Nippon Steel & Sumitomo Metal Corp says it swung to a full-year profit as strong domestic demand offset the impact of severe competition abroad.
Japan's biggest steelmaker said net profit was Y242.8 billion ($A2.56 billion) for the year to March, reversing a Y124.6 billion net loss the previous year.
Sales jumped 25.7 per cent to Y5.5 trillion for the fiscal year, said the steelmaker, one of the world's largest, which was created through the merger of Nippon Steel and Sumitomo Metal.
Rising domestic demand for steel has been boosted by government rebuilding programs following Japan's quake-tsunami disaster in 2011, and a gradually improving economy is also adding momentum.
"Domestic steel demand increased in the civil engineering and construction fields on continuing firm reconstruction demand and economic policies showing their full effects," the firm said on Friday.
"Demand from the manufacturing industry also grew on the recovery in capital investment and an upturn in business confidence," it said.
However, Nippon Steel said it faced headwinds as heavy production by Chinese and South Korean mills was pushing down global steel prices.
The steelmaker has not disclosed its full-year forecast for the year to March "due to several factors, including the fact that price trends for primary raw materials and steel material products are uncertain", it said.
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