Nippon Steel: F3/26 Results: Relatively Solid, but Watching Middle East Impact

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Nippon Steel: F3/26 Results: Relatively Solid, but Watching Middle East Impact

Update

MayMayMayMayMay 13,13,13,13,13, 20262026202620262026 02:1202:1402:1903:3704:05PMPMPMPMPMGMTGMTGMTGMTGMT

Morgan Stanley MUFG Securities Co., Ltd.+MNippon Steel (5401) | Japan Yu Shirakawa

Equity Analyst

F3/26 Results: Relatively Solid, Yu.Shirakawa@morganstanleymufg.com +81 3 6836-5432

Nippon Steel (5401.T, 5401 JT)

Steel | Japanbut Watching Middle East

Stock Rating Overweight

Industry View Cautious

Price target ¥700Impact Shr price, close (May 13, 2026) ¥559

Mkt cap, curr, basic (bn) ¥3,347.0

Avg daily trading value (bn) ¥28.6

Reaction to earnings

Unchanged Modest upside Largely unchanged

Impact to our thesis Financial results versus consensus Direction of next 12-month

consensus EPS

Source: Company data, Morgan Stanley Research

F3/26 results above guidance: Nippon Steel reported F3/26 BP of ¥514.1bn, above

guidance (¥420bn) and our estimate (¥425bn). Underlying profit, excluding factors

like inventory revaluations, was down 18% YoY at ¥650.4bn (guidance: ¥620bn; our

estimate: ¥630bn).

F3/27 guidance likely above consensus, but Middle East a potential concern:

Although not factored into guidance, management commented that a deterioration

in Middle East could have an impact of around -¥50bn per quarter. Underlying BP

guidance of ¥700bn (¥600bn ex. US Steel) is above our forecast of ¥650bn. We

believe consensus outlook is in line with our forecast. The expected contribution

from US Steel is ¥100bn, which is ¥35bn above our estimate. The company

anticipates a decline in US steel prices in 2H, which implies further upside potential

if current elevated US market prices persist. Nippon Steel’s annual DPS forecast is

¥24. The FCF projection is for a ¥400-500bn deficit.