(Adds earnings details, comments)
TOKYO, July 30 JFE Holdings Inc,
Japan's No.2 steelmaker, forecast a 3.6 percent rise in
recurring profit for the fiscal year through March on higher
margins, though it booked a loss on the sale of a stake in its
Australian coal mines, hit by coal prices at near five-year
JFE, which ranks behind only Nippon Steel & Sumitomo Metal
Corp in the sector in Japan, predicted 180 billion yen
($1.8 billion) in recurring pretax profit before one-off items
for the current year, against 174 billion a year ago, driven by
higher earnings from its mainstay steel business.
The forecast, however, came below a consensus estimate of
201 billion in a poll of 15 analysts in Thomson Reuters I/B/E/S.
The company noted Japan's decision to raise a consumption
tax from 5 percent to 8 percent from April 1 but said the
effects had not been great.
"The overall impact from a sales tax hike ... has been
limited as sound demand from shipbuilders and automakers offset
weaker housing demand," JFE Executive Vice President Shinichi
Okada told a news conference.
The group's improved margins, thanks to higher prices of its
products, are expected to boost profit of its steel unit by 11
percent. "But we'll stay cautious on export as the steel prices
are still in a slump in Asia," Okada said.
For the April-June quarter, the company posted a 1.5 percent
year-on-year drop in recurring profit at 34.7 billion yen and
booked a 7 billion yen appraisal loss on the sale of a stake in
a coal mine project in Australia.
JFE Shoji Trade Corp, a unit of JFE Holdings, is in the
process of selling its 37.5 percent stake in Baralaba Coal and a
20 percent stake in Wonbindi Coal in Queensland, Australia, to
its partner Cockatoo Coal Inc, its parent said.
The withdrawal follows a string of mine sales, closures and
project cancellations as coal producers battle prices at near
five-year lows, high costs and a stubbornly high Australian
Okada said the amount of coking coal the JFE group will
procure from mines in which it holds stakes will drop to 15
percent from 18 percent after the sale.
"We have not taken down a target to raise our equity
production of coking coal and iron ore to 30 percent. But it is
not likely happen any time soon as there are not attractive
deals now," he said.
($1 = 102.2300 Japanese Yen)
(Reporting by Yuka Obayashi; Editing by Edwina Gibbs and David