Nippon Steel Reports Decrease in Net Profits but Plans to Finalize U.S. Steel Acquisition Despite Anticipated Losses and Low Demand

Nippon Steel, the largest steel producer in Japan, reported a 20.8% decrease in net profits for the fiscal year ending in March 2021, amounting to 549.4 billion yen ($3.53 billion). This figure surpassed analyst expectations of 464.6 billion yen, as determined by a poll conducted by LSEG. The decline was attributed to ongoing losses from inactive facilities, which the company anticipates will continue in the upcoming fiscal year. Additionally, Nippon Steel foresees persistently low domestic and international steel demand. However, the company still intends to finalize its $15 billion acquisition of U.S. Steel by the end of 2021, conditional upon U.S. Approval. This forecast does not include the anticipated acquisition cost of U.S. Steel. In late 2020, Nippon Steel proposed acquiring U.S. Steel, a well-known entity, which faced pushback from both former President Donald Trump and current President Joe Biden, as well as the United Steelworkers union. Nippon Steel, the world’s fourth-largest steel manufacturer, has agreed to relocate its U.S. Headquarters to Pittsburgh, where U.S. Steel is situated, while also promising specific pledges regarding employment stability and added investments should the transaction proceed. This month, the U.S. Department of Justice requested further information and papers related to the merger as part of an antitrust investigation. The combination had previously received authorization from the European Commission. To support the acquisition and enhance its financial position, Nippon Steel intends to raise up to 250 billion yen via subordinated syndicated loans and public subordinated bonds, as announced on Thursday. ($1 equals 155.7000 yen) (Reporting by Katya Golubkova; Editing by Jamie Freed and Gerry Doyle)