July 31 (Bloomberg) -- Nippon Steel & Sumitomo Metal Corp.’s profit fell 24 percent in the first quarter as Chinese steelmakers kept production at high volumes. The company’s shares fell.
Net income at the world’s second-biggest steelmaker declined to 48.3 billion yen ($470 million) in the three months ended June 30 from 63.4 billion yen a year earlier, the Tokyo-based company said in a statement today. Sales rose 5.8 percent to 1.36 trillion yen from 1.29 trillion yen.
The company, formed by the merger of Nippon Steel Corp. and Sumitomo Metal Industries Ltd. in October 2012, had operating profit of 59.6 billion yen in the first quarter, lagging the 64 billion yen average estimate of four analysts compiled by Bloomberg.
For the full year, current profit is forecast at 400 billion yen, Nippon Steel said. The company posted current profit of 361 billion yen in the fiscal year ended March 31.
Nippon Steel’s shares were down 0.8 percent at 316.9 yen as of 1:43 p.m. They’ve declined about 10 percent since the beginning of the year, compared with a 3.8 percent drop for the Nikkei 225 Stock Average.
China is casting a shadow over Japanese steelmakers, which are benefiting at home from spending on construction and stimulus efforts by Prime Minister Shinzo Abe. Japan’s building boom is sucking in steel from other parts of Asia.
As steel comes in from abroad, Japanese steelmakers have begun weighing whether to take action. Industry figures show steel imports in June rose for an eighth consecutive month, surging 40 percent to 394,000 metric tons.
Japan’s economy grew at a quicker pace than estimated in the first quarter, as business spending increased more than previously reported.
Gross domestic product grew an annualized 6.7 percent in the first three months of the year, the Cabinet Office said in Tokyo on June 9.
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