Nippon Steel expects $1.4 billion fiscal year profit as one-off items fade

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TOKYO, May 13 : Nippon Steel, Japan's biggest steelmaker, on Wednesday said it expects its net profit for the year that ends in March to increase sharply to 220 billion yen ($1.4 billion) as the effects of one-off losses fade from its results.

Nippon Steel, which bought U.S. Steel for $15 billion last year and pledged massive investments into the firm, also posted a 95 per cent drop in profit for the previous financial year to 17.2 billion yen.

In February, the company said it expected to post a loss of 70 billion yen for the year that ended in March due in part to a fire at a blast furnace and costs related to the U.S. Steel deal.

Nippon Steel managed to turn a profit thanks to improved profitability amid cost cuts, as well as inventory and foreign exchange valuation gains, it said, as raw material prices were rising while the yen remained weak.

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The company expects a negative impact from Middle East-related risks of around 50 billion yen in the first quarter, it said, adding that the impact on the full-year results was not yet possible to assess.

As the U.S.-Israeli war on Iran triggered fuel supply shortages and commodity price increases, Japanese steelmakers JFE Holdings and Kobe Steel earlier this month warned of a risk of cost increases and possibly lower sales.

"In response to rising raw material prices, including those for coking coal, we are currently working to increase the sales price of steel products," JFE Holdings, Japan's second-biggest steelmaker, said on May 8.

($1 = 157.7300 yen)

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