JFE Holdings Profit Rises as Japan Building Spurs Steel Demand

JFE Holdings Inc. (5411), Japan’s second-biggest steelmaker, said third-quarter profit increased 38 percent, aided by a revival in domestic demand and the weakening of the yen.

Net income rose to 28.2 billion yen ($275 million) in the three months ended Dec. 31, according to a statement released today by the Tokyo-based company. Net income was 20.4 billion yen in the same period a year ago.

Construction spending in Japan, combined with earnings at auto customers buoyed by the weaker yen, has enabled domestic steel suppliers to increase product prices. Nippon Steel & Sumitomo Metal Corp. (5401), the country’s biggest steelmaker, earlier this week raised its full-year profit forecast and said third-quarter profit tripled.

“In the steel business, the sales environment is recovering steadily due to the yen’s weaker value, which is helping Japanese companies to win more orders overseas,” JFE said in the statement. “Increased public spending under the government’s emergency economic stimulus package also is strengthening the sales environment.”

Domestic construction orders rose 21 percent to 11.9 trillion yen in 2013, the highest in five years, according to a statement released Jan. 27 by the Japan Federation of Construction Contractors.

China Oversupply

The yen has declined 11 percent in the past year against the U.S. dollar, the third-worst performance among group of 10 currencies, according to data compiled by Bloomberg.

JFE Holdings reiterated today that net income may more than double to 95 billion yen for the full year ending March 31, though the company trimmed its annual sales forecast by 1.2 percent to 3.66 trillion yen.

“Overseas markets are forecast to remain unfavorable, partly due to slower growth in both emerging and developing economies and a chronic steel oversupply in China,” JFE said.

JFE Holdings fell as much as 3.2 percent after the earnings report release and were down 63 yen, or 2.8 percent, at 2,172 yen as of 2:13 p.m. in Tokyo trading.

To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.