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Kobe Steel's April-June net profit halved after quality data scandal

Kobe Steel Ltd.'s Tokyo Head Office is seen in Tokyo's Shinagawa Ward, on Oct. 24, 2017. (Mainichi)

TOKYO (Kyodo) -- Kobe Steel Ltd. said Wednesday its group net profit in the April-June quarter fell 49.4 percent from a year earlier to 12.66 billion yen ($113 million) due to the negative impact of a data falsification scandal.

Group operating profit dropped 54.4 percent to 13.83 billion yen in the three months ended June, while group sales rose 10 percent to 478.32 billion yen.

The dismal earnings came after prosecutors indicted Kobe last month on a charge of violating a law preventing unfair competition by falsifying quality data for aluminum and copper products.

The company said the scandal dented its group pretax profit by 2.5 billion yen due in part to the costs of compensation paid to its customers.

Group pretax profit sank 54.9 percent to 12.75 billion yen in the quarter.

Pretax profit in the aluminum and copper business tanked 61 percent to 2.4 billion yen in the quarter.

The aluminum and copper products in question were supplied to over 600 companies at home and abroad, and used to manufacture bullet trains, aircraft, vehicles and defense equipment.

The U.S. Department of Justice is also investigating the scandal, while customers in the United States and Canada have filed class action lawsuits against Kobe Steel seeking compensation.

"We take (the results) seriously and will make efforts to prevent the recurrence of such irregularities," Yoshihiko Katsukawa, a senior managing executive officer, said at a news conference in Tokyo.

Its mainstay iron and steel business also saw pretax profit tumble to 800 million yen from 13 billion yen, partly because of a rise in raw material costs.

But the steelmaker revised upward its net profit outlook for the first half through September to 30 billion yen from 25 billion yen, aided by solid demand for hydraulic shovels in China, the company said.

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