2018 New Year’s Message from Chairman, President and CEO Hiroya Kawasaki

At the start of 2018, I wish you a Happy New Year. Please allow me to share my thoughts with you.

Last year, the Kobe Steel Group was involved in improper conduct concerning product quality. As a result, we have been causing considerable trouble to our customers and many others. We have also been causing you and your families great concern and hardships.

As a company engaged in the business of manufacturing, we certainly shouldn’t break our promises to our customers on quality. Due to this improper conduct, the Kobe Steel Group had in an instant lost the trust that it had built up over the many years with its customers. We’re now going through unprecedented difficult times, and we’re being watched by customers and the public alike.

The Kobe Steel Group has also caused serious scandals involving compliance many times in the past.

For the sustainable growth of the Kobe Steel Group, I believe the spirit of compliance is essential. From different perspectives we must always increase our sensitivity and think about how we can prevent problems from occurring.

However, even now we’ve been unable to break the chain of compliance violations. All of us in the Kobe Steel Group, including myself, must make this problem our own personal matter and must seriously reflect on this.

In the Kobe Steel Group this year, we will work to regain the trust we have lost.

This is the year that the Kobe Steel Group will be reborn and start anew.

The final report from the Independent Investigation Committee will serve as a milestone for many people, and the completion of the final report has been moved to around the end of February. I believe that the supplementary inspections currently underway will enhance the comprehensiveness, appropriateness and validity of the self-inspections that we conducted. By being absolutely certain of the self-inspections, the Kobe Steel Group can take a step forward with confidence to recover trust.

In our organization effective January 1, we established the Quality Management Department in the head office for the specialized function of quality audits. By working in close cooperation with the quality assurance departments in the various business units of Kobe Steel and the group companies, we are making an all-out effort to prevent the recurrence of misconduct. Moreover, we are currently considering measures to prevent recurrence from the standpoint of governance, management and process. And we then plan to implement them. We won’t stop at just measures, but will be reborn as a corporate entity that possesses a high-level quality assurance system.

Looking at safety, we will implement numerous measures with the strong determination that full priority be given to safety.

Finally, under our medium-term management plan, KOBELCO VISION “G+”, 2017 is the intermediate year of the five-year plan to fiscal 2020. We haven’t changed our original course of action at all. We’re proceeding with our growth strategy centered on the three core business areas of materials, machinery and electric power.

We will undertake the various issues brought up in the medium-term management plan to further grow and develop the company.

The Kobe Steel Group faces a major crisis because of this misconduct.

However, by overcoming this difficult situation and increasing the cohesiveness in the Kobe Steel Group, I am confident that we will achieve further growth and make a greater contribution to society. Now is the time for all of us to come together and turn Kobe Steel into a company that we can be truly proud of. As I have said on previous occasions, I am confident that Kobe Steel can be reborn into a company filled with pride, confidence, passion and hope.

It is essential that we regain the trust that we have lost. In order to do so, we must be true to ourselves. And to all stakeholders, including customers, we must be sincere.

In coming to a close, I sincerely wish all of you and your families good health and much happiness in the New Year.