Nippon Steel announces financial results for Fiscal Year 2014
The overall global economy continued to expand gradually in the term under review supported by slower but steady economic growth in China and the ASEAN countries, a bottoming out followed by signs of a recovery in business conditions in Europe, and ongoing recovery of business conditions in the United States.
The Japanese economy also showed signs of sustaining steady recovery supported by strong public sector investment, improving corporate earnings following the adjustment to the overvalued yen, rising capital investment associated with a recovery in production activities, and improving consumer sentiment and spending.
Domestic steel demand increased in the civil engineering and construction fields on continuing firm reconstruction demand and economic policies showing their full effects. Demand from the manufacturing industry also grew on the recovery in capital investment and an upturn in business confidence. Steel exports continued showing signs of recovery supported by improving economic conditions overseas and the yen adjustment, but market conditions for steel materials overseas remained severe amid ongoing stagnant demand for steel materials, caused by persistently strong supply pressure from Chinese and South Korean steelmakers.
In this business environment, the NSSMC Group continued steadily advancing the measures set forth in the Mid-Term Management Plan adopted in March 2013, including pushing forward with technical advances, achieving the industry’s highest level of cost-competitiveness to successfully compete with global competition, halting steelmaking and rolling- related equipment operations to construct the optimal production system, continuing to advance our global strategies, and reinforcing the composition of the steelmaking and steel fabrication group companies.
Operating Results by Business Segment for Fiscal 2013;
The NSSMC Group strived earnestly as every company in each segment responded to its changing business environment. An overview of operating results by business segment is shown below.
1. Steelmaking and Steel Fabrication
NSSMC took comprehensive steps to fortify the domestic manufacturing foundation of the steelmaking and steel fabrication segment, including repairing of the Yawata Works No. 4 blast furnace and other investments in equipment upgrades. The Company also took steps to stimulate technological advancement, including collaborating with customers to develop high-functioning products and integrating the manufacturing, sales, technology, and research divisions to enhance its ability to develop solution proposal for customers.
Measures were also implemented to formulate the optimal manufacturing system by integrating the technologies of Nippon Steel Corporation and Sumitomo Metal Industries, Ltd to increase the competitiveness of production lines while systematically integrating into the more competitive lines. In addition, NSSMC effected the integration and reorganization of the operating structure of its steelworks on April 1, 2014, and continued to integrate and reorganize its core Group companies with the aim of fortifying the domestic business base.
2. Engineering and Construction
Nippon Steel & Sumikin Engineering Company Limited is developing operations in the areas of steel production plants, environment, energy, offshore projects, pipelines and construction where it can fully apply its distinct capabilities. Amid recovering domestic demand and brisk overseas demand in the energy field, the company’s performance was supported by steady progress advancing projects and efforts to reduce costs and improve earnings. Although sales increased due in part to the yen adjustment, owing to factors such as a difference in the structure of orders and sales, the engineering and construction segment recorded net sales of JPY 314.1 billion and ordinary profit of JPY 17.7 billion.
3. Chemicals
Nippon Steel & Sumikin Chemical Company Limited recorded declines in the sales volumes of needle coke, due to sluggish demand for electrodes in Japan and overseas, and in circuit board materials and epoxy resins for electronic devices owing to intensifying market competition. Nevertheless, market conditions for styrene monomer and other general- purpose chemicals improved, demand for superior quality display materials was strong, and applications for organic EL materials in smart devices increased. The chemicals segment recorded net sales of JPY 230.1 billion and ordinary profit of JPY 10.0 billion.
4. New Materials
Nippon Steel & Sumikin Materials Company Limited recorded solid demand for surface treated copper wire, a material alternative to gold bonding wire, and other products in the electronic materials field. Demand increased for social infrastructure maintenance and reinforcement materials in the basic industrial materials and components field and from developing countries for metal substrates in the environmental and energy field. The company also accelerated the shift to production overseas and continued to develop and expand sales of new products. Although sales declined mainly due to lower sales of gold bonding wire, the sales mix improved, leading the new materials segment to post net sales of JPY 37.2 billion and ordinary profit of JPY 1.3 billion.
5. System Solutions
NS Solutions Corporation provides comprehensive solutions in the planning, configuration, operation, and maintenance of IT systems for customers in a wide range of businesses and develops leading edge solutions services to enhance customer capabilities amid changing business conditions. During the term, the company continued to strengthen and expand its cloud computing and other service businesses while expanding its business operations in Asia, including acquiring all shares of the system developer PALSYS Software Company Limited of Thailand. The system solutions segment recorded net sales of JPY 179.8 billion and ordinary profit of JPY 12.7 billion.
6. Sales and Income
Consolidated results in fiscal 2013 were boosted by increased steel demand, particularly in the civil engineering and construction industries and the automotive and other manufacturing industries, and from cost improvements, which included integration effects. The Company recorded JPY 5,516.1 billion in net sales, JPY 298.3 billion in operating profit, JPY 361.0 billion in ordinary profit and JPY 242.7 billion in net income.
Source - Strategic Research Institute