Kobe Steel is actively considering mergers and acquisitions overseas, with a particular focus on India, as part of its strategy to increase production of gas compressors. This move comes as the company faces high manufacturing costs in Japan, driven in part by the weak yen, which has raised the cost of importing raw materials [1].
Kazuhiko Kimoto, an executive at Kobe Steel, stated that the machinery segment, which includes compressors, is becoming increasingly attractive as the steelmaker experiences profitability pressures in its core steel business. Kimoto highlighted India as a key market for potential acquisitions, citing the country's strong growth in industrial demand and ongoing infrastructure development [1].
The company believes that expanding compressor production in India could help offset rising costs in Japan and improve overall profit margins. Kobe Steel is closely monitoring market conditions and evaluating potential acquisition targets in India and other overseas markets, aiming to diversify its manufacturing base and tap into regions with higher growth potential [1].
While no specific financial figures or deal sizes have been disclosed, the executive emphasized that expanding the machinery business, especially through M&A in India, is a strategic priority as Kobe Steel adapts to changing market dynamics and currency fluctuations [1].
CONCLUSION
Kobe Steel is prioritizing overseas M&A, particularly in India, to expand its compressor production and mitigate the impact of high domestic costs and a weak yen. The company is actively seeking opportunities to diversify its manufacturing base and improve profitability, though no concrete deals or financial details have been announced.