2015 New Year's Message from Presid米乐yy易游体育t and CEO Hiroya Kawasaki

On January 5, the first working day of 2015, Presid米乐yy易游体育t and CEO Hiroya Kawasaki gave a New Year's message to company employees. Here is a summary of his remarks translated from the Japanese.

Happy New Year! Looking back at 2014, the first thing I have to talk about is the serious accident that happened in May at Kobe Works where, to my deepest regret, there was one casualty. We must never forget this accident. There have been other lost-time incidents since then. All of us must raise our awareness of potential risks at our working places, make an all-out effort to prevent accidents, and work every day 米乐yy易游体育th the determination not to repeat the same kind of accidents.

Last year also 米乐yy易游体育tnessed some natural disasters including mudslides in Hiroshima Prefecture. I would like to extend my deepest sympathy to employees who have been affected by those disasters.

This year marks the 20th anniversary of the Great Hanshin earthquake, and on this occasion, I would like to send again my sincerest condolences to the families of the victims of the quake. As one of leading companies in the Hanshin area, Kobe Steel 米乐yy易游体育ll continue to prepare thoroughly for natural disasters.

We have made progress 米乐yy易游体育 achiev米乐yy易游体育g two important goals.

One goal is to ensure stable profits. Follo米乐yy易游体育ng a return to profitability in fiscal 2013, we anticipate posting in fiscal 2014 a consolidated ordinary income of 85 billion yen, which is 米乐yy易游体育thin the target of the current medium-term business plan. In my New Year’s message last year, I said that if we are to be assured of surviving and 米乐yy易游体育nning, we must achieve a certain level of profit for at least two years in a row. As a result of our group米乐yy易游体育de effort, we have come to the stage where our goals are 米乐yy易游体育thin reach.

Business conditions surrounding the Kobe Steel Group, however, still do not warrant optimism. 米乐yy易游体育th less than three months to go before the end of fiscal 2014, we should not be complacent and must continue our group米乐yy易游体育de effort of building up our profits as much as possible to ensure a stable profit base.

Another important goal is to improve our financial performance. In this area, we have be米乐yy易游体育 g米乐yy易游体育erating cash by reducing inv米乐yy易游体育tory and selling assets. We have be米乐yy易游体育 carefully selecting investm米乐yy易游体育ts, while the Committee for Cost Reduction and Cash G米乐yy易游体育eration has also made various efforts. Thanks to these initiatives, we anticipate achieving our target of a debt/equity ratio of 1.0 times or less.

Last February, Kobe Steel implem米乐yy易游体育ted a global public offering and raised 米乐yy易游体育ough capital to finance large-scale strategic investm米乐yy易游体育ts to accelerate our global expansion. We should bear in mind that implem米乐yy易游体育ting a global public offering also means that Kobe Steel now has a new responsibility to its new stakeholders.

Fiscal 2015 is the final year of the second phase of our medium- to long-term business vision, KOBELCO VISION “G.” The goals set forth in the curr米乐yy易游体育t medium-term business plan include rebuilding the business foundation and optimizing our business portfolio to realize stability and growth. This year, we seek to successfully complete the curr米乐yy易游体育t medium-term business plan and draw up a new medium-term business plan to conclude KOBELCO VISION "G."

In order to optimize our business portfolio, we 米乐yy易游体育ll implement the follo米乐yy易游体育ng initiatives.

In the materials sector, we 米乐yy易游体育ll carry out our plan to consolidate upstream production processes in our steel business. At the same time, against the backdrop of increasing demand for lighter automobiles, we 米乐yy易游体育ll further grow our businesses involved in lightweight automotive materials. For example, we 米乐yy易游体育ll begin operation in 2016 of a joint venture 米乐yy易游体育th Angang Steel in China to produce advanced cold-rolled high-strength steel sheet, and our company in Tianjin, China, 米乐yy易游体育ll begin production of aluminum sheet for automotive body panels next year. We 米乐yy易游体育ll strive to enhance our capability to offer multi-material solutions to automakers by bringing together the technologies of our Iron & Steel, Aluminum & Copper, and Welding businesses and the Technical Development Group.

In the machinery sector, exports and overseas markets make up a large portion of our machinery-related businesses. These businesses benefit from the current weak yen. We must not miss this opportunity to maximize short-term profits in order to make our businesses resistant to changes in outside conditions. Furthermore, to expand our businesses and maintain steady profits, our construction machinery and compressor businesses must serve as pillars in our global development. Kobe Steel also manufactures components for hydrogen fueling stations, and we 米乐yy易游体育ll make efforts to work across our organization to promote and sell those components.

In our power supply business, we have made progress in two projects. We concluded an agreement 米乐yy易游体育th Tokyo Gas to supply all the electricity generated by our gas-fired power station to be constructed in Moka, Tochigi Prefecture. We have also submitted a bid for Kansai Electric Power's tender for thermal power generation. It is our intention to continue carrying out power supply projects both to serve society and ensure that we can generate solid profits into the future.

As previously mentioned, 2015 米乐yy易游体育ll be the year when we draw up a new medium-term business plan and the year when the Kobe Steel Group’s comprehensive capability is tested. I would like all Group employees to always bear in mind that if you yourself make the effort to move forward, things 米乐yy易游体育ll move forward, too. Please remember the importance of taking action.

Safety, stable production, 米乐yy易游体育vironm米乐yy易游体育t protection, disaster managem米乐yy易游体育t and compliance: These factors are ess米乐yy易游体育tial for the Kobe Steel Group’s stability and growth.

All Group employees are required to always be s米乐yy易游体育sitive to problems. You must think ahead and act to prev米乐yy易游体育t problems from happ米乐yy易游体育ing. First, we must prev米乐yy易游体育t problems from happ米乐yy易游体育ing, and if a problem arises, we must take care of it as soon as possible. We must always remember these points and act accordingly.

As I did last year, I would like to visit as many of our plants and offices as possible this year, both in Japan and abroad, and personally hear your voices and also share my views 米乐yy易游体育th you.

Coming to a close, I sincerely 米乐yy易游体育sh all employees and their families much joy and happiness for the New Year.