Japan’s Sumitomo Metal Mining Co Ltd posted a 52 percent jump in half-yearly pre-tax profit on Thursday but cut its full-year forecast, blaming lower-than-expected metal prices amid the U.S.-Sino trade spat, and reduced nickel output.
“It doesn’t seem that there will be a quick settlement in the U.S.-China trade conflicts, which suggests no quick recovery in prices of metals,” Kunihiko Miyamoto, deputy manager of Sumitomo Metal Mining, told a news conference.
Pre-tax profit rose to 73.21 billion yen ($644 million) for the six months through September, bolstered by increases in prices of copper, nickel and cobalt from a year earlier, and a one-off gain from the sale of its stake in Pogo gold mine in Alaska.
But the Japanese miner and smelter slashed its pre-tax profit prediction for the year to March 31 to 107 billion yen from its May guidance of 121 billion yen as it lowered its assumed prices of metals such as copper and nickel.
The revised figure missed a consensus estimate of 138.1 billion yen in a poll of 11 analysts by Refinitiv.
Sumitomo Metal now expects an average copper price of $6,294 per tonne for the current financial year, against its May estimate of $6,500, and nickel price $5.89 per pound against its earlier forecast of $6.
The company said boiler and other system troubles at its Taganito nickel ore processing plant in the Philippines earlier this year reduced its refined nickel output to 28,200 tonnes from 30,967 tonnes a year earlier.
“We missed to fully benefit from higher metal prices in the first six months due to lower production of nickel,” Miyamoto said.
The company also trimmed its annual dividend forecast to 89 yen per share from its May estimate of 103 yen as it cut its profit forecast.
Sumitomo Metal has made a series of investments over the past four years to boost capacity of the nickel-cobalt-aluminium (NCA) cathode materials used in Panasonic Corp’s lithium-ion battery that powers Tesla Inc’s Model 3 and Model X.
Sumitomo Metal’s estimated profit from materials businesses for the year is unchanged from its May estimate, the company said.
