Nippon Steel said it anticipates U.S. Steel will produce profits exceeding 100 billion yen ($624 million) in the current year, reflecting a favorable U.S. market environment driven by higher domestic prices and import controls, Vice Chairman Takahiro Mori said.
"We are confident that U.S. Steel will be able to post profits in excess of 100 billion yen ($624 million) this year," Mori said, and he added that the market outlook through 2027 suggested further upside. Looking beyond the immediate horizon, Mori said U.S. Steel should be capable of delivering annual profits in the range of 300 billion yen to 400 billion yen once long-term improvements are realized.
In explaining the drivers behind the stronger U.S. performance, Mori highlighted a substantial price gap for hot-rolled steel sheet, with U.S. levels exceeding $1,200 per metric ton - more than double comparable prices in Asia - and the protective effect of import tariffs. To take advantage of that pricing environment, U.S. Steel brought an idled blast furnace in Illinois back into operation in March and is operating it at full capacity.
The comments come after Nippon Steel's completion of its $14.9 billion acquisition of U.S. Steel, a deal that closed after an 18-month period of political and regulatory scrutiny in Washington. Since the acquisition, Nippon Steel has seconded about 100 employees from Japan to the U.S. operation to work on a slate of operational changes.
Those staff are engaged on roughly 260 operational improvement initiatives intended to raise yields and capture synergies, Mori said. Separately, U.S. Steel's board has approved about one-third of the roughly $11 billion investment package Nippon Steel pledged to deploy through 2028, with expected returns that management projects could grow to approximately $3 billion per year by 2035.
Mori also outlined a broader overseas expansion target, saying Nippon Steel will keep pursuing growth outside Japan with particular focus on the U.S., India, Thailand and Europe. The company aims to increase overseas profit to more than 500 billion yen by 2030, which Mori said would be nearly five times fiscal 2025 levels.
At the same time, Mori acknowledged several constraints that could temper outcomes. He pointed to inflation-driven increases in costs and a competitive labor market, noting projects will be competing for workers. He also said that although the U.S. government holds a golden share in the company, it has not intervened in management decisions since the transaction closed.
Summary
Nippon Steel expects U.S. Steel to post profits above 100 billion yen ($624 million) this year and sees potential for greater gains through 2027. Management projects long-run annual profits of 300-400 billion yen and is implementing operational initiatives and a multi-year investment plan to lift returns, while pursuing broader international expansion.
Key points
- Nippon Steel forecasts U.S. Steel profits above 100 billion yen ($624 million) this year and anticipates upside through 2027.
- U.S. hot-rolled steel prices are above $1,200 per metric ton, and U.S. Steel restarted an Illinois blast furnace and runs it at full capacity to benefit from pricing.
- Nippon Steel has seconded about 100 staff to work on 260 improvement initiatives; roughly one-third of an $11 billion investment plan through 2028 has been board-approved, with returns targeted to reach roughly $3 billion per year by 2035.
Risks and uncertainties
- Inflation-driven cost pressures could raise input costs and weigh on margins - this risk affects the manufacturing and metals sectors directly.
- Competition for labor and labor shortages could delay or increase the cost of implementing improvement and investment projects - this may impact capital projects and operational timelines in the steel and industrial sectors.
- Although the U.S. government holds a golden share, Mori reported no intervention to date; any future changes in government posture could introduce uncertainty for management decisions.