TOKYO: Nippon Steel & Sumitomo Metal said Tuesday its net profit fell almost 12 percent in its fiscal year to March, as plunging oil prices led to losses at a Brazilian affiliate.
The Tokyo-based company, one of the world's biggest steelmakers, said its annual net profit came to 214.3 billion yen ($1.8 billion) and forecast weak market conditions for the year ahead.
But its operating profit grew 17.1 percent in fiscal 2014 from the previous year to 349.5 billion yen, helped by the weaker Japanese currency and lower prices of the iron ore used in steelmaking, while sales rose 1.7 percent to 5.6 trillion yen.
The company blamed part of the slump in earnings on an extraordinary loss at its seamless pipe maker Vallourec & Sumitomo Tubos do Brasil (VSB), which supplies the oil and gas market.
Energy companies around the world have been reining in investments since oil prices more than halved last year, but the industry has been hit particularly hard in Brazil where its top player, Petrobras, is facing a huge corruption scandal.
Nippon Steel also booked a loss tied to dismantling inactive facilities in Japan.
The company did not publish a profit estimate for fiscal 2015, which started this month, citing uncertainty over the price of steel products.
But it warned it would have to trim production, due to expected weakness in international markets.
"A projected moderate rise in demand in the ASEAN (Association of Southeast Asian Nations) region will be offset by a downturn in China, a slowdown in energy-related demand triggered by a sharp drop in the crude oil market and other factors," the company said.
"International market conditions will likely remain weak amid the persisting excessive supply of steel products in China and elsewhere in East Asia."
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