Nippon Steel profit up 47 pc, sees fall this year

Tokyo, Apr 28: Nippon Steel Corp., the world's third-biggest steel maker, posted a 47 percent gain in annual profit on Friday on strong sales of steel used in cars, but it forecast a worse-than-expected drop in profit this year.

The company, a big beneficiary of strong worldwide sales of Japanese cars, forecast a 16 percent fall in pretax recurring profit before special items to 460 billion yen (.03 billion) in the year to end-March 2007 in anticipation that car makers will not agree to large price hikes this year. Prices for quality sheet-steel rose about 10 percent last year.

The forecast compares with a mean estimate of 495.82 billion yen from 18 analysts polled by Reuters Estimates.

For the year ended March 31, Nippon Steel booked 547.4 billion yen in pretax recurring profit, up 47.4 percent over a year earlier, above a consensus estimate of 515.48 billion yen.

Like its Japanese peers, Nippon Steel continued to benefit from booming demand for high-quality sheet steel from domestic car makers and shipbuilders, which account for up to 85 percent of its business and helped it weather a plunge in price in the broader Asian market late last year.

The bearish forecast comes as European giants like Arcelor and Thyssen Krupp AG anticipate price rises and a bright year ahead after a run-down in inventories.

Shares in Nippon Steel rose 67 percent in the just-ended year, beating the Nikkei index, which rose 45.5 percent, but falling short of the sector index's 81 percent gain.

Reuters