The world's second biggest steelmaker Japan-based Nippon Steel Corporation has announced its financial results for the financial year 2019-20 ended March 31. In the given year, Nippon Steel recorded net loss of JPY 431.51 billion ($4.06 billion), compared to a net profit of JPY 251.17 billion in the previous year, while the company's net sales amounted to JPY 5.92 trillion ($55.66 billion), decreasing by 4.2 percent compared to net sales of JPY 6.18 trillion in the previous financial year, due to lower production and shipment volumes amid sluggish worldwide demand for steel products and smaller profit margins caused by high raw material market prices and low steel market prices, the impacts of natural disasters, inventory valuation differences, deteriorating earnings at group companies, and the recording of impairment losses on operating assets.
In the given year, Nippon Steel's steelmaking and steel fabrication segment recorded net sales of JPY 5.26 trillion ($49.45 billion), falling by 3.6 percent year on year. Nippon Steel stated that the segment encountered many factors that negatively impacted its earnings for the year.
Meanwhile, in the given financial year, Nippon Steel produced 47.05 million mt of crude steel, down 1.6 percent, while its steel product shipments amounted to 36.31 million mt, decreasing by 4.4 percent, both year on year.
The company noted that domestic and overseas steel demand was steady and that this situation stemmed from slower growth in the global economy and decreased demand for flat steel products due to reduced production of automobiles and other consumer goods. Besides, the company said China increased infrastructure investment in order to revive its national economy and the country, which accounts for more than half of worldwide steel production, saw increased domestic demand for long steel products and continued high-level production of pig iron. This situation resulted in a rise in prices of the main raw materials such as iron ore.
According to Nippon Steel, the global economic outlook is becoming more uncertain due to the worldwide spread of the coronavirus as well as the growing prevalence of protectionist policies, while the Japanese economic outlook is also clouded due to the global economic trend and the coronavirus pandemic. The company stated that it will not provide a new forecast for the fiscal year 2019-20 due to the unpredictable extent and duration of the coronavirus outbreak and the inability to evaluate reliably the business performance of the company amid the outbreak.
Nippon Steel believes the harsh market conditions will continue even after the negative impacts of the coronavirus ease given the prolonged US-China trade friction, falling crude oil prices, depreciating currencies of emerging countries, and the lingering condition of high raw material market prices coupled with low steel market prices.