Japan’s largest steelmaker, Nippon Steel Corp (5401.T), has projected a 14% decline in annual profit before one-offs for the current fiscal year, citing significant challenges in the U.S. market. The company expects an underlying business profit of 680 billion yen ($4.51 billion) for the year ending March 2026, down from 793.7 billion yen in the previous fiscal year. The forecast excludes U.S. Steel, which Nippon Steel acquired in June for $15 billion, due to weaker-than-anticipated U.S. steel market conditions, rising costs, and “heightened uncertainty” in the region.
Despite short-term struggles, Nippon Steel remains committed to long-term investments in the U.S. market. Vice Chairman Takahiro Mori emphasized that while U.S. Steel’s current earnings structure is fragile, ongoing investments will improve profitability. U.S. Steel and Nippon Steel have jointly announced a $14 billion multi-year growth plan, with $11 billion to be invested by 2028. The Japanese firm anticipates potential annual synergies of $0.5 billion by 2030, though analysts at Jefferies warned that high capital expenditure and decarbonization efforts could pressure dividends and potentially necessitate a capital raise.
For the six months ending September, Nippon Steel reported a loss of 113.4 billion yen, compared to a profit of 243.4 billion yen a year earlier. The company now expects a fiscal year loss of 60 billion yen, 50% more than its earlier estimate, as it books a 21 billion yen loss from its exit from the Usiminas steel venture in Brazil. The firm’s stake in Usiminas will be transferred to Ternium, with Nippon Steel redirecting its focus toward key growth regions — the U.S., India, and Thailand — to mitigate further risks and strengthen its global footprint.
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