* Plans crude steel output of 458 mln T in 2013/14
* Expects higher H2 steel prices in Japan
(Adds details, executive comments)
TOKYO Oct 30 Nippon Steel & Sumitomo Metal Corp
, the world's No.2 steelmaker, raised its full-year
profit forecast by 13 percent on Wednesday on cost cuts and
strong steel demand in Japan, lifted by the Abenomics stimulus
Japan's overall crude steel production for the
April-September period hit a five-year high, buoyed by solid
construction demand from government infrastructure spending and
a rush to build homes ahead of a sales tax hike next year.
"Steel demand for both construction and manufacturing uses
have rebounded in Japan. This is a sign that impacts from
Abenomics has spread to steel industry," Executive Vice
President Katsuhiko Ota told a news conference.
"Higher-than-expected prices in the domestic market is a
factor behind our profit forecast revision," Ota said, pointing
that its average steel product prices for the April-September
half have rebounded for the first time in 2 years.
Nippon Steel, Japan's top steel producer, said its recurring
profit grew nearly nine-fold to 173.7 billion yen ($1.77
billion), which is pre-tax and before one-off items, in the
April-September half from a profit of 19.5 billion yen a year
The company, which merged with smaller peer Sumitomo Metal
Industries last October, now expects 340 billion yen in
recurring profit for the year to March 2014, above the 300
billion yen it forecast three months ago.
The 340 billion yen forecast marks the highest since the
combined annual profit of Nippon Steel and Sumitomo Metal
Industries in the 2009/10 year, which was 561.9 billion yen.
"Cost reduction is the biggest boost to our earnings this
year. Appraisal profits on our raw material inventories and
higher steel output are also contributing to a profit recovery,"
SHARES SOAR THIS YEAR
The company plans 458 million tonnes of crude steel on
parent basis this year, up from 435.5 million tonnes a year ago.
The new forecast, which represents more than four-fold from
a year-ago profit of 76.9 billion, missed a consensus estimate
of 366.46 billion yen in a poll of 17 analysts in Thomson
Reuters I/B/E/S, sending its shares down.
Shares in Nippon Steel have gained about 60 percent this
year, outperforming the Nikkei average's about 38
But Nippon Steel shares closed down 2.7 percent after the
announcement, underperforming the benchmark, which closed up 1.2
Nippon's upgraded profit forecast flies in the face of a
prolonged slump in prices in Asia brought on by massive crude
steel output from China.
Last week, POSCO, the world's fifth largest
steelmaker, posted its steepest quarterly fall in operating
profit so far this year.
"For the October-March half, we expect domestic prices to
move higher, but we don't expect much improvement in export
prices as China continues to increase its steel output."
($1 = 98.0900 Japanese yen)
(Reporting by Yuka Obayashi; Editing by Jeremy Laurence)