Kobe Steel (5406) Q2 2026 earnings summary

Executive summary

• Net sales for the first half were ¥1,181.4B, down 5.4% year-on-year, mainly due to lower unit selling prices in steel and electric power segments.

• First-half ordinary profit fell to ¥57.6B, mainly due to a ¥10.5B inventory valuation loss, while profit attributable to owners was ¥56.6B–¥62.8B, supported by extraordinary income from cross-shareholding sales.

• Operating profit for the first half was ¥62.5B, down 19.5% year-on-year.

• Interim dividend set at ¥40 per share; annual dividend forecast unchanged at ¥80 per share.

• Comprehensive income dropped 40.9% year-on-year to ¥42.97B.

Financial highlights

• First-half operating profit: ¥62.5B (down ¥15.1B year-on-year); ordinary profit: ¥57.6B (down ¥13.2B); profit attributable to owners: ¥56.6B–¥62.8B (up ¥6.2B or down 9.9% year-on-year, depending on source).

• Extraordinary income of ¥17.9B in the first half, mainly from sale of cross-shareholdings and land.

• Free cash flow forecast for the year revised up to ¥100.0B due to working capital improvements and investment postponements.

• Basic earnings per share for the period were ¥143.35.

• Equity-to-asset ratio improved to 41.6% from 40.2% at the end of the previous fiscal year.

Outlook and guidance

• Full-year forecasts maintained: net sales at ¥2,465.0B (down 3.5% year-on-year), operating profit at ¥130.0B (down 18.1%), ordinary profit at ¥110.0B, profit attributable to owners at ¥100.0B (down 16.8%).

• Basic earnings per share for the full year are expected to be ¥253.75.

• No revision to the cash dividend forecast; annual dividend expected to be ¥80.00 per share.

• ROIC expected to remain at ~5%, ROE at ~8%, net assets ratio at ~44%, and D/E ratio at ~0.65x.

• Automotive demand to exceed previous forecast due to lessened U.S. tariff impact, while construction and civil engineering demand to stay sluggish.