TOKYO (Reuters) – Japan’s second-biggest steelmaker, JFE Holdings, lowered its forecast for annual net profit by 37%, hit by slow demand for building materials at home and a slumping Asian market amid growing exports from China.
The company now predicts net profit of 130 billion yen ($844 million) for the fiscal year to March 31, down from its August estimate of 205 billion yen.
JFE also cut its annual dividend forecast to 100 yen a share from its August forecast of 110 yen, while reducing its crude steel output plan on parent-basis to 22.4 million metric tons, down 0.6 million tons from its earlier estimate.
“Demand for building materials in Japan is expected to weaken further in the second half, due to rising construction costs and labour shortages,” Executive Vice President Masashi Terahata told a news conference.
“In overseas, China’s oversupply and rising exports have deteriorated steel market in Southeast Asia … We are feeling a sense of crisis,” he said, adding that the market was not likely to recover before next March.
Net profit for the six months ended on Sept. 30 fell 61% from a year earlier to 42.49 billion yen.
Japanese steel industry sources have said weak domestic demand has encouraged China to offload its surplus stocks by offering competitive prices to overseas buyers.
Japan may take trade action if needed in response to growing steel exports from China, the world’s biggest steel producer, an official of its industry ministry said in October.
($1=154.0600 yen)
(Reporting by Yuka Obayashi; Editing by Clarence Fernandez)
