Japanese steelmaker Nippon Steel has announced its outlook for the full 2019-20 financial year, predicting a record net loss instead of the earlier expected profit due to lower production and shipments, high raw material prices and deteriorating earnings at group companies, as well as impairment losses on operating assets.
Nippon Steel is expected to have a JPY 440 billion ($4 billion) net loss in the financial year 2019-20, in contrast to a JPY 40 billion ($364 million) profit in the previous forecast. “In the medium- to long-term, Nippon Steel has to expect a decline in steel demand, associated with factors such as Japan’s declining and aging population and expanded overseas production by our Japanese customers, as well as intensified competition in the overseas market,” the producer said in its report.
The manufacturer has also cut its forecast for non-consolidated crude steel production this fiscal year by 1 million mt to 39.7 million mt. As reported earlier, Nippon Steel produced 41 million mt in the financial year 2018-19.
Nippon Steel announced that its decision to close four blast furnaces will result in a reduction of crude steel production capability by 5 million mt per year, while its will lead to a profit improvement of JPY 100 billion ($911 million) per year.
Over the first nine month of the financial year 2019-20. Nippon Steel showed a JPY 357 billion ($3.25 billion) net loss versus a JPY 206.6 billion ($1.9 billion) profit in the same period last year.