Kobe Steel ups profit forecast on yen's drop, bigger power sales

Kobe Steel

05/04/2021 10:23

TOKYO, April 5 (Reuters) - Japan's Kobe Steel  5406.T  on
Monday lifted its annual net profit forecast for the year just
ended to 7 billion yen ($63 million) from nil, as the yen's drop
helped boost machinery exports and an electricity crunch in
winter raised its power sales.
    "A weaker-than-expected yen against the U.S. dollar helped
improve profitability in our exports of construction machinery
while power sales volume expanded amid an electricity crunch
during the winter," a Kobe Steel spokesman said.
    The dollar hit a one-year high versus the yen in March as
investors bet that fiscal stimulus and aggressive vaccinations
will help the United States lead a global recovery from the
pandemic.  urn:newsml:reuters.com:*:nL1N2LT1CW
    Japan's wholesale electricity prices hit record highs in
January, stoked by cold weather, causing a supply crunch and
sending power generators scrambling to source supplies.
 urn:newsml:reuters.com:*:nL4N2JU1I7 urn:newsml:reuters.com:*:nL1N2JN0KN
    The earnings prediction by Japan's third-biggest steelmaker
and the supplier of aluminium and copper products also comes as
a global chip shortage failed to slow down automobile
production, as the company had anticipated, the spokesman said.
    The automobile industry has been grappling with a shortfall
in chip supply since late last year, driven by coronavirus
lockdowns in Southeast Asia and bulk-buying by U.S.
sanctions-hit Chinese tech giant Huawei Technologies  HWT.UL 
while a recent fire at a Japanese semiconductor factory has
exacerbated the shortage.  urn:newsml:reuters.com:*:nL4N2LT3N4 urn:newsml:reuters.com:*:nL1N2IX10E    
    Kobe Steel's latest profit forecast compares with a net loss
of 68.0 billion yen in the year ended March 2020 when steel
demand from the manufacturing industry declined and steel prices
slumped amid the U.S.-China trade war, even before the COVID-19
pandemic hit global demand. 
    It had not expected to make an annual net profit for the
year ended March 31, 2021 in its February forecast. It also now
predicts a recurring profit of 6 billion yen, instead of its
February forecast of a loss of 10 billion yen.
    It's scheduled to report annual results on May 11.
    ($1 = 110.6200 yen)

 (Reporting by Yuka Obayashi; editing by Emelia
Sithole-Matarise)
 ((Yuka.Obayashi@thomsonreuters.com; +813-4563-2761;))