JFE Holdings Posts First Loss in 1H

JFE Holdings announced on Monday the firm posted 57.4 billion yen of consolidated recurring loss for first half year to September due to loss of the core steel unit, which was the first loss since the start in September 2002. The loss was 12.6 billion yen narrower than outlook in July while the firm posted 258.6 billion yen of profit in same period of 2008.

The firm decided not to distribute half year dividend while the firm will decide the yearend dividend later. The vice president Kohei Wakabayashi said at press conference the firm posted 9.8 billion yen of consolidated recurring profit for July-September compared with 67.2 billion yen of loss in April-June.

The firm posted 72.4 billion yen of consolidated recurring loss for the steel unit for the first half of fiscal 2009 while the unit posted 268.3 billion yen of the profit in same period of fiscal 2008. The engineering unit posted 2.8 billion yen of the profit compared with 500 mill ion yen of the profit while the shipbuilding unit posted 10.4 billion yen of the profit compared with 7.1 billion yen of the loss.

The steel unit’s consolidated recurring loss for first half of fiscal 2009 was 340.7 billion yen negative from same period of fiscal 2008. The unit experienced 370 billion yen of negative factor from volume, product mix and price and 57 billion yen of inventory valuation while the unit gained 75 billion yen from cost cutting and 96 billion yen from raw materials.

JFE Steel’s raw steel output decreased by 22.5% to 12.01 million tonnes in first half of fiscal 2009 from same period of fiscal 2008. The output decreased by 11.3% to 6.9 million tonnes in July-September from same period of 2008, which was 400,000 tonnes higher than outlook in July. The steel export wait was 45.3% in first half and 47.7% in July-September compared with 43.4% and 44.9% in same period of fiscal 2008 respectively. The steel selling price was 71,100 yen per tonne in first half and 67,900 yen in July-September compared with 98,500 yen and 109,100 yen in same period of fiscal 2008 respectively.

The steel unit posted 4.4 billion yen of consolidated recurring profit in July-September thanks to higher sales volume compared with 76.8 billion yen of the loss in April-June. The engineering unit secured the profit through cost cutting and better margin. The shipbuilding unit also secured the profit through better productivity and cost cutting.

The firm expects JFE Steel’s raw steel output is uncertain in January-March while the output in October-December is in line with July-September. The firm declined the price outlook in second half of fiscal 2009 under volatile exchange rate. The firm kept the full year outlook as July due to uncertainty in early 2010.