Japanese steelmaker Kyoei Steel announced its consolidated financial results for the April-June quarter. The company witnessed a decline of 19.1pc in its steel product sales over the period while total sales were at JPY49.67bn, down 21.1pc from the same period the prior year.
During the quarter, the product shipments dropped by 49,000mt from the same period prior year to 382,000mt. Their operating profit dropped by 10.6pc to JPY4.112bn and ordinary profit dropped by JPY4.018bn, down 7.1pc. According to a company release, the return on sales (ROS) was 8.1pc, up by 1.2 points.
The steelmaker has revised its forecast for consolidated performance for April-September, with expected steel sales of JPY100bn, down 19.4pc from the prior year period. The operating profit is estimated at JPY7bn, down 31.3pc along with JPY7bn of ordinary profit, down 28.4pc, JPY5bn in the net profit attributable to the parent company’s shareholder, down 16.8pc.
In the domestic market, the steelmaker recorded JPY26.767bn of sales, down by19.1pc from the same period last year.
Strong competition in the export market
In export markets, steel sales were at JPY20.41bn, down 26.7pc while operating loss was at JPY0.545bn due to lower price sales by Vietnamese competitors – the company had recorded JPY0.838bn of profit in the same period in 2019.
Drop in ferrous scrap prices
Japanese ferrous scrap prices dropped in the same period following weakened demand. The ferrous scrap unit price for procurement decreased by JPY7,100/mt or by around 10pc from the prior year. Nevertheless, the metal spread expanded by JPY3,900/mt or by around 10.3pc.
The company has expansion plans for developing a steel business in Vietnam and North America (US/Canada).
Amid COVID-19 pandemic, steel prices in Vietnam remained low due to international competition and oversupply since companies increased production. The business performance of the steelmaker, thus, remained poor for its Vietnamese plants in contrast to its business in the US due to favourable market conditions.
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