View from City Road: Japanese - and not so different

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The Independent Online
CAN THIS be a Japanese company? It has forecast an 80 per cent decline in profits and is struggling to increase its dividend. It sounds too familiar to Anglo-Saxon ears.

Kobe Steel is more internationally minded than most Japanese companies. It already has joint ventures with Texas Instruments, Alcoa and USX, the US steel firm.

Its London listing signals its determination to add to these relationships. It already co-operates with British Steel on technology and it could be that the rumoured friendship between Yugoro Komatsu, the chairman, and Sir Alastair Frame, his opposite number at BS, could lead to a more substantial venture.

The company is more aware than most of the difficulties of the steel industry. It wants to cut its sales exposure from 45 to 30 per cent by the end of the decade, while leaving machinery at about 30 per cent of the total. The growth areas are aluminium and copper - now 20 per cent but targeted to grow to 30 per cent - and unspecified other businesses.

The listing - which cost it less than pounds 500,000 - also signals a higher profile in Europe's financial markets. On Monday it launched a Y40bn issue on the Euromarkets.

Though it has no immediate plans to issue equity in London, it wants to increase the proportion of shares held by foreign shareholders from only 2.78 per cent. This might go some way to offsetting any sales at home by hard-pressed financial companies.

For this purpose it knows that in the medium term it has to increase its dividends. Traditional payout ratios will no longer suffice. Japanese companies are it seems no longer so different.

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