Tokyo: Nippon Steel Corporation, the world’s second-biggest steelmaker, said its pretax profit in the nine months to December fell 0.7%, hit by high raw materials and other costs.
Surges in fuel, steel scrap and other raw materials costs sapped profit at Nippon Steel, although tight supplies of high-grade sheet steel and thick plates have enabled it to raise prices, partly offsetting its higher costs.
A sharp increase in depreciation costs stemming from a change in tax rules cut its pretax profit by 23 billion yen during the nine months, Nippon Steel said in a statement.
The company, a big contract supplier to Toyota Motor Corporation and other Japanese manufacturers, said its pretax recurring profit before special items came in at 434.67 billion yen ($4.1 billion) in April-December, compared with 437.93 billion yen a year earlier.
Its output in the nine-months increased 3.8% to 24.3 million tonnes on strong demand from Japanese carmakers and other manufacturers.
The company will review its full-year profit target of 600 billion yen in early March after taking into account the impact of price rises on its business.
The mean estimate of 15 analysts in Reuters Estimates is for a 623.11 billion yen profit for the year to March 2008.
Its nine-month net profit nudged down 0.1% to 263.06 billion yen.
Nippon Steel stock sharply underperformed global steel stocks in 2007.
The shares rose 1.2% last year, but South Korea’s POSCO and ArcelorMittal, the world’s biggest, both jumped more than 80%. The stock of China’s Baoshan Iron and Steel Co more than doubled.
Japan’s benchmark Nikkei average declined 11%, while the iron and steel index fell 4.2% in 2007.
On Monday afternoon, the company’s stock was down 7.8% at 638 yen, compared with a 3.7% fall in the Nikkei 225.