Japan's Nippon Steel Q1 profit falls 23%, but raises annual f'cast (updated)

JFE Holdings

04/08/2023 09:31

(Adds quotes, details)
       TOKYO, Aug 4 (Reuters) - Nippon Steel  5401.T , Japan's
top steelmaker, posted a 23% drop in net profit in the first
quarter of the 2023/2024 fiscal year, but raised its full-year
forecast by 8% on higher-than-expected margins amid falling
prices of raw materials, it said on Friday.
    The move comes despite sluggish steel demand at home and
abroad including China, the world's top steel consumer.
        Net profit of the world's No.4 steelmaker in the
April-June quarter came to 177 billion yen ($1.24 billion), down
from 231 billion yen a year ago, on weak demand and the lack of
hefty appraisal gains on its inventories that it had enjoyed a
year earlier. 
        Still, the company lifted its annual profit outlook to
400 billion yen from its May guidance of 370 billion yen, citing
falling prices of steel-making ingredients such as coking coal
as well as its shift to more profitable high-end products.
        The latest prediction beat the mean 392 billion yen
profit estimate in a poll of 11 analysts by Refinitiv.
  
        "Steel demand is sluggish and business environment is
really severe, but we were able to raise the annual forecast,
which means we have taken the right measures," Nippon Steel
Executive Vice President Takahiro Mori told a press conference.
  
        The steelmaker has been shutting down several local
facilities including blast furnaces due to declining demand
while changing the negotiation formula with its key industry
customers such as automakers so that they could swiftly reflect
any change in materials costs to their product prices.
  
        JFE Holdings  5411.T , Japan's second-biggest
steelmaker, said this week its first-quarter net profit fell by
29%.
        Nippon Steel's Mori also said it is still in talks with
Teck Resources  TECKb.TO  to buy a stake in the Canadian miner's
coking coal unit and it wants to settle the deal by the end of
this year. But he declined to give any further details.
        The 
    CEO of Teck said
     last month that the miner is considering a range of
proposals including a partial sale of its coal business from
various interested parties after Glencore  GLEN.L  offered up to
$8.2 billion for the unit.
  
        ($1 = 142.4700 yen)

 (Reporting by Katya Golubkova and Yuka Obayashi; Editing by Tom
Hogue and Kim Coghill)
 ((ekaterina.golubkova@thomsonreuters.com;))