TOKYO Nippon Steel & Sumitomo Metal Corp (5401.T), the world's No.2 steelmaker, raised its full-year profit forecast on Wednesday on cost cuts and strong steel demand in Japan, lifted by the "Abenomics" stimulus program.
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.
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 pretax and before one-off items, in the April-September half from a profit of 19.5 billion yen a year ago.
It 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 new figure, however, is lower than a consensus estimate of 366.46 billion yen in a poll of 17 analysts in Thomson Reuters I/B/E/S, and compares with year-ago profit of 76.9 billion yen.
Helped by market expectation for its earnings recovery, shares in Nippon Steel have gained about 60 percent this year, outperforming the Nikkei average's .N225 about 38 percent gain. But, as of 0542 GMT, Nippon Steel shares were down 2.9 percent, underperforming the benchmark, which was up 1.1 percent.
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 (005490.KS), the world's fifth largest steelmaker, posted its steepest quarterly fall in operating profit so far this year.
(Reporting by Yuka Obayashi; Editing by Jeremy Laurence)