Nippon Steel Raises Profit Target to 560 Billion yen for F2008

Nippon Steel announced on Wednesday the firm expects consolidated recurring profit at 560 billion yen in the business year ending in March 2009, down by 0.7% over the previous year. The firm had made a forecast consolidated recurring profit at 450 billion yen as of July 31. The firm explained the profit is improving when the sourcing cost decreased due to lower ferrous scrap and oil price, higher steel product selling price mainly for export.

The firm expects the consolidated sales increase by 11.9% to 5,400 billion yen in the business year ending in March 2009 from last year. On previous prediction, the sales were expected to 5,500 billion yen. The firm expects the consolidated net profit decreases to 330 billion yen by 7.0%. On previous prediction, the net profit was expected to 255 billion yen.

The firm changed the prediction of sourcing cost to 1,020 billion yen for steel business over the previous year. The firm had made a forecast the cost would increase by 1,100 billion yen. The firm revised upward the positive impact from higher selling price on the recurring profit to 860 billion yen from original 800 billion yen thanks to rising average selling price of steel products. Moreover, the firm expects the recurring profit also improves due to 100 billion yen of cost reduction and 170 billion yen of valuation gain from raw material inventory.

The firm announced on Wednesday the consolidated sales increased by 12.3% to 2,602.1 billion yen for the half-year ending September from the corresponding period of last year while the consolidated recurring profit decreased by 7.7% to 262.2 billion yen and the consolidated net profit decreased by 8.4%to 161.6 billion yen. The sourcing cost increased by 540 billion yen for steel business for the half-year ending September from the corresponding period of last year due to higher material and fuel prices, which decreased by 30 billion yen compared with the previous prediction. Rising steel product selling price increased the recurring profit by 380 billion yen. Fire accident at Yahata works cut the recurring profit by 25 billion yen.

Average steel product selling price increased by 20,900 yen or 26.4% to 100,200 yen per tonne for April-September 2008 from the same period of 2007, which hit 100,000 yen for the first time. Mr. Kiichiro Masuda, vice president, expects average steel product selling price rises in October-December while drops in January-March 2009, the price in the last half of fiscal 2008 exceeds the first half of fiscal 2008 and average steel product selling price in fiscal 2008 increases from last year.

The consolidated crude steel output increased by 3.3% to 18.23 million tonnes in April-September form the corresponding period of last year. The unconsolidated crude steel output increased to 16.57 million tonnes by 2.2%. The amount of the unconsolidated steel product shipping increased by 2.1%to 16.37 million tonnes. The firm expects unconsolidated crude steel output and steel product shipping decreases to 32 million tonnes when the firm will reduce the output by 1 million tonnes in the last half of fiscal 2008.