Kobe Steel’s Al, Cu Products Sales to Drop in F2008

Kobe Steel’s aluminium and copper products unit expects the main product of copper flat and sheet products sales could decrease for fiscal 2008 from fiscal 2007 while the unit planned higher sales. Mr. Hiroyuki Nakayama, who is senior managing director of Kobe Steel and president of the unit said at the press conference for half year results on Thursday the sales could decrease in second half year more than expected.

Mr. Nakayama said the unit got higher rolling margin for aluminium flat, casting and forging products through the negotiation since first half year. He said the unit tries to seek higher price for aluminium extrusion and rolled copper products through ongoing negotiation.

The unit expects the aluminium flat products sales decrease by 1.6% to 138,300 tonnes in second half year to March 2009 from same period of previous year. The unit estimates the light metal sales decrease by 1.7% to 156,000 tonnes including 2.7% lower sales for extrusion at 17,700 tonnes. The unit expects the sales decrease by 1.1% to 70,200 tonnes for rolled copper products when the sales decrease by 4.3% to 35,500 tonnes for copper tube while the copper flat and strip sales increase by 2.4% to 34,700 tonnes.

Mr. Nakayama said the copper flat and strip products could decrease for fiscal 2008 from fiscal 2007 along with copper tube and light metals when economy accelerates to slow. The unit tries to improve the efficiency through reducing inventory and cost for better profitability.

Mr. Nakayama said the unit still tries to improve the rolling margin for copper strip and flat products while the unit got higher margin enough to cover casting loss. He indicates the unit keeps seeking higher margin for better profitability.

The unit plans 11 billion yen of capital expenditure for fiscal 2008, which is 4.1 billion yen lower than fiscal 2007. The unit revised the expenditure plan to meet slower demand condition. The unit stops major expenditure plan while it keeps spending for small valued items.