(Seoul = Yonhap News) Reporter Shin Chang-yong = POSCO Holdings, the holding company of POSCO Group, continued its performance improvement for three consecutive quarters thanks to the recovery of profitability in the steel sector.
POSCO Holdings announced on the 2nd that its consolidated operating profit in the third quarter of this year was provisionally calculated to be KRW 940 billion, an increase of 47.9% from the same period last year.
This operating profit exceeds the market forecast of 812.8 billion won compiled by Yonhap Infomax by more than 15%.
During the same period, sales amounted to 19.14 trillion won, an increase of 10.9% compared to the same period last year. However, net profit decreased by 1.8% to 380 billion won.
This performance improvement was led by the steel sector. POSCO, the flagship affiliate, achieved an operating profit of KRW 455 billion thanks to increased sales prices and increased crude steel production, despite an increase in the unit price of coking coal, the main material for steel products. This is the first time in four quarters since the third quarter of last year (585 billion won) that POSCO's quarterly operating profit recovered to the 400 billion won range.
POSCO is further increasing the prices of steel products in the second half of the year to ease the burden caused by rising raw material costs.
“Following the price increase in the first half of the year, we are negotiating additional price increases with major customers in the second half of the year,” said Noh Seong-rae, head of POSCO’s marketing strategy department, in a conference call announcing the results. “We plan to continue adjusting the sales price and secure a stable profit structure by comprehensively considering market conditions, changes in supply and demand, and contract conditions for each customer.”
However, a decline in production and sales is expected in the fourth quarter due to large-scale facility repairs.
POSCO predicted that product production in the fourth quarter would decrease by 920,000 tons and sales volume by 570,000 tons compared to the previous quarter due to the renovation of Gwangyang Steel Mill's No. 2 blast furnace. The impact of the renovation is expected to last until the first quarter of next year.
POSCO plans to minimize supply disruptions to domestic customers by securing inventory in advance and adjusting sales for each product.
The infrastructure sector also continued to grow. POSCO International achieved an operating profit of KRW 401 billion, a 24% increase compared to the same period last year, thanks to the effects of increased production by SENEX Energy (SENEX) in Australia and expansion of palm production in Indonesia.
POSCO E&C recorded an operating profit of 48 billion won, a 4% increase compared to the previous quarter, due to increased orders.
On the other hand, the secondary battery materials sector was sluggish. POSCO Future M posted an operating profit of KRW 82 billion, a 55% increase compared to the previous quarter, due to the recovery in sales of anode and cathode materials and an increase in selling prices, but the division as a whole suffered an operating loss of KRW 1.7 billion due to seasonal factors such as a decline in global lithium prices and a decrease in winter production at POSCO Argentina.
POSCO Group is accelerating its efforts to secure future competitiveness centered on the resource-centered 'triple core (industrial, strategic, energy resources)' strategy announced in July of this year.
In the steel sector, an industrial resource, construction of 8CGL, a hot-dip galvanized steel sheet for automobiles, began at the Gwangyang Steel Works in September. In the strategic resources sector, POSCO FutureM is responding to the expansion of the energy storage system (ESS) market by converting its Pohang ternary cathode material facility to an LFP system. In addition, POSCO Argentina completed the construction of its second lithium plant (25,000 tons per year). In the energy resources sector, the company acquired a 100% stake in American Cord's shale gas assets and secured annual production volume of approximately 1 million tons.
POSCO Holdings introduced that it had significantly improved its financial soundness by reducing net borrowings by 4.3 trillion won and lowering its debt ratio by 6.7% points by preemptively securing cash and influencing foreign exchange rates.
POSCO Holdings plans to use 10% of the approximately KRW 2.5 trillion secured by securitizing some of its shares in POSCO International and POSCO DX, excluding POSCO Future M, through a price-return swap (PRS) to purchase and cancel its own shares within the year.
