Nippon Steel, Sumitomo Metal to Merge; Sony Sales Fall 1.4%

Nigel Thomas
03 Feb, 2011
New York City

Two largest steelmakers in Japan, Nippon Steel Corp and Sumitomo Metal Industries Ltd agreed to merge to form the second largest global steel maker. Rising input prices played a role in the merger. Mitsubishi UFJ Financial said nine-month net rose. Sony Corp third quarter revenues declined 1.4%.

[R]5:00 Tokyo – Two largest steelmakers in Japan, Nippon Steel Corp and Sumitomo Metal Industries Ltd agreed to merge to form the second largest global steel maker. Rising input prices played a role in the merger. Mitsubishi UFJ Financial said nine-month net increased. Sony Corp third quarter revenues declined 1.4%.[/R]

Nippon Steel Corp and Sumitomo Metal Industries Ltd agreed to merge as rising input costs force companies to cut costs. The merger labeled as the largest among industrial companies in Japan will get anti-trust scrutiny and may force several non-core operations to be divested.

Combined companies are estimated to have total revenues of 5.5 trillion yen and employee base of 75,000.

Rising coal, iron ore and energy costs have forced several steel companies in China and Europe to seek merger partners. China has been asking smaller and energy inefficient companies to merge as coking coal and iron prices have more than doubled in the last three years.

The Nikkei 225 Stock Average declined 0.3% to 10,431.36 and the broader Topix index fell 0.2% to 927.57.

Mitsubishi UFJ Financial Group Inc declined 1.8% to 436 yen after the largest Japanese bank reported nine-month net increased to 551.8 billion yen from 217 billion yen from the year ago period.

Credit costs in the period declined to 248.8 billion yen from 627.7 billion yen a year ago period as bankruptcies fell. Earnings per share increased to 38.39 yen from 17.47 yen and return on equity increased to 8.75% from 3.63%.

Non-performing loans ratio fell to 1.64% from 1.69% at the end of September quarter but higher than 1.5% at the end of March quarter.

Sony Corp said third quarter revenues declined 1.4% to 2.2 trillion yen and adjusted operating income fell 5.9% to 137.5 billion yen. For the nine-month period sales increased 1.8% to 5.6 trillion yen.

Sales at consumer products increased 4.2% to 1.09 trillion yen and Sony Music sales declined 14.5% to 139 billion yen. Network products segments sales that include gaming devices fell 6.4% to 566 billion yen.

Stock Movers

The office equipment maker Ricoh dropped nearly 10% to 1,053 yen after it reported fiscal third quarter earnings of 7.83 billion yen. The sharp drop in earnings surprised analysts.

Fast Retailing Co gained 3.7% to 12,709 yen after the company indicated sales at its retail chain Uniqlo rose. The increase in sales was driven by winter apparel and other goods.

Credit Saison fell 1.8% to 1,451 after media report in Nikkei newspaper said that operating profit at consumer lender for the period ending in December declined 45% from a year ago.

Konami plunged nearly 8% to 1,565 yen after the video game developer said earnings for nine-month period declined 9.5%.

Industrial and exporters declined. Fanuc Corp fell 3.5% to 12,390 yen and Panasonic Corp declined 3.1% to 1,090 yen.