Nippon Steel Reports Results for FY22020
Japan’s largest steel maker Nippon Steel announced the financial results for fiscal 2020. It has reported non consolidated crude steel production of 33 million tonnes for fiscal 2020 & sales of 31.22 million tonnes with sales turnover of JPY 4829 billion. Nippon Steel, expects to produce about 40 million tonnes of crude steel during its fiscal 2021 on a non consolidated basis, 21.2% higher on year as its crude steel output should reach around 46 million tonnes, 22.2% higher YoY.
Nippon Steel said “The global economy substantially decelerated as economic activity was reduced mainly in the first half by the spread of COVID-19 worldwide. The Japanese economy also deteriorated due to global economic developments and the spread of COVID-19. In the second half of the year, the domestic and overseas economies began to show' signs of recovery but the pace of recovery varied by country. In Japan, private consumption and other aspects of the economy showed signs of improvement but have faltered again, while China was one of the first countries that resumed economic activity and steadily recovered, mainly driven by fixed asset investment. Demand for steel materials declined sharply in the first half of the year, both in Japan and overseas, due to the spread of COVID-19. In the second half, Japan recovered mainly in the manufacturing sector, notably in the automobile sector, but the level of economic recovery remained at a low level compared to before the COVID-19 outbreak. The steel market rose due to continued high levels of domestic demand and production in China, which accounts for about 60% of world crude steel production. Other regions’ tighter steel supply-demand conditions, which were in line with their economic resumption, also helped to boost the steel market.”
Nippon Steel added “The Steelmaking and Steel Fabrication segment strived to fully establish the overall stability of its facilities and operations, while taking every possible measure on the safety, environment, disaster prevention, quality management, and compliance, improve its long-term contractual prices and variable costs, and substantially reduce fixed costs. In addition, the segment has been working to enhance its earnings base, including the structural measures for production facilities decided in February of last year, and to reform the management structure. In response to changes in steel demand, caused by the spread ofCOVID-19, the segment has promptly and appropriately implemented measures, such as production management (including temporary suspension and re-operation of blast furnaces), implementation of the business continuity plan (BCP), temporary business shutdowns, and measures in light of the deterioration in operating cash flow. As for the Steelmaking and Steel Fabrication segment’s operating results in fiscal 2020, it recorded a significant loss in the first half, mainly due to a decline in production and shipping volumes, driven by the decline in steel demand, and deterioration in Group companies' profits. In the second half, the segment worked on production in prompt, appropriate response to a recovery in steel demand, mainly from the manufacturing industry, and substantially reduced fixed costs and improved variable costs, which resulted in turning into a profitable structure in non-consolidated operating income. For the full year, the segment recorded revenue of JPY 4,228.4 billion (compared to JPY 5,257.3 billion in fiscal 2019) and business profit of JPY 63.5 billion (compared to business loss of JPY 325.3 billion).”
Source - Strategic Research Institute