Nippon Steel Corp., the nation's largest steelmaker, said Monday it will book a ¥96.3 billion charge after a drop in shares of Sumitomo Metal Industries Ltd., which it is acquiring, cut the value of its investments.
The charge will be accounted for in the three months ended June 30, the Tokyo-based company said in a statement to the Tokyo Stock Exchange. Nippon Steel will announce results for the quarter and provide an outlook for the fiscal first half on July 30, according to the statement.
Sumitomo Metal Industries, Nippon Steel's largest investment, fell 22 percent in the period, the biggest quarterly drop in two years, matching the decline in the Topix Iron & Steel Index after Europe's debt crisis and the global economic slowdown. The appreciation of the yen has reduced the cost competitiveness of Japanese mills abroad and stymied their efforts to boost exports to counter slowing sales at home.
"The steel industry is more vulnerable to the movement of macro-economies," said Shinya Yamada, an analyst at Credit Suisse Securities Japan Ltd. The charge will affect Nippon Steel's profit, he said.
The two steelmakers last week won shareholder approval for the ¥685 billion deal, which will create the world's second-largest steelmaker.