Nippon Steel on 5 November raised its forecast for the year to March 2027. Expected profit attributable to owners of the parent is now ¥440bn, up from the ¥290bn the company gave on 4 August. The company's stated reasons are improved earnings at domestic group companies, stronger overseas operations built on local production for local consumption, and a one-time ¥96.1bn effect from an Arkansas state tax credit tied to the Big River 2 capital investment at United States Steel Corporation.
| Measure | August forecast | Revised forecast | Change |
|---|---|---|---|
| Revenue | ¥11.2tn | ¥11.7tn | +4.5% |
| Business profit | ¥630bn | ¥720bn | +14.3% |
| Net profit attributable to owners | ¥290bn | ¥440bn | +51.7% |
| Basic earnings per share | ¥55.00 | ¥84.00 | n/a |
Where the credit sits
The supplementary results material says the credit was booked as a lump sum, as a deferred tax asset and a reduction in tax expense. Business profit is defined there as revenue less cost of sales, selling and administrative costs and other expenses, plus equity-method gains and other income, so the credit is not part of it. The business profit forecast rose ¥90bn to ¥720bn, against ¥514.1bn a year earlier. The net profit forecast rose ¥150bn, and the ¥96.1bn credit is included in the ¥440bn total.
The interim statement shows the effect. Net profit attributable to owners for the six months to September was ¥263.0bn, against the company's earlier forecast of ¥120bn. Profit after tax exceeded pretax profit of ¥247.0bn because income tax came in as a ¥32.1bn credit. Deferred tax assets stood at ¥184.1bn on 30 September, against ¥42.3bn at the end of March.
The operating explanation
The company's underlying business profit measure, which strips out inventory valuation differences, is now forecast at ¥770bn, up ¥70bn on August. Domestic underlying profit is held at ¥380bn. The bridge against the August forecast shows ¥10bn more from steel group companies and ¥5bn more from three non-steel units, against ¥15bn less from margins, including currency effects.
The company says domestic business remains difficult because price increases lag higher raw material and fuel costs, and because typhoons and heavy rain hit production and shipments. It plans further price rises in the second half.
Overseas underlying profit is forecast at ¥390bn, up ¥70bn. U.S. Steel, including Nippon Steel Slovakia, accounts for ¥230bn of that, up ¥50bn. The company credits rising steel prices and operating synergies at U.S. Steel.
The second-half split
The company's outlook table splits business profit into ¥307.4bn for the first half and ¥412.6bn for the second. Net profit goes the other way, from ¥263.0bn in the first half to ¥177.1bn in the second, with the Arkansas credit already booked in the first half. The company flags that forecasts rest on assumptions at the date of release and that actual results may differ widely.
The annual dividend plan is unchanged at ¥24 a share, with ¥12 set as the interim dividend.