[Company analysis] Nippon Steel Corporation (日本製鉄)

「Nippon Steel Corporation (日本製鉄)」is the largest steel company (blast furnace) in Japan, together with「Kobe Steel, Ltd.(神戸製鋼所)」and「JFE Holdings, Inc.(JFEホールディングス)」. In addition to the steel business, they have business areas such as engineering, chemistry, and system solutions as a business holding company of the Nippon Steel Group. This company also made some issues about Japan-Korea relations in 2019. Recently, tis company made「Nisshin Steel Co., Ltd.(日新製鋼ホールディングス)」a subsidiary. The number of consolidated employees is approximately 105,796.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Nippon Steel Corp.
Company name (Japanese)	日本製鉄
Date of establishment	1934
Headquarters location	〒100-8071 東京都千代田区丸の内二丁目6番1号
Capital	419,524
Consolidated sales	6,177,947
Consolidated operating profit	336,941
Consolidated total assets	8,049,528
Consolidated capital	3,607,367
Capital adequacy ratio	44.8%
Consolidated number of employees	105,796

 

 

 

2. Summary and Features

 
As for the history of「Nippon Steel」, it was established by integrating several steel companies including the 「Yawata Works(八幡製鉄所)」which was a government enterprise. After World War II, GHQ dismantled the conglomerate, so Nippon Steel became splitted into four companies. In spite of this decision,「Shin Nippon
Steel」which was established by merger of the two companies from Yawata Works, started its business since 1970. Right after this merger, it's sales volume surpassed「Hitachi Coporation(日立)」, which was No. 1 steel company in Japan at that time. In 2010, 「Nippon Steel」had the highest production and sales of bar steel, and they were ranked 4th largest steel company in the world.

On the other hand,「Sumitomo Metal Industries(住友金属工業)」 was a steel company that started in 1935 through a merger within the Sumitomo Group. In the past, they were regarded as one of the Sumitomo Group's three core companies such as「Sumitomo Mitsui Financial Group, Inc.(三井住友フィナンシャルグループ)」and「Sumitomo Chemical Co., Ltd.(住友化学)」. According to the business result of 2010,「Sumitomo Metal Industries」was the third largest manufacturer of bar steel in Japan, and the 19th largest in the world.

Eventually, on October 1, 2012,「Nippon Steel」absorbed and merged with「Sumitomo Metal Industries」. By this, 「Shinnittetsu Sumikin(新日鐵住金)」was formed. In the Japanese steel industry, it was the first large-scale merger since the establishment of「JFE Holdings, Inc.」which was founded by the business integration betweem「Kawasaki Steel Corporation(川崎製鉄)」and「Nippon Kokan(日本鋼管)」 in 2002 

However, the main purpose of the previous merger of「Nippon Steel」in 1970 was production adjustment.  but the purpose of this merger in 2012, was a strategic merger to enhance their comparative advantages against with the foreign companies such as South Korea and China. By consolidating the duplicated departments in Japan and concentrating management resources, they tried to improve enfficiency.

By the merger of 2012,「Shinnittetsu Sumikin」became the 2nd largest steel company in the world, surpassing「Baosteel」and「Posco」. Of course, the largest steel company was still「Arcelor Mittal」. According to the business result of 2019, This comapny had the 2nd highest production of bar steel in the world. On April 1, 2019, the company decided to change its name from Nippon Steel & Sumitomo Metal to「Nippon Steel(日本製鉄)」. As for the corporate culture, 「Nippon Steel」is basically stricted. This is the atmosphere since the「Yawata Works)」which was a government enterprise. So for that reason, they are still culturally bureaucratic and athletic .

 

 

 

3. Major Business

 

■ Steelmaking
It has been a core business since the establishment of「Nippon Steel」. they trying to strengthen their production capacity by M & A.

■ Engineering
This company also handle large-scale plants and construction-related businesses such as oil and natural gas. They are expanding their overseas business mainly in the Middle East for the demand of resource plants and Southeast Asia for the demand of industrial plants. Normally it accounts 30% of the total sales.

■ Chemistry
They are working on products related to the coal chemical business and petrochemicals.

■ New material
Based on the knowledge of materials that「Nippon Steel」has accumulated in steel production, they can support materials for the semiconductor and electronic industries.

■ System solution

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		4,632,890	5,668,663	6,177,947
Consolidated operating profit		114,202	182,382	336,941
Consolidated total assets		7,261,923	7,592,413	8,049,528
Consolidated net assets		3,291,015	3,515,501	3,607,367
Breakdown of sales	Steelmaking	4,016,670	4,983,335	5,408,633
	Engineering	234,861	260,908	321,346
	Chemistry	168,596	197,057	243,014
	New material	34,519	37,050
	System solution	178,242	190,310	204,952