Kobe Steel to set up compressor companies in Europe and the Middle East: Expand global marketing, parts procurement and services

TOKYO, June 28, 2012 - Kobe Steel, Ltd. announces that it will establish two 100% owned companies in July, one in Europe and the other in the Middle East, to expand the global marketing and servicing of its compressors.

Kobelco Machinery Europe GmbH will be set up in Munich, Germany to strengthen the marketing of Kobe Steel's nonstandard compressors in Europe. It will also procure parts for use in the manufacture of compressors in Japan. The new subsidiary will be capitalized at 100,000 euros (about 10 million yen). Employees will increase from the current staff of seven to eight.

Kobelco Machinery Middle East FZE. will be established in Dubai, United Arab Emirates. To be located at Dubai Airport Freezone, the company will provide after-sales services for nonstandard compressors sold in the Middle East. The unit will be capitalized at 1 million UAE dirhams (about 20 million yen). Employees will increase from the current three to five.

Kobe Steel currently has representative offices in Germany and the UAE. By turning these offices into companies, Kobe Steel will be able to strengthen compressor marketing, parts procurement and after-sales services, as well as increase its presence in the two regions.

Kobe Steel is the world's only comprehensive manufacturer that makes screw, centrifugal and reciprocating compressors. The company estimates it has a 40% share of the world market for nonstandard screw compressors. Nonstandard compressors are used in petrochemical plants, natural gas plants and other large facilities. Kobe Steel has supplied numerous compressors throughout the world and has an extensive supply record.

In addition to nonstandard compressors, the Kobe Steel Group makes small and medium-size standard compressors, which are used widely in plant utilities in many industries. Kobe Steel has also applied its compression technology in compact steam-driven generators and high-efficiency heat pumps. Total compressor sales amounted to approximately 60 billion yen in fiscal 2011, ended March 2012.

About 60% of Kobe Steel's compressor sales in fiscal 2011 came from overseas markets, making the Compressor Division one of Kobe Steel's more globally advanced businesses. In May 2011, Kobe Steel took an equity stake in Chinese compressor maker Wuxi Compressor Co., Ltd. As a result, Kobe Steel currently makes nonstandard and standard compressors in three countries: Japan, the United States and China. Kobe Steel has been actively making capital investments to increase manufacturing capacity of standard compressors at its China subsidiary Kobelco Compressors Manufacturing (Shanghai) Corporation. It also boosted the production capacity of compressor systems at Kobelco Compressors America, Inc., a U.S. unit.

Kobe Steel has set up these overseas locations with the aim of becoming a top-class comprehensive manufacturer of compressors. Expanding its global marketing and service network, Kobe Steel aims to achieve compressor sales of 110 billion yen in fiscal 2015.