Posco reports 51 percent plunge in Q2 net profit
Group net income, excluding minority interest, was 250.6 billion won ($225 million) in the three months ended June 30, compared with 509.3 billion won a year earlier, Pohang, Korea-based Posco said today in a regulatory filing.
The average of 10 analyst estimates was 554.7 billion won, according to data compiled by Bloomberg. Sales declined 5 percent to 15.6 trillion won.
Slowing growth in China, the world’s top steel user, and Europe’s economic crisis sapped demand amid a global glut, squeezing profit at steelmakers. Posco, Korea’s biggest steelmaker, said yesterday it will seek to expand sales of high-end products including automotive sheets and ship plates and keep its 2013 sales forecast, announced in April, at 64 trillion won.
“Prices have remained weak for a long while,” Im Jeong-jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management, which oversees about $32 billion, said before the announcement. “That is a major reason why investors hold a conservative view on the steel sector.”
Group operating profit fell 31 percent to 902.6 billion won, compared with the 897 billion won average of 18 analyst estimates.
Posco’s average selling price dropped 13 percent to 808,000 won a metric ton in the second quarter from a year ago, Hong Jin-joo, an analyst at Shinhan Investment, estimated in a June 11 report. Prices probably rose from 782,000 won in the first quarter, according to the report.
Steel prices in China, the world’s biggest producer and consumer of the alloy, may gradually recover after bottoming out in the third quarter, the Korean company said.
Posco forecast world steel demand will probably grow 3 percent this year, helped by “solid” growth in emerging markets. That is in line with the World Steel Association’s estimate of 2.9 percent announced in April.
Crude steel output declined 6 percent to 8.85 million tons in the second quarter from a year earlier, while sales fell 3 percent to 8.41 million tons, Posco said yesterday. The company sold 35 million tons in 2012.
Posco accounted for 55 percent of the market in 2012 in terms of crude output of the metal, a company filing showed in March. The company was the fourth-biggest in Asia by 2012 output, according to latest rankings posted by the World Steel Association.