Kobe Steel achieves turnaround in FY 2017 despite data scandal

April 28, 2018

Tokyo- Kobe Steel Ltd. said Friday that it returned to the black on the group bottom line in fiscal 2017, despite its quality data scandal, while its two major domestic rivals enjoyed sharp profit growth in the year through last month.

Kobe Steel reported a net profit of 63,188 million yen, its first black ink in three years, against the previous year's net loss of 23,045 million yen.

The turnaround was thanks to higher steel prices amid the weakening impact of overproduction by Chinese steelmakers.

Costs related to the data scandal came to 12.3 billion yen, including 4.3 billion yen in compensation paid to affected client companies.

Kobe Steel expects such costs to total some 10 billion yen in the current business year to March 2019.

Senior Managing Executive Officer Yoshihiko Katsukawa told a press conference on Friday that the company will "cooperate in good faith" with investigations into the data falsification problem by Tokyo's Metropolitan Police Department and the Tokyo District Public Prosecutors Office.

He added that Kobe Steel will take thorough measures to prevent similar misconduct as it works to regain trust.

Of the two rivals, Nippon Steel & Sumitomo Metal Corp. logged a group net profit of 195,061 million yen, up 49.0 percent year-on-year. JFE Holdings Inc. saw its net profit grow 112.9 percent to 144,638 million yen.

All three companies enjoyed growth in consolidated sales.

At the moment, they see only limited effects from new US tariffs on imported steel.

"We're closely watching any possible change in the steel supply-demand balance in China and other parts of Asia," JFE Executive Vice President Shinichi Okada said. Jiji Press