JFE Holdings Forecasts 21.6% Y/Y Lower Consolidated Recurring Profit for F2011

JFE Holdings announced on Wednesday the firm set its consolidated recurring profit forecast for a full year of fiscal 2011 ending in March 2012 at 130 billion yen, decreasing by 21.6% from the previous financial year. The divided target is set at 10 yen per share for the payment at the end of September 2011, decreasing by 10 yen from a year earlier. The 3-month recurring profit decreased by 50.6% to 25.4 billion yen for April-June 2011 from the same period of fiscal 2010. Steel sales decreased while the firm failed to reflect raw material cost upsurge fully on the selling price. JFE Holdings targets profit improvement by price hike of steel products and production cost cut under rebounding demand after the earthquake disaster.

The first-half-year recurring profit is forecasted at 50 billion yen, 52.4% year-on-year down. The profit of the steel business segment would decrease to 43 billion yen from 88.1 billion yen in the same period of fiscal 2010. The standalone crude steel production is estimated at 13.7 million tonnes for April-September and at around 14 million tonnes for October 2011-March 2012.

Mr. Yoshio Ishikawa, vice president of JFE Holdings, explained the firm calculated the full-year recurring profit forecast for the steel business segment at 120 billion yen, based on the profit forecast for July-September since the market conditions are totally unforeseeable for the sales volume, raw material price and the steel product price. Mr. Ishikawa said the price hike has penetrated among domestic manufacturing industry while not yet domestic building materials and exports.

The standalone steel shipment is expected to increase by 420,000 tonnes to 6.51 million tonnes for July-September from April-June. The export would represent 46% against the total shipment, down from 49.4% for April-June. The unit sales price is estimated to improve by 5,600 yen to 88,000 yen per tonne.

For the second half year of September-March, JFE Holdings forecasts the recurring profit could improve to 80 billion yen. The recurring profit of the steel business segment is expected to increase to 77 billion yen. The full-year order receipts are targeted to increase by 36.5% to 350 billion yen for the engineering business segment and increase by 108.6% to 170 billion yen for the vessel business segment.

For April-June 2011, the steel business segment’s recurring profit decreased by 26.5 billion yen year-on-year. The profit increased by 69 billion yen thanks to improvement of steel sales price and by 16 billion yen due to cost reduction. The inventory evaluation profit was 18 billion yen. Meanwhile, the profit decreased by 11 billion yen by product mix and by 126 billion yen by raw material cost upsurge.