Kobelco Wire Swings to ¥239 Million Q1 Operating Loss as Volumes Fall Ahead of Kobe Steel Share Exchange

Every reporting segment lost money in the quarter

Kobelco Wire Company, Ltd. (TSE: 5660), the maker of special steel wire and wire rope, published consolidated results for the first quarter of FY3/2027, the three months from April 1 to June 30, 2026, on August 5, 2026 under Japanese GAAP. Net sales fell 3.3% to ¥7,551 million. The group recorded an operating loss of ¥239 million against an operating profit of ¥4 million a year earlier, an ordinary loss of ¥211 million against a ¥40 million profit, and a net loss attributable to owners of the parent of ¥107 million against a ¥166 million profit — a loss of ¥18.22 per share against earnings of ¥28.19. All three reporting segments posted an operating loss.

The loss comes from a modest fall in sales against costs that barely moved. Cost of sales declined only 0.6% to ¥6,490 million, far less than the 3.3% drop in sales, so gross profit fell 17.0% to ¥1,060 million and the gross margin narrowed from 16.4% to 14.0%. Selling, general and administrative expenses rose 2.1% to ¥1,300 million and now exceed gross profit by ¥239 million, which is the operating loss. The company attributes the result to lower sales volumes in a persistently difficult business environment and to rising costs, despite price revisions to pass those costs on, efforts to expand sales of high-value-added products and thorough cost reduction. Depreciation rose to ¥297 million from ¥253 million.

The filing describes a Japanese economy expected to be supported in a moderate recovery by improving employment and incomes and by policy measures, while the situation in the Middle East needs continued watching. For its own markets it cites persistent geopolitical risk and rising costs, labour costs first among them, and calls the outlook uncertain.

Below the operating line: share-exchange costs this year, an acquisition gain last year

Non-operating income of ¥86 million, including ¥41 million of dividends received and ¥19 million of equity-method investment income, against non-operating expenses of ¥57 million, including ¥31 million of interest paid, narrowed the loss to ¥211 million at the ordinary level. The quarter then carried an extraordinary loss of ¥62 million in costs related to the share exchange with Kobe Steel, taking the pre-tax loss to ¥274 million. Income taxes were a credit of ¥166 million, chiefly a deferred-tax adjustment of ¥171 million, which is why the net loss of ¥107 million is well below the pre-tax loss.

The prior-year comparison contains a one-off. In the first quarter of FY3/2026 the company booked a ¥353 million gain on negative goodwill and a ¥203 million loss on step acquisition after buying additional shares in an equity-method affiliate and making it a wholly owned subsidiary on April 1, 2025. That net ¥150 million contributed to last year's pre-tax profit of ¥191 million; no such items arose this year.

Special steel wire: bridges, housing, cars and printers all bought less

Special Steel Wire, the largest segment, saw sales to external customers fall 7.6% to ¥4,201 million from ¥4,547 million and swung to a segment loss of ¥82 million from a ¥25 million profit. In prestressed-concrete (PC) products, orders in the core civil-engineering and bridge field fell for both new construction and repair and reinforcement work, while in private-sector building, fewer housing starts and construction delays caused by labour shortages and rising costs reduced volumes. In spring and special wire products, automotive volumes declined on the continued weak sales of Japanese automakers in China, and printer-market volumes fell as printer makers' sales stayed weak and inventory adjustments continued.

Wire rope slipped; engineering doubled its sales but lost more

Wire Rope sales slipped 2.9% to ¥2,987 million from ¥3,075 million, and the segment moved to a loss of ¥36 million from a ¥73 million profit; the filing says demand stayed at a low level because of labour shortages and rising costs across customer industries. Engineering more than doubled its sales, to ¥346 million from ¥171 million, as deliveries began on large bridge projects, but its loss widened to ¥134 million from ¥107 million. The company cites higher costs and notes that the prior-year quarter reflected an inventory increase tied to advance production for large bridge projects. The real-estate business reported under Other was flat, with sales of ¥15 million and operating profit of ¥12 million.

A slightly smaller balance sheet

Total assets were ¥44,319 million at June 30, 2026, down 0.6% from ¥44,582 million at March 31, 2026, mainly because cash and deposits fell to ¥2,172 million from ¥2,803 million, partly offset by an increase in electronically recorded receivables to ¥4,704 million from ¥4,260 million. Liabilities rose to ¥19,343 million, mainly on higher accrued expenses, and net assets fell 1.6% to ¥24,976 million, chiefly through lower retained earnings, which declined to ¥5,892 million from ¥6,236 million. The equity ratio eased from 56.9% to 56.4%. Short-term borrowings were unchanged at ¥5,504 million and long-term borrowings edged down to ¥4,610 million. No quarterly cash-flow statement was prepared.

No guidance and no dividend forecast, with delisting set for August 28

The filing states that Kobelco Wire plans a share exchange with Kobe Steel, Ltd. and that its shares are scheduled to be delisted on August 28, 2026; for that reason it has withheld both its full-year FY3/2027 earnings forecast and its FY3/2027 dividend forecast. For FY3/2026 the company paid ¥25.00 per share at the interim and ¥40.00 at the year-end, an annual ¥65.00. The quarterly filing gives no further terms of the share exchange.

Two further points from the notes. A consolidated subsidiary was absorbed into the company by merger on April 1, 2026 and removed from the scope of consolidation. And the quarterly financial statements were not reviewed by a certified public accountant or audit firm.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.