Kobe Steel’s Steel Unit to Post Zero Recurring Profit for F2011

Kobe Steel announced on Thursday the firm targets 50 billion yen of consolidated recurring profit for fiscal 2011 started April, which is 43.9% lower than fiscal 2010 level. The firm expects the steel unit’s recurring profit is zero compared with 23.7 billion yen of profit in fiscal 2010 due to higher raw materials cost. The firm tries to improve the profitability by increasing the steel selling price.

The firm posted 23.9 billion yen of recurring profit for April-June, which is 37.0% lower than same period of 2010. The steel unit’s recurring profit decreased by 75.7% to 3.3 billion yen.

The firm expects the steel selling price increases by around 6,000 yen per tonne for July-September from April-June. However, the firm’s full year recurring profit decreases by 39 billion yen from fiscal 2010 level when negative factors of 81.5 billion yen form higher raw materials cost and 9 billion yen from steel raw materials inventory valuation are more than positive factors of 70.5 billion yen from production and shipment including selling price and 5.5 billion yen from cost cutting effort. The firm expects the steel unit’s recurring profit is zero both for first half and second half.

The raw steel output decreased by 150,000 tonnes to 1.75 million tonnes in April-June from January-March. The steel selling price increased by 3,000 yen to 85,200 yen per tonne.

The firm plans 115 billion yen of capital expenditure for fiscal 2011, which is 26.0% higher than fiscal 2010 level. The firm expects depreciation increases by 4.5% to 120 billion yen.