Kobe Steel posted an income loss of more than 50% in its first quarter results.

Overall net income in Q1 was JPY9.8bn ($132M) from JPY19.9bn ($250M) the year before. It blamed a slowdown in the economy as a result of the earthquake and tsunami in March this year.

It said Japan’s economy generally remained weak in Q1 (April-June period) and that factory output in the automotive industry especially had dropped significantly.

In overseas markets on the other hand, the USA and Europe continued to gradually recover. Although China’s economic tempo had gradually slowed, it continues to steadily grow.

It said sales of hydraulic excavators in the Kobe Steel Group increased sharply in comparison to the same quarter last year owing to strong demand in China after the Chinese New Year in February.

In its Iron & Steel Business demand for steel products from the automotive industry was weak. Steel shipments were lower than the same period last year.

Sales of steel castings and forgings decreased in comparison to the same period last year due to lower sales prices to the shipbuilding industry.

Ordinary income went down JPY10.4bn ($133.6M) compared with the same period last year to JPY3.3bn ($42.3M).

It forecast strong demand in its steel section for fiscal 2011, ending March 2012 as the world economy improves and the effect of the earthquake lessens.

In Japan, automobile sales, which dropped sharply after the earthquake, are anticipated to return to normal after Q2. It forecast overall net income of JPY20bn ($256M) for the fiscal year.