Japan 4 Nonferrous Metal Smelters Expect for Profit Recovery for F2009

Japanese major 8 nonferrous metal smelters posted year-to-year lower sales and profits for the first half of fiscal 2009 (April-September) due to price down of base metals and demand decline for nonferrous metal products. Market prices of base metals currently returned to the level as high as before global economy deterioration and demand for nonferrous metal products recovered to 70-80% level compared with the first half of fiscal 2008. Meanwhile, demand recovery is delayed in several fields and yen exchange rate keeps strong. Under the condition, only 4 smelters reviewed their full-year profit forecast upward.

Sumitomo Metal Mining, Mitsui Mining & Smelting, Dowa Holdings and Toho Zinc currently revised up their full-year profit forecast for fiscal 2009 ending in March 2010.

Sumitomo Metal Mining has progressed cost reduction measures targeting 15 billion yen per annum. Upsurge of base metal market prices pushes up the full-year profits. Profit recovery is also expected for the Electronics & Advanced Materials unit, which posted more than 10 billion yen operating loss in 1H08.

Mitsui Mining & Smelting reviewed its annual profit forecast upward thanks to cost reduction, high base metal prices mainly for zinc, and profit improvement for TAB/COF business.

Dowa Holdings achieved 6 billion yen cost cut in 1H09 against the annual target of 10 billion yen. Toho Zinc expects for higher annual profits than previously expected thanks to the rise of zinc and lead market prices.

On the other hand, Nippon Mining Holdings, Mitsubishi Materials and Furukawa Co. revised down their annual profit forecast for F2009. Nittetsu Mining set the annual profit forecast unchanged.

Nippon Mining Holdings is suffered from worse margin of oil products and upsurge of energy costs. Meanwhile, Nippon Mining & Metals Group revised up its annual sales forecast to 717 billion yen and recurring profit forecast to 35 billion yen. Positive factors are upturn of copper price, sales recovery of electronic materials and shrinkage of indium inventory value loss.

Mitsubishi Materials posted operating losses in 1H09 for its main business units such as copper, cemented carbide tools and electronic materials. The firm forecasts the demand recovery would take a time. The firm also accounts for investment loss from equity method companies such as SUMCO.

Furukawa estimates operating loss in the machine business unit.