Nippon Steel expects profit to drop 43% this year, US Steel decision by early June

By Yuka Obayashi and Katya Golubkova

TOKYO, May 9 (Reuters) - Nippon Steel 5401.T expects net profit to slide 43% in the fiscal year ending March 2026, it said on Friday, citing a weak global steel market pressured by China's exports and the impact of new U.S. tariffs.

Japan's biggest steelmaker also said it expects a U.S. decision on whether to approve the company's proposed acquisition of U.S. Steel X.N by June 5.

Nippon Steel forecast net profit for the year through March 31, 2026 would fall to 200 billion yen ($1.4 billion), after reporting on Friday that profit fell 36% in the year ended March 2025 to 350.2 billion yen.

"Excess production and increased exports from China, driven by a widening supply-demand gap amid the economic slowdown, show no signs of easing, and this difficult environment is expected to persist through the current fiscal year," President Tadashi Imai told a news conference.

"The indirect impact of the U.S. tariffs on our earnings could be significant," he added, while noting that direct effects will be limited as exports to the U.S. are small and consist of mainly hard-to-substitute products.

Nippon Steel's $15 billion bid for U.S. Steel, rejected by former U.S. President Joe Biden, is under review.

"We'll take all necessary steps to ensure the transaction closes," Imai said.

Imai reiterated Nippon Steel's core proposal to acquire full ownership of U.S. Steel remains the starting point in negotiations with U.S. authorities, though the company is also exploring various proposals to secure approval.

U.S. President Donald Trump, who began his second term on January 20, initially stated he "wouldn't mind" if Nippon Steel bought a minority stake in U.S. Steel. Such a scenario would require an overhaul of the deal structure.

In March, Trump directed the Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investment for national security risk, to reexamine the bid to determine whether "further action" would be appropriate.

Nippon Steel's Vice Chairman Takahiro Mori, a lead negotiator on the deal, said he expects CFIUS to make a recommendation to Trump by May 21, with a final decision from Trump anticipated by June 5.

"We continue to believe that the U.S. Steel deal poses no risk to U.S. national security," Mori said. "But the outcome will ultimately hinge on Trump's decision, as the deal has become a political issue beyond just national security considerations."

($1 = 145.3300 yen)