Nippon Steel Corp, the world's third-biggest steel maker, said on Monday its first-half net profit more than doubled due to strong sales of high-quality sheet steel, and raised its already record-high annual earnings outlook.
The strong results, which outpaced guidance issued two months ago, come as the global steel market shows signs of recovery, prompting the world's second-biggest steel maker Arcelor and other giants to raise prices after facing excess inventories and slowing demand in July and August.
Japanese steel makers are also benefiting from booming demand for high-quality steel sheet used in cars and ships that accounts for up to 85 percent of their business.
Nippon Steel, a big beneficiary of strong world-wide sales of Japanese cars, booked a group net profit of 195.69 billion yen ($1.69 billion) for April-September, up from 81.04 billion yen in the year-ago period.
It raised its net profit outlook announced two months ago by 10 billion yen to 320 billion yen, compared with an average market expectation of 315 billion yen in a Reuters Estimates poll of 19 analysts.
Japanese steel makers are expanding production cuts due to a delay in inventory adjustments of some steel grades in Asia, but most big firms are expected to keep their record profit outlooks announced two months ago.
Nippon Steel's outlook was in focus after Chinese rival Baoshan Iron and Steel Co Ltd, or Baosteel, the world's sixth-biggest steel maker by volume, said on Sunday its profit growth slowed by half in the latest quarter.
A glut of steel production in China - also an important market for Nippon Steel - has forced Baosteel to cut prices, and analysts estimate the firm's fourth-quarter earnings will fall 26 percent from the third quarter.
Nippon Steel, which produced 33 million tonnes of crude steel in the last fiscal year, recently announced production cuts of 1 million tonnes in the second half, double the cuts that had been planned earlier.
Arcelor last week reported a slight increase in third-quarter core earnings, outpacing analyst expectations with a boost from its low-cost Brazilian business. The company reported 1.12 billion euros ($1.35 billion) in earnings before interest, depreciation and amortisation.
Chief Executive Buy Dolle said the company was able to increase flat steel prices by 10 to 40 euros per tonne in the fourth quarter, a rise from the previous quarter of 2-10 percent, depending on the region.
Shares in Nippon Steel, which last month hit a 12-year high of 457 yen, traded at 412 yen after the announcement, up 0.24 percent on the day. The Nikkei average was up 1.75 percent.
The stock climbed 57 percent during the six months, moving in line with the sector index, which rose 50 percent.
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