Nippon Steel Boosts Profit Forecast by 32% on Strong U.S. Steel Performance

Nippon Steel Corp. has significantly upgraded its full-year net profit forecast by 32%, citing stronger-than-expected earnings from its U.S. Steel subsidiary and a robust American steel market. The revision underscores the early financial benefits of the landmark acquisition for Japan's top steelmaker.

U.S. Unit Drives Profit Upgrade

The company announced Tuesday it now expects a net profit of 290 billion yen ($1.84 billion) for the full fiscal year, a substantial increase from its previous guidance. The upbeat forecast follows a strong first quarter, where Nippon Steel posted a net profit of 75.30 billion yen, reversing a 195.83 billion yen net loss from the same period last year, which was impacted by a one-off loss.

"U.S. Steel drove our group earnings," Chief Financial Officer Takahiko Iwai said at a news conference. The company also raised its underlying business profit forecast for U.S. Steel for the fiscal year ending March 2027 to 180 billion yen or more, a significant jump from its May prediction of 100 billion yen.

Favorable Market Conditions

Reflecting strength in the American market, Nippon Steel raised its full-year price assumption for U.S. hot-rolled coil by $100 to a range of $1,000-$1,100 per short ton. Iwai also noted that operational efficiency improvements at the U.S. unit contributed to the higher profits.

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Other factors supporting the revised outlook include an expected increase in inventory valuation gains, driven by the yen's weakness against the U.S. dollar and rising raw material costs. However, the company noted that the Middle East conflict is expected to have a 60 billion yen negative impact for the full year.

Domestic Challenges Persist

In contrast to its international success, the company reported that profits from its domestic operations in Japan remain stagnant. Iwai stated that Nippon Steel aims to pass on higher raw material and fuel costs to its domestic customers.

He added that recent anti-dumping measures imposed by the Japanese government could provide a tailwind for the local market. If the measures successfully curb imports of cheap steel, it may become possible to see stronger domestic prices, according to the CFO.