Japanese Integrated Steels Achieve Mid-term Profit Target for F2006-2008

Japanese integrated steel makers expect to achieve the targets of consolidated recurrent profit along medium-term plans ending March 2009 despite of reduced steel demand by economic crises.

NKK (current JFE Steel) and Kobe Steel posted losses in fiscal 2001 due to dropped demand and market price after late 1990. NKK and Kawasaki Steel were integrated under the condition. Nippon Steel, Sumitomo Metal Industries and Kobe Steel collaborated against severe business environment. They launched plants to increase high-grade steels, acquired expanding demand mainly in China, and improved profits along med-term business plans for fiscal 2003-2005.

As to med-term plans for fiscal 2006-2008, 4 integrated steel makers, Nippon Steel, JFE Steel, Sumitomo Metal Industries and Kobe Steel already achieved their targets in fiscal 2006, and kept higher profits in fiscal 2007 despite of higher raw material and fuel costs. The 4 makers reduced the output in and after the second half of fiscal 2008 along demand decrease and turned into red for January-March 2009. But they maintained higher profits until the first half of fiscal 2008. They turned cash into shareholder return and the investment in fiscal 2008 to expand overseas growth strategy.

They will launch next medium-term plans in April 2009 under harsh business environment. Especially, inventory adjustment is expected to continue for the first half of fiscal 2009. Raw material costs will stay at the high level after April since raw materials were purchased during last year and the prices will be carried over. They entered wide-range output reductions even if deficits are produced. Japanese integrated steel maker source said they would be forced to reduce the output in fiscal 2009.