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UPDATE 1-Japanese steelmaker JFE maintains full-year profit forecast
January 31, 2013 / 6:31 AM / 5 years ago

UPDATE 1-Japanese steelmaker JFE maintains full-year profit forecast

* Nine-month profit 21.9 bln yen vs loss of 37.3 bln yen a yr ago

* Keeps FY profit forecast at 35 bln yen (Adds China outlook in sixth graf)

TOKYO, Jan 31 (Reuters) - JFE Holdings Inc, the world’s fifth-biggest steelmaker, kept its forecast for full-year net income of 35 billion yen ($384.34 million) even as it swung to a profit for the first nine months, underscoring concerns over the global economy.

Net profit for the nine months through December was 21.9 billion yen compared to a loss of 37.3 billion yen a year earlier, the Japanese steelmaker said on Thursday. Sales rose 1.6 percent to 2.3 trillion yen.

JFE’s return to profit was mainly a result of cost cuts and from booking extraordinary income of 23.1 billion yen after an impairment loss on overseas investments in the previous period. The write-offs contributed to the company’s first full-year loss in its history in the last financial year.

The weak global economy is hurting demand for steelmakers like JFE and South Korea’s POSCO and forcing down prices for the alloy used in automobiles, shipbuilding, construction and home appliances. And with the price of iron ore surging in recent weeks, steelmakers are facing higher production costs.

“In (the) steel business, the global economic slowdown is persisting and there is still a steel supply demand gap in Asia,” the company said in a statement. “In Japan, even though downward pressure on the yen has been seen recently, the domestic economic outlook remains unclear.”

In addition, while data from China is pointing to a recovery of the world’s top steel-consuming country this year after the economy grew at the slowest pace in 13 years during 2012, the industry is not out of the woods yet, analysts say.

The economic rebound will probably be a tepid 8.1 percent, with Europe’s debt crisis and a slow U.S. recovery weighing on exports, a Reuters poll showed last week. ($1 = 91.0650 Japanese yen) (Reporting by Aaron Sheldrick; Editing by Matt Driskill and Ryan Woo)

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