Japanese metals producers continue to cut profit forecasts, with Sumitomo Metal Mining Co. and Mitsubishi Materials Corp. the latest to warn of the impact of China’s slowdown.
Sumitomo Metal slashed its operating profit forecast by 37 percent for the year through March, according to a statement Tuesday. Its shares fell as much as 9.5 percent, the most in four years. Mitsubishi Materials, which is less reliant on metals for revenues, saw its shares rise as it made a more modest reduction in its forecast of 2.4 percent and gave a rosier outlook on prices.
The companies’ outlooks underscore the challenges facing metals producers as demand slows in China, the world’s biggest consumer. Mitsui Mining & Smelting Co., and top steel mills Nippon Steel & Sumitomo Metal Corp. and JFE Holdings Inc., are among the firms to cut their full-year earnings forecasts in recent weeks.
Sumitomo Metal now expects a full year-operating profit of 74 billion yen ($600 million), after posting a 6.9 percent decline in the first half to 51.5 billion yen. It cited a significant fall in metals prices for the cut and warned that capital expenditure for the year would fall to 77.5 billion yen from 85.1 billion, according to its statement.
Mitsubishi Materials expects full-year operating profit at 83 billion yen, after a 6.3 percent increase in first-half operating profit to 36.2 billion yen.
At a briefing in Tokyo, Managing Director Nobuo Shibano indicated that copper prices, which are trading at six-year lows, may have bottomed after cuts to supply.
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