The impact of Kobe Steel’s recent data falsification on its finances is yet to be seen, with strong results reported by the Japanese steelmaker for the first half of 2017.
The company’s net sales were up 11.3% to 907 billion yen (US$8 billion), compared to 815.13 billion yen ($7.2 billion) in the first half of 2016. However, this was lower than the previous forecast of 930 billion yen ($8.2 billion).
Operating income, on the other hand, outstripped the previous forecast of 40 billion yen ($352.3 million), increasing by 65.9% to 51.4 billion yen ($425.7 million). This compared to 31 billion yen ($273 million) in the corresponding period of 2016.
Gross profit rose to 145.4 billion yen ($1.3 billion), from 123.3 billion yen ($1.1 billion) in the first half of 2016.
Looking specifically at Kobe Steel’s construction machinery, which is sold under the Kobelco brand, the consolidated segment sales increased 17% to 182.7 billion yen ($1.6 billion), from 156.1 billion yen ($1.4 billion) in the first half of 2016.
Within that, the increase in unit sales of hydraulic excavators was attributed to a spike in demand ahead of stricter exhaust emission regulations in Japan, as well as infrastructure investment in China.
However, unit sales of crawler cranes dropped – though they remained at a high level. This was explained by delayed construction projects and a decrease in demand within Japan. Overseas, demand decreased mainly in Southeast Asia.
Kobe Steel said it was difficult at this time to estimate the impact of its improper conduct concerning the quality of products on future financial results due to the potential deterioration in business performance as a result of the possible cost, such as compensation to customers and other parties.
However, for the full year 2017, the company has forecast that net sales will grow by 10.9% to 1.88 trillion yen ($16.6 billion) and operating income will rise by 669.3% to 75 billion yen ($660.5 million).
In terms of construction machinery, Kobe Steel said that domestic demand for hydraulic excavators was a concern due to a hesitancy to buy after the spike in demand before the introduction of stricter emission regulations. Overseas, the demand for hydraulic excavators was expected to remain firm in China, India and Europe.
For crawler cranes, it was forecast that demand would decline domestically and abroad in North America and East Asia.