Wild first half for metals drives big jump in LME earnings
HKEX said core earnings from its commodities unit jumped by 82% from a year earlier.
TOKYO, Nov 2 – Japan’s top steelmaker Nippon Steel & Sumitomo Metal reported a 4 percent fall in recurring profit for April-September due to rising costs and slower-than-expected output, but it stuck to its full-year forecast.
“Domestic steel demand is expected to remain healthy, but we see growing uncertainty over an impact on (the) global economy from US-China trade frictions,” Nippon Steel Executive Vice President Katsuhiro Miyamoto told a news conference after the results release on Friday.
Natural disasters and glitches at some facilities have prevented Nippon Steel from producing as much steel as planned
“We need to carefully watch how the trade conflicts will impact on (the) Chinese economy and other parts of the world,” he said.
Recurring profit for the world’s third-biggest steelmaker by crude steel output came at 151.5 billion yen ($1.3 billion) for the six months through September, below 157.6 billion yen in the same period a year earlier.
Its crude steel output for the six months, on a parent basis, was 20.5 million tonnes, falling short of its earlier target of 21.3 million, as severe rains and technical problems at some mills slowed production, Miyamoto said.
Nippon Steel kept its forecast for an annual profit of 350 billion yen under International Financial Reporting Standards (IFRS).
The company is set to change its accounting method from the Japanese standard at the end of the current financial year in March 2019.
The company’s guidance compares with a consensus of 355.9 billion yen from 12 analysts, according to I/B/E/S data from Refinitiv, and an estimated profit of 288.7 billion under IFRS in the previous year. That was converted by Nippon Steel from a recurring profit of 297.5 billion yen under the Japanese standard.
Nippon Steel plans to step up crude steel production in the October-March period, predicting an output of 21.6 million tonnes for the six months, above 20.58 million tonnes a year earlier.
Japanese steelmakers are enjoying solid domestic demand from automakers and machinery manufacturers as well as the construction sector, which has been in full swing ahead of the 2020 Tokyo Olympics.
However, natural disasters including one of the strongest typhoons to hit Japan in the past 25 years and glitches at some ageing facilities have prevented them from producing as much steel as planned.
This week, JFE Holdings and Kobe Steel cut their annual profit forecasts due to technical problems at their plants and higher costs of electricity, distribution and subsidiary materials.
($1 = 112.9900 yen)
(By Yuka Obayashi; Editing by Christian Schmollinger and Susan Fenton)
