TOKYO — Japan's five biggest steelmakers on Wednesday reported their worst operating results since the end of World War II.
Nippon Steel, Nippon Kokan, Sumitomo Metal Industries, Kawasaki Steel and Kobe Steel reported operating losses totaling $1.13 billion for the fiscal first half ended Sept. 30.
With the outlook for steel demand bleak and the yen unlikely to weaken much against the dollar, steelmakers will have little choice but to cut capacity and lay off workers starting early next year, industry sources said.
Once the envy of the world's steelmakers, the Japanese companies have been hammered by slow exports, low domestic prices and the strength of the yen, industry spokesman said.
The companies have not been selling much of their metal in the United States recently, and the strong yen means that even what they do sell does not earn them the profit it once did, they said.
Company officials said Japanese steelmakers were forced to sell off securities from their investment portfolios to help offset the poor performance of their steel sales.
As a result, actual losses during the period only amounted to $250 million, figures released by the five companies showed.
The companies reported profits of $566 million in the corresponding six-month period a year ago.
Crude steel production at the five companies slumped to 31.8 million tons from 34.8 million a year ago due to sluggish demand at home and abroad.
Japan's total crude steel output in the year ending next March 31 is expected to fall to about 95 million tons from 100.3 million last fiscal year, industry sources said.