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Three Major Japan Steelmakers Log Net Profit Drops in FY 2007

04/29/2008 - Under the weight of rising material costs, three of Japan's four major steelmakers post reductions in group net profits in fiscal 2007, while industry leader Nippon Steel posts a 1.1% rise in net profit.

Three of Japan's four major steelmakers posted reductions in group net profits in fiscal 2007 under the weight of rising material costs, according to a report published on JCN Network.
 
The three companies reporting lower group profits are JFE Holdings Inc., Kobe Steel Ltd., and Sumitomo Metal Industries Ltd. Industry leader Nippon Steel Corp. posted a 1.1% rise in net profit in the year that ended in March.

All four steelmakers posted increases in sales prompted by robust demand from large-lot users such as automakers and shipbuilders. Throughout the year, the steelmakers had incorporated the effect of rising iron ore and other raw material prices into product prices. Nippon Steel’s average steel price rose 4,500 yen from the previous year to 79,800 yen per ton, while at Sumitomo Metal, the average price had increased 5700 yen to 105,700 yen.

For the year to March 2009, Nippon Steel, Kobe Steel and Sumitomo Metal project sharp net profit falls due to surging procurement costs for such materials as coking coal. JFE did not disclose its earnings estimates for fiscal 2008.

According to the report, the Japanese steelmaking industry's total costs in the current year are expected to increase by more than 3 trillion yen from fiscal 2007, and the major steelmakers thus see the need to raise their product prices by at least 30,000 tons per ton.