TOKYO: Nippon Steel Corp, the world's No. 5 steelmaker, will post an appraisal loss on securities it holds of around 80 billion yen ($1 billion) in April-December due to a decline in share prices of its merger partner Sumitomo Metal Industries, the Nikkei business daily said on Saturday.
Reflecting the loss, Nippon Steel is likely to lower its earnings forecasts for the full year ending next March, the daily said.
Nippon Steel needs to write down the loss because it held 451.76 million shares in Sumitomo Metal worth 63 billion yen, although the book value was seen as more than double that at around 140 billion yen, the newspaper said.
The two firms plan to merge in October to create the world's second-biggest steelmaker, aiming to cut costs of 150 billion yen three years after the consolidation of facilities, but without shutting any of their domestic mills.
In September, Sumitomo Metal Industries, Japan's third-biggest steelmaker, posted a similar appraisal loss on securities it held of 79.76 billion yen ($1 billion) for the July-September quarter due in part to a decline in prices in Nippon Steel shares.
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