UPDATE 1-Japan's JFE eyes 5 pct boost in crude steel output in 2014/15

Thu Apr 24, 2014 4:03am EDT

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TOKYO, April 24 (Reuters) - JFE Holdings Inc, Japan's No.2 steelmaker, aims to boost its crude steel output by about 5 percent in the 2014/15 business year that started this month in a bid to meet solid construction demand at home.

A cooling of China's economy and an oversupply of steel in Asia has hit many of the region's steelmakers, but Japanese producers are being supported by Prime Minister Shintaro Abe's push to revitalise the economy with infrastructure investments and monetary easing.

JFE, the world's ninth-biggest crude steel producer by volume, said its group recurring profit, which is pretax and before one-off items, grew 3.3-fold to 173.68 billion yen ($1.70 billion) in the year ended on March 31 from a year earlier.

Robust demand for construction and automobile steel and higher steel prices in Japan boosted profits.

The Tokyo-based company did not provide its earnings forecast for this year, but a consensus estimate stands at 231.5 billion yen in a poll of 16 analysts in Thomson Reuters I/B/E/S, suggesting another year of profit increase.

Investors are now watching for the impact of a sales tax hike that took effect on April 1 in Japan, though JFE said it was not overly worried about the impact.

"We'll see some decline in demand, but we notice that automobile makers are already revising up their production plans for April-June quarter and April-September half," JFE executive vice president Shinichi Okada told a news conference.

"Also with continuing solid demand in the construction sector, we don't expect a sharp fall in demand. Domestic demand is fairly strong," he said.

Propelled by strong construction demand including redevelopment projects in central Tokyo and a rush to build houses ahead of the sales tax hike, Japan's crude steel output rose to the highest in six years in the 2013/14 business year.

"Our crude steel production this year will depend on demand and supply as well as the economic environment. But we'll first aim for 30 million tonnes," Okada said.

The 30 million tonnes on a parent basis represents a 4.6 percent increase from 28.67 million tonnes a year earlier.

Its crude steel output rose 2.5 percent year-on-year in the 2013/14 year to the highest in three years.

($1 = 102.3850 Japanese Yen) (Reporting by Yuka Obayashi; Editing by Muralikumar Anantharaman and Ed Davies)

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