April 24 (Bloomberg) -- JFE Holdings Inc., Japan’s second-largest steelmaker, reported a 49 percent gain in fourth-quarter profit with the help of price increases and a weaker yen.
Net income rose to 26.3 billion yen ($257 million) in the three months ended March 31, from 17.6 billion yen a year earlier, according to Bloomberg calculations based on full-year results released by the Tokyo-based company today.
Earnings at Japanese steelmakers are being revived as Prime Minister Shinzo Abe’s economic stimulus policies cut the value of the yen by 15 percent since the end of 2012, making products manufactured by the industry and customers, such as carmakers, more cost competitive. JFE’s average product prices rose 13 percent in the fourth quarter compared with the same period a year ago, according to the company’s statement.
“In addition to the correction of the yen’s appreciation, we see strong domestic demand in the areas of construction and automobiles, while our cost-reduction efforts were bearing fruit,” Executive Vice President Shinichi Okada said today at a press conference, referring to full-year profit results at the company’s steel division.
JFE’s annual net income more than doubled to 102.4 billion yen, beating its estimate by 7.8 percent. Sales increased 15 percent to 3.67 trillion yen, while operating profit more than tripled to 153.3 billion yen, the statement said.
JFE didn’t provide an outlook for the current year, saying it was unable to make a reasonable forecast because the term of raw materials contracts shortened and product prices are under negotiation.
JFE expects overall demand for steel in Japan will remain strong this business year even after sales taxes increased to 8 percent in April from 5 percent, according to Okada. A supply glut in Asia’s export markets won’t be resolved anytime soon as China expands production amid slower growth in Asia’s biggest economy, he said.
Nippon Steel & Sumitomo Metal Corp., Japan’s biggest steel producer, will announce full-year results on May 9. It may report a profit of 230 billion yen, according to the median of 18 analyst estimates compiled by Bloomberg, reversing a year-earlier loss.
JFE, which has declined about 23 percent since Jan. 1, closed up 6 yen, or 0.3 percent, to 1,917 yen in Tokyo trading after climbing as much as 2.1 percent after the earnings were released.
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