Nippon Steel Targets Over 100 billion yen Cost Down

Nippon Steel’s vice president Kiichiroh Masuda said on Friday the firm targets more than 100 billion yen of cost cutting mainly for upper stream operations for fiscal 2008 started April compared with 35 billion yen in fiscal 2007. The firm launches special task force for the cost cutting to review the cost for raw materials and operations. The firm tries to deal with unprecedented higher raw materials cost through the across the board effort while the firm secures profitability to pass more than 1 trillion yen of higher cost for raw materials, energy and freight by increasing the steel selling price by around 30,000 yen per tonne. Mr. Masuda said at press conference for financial results release on Friday the firm expects higher cost by 200 billion yen for iron ore, 550 billion yen for coking coal and 250 billion yen for others including freight, ferrous scrap and manganese for fiscal 2008 compared with fiscal 2007 while he said the raw materials price negotiations continue. He said the total cost up could exceed 1 trillion yen compared with 165 billion yen for fiscal 2007. With higher cost up representing near double of consolidated recurring profit for fiscal 2007, the firm launches special task force headed vice president class to study better utilization of raw materials and efficiency for upper stream operations. Mr. Masuda said the firm tries to realize more than 100 billion yen of annual cost down through the across the board effort when the firm seeks higher price for users. However, Mr. Masuda said the extremely higher cost is beyond the own effort when Japanese steel industry faces annual 3 trillion yen of cost up for fiscal 2008 from fiscal 2007. He said the higher price needs for the steel industry to keep the operation and the users should understand the situation.