Kobe Steel of Japan Boosts Annual Profit Projection to an Astounding $840 Million Record High

Well, what a day in Tokyo! Japan’s own Kobe Steel, stock symbol TYO:5406, if you’re into that sort of thing, just cranked up their net profit outlook for the current fiscal year. And we’re not talking pocket change, folks! We’re looking at a stratospheric figure of 120 billion yen ($839 million) in expected profit. Yeah, you heard that right! This good news comes courtesy of anticipated high selling prices and low fuel costs, which Kobe Steel happily announced on a bright Tuesday.

This isn’t some minor adjustment either. The forecast saw a hefty boost of 20 billion yen from the last estimate, and when you compare it to last fiscal year’s 72.5 billion yen in net profit, well, it’s clear that Kobe Steel is going places! And did I mention they’re the third largest steelmaker in Japan?

Now, you might be thinking – what about the sluggish recovery in demand in the IT and semiconductor sectors or the reduced overseas production of Japanese auto manufacturers, considering the rise in China’s electric vehicle production? Fair question, but fear not! The company reassures us that lower procurement costs should nicely balance out these little hiccups.

Let’s wind back to the first quarter of the current fiscal year. Kobe Steel was all smiles then, reporting a net profit increase of 21% to 25.4 billion yen. That was thanks to a robust steel metal market and low coking coal prices that nicely counterbalanced the dip in steel and aluminum rolled products’ sales.

And to top it all off, the company’s board of directors have decided to put more money in shareholders’ pockets by raising the dividend payout ratio target to about 30% of net profit. That’s a significant hike from the current 15% to 25% range. This generous move translates into an interim dividend of 45 yen per share, resulting in a whopping 90 yen annual dividend for the 2023 fiscal year.

In comparison, Nippon Steel, Japan’s top steelmaker, had a bit of a tough week. They reported a 23% drop in net profit in the first quarter of the 2023/2024 fiscal year. But, hey, it’s not all gloomy! They also upped their full-year forecast by 8%, banking on higher-than-expected margins as raw material prices take a tumble.

So, to put a bow on it, today’s exchange rate is $1 for 143.0200 yen. That’s a day in the life of steelmakers in Japan!