Yamato Kogyo Posts 68.5% Lower Recurring Profit in 1Q F2010

Yamato Kogyo announced on Friday the firm posted higher consolidated sales with lower profits in April-June compared with same period of 2009. The consolidated sales increased by 10.1% to 32.522 billion yen while the recurring profit decreased by 68.5% to 2.046 billion yen and the net profit decreased by 63.5% to 1.21 billion yen. Despite the increase in ferrous scrap purchasing cost, the firm could not increase the steel selling price in domestic and overseas market due to the weak demand.

Yamato Kogyo revised down the forecast for sales and profits for fiscal 2010 ending March 2011. The forecast is 135 billion yen in sales, 8 billion yen in recurring profit and 5.5 billion yen in net profit. The firm expected 150 billion yen of sales, 12 billion yen of recurring profit and 7 billion yen of net profit as of April.

Yamato Kogyo announced on the same day the firm had official agreement to establish direct reduced iron based integrated H-beam making joint venture in Bahrain. The JV, in which Yamato Kogyo has 49% interest, builds direct reduction plant with annual 1.5 million tonnes of output capacity, steel making plant with 800,000 tonnes capacity and rolling mill. The venture ordered direct reduction plant to Kobe Steel while the venture is provided steel making plant and rolling mill from SMS group and Samsung Engineering. The JV is scheduled to start the operation in late 2012.