Nippon Steel, Sumitomo to Book $3.1 Billion Impairment Charges
Nippon Steel Corp. (5401) and Sumitomo Metal Industries Ltd. (5405), which will merge in October to become the world’s second largest steelmaker, widened first-year loss estimates on a combined 240 billion yen ($3.1 billion) in impairment charges.
Nippon Steel, Japan’s biggest mill, faces a 155 billion yen loss in the six months ending Sept. 30 due to a 120 billion yen impairment charge at its unprofitable plants in Hirohata and Sakai in western Japan, the Tokyo-based company said today in a statement. Sumitomo Metal, Japan’s third largest maker of steel, widened its loss estimate to 128 billion yen from 8 billion yen on charges for its Wakayama mill.
The two companies left their current profit forecasts unchanged at 10 billion yen each and will give a full-year earnings outlook after the combination is completed on Oct. 1, according to the statement.
Japanese steelmakers, facing falling prices and intense competition, are paring costs and streamlining to challenge rivals in China and South Korea. The combined company will maintain operations at the Hirohata, Sakai and Wakayama steelworks.
Nippon Steel closed down 3.6 percent to 160 yen today on the Tokyo Stock Exchange. Sumitomo Metal fell 3.3 percent to 117 yen.
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