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Steelmakers post large group pretax profit

TOKYO - All of Japan's four major steelmakers booked sharp gains in consolidated pretax profit in fiscal 2003 because of continuing streamlining efforts, higher prices for steel products and growing demand in such Asian countries as China and South Korea.

JFE Holdings Inc on Thursday posted a pretax profit of 218.3 billion yen (US$1.5 billion) for the year ending March 31, up 110 percent from fiscal 2002.

Group sales rose 2 percent to 2.47 trillion yen ($22.1 billion). JFE Holdings' exports to Asia were robust, and profits rose dramatically due to higher prices of steel products sold to domestic auto makers and shipbuilders.

Nippon Steel Corp reported a pretax profit of 172.8 billion yen ($1.5 billion), a 150 percent increase, while Kobe Steel Ltd registered a 43 percent pretax profit gain to 50.7 billion yen ($452.8 million). The pretax profit for Sumitomo Metal Industries Ltd rose 66 percent to 68.7 billion yen ($613.6 million).

Each company is forecasting that profit growth will slow for the year ending March 2005 due higher materials prices. More expensive iron ore, coal and other materials are expected to contribute to 435 billion yen ($3.9 billion) in additional costs.

JFE Holdings and Kobe Steel are estimating 28 percent pretax profit growth, and Nippon Steel projects a 16 percent gain.

In an effort to sustain profit growth, the steelmakers will continue their streamlining programs and seek to pass on the higher costs by boosting product prices.

Steelmakers succeeded in raising prices, effective as of April shipments, on steel products destined for domestic car makers and shipbuilders. They are currently holding talks to raise prices again in the fall.

(Asia Pulse/Nikkei)

May 22, 2004

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