OSAKA STEEL CO., LTD.

Business Details

The Osaka Steel Group is a single-segment company engaged in the manufacture and sale of shaped steel, bar steel, flat steel and other steel products as well as steel billets and processed steel products. Its main customer base is the domestic construction industry. It operates centered on four domestic sites (including the Sakai Plant). Its Indonesian subsidiary KOS (PT. KRAKATAU OSAKA STEEL) decided to suspend operations in January 2026, and at a board meeting in May 2026 resolved a policy for dissolution. The parent company is Nippon Steel Corporation.

Recent Overview

KOS dissolution policy resolved; loss on business withdrawal of ¥19,990 million recorded, resulting in net loss of ¥20,936 million

In FY2026 (ending March 2026), net sales were ¥95,096 million (down 18.3% year on year), and the company fell into an operating loss of ¥259 million. Demand for KOS fell sharply due to cuts to the Indonesian government's infrastructure budget, leading to a decision to suspend operations in January 2026. As a result of recording a business withdrawal loss of ¥19,990 million, including an impairment loss of ¥14,602 million, as an extraordinary loss, net loss attributable to owners of parent was ¥20,936 million. At the board meeting on May 12, 2026, a policy for KOS's dissolution was resolved (the dissolution resolution is scheduled for December 2026). The company acquired 9,000,000 treasury shares for ¥22,050 million, resulting in cash flow from financing activities of -¥24,328 million. The full-year forecast for FY2027 (ending March 2027) is net sales of ¥95,000 million, ordinary profit of ¥2,500 million, and net profit of ¥1,300 million, with dividends yet to be determined.

Key Products

Growth Drivers

• Reinforcement of the integrated steelmaking-rolling-shipping structure and improved cost competitiveness through the energy-saving, CO2-reducing electric arc furnace at the Sakai Plant, which began operation in February 2026
• Leveraging product competitiveness and delivery responsiveness through organic collaboration among the four domestic sites
• Reduction of raw material costs through diversification of scrap procurement sources (expanded use of low-cost scrap)
• Continued cost reduction through on-site activities such as improving yield and unit consumption
• Promotion of profitability improvement measures toward achieving the final year (FY2027) targets of the medium-term management plan: net sales of ¥125,000 million, ordinary profit of ¥9,500 million, and ROE of approximately 5%
• Continued consideration of capital efficiency measures (such as treasury share buybacks)

Risks

• Structural sluggishness in domestic construction demand (continuing delays in construction schedules due to labor shortages and higher material costs)
• Cost pressure from rising prices of steel scrap, the main raw material (prices rose in the latter half of the fiscal year)
• Continued rises in electricity and logistics costs
• Risk of prolonged KOS dissolution procedures and additional losses (the specific schedule for completion of liquidation has not yet been determined)
• Risk of a downturn in the global economy triggered by U.S. tariff policy, Middle East tensions, and other factors
• Continuation of a business environment in which no significant recovery in steel demand for construction is expected in FY2027 (ending March 2027) either