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    5401   JP3381000003

NIPPON STEEL CORPORATION

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Nippon Steel plans to boost overseas capacity, scale down at home

12/06/2020 | 12:11pm EDT
FILE PHOTO:  The logos of Nippon Steel Corp. are didplayed at the company headquarters in Tokyo

TOKYO (Reuters) - Nippon Steel Corp is planning to raise output capacity in overseas markets such as India and the United States and reduce it in Japan to align with future demand levels, a company executive said.

"Our imminent task is to improve our overseas profits by capitalising on recovering global demand from automobiles," Executive Vice President Katsuhiro Miyamoto told Reuters in an interview on Wednesday.

"In the mid-term, we want to expand our production capacity overseas where demand is expected to increase," he said.

Last year, Japan's biggest steelmaker and ArcelorMittal, the world's largest steelmaker, jointly bought India's bankrupt Essar Steel, which has an annual capacity of 9.6 million tonnes.

The companies plan to boost the capacity of the new venture, ArcelorMittal Nippon Steel India, to 12 million-15 million tonnes as planned and further in the future, Miyamoto said. "We will also look to expand capacity at its pellet plant on the east coast," he said.

Nippon Steel is also considering to build a new electric furnace at its U.S. joint venture with ArcelorMittal in Calvert, Alabama.

"We may build a furnace of 1.5 million tonnes of annual output capacity as a first step," Miyamoto said.

"Having our own iron source means a shorter lead time and fewer inventories," he said.

ArcelorMittal said in September it would sell its U.S. assets to Cleveland-Cliffs Inc, except for some assets like the Calvert facility. Nippon Steel is still in talks with the parties involved on whether it will keep its stake in its other U.S. joint venture with ArcelorMittal, I/N Tek and I/N Kote, in Indiana, Miyamoto said.

Nippon Steel expects to book a net loss for a second straight year, as the COVID-19 pandemic decimated demand.

Even before the outbreak, it had been grappling with falling demand at home and competition from China, which forced it to shut nearly 10% of its production capacity. But demand from automakers is picking up faster than it had anticipated a month ago, Miyamoto said.

"We expect domestic steel demand and our steel output in the next financial year (starting in April) to come to somewhere between the 2019 and 2020 financial year's levels," Miyamoto said.

Asked what he expects after U.S. President-elect Joe Biden takes office in January, Miyamoto said: "The U.S. import restrictions taken by the Trump administration have led to a spread of protectionism worldwide. We hope this will change toward free trade."

(Reporting by Yuka Obayashi; Editing by Ramakrishnan M.)

By Yuka Obayashi


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
ARCELORMITTAL 0.99% 28.045 Real-time Quote.47.09%
CLEVELAND-CLIFFS INC. 3.66% 21.79 Delayed Quote.44.37%
NIPPON STEEL CORPORATION 0.13% 1986.5 End-of-day quote.49.59%
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Financials
Sales 2022 6 528 B 57 149 M 57 149 M
Net income 2022 397 B 3 475 M 3 475 M
Net Debt 2022 2 324 B 20 342 M 20 342 M
P/E ratio 2022 4,73x
Yield 2022 6,32%
Capitalization 1 829 B 16 013 M 16 012 M
EV / Sales 2022 0,64x
EV / Sales 2023 0,64x
Nbr of Employees 106 226
Free-Float 91,1%
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Number of Analysts 9
Last Close Price 1 986,50 JPY
Average target price 2 777,78 JPY
Spread / Average Target 39,8%
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Eiji Hashimoto President & Representative Director
Kosei Shindo Chairman
Shuhei Onoyama Representative Director & Vice President
Mutsutake Otsuka Independent Outside Director
Ichiro Fujisaki Independent Outside Director
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