Posco’s quarterly profit exceeds 1 trillion won

Posco, the nation’s largest steelmaker, surpassed 1 trillion won ($883 million) in quarterly operating profit for the first time in four years, according to an earnings report released by the company Wednesday.

During the third quarter, the company posted operating profit of 1.034 trillion won from 12.75 trillion won in sales revenue. Net profit was 475.5 billion won.

The last time operating profit exceeded 1 trillion won was in the third quarter of 2012.

The year-on-year jump in operating profit was 52.4 percent, and net profit soared a whopping 115.6 percent. Sales revenue declined by 0.9 percent compared to the previous quarter, as the number of subsidiaries shrank due to company restructuring, the steelmaker said in a statement.

Its profit push, though, was helped by expanded sales of high value-added steel products, which the company calls world-premium products, even as major steel consumers like automakers and shipbuilders have been going through a tough quarter.

The sales portion of Posco’s “world-premium” products, such as earthquake-resistant structural pipes and high-strength thermo-mechanically-controlled processed steel thicker than 40 millimeters (1.57 inches), increased by 2.8 percentage points to 48.1 percent this quarter. A company spokesperson said these products are less volatile to external market conditions.

Continued efforts in corporate restructuring added to the rally. The company recently merged its subsidiaries Posco TMC and SPFC to Posco P&S. Nine other subsidiaries were restructured, and eight asset sales were completed in the third quarter, slimming down the company as part of its target to accomplish 149 cases of restructuring.

The aggregated profit of Posco’s overseas steel subsidiaries jumped to 132 billion won, a 1,148 percent increase from the last quarter. A rise in average steel price and cost-cutting efforts led to improved performance among most foreign corporations. The price rise was largely due to restructuring plans proposed by Chinese steelmakers to cut supply.

The Indonesian integrated mill PT Krakatau Posco reversed losses of 20 billion won in the second quarter to 39 billion won profit during Q3. “The corporation succeeded in cutting $25 million in production cost which greatly boosted its performance,” a company spokesperson said.

Steelmaker Posco alone, without its subsidiaries, posted 6.1 trillion won in sales and 852 billion won in operating profit. Net profit amounted to 579 billion won, a 86.5 percent advance from the second quarter.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]