Kobe Steel raises full-year free cash flow forecast despite mixed half-year results

Kobe Steel Ltd. reported a 5.4% year-on-year decline in net sales to 1,181,447 million yen for the first half of fiscal 2025, with ordinary profit falling 18.7% to 57,663 million yen, primarily due to a 10,500 million yen loss from inventory valuation deterioration. However, profit attributable to owners of parent increased 11.0% to 62,830 million yen, bolstered by extraordinary income from cross-shareholding sales. The company has revised its full-year free cash flow forecast upward by 30,000 million yen to 100,000 million yen, citing improvements in working capital and investment postponements.

For the full fiscal year 2025, Kobe Steel projects net sales of 2,465,000 million yen, a 3.5% decrease from fiscal 2024. Despite the decline, the ordinary profit forecast remains unchanged at 110,000 million yen, with profit attributable to owners of parent also stable at 100,000 million yen. The company expects return on invested capital to remain at approximately 5% and the debt-to-equity ratio to improve to approximately 0.65 times, compared to the previous forecast of 0.7 times.

Kobe Steel is adjusting the conversion price of its Zero Coupon Convertible Bonds due 2028 and 2030, effective October 1, 2025. The 2028 bonds' price will change from 2,264.4 yen to 2,212.8 yen, and the 2030 bonds' price will change from 2,166.2 yen to 2,116.8 yen. This adjustment follows the approval of an interim dividend of 40 yen per share at the board meeting on November 10, 2025.