Nippon Steel books record loss, plans to shut more furnaces

TOKYO (Reuters) - Nippon Steel Corp 5401.T on Friday reported a record $4 billion annual net loss as a hefty restructuring charge dampened its earnings, and said it will idle two more blast furnaces from July to cope with slumping demand amid the coronavirus pandemic.

FILE PHOTO: The logos of Nippon Steel Corp. are didplayed at the company headquarters in Tokyo, Japan March 18, 2019. REUTERS/Yuka Obayashi

Japan’s biggest steelmaker did not provide a forecast for the current financial year to next March, but its president Eiji Hashimoto said it would not be able to avoid a big loss in April-September period.

“Any recovery in the steel industry after the pandemic will likely come slower than other industries,” he said.

The world’s third-biggest steelmaker booked a net loss of 426 billion yen (3.24 billion pounds)for the year to the end of March, against a profit of 257.6 billion yen a year earlier.

The record loss was flagged by the company in February.

A collapse in demand from industry forced to shut down due to the COVID-19 pandemic has spurred a wave of closures of steel plants across the world.

Nippon Steel said on Friday it will temporarily shut a blast furnace in Muroran, in northern Japan, in July by bringing forward a maintenance plan, while it will also close a blast furnace in Yawata, western Japan, in the same month, which it had planned to permanently shut in September.

Last month, the company said it would suspend three blast furnaces from April-May, following the suspension of another blast furnace in February unrelated to the pandemic, bringing the total reduction in its furnace volume to about 25%.

The closures are expected to slash its crude steel output to 7 million tonnes in the April-June quarter from 10.27 million tonnes a year earlier, with the utilisation rate falling to about 60%.

Analysts have predicted that Japanese steelmakers may need to accelerate restructuring plans or close more facilities as construction project delays due to the coronavirus add to industry woes.

Reporting by Ritsuko Shimizu and Yuka Obayashi; Editing by Kirsten Donovan