Posted on 23 Apr 2015
Nippon Steel & Sumitomo Metal and Kobe Steel likely generated more black ink than planned in the fiscal year ended March 31, thanks to improved profitability and solid foreign demand.
Big Japanese steelmakers bought iron ore for about $93 a ton on average last fiscal year, down 25% from fiscal 2013. Meanwhile, solid demand limited the price slide, widening the margin between costs and prices.
Nippon Steel & Sumitomo Metal's pretax profit apparently rose 20% on the year to 430 billion yen ($3.56 billion) or so, about 20 billion yen higher than forecast.
Sales are estimated at a little over 5.6 trillion yen, a 2% gain. Steel for machinery and shipbuilding enjoyed higher demand at home in Japan as automotive steel fared well overseas. The company shipped about 42 million tons of steel in fiscal 2014, about as much as the previous year.
Plant consolidation and other streamlining efforts since the 2012 merger of Nippon Steel and Sumitomo Metal Industries are bearing fruit as well.
This fiscal year, the company aims to further lift earnings through continued improvements in profitability and cost management.
Kobe Steel's pretax profit likely rose a little over 10% to around 95 billion yen, helped by higher margins. Sales are estimated at 1.9 trillion yen, up 5% and in line with the projection. Rolled aluminum for making beverage cans fared well in Southeast Asia and Australia. Welding materials for shipbuilding and construction enjoyed strong demand, too.
Automotive steel sales proved sluggish in Japan, where demand slowed after last April's consumption tax hike. But this was offset by brisk sales abroad.
The profitability of exported hydraulic excavators rose, thanks to the weak yen.
Even with a supply glut as a growing concern, mainly in Asia, Kobe Steel is seen on track to a roughly 100 billion yen pretax profit this fiscal year thanks to strong sales of such products as rolled aluminum.
The companies will announce their earnings next Tuesday.
