Sumitomo Metal Industries Deepens Forecast for Full-Year Loss

By Masumi Suga and Yasumasa Song

July 30 (Bloomberg) -- Sumitomo Metal Industries Ltd., Japan’s third-biggest steelmaker, more than doubled its forecast for a loss this fiscal year because of a delayed recovery in export markets for its seamless pipes.

The company may post a net loss of 45 billion yen ($474 million) in the year ending March 31 compared with its April forecast for a 20 billion yen loss, Sumitomo Metal Industries said in a statement today. The first-quarter loss was 32.4 billion yen from net income of 43.5 billion yen a year earlier.

Sumitomo Metal joined larger domestic rivals Nippon Steel Corp. and JFE Holdings Inc. in reporting a loss as the industry cut excess inventories after the recession stifled demand for steel in cars, electronic devices, and buildings. ArcelorMittal, the world’s largest mill, yesterday reported a net loss of $792 million, missing analyst estimates for the quarter.

Sales in the first quarter fell 36 percent to 290.5 billion yen, the company said.

Sumitomo Metal Industries, Japan’s largest maker of seamless pipes, fell 5.1 percent to 240 yen as of 2:40 p.m. on the Tokyo Stock Exchange. The shares have advanced 11 percent this year.

Nippon Steel, the world’s second-largest mill, yesterday widened its first-half loss forecast by 33 percent to 80 billion yen saying Asian export markets were weaker than it had anticipated. The company had a net loss of 42.25 billion yen, compared with a profit of 82.8 billion yen a year earlier, and reiterated its break-even forecast this fiscal year.

JFE, Japan’s second-largest steelmaker, forecast a profit of 1.6 billion yen this quarter, compared with a loss of 41.6 billion yen in the three months ended June 30, based on figures derived from the half-year estimate released July 28. The company forecast full-year net income of 24 billion yen, 88 percent lower than a year earlier.

Japan’s crude steel production dropped 34 percent in June from a year earlier to 6.89 million metric tons last month, the Tokyo-based Japan Iron & Steel Federation said. That followed a 44 percent drop in April and a record 47 percent in March.

To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net; Yasumasa Song in Tokyo at ysong9@bloomberg.net.