Slides
Page 1
Financial Results for the First Quarter of Fiscal 2026 and Forecast for the Full Fiscal Year August 5 , 2026 Kobe Steel , Ltd. KOBELCO
Page 2
Kobe Steel, Ltd. all rights reserved Table of Contents 2 ■ Summary of Financial Results and Forecast ■ Financial Results for the First Quarter of Fiscal 2026 ■ Forecast for Fiscal 2026 ■ Return to Shareholders ■ Segment Information ■ Reference Information
Page 3
Kobe Steel, Ltd. all rights reserved Financial Results for the First Quarter of Fiscal 2026 • Activity levels in key demand sectors were sluggish, remaining at a similar level year on year. Cost increases due to higher crude oil prices, triggered by the worsening situation in the Middle East, have become evident. • Ordinary profit decreased year on year to 22.6 billion yen. While the impact of inventory valuation has improved, primarily due to increased aluminum and copper ingot prices, steel metal spreads have deteriorated. • Quarterly profit attributable to owners of parent also decreased year on year to 12.1 billion yen, primarily due to the loss of gains on the sale of cross-shareholdings recorded in the same period of the previous fiscal year. Forecast for Fiscal 2026 • From the second quarter onward, the demand environment is expected to remain sluggish, particularly in the automotive, construction, and civil engineering sectors. • Although the situation in the Middle East is expected to gradually normalize from the second quarter onward, an annual negative earningｓ impact of 12.0 billion yen (worsened by 2.0 billion yen from the previous forecast) is projected, reflecting cost increases due to higher crude oil prices, among other factors. • Despite the impact of the Middle East situation and a projected deterioration in steel metal spreads, the forecasts for ordinary profit, profit attributable to owners of parent, and ROIC remain unchanged from the previous forecast at 120.0 billion yen, 100.0 billion yen, and approximately 5.5%, respectively, primarily due to an increase in inventory valuation gains. • The forecast for free cash flow has been revised downward to 0 billion yen, reflecting the deterioration in ordinary profit excluding inventory valuation. • The net assets ratio and the D/E ratio are expected to remain at approximately 49% and 0.55 times, respectively, unchanged from the previous forecast. Return to Shareholders • The interim and annual dividends remain at 40 yen and 80 yen, respectively, as previously announced (dividend payout ratio: 31.7%). Summary 3
Page 4
Kobe Steel, Ltd. all rights reserved Summary of Financial Results and Forecast 4 Financial Results for the First Quarter of Fiscal 2026 Fiscal 2026 Full-Year Earnings Forecast Year on year Net Sales 2,690.0 billion yen 130.0 billion yen Ordinary Profit (Loss) 120.0 billion yen ー Excluding Inventory Valuation 99.5 billion yen (16.0) billion yen Profit (Loss) Attributable to Owners of Parent 100.0 billion yen ー Year on year Net Sales 578.3 billion yen 9.2 billion yen Ordinary Profit (Loss) 22.6 billion yen (6.0) billion yen Excluding Inventory Valuation 11.6 billion yen (21.0) billion yen Quarterly Profit (Loss) Attributable to Owners of Parent 12.1 billion yen (26.4) billion yen Financial Indicators Fiscal 2026 Full-Year Earnings Forecast • ROIC ： Approx. 5.5% (unchanged from the previously forecast) • ROE ： Approx. 7.5% (unchanged from the previously forecast) • Net assets ratio ： Approx. 49％ (unchanged from the previously forecast) • Gross D/E ratio ： Approx. 0.55 times (unchanged from the previously forecast) Return to Shareholders • The Company’s policy is to pay an interim dividend of 40 yen and an annual dividend of 80 yen per share (unchanged from the previously announced)
Page 5
Kobe Steel, Ltd. all rights reserved Impact of the Middle East Situation 5 (6.0) (1.0) (10.0) (α) (α） • A negative earnings impact of 5.5 billion yen became evident in the first quarter, reflecting cost increases due to higher crude oil prices, among other factors. • Although there are plans to pass on increased costs to selling prices from the second quarter onward, an annual negative earnings impact of 12.0 billion yen is projected, partly due to anticipated delays in implementing cost pass-through. Potential Risks Identified and Current Estimate of Earnings Impact Current Reference 1Q Full Year Previous forecast Higher logistics costs, rising energy and other material prices, and delays in cost pass-through, resulting from elevated crude oil prices (4.5) (10.0) （10.0） Higher procurement costs for alternative raw materials in the aluminum businesses ー (1.0) （1.0） Middle East-related sales declines and timing delays in the machinery businesses (0.5) (0.5) （6.0） Reduced supply of oil-related products and logistics disruptions, leading to constraints in our production and shipment ー ー （α） Emergence of negative impacts on the production and sales activities of customers and business partners (0.5) (0.5) （α） (5.5) (12.0) (20.0)* *The previous forecast factored in an earnings risk of 10.0 billion yen out of the estimated annual negative impact of 20.0 billion yen, assuming the situation would be resolved by the end of the first half. Breakdown of Middle East-Related Earnings Impact by Segment Steel Products: (6.0), Aluminum Rolled Products: (3.0), Advanced Materials: (2.0), Machinery: (0.5), Construction Machinery: (0.5)
Page 6
Kobe Steel, Ltd. all rights reserved Financial Results for the First Quarter of Fiscal 2026 6 Net Sales Net sales remained roughly flat year on year, primarily due to the extended statutory inspection of the Kobe Power Plant Unit No. 3 unit in the electric power segment, despite higher selling prices in the materials businesses resulting from increased aluminum and copper ingot prices. Ordinary Profit （Loss) Despite an improvement in inventory valuation in the materials businesses resulting from increased aluminum and copper ingot prices, ordinary profit decreased year on year, primarily due to a deterioration in steel metal spreads. Profit (Loss) Attributable to Owners of Parent Profit attributable to owners of parent decreased year on year, due to a decrease in extraordinary income resulting from the loss of gains on the sale of cross-shareholdings and other assets recorded in the previous fiscal year. Change 1Q 1H Full Year 1Q 1H Full Year (Billions of yen) ① ② ②－① Net Sales 569.0 1,181.4 2,436.5 578.3 1,300.0 2,690.0 9.2 Operating Profit (Loss) 31.3 62.5 129.8 20.4 65.0 150.0 (10.8) Ordinary Profit (Loss) 28.7 57.6 121.3 22.6 50.0 120.0 (6.0) Excluding Inventory Valuation 32.7 64.1 125.8 11.6 33.0 99.5 (21.0) Extraordinary Income (Losses) 16.7 17.9 (0.4) 2.7 2.7 10.0 (14.0) 38.6 62.8 93.7 12.1 35.0 100.0 (26.4) Profit (Loss) Attributable to Owners of Parent FY2025 Actual FY2026 Forecast (Current)
Page 7
Kobe Steel, Ltd. all rights reserved 28.7 (22.5) 0.0 1.0 (6.8) 15.0 22.6 0.8 FY2025 1Q Quantity mix Selling prices/ raw material prices of steel products Selling prices/ procurement prices (other than steel products) Increase or decrease in costs Subsidiaries & affiliates Electric power Inventory valuation Others FY2026 1Q Financial Results for the First Quarter of Fiscal 2026 : Analysis of Ordinary Profit (Loss)(Year on year) 7 (6.0） billion yen *The calculation of inventory valuation incorporates the average method and the lower-of-cost-or-market method. Steel products (1.5) Aluminum rolled products 0.5 Advanced materials 1.0 Welding 1.0 Machinery (2.5) Engineering 4.5 Construction machinery (1.0) Steel products 1.5 Aluminum rolled products 1.5 Advanced materials (0.5) Welding － Machinery (1.5) Engineering － Construction machinery (1.0) Business Selling/ procurement prices Exchange rates Aluminum rolled products (0.5) 0.5 Advanced materials 1.0 － Welding 0.5 － Construction machinery － 3.0 Total 1.0 3.5 Steel products 5.5 Aluminum rolled products 3.0 Advanced materials 6.5 ＜Impact of the Middle East Situation＞ Quantity mix (１.０) Selling prices/ Procurement prices (4.5) Total (5.5) （4.0） 4.5 (0.5) 2.0 (1.0) • The impact of the extended statutory inspection of the Kobe Power Plant No. 3 unit, among other factors
Page 8
Kobe Steel, Ltd. all rights reserved 6.0 (7.7) (13.8) Excluding Inventory Valuation 10.5 (8.7) (19.3) (0.5) 5.4 5.9 Excluding Inventory Valuation (1.0) 1.9 2.9 0.0 8.1 8.0 Excluding Inventory Valuation 0.0 1.6 1.5 0.9 2.3 1.4 Up primarily due to an increase in sales volume and the progress in cost pass-through. 6.4 8.1 1.6 10.5 6.2 (4.2) Down primarily due to a decrease in sales for the energy and chemical sectors. 1.1 6.0 4.8 Up primarily due to an increase in sales in the DRI-related business. 1.2 0.9 (0.2) Down primarily due to higher procurement costs and a deterioration in the sales mix, despite gains from the weaker yen and the progress in cost pass- through. 12.8 13.2 0.3 8.5 1.6 (6.8) Down primarily due to the extended statutory inspection period for the Kobe Power Plant No. 3 unit and the elimination of gains from changes in coal prices. Machinery Businesses Total Electric Power Steel Products Aluminum Rolled Products Advanced Materials Welding Materials Businesses Total Machinery Engineering Construction Machinery Up primarily due to an increase in sales volume for semiconductor manufacturing equipment and an improvement in inventory valuation. Change Down primarily due to a deterioration in metal spreads resulting from higher raw material prices, despite an improvement in inventory valuation. Up primarily due to a decrease in depreciation expenses resulting from fixed asset impairment and an increase in inventory valuation gains. FY2025 1Q FY2026 1Q Financial Results for the First Quarter of Fiscal 2026 : Ordinary Profit (Loss) by Segment 8
Page 9
Kobe Steel, Ltd. all rights reserved Highlighted in blue are the business units affected by demand fluctuations. Automobile production (Steel products, aluminum rolled products, aluminum extrusions, aluminum suspensions, copper rolled products, steel powder, and welding) Demand in Japan is expected to remain similar to the previous forecast, while overseas demand is expected to decrease from the previous forecast due to Middle East-related factors and decreased sales by Japanese automakers in China. IT and semiconductors (Aluminum rolled products, aluminum castings and forgings, and copper rolled products) Demand for HDDs and semiconductor manufacturing equipment is expected to remain similar to the previous forecast, along with continued solid investment in data centers. Shipbuilding (Steel products, steel castings and forgings, and welding) Despite strong demand, demand is expected to remain similar to the previous forecast, affected by continued labor shortages and other factors. Aircraft (Titanium, and aluminum castings and forgings) Demand is expected to remain similar to the previous forecast, along with continued robust demand for aging aircraft replacement and new aircraft construction, among other factors. Beverage cans (Aluminum rolled products) Demand is expected to remain similar to the previous forecast, as sluggish demand continues amid rising prices and other factors. Construction and civil engineering (Steel products and welding) Demand is expected to remain similar to the previous forecast, primarily due to continued postponements of construction starts affected by labor shortages, escalating construction costs, and other factors. Fiscal 2026 : Assumption of Business Environment for Materials Businesses 9
Page 10
Kobe Steel, Ltd. all rights reserved (Machinery) Energy and chemistry Demand is expected to remain similar to the previous forecast, as investment decisions continue to be deferred amid global economic uncertainty, including the situation in the Middle East. General industry Domestic demand is expected to remain steady. Overseas demand is expected to remain sluggish, as market conditions in China have yet to recover. （Construction machinery—Hydraulic excavators） Japan Demand is expected to remain similar to the previous forecast, as sluggish demand continues due to labor shortages and rising prices. China Demand is expected to exceed the previous forecast, driven by government-led farmland reform policies. North America Demand is expected to remain similar to the previous forecast, supported by continued steady demand for construction. Europe Demand is expected to fall below the previous forecast, reflecting deteriorating business sentiment and diminishing investment appetite associated with the situation in the Middle East, among other factors. Southeast Asia Demand is expected to fall below the previous forecast, due to project delays associated with the situation in the Middle East, among other factors. Fiscal 2026 : Assumption of Business Environment for Machinery Businesses 10
Page 11
Kobe Steel, Ltd. all rights reserved Forecast for Fiscal 2026 11 Ordinary Profit （Loss） Despite a deterioration in steel metal spreads and increased raw material and procurement costs, impacted by the Middle East situation, ordinary profit is expected to remain at a similar level to the previous forecast due to an increase in inventory valuation gains. Net Sales Net sales are expected to exceed the previous forecast, due to higher selling prices in the materials businesses and the electric power business, resulting from increased raw material prices, among other factors. Profit (Loss) Attributable to Owners of Parent Profit attributable to owners of parent is expected to remain unchanged from the previous forecast. Change 1H 2H Full Year 1H 2H Full Year (Billions of yen) ① ② ②－① Net Sales 1,240.0 1,320.0 2,560.0 1,300.0 1,390.0 2,690.0 130.0 Operating Profit (Loss) 60.0 90.0 150.0 65.0 85.0 150.0 － Ordinary Profit (Loss) 45.0 75.0 120.0 50.0 70.0 120.0 － Excluding Inventory Valuation 41.5 74.0 115.5 33.0 66.5 99.5 (16.0) Extraordinary Income (Loss) 3.0 7.0 10.0 2.7 7.3 10.0 － 35.0 65.0 100.0 35.0 65.0 100.0 － Profit (Loss) Attributable to Owners of Parent FY2026 Forecast (Previous) FY2026 Forecast (Current)
Page 12
Kobe Steel, Ltd. all rights reserved 120.0 (1.5) (16.0) (3.0) (1.0) (0.5) (2.0) 16.0 120.0 FY2026 Forecast (Previous) Quantity mix Selling prices/ raw material prices of steel products Selling prices/ procurement prices (other than steel products) Increase or decrease in costs Subsidiaries & affiliates Electric power Inventory valuation Others FY2026 Forecast (Current) Forecast for Fiscal 2026 : Analysis of Ordinary Profit (Loss) (Compared to the previous forecast) 0.0 billion yen 12 *The calculation of inventory valuation incorporates the average method and the lower-of-cost-or-market method. Steel products (1.0) Aluminum rolled products － Advanced materials － Welding － Machinery － Engineering － Construction machinery － Others 0.0 Steel products 10.0 Aluminum rolled products 3.0 Advanced materials 3.0 Business Selling/ procurement prices Exchange rates Aluminum rolled products (2.5) － Advanced materials (2.0) － Welding (0.5) － Construction machinery (1.5) 3.5 Total (6.5) 3.5 ＜Impact of the Middle East Situation＞ Quantity mix (1.0) Selling prices/ Procurement prices (9.5) Increase or decrease in costs (1.5) Others 10.0 Total (2.0) （△1.0） （△4.5） 8.0 (10.0) （△1.5）（△5.0） Steel products － Aluminum rolled products (0.5) Advanced materials － Welding － Machinery － Engineering － Construction machinery (1.0)
Page 13
Kobe Steel, Ltd. all rights reserved 19.5 14.0 (5.5) Excluding Inventory Valuation 17.5 2.0 (15.5) 5.5 5.5 0.0 Excluding Inventory Valuation 4.0 1.0 (3.0) 10.0 11.0 1.0 Excluding Inventory Valuation 9.0 7.0 (2.0) 6.5 6.5 0.0 The same as previously forecast. 41.5 37.0 (4.5) 40.0 40.0 0.0 The same as previously forecast. 11.5 11.5 0.0 The same as previously forecast. 16.0 16.0 0.0 The same as previously forecast, despite a deterioration in the sales mix, due to gains from the depreciation of the yen and other factors. 67.5 67.5 0.0 32.0 30.0 (2.0) Down primarily due to the extended statutory inspection period for the Kobe Power Plant No. 3 unit. (21.0) (14.5) 6.5 Reflecting the risk of the Middle East situation (¥10.0 billion in the previous forecast) in the earnings of each segment. Others Businesses and Adjustment Machinery Engineering Construction Machinery Machinery Businesses Total Electric Power Steel Products Down primarily due to a deterioration in metal spreads caused by the impact of the Middle East situation and delays in cost pass-through, despite an increase in inventory valuation gains. Materials Businesses Total FY2026 Previous FY2026 Current Change Aluminum Rolled Products The same as previously forecast, despite an increase in inventory valuation gains, due to higher procurement costs resulting from the impact of the Middle East situation and other factors. Advanced Materials Up from the previous forecast, primarily due to an increase in inventory valuation gains, despite higher procurement costs resulting from the impact of the Middle East situation and other factors. Welding Forecast for Fiscal 2026 : Ordinary Profit (Loss) by Segment 13
Page 14
Kobe Steel, Ltd. all rights reserved 769.9 755.0 755.0 189.0 150.0 140.0 0.61 times Approx. 0.55 times Approx. 0.55 times FY2025 FY2026 (Previous) FY2026 (Current) Interest-bearing debt (including lease liabilities) Cash and Deposits Gross D/E ratio (73.6) (190.0) (180.0) 201.6 200.0 180.0 128.0 10.0 0.0 FY2025 FY2026 (Previous) FY2026 (Current) Cash flows from operating activities Cash flows from investing activities Free cash flow (Billions of yen) Cash Flow Status 14 • Cash flows from operating activities are expected to decrease by 20.0 billion yen from the previous forecast to 180.0 billion yen, primarily due to a deterioration in ordinary profit excluding inventory valuation. Free cash flow is expected to be approximately break-even. • The balance of interest-bearing debt is expected to remain unchanged from the previous forecast. The net assets ratio and the D/E ratio are expected to be approx. 49% and 0.55 times, respectively. Cash flow Gross D/E ratio (20.0) (Billions of yen) 0.0 (10.0) 10.0 2,865.1 2,840.0 2,880.0 1,330.4 1,400.0 1,400.0 46.4% Approx. 49% Approx. 49% FY2025 FY2026 (Previous) FY2026 (Current) Total assets Net assets Net assets ratio (Billions of yen) Net assets ratio
Page 15
Kobe Steel, Ltd. all rights reserved Return to Shareholders 15 The Company’s policy of paying an interim dividend of 40 yen and an annual dividend of 80 yen per share remains unchanged from the previous announcement. 0 10 40 40 90 100 80 80 0.0% 10.0% 20.0% 30.0% 40.0% 0 50 100 150 (yen/share)Return policy Kobe Steel determines dividends taking its financial condition, business performance, future capital needs and other factors into overall consideration with the aim of paying dividends on a continuous and steady basis in principle. Medium-Term Management Plan (Fiscal 2024–2026) Dividend payout ratio: approx. 30% Dividend（yen/share） Dividend Payout Ratio（％） FY2025 FY2026（policy) Interim Year-end Interim Year-end 40 yen 40 yen 40 yen 40 yen 8０ yen 80 yen 33.6% 31.7% Dividend and Dividend Payout Ratio
Page 16
Kobe Steel, Ltd. all rights reserved Segment Information 16
Page 17
Kobe Steel, Ltd. all rights reserved Financial Results for the First Quarter of Fiscal 2026 and Forecast for Fiscal 2026 17 Change 1Q Full Year 1H 2H Full Year 1Q 1H 2H Full Year 1Q Full Year Full Year (Billions of yen) ① ② ③ ④ ⑤ ④－① ⑤－② ⑤－③ Steel & Aluminum 257.8 996.9 499.0 523.0 1,022.0 250.1 513.0 540.0 1,053.0 (7.6) 56.0 31.0 Advanced Materials 75.9 332.8 174.0 185.0 359.0 92.5 190.0 195.0 385.0 16.5 52.1 26.0 Welding 22.6 96.4 49.0 51.0 100.0 26.2 51.0 52.0 103.0 3.6 6.5 3.0 Machinery 66.1 282.7 144.0 135.0 279.0 59.7 138.0 142.0 280.0 (6.4) (2.7) 1.0 Engineering 32.3 193.8 88.0 108.0 196.0 39.7 86.0 115.0 201.0 7.3 7.1 5.0 Construction Machinery 83.5 389.5 206.0 223.0 429.0 87.5 214.5 237.5 452.0 3.9 62.4 23.0 Electric Power 45.8 203.2 107.0 112.0 219.0 34.8 112.0 121.0 233.0 (10.9) 29.7 14.0 Other Businesses 1.4 5.8 3.0 3.0 6.0 1.3 3.0 3.0 6.0 (0.0) 0.1 － Adjustment (16.8) (64.9) (30.0) (20.0) (50.0) (13.9) (7.5) (15.5) (23.0) 2.8 41.9 27.0 Net Sales 569.0 2,436.5 1,240.0 1,320.0 2,560.0 578.3 1,300.0 1,390.0 2,690.0 9.2 253.4 130.0 Operating Profit (Loss) 31.3 129.8 60.0 90.0 150.0 20.4 65.0 85.0 150.0 (10.8) 20.1 － Steel & Aluminum 5.4 2.8 8.5 16.5 25.0 (2.3) 2.5 17.0 19.5 (7.8) 16.6 (5.5) Advanced Materials 0.0 8.7 5.0 5.0 10.0 8.1 6.0 5.0 11.0 8.0 2.2 1.0 Welding 0.9 5.8 3.0 3.5 6.5 2.3 3.5 3.0 6.5 1.4 0.6 － Machinery 10.5 46.7 18.5 21.5 40.0 6.2 18.0 22.0 40.0 (4.2) (6.7) － Engineering 1.1 12.6 5.0 6.5 11.5 6.0 7.0 4.5 11.5 4.8 (1.1) － Construction Machinery 1.2 12.3 5.5 10.5 16.0 0.9 6.0 10.0 16.0 (0.2) 3.6 － Electric Power 8.5 34.7 12.0 20.0 32.0 1.6 9.5 20.5 30.0 (6.8) (4.7) (2.0) Other Businesses 0.2 5.0 2.5 2.5 5.0 1.5 2.5 2.5 5.0 1.2 (0.0) － Adjustment 0.5 (7.6) (15.0) (11.0) (26.0) (1.8) (5.0) (14.5) (19.5) (2.4) (11.8) 6.5 Ordinary Profit (Loss) 28.7 121.3 45.0 75.0 120.0 22.6 50.0 70.0 120.0 (6.0) (1.3) － Excluding Inventory Valuation 32.7 125.8 41.5 74.0 115.5 11.6 33.0 66.5 99.5 (21.0) (26.3) (16.0) Extraordinary Income (Losses) 16.7 (0.4) 3.0 7.0 10.0 2.7 2.7 7.3 10.0 (14.0) 10.4 － 38.6 93.7 35.0 65.0 100.0 12.1 35.0 65.0 100.0 (26.4) 6.2 － Change Profit (Loss) Attributable to Owners of Parent FY2025 Actual FY2026 Forecast (Previous) FY2026 Forecast (Current)
Page 18
Kobe Steel, Ltd. all rights reserved Change 1Q Full Year 1H 2H Full Year 1Q 1H 2H Full Year 1Q Full Year Full Year (Billions of yen) ① ② ③ ④ ⑤ ④－① ⑤－② ⑤－③ Net Sales 212.0 822.2 402.0 421.0 823.0 199.5 412.0 438.0 850.0 (12.4) 27.7 27.0 Ordinary Profit (Loss) 6.0 3.8 6.5 13.0 19.5 (7.7) (2.5) 16.5 14.0 (13.8) 10.1 (5.5) Excluding Inventory Valuation 10.5 13.3 6.0 11.5 17.5 (8.7) (12.0) 14.0 2.0 (19.3) (11.3) (15.5) Crude steel production *1 (Millions of tons) 1.46 5.81 3.00 2.90 5.90 1.47 3.00 3.00 6.00 0.01 0.19 0.10 Sales volume of steel products *2 (Millions of tons) 1.15 4.63 2.35 2.35 4.70 1.14 2.40 2.40 4.80 (0.01) 0.17 0.10 Domestic 0.93 3.69 0.92 (0.01) Exports 0.23 0.94 0.22 (0.01) Export ratio (value basis) 20% 21% 20% 0% Average steel selling price (Thousands of yen/ton) 138 133 133 (5) *1 Includes production volume through electric arc furnaces at Takasago Works *2 Non-consolidated basis FY2025 Actual FY2026 Forecast (Previous) FY2026 Forecast (Current) Change Steel Products 18 Financial Results for the First Quarter of Fiscal 2026 (Year on year) Forecast for Fiscal 2026 (Compared to the previous forecast) *The calculation of inventory valuation incorporates the average method and the lower-of-cost-or-market method. 6.0 (1.5) (22.5) 1.5 1.0 5.5 2.2 (7.7) FY2025 1Q Quantity mix Selling prices/ raw material prices Increase or decrease in costs Subsidiaries & affiliates Inventory valuation Others FY2026 1Q 19.5 0.0 (16.0) (1.0) (0.5) 10.0 2.0 14.0 FY2026 Forecast (Previous) Quantity mix Selling prices/ raw material prices Increase or decrease in costs Subsidiaries & affiliates Inventory valuation Others FY2026 Forecast (Current)
Page 19
Kobe Steel, Ltd. all rights reserved Forecast for Fiscal 2026 (Compared to the previous forecast) Aluminum Rolled Products 19 Financial Results for the First Quarter of Fiscal 2026 (Year on year) *The calculation of inventory valuation incorporates the average method and the lower-of-cost-or-market method. Change 1Q Full Year 1H 2H Full Year 1Q 1H 2H Full Year 1Q Full Year Full Year (Billions of yen) ① ② ③ ④ ⑤ ④－① ⑤－② ⑤－③ Net Sales 45.7 174.6 97.0 102.0 199.0 50.6 101.0 102.0 203.0 4.8 28.3 4.0 Ordinary Profit (Loss) (0.5) (0.9) 2.0 3.5 5.5 5.4 5.0 0.5 5.5 5.9 6.4 － Excluding Inventory Valuation (1.0) (3.4) 1.0 3.0 4.0 1.9 0.5 0.5 1.0 2.9 4.4 (3.0) Sales volume of aluminum rolled products * (Thousands of tons) 70 263 140 145 285 71 140 145 285 1 22 － Domestic 57 218 59 2 Exports 12 45 12 (0) * Consolidated basis FY2025 Actual FY2026 Forecast (Previous) FY2026 Forecast (Current) Change 5.5 (0.5) (2.5) 0.0 0.0 3.0 0.0 5.5 FY2026 Forecast (Previous) Quantity mix Selling prices/ procurement prices Increase or decrease in costs Subsidiaries & affiliates Inventory valuation Others FY2026 Forecast (Current) (0.5) 0.5 0.0 1.5 0.0 3.0 0.9 5.4 FY2025 1Q Quantity mix Selling prices/ procurement prices Increase or decrease in costs Subsidiaries & affiliates Inventory valuation Others FY2026 1Q
Page 20
Kobe Steel, Ltd. all rights reserved Advanced Materials 20 Financial Results for the First Quarter of Fiscal 2026 (Year on year) Forecast for Fiscal 2026 (Compared to the previous forecast) *The calculation of inventory valuation incorporates the average method and the lower-of-cost-or-market method. Change 1Q Full Year 1H 2H Full Year 1Q 1H 2H Full Year 1Q Full Year Full Year (Billions of yen) ① ② ③ ④ ⑤ ④－① ⑤－② ⑤－③ Net Sales 75.9 332.8 174.0 185.0 359.0 92.5 190.0 195.0 385.0 16.5 52.1 26.0 Ordinary Profit (Loss) 0.0 8.7 5.0 5.0 10.0 8.1 6.0 5.0 11.0 8.0 2.2 1.0 Excluding Inventory Valuation 0.0 6.2 3.0 6.0 9.0 1.6 3.0 4.0 7.0 1.5 0.8 (2.0) Sales volume of aluminum extrusions＊1 (Thousands of tons) 9 36 19 19 38 10 19 20 39 1 3 1 Domestic 7 28 7 1 Exports 2 8 2 0 Copper rolled products *2 (Thousands of tons) 13 54 29 30 59 13 28 32 60 1 6 1 *1 Consolidated basis *2 Non-consolidated basis FY2026 Forecast (Current) ChangeFY2025 Actual FY2026 Forecast (Previous) 10.0 0.0 (2.0) 0.0 3.0 0.0 11.0 FY2026 Forecast (Previous) Quantity mix Selling prices/ procurement prices Increase or decrease in costs Inventory valuation Others FY2026 Forecast (Current) 0.0 1.0 1.0 (0.5) 6.5 0.0 8.1 FY2025 1Q Quantity mix Selling prices/ procurement prices Increase or decrease in costs Inventory valuation Others FY2026 1Q
Page 21
Kobe Steel, Ltd. all rights reserved Welding 21 Financial Results for the First Quarter of Fiscal 2026 (Year on year) Sales Volume Domestic ： Increased due to a gradual recovery in demand. Export ： Roughly flat year on year. Selling Prices Increased due to yen depreciation, among other factors. Cost Increased centered on procurement costs. Forecast for Fiscal 2026 (Compared to the previous forecast) Sales Volume Expected to remain similar to the previous forecast in both domestic and export markets. Selling Prices Expected to increase due to yen depreciation, among other factors. Cost Expected to increase centered on procurement costs. Change 1Q Full Year 1H 2H Full Year 1Q 1H 2H Full Year 1Q Full Year Full Year (Billions of yen) ① ② ③ ④ ⑤ ④－① ⑤－② ⑤－③ Net Sales 22.6 96.4 49.0 51.0 100.0 26.2 51.0 52.0 103.0 3.6 6.5 3.0 Ordinary Profit (Loss) 0.9 5.8 3.0 3.5 6.5 2.3 3.5 3.0 6.5 1.4 0.6 － Sales volume of welding materials＊ (Thousands of tons) 56 227 115 120 235 60 120 115 235 4 8 － Domestic 21 91 24 3 Exports 35 136 35 0 * Consolidated basis FY2025 Actual FY2026 Forecast (Previous) FY2026 Forecast (Current) Change
Page 22
Kobe Steel, Ltd. all rights reserved Forecast for Fiscal 2026 (Compared to the previous forecast) Orders Expected to remain at a similar level to the previously forecast. Ordinary Profit (Loss) Expected to remain unchanged from the previous forecast. Machinery 22 Financial Results for the First Quarter of Fiscal 2026 (Year on year) Orders Remained steady year on year. Ordinary Profit (Loss) Decreased primarily due to a decrease in sales of machine units for the energy and chemical sectors, among other factors. Change 1Q Full Year 1H 2H Full Year 1Q 1H 2H Full Year 1Q Full Year Full Year (Billions of yen) ① ② ③ ④ ⑤ ④－① ⑤－② ⑤－③ Net Sales 66.1 282.7 144.0 135.0 279.0 59.7 138.0 142.0 280.0 (6.4) (2.7) 1.0 Ordinary Profit (Loss) 10.5 46.7 18.5 21.5 40.0 6.2 18.0 22.0 40.0 (4.2) (6.7) － Orders 59.3 270.1 130.0 135.0 265.0 59.0 130.0 140.0 270.0 (0.3) (0.1) 5.0 Backlog of Orders 238.9 241.2 239.9 1.0 FY2025 Actual FY2026 Forecast (Previous) FY2026 Forecast (Current) Change
Page 23
Kobe Steel, Ltd. all rights reserved Engineering 23 Financial Results for the First Quarter of Fiscal 2026 (Year on year) Orders Increased primarily due to orders for large-scale projects in the waste treatment-related and water treatment-related businesses, among other factors. Ordinary Profit (Loss) Increased due to an increase in sales in the DRI-related business. Forecast for Fiscal 2026 (Compared to the previous forecast) Orders Expected to remain unchanged from the previous forecast. Ordinary Profit (Loss) Expected to remain unchanged from the previous forecast. Change 1Q Full Year 1H 2H Full Year 1Q 1H 2H Full Year 1Q Full Year Full Year (Billions of yen) ① ② ③ ④ ⑤ ④－① ⑤－② ⑤－③ Net Sales 32.3 193.8 88.0 108.0 196.0 39.7 86.0 115.0 201.0 7.3 7.1 5.0 Ordinary Profit (Loss) 1.1 12.6 5.0 6.5 11.5 6.0 7.0 4.5 11.5 4.8 (1.1) － Orders 64.9 132.1 145.0 90.0 235.0 84.5 170.0 65.0 235.0 19.5 102.8 － Backlog of Orders 470.1 386.0 436.7 (33.4) FY2025 Actual FY2026 Forecast (Previous) FY2026 Forecast (Current) Change
Page 24
Kobe Steel, Ltd. all rights reserved Construction Machinery 24 Financial Results for the First Quarter of Fiscal 2026 (Year on year) Forecast for Fiscal 2026 (Compared to the previous forecast) Change 1Q Full Year 1H 2H Full Year 1Q 1H 2H Full Year 1Q Full Year Full Year (Billions of yen) ① ② ③ ④ ⑤ ④－① ⑤－② ⑤－③ Net Sales 83.5 389.5 206.0 223.0 429.0 87.5 214.5 237.5 452.0 3.9 62.4 23.0 Ordinary Profit (Loss) 1.2 12.3 5.5 10.5 16.0 0.9 6.0 10.0 16.0 (0.2) 3.6 － Unit sales of hydraulic excavators *1 (Thousands of units) 4.5 21.0 10.5 11.5 22.0 4.5 10.5 11.5 22.0 (0.0) 1.0 － Domestic 0.9 5.9 0.7 (0.2) Exports 3.6 15.1 3.7 0.2 Unit sales of crawler cranes *2 (Units) 68 329 160 170 330 45 130 215 345 (23) 16 15 *1 Consolidated basis (including mini-excavators) *2 Consolidated basis FY2025 Actual FY2026 Forecast (Previous) FY2026 Forecast (Current) Change 1.2 (1.0) 3.0 (1.0) (1.2) 0.9 FY2025 1Q Unit sales Selling prices/ procurement prices Increase or decrease in costs Others FY2026 1Q 16.0 (1.0) 2.0 0.0 (1.0) 16.0 FY2026 Forecast (Previous) Unit sales Selling prices/ procurement prices Increase or decrease in costs Others FY2026 Forecast (Current)
Page 25
Kobe Steel, Ltd. all rights reserved Electric Power 25 Financial Results for the First Quarter of Fiscal 2026 (Year on year) Sales Volume Decreased primarily due to the extended statutory inspection of the Kobe Power Plant No. 3 unit and the increased statutory inspection days for the Kobe Power Plant No. 4 unit. Unit Selling Price Decreased due to fluctuations in coal prices. Ordinary Profit (Loss) Decreased primarily due to the extended statutory inspection period for the Kobe Power Plant No. 3 unit and the loss of gains from changes in coal prices. Forecast for Fiscal 2026 (Compared to the previous forecast) Sales Volume Expected to ｄecrease primarily due to the extended statutory inspection of the Kobe Power Plant No. 3 unit. Unit Selling Price Expected to increase due to fluctuations in coal prices. Ordinary Profit (Loss) Expected to ｄecrease primarily due to the extended statutory inspection of the Kobe Power Plant No. 3 unit. Change 1Q Full Year 1H 2H Full Year 1Q 1H 2H Full Year 1Q Full Year Full Year (Billions of yen) ① ② ③ ④ ⑤ ④－① ⑤－② ⑤－③ Net Sales 45.8 203.2 107.0 112.0 219.0 34.8 112.0 121.0 233.0 (10.9) 29.7 14.0 Ordinary Profit (Loss) 8.5 34.7 12.0 20.0 32.0 1.6 9.5 20.5 30.0 (6.8) (4.7) (2.0) Time lags in fuel cost adjustments 1.0 1.0 － － － 0.0 0.0 － 0.0 (1.0) (1.0) － － 3.0 － － － － － － － － (3.0) － Effect of temporary gains/losses from changes in electricity selling prices FY2025 Actual FY2026 Forecast (Previous) FY2026 Forecast (Current) Change
Page 26
Kobe Steel, Ltd. all rights reserved Reference Information 26
Page 27
Kobe Steel, Ltd. all rights reserved Exchange Rate Assumption 27 Analysis of Exchange Rate Sensitivity Impact of the 1 yen depreciation against the U.S. dollar on future business performance Steel products : Approx. (0.2) billion yen (Impact of dollar balance: (0.7) billion yen Inventory valuation, cost pass-through to selling prices, etc.: 0.5 billion yen) Construction machinery : Approx. 0.2 billion yen (Impact of dollar balance) Impact of the 1 yen depreciation against the euro on future business performance Construction machinery : Approx. 0.2 billion yen (Impact of euro balance) FY2026 Forecast (Previous) 1Q １H ２H Full Year Full Year 1Q 2-4Q Full Year 1 U.S. dollar to yen 143.8 146.1 156.2 151.1 150.0 160.7 155.0 156.4 1 Chinese yuan to yen 19.9 20.3 22.4 21.3 21.0 23.6 22.0 22.4 1 euro to yen 165.1 168.7 182.5 175.6 175.0 186.1 180.0 181.5 FY2025 Actual FY2026 Forecast (Current)
Page 28
Kobe Steel, Ltd. all rights reserved 80 90 100 110 Market conditions Quarterly contract prices 150 200 250 300 Market conditions Quarterly contract prices Raw Material Market Assumption 28 Iron ore The price for fiscal 2026 2Q has been settled at $96. The price level for the second half of fiscal 2026 onward is assumed to remain at the current level. Coking coal The price for fiscal 2026 1Q has been settled at $232. The price level for fiscal 2026 2Q onward is assumed to remain at the current level. Thermal coal From April to June 2026, the price ranged from approximately $130 to $150. The price level for fiscal 2026 2Q onward is assumed to remain at the current level. Coking coal (FOB) market assumptions ($/ ton) Iron ore (FOB) market assumptions($/ ton) FY25-Q1 $97 FY25-Q2 $181 FY26-Q1 $232 FY25-Q3 $192 FY25-Q4 $230 FY25-Q2 $91 FY25-Q3 $88 FY26-Q1/Q2 $96 FY25-Q1 $183 FY25-Q4 $94
Page 29
Kobe Steel, Ltd. all rights reserved Inventory Valuation 29 (Billions of yen) 1Q 1H 2H Full Year 1H 2H Full Year 1Q 1H 2H Full Year Iron ore 1.5 0.5 0.5 1.0 (0.5) 0.0 (0.5) 0.5 0.5 (2.0) (1.5) Coal (0.5) (0.5) 1.5 1.0 (0.5) 0.0 (0.5) 0.0 0.0 0.0 0.0 1.0 0.0 2.0 2.0 (1.0) 0.0 (1.0) 0.5 0.5 (2.0) (1.5) Average method (5.5) (8.0) (1.0) (9.0) (2.0) 0.5 (1.5) 7.0 7.0 2.0 9.0 Lower-of-cost-or-market method 1.0 0.0 (0.5) (0.5) 2.5 1.0 3.5 (6.0) 2.5 0.5 3.0 (4.5) (8.0) (1.5) (9.5) 0.5 1.5 2.0 1.0 9.5 2.5 12.0 1Q 1H 2H Full Year 1H 2H Full Year 1Q 1H 2H Full Year Average method 1.0 1.5 1.0 2.5 1.0 0.5 1.5 3.5 4.5 0.0 4.5 Lower-of-cost-or-market method (0.5) (0.5) 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 1.0 1.5 2.5 1.0 0.5 1.5 3.5 4.5 0.0 4.5 1Q 1H 2H Full Year 1H 2H Full Year 1Q 1H 2H Full Year Average method 1.0 2.0 1.5 3.5 3.0 (2.0) 1.0 7.0 3.0 1.0 4.0 Lower-of-cost-or-market method (1.0) (1.5) 0.5 (1.0) (1.0) 1.0 0.0 (0.5) 0.0 0.0 0.0 0.0 0.5 2.0 2.5 2.0 (1.0) 1.0 6.5 3.0 1.0 4.0 Inventory valuation Inventory valuation Advanced Materials FY2025 Actual FY2026 Forecast (Previous) FY2026 Forecast (Current) Aluminum Rolled Products FY2025 Actual FY2026 Forecast (Previous) FY2026 Forecast (Current) FY2026 Forecast (Previous) FY2026 Forecast (Current) Inventory valuation Carry over Steel Products FY2025 Actual
Page 30
Kobe Steel, Ltd. all rights reserved 121.3 11.0 (25.0) 0.5 0.5 1.0 (4.7) 25.0 120.0 (9.6) FY202５ Quantity mix Selling prices/ raw material prices of steel products Selling prices/ procurement prices (other than steel products) Increase or decrease in costs Subsidiaries & affiliates Electric power Inventory valuation Others FY202６ Forecast for Fiscal 2026 : Analysis of Ordinary Profit (Loss) (Compared to fiscal 2025) 30 (1.3) billion yen *The calculation of inventory valuation incorporates the average method and the lower-of-cost-or-market method. Steel products 3.0 Aluminum rolled products 1.5 Advanced materials 2.5 Welding 1.5 Machinery (5.5) Engineering (1.0) Construction machinery 9.0 Steel products 9.5 Aluminum rolled products 4.5 Advanced materials (2.5) Welding (1.0) Machinery (2.0) Engineering － Construction machinery (8.0) Steel products 21.5 Aluminum rolled products 2.0 Advanced materials 1.5 Business Selling/ procurement prices Exchange rates Aluminum rolled products (2.0) － Advanced materials 1.0 － Welding (0.5) － Construction machinery (2.5) 4.5 Total (4.0) 4.5
Page 31
Kobe Steel, Ltd. all rights reserved 50.0 9.5 25.5 (2.5) 2.0 0.0 11.0 (13.5) 70.0 (12.0) FY2026 1H Quantity mix Selling prices/ raw material prices of steel products Selling prices/ procurement prices (other than steel products) Increase or decrease in costs Subsidiaries & affiliates Electric power Inventory valuation Others FY2026 2H Forecast for Fiscal 2026 : Breakdown of Differences Between the First and Second Half 20.0 billion yen • The impact of the extended statutory inspection of the Kobe Power Plant No. 3 unit • Preliminary construction toward ammonia co-firing, among other factors 31 *The calculation of inventory valuation incorporates the average method and the lower-of-cost-or-market method. Steel products 0.5 Aluminum rolled products － Advanced materials 3.5 Welding (0.5) Machinery 4.0 Engineering (2.5) Construction machinery 4.5 Others 0.0 Steel products (7.0) Aluminum rolled products (4.5) Advanced materials (2.0) Steel products 1.5 Aluminum rolled products 1.0 Advanced materials － Welding － Machinery － Engineering － Construction machinery (0.5) Others 0.0 Business Selling/ procurement prices Exchange rates Aluminum rolled products － － Advanced materials (1.0) － Welding － － Construction machinery (1.5) － Total (2.5) －
Page 32
Kobe Steel, Ltd. all rights reserved Breakdown of Differences between the First Half and the Second Half of Fiscal 2026 (Primary Segments) 32 Steel Products Aluminum Rolled Products Advanced Materials Construction Machinery *The calculation of inventory valuation incorporates the average method and the lower-of-cost-or-market method. (2.5) 0.5 25.5 1.5 0.0 (7.0) (1.5) 16.5 FY2026 1H Quantity mix Selling prices/ raw material prices Increase or decrease in costs Subsidiaries & affiliates Inventory valuation Others FY2026 2H 5.0 0.0 0.0 1.0 0.0 (4.5) (1.0) 0.5 FY2026 1H Quantity mix Selling prices/ procurement prices Increase or decrease in costs Subsidiaries & affiliates Inventory valuation Others FY2026 2H 6.0 3.5 (1.0) 0.0 (2.0) (1.5) 5.0 FY2026 1H Quantity mix Selling prices/ procurement prices Increase or decrease in costs Inventory valuation Others FY2026 2H 6.0 4.5 (1.5) (0.5) 1.5 10.0 FY2026 1H Unit sales Selling prices/ procurement prices Increase or decrease in costs Others FY2026 2H
Page 33
Kobe Steel, Ltd. all rights reserved Indicators 33 *1 Gross D/E ratio : Interest bearing debt (including lease liabilities) divided by shareholders’ equity *2 ROE : Profit (loss) attributable to owners of parent divided by stockholders’ equity *3 ROIC : After tax operating income divided by invested capital FY2023 Actual FY2024 Actual FY2025 Actual FY2026 Forecast (Previous) FY2026 Forecast (Current) 105.2 billion yen 115.8 billion yen 128.5 billion yen 160.0 billion yen 160.0 billion yen 94.8 billion yen 113.2 billion yen 124.4 billion yen 170.0 billion yen 165.0 billion yen 119.0 billion yen 122.4 billion yen 123.9 billion yen 125.0 billion yen 125.0 billion yen 38.6% 42.8% 46.4% approx. 49% approx. 49% 873.5 billion yen 886.3 billion yen 769.9 billion yen 755.0 billion yen 755.0 billion yen 0.83 times 0.76 times 0.61 times approx. 0.55 times approx. 0.55 times 205.2 billion yen 148.2 billion yen 201.6 billion yen 200.0 billion yen 180.0 billion yen (53.7) billion yen (113.8) billion yen (73.6) billion yen (190.0) billion yen (180.0) billion yen 151.5 billion yen 34.3 billion yen 128.0 billion yen 10.0 billion yen 0.0 billion yen 278.7 billion yen 219.8 billion yen 189.0 billion yen 150.0 billion yen 140.0 billion yen 277.38 yen 304.64 yen 237.80 yen 251.80 yen 252.09 yen 11.1% 10.8% 7.7% approx. 7.5% approx. 7.5% 6.7% 6.9% 5.3% approx. 5.5% approx. 5.5% Capital investment (accrual basis) ROIC*3 Capital investment (payment basis) Depreciation Net assets ratio Interest-bearing debt (including lease liabilities) Gross D/E ratio*1 Cash flows from operating activities Cash flows from investing activities Free cash flow Cash and deposits Profit (loss) per share ROE*2
Page 34
Kobe Steel, Ltd. all rights reserved Consolidated Results 34 6.5 (28.5) 1.7 22.0 51.2 84.5 109.6 88.9 (31.4) 6.3 52.9 (14.2)(26.9) 70.1 86.5 (21.5)(23.0) 63.1 35.9 (68.0) 23.2 60.0 72.5 109.5 120.1 93.7 100.0 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 50.0 (13.5) 35.4 50.7 116.0 176.9 183.2 157.9 60.8 10.2 89.0 33.7 (18.1) 85.0 101.6 28.9 (19.1) 71.1 34.6 (8.0) 16.1 93.2 106.8 160.9 157.1 121.3 120.0 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 (Billions of yen) Ordinary Profit (Loss) Profit (Loss) Attributable to Owners of Parent
Page 35
Kobe Steel, Ltd. all rights reserved Dialogue with the Capital Market and External Evaluations 35 Our Company is actively engaged in dialogue with capital markets to achieve sustainable growth and increase corporate value over the medium to long term. The details of our dialogue are disclosed on our corporate website. Dialogue with the Capital Market FY 2025, announced in June 2026: capital_markets_25_e.pdf Dialogue with the Capital Market External Evaluations（Listed below are only major ones） ◆ FTSE4Good Index Series ◆ FTSE JPX Blossom Japan Index ◆ FTSE JPX Blossom Japan Sector Relative Index ◆ MSCI JAPAN ESG SELECT LEADERS INDEX* ◆ MSCI JAPAN EMPOWERING WOMEN INDEX (WIN)* *THE INCLUSION OF KOBE STEEL, LTD. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN,DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF KOBE STEEL, LTD. BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES. ◆ NIKKEI Integrated Report Award ◆ CDP Received an 'A' rating in the climate change category Received the 'Excellence Award’ for the first time
Page 36
Kobe Steel, Ltd. all rights reserved Group Corporate Philosophy 36
Page 37
Kobe Steel, Ltd. all rights reserved Disclaimer Regarding Forward-Looking Statements 37 ◼ This document contains forward-looking statements about the Company’s forecasts, beliefs, expectations, aims, and strategies. These statements are based on the Company’s judgements and assumptions using currently available information and may differ substantially from actual results due to uncertainties within its judgements and assumptions and a variety of factors that may change over time, such as future business operations and changes in internal and external circumstances. Kobe Steel assumes no responsibility for revising these statements or other contents in this presentation. ◼ Below is a list of factors of uncertainties and changes. This includes, but is not limited to: – Changes in economic conditions, demand, and prices in major markets – Political situations and trade and other regulations in major markets – Fluctuations in foreign exchange rates – Availability and prices of raw materials – Products and services of competitors, price strategies, alliances, and other business developments such as M&As – Changes in strategies of the Company’s alliance partners