Japan Special Steel Makers Post Mixed Quarterly Results

Japanese major 6 special steel makers reported mixed consolidated results for April-June with tough business condition due to major production cut by automakers, according to their report by Monday. Sanyo Special Steel, Mitsubishi Steel Mfg. and Nippon Koshuha Steel posted higher recurring profit than same period of 2010 level while Hitachi Metals and Aichi Steel posted lower profit and Daido Steel posted same level profit. Mitsubishi Steel gained from strong demand for construction machinery. All the makers expect lower profit for first half of fiscal 2011 started April when they expect second half heavy profit target under recovering demand for automobile industry.

Aichi Steel announced on Monday the steel unit, which represents 60% of the total sales, reported 8% higher sales in April-June from same period of 2010 while the business was impacted heavily by slow automobile demand. The sales decreased by 17% for forgings unit and by 23% for electro-magnetic components unit.

Aichi Steel reported 59.1% lower recurring profit with lower sales for April-June from same period of 2010. The firm reported 2.6 billion yen of gain from higher selling price for recurring profit while the negative factors were 3.3 billion yen from higher raw materials cost and 1.3 billion yen from lower sales volume.

Strong demand for construction machinery supported the special steel makers’ results in April-June while slow automobile demand impacted on their profitability. The special steel makers try to improve selling price and delivery efficiency toward second half of fiscal 2011 when domestic automakers increase the operation to full capacity level. Historical high yen rate also impacts on their export activity.

Daido Steel expects 3.5 yen per share of dividend for the first half, which is 0.5 yen higher than same period of 2010. Other makers expect same level of dividend at 6 yen for Hitachi Metals, 5 yen for Aichi Steel and 1.5 yen for Mitsubishi Steel.