Tokyo Steel's Q3 Financial Performance: Profit Decline and Lower Steel Production
Tokyo Steel, one of Japan's leading steel producers, has announced its interim consolidated financial results for the third quarter ending December 31, 2024. The company’s net profit for the quarter reached JPY 16.86 billion ($108.67 million), representing a decrease from JPY 22.15 billion reported in the same quarter of the previous year. This marks a significant drop in profitability, reflecting ongoing challenges in both domestic and international steel markets.
Revenue and Operating Profit: Decline Amid Market Struggles
The company's sales revenue for the third quarter amounted to JPY 254.71 billion ($1.64 billion), a decrease of 7.9% compared to the previous year. Similarly, Tokyo Steel's operating profit stood at JPY 23.51 billion ($151.56 million), down from JPY 30.16 billion in the same period in 2023. The decline in both sales and operating profits reflects the broader difficulties in the steel industry, driven by fluctuating demand and global supply chain disruptions.
Steel Production and Sales: Reduced Output and Shipments
Tokyo Steel's steel production for the third quarter was 2.22 million metric tons, which represents a decline of 11.3% compared to the same period in the previous year. The company’s steel sales amounted to 2.40 million metric tons, a decrease of 6.5% year on year. This reduction in both production and sales is a result of various factors, including global market uncertainty, fluctuating demand, and delays in domestic construction projects.
Tokyo Steel also reported that its product shipments had recovered in the third quarter following the disruptions caused by typhoon weather in the previous quarter. However, despite this recovery, the company remains cautious about the market outlook, citing unpredictable conditions, particularly in relation to steel exports from China and the ongoing sluggish demand within the domestic construction sector.
Market Outlook: Uncertainty Due to Chinese Exports and Domestic Delays
Looking ahead, Tokyo Steel has expressed concerns about the ongoing uncertainties facing the steel industry. A key factor contributing to this uncertainty is the level of steel exports from China, which continues to impact global pricing and competition. Additionally, delays in domestic construction projects have resulted in weaker demand for steel, further exacerbating the challenges faced by the company. Despite these challenges, Tokyo Steel expects to see some recovery in the market as conditions stabilize, particularly after the impact of the typhoon subsides.
Full-Year Projections: Conservative Forecasts Amid Market Challenges
For the full financial year 2024-25, Tokyo Steel has revised its forecast. The company expects its net profit to total JPY 29 billion, down from the previous projection. In addition, the company anticipates its sales revenues will reach JPY 323 billion, while its operating profit is forecast to be JPY 28 billion. These projections reflect the ongoing challenges in the global steel market, including competition from Chinese exports and subdued domestic demand.
