Taiheiyo Cement Corp is now expected to report a 38% drop in group pretax profit to around 42 billion yen for fiscal 2007, worse than the 28% drop to 49 billion yen that was previously projected.
Sales are seen dipping 2% to 920 billion yen due to lackluster cement orders for large public works projects such as roads and bridges. Private-sector orders, which has been driving growth, have been hurt by the drop in new plant and housing starts that resulted from tougher construction regulations that took effect in June.
Operating profit is now projected to fall 32% to around 52 billion yen, 4 billion yen below earlier estimates. Profitability has deteriorated as prices for coal, a raw material used to make cement, and the fuel oil used for shipments soared more than expected. Profit at the company’s U.S. subsidiary has come under pressure in the second half of the fiscal year due to the strong yen.
Taiheiyo Cement is still expected to raise its annual dividend by one yen to five yen per share this year.