Japan’s Kobe Steel refrained from giving guidance for FY 2020 due to the uncertainty from COVID-19 after recording a net income loss of JPY 68mn ($634mn), for FY 2019 ended on March 31, 2020.
However, the company, citing weaker demand in steel and aluminum through FY 2019 for its present condition, outlined an emergency plan to achieve savings of JPY120bn this fiscal, which includes reducing inventories, selling assets, deferring capital investments, decreasing fixed costs, and postponing non-urgent maintenance work.
The steelmaker’s plant run rate is down by around 20-30pc from a year earlier according to Yoshihiko Katsukawa, senior managing executive officer at Kobe Steel, adding that while the company did not plan to suspend blast furnaces to adjust to declining demand, it was open to doing so if the situation required it. Except for one location in Singapore, all plants in Japan and overseas are in operation, although, at decreased capacities.
Kobe’s crude steel production declined by 6pc to 6.5mn mt in FY 2019 compared to 6.9mn mt in FY 2018. Steel sales volumes decreased by 6pc to 5.3mn mt in FY 2019 from 5.6mn mt the previous fiscal. Domestic sales fell by 8pc to 3.9mn mt during the year compared to 4.3mn mt in FY 2018, while export sales were unchanged at 1.4mn mt during the same period under comparison.
The production of aluminum rolled products declined by 3pc to 307,000mt in FY 2019 from 299,000mt in the previous year, while copper rolled products and tubes output fell by 6pc to 135,000mt from 144,000mt during the same period. Welding materials declined by 3pc to 288,000mt in FY 2019 from 298,000mt in the previous year.
Net sales declined by 5pc to JPY1,870bn in FY201 compared to JPY1,972bn in the same period the previous year. Iron and steel encompassed 39pc or JPY724mn of total FY 2019 sales followed by construction machinery at 19pc or JPY361mn, and aluminum and copper divisions at 18pc JPY333mn. Iron and steel sales declined by 4pc compared to JPY754mn in FY 2018.
Aluminum and copper sales fell by 7pc from JPY359mn last year. At the ordinary income level, iron and steel encountered losses of JPY21mn while aluminum and copper lost JPY20mn.
Kobe Steel reported a net loss of JPY68mn ($634mn) in FY 2019, compared with a JPY36mn profit in FY 2018. Operating income fell 80pc to JPY9.8mn in FY 2019 compared to JPY48.2 in FY 2018.
The company recorded JPY50mn in impairment losses in FY 2019, almost four times the JPY14mn in losses in the same period the previous year. Impairment losses were recorded on fixed manufacturing assets for titanium, aluminum forgings for suspensions, aluminum castings and forgings, and steel castings and forgings primarily due to lower demand.
($1=JPY107.72)