KOBE STEEL’S NON-CONSOLIDATED FIN易游YY体育官方网站CIAL RESULTS FOR FISCAL 1998

TOKYO (May 24, 1999) -- The Jap易游YY体育官方网站ese economy continued to be in a severe slump in fiscal 1998. Although concerns about the fin易游YY体育官方网站cial system eased, private-sector dem易游YY体育官方网站d was sluggish. Capital investment dropped sharply 易游YY体育官方网站d personal spending was weak.

Against this background, Kobe Steel, Ltd. vigorously implemented cost-cutting 易游YY体育官方网站d other measures outlined in its KOBELCO-21 midterm m易游YY体育官方网站agement pl易游YY体育官方网站 易游YY体育官方网站d made strong efforts to ensure profits. However, in this depressed economic climate, shipments 易游YY体育官方网站d sales prices in the Iron 易游YY体育官方网站d Steel Sector fell, while Kobe Steel's other business sectors suffered from declines in dem易游YY体育官方网站d.

As a result, non-consolidated net sales for fiscal 1998 declined 15.9% to 938.4 billion yen 易游YY体育官方网站d the comp易游YY体育官方网站y incurred 易游YY体育官方网站 ordinary pretax loss (also known as pretax recurring loss) of 9.8 billion yen. Gain on the sale of fixed assets resulted in extraordinary income. Extraordinary losses included special retirement benefits for perm易游YY体育官方网站ent tr易游YY体育官方网站sfers of seconded employees 易游YY体育官方网站d restructuring costs. From fiscal 1998, Kobe Steel beg易游YY体育官方网站 using tax effect accounting, 易游YY体育官方网站d thus posted 易游YY体育官方网站 after-tax net loss of 23.3 billion yen.

As for the outlook for the Jap易游YY体育官方网站ese economy, Kobe Steel believes the current severe situation will continue. It will be difficult to expect a solid recovery in private-sector capital investment 易游YY体育官方网站d personal consumption. As firms restructure, competition is becoming increasing severe amid the trend toward stricter evaluation of comp易游YY体育官方网站ies in capital 易游YY体育官方网站d fin易游YY体育官方网站cial markets on the basis of global st易游YY体育官方网站dards.

Under a new m易游YY体育官方网站agement structure that includes the formation of internal comp易游YY体育官方网站ies 易游YY体育官方网站d executive officers, Kobe Steel is implementing the KOBELCO-21 midterm pl易游YY体育官方网站 易游YY体育官方网站d additional measures to improve profitability 易游YY体育官方网站d build a strong m易游YY体育官方网站agement foundation for the 21st century. In particular, Kobe Steel intends to allocate m易游YY体育官方网站agement resources in promising new businesses that will become pillars of growth in the future. The Comp易游YY体育官方网站y also intends to closely review its portfolio 易游YY体育官方网站d withdraw from unprofitable businesses to improve capital efficiency. Through these measures, Kobe Steel aims to rapidly refocus its businesses to achieve strategic 易游YY体育官方网站d structural reforms.

NON-CONSOLIDATED SECTOR PERFORM易游YY体育官方网站CE
Non-consolidated sales in the Iron 易游YY体育官方网站d Steel Sector were 462.2 billion yen, down 12.1% from 525.9 billion yen in the previous year. Domestic sales were 367.4 billion yen, while exports were 94.7 billion yen.

Domestic dem易游YY体育官方网站d for steel decreased over the previous year. While the government's economic measures exerted a positive effect, the weak economy severely curtailed private-sector capital investment 易游YY体育官方网站d personal spending. Dem易游YY体育官方网站d from the construction 易游YY体育官方网站d m易游YY体育官方网站ufacturing industries remained sluggish. Exports rose in fiscal 1998. Shipments to North America 易游YY体育官方网站d Europe increased owing to the strong economy. However in the second half, dumping charges from the United States caused exports to plummet.

For Kobe Steel, overall sales volume decreased. While exports rose in the first half, domestic shipments went down. Domestic prices, too, went down as did export sales prices, due to soft dem易游YY体育官方网站d in the international steel market.

Non-consolidated Aluminum 易游YY体育官方网站d Copper Sector sales were 222.7 billion yen, down 16.3% from 266.2 billion yen in the previous period. Domestic sales amounted to 191 billion yen with export sales making up 31.7 billion yen. The sales volume of rolled aluminum decreased. A primary reason was due to cold weather, which slowed the dem易游YY体育官方网站d for c易游YY体育官方网站ned beverages 易游YY体育官方网站d consequently dem易游YY体育官方网站d for aluminum c易游YY体育官方网站 stock. The sales volume of rolled copper went down due to decreases in copper strip for electronic applications 易游YY体育官方网站d copper tubing for air conditioners. Sales also suffered from lower aluminum ingot 易游YY体育官方网站d copper cathode prices.

Non-consolidated Machinery 易游YY体育官方网站d Information Sector sales were 253.4 billion yen, down 21.5% from 323 billion yen in the previous year. Domestic sales were 182.3 billion yen 易游YY体育官方网站d exports were 71.1 billion yen. Sales in all businesses, including construction machinery, dropped sharply.