Posco’s overseas affiliates help bolster sales

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Posco’s overseas affiliates help bolster sales

Posco’s operating profit rebounded to over a trillion won thanks largely to increased demand for steel and the favorable performance of its foreign corporations.

According to Korea’s largest steelmaker on Thursday it posted 1.13 trillion won ($1.01 billion) in operating profit during the third quarter, up 15 percent compared to the previous quarter and up 8 percent year on year.

Its quarterly sales revenue stood at 15.04 trillion won while its net profit jumped 71 percent from the previous quarter to 906.6 billion won.

The company’s debt ratio hit 68.1 percent, the lowest in seven years, falling 1.5 percentage points from the second quarter.

Posco’s main steel business accounted for 912 billion won of its operating profit, increasing its contribution by 197.2 billion won compared to the previous quarter. The company said the boost was due to increased demand for steel and reduced material costs, which offset profit cuts from a decline in the price of steel.

Its foreign corporations, which had been dragging the steelmaker’s consolidated performance down, contributed to the boost in third quarter earnings.

Its joint-venture in China, Zhangjiagang Pohang Stainless Steel, saw operating profits jump by a whopping 572.5 percent to 53.8 billion won as the local stainless steel price rose. As Beijing drives the restructuring of China’s steel industry and cuts production, steel prices in China have risen in the third quarter.

PT Krakatau Posco, based in Indonesia, posted 8.8 billion won in operating profits, up 13 billion won from the previous quarter thanks to cheaper material costs and increased sales of thick steel plates. In the second quarter it saw a 4.2 billion won operating loss.

Posco SS-VINA, a steelmaking corporation in Vietnam, still hasn’t turned black but managed to reduce losses by an increase in sales of shape steel. While the corporation posted a 20.1 billion won operating loss in the second quarter, it reduced the loss to 3.2 billion won.

“Still, by monthly figures the corporation turned black in September and we are expecting it to turn black in the annual earnings record next year,” a spokesperson from Posco said during a conference call held for investors and analysts on Thursday.

Posco expects fourth quarter results to be favorable as China continues to reduce production facilities in response to oversupply and environmental problems.

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