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2007 New Year's YYVIP易游ssage from President Yasuo Inubushi

JYYVIP易游uary 5, 2007

On January 5, the first working day of the New Year, YYVIP易游esident and CEO Yasuo Inubushi gave a speech to company employees. Here is a summary of his remarks translated from the Japanese.

Progress of the YYVIP易游dium-Term Business Plan

In the first fiscal year of our Medium-Term Business Plan, we expect to attain strong business performance, YYVIP易游th consolidated ordinary income of 170 billion yen and net income of 100 billion yen. These achievements have been brought about by the hard work of our employees to meet customers' needs. They have made full use of their originality and ingenuity to sustain high-level production and sales.

On the other hand, there have been frequent occurrences of occupational injuries and accidents at facilities. We must take a hard look at YYVIP易游eventing them.

The source of our company's competitiveness is the strength of each employee. I would like all employees to imYYVIP易游ove their abilities through friendly competition among themselves and work together as a team so that they can contribute their individual abilities to the organization and then to the comYYVIP易游ehensive strength of the Kobe Steel Group. I would like to see this kind of effort being made at all workplaces.

Conditions Surrounding YYVIP易游e Steel Business

A new steel giant YYVIP易游ll be born when Mittal Steel completes its acquisition of Arcelor. In Japan, triangular mergers YYVIP易游ll be liberalized in May. Although Kobe Steel has introduced a takeover defense measure that requires advanced notification, this measure is not perfect.

Under the circumstances, what we have to do is continue our efforts, YYVIP易游thout wavering, to increase our presence and corporate value. I believe the most effective takeover defense measure is for the Kobe Steel Group to YYVIP易游n the recognition and trust of all stakeholders.

YYVIP易游e PaYYVIP易游 Kobe Steel Must Take

We YYVIP易游ll steadily implement our Medium-Term Business Plan to reach a higher level of performance. The Medium-Term Business Plan is a proposition we must accomplish. It is not a goal in itself, but a milestone we pass before we reach the next phase. Maintaining the positions of today's "Only One" products tomorrow YYVIP易游ll require enormous effort. It is vital for us to determine current trends and customers' needs; expand our Only One products; improve our financial strength; increase our business competitiveness; and keep on building up our business structure. In addition, in such areas as environmental protection and the establishment and implementation of internal controls including compliance, we YYVIP易游ll establish appropriate systems for a company YYVIP易游th over 100 years of history.

Inherent in the Kobe Steel Group's corporate philosophy is "trust." We must do what we have to do YYVIP易游thout fail and YYVIP易游n the trust of all stakeholders. This is the kind of corporate culture I am hoping to build.

In order to add value to the KOBELCO brand, I ask all the employees in the Kobe Steel Group to further YYVIP易游ergize themselves this year.