Nippon Steel, Japan’s largest steelmaker, has slashed its annual profit forecast and excluded recently acquired U.S. Steel from its financial guidance, citing a cocktail of market challenges, rising costs, and uncertainty in the United States. The move comes just months after Nippon Steel finalized its $15 billion acquisition of U.S. Steel in June 2025, a deal that was touted as a cornerstone in the company’s global ambitions but has quickly run into rough weather.
On November 5, 2025, Nippon Steel announced it expects a 14 percent fall in annual profit before one-off items for the fiscal year ending March 2026, according to Reuters. The company now forecasts an underlying business profit of 680 billion yen (about $4.5 billion), down from 793.7 billion yen last year. But that number comes with a big asterisk: it does not account for U.S. Steel’s performance, which has been left out of the forecast altogether. The reason? “The current U.S. steel market conditions are significantly below the levels initially anticipated,” Nippon Steel said, pointing to unexpected cost rises from equipment issues and “heightened uncertainty in the U.S. market.”
U.S. Steel’s steelmaking capacity is nothing to sneeze at—it represents about 40 percent of Nippon Steel’s global output of 66 million tonnes per year. Despite the current turbulence, Nippon Steel leaders remain convinced that the acquisition is a vital part of their long-term strategy to ramp up production to 100 million tonnes annually. “U.S. Steel’s current earnings structure is very fragile, but executing investments will be an extremely effective measure to improve profitability,” Vice Chairman Takahiro Mori told reporters at a press conference, as quoted by The Business Times.
That optimism is reflected in a bold new plan. On November 4, 2025, U.S. Steel and Nippon Steel announced a sweeping $14 billion multi-year growth strategy, with $11 billion earmarked for investment by the end of 2028. The companies expect this outlay to generate $500 million in annual synergies by 2030, a figure that, if realized, could help shore up the fragile earnings structure that has so worried investors and analysts alike.
Yet, not everyone is convinced that this investment blitz will be smooth sailing. According to a note from investment banking firm Jefferies, “On top of decarbonisation requirements, the pledged capital expenditure in the US would make it challenging for the company to keep dividends high. Thus, we think that there is a risk of a capital raise.” The warning highlights a broader concern: with so much capital tied up in both expansion and environmental upgrades, Nippon Steel may soon find its balance sheet under pressure, potentially forcing the company to raise additional funds and rethink its dividend policy.
The financial headwinds are already blowing. Nippon Steel reported a loss of 113.4 billion yen for the six months ending in September 2025, a dramatic reversal from the 243.4 billion yen profit it posted during the same period a year earlier. The company now expects a full-year net loss of 60 billion yen, which is 50 percent deeper than its previous forecast. Part of that pain comes from a 21 billion yen loss related to its exit from the Brazilian steelmaker Usiminas. The company’s minority stake in Usiminas will be transferred to Ternium, another shareholder, as Nippon Steel pivots its focus toward what it calls its “key regions”—the United States, India, and Thailand.
“The sale of Usiminas shares is intended to mitigate further impairment risks, as no significant recovery is expected in Brazil soon,” Mori explained during the company’s results presentation, as reported by Reuters. The decision to offload its Brazilian assets and double down on the U.S. and Asian markets reflects a strategic shift aimed at shoring up the company’s core business and steering clear of regions with dim short-term prospects.
The story behind these numbers is one of ambition running up against the hard realities of a volatile global market. When Nippon Steel acquired U.S. Steel, the move was hailed as transformative—a way to leapfrog competitors and stake a claim as a true global heavyweight. U.S. Steel, with its storied history and significant capacity, seemed like the perfect partner for a company intent on expanding its reach. But the timing has proved challenging. Steel demand in the U.S. has softened, prices have come under pressure, and operational hiccups—like the explosion at the Clairton plant—have only added to the headaches.
Despite these setbacks, Nippon Steel’s leadership is betting big on the future. The company’s $11 billion investment plan, part of the broader $14 billion growth strategy with U.S. Steel, is designed not just to patch up current weaknesses but to position both firms for the long haul. The focus is on upgrading facilities, improving efficiency, and meeting tough decarbonization requirements that are rapidly becoming the norm in the industry. If all goes according to plan, the two steel giants expect to unlock half a billion dollars in annual cost savings and operational synergies by 2030.
Still, the path ahead is far from certain. The risk of a capital raise looms, and the challenge of balancing massive investment needs with shareholder expectations will test Nippon Steel’s management in the coming years. There’s also the question of whether the U.S. market can recover quickly enough to justify the scale of the bet. For now, the company is keeping its cards close to its chest, refusing to offer profit guidance for U.S. Steel until the situation stabilizes.
For stakeholders—from investors to employees and industry watchers—the next few years will be crucial. Will Nippon Steel’s wager on U.S. Steel pay off, or will the gamble prove too costly? The answer will hinge not just on market forces, but on the company’s ability to execute its ambitious investment plan, adapt to shifting global demand, and navigate the increasingly complex landscape of environmental regulation and trade policy.
As the dust settles from a tumultuous year, Nippon Steel’s pivot away from Brazil and toward the U.S., India, and Thailand signals a clear intent to focus on markets where it sees the greatest potential for growth and profitability. Whether that vision becomes reality remains to be seen, but one thing is certain: Nippon Steel is not shying away from bold moves, even in the face of daunting challenges.
