JFE Holdings Expects Record Profit for F2007, Kobe Steel Sees Lower Profit

JFE Holdings announced on Thursday the firm posted 513.5 billion yen of consolidated recurring profit for fiscal 2006 ended March 2007, which was 13.5 billion yen higher than estimate in March and was 0.7% lower than record profit for fiscal 2005. Kobe Steel posted record 183.2 billion yen of consolidated recurring profit for fiscal 2006, which was 13 billion yen higher than estimated in March and was 3.6% higher than previous record in fiscal 2005. JFE Holdings expects the profit is record 520 billion yen for fiscal 2007 while Kobe Steel expects the profit decreases by 48.2 billion yen. JFE Holdings said the consolidated recurring profit for fiscal 2006 was 8% higher than the profit without onetime gain from inventory valuation of raw materials in fiscal 2005. The averaged steel selling price decreased by 900 yen to 76,000 yen per tonne for fiscal 2006 from fiscal 2005. JFE Holdings plans the steel unit of JFE Steel’s raw steel output is 30 million tonnes for fiscal 2007. With new facilities including pickling line and galvanizing line, the firm expands the output of high valued products. The steel unit’s recurring profit increases by 6.1 billion yen to 510 billion yen for fiscal 2007 from fiscal 2006 with 32 billion yen of gain from higher sales volume and better products mix, 50 billion yen gain from higher price and 27 billion yen gain from variable cost cut despite of 14 billion yen loss from unfavorable foreign exchange rate, 20 billion yen of higher cost and 36 billion yen of extra depreciation due to tax revision. The averaged steel selling price is 77,000 yen per tonne, which is 1,000 yen higher than fiscal 2006, due to higher sales for high valued products. Kobe Steel posted 11.7 billion yen lower operating profit in fiscal 2006 from fiscal 2005 due to onetime gain from inventory valuation in fiscal 2005. However, higher profit from equity method affiliates supported the record recurring profit and record net profit. Kobe Steel expects the recurring profit decreases in fiscal 2007 from fiscal 2006 due to 9 billion yen higher cost for raw materials, 20 billion yen higher fixed cost, 15 billion yen of extra higher depreciation including 11.5 billion yen for steel and 2.5 billion yen for copper and aluminium, 6 billion yen cost for blast furnace relining, 16 billion yen loss from inventory valuation of copper and aluminium despite of 40 billion yen of gain from higher shipment. The steel unit’s operation profit decreases by 9.5 billion yen to 85 billion yen.