Kobe Steel to Expand R&D Budget to 87 billion yen in 3 Years

Kobe Steel expands the research and development budget under the 3-year business plan to fiscal 2008 ending March 2009. The firm increases the consolidated budget to 87 billion yen, which is 1.2 times of that in former 3-year plan and increases the researchers. The firm improves the development activity for the main theme, expansion and creation of only one product and higher production ability. The firm focuses on products for lighter weight of automobile, mineral and energy and production technologies. The firm tries to improve the production base both in software and hardware for stable profitability when the firm expands the capital expenditure to 340 billion yen in the 3 years, which is 1.4 times of former 3 years. The executive vice president Hiroshi Sato said the firm tries to improve the profitability by expanding only one product while the firm improves production ability by improving the yield and production cost for high valued products, which are harder to make than commodity products. The firm targets 40% of only one product rate for total sales in fiscal 2008 from 35% in fiscal 2005. The steel unit will expand the sales portion by expanding sales of the strategic products including automotive wire rod for engine valve spring and suspension springs, shipbuilding plate, castings and forgings as crankshaft for ship and welding materials as flux cored welding wire though the firm revised the only one definition, in which high tensile flat steel means products with more than 80 kilogram per square millimeters of strength. Mr. Sato said steel, aluminium & copper and other units try to develop new products by focusing the resources on the activity. The firm increases the R&D budget to annual 29 billion yen or total 87 billion yen in fiscal 2006-2008 from 25 billion yen or total 75 billion yen in fiscal 2003-2005. The firm allocates annual 25 billion of the budgets into steel unit in 3 years, which is higher than 21 billion yen in former 3 years. The firm targets more than 180 billion yen of consolidated recurring profit and over 100 billion yen of net profit with around 1.9 trillion yen of sales for fiscal 2008 compared with 1.667 trillion yen sales, 176.9 billion yen recurring profit and 84.5 billion yen net profit in fiscal 2005. The firm tries to increase the recurring profit by more than 34 billion yen in 3 years from 146 billion yen in 2005, which excludes 24 billion yen of raw materials inventory valuation profit.

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