Japan's top steelmaker says net profit shrinks

(MENAFN- AFP) Nippon Steel & Sumitomo Metal, the world's number two steelmaker, said Thursday its quarterly net profit dropped by nearly 25 percent owing to falling global prices for the commodity.

The Japanese company's April-June net profit came in at 48.34 billion yen (470 million yen), although its profit in the same period the previous year was partly boosted by one-time gains.

But strong demand at home and abroad saw sales rise 5.8 percent to 1.36 trillion yen, it added.

Operating profit grew 6.4 percent to 59.63 billion yen, the company said.

The firm said its bottom line was pressured by intensifying competition in the global steel market, with Chinese mills boosting production, as it also pointed to weakness in its chemicals division.

"Profits in the chemicals business decreased markedly over the previous fiscal year due to... periodic (equipment) repair and the impacts of a decrease in demand in the styrene monomer market," it said in a statement.

Styrene monomers are widely used to make plastics.

Steel demand in Japan was generally robust but orders from the civil engineering and construction sectors softened, said the firm, which was created through a 2012 merger.

But "there were signs of improvement in demand from manufacturing industries on the back of a recovery in capital expenditure and business confidence," it added.

"Exports steadily recovered, mainly due to a mild recovery in the global economy."