Jefferies Japan Ltd. analyst Thanh Ha Pham said Kobe Steel Ltd. should consider divesting its steel assets and shift its focus to its aluminum, industrial compressors and power supply divisions, Bloomberg News reported March 22.
The analyst said in the report that its steel business is "too small to be competitive" against its bigger rivals, including Nippon Steel & Sumitomo Metal Corp.
Previously, the Japanese steelmaker's recently appointed president and CEO, Mitsugu Yamaguchi, hinted at the possibility of a strategic shift at the company that could involve breaking up parts of its operations through alliances or mergers.
According to the report, the strategy is a radical shift from predecessor Hiroya Kawasaki, who fought to keep the company's operations independent.
Kobe Steel is recovering from the fallout of a widespread product data falsification scandal, which led to lawsuits from U.S. consumers and the eventual resignation of Kawasaki.