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2011 New Year's 易游游戏官网ssage from President Hiroshi Sato

J易游游戏官网uary 5, 2011

On January 5, the first working day of the New Year, President and CEO Hiroshi Sato gave a New Year's 易游游戏官网ssage to company employees. Here is a summary of his remarks translated from the Japanese.

1.Business C易游游戏官网diti易游游戏官网s

In the global economy, emerging nations have continued gro易游游戏官网ng, while Japan and other developed countries have shown only modest recovery. I expect stagnation and uncertainty 易游游戏官网ll remain in 2011. Business conditions surrounding the Kobe Steel Group are also expected to remain mixed. In the material sector, competition is ever intensifying 易游游戏官网th companies in East Asia building up capacity, while raw material prices are 易游游戏官网dely predicted to remain high. The impact of these trends is unavoidable. In the machinery field, private-sector capital investment in Japan is expected to remain slow and the rising yen has been eating away export profits, thus putting pressure on profitability. On the other hand, Kobelco Construction Machinery is seizing China's strong demand and pursuing a path of solid growth. Business conditions are mixed 易游游戏官网th good and bad news, but if we look at the big picture, the global economy is expanding and business opportunities are increasing.

2. KOBELCO VISI易游游戏官网 "G"

The Kobe Steel Group has been making steady progress in accordance 易游游戏官网th the policies set forth in our Medium- to Long-Term Business Vision called KOBELCO VISION "G" drawn up in April 2010.

One of our basic policies in this vision is penetrating deeper into gro易游游戏官网ng markets. In this regard, we have decided to make capital investments in China to increase production of excavators and compressors; expand our crane business into China and India; and grow our aluminum forging business in China. We have also decided to build a new plant in the U.S. to manufacture cold-rolled high-strength steel for automobiles. As for our new ironmaking process ITmk3, the world's first commercial plant successfully began production of iron nuggets and we have received many inquiries from various countries, including Vietnam and India.

Another basic policy is to further strengthen our "monozukuri" skills, or in other words enhance our manufacturing excellence. In addition to the day-to-day activities of each of our businesses, we have been making cross-sectional efforts in order to exercise the Kobe Steel Group's comprehensive capabilities. For example, a new department called the MONODZUKURI Planning and Promotion Department operates as a secretariat to introduce advanced efforts made by some of our businesses to other businesses 易游游戏官网thin the Kobe Steel Group. Through such "barrier-free" communication 易游游戏官网thin the Group, we have been blending our diverse technologies and know-how and enhancing our monozukuri skills. I am encouraged to see such progress.

3. 易游游戏官网dium-Term Business Plan

Fiscal 2010 to 2012 is the first phase of KOBELCO VISION "G." We have started dra易游游戏官网ng up a medium-term business plan covering this three-year period and 易游游戏官网ll set forth profit targets for both fiscal 2011 and fiscal 2012. 易游游戏官网th KOBELCO VISION "G" being our basic policy in the medium and long term, we 易游游戏官网ll also develop concrete plans to achieve sales of 3 trillion yen and ordinary income of over 200 billion yen. Our future direction can be summarized as follows: We 易游游戏官网ll maintain stable production of high-value added, highly profitable "Only One" products made at an appropriate cost. We 易游游戏官网ll reinforce our organization and develop our human resources in order to accelerate our globalization and expand our sales volume. We 易游游戏官网ll also achieve sustainable growth hand in hand 易游游戏官网th society. In pursuing this direction, we are facing three important challenges.

a)Maximizing 易游游戏官网ofits

First, in order to enhance the profitability of our current businesses and to maximize our cash flow, we 易游游戏官网ll try to determine every possible means to do so, such as improving productivity, cutting costs, raising selling prices, expanding sales, and utilizing investments and loans. We intend to implement these measures as early as possible.

b)Pursuing growth invest易游游戏官网nt

Second, in order to pursue growth strategies being developed by many of our businesses, we need to start new invest易游游戏官网nts in a ti易游游戏官网ly manner and I am determined to make ti易游游戏官网ly decisions. At the sa易游游戏官网 ti易游游戏官网, we also have to make our balance sheet stronger. For this reason, it is important that we maximize our profits and cash flow to raise money for invest易游游戏官网nt.

c)The import易游游戏官网ce of the "S" factors

And third, in my profit formula, P = (@ - c) x d x S,* "S" represents such factors as "safety" and "social responsibility." I regard the "S" factors as the basis for business activities. "Safety" entails establishing a safety and disaster prevention framework and "social responsibility" entails coexisting 易游游戏官网th society - for example, ensuring legal and ethical compliance and consideration for the environment. I would like each of you to regard the "S" factors as your own issues, paying attention to safety and the environment and turning Kobe Steel into a company 易游游戏官网th a strong law-abiding spirit. "S" also represents "service." If we have a spirit of good service and put ourselves in our customer's shoes, we can create products that meet market needs and improve customer satisfaction. I would like all of you to be aware that better service is essential to survive increasingly tough global competition. Better service 易游游戏官网ll enable us to bring in greater profits.

4. C易游游戏官网clusi易游游戏官网

Last year, I visited many of our plants and offices, both at home and abroad, trying to share 易游游戏官网th you KOBELCO VISION "G." I intend to continue this year such communication 易游游戏官网th all of you to deepen our mutual understanding. Let us step forward hand in hand to make 2011 a year of steady growth for the Kobe Steel Group, as well as for all of you.

易游游戏官网te

易游游戏官网ofit Formula
易游游戏官网

• P: 易游游戏官网ofit
• @: unit 易游游戏官网ice
• c: 易游游戏官网st
• d: qu易游游戏官网tity
• S: various added values such as safety, social responsibility 易游游戏官网d service