JFE Holdings Regains Recurring Profit at 105 Billion Yen for Apr-Sep

JFE Holdings announced on Friday the firm gained consolidated recurring profit at 104.9 billion yen in the first half of fiscal 2010 (April-September 2010) while the firm posted recurring loss at 57.4 billion yen in the same period of fiscal 2009 and forecasted 100 billion yen for April-September 2010. The steel business was impacted by upsurge of raw material prices while the sales volumes and prices improved as well as operative cost reduction. The firm sets recurring profit forecast unchanged at 220 billion yen for a full year of fiscal 2010 ending in March 2011.

The first six month recurring profit was 88.1 billion yen for steel business (improved from 72.4 billion yen loss in the same period of fiscal 2009), 3.4 billion yen for engineering business (increasing from 2.8 billion profit year-on-year) and 12.5 billion yen for shipbuilding business (increasing from 10.4 billion yen profit year-on-year). The profit also improved for urban development and LSI businesses.

As for steel business, the recurring profit improved by 160.5 billion yen year-on-year. Raw material cost upsurge impacted the recurring profit by 235 billion yen while covered by cost cut effect at 20 billion yen, sales volume recovery at 50 billion yen, price improvement at 85 billion yen, inventory evaluation profit at 185 billion yen and financial recovery at group companies at total 55.5 billion yen. Mr. Yoshio Ishikawa, vice president of JFE Holdings, explained the three-month recurring profit decreased to 42 billion yen for July-September from 46.1 billion yen for April-June due to raw material cost upsurge and sales volume decrease for export.

JFE Steel’s non-consolidated recurring profit was 61.5 billion yen for April-September 2010 while the firm posted recurring loss at 61.5 billion yen in the same period of fiscal 2009. JFE Steel forecasts annual recurring profit at 200 billion yen for steel business, 8 billion yen for engineering business and 13 billion yen for shipbuilding business in a full year of fiscal 2010. The steel business’s recurring profit is expected to increase by 167.7 billion yen year-on-year though higher raw material cost would impact the profit by total 460 billion yen. This impact will be covered by operative cost down at 50 billion yen, sales volume increase at 75 billion yen, price improvement at 255 billion yen, inventory evaluation profit at 220 billion yen and other positive factors at total 27.7 billion yen.

Yen exchange rate is estimated at average 85 yen per US dollar for the second half of fiscal 2010, stronger than 89.7 yen in the first six months. Average steel selling price is forecasted at 81,600 yen per tonne for October-March, as flat as in July-September.