Japanese Steel Manufacturer JFE Focuses on Overseas Investment Amid Slower Profit Growth
In February, JFE announced a 10% average increase in steel product prices starting from April to reflect rising raw material costs and global inflation.
JFE Holdings, Japan’s second-largest steel manufacturer, plans to enhance its overseas investments as part of a long-term effort to double its profits. The company revealed this strategy on Tuesday while reporting an annual net profit increase of 21.4%, although it also projected a smaller profit growth for this year.
JFE President Yoshihisa Kitano, who took office on April 1, stated he would expedite the company’s strategic shift from quantity to quality. However, he did not provide a specific timeline for doubling the operating profit, only indicating it would take more than 3-5 years.
"Increasing overseas earnings is essential for our goal to double profits," Kitano emphasized, highlighting potential business growth in North America, India, Indonesia, and the Middle East.
"We will discuss detailed plans... but we want to consider active overseas investments," he added during a press conference.
JFE's rival, Nippon Steel, aims to complete a $14.9 billion acquisition of US Steel, although the deal faces opposition from some US lawmakers concerned about national security and union worries over job cuts.
JFE's net profit for the fiscal year ending March 31 was ¥197.4 billion ($1.28 billion), surpassing analysts' average forecast of ¥194.90 billion in an LSEG poll, thanks to higher steel margins. The steel manufacturer forecasts a net profit of ¥220 billion for this fiscal year, supported by higher contributions from value-added products and stronger selling prices. However, this figure falls short of LSEG analysts' consensus estimate of ¥231.5 billion.
JFE plans to expand sales of electrical steel sheets for electric vehicles and steel plates for offshore wind power equipment, leveraging Japan’s ongoing efforts to achieve a carbon-neutral economy by 2050.
In February, JFE announced an average 10% increase in steel product prices from April to reflect rising raw material costs and global inflation.
The company expects its unconsolidated crude steel output for this fiscal year to remain at 23.4 million tons, similar to last year. It also noted that while domestic automotive operations are expected to be robust, labor shortages and rising raw material costs continue to drive demand recovery.
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