Japan Major Special Steels to Post Lower Profit in F2011

Japanese major 3 special steel makers expect lower consolidated recurring profit for fiscal 2011 ending March 2012 than fiscal 2010 figures, according to their outlook released by Thursday. Daido Steel announced the outlook on Thursday and Aichi Steel announced the target on June 16 while they didn’t disclose the outlook when they released fiscal 2010 results. They try to meet recovering demand toward second half of the year while they improve the selling price to cover higher raw materials cost.

The major 3 makers expect lower profit in first half of fiscal 2011 than same period of fiscal 2010 due to major production cut by domestic automakers caused by the major earthquake. They expect the recurring profit will be in line with second half of fiscal 2010 when the higher automobile output supports the special steel output.

Daido Steel and Aichi Steel expect higher sales in fiscal 2011 than fiscal 2010 while Sanyo Special Steel announced on April 27 the sales decreases in fiscal 2011. Daido Steel expects higher sales in first half of fiscal 2011 than same period of fiscal 2010 while Aichi Steel expect same level sales and Sanyo Special Steel expect lower sales.

Daido Steel expects 25% lower recurring profit for the first half of fiscal 2011 than same period of fiscal 2010. Aichi Steel expects 73% lower profit and Sanyo Special Steel expects 57% lower profit. Aichi Steel reduced the output temporarily after the quake due to lower automobile production. Daido Steel adjusted the production partly due to limited power availability.

Japanese automakers increase the production level at first in offshore plants. They now try to normalize the domestic production in higher pace than expected. The special steel makers expect higher production level and selling price for the products in second half of fiscal 2011. Daido Steel expects 11% higher sales in second half of fiscal 2011 than the first half. Aichi Steel expects 19% higher sales and Sanyo Special Steel expects 23% higher sales. Daido Steel expects the recurring profit increases to 2.3 times of the first half level while Aichi Steel expects 5.3 times of profit and Sanyo Special Steel expects 3.3 times of profit. The makers expect the profit level recovers level in second half of fiscal 2010.

Japanese automakers try to increase the output in second half of fiscal 2011 to recover production loss in the first half. Domestic production of construction machinery keeps firm and is expected to increase in second half. Aichi Steel’s president Takahiro Fujioka said the firm makes all effort to follow higher production of Toyota Motor in and after September. The special steel makers would have to increase the production and shipment in and after summer under limited power availability.