Dive Brief:
- U.S. Steel has emerged as a major growth driver for Nippon Steel following its acquisition last summer. Higher domestic steel prices and operational improvements last quarter helped the segment partially offset sluggish demand overseas and market uncertainty in the Middle East.
- U.S. Steel generated 32.2 billion yen ($204.5 million) of underlying business profit during the three months that ended June 30. That represented nearly 30% of Nippon Steel’s underlying business profit. The segment is expected to continue driving earnings growth through next year.
- Nippon Steel on Tuesday raised U.S. Steel’s fiscal year 2026 business profit guidance to 180 billion yen ($1.14 billion) compared to a previous forecast of 100 billion yen. The Japan-based company attributed the revision to the full benefits of a blast furnace restart and market recovery in the United States.
Dive Insight:
Nippon Steel’s bet on the U.S. steel market is starting to pay off.
After taking a loss of 5.6 billion yen ($35.5 million) related to U.S. Steel in fiscal year 2025, earnings have rebounded in recent months from a market recovery as U.S. tariffs push steel prices higher and demand remains stable.
These factors offset challenges Nippon Steel faced during the quarter, including higher raw material and fuel costs, as well as a decline in steel exports to the Middle East — which the company said has begun to impact its Japan results.
Nippon Steel reported revenue of 2.8 trillion yen ($17.94 billion), up 40.4% from the same period last year, driven by higher steelmaking and steel fabrication results. Meanwhile, its business profit increased 50% to 145.5 billion yen ($924.7 million).
The company also posted an underlying business profit of 108.4 billion yen ($688.7 million), down from 173.6 billion yen a year ago. Underlying business profit, which excludes inventory valuation impacts, is recognized by Nippon Steel as a more accurate measure of profitability.
Despite cost and export challenges, the company is bullish on its full-year guidance driven by investments in Europe and the U.S. Nippon Steel updated its full-year forecast to surpass 700 billion yen ($4.45 billion) in underlying business profit, citing U.S. Steel as a major growth driver. That is up from 650.4 billion yen last year.
Nippon Steel plans to invest $11 billion in the U.S. by the end of 2028 with a focus on improving U.S. Steel throughput, energy efficiency, productivity and quality, according to its earnings presentation. This commitment was a key part of the $14.9 billion acquisition of U.S. Steel, which was approved in June 2025.
The company has spent $3.7 billion of its multiyear goal, as of Aug. 4. It is scheduled to finish relining a blast furnace and upgrading a hot strip mill in Gary, Indiana by the end of August and September, respectively.
Nippon Steel is also in the process of constructing a direct reduced iron plant in Osceola, Arkansas, as well as installing a slag recycler and hot strip mill at U.S. Steel’s Mon Valley Works across Pennsylvania. Most recently, the company moved to expand an existing quench and tempering line in Fairfield, Alabama.
