Japan 6 Special Steels Suffered from Profit Drop in F2008

Japanese 6 special steel makers posted lower revenue and profit for a full fiscal year ended in March 2009 (fiscal 2008) than in the previous fiscal year. Their output has decreased by around 50% since the last half of fiscal 2008 while raw material cost rose in the first half year. Aichi Steel posted consolidated net loss for the first time since fiscal 1965. Nippon Koshuha Steel posted consolidated recurring loss. The other makers’ recurring profit also worsened by 40-80% year-on-year. Five of them decided to reduce a dividend except for Hitachi Metals. The all makers expect for account recovery in the second half of fiscal 2009. However, the all makers estimate year-on-year lower revenue and three makers forecast would post recurring loss through fiscal 2009.

The six makers posted record high revenue in fiscal 2007 and the sales turned to decrease in fiscal 2008. As for the special steel department, Hitachi Metals’ sales decreased by 9.3% to 265 billion yen in fiscal 2008 from fiscal 2007, Daido Steel’s sales decreased by 6.9% to 306.8 billion yen, Aichi Steel’s sales decreased by 8% to 129 billion yen and Sanyo Special Steel’s sales decreased by 3.4% to 155.2 billion yen. Meanwhile, Mitsubishi Steel’s sales increased for the department.

As to overseas sales, Hitachi Metals posted 232.1 billion yen through fiscal 2008, down by 17% from fiscal 2007. Daido Steel’s offshore sales decreased by 8.3% to 70.1 billion yen. Aichi Steel’s overseas sales lowered by 14.4% to 38.8 billion yen.

Two of them posted recurring loss in fiscal 2008. Raw material cost expanded by 17.7 billion yen year-on-year at Daido Steel, by 14.5 billion yen at Aichi Steel, by 13.1 billion yen at Sanyo Special Steel and by 2.4 billion yen at Nippon Koshuha Steel. In addition, profit shrinkage caused by low sales volume was 34.9 billion yen at Daido Steel, 10.1 billion yen at Aichi steel and 1.8 billion yen at Nippon Koshuha Steel. Their net loss also expanded since many companies withdrew deferred income tax asset.

The six makers forecast consolidated net sales would continue to decrease in fiscal 2009. The all makers estimate worse recurring profit. Daido Steel and Nippon Koshuha Steel forecast annual recurring loss. Mitsubishi Steel expects for zero recurring profit.