TOKYO: Nippon Steel on Friday (May 9) forecast a 43 per cent decline in net profit for the current fiscal year amid a deteriorating business environment and increased tariffs in the US, where it said authorities are still reviewing its bid to buy US Steel.
Japan’s biggest steelmaker estimated profit for the year through March at over ¥200 billion (US$1.4 billion).
That compared to the year earlier’s ¥350.2 billion which was 36 per cent down on year though still above the ¥334.3 billion average of analyst estimates compiled by LSEG.
“The trend of the (US) tariff policy … is currently unforeseeable and its indirect impact on Nippon Steel … may be enormous,” the company said in an earnings release.
However, direct impact is likely to be limited as exports to the US are hard-to-substitute small-volume products, it said.
Nippon Steel’s US$15 billion bid for US Steel, rejected by former US President Joe Biden, is under review.
On Friday Nippon Steel said the parties “are taking all necessary steps to ensure that the transaction closes” though there can be no guarantee it will.
US President Donald Trump, who took office for the second time on Jan 20, began his term saying he “wouldn’t mind” if Nippon Steel bought a minority stake in US Steel. Such a scenario would require an overhaul of the deal structure.
In March, Trump directed the Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investment for national security risk, to look again at the bid to determine whether “further action” would be appropriate.
Nippon Steel is “fully cooperating with the review process to obtain approvals”, the Japanese steelmaker said on Friday.
Vice Chairman Takahiro Mori, speaking to reporters on Friday, said he expects CFIUS to make a recommendation on the deal to Trump by May 21 and the president to decide whether to approve by Jun 5.
