Nisshin Steel Reviews Full-Year Recurring Profit Down to 11 Billion yen for F2011

Nisshin Steel announced on Monday the firm reviewed full-year consolidated recurring profit forecast downward to 11 billion yen from previously estimated 24 billion yen for fiscal 2011 ending in March 2012. Recurring profit would decrease by 40.7% from fiscal 2010 when inventory evaluation profit is likely to decrease due to low material prices and strong yen trend as well as selling prices of stainless steel products would worsen along weak economy. In the first half of fiscal 2011, recurring profit decreased by 41.9% year-on-year to 6.8 billion yen, which was also lower than estimated 9 billion yen.

Recurring profit in the first half year was almost flat from previous six months of October 2010-March 2011. Raw material cost upsurge negatively impacted recurring profit by 13 billion yen compared with the previous six months. Sales price improvement positively affected recurring profit by 8.5 billion yen. Other positive effects were 1 billion yen by cost reduction, 1.5 billion yen by profit improvement at subsidiaries and 2 billion yen by inventory evaluation adjustment.

Sales volume decreased by 10,000 tonnes to 1.74 million tonnes for April-September from the previous six months. Average sales price improved by 4,000 yen to 129,000 yen per tonne. Export ratio kept flat at 15%. By quarters, recurring profit 3.4 billion yen for July-September, almost flat as April-June while lower by 66.3% year-on-year.

Recurring profit for stainless steel business was 3 billion yen for April-September, almost flat as the previous six months. By quarters, recurring profit decreased by 50% to 1 billion yen for July-September from April-June and worsened by 75% from the same period of fiscal 2010.

In the second half of fiscal 2011, sales volume is expected to increases by 140,000 tonnes to 1.88 million tonnes compared with the first half year while average sales price would lower to 125,000 yen per tonne. Export ratio would lower to 14%. Stainless steel business would post 2 billion yen of recurring loss due to inventory evaluation adjustment for nickel and stainless products. Actual business will maintain profitable since July-September 2011.