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TOKYO : Nippon Steel Corp. said on Tuesday its first-half net profit rose 7.5 percent, keeping it on course for another record year thanks to strong demand in emerging economies for its high-end steel.
The Japanese company, which became the world's second largest steelmaker after last year's creation of the Arcelor-Mittal behemoth, predicted further growth in its bottom line despite a slight slip in interim operating profits.
Nippon Steel said it was putting more production facilities on line and teaming up with foreign partners as it keeps up its focus on making medium-high grade steel used to build cars, airplanes and machinery.
"Demand for high-grade steel products continued to expand at a rapid pace, while demand for common-grade steel products remained firm," Nippon Steel executive vice president Kiichiro Masuda said at a news conference.
Nippon Steel said in a statement that global steel consumption "is likely to continue to grow rapidly," driven by demand in the so-called BRIC emerging countries of Brazil, Russia, India and China.
Nippon Steel noted that the industry has been "reshaped" by consolidation, most notably Indian-born magnate Lakshmi Mittal's takeover of Arcelor.
"Against this backdrop, Nippon Steel seeks to raise its corporate value as the number one global steelmaker focusing on medium-high grade steel," the statement said.
The Japanese steelmaker also benefited as rising prices increased contributions from its affiliates, most notably Brazil's biggest steel producer Usinas, in which the Japanese firm is the top shareholder.
Nippon Steel said its net profit rose 7.5 percent to 176.4 billion yen (1.54 billion dollars) in the six months to September from a year earlier.
Revenue gained 16.8 percent to 2.3 trillion yen while operating profit slipped 0.7 percent to 264.4 billion yen as prices jumped for raw materials used in making steel.
Nippon Steel said demand was growing for steel across the world including in Japan.
But it voiced concern that consumption may start to slow in the United States due to the sub-prime loan crisis.
Nippon Steel maintained its forecast for net profit to grow 4.0 percent in the full year to March to 365 billion yen, for a fourth straight record year.
Operating profit is expected to hold steady at 580 billion yen.
However, the company revised down a notch its revenue forecast. It now expects sales of 4.75 trillion yen, below an earlier forecast of 4.80 trillion yen, although it would still mark year-on-year growth of more than 10 percent.
Japan's fourth largest steelmaker Kobe Steel said separately that its first-half net profit fell 8.8 percent to 47.01 billion yen, hit by higher procurement costs for basic materials such as coke.
Nippon Steel, Sumitomo Metal Industries and Kobe Steel also announced plans to expand their use of each other's steel production facilities and consider increasing their cross shareholdings as global competition heats up. - AFP/de
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