OSAKA STEEL CO., LTD.
5449・Standard Market・Iron & Steel
Business
Osaka Steel was established in 1978 as a dedicated electric furnace manufacturer and is positioned as the core electric furnace subsidiary of Nippon Steel Corporation. The company manufactures and sells common steel products such as shaped steel, bar steel, and flat steel, and operates four domestic sites (the Sakai Plant and Onngajima Plant of the Osaka Works, the Nishi-Nihon Kumamoto Plant, and the Kishiwada Plant) along with its consolidated subsidiary Tokyo Steel. Its main demand sectors are construction, civil engineering, and shipbuilding, with steel trading companies and building materials trading companies such as Nippon Steel Trading and MM Kenzai serving as its primary sales channels. The company is characterized by resource- and energy-saving production through the electric furnace method, which uses steel scrap as its raw material, and is listed on the Standard Market of the Tokyo Stock Exchange and the Main Board of the Fukuoka Stock Exchange.
Business Model
A vertically integrated model that melts and refines steel using scrap iron as the main raw material in an electric furnace, then manufactures and sells products such as shaped steel and bar steel through a rolling process. The majority of revenue comes from steel product sales (FY2026: ¥88,728 million), supplemented by billets and other products (¥6,368 million). The core of profitability lies in the spread between raw material scrap procurement costs and product sales margins, with electricity costs and logistics costs also being major factors in the cost structure. The company operates logistics subsidiaries (Osaka Shin Unyu and Seiko Butsuryu) under its umbrella, integrating operations from manufacturing through transportation.
Company Strengths
Collaborates with Nippon Steel on manufacturing equipment and operational technology for electric furnaces and shaped steel, sales cooperation in the construction, civil engineering, and shipbuilding fields, and collaboration in personnel and information security. The ability to leverage the parent company's creditworthiness, technological base, and sales network serves as a differentiating factor versus independent electric furnace makers.
In addition to the Osaka Works (Sakai and Onigajima), the West Japan Kumamoto Plant, and the Kishiwada Plant—four domestic sites in total—sales collaboration in eastern Japan with consolidated subsidiary Tokyo Tekko has established a finely-tuned, agile product supply system. The securities report explicitly cites high-quality product competitiveness (dimensional precision and straightness) and delivery responsiveness as strengths.
An energy-saving, CO2-reducing electric furnace began operation at the Sakai Plant in February 2026. This strengthens the integrated system spanning steelmaking, rolling, and shipping, with the aim of establishing domestically leading cost competitiveness. Total capital expenditure of ¥11.2 billion was executed in FY2026 (ending March 2026), with ¥2.0 billion in subsidies also received. Combined with the effects of the rolling process reinforcement measures (S-Project), multifaceted cost reductions are expected.
ENVALITH's Perspective
Performance Trend
Revenue peaked at ¥117,141 million in FY2023 and has declined for four consecutive periods, reaching ¥95,096 million (down 18.3% year on year) in FY2026 (ending March 2026). Operating profit deteriorated rapidly, from ¥7,013 million in FY2024 to a loss of ¥259 million in FY2026. As external factors, rising prices of construction materials and equipment and labor shortages in the construction industry caused construction delays, continuously suppressing demand for steel products, while the rise in scrap prices in the latter half of the fiscal year and increases in electricity and logistics costs pushed up costs. In addition, an extraordinary loss of ¥19,990 million was recorded for the business withdrawal loss associated with the dissolution of KOS (Small and Medium Shaped Steel, Rebar (Indonesia, KOS)), resulting in a net loss of ¥20,936 million, the largest loss in the past five periods. The full-year forecast for FY2027 (ending March 2027) anticipates a return to profitability, with revenue of ¥95,000 million, operating profit of ¥2,200 million, ordinary profit of ¥2,500 million, and net income of ¥1,300 million, but the environment is expected to continue in which a significant recovery in construction demand is difficult to anticipate.
Growth Strategy
Aiming for FY2027 ROE of approximately 5% through maximizing the effects of the Sakai energy-saving electric arc furnace, collaboration among four domestic sites, and capital efficiency measures
Through the energy-saving, low-CO2 electric arc furnace at the Sakai Plant, which began operation in February 2026, the Company aims to strengthen the integrated steelmaking-rolling-shipping structure and reduce energy costs. It aims to transform its earnings structure through the combined effect of reduced electricity cost burden and improved yield and unit cost.
The four sites—Osaka, Sakai, East Japan, and West Japan Kumamoto—collaborate to strengthen the product supply system in response to customer needs. The Company is promoting sales expansion measures while securing appropriate margins in parallel, aiming to maintain profitability amid sluggish construction demand.
Completed the acquisition of 9,000,000 shares of treasury stock for ¥22,050 million in April 2025. The Company will continue to consider capital efficiency measures based on the Medium-Term Management Plan, aiming to achieve an ROE of approximately 5%. The dividend for FY2027 (ending March 2027) has not yet been determined at this time.
Decided to suspend KOS operations in January 2026, and the Board of Directors resolved a policy of dissolution in May of the same year. A business withdrawal loss of ¥19,990 million was recorded as an extraordinary loss in FY2026 (ending March 2026). The resolution to dissolve KOS is scheduled for December 2026, and the timing of completion of liquidation has not yet been determined.
Achieved the introduction of in-house solar power generation equipment at the West Japan Kumamoto Plant and an improvement in CDP score from B- to B. The Company continues its efforts toward carbon neutrality by FY2050 and has also completed the formulation of the Osaka Steel Group Human Rights Policy.
Last updated: July 19, 2026