Japan’s Kobe Steel posted an 87% decline in fourth- quarter profit as raw material costs increased.

Net income fell to JPY5.7bn ($70M) in the quarter ended March 31 from JPY44.2bn ($540M) a year earlier, the Kobe-based company said. Rising costs for iron ore and coking coal squeezed profit margins.

Kobe Steel may incur a pretax loss from operations or see a ‘substantial drop’ in earnings at its steel division in the current quarter from the previous three months as it struggles to pass on increased costs on to buyers.

The company did not give a forecast for the year started April 1, saying it is unable to make a reasonable estimate because it has yet to determine the impact of this year’s earthquake, and shorter-term contract prices for coal and iron ore have made it difficult to fix costs.

Kobe Steel will have to cut crude steel output in the three months to June 30 from the previous quarter’s 1.9Mt, as the disaster disrupted production of cars due to shortages of parts.

For the year ended March 31, Kobe Steel reported full-year profit rose more than eightfold as booming economies in Asia fuelled demand. Net income rose to JPY52.9bn ($638.7M) in the 12 months ended March 31 from JPY6.3bn ($77.3M) a year earlier, the company said. Sales rose 11% to JPY1.86tri ($22.8bn).