Japan: Tokyo Steel’s profit declines y-o-y in Q1FY’25 amid challenging market conditions

• Margins narrow as steel prices drop more than scrap
• Capex rises due to CRC line modifications at Okayama

Japan Metal Daily: Tokyo Steel has announced its non-consolidated financial results for the April-June period, revealing a significant decline in profits due to narrowing margins and a lower steel sales volume. The company’s ordinary profit fell by 48.1% y-o-y to JPY 5.3 billion, while net sales decreased by 21.4% y-o-y to JPY 73.9 billion.

According to Yuji Komatsuzaki, Director and Managing Executive Officer, the decline in steel sales was substantial, although shipment volumes, unit sales prices, and steel scrap tags were largely in line with expectations. Steel sales volume decreased by 73,000 tonnes (t) y-o-y to 746,000 t, with exports increasing by 5,000 t to 137,000 t.

Notably, margins narrowed y-o-y due to a steep drop in steel prices, which exceeded the decline in raw material costs. This was a major contributor to the decline in profits. The unit price of steel products sold decreased by JPY 14,200/t y-o-y to JPY 96,200/t, while purchase prices of steel scrap fell by JPY 10,000/t to JPY 43,300/t.

Despite the challenges, Tokyo Steel remains committed to its growth strategy, with capital expenditure increasing by JPY 1.9 billion y-o-y to JPY 7.1 billion, primarily due to investment in line modification for cold-rolled coil production at the Okayama plant.

Outlook

Given the current market conditions, Tokyo Steel is likely to face continued pressure on its profit margins. However, the company’s efforts to optimise its production and sales strategies, along with investments in new technologies, are expected to support its long-term growth and competitiveness in the steel industry.

Note: This article has been written in accordance with a content exchange agreement between Japan Metal Daily and BigMint.