Seoul: Posco, the world’s No.4 steelmaker, reported its quarterly operating profit halved but gave a full-year profit target that implies a recovery in the fourth quarter on healthier demand and lower costs.
Posco, the first major Asian steelmaker to report results in this earnings season, said it was aiming to post full-year operating profit of 3.2 trillion won for 2009 and forecast the steel industry’s recovery would continue through the fourth quarter and 2010.
According to Reuters calculations, the full-year operating profit figure implies a fourth-quarter operating profit target of 1.64 trillion won, up 17% from the year-ago period.
“We will continue operating overseas production bases, developing resources and investing in new materials” in order to grow as a global company, Lee Dong-hee, Posco’s president and chief investment officer, said in a statement.
The South Korean steelmaker reported July-September operating profit of 1.018 trillion won ($874.7 million), in line with an average forecast for 980.19 billion won according to Thomson Reuters.
Shares in Posco ended up 4.25% at 515,000 won on Wednesday, beating the wider market’s 1.24% rise, as investors anticipated strong results after the close.
Third-quarter revenue at Posco, which follows ArcelorMittal, Japan’s Nippon Steel and China’s Baosteel in world rankings, fell 22.3% year-on-year to 6.85 trillion won but was up 8% quarter-on-quarter.
Posco was able to rapidly pull out of the worst slump in decades helped by the high quality of its products and price competitiveness versus its global peers, analysts said.
Analysts expect Posco to perform even better in the current quarter, leading a global steel market recovery, backed by healthier demand from domestic automakers, whose need for flat steel was fueled by robust domestic and overseas sales.
Net profit declined 6.2% to 1.14 trillion won from a year earlier but rose 165% from the April-June quarter as a stronger won helped cut costs of imported raw materials.
The Korean won gained 8.1% against the dollar during the quarter ended 30 September after an 8.6% jump in the previous quarter.