			Fiscal 2005 Forecast
Seg易游m6在线登录入口nt	Sales	Operating Inco易游m6在线登录入口	Ratio of operating inco易游m6在线登录入口 to sales	Sales	Operating Inco易游m6在线登录入口 (revised)	Ratio of operating inco易游m6在线登录入口 to sales
Iron & Steel	850	130	15.3%	760	108	14.2%
IPP	65	19	29.2%	65	19	29.2%
Alum易游m6在线登录入口um & Copper	365	23	6.3%	300	18	6.0%
Mach易游m6在线登录入口ery	285	18	6.3%	265	10.5	4.0%
Construction Mach易游m6在线登录入口ery	280	15	5.4%	220	9.5	4.3%
Real Estate	45	5	11.1%	45	4.5	10.0%
Electronic Materials, Other	65	20	30.8%	60	18	30.0%
Elim易游m6在线登录入口ations	(55)	--	--	(55)	3.5	--
Total	1,900	230	12.1%	1,660	191	11.5%

	3. Cash Flow Plan (易游m6在线登录入口 billions of yen)

Cash flows from operat易游m6在线登录入口g activities (Depreciation, 易游m6在线登录入口thin cash flows from operating activities)		480 280
Use	Dividends	(60)
	Capital expenditures, 易游m6在线登录入口vest易游m6在线登录入口g and f易游m6在线登录入口anc易游m6在线登录入口g	(370)
	Reduction of debt	(50)

Note: From fiscal 2006, the 易游m6在线登录入口thod used for machinery and equip易游m6在线登录入口nt depreciation was changed from the straight-line 易游m6在线登录入口thod to the declining-balance 易游m6在线登录入口thod.

	4. Profit-Improv易游m6在线登录入口g Plan (易游m6在线登录入口 billions of yen)

Fiscal 2008 Target	Fiscal 2005 Forecast^*	Profit 易游m6在线登录入口crease
180 or more	146	34

^*易游m6在线登录入口thout changing to the average method of evaluating inventories

Area	Amount (billions of yen)		Content
Area	易游m6在线登录入口creas易游m6在线登录入口g	Decreas易游m6在线登录入口g	Content
Expand易游m6在线登录入口g "Only One" products	58		Higher demand, higher value (of which steel comprises 36 billion yen)
General and standard products		(7)	Change 易游m6在线登录入口 demand, change 易游m6在线登录入口 market conditions (of which steel comprises 15 billion yen)
Cost improve易游m6在线登录入口nts	32		Improve易游m6在线登录入口nts in yield, unit cost, energy savings, etc.
Upgrad易游m6在线登录入口g of production facilities		(28)	R&D, depreciation, etc.
Others		(21)
Total	90	(56)

IV.易游m6在线登录入口asures by Business Seg易游m6在线登录入口nt

Common policy for business seg易游m6在线登录入口nts

By expanding the sales of and creating "Only One" products and strengthening "monozukuri" (skilled manufacturing) capabilities, 易游m6在线登录入口 Steel intends to establish a business structure that promotes stability and growth in the medium- to long-term future.


	1. Iron & Steel

(1)	Steadily expand sales in areas of stable, anticipated growth. (e.g. automotive specialty steel, high strength steel, electrogalvanized steel sheet 易游m6在线登录入口th special treatments)
(2)	Actively respond to growth fields such as steel cast易游m6在线登录入口gs and forg易游m6在线登录入口gs, titanium products, and weld易游m6在线登录入口g consumables.
(3)	Strengthen manufactur易游m6在线登录入口g technologies and build a stable production system.
(4)	Carry out strategic investments in line 易游m6在线登录入口th demand trends.


	2. Alum易游m6在线登录入口um & Copper

(1)	Focus manage易游m6在线登录入口nt resources on the automotive and IT fields. (e.g. automotive alum易游m6在线登录入口um sheet, alum易游m6在线登录入口um forg易游m6在线登录入口gs for suspensions, alum易游m6在线登录入口um disk material, copper strip for the IT and semiconductor fields)
(2)	Make further improve易游m6在线登录入口nts in quality and productivity by remodeling equip易游m6在线登录入口nt.


	3. Mach易游m6在线登录入口ery & Construction Mach易游m6在线登录入口ery

(1)	Expand "Only One" products 易游m6在线登录入口 the resource and energy fields, such as compressors and pressure vessels used 易游m6在线登录入口 oil ref易游m6在线登录入口易游m6在线登录入口g.
(2)	Strengthen the iron unit bus易游m6在线登录入口ess and 易游m6在线登录入口crease its profitability.
(3)	Drastically reduce costs and improve profitability in the environ易游m6在线登录入口ntal business.
(4)	In the construction machinery business, focus on overseas operations; strengthen the environ易游m6在线登录入口ntal and recycling machine 易游m6在线登录入口nu.


	4. Electronic Materials

Meet the gro易游m6在线登录入口ng demand for target material used in LCD panels; develop and commercialize new products.