8:00AM New York - JFE Holdings reported net income in the year ended March 31st dropped 12.6% from 299 billion yen last year to 261 billion yen

Quarterly business review

JFE Holdings reported that net sales in the year ended March 31st rose 8.6% to 3.5 billion yen from 3.2 billion yen a year ago.

For the year, net income fell 12.6% to 261 billion yen from 299 billion yen a year ago. Diluted earnings per share in the period fell to 423.04 per share from 492 per share a year ago.

Operating income dropped 2.1% to 502 billion yen from 513 billion yen a year ago.

Business Review

JFE’s fiscal year ending March 31 marked the midpoint of the Second Medium-Term Business Plan that seeks to facilitate the company’s organic growth.

In the year the company’s crude steel business rose over the previous year to 34.27 million tons, buoyed by strong demand from the domestic manufacturing and robust exports of high-end products.

Resultantly, net sales advanced to 3,203.3 billion yen on higher sales volumes, particularly of high-end steel, and also higher sales prices.

Expanding sales volumes, higher prices and JFE Holdings deliberate efforts to reduce costs helped trim losses caused by the adverse effects of high raw materials costs and an increase in depreciation charges as a result of amendments to the Japanese tax code.

Net sales in the engineering business gained to 31.42 billion yen as sales to the private sector improved. However, the business registered a loss of 11 billion due to increasing raw material costs, equipment and construction costs and additional outlays for some private-projects in new business fields.

For the year, the urban development business segment’s net sales dropped to 25.5 billion from a year earlier as low condominium delivery volumes took their toll on the business performance.

In addition, net sales in the LSI business fell marginally from a year earlier to 42.9 billion yen.

On the overall, consolidated net sales topped 3,539.8 billion yen in the year.

The steel maker further experienced an extraordinary loss of 51.3 billion yen as the estimated costs to be incurred during the next fiscal year and beyond from anticipated future losses throughout the life of contracts entered into by an environmental solutions/services subsidiary for the construction, delivery and long-term operation and maintenance of certain kinds of waste disposal plants.

JFE projects

In March 2008, JFE Holdings acquired shares in Universal Shipbuilding Corporation, a 50-50 joint venture between Hitachi Zosen Corporation and JFE Engineering Corporation, making it a subsidiary.

Outlook

JFE said for the fiscal year to March 2009 the company will be compelled to seek substancial price revisions from its customers, as it anticipates an unprecedented increase in raw materials prices, reflecting the global-scale boom in steel demand.

“The company is currently in the process of negotiating revised steel prices and has foregone publication
of results forecasts for this sector because reasonable forecasts cannot be calculated at this time.