Nippon Steel forecast a 6 percent decline in yearly net profit as a result of decreased output, a far smaller decline than analysts had anticipated because the company voiced confidence in its ability to pass on increased costs to customers.
The fourth-ranked corporation in the world by crude steel output projected a net profit of JPY 600 billion (USD 4.5 billion) for the year ending in March, down from JPY 637.3 billion a year earlier.
High energy and natural resource prices, along with anticipated declines in Japanese demand in manufacturing and construction, according to Executive Vice President Takahiro Mori, might postpone a domestic steel recovery.
Nevertheless, he stated at a press conference that Nippon Steel sought "to maximize profits by different steps to strengthen the earnings structure and passing on increased costs of raw materials and fuels to product pricing."
The forecast is based on a projection that parent-only crude steel output will decline from 38.68 million tons last year to 35 million tons this year.
In the first quarter of April through June, the company's net profit increased by 43% to JPY 231 billion (USD 1.72 billion), thanks to significant inventory valuation increases and the ability to raise product pricing.
In order to pass on rising costs, "we want to hike product pricing again in the second half," Mori added.
Increased gas drilling activity outside of Russia will probably keep up the strong demand for its seamless pipes despite some slowdown in demand beginning to emerge in the United States due to rising interest rates, according to Mori.
JFE Holdings Inc., Japan's No. 2 steelmaker, predicted a 51 percent decline in full-year net profit to JPY 140 billion (USD 1.04 billion), claiming higher procurement costs due to a weaker yen against the dollar.
The materials and information on this article have been prepared or assembled by Viet Nam Steel and are intended for informational purposes only.