JFE posts Q1 profit, forecast misses expectations

TOKYO: JFE Holdings Inc returned to profit in the April-June first quarter, but its earnings were sharply down on the previous quarter, hit by a delay in pushing through price increases, and the world's 5th-ranked steelmaker gave only a cautious full-year outlook below consensus.

April-June recurring profit, before tax and one-offs, was 51.4 billion yen ($591 million), a turnaround from a 67.3 billion yen loss a year ago, but about 30 per cent below the previous quarter's profit. JFE predicted a profit of 220 billion yen for the full year to March 2011, well below a consensus of 310.5 billion yen in a poll of 18 analysts by Thomson Reuters.

Japanese steelmakers only applied the higher contract prices they agreed with domestic carmakers and other customers for part of the first quarter, while having to pay higher raw materials costs for the full April-June period.

In contrast, South Korean rival POSCO earlier this month posted its second-best quarterly profit after twice hiking its steel prices.

Shares in JFE, which generates nearly half its revenues from exporting to Asia's emerging economies, have fallen nearly 30 per cent since early April, double the fall in the benchmark Nikkei average, amid signs of slowing growth in China