International Steel Mills

CRU: JFE looks to overseas expansion

Written by CRU

May 10, 2024

Japanese steelmaker JFE Holdings will invest abroad as part of a drive to lift income, says group president Yoshihisa Kitano.

“Boosting overseas earnings is essential to our goal of doubling profits… . We want to consider aggressive investments overseas,” he was quoted as saying by Reuters news agency. The potential growth areas he listed were North America, India, Indonesia, and the Middle East.

Other corporate goals are accelerating the group’s strategic shift from quantity to quality. As for doubling business profits, that would take more than three to five years, he said.

Kitano was speaking after JFE Holdings, parent company of JFE Steel, reported net profit of ¥197 billion ($1.28 billion) in the financial year ending March 31, up 21.4% on the previous 12 months. The group forecasts net earnings of ¥220 billion for the current fiscal year.

“Looking at the steel business environment in Japan, activity levels can be expected to remain robust in the automotive sector, while the impact of labor shortages and soaring materials prices can be expected to continue pushing back demand, particularly in the civil engineering and construction sectors,” JFE said in look-ahead commentary. “As such, the company expects demand for steel products to remain largely on par with fiscal 2023 levels.

“Overseas, the supply-demand balance for steel products continues to loosen and prices continue to stagnate owing to an increase in exports, such as from China, where the real estate sector is in a slump, and as such, the tough sales climate can be expected to persist for a while yet, although the economic stimulus measures and crude steel production control measures in China require close monitoring,” JFE said.

The company predicts its crude steel production will be a largely unchanged 23.4 million metric tons (mt).

“The business environment will be extremely challenging due to continued soft demand for steel products in Japan and overseas as well as sluggish conditions in overseas steel product markets. However, expected segment income of ¥205 billion should be on par with the current fiscal year due to efforts to shift from quantity to quality,” JFE added.

JFE’s sales revenue last year was ¥5.17 trillion, down 1.8% on the previous 12 months, with steel shipments slipping 4.1% lower to 20.8 million mt, while average realized prices were little changed at around ¥131,000/mt.

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