Japan's biggest steelmaker, Nippon Steel Corp., reported on Thursday its first-quarter net profit fell 4.5 percent as surging costs of raw materials such as coke and ore hurt margins.

But the company lifted its full year to March 2009 earnings guidance after raising prices of its products and amid brisk demand.

The company posted net profit of 82.76 billion yen ($766.3 million) for the three months ended June, down from 86.7 billion yen a year earlier.

Pretax profit fell 3.1 percent to 144.09 billion yen.

Revenue rose 7.1 percent to 1.20 trillion yen.

In April Japanese steelmakers agreed with BHP Billiton and other mining companies to triple the price for a ton of caking coal to $300 for fiscal 2008, and concluded price hikes of 65 percent to 96.5 percent for iron ore, which will push up the industry's material purchasing costs by more 3.5 trillion yen.

For the full year, Nippon Steel forecasts net profit of 255 billion yen, pretax profit of 450 billion yen and revenue of 5.5 trillion yen, compared to earlier projections for net profit of 210 billion yen, pretax profit of 370 billion yen and revenue of 5.40 trillion yen.

The company also raised its first-half forecasts, now projecting net profit of 130 billion yen, pretax profit of 210 billion yen and revenue of 2.64 trillion yen, compared to net profit of 70 billion yen, pretax profit of 130 billion yen and revenue of 2.60 trillion yen as seen earlier. – Thomson Financial