TOKYO STEEL MANUFACTURING CO., LTD.

Business Details

Tokyo Steel Manufacturing is a steel-focused manufacturer that recycles steel scrap using electric arc furnaces to produce and sell steel products—mainly Steel Products (Bar/Shape Steel and Steel Plate)—and steel billets. Domestic sales account for the majority of the business (approximately 87% of net sales), with exports to Europe, Asia, and other regions. Major customers are Hanwa Co., Ltd. (15.2% of net sales) and Onoken Co., Ltd. (10.1%). As both a capital-intensive and market-driven industry, the company's performance is directly linked to fluctuations in steel scrap prices and steel market conditions.

Recent Overview

Corrected an error in the fair value measurement of investment securities; net assets and total assets were revised upward

Regarding the FY2026 (ending March 2026) earnings report announced on April 24, 2026, an error was found in the fair value measurement of investment securities, and a correction was issued dated May 1, 2026. Following the correction, investment securities increased from ¥34,012 million to ¥35,410 million (a difference of ¥1,398 million), total assets were revised upward from ¥291,597 million to ¥292,995 million, and net assets were revised upward from ¥221,132 million to ¥222,089 million. Deferred tax liabilities also increased from ¥6,670 million to ¥7,111 million. Valuation difference on available-for-sale securities was revised from ¥18,802 million to ¥19,759 million. Net assets per share was revised from ¥2,156.96 to ¥2,166.30. Note that there were no changes to the income statement figures (net sales, operating income, ordinary income, net income) or earnings per share, and the actual business performance remains unchanged. In FY2026 (ending March 2026), profitability declined significantly against a backdrop of deteriorating steel market conditions and weak domestic construction material demand, and operating cash flow turned negative.

Key Products

Growth Drivers

• Expanding social demand for electric-arc-furnace products: rising awareness of decarbonization and resource recycling is broadening demand for EAF steel products into other fields as well
• Expanding sales of Low-CO2 Steel "Hobo Zero": the new product launched in July 2024 has received favorable reception across industries, and the company is working to expand its product lineup
• Product diversification and capture of new demand through the resumption of pickled coil production at the Tahara Plant (August 2024)
• Promoting diversification of business partners: reducing dependence on Hanwa Co., Ltd. and Onoken Co., Ltd. and expanding the customer base
• Enhancing added value and competitiveness through advanced (upcycled) utilization of steel scrap

Risks

• Steel market risk: steel exports from China have reached record-high levels, and deterioration in overseas market conditions is spilling over into domestic prices
• Steel scrap price fluctuation risk: fluctuations in the price of steel scrap, the main raw material, directly affect manufacturing costs and profitability
• Sluggish domestic demand for construction materials: labor shortages and rising construction costs are causing construction delays and plan revisions, negatively affecting demand for construction materials
• Tariff policy risk: concerns that the international escalation of tariff policies originating in the United States could adversely affect overseas steel market conditions
• Fixed cost burden risk: a risk specific to capital-intensive industries, where fixed costs rise as a proportion of costs when production volume declines, worsening profitability
• Financial data correction risk: an internal control risk in which, as with this instance of an error in the fair value measurement of investment securities, figures require correction after the announcement of financial results