Sumitomo Metal Industries’ vice president Fumio Hombe said the firm posted higher recurring profit for fiscal 2011 from fiscal 2010 despite of the major earthquake, Thai flood and historical high yen rate when the firm realized business portfolio with strength for downside risk. He said the pipe, rail parts products, plate and bar and wire businesses contributed to the higher profit.
Mr. Hombe said the firm keeps investment for growth while the firm postponed investment items with less priority. He said the growth investments including acquisition of Standard Steel of USA will contribute to higher profit and better financial position in longer term. Mr. Hombe said the firm secured total margin through strategy to accelerate distinctiveness. He said the firm tries to improve the profitability by increasing steel selling price more and by adding more value while the firm tries to realize annualized more than 30 billion yen of cost reduction. Mr. Hombe said Standard Steel regained profitability in second half of last year and could be better due to technical support and capital expenditure. He said the firm plans 50,000-100,000 tonnes of sales in fiscal 2012 from Brazilian seamless mill, which is under process to get certifications. He said the firm started OEM hot rolled coil sample supply from Bhushan Steel of India in March and Indian joint venture with Amtek Auto of India starts No.2 line operation in the year. He said Vietnamese sheet steel joint venture starts operation in around February 2013 while Sumitomo Metals reevaluated the investment in Thai plate mill project with Canadoil Group. Mr. Hombe said the merger company with Nippon Steel should realize 150 billion yen of synergy based on 200 billion yen of combined consolidated recurring profit for fiscal 2011. He emphasized the new company seeks higher level of cost competitiveness to match world most profitable steel maker of POSCO of South Korea. Through the effort, Mr. Hombe said the new company could be world No.1 steel maker with 10% of recurring profit on sales. Mr. Hombe said the new company could streamline the downstream operation while the firm will keep upstream operation. He said the new company will gain from optimum transport by utilizing the production network. Mr. Hombe said the new company keeps research and development in manpower while the firm improves the efficiency. He said the new company expects significant synergy in cost competitiveness in the aspect.