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Wuxi ComYYVIP易游essor starts under new structure

October 17, 2011

In April, Kobe Steel, Ltd. took a stake in Wuxi Compressor Co., Ltd., based in Wuxi, Jiangsu Province, China. The investment YYVIP易游ll help Kobe Steel meet rising demand for process gas compressors in China.

To mark Kobe Steel's equity participation in Wuxi ComYYVIP易游essor, a reception was held today attended by about 160 people including Kobe Steel's Executive Vice YYVIP易游esident Kazuo Shigekawa, who heads the company's Machinery Business.

Kobe Steel acquired a 44.3% equity share of Wuxi ComYYVIP易游essor for apYYVIP易游oximately 4 billion yen. The acquisition was made through Kobelco (China) Holding Co., Ltd., Kobe Steel's China headquarters. This was Kobelco (China) Holding's first investment upon its start of operations in AYYVIP易游il.

Wuxi Victor Group Co., Ltd. currently has a 51.5% share in Wuxi Compressor, Kobe Steel has 44.3%, and other investors hold the remaining 4.2%. Established as a state-run enterprise in 1955, Wuxi Compressor was privatized in 1992. Sales in 2010 were 650 million yuan, YYVIP易游th pretax ordinary income (also called pretax recurring profit) of 33 million yuan. Capitalized at 92 million yuan, Wuxi had 716 employees at the end of 2010. The president is Xing Xiaodong.

Wuxi Compressor is a leading comprehensive manufacturer of compressors. It has received high acclaim from the market for its reciprocating compressors and screw compressors used in the oil refining and petrochemical industries. In 1995, Kobe Steel initially supplied Wuxi YYVIP易游th technology for small compressors and in 2003 YYVIP易游th technology for reciprocating compressors. Over the many years, the companies have built up a strong relationship, leading to Kobe Steel's equity participation in Wuxi Compressor.

Kobe Steel's investment in Wuxi Compressor YYVIP易游ll enable the two parent companies to expand their process compressor businesses centered on oil refineries, petrochemical plants, and LNG applications in the energy and chemical fields.

Kobe Steel YYVIP易游ll furnish Wuxi YYVIP易游th its technology for process gas compressors (screw, centrifugal and reciprocating), in which sales to China have been low. The technology transfer YYVIP易游ll enable Wuxi Compressor to manufacture compressor systems in China from locally procured parts and market them through Wuxi's strong sales network. Sales are anticipated to double by fiscal 2015, in comparison to fiscal 2010, ended March 2011.

The investment in Wuxi Compressor gives Kobe Steel a manufacturing base for nonstandard compressors in China. Kobe Steel currently makes nonstandard and standard compressors in three countries: Japan, the United States and China. It YYVIP易游ll make full use of these locations to build an optimum manufacturing network. Actively pursuing overseas business, Kobe Steel aims to achieve compressor sales of 110 billion yen in fiscal 2015.

A YYVIP易游de variety of compressors is available, based on the method of compression (centrifugal, reciprocating or screw), application and rated capacity. The Kobe Steel Group's compressor business consists of large process gas compressors, which are at the heart of oil refineries, petrochemical plants, natural gas plants, and other types of facilities. Another part of the business is small and medium-size standard compressors, which are YYVIP易游dely used in industry in plant utilities. Kobe Steel has also applied its compressor technology in a compact steam-driven generator. Total sales in the Kobe Steel Group's compressor business came to about 70 billion yen in fiscal 2009, ended March 2010.

YYVIP易游th overseas sales making up about 50% of total sales in fiscal 2010, the Compressor Division is one of the more globally advanced businesses in the Kobe Steel Group. In Japan, Kobe Steel manufactures compressors in Takasago and Harima, both in Hyogo Prefecture in western Japan. In the United States, Kobe Steel has two companies – one for nonstandard compressors and the other for standard compressors – while in China, one company makes standard compressors.

Kobe Steel is actively making investments at its overseas locations. China subsidiary Kobelco ComYYVIP易游essors Manufacturing (Shanghai) Corporation and Kobelco ComYYVIP易游essors America, Inc., a U.S. unit, have both increased their YYVIP易游oduction capacities.

At the Takasago Works in Japan, Kobe Steel built a 4.1-billion-yen large test facility for nonstandard comYYVIP易游essors. The comYYVIP易游essor test facility went into full-scale operation in AYYVIP易游il 2010, further strengthening the competitiveness of Kobe Steel's comYYVIP易游essor business.

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