Kobe Steel Posts 52.5% Higher Profit for F2005

Kobe Steel announced on Thursday the consolidated recurring profit increased by 52.5% to record 176.9 billion yen for fiscal 2005 from former record in fiscal 2004. The firm posted favorable results under firm activities of steel, machinery, construction machinery, electronic materials and aluminium & copper units. The firm doubles the distribution of dividend to 6 yen per share. The firm expects the recurring profit decreases by 18% to 145 billion yen for fiscal 2006 when the inventory valuation profit decreases by 11 billion yen under gross average method though the raw materials cost is flat or moderate increase while the firm shifts the depreciation for machinery from straight line basis to fixed rate method posting 8 billion yen of onetime loss. The firm expects the consolidated sales increases by 5% to 1.75 trillion yen for fiscal 2006 due to higher sales of castings & forgings, titanium, automotive aluminium & copper and materials for semiconductor from fiscal 2005.The consolidated recurring profit decreases by 31.9 billion yen for fiscal 2006 from fiscal 2005. The firm expects total 46 billion yen of negative impacts including 9 billion yen from raw materials cost, 8 billion yen from fixed cost, 21 billion yen from lower inventory valuation profit and 8 billion yen from change of depreciation method while the firm reduces cost by 14.1 billion yen. The firm expects the steel unit’s consolidated operating profit decreases by 35.9 billion yen to 95 billion yen for fiscal 2006 from fiscal 2005. The operating profit decreases by 500 million yen to 19 billion yen for wholesale power supply, by 3.3 billion yen to 20 billion yen for aluminium & copper unit and by 100 million yen to 5 billion yen for real estate while the operating profit increases by 1.7 billion yen to 12 billion yen for machinery, by 200 million yen to 9 billion yen for construction machinery and by 600 million yen to 18 billion yen for electronic materials & others.