Tokyo Steel’s Recurring Profit to Drop by 90% in F2009

Tokyo Steel Manufacturing forecasts its non-consolidated recurring profit would decrease by 89.9% to 5.6 billion yen for a fiscal year ending in March 2010 compared with the previous fiscal year. The firm supposed the sales keep low for a while. The firm estimated the average selling price of steel products at 60,500 yen per tonne and the average purchasing price of ferrous scrap at 22,500 yen per tonne for the last half of F2009. Return on Sales (ROS) would lower to 4.7% in F2009 from 19.9% in F2008.

Tokyo Steel lowered the revenue forecast by 13 billion yen for F2009 from the previous estimation, which decreases by 57.2% to 119.2 billion yen for F2009 from F2008. The firm estimates the annual operating profit decreases by 200 million yen for F2009 from the previous forecast, minus by 90.1% to 5.3 billion yen from F2008. Net profit would decrease by 95.4% to 1.5 billion yen in F2009 from F2008.

The firm announced on Thursday the 6-month revenue decreased by 67.7% to 55.1 billion yen for April-September from the same period of 2008. The operating profit worsened by 81.1% to 3.2 billion yen, recurring profit by 81.5% to 3.5 billion yen and net profit by 85.3% to 1.6 billion yen. The sales and profits widely declined due to dropped price and sales volume. In addition, the firm declared an extraordinary charge at 747 million yen due to an explosion accident at Okayama iron works.

Tokyo Steel’s 6-month sales volume was 856,000 tonnes for April-September, lower by 725,000 tonne than April-September 2008. The export volume decreased by 5,000 tonnes to 221,000 tonnes. Averaged selling price lowered by 43,700 yen to 64,200 yen per tonne. Averaged export price lowered by 60,000 yen to 57,500 yen. The firm expects steel sales volume at 1.06 million tonnes for 2H of F2009 and 1.93 million tonnes through F2009.