Kobe Steel Cuts Profit Forecast to Loss as Global Economy Slows
Kobe Steel Ltd. (5406) (5406), Japan’s fourth- largest steelmaker, cut its annual profit forecast to a loss for the first time in three years as a slower global economy and a stronger yen reduced exports.
The steelmaker may post a loss of 10 billion yen ($131.2 million) for the year ending March 31, compared with its Oct. 31 estimate for a 20 billion-yen profit, the Kobe, Japan-based company said in a statement today. That compares with a mean profit estimate of 17.7 billion yen in a survey of 17 analysts compiled by Bloomberg.
The European sovereign-debt crisis has cut demand for steel in countries as earnings at Japanese mills are being squeezed by a strong yen. Kobe Steel today lowered its full-year production target by 2.7 percent to 7.2 million metric tons.
“The business environment is becoming tougher with slowing overseas economies and a yen that stays high,” Executive Vice President Hiroaki Fujiwara told reporters in Tokyo today.
The company today reported a third-quarter loss of 4.7 billion yen, its first in seven quarters. It forecast the loss will widen by almost five times to 22.6 billion yen in the January-to-March period after cutting domestic prices.
The shares fell 1.6 percent to 123 yen on the Tokyo Stock Exchange, compared with the 0.1 percent gain in the benchmark Nikkei 225 Stock Average. Kobe Steel has dropped 40 percent in the past year.
Nippon Steel Corp. (5401), Japan’s largest steelmaker, last month cut its full-year profit target to zero. JFE Holdings Inc. (5411), the second-biggest, forecast its first annual loss since it was created from the merger of Kawasaki Steel Corp. and NKK Corp. in 2002.
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