Tokyo Steel Posts First Loss in 8 Years

Tokyo Steel posted 2.91 billion yen of recurring loss for fiscal 2009 ended March 2010, which was the first loss in 8 years. The firm suffered from lower margin and steel sales volume along with higher startup cost for Tahara plant. The firm expects 5.5 billion yen of recurring profit for fiscal 2010.

The firm’s steel shipment decreased to less than 2 million tonnes in fiscal 2009, which was the first time in 32 years. The sales were low especially for construction applications. The construction steel sales decreased to around 1 million tonnes in fiscal 2009 from 1.7 million tonnes in fiscal 2008.

The firm expects the steel sales will increase to 2.8 million tonnes in fiscal 2010. The new Tahala plant’s production will be 600,000 tonnes. With the higher flat steel production, the firm’s flat rolled steel sales top construction steel sales volume.

The depreciation for Tahara plant is 9 billion yen in fiscal 2010 compared with 6 billion yen in fiscal 2009.

The firm posted 793 million yen of recurring loss in July-September 2009 compared with 15 million yen of profit in April-June. The loss increased to 1.574 billion yen in October-December and 4.858 million yen in January-March 2010.

The recurring loss was 6.432 billion yen in second half of fiscal 2009 compared with 36.289 billion yen of profit in same period of fiscal 2008 while the profit was 3.5 billion yen in first half of fiscal 2009 compared with 19.014 billion yen in first half of fiscal 2008.

The new Tahara plant starts the ferrous scrap purchase full scale to build inventory for the steel making operation. The plant extends the scrap acceptance time frame on May 6 preparing for the steel making start in end of May.