One year has passed since Nippon Steel acquired US Steel, a symbol of the American steel industry. At the time of the acquisition, Nippon Steel promised a massive investment of some 17 trillion won, but instead of investing, the company has seen its debt ratio soar as it raises the large sums needed to fund the deal.
According to Axios on Monday, Nippon Steel pledged to invest $11 billion (about 17 trillion won) by 2028 when it acquired US Steel on June 18 last year. But as of the end of March this year, the investment actually spent came to less than $200 million, or about 1.8% of the total amount. Although approved investment since the acquisition stands at $3.2 billion, no small figure, execution has been slow.
Nippon Steel said it would spend an additional $580 million by the end of August, but even accounting for that, the executed amount would be just 7% of the total investment commitment. Axios noted that "no information has been disclosed on how the remaining $7.8 billion will be allocated."
Also of concern is that Nippon Steel is under financial pressure from the acquisition cost, which reached $14.1 billion (about 22 trillion won). Nippon Steel's interest-bearing debt ratio surged from 0.51 times before the US Steel acquisition to 0.94 times afterward. In response, international credit rating agency S&P Global lowered Nippon Steel's credit rating one notch from "BBB+" to "BBB" in July last year and set the rating outlook at "negative." S&P said, "The US Steel acquisition is expected to weaken Nippon Steel's financial structure over the next one to two years," adding that "the increased financial burden will outweigh positive effects such as expanded entry into the North American market." As a result, Nippon Steel's shares fell to 531 yen on June 11, marking their lowest level since April 2025.
To be sure, US Steel has been stabilizing since the Nippon Steel acquisition. Net profit this year is expected to exceed $600 million, the strongest performance since 2023. Even so, experts believe that for the time being, the company will spend more than it earns. Suzuki Hiroyuki, an analyst at Tachibana Securities, told the Nihon Keizai Shimbun, "Because of aging facilities, manufacturing costs may be running higher than expected, so its contribution to final net profit, including non-operating income, will be limited to 50 billion to 60 billion yen."
