Nippon Steel Cuts Profit Target for F2010

Nippon Steel announced on Friday the firm revises the profit target downward by 30 billion yen to 220 billion yen of consolidated recurring profit for fiscal 2010 ending March 2011 from former target as of October 2010. The steel unit’s recurring profit is 175 billion yen, which is 40 billion yen lower than former outlook and better than 28.5 billion yen loss in fiscal 2009, when higher raw material cost and slower steel price increase reduce the margin. The firm plans 3 yen per share of dividend for the yearend compared with 1.5 yen for same period of previous year.

The firm will post 80 billion yen of unconsolidated recurring profit for fiscal 2010, which is 20 billion yen lower than previous outlook, due to lower profitability of the integrated steel business. The firm expects higher profit for engineering and construction, urban development and chemicals while the profit is in line with former outlook for new materials and system solutions.

The firm posted 188.3 billion yen of consolidated recurring profit for April-December. The quarterly profit was 53.5 billion yen for October-December compared with 61.8 billion yen for April-June and 72.9 billion yen for July-September. The firm expects 31.7 billion yen of profit for January-March, which is around 22 billion yen lower than October-December, when the profit is 6 billion yen lower for unconsolidated steel business and 24 billion yen lower for group companies.

The vice president Shinichi Taniguchi said at the press conference the steel shipment will increase in January-March from October-December while the quarterly price of iron ore and coal increases, Australian heavy rain increases the raw materials cost and steel price improve is slow. He said the net loss is 9.4 billion yen for January-March compared with 33.4 billion yen profit in October-December mainly due to lower recurring profit and around 25 billion yen of one time charge from adjustment in tax effect.

Mr. Taniguchi said the firm expects Japanese raw steel output will be around 110 million tonnes in fiscal 2011 as fiscal 2010. He emphasized the firm tires to improve the cost structure to improve the cost competitiveness under higher yen rate for the last year of mid-term plan. He said the firm tries to secure margin through steel price increase when raw materials cost would increase more in and after April.