2026 Earnings Revision | Impact of Rising Raw Material Prices and Middle East Situation

Overview of Earnings

Osaka Steel revised its consolidated earnings forecast for the second quarter of the fiscal year ending April 2026, lowering sales to 45,000 million yen (from the previous forecast of 49,000 million yen) and operating profit to △1,200 million yen (from △170 million yen). Net income is also projected at △1,200 million yen, indicating a significant deterioration compared to the same period last year. The full-year sales forecast was raised from 95,000 million yen to 100,000 million yen, but profit forecasts were substantially lowered, primarily due to escalating raw material costs and the impact of Middle East geopolitical developments causing increased costs.

Outlook and Impact

The revision is driven by a rapid rise in scrap metal prices and increased electricity costs due to Middle East geopolitical risks. Despite efforts to revise product prices, margins have temporarily contracted, leading to below-expected performance. The full-year forecast indicates increased sales but markedly lower profits, underscoring the importance of cost management and strategic pricing moving forward. Investors should also monitor fluctuations in raw material prices and exchange rates as key factors affecting performance.