Japan's Nippon Steel and Sumitomo Metal Corp., the world's second-biggest steelmaker, on Friday posted a $1.2 billion net loss in its fiscal year to March.

The firm said it lost 124.57 billion yen ($1.2 billion) as cost-cutting was not enough to offset a downturn from falling steel prices, losses on its stock-market investments and the writedown of money-losing Japanese mills.

The steelmaker, created through the merger of Nippon Steel and Sumitomo Metal last year, did manage a profit on the operational side, saying it earned 20.1 billion yen on sales of 4.39 trillion yen, up 7.3 percent.

"As a steep rise in production costs is expected due to surging prices of resources, we will make our utmost efforts in cost reduction," it said.

Reconstruction work in Japan following the quake-tsunami disaster two years ago boosted demand at home, it said, as a sharp decline in the yen in recent months has helped Japanese manufacturers become more competitive overseas.

"In the case of exports, improving overseas economies, the correction of the strong yen and other factors are contributing to a recovery in steel exports, but supply pressure from South Korean and Chinese steelmakers is expected to remain strong," the company added in a statement.

The company held off announcing a profit forecast for the current year to March 2014, citing unsettled negotiations with suppliers and customers.

"The company will disclose fiscal 2013 earnings forecasts when reasonable estimates become possible," it said.

Two of Japan's biggest steelmakers merged last year as they looked to outpace their Chinese and South Korean rivals in the global market that has seen increasingly fierce price competition for the metal used in cars and construction.

The October merger created the world's second-largest steelmaker behind India's ArcelorMittal.