Posco profit falls 19.1% in tough first quarterThe operating profit for Posco and its subsidiaries fell nearly 20 percent in the first quarter from the previous year as a steel market slump weighed heavily on the company.
Korea’s top steelmaker said Wednesday that it recorded 1.2 trillion won ($1.04 billion) in consolidated operating profit in the first quarter this year, declining 19.1 percent from 1.49 trillion won during the same period last year.
It was also a 5.4 percent fall from the previous quarter.
Net profit dropped 28.2 percent to 778.4 billion won from the previous year while revenue rose 1 percent to 16.01 trillion won.
The company blamed struggling steel prices for the disappointing result.
“The slump in the steel market led to operating profit declining from the previous quarter,” the company said during an earnings call on Wednesday.
Global steel prices have lagged behind recent spikes in iron ore prices due to mine closures in Brazil after a dam collapse in January and a cyclone that shut down Australian iron ore ports last month.
Prices for imported iron ore from China were at $94.48 per ton on Monday, a 31.09 percent rise from the start of the year, according to data from the Trade Ministry.
The company explained that it was able to minimize the quarter’s fall through strong performances from subsidiaries, such as Posco International.
The trading company recorded its highest-ever quarterly earnings in operating profit at 164.4 billion won.
Operating profit rose 9.5 percent compared to the same period last year thanks to the restoration of gas pipes to China from its Myanmar gas field.
Posco International said it sold 570 million cubic feet of gas daily in the first quarter compared to 396 cubic feet of daily gas sales in the final quarter last year.
Meanwhile, the steelmaker was cautiously upbeat about its annual forecast, predicting annual earnings to remain similar to last year’s figures citing a rise in steel prices in the near future due to China’s stimulus plans and growth from developing countries.
Global steel demand is expected to increase this year by 1.3 percent compared to last year, according to the World Steel Association.
Posco said it was wary of the Chinese market’s decreasing demand for vehicles, although concerns of escalation in the U.S.-China trade dispute have subsided.
The steelmaker added that it will aim to maintain dividends to last year’s level, at 10,000 won per share.
Posco shares ended 0.96 percent lower at 258,500 won, while Posco International shares ended the same as Tuesday at 18,550 won.
BY CHAE YUN-HWAN [email@example.com]