Nippon Steel Keeps Seeking Higher Value

Nippon Steel seeks stable growth under the new 3-year plan starting April 2006. Mr. Nobuyoshi Fujiwara, representative director and executive vice president of Nippon Steel said to Japan Metal Bulletin the firm seeks profit growth by expanding technological advantage. Mr. Fujiwara said the steel users accepted the higher steel price under the surging distributors’ market price, which increased with better supply balance since second half of fiscal 2004 ended March 2005. The firm expects 310 billion yen of positive impact from better selling price and products mix for the profit of fiscal 2005 compared with fiscal 2004 while the cost of raw materials increases by 280 billion yen. Mr. Fujiwara said the firm finally covered the higher raw materials cost by the higher selling price though the prices of steel products and raw materials depend on the market. The parent company expects the raw steel output will increase by 1.3 million tonnes to 31.2 million tonnes for fiscal 2005 from 29.88 million tonnes in fiscal 2004. Mr. Fujiwara said the steel products output is in line with the previous year when the firm builds inventory to prepare for the relining of blast furnace at Nagoya works in 2007. The better operations of blast furnace also contribute to the higher output after miner disorder of operations in the first half of fiscal 2005. Mr. Fujiwara said the products mix improved significantly despite of the same level of steel products shipment for fiscal 2005 as fiscal 2004 when the firm tries to increase the shipment of high-valued products while the firm reduces the shipment by 500,000 tonnes for domestic distributors in second half of fiscal 2005 to reduce sheet inventory and by 500,000 tonnes each in first and second half of the year for export. The firm is world no.1 steel maker in market capitalization. Mr. Fujiwara said the fact represents market appreciates the concept for the global no.1 supplier focusing on high-valued steel products for the no.3 maker in raw steel output though he thinks current market doesn’t appreciate the value always appropriately. He said he doesn’t care even if world major steel maker is getting larger as much as 100 million tonnes of annual raw steel output. He said the problem is how strong it is. He said the firm seeks profit growth by expanding technological advantage and he expects capital market appreciates the effort. Mr. Fujiwara said the basic way against hostile takeover is to improve corporate value. He said better partnership with other companies works too. He said the firm and the partners try to improve the corporate value each other by bringing synergy through partnerships. He said the firm and partners hold share each other if necessary to improve the connection and the better relationship results in higher percentage of stable shareholders. He said no comment on the concrete plans against hostile takeover though the firm considers various actions.