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PrintNippon Steel Corp., Japan's largest steelmaker, returned to profit last quarter as the yen weakened and a stock-market recovery boosted the value of its holdings, including merger partner Sumitomo Metal Industries Ltd.
Net income was 59.7 billion yen ($735 million) in the three months ended March 31, compared with a loss of 11.2 billion yen a year earlier, the Tokyo-based company said today in a statement. That beat the 16.2 billion-yen median estimate of five analysts surveyed by Bloomberg. Sales fell 6 percent to 1.02 trillion yen.
The weakening of the yen from a record-high in October helped restore the competitiveness of Japanese steelmakers against South Korean and Chinese rivals. JFE Holdings Inc., Japan's second-largest steel producer, posted a quarterly profit even after forecasting a loss.
Japanese steel producers are set to boost sales this year as carmakers expand output and post-earthquake reconstruction drives demand, SMBC Nikko Securities Inc. said in an April 16 report. Japan's benchmark stock index posted its biggest first- quarter gain since 1988, fueled by the central bank's Feb. 14 decision to increase note purchases by 10 trillion yen.
Nippon Steel shares fell as much as 1 percent to 199 yen and traded at 200 yen as of 2:42 p.m. in Tokyo after earlier rising as much as 2 percent. That pared this year's gains for the stock to 4.2 percent. Sumitomo Metal gained 0.7 percent to 146 yen.
No Forecast
Nippon Steel didn't provide a profit outlook for the year that began April 1, citing the unsettled price of raw materials and negotiations with customers. Net income may reach 96 billion yen this year, according to the median estimate of 22 analysts surveyed by Bloomberg.
The company will increase crude steel output to as much as 7.6 million metric tons in the three months to June 30 from 7.39 million tons in the previous quarter, Executive Vice President Shinichi Taniguchi told reporters in Tokyo today. The company won't give a first-half outlook until July, Taniguchi said.
Sumitomo Metal Industries, Japan's third-largest steelmaker, posted a quarterly loss of 16.1 billion yen today, narrowing from the 42.1 billion yen loss a year earlier. Operating profit increased 15 percent to 19 billion yen.
Sumitomo Metal, Nippon Steel's biggest investment, advanced 19 percent in Tokyo trading in the last quarter, in line with the gain in the benchmark Nikkei 225 stock index. Nippon Steel said April 2 it reversed 80.7 billion yen of losses in the fourth quarter.
The two steelmakers plan to merge on Oct. 1, creating a bigger company to compete against rivals including ArcelorMittal (MT), South Korea's Posco and China's Baoshan Iron & Steel Co.
Source:Bloomberg
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