Kobe Steel’s Al & Cu Unit Improves Cost Structure

Kobe Steel’s aluminium and copper unit gained 3 billion yen during April-September from cost cut activity, called Cost & Cash Innovation 50 (CCI50). The officer Ryusuke Hamanaka said at financial results briefing on Thursday the unit generated the cash by reducing variable and fixed cost and inventory. He expects the unit can improve the profitability and generate more money through cost cutting effort in second half of fiscal 2009 ending March 2010 while the demand in second half is in line with first half despite of firm demand for flat aluminium and copper flat and strip products for automobile.

The unit launched CCI50 to generate annual 5 billion yen of cash for fiscal 2009 by reducing cost and inventory and improving productivity. The unit succeeded to reduce 3 billion yen of cost other than usual cost cut. The unit posted 200 million yen of operating profit for first half of fiscal 2009. The unit expects to post 1 billion yen of operating loss for fiscal 2009 compared with 7 billion yen of loss at previous outlook.

Mr. Hamanaka said shipment of automotive aluminium panel recovered monthly 1,000-1,500 tonnes level under higher demand for hybrid vehicle in first half of fiscal 2009 while forging shipment recovered 60-70% of the level of same period of fiscal 2008. The copper flat and strip products shipment recovered around 80% of the peak. He warned aluminium flat products demand for semiconductor making equipment is less than 50% of same period of 2008.