By Katya Golubkova and Yuka Obayashi
TOKYO (Reuters) -Nippon Steel revised on Friday its forecast for the full fiscal year to a 40 billion yen ($266 million) loss from 200 billion yen profit previously, mostly due to charges related to its acquisition of U.S. Steel.
In June, Nippon Steel, Japan’s biggest steelmaker, closed its $14.9 billion acquisition of U.S. Steel after an 18-month struggle to obtain U.S. government approval for the deal, which faced scrutiny due to national security concerns.
Nippon Steel said that the annual results will be hit by a one-off loss tied to the U.S. Steel deal, in particular a loss of 231.5 billion yen related to the transfer of its 50% stake in joint venture AM/NS Calvert to partner ArcelorMittal, and some other factors.
U.S. Steel will be consolidated for the nine months from July to March 2026 and contribute 80 billion yen to Nippon Steel’s business profit in the current year, followed by 150 billion yen next year as its Big River 2 plant begins operations, Vice Chair Takahiro Mori said.
“We aim for U.S. Steel’s contribution to reach 250 billion yen soon after fiscal 2028, driven by the expansion of high value-added products, and further enhanced by synergies from $11 billion in capital investment,” Mori said.
“By transferring our advanced technologies such as non-directional electromagnetic steel sheets, U.S. Steel’s earnings will likely improve significantly,” Mori said.
The company will formulate action plans for U.S. Steel this month, which will be reflected in Nippon Steel’s next mid-term management plan to be mapped out later this year, he said.
On Friday, Nippon Steel posted a net loss of 195.8 billion yen for the three months ended June 30, wider than analysts’ estimate of 25.7 billion yen loss, according to an LSEG poll. A year earlier, it reported quarterly a net profit of 157.56 billion yen.
Nippon Steel also decided to conduct a stock split at a ratio of five shares for every one share effective from October 1.
Last month, global rating agency S&P downgraded Nippon Steel to ‘BBB’ from ‘BBB+’ with a ‘negative’ outlook, citing an increasing financial strain following the U.S. Steel deal.
($1 = 150.5400 yen)
(Reporting by Katya Golubkova and Yuka Obayashi; Editing by Jacqueline Wong and Emelia Sithole-Matarise)
