Nippon Steel Flags Profit Decline as U.S. Market Weakness Hits Results

Post by : Bianca Suleiman

Japan’s largest steel producer, Nippon Steel, has warned investors of a roughly 14% reduction in underlying profit for the current fiscal year, attributing the downgrade to a challenging U.S. market environment and rising operating expenses. The company now projects core profit of 680 billion yen ($4.5 billion) for the year ending March 2026, down from 793.7 billion yen a year earlier.

The firm said its forecast deliberately omits the results of U.S. Steel, which Nippon Steel acquired in June in a deal valued at about $15 billion. Executives explained the excluded unit reflects unexpectedly weak demand in the United States, cost increases tied to equipment, and broader uncertainty in the region.

U.S. Steel accounts for almost 40% of Nippon Steel’s worldwide crude steel capacity, which totals around 66 million tonnes a year. Management continues to view the takeover as a strategic move toward a long-term production objective of 100 million tonnes annually.

Earlier this week, U.S. Steel laid out a $14 billion, multi-year investment programme with support from Nippon Steel, including about $11 billion planned through 2028. Nippon Steel says these capital commitments should bolster U.S. operations over time, even as near-term earnings are pressured.

For the six months to September, Nippon Steel recorded a loss of 113.4 billion yen, a reversal from a 243.4 billion yen profit in the same period last year. The company also adjusted its full-year net loss forecast to 60 billion yen—around 50% worse than its prior estimate—after recognising a 21 billion yen hit tied to its exit from Brazilian producer Usiminas.

To shore up resilience, Nippon Steel is refocusing on priority growth markets such as the United States, India and Thailand while divesting non-core holdings to cut exposure. The disposal of its minority stake in Usiminas to partner Ternium is part of that portfolio realignment.

While acknowledging short-term setbacks, Nippon Steel maintains its commitment to international expansion and decarbonisation efforts, arguing that sustained investment — particularly in the U.S. — will ultimately restore profitability and reinforce its global market position.