JFE Holdings Returns to Profit on Cost Savings, Weaker Yen
Profit was 20.4 billion yen ($225 million) for the three months ended Dec. 31, the Tokyo-based company said in a statement today. JFE Holdings posted a loss of 12.9 billion yen in the same period a year earlier, according to calculations based on nine-month results released at the time.
JFE, which last year reported its first annual loss since it was created from the merger of Kawasaki Steel Corp. and NKK Corp. in 2002, is proceeding with a 120 billion yen cost- reduction plan, mainly by using lower-grade steelmaking raw materials. The Japanese currency is trading at its lowest against the dollar since June 2010, boosting the prospects of domestic steelmakers and their customers such as carmakers.
Net income for the fiscal year ending March 31 will probably be 35 billion yen, compared with a loss of 36.6 billion yen a year earlier, the company said today, reiterating a forecast it made in October. Operating profit for the full year will be 40 billion yen, 11 percent lower than the previous year and 27 percent short of the October forecast, it said.
JFE was up 2.4 percent at 1,904 yen as of 2:11 p.m. in Tokyo trading, compared with 1,887 yen before the earnings release. The shares have gained about 20 percent since Jan. 1, adding to their 15 percent advance in 2012.
JFE Steel Corp., which accounts for about 80 percent of JFE Holdings’ total revenue, cut the average price of its products by 18 percent to 68,700 yen per metric ton in the quarter ended Dec. 31 from 84,100 yen a year ago.
It plans to produce about 7 million metric tons of crude steel in the current quarter on a parent company basis, up from 6.84 million tons in the previous three months, the statement said.
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