JFE Holdings, Japan’s second-largest steelmaker, plans to ramp up overseas investments as part of a long-term drive to double its profits, as it posted a 21.4% rise in annual net profit but flagged a smaller increase for this year.
JFE President Yoshihisa Kitano, who took the helm on April 1, said boosting overseas earnings is essential to the company’s goal of doubling its business profits, which he said would take more than 3-5 years. He highlighted the growth potential in North America, India, Indonesia, and the Middle East.
“We’ll discuss the detailed plans … but we want to consider aggressive investments in overseas,” Kitano told a news conference.
JFE’s net profit for the year ended March 31 came to 197.4 billion yen ($1.28 billion), slightly ahead of analysts’ average forecast. However, the company forecasted a profit of 220 billion yen for this financial year, falling short of the 231.5 billion yen consensus estimate.
To drive future growth, JFE plans to expand sales of electrical steel sheets for electric vehicles and steel plates for offshore wind power equipment, capitalizing on Japan’s efforts to achieve carbon neutrality by 2050. The company also announced a 10% average increase in steel product sale prices from April to reflect rising raw material costs and global inflation.
Domestically, JFE expects its crude steel output to remain flat this financial year, as robust activity in the auto sector is offset by labor shortages and soaring materials prices. Overseas, the company said the supply-demand balance for steel products continues to loosen, and prices remain stagnant due to increased exports, particularly from China.
The steelmaker’s shift in focus from quantity to quality, and its plans for aggressive overseas investments, come as it aims to double its business profits over the long term, despite the near-term slowdown in profit growth.