Sumitomo Metal raises FY profit forecast on higher prices

Sumitomo Taganito Nickel Corporation Phillipnes

Japan’s Sumitomo Metal Mining on Wednesday increased its forecasts for full-year net profit and dividend thanks to stronger-than-expected prices of nickel, copper and gold.

Net profit is now predicted at 158 billion yen ($1.2 billion) for the year to March 31, up 15% from its November guidance of 137 billion yen, while an annual dividend forecast was raised to 202 yen a share from 175 yen.

“Higher profit contributions from overseas copper mines boosted earnings estimate of resource segment, and firmer nickel prices helped bolster profit outlook in smelting segment,” Executive Officer Kunihiko Miyamoto told a news conference.

But its net profit for the April-December period fell 10.2% from a year earlier to 152.8 billion yen due to smaller gains from mining following the sale of its stake in the Sierra Gorda copper mine in Chile last year.

“The electronic materials segment is struggling as the market is going through an adjustment of accumulated inventories,” Miyamoto said.

Asked about the impact of protests in Peru against the political leadership, Miyamoto said there had been no impact on production at the Cerro Verde copper mine, in which Sumitomo Metal owns a stake.

“It’s unclear what will happen to the political unrest and the operation on the mine may be affected depending on the situation,” he said.

Meanwhile, the Philippines is looking at taxing nickel ore exports to encourage miners in the world’s second-biggest supplier of the material – which is used in making stainless steel and batteries for electric vehicles – to invest in domestic processing instead of just selling raw ore.

Sumitomo Metal has two nickel processing plants, which are both partly owned by the Philippines’ biggest ore producer Nickel Asia Corp.

Asked whether Sumitomo Metal would expand its nickel business in Philippines, Miyamoto said securing nickel resources remained a top priority for the Japanese company and building a third plant there could be an option.

($1 = 130.9800 yen)

(By Yuka Obayashi; Editing by Robert Birsel)


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