JFE Holdings Revises Down Full-Year Profit Forecast Due to High Material Cost

JFE Holdings, a parent company of JFE Steel, announced on Friday the firm revised down its full-year consolidated recurring profit forecast for fiscal 2010 ending in March 2011 to 170 billion yen, 50 billion yen lower than the previous forecast announced in October 2010. The recurring profit would become lower than the previous forecast when raw material costs are surging, especially due to the impact of coal supply trouble in Australia, while selling price of steel products aren’t increasing enough. The latest forecast is 2.5 times of the full-year recurring profit in fiscal 2009.

JFE Holdings revised down its full-year recurring profit forecast for the steel division by 60 billion yen to 140 billion yen. The profit would be lowered by 25 billion yen due to raw material cost upsurge and by 35 billion yen due to low selling price compared with the previous forecast.

The steel division’s full-year recurring profit is expected to increase by 107.7 billion yen from fiscal 2009. The major positive factor is improvement of sales volume, price by total 300 billion yen and inventory evaluating profit by 230 billion yen. Meanwhile, the profit would down by 490 billion yen from fiscal 2009 due to raw material costs.

Mr. Yoshio Ishikawa, JFE Holdings’ executive vice president and director, explained at a press conference the firm couldn’t pass material cost upsurge on steel products’ selling price fully in past several quarters and then the firm tries to improve the selling price, especially for low grade steel products such as building materials, as soon as possible. JFE Holdings will offer price hike against end users since raw material prices are likely to keep uptrend in fiscal 2011.

JFE Holdings estimates the group’s steel production and shipment would rebound in January-March compared with October-December while steel products’ selling price would maintain flat. Domestic steel shipment maintains weak and then exporting ratio is estimated to reach 51%. Thus the unit selling price would maintain the current level due to relatively low price of exporting products.