Kobe Steel’s Machinery Division Aims 10% ROS by Offshore Business Expansion

Kobe Steel’s machinery business division targets consolidated net sales at 220 billion yen with recurring profit at more than 20 billion yen and Return on Sales (ROS) at 10% in fiscal 2015 ending in March 2016 mainly by global business expansion. The division plans to expand productive and sales network in emerging areas including China, India and South America. At the same time, the firm advances development of sophisticated technologies and products. Mr. Kazuo Shigekawa, Kobe Steel’s executive vice president and head of machinery business division, said the firm tries to make every main product enter world’s top 3.

The division’s overseas sales rate, including export and offshore production, is expected to reach 70% in fiscal 2015 from present 60-65%. The division plans to raise offshore production rate from present 10% to 20% for industrial machinery while from present 15% to 30% for compressor. The division also tries to raise local material procurement rate from present 20% in cooperation with group companies such as Shinsho Corporation to compete with global market price, especially low price in China.

Kobe Steel will keep 3 billion yen capital expenditure for the division every year while examine additional investment to expand output capacity and distribution network in response to strong offshore demand, for example, strong demand for ordinary grade compressors in China. The division eyes several M&A and business partnership conclusion as well.

Sales target in fiscal 2015 is 110 billion yen with ROS 10% for compressors, 70 billion yen with ROS 10% for industrial machineries and 40 billion yen with ROS 8% for energy related machineries. Kobe Steel’s total financial target is 3 trillion yen of consolidated net sales with more than 200 billion yen of recurring profit 5-10 years later.