AAA weekly


Kobe Steel’s Recent Business Developments

Kobe Steel, which manufactures steel sheets for automobiles among other products, is working toward carbon neutrality by 2050. As part of this effort, the machinery business division was reorganized in April 2022. A new business promotion headquarters will be set up within this division to accelerate the development of equipment and devices related to carbon neutrality and the creation of new businesses. In October 2021, in collaboration with its subsidiary Kobelco Eco-Solutions, Kobe Steel started developing a process to effectively utilize steel slag generated in the manufacturing process of steel products for immobilization of CO2.

Kobe Steel: Recent Business Developments

Business Performance

Significant business recovery in FY 2021

・Consolidated sales in FY 2020 were about 1.7 trillion JPY, down 8.8% from the previous year. - Due to the impact of the new coronavirus infection, the demand for the steel and aluminum and advanced materials businesses, mainly in the automobile industry, declined. Operating income was positive, but this was because sales in FY 2019 were negative due to the recording of an impairment loss on fixed assets triggered by the slump of the steel products business. ・Consolidated sales in FY 2021 are expected to be approximately 2.1 trillion JPY (as of February 2022). - If achieved, it will exceed 2 trillion JPY for the first time in 13 years since the Lehman shock. - Demand for automobiles recovered following the previous year's decline triggered by the pandemic. Strong demand in several businesses such as steel and aluminum, advanced materials, industrial machinery and welding contributed to the increase in sales in the first half of FY 2021. ・In FY 2022, if the semiconductor shortage continues, the number of automobiles produced will decrease which may affect steel and aluminum demand. - The company is exercising price pass-through of rising raw material costs especially those of magnesium and silicon which are needed for the manufacturing of aluminum plates and advanced materials. ・The top priorities of the company’s medium-term management plan set for the period 2021-2023 are “establishing a stable earnings base” and “tackling carbon neutrality.” - Kobe Steel has set its ROIC target at 5% or more for FY 2023 and 8% or more in the future. In FY 2021, ROIC is forecast to be 4.2% (as of February 2022).

Engaging in New Businesses / CO2 Reduction

Partnership with UD Trucks in the area of autonomous driving

・In November 2021, Kobe Steel announced that it had reached a basic agreement with UD Trucks to conduct a joint demonstration experiment of Level 4 autonomous driving trucks. - At Kobe Steel’s Kakogawa Steel Works, the two companies will conduct a demonstration experiment using a heavy-duty truck equipped with Level 4 autonomous driving technology (SAE standard) developed by UD Trucks. They aim to build a smart logistics service network that integrates the supply chain from upstream to downstream, and promote digital transformation (DX) at manufacturing and logistics sites. - By the second half of 2022, the experiment will be conducted using a Quon-based vehicle on a transportation route within the premises of Kakogawa Steel Works. - The project is intended to promote the implementation of smart logistics services in a super smart society (Society 5.0) that makes full use of AI and IoT, and contribute to solving labor shortages at manufacturing and logistics sites, and improving the efficiency of transportation operations by DX. - It is part of the medium-term management plan for the period of 2021-2023 announced in May 2021.
Please log in or subscribe to AAA weekly to view the rest of this report.
Free trial subscriptions are available!