Business Results

During the current consolidated fiscal year, the world economy showed signs of modest growth, with steady economic recovery in the U.S. and continued economic growth in China and other emerging countries. As for Japan, the country continued on a path of modest recovery, with favorable employment conditions and active capital investments underpinned by improved corporate earnings.There were also signs of improvement in manufacturing and other industrial activities.
Against this backdrop, the Group expanded its foundation for developing business globally. In Mexico, manufacturer and retailer of cold heading (CH) steel wire, Kobelco CH Wire Mexicana, S.A. de C.V., commenced mass production. In South Korea, aluminum sheet cutter, processor, and wholesaler, KTN Co., Ltd., expanded and relocated its facilities to accommodate increased local demand for liquid crystal displays and semiconductor equipment. As for Japan, we made efforts to strengthen the Group’s sales structure. For example, we made MORIMOTO KOSAN Co., Ltd. (a cutter, processor, and wholesaler of steel-plate and sheet materials) a consolidated subsidiary after acquiring stocks therein. We also purchased additional stocks in Nakayama Corporation (a wholesaler and processor of nonferrous metals), making it a wholly owned subsidiary. In this way, we aggressively promoted business to showcase our strengths as a trading enterprise.
Regarding the Group’s financial results for the current consolidated fiscal year, sales were ¥929,467 million (up 20.8% year-on-year), operating income was ¥8,119 million (up 68.5% year-on-year), and ordinary income was ¥8,624 million (up 64.3% year-on-year). Net income attributable to shareholders of parent came to ¥5,449 million (up 83.5% year-on-year).

An outline of the performance in each of the business segments is provided below.

Iron & Steel segment

Domestic sales volume of steel-plate and sheet materials increased thanks to strong demand among manufacturers, while sales prices were also up due to positive market conditions. As for exports to overseas markets, while sales volume declined, sales prices rose. Regarding wire rod products, sales volume rose in Japan while declining overseas, and sales prices increased both in Japan and overseas following an upturn in automotive equipment prices.
Consequently, the Iron & Steel Segment saw sales of ¥338,632 million (up 19.5% year-on-year), and segment income of ¥4,048 million (up 53.1%).

Ferrous Raw Materials segment

Regarding ferrous raw material imports, both sales volume and sales prices increased. The same was true for cold iron materials. The sales volume of alloy steel and titanium materials also increased.
Consequently, the Ferrous Raw Materials Segment saw sales of ¥303,069 million (up 33.1%), and segment income of ¥1,394 million (up 33.8%).

Nonferrous Metals segment

Regarding copper products, the segment saw higher sales volume in copper tubes for air conditioning units, copper sheets and strips for automotive terminals, and copper sheets and strips forsemiconductors. Regarding aluminum products, the segment saw increased sales volume in aluminum sheets/strips and extruded aluminum for automobiles and in aluminum-processed products for liquid crystal displays and semiconductor equipment. As for nonferrous raw materials, the sales volume of copper scrap material increased.
Consequently, the Nonferrous Metals Segment saw sales of ¥242,656 million (up 21.3%), and segment income of ¥2,175 million (up 52.6%).

Machinery & Electronics segment

Regarding machinery products, the segment saw lower sales volume in large-scale equipment orders for ironworks and compressor plants, and higher sales volume in standard compressors, heat-treating furnaces, testing equipment, and battery-related materials. As for information-related products, volume of sales in solar battery-related materials declined, but that in PC components increased.
Consequently, the Machinery & Electronics Segment saw sales of ¥66,933 million (down1.8%), but segment income was ¥967 million (up 758.5%).

Welding segment

Regarding welding materials, the segment recorded a strong domestic sales volume for distribution-related materials such as materials for construction machinery, particularly those for steel-frame building construction. However, materials for shipbuilding remained at the same level as the previous year, while those for chemical engineering declined. Sales volume for exports declined too. Sales volume was strong in welding-related equipment—specifically, in general-purpose welding equipment, and steel frame welding robot systems. Shipbuilding equipment performed well in terms of exports, but it significantly declined in terms of domestic sales. Materials for production were negatively affected to a great extent by a decline in titanium materials.
Consequently, the Welding Segment saw sales of ¥42,080 million (down 1.1%), and segment income of ¥94 million (down 65.3%)

Outlook for the fiscal year ending March 31, 2019

Regarding the outlook for Japan’s economy, there are some encouraging signs, including vigorous exports and manufacturing and a surge in domestic demand for infrastructure in the run-up to Tokyo 2020. However, the overall picture remains cloudy amid various causes for concern, including U.S. trade policies, the high yen, and the North Korea situation.