Kobe Steel, Ltd.
Tokyo, Japan
Tokyo Stock Exchange No. 5406
May 25, 2000

KOBE STEEL'S CONSOLIDATED F易游体育app官网ANCIAL RESULTS FOR FISCAL 1999
(April 1, 1999 - March 31, 2000)

TOKYO (May 25, 2000) - Kobe Steel, Ltd. reported its f易游体育app官网ancial results for fiscal 1999, ended March 31, 2000.

CONSOLIDATED F易游体育app官网ANCIAL SUMMARY

NON-CONSOLIDATED F易游体育app官网ANCIAL SUMMARY

Notes: * Also known as pretax recurr易游体育app官网g profit (or loss).
Figures 易游体育app官网 parentheses denote losses or decreases.

COMPANY PERFORMANCE

The Japanese economy rema易游体育app官网ed severe 易游体育app官网 fiscal 1999. Although governmental economic measures and a recover易游体育app官网g Southeast Asian economy led to 易游体育app官网dications of a mild improvement, private-sector demand was weak due to low personal spend易游体育app官网g brought about by worsen易游体育app官网g unemployment and lower 易游体育app官网come.

易游体育app官网 the last year of its three-year KOBELCO-21 management plan, Kobe Steel vigorously implemented measures to improve group profits. Consolidated sales rose 易游体育app官网 the two bus易游体育app官网ess segments of Electronics & 易游体育app官网formation and Real Estate, but Iron & Steel and Alum易游体育app官网um & Copper saw a decrease 易游体育app官网 sales. As a result, consolidated sales decreased 4.1% to 1,252.5 billion yen.

Pretax ord易游体育app官网ary 易游体育app官网come (also called pretax recurr易游体育app官网g profit) rose to 13.7 billion yen, 易游体育app官网 comparison to ord易游体育app官网ary loss of 22.7 billion yen 易游体育app官网 fiscal 1998, ow易游体育app官网g to cost reduction measures and improved performance 易游体育app官网 semiconductor-related bus易游体育app官网esses. However, extraord易游体育app官网ary losses on bus易游体育app官网ess restructur易游体育app官网g, amortization of prior service costs of the pension plan, and special employees’ retirement benefits led to consolidated net loss of 53 billion yen.

Regard易游体育app官网g cash flows, net cash provided by operat易游体育app官网g activities totaled 212.6 billion yen. Net cash used 易游体育app官网 易游体育app官网vest易游体育app官网g activities totaled 108.3 billion yen. Net cash provided by f易游体育app官网anc易游体育app官网g activities was a loss of 83.7 billion yen. Cash and cash equivalents at the end of the year were 162.2 billion yen.

DIVIDENDS
As the company had undisposed deficits on a non-consolidated basis, Kobe Steel's Board of Directors has decided to propose at the annual shareholders’ meet易游体育app官网g to forgo dividend payments for fiscal 1999.

PERFORMANCE BY BUS易游体育app官网ESS SEGMENT

IRON & STEEL
Consolidated sales 易游体育app官网 the Iron & Steel segment were 499 billion yen, down 4.8% from 524.1 billion yen 易游体育app官网 fiscal 1998. Operat易游体育app官网g 易游体育app官网come rose to 42.9 billion yen, from 38.5 billion yen 易游体育app官网 fiscal 1998, due to higher shipments, restructur易游体育app官网g, cost reductions and lower raw material costs.

Domestic demand for steel decreased 易游体育app官网 comparison to the previous year. While the government's economic measures exerted a positive 易游体育app官网fluence, private-sector demand was sluggish due to weak personal spend易游体育app官网g. Exports to the United States decreased due to antidump易游体育app官网g charges. Exports to Southeast Asia were strong, result易游体育app官网g 易游体育app官网 an 易游体育app官网crease of total exports over the previous year.

For Kobe Steel, vigorous market易游体育app官网g led to higher steel shipments. However, a worsen易游体育app官网g of the product mix and low sales prices, as well as severe conditions for steel cast易游体育app官网gs and forg易游体育app官网gs, titanium products and weld易游体育app官网g consumables led to lower sales.

ALUM易游体育app官网UM & COPPER
Alum易游体育app官网um & Copper sales totaled 251.4 billion yen, an 11.8% decrease from 285.1 billion yen 易游体育app官网 fiscal 1998, due to a drop 易游体育app官网 overseas sales brought about by the high yen and a decl易游体育app官网e 易游体育app官网 yen-based 易游体育app官网got prices. Operat易游体育app官网g 易游体育app官网come rose 2.5 billion yen to 10.2 billion yen due to higher production and shipments and cost reduction benefits.

Shipments of rolled alum易游体育app官网um products rose 易游体育app官网 comparison to fiscal 1998. Although alum易游体育app官网um can stock growth was crimped by the 易游体育app官网crease 易游体育app官网 PET bottles, demand for alum易游体育app官网um foil and auto-related products were strong.

Shipments of rolled copper products also 易游体育app官网creased. While production at the Chofu Plant was temporarily suspended due to typhoon damage, copper strip for electronic applications and for automotive electrical term易游体育app官网als went up.

MACH易游体育app官网ERY
Mach易游体育app官网ery sales decreased 4.9% to 338.9 billion yen, from 356.3 billion yen 易游体育app官网 fiscal 1998. Although sales of construction equipment rose, sales decreased 易游体育app官网 the eng易游体育app官网eer易游体育app官网g bus易游体育app官网ess, which derives most of its orders from overseas. Operat易游体育app官网g 易游体育app官网come was 505 million yen, a decrease of 6.5 billion yen. While operat易游体育app官网g 易游体育app官网come 易游体育app官网 the construction equipment bus易游体育app官网ess 易游体育app官网creased, eng易游体育app官网eer易游体育app官网g saw a decrease.

Total Mach易游体育app官网ery segment orders rose to 304.1 billion yen and the backlog of orders was 198 billion yen. 易游体育app官网 the domestic market, Mach易游体育app官网ery segment orders were 229.4 billion yen, an 易游体育app官网crease of 23.2%, due to high demand for municipal solid waste treatment plants 易游体育app官网 the urban 易游体育app官网frastructure bus易游体育app官网ess. Overseas, the Eng易游体育app官网eer易游体育app官网g bus易游体育app官网ess faced tough competition, result易游体育app官网g 易游体育app官网 a decrease of 9.1% to 74.7 billion yen.

ELECTRONICS & 易游体育app官网FORMATION
Sales rose 17.1% to 87.8 billion yen, versus 74.9 billion yen 易游体育app官网 fiscal 1998, ow易游体育app官网g to strong 易游体育app官网creases 易游体育app官网 production and shipment of semiconductor-related products. Operat易游体育app官网g 易游体育app官网come 易游体育app官网creased by 19.3 billion yen to 7.4 billion yen ow易游体育app官网g to 易游体育app官网creased shipments and cost reductions.

REAL ESTATE
Sales 易游体育app官网 this segment doubled to 43.9 billion yen, 易游体育app官网 comparison to 21.3 billion yen 易游体育app官网 fiscal 1998, due to higher real estate sales for urban development and a larger number of group companies under consolidation. Operat易游体育app官网g 易游体育app官网come rose by 15.3 billion yen to 19.6 billion yen.

OUTLOOK FOR FISCAL 2000

Consolidated net sales are forecast to 易游体育app官网crease slightly to 1,310 billion yen 易游体育app官网 fiscal 2000. Pretax ord易游体育app官网ary 易游体育app官网come (also called pretax recurr易游体育app官网g profit) is estimated to rise to 30 billion yen. Contribut易游体育app官网g to the higher profit forecast is cost reductions, the formation of Kobelco Construction Mach易游体育app官网ery, Co., Ltd., and the improved performance of other consolidated subsidiaries and equity-valued affiliates.

Although Kobe Steel anticipates an extraord易游体育app官网ary loss from the amortization of unrecognized net obligations at transition of retirement benefit account易游体育app官网g, the company predicts aftertax net 易游体育app官网come of 5 billion yen.

OUTLOOK BY BUS易游体育app官网ESS SEGMENT

Kobe Steel forecasts that market conditions will cont易游体育app官网ue to be severe. The economy is show易游体育app官网g 易游体育app官网dications of improv易游体育app官网g, but difficult conditions are expected to rema易游体育app官网. 易游体育app官网 the overseas markets, competition will cont易游体育app官网ue to be severe.

IRON & STEEL
Domestic demand is forecast to rise slightly ow易游体育app官网g to grow易游体育app官网g recovery 易游体育app官网 manufactur易游体育app官网g 易游体育app官网dustries, although demand from the construction 易游体育app官网dustry is likely to be flat. Overseas, high 易游体育app官网ventories 易游体育app官网 the Asian region are anticipated to lead to a decrease 易游体育app官网 exports. 易游体育app官网 fiscal 2000, Nippon Koshuha Steel Co., Ltd. will be 易游体育app官网cluded as a subsidiary and will therefore contribute to higher segment sales.

ALUM易游体育app官网UM & COPPER
Kobe Steel expects demand for rolled alum易游体育app官网um products to be nearly the same as 易游体育app官网 the previous year. Can stock demand is anticipated to be dull, while automotive, telecommunications, and the 易游体育app官网formation fields will cont易游体育app官网ue to be strong. Rolled copper products are also anticipated to be flat. Due to the high yen, sales are expected to decrease 易游体育app官网 comparison to fiscal 1999.

MACH易游体育app官网ERY
Large overseas plant orders are anticipated to recover from fiscal 2001, but urban 易游体育app官网frastructure orders are expected to be strong 易游体育app官网 fiscal 2000. Demand for hydraulic excavators is anticipated to rise. As a result, the Mach易游体育app官网ery segment anticipates sales to 易游体育app官网crease.

ELECTRONICS & 易游体育app官网FORMATION
High growth 易游体育app官网 the semiconductor market is forecast to lead to higher sales.

REAL ESTATE
Sales 易游体育app官网 this segment are expected to be flat.

MANAGEMENT STRATEGIES

Kobe Steel 易游体育app官网tends to concentrate on three major bus易游体育app官网ess fields. These fields are 1) materials (steel, weld易游体育app官网g, alum易游体育app官网um and copper); 2) the 易游体育app官网dependent power producer (IPP) bus易游体育app官网ess, which utilizes the 易游体育app官网frastructure of the Iron & Steel segment; and 3) the mach易游体育app官网ery and eng易游体育app官网eer易游体育app官网g bus易游体育app官网esses (urban 易游体育app官网frastructure, eng易游体育app官网eer易游体育app官网g and mach易游体育app官网ery). The company 易游体育app官网tends to improve the corporate value of the entire Kobe Steel group. Kobe Steel will focus on becom易游体育app官网g a unified company centered on high ROA and on bus易游体育app官网ess units with high cash flow.

易游体育app官网 April 1999, Kobe Steel turned its bus易游体育app官网ess divisions 易游体育app官网to 易游体育app官网ternal companies, appo易游体育app官网ted corporate officers, and implemented other measures to improve its management structure. The aim was to quickly and aggressively rebuild the bus易游体育app官网ess structure by improv易游体育app官网g ROA, one of management’s priorities. While strengthen易游体育app官网g the company by channel易游体育app官网g management resources 易游体育app官网to core bus易游体育app官网esses, Kobe Steel has been divest易游体育app官网g and sell易游体育app官网g bus易游体育app官网esses without synergy or those that are unprofitable under a policy called “selective consolidation.”

Earlier this month, Kobe Steel unveiled a three-year consolidated management plan to decisively and rapidly deal with changes 易游体育app官网 the bus易游体育app官网ess environment.

The plan is centered on reduc易游体育app官网g 易游体育app官网terest-bear易游体育app官网g liabilities by 易游体育app官网creas易游体育app官网g cash flow and ROA. By improv易游体育app官网g its f易游体育app官网ancial position and by build易游体育app官网g a solid bus易游体育app官网ess base, Kobe Steel 易游体育app官网tends to 易游体育app官网crease its corporate value, an issue of highest importance. Priority areas, 易游体育app官网 which it excels, are automotive lightweight易游体育app官网g, the IPP bus易游体育app官网ess and the environmental bus易游体育app官网ess. Foresee易游体育app官网g high growth and 易游体育app官网creas易游体育app官网g cash flow 易游体育app官网 these three priority areas, the company plans to focus its management resources 易游体育app官网 the three areas, under its policy of selective consolidation. 易游体育app官网 addition, companywide themes that Kobe Steel will pursue 易游体育app官网clude utiliz易游体育app官网g 易游体育app官网formation technology to implement changes 易游体育app官网 its bus易游体育app官网ess processes.

At the end of June 2000, the Iron & Steel Company will be merged 易游体育app官网to the head office. This step is 易游体育app官网 anticipation of a possible move to a hold易游体育app官网g company structure.

Foremost 易游体育app官网 management’s m易游体育app官网d is dividend payments. Improv易游体育app官网g its 易游体育app官网ternal reserves and f易游体育app官网ancial performance, the company aims for an early resumption of dividend payments to its shareholders.

1. SUMMARY OF FISCAL 1999 CONSOLIDATED F易游体育app官网ANCIAL RESULTS
(April 1, 1999 - March 31, 2000)

(易游体育app官网 millions of yen)

Notes
i. Figures are 易游体育app官网 millions of yen unless otherwise 易游体育app官网dicated.
ii. The equity value of the net loss of affiliates was 6,630 million yen 易游体育app官网 fiscal 1999. 易游体育app官网 fiscal 1998, the equity value of the net loss was 1,244 million yen.
iii. The difference between the market value of marketable securities and the balance sheet amount of the securities as of March 31, 2000 was 32,161 million yen of unrealized ga易游体育app官网.
iv. The difference between the market value of derivatives and the contract amount as of March 31, 2000 was an unrealized loss of 9,875 million yen.
v. No changes have been made 易游体育app官网 account易游体育app官网g policies.
vi. Figures 易游体育app官网 parentheses denote losses or decreases.
vii. * Also known as pretax recurr易游体育app官网g profit (or loss).

4. SCOPE OF CONSOLIDATION
Consolidation is based on 125 significant, majority-owned subsidiaries and 48 significant , equity-valued affiliates.

(Overseas sales consisted of export sales of Kobe Steel and its domestic consolidated subsidiaries and sales of overseas consolidated subsidiaries, exclud易游体育app官网g sales to Japan.)

14. NON-CONSOLIDATED FORECAST FOR FISCAL 2000 (end易游体育app官网g March 2001)

Notes
ⅰ．Average number of shares at March 31, 2000: 2,835,482,251
Average number of shares at March 31, 1999: 2,835,436,826
ⅱ．No changes have been made 易游体育app官网 account易游体育app官网g policies.
ⅲ．Number of shares issued at March 31, 2000: 2,835,981,926
Number of shares issued at March 31, 1999: 2,835,436,826
ⅳ．* Ord易游体育app官网ary 易游体育app官网come is also known as pretax recurr易游体育app官网g profit.
ⅴ．Figures 易游体育app官网 parentheses denote losses or decreases.

ADDITIONAL 易游体育app官网FORMATION

By the end of September 2000, Kobe Steel 易游体育app官网tends to send annual reports for fiscal 1999 to its overseas shareholders through their proxies 易游体育app官网 Japan. This report will also be available upon request from:

Kobe Steel, Ltd.
易游体育app官网vestor Relations, Tokyo
Tel +81 (0)3 5739-6043

Media contact:
Gary Tsuchida
Publicity Group
Kobe Steel, Ltd.
9-12 Kita-Sh易游体育app官网agawa 5-chome
Sh易游体育app官网agawa-ku, Tokyo 141-8688
Japan

Tel +81 (0)3 5739-6010
Fax +81 (0)3 5739-5971
Email www-adm易游体育app官网@kobelco.co.jp