JFE Holdings Forecasts to Decrease Full Year Recurring Profit by 90%

JFE Holdings announced on Tuesday the firm forecasts consolidated recurring profit decreases to 40 billion yen by 90% for the year ending March 2010. The firm forecasts shipbuilding unit returns to the black and engineering unit keeps the black while steel unit reduces the profit by dropped sales volume and selling price. The firm announced on Tuesday the recurring loss was 67.2 billion yen in the first quarter for April-June 2009, which returned to the red for the first time since fiscal 2005. The recurring profit was 112.1 billion yen in the first quarter in fiscal 2008. The firm forecasts the recurring loss returns to the red at 70 billion yen for the half-year ending September 2009, and will pass on midterm dividend.

The steel unit’s recurring profit decreases to 20 billion yen from 412.5 billion yen in the business year ending in March 2010 from last year when the unit lost 620 billion yen from lower selling volume and price and 120 billion yen from devaluation loss in inventories while gained 290 billion yen from lower material price and 120 billion yen from production cost reduction.

Shipbuilding unit’s recurring profit retunes to the black at 13 billion yen in the business year ending in March 2010. Engineering unit’s profit is 8 billion yen. City development unit and LSI unit gets the loss of recurring profit at 2 billion yen and 1.5 billion yen.

Steel unit got the loss at 76.8 billion yen in the first quarter in 2009 while engineering unit and shipbuilding unit got the black at 300 million yen and 6.6 billion yen.

Steel unit’s recurring profit is expected to zero in the second quarter 2009. Kohei Wakamatsu, vice president of JFE Holdings said the firm will seek cost reduction and minimize of operation cost under low output. The firm plans to reduce production cost by 120 billion yen per year from 1000 billion yen in fiscal 2009 from previous plan. The firm forecasts the firm’s recurring profit is about 100 billion yen in the last half of fiscal 2010.