Japanese Nonferrous Smelters Forecast Recurring Profit Decline in F2011

Japanese seven major nonferrous metal smelters lately forecast the year-to-year decrease of their full-year consolidated recurring profits in fiscal 2011 (April 2011-March 2012) except for Nittetsu Mining. Five of them reviewed full-year recurring profit forecasts downward as of announcement of their nine-month financial results. Base metal market prices have recovered from the sharp decline in 3Q F2011. However, historically strong yen trend and demand deterioration for electronic materials impact Japanese smelters’ sales and profits.

Mitsubishi Materials lately lowered its full-year recurring profit forecast by 20 billion yen to 40 billion yen and the net profit forecast by 20 billion yen to 2 billion yen. Mitsubishi Materials posts extraordinary loss due to business restructuring at SUMCO, the equity method affiliate and the world major supplier of silicon wafer.

Sumitomo Metal Mining posts extraordinary loss for the withdrawals from electronic material businesses such as bonding wire. The electronic material business unit would post 2 billion yen of full-year recurring loss in F2011. JX Nippon Mining & Metal’s electronic material business unit would halve the full-year segment profit mainly due to sales decrease of rolled copper foil.

Mitsui Mining & Smelting’s electronic material business unit is forecasted to post 80% lower segment profit in F2011. Sales volume is severely decreasing such for electrolytic copper foil. Furukawa’s electronic material business unit would post full-year operating loss.

As for mineral resources, smelting and refining businesses, base metal market prices are currently steady while high yen exchange rate impacts Japanese smelters’ profits. JX Nippon Mining & Metals continuously forecasts year-to-year profit minus for its mineral resource development business unit in F2011. Sumitomo Metal Mining lately lowered full-year profit forecasts for its mineral resource and smelting business units.

Mitsui Mining & Smelting, Japanese largest zinc producer, forecasts full-year recurring loss in its metal and mineral resource business unit mainly due to inventory evaluation loss. Toho Zinc also forecasts wide-range year-to-year profit deterioration who acquired CBH Resources, Australian zinc miner.