Kobe Steel Reports Consolidated Financial Results for the First Half of Fiscal 2006.Tokyo Tokyo (tō`kēō), city (1990 pop. 8,163,573), capital of Japan and of Tokyo prefecture, E central Honshu, at the head of Tokyo Bay. , Japan, Oct 31, 2006 - (JCN JCN Japan Corporate News JCN Journal of Cognitive Neuroscience JCN Journal of Cardiovascular Nursing JCN Journal of Christian Nursing JCN Job Control Number JCN Journal of Child Neurology JCN joint communications network (US DoD) Newswire) - Kobe Steel Kobe Steel, Ltd. (株式会社神戸製鋼所 , Ltd. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). : 5406) announced today its financial results for the first half of fiscal 2006, ended September 30, 2006. Kobe Steel's consolidated net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight in the first six months rose 109.3 billion yen to 898.8 billion yen, in comparison to the same period last year. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was 98.8 billion yen, a decrease of 9.3 billion yen in comparison to the same period last year, as the inventory valuation under the average method in fiscal 2005 had pushed up profits more for that year. In addition, from fiscal 2006 machinery and equipment depreciation was changed from the straight-line method Noun 1. straight-line method - (accounting) a method of calculating depreciation by taking an equal amount of the asset's cost as an expense for each year of the asset's useful life straight-line method of depreciation to the declining-balance method, which increased the depreciation burden. However, ordinary income increased 1.9 billion yen to 87.3 billion yen in comparison to the same period last year owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de higher profits from equity-valued affiliates. As no extraordinary loss was posted in the half-year period, aftertax net income increased 14.8 billion yen to 51.5 billion yen. Kobe Steel has decided to pay an interim dividend of 3 yen per share for the half-year period, taking into consideration the trend of its business performance and the result of a comprehensive evaluation. I) Consolidated Financial Summary for the First Half Ended September 30, 2006
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(yen millions)
H1 Ended H1 Ended Change Year Ended
9/30/06 9/30/05 % YoY 3/31/2006
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Operating Results
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Net Sales 898,862 789,502 13.9 1,667,313
Operating Income 98,844 108,235 8.7 220,395
Income Before Taxes 87,360 85,413 2.3 176,932
Net Income 51,579 36,712 40.5 84,559
EPS (basic)(yen) 16.60 12.37 27.93
EPS (diluted)(yen) -- 11.80 27.24
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Financial Position
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Total Assets 2,103,448 1,961,486 2,074,241
Total Sh'holders Equity 598,143 433,177 529,999
Sh'holders Equity Ratio 26.4% 22.1% 25.6%
Shareholders EPS (yen) 178.88 145.94 170.64
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Cash Flows
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Net Cash from
Operating Activities 66,573 104,924 198,181
Net Cash from
Investing Activities (51,585) (38,619) (92,214)
Net Cash from
Financing Activities (40,658) (65,727) (93,593)
Cash and Cash Equivalents
at End of Period 69,938 83,716 95,485
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II) Results by Business Segment Iron & Steel Domestic demand for medium- and high-grade High-grade Credit quality of AAA or AA. high-grade Of, relating to, or being a bond with little risk of default on the part of the issuer. High-grade is usually reserved for bonds rated AAA or AA by the rating services. steel products, used mainly in the automotive and shipbuilding industries Noun 1. shipbuilding industry - an industry that builds ships industry - the people or companies engaged in a particular kind of commercial enterprise; "each industry has its own trade publications" shipbuilder - a business that builds and repairs ships , was strong in the period under review. In the overseas market, the supply and demand balance, which had worsened due to China's rising crude steel capacity, improved owing to growing worldwide demand for steel, leading to progress in market recovery. Domestic inventories, which had accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. due to weak demand for general steel products, showed improvement and went down to more appropriate levels. While focusing mainly on demand for upper-end products for the manufacturing sector, Kobe Steel controlled shipments to keep inventories at appropriate levels. As a result, Kobe Steel's shipments of steel products decreased in comparison to the same period last year. With regard to sales prices, due to the order composition, the average sales price went down in comparison to the second half of fiscal 2005. Demand was brisk Brisk as a proper name may refer to:
As a result, segment sales increased 8.4% to 397.1 billion yen, but operating income went down 23.5 billion yen to 45.4 billion yen, in comparison to the same period last year. Operating income was affected by the average method in fiscal 2005, which had pushed up profits higher for that year and by a change in the method of depreciation. Wholesale Power Supply Sales rose 10.6% to 34.3 billion yen owing to an increase in the electricity price brought about by higher coal prices. Operating income rose 1.0 billion yen to 9.3 billion yen in comparison to the same period last year. The Shinko Kobe Power Station has an electricity generation capacity of 1.4 million kilowatts. Aluminum & Copper Shipments of rolled aluminum products decreased over the same period last year. Although shipmnets were strong for aluminum sheet for automotive panels and aluminum disk blanks for hard drives, the cool summer led to a considerable decrease in aluminum can stock for beverage cans A beverage can is most often an aluminium can manufactured to hold a single serving of a beverage. Overview The early metal beverage can was made out of steel (similar to a tin can) and had no pull-tab. . Demand for rolled copper products was the same as the first half last year. Demand continued to be strong for copper strip for automotive electrical parts and semiconductor leadframes. Demand for copper tube was the same as the first half last year. Aluminum castings and forgings saw strong shipments the automotive and semiconductor markets. Under these conditions, although overall sales volume decreased, high aluminum ingot ingot Mass of metal cast into a size and shape such as a bar, plate, or sheet convenient to store, transport, and work into a semifinished or finished product. The term also refers to a mold in which metal is so cast. and copper cathode prices boosted sales prices. As a result, segment sales increased 26.2% to 192.4 billion yen in comparison to the same period last year. Operating income increased 5.8 billion yen to 18.0 billion yen with the use of the average method of calculating inventories. Machinery Domestic orders increased 27.9% to 87.6 billion yen in comparison to the same period last year. On the back of strong private-sector capital investment, orders were strong for compressors, rolling mills rolling mill: see steel. and other products. In the environmental business, Kobe Steel received orders for large waste treatment projects. Overseas orders shot up 111.6% to 88.5 billion yen. Capital investments were active in the oil refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar , petrochemical petrochemical, any one of a large group of chemicals derived from a component of petroleum or natural gas. The cracking processes for manufacturing gasoline produce vast quantities of gaseous hydrocarbons. and energy fields in the Middle East and Asia, leading to strong demand for non-standard compressors, plastics processing Plastics processing Those methods used to convert plastics materials in the form of pellets, granules, powders, sheets, fluids, or preforms into formed shapes or parts. machinery and pressure vessels Pressure vessel A cylindrical or spherical metal container capable of withstanding pressures exerted by the material enclosed. Pressure vessels are important because many liquids and gases must be stored under high pressure. . Orders were also awarded for gas-based direct reduction plants. As a result, total orders increased 59.7% to 176.1 billion yen, and the backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of orders was 317.1 billion yen. Owing to strong orders, machinery segment sales rose 5.0% to 119.4 billion yen in the first half of fiscal 2006, in comparison to the same period last year. Operating income increased 2.4 billion yen to 5.5 billion yen due to cost reductions. Construction Machinery Domestic demand for construction machinery was brisk, supported by strong private-sector capital investment, although public works public works pl.n. Construction projects, such as highways or dams, financed by public funds and constructed by a government for the benefit or use of the general public. Noun 1. projects continued to shrink shrink Vox populi noun A psychiatrist . The overseas market was also strong. Demand was firm in Europe and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , and the Chinese market rapidly recovered and expanded. The crane business was also robust, centered on the Middle East and Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. . As a result, segment sales increased 25.1% to 133.0 billion yen in comparison to the same period last year. Operating income increased 3.2 billion yen to 6.9 billion yen. Real Estate With the completion and handing over of condominiums, mainly in the Kansai (western) region of Japan, segment sales went up 9.6% to 18.9 billion yen in comparison to the same period last year. Operating income increased 1.4 billion yen to 2.7 billion yen. Electronic Materials & Other Businesses Due to inventory adjustments of liquid crystal displays liquid crystal display (LCD) Optoelectronic device used in displays for watches, calculators, notebook computers, and other electronic devices. Current passed through specific portions of the liquid crystal solution causes the crystals to align, blocking the passage of light. , demand slowed for target material used in LCDs. However, the materials analysis business continued to be strong. As a result, segment sales rose 8.2% to 30.5 billion yen in comparison to the same period last year. Operating income was roughly the same at 8.2 billion yen.
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Segment sales (in millions of yen)
FY2006 H1 FY2005 H1
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Iron & Steel 397,124 366,365
Wholesale Power Supply 34,343 31,043
Aluminum & Copper 192,405 152,432
Machinery 119,476 113,818
Construction Machinery 133,084 106,384
Real Estate 18,901 17,238
Electronic Materials & Other Businesses 30,529 28,205
Eliminations (27,003) (25,983)
Consolidated net sales 898,862 789,502
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III) Outlook for Fiscal 2006 (ending March 2007) Japan's economy in the second half of the fiscal year is forecast to continue improving gradually. Domestic demand in the private sector is expected to continue increasing, and the Chinese and other Asian economies are anticipated to be strong. However, trends in the U.S. economy and a softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. of the market for general steel products due to higher steel production in China are factors of concern, and conditions may not be entirely optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op . On this background, Kobe Steel's outlook for its business segments in the second half of fiscal 2006 is as follows: Iron & Steel Steel demand, both in Japan and overseas, is anticipated to continue being robust. Demand is expected to be brisk for steel castings and forgings, titanium products and welding consumables. As a result, second-half sales are forecast to be higher than in the first half of fiscal 2006. However, on the supply side, there is concern that supply pressure will increase due to higher steel production in China. Wholesale Power Supply The Shinko Kobe Power Station intends to run its facilities under stable operation. As no extraordinary factors are anticipated, second-half sales are expected to be similar to the first half. Aluminum & Copper Second-half shipments of rolled aluminum products are expected to be similar to the first half. Although demand for can stock will slacken slack·en tr. & intr.v. slack·ened, slack·en·ing, slack·ens 1. To make or become slower; slow down: The runners slackened their pace. Air speed slackened. 2. due to the off-season, demand will continue to be strong in the automotive, IT and semiconductor industries. For rolled copper products, second-half shipments are forecast to be similar to the first half. Demand is expected to be firm in the electronic industry. However, demand for copper tube, used in air conditioners Conditioners used on leather take many shapes and forms. They are used mostly to keep leather from drying out and deteriorating. A very old and widely used conditioner is dubbin. , is expected to go down in the second half, because of the off-season. As a result, second-half shipments are anticipated to be similar to the first half. Owing to the high prices of aluminum ingot and copper cathode in the first half, second-half sales are anticipated to be higher that in the first half. Machinery Orders for compressors used in the oil refining, petrochemical and energy fields; plastics processing machinery; and pressure vessels are anticipated to continue being strong. Owing to a concentration of environment-related sales in the second half, second-half sales are anticipated to be higher that the first half. Construction Machinery The domestic market is forecast to be strong on the back of firm private-sector investment. As demand in China will enter a slack 1. (operating system) slack - Internal fragmentation. Space allocated to a disk file but not actually used to store useful information. 2. (jargon) slack period, second-half segment sales are anticipated to be similar to the first half. Real Estate As the completion and handing over of condominiums are anticipated to increase, second-half sales are expected to be higher than first-half sales. Electronic Materials & Other Businesses Although inventory adjustments of liquid crystal displays will continue, the materials analysis business is forecast to be brisk. Thus, second-half sales are expected to increase over the first half. Overall Forecast Second-half sales are forecast to be higher than first-half sales. Iron & Steel segment sales are anticipated to be higher on the back of brisk demand for steel castings and forgings and titanium products. In the Machinery segment, sales will concentrate in the second half of the fiscal year. Profits will be lower than the first half as the profit-boosting effect from the use of the average method, which increased inventory valuation, will be lower. As a result, consolidated sales at Kobe Steel are anticipated to reach 1,900 billion yen. Ordinary income is expected to reach 170 billion yen, and net income is projected at 100 billion yen. IV) Financial Position Owing to the higher value of inventories due to rising raw material prices, strategic investments to improved business competitiveness, and the implementation of necessary refurbishment re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur investments for stable production, total assets at the end of the half-year period increased 29.2 billion yen to 2,103.4 billion yen. With net income of 51.5 billion yen and minority interests posted under net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. from the first half of fiscal 2006, net assets increased 68.1 billion yen to 598.1 billion yen, in comparison to fiscal 2005. As a result, the stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. ratio was 26.4%, up 0.8% from fiscal 2005. Net cash provided by operating activities was 66.5 billion yen. Income before income taxes reached 87.3 billion yen and depreciation was 41.1 billion yen, with cash paid for income taxes amounting to 51.4 billion yen. Net cash used in investing activities amounted to 51.5 billion yen, after purchases of plant, equipment and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. . Free cash flow, the sum of net cash provided by operating activities and net cash used in investing activities, was 14.9 billion yen. Net cash used in financing activities amounted to 40.6 billion yen, following a reduction in debt and repayment of dividends using cash and cash equivalents and free cash flow. As a result, debt decreased 19.3 billion yen to 701.5 billion yen in comparison to fiscal 2005. Cash and cash equivalents decreased 25.5 billion yen to 69.9 billion yen, in comparison to fiscal 2005. Consolidated cash flow Indicators
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FY2002 FY2003 FY2004 FY2005 FY2006
(half)
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Stockholders'
equity ratio 15.4% 17.2% 19.9% 25.6% 26.4%
Stockholders'
equity ratio
at market price 10.9% 24.7% 29.6% 67.1% 54.9%
Debt redemption
years 8.4 9.0 3.6 3.6 --
Interest coverage
ratio (times) 3.8 4.1 9.3 9.0 6.8
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For more information and related materials, please visit the Kobe Steel website at http://www.kobelco.co.jp/english/index.html . About Kobe Steel, Ltd. Kobe Steel is one of Japan's top manufacturers of aluminum and copper products. It is also a leading steelmaker in Japan. Other businesses include welding consumables, industrial machinery, engineering, construction equipment, and electronic materials. More information is available at: www.kobelco.co.jp Source: Kobe Steel, Ltd. Contact: Gary Tsuchida Kobe Steel Publicity Group Tel: +81-3-5739-6010 Fax: +81-3-5739-5971 Email: www-admin@kobelco.co.jp Website: www.kobelco.co.jp Copyright [c] 2006 JCN Newswire. All rights reserved. A division of Japan Corporate News Network K.K. |
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